Walmart Inc. (NYSE:WMT) Q2 2023 Earnings Conference Call August 16, 2022 8:00 AM ET Company Participants Dan Binder - Senior Vice President, Investor Relations Doug McMillon - Chief Executive Officer John David Rainey - Executive Vice President and Chief Financial Officer John Furner - President and Chief Executive Officer, Walmart U.S. Judith McKenna - President and Chief Executive Officer, Walmart International Kath McLay - President and Chief Executive Officer, Sam’s Club Conference Call Participants Bob ...

Summary of Walmart Inc. Conference Call Company Overview - **Company**: Walmart Inc. (NYSE: WMT) - **Industry**: Retail - **Key Participants**: Judith McKenna (President and CEO of Walmart International), Peter Benedict (Senior Retail/Consumer Products & Services Analyst at Baird) Key Points Company Size and Scope - Walmart International operates in **23 countries**, with key markets including **Canada, Mexico, India, and China** [3] - It generates **$100 billion** in revenue, accounting for **18%** of Walmart's total revenue [3] - The segment achieved approximately **$4 billion** in EBIT, representing **15%** of Walmart's total EBIT [3] Inventory Management - Walmart U.S. reported a **32%** increase in inventory, with **one-third** attributed to inflation [5][6] - Internationally, inventory is up by **20%**, also impacted by inflation [7] - Specific challenges noted in China due to COVID-19 lockdowns, affecting inventory levels and operations [7][39] International Strategy - The focus is on **long-term sustainable growth** and **risk diversification** across different markets [11] - Walmart has undergone a **portfolio rationalization** to concentrate resources on markets with the most potential [10] - The strategy emphasizes **strong local businesses** powered by Walmart's global scale [12] Market Performance - International operations reported a **10% growth** in the last quarter, attributed to effective portfolio management [14] - **Walmex** (Mexico) contributes approximately **40%** of Walmart International's total revenue [16] Consumer Behavior Insights - Inflation is a concern across all markets, with Chile experiencing the highest rates and China the lowest [22] - Consumer confidence has remained relatively stable, with remittances in Mexico holding strong [22][23] Investment in India - Walmart's investment in **Flipkart** has been successful, with the company achieving a **$20 billion** valuation and raising **$38 billion** last year [28] - Flipkart is expanding into new revenue streams, including advertising and travel [31][32] - The company is focused on building a **co-commerce** ecosystem and enhancing profitability through alternative profit pools [34] Operations in China - Walmart China operates under a challenging environment due to lockdowns, with significant operational adjustments made [37][39] - The company is focusing on fresh food delivery and adapting its business model to meet current demands [39] Best Practices and Technology Sharing - Walmart International shares best practices, innovations, and technology across markets to enhance overall performance [42] - The company is testing various automation technologies in Canada and Mexico to improve efficiency [42] Financial Outlook - Walmart International aims for balanced capital allocation across markets, focusing on areas with the highest return potential [45] - The company is committed to long-term sustainable growth, both in revenue and profitability [46] ESG Initiatives - Walmart emphasizes the importance of **ESG** (Environmental, Social, and Governance) practices in its operations, which are critical for maintaining market reputation [48] - Initiatives include sustainability efforts, job creation, and community support across various markets [49][50] Additional Insights - The company is leveraging its experience in inflationary environments to prepare for potential economic challenges [24] - Walmart's flexible ownership structure allows for tailored approaches in different markets, enhancing operational effectiveness [19][20]

Sales Performance - Comparable sales in the U.S. increased by 6.0% for the three months ended April 30, 2022, compared to the same period in the previous fiscal year[58]. - Walmart U.S. segment had comparable sales growth of 4.0% driven by growth in average ticket and strong sales in grocery[58]. - Sam's Club segment experienced a 17.4% increase in comparable sales for the three months ended April 30, 2022, benefiting from growth in transactions and average ticket[58]. - Walmart U.S. segment net sales increased by $3.7 billion or 4.0% for the three months ended April 30, 2022, totaling $96,904 million[73]. - Sam's Club segment net sales increased by $2.9 billion or 17.5% for the three months ended April 30, 2022, driven by comparable sales growth of 17.4%[76]. - Walmart International segment net sales decreased by $3.5 billion or 13.0% for the three months ended April 30, 2022, compared to the same period in the previous fiscal year[75]. Financial Performance - Consolidated net income for the three months ended April 30, 2022, was $2,103 million, a decrease of $0.7 billion compared to the same period in the previous fiscal year[72]. - Total revenues increased by $3.3 billion or 2.4% for the three months ended April 30, 2022, reaching $141,569 million[72]. - Operating income for the three months ended April 30, 2022, was $5,318 million, down from $6,909 million in the same period last year[72]. - Operating income for Walmart International segment decreased by $0.4 billion to $772 million, representing 3.2% of net sales for the three months ended April 30, 2022[75]. - Gross profit margin as a percentage of net sales decreased to 23.8% for the three months ended April 30, 2022, down from 24.7% in the previous year[72]. - Gross profit rate for Sam's Club segment decreased by 216 basis points for the three months ended April 30, 2022, primarily due to higher supply chain costs and inflation[77]. Cash Flow and Capital Expenditures - Free cash flow for the three months ended April 30, 2022, was negative $7,297 million, a decline of $7.9 billion compared to the same period in the prior year[70]. - Capital expenditures totaled $3,539 million for the three months ended April 30, 2022, up from $2,214 million in the same period last year[62]. - Net cash used in operating activities was $3.8 billion for the three months ended April 30, 2022, compared to net cash provided of $2.9 billion in the same period of 2021[79]. - Net cash used in investing activities was $4.6 billion for the three months ended April 30, 2022, compared to net cash provided of $5.9 billion in the same period of 2021[81]. - Net cash provided by financing activities was $5.3 billion for the three months ended April 30, 2022, compared to net cash used of $5.4 billion in the same period of 2021[83]. Expenses and Taxation - Operating, selling, general and administrative expenses increased by 4.5% to $29,404 million for the three months ended April 30, 2022[61]. - Operating expenses as a percentage of net sales increased by 45 basis points for the three months ended April 30, 2022, primarily due to increased wage costs[72]. - The effective income tax rate for the three months ended April 30, 2022, was 27.5%, compared to 26.9% for the same period in the previous fiscal year[72]. Strategic Focus and Outlook - The company is focusing on strong, efficient growth by increasing comparable store and club sales and accelerating eCommerce sales growth[57]. - Strategic capital allocation is shifting towards supply chain, customer-facing initiatives, and technology, with less emphasis on new store openings[62]. - The company anticipates continued uncertainty in business and the global economy due to various external factors, including inflation and supply chain disruptions[55]. Shareholder Returns and Credit Ratings - The Board of Directors approved a fiscal 2023 annual dividend of $2.24 per share, an increase from $2.20 per share in fiscal 2022[85]. - As of April 30, 2022, authorization for $8.3 billion of share repurchases remained under the current share repurchase program[86]. - The company maintains strong credit ratings with Standard & Poor's at A-1+ for commercial paper and AA for long-term debt, Moody's at P-1 and Aa2, and Fitch at F1+ and AA[91]. Legal and Regulatory Matters - The company has ongoing legal proceedings related to opioid dispensing claims, with over 2,150 cases included in the National Prescription Opiate Litigation as of May 20, 2022[98]. - The company is involved in a civil complaint filed by the U.S. Department of Justice regarding alleged violations of the Controlled Substances Act related to opioid distribution[98]. - The company is responding to a show cause notice from India's Directorate of Enforcement regarding alleged violations of Foreign Direct Investment rules prior to its acquisition of Flipkart[100]. - The company is defending against a lawsuit filed by the California Attorney General regarding the management of hazardous waste consumer products, with potential penalties exceeding $1 million[101]. - There has been no material change in the risk factors affecting the company's operations as disclosed in the Annual Report for the fiscal year ended January 31, 2022[103].

Financial Data and Key Metrics Changes - The company reported strong top-line sales for Q1 2023, exceeding expectations across all segments, but bottom-line results fell short due to increased wage expenses, inventory costs, and fuel costs [5][11][39] - Operating income declined by 20% year-over-year, with adjusted EPS also down 20% to $1.30 [42] - Operating cash flow was negative $3.8 billion, attributed to higher inventory levels and lower operating income [43] Business Line Data and Key Metrics Changes - Walmart U.S. comp sales excluding fuel grew by 3%, with a 9% increase on a two-year stack, driven by strong food sales [44] - E-commerce sales grew by 1% in Q1, impacted by a fire at a fulfillment center, but the company managed to fulfill orders through other facilities [24][25] - Sam's Club U.S. reported comp sales growth of 10.6% excluding fuel and tobacco, with e-commerce sales up 22% [50][98] Market Data and Key Metrics Changes - International sales increased by 8% in constant currency, with Mexico and Canada leading growth [47] - E-commerce sales in constant currency grew by 22%, with significant growth in markets like Mexico (20% growth) and Canada (7.7% growth) [48][49] - The company noted a shift in consumer behavior, with increased private brand penetration due to inflation pressures [40][109] Company Strategy and Development Direction - The company is focused on a diversified approach to profitability, emphasizing the importance of its flywheel strategy, which includes marketplace growth, fulfillment services, and advertising income [16][17] - Walmart is committed to maintaining a top-line growth of 4% and profit growth greater than 4% despite current economic challenges [16] - The company is expanding its health and wellness initiatives, including new Walmart Health locations and partnerships in financial services [19][22] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the unusual inflation levels in the U.S. and the impact on both top and bottom lines, but expressed confidence in continued strong sales performance [12][13] - The company raised its sales guidance for the year, expecting consolidated net sales growth of 4.5% to 5% [53] - Management indicated that while Q1 profits were lower than expected, they remain focused on serving customers and shareholders [56] Other Important Information - The company experienced significant supply chain disruptions and cost increases due to external factors, including the war in Ukraine and COVID-19 impacts [39][41] - The company is actively managing inventory levels, which increased by 33% due to inflation and aggressive buying strategies [47][67] Q&A Session Summary Question: Assessment of consumer health - Management noted that consumer behavior varies widely, with some segments showing strength while others indicate a shift towards private brands [57][59] Question: Inventory management and markdowns - Management expressed confidence in managing inventory levels and indicated that rollbacks are being well received by customers [64][68] Question: Vendor negotiations and cost management - Management emphasized the importance of keeping costs low and maintaining value for customers, while also managing supplier relationships [70][72] Question: Changes in consumer basket and inventory - Management observed a mix shift towards grocery and noted that while units per basket were down, ticket sizes increased [78][80] Question: E-commerce outlook and advertising growth - Management reported a 1% increase in e-commerce sales and highlighted strong growth in the advertising business, which grew over 30% [96][100] Question: Inflation levels and pricing strategy - Management indicated double-digit inflation in food and discussed strategies to manage costs while maintaining competitive pricing [109][110]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ___________________________________________ FORM 10-K ___________________________________________ ☒ Annual report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended January 31, 2022, or ☐ Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 Commission file number 001-06991. ___________________________________________ WALMART INC. (Exact name of registrant ...

Walmart Inc. (NYSE:WMT) 2022 UBS Global Consumer & Retail Conference March 10, 2022 12:00 PM ET Company Participants Brett Biggs - EVP, CFO Kary Brunner - Director, IR Conference Call Participants Michael Lasser - UBS Michael Lasser Good afternoon, everyone. I'm Michael Lasser, the hardline, broadline and food retail analyst from UBS. How thrilling is this? We get to have a fun conversation with Brett Biggs, Walmart's CFO. He's been the CFO since -- Brett Biggs I don't think I've ever been called thrilling ...

Invest Relations. Dan, you may now begin. Thank you, Rob. Good morning and welcome to Walmart's fourth quarter fiscal 2022 earnings call. I'm joined by members of our executive team, including Doug McMillan, Walmart's President and CEO, Brett Biggs, Executive Vice President and Chief Financial Officer, and John Ferner, President and CEO of Walmart U.S. In a few moments, Doug and Brett will provide you an update on the business and discuss fourth quarter and full year results. That will be followed by our qu ...