01—Abstract
Summary
Summary of the 10-Q filed October 30, 2012. Cited figures are marked; the original filing is the authoritative source.
Altria Group, Inc. reported a net earnings increase of 20.5% for the first nine months of 2012 compared to the same period in 2011, reaching $3,077 milliona, or $1.51 per diluted share, up from $1.23 per diluted share.
This growth was driven by higher operating income from its smokeable products, financial services, and smokeless products segments, alongside increased equity earnings from its SABMiller investment. However, the company experienced a significant $874 millionb pre-tax loss on early debt extinguishment in the third quarter of 2012, impacting quarterly earnings. Despite this, the company reaffirmed its full-year adjusted diluted EPS forecast, projecting 7% to 9% growth over 2011.
Altria also announced a 7.3% increase in its quarterly dividend to $0.44c per share and expanded its share repurchase program by $500 million, demonstrating a commitment to returning capital to shareholders. The company's financial services segment saw improved performance due to a beneficial settlement with the IRS regarding leveraged lease transactions, while its tobacco segments navigated ongoing regulatory pressures and evolving consumer preferences, with the smokeable products segment showing strength in Marlboro's retail share and the smokeless products segment benefiting from Copenhagen's performance.
02—Key points
Key Highlights
- Net earnings attributable to Altria Group, Inc. increased by 20.5% to $3,077 million for the first nine months of 2012, translating to diluted EPS of $1.51, up from $1.23 in the prior year.
- The company recorded a significant pre-tax loss of $874 million on early extinguishment of debt in the third quarter of 2012.
- Altria declared a quarterly dividend of $0.44 per common share, a 7.3% increase, and reaffirmed its full-year adjusted diluted EPS growth forecast of 7-9%.
- Share repurchases continued, with $622 million spent in the first nine months of 2012 under an expanded $1.5 billion program.
- Equity earnings from the investment in SABMiller plc increased significantly, contributing to overall net income growth.
- The financial services segment benefited from a $68 million net earnings benefit related to a favorable IRS closing agreement on leveraged lease transactions.
- Smokeable products segment showed resilience with higher pricing and cost management, while Marlboro's retail share improved. Smokeless products segment also saw growth driven by Copenhagen.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2012, Altria Group, Inc. kept $0.11.
- Revenue$6.24B100.0%
- Cost of revenue−$3.76B60.2%
- Gross profit$2.48B39.8%
- Operating costs−$515.0M8.3%
- Operating income$1.97B31.5%
- Interest, other & tax−$1.31B21.0%
- Net income$657.0M10.5%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2012filed October 30, 2012Financial Statements
Q3 FY2012 against Q3 FY2011
| Line item | Q3 FY2012Q3 FY2011 | Change |
|---|---|---|
| Revenue | $6.24B$6.11B | +2.2% |
| Cost of Revenue | $1.98B$1.88B | +5.3% |
| Gross Profit | $2.48B$2.44B | +1.6% |
| Operating Income | $1.97B$1.88B | +4.8% |
| Net Income | $657.00M$1.17B | −44.0% |
| EPS (Basic) | $0.32$0.57 | −43.9% |
| EPS (Diluted) | $0.32$0.57 | −43.9% |
| Shares Outstanding (Basic) | 2.02B2.05B | −1.5% |
05—Questions
Frequently Asked Questions
What was Altria's earnings performance for the first nine months of 2012?
For the first nine months of 2012, Altria Group, Inc. reported net earnings attributable to Altria Group, Inc. of $3,077 million, an increase of 20.5% compared to $2,554 million in the same period of 2011. Diluted earnings per share rose to $1.51 from $1.23.
What significant financial event impacted Altria's third-quarter 2012 results?
Altria incurred a pre-tax loss of $874 million in the third quarter of 2012 related to the early extinguishment of debt through a tender offer, which included debt tender premiums and fees.
How did Altria manage shareholder returns during this period?
Altria increased its quarterly dividend by 7.3% to $0.44 per common share and expanded its share repurchase program by $500 million to a total of $1.5 billion, expecting to complete the program by June 30, 2013. The company also reaffirmed its full-year adjusted diluted EPS growth forecast of 7% to 9%.
What were the key drivers of the year-over-year earnings growth?
The increase in earnings was primarily driven by higher operating income from its smokeable, financial services, and smokeless products segments, as well as a significant increase in equity earnings from its investment in SABMiller. A lower income tax rate also contributed positively, although this was partially offset by the loss on debt extinguishment.
06—Continue