01—Abstract
Summary
Summary of the 10-Q filed April 28, 2011. Cited figures are marked; the original filing is the authoritative source.
Altria Group, Inc. (MO) reported a solid first quarter for 2011, with net earnings attributable to Altria Group, Inc. increasing by 15.3% to $937 milliona, and diluted earnings per share (EPS) rising by 15.4% to $0.45 compared to the same period in 2010.
This growth was driven by higher operating income across its segments, particularly in cigarettes and smokeless products, lower interest expenses, and a significant increase in earnings from its equity investment in SABMiller. The company reaffirmed its full-year 2011 EPS guidance, anticipating 6% to 9% growth over 2010 adjusted diluted EPS, though it cautioned about potential lumpiness in quarterly results due to trade inventory dynamics and ongoing economic pressures on consumers. Financially, Altria maintained a strong liquidity position with approximately $3.4 billionb in cash and cash equivalents.
The company's debt levels remained substantial at $12.2 billionc, but its credit metrics, such as the debt-to-EBITDA ratio, were within covenant requirements. Altria's Board of Directors authorized a new $1.0 billion share repurchase program in January 2011, though no shares were repurchased under this program in the first quarter. The company also continued its dividend payments, with a 12.5% increase in total dividend payments compared to the prior year, reflecting its commitment to returning capital to shareholders.
02—Key points
Key Highlights
- Net earnings attributable to Altria Group, Inc. increased 15.3% to $937 million ($0.45 per diluted share) for the first quarter of 2011, up from $813 million ($0.39 per diluted share) in the prior year.
- Operating income for the consolidated company increased by $109 million (7.6%) year-over-year, driven primarily by strong performance in the cigarettes and smokeless products segments.
- Earnings from the equity investment in SABMiller increased significantly, contributing $189 million pre-tax for the quarter, up from $138 million in the prior year.
- The company reaffirmed its full-year 2011 diluted EPS forecast to be in the range of $2.00 to $2.06, representing 6% to 9% growth over 2010 adjusted diluted EPS.
- Altria maintained robust liquidity with $3.432 billion in cash and cash equivalents at the end of the first quarter.
- The company's cigarettes segment saw a decline in shipment volume (down 6.4%) and retail share (down 1.2 share points), impacted by trade inventory movements and new product launch timing.
- A new $1.0 billion share repurchase program was authorized in January 2011, though no shares were repurchased under this program during the first quarter.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2011, Altria Group, Inc. kept $0.17.
- Revenue$5.64B100.0%
- Cost of revenue−$3.50B61.9%
- Gross profit$2.15B38.1%
- Operating costs−$609.0M10.8%
- Operating income$1.54B27.3%
- Interest, other & tax−$601.0M10.7%
- Net income$938.0M16.6%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2011filed April 28, 2011Financial Statements
Q1 FY2011 against Q1 FY2010
| Line item | Q1 FY2011Q1 FY2010 | Change |
|---|---|---|
| Revenue | $5.64B$5.76B | −2.0% |
| Cost of Revenue | $1.79B$1.87B | −3.9% |
| Gross Profit | $2.15B$2.08B | +3.1% |
| Operating Income | $1.54B$1.43B | +7.6% |
| Net Income | $938.00M$813.00M | +15.4% |
| EPS (Basic) | $0.45$0.39 | +15.4% |
| EPS (Diluted) | $0.45$0.39 | +15.4% |
| Shares Outstanding (Basic) | 2.08B2.07B | +0.5% |
| Shares Outstanding (Diluted) | 2.08B2.08B | +0.3% |
05—Questions
Frequently Asked Questions
What was Altria's overall financial performance in Q1 2011?
Altria reported a strong first quarter in 2011, with net earnings attributable to Altria Group, Inc. increasing by 15.3% to $937 million, or $0.45 per diluted share. This growth was driven by higher operating income from its core businesses, particularly cigarettes and smokeless products, and a notable increase in earnings from its SABMiller investment. The company also reaffirmed its full-year earnings guidance.
How did Altria's key business segments perform?
The cigarettes segment's operating companies income increased due to higher pricing and lower costs, but shipment volume and retail share declined year-over-year. The smokeless products segment saw improved operating income driven by pricing, although volume and share saw a slight decrease compared to a strong prior year with new product activity. The cigars segment experienced a decline in operating income due to increased promotional investments. The wine segment showed modest growth in both revenue and operating income, and the financial services segment's operating income remained flat.
What is Altria's outlook for the remainder of 2011?
Altria reaffirmed its full-year 2011 reported diluted EPS guidance to be between $2.00 and $2.06. This guidance reflects an expected 6% to 9% growth in adjusted diluted EPS compared to 2010. However, the company anticipates some quarterly unevenness in growth due to trade inventory dynamics and ongoing economic pressures on consumers, with stronger growth expected in the latter half of the year.
What is the status of Altria's share repurchase program and dividends?
Altria's Board of Directors authorized a new $1.0 billion share repurchase program in January 2011. However, no shares were repurchased under this program during the first quarter of 2011. The company continued to return capital to shareholders through dividends, paying $794 million in the first quarter of 2011, an increase of 12.5% over the prior year, reflecting a higher dividend rate.
06—Continue