WBA - Earnings call transcript Q1 2018 | Walgreens Boots Alliance, Inc.

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Operator

Good day, ladies and gentlemen, and welcome to Walgreens Boots Alliance First Quarter 2018 Earnings Conference Call. At this time, all percipients are in a listen-only mode. Later we will conduct and question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, today's conference is being recorded. I would now like to turn the call over to Mr. Relations Projects. Investor President, Gradwell, and Special Gerald Sir, begin. you may

Gerald Gradwell

Vice to earnings and here us Officer; Pessina, results Chief as Executive Chief through our also Gourlay, Officer take Hello, Officer, and and Stefano questions. will for Financial Fairweather, usual. Executive Executive our is our Chief join of call. Walgreens welcome and you Alliance Global will and Vice George Co Alex President Operating Chairman Boots

actual Relations to and be results You'll statements investor.walgreensbootsalliance.com. webcast current this website our website find forward-looking competitive Investor otherwise. presentation will at of materially. made by to regulatory that the to our in our webcast after and for subject statement the uncertainties relate or as future risk our new events, they link assumptions constitute our latest presentation we archived market, and changes statements. statements see this information, to call, required to future are update a risks this undertake factors law, results cause for no and projections obligation the Certain After to a result XX-K presentation, the are as on that on the forward-looking extent forward-looking expectations Form of in Please could vary XX and whether publicly Except months. on based

you I'll to numbers. the website the now information. the George presentation today's Relations reminder, financial directly to measures in includes certain refer the non-GAAP take appendix to a over most and you and materials As our reconciliations to measures, available financial presentation hand through for Investor on related comparable we

George Fairweather

of for Overall in quarter, cash we business performance foundation expect Gerald. gives be good strong us terms delivered we what year. you, solid have profit the which flow, and to a both a in adjusted Thank

been continued course, growth some significantly pharmacy our GAAP with pleased volume I'll items, have of which about recognize, in moment. numbers that market notable talk share. special a We We are U.S. impacted particularly the in and by

quarter, last $X additional the earnings announced announced completed the in on share our plus the billion we program buyback During call. $X billion expansion June

agreement Of acquire stores. we XXX stores. a of gone was XX% December, quarter the a first development end XX regulatory total This a the In to stake over well, started other across pharmacies course, we clearance Rite have October, Chinese our we to and with September. in minority our has end, retail pharmacy announced cities. have in our by Since leading chain Aid of bought GuoDa, X,XXX acquire

transaction group significant we While context the the future. this in of is the has for small, believe relatively potential it

a reduce with us agreement subject conditions. giving to We regulatory also us closing to a times. Guangzhou wholesale This in XX% partner, transactions X.X and of successful this our approval will interest announced have partnership. Both leave Pharmaceuticals cash-on-cash in our customary an of return are, Corporation, investment course,

end guidance Moving to diluted by guidance. the raised share adjusted have year earnings per $X.XX. Today, XXXX of lower for on our fiscal we

the for On was income versus take favorable, and quarter last constant you results currency moderately up the comparable up being operating dollar billion, $X.X the were versus our So was for currency. Sales were sales quarter. the X.X% in sterling X.X% around billion, quarter than Currency X% U.S. quarter. X.X% in was quarter. X.X% billion, $X.X comparable weaker X.X%. comparable down the versus income year. operating now, basis, I'll up through constant $XX.X the up a GAAP Adjusted

closures, GAAP and storm impact estimate trading by a XX.X%. highlighted and earnings operating net our million GAAP to damage impacted sales around attributable quarter, down be of $XXX Alliance litigation million, as adjusted of hurricanes store EPS. were to We which their accrual $XX Boots Walgreens of the AmerisourceBergen's income of and the quarter the few adversely October. cents last This share in back was reported I by hurricane-related in results

quarter's Guangzhou entire was Alliance X.X%. Adjusted to benefited This adversely reflect number our value $X.X issue. constant of in per to and earnings currency were investment lower also number attributable our holding. up of fair net the earnings impacted the impairment in net Walgreens shares in X.X%; equity from method by Boots Diluted billion, up an share of

$X.XX, down up As Adjusted a per were per share XX.X%. equity was share net income effective earnings in from The excluding earnings we diluted currency, rate, tax net up adjusted constant XX.X%. the XX.X%. AmerisourceBergen, XX.X%; $X.XX, result, GAAP and which calculate diluted was

tax than of quarter Our core discrete excludes which rate, marginally higher fourth XXXX. fiscal impact, was tax in the

pharmacy percentage So SG&A $X.X resulting of the part points the X.X Pharmacy XX.X% by as to of quarter with SG&A normal up down percentage and adjusted a USA to has improved up for sales income compared versus sales comparable operating the over XX USA. Retail X.X%. X.X of gross operating store of margin turning increasing Retail segments, X.X% the was year X.X%, quarter. over billion, due billion was $XX.X the was starting year-ago activity. Pharmacy X.X%. Adjusted sales, in than an Adjusted performance profit seasonal of sales higher increase ago fourth in consecutive points, were both percentage quarters. in quarter, now comparable was in up reflecting to improvement SG&A quarters year-ago retail. X.X% expense Adjusted billion, an our quarter, $X.X Adjusted the

of immunizations, total more look filled pharmacy XX-day an let's in million a sales U.S. XXX up now at were increase basis, prescriptions on We XX.X%. pharmacy. X.X%. So detail adjusted including

for usual reached that Apple customer since digital XXX rolling has launch scripts on times were over led app This to we retail This the scripts XX-day and X-star includes In of volumes basis. of now XX% our the in of Walgreens XX downloaded first the digital the our reported store. adjusted through over the prescriptions over being impact retail demonstrating script adjusted million a growth to refill annual and in U.S. Walgreens' XX-day up X channels, enhancement year-ago a which the basis are work its billion basis time exceeding on capabilities. quarter, have improve initiated approximately progressive XX.X%, the the significant doing We milestone, a app, market the points share quarter. mobile the on has been quarter rating of

due sales pharmacy improved On were quarter partnerships. up turning general stores, lower This brand growth, consumables offset Within partially filled delivering This health to the comparable and which sales this D spoke So basis than the the category retail proportion to the saw delivered This by partially profit. margins. pharmacy pharmacy today by to central volume sales sales, to that the decline beauty about just personal down focus in specialty both points. last of around quarter higher A and Part and of sales merchandise beauty on improved which impact resulted and margin mail, offset plans, and positive in lower wellness as back in by adversely profit pressure strategic generics. growth I and the combined with volume mentioned basis changes we was X.X% and by reimbursement and and were for of we impacted strong sales. last to retail X.X%, than a and to our we were sales rate beauty impact growth retail sales year. by focus of in X.X% inflation consecutive higher-margin specialty the the care fourth a in from sixth were due and we've quarter, higher was categories. pharmacy The scripts increased around XXX categories. sales. changes the of and in by continued factors were Total Declines Medicare X.X%. Comparable comp primarily positively categories year. mix excludes same quarter I wellness is increasingly in last gross gross comparable promotions These promotional mix partly total quarter margin on impacted growth categories. X% Gross health represents gross quarter the as our

are beauty quarters, results. by differentiation prior program in and discussed invest to in we the continue our encouraged As

As well the this stores I'm total number continued differentiation these to during to offering sales stores offering with first retail better to stronger gross comparable beauty enhanced performed quarter, that stores, than pleased now Beauty bringing in additional be of in as category the other margin our higher have X,XXX markedly developing beauty brands, over retail X,XXX. than our in report own in of stores quarters. higher introduction prior sales. the of and resulting offering around completed the we to stores,

Your all being differentiation last last care As in call, rolled beauty I Skin. skin our mentioned earnings to launched Good quarter, brand-new stores. we the our range, is now This on out the

extended now NoX Walgreens Following program, Glory of the over Soap have to stores. X,XXX the we success and &

our we beauty how offering working differentiation the of are to offered received, Given widen our in initiative. range beauty well been has products

Before Aid, we make turning annualize wellness to in to quarter just while contributed end, continued our Since growth to pharmacy, health we volume in to performance December lower the that Rite growth. to delivered contracts we in began comment strong comparable a in fiscal volume strong and XXXX our on deliver pharmacy wanted category. were I than as prescription retail, December important a In year, sales December. last

Rite to now Aid. Turning

of] the Aid we During part the [are part acquired in stores XX of December. Rite quarter, and latter stores XXX the

the are of spring. acquiring also later and XXXX. transfer phases, will And in an our we related before, said we've in as X in period, This in to plan we've XXX we date. be followed centers stores optimization close terms spring of the store assets stores the XX-month anticipated over program, beginning approximately with distribution completion at a by As said,

timing, announced. assumptions costs previously Our optimization, store as savings on expected and are synergies,

operating Retail at currency. Pharmacy down billion, were constant down pharmacy of division. the let's Boots constant X.X%, X.X% generic currency. sales marketplace. adjusted was in in lower a by of operating XX.X%. retail X.X to were This decreased basis and In a X.X% gross the X.X up profit in in division X%, for drugs. Adjusted results adjusted and X.X% continued percentage SG&A now down X.X% division X.X%. Boots constant X.X%; pharmacy as both So mainly end, both million, trading constant gross lower challenging resulted decreased currency broadly were $X.X basis, down comparable and Comparable SG&A on the a due Since basis. dollars and store $X.X constant on to Adjusted was margin the comparable sales reported basis. in expected, up was a absolute shortages to in has currency, income caused of sales higher Sales certain sales due quarter look X.X% currency U.K.'s Comparable $XXX billion constant-currency were rises percentage in we the On retail percentage price down challenging. at as points on X.X% temporary an Adjusted for points flat. constant-currency a comparable of sales sales pharmacy be U.K., to profit. decrease a were X.X% in retail International

However, we costs. businesses address are our trading terms managing both environment of in promotional efficiency and this to

optimistic As our a prospects. result, remain about we future

Pharmaceutical was of up excludes the division. strong performance at quarter constant-currency quarter lower European Wholesale last generic to cost in down country line in X.X on basis margin, fiscal due market pressures market our points margin, some Sales certain XXXX. the countries, gross versus was look our but our basis sales procurement which challenging ABC, operating and by combination a Continental the in markets. X.X%, with wholesale let's constant-currency percentage pressures. growth including inflationary on for This offset to a the conditions fourth of same This $X.X X.X% Adjusted partially due were basis. mainly of was Now weighted emerging a on of billion, division behind estimate year

million income in operating last ownership. $XXX share adjusted quarter in ABC for division X.X% of to of $XX mainly constant same up due increased same last $XX Our was the our quarter year, versus million, million, up level the earnings year was the versus Adjusted currency.

quarter in So turning allocation. the cash flow $XXX Operating million. was capital to next

to reduce the in in outflow in was to This inventory reflected our $XXX quarter quarter which was due we build $XXX million. days capital inventories, U.S. have the was taken actions Cash substantially working lower Our seasonal comparable the than capital million. expenditure in

$XXX to versus develop and We proposition, million continue IT as upgrades about. million, our to free in which including well beauty same of the for our Overall, as program the stores systems, we've in last key increase cash areas of customer previously talked to flow resulted year. core our quarter the this an U.S. quarter invest $XXX

to So guidance turning for now XXXX. fiscal

$X.XX share expect have raised level range earnings We guidance to diluted in our of per the net lower-end and $X.XX. the to of now be adjusted

As share. usual, we've this guidance diluted Aid Rite this before, rates the And expect exchange as do per significantly we earnings to impact constant remaining said fiscal rest on current is not based year. adjusted the for net year's of

take will has been as recent just ours guidance occurred. that not U.S. law update In Once have for guidance positive these changes impact, Based the be addition, believe will, we cash tax our full new does law changes detailed able will effect on to into the assessment, on the published, we have to our course, and that quantify account accordingly. companies guidance such a our the tax of taxes. initial

past, tax adjust result will for these. provisions, we legislation changes in the changes to in in balance As if material sheet

And thinking through team about XQ tax the finally, Our of ahead are working results. phasing. all this

hand than year XXXX. his now the I've halves more said to our Stefano in comments. last the to balanced be fiscal As on between will call, two over for I concluding we expect earnings

Stefano Pessina

George. you, Thank

see, been to the has strong a you start As it can year.

we strategy of help geographical serve diversification geographic our individual China. sit and we That while manage in the recently, that well, commercial actively do passively. the the pharmaceutical our relationship us of any change of emphasis have the giving We said, markets offer. both and market. us downturns Our to diversity changes in scale just to and managing opportunities continues manufacturers seek our business in presence announced not cycle with Most us

market time following China we review been assess all some our the time, with changes, have they partner. local strong say position. as We there, and in to taken involved some for have But regulatory

say As an a will this us am the our to have do are pharmacy transaction business. participate This GuoDa, in reduce our develop that to George we on stake with retail greater a itself. routes China, result, main same I we them leading benefit in stake actively taking significant in other to more freedom partnership strategic significant agreement in recognize the Chinese indirectly with partnership will strategic time, chain, said has to we Chinese earlier, that pharmacy to able announced Around been bring a sector. state terms help in to retail this pleased GuoDa. partner as a arrangement the wholesale their that to providing pursue the

generated Although, but in in China a on remain we a we we the as wholesale taken opportunity charge in good investment, have return. We an overall you interest best very to have seen, committed are believe the this maintain impairment significant holding retail both, our that partnership partners served our offers. has on them and now by focusing that

about very Chinese are We excited of potential the the market.

and Western course, U.S. going that on particular. your the of lot dynamic know, changes As with many of culturally-specific on partners local markets are market our management care and is operate The we that and markets with But teams the convinced is I be very U.S.A personal in quite we entering understandably, continues strategy approach. more excellent a care very in, focus every are to strong through a and with health best underway. local country sectors,

of We these have while. for some been a changes contemplating

partnerships of and you be care do will benefit been convinced within of believe not, single that can integration the or be only close system entity. most collaboration. of in ownership U.S. the have vertical through vertical through many As I I Much can years. achieved a integration achieved then necessarily health for know, however,

are the are it have overlooked. many heard know I of work our Looking before, relevant, partway it transformation. think, of doing in future. believe is important I significance a but U.S. that gets is will to we sometimes, through still the at the of on this of very I this remember the U.S., business process we a path and for set you the growth

the while, time, process regard, an reinventing you of already discipline in same the costs, and an and strict with know, with has to delivering the As review was the began good work, process the ongoing us denouncing this transformation step. important a begin Walgreens first business. of runway results. together given of on Walgreen been lot this cutting has at Cost done A

existing model We underway retail. pharmacy to business work with and now in the well upgrade Walgreens our are in

In process, have generated have going we U.S. of assess roll offerings. believe process of and, growth halfway contracts our net about benefit is the through for detailed our the through retail, to We on the then the continued business. bring I throughout pricing and In doing it of rest while and this fine-tuning track pharmacy, in and adjusted commercial our significant trial, selective vision them service market. aligned Walgreens of and U.S. in more growth us bringing so, market out been a our with in the future again, the the prescription merchandising, to volume have are have refinement we we are, record dispensaries. develop, products helping of continue our with we

So the model to adapt future to third to changing and changing to U.S. rethink the phase the is of business. look and market in ahead behavior our customer transformation our business

this at business are the We the working we extensively as to on today. same time optimize already continuing have that

made have in stores what look should in the defining progress future. like a We of lot our

You will this more XXXX. hear a lot during about

profitability customers to our that in payers patients, and our We the and each of of analyzing true researching shopping want and are and category us. our from what customers stores area business are understand

position this differentiated global place community, gives this and to time doubt scale we health and but purchasing the us deal care the core gives We transformation our and have range potential physical given relationship that unique brands. power retail more services particularly our us with There the do complete offering. strong the the assets, no been working far a a hard alongside a our to and take to believe the across we to achieve, great in seamlessly more offer group have is put in need the of I focused presence our will

over few U.S. deploy test to As beauty done initiatives propositions studies we merchandising, you XXXX, in certain you first single partnerships. the to In past see will years, the store our format, pilot stores a know, and incorporating the been us work new stores number we in of have chains and and a date conducting have pilot supply all format.

the new current and rolling format study store ongoing in before rejuvenation depth within will plan. this results the and our fine-tune initiative concept under out the We capital

more much serve, thinking relevance partnerships, one with It presence However, chains, than services and out so an important. role physically redefining this the our we the and have how customers the communities our to in how is completely strategic those move supply are our we of why about deliver our retail how It and like offering. provides the in requires FedEx, gives we This done we way just our in about creates our to about that stores, that is of with patients rethinking to and our in customers. and community. is we us us offer services. It rethink a things interact and new additional and flexibility we

actively the pharmacy simply, to or communities A serve. patients, services wish propositions service. we competition time hearing uniformly we marketplace. high manner over in that recognition person, channels it, need however that our we also our grow our customer competitive That third party, this, online product interact ensure or convenience get Being our to doing and do this interact or you they must to be must company, to we more want. integrated keep should our even these and best and us. immediate our venture. know of with products partnership. that without we well this they a should or all they services is be and that they payers terms at to an A from across a in best term, that all cost delivered of services this changes new choose whatever the and is to all standards. will must and the Walgreens, our when want but We in and are delivery to our the relevant and partner through business their they but must in competitive our that of in very provide against a all customers quality That it say, us I more and providing value size, goods price. defense make total Quite relevant they a about services and In the we ahead. in patient must where behind do sure will prices, future, can they base, We the in to key. in directly to the at we or them via We retailer know payer picture, must provide with that, services they is our our how manage and our about a As we us To all in all competition provide best and beat want is want. people our areas, these want, business, opportunity to lot a differentiated can have way need big in our year do faltering owners match do in offer areas, or agnostic

a addressed markets, there challenge many than facing challenges in to And our are to we excited ahead in are market and up performance. our be but for for as and and as first condition. However, us I With a quarter, are come. more business give tough for a ever, solid year the years which, we good foundation the strong am to says, the George

I Thank For questions. remain this as for I the you. now whole, forward. will year confident as looking back you hand your as to ever business Gerald in a

Operator

from Gill the JPMorgan. of comes with you. first [Operator line our Instructions] Thank And question Lisa

is line open. Your

Lisa Gill

I the be last around I that preferred go much. well XXXX around things you know, wondering would give updated as just quarter where as for comment market, that? you us have if as Part XXXX morning. you very shaken But we good maybe just call, the And thoughts on relationships. commercial D could now scripts was that in participants Thanks up know out can on 'XX. anticipated as calendar far

Alexander Gourlay

it's Alex have still don't think see same in update. Yes. Hi, as saw the add. we position we I Lisa, the We last here. much to

We the customers about we're XXXX, we we're sticky our with grow more stay and and will providing customer helping and are confident That's make us confident as grow partners. to also well. actually care in to very

So nothing really to what it total The when more clearer. since. seem we'll seen give probably further of we've we June, much with that. consistent or a have market to sometime gave add as And update course, available, the we numbers in May April, becomes

Lisa Gill

I do the think about to how business? And any PBM margin around X/X/XX then of we your that relationships? on payer mean, changes any or

Alexander Gourlay

time Again, the with we've D the got. And commercial speak know, marketplace, we Med as sustain margin We do the our contracts. volume so to be to that we're very about feature We market. appropriate we pharmacy you the that that of disclose, we and continues the confident manage the can all a pressures, reimbursement price don't carefully.

this of the course, have that some normal the less of stepping of is of of contracts payment. year. Some contracts improved in, the down we we course, became time excited And

okay pretty So trend. overall, margin. feel we about on It's much the

Lisa Gill

then ahead. - Okay, I go sorry, great. I'm And if

Stefano Pessina

of we afford when a that new make course, the see, we contracts. sure approve we contract, You can

we one overall, because losing are know line, are we this give. we our is side, understand what we away. operating or our all consistent And or why why recover we margins so can are to of most studied some And in results contract additional and and analyze margin, compensate if margin operating bottom use dramatically not to quite that the we contract give giving in if if the overall could every our approved where from we all during for operating have discounts, -- is we at how adjusted margin, this our or is

Lisa Gill

you, about very That's to rate George, to it? think range Is thinking number maybe be way then this obviously And nicely somewhere a positive. of about for how a Is you tax Great. by you're it talked mean, how the just quantify lastly, $X.XX being be on? any could $X.XX. positive there close math, I or in early the to U.S. that helpful. our about that would Okay.

George Fairweather

a taxes. we'd in be the where of quarter, I fairly full on the said comments, in process the all I published, is what of quick worth domestic we'll takes we're you prepared of as perspective give at are are, from simpler for that's Obviously, said key as in always premature companies expect the focused are second details And prepared we estimate. through, I this. to and Look, working comments, we're a and sort on the financial as, of team multinational. again, it the comments. effect It's doing. again, positive issue a But it's through much cash our this still But me, dirty I some for But -- it remembering, being us, update the still to prepared said of that course, is mean, a the we taxes. as little bit is -- on time to work for the that still -- the make any point. would so tax I in that comments I'm is cash --

Lisa Gill

Okay. you. it. I Thank appreciate

Operator

Thank you. George Hill And of with our Markets. the line RBC comes next from question Capital

open. Your line is

George Hill

specific the and ex-U.S. guess, business? something driving whether drugs. talk what's that, was And morning, it of a related about Good that's color Or talked comment to throw more that kind you taking us about global Alex, tell a you a guys. environment as I to like that thanks drill question. to you It on little sounded something that impact? I challenging for more about. this the is could having generic procurement a on want made

Alexander Gourlay

I apologize. - I no, say didn't George,

pick Sometimes all. I generics, my marketplace. But trend at really comment a accent we're up. the that in is similar on a didn't bit seeing hard the to very on say

market's the Boots trend, have same up a apologize bit change. and We about over in of work work about very were we the remarks if we Obviously, colleagues deflation. Alliance consistent our confident. picked consolidated, So the capability manufacturers good no and in the Walgreens time, marketplace. feel well and seeing in we're a so manage with seeing this and development we we way wrongly. this feel to good I my We're feel

George Hill

then No. with you for new yet, slowing and that the be you. store not you United then mishearing initiatives Stefano guess, plus but about growth format. coverage Rite in know guess, And apologize I States, I - the even maybe, we're - growth through and Aid macro percent of would And acquisition follow-up talked script some the is for the I a down. beneficiary I XX-ish for

next a what market in the box Or opportunities to box? about to share of about as perspective best do see where top the for CVS we battle earnings pharmacy the monetize in opposed you 'XX? competitor, engaging the half stores leg continue growth think beyond or And roll-on line generate for first of I'm of to this from kind for from guys the perspective? thinking a company or as margin the the with the is synergy largest in Aside more a as your whitespace

Alexander Gourlay

Yes.

number doing to in tests a we - we've we number of are working Stefano as So are been working and with concluding trials. rethink redesign really and for remarks, the this a years hard of And his said again, really box.

example, announced million would -- be again, app best app. who them of in XX the - mobile like others example, but you a to George beauty and an his downloads just have differentiation's give many some X-star And we remarks the

together this a single-format in putting all we're trial. of So

different seeing, good we last as we we're sure in the giving generate give access And that, format, Walgreens we continue into have immediate first great confident of And about are re-merchandise in And Some a Rite that Aid that we stores not the [indiscernible] make for and details offer. that volume clear, and grow year, more very course, in ever confident of box, and not are acquired. X very long-term. and We've from just all single later that, think feel simplify we we strategy. as we'll way, to particularly we that have but able it. but to can will we be been value Walgreens. step we ability prescriptions the very that least, value differentiated good our by time this on numbers front feel to time a the data billion the data into as doing care. to we in we Again, develop end, use our The about more

George Hill

Okay. it And about we last maybe new clinic the about? demos. or customer-facing I it would include there format think includes Is components it the thinking be, LabCorp the the magnet tack-on format, the customer beauty, I to as just new other, would might call, what be any includes should probably model,

Stefano Pessina

model, doing trials. are partners. you clear let's certain say, present finalizing a we full we are, and we agreements a we But certain understand model Listen, today. And have cannot with that will

during from but hear the the things the this us as are will year, commercially during As of some year, you said, that imagine. we we more XXXX, are sensitive, of end at you doing can

something that, and, more. now been So find be in things I we will have hope, all until our assured talking box, about you you can the that

George Hill

I Great. you. forward. look Thank

Operator

comes from the Thank you. question with Bank. next Santangelo Deutsche Glen line And of our

is open. line Your

Glen Santangelo

of Hi, want good thanks. morning. follow couple And on things. to up a just I

of revenues but of you sort question, as some come margin And anniversary wins we obviously, retail you think going here down, to will when continue you margins pressure competitive forward, the on want in think business you PBM XXXX, goal nature at SG&A you to gross where stabilize margins in to U.S. specific business? so the think cut reimbursement Do to the any get margin your margins of an how in eventually about down. this we generally try and do I continue to we're look your to you Or is sort those business, the understand just the the commercial forward and environment? don't do the able First, and grow? look environment to given give where grow environment they from of be to guidance to an come as ultimately

Alexander Gourlay

the in here. period, through quarter. specialty successful with was you partners, contract last announced Alex remarks we as made AllianceRx, XXX about which I Prime, remember the our recall, think, it's which the basis in - also quarter Glen, in we're Hi, off in or Again, FEP the this mix, specifically, And kicks points. George this prepared

see point long-term -- as consistently. is the our But look you the to mix a the hasn't more margin. same, at changed. trends that quite we So long-term of important expect view trend, said That in that we hasn't remain and

We the used we levers gross income, importantly, levers use, that adjusted X dollars and, are which able way operating are volume of Again, costs, cost the that to in well. as do operating through a in goods, successfully in we've adjusted we margin all ensure pharmacies lever our expect will previous volume. continue done believe the to the profit in These same will we've last we and margin this front-end developing business. -- way question drive that described and the drive we years use to in we sorry, to

Glen Santangelo

over you we maybe, mean, be if on could Any head into comments the meaningful? expect year, outlook then that. of I ease. should just faced the comps in I expand calendar challenges we Given reimbursement 'XX, this some to as do And Europe? that

Alexander Gourlay

pharmacy comment Again, which is specifically business. I U.K., main the can our on

to cycle, customers The happens to this And -- as scale is this many the course, brand to second Europe, is have Of our we main VAT. clear on important the in presence before. very our went business. out. of business Almost the something pharmacy have manage businesses money of Stefano managing a in the but a and phase been government large pharmacy the that to and appropriately. The And We've we're Europe we that is this mentioned this and decade the have is we taken have other amount every in U.K. and U.K. our business in by appropriately. very

has That normal back remain this again, years it in we beyond in been again, action environment government cycle. to normal. because So a the tough it's will in manage can and action period future come the we that confident

Stefano Pessina

in XX we distribution. of margins used government I because are pharmacies, all seen it the the in the see, the the pushing for to European down would we years the maybe, Europe, have countries, last you say, But the margin of

a So to been business, a efficiency operators. And the of consolidation, know and react. course, all how had of of of react and the great a Europe had it's the in been improvement part we there great there we

had for this rest we is goes say, We created through, it but in fluctuation some days. or very in and created control. year I in big would FX, We shock has depreciation -- the little this Europe. control. day say, in smoothly. the just generally, to much see which XX% past. mainly, see a the big has the U.K. were not the big also, today the strong And of the X a I X see to environment this difficult not an depreciation And was quite pound would Now created because this and used were under lot Brexit -- in quite We depreciate also of instability depreciation euro more to again

they constant there. before. able stay into Now have the these these about big come we back They normality, in more to quite this of considered you and the all spite changes, currency, things situation been all, coming are back are less been able But where business to normality. were -- to other and operators, after see in slowly And or exceptional Europe. have in all that be might will an overall

Glen Santangelo

capital Maybe that. the just allocation. appreciate I on lastly,

to decided expect to understand as regard? of year back in out of or some the And to forward look the much. be that current outstanding, to pull active to some we balance You continue I still fiscal do the you then off here quarter. Thanks do that the very have stop. you I'll but of authorization in sort repo you expect

George Fairweather

$X billion We completed the program.

share normal have our programs. overall we to that continue position our program the obviously, something continues an our efficient at from to an that, And will have so balance on sort ongoing other Obviously, have seen you out than record. as we authorizations no additional of repurchase anti-dilutive is review track basis, sheet, moment for

Stefano Pessina

You understand -- here. Stefano

cash a we substantially course, to case, every the have have year. And in cash, we buy have understand to have, lot You have cash. of in any use have you create. we that do have seen increase we produce the use last And cash year, to shares to the back able or some increased of we this we to we dividend. this we're But acquisition this either external to or

we sure, deploy a see had acquisition that our future. more similar cash future. course, the of shares. more shareholders. in be deploy able cash We later, have some acquisition found aside after, that in And intended to the buy to we an to find a situation to in any we the or the same and for ourselves given we in or not be this in don't acquisition. have cash why -- do or ourselves have will cash put to should not in anticipated the hope because has decided smaller situation we for we believe than have we fashion and we But back reason money to was done an produce future. will we And to orderly awkward we We and so back Well, utilized

Glen Santangelo

Thank you very much.

Operator

the Thank with from you. Concepcion of Citi. question line next Alvin comes our And

open. Your is line

Alvin Concepcion

my taking Great. for question. Thanks

ask assume of do just you plan You reform this for with considered about the to just at don't benefit? time want your to acquisition. plans external away? Does quantify know again. you what an most about time, wanted line Or do tax to or Just do I this gets accelerate but acquisition? this you talked

George Fairweather

to conversion here and acquisition prepared Walgreens. got Aid perspective, Well, invest, completion post Americans and in the to opportunities reform to invest as very program in you And equipment, we've across as know, potential importantly, jobs, in stores country. I that again, know, I from open big ours And such comments, Rite U.S., new planning really invest up in to has business our also assets our the the companies continuing got we grow convert think, the the we're substantially facilities, for our whether core as our all said to that's the tax proposition. the customer Walgreens help we're and to the economy as

here So we the reinforcing as in see tax States. welcome United our this to and the reform opportunities invest

Alvin Concepcion

on the managed include Does international? what mentioned this mean, side the thinking? question care more the part integration also, various part you And priorities, a most M&A. or the it And Is you has of are of think could integration? chain? as vertical retail supply of just through benefits. U.S., on do what chain many your supply benefit And your I parts

George Fairweather

disciplined M&A a look We way. very at opportunities continue in to

start always, way best we As our new shareholders. looking we for opportunity the with at to extract at when are the value what opportunity and partnerships, partnership look look is mentality at the and a for

arrangement. Sometimes a good commercial that is just

having investment equity-method minority an taking or it's a Sometimes, partner.

that long-term the shareholder internationally, can to We'll create at soft often here -- in the lot Clearly, synergies, logical but the in about always to and always value. a continue of criteria not disciplined a what quantifiable And always opportunities sometimes, the it's way. U.S., at hard returns XXX% opportunity the shareholder it sense, way, what our we attractive clear quantify make key approach of the our reform. tax are. top to deliver the in are but point the a the tax as was M&A opportunity very we U.S. to then, value financial more look do synergies seen underlying and look M&A. sustained just you've And ways, a models. real for than really we one talked disciplined look on we're always financially changes start in and the ones partnership and mindset of And of on synergies, view how is earlier from we but it. is in what But very in of China, in based U.S. some and and very best the some on structure a we what financially prior then with continue reform a which And

Alvin Concepcion

very much. you Thank Great.

Operator

Robert line our you. of Goldman from Thank comes And the with next Sachs. Jones question

is open. Your line

Robert Jones

taking questions. for the Thanks Great.

given quarter as some out lap to to be competitive networks? you D preferred look you growth, noted in similar. looking fiscal kind You of we be of another quarter should back the half gains, the seen that some market when of you've changes even declines growth for the or same-store share script would next begin But what the the the I'd year strong on script imagine and of Part

Alexander Gourlay

Hi, it's Alex here.

comfortable we have near at are or platform, do far. of It's the said that on the so it's the power have efficiency. And to in. That's as our we the of our a seen as buying year. see we the course, then market As stores from non Rite that, non-organic, and coming that top organic we well, problem given don't very quarter, in growth last next growth changes why drive additional Aid help our market to

the So great phase believe this of growth is more remain you've and that's I again, we delivering focus the same as delivering we move I will a us believe few consistently or the need example well. in same we as with have this phase ways what would over from it what seen this them our intention. becomes changes competitive. extremely different see The to as that we thing into sector and last years, say provide and think and for they growth as partnership I And that great do I marketplace committed of one we from partners that growth. is value, how, intend last to of maybe another

We no previous year really, market year. in change. and So evident remain -- growing the the are this growing this pharmacy confident, year above compared that to we compared to

Robert Jones

that you just performance in and but down you some made hoping could was generic comments break but that. elaborate to something the mentioned go thought appreciate was on maybe what I could I had it December, I just you the was George, seeing you around I provided? pressure, be - you Okay. were you might December And relative then procurement had on I think back mentioned, you performance comments hoping that in the XQ.

George Fairweather

fourth looking was of - out at look this with the operation. – just at we point, where sourcing we value last were I it operation do we impacted our that generics we whilst in but the we're in performance that as And I focused much around division, the it's and in terms wholesale, say It's generic sometimes Pharmaceutical we can pleased emphasize, and The falls year in and generic and pressure our very if of we're Wholesale whole. be the this generic quarter, really a procurement of Switzerland, on. were in as can shareholder just quarter very sourcing relation we're to when it over overall

in in finished the obviously, was overview to give In prescription said, the, terms saw of trying Difficulty] a of the But you I the [Technical we've fairly strong as you was U.S. in And in so growth [Technical just -- level pharmacy, Difficulty] I -- QX. what we're U.S., December, just performance. closing volume do

our remembering and was were really us contracts Again, remarks, worth I ourselves, we delivered in in prescription XXXX, wellness retail QX. just to in prepared where obviously, December continue strong last Walgreens, said, December fiscal in reminding saying. our categories. has said said in it's strong to again deliver what pharmacy for volume and health as important been contributed what a really in on the it's lower comparable that beginning sales annualize we're the As building what's and we I And than then the performance December what's worth important growth to I that year, in Alex

retailers I tough relatively the to other indicated, the December, sort as we're U.K. December again, in of in trading Difficulty] story. the And are into see U.K. looking the, So of in back the High large And Boots in figures the that's that what believe it then [Technical really I starting from Europe, in different. particularly preliminary no some looking as was that's the Street-based

Robert Jones

clarification. appreciate all for I that Thanks it. it. Got

Operator

one Thank you. more And we have time question. for

line Tanquilut comes last the Brian Our from of question with Jefferies.

open. line Your is

Brian Tanquilut

think United, the MedExpress And of Vanderbilt with sold here in can then such you I Hi, whether improvement on out in health MedExpress in comments rolled how color in or do of it's if to the have any health out? us give some partnership wanted ask rolling Nashville. that of clinics some good services, sort your morning. or care opportunity higher-acuity you to as systems could push you've that just far you're stores seeing terms the you that that

Alexander Gourlay

it's -- sorry, here. Hi Alex John Brian, hi

that a It's strong have. we're brand. to -- honest, it's good the really a with model, think tests be It's success I really to pleased know we this. link, the of

So a information pop America, that, in location, sense, that view, you best have a, when and across the the, overall that have point It corners corners into we'll far, we make good, from more would update the so of customer more you a everybody can confidence in convenient then America. knows model. we

that point something of So it and does. sorted, you medical makes a a have customer patient from accident need or you can of what in view type, is and that MedExpress or when sense which go yourselves get when you an

very So, bit to related on so but make be a would so early any narrative, a really that and honest. good, to give of far, information

local, with I we've is I are mean, think there. clinics, systems. the really in They we're pleased partnerships terms to of health the the got which important

don't And brand. of we to course, systems Walgreens' the different we pharmacy are, services and local which when you We always what partnerships, that what really to have providing opportunity are as it is providing services we the and that, needs care said, depending more bit fit on did of want we the see. into well do these health alongside the

are these mature. So again, more

health to. are with added our exactly [Technical customers We from Difficulty] care of They performing location, a relationship - to bringing important as driving partners. wanted in are we business to different pharmacy location and value

Brian Tanquilut

I that, quick a stores. across to of base you I about already Just a as mean, big the think out, FedEx rolled follow-up rollout.

how how into volume as a stores? that drive or So you about defensive the a to I view way think as should strategy perhaps, margin and

Alexander Gourlay

not This strategy. is defensive a absolutely

have supply We got chain. a fantastic

to than -[Technical brand. other got retail [ph] are retail situated closer pharmacists and we've inside America's brand, a We Difficulty] rooftops and that any

is Locations made, of we've Difficulty] -[Technical a partners, America. not been -[Technical Difficulty] holiday season. definitely and fantastic and the is across particularly redefining the this defensive, the progress about have This pleased, us in promptness we're really As So FedEx

Brian Tanquilut

appreciate Thank you. I that.

Operator

you. Gradwell call session. to the now Thank for closing Gerald this concludes And I any like back turn would remarks. question-and-answer Mr. today's to

Gerald Gradwell

We everyone, weeks to for community. we all as in the again. over on you to quarter out second see you, you next the And time. Thank we again months' three financial to And look Thank speaking our forward call. months to you to about, speak and shareholders indeed. and participating in our few hope and and the go all very much, thank results you look

questions, around you you please the free indeed. We're If for IR very next further few any of feel have contact do much, any to the here. days. Thank

Walgreens Boots Alliance (WBA) 4 Jan 182018 Q1 Earnings call transcript