image40a02a01a16.jpg
Walmart U.S. Q2 comps1 grew 4.5% and Walmart U.S. eCommerce sales grew 40%,
Q2 GAAP net loss per share of $0.29; Adjusted EPS2 of $1.29,
Walmart updates guidance for FY'19 GAAP EPS to $2.90 to $3.05, ex. Flipkart3 
Walmart raises guidance for FY'19 Adjusted EPS2 to $4.90 to $5.05, ex. Flipkart3 
image9a15.jpg
Total revenue was $128.0 billion, an increase of $4.7 billion, or 3.8%. Excluding currency2, total revenue was $127.8 billion, an increase of $4.4 billion, or 3.6%.
 
"Thanks to the hard work of our associates, we had a great quarter with strong results and momentum across the business. We’re pleased with how customers are responding to the way we're leveraging stores and eCommerce to make shopping faster and more convenient. We're continuing to aggressively roll out grocery pickup and delivery in the U.S., and we recently announced expanded omni-channel initiatives in China and Mexico. Customers have choices and we're making it easier than ever for them to choose Walmart."
Doug McMillon
President and CEO, Walmart
 
image9a15.jpg
Walmart U.S. comp sales1 increased 4.5%, the strongest growth in more than ten years led by the performance of grocery, apparel and seasonal. Strong comp sales were supported by traffic and ticket growth as each exceeded 2.0%.
 
 
image9a15.jpg
Walmart U.S. omni-channel saw significant progress with an expanded online assortment, including 1,100 popular new brands. Grocery pickup is now in more than 1,800 locations, and the company is on track to reach about 40% of the U.S. population by year-end with grocery delivery.
 
 
image9a15.jpg
Sam's Club comp sales1 increased 5.0%4, the strongest growth in six years.
 
 
image9a15.jpg
Net sales at Walmart International were $29.5 billion, an increase of 4.0%. Excluding currency2, net sales were $29.2 billion, an increase of 3.1%. Comp sales were positive in the four largest markets.
 
 
image9a15.jpg
Adjusted EPS2 excludes the impact of three items:
Charge of $1.51 related to the sale of a majority stake in Walmart Brazil
Negative impact of $0.04 due to an adjustment in the provisional amount related to Tax Reform
Unrealized loss of $0.03 on the company's equity investment in JD.com

 
Key results
(Amounts in billions, except as noted. Dollar and percentage changes may not recalculate due to rounding.)
 
image40a02a01a16.jpg
Q2 FY19
Q2 FY18
Change
 
 
Revenue
$128.0
$123.4
$4.7
3.8%
 
Revenue (constant currency)2
$127.8
$123.4
$4.4
3.6%
 
Operating income
$5.8
$6.0
-$0.2
-3.7%
 
Operating income (constant currency)2
$5.7
$6.0
-$0.2
-4.0%

Free Cash Flow
YTD FY19
$ Change
 
Returns to Shareholders
Q2 FY19
% Change
Operating cash flow
$11.1
-$0.3
 
Dividends
$1.5
-0.3%
Capital expenditures
$4.3
-$0.1
 
Share repurchases5
$1.3
-42.3%
Free cash flow2
$6.8
-$0.1
 
Total
$2.8
-25.3%



1 13-week period ended July 27, 2018, compared to 13-week period ended July 28, 2017, and excludes fuel. See Supplemental Financial Information for additional information.
2 See additional information at the end of this release regarding non-GAAP financial measures.
3 Guidance does not incorporate the previously provided estimated impact for Flipkart, which included the incremental interest expense to fund the transaction, as the transaction has not yet closed.
4 Tobacco sales negatively impacted Sam's Club's comparable sales by approximately 150 basis points.
5 $16.9 billion remaining of the $20 billion authorization approved in October 2017. The company repurchased approximately 15.3 million shares in Q2.
NYSE: WMT
August 16, 2018
stock.walmart.com




2

Guidance
The following guidance reflects the company’s expectations for fiscal year 2019. Assumptions in today’s guidance include that economic conditions, currency rates and the tax and regulatory landscape in our largest markets remain generally consistent. Additionally, the guidance does not include the expected impact of the company's investment in Flipkart, including interest related to the purchase, as the transaction has not yet closed.
Metric
Updated FY19 Guidance
Original FY19 Guidance
Consolidated net sales
About 2% in constant currency, impacted by:
Sale of a majority stake in Walmart Brazil
Sam’s Club closures and tobacco actions
Wind-down of first-party Brazil eCommerce
Divestiture of Suburbia
Combined impact: -180 bps
+1.5 to +2% in constant currency, impacted by:
Sam’s Club closures and tobacco actions
Wind-down of first party Brazil eCommerce
Divestiture of Suburbia
Combined impact: -140 bps

Comp sales (ex. fuel)



Walmart U.S.: around +3%
Sam's Club: around +3%, with negative impact from tobacco of 200 bps
Walmart U.S.: at least 2%
Sam's Club: -1% to flat, with negative impact from tobacco of 400 bps
Walmart U.S. eCommerce net sales
Approximately 40%
Approximately 40%
Walmart International net sales
About 0.7% in constant currency, impacted by:
Sale of a majority stake in Walmart Brazil
Wind-down of first-party Brazil eCommerce
Divestiture of Suburbia
Combined impact: -330 bps
+3% in constant currency, impacted by:
Wind-down of first-party Brazil eCommerce
Divestiture of Suburbia
Combined impact: -63 bps

Consolidated operating income, adjusted3
Flat to slight percentage decrease3

Low single-digit percentage decrease3

Consolidated operating income margin
Around 4.4% in constant currency

4.3% to 4.4% in constant currency

GAAP EPS1
$2.90 to $3.05
$4.75 to $5.00
Adjusted EPS1,2
$4.90 to $5.05, excluding:
Sale of a majority stake in Walmart Brazil
Unrealized losses on JD.com investment
Tax Reform adjustments
$4.75 to $5.00
Effective tax rate
31% - 33%, impacted +700 bps due to the combined impact of unrealized losses on JD.com investment, sale of a majority stake in Walmart Brazil and Tax Reform adjustments
For adjusted EPS, 24% to 26%
24% to 26%

Other gains and losses
Other gains and losses in Q2 fiscal 2019 consists primarily of a $4.8 billion pre-tax loss related to the sale of a majority stake in Walmart Brazil and a $94 million unrealized loss on the company's JD.com investment due to a decline in the JD.com stock price during the quarter.



1 Guidance does not incorporate the previously provided estimated impact for Flipkart, which included the incremental interest expense to fund the transaction, as the transaction has not yet closed.
2 See additional information at the end of this release regarding non-GAAP financial measures.
3 Adjusted for discrete items in the prior year. Including discrete items in the prior year, the fiscal 2019 consolidated operating income is expected to result in a high single-digit percentage increase.
NYSE: WMT
August 16, 2018
stock.walmart.com




3

Portfolio Repositioning
Thoughtful and deliberate consideration of the company's portfolio of businesses is a key enabler of its strategic framework. Following is an update of recently announced transactions.
Investment in Flipkart Group
On Aug. 8, 2018, the Competition Commission of India issued an unconditional approval for the company's investment in Flipkart, which satisfies one of the conditions to the closing of the company's investment in Flipkart. The transaction is expected to close as soon as reasonably practicable after the satisfaction or waiver of the remaining closing conditions.
Sale of a majority stake in Walmart Brazil
On Aug. 1, 2018, the company completed the sale of an 80 percent stake in Walmart Brazil.
Combination of Sainsbury's and Asda, Walmart's U.K. subsidiary
The previously announced proposed combination of Sainsbury's and Asda is pending regulatory review.
Segment results
 
(Amounts in billions, except as noted. Dollar and percentage changes may not recalculate due to rounding.)
In the first quarter of fiscal 2019, the company revised its corporate overhead allocations to the operating segments. Accordingly, previous segment operating income was recast to be comparable to the current period.
image55.jpg U.S.
Q2 FY19
Q2 FY18
Change
Net sales
$82.8
$78.7
$4.1
5.2%
Comp sales (ex. fuel)1
4.5%
1.8%
270 bps
N/A
image9a15.jpg
Traffic
2.2%
1.3%
90 bps
N/A
image9a15.jpg
Ticket
2.3%
0.5%
180 bps
N/A
image9a15.jpg
eCommerce
~100 bps
~70 bps
~30 bps
N/A
Operating income
$4.5
$4.4
$0.1
1.4%

 
image54.jpg
Q2 FY19
Q2 FY18
Change
 
 
Net sales
$29.5
$28.3
$1.1
4.0%
 
Net sales (constant currency)2
$29.2
$28.3
$0.9
3.1%
 
Operating income
$1.3
$1.6
-$0.3
-19.1%
 
Operating income (constant currency)2
$1.2
$1.6
-$0.3
-20.4%

 
image53.jpg
Q2 FY19
Q2 FY18
Change
 
 
Net sales
$14.8
$14.9
-$0.1
-0.6%
 
Comp sales (ex. fuel)1
5.0%
1.2%
380 bps
N/A
 
image9a15.jpg
Traffic
6.7%
2.1%
460 bps
N/A
 
image9a15.jpg
Ticket
-1.7%
-0.9%
-80 bps
N/A
 
image9a15.jpg
eCommerce
~110 bps
~80 bps
~30 bps
N/A
 
Operating income
$0.4
$0.4
$—
2.8%

 
1 13-week period ended July 27, 2018, compared to 13-week period ended July 28, 2017, and excludes fuel.
2 See additional information at the end of this release regarding non-GAAP financial measures.
NYSE: WMT
August 16, 2018
stock.walmart.com




4

About Walmart
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 265 million customers and members visit our more than 11,200 stores under 55 banners in 27 countries and eCommerce websites. With fiscal year 2018 revenue of $500.3 billion, Walmart employs over 2.2 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
Dan Binder (479) 258-7172

Media Relations contact
Randy Hargrove (800) 331-0085


Forward-Looking Statements
This release contains statements as to Walmart management's guidance regarding earnings per share, adjusted earnings per share, consolidated net sales growth, Walmart U.S. eCommerce sales growth, Walmart International sales growth, capital expenditures and Walmart's effective tax rate for the fiscal year ending January 31, 2019, and comparable sales (excluding fuel) for Walmart U.S. and Sam's Club 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, administrative audit outcomes, impact of discrete items and the mix of earnings between the U.S. and Walmart's international operations;
changes in existing tax, labor and other laws and regulations and changes in tax rates, trade agreements, trade restrictions and tariff rates;
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;
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.
Such risks, uncertainties and factors also include the risks relating to Walmart’s strategy, operations and performance and the financial, legal, tax, regulatory, compliance, reputational and other risks discussed in Walmart’s most recent annual report on Form 10-K and subsequent quarterly reports on Form 10-Q filed with the SEC. Walmart urges you to consider all of the risks, uncertainties and factors identified above or discussed in such reports carefully in evaluating the forward-looking statements in this release. Walmart cannot assure you that the results reflected or implied by any forward-looking statement will be realized or, even if substantially realized, that those results will have the forecasted or expected consequences and effects for or on Walmart’s operations or financial performance. The forward-looking statements made in this release are as of the date of this release. Walmart undertakes no obligation to update these forward-looking statements to reflect subsequent events or circumstances.

NYSE: WMT
August 16, 2018
stock.walmart.com




5

Walmart Inc.
Condensed Consolidated Statements of Income
(Unaudited)
 
 
Three Months Ended
 
Six Months Ended
 
 
July 31,
 
July 31,
(Amounts in millions, except per share data)
 
2018

2017
 
Percent Change
 
2018

2017

Percent Change
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
Net sales
 
$
127,059


$
121,949

 
4.2
 %
 
$
248,689


$
238,475


4.3
 %
Membership and other income
 
969


1,406

 
(31.1
)%
 
2,029


2,422


(16.2
)%
Total revenues
 
128,028


123,355

 
3.8
 %
 
250,718


240,897


4.1
 %
Costs and expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Cost of sales
 
95,571


91,521

 
4.4
 %
 
187,278


179,209


4.5
 %
Operating, selling, general and administrative expenses
 
26,707


25,865

 
3.3
 %
 
52,536


50,482


4.1
 %
Operating income
 
5,750


5,969

 
(3.7
)%
 
10,904


11,206


(2.7
)%
Interest:
 
 
 
 
 
 
 
 
 
 
 
 
Debt
 
460


522

 
(11.9
)%
 
897


1,028


(12.7
)%
Capital lease and financing obligations
 
94


91

 
3.3
 %
 
187


183


2.2
 %
Interest income
 
(51
)

(38
)
 
34.2
 %
 
(94
)

(73
)

28.8
 %
Interest, net
 
503


575

 
(12.5
)%
 
990


1,138


(13.0
)%
Loss on extinguishment of debt
 

 
788

 
(100.0
)%
 

 
788

 
(100.0
)%
Other (gains) and losses
 
4,849

 

 
N/A

 
6,694

 

 
N/A

Income before income taxes
 
398


4,606

 
(91.4
)%
 
3,220


9,280


(65.3
)%
Provision for income taxes
 
1,125


1,502

 
(25.1
)%
 
1,671


3,024


(44.7
)%
Consolidated net income (loss)
 
(727
)

3,104

 
(123.4
)%
 
1,549


6,256


(75.2
)%
Consolidated net income attributable to noncontrolling interest
 
(134
)

(205
)
 
(34.6
)%
 
(276
)

(318
)

(13.2
)%
Consolidated net income (loss) attributable to Walmart
 
$
(861
)

$
2,899

 
(129.7
)%
 
$
1,273


$
5,938


(78.6
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss) per common share:
 
 
 
 
 
 
 
 
 
 
 
 
Basic net income (loss) per common share attributable to Walmart
 
$
(0.29
)

$
0.96

 
(130.2
)%
 
$
0.43


$
1.97


(78.2
)%
Diluted net income (loss) per common share attributable to Walmart
 
$
(0.29
)

$
0.96

 
(130.2
)%
 
$
0.43


$
1.96


(78.1
)%
 
 
 
 
 
 
 
 








Weighted-average common shares outstanding:
 
 
 
 
 
 
 








Basic
 
2,946


3,008

 
 
 
2,948


3,021


 
Diluted
 
2,960


3,021

 
 
 
2,963


3,034


 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dividends declared per common share
 
$

 
$

 
 
 
$
2.08


$
2.04


 




6

Walmart Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
 
 
 
 
 
 
 
 
 
July 31,
 
January 31,
 
July 31,
(Amounts in millions)
 
2018
 
2018
 
2017
ASSETS
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
Cash and cash equivalents
 
$
15,840

 
$
6,756

 
$
6,469

Receivables, net
 
5,002

 
5,614

 
5,395

Inventories
 
41,985

 
43,783

 
43,442

Prepaid expenses and other
 
3,543

 
3,511

 
1,457

Total current assets
 
66,370

 
59,664

 
56,763

Property and equipment:
 
 
 
 
 
 
Property and equipment
 
182,524

 
185,154

 
183,545

Less accumulated depreciation
 
(78,505
)
 
(77,479
)
 
(75,375
)
Property and equipment, net
 
104,019

 
107,675

 
108,170

Property under capital lease and financing obligations:
 
 
 
 
 
 
Property under capital lease and financing obligations
 
12,545

 
12,703

 
12,581

Less accumulated amortization
 
(5,547
)
 
(5,560
)
 
(5,398
)
Property under capital lease and financing obligations, net
 
6,998

 
7,143

 
7,183

 
 
 
 
 
 
 
Goodwill
 
17,840

 
18,242

 
18,037

Other long-term assets
 
10,835

 
11,798

 
11,413

Total assets
 
$
206,062

 
$
204,522

 
$
201,566

 
 
 
 
 
 
 
LIABILITIES AND EQUITY
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
Short-term borrowings
 
$
444

 
$
5,257

 
$
3,262

Accounts payable
 
43,128

 
46,092

 
42,389

Dividends payable
 
3,057

 

 
3,057

Accrued liabilities
 
22,846

 
22,122

 
19,686

Accrued income taxes
 
424

 
645

 
505

Long-term debt due within one year
 
1,090

 
3,738

 
3,254

Capital lease and financing obligations due within one year
 
694

 
667

 
658

Total current liabilities
 
71,683

 
78,521

 
72,811

 
 
 
 
 
 
 
Long-term debt
 
44,958

 
30,045

 
33,706

Long-term capital lease and financing obligations
 
6,610

 
6,780

 
6,763

Deferred income taxes and other
 
8,999

 
8,354

 
9,240

 
 
 
 
 
 
 
Commitments and contingencies
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity:
 
 
 
 
 
 
Common stock
 
294

 
295

 
299

Capital in excess of par value
 
2,710

 
2,648

 
2,352

Retained earnings
 
80,810

 
85,107

 
84,838

Accumulated other comprehensive loss
 
(12,629
)
 
(10,181
)
 
(11,100
)
Total Walmart shareholders’ equity
 
71,185

 
77,869

 
76,389

Noncontrolling interest
 
2,627

 
2,953

 
2,657

Total equity
 
73,812

 
80,822

 
79,046

Total liabilities and equity
 
$
206,062

 
$
204,522

 
$
201,566





7

Walmart Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited) 

 
Six Months Ended

 
July 31,
(Amounts in millions)
 
2018

2017
Cash flows from operating activities:
 
 
 
 
Consolidated net income
 
$
1,549


$
6,256

Adjustments to reconcile consolidated net income to net cash provided by operating activities:
 



Depreciation and amortization
 
5,332


5,169

Unrealized (gains) and losses
 
1,939

 

(Gains) and losses for disposal of business operations
 
4,755

 

Deferred income taxes
 
(117
)

94

Loss on extinguishment of debt
 

 
788

Other operating activities
 
469


(16
)
Changes in certain assets and liabilities, net of effects of acquisitions:
 



Receivables, net
 
257


585

Inventories
 
441


233

Accounts payable
 
(1,588
)

535

Accrued liabilities
 
(1,702
)

(1,720
)
Accrued income taxes
 
(240
)

(564
)
Net cash provided by operating activities
 
11,095


11,360

 
 
 
 
 
Cash flows from investing activities:
 
 
 
 
Payments for property and equipment
 
(4,282
)

(4,423
)
Proceeds from the disposal of property and equipment
 
205


212

Proceeds from disposal of certain operations
 

 
1,012

Payments for business acquisitions, net of cash acquired
 

 
(363
)
Other investing activities
 
(351
)

20

Net cash used in investing activities
 
(4,428
)

(3,542
)
 
 
 
 
 
Cash flows from financing activities:
 
 
 
 
Net change in short-term borrowings
 
(4,761
)

2,144

Proceeds from issuance of long-term debt
 
15,851


1,503

Repayments of long-term debt
 
(3,050
)

(3,400
)
Premiums paid to extinguish debt
 

 
(777
)
Dividends paid
 
(3,067
)

(3,088
)
Purchase of Company stock
 
(1,844
)

(4,447
)
Dividends paid to noncontrolling interest
 
(171
)

(473
)
Purchase of noncontrolling interest
 


(8
)
Other financing activities
 
(478
)

(85
)
Net cash provided by (used in) financing activities
 
2,480


(8,631
)
 
 





Effect of exchange rates on cash, cash equivalents and restricted cash
 
(299
)

432

 
 





Net increase (decrease) in cash, cash equivalents and restricted cash
 
8,848

 
(381
)
Cash, cash equivalents and restricted cash at beginning of year
 
7,014

 
7,144

Cash, cash equivalents and restricted cash at end of period
 
$
15,862

 
$
6,763










Note: Due to the adoption of ASU 2016-18, Statement of Cash Flows-Restricted Cash (Topic 230), on February 1, 2018, restricted cash is now included with cash and cash equivalents when reconciling the beginning and ending period amounts for both fiscal 2019 and 2018.




8

Walmart Inc.
Supplemental Financial Information
(Unaudited)

Net sales and operating income
 
Net Sales
 
Operating Income
 
Three Months Ended
 
Three Months Ended
 
July 31,
 
July 31,
(dollars in millions)
2018
2017
Percent Change
 
2018
2017
Percent Change
Walmart U.S.
$
82,815

$
78,738

5.2
 %
 
$
4,479

$
4,417

1.4
 %
Walmart International
29,454

28,331

4.0
 %
 
1,269

1,568

-19.1
 %
Sam's Club
14,790

14,880

-0.6
 %
 
402

391

2.8
 %
Corporate and support


N/A

 
-400

-407

-1.7
 %
Consolidated
$
127,059

$
121,949

4.2
 %
 
$
5,750

$
5,969

-3.7
 %
 
 
 
 
 
 
 
 
U.S. comparable sales results
 
 
With Fuel
 
Without Fuel
 
Fuel Impact
 
 
13 Weeks Ended
 
13 Weeks Ended
 
13 Weeks Ended
 
 
7/27/2018
 
7/28/2017
 
7/27/2018
 
7/28/2017
 
7/27/2018
 
7/28/2017
Walmart U.S.
 
4.7%
 
1.9%
 
4.5%
 
1.8%
 
0.2%
 
0.1%
Sam's Club
 
7.7%
 
1.4%
 
5.0%
 
1.2%
 
2.7%
 
0.2%
Total U.S.
 
5.2%
 
1.8%
 
4.6%
 
1.7%
 
0.6%
 
0.1%
 
 
 
 
 
 
 
 
 
 
 
 
 

Comparable sales is a metric that indicates the performance of our existing stores and clubs and it is important to review in conjunction with the Company's financial results reported in accordance with GAAP.  Comparable sales excluding fuel is also an important, separate metric that indicates the performance of our existing stores and clubs without considering fuel, which is volatile and unpredictable. Other companies in our industry may calculate comparable sales differently, limiting the comparability of the metric.




9

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 six months ended July 31, 2018.
 
Three Months Ended July 31,
 
Six Months Ended July 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
$
29,769

2.7
 %
 
$
128,028

3.8
 %
 
$
60,403

7.0
 %
 
$
250,718

4.1
 %
Currency exchange rate fluctuations
-248

N/A

 
-248

N/A

 
-2,218

N/A

 
-2,218

N/A

Constant currency total revenues
$
29,521

1.8
 %
 
$
127,780

3.6
 %
 
$
58,185

3.1
 %
 
$
248,500

3.2
 %
 


 




 


 


Net sales:


 




 


 


As reported
$
29,454

4.0
 %
 
$
127,059

4.2
 %
 
$
59,714

7.7
 %
 
$
248,689

4.3
 %
Currency exchange rate fluctuations
-242

N/A

 
-242

N/A

 
-2,189

N/A

 
-2,189

N/A

Constant currency net sales
$
29,212

3.1
 %
 
$
126,817

4.0
 %
 
$
57,525

3.8
 %
 
$
246,500

3.4
 %
 


 




 


 


Operating income:


 




 


 


As reported
$
1,269

-19.1
 %
 
$
5,750

-3.7
 %
 
$
2,534

-6.4
 %
 
$
10,904

-2.7
 %
Currency exchange rate fluctuations
-21

N/A

 
-21

N/A

 
-146

N/A

 
-146

N/A

Constant currency operating income
$
1,248

-20.4
 %
 
$
5,729

-4.0
 %
 
$
2,388

-11.8
 %
 
$
10,758

-4.0
 %
1 Change versus prior year comparable period.





10

Free Cash Flow
We define free cash flow as net cash provided by operating activities in a period minus payments for property and equipment made in that period. We had net cash provided by operating activities of $11.1 billion and $11.4 billion for the six months ended July 31, 2018 and 2017, respectively. The decrease in net cash provided by operating activities was primarily due to the timing of vendor payments, partially offset by a decrease in tax payments primarily as a result of Tax Reform. We generated free cash flow of $6.8 billion for the six months ended July 31, 2018, which was relatively flat compared to $6.9 billion for the six months ended July 31, 2017.
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.
 
 
Six Months Ended
 
 
July 31,
(Dollars in millions)
 
2018

2017
Net cash provided by operating activities
 
$
11,095


$
11,360

Payments for property and equipment (capital expenditures)
 
-4,282


-4,423

Free cash flow
 
$
6,813


$
6,937

 
 





Net cash used in investing activities1
 
$
-4,428


$
-3,542

Net cash provided by (used in) financing activities
 
2,480


-8,631

1 "Net cash used in investing activities" includes payments for property and equipment, which is also included in our computation of free cash flow.







11

Adjusted EPS
Adjusted diluted earnings per share from continuing operations attributable to Walmart (Adjusted EPS) is considered a non-GAAP financial measure under the SEC's rules because it excludes certain amounts not excluded in the diluted earnings per share from continuing operations attributable to Walmart calculated in accordance with GAAP (EPS) for such period. Management believes that Adjusted EPS is a meaningful measure to share with investors because it 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 and the ability to make a more informed assessment of such core earnings performance.

We have calculated Adjusted EPS for the three months ended July 31, 2018 by adjusting EPS for the following: (1) the sale of a majority stake in Walmart Brazil, (2) an adjustment in the provisional amount related to Tax Reform, and (3) unrealized gains and losses on the company's equity investment in JD.com. The most directly comparable financial measure calculated in accordance with GAAP is EPS. We adjust for two of the items on a recurring basis each quarter, including:
Tax Reform - The SEC allows companies to record provisional amounts during a one year measurement period from the U.S. Tax Reform enactment date. While the company recorded provisional amounts as of January 31, 2018, the company adjusts such provisional amounts during fiscal 2019. As the company adjusted EPS in fiscal 2018 for the impact of Tax Reform, for consistency, management adjusts EPS for any fiscal 2019 changes to the provisional amounts.
Unrealized gains and losses - Beginning in fiscal 2019, due to a change in U.S. accounting principles, Walmart is required to include unrealized gains/losses of certain equity investments within net income.  The company's unrealized gains/losses primarily relate to Walmart's equity investment in JD.com.  While the company's investment in JD.com was a strategic decision for the company's retail operations in China, management's measurement of that strategy is primarily focused on the Walmart China financial results rather than the investment value of JD.com. Accordingly, management adjusts EPS for the unrealized JD.com investment gains/losses.

 
Three Months Ended
July 31, 2018
Diluted earnings per share:
 
 
 
 
 

Reported net loss per share
 
 
 
 
 
-$0.29

 
 
 
 
 

Adjustments:
 
Pre-Tax Impact
 
Tax Impact1
 
Net Impact
Loss on sale of majority stake in Walmart Brazil
 
$1.61
 
-$0.10
 
$1.51
Adjustment to provisional amount for Tax Reform
 
 
0.04
 
0.04
Unrealized (gains) and losses on JD.com investment
 
0.03
 
 
0.03
Net adjustments
 
 
 
 
 
$1.58

 
 
 
 
 
 
Adjusted EPS
 
 
 
 
 
$1.29
1 Calculated based on nature of item, including any realizable deductions, and statutory rate in effect for relevant jurisdictions.
2 Change versus prior year comparable period.





12

As previously disclosed in our second quarter ended July 31, 2017 press release, we have calculated Adjusted EPS for the three months ended July 31, 2017 by adjusting EPS for the following: (1) the loss on the early extinguishment of certain debt and (2) the gain on the sale of Suburbia in Mexico. The most directly comparable financial measure calculated in accordance with GAAP is EPS.
 
 
Three Months Ended July 31, 2017
Diluted earnings per share:
 
 
 
 
 
 
 
 
Reported EPS
 
 
 
 
 
 
 
$0.96
 
 
 
 
 
 
 
 
 
Adjustments:
 
Pre-Tax Impact
 
Tax Impact1
 
NCI Impact2
 
Net Impact
Loss on early extinguishment of debt
 
$0.26
 
-$0.09
 
-
 
$0.17
Gain on sale of Suburbia
 
-0.13
 
0.04
 
0.04
 
-0.05
Net adjustments
 
 
 
 
 
 
 
$0.12
 
 
 
 
 
 
 
 
 
Adjusted EPS
 
 
 
 
 
 
 
$1.08

1 Calculated based on nature of item and statutory rate in effect for relevant jurisdictions.
2 Calculated based on the ownership percentages of the noncontrolling interest at Walmex.


Adjusted EPS Guidance

Adjusted EPS Guidance is considered a non-GAAP financial measure. Management believes that Adjusted EPS Guidance for fiscal 2019 is a meaningful metric to share with investors because that metric, which adjusts EPS for certain items recorded in the period, is the metric that best allows comparison of the expected performance for fiscal 2019 to the comparable prior period. In addition, the metric affords investors a view of what management is forecasting for Walmart's core earnings performance for fiscal 2019 and also affords investors the ability to make a more informed assessment of the core earnings performance for the comparable period. We have calculated Adjusted EPS Guidance for fiscal 2019 by adjusting for the amount of the impact of: (1) the sale of a majority stake in Walmart Brazil, (2) adjustments in the provisional amount related to Tax Reform, and (3) unrealized gains and losses on the company's equity investment in JD.com.
 
 
Fiscal 2019
Diluted earnings per share:
 
 
 
 
 
 
Forecasted EPS1
 
 
 
$2.90 to $3.05
 
 
 
 
 
 
 
Adjustments:
 
Pre-Tax Impact
 
Tax Impact2
 
Net Impact
Loss on sale of majority stake in Walmart Brazil
 
$1.61
 
-$0.10
 
$1.51
Adjustment to provisional amount for Tax Reform
 
 
(0.01)
 
(0.01)
Unrealized (gains) and losses on JD.com investment
 
0.65
 
(0.15)
 
0.50
Net adjustments
 
 
 
 
 
$2.00
 
 
 
 
 
 
 
Adjusted EPS guidance
 
 
 
$4.90 to $5.05

1 Guidance does not incorporate the previously provided estimated impact for Flipkart, which included the incremental interest expense to fund the transaction, as the transaction has not yet closed.
2 Calculated based on nature of item, including any realizable deductions, and statutory rate in effect for relevant jurisdictions.


###



View differences made from one to another to evaluate Walmart Inc.'s financial trajectory

Compare SEC Filings Year-over-Year (YoY) and Quarter-over-Quarter (QoQ)
Sample 10-K Year-over-Year (YoY) Comparison

Compare this 8-K Corporate News to its predecessor by reading our highlights to see what text and tables were  removed  ,   added    and   changed   by Walmart Inc..

Continue

Never Miss A New SEC Filing Again


Real-Time SEC Filing Notifications
Screenshot taken from Gmail for a new 10-K Annual Report
Last10K.com Member Feature

Receive an e-mail as soon as a company files an Annual Report, Quarterly Report or has new 8-K corporate news.

Continue

We Highlighted This SEC Filing For You


SEC Filing Sentiment Analysis - Bullish, Bearish, Neutral
Screenshot taken from Wynn's 2018 10-K Annual Report
Last10K.com Member Feature

Read positive and negative remarks made by management in their entirety without having to find them in a 10-K/Q.

Continue

Widen Your SEC Filing Reading Experience


Increased Reading Area for SEC Filings
Screenshot taken from Adobe Inc.'s 10-Q Quarterly Report
Last10K.com Member Feature

Remove data columns and navigations in order to see much more filing content and tables in one view

Continue

Uncover Actionable Information Inside SEC Filings


SEC Filing Disclosures
Screenshot taken from Lumber Liquidators 10-K Annual Report
Last10K.com Member Feature

Read both hidden opportunities and early signs of potential problems without having to find them in a 10-K/Q

Continue

Adobe PDF, Microsoft Word and Excel Downloads


Download Annual and Quarterly Reports as PDF, Word and Excel Documents
Screenshots of actual 10-K and 10-Q SEC Filings in PDF, Word and Excel formats
Last10K.com Member Feature

Export Annual and Quarterly Reports to Adobe PDF, Microsoft Word and Excel for offline viewing, annotations and analysis

Continue

FREE Financial Statements


Download Annual and Quarterly Reports as PDF, Word and Excel Documents
Screenshot of actual balance sheet from company 10-K Annual Report
Last10K.com Member Feature

Get one-click access to balance sheets, income, operations and cash flow statements without having to find them in Annual and Quarterly Reports

Continue for FREE

Intrinsic Value Calculator


Intrinsic Value Calculator
Screenshot of intrinsic value for AT&T (2019)
Last10K.com Member Feature

Our Intrinsic Value calculator estimates what an entire company is worth using up to 10 years of financial ratios to determine if a stock is overvalued or not

Continue

Financial Stability Report


Financial Stability Report
Screenshot of financial stability report for Coco-Cola (2019)
Last10K.com Member Feature

Our Financial Stability reports uses up to 10 years of financial ratios to determine the health of a company's EPS, Dividends, Book Value, Return on Equity, Current Ratio and Debt-to-Equity

Continue

Get a Better Picture of a Company's Performance


Financial Ratios
Available Financial Ratios
Last10K.com Member Feature

See how over 70 Growth, Profitability and Financial Ratios perform over 10 Years

Continue

Log in with your credentials

or    

Forgot your details?

Create Account