Earnings Call Excerpt
CVS Corporation (CVS)
Q3 2006 Earnings Call
November 2, 2006 8:30 am ET
Executives
Nancy Christal – IR
David Rickard - CFO
Presentation
Operator
At this time I would like to welcome everyone to the CVS Corporation third quarter earnings conference call. (Operator Instructions) At this time I would like to turn the conference over to Ms. Nancy Christal, Vice President of Investor Relations. Please go ahead, ma'am.
Nancy Christal
Thank you. Good morning, everyone. Thanks for joining us. I'm here with David Rickard, Executive Vice President and Chief Financial Officer of CVS. Given all the activity associated with our announced merger with Caremark, this earnings review has been recorded.
We appreciate you joining us for this review of our very strong third quarter 2006 and October sales results. We understand that our earnings may have been somewhat overshadowed by the industry-changing news regarding our agreement to merge with Caremark. However, we would like to take this time to quickly highlight our robust results for the quarter and our expectations for the year.
First I'll touch on the highlights of our strong October sales results. Total comps were up 9.3% with pharmacy comps up 10.3% and front store comps up 5.8%. The 2004 acquired stores continue to deliver very strong results with total comps up 13.9% in October, once again, reflecting solid results in both the front store and the pharmacy. We saw strength across all of our core categories.
Before I turn this over to Dave, I have a couple of administrative items to cover. First, today's call is being simulcast on our IR website and it will also be archived there for a one-month period following the call.
Second, please note that during this call we'll discuss one non-GAAP financial measure in talking about our company's performance, namely free cash flow. It's defined as earnings after taxes, plus non-cash charges, plus changes in working capital, less net capital expenditures; so free cash flow excludes acquisitions and dividends. In accordance with SEC regulations, you can find the reconciliation of free cash flow to comparable GAAP measures on the Investor Relations portion of our website at investor.cvs.com.
Third, our attorneys have asked me to read the Safe Harbor statement. During this presentation, we will make certain forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially. For these statements we claim the protection of the Safe Harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. We strongly recommend that you become familiar with the specific risks and uncertainties that we've outlined for you under the caption ?Cautionary Statements? concerning forward-looking statements in our Annual Report on Form 10-K for the 2005 fiscal year ending December 31, 2005, and in our quarterly report on Form 10-Q for the quarter ended July 1, 2006.
- The increase in the amount of generic drugs dispensed.
- The initial synergies from the Savon Osco acquisition.
- The mix shift toward the higher margin front end.
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