01—Abstract
Summary
Summary of the 10-K filed February 25, 2020. Cited figures are marked; the original filing is the authoritative source.
Altria Group, Inc. reported a net loss of $1.3 billiona for the year ended December 31, 2019, a significant shift from the $7.0 billion net earnings in the prior year.
This decline was largely driven by an $8.6 billionb impairment charge related to its investment in JUUL, coupled with a $1.4 billion loss on Cronos-related financial instruments. Excluding these and other special items, Altria's adjusted diluted earnings per share were $4.22, demonstrating underlying operational performance. The company forecasts 4%-7% adjusted diluted EPS growth for 2020, indicating confidence in its core business despite the significant investment write-downs.
The company's primary revenue driver, the smokeable products segment (cigarettes and cigars), saw a slight decrease in net revenues, primarily due to lower shipment volumes, although pricing actions helped offset some of this decline. The smokeless products segment showed modest net revenue growth, supported by higher pricing.
However, the wine segment experienced a decline in operating income, partly due to a goodwill impairment charge. Altria's strategic investments in JUUL and Cronos have significantly impacted profitability in 2019, highlighting the risks associated with diversifying into new product categories.
02—Key points
Key Highlights
- Reported a net loss of $1.3 billion for fiscal year 2019, significantly impacted by an $8.6 billion impairment charge on its JUUL investment.
- Adjusted diluted EPS was $4.22 for fiscal year 2019, with the company forecasting 4%-7% growth for 2020.
- Smokeable products segment net revenues decreased slightly due to lower shipment volumes, partially offset by pricing increases.
- Smokeless products segment reported a modest increase in net revenues, driven by higher pricing.
- Wine segment operating income declined, impacted by a $74 million goodwill impairment charge.
- The company continued to return capital to shareholders through dividends, paying out approximately $6.1 billion in 2019.
- Altria faces ongoing regulatory scrutiny and litigation risks, particularly concerning its e-vapor investments and tobacco products.
03—One dollar
Follow one dollar
For each $1.00 of revenue in FY2019, Altria Group, Inc. lost $0.05.
- Revenue$25.11B100.0%
- Cost of revenue−$12.40B49.4%
- Gross profit$12.71B50.6%
- Operating costs−$2.38B9.5%
- Operating income$10.33B41.1%
- Interest, other & tax−$11.62B46.3%
- Net income−$1.29B5.1%
Where FY2019 revenue went
$25.11B- Operating income: $10.33B, 41% of revenue
- Other operating costs: $7.53B, 30% of revenue
- Cost of revenue: $7.08B, 28% of revenue
- R&D: $168.0M, 0.7% of revenue
Kept 41% as operating income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2019filed February 25, 2020Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $25.11B$25.36B | −1.0% |
| Cost of Revenue | $7.08B$7.37B | −3.9% |
| Gross Profit | $12.71B$12.25B | +3.7% |
| R&D Expenses | $168.00M$252.00M | −33.3% |
| Operating Income | $10.33B$9.12B | +13.3% |
| Interest Expense | $1.32B$697.00M | +89.7% |
| Net Income | -$1.29B$6.96B | −118.6% |
| EPS (Basic) | $-0.70$3.69 | −119.0% |
| EPS (Diluted) | $-0.70$3.68 | −119.0% |
| Shares Outstanding (Basic) | 1.87B1.89B | −1.0% |
| Shares Outstanding (Diluted) | 1.87B1.89B | −1.0% |
05—Questions
Frequently Asked Questions
What was the primary reason for Altria's net loss in 2019?
The primary reason for Altria's net loss of $1.3 billion in 2019 was an $8.6 billion impairment charge on its investment in JUUL Labs, Inc., along with a $1.4 billion loss on Cronos-related financial instruments. These significant write-downs overshadowed the operational performance of its core businesses.
How did Altria's core tobacco segments perform in 2019?
The smokeable products segment saw a slight decrease in net revenues due to lower shipment volumes, though pricing actions helped to partially mitigate this decline. The smokeless products segment experienced a modest increase in net revenues, primarily driven by higher pricing.
What is Altria's outlook for 2020?
Altria forecasts 4%-7% growth in adjusted diluted earnings per share for the full year 2020, indicating management's confidence in the underlying business performance and strategic initiatives.
What are the key risks and challenges facing Altria?
Altria faces significant risks including ongoing litigation and regulatory scrutiny in the tobacco industry, evolving consumer preferences, potential excise tax increases, and the performance of its strategic investments in newer product categories like e-vapor and cannabis.
06—Continue