Walgreens Boots Alliance Inc. (NASDAQ:WBA)

Current Provision

The current provision exhibits a generally fluctuating trend over the analyzed periods. Beginning at $1,351 million in 2014, it declines to $1,095 million in 2015, followed by an increase to $1,426 million in 2016. Subsequent years show a decrease to $1,194 million in 2017, an increase again to $1,322 million in 2018, and then a substantial drop to $488 million in 2019. This pattern suggests variability in the company's current tax obligations, with a notable reduction in the latest period.

Deferred Provision

The deferred provision presents a contrasting trend relative to the current provision, starting positive at $175 million in 2014 and then turning negative in the subsequent years until 2019, except for the last year. Specifically, it shifts from -$39 million in 2015 to larger negative values of -$429 million in 2016, -$434 million in 2017, and -$324 million in 2018. In 2019, the deferred provision turns positive again at $100 million. This indicates periods of deferred tax assets or liabilities that impacted the provision's deferred segment significantly, with the 2019 year marking a reversal back to a positive deferred tax impact.

Income Tax Provision

The total income tax provision shows an overall downward trend from 2014 to 2019, with fluctuations. It begins at $1,526 million in 2014, drops sharply to $1,056 million in 2015, and continues to decline to $997 million in 2016 and $760 million in 2017. It then rises slightly to $998 million in 2018 before decreasing again to $588 million in 2019. This trajectory corresponds with movements in both current and deferred provisions, culminating in a lower total tax burden in the most recent year analyzed.

Federal statutory tax rate

The federal statutory tax rate remained stable at 35% from 2014 to 2017, then experienced a significant decrease to 25.7% in 2018 and further declined to 21% in 2019. This trend indicates the impact of lowered federal tax rates in the latter years.

State income taxes, net of federal benefit

State income taxes as a percentage of income showed a general decline from 1.9% in 2014 to 0.3% in 2017, followed by a rebound to 2.3% in 2018 and a reduction to 0.9% in 2019. This indicates variability in state tax impacts across the period.

Loss on Alliance Boots call option

A loss of 8.5% was recorded in 2014, with no further values reported afterward, suggesting a one-time or discontinued item affecting tax considerations in that year.

Deferred tax asset recognition

A notable deferred tax asset impact of -4.1% was recognized in 2015 only, indicating a specific adjustment to tax assets in that year.

Gain on previously held equity interest

A gain impact of -5.8% was reported in 2015, with no subsequent values, reflecting a one-time tax gain event.

Foreign income taxed at non-U.S. rates

The percentage impact of foreign income taxed at non-U.S. rates became increasingly negative from -3.1% in 2014 to -12.2% in 2018, before rising to -2.1% in 2019. This suggests increased foreign income benefits up to 2018, then a notable reduction in 2019.

Non-taxable income

Non-taxable income contributed to reducing the effective tax rate steadily from no impact in 2014 to a maximum lower impact around -5.3% in 2017 and 2018, then decreased slightly to -3.5% in 2019.

Non-deductible expenses

Non-deductible expenses fluctuated, starting at 0.3% in 2014, peaking at 2.3% in 2015, and then generally declining to 0.5% by 2019, indicating a variable but decreasing burden on tax expense.

Transition tax

A significant transition tax effect of 12.4% appeared only in 2018, reflecting a tax event unique to that fiscal year.

Tax law changes

Tax law changes reduced the tax rate by 3.5% in 2016, 1.6% in 2017, and sharply by 10.9% in 2018, with a minor adjustment of -0.4% in 2019, demonstrating substantial favorable impacts from tax legislation primarily between 2016 and 2018.

Change in valuation allowance

The change in valuation allowance saw a positive impact starting at 1.7% in 2016, slightly declining to 0.7% in 2017, surging to 8.7% in 2018, then reducing to 1.9% in 2019. This suggests fluctuating adjustments to tax asset valuations, especially notable in 2018.

Tax credits

Tax credits increasingly reduced tax expense, from -1.5% in 2016 to -6.9% in 2018, then slightly lessening to -4.8% in 2019, indicating growing utilization of credits up to 2018 with some decline afterward.

Other

Other tax impacts were minimal and inconsistent, showing small positive and negative values fluctuating between 0.7% and -0.5% across the years.

Effective income tax rate

The effective income tax rate experienced a sharp decline from a high of 42.9% in 2014 to 19.9% in 2015 and remained relatively stable around 19.4% to 16.7% through 2016 to 2018. In 2019, the rate further decreased to 13%, reflecting the cumulative influences of lower statutory rates, tax law changes, transition tax, and other factors contributing to a significantly reduced tax burden over the period.

Postretirement benefits

Values for postretirement benefits exhibit fluctuation, peaking at 247 million USD in 2014, dropping to 130 million USD in 2015, then rising again to 190 million USD in 2016, and decreasing to 134 million USD in 2017. Data for subsequent years are not available, indicating potential discontinuity or reporting changes.

Compensation and benefits

Compensation and benefits show an overall decreasing trend over the period, starting at 166 million USD in 2014, peaking at 224 million USD in 2015, then generally declining to 133 million USD by 2019. This suggests a gradual reduction in spending or liabilities in this category.

Insurance

Insurance expense displays volatility with an initial decrease from 98 million USD in 2014 to 68 million USD in 2015, followed by a rise to 109 million USD in 2017 and a subsequent moderate decrease to 90 million USD in 2019, signaling fluctuations in insurance-related costs or reserves.

Accrued rent

Accrued rent liabilities steadily rise from 166 million USD in 2014 to a peak of 271 million USD in 2018 before declining to 219 million USD in 2019. The increase may reflect growing rental obligations or accounting adjustments in lease-related accruals.

Outside basis difference

Data regarding outside basis difference appears sporadic; recorded values peak at 134 million USD in 2016 but are missing for early and later periods, indicating either changes in reporting or relevance of this item.

Allowance for doubtful accounts

This allowance steadily decreases from 65 million USD in 2014 to 13 million USD in 2019, which may indicate improving credit quality or more conservative provisioning policies over time.

Tax attributes

Tax attributes demonstrate substantial growth, surging dramatically from 430 million USD in 2014 to 6,687 million USD in 2019, with a marked increase in 2018 and 2019. This significant rise might reflect recognition of deferred tax benefits or changes in tax positions.

Stock compensation

Stock compensation declines consistently from 131 million USD in 2014 to 45 million USD in 2019, signifying possible reductions in stock-based pay expenses or changes in compensation structure.

Deferred income (positive values)

Deferred income appears beginning in 2016 at 150 million USD and rises to 220 million USD in 2017, followed by a downward trend to 110 million USD in 2018 and 115 million USD in 2019, suggesting fluctuating deferred revenue recognition.

Other

Other liabilities or expenses fluctuate notably, starting at 75 million USD in 2014, peaking at 195 million USD in 2016, dropping to 44 million USD in 2018, and rising again to 78 million USD in 2019, indicating variability in miscellaneous items.

Deferred tax assets, gross

Deferred tax assets gross amount increases strongly from 1,378 million USD in 2014 to 7,380 million USD in 2019, with substantial rises especially noted after 2017; this points to enhanced recognition of tax benefits or adjustments in deferred tax accounting.

Valuation allowance

The valuation allowance against deferred tax assets deepens profoundly over time, from -223 million USD in 2014 to -6,638 million USD in 2019, reflecting increased reservations against deferred tax asset realizability.

Deferred tax assets, net

Net deferred tax assets present a declining trend, starting at 1,155 million USD in 2014, peaking slightly around 2016-2017, before decreasing to 742 million USD in 2019, suggesting erosion in net tax asset values after allowance adjustments.

Accelerated depreciation

Accelerated depreciation liabilities consistently decrease in absolute value from -1,244 million USD in 2014 to -475 million USD in 2019, indicating a reduction in timing differences relating to depreciation expenses.

Inventory

Inventory-related deferred tax liabilities reduce from -407 million USD in 2014 to -394 million USD in 2019, with minor fluctuations, implying a relatively stable inventory tax position over the period.

Intangible assets

Deferred tax liabilities related to intangible assets show decreasing negative values from -64 million USD in 2014 to -1,116 million USD in 2019, suggesting increasing timing differences and possible valuation challenges related to intangible asset amortization.

Equity method investment

The net position tied to equity method investments falls from -355 million USD in 2014 to -481 million USD in 2019, after peaking negatively near -1,002 million USD in 2017, reflecting changes in investment valuations or related deferred tax liabilities.

Deferred income (negative values)

Deferred income reported on the liability side shows a significant negative value of -889 million USD in 2015, with absence of data in subsequent periods, indicating either reclassification or discontinuation in reporting.

Deferred tax liabilities

Overall deferred tax liabilities decrease from -2,278 million USD in 2014 to -2,466 million USD in 2019, with fluctuations showing a general declining trend post-2015, indicative of changes in taxable temporary differences or tax planning strategies.

Net deferred tax assets (liabilities)

The net deferred tax position worsens significantly from -1,123 million USD in 2014 to -1,724 million USD in 2019, with the most pronounced declines occurring between 2014 and 2015, and a gradual stabilization thereafter. This implies an increasing net liability position related to deferred taxes over time.

The analysis of the financial data over the six-year period reveals notable trends in the company's liabilities, shareholders’ equity, and net earnings, both in reported and adjusted terms.

Liabilities

Reported total liabilities increased significantly from 16,621 million USD in 2014 to 43,447 million USD in 2019, indicating a substantial rise in financial obligations. Adjusted total liabilities followed a similar upward trajectory, rising from 15,573 million USD to 41,662 million USD over the same period. The adjustment reduces the liabilities slightly but does not alter the overall increasing trend, suggesting growing leverage or increased borrowing needs.

Shareholders' Equity

Reported shareholders’ equity decreased steadily from 20,457 million USD in 2014 to 23,512 million USD in 2019, with a peak in 2015 and a consistent decline thereafter. The adjusted equity figures are slightly higher but also follow a declining pattern, moving from 21,580 million USD in 2014 down to 25,236 million USD in 2019. This declining equity trend, despite the variations in adjustment, may imply pressures on retained earnings or equity reductions due to losses, dividends, or share buybacks.

Net Earnings

Reported net earnings show a volatile pattern with an initial increase from 1,932 million USD in 2014 to a peak of 5,024 million USD in 2018, followed by a decline to 3,982 million USD in 2019. Adjusted net earnings similarly rise from 2,107 million USD in 2014 to 4,700 million USD in 2018 before decreasing to 4,082 million USD in 2019. The adjustment reduces reported earnings in most years but maintains a similar trend. The peak in 2018 suggests a strong earnings year before a downturn in 2019, which could reflect operational challenges or changes in tax impacts.

Overall, the company experienced increasing liabilities, diminishing equity, and fluctuating net earnings during the observed period. The adjustments to the financial figures moderately affect the absolute values but largely preserve the trends and seasonal patterns. The increasing liabilities alongside declining equity might indicate rising financial risk, while the volatile net earnings require further investigation into underlying causes.

Net Profit Margin

The reported net profit margin shows fluctuation over the analyzed years, initially increasing from 2.53% in 2014 to a peak of 4.08% in 2015, followed by a gradual decline to 2.91% by 2019. The adjusted net profit margin exhibits a similar trajectory, peaking at 4.04% in 2015 and declining thereafter, though it remains slightly higher than the reported margin in 2019 at 2.98%. This indicates some impact from adjustments related to income taxes, but overall profitability margins trended downward after 2015.

Financial Leverage

Reported financial leverage increased steadily from 1.82 in 2014 to 2.88 in 2019, reflecting a rising use of debt or other liabilities relative to equity over time. Adjusted financial leverage also shows a consistent upward trend, rising from 1.72 to 2.68 throughout the period. The adjustments reduce the leverage ratios slightly compared to reported figures but maintain the upward trajectory, suggesting increasing financial risk or capital structure changes.

Return on Equity (ROE)

Reported ROE improved consistently from 9.44% in 2014 to a high of 19.32% in 2018, before decreasing to 16.94% in 2019. Adjusted ROE follows a comparable pattern but at generally lower levels, starting at 9.76% in 2014, peaking at 16.93% in 2018, and slightly declining to 16.18% in 2019. The adjustment narrows the difference between reported and adjusted values over time, indicating that deferring income taxes may have a moderating effect on equity returns.

Return on Assets (ROA)

Reported ROA demonstrates an upward trend from 5.2% in 2014 to 7.37% in 2018, followed by a decrease to 5.89% in 2019. Adjusted ROA also rises from 5.67% to a peak of 6.9% in 2018, and then declines to 6.04% in 2019. The gap between reported and adjusted ROA narrows over the years, with adjustments mainly lowering asset returns. The pattern suggests improving asset efficiency that weakened slightly in the last year observed.

The financial data over the six-year period reveals several notable trends in the reported and adjusted net earnings as well as the corresponding profit margins.

Reported Net Earnings

Reported net earnings show a significant increase from 2014 to 2015, more than doubling from 1,932 million US dollars to 4,220 million US dollars. After 2015, earnings generally decline slowly over the next two years, falling to 4,078 million US dollars by 2017. In 2018, there is a rebound to 5,024 million US dollars, the highest level in the period, followed by a notable decline in 2019 to 3,982 million US dollars.

Adjusted Net Earnings

Adjusted net earnings follow a somewhat similar pattern but tend to be lower than reported earnings in most years except for 2014 and 2018. Starting at 2,107 million US dollars in 2014, adjusted earnings peak in 2015 near the level of reported earnings at 4,181 million US dollars. From 2015 through 2017, adjusted earnings decline steadily to 3,644 million US dollars before rising again in 2018 to 4,700 million US dollars. In 2019, adjusted earnings decrease slightly to 4,082 million US dollars, maintaining a smaller decline compared to reported earnings.

Reported Net Profit Margin

The reported net profit margin increases substantially from 2.53% in 2014 to a peak of 4.08% in 2015. Following this peak, the margin declines consistently through 2017, reaching a low of 3.45%. The margin then improves moderately to 3.82% in 2018 before dropping again to 2.91% in 2019, representing the lowest margin since the starting year.

Adjusted Net Profit Margin

The adjusted net profit margin exhibits a similar trajectory with slight variation. It starts at 2.76% in 2014, peaks slightly lower than the reported margin at 4.04% in 2015, and then declines more steadily through 2017 to 3.08%. In 2018, the adjusted margin increases to 3.57% but again falls in 2019 to 2.98%, mirroring the downward trend observed in reported margins.

In summary, both reported and adjusted net earnings and profit margins experienced their highest levels around 2015, followed by a period of decline until 2017. A rebound occurred in 2018 before a subsequent decrease in 2019. The adjusted figures typically present a smoother variation with smaller fluctuations than reported figures. The overall trend indicates volatility in profitability, with a peak in 2015 and challenges in maintaining profit margins through the later years.

Shareholders’ Equity Trends

The reported total shareholders’ equity exhibited a declining trend from 2015 to 2019. Specifically, it increased significantly from 20,457 million US dollars in 2014 to a peak of 30,861 million in 2015, but subsequently decreased steadily each year, reaching 23,512 million by 2019.

The adjusted total shareholders’ equity followed a similar pattern: an increase from 21,580 million US dollars in 2014 to 34,402 million in 2015, followed by a consistent decrease through to 25,236 million in 2019. The adjusted figures are consistently higher than the reported amounts, indicating adjustments that increase the valuation of equity across all years.

Financial Leverage Trends

The reported financial leverage ratio showed a general upward trend across the period analyzed. Beginning at 1.82 in 2014, the ratio increased gradually, reaching 2.88 in 2019. This indicates increasing use of debt relative to equity over time.

The adjusted financial leverage ratios, which presumably account for deferred taxes and other adjustments, reflect a similar pattern. These ratios were marginally lower than the reported figures but also rose consistently from 1.72 in 2014 to 2.68 in 2019, reinforcing the trend toward higher leverage.

Insights and Summary

Overall, the period demonstrates a clear decline in shareholders’ equity alongside an increase in financial leverage. This suggests that the company has progressively been financing more of its assets through debt relative to equity, potentially increasing financial risk.

The adjustments made to reported data consistently increase shareholders’ equity and reduce reported financial leverage, indicating that deferred income taxes and other accounting adjustments have a material impact on the financial position. However, both reported and adjusted data confirm the underlying trends.

Net Earnings

Reported net earnings showed a general upward trend from 2014 to 2018, increasing from $1,932 million to a peak of $5,024 million. However, in 2019, there was a notable decline to $3,982 million. Adjusted net earnings follow a somewhat similar pattern, rising from $2,107 million in 2014 to $4,700 million in 2018 before decreasing to $4,082 million in 2019. This indicates that while both reported and adjusted net earnings improved considerably over the first five years, both experienced declines in the final year presented.

Shareholders' Equity

Reported shareholders’ equity rose significantly from $20,457 million in 2014 to a peak of $30,861 million in 2015, then experienced a consistent decline through 2019, ending at $23,512 million. Adjusted shareholders’ equity exhibits a similar trajectory, peaking at $34,402 million in 2015, and decreasing steadily to $25,236 million in 2019. This downward trend after 2015 suggests some erosion of equity over time, possibly due to factors such as share repurchases, dividend payments, or losses not captured by net earnings alone.

Return on Equity (ROE)

Reported ROE improved steadily from 9.44% in 2014 to 19.32% in 2018, indicating increasing profitability relative to shareholders’ equity. In 2019, ROE decreased to 16.94%, reflective of the decline in net earnings and shareholders’ equity. Adjusted ROE follows a comparable pattern, rising from 9.76% in 2014 to 16.93% in 2018, then slightly falling to 16.18% in 2019. The adjusted ROE values are consistently lower than reported ROE, indicating that certain adjustments reduce the apparent profitability relative to equity.

Overall Observations

The data reveals growth in earnings and equity through the initial years, with a peak around 2018. Following this peak, both net earnings and shareholders’ equity declined in 2019. The downward movement in shareholders’ equity combined with fluctuating net earnings led to volatility in ROE. The adjustments applied to net earnings and equity consistently lower these values, suggesting that unadjusted figures may be influenced by items that temporarily boost financial results. The patterns suggest that the company experienced strong financial performance improvements until 2018, followed by a contraction or normalization in 2019.

Reported Net Earnings

The reported net earnings showed a significant increase from 2014 to 2015, rising from 1,932 million US dollars to 4,220 million US dollars. This upward trend stabilized with a minor decline in 2016 and 2017, with earnings around 4,100 million US dollars, before peaking at 5,024 million US dollars in 2018. A notable decline followed in 2019, dropping to 3,982 million US dollars. Overall, the earnings reflect volatility with a peak in 2018 and reduced values afterwards.

Adjusted Net Earnings

The adjusted net earnings also increased from 2,107 million US dollars in 2014 to 4,181 million US dollars in 2015. Subsequently, there was a consistent decline through 2016 and 2017, reaching a low point around 3,644 million US dollars. However, a rebound occurred in 2018, increasing to 4,700 million US dollars, followed by a decrease to 4,082 million US dollars in 2019. The adjusted earnings trend closely mirrors the reported earnings but tends to be slightly higher in the early years and converges in the later periods.

Reported Return on Assets (ROA)

The reported ROA exhibited an upward trend from 5.2% in 2014 to 6.14% in 2015, with a slight decrease in 2016 to 5.74%. The ROA then increased modestly reaching 7.37% in 2018, the highest point in the analyzed period. However, a decline followed in 2019 to 5.89%. This reflects increased asset efficiency leading up to 2018, with a downturn in the final year examined.

Adjusted Return on Assets (ROA)

The adjusted ROA started at 5.67% in 2014, rose to 6.08% in 2015, and decreased steadily in 2016 and 2017 to 5.15% and 5.52%, respectively. A significant improvement to 6.9% was observed in 2018, followed by a slight decline to 6.04% in 2019. The adjusted ROA shows a similar pattern to the reported ROA but with less fluctuation and smaller peaks and troughs.

Overall Analysis

Both reported and adjusted net earnings display a substantial increase early in the period followed by fluctuations, with a distinct peak in 2018 and subsequent declines in 2019. The returns on assets mirror these earnings trends, showing improvements in asset efficiency through 2018 and reductions thereafter. The adjustments to earnings and ROA slightly moderate the fluctuations observed in reported values, indicating that the deferred income tax adjustments contribute to smoothing variations over time.