01—Abstract
Summary
Summary of the 10-Q filed July 28, 2022. Cited figures are marked; the original filing is the authoritative source.
Altria Group, Inc. reported a net earnings of $2.85 billiona for the six months ended June 30, 2022, a decrease from $3.57 billion in the prior year period, primarily driven by unfavorable results from its equity investments, particularly a significant unrealized loss on its JUUL investment.
Diluted EPS also saw a decline. Adjusted diluted EPS, however, showed a slight increase, indicating that core operations performed better excluding these investment-related impacts. The company continued its share repurchase program, returning capital to shareholders.
The company is navigating a challenging macroeconomic environment marked by inflation and supply chain disruptions, which are impacting consumer behavior and costs. Regulatory scrutiny, particularly concerning smoke-free products like JUUL, remains a significant factor. Despite these headwinds, Altria remains committed to its "Moving Beyond Smoking" vision, focusing on transitioning adult smokers to smoke-free alternatives.
02—Key points
Key Highlights
- Net earnings attributable to Altria decreased by 20.2% to $2.85 billion for the six months ended June 30, 2022, compared to $3.57 billion in the same period last year.
- Diluted EPS attributable to Altria decreased by 18.7% to $1.57 for the six months ended June 30, 2022.
- Adjusted diluted EPS attributable to Altria increased by 3.5% to $2.38 for the six months ended June 30, 2022, driven by fewer shares outstanding and higher adjusted net earnings.
- The company recorded a significant non-cash, pre-tax unrealized loss of $1.26 billion related to its investment in JUUL for the six months ended June 30, 2022.
- Altria continued its share repurchase program, repurchasing $1.08 billion of common stock during the first six months of 2022.
- Net revenues decreased by 4.1% to $12.44 billion for the six months ended June 30, 2022, primarily due to the sale of its wine business and lower revenues in smokeable and oral tobacco products segments.
- The company's smokeable products segment's OCI increased by 3.4% for the six months ended June 30, 2022, driven by higher pricing and lower promotional investments, despite a decline in shipment volume.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2022, Altria Group, Inc. kept $0.14.
- Revenue$6.54B100.0%
- Cost of revenue−$2.88B44.0%
- Gross profit$3.67B56.0%
- Operating costs−$561.0M8.6%
- Operating income$3.10B47.5%
- Interest, other & tax−$2.21B33.8%
- Net income$891.0M13.6%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2022filed July 28, 2022Financial Statements
Q2 FY2022 against Q2 FY2021
| Line item | Q2 FY2022Q2 FY2021 | Change |
|---|---|---|
| Revenue | $6.54B$6.94B | −5.7% |
| Cost of Revenue | $1.71B$1.88B | −9.2% |
| Gross Profit | $3.67B$3.73B | −1.8% |
| Operating Income | $3.10B$3.19B | −2.5% |
| Net Income | $891.00M$2.15B | −58.5% |
| EPS (Basic) | $0.49$1.16 | −57.8% |
| EPS (Diluted) | $0.49$1.16 | −57.8% |
| Shares Outstanding (Basic) | 1.81B1.85B | −2.2% |
| Shares Outstanding (Diluted) | 1.81B1.85B | −2.2% |
05—Questions
Frequently Asked Questions
What was the primary driver of the decrease in net earnings for the six months ended June 30, 2022?
The primary driver of the decrease in net earnings was the unfavorable results from Altria's equity investments, particularly the significant non-cash, pre-tax unrealized loss of $1.26 billion recognized on its investment in JUUL during the period. Lower income from its investment in ABI also contributed.
How did Altria's smokeable products segment perform during the period?
For the six months ended June 30, 2022, Altria's smokeable products segment reported an increase in OCI (Operating Companies Income) of 3.4% to $5.32 billion. This was driven by higher pricing and lower promotional investments, which helped offset a decline in shipment volume of 8.8% and increased costs.
What is Altria's outlook for adjusted diluted EPS for the full year 2022?
Altria forecasted its 2022 full-year adjusted diluted EPS to be in the range of $4.79 to $4.93, representing a growth rate of 4% to 7% over its 2021 full-year adjusted diluted EPS of $4.61. This guidance accounts for potential economic and regulatory factors.
What is the status of Altria's investment in JUUL?
Altria's investment in JUUL continues to face significant challenges. The FDA issued marketing denial orders (MDOs) for JUUL's products, although these were administratively stayed pending further review. This uncertainty, along with JUUL's liquidity concerns and ongoing litigation, led to a substantial decrease in the estimated fair value of Altria's investment, resulting in a large unrealized loss for the period.
06—Continue