Walgreen Company Q4 Conference Call Highlights

Walgreen Company WAG reported its fourth quarter earnings on Tuesday. Shares of the company are neutral.

Below are some key highlights from its conference call:

• We've put into place a strong blended management team for the future Walgreen Boots Alliance organization.
• We achieved $491 million in synergies through our WBAD joint venture.
• Our retail pharmacy market share grew 30 basis points to 19% in fiscal 2014,
• Filled a record 856 million prescriptions.
• In pharmacy, health and wellness, our script comp was up 3.9% in the quarter.
• Turning to our front-end comp sales, which increased 1.3% in the fourth quarter, average basket size grew 3.5% while traffic was down 2.2%
• Our strategic partnership with Alliance Boots contributed $0.06 of adjusted EPS accretion in the fourth quarter

Financials:

• Net sales were $19.1 billion, up 6.2% from $17.9 billion in the fourth quarter last year.
• GAAP operating income for the quarter was $969 million, down 5.8% from $1 billion last year.
• The GAAP loss per share in the fourth quarter equaled $0.25 compared to earnings per share of $0.69 last year.
• Fourth quarter adjusted earnings per diluted share were $0.74, up 1.4% from $0.73 in the same quarter last year.
• Sales were $76.4 billion compared to $72.2 billion last year.
• Our full year GAAP earnings per diluted share were $2, down 21.9% from $2.56 last year.
• Average diluted shares outstanding were 968 million versus 957 million last year.
• Adjusted EPS accretion totaled $0.06 for the quarter and $0.43 for the fiscal year.
• Accounts receivable increased 22.3%.
• And returning cash to shareholders by committing to a 30% to 35% dividend payout target over the long-term

Guidance:

• We'll continue our strong focus on cost reduction
• Driving to achieve our $1 billion target over three years, which we announced in August.
• We've put headquarters and non-labor spending reductions into immediate effect
• Continuing to work toward greater efficiencies in our processes through Walgreens Lean Six Sigma.
• We continued to face headwinds to our pharmacy margin from ongoing pressure from reimbursement and generic drug inflation.
• By the end of the fiscal year, we now have access to more than 100 limited distribution drugs by manufacturers.
• For the first quarter of 2015, we expect accretion from Alliance Boots to total $0.10 to $0.11 versus $0.14 in the quarter and in the first quarter of 2014.
• We're well positioned to capitalize on industry tailwinds, an aging population, growth in chronic conditions, consumerization of health care, increased new generics and growing demand for a personalized experience.
• We expect to continue to drive sales and margin growth in the front-end, offering ultimate convenience, the best in customer loyalty and extraordinary customer care with a focus on integrating health, beauty, and convenience.
• For fiscal 2015, we expect the combined synergies to be approximately $650 million.
• We're currently executing against our $3 billion share repurchase authorization.

Posted In: EarningsNewsGuidanceconference call
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