http://www.morningstar.com/earnings/15178042-walgreen-co-wag-q3-2010.aspx

Walgreen Co WAG
Q3 2010 Earnings Call Transcript

Transcript Call Date 06/22/2010

Operator: Good day, ladies and gentlemen. Welcome to this Walgreen Company’s Third Quarter 2010 Earnings Conference Call. Today’s call is being recorded.

I would now like to turn things over to Mr. Rick Hans, Divisional Vice President of Investor Relations. Please go ahead sir.

Rick J. Hans - Divisional VP, IR: Thank you, Irene. Good morning, everyone. Welcome to our third quarter fiscal 2010 conference call. Today, Greg Wasson, our President and CEO will be discussing the quarter’s highlights and our continued progress in executing our growth strategies. In addition, Wade Miquelon, Executive Vice President and Chief Financial Officer would detail our third quarter financial results.

When we get to your questions, please limit yourself to one question and a follow-up so that we can give an opportunity to as many investors as possible during our limited time. Also, joining us on the call and available for questions, is Kermit Crawford, Executive Vice President of Pharmacy.

As a reminder, today’s presentation includes certain non-GAAP financial measures, and I would direct you to our website at investor.walgreens.com for reconciliation. Also, I’m available throughout the day by phone to answer any additional questions you may have. You can find a link to our webcast under our Investor Relations website. After the call, the presentation will be archived on the website for 12 months. We are also making the call available as a podcast. You can download that too at our website.

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 latest forms 10-K and 10-Q for a discussion of factors as they relate to forward-looking statements.

Now, I’ll turn the call over to Greg.

Gregory D. Wasson - President and CEO: Thank you, Rick, and thank you everyone for joining us on our call. Before I discuss third quarter earnings, I’d like to briefly acknowledge our Friday announcement, where we reached a multi-year agreement with CVS Caremark. We won’t be providing specific details regarding the economics of the deal, but I would say that we are very pleased with the outcome.

The agreement provides the framework we need to operate our business going forward, which is also good for our patients, our pharmacists and shareholders. We look forward to continuing to meet the needs of patients and payers across the country. We also look forward to building a mutually beneficial relationship with CVS Caremark and other PBMs.

Now, let’s move to the quarter. As you saw from our press release this morning, Walgreens reported record sales of $17.2 billion in the quarter, a 6.1% increase over last year. Third quarter net earnings were $463 million compared with $522 million in the same quarter a year ago, and we generated strong cash flow from operations of $1 billion in the quarter, and $2.8 billion fiscal year-to-date.

Our reported EPS of $0.47 included $0.04 in costs resulting from the Medicare Part D tax charge, $0.02 from the impact of our Duane Reade acquisition, and $0.01 from our Rewiring for Growth initiative. Net sales for the nine-month period grew 6.1% to $50.6 billion, and net earnings were up 3.2%.

Read our Earnings Call Transcript disclaimer.
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