01—Abstract
Summary
Summary of the 10-Q filed April 25, 2024. Cited figures are marked; the original filing is the authoritative source.
Altria Group, Inc. (MO) reported first-quarter 2024 results showing a 19.1% increase in net earnings to $2.13 billiona, or $1.21 per diluted share, compared to the prior year.
This growth was significantly boosted by a $165 millionb pre-tax gain from the partial sale of its Anheuser-Busch InBev (ABI) investment and a $71 million income tax benefit related to the release of a valuation allowance. Despite the reported earnings increase, adjusted net earnings decreased by 4.5% to $2.02 billion, or $1.15 per diluted share, primarily due to lower Operating Companies Income (OCI) from core operations. Net revenues declined 2.5% to $5.58 billion, driven by a 9.9% decrease in shipment volume from the smokeable products segment, although pricing actions helped offset some of this decline.
The company continues to navigate a challenging operating environment characterized by macroeconomic pressures, evolving consumer preferences, and ongoing regulatory scrutiny. Altria completed a significant portion of its $2.4 billionc Accelerated Share Repurchase (ASR) program in March 2024, repurchasing 46.5 million shares.
The company maintains a strong liquidity position with $3.6 billiond in cash and cash equivalents and a $3.0 billion revolving credit facility. Investors should note the ongoing strategic shift towards smoke-free products and the potential impacts of litigation and regulatory developments.
02—Key points
Key Highlights
- Reported net earnings increased 19.1% to $2.13 billion ($1.21/share) due to a gain on ABI investment sale and tax benefits.
- Adjusted net earnings decreased 4.5% to $2.02 billion ($1.15/share), driven by lower core operating income.
- Net revenues declined 2.5% to $5.58 billion, primarily due to a 9.9% decrease in shipment volume from the smokeable products segment.
- Completed $2.04 billion of the $2.4 billion ASR program, with final settlement expected by June 30, 2024.
- Maintained a strong liquidity position with $3.6 billion in cash and cash equivalents and significant credit facility availability.
- The oral tobacco products segment saw net revenue growth of 3.7% to $651 million, driven by pricing, though shipment volumes declined 3.1%.
- The company continues to emphasize its 'smoke-free future' vision amidst ongoing regulatory and economic challenges.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2024, Altria Group, Inc. kept $0.38.
- Revenue$5.58B100.0%
- Cost of revenue−$2.30B41.2%
- Gross profit$3.28B58.8%
- Operating costs−$606.0M10.9%
- Operating income$2.67B48.0%
- Interest, other & tax−$545.0M9.8%
- Net income$2.13B38.2%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2024filed April 25, 2024Financial Statements
Q1 FY2024 against Q1 FY2023
| Line item | Q1 FY2024Q1 FY2023 | Change |
|---|---|---|
| Revenue | $5.58B$5.72B | −2.5% |
| Cost of Revenue | $1.44B$1.43B | +0.2% |
| Gross Profit | $3.28B$3.33B | −1.5% |
| Operating Income | $2.67B$2.76B | −3.0% |
| Net Income | $2.13B$1.79B | +19.1% |
| EPS (Basic) | $1.21$1.00 | +21.0% |
| EPS (Diluted) | $1.21$1.00 | +21.0% |
| Shares Outstanding (Basic) | 1.76B1.79B | −1.6% |
| Shares Outstanding (Diluted) | 1.76B1.79B | −1.6% |
05—Questions
Frequently Asked Questions
What drove the significant increase in reported net earnings for the quarter?
The reported net earnings increase of 19.1% was largely driven by a $165 million pre-tax gain from the partial sale of Altria's investment in Anheuser-Busch InBev (ABI) and a $71 million income tax benefit resulting from the release of a valuation allowance, primarily related to the ABI transaction. These items are considered 'special items' and are excluded from adjusted net earnings.
How did Altria's core business perform, excluding special items?
Excluding special items, adjusted net earnings decreased by 4.5% to $2.02 billion. This was primarily due to lower Operating Companies Income (OCI) from core operations, particularly in the smokeable products segment, where shipment volumes declined. Net revenues also decreased by 2.5% to $5.58 billion.
What is the status of Altria's share repurchase program?
Altria significantly advanced its share repurchase activities. In March 2024, the company initiated Accelerated Share Repurchase (ASR) transactions totaling $2.4 billion. As of March 31, 2024, $2.04 billion had been paid for the repurchase of common stock, with final settlement of the remaining $360 million expected by June 30, 2024. The company also has an additional $1.0 billion remaining under its January 2024 share repurchase program.
How is the company addressing the decline in cigarette volumes?
Altria is actively working to transition adult smokers to smoke-free alternatives as part of its 'responsible lead the transition of adult smokers to a smoke-free future' vision. While cigarette volumes continue to decline (down 9.9% in the smokeable products segment), the company is investing in its smoke-free portfolio, including oral nicotine pouches ('on!') and e-vapor products (NJOY). Pricing actions in the smokeable products segment are being used to offset some of the volume declines.
06—Continue