01—Abstract
Summary
Summary of the 10-Q filed April 24, 2014. Cited figures are marked; the original filing is the authoritative source.
Altria Group, Inc. reported a decrease in net earnings attributable to Altria Group, Inc. for the first quarter of 2014 to $1,175 milliona, or $0.59 per diluted share, compared to $1,385 million, or $0.69 per diluted share, in the same period of 2013.
This decline was primarily driven by a significant one-time benefit in the prior year related to the Non-Participating Manufacturer (NPM) Adjustment Settlement, which boosted 2013 results. Excluding these special items, the company's core operations showed an increase in earnings, primarily due to improved performance in the smokeable and smokeless products segments, alongside lower interest expenses. Altria reaffirmed its full-year 2014 adjusted diluted EPS forecast, indicating continued focus on operational efficiency and profitable growth.
The company also continued its share repurchase program, returning capital to shareholders, and maintained its commitment to its dividend payout ratio target, signaling confidence in its financial health despite the year-over-year reported earnings decline. Investors should note the impact of the NPM adjustment settlement in the prior year on the reported figures and focus on the underlying operational trends.
02—Key points
Key Highlights
- Net earnings attributable to Altria Group, Inc. decreased by 15.2% to $1,175 million ($0.59 per diluted share) for Q1 2014, compared to $1,385 million ($0.69 per diluted share) in Q1 2013.
- The year-over-year decline in net earnings was largely due to the absence of a significant NPM Adjustment Settlement benefit recorded in Q1 2013.
- Excluding special items, operational performance showed improvement, driven by higher income from the smokeable and smokeless products segments and lower interest expenses.
- Altria Group, Inc. continued its share repurchase program, spending $272 million in Q1 2014, and had $185 million remaining under its repurchase authorization as of March 31, 2014.
- The company reaffirmed its full-year 2014 adjusted diluted EPS forecast, expecting growth of 6% to 9% over 2013.
- Total smokeable products shipment volume decreased by 2.5%, while smokeless products shipment volume increased by 5.9% in Q1 2014 compared to Q1 2013.
- The company continues to navigate significant legal and regulatory challenges inherent in the tobacco industry.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2014, Altria Group, Inc. kept $0.21.
- Revenue$5.52B100.0%
- Cost of revenue−$3.26B59.1%
- Gross profit$2.26B40.9%
- Operating costs−$522.0M9.5%
- Operating income$1.73B31.4%
- Interest, other & tax−$559.0M10.1%
- Net income$1.18B21.3%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2014filed April 24, 2014Financial Statements
Q1 FY2014 against Q1 FY2013
| Line item | Q1 FY2014Q1 FY2013 | Change |
|---|---|---|
| Revenue | $5.52B$5.53B | −0.2% |
| Cost of Revenue | $1.75B$1.30B | +34.9% |
| Gross Profit | $2.26B$2.67B | −15.6% |
| Operating Income | $1.73B$2.15B | −19.4% |
| Net Income | $1.18B$1.39B | −15.2% |
| EPS (Basic) | $0.59$0.69 | −14.5% |
| Shares Outstanding (Basic) | 1.99B2.00B | −0.8% |
05—Questions
Frequently Asked Questions
What was the primary reason for the decrease in net earnings year-over-year?
The decrease in net earnings for Q1 2014 compared to Q1 2013 was primarily due to the absence of a significant Non-Participating Manufacturer (NPM) Adjustment Settlement benefit that was recorded in the prior year. This settlement significantly boosted the reported earnings in Q1 2013.
How did Altria's core business segments perform?
Excluding special items, Altria's core operations showed improvement. The smokeable products segment's operating companies income decreased year-over-year due to the NPM adjustment settlement benefit in the prior year, but the underlying operational performance was supported by gains in Marlboro's retail share. The smokeless products segment showed strong performance with increased shipment volume and operating companies income, driven by growth in Copenhagen.
What is Altria's outlook for the remainder of 2014?
Altria reaffirmed its full-year 2014 adjusted diluted EPS forecast, projecting a growth rate of 6% to 9% over 2013. This outlook reflects a focus on underlying operational performance and efficiency, with expected stronger growth in the second half of the year.
How is Altria managing its capital and returning value to shareholders?
Altria continued to repurchase shares in Q1 2014, spending $272 million. It also maintained its commitment to a dividend payout ratio target of approximately 80% of its adjusted diluted EPS, with the annualized dividend rate at $1.92 per share. These actions demonstrate a continued focus on capital allocation and shareholder returns.
06—Continue