01—Abstract
Summary
Summary of the 10-Q filed October 28, 2010. Cited figures are marked; the original filing is the authoritative source.
Altria Group, Inc. reported strong financial performance for the nine months ended September 30, 2010.
Net revenues increased by 5.1% to $18.4 billiona, driven by higher pricing and increased volume in the smokeless products segment, partially offset by lower cigarette volumes. Operating income saw a significant increase of 11.1% to $4.7 billion, benefiting from lower asset impairment, exit, implementation, and integration costs compared to the prior year, and reduced acquisition-related costs. Net earnings attributable to Altria Group, Inc. rose by 20.4% to $2.99 billion, translating to diluted EPS of $1.43, up from $1.19 in the prior year.
The company also increased its quarterly dividend by 11.8% year-to-date, reflecting a commitment to shareholder returns. The acquisition of UST continues to integrate well, contributing positively to the results, particularly in the smokeless products segment which saw substantial growth. The company's financial position remains robust, with total assets of $37.1 billionb and total liabilities of $31.9 billion as of September 30, 2010.
The company raised its full-year 2010 EPS guidance, signaling confidence in its ongoing operational performance and strategic initiatives. Key drivers for the improved performance include pricing strategies, cost management programs, and a favorable tax rate due to the resolution of certain tax matters.
02—Key points
Key Highlights
- Net revenues for the nine months ended September 30, 2010 increased 5.1% to $18.44 billion.
- Operating income increased 11.1% to $4.74 billion for the nine months ended September 30, 2010.
- Net earnings attributable to Altria Group, Inc. increased 20.4% to $2.99 billion for the nine months ended September 30, 2010.
- Diluted EPS increased 20.2% to $1.43 for the nine months ended September 30, 2010.
- The company increased its quarterly dividend by 11.8% year-to-date to $0.38 per share.
- Smokeless products segment saw significant growth, with a 13.4% increase in net revenues and a 94.0% increase in operating companies income for the nine months.
- Altria raised its full-year 2010 EPS guidance range.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2010, Altria Group, Inc. kept $0.18.
- Revenue$6.40B100.0%
- Cost of revenue−$3.93B61.3%
- Gross profit$2.48B38.7%
- Operating costs−$700.0M10.9%
- Operating income$1.78B27.7%
- Interest, other & tax−$645.0M10.1%
- Net income$1.13B17.7%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2010filed October 28, 2010Financial Statements
Q3 FY2010 against Q3 FY2009
| Line item | Q3 FY2010Q3 FY2009 | Change |
|---|---|---|
| Revenue | $6.40B$6.30B | +1.6% |
| Cost of Revenue | $1.99B$2.03B | −2.4% |
| Gross Profit | $2.48B$2.29B | +8.4% |
| Operating Income | $1.78B$1.39B | +27.4% |
| Net Income | $1.13B$882.00M | +28.2% |
| EPS (Basic) | $0.54$0.43 | +25.6% |
| EPS (Diluted) | $0.54$0.42 | +28.6% |
| Shares Outstanding (Basic) | 2.08B2.07B | +0.5% |
| Shares Outstanding (Diluted) | 2.08B2.07B | +0.4% |
05—Questions
Frequently Asked Questions
What was the primary driver for the increase in Altria's net earnings during the first nine months of 2010?
The primary drivers for the increase in net earnings were higher operating income from the cigarettes and smokeless products segments, improved earnings from the SABMiller equity investment (excluding special items), a lower income tax rate, and reduced interest and other debt expense, net.
How did the UST acquisition impact Altria's performance in this period?
The UST acquisition, completed in January 2009, continued to positively impact Altria's results, particularly in the smokeless products segment, which experienced significant revenue and operating income growth. Integration and acquisition-related costs were lower in 2010 compared to 2009.
What is Altria's dividend policy and how has it changed?
Altria's dividend policy targets approximately 80% of its adjusted diluted EPS. The company increased its quarterly dividend by 11.8% year-to-date in 2010, reflecting strong performance and a commitment to shareholder returns. The current annualized dividend rate is $1.52 per share.
What is the outlook for Altria's full-year 2010 performance?
Altria raised its full-year 2010 guidance for reported diluted EPS, reflecting tax benefits and strong operational performance. The company expects adjusted diluted EPS to grow 7-9% over 2009.
06—Continue