10-KPeriod: FY2021

ALTRIA GROUP, INC. Annual Report, Year Ended Dec 31, 2021

Filed February 25, 2022For Securities:MO

Summary

Altria Group, Inc.'s 2021 10-K filing highlights a year of strategic divestitures, including the sale of its wine business, Ste. Michelle Wine Estates, for approximately $1.2 billion. The company continues its 'Moving Beyond Smoking' vision, focusing on transitioning adult smokers to smoke-free alternatives. Despite a reported net loss attributable to Altria of $2.5 billion for 2021, primarily due to significant special items including a substantial impairment charge related to its investment in ABI ($6.2 billion), the adjusted net earnings and adjusted diluted earnings per share showed year-over-year growth, reflecting the underlying operational performance. The company faced challenges in its innovative tobacco products segment, particularly with the IQOS heated tobacco system, which was removed from the market due to an ITC exclusion order, with no expected access in 2022. However, the core smokeable products segment demonstrated resilience with increased operating income, driven by pricing actions that offset shipment volume declines. The oral tobacco products segment also saw modest revenue growth. Altria remains committed to its dividend payout ratio target of approximately 80% of adjusted diluted EPS and announced a $3.5 billion share repurchase program.

Financial Highlights

53 data points
Beta

Revenue

$26.01B

53.8% Gross Margin

Net Income

$2.48B

9.5% Net Margin

EPS (Diluted)

$1.34

Total Assets

$39.52B

Cash & Equivalents

$4.59B

Free Cash Flow

$8.24B

Financial Statements
Beta
Revenue$26.01B
Cost of Revenue$7.12B
Gross Profit$13.99B
R&D Expenses$145.00M
Operating Income$11.56B
Interest Expense$1.19B
Net Income$2.48B
EPS (Basic)$1.34
EPS (Diluted)$1.34
Shares Outstanding (Basic)1.84B
Shares Outstanding (Diluted)1.84B

Key Highlights

  • 1Divested the Ste. Michelle wine business for approximately $1.2 billion.
  • 2Reported a significant impairment charge of $6.2 billion related to its investment in Anheuser-Busch InBev (ABI).
  • 3Adjusted diluted EPS increased by 5.7% year-over-year, indicating underlying operational strength.
  • 4Smokeable products segment operating income increased due to higher pricing, despite declining shipment volumes.
  • 5The IQOS heated tobacco system was removed from the market due to an ITC exclusion order, with no expected availability in 2022.
  • 6Continued focus on the 'Moving Beyond Smoking' strategy with growth in oral nicotine pouches.
  • 7Announced and expanded a $3.5 billion share repurchase program.

Frequently Asked Questions

Altria reported a net loss attributable to Altria of $2.5 billion for 2021. However, excluding significant special items like the $6.2 billion impairment charge on its ABI investment, adjusted net earnings were $8.5 billion, and adjusted diluted EPS was $4.61, showing a 5.7% increase year-over-year. Net revenues were $26.0 billion, a slight decrease from 2020.

Altria's vision is to 'responsibly lead the transition of adult smokers to a smoke-free future.' The company is focusing on products like oral nicotine pouches (on!), e-vapor products (though facing challenges with JUUL), and heated tobacco products. They are investing in research, development, and marketplace activities to support these smoke-free product transitions.

Key challenges included the market removal of the IQOS heated tobacco system due to an ITC exclusion order, regulatory uncertainties surrounding e-vapor products, significant impairment charges on investments like ABI, ongoing litigation risks, and the general decline in cigarette consumption. The company also faces competitive pressures in the oral tobacco products category.

Altria recorded a significant $6.2 billion impairment charge for its ABI investment due to a prolonged decline in fair value. The investment in JUUL remained valued at $1.7 billion, with significant ongoing litigation and regulatory risks. The Cronos investment also experienced an impairment charge of $205 million due to a decline in fair value that was deemed other than temporary.