McKesson Corporation (NYSE:MCK) Q4 2018 Earnings Conference Call - Final Transcript

May 24, 2018 • 08:00 am ET


McKesson Corporation (NYSE:MCK) Q4 2018 Earnings Conference Call - Final Transcript


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Good day, ladies and gentlemen, and welcome to the McKesson Fourth Quarter Earnings Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Craig Mercer. Please go ahead, sir.

Craig Mercer

Thank you, Nicole. Good morning, and welcome to the McKesson Fiscal 2018 Fourth Quarter Earnings Call. I'm joined today by John Hammergren, McKesson's Chairman and CEO; and Britt Vitalone, McKesson's EVP and CFO. John will first provide a business update, and then Britt will review the financial results for the quarter and full year. After Britt's comments, we will open the call for your questions. We plan to end the call promptly after 1 hour at 9:00 a.m. Eastern Time.

(Forward-Looking Cautionary Statements)

Please note that on today's call, we will refer to certain non-GAAP financial measures. In particular, John and Britt will reference adjusted earnings, adjusted operating profit margin, adjusted operating profit margin excluding noncontrolling interest, free cash flow and items excluding foreign currency exchange effects.

Please note McKesson will no longer provide forward-looking GAAP earnings per diluted share guidance. The company is unable to provide this information without unreasonable effort, given the inherently uncertain factors impacting forward-looking GAAP results, many of which are beyond the company's control, such as LIFO inventory-related adjustments, gains from antitrust litigation and certain impacts from federal tax reform.

We filed a second 8-K with the SEC today, which includes supplemental historical segment financial information for fiscal 2016, 2017 and 2018 results as well as quarterly information for fiscal 2018. This will allow you to compare our fiscal 2019 outlook to our historical results on a same-segment basis.

Finally, I would call to your attention the supplemental slide presentation that we will reference on today's call, which may be found on the Investors page of our website at We believe the earnings press release, supplemental slides and the supplemental historical segment information 8-K filing, which all include non-GAAP measures, will provide useful information for investors with regard to the company's underlying operating performance and comparability of financial results period over period. Please refer to these materials, which may be found in the Investors section of our company website, for further information and a reconciliation of the non-GAAP performance measures to the GAAP financial results.

Thank you. And here is John Hammergren.

John Hammergren

Thanks, Craig, and thanks, everyone, for joining us on our call. I'm pleased to report our fourth quarter adjusted earnings of $12.62, representing a 1% growth year-over-year. These results were consistent with what we communicated a month ago, which included a lower tax rate, stronger operational performance and our $100 million contribution to create the new nonprofit foundation.

And our fiscal 2019 outlook for adjusted earnings of $13 to $13.80 per diluted share represents low to high single-digit percentage growth year-over-year. This outlook reflects a competitive but more stable market environment and effective capital allocation while including the anticipated headwinds in our European and Canadian businesses.

I would also remind you that our multi-year strategic growth initiative