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Tuesday, April 2, 2019

Walgreens Boots Alliance (WBA) reported earnings on Tue 2 Apr 2019 (b/o)

** charts before earnings **


** charts after earnings **


Walgreens Boots Alliance misses by $0.08, reports revs in-line; lowers FY19 EPS below consensus; provides update on Transformational Cost Management Program
  • Reports Q2 (Feb) earnings of $1.64 per share, $0.08 worse than the S&P Capital IQ Consensus of $1.72; revenues rose 4.6% year/year to $34.53 bln vs the $34.57 bln S&P Capital IQ Consensus.
  • Co issues downside guidance for FY19, sees EPS of ~flat yr/yr from $6.02 in FY18, plus $0.04 of FX headwinds, which equates to $5.98 vs. $6.38 S&P Capital IQ Consensus.
    • Fiscal 2019 adjusted EPS growth expected to be roughly flat at constant currency rates, compared with previous guidance of 7 percent to 12 percent growth
  • Long-Term Business Model
    • The company confirmed its existing transformation priorities and announced it will be taking immediate action to reinforce and accelerate them. With these actions, the company's business model aims to deliver improved performance in 2020, and mid-to-high single-digit growth in adjusted EPS, at constant currency rates, in the following years.
  • Transformational Cost Management Program
    • The company's global cost review, scheduled for completion by the end of April 2019, has provided sufficient visibility to increase the annual cost savings target from the transformational cost management program from in excess of $1 billion to in excess of $1.5 billion by fiscal 2022. The program includes divisional optimization initiatives, global smart spending, global smart organization and digitalization of the enterprise to transform long-term capabilities.
    • During the second quarter and since the quarter ended, the company has taken decisive steps to reduce costs in the UK and to optimize the field management structure in the U.S.
    • The company continues to anticipate that aspects of such initiatives will result in significant restructuring and other special charges as they are implemented. The company has recognized cumulative pre-tax charges of $179 million for the six months ended February 28, 2019. These charges primarily relate to the Pharmaceutical Wholesale and Retail Pharmacy International divisions.

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