On October 31, 2024, Altria Group Inc (MO, Financial) released its 8-K filing detailing its third-quarter and nine-months results for 2024. The company reported adjusted diluted earnings per share (EPS) of $1.38, surpassing the analyst estimate of $1.36. However, net revenues of $6.259 billion fell short of the estimated $6.326 billion, marking a 0.4% decrease compared to the same quarter last year.
Company Overview
Altria Group Inc (MO, Financial) is a leading player in the tobacco industry, comprising subsidiaries such as Philip Morris USA, US Smokeless Tobacco, John Middleton, Horizon Innovations, and Helix Innovations. The company holds a dominant position in the U.S. cigarette and smokeless tobacco markets, with its Marlboro brand capturing a 42% market share in 2023. Beyond tobacco, Altria has diversified interests, including an 8% stake in Anheuser-Busch InBev, a 42% stake in cannabis manufacturer Cronos, and ownership of Njoy Holdings. The company also operates a joint venture with Japan Tobacco in the heated tobacco category.
Performance and Challenges
Altria's performance in the third quarter was marked by a 9.8% increase in reported diluted EPS to $1.34, driven by fewer shares outstanding and higher operating companies income. However, the company faced challenges with a 0.4% decline in net revenues, primarily due to lower revenues in the smokeable products segment. The decline in cigarette shipment volume, impacted by the growth of illicit e-vapor products and discretionary income pressures, remains a significant challenge for Altria.
Financial Achievements
Despite revenue challenges, Altria achieved a 7.8% increase in adjusted diluted EPS, highlighting the company's ability to maintain profitability through strategic pricing and cost management. The company's focus on shareholder returns is evident in its share repurchase program, with 13.5 million shares repurchased in the third quarter at an average price of $50.37, totaling $680 million. Altria also increased its quarterly dividend by 4.1%, marking the 59th increase in 55 years, underscoring its commitment to returning value to shareholders.
Key Financial Metrics
Altria's financial statements reveal important metrics that are crucial for understanding its performance. The company's adjusted operating companies income (OCI) increased by 7.1% in the smokeable products segment, driven by higher pricing and lower selling, general, and administrative costs. However, the oral tobacco products segment faced a decrease in adjusted OCI margins by 2.5 percentage points to 66.8%, due to higher promotional investments and a shift in product mix.
| Metric | Q3 2024 | Change vs. Q3 2023 |
|---|---|---|
| Net Revenues | $6.259 billion | (0.4)% |
| Adjusted Diluted EPS | $1.38 | 7.8% |
| Reported Diluted EPS | $1.34 | 9.8% |
Analysis and Outlook
Altria's strategic initiatives, such as the "Optimize & Accelerate" program, aim to modernize operations and achieve cost savings of $600 million over the next five years. These savings are expected to be reinvested in the business to support its vision of transitioning to a smoke-free future. The company's reaffirmation of its full-year adjusted diluted EPS guidance in the range of $5.07 to $5.15 reflects confidence in its strategic direction despite the dynamic external environment.
Altria's ability to navigate challenges in the tobacco industry, including regulatory pressures and shifts in consumer preferences, will be crucial for sustaining its market leadership. The company's diversified portfolio and strategic investments position it well to capitalize on growth opportunities in the smoke-free product segment.
Explore the complete 8-K earnings release (here) from Altria Group Inc for further details.
