Walgreens Boots Alliance(WBA) - 2025 Q1 - Quarterly Report

Sales Performance - Sales for the three months ended November 30, 2024 increased by 10.2% to $6.4 billion, with a favorable currency impact of 3.6 percentage points[189] - Pharmacy sales decreased by 1.5$241 million to $2.2 billion for the three months ended November 30, 2024, driven by growth in all businesses[203] Operating Income and EBITDA - Operating income for the three months ended November 30, 2024 increased by 21.4$141 million, with a favorable currency impact of 1.5 percentage points[195] - Adjusted operating income for the three months ended November 30, 2024 increased by 17.9% to $168 million, with a favorable currency impact of 1.8 percentage points[196] - Adjusted operating income for the U.S. Healthcare segment improved by$121 million to $25 million for the three months ended November 30, 2024[207] - Adjusted EBITDA for the U.S. Healthcare segment improved by$109 million to $70 million for the three months ended November 30, 2024[208] - U.S. Retail Pharmacy segment reported an operating income of$17 million for Q1 2025, compared to $297 million in Q1 2024[217] - Adjusted operating income for the U.S. Healthcare segment improved to$25 million in Q1 2025 from a loss of $96 million in Q1 2024[217] - Adjusted EBITDA for the U.S. Healthcare segment increased to$70 million in Q1 2025 from a loss of $39 million in Q1 2024[222] Financial Adjustments and Costs - Total adjustments to operating loss amounted to$838 million in Q1 2025, up from $726 million in Q1 2024[219] - Adjusted net earnings attributable to Walgreens Boots Alliance, Inc. were$440 million in Q1 2025, down from $571 million in Q1 2024[219] - Adjusted diluted net earnings per common share were$0.51 in Q1 2025, compared to $0.66 in Q1 2024[221] - Footprint optimization costs were$333 million in Q1 2025, primarily related to restructuring activities[217][219] - Acquisition-related amortization costs were $269 million in Q1 2025, slightly down from$275 million in Q1 2024[217][219] - Acquisition and disposition-related costs were $104 million in Q1 2025, down from$163 million in Q1 2024[217][219] - Transformational cost management resulted in a net benefit of $15 million in Q1 2025, compared to a cost of$109 million in Q1 2024[217][219] - Total impairment charges for long-lived assets were $279 million in the three months ended November 30, 2024, compared to$162 million in the same period in 2023[8] Cash Flow and Liquidity - Cash, cash equivalents, and restricted cash decreased to $1.3 billion as of November 30, 2024, from$3.2 billion as of August 31, 2024[231] - Net cash used for operating activities decreased to $140 million in Q1 2025 from$281 million in Q1 2024, driven by lower opioid legal payments and higher operating income[245] - Net cash used for investing activities was $76 million in Q1 2025, compared to net cash provided by investing activities of$85 million in Q1 2024[247] - Net cash used for financing activities was $1.7 billion in Q1 2025, compared to net cash provided by financing activities of$186 million in Q1 2024[250] - Proceeds from debt were $3.2 billion in Q1 2025, down from$4.0 billion in Q1 2024, primarily from revolving credit facilities[251] - Payments of debt totaled $4.7 billion in Q1 2025, including$1.2 billion for 3.800% unsecured notes and $290 million for a senior unsecured term loan[253] - Cash dividends paid decreased to$216 million in Q1 2025 from $415 million in Q1 2024[255] - The company has repurchased$8.0 billion of its common stock under the June 2018 stock repurchase program as of November 30, 2024[256] - The company expects to fund its liquidity needs through cash flow from operations, existing credit facilities, and monetization of investments and other assets[230] Debt and Credit Ratings - The company had outstanding total debt of $8.1 billion as of November 30, 2024, with$446 million classified as current[235] - The company reduced its outstanding lease liability by $652 million during the three months ended November 30, 2024[238] - The company has an aggregate borrowing capacity of$5.8 billion under committed revolving credit facilities, expiring in fiscal 2026 and 2027[236] - Credit ratings as of January 9, 2025: Moody's Ba3 (Stable outlook), S&P BB- (Stable outlook)[258] - Long-term credit ratings were downgraded to BB (S&P) and Ba3 (Moody's) in fiscal 2024, impacting borrowing costs and access to capital markets[260] - The company's credit ratings significantly reduce its ability to issue commercial paper and may increase the cost of new financing[260] Legal and Pension Liabilities - The company accrued a total liability of $6.6 billion related to opioid-related claims and litigation settlements as of November 30, 2024[239] - The company made approximately$435 million in contributions to the Boots Pension Plan and estimates remaining contributions of $410 million to$480 million by the end of fiscal 2026[240] Capital Expenditures - Capital expenditure decreased to $284 million in Q1 2025 from$506 million in Q1 2024, driven by reduced spending on U.S. Retail Pharmacy and VillageMD projects[249] Critical Accounting Estimates - Critical accounting estimates include business combinations, leases, goodwill impairment, and long-lived assets impairment[263]