Income Statement

The income statement presents information on the financial results of a company business activities over a period of time. The income statement communicates how much revenue the company generated during a period and what cost it incurred in connection with generating that revenue.

Walgreens Boots Alliance Inc., consolidated income statement

US$ in millions

12 months ended:	Aug 31, 2019	Aug 31, 2018	Aug 31, 2017	Aug 31, 2016	Aug 31, 2015	Aug 31, 2014
Sales	136,866)	131,537)	118,214)	117,351)	103,444)	76,392)
Cost of sales	(106,790)	(100,745)	(89,052)	(87,477)	(76,520)	(54,823)
Gross profit	30,076)	30,792)	29,162)	29,874)	26,924)	21,569)
Selling, general and administrative expenses	(25,242)	(24,569)	(23,740)	(23,910)	(22,571)	(17,992)
Equity earnings in AmerisourceBergen	164)	191)	135)	37)	—)	—)
Equity earnings in Alliance Boots	—)	—)	—)	—)	315)	617)
Operating income	4,998)	6,414)	5,557)	6,001)	4,668)	4,194)
Gain on previously held equity interest	—)	—)	—)	—)	563)	—)
Other income (expense)	233)	177)	(11)	(261)	685)	(481)
Earnings before interest and income tax provision	5,231)	6,591)	5,546)	5,740)	5,916)	3,713)
Interest expense, net	(704)	(616)	(693)	(596)	(605)	(156)
Earnings before income tax provision	4,527)	5,975)	4,853)	5,144)	5,311)	3,557)
Income tax provision	(588)	(998)	(760)	(997)	(1,056)	(1,526)
Post tax earnings from other equity method investments	23)	54)	8)	44)	24)	—)
Net earnings	3,962)	5,031)	4,101)	4,191)	4,279)	2,031)
Net (earnings) loss attributable to noncontrolling interests	20)	(7)	(23)	(18)	(59)	(99)
Net earnings attributable to Walgreens Boots Alliance, Inc.	3,982)	5,024)	4,078)	4,173)	4,220)	1,932)

Based on: 10-K (reporting date: 2019-08-31), 10-K (reporting date: 2018-08-31), 10-K (reporting date: 2017-08-31), 10-K (reporting date: 2016-08-31), 10-K (reporting date: 2015-08-31), 10-K (reporting date: 2014-08-31).

The financial data reflects several notable trends over the six-year period observed.

Sales and Cost of Sales: Sales exhibited a consistent upward trajectory from 2014 through 2019, increasing from $76,392 million to $136,866 million. This represents a substantial growth in revenue generation. Correspondingly, the cost of sales also increased steadily, from -$54,823 million in 2014 to -$106,790 million in 2019. While costs rose, the growth in sales outpaced this increase, contributing to sustained profitability.
Gross Profit: Gross profit showed overall growth from $21,569 million in 2014 to a peak of $30,792 million in 2018. There was a slight decline in 2017 to $29,162 million and again in 2019 to $30,076 million. Despite minor fluctuations, gross profit remained relatively stable in the latter years, indicating effective management of direct costs relative to sales.
Selling, General, and Administrative Expenses (SG&A): SG&A expenses increased steadily from -$17,992 million in 2014 to -$25,242 million in 2019. The growth in these operating expenses may reflect investments in marketing, administration, and selling efforts needed to support increasing sales volumes but also suggests rising operational costs over time.
Equity Earnings: Equity earnings from AmerisourceBergen became significant starting in 2016, rising from $37 million to a peak of $191 million in 2018, before slightly decreasing to $164 million in 2019. Earnings from Alliance Boots were reported only in 2014 and 2015, decreasing from $617 million to $315 million and then ceasing thereafter, possibly due to restructuring or divestment activities associated with this entity.
Operating Income: Operating income demonstrated growth from $4,194 million in 2014 to a high of $6,414 million in 2018, followed by a notable decline to $4,998 million in 2019. This decline may signal increased pressure on operating margins or rising costs not fully offset by revenue increases in the final year observed.
Other Income and Gains: Other income (expense) fluctuated considerably, with a large positive spike in 2015 ($685 million) and more moderate positive figures in 2018 and 2019. A one-time gain on previously held equity interest was recorded in 2015 at $563 million, likely related to an investment transaction or restructuring. These items contribute volatility to non-operating income.
Earnings Before Interest and Taxes (EBIT): EBIT increased from $3,713 million in 2014 to a peak of $6,591 million in 2018, but then receded to $5,231 million in 2019. This pattern aligns with operating income trends, indicating that earnings before financing costs and taxes improved until 2018 but weakened afterward.
Interest Expense: Net interest expense rose from -$156 million in 2014 to -$704 million in 2019, displaying increased borrowing or higher cost of debt over the period, which could partially explain the decline in net earnings in later years.
Earnings Before Tax and Net Earnings: Earnings before income tax provision generally increased until 2018, reaching $5,975 million, then contracted to $4,527 million in 2019. The income tax provision fluctuated, dropping in 2019 to -$588 million from prior years' consistently higher levels. Net earnings followed a similar pattern, rising substantially from $2,031 million in 2014 to $5,031 million in 2018 before declining to $3,962 million in 2019.
Net Earnings Attributable to the Company: Net earnings attributable to Walgreens Boots Alliance, Inc. reflect the overall net earnings trend, with growth from $1,932 million in 2014 to $5,024 million in 2018, and a decrease to $3,982 million in 2019. The positive shift through 2018 suggests effective operational performance and profitability enhancements, while the decrease in 2019 may be associated with rising interest expenses and possible operational challenges.

Overall, the company showed strong revenue and profit growth through 2018, supported by expanding sales and controlled gross margins. However, the data from 2019 indicates a reversal in some profitability metrics, with declining operating income, EBIT, and net earnings possibly related to increased interest expenses and higher SG&A costs. The equity earnings from AmerisourceBergen contributed positively since 2016, whereas gains from Alliance Boots ceased after 2015. Fluctuations in other income and gain items contributed volatility to non-operating results. The trends suggest the need for ongoing focus on cost management and financing expenses to sustain profitability in the future.

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Walgreens Boots Alliance Inc. (NASDAQ:WBA)

Income Statement