Form 8-K Walmart Inc. For: Feb 20
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
February 20, 2018
Walmart Inc.
(Exact Name of Registrant as Specified in Charter)
Delaware | 001-06991 | 71-0415188 |
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
702 S.W. 8th Street
Bentonville, Arkansas 72716
(Address of Principal Executive Offices) (Zip Code)
Registrant’s telephone number, including area code:
(479) 273-4000
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Item 2.02. Results of Operations and Financial Condition.
In accordance with Item 2.02 of Form 8-K of the Securities and Exchange Commission (the "SEC"), Walmart Inc., a Delaware corporation (the "Company"), is furnishing to the SEC a press release that the Company will issue on February 20, 2018 (the "Press Release") and a financial presentation that will be first posted by the Company on the Company’s website at http://stock.walmart.com on February 20, 2018 (the "Financial Presentation"). The Press Release and the Financial Presentation will disclose information regarding the Company's results of operations for the three and twelve months ended January 31, 2018, and the Company's financial condition as of January 31, 2018.
In accordance with General Instruction B.2 of Form 8-K, the information in this Item 2.02 of this Current Report on Form 8-K, including Exhibits 99.1 and 99.2 hereto, which are furnished herewith pursuant to and relate to this Item 2.02, shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise be subject to the liabilities of Section 18 of the Exchange Act. The information in this Item 2.02 of this Current Report on Form 8-K and Exhibits 99.1 and 99.2 hereto shall not be incorporated by reference into any filing or other document filed by the Company with the SEC pursuant to the Securities Act of 1933, as amended, the rules and regulations of the SEC thereunder, the Exchange Act, or the rules and regulations of the SEC thereunder, except as shall be expressly set forth by specific reference in such filing or document.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
The following documents are furnished as exhibits to this Current Report on Form 8-K: | ||
99.1 | ||
99.2 | ||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: February 20, 2018
WALMART INC. | |
By: | /s/ M. Brett Biggs |
Name: | M. Brett Biggs |
Title: | Executive Vice President and Chief Financial Officer |
Walmart U.S. Q4 comps1 grew 2.6% and Walmart U.S. eCommerce sales grew 23%,
Walmart U.S. full year comps1 grew 2.1% and Walmart U.S. eCommerce sales grew 44%,
Fiscal year 2018 GAAP EPS of $3.28; Adjusted EPS2 of $4.42,
Company expects fiscal 2019 EPS of $4.75 to $5.00
Fourth-quarter highlights
 | GAAP EPS was $0.73 and adjusted EPS2 was $1.33. | "We have good momentum in the business with solid sales growth across Walmart U.S., Sam's Club and International. We're making real progress putting our unique assets to work to serve customers in all the ways they want to shop, and I want to thank our associates for their great work this past year. We're making decisions to position the business for success and investing to win with customers and shareholders." Doug McMillon President and CEO, Walmart | ||
| Total revenue was $136.3 billion, an increase of $5.3 billion, or 4.1%. Excluding currency2, total revenue was $135.1 billion, an increase of $4.1 billion, or 3.1%. | |||
| Walmart U.S. comp sales1,2 increased 2.6%, and comp traffic increased 1.6%. On a two-year stack, comp sales growth of 4.4% marked the best performance in eight years. | |||
| eCommerce sales and GMV3 at Walmart U.S. increased 23% and 24%, respectively. | |||
| Sam's Club comp sales, excluding fuel2, increased 2.4% led by comp traffic growth of 4.3%. | |||
| Net sales at Walmart International were $33.1 billion, an increase of 6.7%. Excluding currency2, net sales were $31.9 billion, an increase of 2.8%. Nine of eleven markets posted positive comp sales, including our four largest markets. | |||
| Consolidated operating income was $4.5 billion, a decrease of 28%. Excluding the impact of discrete charges detailed in this press release, operating income would have decreased less than 1.0 percent. | |||
Fiscal 2018 highlights
 | Total revenue was $500.3 billion, an increase of $14.5 billion, or 3.0%. Excluding currency2, total revenue was $500.9 billion, an increase of $15.1 billion, or 3.1%. | ||||
| eCommerce sales and GMV3 at Walmart U.S. increased 44% and 47%, respectively. | ||||
| Consolidated operating income was $20.4 billion, a decrease of 10.2%. Excluding the impact of discrete charges detailed in this press release, operating income would have been relatively flat. | ||||
| The company generated $28.3 billion in operating cash flow and returned $14.4 billion to shareholders through dividends and share repurchases. | ||||
Key results
(Amounts in billions, except as noted. Dollar and percentage changes may not recalculate due to rounding.)
| Q4 FY18 | Q4 FY17 | Change | FY18 | FY17 | Change | ||||
Revenue | $136.3 | $130.9 | $5.3 | 4.1% | $500.3 | $485.9 | $14.5 | 3.0% | ||
Revenue (constant currency)2 | $135.1 | $130.9 | $4.1 | 3.1% | $500.9 | $485.9 | $15.1 | 3.1% | ||
Operating income | $4.5 | $6.2 | -$1.7 | -28.0% | $20.4 | $22.8 | -$2.3 | -10.2% | ||
Operating income (constant currency)2 | $4.4 | $6.2 | -$1.8 | -29.3% | $20.5 | $22.8 | -$2.3 | -9.9% | ||
1 Represents Walmart U.S. comparable sales excluding fuel. Including fuel, Walmart U.S. comparable sales grew 2.7% and 2.2% for Q4 and the full year, respectively.
2 See additional information at the end of this release regarding non-GAAP financial measures.
3 GMV represents the total U.S. dollar volume of merchandise sold or services rendered for all transactions, including marketplace transactions, that are generally initiated through our eCommerce platforms or include our owned inventory sold on other third party platforms.
NYSE: WMT | February 20, 2018 | stock.walmart.com |
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Free Cash Flow | FY18 | $ Change | Returns to Shareholders | FY18 | % Change | |
Operating cash flow | $28.3 | -$3.3 | Dividends | $6.1 | -1.5% | |
Capital expenditures | $10.1 | -$0.6 | Share repurchases3 | $8.3 | 0.0% | |
Free cash flow2 | $18.3 | -$2.8 | Total | $14.4 | -0.6% | |
Tax Reform
On December 22, 2017, the 2017 Tax Cuts and Jobs Act (the "Tax Act") was enacted into law and contains several key tax provisions that affected us, including a one-time mandatory transition tax on accumulated foreign earnings and a reduction of the U.S. corporate income tax rate to 21 percent, effective January 1, 2018. The Securities and Exchange Commission (SEC) staff subsequently issued Staff Accounting Bulletin No. 118 (SAB 118), allowing companies to record provisional amounts during a measurement period not to extend beyond one year of the enactment date while the accounting impact is still under analysis. We are currently analyzing the accounting impact of the Tax Act, but our analysis is incomplete. As a result, we have recorded a provisional benefit of $207 million for both the fourth quarter and full year. We expect to complete our work within the allowed measurement period.
Fiscal 2019 Full Year Guidance
The following guidance reflects the company's expectations for full year fiscal 2019.
• | Comp sales for the 52-week period ending Jan. 25, 2019: |
◦ | Walmart U.S. (ex. fuel1): at least +2.0% |
◦ | Sam's Club (ex. fuel & tobacco1): +3.0% to +4.0% |
▪ | Excludes tobacco, which represents a negative impact to comp sales of approximately 400 basis points |
• | Consolidated net sales growth in constant currency of 1.5% to 2.0%, negatively impacted by: |
◦ | Sam's Club closures and the decision to remove tobacco from certain clubs |
◦ | Decision to wind-down first-party eCommerce business in Brazil and the divestiture of Suburbia |
• | Walmart U.S. eCommerce sales growth: approximately 40% |
• | EPS: $4.75 to $5.00, including a benefit of approximately $0.05 from currency based on current rates |
• | Capital expenditures: approximately $11.0 billion |
• | Effective tax rate: between 24% and 26% |
Segment results | |
(Amounts in billions, except as noted. Dollar and percentage changes may not recalculate due to rounding.)
 U.S. | Q4 FY18 | Q4 FY17 | Change | FY18 | FY17 | Change | |||||
Net sales | $86.6 | $83.7 | $2.8 | 3.4% | $318.5 | $307.8 | $10.6 | 3.5% | |||
Comp sales (ex. fuel)1,2 | 2.6% | 1.8% | 80 bps | N/A | 2.1% | 1.4% | 70 bps | N/A | |||
| Traffic | 1.6% | 1.4% | 20 bps | N/A | NP | NP | NP | NP | ||
| Ticket | 1.0% | 0.4% | 60 bps | N/A | NP | NP | NP | NP | ||
| eCommerce | ~60 bps | ~40 bps | ~20 bps | N/A | NP | NP | NP | NP | ||
Operating income | $5.0 | $5.0 | $— | -0.9% | $17.9 | $17.7 | $0.1 | 0.7% | |||
1 See additional information at the end of this release regarding non-GAAP financial measures.
2 13-week period ended Jan. 26, 2018, compared to 13-week period ended Jan. 27, 2017, and excludes fuel.
3 $18.8 billion remaining of $20 billion authorization approved in October 2017. The company repurchased approximately 105 million shares in fiscal 2018.
NYSE: WMT | February 20, 2018 | stock.walmart.com |
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 | Q4 FY18 | Q4 FY17 | Change | FY18 | FY17 | Change | ||||
Net sales | $33.1 | $31.0 | $2.1 | 6.7% | $118.1 | $116.1 | $1.9 | 1.7% | ||
Net sales (constant currency)1 | $31.9 | $31.0 | $0.9 | 2.8% | $118.6 | $116.1 | $2.5 | 2.1% | ||
Operating income | $1.3 | $1.5 | -$0.2 | -10.9% | $5.4 | $5.8 | -$0.4 | -7.1% | ||
Operating income (constant currency)1 | $1.3 | $1.5 | -$0.2 | -16.1% | $5.4 | $5.8 | -$0.3 | -5.9% | ||
 | Q4 FY18 | Q4 FY17 | Change | FY18 | FY17 | Change | ||||||
Net sales | $15.5 | $15.0 | $0.5 | 3.3% | $59.2 | $57.4 | $1.9 | 3.2% | ||||
Comp sales (ex. fuel)1,2 | 2.4% | 2.4% | 0 bps | N/A | 2.0% | 1.1% | 90 bps | N/A | ||||
| Traffic | 4.3% | 1.2% | 310 bps | N/A | NP | NP | NP | NP | |||
| Ticket | -1.9% | 1.2% | -310 bps | N/A | NP | NP | NP | NP | |||
| eCommerce | ~80 bps | ~80 bps | ~0 bps | N/A | NP | NP | NP | NP | |||
Operating income | -$0.3 | $0.4 | -$0.7 | -172.6% | $1.0 | $1.7 | -$0.7 | -41.2% | ||||
Net EPS impact of discrete items
The net EPS impact of certain discrete items included in the company's reported fourth quarter and fiscal year results was -$0.601 and -$1.141 per share, respectively. The discrete items and the respective EPS impact, net of tax1, included in the reported results were as follows:
Q4 fiscal year 2018, net of tax3 | |||
= | Restructuring charges4 | -0.28 | |
= | Loss on extinguishment of debt | -0.21 | |
= | Asset impairments and write-offs5 | -0.12 | |
= | Associate lump sum bonus | -0.09 | |
= | U.S. tax reform benefit | 0.07 | |
= | Legal settlement recovery | 0.03 | |
-0.60 | |||
Fiscal year 2018, net of tax3 | |||
= | Loss on extinguishment of debt | -0.67 | |
= | Restructuring charges4 | -0.28 | |
= | Asset impairments and write-offs5 | -0.16 | |
= | FCPA accrual | -0.09 | |
= | Associate lump sum bonus | -0.09 | |
= | U.S. tax reform benefit | 0.07 | |
= | Gain on sale of Suburbia | 0.05 | |
= | Legal settlement recovery | 0.03 | |
-1.14 | |||
During fiscal year 2017, the net impact to EPS from discrete items included in the company's reported fourth quarter and full year results from continuing operations was -$0.081 and $0.061 per share. [Note: Details provided in press release issued Feb. 21, 2017.]
1 See additional information at the end of this release regarding non-GAAP financial measures.
2 13-week period ended Jan. 26, 2018, compared to 13-week period ended Jan. 27, 2017, and excludes fuel.
3 Calculated based on nature of item and statutory rate in effect for relevant jurisdiction.
4 Restructuring charges include $0.20 for restructurings in the U.S., primarily relating to Sam's Club store closures and Home Office severance, and $0.08 for Walmart International, primarily due to the winding down of the first party Brazil eCommerce operations.
5 Asset impairments and write-offs for Q4 include $0.08 of impairment charges due to decisions to discontinue certain real estate projects at Walmart U.S. and Sam's Club and technology assets at Corporate, and $0.04 for the write-off of certain assets at Walmart International. Fiscal year 2018 also includes $0.04 related to our Q3 decision to exit certain properties in a Walmart International market.
NYSE: WMT | February 20, 2018 | stock.walmart.com |
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Walmart Inc. (NYSE: WMT) helps people around the world save money and live better - anytime and anywhere - in retail stores, online, and through their mobile devices. Each week, nearly 270 million customers and members visit our more than 11,700 stores under 59 banners in 28 countries and eCommerce websites. With fiscal year 2018 revenue of $500.3 billion, Walmart employs approximately 2.3 million associates worldwide. Walmart continues to be a leader in sustainability, corporate philanthropy and employment opportunity. Additional information about Walmart can be found by visiting http://corporate.walmart.com, on Facebook at http://facebook.com/walmart and on Twitter at http://twitter.com/walmart.
Investor Relations contact
Steve Schmitt (479) 258-7172
Media Relations contact
Randy Hargrove (800) 331-0085
###
NYSE: WMT | February 20, 2018 | stock.walmart.com |
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Forward-Looking Statements |
This release contains statements as to Walmart management's guidance regarding earnings per share, consolidated net sales growth, Walmart U.S. eCommerce sales growth, capital expenditures and Walmart's effective tax rate for the fiscal year ending January 31, 2019, and Walmart U.S.'s comparable sales (excluding fuel) and Sam's Club's comparable sales (excluding fuel and tobacco) for the 52 weeks ending January 25, 2019. Walmart believes such statements are "forward-looking statements" as defined in, and are intended to enjoy the protection of the safe harbor for forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Assumptions on which such forward-looking statements are based are also forward-looking statements. Walmart's actual results may differ materially from the guidance provided as a result of changes in circumstances, assumptions not being realized or other risks, uncertainties and factors including:
• | economic, geo-political, capital markets and business conditions, trends and events around the world and in the markets in which Walmart operates; |
• | currency exchange rate fluctuations, changes in market interest rates and commodity prices; |
• | unemployment levels; |
• | competitive pressures; |
• | inflation or deflation, generally and in particular product categories; |
• | consumer confidence, disposable income, credit availability, spending levels, shopping patterns, debt |
levels and demand for certain merchandise;
• | consumer enrollment in health and drug insurance programs and such programs' reimbursement rates; |
• | the amount of Walmart's net sales denominated in the U.S. dollar and various foreign currencies; |
• | the impact of acquisitions, investments, divestitures, store or club closures, and other strategic decisions; |
• | Walmart's ability to successfully integrate acquired businesses, including within the eCommerce space; |
• | Walmart's effective tax rate and the factors affecting Walmart's effective tax rate, including assessments of certain tax contingencies, valuation allowances, changes in law (including the Tax Act), administrative audit outcomes, impact of discrete items and the mix of earnings between the U.S. and Walmart's international operations; |
• | customer traffic and average ticket in Walmart's stores and clubs and on its eCommerce websites; |
• | the mix of merchandise Walmart sells, the cost of goods it sells and the shrinkage it experiences; |
• | the amount of Walmart's total sales and operating expenses in the various markets in which it operates; |
• | transportation, energy and utility costs and the selling prices of gasoline and diesel fuel; |
• | supply chain disruptions and disruptions in seasonal buying patterns; |
• | consumer acceptance of and response to Walmart's stores, clubs, digital platforms, programs, merchandise offerings and delivery methods; |
• | cyber security events affecting Walmart and related costs; |
• | developments in, outcomes of, and costs incurred in legal or regulatory proceedings to which Walmart is a party; |
• | casualty and accident-related costs and insurance costs; |
• | the turnover in Walmart's workforce and labor costs, including healthcare and other benefit costs; |
• | changes in accounting estimates or judgments; |
• | changes in existing tax, labor and other laws and regulations and changes in tax rates, trade agreements, |
• | trade restrictions and tariff rates; |
• | the level of public assistance payments; |
• | natural disasters, public health emergencies, civil disturbances, and terrorist attacks; and |
• | Walmart's expenditures for Foreign Corrupt Practices Act "FCPA" and other compliance related costs, including the adequacy of the accrual with respect to this matter made in the third quarter of the fiscal year ending January 31, 2018. |
Such risks, uncertainties and factors also include the risks relating to our operations and financial performance discussed in our filings with the SEC. You should read this release in conjunction with our Annual Report on Form 10-K for the year ended January 31, 2017, and our subsequently filed Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. You should consider all of the risks, uncertainties and other factors identified above and in those SEC reports carefully when evaluating the forward-looking statements in this release. We cannot assure you that the future results reflected in or implied by any such forward-looking statement will be realized or, even if substantially realized, will have the forecasted or expected consequences and effects for or on our operations or financial performance. Such forward-looking statements are made as of the date of this release, and Walmart undertakes no obligation to update such statements to reflect subsequent events or circumstances.
6
Walmart Inc.
Condensed Consolidated Statements of Income
(Unaudited)
Quarters Ended | Fiscal Years Ended | |||||||||||||||||||||
January 31, | January 31, | |||||||||||||||||||||
(Amounts in millions, except per share data) | 2018 | 2017 | Percent Change | 2018 | 2017 | Percent Change | ||||||||||||||||
Revenues: | ||||||||||||||||||||||
Net sales | $ | 135,150 | $ | 129,750 | 4.2 | % | $ | 495,761 | $ | 481,317 | 3.0 | % | ||||||||||
Membership and other income | 1,117 | 1,186 | (5.8 | )% | 4,582 | 4,556 | 0.6 | % | ||||||||||||||
Total revenues | 136,267 | 130,936 | 4.1 | % | 500,343 | 485,873 | 3.0 | % | ||||||||||||||
Costs and expenses: | ||||||||||||||||||||||
Cost of sales | 102,640 | 97,743 | 5.0 | % | 373,396 | 361,256 | 3.4 | % | ||||||||||||||
Operating, selling, general and administrative expenses | 29,160 | 26,988 | 8.0 | % | 106,510 | 101,853 | 4.6 | % | ||||||||||||||
Operating income | 4,467 | 6,205 | (28.0 | )% | 20,437 | 22,764 | (10.2 | )% | ||||||||||||||
Interest: | ||||||||||||||||||||||
Debt | 448 | 508 | (11.8 | )% | 1,978 | 2,044 | (3.2 | )% | ||||||||||||||
Capital lease and financing obligations | 88 | 77 | 14.3 | % | 352 | 323 | 9.0 | % | ||||||||||||||
Interest income | (37 | ) | (30 | ) | 23.3 | % | (152 | ) | (100 | ) | 52.0 | % | ||||||||||
Interest, net | 499 | 555 | (10.1 | )% | 2,178 | 2,267 | (3.9 | )% | ||||||||||||||
Loss on extinguishment of debt | 1,004 | — | N/A | 3,136 | — | N/A | ||||||||||||||||
Income before income taxes | 2,964 | 5,650 | (47.5 | )% | 15,123 | 20,497 | (26.2 | )% | ||||||||||||||
Provision for income taxes | 601 | 1,664 | (63.9 | )% | 4,600 | 6,204 | (25.9 | )% | ||||||||||||||
Consolidated net income | 2,363 | 3,986 | (40.7 | )% | 10,523 | 14,293 | (26.4 | )% | ||||||||||||||
Consolidated net income attributable to noncontrolling interest | (188 | ) | (229 | ) | (17.9 | )% | (661 | ) | (650 | ) | 1.7 | % | ||||||||||
Consolidated net income attributable to Walmart | $ | 2,175 | $ | 3,757 | (42.1 | )% | $ | 9,862 | $ | 13,643 | (27.7 | )% | ||||||||||
Net income per common share: | ||||||||||||||||||||||
Basic net income per common share attributable to Walmart | $ | 0.74 | $ | 1.23 | (39.8 | )% | $ | 3.29 | $ | 4.40 | (25.2 | )% | ||||||||||
Diluted net income per common share attributable to Walmart | $ | 0.73 | $ | 1.22 | (40.2 | )% | $ | 3.28 | $ | 4.38 | (25.1 | )% | ||||||||||
Weighted-average common shares outstanding: | ||||||||||||||||||||||
Basic | 2,959 | 3,065 | 2,995 | 3,101 | ||||||||||||||||||
Diluted | 2,978 | 3,077 | 3,010 | 3,112 | ||||||||||||||||||
Dividends declared per common share | $ | — | $ | — | $ | 2.04 | $ | 2.00 | ||||||||||||||
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Walmart Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
January 31, | January 31, | |||||||
(Amounts in millions) | 2018 | 2017 | ||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 6,756 | $ | 6,867 | ||||
Receivables, net | 5,614 | 5,835 | ||||||
Inventories | 43,783 | 43,046 | ||||||
Prepaid expenses and other | 3,511 | 1,941 | ||||||
Total current assets | 59,664 | 57,689 | ||||||
Property and equipment: | ||||||||
Property and equipment | 185,154 | 179,492 | ||||||
Less accumulated depreciation | (77,479 | ) | (71,782 | ) | ||||
Property and equipment, net | 107,675 | 107,710 | ||||||
Property under capital lease and financing obligations: | ||||||||
Property under capital lease and financing obligations | 12,703 | 11,637 | ||||||
Less accumulated amortization | (5,560 | ) | (5,169 | ) | ||||
Property under capital lease and financing obligations, net | 7,143 | 6,468 | ||||||
Goodwill | 18,242 | 17,037 | ||||||
Other assets and deferred charges | 11,798 | 9,921 | ||||||
Total assets | $ | 204,522 | $ | 198,825 | ||||
LIABILITIES AND EQUITY | ||||||||
Current liabilities: | ||||||||
Short-term borrowings | $ | 5,257 | $ | 1,099 | ||||
Accounts payable | 46,092 | 41,433 | ||||||
Accrued liabilities | 22,122 | 20,654 | ||||||
Accrued income taxes | 645 | 921 | ||||||
Long-term debt due within one year | 3,738 | 2,256 | ||||||
Capital lease and financing obligations due within one year | 667 | 565 | ||||||
Total current liabilities | 78,521 | 66,928 | ||||||
Long-term debt | 30,045 | 36,015 | ||||||
Long-term capital lease and financing obligations | 6,780 | 6,003 | ||||||
Deferred income taxes and other | 8,354 | 9,344 | ||||||
Commitments and contingencies | ||||||||
Equity: | ||||||||
Common stock | 295 | 305 | ||||||
Capital in excess of par value | 2,648 | 2,371 | ||||||
Retained earnings | 85,107 | 89,354 | ||||||
Accumulated other comprehensive loss | (10,181 | ) | (14,232 | ) | ||||
Total Walmart shareholders’ equity | 77,869 | 77,798 | ||||||
Nonredeemable noncontrolling interest | 2,953 | 2,737 | ||||||
Total equity | 80,822 | 80,535 | ||||||
Total liabilities and equity | $ | 204,522 | $ | 198,825 | ||||
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Walmart Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Fiscal Years Ended | ||||||||
January 31, | ||||||||
(Amounts in millions) | 2018 | 2017 | ||||||
Cash flows from operating activities: | ||||||||
Consolidated net income | $ | 10,523 | $ | 14,293 | ||||
Adjustments to reconcile consolidated net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 10,529 | 10,080 | ||||||
Deferred income taxes | (304 | ) | 761 | |||||
Loss on extinguishment of debt | 3,136 | — | ||||||
Other operating activities | 1,210 | 206 | ||||||
Changes in certain assets and liabilities, net of effects of acquisitions: | ||||||||
Receivables, net | (1,074 | ) | (402 | ) | ||||
Inventories | (140 | ) | 1,021 | |||||
Accounts payable | 4,086 | 3,942 | ||||||
Accrued liabilities | 928 | 1,280 | ||||||
Accrued income taxes | (557 | ) | 492 | |||||
Net cash provided by operating activities | 28,337 | 31,673 | ||||||
Cash flows from investing activities: | ||||||||
Payments for property and equipment | (10,051 | ) | (10,619 | ) | ||||
Proceeds from the disposal of property and equipment | 378 | 456 | ||||||
Proceeds from disposal of certain operations | 1,046 | 662 | ||||||
Purchase of available for sale securities | — | (1,901 | ) | |||||
Business acquisitions, net of cash acquired | (375 | ) | (2,463 | ) | ||||
Other investing activities | (58 | ) | (122 | ) | ||||
Net cash used in investing activities | (9,060 | ) | (13,987 | ) | ||||
Cash flows from financing activities: | ||||||||
Net change in short-term borrowings | 4,148 | (1,673 | ) | |||||
Proceeds from issuance of long-term debt | 7,476 | 137 | ||||||
Repayments of long-term debt | (13,061 | ) | (2,055 | ) | ||||
Premiums paid to extinguish debt | (3,059 | ) | — | |||||
Dividends paid | (6,124 | ) | (6,216 | ) | ||||
Purchase of Company stock | (8,296 | ) | (8,298 | ) | ||||
Dividends paid to noncontrolling interest | (690 | ) | (479 | ) | ||||
Purchase of noncontrolling interest | (8 | ) | (90 | ) | ||||
Other financing activities | (261 | ) | (398 | ) | ||||
Net cash used in financing activities | (19,875 | ) | (19,072 | ) | ||||
Effect of exchange rates on cash and cash equivalents | 487 | (452 | ) | |||||
Net increase (decrease) in cash and cash equivalents | (111 | ) | (1,838 | ) | ||||
Cash and cash equivalents at beginning of year | 6,867 | 8,705 | ||||||
Cash and cash equivalents at end of period | $ | 6,756 | $ | 6,867 | ||||
9
Walmart Inc.
Supplemental Financial Information
(Unaudited)
Net sales and operating income
Net Sales | Operating Income | ||||||||||||||||
Three Months Ended | Three Months Ended | ||||||||||||||||
January 31, | January 31, | ||||||||||||||||
(dollars in millions) | 2018 | 2017 | Percent Change | 2018 | 2017 | Percent Change | |||||||||||
Walmart U.S. | $ | 86,579 | $ | 83,747 | 3.4 | % | $ | 4,952 | $ | 4,995 | -0.9 | % | |||||
Walmart International | 33,092 | 31,025 | 6.7 | % | 1,348 | 1,513 | -10.9 | % | |||||||||
Sam's Club | 15,479 | 14,978 | 3.3 | % | -283 | 390 | -172.6 | % | |||||||||
Corporate and support | — | — | N/A | -1,550 | -693 | 123.7 | % | ||||||||||
Consolidated | $ | 135,150 | $ | 129,750 | 4.2 | % | $ | 4,467 | $ | 6,205 | -28.0 | % | |||||
Net Sales | Operating Income | ||||||||||||||||
Fiscal Years Ended | Fiscal Years Ended | ||||||||||||||||
January 31, | January 31, | ||||||||||||||||
(dollars in millions) | 2018 | 2017 | Percent Change | 2018 | 2017 | Percent Change | |||||||||||
Walmart U.S. | $ | 318,477 | $ | 307,833 | 3.5 | % | $ | 17,869 | $ | 17,745 | 0.7 | % | |||||
Walmart International | 118,068 | 116,119 | 1.7 | % | 5,352 | 5,758 | -7.1 | % | |||||||||
Sam's Club | 59,216 | 57,365 | 3.2 | % | 982 | 1,671 | -41.2 | % | |||||||||
Corporate and support | — | — | 0.0 | % | -3,766 | -2,410 | 56.3 | % | |||||||||
Consolidated | $ | 495,761 | $ | 481,317 | 3.0 | % | $ | 20,437 | $ | 22,764 | -10.2 | % | |||||
U.S. comparable sales results
With Fuel | Without Fuel1 | Fuel Impact | ||||||||||
13 Weeks Ended | 13 Weeks Ended | 13 Weeks Ended | ||||||||||
1/26/2018 | 1/27/2017 | 1/26/2018 | 1/27/2017 | 1/26/2018 | 1/27/2017 | |||||||
Walmart U.S. | 2.7% | 1.8% | 2.6% | 1.8% | 0.1% | 0.0% | ||||||
Sam's Club | 3.6% | 3.1% | 2.4% | 2.4% | 1.2% | 0.7% | ||||||
Total U.S. | 2.8% | 2.0% | 2.6% | 1.9% | 0.2% | 0.1% | ||||||
With Fuel | Without Fuel1 | Fuel Impact | ||||||||||
52 Weeks Ended | 52 Weeks Ended | 52 Weeks Ended | ||||||||||
1/26/2018 | 1/27/2017 | 1/26/2018 | 1/27/2017 | 1/26/2018 | 1/27/2017 | |||||||
Walmart U.S. | 2.2% | 1.4% | 2.1% | 1.4% | 0.1% | 0.0% | ||||||
Sam's Club | 3.0% | 0.2% | 2.0% | 1.1% | 1.0% | -0.9% | ||||||
Total U.S. | 2.3% | 1.2% | 2.1% | 1.3% | 0.2% | -0.1% | ||||||
1 See additional information at the end of this release regarding non-GAAP financial measures.
10
Walmart Inc.
Reconciliations of and Other Information Regarding Non-GAAP Financial Measures
(Unaudited)
The following information provides reconciliations of certain non-GAAP financial measures presented in the press release to which this reconciliation is attached to the most directly comparable financial measures calculated and presented in accordance with generally accepted accounting principles (GAAP). The company has provided the non-GAAP financial information presented in the press release, which is not calculated or presented in accordance with GAAP, as information supplemental and in addition to the financial measures presented in the press release that are calculated and presented in accordance with GAAP. Such non-GAAP financial measures should not be considered superior to, as a substitute for or alternative to, and should be considered in conjunction with, the GAAP financial measures presented in the press release. The non-GAAP financial measures in the press release may differ from similar measures used by other companies.
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 of changes in currency exchange rates as the difference between current period activity translated using the current period's currency exchange rates, and the comparable prior year period's currency exchange rates. Throughout our discussion, we refer to the results of this calculation as the impact of currency exchange rate fluctuations. When we refer to constant currency operating results, this means operating results without the impact of the currency exchange rate fluctuations. The disclosure of constant currency amounts or results permits investors to better understand Walmart's underlying performance without the effects of currency exchange rate fluctuations.
The table below reflects the calculation of constant currency for total revenues, net sales and operating income for the three and twelve months ended January 31, 2018.
Three Months Ended January 31, | Twelve Months Ended January 31, | ||||||||||||||||||||||
Walmart International | Consolidated | Walmart International | Consolidated | ||||||||||||||||||||
(Dollars in millions) | 2018 | Percent Change1 | 2018 | Percent Change1 | 2018 | Percent Change1 | 2018 | Percent Change1 | |||||||||||||||
Total revenues: | |||||||||||||||||||||||
As reported | $ | 33,455 | 6.1 | % | $ | 136,267 | 4.1 | % | $ | 119,763 | 1.4 | % | $ | 500,343 | 3.0 | % | |||||||
Currency exchange rate fluctuations | -1,208 | N/A | -1,208 | N/A | 582 | N/A | 582 | N/A | |||||||||||||||
Constant currency total revenues | $ | 32,247 | 2.3 | % | $ | 135,059 | 3.1 | % | $ | 120,345 | 1.9 | % | $ | 500,925 | 3.1 | % | |||||||
Net sales: | |||||||||||||||||||||||
As reported | $ | 33,092 | 6.7 | % | $ | 135,150 | 4.2 | % | $ | 118,068 | 1.7 | % | $ | 495,761 | 3.0 | % | |||||||
Currency exchange rate fluctuations | -1,197 | N/A | -1,197 | N/A | 542 | N/A | 542 | N/A | |||||||||||||||
Constant currency net sales | $ | 31,895 | 2.8 | % | $ | 133,953 | 3.2 | % | $ | 118,610 | 2.1 | % | $ | 496,303 | 3.1 | % | |||||||
Operating income: | |||||||||||||||||||||||
As reported | $ | 1,348 | -10.9 | % | $ | 4,467 | -28.0 | % | $ | 5,352 | -7.1 | % | $ | 20,437 | -10.2 | % | |||||||
Currency exchange rate fluctuations | -78 | N/A | -78 | N/A | 68 | N/A | 67 | N/A | |||||||||||||||
Constant currency operating income | $ | 1,270 | -16.1 | % | $ | 4,389 | -29.3 | % | $ | 5,420 | -5.9 | % | $ | 20,504 | -9.9 | % | |||||||
1 Change versus prior year comparable period.
11
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 $28.3 billion and $31.7 billion for the twelve months ended January 31, 2018 and 2017, respectively. We generated free cash flow of $18.3 billion and $21.1 billion for the twelve months ended January 31, 2018 and 2017, respectively. The decreases in net cash provided by operating activities and free cash flow were due to the timing of tax and other payments, as well as lapping prior year's improvements in working capital management.
Free cash flow is considered a non-GAAP financial measure. Management believes, however, that free cash flow, which measures our ability to generate additional cash from our business operations, is an important financial measure for use in evaluating the company's financial performance. Free cash flow should be considered in addition to, rather than as a substitute for, consolidated net income as a measure of our performance and net cash provided by operating activities as a measure of our liquidity.
Additionally, Walmart's definition of free cash flow is limited, in that it does not represent residual cash flows available for discretionary expenditures, due to the fact that the measure does not deduct the payments required for debt service and other contractual obligations or payments made for business acquisitions. Therefore, we believe it is important to view free cash flow as a measure that provides supplemental information to our Consolidated Statements of Cash Flows.
Although other companies report their free cash flow, numerous methods may exist for calculating a company's free cash flow. As a result, the method used by Walmart's management to calculate our free cash flow may differ from the methods used by other companies to calculate their free cash flow.
The following table sets forth a reconciliation of free cash flow, a non-GAAP financial measure, to net cash provided by operating activities, which we believe to be the GAAP financial measure most directly comparable to free cash flow, as well as information regarding net cash used in investing activities and net cash used in financing activities.
Fiscal Years Ended | ||||||||
January 31, | ||||||||
(Dollars in millions) | 2018 | 20171 | ||||||
Net cash provided by operating activities | $ | 28,337 | $ | 31,673 | ||||
Payments for property and equipment (capital expenditures) | -10,051 | -10,619 | ||||||
Free cash flow | $ | 18,286 | $ | 21,054 | ||||
Net cash used in investing activities2 | $ | -9,060 | $ | -13,987 | ||||
Net cash used in financing activities | -19,875 | -19,072 | ||||||
1 Reclassifications made due to the adoption of ASU 2016-09, Improvements to Employee Share-Based Payment Accounting.
2 "Net cash used in investing activities" includes payments for property and equipment, which is also included in our computation of free cash flow.
12
Adjusted EPS
Adjusted diluted earnings per share from continuing operations attributable to Walmart (Adjusted EPS) for each of the three months and fiscal years ended January 31, 2018 and 2017 is considered a non-GAAP financial measure under the SEC's rules because the Adjusted EPS for each such period excludes certain amounts not excluded in the diluted earnings per share from continuing operations attributable to Walmart calculated in accordance with GAAP (EPS) for such periods. Management believes that the Adjusted EPS for each of the three months and fiscal years ended January 31, 2018 and 2017 is a meaningful measure to share with investors because each measure, which adjusts EPS for such periods for certain items recorded in such periods, is the measure that best allows comparison of the performance for the comparable period. In addition, Adjusted EPS affords investors a view of what management considers Walmart's core earnings performance for each of the three months and fiscal years ended January 31, 2018 and 2017 and also affords investors the ability to make a more informed assessment of such core earnings performance for the comparable periods.
We have calculated Adjusted EPS for the three months and fiscal year ended January 31, 2018 by adjusting EPS for the following: (1) restructuring charges, (2) losses on the early extinguishment of certain debt, (3) asset impairments and write-offs, (4) U.S. associate lump sum bonuses, (5) the impact of U.S. tax reform, (6) a legal settlement recovery and, for the fiscal year ended January 31, 2018 only, the (7) the FCPA accrual based on discussions with government agencies regarding the possible resolution of the FCPA matter and (8) the gain on sale of Suburbia.
Adjusted EPS for the three months ended January 31, 2018 is a non-GAAP financial measure. The most directly comparable financial measure calculated in accordance with GAAP is EPS for the three months ended January 31, 2018.
Three Months Ended January 31, 2018 | ||||||
Diluted earnings per share: | ||||||
Reported EPS | $0.73 | |||||
Adjustments: | Pre-Tax Impact | Tax Impact1 | Net Impact | |||
Restructuring charges2 | $0.40 | -$0.12 | $0.28 | |||
Loss on extinguishment of debt | 0.34 | -0.13 | 0.21 | |||
Asset impairments and write-offs3 | 0.18 | -0.06 | 0.12 | |||
Associate lump sum bonus | 0.15 | -0.06 | 0.09 | |||
U.S. tax reform benefit | — | -0.07 | -0.07 | |||
Legal settlement recovery | -0.05 | 0.02 | -0.03 | |||
Net adjustments | $0.60 | |||||
Adjusted EPS | $1.33 | |||||
1 Calculated based on nature of item and statutory rate in effect for relevant jurisdiction.
2 Restructuring charges include $0.20 for restructurings in the U.S., primarily relating to Sam's Club store closures and Home Office severance, and $0.08 for Walmart International, primarily due to the winding down of the first party Brazil eCommerce operations.
3 Asset impairments and write-offs for Q4 include $0.08 of impairment charges due to decisions to discontinue certain real estate projects at Walmart U.S. and Sam's Club and technology assets at Corporate, and $0.04 for the write-off of certain assets at Walmart International.
13
Adjusted EPS for the fiscal year ended January 31, 2018 is a non-GAAP financial measure. The most directly comparable financial measure calculated in accordance with GAAP is EPS for the fiscal year ended January 31, 2018.
Fiscal Year Ended January 31, 2018 | ||||||||
Diluted earnings per share: | ||||||||
Reported EPS | $3.28 | |||||||
Adjustments: | Pre-Tax Impact | Tax Impact1 | NCI Impact2 | Net Impact | ||||
Loss on extinguishment of debt | $1.05 | -$0.38 | — | $0.67 | ||||
Restructuring charges3 | 0.40 | -0.12 | — | 0.28 | ||||
Asset impairments and write-offs4 | 0.23 | -0.07 | — | 0.16 | ||||
FCPA accrual | 0.09 | — | — | 0.09 | ||||
Associate lump sum bonus | 0.15 | -0.06 | — | 0.09 | ||||
U.S. tax reform benefit | — | -0.07 | — | -0.07 | ||||
Gain on sale of Suburbia | -0.13 | 0.04 | 0.04 | -0.05 | ||||
Legal settlement recovery | -0.05 | 0.02 | — | -0.03 | ||||
Net adjustments | $1.14 | |||||||
Adjusted EPS | $4.42 | |||||||
1 Calculated based on nature of item and statutory rate in effect for relevant jurisdiction.
2 Calculated based on the ownership percentages of the noncontrolling interest at Walmex.
3 See prior page for details of restructuring charges.
4 In addition to Q4 details on prior page, also includes $0.04 in Q3 related to decision to exit certain properties in a Walmart International market.
14
As previously disclosed in our fiscal year ended January 31, 2017 press release, we have calculated the Adjusted EPS for the three months and the fiscal year ended January 31, 2017 by adjusting the EPS for each period for the amount of the impact of: (1) U.S. discontinued real estate projects and severance and (2) the gain on the sale of Yihaodian in China as reported in Q2 FY17. Adjusted EPS for each of the three months and the fiscal year ended January 31, 2017 is a non-GAAP financial measure. The most directly comparable financial measure calculated in accordance with GAAP is EPS for the three months and the fiscal year ended January 31, 2017.
Adjusted EPS - Fiscal 2017 | |||||
Three Months Ended January 31, 2017 | |||||
Diluted earnings per share: | |||||
Reported EPS | $1.22 | ||||
Adjustment: | Pre-Tax Impact | Tax Impact1 | Net Impact | ||
U.S. discontinued real estate projects and severance | $0.12 | -$0.04 | $0.08 | ||
Adjusted EPS | $1.30 | ||||
Fiscal Year Ended January 31, 2017 | |||||
Diluted earnings per share: | |||||
Reported EPS | $4.38 | ||||
Adjustments: | Pre-Tax Impact | Tax Impact1 | Net Impact | ||
Gain on the sale of Yihaodian in China | -$0.17 | $0.03 | -$0.14 | ||
U.S. discontinued real estate projects and severance | 0.12 | -0.04 | 0.08 | ||
Net adjustments | -$0.06 | ||||
Adjusted EPS | $4.32 | ||||
1 Calculated based on nature of item and statutory rate in effect for relevant jurisdiction.
Non-GAAP Comparable Sales Measures
The comparable sales of the company's Walmart U.S. and Sam's Club operating segments for the 13-week and 52-week periods ended January 26, 2018 and January 27, 2017, and our guidance for comparable sales for the 52-week period ending January 25, 2019, in each case calculated or forecasted by excluding fuel or fuel and tobacco sales for such periods (collectively the "Non-GAAP Comparable Sales Measures"), are non-GAAP financial measures as defined by the SEC's rules. We believe the most directly comparable financial measures computed in accordance with GAAP are the comparable sales calculated by including fuel and tobacco sales for the corresponding periods.
We believe that the presentation of the Non-GAAP Comparable Sales Measures provides useful information to investors regarding the company's financial condition and results of operations because that information permits investors to understand the impact of fuel or fuel and tobacco sales, which are affected by the volatility of fuel prices and Sam's Club's decision to remove tobacco from certain locations, on Walmart U.S. and Sam's Club's comparable sales for the periods presented.
###
Safe harbor and non-GAAP measures
This presentation contains statements as to Walmart management's guidance regarding earnings per share, consolidated net sales growth, Walmart U.S. eCommerce sales growth, capital expenditures and Walmart's effective tax rate for the fiscal year
ending January 31, 2019, and Walmart U.S.'s comparable sales (excluding fuel) and Sam's Club's comparable sales (excluding fuel and tobacco) for the 52 weeks ending January 25, 2019. Walmart believes such statements are "forward-looking
statements" as defined in, and are intended to enjoy the protection of the safe harbor for forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Assumptions on which such forward-looking
statements are based are also forward-looking statements. Walmart's actual results may differ materially from the guidance provided as a result of changes in circumstances, assumptions not being realized or other risks, uncertainties and factors including:
• economic, geo-political, capital markets and business conditions, trends and events around the world and in the markets in which Walmart operates;
• currency exchange rate fluctuations, changes in market interest rates and commodity prices;
• unemployment levels;
• competitive pressures;
• inflation or deflation, generally and in particular product categories;
• consumer confidence, disposable income, credit availability, spending levels, shopping patterns, debt levels and demand for certain merchandise;
• consumer enrollment in health and drug insurance programs and such programs' reimbursement rates;
• the amount of Walmart's net sales denominated in the U.S. dollar and various foreign currencies;
• the impact of acquisitions, investments, divestitures, store or club closures, and other strategic decisions;
• Walmart's ability to successfully integrate acquired businesses, including within the eCommerce space;
• Walmart's effective tax rate and the factors affecting Walmart's effective tax rate, including assessments of certain tax contingencies, valuation allowances, changes in law (including the Tax Act), administrative audit outcomes, impact of
discrete items and the mix of earnings between the U.S. and Walmart's international operations;
• customer traffic and average ticket in Walmart's stores and clubs and on its eCommerce websites;
• the mix of merchandise Walmart sells, the cost of goods it sells and the shrinkage it experiences;
• the amount of Walmart's total sales and operating expenses in the various markets in which it operates;
• transportation, energy and utility costs and the selling prices of gasoline and diesel fuel;
• supply chain disruptions and disruptions in seasonal buying patterns;
• consumer acceptance of and response to Walmart's stores, clubs, digital platforms, programs, merchandise offerings and delivery methods;
• cyber security events affecting Walmart and related costs;
• developments in, outcomes of, and costs incurred in legal or regulatory proceedings to which Walmart is a party;
• casualty and accident-related costs and insurance costs;
• the turnover in Walmart's workforce and labor costs, including healthcare and other benefit costs;
• changes in accounting estimates or judgments;
• changes in existing tax, labor and other laws and regulations and changes in tax rates, trade agreements, trade restrictions and tariff rates;
• the level of public assistance payments;
• natural disasters, public health emergencies, civil disturbances, and terrorist attacks; and
• Walmart's expenditures for Foreign Corrupt Practices Act "FCPA" and other compliance related costs, including the adequacy of the accrual with respect to this matter made in the third quarter of the fiscal year ending January 31, 2018.
Such risks, uncertainties and factors also include the risks relating to our operations and financial performance discussed in our filings with the SEC. You should read this presentation in conjunction with our Annual Report on Form 10-K for the year ended
January 31, 2017, and our subsequently filed Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. You should consider all of the risks, uncertainties and other factors identified above and in those SEC reports carefully when evaluating the
forward-looking statements in this release. We cannot assure you that the future results reflected in or implied by any such forward-looking statement will be realized or, even if substantially realized, will have the forecasted or expected consequences and
effects for or on our operations or financial performance. Such forward-looking statements are made as of the date of this presentation, and Walmart undertakes no obligation to update such statements to reflect subsequent events or circumstances.
This presentation includes certain non-GAAP measures as defined under SEC rules, including net sales, revenue, and operating income on a constant currency basis, adjusted EPS, comp sales excluding fuel, free cash flow and return on investment.
Refer to information about the non-GAAP measures contained in this presentation. Additional information as required by Regulation G and Item 10(e) of Regulation S-K regarding non-GAAP measures can be found in our most recent Form 10-K and our
Form 8-K furnished as of the date of this presentation with the SEC, which are available at www.stock.walmart.com.
2
FY19 EPS:
$4.75 to $5.00
Comp sales for 52-week period,
excluding fuel1,2:
at least +2.0%
Comp sales for 52-week period
(ex. fuel & tobacco)1,2:
+3.0% to +4.0% (excluding the
approximately 400 basis point negative impact to
comp sales from tobacco)
or (-1.0%) to flat (including the impact of
reduced tobacco sales)
1 52-week period ending January 25, 2019.
2 See press release located at www.stock.walmart.com and additional information at the end of this presentation regarding non-GAAP
financial measures.
Fiscal Year 2019 Guidance
3
U.S.
Additional Fiscal Year 2019 Guidance
4
• Consolidated net sales growth in constant currency: +1.5% to +2.0%
◦ Negatively impacted by actions at Sam's Club, including club closures
and tobacco sales reduction
◦ Decision to wind-down first-party eCommerce business in Brazil and the
divestiture of Suburbia
• Walmart U.S. eCommerce sales growth: approximately 40%
• Expect to slightly leverage expenses on a consolidated basis
• Consolidated operating margin (% of sales): approximately 4.3% - 4.4% in
constant currency
• Capital expenditures: approximately $11.0 billion
• Effective tax rate: between 24% and 26%
Walmart Inc.
(Amounts in millions, except per share data) Q4 $ Δ1 % Δ1 FY18 $ Δ1 % Δ1
Total revenue $136,267 $5,331 4.1% $500,343 $14,470 3.0%
Total revenue, constant currency2 $135,059 $4,123 3.1% $500,925 $15,052 3.1%
Net sales $135,150 $5,400 4.2% $495,761 $14,444 3.0%
Net sales, constant currency2 $133,953 $4,203 3.2% $496,303 $14,986 3.1%
Membership & other income $1,117 (69) -5.8% $4,582 $26 0.6%
Operating income $4,467 -$1,738 -28.0% $20,437 -$2,327 -10.2%
Operating income, constant currency2 $4,389 -$1,816 -29.3% $20,504 -$2,260 -9.9%
Interest expense, net $499 -$56 -10.1% $2,178 -$89 -3.9%
Consolidated net income attributable to Walmart $2,175 -$1,582 -42.1% $9,862 -$3,781 -27.7%
Diluted EPS $0.73 -$0.49 -40.2% $3.28 -$1.10 -25.1%
Adjusted EPS2 $1.33 $0.03 2.3% $4.42 $0.10 2.3%
1 Change versus prior year comparable period.
2 See press release located at www.stock.walmart.com and reconciliations at the end of presentation regarding non-GAAP financial measures.
5
Walmart Inc.
Q4 bps Δ1 FY18 bps Δ1
Gross profit rate 24.1% -61 bps 24.7% -26 bps
Operating expenses as a percentage of net
sales 21.6% 78 bps 21.5% 32 bps
Effective tax rate2 20.3% -917 bps 30.4% 15 bps
Debt to total capitalization3 NP NP 37.4% -90 bps
Return on investment4 NP NP 14.2% -100 bps
1 Basis points change versus prior year comparable period.
2 The decrease in the effective tax rate for the quarter was primarily due to the tax reform benefit recorded in the quarter.
3 Debt to total capitalization is calculated as of January 31, 2018. Debt includes short-term borrowings, long-term debt due within one
year, capital lease and financing obligations due within one year, long-term debt, and long-term capital lease and financing obligations.
Total capitalization includes debt and total Walmart shareholders' equity.
4 ROI is calculated for the trailing 12 months ended January 31, 2018. See press release located at www.stock.walmart.com and
reconciliations at the end of presentation regarding non-GAAP financial measures.
NP - Not provided
6
(Amounts in millions) Q4 $ Δ1 % Δ1
Receivables, net $5,614 -$221 -3.8%
Inventories $43,783 $737 1.7%
Accounts payable $46,092 $4,659 11.2%
Walmart Inc.
1 Change versus prior year comparable period.
7
Walmart Inc.
(Amounts in millions) FY18 $ Δ1
Operating cash flow $28,337 -$3,336
Capital expenditures $10,051 -$568
Free cash flow2 $18,286 -$2,768
(Amounts in millions) Q4 % Δ1 FY18 % Δ1
Dividends $1,510 -1.6% $6,124 -1.5%
Share repurchases3 $1,640 -19.8% $8,296 0.0%
Total $3,150 -12.0% $14,420 -0.6%
1 Change versus prior year comparable period.
2 See press release located at www.stock.walmart.com and reconciliations at the end of this presentation regarding non-
GAAP financial measures.
3 $18.8 billion remaining of $20 billion authorization approved in October 2017. The company repurchased approximately
105 million shares in fiscal 2018. 8
Walmart U.S.
(Amounts in millions) Q4 Δ1 FY18 Δ1
Net sales $86,579 3.4% $318,477 3.5%
Comparable sales2,3 2.6% 80 bps 2.1% 70 bps
• Comp traffic 1.6% 20 bps NP NP
• Comp ticket 1.0% 60 bps NP NP
eCommerce impact3,4 ~0.6% ~20 bps NP NP
Neighborhood Market ~5.5% ~20 bps NP NP
Gross profit rate Decrease -50 bps Decrease -24 bps
Operating expense rate Decrease -19 bps Decrease -1 bps
Operating income $4,952 -0.9% $17,869 0.7%
1 Change versus prior year comparable period.
2 Comp sales for the 13-week and 52-week periods ended January 26, 2018, excluding fuel. Including fuel, Walmart U.S. comparable sales are 2.7% and
2.2%, respectively. See press release located at www.stock.walmart.com and reconciliations at the end of this presentation regarding non-GAAP
financial measures.
3 The results of new acquisitions are included in our comp sales metrics in the 13th month after acquisition.
4 The company's eCommerce sales impact includes those sales initiated through the company's websites and fulfilled through the company's dedicated
eCommerce distribution facilities, as well as an estimate for sales initiated online but fulfilled through the company's stores and clubs.
NP - Not provided
9
Walmart U.S. - quarterly financial highlights
10
Sales
• Comp sales1 increased 2.6% led by strong comp traffic of 1.6%. eCommerce contributed approximately 60 basis points to segment comp sales
growth. On a 2-year stack basis, comp sales and traffic were up 4.4% and 3.0%, respectively.
• Strong performance in food categories continued with comp sales, traffic and unit growth across categories.
• Strong growth in multi-channel sales continued, including online grocery and general merchandise pickup in store.
Gross Margin
• Gross margin rate declined 50 basis points due primarily to price investments, higher transportation expense as a result of higher volumes and fuel
costs, and mix effects from our growing eCommerce business. For the full year, the gross margin rate declined 24 basis points.
Expenses
• Segment operating expenses leveraged 19 basis points. Physical stores leveraged expenses for the 4th consecutive quarter and were partially
offset by investments in eCommerce and technology.
• This year’s Q4 results included a $244 million discrete charge related to discontinued real estate projects, which was partially offset by a $137
million legal settlement recovery. Last year’s Q4 results included a $249M discrete charge related to discontinued real estate projects. Excluding
these adjustments, expenses would have leveraged slightly.
Inventory
• Total inventory increased 0.1% versus last year and comp store inventory declined approximately 0.2%, while in-stock levels remained high.
Format growth
• We had net openings of 9 Supercenters and no Neighborhood Markets. We also remodeled 53 stores in the quarter and 496 for the full year.
• As of the end of Q4, online grocery was offered in over 1,100 locations, which represents more than 500 additional locations since last year.
1 Comp sales for the 13-week period ended January 26, 2018, excluding fuel. Including fuel, Walmart U.S. comparable sales grew 2.7%.
See press release located at www.stock.walmart.com and reconciliations at the end of this presentation regarding non-GAAP financial
measures.
Walmart U.S. - quarterly merchandise highlights
Category Comp Comments
Grocery1 + low single-digit
Food and consumables had solid comp sales driven by strong
customer traffic. Strength was broad-based across categories, with
fresh foods, packaged goods and private brands particularly strong
driven by improvements in assortment, quality and price.
Health & wellness + mid single-digit
An elevated cold, cough and flu season drove strong comp
performance in over-the-counter and pharmacy sales. The pharmacy
business continues to benefit from branded drug inflation and script
growth.
General
merchandise2 + low single-digit
Overall, sales results were driven by seasonal, toys and apparel.
Entertainment had its strongest quarter of the year with strong holiday
sales. Women’s apparel and shoes had strong results as customers
responded favorably to the newness across categories.
1 Includes food and consumables.
2 General merchandise includes entertainment, toys, hardlines, apparel, home and seasonal. 11
Walmart International
1
(Amounts in millions) Reported
Constant
currency1 Reported
Constant
currency1
Q4 Δ2 Q4 Δ2 FY18 Δ2 FY18 Δ2
Net sales $33,092 6.7% $31,895 2.8% $118,068 1.7% $118,610 2.1%
Gross profit rate Decrease -75 bps NP NP Decrease -28 bps NP NP
Operating income $1,348 -10.9% $1,270 -16.1% $5,352 -7.1% $5,420 -5.9%
1 See press release located at www.stock.walmart.com and reconciliations at the end of presentation regarding non-GAAP financial
measures.
2 Change versus prior year comparable period.
NP - Not provided 12
Walmart International - quarterly financial highlights
13
Sales
• Net sales on a constant currency basis increased 2.8 percent.
• Reported net sales increased 6.7 percent, which included a benefit of approximately $1.2 billion from currency.
• The divestitures of Suburbia and Yihaodian created a headwind to sales of about $400 million when compared to last year.
• Nine of 11 markets delivered positive comp sales.
Gross Margin
• Gross margin rate declined 75 basis points driven by price investments in certain markets, winding down our first-party Brazil
eCommerce business and some unplanned items in two markets. The first-party Brazil eCommerce business wind down and the
unplanned items collectively contributed more than half of the gross margin decline.
Operating income
• Operating income in the quarter declined 16.1 percent on a constant currency basis and 10.9 percent on a reported basis.
• On a constant currency basis, restructuring and impairment charges of approximately $400 million impacted operating income
during the quarter, which was offset by a net $100 million impact in the comparable prior year period. Without these items,
operating income would have increased year-over-year
Inventory
• During the quarter, inventory grew more slowly than sales.
1 See press release located at www.stock.walmart.com and reconciliations at the end of this presentation regarding non-GAAP financial
measures.
2 On a reported basis, restructuring and impairment charges were also approximately $400 million during the quarter.
Walmart International - key markets quarterly results
1 Results are presented on a constant currency basis here and for all key market highlights. Net sales and comp sales are
presented on a nominal, calendar basis.
2 eCommerce results are included for each of the markets listed in the table.
3 Change versus prior year comparable period.
4 Comp sales for the United Kingdom are presented excluding fuel.
5 Walmex includes the consolidated results of Mexico and Central America. Excluding Suburbia net sales of $270 million in
the comparable prior year period would result in an increase in Walmex net sales of 7.9% for the quarter. Excluding
Suburbia operating income of approximately $50 million in the comparable prior year period, operating income would have
increased.
Country1,2
Comp3 Net
sales3
Gross
profit
rate3
Operating
income3Sales Traffic Ticket
United Kingdom4 0.5% -1.6% 2.1% 2.0% Decrease Decrease
Walmex5 6.1% 0.9% 5.2% 4.3% Decrease Decrease
Canada 2.9% 1.4% 1.5% 3.4% Decrease Increase
China 2.3% 0.8% 1.5% 4.1% Increase Decrease
14
Walmart International - key market highlights
15
Walmex
• Net sales in the quarter increased 4.3 percent and comp sales increased 6.1 percent. Normalizing for Suburbia2 sales last year, net
sales would have increased 7.9 percent.
• In Mexico specifically, comp sales increased 6.4 percent in the quarter or 14.3 percent on a two-year stacked basis.
• For the year all of our merchandise divisions outpaced ANTAD1 self-service and our strongest performance came from our key
Food and Staples business.
• From a format perspective, our strongest performance for the year came from Sam's Club followed by our Bodega format.
• Net sales in the quarter in Central America increased 9.2 percent, and all countries delivered positive comp sales.
Canada
• Net sales in the quarter increased 3.4 percent while comp sales increased 2.9 percent.
• We gained 60 basis points of market share in food, consumables, and health and wellness for the 12-week period ended January 27,
according to Nielsen.
• Gross profit rate declined primarily driven by price investments.
• We leveraged operating expenses during the quarter through sales growth and continued cost control.
• Inventory levels decreased even as sales increased 3.4 percent.
1 ANTAD - Asociación Nacional de Tiendas de Autoservicio y Departamentales; The National Association of Supermarkets and Department Stores
2 Excluding Suburbia net sales of $270 million in the comparable prior year period would result in an increase in Walmex net sales of 7.9% for the
quarter.
Walmart International - key market highlights
16
U.K.
• During the quarter, net sales increased 2.0 percent, while comp sales increased 0.5 percent.
• During the quarter, we experienced improved in-store service scores and performance strengthened across our private brand and
online grocery offerings.
• Gross profit rate in the quarter declined driven by on-going price investments.
China
• Net sales increased 4.1 percent while comp sales increased 2.3 percent.
• Our omni channel initiatives drove strength within our hypermarket format and fresh continues to be a key growth driver.
• Approximately 160 Walmart stores now offer grocery delivery through JD Daojia.
• During the quarter, we continued to expand our assortment of items available from the U.S., Japan and the U.K. through our Walmart
global imports store on the JD.com platform.
• Since the launch of our digital Sam's Club membership through WeChat, the majority of our new members have been acquired
through this offering.
Sam's Club
(Amounts in millions)
With fuel Without fuel1 With fuel Without fuel1
Q4 Δ2 Q4 Δ2 FY18 Δ2 FY18 Δ2
Net sales $15,479 3.3% $14,238 2.1% $59,216 3.2% $54,456 2.2%
Comparable sales3 3.6% 50 bps 2.4% — bps 3.0% 280 bps 2.0% 90 bps
• Comp traffic NP NP 4.3% 310 bps NP NP NP NP
• Comp ticket NP NP -1.9% -310 bps NP NP NP NP
eCommerce impact4 NP NP ~0.8% ~0 bps NP NP NP NP
Gross profit rate Decrease -93 bps Decrease -89 bps Decrease -44 bps Decrease -44 bps
Membership income NP NP NP 1.9% NP NP NP 1.3%
Operating income -$283 -172.6% -$307 -181.6% $982 -41.2% $864 -46.6%
1 See press release located at www.stock.walmart.com and reconciliations at the end of this presentation regarding non-GAAP financial
measures.
2 Change versus prior year comparable period.
3 Comp sales for the 13-week and 52-week periods ended January 26, 2018.
4 The company's eCommerce sales impact includes those sales initiated through the company's websites and fulfilled through the
company's dedicated eCommerce distribution facilities, as well as an estimate for sales initiated online but fulfilled through the company's
stores and clubs.
NP - Not provided
17
Sam's Club - quarterly financial highlights
18
Sales
• Comp sales1 for the period increased 2.4% with growth in comp traffic of 4.3%. Tobacco negatively impacted comp sales by approximately 120 basis
points.
• In eCommerce, both Club Pickup and the direct to home business continued to have strong results.
• Penetration of the Members Mark brand continues to increase.
Gross Profit
• Excluding fuel1, gross profit rate declined 89 basis points. Club closures negatively impacted gross profit rate by approximately 93 basis points,
primarily as a result of markdowns to liquidate inventory. Consistent with previous quarters, certain fresh supply expenses were reclassified from
operating expenses to cost of goods sold.
Operating Expenses
• Operating expenses de-levered 347 basis points, primarily due to a charge of approximately $565 million related to club closures and discontinued real
estate projects. The charge was partially offset by an approximately $13 million legal settlement recovery.
Membership Income
• Membership income increased 1.9% versus last year. Plus penetration increased 9 basis points.
Inventory
• Inventory decreased 1.1%, primarily due to club closures. Inventory at comp clubs increased 4.2%.
1 Gross profit including fuel declined 93 basis points.
Sam's Club - quarterly category highlights
19
Category Comp Comments
Fresh / Freezer / Cooler + mid single-digit Strong performance in produce, bakery, deli and prepared foods.
Grocery and beverage + low single-digit Good contributions from Instant Savings Book (ISB) offerings and Members Mark products.
Consumables + mid single-digit Strong performance in Member's Mark items, especially in paper products and food service.
Home and apparel + high single-digit Tires, domestics, kitchen electrics, as well as apparel and seasonal categories deliveredstrong results.
Technology, office and
entertainment + low single-digit Good performance in computers and tablets was partially offset by soft sales in televisions.
Health and wellness + low single-digit Protein drinks performed well, along with overall strong performance in OTC.
Third-party FCPA- and compliance-related
expenses
Q4 YTD
(Amounts in millions) FY18 FY17 FY18 FY17
Ongoing inquiries and
investigations $4 $12 $14 $80
Global compliance program and
organizational enhancements 3 5 26 19
Total $7 $17 $40 $99
• In fiscal year 2019, we expect our third party FCPA and compliance-related expenses to be
at or around the same level as in fiscal year 2018. These are included in our Corporate and
support expenses.
20
Non-GAAP measures - ROI
We include Return on Assets ("ROA"), which is calculated in accordance with generally accepted accounting principles in the U.S. ("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 investors because it helps
investors assess how effectively Walmart is deploying its assets. Trends in ROI can fluctuate over time as management balances long-term potential strategic
initiatives with possible short-term impacts. We consider ROA to be the financial measure computed in accordance with GAAP that is the most directly
comparable financial measure to our calculation of ROI.
ROA was 5.2 percent and 7.2 percent for the trailing twelve months ended January 31, 2018 and 2017, respectively. ROI was 14.2 percent and 15.2 percent for
the trailing twelve months ended January 31, 2018 and 2017, respectively. The decline in ROA was primarily due to the losses on extinguishment of debt and the
decrease in operating income. The decline in ROI was primarily due to the decrease in operating income.
We define ROI as adjusted operating income (operating income plus interest income, depreciation and amortization, and rent expense) for the trailing 12 months
divided by average invested capital during that period. We consider average invested capital to be the average of our beginning and ending total assets, plus
average accumulated depreciation and average amortization, less average accounts payable and average accrued liabilities for that period, plus a rent factor
equal to the rent for the fiscal year or trailing 12 months multiplied by a factor of 8. When we have discontinued operations, we exclude the impact of the
discontinued operations.
Our calculation of ROI is considered a non-GAAP financial measure because we calculate ROI using financial measures that exclude and include amounts that
are included and excluded in the most directly comparable GAAP financial measure. For example, we exclude the impact of depreciation and amortization from
our reported operating income in calculating the numerator of our calculation of ROI. In addition, we include a factor of 8 for rent expense that estimates the
hypothetical capitalization of our operating leases. As mentioned above, we consider return on assets to be the financial measure computed in accordance with
generally accepted accounting principles most directly comparable to our calculation of ROI. ROI differs from ROA (which is consolidated net income for the
period divided by average total assets for the period) because ROI: adjusts operating income to exclude certain expense items and adds interest income; adjusts
total assets for the impact of accumulated depreciation and amortization, accounts payable and accrued liabilities; and incorporates a factor of rent to arrive at
total invested capital. Because of the adjustments mentioned above, we believe ROI more accurately measures how we are deploying our key assets and is more
meaningful to investors than ROA.
Although ROI is a standard financial measure, numerous methods exist for calculating a company's ROI. As a result, the method used by management to
calculate our ROI may differ from the methods used by other companies to calculate their ROI.
21
Non-GAAP measures - ROI cont.
The calculation of ROA and ROI, along with a reconciliation of ROI to the calculation of ROA, the most comparable GAAP
financial measure, is as follows:
Walmart Inc.
Return on Assets and Return on Investment
Trailing Twelve Months
Ended
Trailing Twelve Months
Ended
January 31, January 31,
(Dollars in millions) 2018 2017 (Dollars in millions) 2018 2017
CALCULATION OF RETURN ON ASSETS CALCULATION OF RETURN ON INVESTMENT
Numerator Numerator
Consolidated net income $ 10,523 $ 14,293 Operating income $ 20,437 $ 22,764
Denominator + Interest income 152 100
Average total assets1 $ 201,674 $ 199,203 + Depreciation and amortization 10,529 10,080
Return on assets (ROA) 5.2% 7.2% + Rent 2,932 2,612
Adjusted operating income $ 34,050 $ 35,556
As of January 31, Denominator
Certain Balance Sheet Data 2018 2017 2016 Average total assets1 $ 201,674 $ 199,203
Total assets $ 204,522 $ 198,825 $ 199,581
+ Average accumulated depreciation
and amortization1 79,995 74,245
Accumulated depreciation and amortization 83,039 76,951 71,538 - Average accounts payable1 43,763 39,960
Accounts payable 46,092 41,433 38,487 - Average accrued liabilities1 21,388 20,131
Accrued liabilities 22,122 20,654 19,607 + Rent x 8 23,456 20,896
Average invested capital $ 239,974 $ 234,253
Return on investment (ROI) 14.2% 15.2%
1 The average is based on the addition of the account balance at the end of the current period to the account balance at the end of the
prior period and dividing by 2. 22
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 $28.3 billion and $31.7 billion for the twelve months ended January 31, 2018 and 2017, respectively. We generated free cash flow of $18.3 billion and $21.1 billion for the
twelve months ended January 31, 2018 and 2017, respectively. The decreases in net cash provided by operating activities and free cash flow were due to the timing of tax and other
payments, as well as lapping prior year's improvements in working capital management.
Free cash flow is considered a non-GAAP financial measure. Management believes, however, that free cash flow, which measures our ability to generate additional cash from our
business operations, is an important financial measure for use in evaluating the company's financial performance. Free cash flow should be considered in addition to, rather than as a
substitute for, consolidated net income as a measure of our performance and net cash provided by operating activities as a measure of our liquidity. Additionally, Walmart's definition of
free cash flow is limited, in that it does not represent residual cash flows available for discretionary expenditures, due to the fact that the measure does not deduct the payments required
for debt service and other contractual obligations or payments made for business acquisitions. Therefore, we believe it is important to view free cash flow as a measure that provides
supplemental information to our Consolidated Statements of Cash Flows.
The following table sets forth a reconciliation of free cash flow, a non-GAAP financial measure, to net cash provided by operating activities, which we believe to be the GAAP financial
measure most directly comparable to free cash flow, as well as information regarding net cash used in investing activities and net cash used in financing activities.
Fiscal Years Ended
January 31,
(Dollars in millions) 2018 20171
Net cash provided by operating activities $ 28,337 $ 31,673
Payments for property and equipment (capital expenditures) -10,051 -10,619
Free cash flow $ 18,286 $ 21,054
Net cash used in investing activities2 $ -9,060 $ -13,987
Net cash used in financing activities -19,875 -19,072
1 Reclassifications made due to the adoption of ASU 2016-09, Improvements to Employee Share-Based Payment Accounting.
2 "Net cash used in investing activities" includes payments for property and equipment, which is also included in our computation of free cash flow.
23
1 Change versus prior year comparable period.
Non-GAAP measures - constant currency
24
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 of changes in currency exchange rates as the difference between current period activity translated
using the current period's currency exchange rates, and the comparable prior year period's currency exchange rates. Throughout our discussion, we refer to the results of this
calculation as the impact of currency exchange rate fluctuations. When we refer to constant currency operating results, this means operating results without the impact of the
currency exchange rate fluctuations. The disclosure of constant currency amounts or results permits investors to better understand Walmart's underlying performance without the
effects of currency exchange rate fluctuations.
The table below reflects the calculation of constant currency for total revenues, net sales and operating income for the three and twelve months ended January 31, 2018.
Three Months Ended January 31, Twelve Months Ended January 31,
Walmart International Consolidated Walmart International Consolidated
(Dollars in millions) 2018
Percent
Change1 2018
Percent
Change1 2018
Percent
Change1 2018
Percent
Change1
Total revenues:
As reported $ 33,455 6.1% $ 136,267 4.1% $ 119,763 1.4% $ 500,343 3.0%
Currency exchange rate fluctuations -1,208 N/A -1,208 N/A 582 N/A 582 N/A
Constant currency total revenues $ 32,247 2.3% $ 135,059 3.1% $ 120,345 1.9% $ 500,925 3.1%
Net sales:
As reported $ 33,092 6.7% $ 135,150 4.2% $ 118,068 1.7% $ 495,761 3.0%
Currency exchange rate fluctuations -1,197 N/A -1,197 N/A 542 N/A 542 N/A
Constant currency net sales $ 31,895 2.8% $ 133,953 3.2% $ 118,610 2.1% $ 496,303 3.1%
Operating income:
As reported $ 1,348 -10.9% $ 4,467 -28.0% $ 5,352 -7.1% $ 20,437 -10.2%
Currency exchange rate fluctuations -78 N/A -78 N/A 68 N/A 67 N/A
Constant currency operating income $ 1,270 -16.1% $ 4,389 -29.3% $ 5,420 -5.9% $ 20,504 -9.9%
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 and 52-week
periods ended January 26, 2018 and January 27, 2017, and our guidance for comparable sales for the 52-week period ending
January 25, 2019, in each case calculated or forecasted by excluding fuel or fuel and tobacco sales for such periods
(collectively the "Non-GAAP Comparable Sales Measures"), are non-GAAP financial measures as defined by the SEC's rules.
We believe the most directly comparable financial measures computed in accordance with GAAP are the comparable sales
calculated by including fuel and tobacco sales for the corresponding periods.
We believe that the presentation of the Non-GAAP Comparable Sales Measures provides useful information to investors
regarding the company's financial condition and results of operations because that information permits investors to understand
the impact of fuel or fuel and tobacco sales, which are affected by the volatility of fuel prices and Sam's Club's decision to
remove tobacco from certain locations, on Walmart U.S. and Sam's Club's comparable sales for the periods presented.
25
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 and twelve months ended January 31, 2018 and 2017.
Three Months Ended January 31, Twelve Months Ended January 31,
(Dollars in millions) 2018 2017 % Change 2018 2017 % Change
Sam's Club
Net Sales:
As Reported $ 15,479 $ 14,978 3.3% $ 59,216 $ 57,365 3.2%
Less: Fuel Impact 1,241 1,034 N/A 4,760 4,076 N/A
Excluding Fuel $ 14,238 $ 13,944 2.1% $ 54,456 $ 53,289 2.2%
Operating Income:
As Reported $ -283 $ 390 -172.6% $ 982 $ 1,671 -41.2%
Less: Fuel Impact 24 14 N/A 118 52 N/A
Excluding Fuel $ -307 $ 376 -181.6% $ 864 $ 1,619 -46.6%
The table below reflects the fuel impact for comparable club sales for the 13-week and 52-week periods ended January 26, 2018 and January 27, 2017.
With Fuel Without Fuel Fuel Impact
13 Weeks Ended 13 Weeks Ended 13 Weeks Ended
1/26/2018 1/27/2017 1/26/2018 1/27/2017 1/26/2018 1/27/2017
Walmart U.S. 2.7% 1.8% 2.6% 1.8% 0.1% 0.0%
Sam's Club 3.6% 3.1% 2.4% 2.4% 1.2% 0.7%
52 Weeks Ended 52 Weeks Ended 52 Weeks Ended
1/26/2018 1/27/2017 1/26/2018 1/27/2017 1/26/2018 1/27/2017
Walmart U.S. 2.2% 1.4% 2.1% 1.4% 0.1% 0.0%
Sam's Club 3.0% 0.2% 2.0% 1.1% 1.0% -0.9%
26
Adjusted diluted earnings per share from continuing operations attributable to Walmart (Adjusted EPS) for each of the three months and fiscal
years ended January 31, 2018 and 2017 is considered a non-GAAP financial measure under the SEC's rules because the Adjusted EPS for
each such period excludes certain amounts not excluded in the diluted earnings per share from continuing operations attributable to Walmart
calculated in accordance with GAAP (EPS) for such periods. Management believes that the Adjusted EPS for each of the three months and
fiscal years ended January 31, 2018 and 2017 is a meaningful measure to share with investors because each measure, which adjusts EPS for
such periods for certain items recorded in such periods, is the measure that best allows comparison of the performance for the comparable
period. In addition, Adjusted EPS affords investors a view of what management considers Walmart's core earnings performance for each of the
three months and fiscal years ended January 31, 2018 and 2017 and also affords investors the ability to make a more informed assessment of
such core earnings performance for the comparable periods.
We have calculated Adjusted EPS for the three months and fiscal year ended January 31, 2018 by adjusting EPS for the following:
(1) restructuring charges, (2) losses on the early extinguishment of certain debt, (3) asset impairments and write-offs, (4) U.S. associate lump
sum bonuses, (5) the impact of U.S. tax reform, (6) a legal settlement recovery and, for the fiscal year ended January 31, 2018 only, the (7) the
FCPA accrual based on discussions with government agencies regarding the possible resolution of the FCPA matter and (8) the gain on sale of
Suburbia.
Adjusted EPS for the three months ended January 31, 2018 is a non-GAAP financial measure. The most directly comparable financial measure
calculated in accordance with GAAP is EPS for the three months ended January 31, 2018.
Non-GAAP measures - adjusted EPS
27
Non-GAAP measures - adjusted EPS
28
Three Months Ended January 31, 2018 Fiscal Year Ended January 31, 2018
Diluted earnings per share:
Reported EPS $0.73 $3.28
Adjustments:
Pre-Tax
Impact Tax Impact1 Net Impact
Pre-Tax
Impact
Tax
Impact1
NCI
Impact4 Net Impact
Restructuring charges2 0.40 -0.12 0.28 0.40 -0.12 — 0.28
Loss on extinguishment of debt 0.34 -0.13 0.21 1.05 -0.38 — 0.67
Asset impairments and write-offs3 0.18 -0.06 0.12 0.23 -0.07 — 0.16
FCPA accrual — — — 0.09 — — 0.09
Associate lump sum bonus 0.15 -0.06 0.09 0.15 -0.06 — 0.09
U.S. tax reform benefit — -0.07 -0.07 — -0.07 — -0.07
Gain on sale of Suburbia — — — -0.13 0.04 0.04 -0.05
Legal settlement recovery -0.05 0.02 -0.03 -0.05 0.02 — -0.03
Net adjustments 0.60 1.14
Adjusted EPS 1.33 4.42
1 Calculated based on nature of item and statutory rate in effect for relevant jurisdiction.
2 Restructuring charges include $0.20 for restructurings in the U.S., primarily relating to Sam's Club store closures and Home Office severance, and $0.08 for Walmart International, primarily due to the
winding down of the first party Brazil eCommerce operations.
3 Asset impairments and write-offs for Q4 include $0.08 of impairment charges due to decisions to discontinue certain real estate projects at Walmart U.S. and Sam's Club and technology assets at
Corporate, and $0.04 for the write-off of certain assets at Walmart International. Fiscal year 2018 also includes $0.04 related to our Q3 decision to exit certain properties in a Walmart International
market.
4 Calculated based on the ownership percentages of the noncontrolling interest at Walmex.
Non-GAAP measures - adjusted EPS
29
Three Months Ended January 31, 2017
Diluted earnings per share:
Reported EPS $1.22
Adjustment:
Pre-Tax
Impact Tax Impact1 Net Impact
U.S. discontinued real estate projects and severance $0.12 -$0.04 $0.08
Adjusted EPS $1.30
Fiscal Year Ended January 31, 2017
Diluted earnings per share:
Reported EPS 4.38
Adjustments:
Pre-Tax
Impact Tax Impact1 Net Impact
Gain on the sale of Yihaodian in China -$0.17 $0.03 -$0.14
U.S. discontinued real estate projects and severance 0.12 -0.04 0.08
Net adjustments -$0.06
Adjusted EPS 4.32
We have calculated the Adjusted EPS for the three months and the fiscal year ended January 31, 2017 by adjusting the EPS for each period for the amount of the impact of: (1)
U.S. discontinued real estate projects and severance and (2) the gain on the sale of Yihaodian in China as reported in Q2 FY17. Adjusted EPS for each of the three months and the
fiscal year ended January 31, 2017 is a non-GAAP financial measure. The most directly comparable financial measure calculated in accordance with GAAP is EPS for the three
months and the fiscal year ended January 31, 2017.
1 Calculated based on nature of item and statutory rate in effect for relevant jurisdiction.
• Unit counts & square footage
• Comparable store sales
• Terminology
• Fiscal year 2019 earnings dates
Additional resources at stock.walmart.com
30