00:00So I think that the second quarter beat was really more on the consumer side than the pro side.
00:06But you're absolutely right that the pros are becoming a more and more important piece of the business for Home
00:12Depot.
00:13They want to serve that customer better. They think that growth going forward is better.
00:17That is a $700 billion addressable market, a huge market growing very quickly.
00:23So the pro remains important. Pro spending is solid.
00:26You know, they still have the same expectations for SRS, which is an acquisition that they made.
00:31You know, this year grow mid-single digits organically.
00:35But 2Q was really about the DIY consumer.
00:39First half, I mean, that top line of 5% looks pretty good to me.
00:42And it looks like their guidance, if I'm reading it right, is looking for a slower growth in the second
00:46half.
00:47What are they saying about that?
00:49Yeah, that's right.
00:50So the top line, you know, there's some acquisitions in there that's sort of helping that top line exceed organic
00:56growth.
00:57Same-store sales, though, 1.7%, the best in a couple of years.
01:01That was really driven.
01:02You know, Canada was strong.
01:04Mexico was strong.
01:04But the U.S. even put up a 1.3%.
01:07And it seemed like, you know, some of their spring assortment did very well.
01:12Big-ticket items, think grills, patio furniture, gardening items.
01:16It seems that they did pretty well in the quarter.
01:19Same-store sales were building June stronger than May, July stronger than June.
01:24So pretty solid.
01:26But then there's a lot of caution.
01:28As you mentioned, Paul, when we look at the outlook, that back half looks like there could be, you know,
01:34a pullback.
01:35And I think there's some caution, uncertainty about that consumer demand coming out of this spring-summer season.
01:43Home Depot also has some, I don't want to say leadership changes, but there's going to be, there's some leadership
01:50disruption happening.
01:51Do you anticipate there to be any shift in its ability to execute what it has, you know, laid out
01:58as its strategy with the CEO, Ted Decker, taking some leave?
02:02Yeah, so it's temporary medical leave.
02:04The strategy is still in place.
02:06You know, every, the leadership team seems very focused on executing all of the goals that they laid out at
02:12a December investor day.
02:13And I expect them to continue along their path, again, mostly focused on gaining shares with pros, but also being
02:20there for the consumer.
02:22And really trying to drive growth, even in a market where we have very low housing turnover.
02:27And we just don't know when that, the rebound in that housing market is going to come.
02:32Lindsay, talk to us about tariffs.
02:34Because when I walk into Home Depot, which is not very often, by the way, because it might shock you
02:38that I am not a handyman.
02:40I am shocked by, like, the amount of plywood they'd have just stacked up there.
02:44And whenever I see that now, I think of, I'm guessing a lot of that comes from Canada.
02:48Is that being tariffed?
02:49Where are, what's Home Depot doing about tariffs these days?
02:51What are they saying?
02:53Yeah, so they, they had filed a claim.
02:56We knew that ahead of earnings.
02:57You know, I think there was some expectation that there would be some refunds in the quarter.
03:02They got refunds in late June.
03:05Their cost of goods gold was dropped by $685 million.
03:10You know, so significant benefit to profitability in the second quarter.
03:13There will be some benefit in the third quarter as well, though probably a little bit less than what we
03:18just saw.
03:20And then by fourth quarter, that benefit is really going to kind of roll off in terms of the refund.
03:26In terms of tariffs, generally, you know, costs are still rising going into the back half of the year.
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