Diane Dayhoff - Vice President, IR Frank Blake - Executive Chairman and CEO Craig Menear - Executive Vice President, Merchandising Carol Tomé - Chief Financial officer Marvin Ellison - Executive Vice President, U.S. Stores

Dennis McGill - Zelman & Associates Gary Balter - Credit Suisse Aram Rubinson - Nomura Securities Dan Binder - Jefferies & Company David Gober - Morgan Stanley Christopher Horvers - J.P. Morgan Michael Lasser - UBS Matthew Fassler - Goldman Sachs Brian Nagel - Oppenheimer Peter Benedict - Robert Baird Greg Melich - ISI Group Michael Baker - Deutsche Bank Alan Rifkin - Barclays Capital Scot Ciccarelli - RBC Capital Markets

Good day, everyone. And welcome to today’s Home Depot First Quarter 2013 Earnings Conference Call. (Operator instructions) Beginning today’s discussion is Ms. Diane Dayhoff, vice president, investor relations. Please go ahead ma’am.

Thank you, Mary and good morning to everyone. Joining us on our call today are Frank Blake, chairman and CEO of the Home Depot; Craig Menear, executive vice president of merchandising; Carol Tomé, chief financial officer and executive vice president, corporate services. Following our prepared remarks the call will be open for analyst questions. Questions will be limited to analysts and investors, and as a reminder, we would appreciate it if the participants would limit themselves to one question with one follow-up, please. If we are unable to get to your question during the call, please call our Investor Relations department at 770-384-2387. Now, before I turn the call over to Frank, let me remind you that today's press release and the presentations made by our executives include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations and projections. These risks and uncertainties include, but are not limited to, those factors identified in the release and in our filings with the Securities and Exchange Commission. Today's presentations may also include certain non-GAAP measurements. Reconciliation of these measurements is provided on our website. Now let me turn the call over to Frank Blake.

Thank you, Diane. And I would like to start by saying our thoughts and prayers are with those who have been stricken by the violet storms in Oklahoma and throughout the Southwest. Our company and our associates are part of these communities, so we will be working hard to be helping in the days and weeks ahead. Now on our results, sales for the first quarter were $19.1 billion, up 7.4% from last year. Comp sales were positive 4.3% and our diluted earnings per share were $0.83. Our US stores had a positive comp of 4.8%. All three of our US divisions posted positive comps for the quarter. For our northern division in particular this was a significant accomplishment given the dramatic difference between the unusually warm spring of 2012 and the relatively cold spring of 2013. Our western division was our best performing division driven by double-digit positive comp in most of the major markets in California. Our Florida markets also performed well with comps above the company average. Internationally, our Canadian business had positive comp for the sixth quarter in a row and our Mexican business had another quarter of positive comp making it 38 quarters in a row of positive comp growth. As Craig will detail, while weather negatively impacted our seasonal and exterior businesses, our core interior project business remained strong throughout the quarter. This was encouraging and consistent with the view that the housing market is starting on the path to recovery. For the first time in the last several years the growth rate in our pro customer segment outpace the growth rate in the consumer segment. We’ve been tracking the relative growth rates of our pro and consumer segment, as one indicator of the housing recovery. Since 2008, our pro segment has underperformed our consumer segment, last year the relative growth rates grew closer and in the fourth quarter of 2012, they grew at approximately the same pace. Our expectation was that the pro business would accelerate during the housing recovery and so this quarter’s outperformance from the pro segment is a positive sign. Some of the outperformance was due to the slower growth in our consumer-oriented garden business, but even adjusting for that, the pro segment had a higher growth rate. Also our smaller spend pro customers contributed more significantly to the overall pro growth than in the last few years. Our expectation was that we see improve performance in the smaller spend pros as the housing market recovers, so this is another positive sign. Our services business had double-digit growth in the quarter and we are pleased with the integration of Measurecomp and U.S. Home Systems, our two recent services-related acquisitions. Marvin and his team have been able to improve the customer experience both in the home and in the store by bringing these businesses directly into Home Depot. As part of our interconnected retail strategy, we have completed the rollout of buy online, ship to store. This required an effort across our business from supply chain to merchandising to online to IT and store operations. Our customers now have access to over 300,000 items available for pick up at their convenience in our stores. So far the growth we’ve seen from this has been ahead of our expectations and one out of five customers who pick up and order at the store also buys an additional item over there. We also continued our efforts to improve the overall dotcom experience for our customers. We simplified our checkout process, refresh lending pages and integrated e-receive into the site among other key activities. We are pleased that the online traffic to our site was up almost 50% and as part of that not surprisingly mobile traffic more than doubled. The U.S. macro data on housing continues to improve, private fixed residential investment as a percent of GDP picked up for the sixth consecutive quarter to 2.7%, increasing household formation, price appreciation and higher housing turnover are all positives for our market, but credit availability remains tight and constrains the velocity of the recovery. Last year at our Investors and Analysts Conference we set out a framework for thinking about the recovery of the housing market and the impact the recovery would have on us. In 2010 and 2011, we went through a period when our sales were growing but the housing market was still down or thus stabilizing. Our sales performance correlated most directly to overall GDP. Last year we had an additional modest resist from housing as the market started to improve. We saw that carry through in this past quarter somewhat stronger than we anticipated at or adjusting for weather impacts. As Carol will discuss in more detail, we are therefore revising upwards both our sales and earnings guidance for the year. We remain focused on taking care of our customers and investing in our business and in our associates. I’d like to thank our associates for their hard work and dedication. Based on this quarter’s results, roughly 98% of our stores would be in success sharing, our profit sharing program for our hourly associates. Last year we had 100% of our U.S. stores make success sharing, our objective is to accomplish that again this year. And with that, let me turn the call over to Craig

Thanks, Frank, and good morning, everyone. We are pleased with our performance in the first quarter with strength in our business across the breath of the store. We had positive comps in all departments, except our indoor and outdoor garden departments. The departments that outperform the company’s average comp were kitchens, lumber, tools, plumbing, décor, electrical, bath, flooring, lighting and hardware. Paint, millwork and building materials performed positively while comp sales in indoor and outdoor garden were negative. Spring arrived at various times across the country and we were ready when it broke. In the western division where weather was more normal we had positive performance in all departments throughout the quarter. In contrast, in the northern and southern divisions where weather was significantly colder than a year ago, spring gardening and outdoor entertainment categories posted negative comps in February and March. But as the weather improved in April, our nimble supply chain and partnership with our store operations and field merchandising teams reacted quickly and maximized demand spikes. By taking advance of this moment of opportunity we were able to post positive performance in our garden business across all divisions in April. Inside the home, we continued to gain momentum in sample décor. In flooring, customers’ response to our SoftSpring carpet, new floor tiles and fusion grout helped drive department comp above the company average. In bath, our lineup of Moen and Delta Foundations faucets as well as new vanities from Glacier Bay were the drivers of our performance. We continued to see strong results in lighting as customers transitioned to LED bulbs and light fixtures. In maintenance and repair categories, we continued to see strength with comps above the company average in wiring devices, safety and security, plumbing repair, pipe and fittings, tools, hand tools, power tool accessories, cleaning and door locks. Total comp transactions grew by 0.1% for the quarter overcoming significant downward pressure from our seasonal business. Transactions for tickets under $50 representing approximately 20% of our US sales were down 1.6% for the first quarter, principally due to our garden business. In contrast, in the month of April we were able to drive positive transactions, including tickets under $50. Transactions for tickets over $900 also representing approximately 20% of our US sales were up 9.7% for the first quarter. Average ticket increased 5% in the first quarter. The drivers behind our average ticket growth were the strength in appliances as well as continued improvement from our pro business. Our average ticket increase was also impacted somewhat by commodity price inflation mainly from lumber and copper which contributed approximately 120 basis points to comp. Now let me turn our attention to the second quarter. We are introducing new technology in paint from Behr's with our new line of MARQUEE Exterior Paint and Primer. This new paint creates a tough non-stick surface that resists dirt and offers advanced state performance for longer-lasting color all backed by lifetime guarantee. Our exclusive MARQUEE paint resists rain showers as early as 60 minutes after application and can be applied in lower temperatures, which are great features for our pro customers. Also in paint for our professional customer, we are introducing new paint sprayers from Graco. We have an incredible lineup of great values and special buys as well as innovative products for Memorial Day. We are introducing the first battery-powered trimmer that converts to a corded trimmer that you never run out of power from RYOBI. In store now we have the [Pennington’s feed] Behr’s system. Without measuring, pouring or mixing the system delivers even feeding every time and puts up more nutrients than competing products while using less water. For Father's Day and 4th of July events, we also have an extensive lineup of great value and special buys. These events along with our superior execution in the stores will generate a lot of excitement in the second quarter. And with that, I would like to turn the call over to Carol. Carol Tomé: Thank you, Craig and hello everyone. In the first quarter, sales were $19.1 billion, a 7.4% increase from last year. As you will recall, fiscal 2012 had a 53rd week which shifted our fiscal 2013 calendar. By starting fiscal 2013 one week later than last year, we had an additional week of spring sales. The calendar shift contributed approximately 320 basis points of year over year sales growth. On a like for like basis, comps or same-store sales were positive 4.3% for the quarter with positive comps of 4.6% in February, negative 3.5% in March and positive 9.9% in April. Comps for U.S. stores were positive 4.8% for the quarter with positive comps of 4.8% in February, negative 3% in March and positive 10.8% in April. The monthly variation in our comp was due primarily to weather which impacted our garden department as well as the timing of Easter. As Craig mentioned, every department with the exception of our garden department reported a positive comp in the quarter. Sales related to Hurricane Sandy were approximately $145 million in the second quarter, $30 million higher than the storm sales we realized from Hurricane Irene in the same period last year. As the rebuilding continues, we believe we will see some additional storm-related sales in the second quarter. Our total company gross margin was 34.9% for the quarter, an increase of 20 basis points from last year. This gross margin expansion came from our U.S. business and can be attributed to the following. First, our shrink efforts are gaining traction as we realized 11 basis points of gross margin expansion due to better shrink performance than one year ago. Second, we experienced approximately 20 basis points of gross margin expansion due to the impact of recently acquired businesses, which are gross margin accretive. And third, we experienced approximately 10 basis points of gross margin contraction due to a change in mix of products sold. For the year, we continue to expect moderate gross margin expansion. In the first quarter, operating expense as a percent of sales decreased by 112 basis points to 24%. Total operating expenses grew at a factor of 35% of our sales growth, better than our original guidance due principally to the sales environment. Interest in other expense was $161 million for the first quarter, an increase of $77 million over the same period last year due to the following factors. First, in the first quarter of 2012, we had a $67 million benefit arising from the termination of a third-party loan guarantee that did not repeat in 2013. And second, our net interest expense was $10 million higher than last year due for the most part to interest associated with $2 billion of incremental debt issued in April of 2013. Our income tax provision rate was 36.6% in the first quarter and we expect our income tax provision rate to be approximately 37% for the year. Diluted earnings per share for the first quarter were $0.83, an increase of 22.1% from last year. Moving to our operational metrics, during the first quarter we opened one new store in Mexico for an ending store count of 2,257. At the end of the first quarter, selling square footage was 235 million. And total sales per square foot for the first quarter were $328, up 7.8% from last year. Now, turning to the balance sheet, at the end of the quarter, inventory was $11.8 billion, up approximately 2% from a year ago. Inventory turns were 4.4 times, up from 4.3 times last year. We ended the quarter with $44.2 billion in assets, including $4.3 billion in cash. In the first quarter, we repurchased $2.1 billion or approximately 27.2 million shares of outstanding stock, including point 9.1 million shares through open market repurchases and 18.1 million shares through an accelerated share repurchase program. The shares acquired under the accelerated share repurchase program are an initial calculation. The final number of shares repurchased will be determined upon completion of the program in the second quarter. In April, we issued $2 billion of long-term debt at a record low blended coupon of 3.45%. At the end of the quarter, our adjusted debt-to-EBITDA ratio was 1.8 times against a target of two times, giving us approximately $2 billion in additional borrowing capacity. We have no plans to issue incremental debt in the second quarter but if conditions warrant, we may look to do so in the back half of the year. Computed on the average of beginning and ending long-term debt and equity for the trailing four quarters, return on invested capital was 17.7%, 230 basis points higher than the first quarter of fiscal 2012. Continued strong performance in the core of our store drove first quarter sales ahead of our plan. Further we know that some garden sales that were deferred in the first quarter will be realized in the second quarter. Finally while the forecast for GDP growth in the US hasn't changed materially, housing continues to recover. Today we are looking our 2013 sales and earnings-per-share growth guidance reflecting our first quarter outperformance and our forecast for the second quarter where we are projecting sales and earnings to be higher than what we originally planned. Because it is early in the year, we are not changing our forecast for the back half of the year. As a result, we now expect fiscal 2013 sales to increase by approximately 2.8% with positive comps on a 52-week like to like basis of approximately 4%. Given our updated sales growth guidance we now expect expenses to grow at 30% of our sales growth rate on a 52-week basis. For earnings per share, remember that we guide off of GAAP, we now project fiscal 2013 diluted earnings per share to increase approximately 17% to $3.52. This earnings-per-share guidance includes the $2.1 billion of share repurchases completed in the first quarter and our intent to repurchase an additional $4.4 billion in shares over the course of the year. So we thank you for your participation in today’s call. And Mary, we are now ready for questions.

(Operator Instructions) And we’ll take our first question from Dennis McGill from Zelman & Associates. Dennis McGill - Zelman & Associates: I guess first question, I think it was a couple of years ago, you had mentioned an REO turnkey program for banks on the foreclosure side and I think that business is probably still growing and you’ve got an emergence of single family rental companies out there as well that are going to be a little bit more institutional and maybe national, can you talk big picture kind of what that program looks like today and how you guys are thinking about maybe agreements that create a chance on the maintenance on the single family part of the business on the rental side? Carol Tomé: Well I will start, Marvin, you want to kick in. We are pleased with this business. On a relative basis, Dennis, it’s a pretty small for us but we are seeing nice growth and we will continue to use our services to expand this across the country. What we’re more excited about actually is what Frank commented on is the strength in our pro business. And this REO would not be inside of that pro business necessarily but we’re really excited in that regard. Marvin, any color you want to add?

Dennis, the only thing I will add is as you know the business is shifting from traditional foreclosures with banks to a private equity funds are going in and purchasing up groups of properties. So we are shifting and adjusting but I think Carol’s point is most important. This is a small business. It’s something that we’re very interested in, we think that we have unique competencies with our pro business, with the products that we sell and our key is really two things. Leveraging our GC network that we have because we are in the services business and the pro business but also leveraging product pull-through, we want those customers to come to our stores to buy products, and those products to be the fixtures, faucets, the plumbing suppliers et cetera that we put in those homes from a remodel and from a maintenance standpoint. So far so good but it is a relatively small business. Dennis McGill - Zelman & Associates: Roughly how big would that be? Carol Tomé: We haven’t disclosed that Dennis. Dennis McGill - Zelman & Associates: Second question, as you talked about double-digit comps in California for the quarter, can you go into a little bit of details as far as categories that you see driving that performance and then maybe Frank, just big picture how you think about that maybe being a leading indicator to other parts of the country as home price inflation gains momentum as well?

Well, let me take the latter first. What we have seen over the last several quarters is some of our hard hit markets, the markets that were really ground zero of the housing collapse recover and that’s California, Florida, moving into Arizona, now even Las Vegas and Nevada. So it’s really part of how badly those markets suffered previously and now starting to return to more normal performance. I’ll let Craig and Marvin comment, but I’m not aware of any particular differences in terms of what’s being sold in those markets, we are really selling across the store there.

Yeah. Really is broad based when you look at virtually every department we have, all posted positive growth in the California area, so we are very, very pleased that’s it’s a broad base sales pattern? Carol Tomé: You are just saying the rising title of floor boards the entire business is lifting.

Correct. Dennis McGill - Zelman & Associates: Very bullish. Thanks guys.

And we’ll take our next question from Gary Balter with Credit Suisse. Gary Balter - Credit Suisse: Thank you. I’ve just two questions. One is could you talk about, you did -- you’re doing these different tests with PayPal and other ways of servicing the customer from a payment point of view? Could you just discuss where you’re going with that and what’s been the results of some of the tests and what are you rolling out et cetera? Carol Tomé: Well, on the PayPal front, we are very pleased with the year-over-year performance, it actually doubled in penetration, particularly it’s very, very small. We brought PayPal into our business because our customers wanted to use that as a form of standard and so we’re delighted to have the relationship with them. As we look ahead, we set our eyes wide open as to what may be available to retailers from a mobile wallet perspective and there are a number of things that are being talked about as you know, there is a consortium of retailers. We are not part of that consortium, but we are watching what they are doing as [MCS], we’re watching what they’re doing. Obviously, we’re watching what Google is doing. There was announcement about Google. So our eyes wide open. We want to be where the customer is going. We don’t necessarily want to lead the way. Gary Balter - Credit Suisse: Okay. And lows being part of that consortium doesn’t really impact your decisions, right? Carol Tomé: Eyes wide open. We want to do the right thing for our customers. Gary Balter - Credit Suisse: Okay. Okay. And the second question, your productivity now by assuming the calculation which was about 326 per square foot you detailed about $100 higher back in the good old days and just comping in the high singles you are going to get near there. As you look at your staffing the stores and the way the store is set, do you have -- do you feel like you could, the capacity is fine for getting up to those levels or do you feel that maybe you will start stretching your stores again and you have to start changing the way you come to market level? Carol Tomé: Well, it really depends on the nature of the sales growth. As you know, we forecast sales growth 50% coming from transactions, 50% coming from ticket growth. As you saw on the first quarter, our growth came from ticket growth that has an impact on our staffing model, because it’s an activity-based staffing model, but marketing depends tons of flexibility to do what you need to do with certain customers.

Yeah. Gary, we do, in fact, if you go back to the whole 60/40 initiative, over the last four years we’ve reinvested roughly 500 hours per store per week back to the stores for service and that’s reallocation not an incremental add, so that’s really allowed us to continue to sustain a service level while making sure that we respond to the needs of the business. But I think Carol’s point is very key and that is we have an activity-based system, driven by transactions in ticket. So where sales are picking up our staffing has increased. We think we will be in a perfect position to keep up with the trends. We work hand in hand with Craig’s team. So as we forecast events, new product introductions, we will adjust our staffing to make sure we have customers served in a most appropriate way. So we feel really good about the future and how we can keep up with business.

Gary, the one other point that I’d add to that on the store, we’re faced with the size of our store, we don’t see a need to substantially remodel our stores or expand them. But one thing that we’re dealing with between Marvin and our supply chain team is buy online pickup in store as -- and buy online ship to store and buy online ship to store particularly that we’ve had some pretty good customer interest in that and so we’re thinking about how do we segment parts of the store to more efficiently serve that customer who is coming in and has bought online and just wants to pick it up from the store. So Marvin and his team are working on to what would we do with the store layout but that’s a slight operation, it’s not a remodel. Carol Tomé: It’s really interesting statistics. If you look at the first quarter 22% of the sales based online were actually picked up in the store and 10% of those were boss related buy online ship store related, isn’t that interesting? Gary Balter - Credit Suisse: Thank you very much.

And we will take our next question from Aram Rubinson. Aram Rubinson - Nomura Securities: A question about traffic and ticket, I see the quarter’s entire comp was as you say came from ticket. There were a number of factors though that might have influenced that through the extra week shift and the weather and other things, can you help us disaggregate some of those factors, trying to get a sense of how the underlying traffic is on a reported basis underlying traffic on a comp basis was slightly negative. So just trying to get a little context on that. Carol Tomé: I can start and Craig, you can add some color. Our comp transactions under 20 were up 0.1%, and that’s a good number given how we are so heavily penetrated in garden in the first quarter. Our garden business makes up 18% of our total sales. If you look at our comp average ticket, it was up 4.2% year on year and if you look at the drivers, it was across all categories. As Craig pointed out, we had about 120 basis points coming from commodity inflation. We had about 70 basis points of growth coming from appliances, so our appliance business is growing quite nicely and then the rest is across all categories. Craig, do you want to give a more color?

Yeah, just to reiterate when we got into April and actually began to see a more normalized weather pattern, we were able to actually drive the transaction growth in the company and with the garden businesses kicking in and getting into positive growth in the month of April, it significantly helped that including the lower ticket categories which grew as well. Aram Rubinson - Nomura Securities: So usually in a cyclical rebound we see ticket lead to comp, is that just part of what we are seeing naturally or do you expect the traffic to kind of be balanced with the ticket in the year ahead? Carol Tomé: So we would expect the traffic to come back in the second quarter of course because the sales that we didn’t get in the first quarter have not been lost. And as we look at our garden sales, recall last year we had a really warm first quarter. So we pulled forward about $160 million of garden sales into the first quarter last year. This year we estimate we lost about $188 million of garden sales. But it’s not lost forever, some of it’s lost. But we are going to get the majority of that back in the second quarter and with that comes people.

I think the other factor when you think about the growth in ticket as we called out over $900, being up 9.7% improvement in the pro business is also a factor there, that’s helping to drive that higher ticket. While we are not back to historical norms, we’re seeing improvement in terms of unit productivity and the number of items in a basket with our pro customer. And so that’s encouraging for us as well.

And we will take our next question from Dan Binder with Jefferies. Dan Binder - Jefferies & Company: I was wondering if you could just give us your best thoughts on what the -- when the seasonal shifts will occur with, I should say the week shift that occurred in Q1, how that plays out across the rest of the year? And then my second question was just regarding competition both online and on-land, how that’s booking these days? Carol Tomé: Sure. So let’s talk about this seasonal shift and I am going to do it on a comp basis. So for the first quarter we told you that the seasonal shift to our 320 days is planned on a comp basis instead of the dollars that was $554 million. And looking at the second quarter, we will actually have a lower comp basis and it will be lower by about $300 million. So if you think about what that means, our comps will be higher in the second quarter than our total sales growth. Then looking to the third quarter there should be any meaningful difference in the comp basis and then finally in the fourth quarter our comp basis should decline by about $100 million, you can call it pretty flat. So hoping that’s helpful.

And as far as the competition really it’s still there. We have plenty out there, kind of haven’t seen anything dramatically different in the last quarter but clearly we monitor what’s happening in the marketplace and then adjust according to what we see happening.

And we will take our next question from David Gober from Morgan Stanley. David Gober - Morgan Stanley: Hi, guys. I was just wondering. Good morning, guys. And Craig, I was just wondering if you could touch a little bit on some of the merchandizing initiatives, particularly on the localization front as you ramp into the busy part of the year and you have update on, on what you’re seeing there and how you are expecting that to impact the business, whether that would be contributing kind of ticket or traffic?

Yeah. Dave, we have, as you know, we’ve put tools in place to assist our merchants and assorting. We are working on actually delivering enhancements to those capabilities right now. We have been developing clusters. So working to do a better job of assorting locally, following example that would be adjustments in floor tile mix and we had pretty nice performance. So we believe that by working with our field merchandizing team in conjunction with the merchants here in Atlanta that those kind of adjustments are paying off for us and see it in the performance. David Gober - Morgan Stanley: And maybe just a follow up on the appliance business, I know Carol mentioned that that continues to be strong and seem like in the fourth quarter that was a big part as you guys expanded a couple of relationships with vendors? And are you still seeing momentum there and as you continue to roll that out, and are you seeing the impact across the stores that more localize the appliance section?

First of all, we said, we are pleased with the performance that we are seeing in the appliance business as we call out it contributed about 70 basis points of comp in the quarter. Our customers are responding to the expanded offering. We completed the initial rollout of our expanded store base, which was 120 stores at the end of last year and we are moving forward, as we call out last quarter with an additional 120 stores. The appliance business is an interesting business, it’s highly repair-oriented, a lot of appliances break every day in the country. So, we do see that as a big repair business. It also does complete the kitchen. So there is an opportunity on both sides. David Gober - Morgan Stanley: Got it. Thanks.

And will take our next question from Christopher Horvers with J.P. Morgan. Christopher Horvers - J.P. Morgan: Thanks and good morning. Carol, I believe you mentioned 18% of sales is historically, you said garden in the first quarter, what was that this year, how does that compared to 2Q? And perhaps, can you expand that bucket, how much would you say is seasonal and outdoor broadly historically in the first and second quarter, including things like grills, patio, furniture and outdoor paint and all the outdoor activities? Carol Tomé: Well, the 18% number that I shared with you was the penetration this year and as we pointed out, our comps were negative. So obviously the penetration was higher last year, slightly higher. And Craig you might want to talk about how we categorize?

Yeah. In terms of outdoor kind of categorizes in total as we look at it, generally in Q1 that represents about 30% of our business and it grows to about 35% of our business in Q2 Christopher Horvers - J.P. Morgan: And then, okay, and so, I assume last year that was a lot higher in the first quarter is it 2 or 300 basis points higher, the flip year-to-year or is it something smaller? Carol Tomé: Well, if you just want to give us a second we can tell you. So the penetration has changed about 200 basis points year-on-year. Christopher Horvers - J.P. Morgan: 200 bps year-to-year, okay. So, you are raising the guidance for the, you are just raising, assuming that the season -- the seasonal business shift into the second quarter from the first, the 100 -- I think the $180 million that you mentioned, you missed this year that’s about 90 basis point, should we look at that the 2Q outlook on the stock basis or we just going to sort of assume that the foray domestically, and I get the 90 bps back of that garden business shifting or is another 200 basis points from the seasonal shift, total outdoor seasonal shift? Carol Tomé: Well, let me share with you how we’re thinking about it. Our -- the guidance that we’ve given today, the lift from 2 to 2.8 on comp basis 3 to 4, equates to about $800 million more in sales than we originally planned. Of that $800 million about $340 million was recognized in the first quarter. So that balance we believe will come in the second quarter. And we did that the following way. First is recovery of garden and we won’t recover everything we lost but we will recover the majority. We also believe that we will have additional sales from Sandy and this will all be incremental. So we are projecting $80 million from Sandy and I will tell you that is a projection. Don't really know. And then the rest will come from strength across the core of the business. It’s May 21, our sales thus far in the month are great. So we feel very comfortable with the guidance that we’ve given.

And we will take our next question from Michael Lasser with UBS. Michael Lasser - UBS: I actually have two. First, it’s on the floor of the credit to consumers, how are you viewing that dynamic within the broader macro environment as influencing your sales, is that starting to happen, what’s the driver, or do you expect that, that’s still on the horizon that will happen down the road? Carol Tomé: So Michael, the question is on consumer credit? Michael Lasser - UBS: Yes, is it starting to flow -- we saw in the fourth quarter home equity line was down year over year. What do you is fostering all this good growth that you are seeing? Carol Tomé: Well interestingly we did see improved penetration on our private label cards. In the quarter the penetration increased 119 basis points to 22.9%. And if we look by category where we saw that growth it was driven by our kitchen departments, our millwork departments and our plumbing departments, some of our strongest year-over-year growth departments. So that’s good news. I will tell you our approval rates continue to decline principally because people are coming off the sidelines which lower FICO scores and they're not being followed by. So our approval rates were about 65% down from last year slightly. The average FICO score being improved to 7/10 of an average credit line of $5800. The other interesting statistic that for our existing customers, they are only about 27% utilized on their credit. So consumers continue to be pretty cautious with credit. This thing holds true for pro. Our pro approval rates were about 70%, a bit of a higher line there $6800 but only 20% utilized. Now on the consumer side, as you know the ability to pay or the card act really negatively impacted approval. The consumer financial protection bureau came out with some changes recently which we think will help approval rate. We think it will help grow our approval rate 500 basis points more or less. So that’s good news. This is my long answer to your question but much like the housing market beginning to recover the consumer and credit availability is beginning to recover but it’s not recovered. Michael Lasser - UBS: And it sounds like you are doing your part to contribute to the free flow of credit to the consumer? Carol Tomé: Yes, we are. Michael Lasser - UBS: And my second question is, as housing recovery continues the profitability of the supply chain should improve, or the entire home-improvement supply chain should improve as capacity utilization rates rise. Are you starting to see evidence that you’re benefiting from that and whatever capacity you might -- Carol Tomé: Well as you know, we’ve given guidance through 2015 which we judge we will get about 20 basis points of benefit from our supply chain by 2015. Didn’t see that in the first quarter but that’s just because of the nature of the seasonal business, IT sales and our supply chain did a great job in the first quarter. But longer term we should enjoy far more benefits. Michael Lasser - UBS: I wasn’t necessarily talking about your supply chain, sorry for the confusion, I was talking about your vendors becoming more profitable such that you would start to participate in their improved profitability?

Certainly when you can put throughput through the factories, that improves overall profitability and we do have agreements in place with our suppliers where as we drive productivity for them we ensure that productivity and obviously can deliver greater value for our customers as well.

And we will take our next question from Matthew Fassler with Goldman Sachs. Matthew Fassler - Goldman Sachs: You spoke about the strengths in your commercial business and macro dynamic, commercial business and you attributed that part to macro dynamics, which clearly working in your favor. When we’ve been talking to pros over the past months about the power center channel supplying to them? Home Depot often stands out, is taking more aggressive action and making incremental -- having incremental impacts? So is it possible to try to disaggregate you think the contributions of your own changes and you might talk about anyone that are new or different or making a big difference versus that of the market in driving that pro business above the consumer business here in the first quarter?

So, Matt, first off, I’ll ask Marvin to address some of the actions we’ve taken in the store to better serve our pros. But I’d just say, generally, it’s tough for us to measure share period. It is really hard for us to measure share with the pro, because the pro shops ask so many different channels, there are so many different kinds of pros in our stores. So we really don't have a good read through into what -- to what extent do our pro numbers reflect some possible share gain versus the market. Since we started, for several years now we’ve had a notional theory of what we see in the housing recovery and since we are seeing that play out with our pro numbers we are more incline to take that as more general market recovery. But we have done and thank you for noting me, we have done somethings that are very focused on this customer segment things or maybe Marvin you want to comment on some of those.

Sure. Matt, we really took advantage of the downturn. We had processes and our focus was really not that good to be quite candidate and so when the market was depressed we decided to invest in a couple of things. Number one, we had a very distinct focus on what we do in the store and what we do outside of the store. In the store was primarily for our smaller pros. Out of the store was for pros that typically would not venture into Home Depot because of the nature of their business. And in the store we focus on speed and convenience. We put in dedicated cashiers for the pros. We put in dedicated loading or we created pro power hours where we eliminated tasking and we want it service focus with specific times of the day and we really -- made a really consistent focus on speed. We leverage the mobile point of sale to help pros accelerate the transactions then we shift outside of the store. We put in a sales force design specifically to go to the pros, larger pros and to make sales calls talking about the features and benefits of working, and buying from the Home Depot. We work with Craig’s team to improve the bid room process. It would take into past days to get a bid back. We turn it into minutes. We continue to listen to pros and just made the necessary changes and what we hope is that when the market started to improve that the investments in training and service that we put in place would benefit us. It’s still very early. We still have a lot of work to do and to Frank point it’s difficult to measure market share, but we have to believe that all of the dedicated focus over the last two years maybe giving us disproportionate benefit as the market improves. Matthew Fassler - Goldman Sachs: Thank you.

And we’ll take our next question from Brian Nagel with Oppenheimer. Brian Nagel - Oppenheimer: Hi. Good morning.

Good morning. Brian Nagel - Oppenheimer: First question I just want to follow on Matt’s question on the pro a bit, but you called out the strength you’ve seen in the pro business. Clearly, as you said, it’s been a big focus for Home Depot. But you connecting better with those customers now, you’re following that a better? Is there, as you look at the buying patterns now, with all those going on the macro environment, it’s not surprising pros taking up a bit? Are you seeing something new data to suggest, there is, we do have a sustainable trend here now for Home Depot in this pro business more than we’ve seen in the past?

I would say, Brain, this is interestingly. This is the first quarter that the pro segment sales have outpaced our consumer segment sales. So we are, I think, appropriately cautious about drawing broader generalizations. As Carol said, we raised our guidance thinking through what’s going to, what we think is going to playout in the second quarter and we are just I would say, it’s a bit early from this quarter to say, boy, this is sustaining. We do like the trend over the last, I mean, definitely the trend has been a positive trend. Carol Tomé: It might be helpful to share with you the top 10 pro classes to the question of what are they buying, it includes plywood, just dimensional lumber, pipe and fittings, flooring tiles, faucet moldings, interior paint, studs and lightbulbs, that’s pretty core to the pro customer.

Brian, the only thing I will add is when you talk about the large pro which we define as over 10,000 annual spend, and the smaller pro is improving and that’s a good sign as Frank noted earlier and what we are hearing from the pros is a very simple definition as to why. A lot of the smaller pros basically shut their businesses down and started to work for the larger pros. And so as the business and the market improves, there are more jobs available and a lot of smaller pros are venturing out again to open up their shops and they are back in business. But it’s very early. But the trend is positive. We just hope that it sustains. Brian Nagel - Oppenheimer: And then maybe just a shorter question on, a lot of us are focused on the seasonal sales because there has been a lot of shifts with the weather and such, but is there a way that you could look at your business and say, okay, despite all these weather shifts we’ve had 2013 versus 2012, seasonal sales were actually better this year, or the same as last year, is there some way to look at like that?

Weather adjusted seasonal sales metric, we really don’t have that. That would be a difficult one to come up with.

I think what we do, do is we look at this really on a half basis. And we try to take into account both quarters combined to eliminate the shifting noise if you will from year to year and we look at multi-year penetrations by category by week. And this is why as Carol said, we feel like we’ve got an opportunity to gain most of those sales in Q2. You may have some categories like pre-emergent that we may not get it all back. But we feel pretty confident that we will get the majority of it.

And we will take our next question from Peter Benedict with Robert Baird. Peter Benedict - Robert Baird: What do you guys make of the recent decline in lumber prices, anything that’s driving that and just getting to your outlook for inflation over the balance of the year, what are you guys thinking on that front?

The lumber price has been interesting for the year. I think output in Q1 from the industry was up double-digit US, as well as high single digit from Canada. So I am sure that has a factor on driving the overall pricing in the market. It’s still up significantly year-over-year and I think that’s probably a factor to the recent declines. Carol Tomé: And we plan on a commodity neutral basis. So as you know we haven’t listed the back half of the year for anything that might happen with prices up or down. Peter Benedict - Robert Baird: And then diving a little bit more into that pro -- some of the pro questions here. Any indication in some of the categories, things like job site tools, windows, things like that, are they starting to show any kind of an uptick or is that still on the comp?

I mean we look at pro categories, Carol called it top 10, we are seeing growth in those businesses and we saw growth in the first quarter obviously versus the fourth quarter which we would expect to see some based on just seasonal. So we are encouraged by the growth across these categories. Peter Benedict - Robert Baird: One last one, when spring arrives this year, I mean when does it typically peak? I mean we have seen the peak now, does the peak occur kind of as you get into June, just trying to understand how long the spring season goes, when it arrives, when it -- at a similar time it did this year?

That really varies by area of the country. And as you can imagine the south peaks several weeks in advance of the north but even in that the peak in any given area can shift up to roughly two weeks give or take. So it really does vary by the area of the country. In some areas it can be as early as week 10 and other areas, it can be as late as 17 or 18. Carol Tomé: Yeah, based on our month to date sales I would say have a peak.

We will take our next question from Greg Melich with ISI Group. Greg Melich - ISI Group: Carol, I have one follow-up question from before and a longer-term one. Carol, you mentioned that May is running great. Would you describe April as great as well? Carol Tomé: Well, April was outstanding month. But I also want to bring your attention to the timing of Easter because of where Easter fell this year versus last year. March was the negative comp was overstated by about 230 basis points which means a positive comp in April was overstated by about 230 basis points. Greg Melich - ISI Group: Got it. So April was great, not outstanding if you adjust for Easter. I’ll leave it at that. Carol Tomé: Okay. Greg Melich - ISI Group: I’ve got some more serious questions. Your free cash flow guidance you didn’t update as part of the change in your EPS guidance. I think it was around $7 billion. Is that change particularly given that it seemed that inventory was only up 2% to get the sort of top line growth. Should we expect more free cash flow leverage or is it still the same number there? Carol Tomé: No. We’ve updated our forecast. We didn’t call it because I don’t think it’s really material in a $7 billion number, but it’s up maybe $200 million or $300 million. Greg Melich - ISI Group: That’s great. Thanks. Carol Tomé: Yeah.

And we’ll take our next question from Michael Baker with Deutsche Bank. Michael Baker - Deutsche Bank: Hi. Thanks. So one short-term, one longer term question. Shorter term, this quarter can you tell the EPS impact of that calendar shift of the 540 odd million dollars? Carol Tomé: Sure. The EPS impact was $0.03. Michael Baker - Deutsche Bank: Okay. Thank you. And then the longer-term, so it was on my model, last time you add an equivalent sales per foot number, your operating margins were 250 points lower than they are now. So I sort of start to think of longer term and if you can get back to where sales per foot were pre-recession, is there any reason to believe that your operating margin should be that much higher, 200 to 400 basis points higher than they were last time they peaked? Carol Tomé: Well, as you point out, we have a ton of operating leverage in our business and the great work of the team in terms of cost out and just driving productivity, it’s more productive than it’s ever been. We’ve guided to 12% operating margin by 2015. Let us get there and then we'll talk about how much or opportunities …. Michael Baker - Deutsche Bank: You are going to get pretty close by the end of this year, may be within 50 basis points. We’ll wait for that update? Carol Tomé: Very good. Thank you. Michael Baker - Deutsche Bank: Thank you.

And we’ll take our next question from Alan Rifkin with Barclays. Alan Rifkin - Barclays Capital: Thank you very much. With respect to the average ticket 900 plus. Is the composition between large Pro, small Pro and the DIY similar within that category as rest of -- as the corporate average? Carol Tomé: Well, when you look at that average ticket performance, some of the top drivers of year-over-year growth were in the appliance category. And that’s mostly consumer. Alan Rifkin - Barclays Capital: That is mostly consumer. Okay. So collectively, I mean, compared to three and six months ago, what is your take on the proclivity for both the Pro customer large and small as well as the DIY customer to take on some of these larger projects. Are you seeing clear evidence of that?

I mean, I think we’ve seen expansion of the project businesses I call out. We have seen nice growth in the simple core, so whether that’s customer taking on a flooring projects or now taking on storage projects, where in the past, they might have differed that. We’ve begun to see those categories have nice growth in the business. So we’re encouraged by that. Other drivers to kind of expansion in ticket is also of innovation. So things like LED, which drives ticket expansion inside of a category, things like lithium technology which drive expansion in tools now across almost five departments in the store, all of those have positive influences on the growth of average ticket as well. Carol Tomé: And just one thing, we are looking at very carefully and this data comes from CoreLogic and that is where home owners are on a loan-to-value basis. Because once home owners believe their home is more of an investment than an extent, we believe the nature of their spending will change. And so this data came out in fourth quarter, it just shows that it would have negative equity spend may be $10,000 a year but those that have 100% positive equity or maybe loan-to-value as much as 49%, those been close to $3000 a year. We’re watching with home price appreciation, how powerful we move into different spending buckets and then trying to determine what the impact on our business will be. It’s still little early, Alan, obviously because its data is just coming out. But we’re really trying to understand, what it could mean for our and the project nature of our business going forward. Alan Rifkin - Barclays Capital: Okay. Thank you, Carol. One follow-up, if I may for you. Obviously, California, Florida, Nevada, Arizona outside these gains, where are we today in absolute terms with where stores in those markets are relative to where we were six years ago when the crisis really began. Are we above those levels in absolute terms at the store level? Carol Tomé: Not yet. No. Alan Rifkin - Barclays Capital: Any quantification of still how far below you are on an average store revenue basis on those markets? Carol Tomé: Just think about it as of the end of 2012, we still had close to $3 billion of sales to recover from what we lost during the recession. Alan Rifkin - Barclays Capital: Very interesting. Thank you. Good luck. Carol Tomé: Thank you.

And now, we have time for one more questions.

And our last question comes from Scot Ciccarelli with RBC Capital Markets. Scot Ciccarelli - RBC Capital Markets: Good morning guys.

Good morning. Carol Tomé: Good morning Scot Ciccarelli - RBC Capital Markets: Obviously, there were some weather challenges that you guys kind of called out already. But in generally, I think what we have continued to see over the last several quarters is relatively modest improvements in the smaller ticket sales but pretty big improvements in bigger ticket sales. I guess, my question is how much of that is due to change in mix on the assortment side. And if this trend continues, is that something you continue to adjust in terms of the mix and assortment of the stores in addition to the labor enhancement, Marvin's already called out?

I mean, it is certainly a portion of this is driven by the growth in categories like appliances which carry a big ticket. But certainly in the first quarter, the smaller ticket was clearly negatively impacted by the lack of garden sales which is a massive driver to transaction on smaller ticket. As you can imagine, lots of customers coming in, buying some bags of dirt, buying live goods, and so on, which carry a much smaller ticket. But as we as we look at the larger ticket, improvement in penetration in lumber with our Pro customer’s, one of the top classes, plywood, dimensional, lumber fall into that, gypsum those are businesses where customers on the Pro side are buying multiples helping to drive the larger ticket as well as you say the appliance business. We’ve seen over multiple quarters, the hard work that we’ve put into things like our kitchen business overall and as well as the improvement of our services businesses, which drives ticket, pay off and help drive the growth in the larger ticker over the past several quarters. We still feel that it’s balanced, that will be driving both -- on an annualized basis both transaction as well as ticket in our business. Scot Ciccarelli - RBC Capital Markets: Well, is there anything that you’ve seen in the business to make you think that the trends that we’ve seen recently won’t continue. I mean, it seems like you’ve been calling our appliances for a while. Lumber has obviously been gaining steam for the last couple of quarters. These tend to become a long cycle trend, don’t’ they?

Yeah. I think they will continue to help us grow the larger ticket categories for sure. Scot Ciccarelli - RBC Capital Markets: Okay. Got it. Thanks a lot guys.

Thank you very much for joining us today. We look forward to speaking with you next quarter.

And that concludes today’s conference. Thank you for your participation.