Walmart Inc. · NASDAQ:WMT
Walmart — Q2 FY2019 Earnings Presentation
28 slides from Walmart's earnings presentation, Aug 16, 2018
Slide 1: Financial presentation to accompany management transcript
Walmart >'<. Financial presentation to accompany management transcript
Slide 2: Safe harbor and non-GAAP measures
Safe harbor and non-GAAP measures This presentation contains statements as to Walmart management's guidance regarding earnings per share, adjusted earnings per share, consolidated net sales growth, Walmart U.S. eCommerce sales growth, Walmart International sales growth, capital expenditures and Walm
Slide 3: Fiscal Year 2019 Guidance
Fiscal Year 2019 Guidance EPS1 $2.90 to $3.05 (ex. Flipkart) Adjusted EPS1,2 $4.90 to $5.05 (ex. Flipkart) U.S. Comp sales3 of around +3%, which compares to the previous guidance of at least +2% Comp sales3 of about +3%, with a negative impact from tobacco of approximately 200 basis points. This is
Slide 4: Walmart Inc. consolidated results
Walmart Inc. (Amounts in millions, except per share data) Q2 $ Δ1 % Δ1 YTD $ Δ1 % Δ1 Total revenue $128,028 $4,673 3.8% $250,718 $9,821 4.1% Total revenue, constant currency2 $127,780 $4,425 3.6% $248,500 $7,603 3.2% Net sales $127,059 $5,110 4.2% $248,689 $10,214 4.3% Net sales, constant currency2
Slide 5: Walmart Inc. margins, tax rate and returns
Walmart Inc. Q2 bps Δ1 YTD bps Δ1 Gross profit rate 24.8% -17 bps 24.7% -16 bps Operating expenses as a percentage of net sales 21.0% -19 bps 21.1% -4 bps Effective tax rate2 282.7% NM 51.9% NM Debt to total capitalization3 NP NP 43.0% 460 bps Return on assets4 NP NP 2.9% -380 bps Return on investme
Slide 6: Walmart Inc. receivables, inventories, payables
Walmart Inc. (Amounts in millions) Q2 $ Δ1 % Δ1 Receivables, net $5,002 -$393 -7.3% Inventories $41,985 -$1,457 -3.4% Accounts payable $43,128 $739 1.7% 1 Change versus prior year comparable period. 6
Slide 7: Walmart Inc. cash flow and capital returns
Walmart Inc. (Amounts in millions) YTD $ Δ1 Operating cash flow 11,095 -265 Capital expenditures 4,282 -141 Free cash flow2 6,813 -124 (Amounts in millions) Q2 % Δ1 YTD % Δ1 Dividends 1,534 -0.3% $3,067 -0.7% Share repurchases3 1,305 -42.3% $1,844 -58.5% Total $2,839 -25.3% $4,911 -34.8% 1 Change ve
Slide 8: Walmart U.S.
Walmart U.S. (Amounts in millions) Q2 Δ1 YTD Δ1 Net sales $82,815 5.2% $160,563 4.1% Comparable sales2,3 4.5% 270 bps 3.3% 170 bps • Comp traffic 2.2% 90 bps NP NP • Comp ticket 2.3% 180 bps NP NP eCommerce impact3 ~100 bps ~30 bps NP NP Gross profit rate Decrease -34 bps Decrease -29 bps Operating
Slide 9: Walmart U.S. - quarterly financial highlights
Walmart U.S. - quarterly financial highlights Sales • Comp sales1 increased 4.5% driven by comp ticket growth of 2.3% and comp traffic growth of 2.2%. eCommerce contributed approximately 100 basis points to segment comp sales growth with strength in online grocery and eCommerce home delivery. • On a
Slide 10: Walmart U.S. - quarterly merchandise highlights
Walmart U.S. - quarterly merchandise highlights Category Comp Comments Food and consumables had strong comp sales and traffic throughout Grocery 1 + mid single-digit the quarter, with particular strength in fresh food categories like produce, meat and bakery. Customers continue to respond positively
Slide 11: Walmart International
Walmart International Constant Constant (Amounts in millions) Reported currency1 Reported currency1 Q2 Δ2 Q2 Δ2 YTD 1 Δ2 YTD Δ2 Net sales $29,454 4.0% $29,212 3.1% $59,714 7.7% $57,525 3.8% Gross profit rate Increase 11 bps NP NP Flat — bps NP NP Operating income3 $1,269 -19.1% $1,248 -20.4% $2,534
Slide 12: International - quarterly financial highlights
Walmart International - quarterly financial highlights Sales • Positive comp sales growth in our four largest markets, including: Mexico, U.K., Canada and China. • Easter timing and last year’s wind-down of the first-party portion of our eCommerce business in Brazil were a sales headwind. Gross Marg
Slide 13: International - key market quarterly results
Walmart International - key market quarterly results Comp3 Gross 1,2 Net Operating Country profit Sales Traffic Ticket sales3 3 income3 rate United Kingdom4,5 0.4% -0.5% 0.9% 2.4% Increase Increase Walmex5,6 5.4% 0.5% 4.9% 7.3% Increase Decrease7 Canada 2.6% 1.5% 1.1% 2.8% Decrease Decrease China 1.
Slide 14: International - key market highlights
Walmart International - key market highlights Walmex • Net sales increased 7.3% and comp sales increased 5.4%. • In Mexico specifically, comp sales increased 6.5% or 13.7% on a two-year stacked basis. ◦ Mexico experienced an incremental comp headwind due to the Easter calendar shift. • Comp growth c
Slide 15: International - key market highlights
Walmart International - key market highlights Canada • Net sales increased 2.8%, with comp sales growth of 2.6%. • Gained 60 basis points of market share in food, consumables, and health and wellness for the 12-week period ended July 28th, according to Nielsen. • Gross profit rate declined due to hi
Slide 16: Sam's Club
Sam's Club With fuel Without fuel1 With fuel Without fuel1 (Amounts in millions) Q2 Δ2 Q2 Δ2 YTD Δ2 YTD Δ2 Net sales $14,790 -0.6% $13,293 -3.1% $28,412 -1.6% $25,673 -3.6% Comparable sales3 7.7% 630 bps 5.0% 380 bps 6.5% 430 bps 4.4% 300 bps • Comp traffic NP NP 6.7% 460 bps NP NP NP NP • Comp tick
Slide 17: Sam's Club - quarterly financial highlights
Sam's Club - quarterly financial highlights Sales 1 • Comp sales for the period increased 5.0%, with growth in comp traffic of 6.7%. Tobacco negatively impacted comp sales by 150 basis points, and the transfer of sales from closed clubs contributed approximately half of the comp increase, excluding
Slide 18: Sam's Club - quarterly category highlights
Sam's Club - quarterly category highlights Category Comp Comments Strong performance seen in produce, deli, prepared foods, seafood, and dairy (driven by Fresh / Freezer / Cooler + mid single-digit egg inflation). Assortment optimization across major categories such as water, soda, snacks, coffee, a
Slide 19: Third-party FCPA and compliance-related expenses
Third-party FCPA and compliance-related expenses Q2 YTD (Amounts in millions) FY19 FY18 FY19 FY18 Ongoing inquiries and $5 $7 $8 $20 investigations Global compliance program and 3 5 7 8 organizational enhancements Total $8 $12 $15 $28 • These expenses are included in our Corporate and support expens
Slide 20: Non-GAAP measures - ROI
Non-GAAP measures - ROI We include Return on Assets ("ROA"), which is calculated in accordance with U.S. generally accepted accounting principles ("GAAP") as well as Return on Investment ("ROI") as measures to assess returns on assets. Management believes ROI is a meaningful measure to share with in
Slide 21: Non-GAAP measures - ROI cont.
Non-GAAP measures - ROI cont. The calculation of ROA and ROI, along with a reconciliation of ROI to the calculation of ROA, is as follows: Walmart Inc. Return on Assets and Return on Investment Trailing Twelve Months Trailing Twelve Months Ended July 31, Ended July 31, (Dollars in millions) 2018 201
Slide 22: Non-GAAP measures - free cash flow
Non-GAAP measures - free cash flow We define free cash flow as net cash provided by operating activities in a period minus payments for property and equipment made in that period. We had net cash provided by operating activities of $11.1 billion and $11.4 billion for the three months ended July 31,
Slide 23: Non-GAAP measures - constant currency
Non-GAAP measures - constant currency In discussing our operating results, the term currency exchange rates refers to the currency exchange rates we use to convert the operating results for all countries where the functional currency is not the U.S. dollar into U.S. dollars. We calculate the effect
Slide 24: Non-GAAP measures - adjusted EPS
Non-GAAP measures - adjusted EPS Adjusted diluted earnings per share from continuing operations attributable to Walmart (Adjusted EPS) is considered a non-GAAP financial measure under the SEC's rules because it excludes certain amounts not excluded in the diluted earnings per share from continuing o
Slide 25: Non-GAAP measures - adjusted EPS
Non-GAAP measures - adjusted EPS Percent Percent Three Months Ended July 31, 2018 Change2 Six Months Ended July 31, 2018 Change2 Diluted earnings per share: Reported net loss per share $ -0.29 -130.2% $ 0.43 -78.1% Pre-Tax Tax Net Pre-Tax Tax Net Adjustments: Impact Impact1 Impact Impact Impact1 Imp
Slide 26: Non-GAAP measures - adjusted EPS
Non-GAAP measures - adjusted EPS As previously disclosed in our second quarter ended July 31, 2017 press release, we have calculated Adjusted EPS for the three months ended July 31, 2017 by adjusting EPS for the following: (1) the loss on the early extinguishment of certain debt and (2) the gain on
Slide 27: Non-GAAP measures - adjusted EPS guidance
Non-GAAP measures - adjusted EPS guidance Adjusted EPS Guidance is considered a non-GAAP financial measure. Management believes that Adjusted EPS Guidance for fiscal 2019 is a meaningful metric to share with investors because that metric, which adjusts EPS for certain items recorded in the period, i
Slide 28: Additional resources at stock.walmart.com
Additional resources at stock.walmart.com • Unit counts & square footage • Comparable store sales, including and excluding fuel • Terminology • Fiscal year 2019 earnings dates 28