01—Abstract
Summary
Summary of the 10-K filed February 25, 2015. Cited figures are marked; the original filing is the authoritative source.
Altria Group, Inc. reported strong financial performance for the fiscal year ended December 31, 2014, with net earnings attributable to Altria Group, Inc. of $5.07 billiona, a 11.8% increase from the prior year, driven by lower losses on debt extinguishment and reduced interest expenses.
The company's primary revenue driver remains its smokeable products segment, which includes the flagship Marlboro brand, though shipment volumes for cigarettes saw a slight decline. The smokeless products segment, led by Copenhagen and Skoal, demonstrated growth in both shipment volume and retail share.
The innovative tobacco products segment, notably the MarkTen e-vapor products, saw expanded national distribution. The company continued its commitment to shareholder returns through significant dividend payments and share repurchases, with over $939 millionb spent on repurchases during the year.
02—Key points
Key Highlights
- Net earnings attributable to Altria Group, Inc. increased by 11.8% to $5.07 billion in 2014.
- Diluted EPS grew by 13.3% to $2.56, aided by share repurchases and operational improvements.
- The smokeable products segment, while facing a slight volume decline in cigarettes, maintained market share and benefited from higher pricing.
- The smokeless products segment showed growth, with increased shipment volumes and combined retail share for its premium brands, Copenhagen and Skoal.
- Altria expanded its presence in the innovative tobacco products category with the national rollout of MarkTen e-vapor products and the acquisition of Green Smoke.
- The company returned significant capital to shareholders, with $3.96 billion in dividends paid and $939 million in shares repurchased during 2014.
- Altria holds a substantial 27% equity interest in SABMiller, contributing $1.006 billion to its earnings in 2014.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2014, Altria Group, Inc. kept $0.21.
- Revenue$24.52B100.0%
- Cost of revenue−$14.36B58.6%
- Gross profit$10.16B41.4%
- Operating costs−$2.54B10.4%
- Operating income$7.62B31.1%
- Interest, other & tax−$2.55B10.4%
- Net income$5.07B20.7%
Where FY2014 revenue went
$24.52B- Other operating costs: $8.95B, 36% of revenue
- Cost of revenue: $7.79B, 32% of revenue
- Net income: $5.07B, 21% of revenue
- R&D: $167.0M, 0.7% of revenue
- Interest, other & tax: $2.55B, 10% of revenue
Kept 21% as net incomeR&D $167.0M · 0.7%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2014filed February 25, 2015Financial Statements
FY2014 against FY2013
| Line item | FY2014FY2013 | Change |
|---|---|---|
| Revenue | $24.52B$24.47B | +0.2% |
| Cost of Revenue | $7.79B$7.21B | +8.0% |
| Gross Profit | $10.16B$10.46B | −2.8% |
| R&D Expenses | $167.00M$153.00M | +9.2% |
| Operating Income | $7.62B$8.08B | −5.7% |
| Interest Expense | $857.00M$1.05B | −18.6% |
| Net Income | $5.07B$4.54B | +11.8% |
| EPS (Basic) | $2.56$2.26 | +13.3% |
| Shares Outstanding (Basic) | 1.98B2.00B | −1.1% |
05—Questions
Frequently Asked Questions
What was Altria's primary revenue source in 2014?
Altria's primary revenue source was its smokeable products segment, which generated $21.9 billion in net revenues, primarily from cigarette sales, despite a slight decline in shipment volumes. Marlboro remained the leading cigarette brand in the U.S.
How did Altria manage its capital allocation in 2014?
Altria demonstrated a strong commitment to capital allocation by paying $3.96 billion in dividends to shareholders and repurchasing $939 million of its common stock. The company also invested in its innovative tobacco products segment through the acquisition of Green Smoke and the national expansion of its MarkTen e-vapor products.
What are the key risks facing Altria as disclosed in the 10-K?
Key risks highlighted include ongoing litigation, regulatory actions by the FDA under the Family Smoking Prevention and Tobacco Control Act (FSPTCA), significant excise taxes on tobacco products, intense competition, and evolving consumer preferences, particularly the growth of e-vapor products which could impact cigarette consumption.
What is the significance of the company's investment in SABMiller?
Altria holds a significant 27% equity interest in SABMiller, which contributed $1.006 billion to Altria's earnings in 2014. This investment represents a substantial non-operating income source for the company.
06—Continue