10-QPeriod: Q1 FY2025

ALTRIA GROUP, INC. Quarterly Report for Q1 Ended Mar 31, 2025

Filed April 29, 2025For Securities:MO

Summary

Altria Group, Inc. (MO) reported a significant decrease in net earnings for the first quarter of 2025, down 49.4% year-over-year to $1.08 billion, translating to $0.63 per diluted share. This decline was largely driven by a substantial $873 million non-cash goodwill impairment charge related to the NJOY e-vapor business, stemming from an ITC order that prohibited the sale of NJOY ACE in the U.S. Adjusted net earnings, which exclude special items, showed more resilience, increasing by 2.1% to $2.09 billion, or $1.23 per diluted share, indicating that core operations performed better than the reported net earnings suggest. Despite the reported net earnings drop, Altria's core smokeable products segment demonstrated strength, with OCI increasing by 1.2% to $2.47 billion, supported by higher pricing and reduced promotional spending. However, shipment volumes in this segment continued to decline, reflecting ongoing industry trends and consumer pressures. The oral tobacco products segment remained stable, with OCI largely flat year-over-year. Investors should note the significant goodwill impairment and the continued challenges in the e-vapor market, while also recognizing the stability in core segments and the positive adjusted earnings performance.

Financial Highlights

48 data points
Beta

Revenue

$5.26B

61.8% Gross Margin

Net Income

$1.08B

20.5% Net Margin

EPS (Diluted)

$0.63

Total Assets

$35.76B

Cash & Equivalents

$4.75B

Free Cash Flow

$2.68B

Financial Statements
Beta
Revenue$5.26B
Cost of Revenue$1.27B
Gross Profit$3.25B
Operating Income$1.79B
Net Income$1.08B
EPS (Basic)$0.63
EPS (Diluted)$0.63
Shares Outstanding (Basic)1.69B
Shares Outstanding (Diluted)1.69B

Key Highlights

  • 1Net earnings decreased significantly by 49.4% to $1.08 billion, primarily due to an $873 million goodwill impairment charge for the NJOY e-vapor business.
  • 2Adjusted net earnings, excluding special items, increased by 2.1% to $2.09 billion, indicating resilient core operations.
  • 3Smokeable products segment's Operating Companies Income (OCI) increased by 1.2% to $2.47 billion, driven by pricing strategies and lower promotional investments.
  • 4Shipment volumes for smokeable products declined by 13.4%, reflecting ongoing industry-wide volume pressures.
  • 5Oral tobacco products segment's OCI remained stable at $433 million, with revenue largely unchanged.
  • 6The company continues to manage its significant debt load, with total long-term debt at $26.1 billion.
  • 7Altria repurchased approximately 5.7 million shares of common stock under its share repurchase programs during the quarter.

Frequently Asked Questions

The primary reason for the significant decrease in reported net earnings was an $873 million non-cash goodwill impairment charge recognized for the NJOY e-vapor reporting unit. This impairment was triggered by an International Trade Commission (ITC) order prohibiting the importation and sale of NJOY ACE in the United States.

Excluding special items like the NJOY goodwill impairment, Altria's adjusted net earnings increased by 2.1% to $2.09 billion. This indicates that the company's underlying operations, particularly in its smokeable and oral tobacco segments, remain relatively stable or are showing modest growth, supported by pricing initiatives and cost management.

The smokeable products segment experienced a 5.8% decrease in net revenues, primarily due to a 13.7% decline in shipment volumes. This decline is attributed to ongoing industry-wide volume pressures, the growth of illicit e-vapor products, continued discretionary income pressures on adult tobacco consumers, and retail share losses. However, higher pricing and reduced promotional investments helped offset some of these volume declines, leading to a slight increase in Operating Companies Income (OCI).

Altria paid $1.73 billion in dividends during the first three months of 2025 and has an annualized dividend rate of $4.08 per share, targeting mid-single digit annual dividend growth through 2028. The company also authorized a new $1.0 billion share repurchase program in January 2025 and repurchased approximately 5.7 million shares during the quarter.