Más contenido relacionado La actualidad más candente (14) Similar a Walgreen Co. Fourth Quarter 2008 Earnings (20) Walgreen Co. Fourth Quarter 2008 Earnings 2. Fourth Quarter 2008 Agenda
• Introduction/ Safe Harbor Rick Hans
Divisional VP - IR & Finance
• Q4 & Fiscal Year Highlights Jeff Rein
Chairman, CEO
• Q4 & Fiscal Year Financials Wade Miquelon
CFO
• Growth Strategy Update Greg Wasson
President, COO
• Summary Jeff Rein
• Questions & Answers All
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3. Safe Harbor
• Certain statements and projections of future
results made in this presentation constitute
forward-looking information that is based on
current market, competitive and regulatory
expectations that involve risk and uncertainty.
• Please see our Form 10-K for a discussion of
factors as they relate to forward-looking
statements dated August 31, 2007.
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4. Q4 & Fiscal Year Highlights
Jeff Rein
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5. Another Record Year
• 34th consecutive year of record sales and
earnings
– A record matched by only one other
Fortune 500 company
• Sales increased 9.8% to $59.0 billion
• Net earnings grew 5.7% to $2.2 billion
• EPS reached $2.17 on a fully diluted basis
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6. Fourth Quarter Highlights
• Sales increased 8.8% to $14.6 billion
• Net earnings grew 11.7% to $443 million
• EPS reached $0.45 on a fully diluted basis
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7. Consistently Beating The Industry
WAG Script Growth Vs. Industry
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
-2.0%
-4.0%
Q3-07 Q4-07 Q1-08 Q2-08 Q3-08 Q4-08
WAG Total Retail Script Growth IMS w/o WAG
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Source: IMS Data
8. FY 2008 Initiatives
Moderated our organic growth plan for retail
store expansion to provide more operational and
financial flexibility
Acquired worksite health centers to expand our
points of care beyond Take Care Clinics
Implemented disciplined and sustainable SGA
expense control
• Initiated corporate-wide program to reduce costs
Expanded our leadership team with new talent
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9. Q4 & Fiscal Year Financial Review
Wade Miquelon
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10. Fourth Quarter Financials
Percentage Change
Three Months Ended
August 31, 2008 August 31, 2007 August 31, 2006
Net Sales 8.8% 10.3% 16.0%
Net Earnings 11.7% -3.8% 25.3%
Comparable Drugstore Sales 2.6% 6.3% 9.7%
Comparable Front-End Sales 3.7% 6.1% 5.2%
Prescription Sales 7.9% 10.5% 18.0%
Comparable Prescription Sales 2.0% 6.5% 12.3%
Comparable Prescriptions (Units) -0.1% 4.0% 7.1%
Percent to Sales
Three Months Ended
August 31, 2008 August 31, 2007 August 31, 2006
Gross Margin 27.6% 28.0% 27.6%
Selling, General and Administrative 22.8% 23.5% 22.5%
Expenses
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*Fiscal 2008 fourth quarter includes a LIFO provision of $24.9
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million versus a $32.0 million provision in the previous year.
11. Controlling SG&A
Year-Over-Year % Increase
25.0%
20.0%
Gross Profit
15.0%
SG&A
10.0%
5.0%
Without the vacation accrual credit, SG&A expenses would have increased 8.0 percent
0.0%
3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08
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Note: SG&A data adjusted for Hurricane Katrina in the fourth quarter 2005
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Source: Company Data
12. Percent Increase in SG&A Dollars:
Two-Year Stacked
30% 27.5%
25.3% 24.7%
23.3% *
25%
20%
15%
10%
5%
0%
Q107 + Q108 Q207 + Q208 Q307 + Q308 Q407 + Q408
* Without the vacation accrual credit, SG&A expenses would have increased 8.0 percent in Q408
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13. Percent Increase in SG&A Dollars:
Two-Year Stacked
28.9%
30% 27.6%
23.3% *
25%
20%
15%
10%
5%
0%
Q405 + Q406 Q406 + Q407 Q407 + Q408
* Without the vacation accrual credit, SG&A expenses would have increased 8.0 percent in Q408
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14. Gross Profit Margin
• Gross profit increased 7.4% to just over
$4.0 billion
• Margins were hurt by increased promotional
activity and non-retail businesses, including
specialty pharmacy
• Generics and private brand products positively
affected gross profit margin
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15. Financial Takeaways
Tax Rate
• Q408 of 37.0% vs. 35.0% in Q407
Working Capital
• Accounts receivable up 13.0%, driven by third-party sales and slower
Medicaid payments
• Inventories increased 6.8%, slower than sales
• Accounts payable up 14.9%, due primarily to the timing of payments
Balance Sheet
• Q408 net debt of $977 million vs $651 million in Q407
CapEx
• $2.2 billion in FY 2008
• Lower in FY 2009 with slower organic growth
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16. Slowing Organic Net New Store Growth
Net New Stores
600
500
400
300
200
100
0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009E 2010E 2011E
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20. The Right Strategies for Growth
Broadening access to our products and
services
Reinventing the shopping experience
around the customer
Expanding into related health care services
Efficient systems and processes
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21. Integrated, Cost-Effective Solutions
Take CareSM
Health Clinics
Medical Campuses
Worksite
Mail Service
Clinics
Retail Stores
Specialty Pharmacy
Home Care
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22. The Right Strategies for Growth
Broadening access to our products and
services
Reinventing the shopping experience
around the customer
Expanding into related health care services
Efficient systems and processes
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23. Customer-Centric Initiatives
Prescription Savings Club
> 1 million members
• Offers more overall value than other
discount programs
• Discounts on more than 5,000 drugs,
including a 90-day supply of more
than 400 generics for less than a
dollar a week
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24. The Right Strategies for Growth
Broadening access to our products and
services
Reinventing the shopping experience
around the customer
Expanding into related health care services
Efficient systems and processes
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25. Expanding Health Care Services
Take Care Consumer &
Employer Solutions
• Providing routine health care at
Walgreens drugstores and large
employer worksites
• Nearly 600 health centers and clinics
currently and growing to 800
Specialty Pharmacy
• Largest independent provider
• New Premera contract
• Fastest growing segment of pharmacy
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26. The Right Strategies for Growth
Broadening access to our products and
services
Reinventing the shopping experience
around the customer
Expanding into related health care services
Efficient systems and processes
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31. Calculation of Adjusted SG&A
4Q04 4Q05 4Q06
($s in millions)
SGA$ under GAAP $ 2,086.4 $ 2,434.9 $ 2,732.4
Less: Katrina Expense $ - $ 54.7 $ -
Adjusted SGA$ $ 2,086.4 $ 2,380.2 $ 2,732.4
Adjusted YOY % Increase 14.1% 14.8%
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