Lowe's Companies, Inc. (LOW) Earnings Call Transcript & Summary

Good morning, and welcome to the 2021 Annual Stockholders' Meeting of Lowe's. Please note that this meeting is being recorded. I will now turn the call all over to Kate Pearlman, Vice President, Investor Relations.

Thank you, and good morning, everyone. I would like to begin by reminding you that today's presentation includes forward-looking statements. These statements are subject to risks and uncertainties that could cause actual results to differ materially from the company's expectations and projections. Additionally, the presentation includes certain non-GAAP financial measures. A reconciliation of these items to U.S. GAAP is available in the Quarterly Earnings section of our Investor Relations website. I would now like to turn the conference over to Rick Dreiling, Chairman of the Board of Lowe's.

Thank you, and good morning. This is Rick Dreiling. And as Chairman of the Board of Lowe's, it's my pleasure to welcome all of you to the Lowe's 2021 Annual Shareholders Meeting. We are hosting this meeting on a virtual platform due to the ongoing public health concerns of COVID-19. We look forward to returning to the in-person meeting format once it's safe to do so. During 2020, we faced unprecedented challenges as we navigated the far-reaching impacts of the pandemic. On behalf of the Board of Directors, I would like to express our appreciation to the Lowe's associates for their hard work, dedication in this challenging environment. And I'd also like to thank our shareholders for your continued support of our company. Now I'd like to introduce your Board of Directors, in addition to myself, who are standing for election at today's meeting and are all present virtually for this meeting: Mr. Raul Alvarez; Mr. David Batchelder; Ms. Angela Braly; Ms. Sandy Cochran; Ms. Laurie Douglas; Mr. Marvin Ellison; Mr. Dan Heinrich; Mr. Brian Rogers; Mr Bert Scott; and Ms. [ Mary Beth West ]. At this time, I'd also like to recognize Mr. Eric Wiseman and Ms. Lisa Wardell, who are also on the call with us today. I would like to thank them for their years of dedicated service. The Board would miss their advice and counsel and we wish them all of the best. In order to facilitate this virtual meeting, I have asked our President and CEO, Marvin Ellison, to conduct the business portion of the meeting. Thank you, and I'll now turn the meeting over to Marvin.

Thank you, Rick. And to all of our shareholders, we're glad that you could join us. I'd like to begin this morning by extending my best wishes for the health and safety of you and your families. And as we begin the business portion of our meeting today, I'd like to introduce 4 members of management who's here with me on the line. We have Dave Denton, our Executive Vice President and Chief Financial Officer; Bill McCanless, Executive Vice President, General Counsel and Corporate Secretary; Chris Cassell, Senior Director of Corporate Sustainability; and Kate Pearlman, our Vice President of Investor Relations. I'd also like to note that Ms. [ Lori Lundrigan ] from the independent accounting firm of Deloitte & Touche is on the call. She will be available to answer your questions in the Q&A session of the meeting. And Mr. Sid Rodrigue, Senior Director at Broadridge, is also joining us today on the call. Mr. Rodrigue has been appointed inspector of elections for this meeting, and Broadridge will assist with the tabulation of proxies and ballots. As your proxy cards indicated, Bill McCanless and Dave Denton have been duly appointed as proxies for this meeting. At this time, I officially call the meeting to order. Bill, please outline the process for today's meeting and report on the mailing of notice for this meeting, the presence of a quorum and other business we'll consider today.

Thank you, Marvin, and good morning. We will begin the meeting with the formal business portion. This consists of the election of directors named in the proxy statement, approval on an advisory basis of the compensation of the company's named executive officers in fiscal 2020, the ratification of the appointment of independent auditors and consideration of one shareholder proposal. After we complete the formal portion of the meeting, Marvin and Dave will provide a business update. We will then open the floor for questions, and we'll use the time remaining to answer questions that were submitted by shareholders before and during the meeting. Shareholders who have logged into the web portal for the meeting using their control number may submit their questions over the portal. Please refer to the meeting rules of conduct posted on the web portal for additional guidance regarding the procedures for the meeting and the question-and-answer session. A replay of the annual meeting will be made available on the Investor Relations page of our website following today's meeting. No one attending via webcast or telephone is permitted to use any device to record the meeting. Notice of the Annual Meeting of Shareholders of Lowe's Companies, Inc. has been provided to shareholders of record as of March 22, 2021. The notice and proxy statement were mailed to shareholders beginning on April 15, 2021. And as of the date of record, there were 717,178,375 shares of common stock outstanding, of which 626,373,806 are represented on the webcast today either online or by proxy. Therefore, we have a quorum. As provided in the notice of the Annual Meeting of Shareholders, the purpose of this meeting is to address 5 items of business: first elect 11 directors to a term of 1 year. A description of the nominee's qualifications to serve as a director is included in the proxy statement; second, approve on an advisory basis, the compensation paid to the company's named executive officers in fiscal 2020; third, ratify the appointment of Deloitte & Touche as the company's independent registered public accounting firm for fiscal 2021; fourth, consider and vote on the shareholder proposal, if properly presented; and fifth, transact such other business as may properly come before the annual meeting or any adjournment or postponement thereof. With regards to the fourth item of business to consider and vote upon the shareholder proposal submitted by Mr. John Chevedden, Mr. Chevedden will now have 3 minutes to present the proposal. Operator, please open the line for Mr. Chevedden. Mr. Chevedden, your line is now open.

This is John Chevedden. Can you hear me okay?

Yes, sir. We can hear you.

Proposal 4, improve our catch 22 proxy access. Shareholders request that our Board of Directors take the steps necessary to enable as many shareholders as may be needed to combine their shares to equal 3% of our stock owned continuously for 3 years in order to enable shareholder proxy access. Proxy access allows a group of shareholders to nominate a director who will compete with management nominated directors to see who gets the most votes. Competition is good for our Board of Directors. Currently, a strict limit of 20 shareholders must have owned $4 billion of Lowe's stock for an unbroken 3 years in order to nominate one candidate for the Board under our proxy access rules. A strict limit of 20 deep pocket shareholders with $4 billion of Lowe's stocks does not allow for a diverse group of shareholders. It is disappointing that management does not support the diversity that this proposal calls for. As a practical matter, it is unlikely that more than 50 shareholders would participate in nominating a director using proxy access with this proposal. There is hardly any administrative difference in 20 shareholders submitting proof of owning $4 billion of Lowe's stock compared to 50 shareholders submitting proof of owning $4 billion of Lowe's stock. Adopting this proposal would show management's commitment to diversity. This proposal is asking for so little. Our current proxy access is way out of balance and too difficult for shareholders to make use of. The evidence is that there has not been one proxy access director candidate placed on the ballot of any company during the past 5 years. There have been 500 companies where they show the right for proxy access during these 5 years. 5 years times 500 companies equals 2,500 company years without one proxy access director candidate. This means that under the current rules, a company such as Lowe's, would not expect one proxy access director candidate during the next 2,500 years. This is way out of balance as far as shareholders are concerned. Management promotes the policy that shareholders should be complacent in improving our corporate governance with this proposal simply because management has the average governance practices that a lot of other companies have. The unfortunate attitude of management is that since Lowe's is average, the management goal is to block improvement. Management promotes the policy that shareholders should have a penny-pinching attitude when it comes to nominating directors, but there's no text in the meeting materials today's promoting penny-pitching for CEO pay. Management brags about shareholder engagement, which means that management uses its public relations skills to ban the ears of shareholders. If shareholder engagement is so great, why does management force feed shareholders with glossy advertisements just before the annual meeting, telling shareholders that 100% increase in CEO pay is a great value for shareholders? The effectiveness of a good governance proposal like this proposal is that it would not result in more cost, but it wouldn't set pay dividends because the mere presence of good governance serves as a guardrail to make sure that management elects the best directors on their own. Because if management does not elect the best directors, then shareholders have a remedy with teeth to make their director nominations known to management. Please vote yes, improve our catch 22 proxy access proposal 4.

Okay. Thank you, Mr. Chevedden. After careful consideration of the proposal, the Board recommended voting against this proposal, as explained in the proxy statement. And Marvin, this completes our proposals, and I return the meeting to you.

Thank you, Bill. I now declare the polls open for voting. The proxies have already delivered their ballots to the inspector of election. If you have already voted, it is not necessary to vote during the meeting unless you wish to change your vote. Anyone who desires to vote during the meeting should do it now by following the instructions on the website. I will now pause my comments for approximately 30 seconds to allow any voting to take place. [Voting]

Since all votes have now been cast, I declare the polls to be closed. I've received a report from the voting inspector, and based upon the vote of shareholders, all nominees of the Board of Directors are elected; the advisory vote on compensation paid to the company's named executive officers has been approved; Deloitte & Touche is ratified as the company's independent accounting for fiscal 2021; and the shareholder proposal did not pass. Please note that the final voting results will be filed with the SEC within 4 business days. This concludes the business portion of the meeting. Now I'd like to take a few minutes and update you on our business performance of our company. First, I'd like to begin by thanking our associates for their tremendous efforts to support our communities and help our customers keep their homes and businesses safe and operational. Our associates have been resilient and heroic, and I want to thank them for their commitments to the company. I would also like to extend our thoughts and prayers to our associates in India who are grafting with an aggressive resurgence of COVID in their country. At Lowe's, we have associates in Bangalore, India in our digital, information technology and finance functions who have played a key role in our transformation efforts over the past 2 years. To help our team in India safeguard their health, we sent personal protective equipment to our team members there. We've also made a financial commitment to support nonprofit organizations in India that are working to respond to this humanitarian crisis. I would now like to provide an update on Lowe's performance during 2020, including our response to the COVID-19 pandemic. And I'd like to discuss our new Total Home strategy, which will enhance customer engagement and grow market share. As an essential retailer, we established 3 key priorities at the onset of the pandemic last February: first, creating a safe store environment for our associates and our customers; secondly, supporting our frontline associates; and third, providing support for our communities. During the year, we provided nearly $1.3 billion in support of these 3 critical priorities. I'd like to take a few moments to review the numerous safety standards that we quickly implemented in the first quarter of 2020 in support of social distancing, enhanced sanitizing and cleaning. We removed product in our stores to free up space for our customers, and we enhanced cleaning services during and after operating hours. We were one of the first retailers to install plexiglass shield at all point-of-sale registers in our stores. In early May, we adopted additional safety measures by requiring all frontline associates to wear mask. And by mid-July, we added a standard for all customers to wear mask as well. In support of this standard, we provided masks to customers for free who needed them. Due to the changes in the CDC guidelines effective May 19 of this year, we adjusted our mask and face-covering guidelines. We're now allowing customers and associates who are fully vaccinated to shop and work without a mask or face coverings, except where local estate requirements dictate otherwise. Although the country is seeing an overall reduction in COVID cases, we will remain focused on our #1 priority, which is the health and safety of our associates and our customers. During fiscal 2020, we also provided over $900 million in incremental COVID-related financial support for our frontline hourly associates. We also provided 14 days of emergency paid leave for all associates who needed it and up to 4 weeks of emergency paid leave for associates who are high risk of severe illness from COVID-19. And we provided 2 extra weeks of paid vacation to salary frontline managers and closed all of our stores and distribution centers on Easter Sunday to provide associates with time off to recharge and spend time with their families. We also extended telemedicine benefits and made them accessible to all associates and their families even if they were not enrolled in Lowe's medical plan. Also during every quarter of fiscal 2020, 100% of our stores earned, they're winning together quarterly profit sharing bonuses for hourly associates with a total payout of $365 million. In an effort to serve our country during this time of tremendous need, Lowe's contributed more than $150 million to provide support for communities where our associates live and work. This included more than $100 million in pandemic-related relief, with $55 million in grants to minority-owned, women-owned and rural small businesses as well as a $16 millions donation of essential protective products for medical professionals and first responders. We also supported our communities by hiring 90,000 associates into permanent roles during the time of high unemployment for the country. Now shifting gears to the improvements we've made in our online business. Last year, we dramatically expanded our fulfillment capabilities to support a sharp increase in demand for online shopping. To meet this demand, we rolled out curbside pickup and touchless pickup lockers to 100% of our U.S. stores. We also continue to enhance Lowe's mobile app to improve the customer pickup experience. In addition, we accelerated the replatform of Lowes.com from a decade-old technology platform to the cloud. This replatforming transformed the site stability, which enable us to handle sales growth of 111% on Lowes.com. Looking back on our 2020 results, I am confident that our commitment to retail fundamentals was essential to our success. This strategy focused on building our operating capabilities through strategic investments in merchandising excellence, supply chain transformation, operational efficiency and customer engagement. Our commitment over the previous 18 months to improve these areas of the company allowed us to quickly respond to the global health crisis in 2020 and meet the surge in consumer demand for the home improvement products and services. Looking forward, now it's time to build on this foundation and shape the next chapter in the evolution of our business by implementing our Total Home strategy, which will further differentiate Lowe's and accelerate our market share gains. Our Total Home strategy reflects our commitment to offering everything a customer needs to provide a total home solution across every area of the home. In executing our Total Home strategy, we will intensify our focus on the Pro customer, aggressively expand our online business, modernize our installation services, localize our product offering and elevate our product assortment. Our first quarter 2021 financial results reflect that we are gaining traction with the DIY and Pro customers through our Total Home strategy. Our CFO, Dave Denton, will review these results in a moment. I would also like to review the commitments that we've made to our associates and communities to promote the health of our planet. To support product sustainability, we set several goals to promote sustainable practices throughout our value chain while providing our customers with the highest quality and safest products, and also helping them reduce the impact on the environment. To support our people and our communities, we committed to fostering a diverse and inclusive culture. We've also made commitments of both time and financial assistance to our communities with a focus on safe, affordable housing and skill trace workforce development. And in pursuit of operational excellence, we've established operating targets designed to reduce the environmental footprint of operating while reducing operating costs. Before I close, I'd like to highlight that your Board of Directors approved a 33% increase in Lowe's quarterly dividend yesterday, increasing from $0.60 per share to $0.80 per share, scheduled to be paid on August 4 of this year. This reflects the Board's confidence in the company's continued business momentum, its trajectory and strong cash flow generation. Although the business environment remains uncertain, I strongly believe that the best days of Lowe's are still in front of us. We are confident that we are making the right investments to drive market share gains and operating efficiency. And we will not lose focus on our highest priority, which is supporting the health and safety of our associates and our customers. My sincere appreciation again goes out to our hard-working associates for their commitment and their focus on the customer. Now I'd like to introduce Lowe's Chief Financial Officer, Dave Denton, who will provide an overview of our 2020 financial results and our robust capital allocation program.

Good morning, everyone. In 2020, we generated $9.3 billion in free cash flow driven by outstanding operating performance. We returned $6.7 billion to our shareholders through the combination of dividends and share repurchases, a reflection on our commitment to drive sustainable shareholder value. Last year, we delivered significant increases in both revenue and operating profits driven by our improved execution and strong customer demand. Our sales in 2020 were $89.6 billion, which reflects a 26% increase on a comparable sales basis. Adjusted diluted earnings per shares increased by 54% driven by higher sales, disciplined expense management and improved operating leverage. I'm really pleased with the strong improvement in our operating performance, and I'd like to extend my appreciation to the associates at Lowe's across the world who delivered these results. In the first quarter of '21, we generated $4 billion in free cash flow driven by improved operating execution and continued strong consumer demand. We returned $3.5 billion to our shareholders through a combination of dividends and share repurchases. We delivered strong total sales growth of approximately 24.1% driven by comparable sales growth of 25.9%. We reported diluted earnings per share of $3.21, an increase of 81% compared to adjusted diluted earnings per share in the prior year. This growth was due to strong sales growth, improved gross margin rate and SG&A leverage as a result of strong execution across many facets of our business. We're off to a strong start to the year, and we are continuing to see strong customer demand for our products and our services. At the end of the quarter, we had $6.7 billion of cash and cash equivalents and access to $4 billion from our undrawn revolving credit facilities and term loans, which gives us an immediate access to $10.7 billion in funds. Our balance sheet remains extremely healthy with adjusted debt-to-EBITDAR at 2.07x at the end of the quarter and well below our long-term target of 2.75x. Now before I close, I'd like to take a moment to remind you of our framework for driving significant shareholder returns, which is focused really in 3 areas: first is to drive operational excellence throughout the enterprise; second is to consistently generate high levels of free cash flow; and finally, is to employ a disciplined approach to capital allocation. Since we launched our multiyear transformation, we have delivered significantly improved results and created meaningful shareholder value. Thank you for your investment in Lowe's. Our CEO, Marvin Ellison, will now lead a shareholder question-and-answer session.

Thank you, Dave. That concludes the business update portion of the meeting. I'll now open the question-and-answer period of our meeting. Kate Pearlman on the Investor Relations team will now read the shareholder questions.

Thank you, Marvin. We will attempt to answer as many questions as possible during our time today. If we do not get to your questions, we will post answers to unanswered questions on the Investor Relations page of our website. We also encourage you to contact Lowe's Investor Relations at [email protected]. If a shareholder has a question, please enter it in the submit a question box on the website. Also, we have received a number of similar questions. In the interest of time and to answer as many questions as possible, we will group similar questions together. Our first shareholder question is, how are you protecting the safety of your associates working in offices and call centers, especially in honeycomb style cubes?

First, thank you for the question. As I mentioned in the prepared comments, the health and safety of our associates and customers has always been our highest priority. And at the onset of the pandemic, we implemented remote work for all of our call centers, corporate and store support centers for our associates. More specifically in our call centers, roughly 94% of our associates are currently still working from home. But on a rare occasion when associates have returned to the office, we've carefully mandated social distancing. We've reset the workspace to ensure that we're creating a safe environment for all of our associates. At Lowe's, the health and safety of our associates will always be our #1 priority.

Our next shareholder question is, why does Lowe's insist on the outdated labor model of low pay, high pressure that leads to high turnover?

Again, thank you for the question. At Lowe's, we offer some of the most competitive wages in retail. In fact, our compensation and our total rewards package are above many retailers in the markets where we operate. We also offer other valuable benefits like quarterly profit sharing bonuses for hourly associates, a 10% employee discount and discounted stock purchase plans. In 2019 and 2020, as a company, we invested over $1.4 billion in incremental wages and equity programs, specifically for our frontline associates. And we'll continue to fund these incremental investments and merit increases along the way. But in addition to the $1.4 billion investment over the past 2 years, last year, we provided over $900 million in incremental financial assistance to our frontline hourly associates. This included 7 special payments of $300 for full-time associates and $150 for part-time associates, a temporary wage increase of $2 per hour in the month of April. We offered 14 days of emergency paid leave to all associates who needed it. We offered up to 4 weeks of emergency paid leave for those who are in high risk of severe illness due to COVID, and we provided 2 extra weeks of paid vacation for our salary frontline managers. And finally, as I mentioned in the prepared comments, 100% of our stores earned are winning together profit sharing bonuses every quarter in 2020, totaling $365 million, which was an incremental $100 million payout above the target payout level. And also during a time of really tough unemployment for the company, in 2020, we hired 90,000 associates to permanent positions. We're very proud of that. I guess I'll close with the point that we strive every day at Lowe's to make our company a workplace of choice for all our future and current associates, and we'll continue to do that.

Our next shareholder question is, why is there not more effort on getting and retaining high performers?

Again, thank you for the question. When it comes to recruiting and retaining talent, Lowe's strives, as I mentioned earlier, to be an employer of choice. We're committed to creating valuable career opportunities for all of our associates, and we've demonstrated that commitment to our frontline associates through extensive developmental programs we put in place. All of our associates go through what we call Lowe's University. It's a training program that's tailored to the specific role and position of the associate. It includes both technical and training and personal development. Some of our associates go through advanced development programs to accelerate their growth and prepare them for future roles. But in addition to these developmental opportunities, since 2019, we added almost 10,000 incremental department supervisor roles to our stores, and we added over 1,600 incremental assistant manager roles to our stores. These additional roles reflect our commitment as a company to developing our associates but also creating promotional opportunities for everyone out there who's working hard and who desires to move forward in their careers. Lowe's will always pride itself as being a company that develops and retains talent, and we will stay committed to those objectives.

Our next shareholder question is, why is there such a large gap between CEO and associate compensation?

Thank you for the question. Well, 2020 was obviously a very challenging year. But during that challenging year, Lowe's generated total shareholder returns of more than 45%. Lowe's also provided nearly $1.3 billion in COVID-related support to our associates, store safety, small businesses and community pandemic relief. And as I mentioned earlier, of the $1.3 billion, roughly $900 million went to hourly associates for additional income in 2020. But as an essential retailer, we help our customers keep their homes and businesses safe and operational, and I'm very proud of that. And a significant amount of our executive pay is tied to performance with a balanced focus on top and bottom line performance as well as strategic initiatives. And our managers throughout the companies are incentivized on the same metrics. As a point in case, my performance metrics are identical to a store manager running a store in one of your hometowns. And our frontline associates share in that success, as I mentioned, with our quarterly winning together bonuses that totaled $365 million in 2020. We look at compensation at all levels based on scale and also the associates' responsibility. And we're proud that historically, our hourly positions have been a great starting point at Lowe's and a great launching pad for future careers. I'm very fortunate in my career, I started out in retail as a kid in college, making $4.35 an hour. And so I value our hourly associates, and I'm committed to making Lowe's a great place for all of our associates to work.

Our next shareholder question is, several years ago, employees were prohibited from wearing a vest ID card that referenced how long they have been an employee owner. Why did the management team make this policy change?

Again, thank you for the question. Over time, the company has made decisions to change associate badges and the language on the badges, and none of the changes were ill-intended. When I arrived the summer of 2018, I noticed, along with my management team, that we had store associates that no longer had any length of employment listed on their badges. Therefore, in the first quarter of 2019, the store operations team added what we call longevity badges to the red vests of our store associates. So today, when you visit a store, you can quickly determine the length of an associate's tenure with Lowe's. We also remain committed to helping our associates become owners of the company by supporting an associate stock ownership through our discounted stock purchase plan, and we encourage our associates to take advantage of this great opportunity. But we want all of our long-tenured associates to be proud to display their length of employment with Lowe's, and we also encourage our newer associates to seek out these tenured associates for guidance and for product knowledge expertise.

Our next shareholder question is, are we looking to expand the number of Lowe's stores across the United States since we are starting to come out of the pandemic and especially given the record sales generated in 2020?

Thank you again for the question. We will always open a small number of new Lowe's stores from time to time. We already have a store footprint that spans the U.S. and Canada. But rather than being committed to aggressively growing brick-and-mortar selling space, we're committed to growing our sales per square foot, which is correlated to improving the productivity of our stores that we already have. Our commitment to our Total Home strategy that I discussed earlier in the morning will allow us to intensify our investments in areas like the Pro customer, installation services and our online and omnichannel execution. If we do these things well, we think we can deliver improved store productivity. And when we look at these productivity possibilities, we remain really opportunistic about adding new store footage as it makes sense. But our key objective will be making our current stores more productive and ensuring that we are focusing on driving sales per square foot in those existing store locations.

Our next shareholder question is, we heard a rumor that Lowe's was going to start selling exercise equipment online. Is this true?

Again, thank you for the question. We will always look at expanding into some adjacent categories online as we look to grow our online business. The pandemic taught us a lot. And one of the things we learned from our customers is that if they trust us as a company, they will buy more from us than just core home improvement products. So we already deliver quite a large assortment of big and bulk items like appliances, so it's easy for us to leverage those capabilities to expand in the other product categories that consist of large products. So we're seeking to provide a full complement of products and services for our Pros, our DIY consumers. And as I mentioned earlier, we have this Total Home strategy, which is intended on providing solutions for everything you need in your home. And as I discussed again earlier this morning, our Total Home strategy at Lowe's is going to be designed to offer those customers what they need, Pro and DIY, and we think that will include categories that may not be core to home improvement. And so we'll always seek those opportunities out.

Our next shareholder question is, what is Lowe's position on voting rights?

Thank you for the question. At Lowe's, we believe that the biggest impact that we can have on our communities is ensuring that our associates have a combination of factual information and the company's support and flexibility they need on their schedule to vote and to take action for themselves and their families. But make no mistake about it, we believe that voting is a sacred right, and we're very proud of the commitment that we've made as a company to diversity and to equality.

Our next shareholder question is, does Lowe's have any plans for international expansion?

Thanks for the question. Look, we have a great opportunity, as I mentioned earlier, to grow our business within our existing footprint in the U.S. and Canada. And we have established some very meaningful near-term growth targets for our business on the revenue, operating profit and return on invested capital categories of our financial performance. And we think achieving these targets will translate into significant value creation for our shareholders. So given that we're already in a really significant position with our square footage, we think that we have a compelling growth opportunity within the U.S. and Canada still by simply growing our sales per square foot productivity, which will enhance operating income and return on invested capital and so at this point, we don't see a need to expand internationally.

Our next shareholder question is, why does Lowe's continue to sell Roundup?

Thanks again for that question as well. Look, at Lowe's, we pride ourselves on carrying a wide selection of products to meet a variety of customer needs and preferences, and we do carry Roundup as well. We also carry other synthetic and natural options for customers to choose from. Lowe's will always abide by all regulations, and there are currently no restrictions from the EPA directing retailers not to carry this product. But with all products, we encourage our customers to follow the label directions and the manufacturer safety instructions on proper use. But we feel strongly it's important to offer our customers choices.

We have time for one more question. Our final shareholder question is, what type of acquisitions are you looking for?

Again, thank you for the question. Look, at Lowe's, we're only interested in acquisitions that provide us with enhanced capabilities that will allow us to grow our business or allow us to better serve our customers. But as Dave mentioned earlier this morning in his prepared comments, the core of our capital allocation strategy will be to focus on investing in our core business but also returning value to our shareholders through dividends and share repurchases.

Thank you for your questions and comments. That concludes our question-and-answer session. We appreciate your attendance and participation. This meeting is now adjourned.

This concludes Lowe's 2021 Annual Shareholders Meeting. You may now disconnect.