01—Abstract
Summary
Summary of the 10-Q filed May 2, 2017. Cited figures are marked; the original filing is the authoritative source.
Altria Group, Inc. reported solid financial results for the first quarter of 2017, with net earnings attributable to Altria Group, Inc. increasing by 15.1% to $1,401 milliona, or $0.72 per diluted share, up from $1,217 million, or $0.62 per diluted share, in the prior year's quarter.
This growth was primarily driven by a 13.7%b increase in operating income, fueled by stronger performance in the smokeable products segment, higher pricing across its portfolio, and lower litigation and settlement charges compared to the prior year. Despite a 5.0% decline in smokeless product shipment volume due to a voluntary product recall, the segment's net revenues saw a slight increase due to higher pricing. The company reaffirmed its full-year 2017 adjusted diluted EPS growth forecast of 7.5% to 9.5%.
Altria continues to focus on returning value to shareholders, with significant share repurchases of $551 millionc during the quarter, alongside its ongoing dividend payments. The company's substantial investment in AB InBev also contributes to its financial performance, although it was negatively impacted by market conditions in Brazil and hedging losses in the current quarter.
02—Key points
Key Highlights
- Net earnings attributable to Altria Group, Inc. increased 15.1% to $1,401 million.
- Diluted EPS increased 16.1% to $0.72 per share.
- Smokeable products segment operating companies income increased by 16.6% driven by higher pricing and cost efficiencies.
- Smokeless products segment experienced a 5.0% shipment volume decline, largely due to a product recall, but pricing increases helped mitigate the revenue impact.
- The company repurchased $551 million of its common stock during the quarter.
- Altria paid $1,187 million in dividends during the quarter, reflecting an increase in the dividend rate.
- The company reaffirmed its 2017 full-year adjusted diluted EPS growth forecast of 7.5% to 9.5%.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2017, Altria Group, Inc. kept $0.23.
- Revenue$6.08B100.0%
- Cost of revenue−$3.31B54.4%
- Gross profit$2.78B45.6%
- Operating costs−$537.0M8.8%
- Operating income$2.24B36.8%
- Interest, other & tax−$838.0M13.8%
- Net income$1.40B23.0%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2017filed May 2, 2017Financial Statements
Q1 FY2017 against Q1 FY2016
| Line item | Q1 FY2017Q1 FY2016 | Change |
|---|---|---|
| Revenue | $6.08B$6.07B | +0.3% |
| Cost of Revenue | $1.81B$1.87B | −3.3% |
| Gross Profit | $2.78B$2.66B | +4.5% |
| Operating Income | $2.24B$1.98B | +13.3% |
| Net Income | $1.40B$1.22B | +15.1% |
| EPS (Basic) | $0.72$0.62 | +16.1% |
| Shares Outstanding (Basic) | 1.94B1.96B | −0.9% |
05—Questions
Frequently Asked Questions
What drove the increase in Altria's net earnings for the first quarter of 2017?
The increase in net earnings was primarily driven by higher operating income, particularly from the smokeable products segment due to higher pricing and cost efficiencies, coupled with lower tobacco and health litigation items and favorable NPM adjustment items compared to the prior year. Lower interest expenses also contributed positively.
How did the product recall in the smokeless products segment impact financial results?
The voluntary product recall in the smokeless products segment negatively impacted shipment volume by 5.0% and reduced operating companies income by an estimated $60 million for the quarter. However, higher pricing in the segment helped to offset some of the revenue decline.
What is Altria's outlook for the full year 2017?
Altria reaffirmed its expectation for a full-year 2017 adjusted diluted EPS growth rate in the range of 7.5% to 9.5% over 2016 full-year adjusted diluted EPS. The company anticipates stronger adjusted diluted EPS growth in the second half of the year.
How is Altria returning capital to shareholders?
Altria returned capital to shareholders through share repurchases, spending $551 million in the first quarter of 2017. The company also continued its regular dividend payments, totaling $1,187 million for the quarter, with a target dividend payout ratio of approximately 80% of adjusted diluted EPS.
06—Continue