01—Abstract
Summary
Summary of the 10-K filed February 25, 2022. Cited figures are marked; the original filing is the authoritative source.
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 billiona. 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 billionb share repurchase program.
02—Key points
Key Highlights
- Divested the Ste. Michelle wine business for approximately $1.2 billion.
- Reported a significant impairment charge of $6.2 billion related to its investment in Anheuser-Busch InBev (ABI).
- Adjusted diluted EPS increased by 5.7% year-over-year, indicating underlying operational strength.
- Smokeable products segment operating income increased due to higher pricing, despite declining shipment volumes.
- The IQOS heated tobacco system was removed from the market due to an ITC exclusion order, with no expected availability in 2022.
- Continued focus on the 'Moving Beyond Smoking' strategy with growth in oral nicotine pouches.
- Announced and expanded a $3.5 billion share repurchase program.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2021, Altria Group, Inc. kept $0.10.
- Revenue$26.01B100.0%
- Cost of revenue−$12.02B46.2%
- Gross profit$13.99B53.8%
- Operating costs−$2.43B9.3%
- Operating income$11.56B44.4%
- Interest, other & tax−$9.09B34.9%
- Net income$2.48B9.5%
Where FY2021 revenue went
$26.01B- Interest, other & tax: $9.09B, 35% of revenue
- Other operating costs: $7.19B, 28% of revenue
- Cost of revenue: $7.12B, 27% of revenue
- Net income: $2.48B, 9.5% of revenue
- R&D: $145.0M, 0.6% of revenue
Kept 9.5% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2021filed February 25, 2022Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $26.01B$26.15B | −0.5% |
| Cost of Revenue | $7.12B$7.82B | −8.9% |
| Gross Profit | $13.99B$13.02B | +7.4% |
| R&D Expenses | $145.00M$131.00M | +10.7% |
| Operating Income | $11.56B$10.87B | +6.3% |
| Interest Expense | $1.19B$1.22B | −2.9% |
| Net Income | $2.48B$4.47B | −44.6% |
| EPS (Basic) | $1.34$2.40 | −44.2% |
| EPS (Diluted) | $1.34$2.40 | −44.2% |
| Shares Outstanding (Basic) | 1.84B1.86B | −0.7% |
| Shares Outstanding (Diluted) | 1.84B1.86B | −0.8% |
05—Questions
Frequently Asked Questions
What was Altria's financial performance in 2021?
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.
What is Altria's strategy for moving beyond traditional cigarettes?
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.
What were the main challenges or risks faced by Altria in 2021?
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.
How did Altria manage its investments in ABI, JUUL, and Cronos?
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.
06—Continue