wal-mart stores, inc. · wal-mart stores, inc. on march 26, 2013. 5. capital expenditures (capex or...
TRANSCRIPT
Wal-Mart Stores, Inc.
Charles Holley
EVP & Chief Financial Officer
1
What you can expect
2
Consistent performance
Using innovation to capture value
Disciplined investments
Dedicated to shareholder returns
$22
$28
FY08 FY13 FY14E
$3.15
$5.02
FY08 FY13 FY14E
Story of consistent performance
3
Grow sales
Leverage SG&A
Op income growth > sales growth
Consistency
$374
$466
FY08 FY13 FY14E
Net sales Operating income EPS
Performance
metrics
Expectations
Note: Net sales and operating income in billions; FY14E not drawn to scale; 1CAGR based on FY08 - FY13
$91
$135
FY08 FY13 FY14E
$44 $56
FY08 FY13 FY14E
$239
$274
FY08 FY13 FY14E
Performance across our portfolio
4
Expectations Comp growth
Expense leverage
Customer access
Top line growth
Best practices
Op margin expansion
Top line growth
Member value
Share growth
Net sales (billions)
Note: FY14E not drawn to scale; 1CAGR based on FY08 - FY13
Integrated with our eCommerce strategy
5
Note: FY14E - FY17E not drawn to scale
Revenue
FY12 FY13 FY14E FY15E FY16E FY17E
US Int'l Sam's
Revenue eCommerce CapEx
Operating
trends
Expectations Growth > industry
Move to profitability
Investing in fulfillment
FY12 FY13 FY14E FY15E
$345
$374
$401 $405 $419
$444
$466 $475-$480
FY 07 FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 FY 14E FY 17E
6
Sq. ft. growth
assortment
formats
eCommerce
Expect increases in sales growth
• Comp improvement
• eCommerce sales growth
Note: Values in billions; FY14E - FY17E not drawn to scale; 1CAGR based on FY14E - FY17E
7
Our investments in leverage
Build customer knowledge FY15E benefits
COGS 44%
SG&A 52%
CapEx & other
4%
Best practice implementation
Back office efficiency
Build sourcing capabilities
Big Data & analytics
Note: Projections for FY15E benefits are based on company’s internal projections
8
Our investments in leverage
Decrease COGS FY15E benefits
COGS 44%
SG&A 52%
CapEx & other
4%
Build customer knowledge
Best practice implementation
Back office efficiency
Build sourcing capabilities
Big Data & analytics
Note: Projections for FY15E benefits are based on company’s internal projections
9
Our investments in leverage
Decrease COGS
Decrease SG&A
FY15E benefits
COGS 44%
SG&A 52%
CapEx & other
4%
Build customer knowledge
Best practice implementation
Back office efficiency
Build sourcing capabilities
Big Data & analytics
Note: Projections for FY15E benefits are based on company’s internal projections
Our investments in leverage
10
Decrease COGS
Decrease SG&A
Improve op income
Invest in price
FY15E benefits
COGS 44%
SG&A 52%
CapEx & other
4%
Build customer knowledge
Best practice implementation
Back office efficiency
Build sourcing capabilities
Big Data & analytics
Note: Projections for FY15E benefits are based on company’s internal projections
$1.3 $2.3
$2.9
19.4% 19.2%
19.1%
FY11 FY12 FY13 FY14E FY15E FY16E FY17E
Cumulative savings SG&A % of sales
100 bps decline in SG&A % of sales
Reducing SG&A expense
11
We are committed to our 100 bps SG&A leverage goal
Note: Cumulative savings in billions; FY14E - FY17E not drawn to scale
$21
$22 $23
$24
$26 $27
$28
FY 07 FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 FY 14E FY 17E
12
Expect increases in operating income
• Growing faster than sales
• Leveraging expenses
Growth
leverage
EDLC
Note: Values in billions; FY14E - FY17E not drawn to scale
$2.93 $3.15
$3.35
$3.73
$4.18
$4.54
$5.02
$5.10-$5.30
FY 07 FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 FY 14E FY 17E
13
Expect continued EPS growth
Growth
leverage
EDLC
• Growth and leverage
• Strong share repurchases
Note: FY14E - FY17E not drawn to scale, FY14E are based on company’s EPS guidance as of August 15, 2013
Cash flow
from
operations
&
net debt
growth
Our plans for free cash flow2
14
FY14E
AA rated balance sheet
Sources of cash Uses of cash
$25-27B
$11-13B
$12-13B CapEx5
Free cash flow2
$13-14B
Share
repurchases &
dividends
Note: Free cash flow is non-GAAP financial measure and the reconciliation can be found in the appendix; FY14E projections based on internal
projections
Cash flow
from
operations
&
net debt
growth
FY14E
AA rated balance sheet
4 - 6%
<Flat
Future expectations
Sources of cash Uses of cash
CapEx
Share
repurchases,
dividends &
acquisitions
AA rated balance sheet
Sources of cash Uses of cash
$25-27B
$11-13B
$12-13B CapEx5
Share
repurchases
& dividends
Free cash flow2
$13-14B
Our plans for free cash flow2
15
Excess
cash Cash flow
from
operations
&
net debt
growth
Note: Free cash flow is non-GAAP financial measure and the reconciliation can be found in the appendix; FY14E projections based on internal
projections
16
Improving capital productivity
FY13 FY14E FY15E
New store CapEx / sq. ft.
Note: FY14E - FY15E not drawn to scale
Lower material costs
Shorter construction time
Adopting best practices
FY09 FY14E FY15E
Technology capital
Technology capital is growing
17
Note: Technology includes systems and global eCommerce capital dollars; FY14E - FY15E not drawn to scale
• Fastest growing area
• Important to our
customers
$0.36 $0.52
$0.60 $0.67
$0.88 $0.95
$1.09 $1.21
$1.46 $1.59
$1.88
FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14
Consistent dividend growth
18
• Dividends have doubled since
the financial crisis
Note: 1CAGR based on FY04 - FY14
$1.6 $2.2 $2.5 $2.8 $3.6 $3.7 $4.2 $4.4 $5.0 $5.4
$5.0 $4.5 $3.6
$1.7
$7.7
$3.5
$7.3
$14.8
$6.3
$7.6
FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14E
Dividends Share repurchases
Returns to shareholders remain a top priority
19
Over the last 10 years, we’ve
returned nearly $100B to our
shareholders.
Note: Values in billions, FY14E not drawn to scale
Capital expenditures5
20
$ Billions FY13
Actual
FY14
Revised
FY15
Guidance
Walmart U.S. 6.0 6.0 - 6.5 5.8 - 6.3
Walmart Int’l 4.6 4.0 - 4.5 4.0 - 4.5
Sam’s Club 0.9 ~1.0 ~1.0
Corporate & support 1.4 ~1.0 ~1.0
Total Walmart 12.9 ~12.0 - 13.0 ~11.8 - 12.8
FY15 Guidance
21
*Growth rates based on FY14E - FY15E midpoint
Financial
priorities Metrics
FY15
Guidance*
FY15
Guidance
Growth Sales growth 3 - 5% $14B - $24B
Square footage growth3 < Flat 33 - 37M sq. ft.
Leverage SG&A growth4 < Sales
Operating income growth > Sales
Returns Free cash flow Strong
Today’s takeaways
22
Co
nsis
ten
cy Growth
Commitment to leverage
Shareholder returns
Disciplined investments
Other global financial items
23 Note: For additional information, refer to the appendix.
24
Appendix
Notes
25
1. CAGR (compound annual growth rate) – this is the year over year growth rate applied to an investment or other
part of a company’s activities over multiple periods. The formula for CAGR is (Current Value / Base Value)^(1/
number of years) -1.
2. Free Cash Flow (FCF) – Wal-Mart Stores, Inc. defines free cash flow, a non-GAAP financial measure, as net cash
provided by operating activities minus payments for property and equipment (as such amounts appear on the
pertinent statements of cash flow or equivalent financial statements).
Free Cash Flow Reconciliation FY13 FY12
Net Cash provided by operating activities 25,591 24,255
Payments for property and equipment (12,898) (13,510)
Free Cash Flow 12,693 10,745
Notes
26
3. Square Footage Growth – Square footage projections for fiscal years 2013 and 2014 are approximations and do
not include square footage gained during the close of acquisitions, but do include square footage added after the
acquisition closed. Square footage increases reflect additions made between February 1 and January 31 of each
respective year.
4. SG&A Growth – Wal-Mart Stores, Inc. has disclosed its definition of SG&A expense in the Form 10-K filed by
Wal-Mart Stores, Inc. on March 26, 2013.
5. Capital Expenditures (Capex or capital spending) – refers to Wal-Mart’s payments for property and equipment.
6. FY14, FY15, FY16, FY17 Projections – The anticipated, projected, or expected amounts, numbers, or results for
the complete fiscal year 2014 and beyond discussed in connection with or included in this presentation constitute
estimates and projections of Walmart’s management and as such, are forward-looking statements. Please refer to
Walmart’s Safe Harbor Statement provided in conjunction with the presentations at this meeting and read at the
beginning of this meeting.