01—Abstract
Summary
Summary of the 10-Q filed April 26, 2018. Cited figures are marked; the original filing is the authoritative source.
Altria Group, Inc. reported a strong first quarter of 2018, with net earnings attributable to Altria Group, Inc. increasing by 35.2% to $1.9 billiona, and diluted EPS rising 38.9% to $1.00 per share.
This growth was primarily driven by a lower effective tax rate due to the Tax Cuts and Jobs Act, improved earnings from its investment in AB InBev, and stronger performance in the smokeless products segment. The company also demonstrated a commitment to shareholder returns by approving a 6.1% increase in its quarterly dividend to $0.70b per share and continuing its share repurchase program, having completed one $1 billion program and initiating another. Despite a slight decline in smokeable product volumes, Altria managed to offset this with pricing strategies and favorable NPM (Non-Participating Manufacturer) adjustment items, while the smokeless products segment showed robust growth.
Overall, the results reflect a solid operational performance coupled with the significant benefit of tax reform, positioning the company favorably for the remainder of the year. Investors can look forward to continued dividend growth and capital returns, though the long-term challenges within the tobacco industry, including regulatory scrutiny and evolving consumer preferences, remain key considerations.
02—Key points
Key Highlights
- Net earnings attributable to Altria Group, Inc. increased by 35.2% to $1.9 billion in Q1 2018 compared to Q1 2017.
- Diluted EPS increased by 38.9% to $1.00 per share, largely driven by tax reform and improved AB InBev investment earnings.
- The company's effective tax rate decreased significantly to 23.2% from 33.0% due to the Tax Cuts and Jobs Act.
- Altria increased its quarterly dividend by 6.1% to $0.70 per share, with an annualized rate of $2.80 per share.
- Smokeable products segment operating income remained stable, with pricing increases offsetting lower shipment volumes and higher costs.
- Smokeless products segment showed strong growth, with net revenues up 12.7% and operating companies income up 37.4%, benefiting from pricing and the prior year's product recall impact.
- Altria reaffirmed its full-year 2018 adjusted diluted EPS growth forecast of 15% to 19%.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2018, Altria Group, Inc. kept $0.31.
- Revenue$6.11B100.0%
- Cost of revenue−$3.17B51.9%
- Gross profit$2.94B48.1%
- Operating costs−$620.0M10.2%
- Operating income$2.32B37.9%
- Interest, other & tax−$422.0M6.9%
- Net income$1.89B31.0%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2018filed April 26, 2018Financial Statements
Q1 FY2018 against Q1 FY2017
| Line item | Q1 FY2018Q1 FY2017 | Change |
|---|---|---|
| Revenue | $6.11B$6.08B | +0.4% |
| Cost of Revenue | $1.73B$1.81B | −4.4% |
| Gross Profit | $2.94B$2.78B | +5.8% |
| Operating Income | $2.32B$2.24B | +3.4% |
| Net Income | $1.89B$1.40B | +35.2% |
| EPS (Basic) | $1.00$0.72 | +38.9% |
| EPS (Diluted) | $1.00— | — |
| Shares Outstanding (Basic) | 1.90B1.94B | −2.1% |
05—Questions
Frequently Asked Questions
What was Altria's net revenue and earnings performance in Q1 2018?
Altria reported net revenues of $6.108 billion, a slight increase of 0.4% compared to $6.083 billion in Q1 2017. Net earnings attributable to Altria Group, Inc. significantly increased by 35.2% to $1.894 billion, or $1.00 per diluted share, up from $1.401 billion, or $0.72 per diluted share, in the prior year's quarter.
How did the Tax Cuts and Jobs Act impact Altria's financial results?
The Tax Cuts and Jobs Act significantly reduced Altria's effective tax rate from 33.0% in Q1 2017 to 23.2% in Q1 2018. This tax benefit was a primary driver of the substantial increase in net earnings and EPS for the quarter.
What was the performance of Altria's key business segments?
The smokeable products segment's operating income was stable, with pricing increases and favorable NPM adjustment items offsetting lower shipment volumes and higher costs. The smokeless products segment demonstrated strong growth, with increased net revenues and operating income due to pricing and the prior year's product recall impact. The wine segment saw a slight decrease in operating income due to higher SG&A costs and unfavorable premium mix.
What is Altria's outlook for the full year 2018?
Altria reaffirmed its full-year 2018 adjusted diluted EPS growth rate expectation to be in the range of 15% to 19% over 2017 full-year adjusted diluted EPS. The company also expects its full-year adjusted effective tax rate to be approximately 23% to 24%.
06—Continue