Diane S. Dayhoff - Vice President of Investor Relations Francis S. Blake - Executive Chairman and Chief Executive Officer Craig A. Menear - Executive Vice President of Merchandising Carol B. Tomé - Chief Financial Officer, Principal Accounting Officer and Executive Vice President of Corporate Services Marvin R. Ellison - Executive Vice President of U S Stores

Gary Balter - Crédit Suisse AG, Research Division Colin McGranahan - Sanford C. Bernstein & Co., LLC., Research Division Christopher Horvers - JP Morgan Chase & Co, Research Division Kate McShane - Citigroup Inc, Research Division Alan M. Rifkin - Barclays Capital, Research Division Michael Lasser - UBS Investment Bank, Research Division Gregory S. Melich - ISI Group Inc., Research Division Matthew J. Fassler - Goldman Sachs Group Inc., Research Division Scot Ciccarelli - RBC Capital Markets, LLC, Research Division Michael Baker - Deutsche Bank AG, Research Division Peter S. Benedict - Robert W. Baird & Co. Incorporated, Research Division David S. Strasser - Janney Montgomery Scott LLC, Research Division

Good day, everyone, and welcome to today's Home Depot First Quarter 2012 Earnings Conference Call. Today's call is being recorded. [Operator Instructions] Beginning today's discussion is Ms. Diane Dayhoff, Vice President of Investor Relations. Please go ahead, ma'am. Diane S. Dayhoff: Thank you, Christie, and good morning to everyone. Welcome to The Home Depot First Quarter Earnings Conference Call. Joining us on our call today are Frank Blake, Chairman and CEO of The Home Depot; Craig Menear, Executive Vice President, Merchandising; and 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 participants would limit themselves to one question with one follow-up, please. This earnings conference call is being broadcast real time on the Internet. The replay will also be available on our site at earnings.homedepot.com. 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 also include certain non-GAAP measurements. Reconciliation of these measures -- measurements is provided in the financial statements included with our earnings release and on our website. Now, let me turn the call over to Frank. Francis S. Blake: Thank you, Diane, and good morning, everyone. Sales for the first quarter were $17.8 billion, up 5.9% from last year. Comp sales were positive 5.8%, and our diluted earnings per share were $0.68. Our U.S. stores had a positive comp of 6.1%. This is the second quarter in a row that we have posted a positive comp in the U.S. of over 6%, something we haven't done in 8 years. This was well ahead of our plan for the quarter. And as with the fourth quarter of 2011, unusually warm weather played a significant role. We had the fourth warmest winter in history and also had the benefit of a comparison to a relatively cold winter in 2011. Not surprisingly, the areas of strongest growth for us were in our northern division where we had double-digit positive comps in the regions across the northernmost tiers. By contrast, while we had positive comps in our southern and western divisions, they were mostly in the mid- to low single digits. In all, we had positive comps in 38 of our top 40 U.S. markets and Florida and California continued on the path to recovery. Adjusting for weather impacts and for the pull-forward of activity, the quarter's results were encouraging and consistent with our view that our growth this year will be reflective of broad GDP growth rather than a recovery in the housing market. While there are still some -- while there are some positive signs in the housing market, it is still under pressure. Pricing is stabilizing, but not yet solid. Inventory is down, but shadow inventory remains a concern and credit availability continues to be constrained. In this environment, our customers are looking at DIY projects as a way to save money while they improve their homes. As Craig will describe, we have focused on that need and are providing innovative products at great value to make home improvement simpler and more affordable. Craig and his team are also focused on developing and leveraging our merchandising tools. Our business is obviously impacted by weather, particularly at this time of year, and those tools are critical in making sure we have the right product in the right place in the right quantity as the season breaks. Unusual weather such as this year's presents an additional challenge. As you know, over the last few years we've rebuilt our supply chain and centralized forecasting and replenishment. This quarter was a real-life stress test of these new capabilities. There are always opportunities, but overall, we were very pleased by the response of our supply chain. And we also leveraged our supply chain expense for the quarter and saw turn improvement. We had strong transaction growth in the quarter and at the same time were able to improve our customer satisfaction scores, which is indicative of the progress Marvin and our store operations team are making. We retrained all of our associates on customer service during the quarter as part of our continuing commitment to customer service improvement. On the pro side of our business, we have seen gradual recovery. To give this some context, at the height of the housing crisis, our pro business declined at a much faster rate than our consumer business. Our hypothesis was that the pro would be a leading indicator coming out of the housing crisis. The reality has been more nuanced. We are in fact seeing recovery in our pro business, but the strength within our pro business appears to be developing sequentially within different classes of customers. Our larger pro customers are growing at a faster pace than our consumer segment, but our overall pro business is moving slightly less than the general consumer. This suggests a thawing process with the larger customers recovering first, with, hopefully, stronger recovery spreading throughout the rest of our pro base over time. In the quarter, we upgraded our dot-com platform, enhancing the site's visual appeal and responsiveness. Our apps recently reached a new milestone and have been downloaded over 2 million times. We now have over 500,000 SKUs on our site, including our Home Decorators Collection. We continue to invest in the business, and Matt and his team are providing new tools throughout the company. For example, we have begun the rollout of what we call our First Phone Junior to all stores. This junior version of the First Phone provides our associates a tool that combines the communication features of the phone with a product and inventory lookup features of the First Phone, but without the complex business analytics and product ordering functionality of the First Phone. This allows us to spread the basic functionality of the First Phone throughout the store at a fraction of the cost. On the international front, our Mexican business posted positive comps for the 34th consecutive quarter. And our Canadian business also posted a positive comp, their strongest first quarter comp since 2004. Before I close, let me comment on a small acquisition we just completed. This month, we acquired a flooring, measurement and quote building company, MeasureComp. The company's business was largely dedicated to Home Depot, and by in-sourcing this service, we can build a seamless process for our flooring customers that we expect will provide a far better experience for them and a better close rate for us. As Carol will discuss in more detail, we are raising our earnings per share and sales guidance for the year. This is based on our outperformance to plan in the first quarter, adjusted for the estimated sales we pulled forward in the quarter. We remain focused on taking care of the customer and investing in our business and in our associates. I'd like to thank our associates for their hard work and dedication in the first quarter. Based on this quarter's results, over 98% of our stores would be eligible for Success Sharing, our profit-sharing program for our hourly associates. We're very proud of that result. And with that, let me turn the call over to Craig. Craig A. Menear: Thanks, Frank, and good morning, everyone. We had a strong first quarter driven by continued strength in our core business and enhanced by record-setting weather in February and March. Warmer-than-expected weather allowed customers to complete exterior projects and begin spring projects early. We estimate weather positively impact U.S. comps by 300 basis points, of which between 80 and 100 was an estimated pull-forward of activity that otherwise would have occurred in the second quarter. While northern regions benefited from a strong seasonal business and an easy compare in the first quarter, we were also pleased with the positive performance in southern and western regions where the weather was more normal. Total transactions grew by 3.9% while average ticket also increased 2.2% for the quarter. Transactions for tickets under $50, representing approximately 20% of our U.S. sales, were up 2.4% for the first quarter. Transactions for tickets over $900, also representing approximately 20% of our U.S. sales, were up 6.7% in the first quarter. All departments except for 2 posted positive comps for the first quarter. The departments that outperformed the company's average comp were indoor garden, lumber, outdoor garden, electrical, decor, paint and hardware. Lighting, tools, millwork, building materials, bath and flooring showed positive comps. Comps in plumbing were flat, and kitchens were slightly negative. Sales in the first quarter were driven by double-digit positive comps in seasonal product categories like Walk Behind Mowers, Riding Mowers, lawn accessories, soils and mulches, chemicals, grills, watering and planters. Fertilizer, exterior lighting, live goods and landscape lighting delivered solid comp performances as well. We also saw double-digit positive performance in the following outdoor project categories: decks, pressure washers, exterior stains, siding, gutters, portable outdoor power, roofing, exterior paint, windows, waterproofers and fencing. In addition to exterior projects and seasonal categories, as I've shared in the past, simple decor categories continued to gain strength. Within our hard surface flooring, the combination of wood and laminate categories led the way with comps in the high teens. We are also pleased to see comp growth in other decor categories like window coverings, bath accessories, vanities, interior paint and ceramic tile. Finally, due to our continued emphasis on providing value for our customers and offering innovative products, the core of the store continues to perform. And we saw positive comps in fasteners, electrical repair, portable power, door locks and pipes and fittings. We continue to offer our customers great values. For the professional electrician, we are introducing new loadcenter value packs. These new larger loadcenters meet the increasing demand for electronics in the home while allowing for better customization per project for our pro customer. We're also expanding our successful SharkBite program by introducing new dishwasher hookups, water heater expansion tanks and many more products for the professional plumber. We launched new brushless motor technology and power tools from Makita and Milwaukee. Brushless motors use energy more efficiently than brush motors, which means more work per charge and a longer maintenance-free motor life. For our do-it-yourself customers, we're introducing new products in decor, including a significant update of our in-stock faucet assortment. We're also announcing the addition of 1-inch blinds from Bali, complementing our Home Decorator Collections premium faux wood blinds. For outside of the home, we have new weatherproofing wood stains from BEHR and new Masonite and Feather River fiberglass doors. Also for Father's Day, we have a strong product lineup in our Gift Centers, and at the end of the second quarter, we will have a storage event, which will feature products from departments across the store and from our Home Decorators Collection. I'd also like to mention the work of our consumer insights team. As Frank said, we're beginning to see a recovery in our pro business and this recovery appears to be sequential, but by only a certain class of pro. This analysis is the direct result of the team's efforts to bring our consumer analysis in-house. The ability to see customer purchase patterns on product and frequency has enhanced our shift from mass marketing to personalized communication. In addition to seeing broad trends in our business, we are now able to analyze specific customer behavior. We can look inside customer segments, for example, painters or electricians, and the data helps our CRM tools, and as a result, led to more productive and successful direct marketing campaigns. As we continue to enhance our attributing capabilities inside our enterprise data warehouse across product, customer and geographies, we will drive efficiency in our response to trend recognition and actions with our CRM team. Finally, this was a demanding quarter and I'm proud of the hard work by our stores, merchants and supply chain as they did a great job to meet the needs of our customers. And with that, I'd like to turn the call over to Carol. Carol B. Tomé: Thank you, Craig, and hello, everyone. In the first quarter, sales were $17.8 billion, a 5.9% increase from last year. Comps or same-store sales were positive 5.8% for the quarter with positive comps of 6.2% in February, 6% in March and 5.4% in April. Comps for U.S. stores were positive 6.1% for the quarter with positive comps of 7.2% in February, 5.8% in March and 5.6% in April. Our total company gross margin was 34.7% for the quarter, an increase of 8 basis points from last year, of which 7 basis points came from our U.S. business. In the U.S., the gross margin expansion can be solely attributed to benefits arising from our supply chain transformation. Excluding supply chain benefits, the gross margin for the U.S. was flat to last year due primarily to a change in the 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 109 basis points to 25.1%. Total operating expenses grew at a factor of 24% of our sales growth, better than our original guidance due principally to the sales environment. For the quarter, our operating expenses were within $8 million of our original plan. Based on our first quarter results, we now expect total expenses to grow at approximately 40% of our sales growth rate on a 52-week basis. Turning to interest and other expense. You may recall that we had guaranteed a $1 billion senior secured term loan issued by HD Supply and established a $67 million fair value liability related to this guarantee. In the first quarter, our guarantee was terminated, and as a result, we reversed the liability. This reduced other expense by $67 million and provided approximately $0.03 of earnings per share benefit in the quarter. Our income tax provision rate was 36.5% in the first quarter, and for the year, we expect our tax rate to be approximately 36.5%. Diluted earnings per share for the first quarter were $0.68, an increase of 36% from last year. Moving to our operational metrics. During the first quarter, we opened 2 new stores in the U.S. for an ending store count of 2,254. At the end of the first quarter, selling square footage was 236 million. Total sales per square foot for the first quarter were $304, up 6% from last year. Now turning to the balance sheet. At the end of the quarter, inventory was $11.6 billion, down approximately $100 million from a year ago. Inventory turns were 4.3x, up from 3.9x last year. We ended the quarter with $43.3 billion in assets, including $3.2 billion in cash. We are about $500 million ahead of our cash plan, due in large part to in-the-money stock options that were exercised in the quarter. In the first quarter, we repurchased $1.1 billion or approximately 19.4 million shares of outstanding stock, including 2.1 million shares through open market repurchases and 17.3 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 the completion of the program in the second quarter. Computed on the average of beginning and ending long-term debt and equity for the trailing 4 quarters, return on invested capital was 15.4%, 240 basis points higher than the first quarter of fiscal 2011. As you've heard, the warm spring weather and continued strong performance in the core of our store drove first quarter sales ahead of our internal expectations. But it's our point of view that the fundamental assumptions behind our 2012 financial plan haven't changed. As a result, we are simply raising our guidance for fiscal 2012 to reflect first quarter outperformance, offset in part by the sales we believe we pulled forward into the quarter. On a 53-week basis, we now expect fiscal 2012 sales to increase approximately 4.6%. For earnings per share, remember that we guide off of GAAP. Based on our first quarter results, we now project fiscal 2012 diluted earnings per share to increase approximately 17% to $2.90 on a 53-week basis. This earnings per share guidance includes share repurchases completed in the first quarter and our intent to repurchase an additional $2.4 billion in shares over the course of the year. Our guidance assumes that share repurchases will contribute about $0.07 of EPS accretion in 2012, offset by $0.02 of dilution coming from shares issued in association with stock option exercises. We look forward to sharing with you a longer-range business outlook at our investor conference on June 6 in Atlanta. We thank you for your participation in today's call. And Christie, we are now ready for questions.

[Operator Instructions] We'll go first to Gary Balter from Credit Suisse. Gary Balter - Crédit Suisse AG, Research Division: Just one question, just a follow-up. Your current guidance guides us to about a 10% operating margin and that's with no strong -- with nothing really in the housing market, as you mentioned, and just the beginning of the contract business coming back. In a stronger market, as you look at your -- what you've done internally, what type of margin assumption should -- where do you think you could get to? Carol B. Tomé: Well, Gary, we have an investor conference coming up on June 6, at which time... Gary Balter - Crédit Suisse AG, Research Division: Am I going to ruin the conference by asking? Carol B. Tomé: No. Thank you for teeing it up for us actually. We'll talk about our longer-term margin opportunities. We're not stopping at 10%. We have an opportunity, we believe, to grow our margin. If you remember our peak margin, back in 2005, was 11.8%. We'll give you a lot more color on June 6. Gary Balter - Crédit Suisse AG, Research Division: Okay, so that doesn't count as a question. Could you talk about share gains this quarter? Your comps were much stronger than your -- one of your competitors. The other one obviously hasn't reported. What do you think you did in terms of market share for the different categories? Craig A. Menear: So Gary, we look at share 2 different ways. We obviously look at the census data from the NAICS. That would actually indicate that we lost share, although there are companies in there that -- much smaller base that had huge, huge gains, which affects the number. And then when we look at the consumer side of independent tracking, which doesn't include our pro business, we gained in 4 departments out of our total. That would've been lighting, lawn and garden, kitchens and millwork. When we try to triangulate the data, working with our suppliers, we do feel that we're gaining share in a number of our business categories. But those 2 indicators are what they are.

And we'll go to our next question from Colin McGranahan from Bernstein. Colin McGranahan - Sanford C. Bernstein & Co., LLC., Research Division: Wondered about pull forward of demand. This is going to be a little confusing, but if I look at the fourth quarter, your 5.7% comp, I think at that point you said weather was a benefit of 200 to 250 basis points. So and I may be getting a little too nuanced here, but if I were to back that out, I'd say the fourth quarter weather-adjusted comp then was maybe 3.2% to 3.7%. If I look at this quarter, you comped at 5.9% and said 300 basis points. So again, little nuance, but backing it out would suggest a 2.9% weather-adjusted comp. So I guess my first question is, is that reasonable and do you think the underlying business actually decelerated by something, about 50 basis points or so? Francis S. Blake: Well, these are -- it's an art as much of a science in terms of what's weather-impacted. And obviously for us, the fourth quarter is a little bit anomalous because it's our lowest volume and heavily driven by how we perform on our -- the seasonal holiday, which was very strong for us in the fourth quarter. I would tell you it didn't feel like the business decelerated. But weather -- I mean, as Craig mentioned and Marvin's here for the store side, boy, our stores were very, very busy. And we had huge transaction growth in the first quarter. So I understand your point, Colin, on weather-adjusted, did we decelerate, but I would say it didn't feel like that. Colin McGranahan - Sanford C. Bernstein & Co., LLC., Research Division: Okay, that's fair. And again, I know it was a very nuanced kind of thing, just trying to make a little bit more science of it than probably is worthwhile. But then if I think about pull-forward demand, I guess my second question is how could you -- how do you measure that? How comfortable do you get with that 80 to 100 basis point estimate? And if that's the right number, should we think about this quarter being something kind of around a 3% comp -- the first quarter being something around a 3% comp on a weather-adjusted basis? And then back out 80 to 100, to think about 2Q comps something more like in the 2% range? Carol B. Tomé: Well, let me just share with you the math behind or the science behind the art because we do try to apply some science. We will take 5 years of garden business, looking at the relationship between the first and second quarter, and we'll come up with a ratio that we regress against the first quarter results, which will give us a factor to apply against the second quarter projected sales against our plan. And that's how we determine what we have pulled forward. Again, 80 to 100 basis points of our total comp growth pull-forward, that's about $120 million to $150 million. We then, Colin, do an eyeball test and we look at the categories where we saw sales growth that would be onetime categories, be it a riding lawn tractor or a Walk Behind Mower, that sort of thing, where typically you're only going to buy it once in the season, to give us some comfort that our math is more or less correct. And that's again -- that's in -- just Craig is just asking me to make sure it's clear that when we say weather-impacted of 300, the 80 to 100 is in that 300 number. Craig A. Menear: Correct, it's not additive. Colin McGranahan - Sanford C. Bernstein & Co., LLC., Research Division: Okay, okay. That's fair. And then my follow-up question, Carol, while I've got you here. Just on OpEx, you said you were within $8 million of the plan from the beginning of the quarter. It seems like obviously you probably hadn't planned for comps this strong. So were you able to just deal with the labor as it was because the productivity is so much better, or did you add labor as sales picked up and found other places to take out? Carol B. Tomé: Well, we leveraged payroll in the first quarter, but the stores did an awesome job of staffing up to meet the sales demand. And Marvin, you might want to comment on that? Marvin R. Ellison: Yes, Colin, we put in a new labor system, scheduling system, last year. It was part of our 60/40 initiative work with Matt and his team to get this in place. It was a big undertaking, but it really paid dividends this quarter because we were able to have our labor meet our sales demand and schedule and forecast to that in a more effective manner. For the first time, our store managers were able to track their labor versus their sales performance on a daily basis. We've never been able to do that before. So that enabled us, not only to meet the demand, but also to make the right investments in departments like live goods where, for the first time, we actually experienced a customer service score increase in the live goods area during the season. Typically, for us, Q1, we take a really big decline in service scores in that seasonal area, so we made a labor investment based on the new system and we actually saw improved sales as the numbers reflect. But in addition, we saw improved customer service scores. So we feel good about the process and we feel good about the leverage we were able to create because the leverage was created on top of increased sales and top of increased customer service scores.

And we'll go next to Chris Horvers from JPMorgan. Christopher Horvers - JP Morgan Chase & Co, Research Division: Couple questions. So first, on your pro commentary, the largest customers recovering faster and sequentially, but the rest really not recovering. I guess what's been the discussion internally on what you think that represents and what customers are on the other side of that transaction and what projects that they're doing? Francis S. Blake: So Chris, I'll give you a hypothesis, but again recognize this is just a working hypothesis and we'll have to see as this goes forward. The first just comment to make is I was, in the commentary, differentiating between the pros, our larger pro spend customers and our smaller pro spend customers. Pro, overall. So in both segments, it's recovering where we're seeing outsized recovery versus our consumers with our larger pros. I'd give a hypothesis that credit has something to do with that. That those are the larger, more creditworthy firms. And as you think about kind of a thawing process, it sort of makes sense that they'd start picking up business in advance of some of our smaller customers. That's a theory. As Craig said, we've got a lot more analytics that we now have at our disposal to put to the question and hopefully over time we'll get more and more refined on exactly what's driving that difference. Carol B. Tomé: And we can give you some numbers behind the comments that Frank just shared with you. If we look at the insights, consumers grew about 7% in the quarter, pros grew about 5%. Francis S. Blake: Sales. Carol B. Tomé: Thank you, in their sales growth. And then our larger pros, those who spend more than $10,000 with us annually, they grew around 11%. That's about 12% of the pro base. Marvin R. Ellison: So Chris, this is Marvin. The additional point to that, probably the vast majority of all the growth, as Frank mentioned, came from those large customers. And so in addition to credit, it's also moderate demand. When demand is moderate, those smaller pros don't get the subcontracting jobs that they typically get. And what happens when there's high demand is that the large pros can't handle all the work that they get and so residual work kind of falls down to some of the smaller GCs in the marketplace. But when demand is moderate, and as Frank mentioned it's recovering, those larger pros can take those jobs and it meets their work schedules and their capacity. So we feel good about the moderate recovery, but until we see every pro in our demographic start to benefit, then we stay a little cautiously optimistic that it's recovering, but not fully. Christopher Horvers - JP Morgan Chase & Co, Research Division: So does the larger pros imply larger products like new builds versus renovation? And then as… Francis S. Blake: No, Chris, it's not. I mean this isn't a sign of, hey, homebuilding's coming back and remodeling not, no. Craig A. Menear: No, we're actually seeing, with those pros, an improvement in the number of transactions. So they're just -- they're getting more repair jobs and we're seeing that type of business. Christopher Horvers - JP Morgan Chase & Co, Research Division: Got you. And then just quickly on the monthlies. April saw, to follow up on Colin's question, April saw a pretty big decel if you look at it on a 2-year basis, so guiding to that 2 to 3 for 2Q, how are you feeling about May? Is that within the range? Is that above the range? Any commentary there is appreciated. Carol B. Tomé: May is performing as we expected.

And we'll go to our next question from Kate McShane with Citi Research. Kate McShane - Citigroup Inc, Research Division: I wondered if you could update us a little bit more on what you're seeing in the competitive environment and if you had any commentary around the introduction of AmazonSupply? Francis S. Blake: AmazonSupply? So Kate, I would say from a competitive perspective, first, no. I mean it would be really very early in the day to expect to see anything from AmazonSupply. Obviously, it's something we're very aware of and focused on, but no competitive impact from it. Across-the-board, as Craig was saying, it's always worthwhile recognizing we compete in all our different business segments across a broad range of competitors. We believe, talking to our vendors, that we're picking up share, but that's always -- just because our various markets are so different, it's always hard to track precisely. Kate McShane - Citigroup Inc, Research Division: Okay, great. One of your competitors is doing a pretty extensive line review right now. And I wondered if that was having any impact at all with some of your conversations with vendors and maybe your relationship with your vendors and what you're getting into your stores? Craig A. Menear: I mean, again, I -- we're in constant communication with our suppliers. Our focus is on driving the business with our suppliers and we're always talking to folks in the market who we do business with and we don't do business with. So really no major change to how we're approaching things. Carol B. Tomé: And you would say that growth is a great thing to deliver to our suppliers. We grew ourselves in 2011 and we started off the year pretty strong.

And we'll go to our next question from Alan Rifkin with Barclays. Alan M. Rifkin - Barclays Capital, Research Division: Question on the gross margin line. Carol you mentioned that the gross margins were aided mostly from improvements in supply chain. But compared to the last few quarters, it looks like those improvements are moderating. Can you maybe give us an update on where you think future improvements from the RDC initiative are likely to come and what those benefits may be? Carol B. Tomé: Well, sure. We were actually very pleased with our supply chain performance in the first quarter. It was better than our plan. And given the sales spikes that we had across the country, we needed to do amazing things to move products. So kudos to our supply chain team for doing such a great job and for delivering the leverage that they did deliver. A couple of other points, Alan: first, we did have some fuel headwind come our way in the first quarter that cost us about 3 basis points. So the supply chain benefit would have been 11 x fuel. And as we think about year-over-year, last year we got about 32 basis points of benefit coming off of the supply chain. This year, we'll probably get about 1/3 of that for the year and that's consistent with the plan that we laid out. And then as we look longer term, and again we've got an investor conference coming up in June, we'll show you even more benefits coming off the supply chain. Alan M. Rifkin - Barclays Capital, Research Division: Okay. And one follow-up, if I may. Just going back to the difference on the pro side between the larger pros and the smaller pro business, what opportunities are there for you to try to stimulate the smaller pro customer including credit? Francis S. Blake: So Alan, the biggest opportunity we have with our pro customer, which is what Marvin and his team are focused on is doing a great job getting them in and out the store fast and having the product that they want in the right quantity at the right price. And that's really where we're focused and that's where Marvin's focused his team. I don't know, Marvin, if you want to -- so we're not thinking about a new program on our side on credit to try to stimulate activity. Carol B. Tomé: But we do approve 70% of all applications that we receive from our pros. The average line that we grant is about $6,600. So we will provide credit to those who qualify, and a 70% approval rate is pretty good approval rate. Marvin R. Ellison: Yes, and Alan, to the service point that Frank made, our Net Promoter Score for the pro segment increased 453 basis points in the quarter. It's the largest improvement in service we have in the entire store. And when you dissect that service score into components, the most improved component is the speed of checkout and how the pros feel about our price and our product. So for us, we've asked a lot of questions. We spent a lot of time with these customers, both small and large, and we asked those customers what can we do to facilitate a better environment for them. And in the service in and out fast is important. The right products at the right price is important. And as Carol mentioned, I mean we feel really good about our credit offering. So we're just very hopeful that we'll continue to do these things and that business segment will continue to improve. Alan M. Rifkin - Barclays Capital, Research Division: And just one quick point of clarification. Did I hear you correctly in saying that larger pros who spend $10,000 or more represent 12% of your pro base? Carol B. Tomé: Yes.

And we'll go next to Michael Lasser with UBS. Michael Lasser - UBS Investment Bank, Research Division: During the script, you alluded to some stress within the supply chain that you handled well over the quarter. Do you think that had the impact of restraining your sales and are you able to quantify that during the period? Francis S. Blake: So Mike, I don't think we can quantify it for you. But for sure, and Craig and Mark Holifield, our Head of our Supply Chain, are here. This was a very unusual winter. And we got hit with some very unusual demands and we were really pleased at how our supply chain responded. But the reality is you're always a little bit chasing in that kind of a spiked environment. Craig A. Menear: Yes, we had regions of the country, Michael, where we had product categories that drove comps in excess of 50%. Certainly, our suppliers didn't plan and anticipate that, nor did we at the beginning of the season, but everybody rallied to scramble. Really hard to tell if you missed sales. I mean in most product categories, we carry a multitude of products to choose from. So whether you actually missed a sale or not is a question that's pretty hard to get your head around. But we certainly know we had opportunities within the quarter in those kind of high spiked areas. Michael Lasser - UBS Investment Bank, Research Division: So it's probably safe to assume that supply chain always acts as a bit of a bottleneck in such a spiky and seasonally changing business. Do you think it was any more intense given the patterns you saw during this quarter than it had been in the past, especially given the newness of the supply chain? Craig A. Menear: I would say actually I think the supply chain allowed us to react faster than we would have been able to before. Carol B. Tomé: Absolutely. Francis S. Blake: We did, as I've said, this was an interesting real stress test on a new system and we were really pleased with how it responded. Carol B. Tomé: Remember, the last time we saw these kind of comps was fourth quarter of 2003 and the first quarter of 2004. And back then, well, we didn't have much of a supply chain. Marvin R. Ellison: And Michael, speaking as a guy that run the store and take the calls and e-mails from the stores, when we're now performing well in any part of the business, they were very pleased. If you look at the northern parts of the country, high-volume markets, accelerated spike sales, the supply chain did -- team did yeoman's work and we were very pleased with our ability to get products to the market, in some cases, before our competition. And we feel good about that. So we think that Mark and his team deserve a ton of credit for helping us to facilitate the sales that we were able to bring to the table. Michael Lasser - UBS Investment Bank, Research Division: I want to switch gears just as my follow-up. In the past, the relationship between home improvement and housing has been that home improvement has tended to lag behind, at least the velocity of housing turnover. Are you seeing any evidence to suggest that the relationship may be a little different this time where home improvement may be picking up before housing? And if that's the case, could it take some wind out of the sails as the housing market recovers? Francis S. Blake: So I would say, Michael, if I understand your question, the first thing I'd say is that the home improvement, the repair/remodel business has obviously been more stable than the housing market, particularly the new home build. And so you're seeing some more elevated growth compared to home building. If -- I'm not sure I -- the second part of your question, which is could that… Michael Lasser - UBS Investment Bank, Research Division: So if consumers are feeling better about that, the sentiment has improved and that would normally occur, or at least in the past it would have occurred concurrent with housing lift in either prices or the velocity of turnover, and now it seems like sentiment's improving actually faster than the fundamentals of the underlying housing markets, that maybe home improvement is getting a little bit more of a lift ahead of time that will take some of the benefit, I guess, essentially pulling it forward. Francis S. Blake: Okay. Well, so here's how I answer that and again we'll see how it responds, so this is kind of new territory for all of us. But I'd say the important thing to look at is both on housing, existing home turnover and on repair/remodel activity, just think about the number of mortgages that are underwater. So you've got almost 1/4 of the people who own mortgages that are underwater. That's both stressful on a turnover. That kind of puts a bit of a break on existing home turnover and it's stressful on repair and remodel activity. You do some basic repair activity, but you're less inclined to do large remodels when you're underwater. And we'll talk about this more in the -- in our upcoming conference, but I'd say what you'd hope to see is pricing improving, credit availability improving and a lift across both segments. So if I understood the kind of basis of your question, which is would home improvement repair/remodel actually kind of decelerate into the improving housing picture, we don't think that's how it will play out. Michael Lasser - UBS Investment Bank, Research Division: Okay, so there still could be good days ahead. Francis S. Blake: We certainly think so. Carol B. Tomé: Yes, we think.

And we'll go to our next question from Greg Melich from ISI. Gregory S. Melich - ISI Group Inc., Research Division: Want to follow up on an earlier question and I have one on inventory and cash flow. The follow-up is the ticket, which was up 2.2% in the quarter, it sounded like a lot of that was driven by seasonal projects and also these large contractors. So does that mean as we decelerate in the second quarter, it'll be more ticket you think? Or you think it's really traffic that's driving that deceleration? Craig A. Menear: So if we look at ticket above $900, the big drivers in this quarter for that were riding lawn equipment, we had a solid quarter in appliances, and then interestingly, the in-stock kitchen business, which largely focuses on our pro customer. Carol B. Tomé: And Greg, we had 329 million transactions in the first quarter. That's the highest in our company history, so we would think that would start to slow down as we move into the second quarter. Gregory S. Melich - ISI Group Inc., Research Division: So basically, it sounds like both are going to slow when you see it in 2Q? And then on the cash flow, inventory was down but payables were up 9% and your cash balance ended up over $3 billion, which is very heavy. I guess if I take your guidance, I get your leverage moving down around 1.8x debt-to-EBITDAR by the end of the year. Would you go to the debt markets to try and keep that at 2 or are you sort of happy with it being at 1.8x if that's where it ends up? Just give us some thoughts on the working capital and the leverage. Carol B. Tomé: Sure. Well, first on the working capital side, the payables ratio is really a reflection of how weak sales were in April of 2011. As you recall, we had a negative comp in April, our purchases were down. We had positive comp this year, so it's just a timing matter year-on-year. We are about $500 million ahead of our cash plan, but that's because of stock options that were exercised in the first quarter that we hadn't planned on. Our stock hit a 10-year high, many of our optionees elected to exercise their options, and we got some cash in. As we think about then what do we do with the cash and what do we do with our capital structure, I don't mean to kick the can down the road, but I'm going to kick it to our June conference at which time we'll give you more color about any additional share repurchases we might do in 2012 as well as a longer-term perspective on share repurchases, debt, capital raising, et cetera. Gregory S. Melich - ISI Group Inc., Research Division: And I guess just lastly, do you think the inventory now is at the right level, or are we still a little light given how strong the quarter was? Carol B. Tomé: Well, if you look at inventory, down $100 million year-on-year. On a per-store basis, down a little over 1%. The majority of the per-store decline as of the end of the quarter was in Canada. And last year, our Canadian inventories were bloated, in all candor. So we feel good about where inventory is. Craig A. Menear: The other piece of the inventory, Greg, is with the investments we made in our DCF and our [ph] programs, we've actually been able to leverage our inventory investment in our DCs while maintaining good position overall. So we feel good about that as well.

And we'll go next to Matthew Fassler from Goldman Sachs. Matthew J. Fassler - Goldman Sachs Group Inc., Research Division: Two questions, and the first revolves around some of the merchandising efforts. Obviously, you've been working on building localization, regionalization of inventory. Can help us understand how that might have impacted your in-stock and it might have benefited margin above and beyond the direct supply chain benefits? Craig A. Menear: Well, Matt, you're right. We've been working hard to make sure that we are adjusting our assortments to the local markets and the demographics in those markets. We certainly think that, that is part of what has helped us drive the overall business and deliver the comp performance not only in this quarter, but kind of where we've been for the past few quarters. And certainly, when you get the product in the right location, you then benefit from -- particularly if they're in seasonal businesses, you don't have the same liquidation expense that you might have like we did a few years back when we weren't leveraging or didn't have the capability or the tools that we have. So certainly, having the right product in the right place benefits you in terms of the ability and the amount that you sell at full price. Marvin R. Ellison: Matt, this is Marvin. I don't think we can overstate the importance of product coming from receiving to the sales floor versus in the overhead. Mark Holifield and his team and the supply chain, along with Marc Powers and the operations team, have really done a good job of partnering on the whole receiving and freight movement process. I mean if you follow The Home Depot for a while and just take a look at the overheads in our stores versus years past and what you'll see is a product where it needs to be and that's on the floor where we can sell it, our payroll is a lot more productive and we don't need to carry as much safety stock because of the supply chain improvements. So I think you take what Craig said, you think about the efficiencies on the supply chain and in the receiving and in-stock process and that's benefiting us as well. Matthew J. Fassler - Goldman Sachs Group Inc., Research Division: And is there any way to quantify that year-on-year or just we know that it helped? Marvin R. Ellison: It's pretty tough to actually put a number to it. Matthew J. Fassler - Goldman Sachs Group Inc., Research Division: Got it. And then on the numbers, this is maybe a bit of an academic exercise since we have a sense of where Q2 is tracking. But within the first quarter, the cadence obviously was driven by better weather in part for the first couple of months and then you had this, presumably a lot of pull-forward within the quarter and then this very subdued compare given the rain a year ago. Any sense of how much February and March pull-forward from April just as we do look at the monthly multiyear trends? Carol B. Tomé: We didn't do that regression. We should have, but we didn't do that. Matthew J. Fassler - Goldman Sachs Group Inc., Research Division: Okay. And then finally, Carol, you spoke at the outset of the year about your anticipation for comp cadence over the year as a whole. Clearly, I guess the first quarter probably, at least in your outlook, is a high watermark. But any update as we think about the ensuing quarters and what kind of cadence you might anticipate as part of the guidance? Carol B. Tomé: Sure. So because of the pull-forward, the second quarter comp should be lower than the first quarter. The comp for the first half should be higher than the back half. Not a big difference between the halves, but clearly first half will be stronger than the back half. Matthew J. Fassler - Goldman Sachs Group Inc., Research Division: And the second quarter versus the rest of the year, if I could try to parse it that finally? Carol B. Tomé: I would say the second quarter would be the lowest comping quarter of the year. Matthew J. Fassler - Goldman Sachs Group Inc., Research Division: Despite the fourth quarter compare? Carol B. Tomé: Despite the fourth quarter compare. Because as you know, every year we tend to outperform the previous year since Craig and the merchants and the operators are doing a masterful job of growing our seasonal business. This is a business that we are very low penetrated in that we continue to show year-on-year growth.

And we'll go next to Scott Ciccarelli from RBC Capital Markets. Scot Ciccarelli - RBC Capital Markets, LLC, Research Division: You guys have been pretty adamant for quite a while that there isn't a recovery in the housing market and that you expect to fluctuate with GDP. But you have been comping in the 4 to 6 range the last few -- last 4 quarters and I understand the weather's helped the last 2. But I guess the question is if we were to get a housing recovery, what kind of comps do you think you guys could generate on, let's call it a multi-year basis? Francis S. Blake: So Scott, first, it's not -- I don't want to misinterpret it as saying that there is no housing recovery. I think the housing market is definitely better. The question for us is, is it better enough to kind of push us off the general GDP growth connection that we've been seeing for the last couple of years? And we go, yes, it's better, but it's not yet that much better. When we get together in June, hopefully we can lay out for you a little more clearly how we think our business improves depending on your point of view on the degree of the housing market recovery, strong recovery when it occurs, and whether it's a strong recovery or just kind of a very gradual fall. Scot Ciccarelli - RBC Capital Markets, LLC, Research Division: Okay, that's fair. And then just curious in terms of mix. I don't know if you have mentioned this or not. But with a stronger sales of outdoor products because of the weather, was there a negative impact on the gross margin from mix at all? Carol B. Tomé: Yes, as we said, the gross margin x supply chain was flat year-on-year and that really was a mix story. Craig, maybe want to give... Craig A. Menear: Yes, I mean categories like power -- outdoor power equipment, dirt, mulch, all those carry lower-than-average margins, so it certainly had a mix impact. Carol B. Tomé: You may recall last year, Scott, we had 14 basis points of gross margin benefit in the first quarter from mix because we had a lower penetration of seasonal category spend.

And we'll go next to Mike Baker from Deutsche Bank. Michael Baker - Deutsche Bank AG, Research Division: So Frank, you'd said that Florida and California continue to recover. Can you quantify that relative to last quarter where I think you said Florida was ahead of the comp average and California was about in line? Francis S. Blake: Right, and this quarter as you might expect given just the weather impact, Florida and California were below the company average. Michael Baker - Deutsche Bank AG, Research Division: Okay, and so then I guess therefore... Francis S. Blake: But still -- but that's still good -- I mean, it's a good recovery, still a positive and a good recovery. Michael Baker - Deutsche Bank AG, Research Division: Sure, okay. And then you said 38 out of 40 regions were positive. So 2 were negative. Surprised that any were negative. Can you just tell us what areas were negative? Francis S. Blake: So 38 out of our top 40 markets, not -- I mean we don't have 40 regions. The negative ones were, for what it's worth, it was Phoenix and then we also were negative in New Orleans, and there are some very specific conditions in both of those markets that explain that. Carol B. Tomé: Particularly the year-over-year comparisons. Last year in the first quarter, those 2 markets were some of our strongest-performing markets. Michael Baker - Deutsche Bank AG, Research Division: Okay, okay. Yes, I was just more curious than anything. And then one last question, the commentary that you talked about, the large pro versus small pro, I don't think you've talked about that before. So I'm just wondering why you called it out now. Is it a change in trend that you're seeing? Is that sort of dynamic where the large is doing so much better than the small pro? Is that something you've seen consistently or did that really just sort of pop up early this year? Francis S. Blake: No, so I'll tell you why we called it out in part. First off, because I do think it's an interesting way of thinking about our business and thinking -- for us, it's a tool for thinking about the recovery of the business because we've been talking to everyone for quite a while about how our pro and consumer businesses, how they're differentially faring. And the second thing was, as Craig said and for those of you who followed us for a while, you know we've been sort of on a journey to build in some of this consumer insight capability. We had, had it outsourced and then we brought it in-house and it's taken a while for us to get comfortable with the tools, get the data together. And so we were kind of giving you a here's what those tools are showing us, here's what we think the implications are. Michael Baker - Deutsche Bank AG, Research Division: Okay, so it's not necessarily it's just that you're starting to look at it now, but it's not necessarily that the large pro's all of a sudden gotten a lot better than the small pro or anything like that? Francis S. Blake: No. I would say as we called out, that we saw some good-sized growth on those large pros, which is encouraging. As I said, you can have a theory of the case on how the pro market as a whole will thaw and we'll be giving periodic updates, I'm sure, on how that hypothesis is playing out.

And we'll go next to Peter Benedict from Robert Baird. Peter S. Benedict - Robert W. Baird & Co. Incorporated, Research Division: A few quarters ago, there was a lot of concern in the market about the potential uptick in promotional activity across the space. Can you talk about how the promotional tone was during the quarter and how it was versus your expectations? Craig A. Menear: Yes, I mean, to be honest with you, we didn't see any major shift in promotional activity during the quarter at all. Peter S. Benedict - Robert W. Baird & Co. Incorporated, Research Division: All right, perfect. And then some regional color on this pro recovery trend, not to beat a dead horse here, but particularly those larger pros. Are there any markets, in particular, where that recovery by the larger pro is particularly strong? Marvin R. Ellison: Peter, this is Marvin. It's no coincidence that the north and the northeast was very strong, really due to the ability of pros to get out and do jobs they typically would not be able to do this time of the year.

Our last question comes from David Strasser from Janney Capital Markets. David S. Strasser - Janney Montgomery Scott LLC, Research Division: I'm going to change the topic a little bit. Can I talk a little bit about online and private label? Two things I've noticed a lot of recently is it just seems you've been really expanding online as you've talked about a lot, particularly into the seasonal patio furniture. I was just curious how that's gone and sort of this home decorator concept that you've had. I think it's direct -- I think it's through Groupon and I don't know if it's exclusive with Groupon. And then I guess the last question, somewhat related is HDX, I'm seeing that brand pop up a lot in stores, so I'm just sort of curious, what -- as you think about that, it seems to be a somewhat rather diverse group of product offerings in that and how you're thinking about that. So I guess 3 somewhat different questions, but I hope you can at least answer 2 of them. Craig A. Menear: So let me start with the online. As you know, we've been investing in our online business. We put new Webster 7 in place to enhance our capabilities, improve the speed, which is important obviously for our customers. We're very pleased with how that business is going. We're seeing both sales growth that obviously exceeds the company. And we're seeing traffic growth in that space. And so it's an area of the business that's important to us. It's still a little around 2% of the business in total. We've seen some nice external recognition of the work that we've done as well in terms of the ForeSee E-Retail Satisfaction Index. We got above 79, which is a new place for us, which is a very positive result and recognized as the most improved since that index began at over 10 points. So we're pleased with where that space is going, and overall, how it's helping us to satisfy the customers' needs to be able to shop when, where and how they want. As it relates to the private label business, we've talked quite openly with our supply base in terms of when and why we'll go after a private label program. We are expanding the opportunity that we have to continue to drive value for our customer and be able to deliver strong value propositions as well as support the overarching strategy that we have in place to compete in all channels. So you'll see us, we'll talk more about that at our investor conference. But that is an element of the business that we're focused on as part of our portfolio strategy. David S. Strasser - Janney Montgomery Scott LLC, Research Division: Just one follow-up, and kind of once again the 2 of them related. As you look at sort a lot more free shipping and you're offering it even on some patio furniture over, I think, $399. The impact to that on gross margin and then sort of, I guess, the positive impacts on sort of the HDX, is that even big enough to have any impact on all today? Craig A. Menear: I mean we do look at the business in total in terms of how we look at both sales and the contribution margin, both in-store and online and how those businesses come together. So that is something that we're focused on. Carol B. Tomé: But your point about size is the right point. Today, our dot-com sales is about 2% of our total sales. Diane S. Dayhoff: Well, thank you to everyone who has joined us this quarter, and we look forward to talking to you either at our Investor Conference on June 6 or at next quarter's earnings.

That concludes our call for today. Thank you for your participation.