01—Abstract
Summary
Summary of the 10-Q filed October 27, 2022. Cited figures are marked; the original filing is the authoritative source.
Altria Group, Inc. reported a net earning of $3,074 milliona 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 millionb by September 30, 2022.
This decline is primarily attributable to a $2.5 billionc 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.
02—Key points
Key Highlights
- Net 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.
- Total investments in equity securities decreased significantly from $13,481 million at December 31, 2021, to $9,814 million at September 30, 2022.
- A substantial $2.5 billion impairment charge was recorded on the investment in Anheuser-Busch InBev (ABI) during the first nine months of 2022.
- The fair value of the JUUL investment decreased substantially, ending the period at $350 million, down from $1,705 million at the end of 2021.
- The 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.
- Altria increased its quarterly dividend by 4.4% to $0.94 per share, with an annualized rate of $3.76.
- Total debt decreased to $26.3 billion from $28.0 billion, reflecting debt repayments.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2022, Altria Group, Inc. kept $0.03.
- Revenue$6.55B100.0%
- Cost of revenue−$2.85B43.6%
- Gross profit$3.70B56.4%
- Operating costs−$585.0M8.9%
- Operating income$3.11B47.5%
- Interest, other & tax−$2.89B44.1%
- Net income$224.0M3.4%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2022filed October 27, 2022Financial Statements
Q3 FY2022 against Q3 FY2021
| Line item | Q3 FY2022Q3 FY2021 | Change |
|---|---|---|
| Revenue | $6.55B$6.79B | −3.5% |
| Cost of Revenue | $1.72B$1.86B | −7.7% |
| Gross Profit | $3.70B$3.67B | +0.7% |
| Operating Income | $3.11B$2.95B | +5.5% |
| Net Income | $224.00M-$2.72B | +108.2% |
| EPS (Basic) | $0.12$-1.48 | +108.1% |
| EPS (Diluted) | $0.12$-1.48 | +108.1% |
| Shares Outstanding (Basic) | 1.80B1.84B | −2.3% |
| Shares Outstanding (Diluted) | 1.80B1.84B | −2.3% |
05—Questions
Frequently Asked Questions
What was the primary driver of the significant increase in net earnings for the first nine months of 2022?
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.
How has Altria's investment portfolio performed?
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.
What is the outlook for Altria's core tobacco business?
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.
What are the company's capital allocation priorities, particularly regarding dividends and share repurchases?
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.
06—Continue