WAG Walgreens November 2009 Presentation

8/9/2019 WAG Walgreens November 2009 Presentation

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Morgan Stanley Global Consumer & Retail Conference

November 19 2009

Greg Wasson

Copyright 2009 Walgreen Co.


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Certain statements and projections ofu ure resu s ma e n s presen a on

constitute forward-looking information that

and regulatory expectations that involve

risk and uncertainty.

Please see our latest Forms 10-K and 10-Qfor a discussion of factors as they relate to

forward-looking statements.

Copyright 2009 Walgreen Co. 2


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108- ear histor

5.6 mil lion customers daily

238 000 em lo ees

70,000 healthcare professionals

of a Walgreens

Fortunes Most Admired Company

#36 on Fortune 500 U.S.-based

companies



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35 Years of Record Sales...

1.8

.

48les

ings

1.232Ne

tSa

et

Ear

.616

N

1975 20090 0


Adjusted for $163 million after-tax, or $.16 per diluted share, restructuring and restructuring-related costs.


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In $ Mill ions, except EPS

FY08 FY09 ChangeNet Sales $59,034 $63,335 7.3%

Net Earnings $2,157 $2,006* (7.0%)

EPS, diluted $2.17 $2.02* (6.9%)

Cash from Operations $3,039 $4,111 35.3%


* Includes $163 million after-tax, or $.16 per diluted share, restructuring and restructuring-related costs.


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Improving Comp Sales Trends

12.00%

14.00%

6.00%

8.00%

10.00%Rx*

2.00%

4.00%

FE

-2.00%

0.00%

-6.00%

- .

Nov-08 Dec-08 Jan-09 Feb-09 Mar/Apr 2009

May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09


*Scripts Comps are adjusted for Dayfall Impact

Adjusted for Dayfall Impact and scripts without Flu Shot impact


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Percent Increase in SG&A Dollars

28.0%30%

25.5 24.9%23.4%

18.6%

10.0%

11.2% 10.2% 8.0%20%

25%

..

14.1%8.6% 5.7%15%

7.4%

6.1%.

14.3% 14.7%11.2% 10.2%10.0%

15.4%

5%8.0%

1Q07+1Q08

2Q07+2Q08

3Q07+3Q08

4Q07+4Q08

1Q08+1Q09

2Q08+2Q09

3Q08+3Q09

4Q08+4Q09


Note: SG&A data adjusted for vacation accrual in 4Q08 and restructuring and restructuring-related costs in 1Q, 2Q, 3Q and 4Q 2009.


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SG&A Declined Ahead of Slowing Net

and 700 25%

gOn-S

it

ystore

s)

SG&AGrowth Rate

500

600

20%

(includin

sR

xOnl

300

400

10%

15%

sAdded

Walgree

100

200

5%

Stor

Or anic Ac uired

0

FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY090%


Adjusted for rest ructuring and restructuring-related costs


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Year-over-Year Percent Increase in Dollars

20%

Gross Profit $15%

10%

0%

5%

SG&A adjusted for restructuring and restructuring-related costs in 1Q, 2Q, 3Q and 4Q 2009

2004 2005 2006 2007 2008 2009


Gross Profit adjusted for restructuring and restructuring-related costs in 2Q, 3Q, and 4Q 2009


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Significant Increases in Cash Flow

from Operations(FCF=Cash Flow from Operations CapEx)

Free Cash Flow(From Statements of Cash Flows)

1,500 1,500(in millions) (in millions)

1,000 1,000

2009

500 5002008

0 0

2008

-500

1Q 2Q 3Q 4Q

-500

1Q 2Q 3Q 4Q

1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09


, , ,

Capital Expenditures under GAAP ($490) ($553) ($610) ($572) ($638) ($454) ($442) ($393)

Free Cash Flo w non-GAAP measure ($100) $563 $375 ($24) ($326) $974 $1,077 $459


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Healthcare Reform

Support need for healthcare reform

Employer-funded medical coverage critical

Provider of quality, affordable, accessiblehealthcare with 70,000 health professionals



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Leveraging and Enhancing

Slowing store openings

Re-inventing thecustomer experience

Transforming community pharmacy

Expanding health & wellness

Expanding specialty pharmacy

Broadenin and dee enin

payor relationships

Rewiring for growth



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12%

Estimated

8%

10%

6%

3% Growth

2%

2007 2008 2009 2010 2011

0%


New store openings includenew and relocated stores


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Walgreens Leads in Retail Locations

8In Thousands

6

7CVS

4 WMT

1

2 TGT

0

2004 2005 2006 2007 2008 2009



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Re-inventing the Customer Experience

Optimal assortment

Intuitive and convenient

product placement

Relevant offerings

Quadruple win: sales, labor,

cap ta , customer exper ence



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Transforming Community Pharmacy

Increasing role of pharmacists: flu, disease management

17,000 pharmacists certif ied to immunize

Improving efficiency: POWER

40

25

30

35

/F

ever

illions

2009-2010

10

15

20

ough/Col

asesin

-

0

5CSource: SDI FAN Flu

Aug 09 Jan 10 May 10 Aug 10



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The Power of Transforming Community Pharmacy

Removing (in millions)Seasonal Flu Shots

5 2

6

Making more time forpatients

5 2

4

5

Expanding the

pharmacy revenue3

4

Establishingrelationshi s with

1 2

1

2

patients

Attracting first-time0

FY09

FY10 to date


cus omers

19


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Taking Walgreen Co. to the Marketplace

Community Pharmacy

Home Infusion Online

Medical On-SitePharmacy

Worksite/TakeCare ClinicsSM

SpecialtyPharmacy Pharmacy


Mail Order Pharmacy Benefit Solutions


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$500 mill ion pre-tax savings in FY10

$1 bill ion pre-tax savings in FY11

1Q09 2Q09 3Q09 4Q09

Savings $.01 $.02 $.06 $.07

Costs* ($.01) ($.06) ($.06) ($.03)

NetSavings

$.00 ($.04) $.00 $.04

*


-

21


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Opportunities Executing our three core strategies

Significant growth and share gain

Challenges... Our Next Opportunities Reimbursement pressure continues

Economic uncertainty



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Our Strategies to Create Shareholder

Industry-leading

Strong

Top-TierReturn to Double- Steady Increase

Returns

Financial Flexibilityto Support


Strategies

23


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Calculation of Adjusted SG&A:

esruc urng an esruc urng- e a e osDollars in Millions

SGA under GAAP $ 3,193 $ 3,482

Less: Restructurin andRestructuring-related Costs $ - $ 14

Adjusted SGA $ 3,193 $ 3,468

Adjusted YOY % Increase 8.6%



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Calculation of Adjusted Gross Profit:


Gross Profit under GAAP $ 4,442 $ 4,657

Plus: Restructurin andRestructuring-related Costs $ - $ 11

Adjusted Gross Profit $ 4,442 $ 4,668




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Adjusted SGA $ 3,331 $ 3,579




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Adjusted SGA $ 3,324 $ 3,612



Documents

WAG Walgreens November 2009 Presentation