10-QPeriod: Q1 FY2012

ALTRIA GROUP, INC. Quarterly Report for Q1 Ended Mar 31, 2012

Filed April 26, 2012For Securities:MO

Summary

Altria Group, Inc. reported net earnings attributable to Altria Group, Inc. of $973 million for the first quarter of 2012, an increase from $937 million in the same period of 2011. Diluted earnings per share (EPS) rose to $0.48 from $0.45 year-over-year, driven by higher operating income and fewer shares outstanding due to ongoing share repurchases. Net revenues remained stable at $5.6 billion. The company benefited from cost reduction initiatives and positive pricing actions across its segments, particularly in smokeable and financial services. Despite a slight decline in cigarette shipment volumes, the company saw positive retail share growth in its Marlboro brand and increased share in the smokeless products segment with Copenhagen. The company also reaffirmed its full-year 2012 diluted EPS forecast of $2.14 to $2.20, indicating confidence in its ongoing operational performance and strategic initiatives. However, investors should remain mindful of ongoing litigation, regulatory scrutiny, and excise tax pressures inherent in the tobacco industry.

Financial Highlights

46 data points
Beta

Revenue

$5.65B

39.0% Gross Margin

Net Income

$1.20B

21.2% Net Margin

EPS (Diluted)

$0.59

Total Assets

$37.81B

Cash & Equivalents

$4.16B

Free Cash Flow

$1.82B

Financial Statements
Beta
Revenue$5.65B
Cost of Revenue$1.79B
Gross Profit$2.20B
Operating Income$1.64B
Net Income$1.20B
EPS (Basic)$0.59
EPS (Diluted)$0.59
Shares Outstanding (Basic)2.03B

Key Highlights

  • 1Net earnings attributable to Altria Group, Inc. increased to $973 million in Q1 2012 from $937 million in Q1 2011.
  • 2Diluted EPS rose to $0.48 from $0.45 year-over-year, driven by improved operations and share repurchases.
  • 3Net revenues remained stable at $5.6 billion, with growth in financial services and wine segments offset by a slight decrease in smokeable products.
  • 4Smokeable products segment saw operating companies income increase by $70 million, benefiting from higher net pricing and cost savings.
  • 5Smokeless products segment's operating companies income was stable, with strong retail share gains for Copenhagen offset by volume declines and cost reduction program impacts.
  • 6Altria reaffirmed its full-year 2012 diluted EPS guidance of $2.14 to $2.20, representing 6%-9% growth over the prior year's adjusted diluted EPS.
  • 7The company repurchased approximately 10.96 million shares of common stock during the first quarter of 2012.

Frequently Asked Questions

Altria's net revenues were $5.6 billion, essentially unchanged compared to the same period in 2011. This stability was driven by higher net revenues in the financial services and wine segments, which offset a slight decrease in net revenues from the smokeable products segment.

Altria reported diluted EPS of $0.48 for the first quarter of 2012, an increase from $0.45 in the first quarter of 2011. This improvement was attributed to higher operating income and the positive impact of share repurchases, which reduced the number of outstanding shares.

The increase in operating income was primarily driven by higher operating results in the smokeable products and financial services segments. This was supported by effective cost management, higher net pricing (including promotional investments), and cost reduction initiatives.

Altria reaffirmed its full-year 2012 reported diluted EPS forecast to be in the range of $2.14 to $2.20. This forecast anticipates adjusted diluted EPS growth of 6% to 9% over 2011 full-year adjusted diluted EPS.