We're also pleased with the traction we are seeing in our interconnected business. We've seen increased app engagement, downloads, conversion, as we've rolled out several enhancements, including an improved online experience for our Pro loyalty program, seamless connectivity for our military program and the launch of our new store mode feature, which makes store navigation and product interaction easier. We are very pleased with the continued progress on our supply chain build-out, as we reached an important milestone earlier this year. All our appliance delivery volume is now managed through our market delivery operations, significantly improving the customer experience. In the near term, we continue to navigate a unique environment. Throughout most of fiscal 2022, we observed a resilient customer, who is less price sensitive than we would have expected in the face of persistent inflation.

In the third quarter, we noted some deceleration in certain products and categories, which was more pronounced in the fourth quarter. This along with the negative impact from lumber deflation led to fourth quarter comps that were slightly softer than anticipated. We are closely monitoring our elasticities and trends across the business and believe we have the tools team and experience to manage in any environment. This team has been effectively navigating the unprecedented growth in the last three years and I have full confidence in their ability to execute as we go forward. The investments in our associates, stores, digital platforms, supply chain, technology and other strategic initiatives have strengthened our business and enabled us to grow share and deliver exceptional shareholder value over the long-term.

The most important investment we can make is in our people, which is why we are announcing that we are increasing annualized compensation by approximately $1 billion for our frontline hourly associates. We believe this investment will position us favorably in the market allowing us not only to attract the most qualified talent, but also retain the exceptional associate base that is already in place. Today, our Board approved a 10% increase in our quarterly dividend to $2.09 per share which equates to an annual dividend of $8.36 per share. Turning to 2023. We are targeting approximately flat comp sales and a mid single-digit percent decline in diluted earnings per share compared to last year. Richard will take you through the details in a moment.

While we expect this to be a year of moderation in demand for home improvement, we believe that the long-term underpinnings of our market remains strong and we are well positioned to leverage our distinct competitive advantages to capitalize on compelling growth opportunities in our space. I could not be more pleased with the resilience and strength that our associates have continued to demonstrate and I want to thank them and our supplier partners for their hard work and dedication to serving our customers and communities. Now I'm going to turn it over to Ann-Marie Campbell, Executive Vice President of US Stores and International Operations to share a little more on how we are taking care of our associates and continuing to enhance the customer experience.

Ann-Marie Campbell : Thanks Ted, and good morning everyone. I'm very excited to have the opportunity to spend a few minutes talking about the best team in retail and the many ways we are investing in the associate experience at The Home Depot. We know that our associates are a key differentiator and they are essential in helping us sustain the customer experience we strive for. In order to provide the best customer experience in home improvement, we must focus on cultivating the best associate experience in retail. So what does this mean to us? This means not only investing in competitive wages and benefits, but also providing tools training and development opportunities that make working at the Home Depot and enjoyable and rewarding experience.

As Ted mentioned, we are making a significant investment of approximately $1 billion in compensation for frontline hourly associates. This is a meaningful investment that we believe will position us favorably in the marketplace. But this is just one component of the associate investment story. We know that the key to an engaged and committed workforce is investing in the person, taking an interest in them and in their development. To that end, we began the year with a new store leadership structure, the first time we have changed the structure since our company was founded. The driving forces of these changes were customer service and associate development. We created new management positions focused entirely on the customer service experience, increasing the number of managers on the floor at any given time.

This frees up time for other store leaders to devote to associate training and development. The net result of all this is both an improved customer and associate experience, while also creating new career paths for our associates. Another important element of a best-in-class associate experience rests on simplification, how can we simplify processes and systems in our stores to enable associates to deliver a better customer experience and how can we simplify and streamline paths, so that an associate can spend more time serving our customers. One example we have talked about before is the work we've done to simplify order management in our stores with the order up initiative. Historically, our associates have to navigate dozens of systems but with order up, we have been able to streamline multiple systems into one that is simpler and more intuitive.

We took simplification even further this year with the introduction of the new HD phone and associated applications such as Sidekick. The rollout of our HD phone was a direct result of associate feedback on the limitations of our first-generation in all devices known as first phones. For the first time ever, every associate on the floor will have an HD phone in their hand with enhanced communication features, tools and training capabilities. This increased accessibility to real-time support is significant in helping our associates better serve our customers. In addition to enhancing the customer service experience, the home -- the new HD phone provides real-time access to tools and applications such as Sidekick that helps associates prioritize the highest value tasks more effectively.

Powered by machine learning, Sidekick directs associates to key bays where on-shelf availability is low or out exist. The HD phone empowers our associates to provide a best-in-class customer experience, increase operational efficiency and generally makes an associate job much easier. These are just a few examples of the many ways we're investing to enhance and improve the associate experience at The Home Depot. Our associates are trusted advisers for our customers and are the heartbeat of our company, and I want to thank them for all they do to take care of our customers. We will continue to invest in them with a focus on listening to their needs, maintaining competitive wages and benefits and continuing to enhance our tools, training and development opportunities.

With that, let me turn the call over to Jeff.

Jeff Kinnaird: Thank you, Ann, and good morning everyone. I want to start by also thanking all of our associates and supplier partners for their ongoing commitment to serving our customers and communities. During the fourth quarter, our comp average ticket increased 5.8% and comp transactions decreased 6%. The growth in our comp average ticket was driven primarily by inflation across our product categories, as well as demand for new and innovative products. Inflation from core commodity categories positively impacted our average ticket growth, by approximately 15 basis points during the fourth quarter. On lumber specifically, during the fourth quarter, we saw a significant decline in lumber prices relative to a year ago. On average, lumber prices were down over 50% year-over-year.

Given this dynamic, comp sales were negatively impacted by approximately 70 basis points in the fourth quarter. Turning to our department comp performance for the fourth quarter, seven of our 14 merchandising departments posted positive comps. Building materials, plumbing, millwork, hardware, tools, outdoor garden and paint had comps above the company average. Big ticket comp transactions or those over $1,000, were up 3.8% compared to the fourth quarter of last year. While we saw big ticket strength across Pro-heavy categories like portable power, hype and fitting, and gypsum we did experience softness in other categories like laundry, soft flooring and roofing. During the fourth quarter, Pro sales growth outpaced DIY. Pro backlog still remain elevated compared to historical averages, and we saw positive comp performance in our build materials, plumbing and millwork departments as well as in certain bath-related categories.

Turning to total company online sales. We are very pleased, with the performance of our digital assets. Sales leveraging our digital platforms increased over 4%, compared to the fourth quarter of last year. This was driven by our continued investments, which are resonating with our customers. For those customers, that chose to transact with us online during the fourth quarter, approximately 45% of our online orders were fulfilled through our stores, a testament to the power of our interconnected retail strategy. During the fourth quarter, we held our Decorative Holiday, Gift Center and Black Friday events. 2022 was a record sales year for these events. We are the product authority in home improvement. And together with our supplier partners, we continue to offer the best product at the best value for our customers every day.

A great example of this, is our recent partnership with Ecolab, a global leader in water, hygiene and infection prevention solutions and services. The Ecolab scientific clean product line, offers the cleaning solutions for commercial, industrial and residential use that Ecolab is known for to both our Pro and DIY customers, giving them access to innovative cleaning technology and this partnership is exclusive to The Home Depot. It marks the first of its kind, in Ecolab's 100-year history. We're looking forward to the year ahead particularly, with the spring selling season, right around the corner. We have a great lineup of products from live goods to outdoor power equipment. We continue to see an industry-wide shift from gas-powered to battery-powered tools.

And as we've been discussing for some time, we have been leaning into this trend, offering a broad assortment of outdoor power equipment, with cordless technology. We have the brands that matter across tools and outdoor power including RYOBI, Milwaukee, DeWalt and Makita. In our spring gift center event, we are expanding our assortment to include, cordless innovation in mowers, trimmers, blowers and chainsaws. As an example, our Makita XGT platform will have over 125 professional-grade cordless tools. I'm particularly excited, about our new 40-volt XGT mower, that delivers gas-powered performance with high vacuum lift for premium cut quality. The XGT mower can cut over an acre in less than 60 minutes on two 40-volt XGT batteries. These Makita tools are exclusive to The Home Depot in the big-box retail channel.

One of our key focuses in the spring is to provide great value and innovation for our customers within our live goods offerings. We continually work to strengthen our relationship with key vendors throughout the industry providing the best value, innovation and guarded performance for our customers. We have expanded our offerings in national, regional and proprietary brands such as Vigoro, Rio, Southern Living and Knockout Rose just to name a few. Our teams continue to look for better garden performance varieties that provide solutions for our customers and we are excited about the upcoming spring season. With that, I'd like to turn the call over to Richard.

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Richard McPhail: Thank you, Jeff, and good morning everyone. In the fourth quarter, total sales were $35.8 billion, an increase of approximately $100 million, or 0.3% from last year. During the fourth quarter, our total company comps were essentially flat at negative 0.3% for the quarter. As Jeff mentioned, lumber prices in the quarter negatively impacted comp sales by approximately 70 basis points. We had comps of negative 1.3% in November, positive 0.8% in December, and negative 0.1% in January. Comps in the US were negative 0.3% for the quarter, with negative comps of 0.4% and 1.4% in November, positive 0.7% in December, and negative 0.1% in January. For the year, our sales totaled a record $157.4 billion with sales growth of $6.2 billion, or 4.1% versus fiscal 2021.

For the year, total company comp sales increased 3.1% and US comp sales increased 2.9%. In the fourth quarter, our gross margin was approximately 33.3%, an increase of seven basis points from last year. For the year, our gross margin was approximately 33.5%, a decrease of 10 basis points from last year. Gross margin was in line with our expectations, reflecting planned investments in our supply chain capabilities. Throughout the year, we continued to successfully offset significant transportation and product cost pressures as well as increased pressure from shrink during the back half of the year and we did this while maintaining our position as the customer's advocate for value. During the fourth quarter, operating expenses were approximately 20% of sales, representing an increase of 32 basis points from last year.

Our operating expense deleverage is driven largely by charges unique to the quarter related to litigation in California storm-related expenses and an unfortunate fire in one of our stores. For the year, operating expenses were approximately 18.3% of sales representing a decrease of 13 basis points from fiscal 2021. Our operating margin for the fourth quarter was approximately 13.3%, and for the year was approximately 15.3%. Interest and other expense for the fourth quarter increased by $85 million to $408 million due primarily to higher long-term debt levels than one year ago. In the fourth quarter, our effective tax rate was 22.6% and for fiscal 2022 was 23.9%. Our diluted earnings per share for the fourth quarter were $3.30, an increase of 2.8% compared to the fourth quarter of 2021.

Diluted earnings per share for fiscal 2022 were $16.69, an increase of 7.5%, compared to fiscal 2021. During the year, we opened six new stores and lost a store in California due to a fire bringing our store count to 2,322 at the end of fiscal 2022. Retail selling square footage was approximately 241 million square feet at the end of fiscal 2022. Total sales per retail square foot were approximately $627 in fiscal 2022, the highest annual figure in our company's history. At the end of the quarter, merchandise inventories were $24.9 billion, an increase of $2.8 billion versus last year and inventory turns were 4.2 times, down from 5.2 times from the same period last year. Moving to capital allocation. During the fourth quarter, we invested approximately $900 million back into our business in the form of capital expenditures.

This brings total capital expenditures for fiscal 2022 to $3.1 billion. During the year, we paid approximately $7.8 billion of dividends to our shareholders. We look to grow our dividend every year as we grow earnings. And as Ted mentioned today, we announced our Board of Directors increased our quarterly dividend by 10% to $2.09 per share, which equates to an annual dividend of $8.36 per share. And finally, during fiscal 2022, we returned approximately $6.5 billion to our shareholders in the form of share repurchases including $1.5 billion in the fourth quarter. Computed on the average of beginning and ending long-term debt and equity for the trailing 12 months, return on invested capital was 44.6% compared to 44.7% at the end of the fourth quarter of fiscal 2021.

Now, I'll comment on our outlook for 2023. As we think about how 2023 might unfold, we think it's helpful to look back on our performance since 2019. From 2019 through 2022, we grew sales by $47.2 billion, a compound annual rate of 12.6%. During the first five quarters of this period from the first quarter of 2020 through the first quarter of 2021, our sales were driven by significant ticket and transaction growth. This growth reflects factors unique to home improvement, as homeowners spent more time in their homes and took on more projects, as they saw their homes significantly increase in value over that period. The home improvement market also captured a greater share of the consumer's wallet, as spending on goods outpaced spending on services during the period.

Beginning in the second quarter of 2021 and continuing through the fourth quarter of 2022, we reported strong sales and earnings growth driven by ticket while transactions steadily normalized back towards 2019 levels as the broader consumer economy shifted from goods and back into services. During this time, we continued to report positive sales growth in every quarter up to present. As we set targets for 2023, the context of the past three years led us to consider three factors that will likely influence our performance this year. First, the starting point for our target setting this year is our assumption regarding consumer spending. We've assumed like many economists that we will see flat real economic growth and consumer spending in 2023.

Second, over the last seven quarters, we have seen our transactions gradually normalize as consumer spending has shifted from goods to services. We believe that if this shift continues at its current pace, the home improvement market would be down low-single digits. And third, as an offset to this pressure, we plan to continue to capture market share. Our competitive advantages, the investments we have made over many years and the unique advantage that our orange-blooded associates give us over our competition position us to take share in any environment. Taking these factors into account, we are targeting approximately flat sales and comp sales growth for 2023. Further, our operating margin target of 14.5% reflects approximately 60 basis points of impact from the compensation investment we announced today.

Our effective tax rate is targeted at approximately 24.5%. Our diluted earnings per share, is targeted to decline by a mid-single-digit percentage. Outside of this target setting, if lumber prices remain at current levels for the remainder of our fiscal year that would equate to approximately 100 basis points of pressure to comp sales and an insignificant impact to earnings. At today's current price, this would imply more pressure in the first half than in the rest of the year. We plan to continue investing in our business with CapEx of approximately 2% of sales on an annual basis. After investing in our business and paying our dividend, it's our intent to return excess cash to shareholders in the form of share repurchases. We believe that we have positioned ourselves to meet the needs of our customers in any environment.

The investments we've made in our business have enabled agility in our operating model. As we look forward, we will continue to invest to strengthen our position with customers, leverage our scale and low-cost position to drive growth faster than the market and deliver shareholder value. Thank you for your participation in today's call. And Christine, we are now ready for questions.

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