01—Abstract
Summary
Summary of the 10-Q filed October 26, 2017. Cited figures are marked; the original filing is the authoritative source.
Altria Group, Inc. (MO) reported strong financial results for the nine months ended September 30, 2017, with net earnings attributable to Altria Group, Inc. increasing by 32.6% to $5,256 milliona, and diluted EPS growing by 34.7% to $2.72 compared to the same period in 2016.
This performance was driven by higher operating income across its key segments, particularly smokeable products, and favorable tax items, including a significant benefit from the release of a valuation allowance related to foreign tax credit carryforwards and the settlement of an IRS audit. The company also continued its commitment to returning capital to shareholders, increasing its quarterly dividend by 8.2%b and actively repurchasing its own stock under an expanded program. Despite a slight decrease in net revenues due to lower shipment volumes in the smokeable products segment, which was impacted by excise tax increases in California and competitive activity, Altria demonstrated effective cost management and pricing strategies.
The smokeless products segment showed growth in net revenues and operating companies income. The company also reaffirmed its full-year 2017 adjusted diluted EPS growth forecast, underscoring management's confidence in its operational execution and strategic initiatives amidst a challenging regulatory and economic environment.
02—Key points
Key Highlights
- Net earnings attributable to Altria Group, Inc. increased by 32.6% to $5,256 million for the nine months ended September 30, 2017, compared to the prior year period.
- Diluted EPS grew by 34.7% to $2.72 for the nine months ended September 30, 2017, compared to $2.02 in the prior year period.
- The company increased its quarterly dividend by 8.2% to $0.66 per share, reflecting a commitment to shareholder returns.
- Total debt remained stable at $13.9 billion, with strong liquidity maintained through its credit agreement and commercial paper program.
- The smokeable products segment's operating companies income increased by 10.2% for the nine months ended September 30, 2017, driven by higher pricing and lower costs.
- The smokeless products segment saw growth in net revenues and operating companies income, primarily due to higher pricing, despite a slight decline in shipment volume.
- Altria reaffirmed its full-year 2017 adjusted diluted EPS growth guidance of 7.5% to 9.5% over 2016.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2017, Altria Group, Inc. kept $0.28.
- Revenue$6.73B100.0%
- Cost of revenue−$3.56B52.9%
- Gross profit$3.17B47.1%
- Operating costs−$582.0M8.6%
- Operating income$2.59B38.5%
- Interest, other & tax−$723.0M10.7%
- Net income$1.87B27.7%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2017filed October 26, 2017Financial Statements
Q3 FY2017 against Q3 FY2016
| Line item | Q3 FY2017Q3 FY2016 | Change |
|---|---|---|
| Revenue | $6.73B$6.91B | −2.5% |
| Cost of Revenue | $1.94B$2.04B | −5.0% |
| Gross Profit | $3.17B$3.15B | +0.7% |
| Operating Income | $2.59B$2.38B | +8.7% |
| Net Income | $1.87B$1.09B | +70.7% |
| EPS (Basic) | $0.97$0.56 | +73.2% |
| Shares Outstanding (Basic) | 1.92B1.95B | −1.9% |
05—Questions
Frequently Asked Questions
What was Altria's net earnings and EPS performance for the first nine months of 2017 compared to 2016?
For the nine months ended September 30, 2017, Altria reported net earnings attributable to Altria Group, Inc. of $5,256 million, a 32.6% increase from $3,963 million in the same period of 2016. Diluted EPS also increased by 34.7% to $2.72 from $2.02.
How did Altria's dividend and share repurchase programs evolve during this period?
Altria's Board of Directors approved an 8.2% increase in the quarterly dividend rate to $0.66 per share. The company also continued its share repurchase program, having approximately $576 million remaining under its $4.0 billion authorization as of September 30, 2017.
What were the key drivers of the increase in operating income for the smokeable products segment?
The smokeable products segment's operating companies income increased by 10.2% for the nine months ended September 30, 2017, driven primarily by higher pricing, lower marketing, administration and research costs (including lower litigation expenses), and reduced asset impairment and exit costs, partially offset by lower shipment volume.
Did Altria provide any forward-looking guidance for the full year 2017?
Yes, Altria reaffirmed its 2017 full-year adjusted diluted EPS growth rate forecast to be in the range of 7.5% to 9.5% over 2016 full-year adjusted diluted EPS.
06—Continue