Readers respond to taxes and benefits
The Home Depot said it will pay a one-time cash bonus for U.S. hourly associates of up to $1,000 in the fourth quarter of fiscal 2017, following the passage of the tax reform bill.
That’s not an unusual approach to the tax windfall, according to readers of HBSDealer. According to the weekly poll question, 25% of respondents said their company would invest in the company, and another 9% said their companies would provide bonuses for employees,
Here’s the breakdown of responses:
- Invest in company — 25%
- Hire more people — 17%
- None of these options — 17%
- All of these options — 16%
- Pay off debts — 13%
- Bonuses for employees — 9%
- Increase marketing — 2%
- Stock buybacks — 2%
- Save for a rainy day — 0%
[Note, the poll is still open. You can cast your ballot here.]
In recent news report, Lowe’s Cos. and Scotts Miracle-Gro Co. also pointed to varying degrees of post-passage benefit improvement.
Lowe’s said it is expanding several benefits and offering a one-time bonus of up to $1,000. According to CEO Robert Niblock, the move is an “example of how we will continue to invest in our employee and customer experience as we continue to evaluate the impact of tax reform.”
At Scotts, CEO Jim Hagedorn said shareholders and employees will benefit from the new tax structure in the United States.
“We expect the first 20% of the savings we achieve will eventually result in higher wages for most of our hourly associates and improvements in our benefit programs for all of our people,” Hagedorn told analysts during the company’s first quarter earnings call.
The Home Depot and Scotts were among the first home improvement companies to officially raise their voices on tax policy. At Home Depot, bonuses will be paid in addition to the company’s Success Sharing bonuses for hourly associates, according to the company.
“We are pleased to be able to provide this additional reward to our associates for continuing to deliver outstanding customer service,” said Craig Menear, Home Depot chairman, CEO and president. “This incremental investment in our associates was made possible by the new tax reform bill.”
The Home Depot also announced that it estimates the impact of the Tax Cuts and Jobs Act will result in additional net tax expense of approximately $150 million in the fourth quarter of fiscal year 2017, primarily related to taxes on unremitted offshore earnings.
The Atlanta-based home improvement giant said it is still evaluating all the provisions of the tax reform legislation and estimates that the net impact of tax reform on its 2018 tax provision and cash taxes paid will be beneficial
USG reports Q4 loss
Building materials manufacturer USG Corporation reported fourth quarter 2017 consolidated net sales of $831 million, a 13.2% increase from consolidated net sales of $734 million in the fourth quarter 2016.
For the full year, 2017 net sales increased about 6% to $3.2 billion from 2016 net sales of $3 billion.
But the Chicago-based company posted a net loss of $62 million for the quarter compared to a net income of $307 million in the fourth quarter 2016.
USG said the net loss in the fourth quarter of 2017 includes $138 million of income tax expense resulting from the Tax Cut and Reform Bill whereas 2016 net income included $279 million of gain on the sale of discontinued operations stemming from the sale of L&W Supply. On an adjusted basis, USG’s net income of $77 million for the fourth quarter of 2017 increased from $65 million for the fourth quarter of 2016, USG said.
For the full year, USG posted a net income of $95 million, down from a net income of $507 million in 2016.
USG also announced today that its board of directors approved a $250 million increase to its share repurchase program, raising the total authorization to $500 million. As of Dec. 31, 2017, $66 million remained under the corporation’s previously authorized $250 million share repurchase program.
USG provides construction materials globally including gypsum wallboard, performance materials, ceilings, and its USG Boral divisions.
Lowe’s handing out employee bonuses
Lowe's reported today that it will enhance employee benefits, including expanded maternity and parental leave as well as adoption assistance.
The company will also said it will give a one-time bonus of up to $1,000 to its more than 260,000 hourly U.S. employees. The bonus will be paid in addition to the company's long-standing, store-level bonus program.
"We are investing in our employees who make a difference every day in the communities where we live and work," Robert Niblock, Lowe's chairman, president and CEO, said in a prepared statement released this morning. "Our employees are the foundation of our business, and we are excited to enhance our benefits to better meet their needs and the needs of their families."
Lowe's will award the one-time cash bonus to eligible full- and part-time hourly employees across all its U.S. facilities including: stores, customer support centers, contact centers, and distribution centers, the Mooresville, N.C.-based retailer said.
"Today's announcement is another example of how we will continue to invest in our employee and customer experience as we continue to evaluate the impact of tax reform," Niblock said.
Lowe's estimates that the impact of the Tax Cuts and Jobs Act of 2017 will result in additional net tax expense of approximately $75 million in the fourth quarter of fiscal 2017. This charge, coupled with the one-time bonus, is expected to negatively impact the company's 2017 fourth quarter diluted earnings-per-share by approximately $0.14.
For fiscal 2018, Lowe's estimates that the net impact of tax reform on its tax provision and cash taxes paid will be positive. The company will continue to make investments to better meet the needs of customers and its employees. Lowe's will report its fourth quarter 2017 earnings on Feb. 28.
In addition to the company's benefits program, eligible full-time hourly and salaried U.S. employees will qualify to receive 10 weeks of paid maternity leave and two weeks of paid parental leave; an adoption assistance benefit to cover up to $5,000 of expenses related to agency, legal, and other fees; and the ability to enroll in health benefits sooner, as early as the first of the month following 30 days of service at the company.
These enhancements follow the company's recent hiring announcement to recruit more than 53,000 seasonal associates nationwide to better serve customers and communities.
Several companies have announced new bonus programs following recent federal tax changes, including Lowe’s chief rival The Home Depot.
Lowe’s operates more 2,370 stores in the United States, Canada and Mexico and had sales of $65.0 billion in 2016.