Walmart Earnings 2020-07-31

Walmart Earnings 2020-07-31

WMT 10Q Quarterly Report

Balance Sheet	Income Statement	Cash Flow
Assets, Equity	Rev, G Profit, Net Income	Ops, Inv, Fin

Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)



☒	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

For the quarterly period ended July 31, 2020.



☐	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

For the transition period from to .

Commission File Number 001-6991

WALMART INC.

(Exact name of registrant as specified in its charter)



Delaware		71-0415188
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

702 S.W. 8th Street		72716
Bentonville	AR
(Address of principal executive offices)		(Zip Code)

Registrant's telephone number, including area code: (479) 273-4000

Former name, former address and former fiscal year, if changed since last report: N/A

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.10 per share	WMT	New York Stock Exchange
1.900% Notes Due 2022	WMT22	New York Stock Exchange
2.550% Notes Due 2026	WMT26	New York Stock Exchange

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

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. ☐

Indicate by a check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The registrant had 2,833,752,938 shares of common stock outstanding as of August 31, 2020.

Table of Contents

Walmart Inc.

Form 10-Q

For the Quarterly Period Ended July 31, 2020

Table of Contents



			Page
Part I. Financial Information
	Item 1. Financial Statements
		Condensed Consolidated Statements of Income	3
		Condensed Consolidated Statements of Comprehensive Income	4
		Condensed Consolidated Balance Sheets	5
		Condensed Consolidated Statements of Shareholders' Equity	6
		Condensed Consolidated Statements of Cash Flows	8
		Notes to Condensed Consolidated Financial Statements	9
	Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations		15
	Item 3. Quantitative and Qualitative Disclosures About Market Risk		26
	Item 4. Controls and Procedures		27

Part II. Other Information
	Item 1. Legal Proceedings		28
	Item 1A. Risk Factors		29
	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		29
	Item 5. Other Information		29
	Item 6. Exhibits		33

Signatures			34

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1.
Financial Statements

Walmart Inc.

Condensed Consolidated Statements of Income

(Unaudited)



	Three Months Ended July 31,						Six Months Ended July 31,
(Amounts in millions, except per share data)	2020			2019			2020			2019
Revenues:
Net sales	$	136,824		$	129,388		$	270,496		$	252,337
Membership and other income	918			989			1,868			1,965
Total revenues	137,742			130,377			272,364			254,302
Costs and expenses:
Cost of sales	102,689			97,923			204,715			190,957
Operating, selling, general and administrative expenses	28,994			26,871			56,366			52,817
Operating income	6,059			5,583			11,283			10,528
Interest:
Debt	577			558			1,087			1,146
Finance lease	81			83			163			168
Interest income	(23		)	(56		)	(66		)	(104		)
Interest, net	635			585			1,184			1,210
Other (gains) and losses	(3,222		)	85			(3,943		)	(752		)
Income before income taxes	8,646			4,913			14,042			10,070
Provision for income taxes	2,207			1,233			3,529			2,484
Consolidated net income	6,439			3,680			10,513			7,586
Consolidated net (income) loss attributable to noncontrolling interest	37			(70		)	(47		)	(134		)
Consolidated net income attributable to Walmart	$	6,476		$	3,610		$	10,466		$	7,452

Net income per common share:
Basic net income per common share attributable to Walmart	$	2.29		$	1.27		$	3.70		$	2.60
Diluted net income per common share attributable to Walmart	2.27			1.26			3.67			2.59

Weighted-average common shares outstanding:
Basic	2,832			2,853			2,832			2,861
Diluted	2,848			2,869			2,848			2,878

Dividends declared per common share	$	—		$	—		$	2.16		$	2.12

See accompanying notes.

Table of Contents

Walmart Inc.

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)



	Three Months Ended July 31,						Six Months Ended July 31,
(Amounts in millions)	2020			2019			2020			2019
Consolidated net income	$	6,439		$	3,680		$	10,513		$	7,586
Consolidated net (income) loss attributable to noncontrolling interest	37			(70		)	(47		)	(134		)
Consolidated net income attributable to Walmart	6,476			3,610			10,466			7,452

Other comprehensive income (loss), net of income taxes
Currency translation and other	298			(81		)	(3,670		)	426
Net investment hedges	(191		)	140			(34		)	248
Cash flow hedges	313			(158		)	34			(289		)
Minimum pension liability	16			4			31			5
Other comprehensive income (loss), net of income taxes	436			(95		)	(3,639		)	390
Other comprehensive (income) loss attributable to noncontrolling interest	(52		)	(84		)	660			(118		)
Other comprehensive income (loss) attributable to Walmart	384			(179		)	(2,979		)	272

Comprehensive income, net of income taxes	6,875			3,585			6,874			7,976
Comprehensive (income) loss attributable to noncontrolling interest	(15		)	(154		)	613			(252		)
Comprehensive income attributable to Walmart	$	6,860		$	3,431		$	7,487		$	7,724

See accompanying notes.

Table of Contents

Walmart Inc.

Condensed Consolidated Balance Sheets

(Unaudited)



	July 31,			January 31,			July 31,
(Amounts in millions)	2020			2020			2019
ASSETS
Current assets:
Cash and cash equivalents	$	16,906		$	9,465		$	9,283
Receivables, net	5,111			6,284			5,382
Inventories	41,084			44,435			44,134
Prepaid expenses and other	1,895			1,622			2,572
Total current assets	64,996			61,806			61,371

Property and equipment, net	101,182			105,208			104,674
Operating lease right-of-use assets	16,869			17,424			17,239
Finance lease right-of-use assets, net	4,843			4,417			3,949
Goodwill	29,542			31,073			31,454
Other long-term assets	19,950			16,567			16,174
Total assets	$	237,382		$	236,495		$	234,861

LIABILITIES AND EQUITY
Current liabilities:
Short-term borrowings	$	357		$	575		$	3,681
Accounts payable	46,326			46,973			45,871
Dividends payable	3,060			—			3,023
Accrued liabilities	23,768			22,296			20,691
Accrued income taxes	610			280			387
Long-term debt due within one year	5,553			5,362			4,396
Operating lease obligations due within one year	1,734			1,793			1,795
Finance lease obligations due within one year	549			511			439
Total current liabilities	81,957			77,790			80,283

Long-term debt	40,959			43,714			44,404
Long-term operating lease obligations	15,669			16,171			16,079
Long-term finance lease obligations	4,673			4,307			3,915
Deferred income taxes and other	12,927			12,961			13,049

Commitments and contingencies

Equity:
Common stock	283			284			285
Capital in excess of par value	3,197			3,247			2,880
Retained earnings	87,614			83,943			78,432
Accumulated other comprehensive loss	(15,784		)	(12,805		)	(11,270		)
Total Walmart shareholders' equity	75,310			74,669			70,327
Noncontrolling interest	5,887			6,883			6,804
Total equity	81,197			81,552			77,131
Total liabilities and equity	$	237,382		$	236,495		$	234,861

See accompanying notes.

Table of Contents

Walmart Inc.

Condensed Consolidated Statements of Shareholders' Equity

(Unaudited)



												Accumulated			Total
						Capital in						Other			Walmart
(Amounts in millions)	Common Stock					Excess of			Retained			Comprehensive			Shareholders'			Noncontrolling			Total
(Amounts in millions)	Shares		Amount			Par Value			Earnings			Loss			Equity			Interest			Equity
Balances as of February 1, 2020	2,832		$	284		$	3,247		$	83,943		$	(12,805	)	$	74,669		$	6,883		$	81,552
Consolidated net income	—		—			—			3,990			—			3,990			84			4,074
Other comprehensive loss, net of income taxes	—		—			—			—			(3,363		)	(3,363		)	(712		)	(4,075		)
Dividends declared ($2.16 per share)	—		—			—			(6,117		)	—			(6,117		)	—			(6,117		)
Purchase of Company stock	(6	)	(1		)	(26		)	(666		)	—			(693		)	—			(693		)
Dividends declared to noncontrolling interest	—		—			—			—			—			—			(359		)	(359		)
Other	6		1			(238		)	(9		)	—			(246		)	(26		)	(272		)
Balances as of April 30, 2020	2,832		$	284		$	2,983		$	81,141		$	(16,168	)	$	68,240		$	5,870		$	74,110
Consolidated net income	—		—			—			6,476			—			6,476			(37		)	6,439
Other comprehensive income, net of income taxes	—		—			—			—			384			384			52			436
Dividends to noncontrolling interest	—		—			—			—			—			—			(3		)	(3		)
Other	2		(1		)	214			(3		)	—			210			5			215
Balances as of July 31, 2020	2,834		$	283		$	3,197		$	87,614		$	(15,784	)	$	75,310		$	5,887		$	81,197

See accompanying notes.

Table of Contents

Walmart Inc.

Condensed Consolidated Statements of Shareholders' Equity

(Unaudited)



												Accumulated			Total
						Capital in						Other			Walmart
(Amounts in millions)	Common Stock					Excess of			Retained			Comprehensive			Shareholders'			Noncontrolling			Total
(Amounts in millions)	Shares		Amount			Par Value			Earnings			Loss			Equity			Interest			Equity
Balances as of February 1, 2019	2,878		$	288		$	2,965		$	80,785		$	(11,542	)	$	72,496		$	7,138		$	79,634
Adoption of new accounting standards on February 1, 2019, net of income taxes	—		—			—			(266		)	—			(266		)	(34		)	(300		)
Consolidated net income	—		—			—			3,842			—			3,842			64			3,906
Other comprehensive income, net of income taxes	—		—			—			—			451			451			34			485
Dividends declared ($2.12 per share)	—		—			—			(6,071		)	—			(6,071		)	—			(6,071		)
Purchase of Company stock	(21	)	(2		)	(73		)	(2,012		)	—			(2,087		)	—			(2,087		)
Dividends declared to noncontrolling interest	—		—			—			—			—			—			(481		)	(481		)
Other	5		—			(158		)	(2		)	—			(160		)	(16		)	(176		)
Balances as of April 30, 2019	2,862		$	286		$	2,734		$	76,276		$	(11,091	)	$	68,205		$	6,705		$	74,910
Consolidated net income	—		—			—			3,610			—			3,610			70			3,680
Other comprehensive income (loss), net of income taxes	—		—			—			—			(179		)	(179		)	84			(95		)
Dividends	—		—			—			15			—			15			—			15
Purchase of Company stock	(15	)	(2		)	(54		)	(1,499		)	—			(1,555		)	—			(1,555		)
Dividends to noncontrolling interest	—		—			—			—			—			—			6			6
Other	—		1			200			30			—			231			(61		)	170
Balances as of July 31, 2019	2,847		$	285		$	2,880		$	78,432		$	(11,270	)	$	70,327		$	6,804		$	77,131

See accompanying notes.

Table of Contents

Walmart Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)



	Six Months Ended July 31,
(Amounts in millions)	2020			2019
Cash flows from operating activities:
Consolidated net income	$	10,513		$	7,586
Adjustments to reconcile consolidated net income to net cash provided by operating activities:
Depreciation and amortization	5,562			5,436
Unrealized (gains) and losses	(4,006		)	(731		)
Loss on disposal of business operations	37			—
Deferred income taxes	472			241
Other operating activities	305			348
Changes in certain assets and liabilities, net of effects of acquisitions and dispositions:
Receivables, net	823			978
Inventories	2,466			220
Accounts payable	1,052			(1,242		)
Accrued liabilities	1,428			(1,657		)
Accrued income taxes	304			6
Net cash provided by operating activities	18,956			11,185

Cash flows from investing activities:
Payments for property and equipment	(3,569		)	(4,871		)
Proceeds from the disposal of property and equipment	83			128
Proceeds from the disposal of certain operations	—			833
Payments for business acquisitions, net of cash acquired	(175		)	(56		)
Other investing activities	27			142
Net cash used in investing activities	(3,634		)	(3,824		)

Cash flows from financing activities:
Net change in short-term borrowings	(178		)	(1,564		)
Proceeds from issuance of long-term debt	—			4,020
Repayments of long-term debt	(2,937		)	(407		)
Dividends paid	(3,058		)	(3,036		)
Purchase of Company stock	(723		)	(3,707		)
Dividends paid to noncontrolling interest	(66		)	(259		)
Other financing activities	(852		)	(578		)
Net cash used in financing activities	(7,814		)	(5,531		)

Effect of exchange rates on cash, cash equivalents and restricted cash	(69		)	(266		)

Net increase in cash, cash equivalents and restricted cash	7,439			1,564
Cash, cash equivalents and restricted cash at beginning of year	9,515			7,756
Cash, cash equivalents and restricted cash at end of period	$	16,954		$	9,320

See accompanying notes.

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Walmart Inc.

Notes to Condensed Consolidated Financial Statements

Note 1. Summary of Significant Accounting Policies

Basis of Presentation

The Condensed Consolidated Financial Statements of Walmart Inc. and its subsidiaries ("Walmart" or the "Company") and the accompanying notes included in this Quarterly Report on Form 10-Q are unaudited. In the opinion of management, all adjustments necessary for the fair presentation of the Condensed Consolidated Financial Statements have been included. Such adjustments are of a normal, recurring nature. The Condensed Consolidated Financial Statements, and the accompanying notes, are prepared in accordance with generally accepted accounting principles in the United States ("GAAP") and do not contain certain information included in the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2020 ("fiscal 2020"). Therefore, the interim Condensed Consolidated Financial Statements should be read in conjunction with that Annual Report on Form 10-K.

The Company's Consolidated Financial Statements are based on a fiscal year ending January 31 for the United States ("U.S.") and Canadian operations. The Company consolidates all other operations generally using a one-month lag and based on a calendar year. There were no significant intervening events during the month of July related to the operations consolidated using a lag that materially affected the Condensed Consolidated Financial Statements.

The Company's business is seasonal to a certain extent due to calendar events and national and religious holidays, as well as weather patterns. Historically, the Company's highest sales volume and operating income have occurred in the fiscal quarter ending January 31.

Use of Estimates

The Consolidated Financial Statements have been prepared in conformity with GAAP. Those principles require management to make estimates and assumptions, including potential impacts arising from the COVID-19 pandemic and related government actions, that affect the reported amounts of assets and liabilities. Management's estimates and assumptions also affect the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ materially from those estimates.

Receivables

In June 2016, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments–Credit Losses (Topic 326), which modifies the measurement of expected credit losses of certain financial instruments. The Company adopted this ASU on February 1, 2020 with no material impact to the Company's Condensed Consolidated Financial Statements.

Receivables are stated at their carrying values, net of a reserve for credit losses, and are primarily due from the following: customers, which also includes insurance companies resulting from pharmacy sales, banks for customer credit, debit cards and electronic transfer transactions that take in excess of seven days to process; suppliers for marketing or incentive programs; governments for income taxes; and real estate transactions.

Table of Contents

Note 2. Net Income Per Common Share

Basic net income per common share attributable to Walmart is based on the weighted-average common shares outstanding during the relevant period. Diluted net income per common share attributable to Walmart is based on the weighted-average common shares outstanding during the relevant period adjusted for the dilutive effect of share-based awards. The Company did not have significant share-based awards outstanding that were anti-dilutive and not included in the calculation of diluted net income per common share attributable to Walmart for the three and six months ended July 31, 2020 and 2019.

The following table provides a reconciliation of the numerators and denominators used to determine basic and diluted net income per common share attributable to Walmart:



	Three Months Ended July 31,					Six Months Ended July 31,
(Amounts in millions, except per share data)	2020		2019			2020			2019
Numerator
Consolidated net income	$	6,439	$	3,680		$	10,513		$	7,586
Consolidated net (income) loss attributable to noncontrolling interest	37		(70		)	(47		)	(134		)
Consolidated net income attributable to Walmart	$	6,476	$	3,610		$	10,466		$	7,452

Denominator
Weighted-average common shares outstanding, basic	2,832		2,853			2,832			2,861
Dilutive impact of share-based awards	16		16			16			17
Weighted-average common shares outstanding, diluted	2,848		2,869			2,848			2,878

Net income per common share attributable to Walmart
Basic	$	2.29	$	1.27		$	3.70		$	2.60
Diluted	2.27		1.26			3.67			2.59

Note 3. Accumulated Other Comprehensive Loss

The following table provides the changes in the composition of total accumulated other comprehensive loss for the three months ended April 30, 2020 and July 31, 2020, respectively:



(Amounts in millions and net of immaterial income taxes)	Currency Translation and Other			Net Investment Hedges		Cash Flow Hedges			Minimum Pension Liability			Total
Balances as of February 1, 2020	$	(11,827	)	$	1,517	$	(539	)	$	(1,956	)	$	(12,805	)
Other comprehensive income (loss) before reclassifications, net	(3,256		)	157		(295

Price	115.63	EPS	5
Shares	2,832	P/E	22
MCap	327,501	P/FCF	13
Net Debt	39,611	EBIT	24,325
TEV	367,112	TEV/EBIT	15
TTM 2020-01-31, in MM, except price, ratios

10-Q	2020-07-31	Filed 2020-09-02
10-Q	2020-04-30	Filed 2020-06-03
10-K	2020-01-31	Filed 2020-03-20
10-Q	2019-10-31	Filed 2019-12-04
10-Q	2019-07-31	Filed 2019-09-06
10-Q	2019-04-30	Filed 2019-06-07
10-K	2019-01-31	Filed 2019-03-28
10-Q	2018-10-31	Filed 2018-11-30
10-Q	2018-07-31	Filed 2018-09-06
10-Q	2018-04-30	Filed 2018-06-04
10-K	2018-01-31	Filed 2018-03-30
10-Q	2017-10-31	Filed 2017-12-01
10-Q	2017-07-31	Filed 2017-08-31
10-Q	2017-04-30	Filed 2017-06-02
10-K	2017-01-31	Filed 2017-03-31
10-Q	2016-10-31	Filed 2016-12-01
10-Q	2016-07-31	Filed 2016-08-31
10-Q	2016-04-30	Filed 2016-06-03
10-K	2016-01-31	Filed 2016-03-30
10-Q	2015-10-31	Filed 2015-12-02
10-Q	2015-07-31	Filed 2015-09-09
10-Q	2015-04-30	Filed 2015-06-05
10-K	2015-01-31	Filed 2015-04-01
10-Q	2014-10-31	Filed 2014-12-01
10-Q	2014-07-31	Filed 2014-09-05
10-Q	2014-04-30	Filed 2014-06-06
10-K	2014-01-31	Filed 2014-03-21
10-Q	2013-10-31	Filed 2013-12-06
10-Q	2013-07-31	Filed 2013-09-05
10-Q	2013-04-30	Filed 2013-06-07
10-K	2013-01-31	Filed 2013-03-26
10-Q	2012-10-31	Filed 2012-12-04
10-Q	2012-07-31	Filed 2012-09-06
10-Q	2012-04-30	Filed 2012-06-01
10-K	2012-01-31	Filed 2012-03-27
10-Q	2011-10-31	Filed 2011-12-08
10-Q	2011-07-31	Filed 2011-09-01
10-Q	2011-04-30	Filed 2011-06-03
10-K	2011-01-31	Filed 2011-03-30
10-Q	2010-10-31	Filed 2010-12-06
10-Q	2010-07-31	Filed 2010-09-01
10-Q	2010-04-30	Filed 2010-06-04
10-K	2010-01-31	Filed 2010-03-30

8-K	2020-10-22	Regulation FD, Exhibits
8-K	2020-10-02	Regulation FD, Exhibits
8-K	2020-09-19	Regulation FD, Exhibits
8-K	2020-09-14	Other Events
8-K	2020-09-13	Regulation FD, Exhibits
8-K	2020-08-18	Earnings, Exhibits
8-K	2020-06-03
8-K	2020-05-19
8-K	2020-02-18
8-K	2019-11-19
8-K	2019-11-14
8-K	2019-11-14
8-K	2019-11-04
8-K	2019-10-18
8-K	2019-10-09
8-K	2019-09-19
8-K	2019-08-15
8-K	2019-07-23
8-K	2019-06-20
8-K	2019-06-05
8-K	2019-05-16
8-K	2019-04-16
8-K	2019-02-19
8-K	2019-02-07
8-K	2018-12-07
8-K	2018-11-15
8-K	2018-11-13
8-K	2018-10-26
8-K	2018-10-16
8-K	2018-08-16
8-K	2018-06-20
8-K	2018-06-04
8-K	2018-05-30
8-K	2018-05-17
8-K	2018-05-09
8-K	2018-05-09
8-K	2018-04-30
8-K	2018-02-20
8-K	2018-02-07
8-K	2018-02-01
8-K	2018-01-23
8-K	2018-01-16
8-K	2018-01-09

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EX-31.2	wmt312-7312020.htm
EX-32.1	wmt321-7312020.htm
EX-32.2	wmt322-7312020.htm
EX-99.1	wmt991-7312020.htm

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