10-QPeriod: Q1 FY2016

ALTRIA GROUP, INC. Quarterly Report for Q1 Ended Mar 31, 2016

Filed April 28, 2016For Securities:MO

Summary

Altria Group, Inc. (MO) reported strong financial results for the first quarter of 2016, with net earnings attributable to Altria Group, Inc. increasing by 19.5% to $1,217 million, and diluted EPS rising by 19.2% to $0.62 compared to the same period in 2015. This growth was driven by higher pricing across its segments, particularly in smokeable and smokeless products, and a favorable decrease in certain expenses such as marketing, administration, and research costs. The company also benefited from lower interest and other debt expenses. The company's operational performance was robust, with net revenues increasing by 4.5% to $6,066 million, primarily due to strong performance in the smokeable products segment. Despite a slight decline in cigarette industry volume, Altria saw a 1.2% increase in its reported cigarette shipment volume, with Marlboro maintaining its leading retail share. The smokeless products segment also showed significant growth in both shipments and retail share, bolstered by the national expansion of Copenhagen Mint. The company reaffirmed its full-year 2016 adjusted diluted EPS growth forecast of 7% to 9%, demonstrating continued confidence in its business operations and strategic initiatives.

Financial Highlights

46 data points
Beta

Revenue

$6.07B

43.8% Gross Margin

Net Income

$1.22B

20.1% Net Margin

EPS (Diluted)

$0.62

Total Assets

$34.06B

Cash & Equivalents

$3.81B

Free Cash Flow

$2.69B

Financial Statements
Beta
Revenue$6.07B
Cost of Revenue$1.87B
Gross Profit$2.66B
Operating Income$1.98B
Net Income$1.22B
EPS (Basic)$0.62
Shares Outstanding (Basic)1.96B

Key Highlights

  • 1Net earnings attributable to Altria Group, Inc. increased by 19.5% to $1,217 million for the first quarter of 2016.
  • 2Diluted EPS increased by 19.2% to $0.62 compared to the prior year's first quarter.
  • 3Total net revenues grew by 4.5% to $6,066 million, driven by higher pricing and shipment volumes.
  • 4The smokeable products segment saw a 3.8% increase in net revenues, with total cigarette shipment volume up 1.2%.
  • 5The smokeless products segment reported an 11.4% increase in net revenues, with shipment volume growing by 7.8%.
  • 6Altria reaffirmed its full-year 2016 adjusted diluted EPS growth guidance of 7% to 9%.
  • 7The company's investment in SABMiller showed an increase in value, with potential for a significant one-time gain upon completion of the AB InBev acquisition.

Frequently Asked Questions

Altria reported a significant increase in net earnings attributable to Altria Group, Inc., up 19.5% to $1,217 million, and diluted EPS rose 19.2% to $0.62 compared to the first quarter of 2015. Net revenues increased by 4.5% to $6,066 million, driven by strong performance in both the smokeable and smokeless products segments.

The smokeable products segment saw net revenues increase by 3.8% due to higher pricing and a 1.2% rise in cigarette shipment volume. The smokeless products segment experienced an 11.4% increase in net revenues, supported by higher shipment volumes and pricing, with Copenhagen and Skoal showing strong retail share growth.

Altria reaffirmed its full-year 2016 adjusted diluted EPS growth forecast to be in the range of 7% to 9% over 2015's adjusted diluted EPS. The company expects its effective tax rate on operations to be approximately 35.3%.

Key factors influencing results include pricing strategies, shipment volumes, marketing and administrative cost management, and the impact of special items like asset impairment and exit costs, litigation charges, and gains on derivative financial instruments. The company's investment in SABMiller and the potential business combination with AB InBev also play a role.