10-QPeriod: Q1 FY2024

ALTRIA GROUP, INC. Quarterly Report for Q1 Ended Mar 31, 2024

Filed April 25, 2024For Securities:MO

Summary

Altria Group, Inc. (MO) reported first-quarter 2024 results showing a 19.1% increase in net earnings to $2.13 billion, or $1.21 per diluted share, compared to the prior year. This growth was significantly boosted by a $165 million 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 billion Accelerated Share Repurchase (ASR) program in March 2024, repurchasing 46.5 million shares. The company maintains a strong liquidity position with $3.6 billion 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.

Financial Highlights

49 data points
Beta

Revenue

$5.58B

58.8% Gross Margin

Net Income

$2.13B

38.2% Net Margin

EPS (Diluted)

$1.21

Total Assets

$36.48B

Cash & Equivalents

$3.65B

Free Cash Flow

$2.84B

Financial Statements
Beta
Revenue$5.58B
Cost of Revenue$1.44B
Gross Profit$3.28B
Operating Income$2.67B
Net Income$2.13B
EPS (Basic)$1.21
EPS (Diluted)$1.21
Shares Outstanding (Basic)1.76B
Shares Outstanding (Diluted)1.76B

Key Highlights

  • 1Reported net earnings increased 19.1% to $2.13 billion ($1.21/share) due to a gain on ABI investment sale and tax benefits.
  • 2Adjusted net earnings decreased 4.5% to $2.02 billion ($1.15/share), driven by lower core operating income.
  • 3Net revenues declined 2.5% to $5.58 billion, primarily due to a 9.9% decrease in shipment volume from the smokeable products segment.
  • 4Completed $2.04 billion of the $2.4 billion ASR program, with final settlement expected by June 30, 2024.
  • 5Maintained a strong liquidity position with $3.6 billion in cash and cash equivalents and significant credit facility availability.
  • 6The oral tobacco products segment saw net revenue growth of 3.7% to $651 million, driven by pricing, though shipment volumes declined 3.1%.
  • 7The company continues to emphasize its 'smoke-free future' vision amidst ongoing regulatory and economic challenges.

Frequently Asked Questions

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.

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.

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.

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.