Q1FY2022
Financialpresentationtoaccompanymanagementcommentary
Thispresentationcontainsstatementsormayincludeormayincorporatebyreference,statementsthatmaybedeemedtobe"forward-lookingstatements"withinthemeaningofSection21EoftheSecuritiesExchangeActof1934,asamended(the"Act"),thatareintendedtoenjoytheprotectionofthesafeharborforforward-lookingstatementsprovidedbytheActaswellasprotectionsaffordedbyotherfederalsecuritieslaws.Assumptionsonwhichsuchforward-lookingstatementsarebasedarealsoforward-lookingstatements.Suchforward-lookingstatementsarenotstatementsofhistoricalfacts,butinsteadexpressourestimatesorexpectationsforourconsolidated,oroneofoursegment'sorbusiness’,economicperformanceorresultsofoperationsforfutureperiodsorasoffuturedatesoreventsordevelopmentsthatmayoccurinthefutureordiscussourplans,objectivesorgoals.Ouractualresultsmaydiffermateriallyfromthoseexpressedinorimpliedbyanyoftheseforward-lookingstatementsasaresultofchangesincircumstances,assumptionsnotbeingrealizedorotherrisks,uncertaintiesandfactorsincluding:theimpactoftheCOVID-19pandemiconourbusinessandtheglobaleconomy;economic,capitalmarketsandbusinessconditions;trendsandeventsaroundtheworldandinthemarketsinwhichweoperate;currencyexchangeratefluctuations,changesinmarketinterestratesandmarketlevelsofwages;changesinthesizeofvariousmarkets,includingeCommercemarkets;unemploymentlevels;inflationordeflation,generallyandinparticularproductcategories;consumerconfidence,disposableincome,creditavailability,spendinglevels,shoppingpatterns,debtlevelsanddemandforcertainmerchandise;theeffectivenessoftheimplementationandoperationofourstrategies,plans,programsandinitiatives;unexpectedchangesinourobjectivesandplans;theimpactofacquisitions,investments,divestitures,andotherstrategicdecisions;ourabilitytosuccessfullyintegrateacquiredbusinesses;changesinthetradingpricesofcertainequityinvestmentswehold;initiativesofcompetitors,competitors'entryintoandexpansioninourmarkets,andcompetitivepressures;customertrafficandaveragetransactionsinourstoresandclubsandonoureCommercewebsites;themixofmerchandisewesell,thecostofgoodswesellandtheshrinkageweexperience;ourgrossprofitmargins;thefinancialperformanceofWalmartandeachofitssegments,includingtheamountsofourcashflowduringvariousperiods;theamountofournetsalesandoperatingexpensesdenominatedintheU.S.dollarandvariousforeigncurrencies;commoditypricesandthepriceofgasolineanddieselfuel;supplychaindisruptionsanddisruptionsinseasonalbuyingpatterns;theavailabilityofgoodsfromsuppliersandthecostofgoodsacquiredfromsuppliers;ourabilitytorespondtochangingtrendsinconsumershoppinghabits;consumeracceptanceofandresponsetoourstores,clubs,eCommerceplatforms,programs,merchandiseofferingsanddeliverymethods;cybersecurityeventsaffectingusandrelatedcostsandimpacttothebusiness;developmentsin,outcomesof,andcostsincurredinlegalorregulatoryproceedingstowhichweareapartyoraresubject,andtheliabilities,obligationsandexpenses,ifany,thatwemayincurinconnectiontherewith;casualtyandaccident-relatedcostsandinsurancecosts;theturnoverinourworkforceandlaborcosts,includinghealthcareandotherbenefitcosts;oureffectivetaxrateandthefactorsaffectingoureffectivetaxrate,includingassessmentsofcertaintaxcontingencies,valuationallowances,changesinlaw,administrativeauditoutcomes,impactofdiscreteitemsandthemixofearningsbetweentheU.S.andWalmart'sinternationaloperations;changesinexistingtax,laborandotherlawsandregulationsandchangesintaxratesincludingtheenactmentoflawsandtheadoptionandinterpretationofadministrativerulesandregulations;theimpositionofnewtaxesonimports,newtariffsandchangesinexistingtariffrates;theimpositionofnewtraderestrictionsandchangesinexistingtraderestrictions;adoptionorcreationofnew,andmodificationofexisting,governmentalpolicies,programs,initiativesandactionsinthemarketsinwhichWalmartoperatesandelsewhereandactionswithrespecttosuchpolicies,programsandinitiatives;changesinaccountingestimatesorjudgments;thelevelofpublicassistancepayments;naturaldisasters,changesinclimate,geopoliticalevents,globalhealthepidemicsorpandemicsandcatastrophicevents;andchangesingenerallyacceptedaccountingprinciplesintheUnitedStates.
OurmostrecentannualreportonForm10-KandsubsequentquarterlyreportonForm10-QfiledwiththeSECdiscussotherrisksandfactorsthatcouldcauseactualresultstodiffermateriallyfromthoseexpressedorimpliedbyanyforward-lookingstatementinthepresentation.Weurgeyoutoconsideralloftherisks,uncertaintiesandfactorsidentifiedaboveordiscussedinsuchreportscarefullyinevaluatingtheforward-lookingstatementsinthispresentation.Walmartcannotassureyouthattheresultsreflectedinorimpliedbyanyforward-lookingstatementwillberealizedor,evenifsubstantiallyrealized,thatthoseresultswillhavetheforecastedorexpectedconsequencesandeffectsfororonouroperationsorfinancialperformance.Theforward-lookingstatementsmadetodayareasofthedateofthispresentation.Walmartundertakesnoobligationtoupdatetheseforward-lookingstatementstoreflectsubsequenteventsorcircumstances.
Thispresentationincludescertainnon-GAAPmeasuresasdefinedunderSECrules,includingnetsales,revenue,andoperatingincomeonaconstantcurrencybasis,adjustedoperatingincome,adjustedoperatingincomeinconstantcurrency,adjustedEPS,freecashflowandreturnoninvestment.Refertoinformationaboutthenon-GAAPmeasurescontainedinthispresentation.AdditionalinformationasrequiredbyRegulationGandItem10(e)ofRegulationS-Kregardingnon-GAAPmeasurescanbefoundinourmostrecentForm10-KandourForm8-KfurnishedasofthedateofthispresentationwiththeSEC,whichareavailableatwww.stock.walmart.com.
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Safeharborandnon-GAAPmeasures
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Metric PriorFY22Guidance UpdatedFY22GuidanceConsolidatednetsales Declineinconstantcurrency
• Excludingdivestitures1,consolidatednetsalesgrowthuplowsingle-digits
Declinelowsingle-digitsinconstantcurrency• Excludingdivestitures1,consolidatednetsalesgrowthuplow-
to-midsingle-digits
Compsalesgrowth • WalmartU.S.,uplowsingle-digits,excludingfuel• Sam’sClub,uplowsingle-digits,ex.fuelandtobacco
Nochange
WalmartInternationalnetsales Declineinconstantcurrency• HighergrowthpercentagethanU.S.,excludingdivestitures1
Decline20%-25%inconstantcurrencyduetodivestitures1
• Increasemidsingle-digits,excludingdivestitures1
Consolidatedexpenseleverage Maintainrate,orslightlydeleverage Maintainrate,orslightlyleverage
Consolidatedoperatingincome Declineslightlyinconstantcurrency• Flattoupslightly,excludingdivestitures1
Increasemidsingle-digitsinconstantcurrency• Increasehighsingle-digits,excludingdivestitures1,inconstant
currencyWalmartU.S.operatingincome Increaseslightly Increasehighsingle-digits
Effectivetaxrate 24.5%to25.5% Nochange
EPS Declineslightly• Flattoupslightly,excludingdivestitures1
Increasehighsingle-digits• Increaselowdouble-digits,excludingdivestitures1
Capitalexpenditures Around$14billionwithafocusonsupplychain,automation,customer-facinginitiativesandtechnology
Nochange
1WecompletedthesalesofWalmartArgentinainNovember2020,AsdainFebruary2021andSeiyuinMarch2021.
Fiscal2022Q2andfull-yearguidanceThefollowingguidancereflectsthecompany’supdatedexpectationsforfiscalyear2022andisprovidedonanon-GAAPbasisasthecompanycannotpredictcertainelementswhichareincludedinreportedGAAPresults,includingtheimpactofforeignexchangetranslationandexternallyadjusteditems.Prioryearresultsareonanadjustedbasis.Thecompany’supdatedguidanceassumesCOVID-19conditionscontinuetoimproveaswellasnosignificantadditionalgovernmentstimuluspackagesfortheremainderoftheyear.
Metric PriorQ2FY22Guidance UpdatedQ2FY22GuidanceCompsalesgrowth N/A WalmartU.S.,uplowsingle-digits,excludingfuel
Consolidatedoperatingincome Declinemid-to-highsingle-digits Declinelow-to-midsingledigits• Upslightly,excludingdivestitures1
EPS Declinemid-to-highsingle-digits Declinelowsingle-digits• Uplowsingle-digits,excludingdivestitures1
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Totalrevenue
$138.3+2.7%
Totalrevenue,constantcurrency1,2
$137.4+2.1%
MembershipandOtherIncome
$1.2+21.2%
Netsales
$137.2+2.6%
Netsales,constantcurrency1,2
$136.2+1.9%
Grossprofitrate2
24.7%+104bps
Operatingexpenseasapercentageofnetsales2
20.5%+3bps
Operatingincome
$6.9+32.3%
Operatingincome,constantcurrency1,2
$6.9+31.3%
Effectivetaxrate
26.9%
EPS
$0.97-30.7%
AdjustedEPS1
$1.69+43.2%
WalmartInc.-Q1FY22Dollarsinbillions,exceptpershare.Changeiscalculatedasthechangeversustheprioryearcomparableperiod
1Seepressreleaselocatedatwww.stock.walmart.comandreconciliationsattheendofpresentationregardingnon-GAAPfinancialmeasures.2WhenremovingthedivestituresofU.K.,JapanandArgentina:
• Totalrevenueinconstantcurrencywouldhaveincreased5.8%,excluding$4.7billionand$9.2billioninQ1fiscal2022and2021,respectively.• Netsalesinconstantcurrencywouldhaveincreased5.6%,excluding$4.7billionand$9.1billioninQ1fiscal2022and2021,respectively.• Grossprofitratewouldhaveincreased96bps,excludingabenefitof8bpsduetothedivestitures.• Operatingexpenseasapercentageofnetsaleswouldhaveincreased21bps,excludingabenefitof18bpsduetothedivestitures.• Operatingincomeinconstantcurrencywouldhaveincreased28.3%,excluding$273millionand$90millioninQ1fiscal2022and2021,respectively.• eCommercenetsalesinconstantcurrencywouldhaveincreased42.8%,excluding$706millionand$730millioninQ1fiscal2022and2021,respectively.
Adj.operatingincome,constantcurrency1,2
$7.0+33.7%
1DebttototalcapitalizationcalculatedasofApril30,2021.Debtincludesshort-termborrowings,long-termdebtduewithinoneyear,financeleaseobligationsduewithinoneyear,long-termdebtandlong-termfinanceleaseobligations.TotalcapitalizationincludesdebtandtotalWalmartshareholders'equity.
2Calculatedforthetrailing12monthsendedApril30,2021.ForROI,seereconciliationsattheendofpresentationregardingnon-GAAPfinancialmeasures.5
Receivables,net Debttocapitalization1
$5.8 38.2%+15.3% -780bps
Inventories Returnonassets2
$46.4 5.3%+12.5% -130bps
Accountspayable Returnoninvestment2
$48.2 14.4%+9.2% +100bps
WalmartInc.-Q1FY22Dollarsinbillions.Changeiscalculatedasthechangeversustheprioryearcomparableperiod
1Seepressreleaselocatedatwww.stock.walmart.comandreconciliationsattheendofthispresentationregardingnon-GAAPfinancialmeasures.2$17.6billionremainingof$20billionauthorizationapprovedinFebruary2021.Thecompanyrepurchasedapproximately20.6millionsharesinQ1fiscal2022. 6
Operatingcashflow Dividends
$2.9 $1.5-$4.2
Capitalexpenditures Sharerepurchases2
$2.2 $2.8+$0.5
Freecashflow1 Totalshareholderreturns
$0.6 $4.4-$4.6
WalmartInc.-YTDQ1FY22Dollarsinbillions.Dollarchangesmaynotrecalculateduetorounding.Changeiscalculatedasthechangeversustheprioryearcomparableperiod
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NetSales
$93.2+5.0%
eCommercenetsalesgrowth
+37%
eCommercecontributiontocomp1,2
~360bps
Inventory
Total:+15.8%
Comparablesales1,2
6.0%Comparabletransactions
-3.2%Comparableaverageticket
9.5%
• StrongeCommercesalesgrowthacrosschannelsthroughoutQ1;ledbygrowthinstorepickup&deliveryandmarketplace
• Onatwo-yearstack,eCommercesalesmorethandoubled
• Compsalesstrongerthanexpectedaidedbystimulusspendingdespitelappinglastyear'sCOVID-relatedstock-upphaseandstimulus
• Onatwo-yearstack,compsalesincreased16%
• Customerscontinuedtoconsolidatestoreshoppingtripswithlargeraveragebasketsizes;morepurchasesviaeCommerce;comparabletransactionsdeclinedlessthanpriorquarters
Remodels:89stores
Pickup:~3,800locations
Same-daydelivery:>3,200stores
• Increasereflectsinventorybuildtosupporthighersalestrendsandlappinglastyear'sCOVID-relatedeffectsoninventory
1Compsalesforthe13-weekperiodendedApril30,2021comparedtothe13-weekperiodendedMay1,2020,andexcludesfuel.2Theresultsofnewacquisitionsareincludedinourcompsalesmetricsinthe13thmonthafteracquisition.
WalmartU.S.-Q1FY22Dollarsinbillions.Changeiscalculatedasthechangeversustheprioryearcomparableperiod
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Grossprofitrate
+142bps
Operatingincome
$5.5+26.8%
Operatingexpenserate
+49bps
• BenefitedfrommixshiftsintoGeneralMerchandise,dueinparttostimulus,andlowermarkdowns
• Alsobenefitedfromlappinglastyear'sweakerresultsduetoCOVID-relatedmixshiftsintoFoodandclosuresofAutoCareCentersandVisionCenters
• Expensesdeleveragedprimarilyduetostrategicwageandtechnologyinvestments
• COVID-relatedcostswerelowerby~$400millionandbenefitedexpenseleverageby~50bps
Adj.operatingincome1
$5.6+29.7%
WalmartU.S.-Q1FY22Dollarsinbillions.Changeiscalculatedasthechangeversustheprioryearcomparableperiod
1Seepressreleaselocatedatwww.stock.walmart.comandreconciliationsattheendofpresentationregardingnon-GAAPfinancialmeasures.
WalmartU.S.-quarterlymerchandisehighlights
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Category Compsales Details
Grocery -lowsingle-digit
• Salesdeclinedagainstatoughcomparisonaswelappedlastyear'scustomerstockup,butwereuplow-doubledigitsonatwo-yearstackedbasis
• Foodcategoriessawmid-teensgrowthonatwo-yearstackaidedbystrongpricepositioning,improvingin-stocksandexpandedstorehourswhileconsumablessalesreflectedstrengthinhouseholdchemicalsandareboundinbeautysaleswithcustomertrendstowardsocialinteraction
• SalesvolumesfromeCommercepickupanddeliveryfromstoreremainrobust
Health&wellness +midsingle-digit • Strongsalesreflectedbrandeddruginflation,lappinglastyear'sCOVID-relatedclosuresofVisionCenters,andthisyear'svaccineadministration
Generalmerchandise +low20%• Saleswereaidedbystimulusspendingandreflectedcustomertrendstowardrecreation
andhomeimprovementsincludingcategoriessuchasapparel,home,outdoorlivingandsportinggoods
101Seepressreleaselocatedatwww.stock.walmart.comandreconciliationsattheendofpresentationregardingnon-GAAPfinancialmeasures.
Inventory
$9.2+1.8%
Grossprofitrate
+42bpsOperatingincome
$1.2+48.1%
Netsales,constantcurrency1
$26.4-11.4%
Operatingexpenserate
-86bps
Operatingincome,constantcurrency1
$1.1+41.8%
• Positivelyimpactedby18bpsfromdivestitures
• Retainedmarketgrossprofitrateincreased24bpsduetomixshifttohighermargincategoriesandfewermarkdowns
Netsales
$27.3-8.3%
WalmartInternational-Q1FY22Dollarsinbillions.Dollarchangesmaynotrecalculateduetorounding.Changeiscalculatedasthechangeversustheprioryearcomparableperiod
• Operatingexpenserateleveraged~90bpsfromdivestitures,primarilydrivenbyceasingdepreciation&amortizationfortheU.K.andJapan(~60bps)whileheldforsaleunderU.S.GAAPandlowerCOVID-relatedcosts(~24bps)
• Retainedmarketoperatingexpenseratewasrelativelyflat
• RetainedmarketlowerCOVID-relatedcostsbenefitedleverage~$30million(~8bps)
• Divestiturescontributed$5.0billionofnetsalesduetoapartialperiodownership;areductionof$4.2billionYoY
• Retainedmarketgrowthof8.4%
• Divestiturescontributed$4.7billionofnetsalesduetoapartialperiodownership;areductionof$4.4billionYoY
• Retainedmarketgrowthof5.1%:◦ StrengthinFlipkartandCanada◦ eCommercenetsalescontributed
16%oftotalnetsales◦ Negativelyaffectedby
government-mandatedrestrictionsincertainmarkets
• Divestiturescontributed$289millionofoperatingincome
• Retainedmarketgrowthof26.4%
• Divestiturescontributed$273millionofoperatingincome
• Retainedmarketgrowthof21.5%
• $1.8billiondecreasefromdivestitures
• Retainedmarketinventoryincreasedreflectinghighersalestrends
1WalmexincludestheconsolidatedresultsofMexicoandCentralAmerica2ANTAD-AsociacionNacionaldeTiendasdeAutoservicioyDepartamentales;TheNationalAssociationofSupermarketsandDepartmentStores
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Walmex1 China Canada
Netsalesgrowth +0.4% +4.1% +3.5%
Comparablesales -0.8% +1.3% +3.4%
Comparabletransactions -17.0% +5.8% +0.2%
Comparableticket +19.5% -4.3% +3.2%
• Growthinapparelandgeneralmerchandise,offsetbyslowergrowthinfoodandconsumablesagainsttoughercomparisons
• InMexico,compsalesslightlydeclined-0.1%;two-yearstackof+10.7%
• CompsalesoutpacedANTAD2self-serviceandclub
• MexicoeCommercenetsales+166%
• StrongsalesinSam'sClubacrossallcategories,offsetbysoftertrafficinHypermarkets
• StrongresultsfromChineseNewYear
• Sam'sClubdelivereddoubledigitcompsalesgrowth
• eCommercenetsales+60%
WalmartInternational-Q1FY22Resultsarepresentedonaconstantcurrencybasis.Netsalesandcompsalesarepresentedonanominal,calendarbasisandincludeeCommerceresults.Changeiscalculatedasthechangeversustheprioryearcomparableperiod.
• Strongsalesinapparelandgeneralmerchandise
• StrongstartwithheadwindslaterinthequarterfromCOVID-relatedrestrictionsonnon-essentialcategoriesandstorecapacity
• eCommercenetsales+116%,ledbyonlinegrocery
• Write-downonlandcombinedwithinvestmentsinomnichannelexpansionandcustomerexperience
1WalmexincludestheconsolidatedresultsofMexicoandCentralAmerica.
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Walmex1 China Canada
Grossprofitrate Increase Decrease Increase
• Changeinmixtohighermargincategoriessuchasapparelandgeneralmerchandise
• Investmentsinomnichannelexpansion
• Changeinmixtolowermarginformats
• Changeinmixtohighermargincategories,particularlyearlierinthequarter
Operatingexpenserate Increase Decrease Increase
Operatingincome$ Increase Increase Decrease
WalmartInternational-Q1FY22Resultsarepresentedonaconstantcurrencybasis.Changeiscalculatedasthechangeversustheprioryearcomparableperiod
• LappingCovid-relatedexpenses,includingassociatebenefitsandhealthandsafetymeasures,aswellascostdiscipline
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+7.2%Comparablesales
+2.2%Comparabletransactions
+4.9%Averagecomparableticket
~310bpseCommercecontribution
$14,937+6%
Netsales
+12.7%Membershipincome
86bpsGrossprofitrate
+25.9999999999999bps
Operatingexpenserate
$53033.2%
Operatingincome
WithFuel WithoutFuel
Comparablesales1
+11.1%
Netsales
$16.7+10.1%
eCommercenetsalesgrowth
+47%
Comparablesales
+11.1%
Membershipincome
+12.7%
Grossprofitrate
-2bps
Operatingexpenserate
-18bps
Inventory
$4.9+13.7%
Operatingincome
$0.6+16.4%
• Strongmembershiptrendswithrecordtotalmembercount
• Renewalratesincreased580bpswithPlusmemberrenewalrateincreasingover875bps
• Pluspenetrationratealsoimprovedsignificantly
• Significantincreaseinfirstyearmemberrenewals
• Higherfuelsalespositivelyaffectedoperatingexpenseleverage
• Wageinvestmentsandlowertobaccosalessomewhatoffsetthattailwind
• COVID-relatedcostswerelowerby~$25mil.andbenefitedexpenseleverageby~20bps
• Lowerfuelrateandunfavorablefuelmixnegativelyimpactedgrossprofit
• Favorablemerchandisemixshiftandlowertobaccosalesoffsettheseheadwinds
• Strongcurbsideperformanceandsoliddirect-to-homecontribution
• Compsaleswereaidedbystimulusspendingdespitelappinglastyear'sCOVID-relatedstock-upphaseandstimulus
• Onatwo-yearstack,compsalesincreased19.6%
• Broadstrengthacrosscategories,ledbyhomeandapparel
• Tobacconegativelyaffectedcompsales
1Compsalesforthe13-weekperiodendedApril30,2021comparedtothe13-weekperiodendedMay1,2020.
• Increasereflectsinventorybuildtosupporthighersalestrendsandlappinglastyear'sCOVID-relatedeffectsoninventory
Sam'sClub-Q1FY22Dollarsinbillions.Changeiscalculatedasthechangeversustheprioryearcomparableperiod
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$16,692+10.1%NetSales
+33%eCommercenetsalesgrowth
+11.1%Comparablesales
-2.00000000000033bps
Grossprofitrate
-18.0000000000001bps
Operatingexpenserate
$57516.4%
Operatingincome
WithoutFuel
Netsales
$14.9+6.2%
Operatingexpenserate
+26bps
Grossprofitrate
+86bps
Operatingincome
$0.5+33.2%
Comparabletransactions
+2.2%
Comparablesales1,2
+7.2%
eCommercecontribution
~310bps
Averagecomparableticket
+4.9%
1Compsalesforthe13-weekperiodendedApril30,2021comparedtothe13-weekperiodendedMay1,2020,andexcludesfuel.2Tobacconegativelyaffectedcompsalesforthe13-weekperiodendedApril30,2021by340basispoints.Onatwo-yearstack,tobacconegativelyaffectedcompsalesby750basispoints.
Sam'sClub-Q1FY22Dollarsinbillions.Changeiscalculatedasthechangeversustheprioryearcomparableperiod
• Onatwo-yearstack,averagecompticketincreased5.0%
• Onatwo-yearstack,compsalesincreased19.2%
• Onatwo-yearstack,comptransactionsincreased14.1%
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Category Compsales Details
Fresh/Freezer/Cooler +midsingle-digit • Produce,preparedfoodsandfreshmeat&seafoodperformedwell
Groceryandbeverage +highsingle-digit • Drinks,snacksandcandyshowedstrength
Consumables +lowsingle-digit • Laundry&homecare,plasticwareandpetsuppliesperformedwell
Homeandapparel +high50% • Strengthinapparel,outdoor,seasonalanddomestics.
Technology,officeandentertainment +lowdouble-digit
• TVsandentertainmentperformedwellbutwerepartiallyoffsetbyreducedmobilephonesales
• Sam'senteredintoanewstrategicarrangementinitsmobilephonebusinessandnolongerrecognizesthefulltransactionvalue;instead,itreceivesacommissiononeachsale
Healthandwellness +highsingle-digit • OTC,opticalandhearingwerestrong
Sam'sClub-quarterlyfinancialhighlights
WeincludeReturnonAssets("ROA"),whichiscalculatedinaccordancewithU.S.generallyacceptedaccountingprinciples("GAAP")aswellasReturnonInvestment("ROI")asmeasurestoassessreturnsonassets.ManagementbelievesROIisameaningfulmeasuretosharewithinvestorsbecauseithelpsinvestorsassesshoweffectivelyWalmartisdeployingitsassets.TrendsinROIcanfluctuateovertimeasmanagementbalanceslong-termstrategicinitiativeswithpossibleshort-termimpacts.WeconsiderROAtobethefinancialmeasurecomputedinaccordancewithGAAPthatisthemostdirectlycomparablefinancialmeasuretoourcalculationofROI.
ROAwas5.3percentand6.6percentforthetrailing12monthsendedApril30,2021and2020,respectively.ThedecreaseinROAwasprimarilyduetothelossesondivestitureofouroperationsintheU.K.,JapanandArgentina,partiallyoffsetbytheincreaseinoperatingincomeaswellasthefairvaluechangeinourequityinvestments.ROIwas14.4percentand13.4percentforthetrailingtwelvemonthsendedApril30,2021and2020.TheincreaseinROIwasprimarilyduetotheincreaseinoperatingincome.
WedefineROIasadjustedoperatingincome(operatingincomeplusinterestincome,depreciationandamortization,andrentexpense)forthetrailingtwelvemonthsdividedbyaverageinvestedcapitalduringthatperiod.Weconsideraverageinvestedcapitaltobetheaverageofourbeginningandendingtotalassets,plusaverageaccumulateddepreciationandaverageamortization,lessaverageaccountspayableandaverageaccruedliabilitiesforthatperiod.
OurcalculationofROIisconsideredanon-GAAPfinancialmeasurebecausewecalculateROIusingfinancialmeasuresthatexcludeandincludeamountsthatareincludedandexcludedinthemostdirectlycomparableGAAPfinancialmeasure.Forexample,weexcludetheimpactofdepreciationandamortizationfromourreportedoperatingincomeincalculatingthenumeratorofourcalculationofROI.Asmentionedabove,weconsiderROAtobethefinancialmeasurecomputedinaccordancewithgenerallyacceptedaccountingprinciplesmostdirectlycomparabletoourcalculationofROI.ROIdiffersfromROA(whichisconsolidatednetincomefortheperioddividedbyaveragetotalassetsfortheperiod)becauseROI:adjustsoperatingincometoexcludecertainexpenseitemsandaddsinterestincome;adjuststotalassetsfortheimpactofaccumulateddepreciationandamortization,accountspayableandaccruedliabilitiestoarriveattotalinvestedcapital.Becauseoftheadjustmentsmentionedabove,webelieveROImoreaccuratelymeasureshowwearedeployingourkeyassetsandismoremeaningfultoinvestorsthanROA.AlthoughROIisastandardfinancialmeasure,numerousmethodsexistforcalculatingacompany'sROI.Asaresult,themethodusedbymanagementtocalculateourROImaydifferfromthemethodsusedbyothercompaniestocalculatetheirROI.
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Non-GAAPmeasures-ROI
ThecalculationofROAandROI,alongwithareconciliationofROItothecalculationofROA,isasfollows:
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3 Upon adoption of ASU 2016-02, Leases, a factor of eight times rent is no longer included in the calculation of ROI on a prospective basis as operating lease assets are now recorded on the Consolidated Balance Sheet.
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.
2 The average is based on the addition of 'total assets without leased assets, net' at the end of the current period to 'total assets without leased assets, net' at the end of the prior period and dividing by 2, plus 'leased assets, net' at the end of the current period.
3 The average is based on the addition of 'accumulated depreciation and amortization, without leased assets' at the end of the current period to 'accumulated depreciation and amortization, without leased assets' at the end of the prior period and dividing by 2, plus 'accumulated amortization on leased assets' at the end of the current period.
NP = not provided
CALCULATIONOFRETURNONASSETS CALCULATIONOFRETURNONINVESTMENT
TrailingTwelveMonths TrailingTwelveMonths
Ended April30, Ended April30,(Dollarsinmillions) 2021 2020 (Dollarsinmillions) 2021 2020Numerator NumeratorConsolidatednetincome $ 12,443 $ 15,369 Operatingincome $ 24,233 $ 20,847Denominator +Interestincome 108 184Averagetotalassets1 $ 234,737 $ 233,718 +Depreciationandamortization 11,022 11,062Returnonassets(ROA) 5.3% 6.6% +Rent 2,534 2,694
ROIoperatingincome $ 37,897 $ 34,787
April30, DenominatorCertainBalanceSheetData 2021 2020 2019 Averagetotalassets1 $ 234,737 $ 233,718
Totalassets $ 236,581 $ 232,892 $ 234,544'+Averageaccumulateddepreciationandamortization1 95,424 90,970
Accumulateddepreciationandamortization 96,334 94,514 87,426 '-Averageaccountspayable1 46,124 44,603Accountspayable 48,151 44,096 45,110 '-Averageaccruedliabilities1 20,874 20,700
Accruedliabilities 21,371 20,377 21,023 Averageinvestedcapital $ 263,163 $ 259,385
Returnoninvestment(ROI) 14.4% 13.4%
1Theaverageisbasedontheadditionoftheaccountbalanceattheendofthecurrentperiodtotheaccountbalanceattheendofthepriorperiodanddividingby2.
Non-GAAPmeasures-ROI(cont.)
1"Netcashprovidedby(usedin)investingactivities"includespaymentsforpropertyandequipment,whichisalsoincludedinourcomputationoffreecashflow.
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Wedefinefreecashflowasnetcashprovidedbyoperatingactivitiesinaperiodminuspaymentsforpropertyandequipmentmadeinthatperiod.Wehadnetcashprovidedbyoperatingactivitiesof$2.9billionforthethreemonthsendedApril30,2021,whichdecreasedwhencomparedto$7.0billionforthethreemonthsendedApril30,2020primarilyduetoanincreaseininventorypurchasesdueinparttolappingtheimpactofacceleratedinventorysell-throughinthefirstquarteroffiscal2021.Wegeneratedfreecashflowof$0.6billionforthethreemonthsendedApril30,2021,whichdecreasedwhencomparedto$5.3billionforthethreemonthsendedApril30,2020duetothesamereasonsasthedecreaseinnetcashprovidedbyoperatingactivities,aswellas$0.5billioninincreasedcapitalexpenditures.
Freecashflowisconsideredanon-GAAPfinancialmeasure.Managementbelieves,however,thatfreecashflow,whichmeasuresourabilitytogenerateadditionalcashfromourbusinessoperations,isanimportantfinancialmeasureforuseinevaluatingthecompany’sfinancialperformance.Freecashflowshouldbeconsideredinadditionto,ratherthanasasubstitutefor,consolidatednetincomeasameasureofourperformanceandnetcashprovidedbyoperatingactivitiesasameasureofourliquidity.Additionally,Walmart’sdefinitionoffreecashflowislimited,inthatitdoesnotrepresentresidualcashflowsavailablefordiscretionaryexpenditures,duetothefactthatthemeasuredoesnotdeductthepaymentsrequiredfordebtserviceandothercontractualobligationsorpaymentsmadeforbusinessacquisitions.Therefore,webelieveitisimportanttoviewfreecashflowasameasurethatprovidessupplementalinformationtoourConsolidatedStatementsofCashFlows.Althoughothercompaniesreporttheirfreecashflow,numerousmethodsmayexistforcalculatingacompany’sfreecashflow.Asaresult,themethodusedbyWalmart’smanagementtocalculateourfreecashflowmaydifferfromthemethodsusedbyothercompaniestocalculatetheirfreecashflow.
Thefollowingtablesetsforthareconciliationoffreecashflow,anon-GAAPfinancialmeasure,tonetcashprovidedbyoperatingactivities,whichwebelievetobetheGAAPfinancialmeasuremostdirectlycomparabletofreecashflow,aswellasinformationregardingnetcashusedininvestingactivitiesandnetcashusedinfinancingactivities.
ThreeMonthsEndedApril30,
(Dollarsinmillions) 2021 2020
Netcashprovidedbyoperatingactivities $ 2,858 $ 7,017
Paymentsforpropertyandequipment(capitalexpenditures) (2,214) (1,752)
Freecashflow $ 644 $ 5,265
Netcashprovidedby(usedin)investingactivities1 $ 5,850 $ (1,696)
Netcash(usedin)providedbyfinancingactivities (5,399) 565
Non-GAAPmeasures-freecashflow
1Changeversusprioryearcomparableperiod.2ForQ1FY22,consolidatedeCommercenetsaleswere$17.2billionwhichwaspositivelyimpactedby$126millionofcurrencyexchangeratefluctuations.ForQ1FY21,
consolidatedeCommercenetsaleswere$12.2billion. 19
Indiscussingouroperatingresults,thetermcurrencyexchangeratesreferstothecurrencyexchangeratesweusetoconverttheoperatingresultsforcountrieswherethefunctionalcurrencyisnottheU.S.dollarintoU.S.dollars.Wecalculatetheeffectofchangesincurrencyexchangeratesasthedifferencebetweencurrentperiodactivitytranslatedusingthecurrentperiod’scurrencyexchangeratesandthecomparableprioryearperiod’scurrencyexchangerates.Additionally,nocurrencyexchangeratefluctuationsarecalculatedfornon-USDacquisitionsuntilownedfor12months.Throughoutourdiscussion,werefertotheresultsofthiscalculationastheimpactofcurrencyexchangeratefluctuations.Whenwerefertoconstantcurrencyoperatingresults,thismeansoperatingresultswithouttheimpactofthecurrencyexchangeratefluctuations.ThedisclosureofconstantcurrencyamountsorresultspermitsinvestorstobetterunderstandWalmart’sunderlyingperformancewithouttheeffectsofcurrencyexchangeratefluctuations.Thetablebelowreflectsthecalculationofconstantcurrencyfortotalrevenues,netsalesandoperatingincomeforthethreemonthsendedApril30,2021.
ThreeMonthsEndedApril30,2021
2021PercentChange1 2021
PercentChange1
(Dollarsinmillions) WalmartInternational ConsolidatedTotalrevenues:Asreported $ 27,669 (7.9)% $ 138,310 2.7%Currencyexchangeratefluctuations (928) N/A (928) N/AConstantcurrencytotalrevenues $ 26,741 (11.0)% $ 137,382 2.1%
Netsales2:Asreported $ 27,300 (8.3)% $ 137,159 2.6%Currencyexchangeratefluctuations (913) N/A (913) N/AConstantcurrencynetsales $ 26,387 (11.4)% $ 136,246 1.9%
Operatingincome:Asreported $ 1,194 48.1% $ 6,909 32.3%Currencyexchangeratefluctuations (51) N/A (51) N/AConstantcurrencyoperatingincome $ 1,143 41.8% $ 6,858 31.3%
Non-GAAPmeasures-constantcurrency
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AdjusteddilutedearningspershareattributabletoWalmart(AdjustedEPS)isconsideredanon-GAAPfinancialmeasureundertheSEC’srulesbecauseitexcludescertainamountsincludedinthedilutedearningspershareattributabletoWalmartcalculatedinaccordancewithGAAP(EPS),themostdirectlycomparablefinancialmeasurecalculatedinaccordancewithGAAP.ManagementbelievesthatAdjustedEPSisameaningfulmeasuretosharewithinvestorsbecauseitbestallowscomparisonoftheperformancewiththatofthecomparableperiod.Inaddition,AdjustedEPSaffordsinvestorsaviewofwhatmanagementconsidersWalmart’scoreearningsperformanceandtheabilitytomakeamoreinformedassessmentofsuchcoreearningsperformancewiththatoftheprioryear.
Weadjustfortheunrealizedandrealizedgainsandlossesonourequityinvestmentseachquarterbecausealthoughtheinvestmentsarestrategicdecisionsforthecompany’sretailoperations,management’smeasurementofeachstrategyisprimarilyfocusedontheoperationalresultsratherthanthefairvalueofsuchinvestments.Additionally,managementdoesnotforecastchangesinthefairvalueofitsequityinvestments.Accordingly,managementadjustsEPSeachquarterfortherealizedandunrealizedgainsandlossesrelatedtothoseequityinvestments.
WehavecalculatedAdjustedEPSforthethreemonthsendedApril30,2021byadjustingEPSforthefollowing:
1. theincrementallossonsaleofouroperationsintheU.KandJapanduringthefirstquarteroffiscal2022;and
2. unrealizedandrealizedgainsandlossesonthecompany’sequityinvestments.
Non-GAAPmeasures-adjustedEPS
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1Changeversusprioryearcomparableperiod.2Calculatedbasedonnatureofitem,includinganyrealizabledeductions,andstatutoryrateineffectforrelevantjurisdictions.Minimalrealizabletaxbenefitwasprovidedinconnectionwiththeincrementallossonsale.
3Thereportedeffectivetaxratewas26.9%forthethreemonthsendedApril30,2021.Adjustedfortheaboveitems,theeffectivetaxratewas23.3%forthethreemonthsendedApril30,2021.
ThreeMonthsEndedApril30,2021
PercentChange1
Dilutedearningspershare:
ReportedEPS $ 0.97 (30.7)%
Adjustments:Pre-TaxImpact
TaxImpact2,3
NetImpact
Unrealizedandrealized(gains)andlossesonequityinvestments $ 0.74 $ (0.17) $ 0.57
IncrementallossonsaleofouroperationsintheU.K.andJapan 0.15 — 0.15
Netadjustments $ 0.72
AdjustedEPS $ 1.69 43.2%
Non-GAAPmeasures-adjustedEPS(cont.)
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AspreviouslydisclosedinourfirstquarterendedApril30,2020pressrelease,wehavecalculatedAdjustedEPSforthethreemonthsendedApril30,2020byadjustingEPSfortheunrealizedgainsandlossesonourJD.cominvestment.
ThreeMonthsEndedApril30,2020
Dilutedearningspershare:
ReportedEPS $ 1.40
Adjustments:Pre-TaxImpact TaxImpact1 NetImpact
Unrealized(gains)andlossesonJD.cominvestment $ (0.27) $ 0.05 $ (0.22)
AdjustedEPS $ 1.18
Non-GAAPmeasures-adjustedEPS(cont.)
1Calculatedbasedonnatureofitem,includinganyrealizabledeductions,andstatutoryrateineffectforrelevantjurisdictions.
• Unitcounts&squarefootage• Comparablestoresales,includingandexcludingfuel• Terminology
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Additionalresourcesatstock.walmart.com
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