10-QPeriod: Q3 FY2022

ALTRIA GROUP, INC. Quarterly Report for Q3 Ended Sep 30, 2022

Filed October 27, 2022For Securities:MO

Summary

Altria Group, Inc. reported a net earning of $3,074 million for the first nine months of 2022, a significant increase from $851 million in the same period of 2021. This improvement was largely driven by a substantial reduction in investment losses, particularly from its investment in Anheuser-Busch InBev (ABI), which saw a significant impairment charge in the prior year. However, the company's balance sheet reflects a substantial decline in its investment portfolio, with the total value of investments in equity securities decreasing from $13,481 million at the end of 2021 to $9,814 million by September 30, 2022. This decline is primarily attributable to a $2.5 billion impairment charge recognized on its ABI investment and a significant decrease in the fair value of its JUUL investment, which fell to $350 million from $1,705 million. Despite these headwinds in its investment portfolio, Altria's core tobacco business demonstrated resilience, with operating income for smokeable products increasing year-over-year, supported by higher pricing strategies.

Financial Highlights

50 data points
Beta

Revenue

$6.55B

56.4% Gross Margin

Net Income

$224.00M

3.4% Net Margin

EPS (Diluted)

$0.12

Total Assets

$33.95B

Cash & Equivalents

$2.54B

Free Cash Flow

$3.01B

Financial Statements
Beta
Revenue$6.55B
Cost of Revenue$1.72B
Gross Profit$3.70B
Operating Income$3.11B
Net Income$224.00M
EPS (Basic)$0.12
EPS (Diluted)$0.12
Shares Outstanding (Basic)1.80B
Shares Outstanding (Diluted)1.80B

Key Highlights

  • 1Net earnings attributable to Altria increased to $3,074 million for the first nine months of 2022, up from $851 million in the prior year period.
  • 2Total investments in equity securities decreased significantly from $13,481 million at December 31, 2021, to $9,814 million at September 30, 2022.
  • 3A substantial $2.5 billion impairment charge was recorded on the investment in Anheuser-Busch InBev (ABI) during the first nine months of 2022.
  • 4The fair value of the JUUL investment decreased substantially, ending the period at $350 million, down from $1,705 million at the end of 2021.
  • 5The company's smokeable products segment showed resilience, with Operating Companies Income (OCI) increasing by 2.7% for the nine-month period, driven by higher pricing.
  • 6Altria increased its quarterly dividend by 4.4% to $0.94 per share, with an annualized rate of $3.76.
  • 7Total debt decreased to $26.3 billion from $28.0 billion, reflecting debt repayments.

Frequently Asked Questions

The significant increase in net earnings was primarily driven by a favorable comparison to the prior year's investment losses, particularly a large impairment charge recorded on the investment in Anheuser-Busch InBev (ABI) in the first nine months of 2021. While the company did record another impairment charge on ABI in 2022, the year-over-year impact was less severe.

Altria's investment portfolio experienced a notable decline. The total value of investments in equity securities decreased by over $3.6 billion from the end of 2021 to September 30, 2022. This was primarily due to a $2.5 billion impairment charge on the ABI investment and a significant decrease in the fair value of the JUUL investment, which is now valued at $350 million.

Altria's core tobacco business, particularly the smokeable products segment, showed resilience. Operating income for this segment increased due to higher pricing strategies, which helped offset a decline in shipment volumes. The company continues to manage pricing to maintain profitability amidst macroeconomic pressures.

Altria continues to prioritize returning capital to shareholders. The company increased its quarterly dividend by 4.4% and maintains an annualized dividend rate of $3.76 per share. It also continues with its share repurchase program, with $374 million remaining authorization at the end of the period.