Walgreen Boots Alliance (WBA) Tops Q3 EPS by 15c; Appoints New CEO; Boosts Dividend
Walgreen Boots Alliance (NASDAQ: WBA) reported Q3 EPS of $1.02, $0.15 better than the analyst estimate of $0.87. Revenue for the quarter came in at $28.8 billion versus the consensus estimate of $29.63 billion.
Executive Vice Chairman and CEO Stefano Pessina said, “In just six months since the strategic combination that formed Walgreens Boots Alliance, we are beginning to make progress in our operations, as we were able to deliver another strong quarter. Our Retail Pharmacy USA division produced a solid increase in comparable prescriptions filled in the quarter, along with improved retail front-end margins and very good cost control. Our other divisions continued to perform as we expected. Of course, there is more work to be done as we move forward. The fourth quarter is typically the slowest quarter because of seasonality in the business, while prescription reimbursement pressure continues to impact our pharmacies, making retail margin expansion and cost control as important as ever.”
The company also announced today that its board of directors has named Stefano Pessina as CEO, effective immediately. Pessina had been serving as acting CEO since January. In his capacity as CEO, he will continue reporting to Executive Chairman James Skinner.
“In Walgreens Boots Alliance’s initial six months as a newly combined company, Stefano has done an extraordinary job leading the new enterprise, focusing our strategy while enhancing our financial performance,” said Skinner. “The integration of Walgreens and Alliance Boots is proceeding exceptionally well, with Stefano’s vision for the company driving the organization forward. Through his leadership, our organization is meeting the challenges of combining our two companies, and many of the opportunities we anticipated from our strategic combination are now becoming a reality. In order to continue this momentum and to recognize the progress that is already being made, the board concluded Stefano is the very best person to achieve our vision to be a truly global health care champion, the first choice for pharmacy, health care and wellbeing across the world.”
Dividend Increase and Debt Redemption
The company announced today a 6.7 percent increase to its quarterly dividend to 36 cents per share. The increased dividend was declared by the board of directors on 8 July 2015, is payable 11 September 2015 to stockholders of record 19 August 2015, and raises the annual rate from $1.35 per share to $1.44 per share. This marks the 40th consecutive year Walgreens Boots Alliance or its predecessor company, Walgreen Co., has raised the dividend. The company remains committed to a long-term dividend payout ratio target of 30-35 percent.
In addition, to allow the company to efficiently manage its balance sheet and potentially take advantage of lower financing costs in the future, Walgreens Boots Alliance announced today that its wholly-owned subsidiary, Walgreen Co., intends to redeem $1 billion of its 1.8 percent Notes due 2017 (issued 2012), and $750 million of its 5.25 percent Notes due 2019 (issued 2009), on 10 August 2015. The redemption will be made from the company's existing $4.4 billion in cash resources. The redemption price for each series of note is equal to the sum of the principal amount of the notes being redeemed, a make-whole premium that will be calculated three business days prior to the redemption date in accordance with the related indenture, and accrued and unpaid interest on the Notes through the date prior to the redemption date.
Guidance:
Walgreen Boots Alliance sees FY2015 EPS of $3.70 - $3.80, versus the consensus of $3.64.
For earnings history and earnings-related data on Walgreen Boots Alliance (WBA) click here.