Walmart Inc. · NASDAQ:WMT
Walmart — Q1 FY2019 Earnings Presentation
28 slides from Walmart's earnings presentation, May 17, 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 and management’s accompanying remarks, including management’s remarks regarding the impact of Walmart’s proposed investment in Flipkart on its earnings per share for the fiscal year ending January 31, 2019, contain statements which may be "forward-
Slide 3: Walmart Inc.
Walmart Inc. (Amounts in millions, except per share data) Q1 $ Δ1 % Δ1 Total revenue $122,690 $5,148 4.4% Total revenue, constant currency2 $120,720 $3,178 2.7% Net sales $121,630 $5,104 4.4% Net sales, constant currency2 $119,683 $3,157 2.7% Membership & other income $1,060 $44 4.3% Operating incom
Slide 4: Walmart Inc.
Walmart Inc. Q1 bps Δ1 Gross profit rate 24.6% -15 bps Operating expenses as a percentage of net 21.2% 11 bps sales Effective tax rate2 19.3% -1,330 bps Debt to total capitalization3 38.0% 60 bps Return on investment4 13.9% -120 bps 1 Basis points change versus prior year comparable period. 2 The de
Slide 5: Walmart Inc.
Walmart Inc. (Amounts in millions) Q1 $ Δ1 % Δ1 Receivables, net $4,568 -$684 -13.0% Inventories $43,303 -$58 -0.1% Accounts payable $44,612 $3,245 7.8% 1 Change versus prior year comparable period. 5
Slide 6: Walmart Inc.
Walmart Inc. (Amounts in millions) Q1 $ Δ1 Operating cash flow 5,161 (224) Capital expenditures 1,818 (172) Free cash flow2 3,343 (52) (Amounts in millions) Q1 % Δ1 Dividends 1,533 (1.0)% Share repurchases3 539 (75.3)% Total $2,072 (44.5)% 1 Change versus prior year comparable period. 2 See press re
Slide 7: Walmart U.S.
Walmart U.S. (Amounts in millions) Q1 Δ1 Net sales $77,748 3.1% Comparable sales2,3 2.1% 70 bps • Comp traffic 0.8% -70 bps • Comp ticket 1.3% 140 bps eCommerce impact3 ~100 bps ~20 bps Gross profit rate Decrease -23 bps Operating expense rate Increase 11 bps Operating income4 $3,927 -3.1% 1 Change
Slide 8: Walmart U.S. - quarterly financial highlights
Walmart U.S. - quarterly financial highlights Sales • Comp sales1 increased 2.1% driven by comp ticket growth of 1.3% and comp traffic growth of 0.8%. eCommerce contributed approximately 100 basis points to segment comp sales growth with strength in home delivery and online grocery. • On a two-year
Slide 9: Walmart U.S. - quarterly merchandise highlights
Walmart U.S. - quarterly merchandise highlights Category Comp Comments Food and consumables had solid comp sales driven by strong Grocery1 + low single-digit customer traffic. Categories like fresh foods and packaged goods were particularly strong due in part to growth in private brands. Branded dru
Slide 10: Walmart International
Walmart International Constant (Amounts in millions) Reported currency1 Q1 Δ2 Q1 Δ2 1 Net sales $30,260 11.7% $28,313 4.5% Gross profit rate Decrease -10 bps NP NP Operating income3 $1,265 11.1% $1,141 0.2% 1 See press release located at www.stock.walmart.com and reconciliations at the end of presen
Slide 11: Walmart International - quarterly financial highlights
Walmart International - quarterly financial highlights Sales • Comp store sales drove growth with 8 of 11 markets delivering positive comp sales. • More than half of the markets delivered comp sales of over 3%. • Easter timing benefited sales, offset by ~$200 million headwind from Suburbia divestitu
Slide 12: Walmart 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 3.4% 0.1% 3.3% 3.7% Decrease Increase Walmex5 9.5% 3.4% 6.1% 9.1% Decrease Increase Canada 2.6% 1.8% 0.8% 2.9% Decrease Decrease China 4.0% 1.4
Slide 13: Walmart International - key market highlights
Walmart International - key market highlights Walmex • Net sales increased 9.1% and comp sales increased 9.5%. • As a reminder, our Q1 results last year included sales through our Suburbia format.1 • In Mexico specifically, comp sales increased 10.0% or 14.1% on a two-year stacked basis. • Comp grow
Slide 14: Walmart International - key market highlights
Walmart International - key market highlights Canada • Net sales increased 2.9%, with comp sales growth of 2.6%. • Gained 70 basis points of market share in food, consumables, and health and wellness for the 12-week period ended April 21, according to Nielsen. • Gross profit rate declined due to hig
Slide 15: Walmart International - key market highlights
Walmart International - key market highlights China • Net sales increased 6.0% and comp sales increased 4.0%. ◦ Walmart and Sam’s Club both had strong positive comps during the quarter. ◦ Fresh continues to perform well delivering double-digit comps in the quarter.. • We continued to expand our offe
Slide 16: Sam's Club
Sam's Club With fuel Without fuel1 (Amounts in millions) Q1 Δ2 Q1 Δ2 Net sales $13,622 -2.7% $12,380 -4.1% Comparable sales3 5.3% 230 bps 3.8% 220 bps • Comp traffic NP NP 5.6% 450 bps • Comp ticket NP NP -1.8% -230 bps eCommerce impact NP NP ~100 bps ~20 bps Gross profit rate Decrease -34 bps Decre
Slide 17: Sam's Club - quarterly financial highlights
Sam's Club - quarterly financial highlights Sales 1 • Comp sales for the period increased 3.8%, with growth in comp traffic of 5.6%. Tobacco negatively impacted comp sales by 140 basis points. • In eCommerce, both Club Pickup and the direct to home business continued to have strong results. • Fresh
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 coffee, breakfast, water, soda
Slide 19: Third-party FCPA and compliance-related expenses
Third-party FCPA and compliance-related expenses Q1 (Amounts in millions) FY19 FY18 Ongoing inquiries and $4 $13 investigations Global compliance program and 3 3 organizational enhancements Total $7 $16 • These expenses are included in our Corporate and support expenses. 19
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 Ended April 30, April 30, (Dollars in millions) 2018 2
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 $5.2 billion and $5.4 billion for the three months ended April 30, 2
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 - comparable sales measures
Non-GAAP measures - comparable sales measures The comparable sales of the company's Walmart U.S. and Sam's Club operating segments for the 13-week periods ended April 27, 2018 and April 28, 2017, in each case calculated by excluding fuel sales for such periods (collectively the "Non-GAAP Comparable
Slide 25: Non-GAAP measures - comparable sales measures cont.
Non-GAAP measures - comparable sales measures cont. The table below reflects the calculation of the Sam's Club fuel impact for net sales and operating income for the three months ended April 30, 2018 and 2017. Three Months Ended April 30, (Dollars in millions) 2018 2017 % Change Sam's Club Net Sales
Slide 26: Non-GAAP measures - adjusted EPS
Non-GAAP measures - adjusted EPS Adjusted EPS Adjusted diluted earnings per share from continuing operations attributable to Walmart (Adjusted EPS) for the three months ended April 30, 2018 is considered a non-GAAP financial measure under the SEC's rules because it excludes certain amounts not exclu
Slide 27: Non-GAAP measures - adjusted EPS
Non-GAAP measures - adjusted EPS We have calculated Adjusted EPS for the three months ended April 30, 2018 by adjusting EPS for the following: (1) unrealized gains and losses on JD.com, and (2) adjustment to the provisional amount recorded in Q4 fiscal 2018 related to Tax Reform. The most directly c
Slide 28: Additional resources at stock.walmart.com
Additional resources at stock.walmart.com • Unit counts & square footage • Comparable store sales • Terminology • Fiscal year 2019 earnings dates 28