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Similaire à Walgreen Co. Second Quarter 2008 Earnings
Similaire à Walgreen Co. Second Quarter 2008 Earnings (20)
Walgreen Co. Second Quarter 2008 Earnings
- 1. Confidential
Second Quarter 2008 Conference Call
March 24, 2008
© Copyright 2008 Walgreen Co.
- 2. Confidential
Second Quarter 2008 Agenda
• Introduction/ Safe Harbor Rick Hans
Director, Finance
• Prime Therapeutics and Q2 Highlights Jeff Rein
Chairman, CEO
• Financial Results Bill Rudolphsen
CFO
• Health & Wellness, Retail Strategy Greg Wasson
President, COO
• Questions & Answers All
2
© Copyright 2007 Walgreen Co.
- 3. Confidential
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.
3
© Copyright 2007 Walgreen Co.
- 4. Confidential
Prime Therapeutics Contract
• Exclusive multi-year specialty pharmacy contract
with a PBM owned by 10 Blue Cross Blue Shield
plans
• Provides access to any of the 20 million members
who have specialty pharmacy needs
• Independence offers Walgreens an advantage
4
© Copyright 2007 Walgreen Co.
- 5. Confidential
Second Quarter Highlights
• Record sales and earnings
• Disciplined and sustainable SG&A expense controls
• Continued organic growth
• Sales improved as the quarter progressed
• Core product sales insulate us from slowing
economy
• Late/weak flu season generates fewer prescriptions
• Balance short-term results with long-term
investments
5
© Copyright 2007 Walgreen Co.
- 6. Confidential
Second Quarter Financials
Percentage Change
Three Months Ended
Feb 29, 2008 Feb 28, 2007 Feb 28, 2006
Net Sales 10.5% 14.6% 10.7%
Net Earnings 5.2% 24.5% 6.6%
Comparable Drugstore Sales 4.7% 8.9% 6.5%
Comparable Front-End Sales 4.0% 5.7% 5.0%
Prescription Sales 11.1% 16.4% 11.1%
Comparable Prescription Sales 5.2% 10.9% 7.4%
Comparable Prescriptions (Units) 3.6% 6.3% 3.5%
Percent to Sales
Three Months Ended
Feb 29, 2008 Feb 28, 2007 Feb 28, 2006
Gross Margin 28.82% 28.96% 28.44%
Selling, General and Administrative 21.75% 21.64% 21.69%
Expenses
6
© Copyright 2007 Walgreen Co.
- 7. Confidential
Slowing Growth of SG&A
Year-Over-Year % Increase
25.0%
20.0%
Gross Profit
15.0%
SG&A
10.0%
5.0%
0.0%
2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08
Note: SG&A data adjusted for Hurricane Katrina in the fourth quarter 2005 7
© Copyright 2007 Walgreen Co.
Source: Company Data
- 8. Confidential
Additional Financial Information
• LIFO rate remained the same as Q1; Q2 2007
provision was $13.4 million versus $30.6 million
this year
• Sustained and disciplined management of
payroll and discretionary spending slowed
growth in SG&A expense
• Tax rate of 36.8% for Q2; 37.0% anticipated for
fiscal year
• Total short-term debt $728 million, new
acquisitions to be funded with commercial paper
and short-term debt 8
© Copyright 2007 Walgreen Co.
- 9. Confidential
Looking Forward
• Option Care on track
• Continue to target at least 15% ROIC
• Planning store growth of about 8% per
year in square footage
• Strong financial position gives us flexibility
9
© Copyright 2007 Walgreen Co.
- 10. Confidential
Walgreens Health & Wellness
• Natural extension of Walgreens health care strategy
• Includes more than 500 health centers and in-store
Take Care Health Clinics
• With retail pharmacies, Walgreens will have nearly
7,000 points of care
• The market: 7,600 corporate campuses of 1,000
employees or more + families and retirees
10
© Copyright 2007 Walgreen Co.
- 11. Confidential
Platform of Services Will Expand Sales
• Pharmacy services
• Specialty pharmacy products and services
• Home care services
• Wellness programs, disease management
and occupational health services
Walgreens will help employers reduce costs and
improve the quality of health care for their
employees, dependents and retirees
11
© Copyright 2007 Walgreen Co.
- 12. Confidential
Growth on Track: 6,237 Retail Locations
#1 in Market Share in 121 Major Markets
23
110 2
10 1
115
2
206
13
52 24
ID
136
8 197 134
61 89
52 21
536
185
64 228 73
132
30 3 105
170
58 62
79
74
494
Number of 218 121 42
stores 90
54 47
235 71
200+
75
54 143
Puerto Rico
150-200 599
73
118
100-150
746
50-100
Hawaii 1
1-50
• Opened 290 new stores in the first six months
• Acquired pharmacy files of 70 pharmacies, including 27 Rite Aid stores, in Q2
12
© Copyright 2007 Walgreen Co.
- 13. Confidential
Questions & Answers
13
© Copyright 2007 Walgreen Co.
- 16. Confidential
Acquisitions Helping Drive Growth
2008:
• I-Trax (CHD Meridian and ProFitness Solutions) – worksite health centers
• Whole Health Management – worksite health centers
2007:
• Option Care, specialty pharmacy and home infusion services provider
• Take Care Health Systems, a convenient care clinic provider
• Familymeds Group (selected assets)
• Senior Med (primarily prescription files)
2006:
• Medmark Specialty Pharmacy
• Canadian Valley Medical Solutions (home care services)
• Happy Harry’s
2005:
• Schraft’s Specialty Pharmacy
• Home Pharmacy of CA
• Selected assets from the 23-store Medic drugstore chain
16
© Copyright 2007 Walgreen Co.
- 17. Confidential
Worksite Market Opportunity
Service No service
provided by 3rd
• Walgreens Health & provided in the
party vendor workplace
Wellness: more than 500
worksite health centers
17%
and in-store clinics,
growing to 750 by year
37%
end
• Potential Market: 7,600 45%
corporate campuses of
1,000 employees or more
Service provided by in-house clinicians
Market: 7,600 corporate campuses
17
© Copyright 2007 Walgreen Co.
- 18. Confidential
Calculation of Adjusted SG&A
4Q04 4Q05 4Q06
($s in millions)
SGA$ under GAAP $ 2,102.1 $ 2,434.9 $ 2,732.4
Less: Katrina Expense $ - $ 54.7 $ -
Adjusted SGA$ $ 2,102.1 $ 2,380.2 $ 2,732.4
Adjusted YOY % Increase 13.2% 14.8%
18
© Copyright 2007 Walgreen Co.
