ALTRIA GROUP, INC. Quarterly Report for Q3 Ended Sep 30, 2016

Summary

Altria Group, Inc. reported mixed financial results for the nine months ended September 30, 2016, with net earnings attributable to Altria Group, Inc. of $3,963 million, a slight decrease of 0.8% compared to the prior year's period, translating to diluted EPS of $2.02, down 0.5%. This decrease was primarily driven by a significant loss on early extinguishment of debt and higher restructuring charges, partially offset by improved operating income from its smokeable and smokeless products segments, and a notable gain on derivative financial instruments related to the SABMiller transaction. The company announced an 8.0% increase in its quarterly dividend to $0.61 per share, reinforcing its commitment to shareholder returns, and continued its share repurchase program, with approximately $453 million remaining under its $1 billion authorization at the quarter's end. The company also provided an update on its significant investment in SABMiller, which completed its business combination with Anheuser-Busch InBev SA/NV on October 10, 2016. Altria now holds a 10.2% ownership in the combined entity, AB InBev. This transaction is expected to result in a substantial pre-tax gain of approximately $13.7 billion, largely to be recognized in the fourth quarter of 2016. Despite ongoing legal and regulatory challenges inherent to the tobacco industry, Altria's core operations, particularly smokeless products, demonstrated growth, and the company remains focused on its productivity initiatives and long-term shareholder value.

Key Highlights

• 1Net earnings attributable to Altria Group, Inc. were $3,963 million for the nine months ended September 30, 2016, a decrease of 0.8% year-over-year.
• 2Diluted EPS attributable to Altria Group, Inc. was $2.02 for the nine months ended September 30, 2016, a decrease of 0.5% year-over-year.
• 3The company announced an 8.0% increase in its quarterly dividend rate to $0.61 per common share, with an annualized rate of $2.44.
• 4Altria invested $1.6 billion to increase its ownership in the newly formed AB InBev (following the SABMiller combination) to approximately 10.2%.
• 5A pre-tax gain of approximately $13.7 billion is expected from the SABMiller transaction, to be recorded primarily in the fourth quarter of 2016.
• 6Altria completed debt tender offers totaling $933 million during the third quarter of 2016, resulting in pre-tax losses on early extinguishment of debt of $823 million.
• 7The company incurred $130 million in pre-tax charges related to a productivity initiative in the first nine months of 2016.

Frequently Asked Questions