Altria Reports 2024 First-Quarter Results

RICHMOND, Va.–(BUSINESS WIRE)–Altria Group, Inc. (NYSE: MO) today reports our 2024 first-quarter business results and reaffirms our guidance for 2024 full-year adjusted diluted earnings per share (EPS). 

“We made meaningful progress in pursuit of our Vision, and our highly profitable traditional tobacco businesses continued to perform well in a challenging environment,” said Billy Gifford, Altria’s Chief Executive Officer. “In spite of the absence of an effective regulatory environment, we saw continued early momentum from NJOY and believe our businesses are on track to deliver against full-year plans.”

“We also demonstrated our continued commitment to maximizing the return on our investments and delivering strong shareholder returns through the sale of a portion of our investment in ABI and the subsequent expansion of our share repurchase program in March.”

¹ “Adjusted” financial measures presented in this release exclude the impact of special items. See “Basis of Presentation” for more information and see the schedules to this press release for reconciliations to corresponding GAAP measures.
² “EPS” represents diluted earnings per share.

As previously announced, a conference call with the investment community and news media will be webcast on April 25, 2024 at 9:00 a.m. Eastern Time. Access to the webcast is available at www.altria.com/webcasts.

NJOY

Business Results

For the first quarter:

• Reported shipment volume of NJOY consumables was approximately 10.9 million units.
• Reported shipment volume of NJOY devices was approximately 1.0 million units.
• Retail share of NJOY in the U.S. multi-outlet and convenience channel was 4.3%, an increase of 0.6 share points sequentially.

Partial Sale of Our Investment in ABI

• In March, we sold 35 million ordinary shares of ABI through a global secondary offering and ABI repurchased from us approximately 3.3 million of its ordinary shares (Offering).
• The aggregate proceeds from these sales were approximately $2.4 billion.
• As part of the Offering, we granted the underwriters a 30-day option to purchase additional shares from Altria at the offer price, which they elected not to exercise.
• Following the Offering, our remaining ownership of ABI is approximately 8.1%. The tax basis of our remaining ownership is approximately $1.2 billion.
• We expect to maintain two seats on ABI’s board of directors through ABI’s 2025 annual general meeting. Following that meeting, we expect to have one seat on ABI’s board of directors, in accordance with our rights as a holder of restricted shares.

Cash Returns to Shareholders and Capital Markets Activity

Share Repurchase Program

• In connection with the Offering, our Board of Directors (Board) authorized a $2.4 billion increase to our existing $1.0 billion share repurchase program. As a part of the expanded share repurchase program, we entered into a $2.4 billion accelerated share repurchase program (ASR Program).
• On March 19, 2024, we received approximately 46.5 million shares of our common stock, representing 85% of the ASR Program, and we expect to receive shares representing the remaining 15% of the ASR Program by June 30, 2024.
• After the completion of the ASR Program, we expect to have $1 billion remaining under the currently authorized $3.4 billion share repurchase program, which we expect to complete by December 31, 2024. Share repurchases depend on marketplace conditions and other factors, and the program remains subject to the discretion of our Board.

Dividends

• We paid dividends of $1.7 billion in the first quarter.

Capital Markets Activity

• We retired approximately $1.1 billion of outstanding debt at maturity in the first quarter of 2024.

Other Business Activities in the All Other Category

Our Research and Development (R&D) investments have evolved and shifted from our traditional tobacco businesses to new product platforms and technologies. Beginning January 1, 2024 our R&D expense is aligned with how our management evaluates performance results and allocates resources for segment reporting. Using this approach, we recorded substantially all of our pre-tax R&D expense in our all other category, which now includes R&D expense for certain new product platforms and technologies. In 2023, the majority of our pre-tax R&D expense was recorded in our smokeable products segment.

Environmental, Social and Governance

Our Corporate Responsibility Focus Areas are: (i) reduce the harm of tobacco products, (ii) prevent underage use, (iii) protect the environment, (iv) drive responsibility through our value chain, (v) support our people and communities and (vi) engage and lead responsibly. Our corporate responsibility reports are available on the Responsibility section of www.altria.com.

• We were recognized as a member of CDP’s 2023 Supplier Engagement Leaderboard for climate change, highlighting our work in sustainable supply chain management. Our Supplier Engagement Rating positions us amongst leading companies who responded to CDP’s full climate change questionnaire.
• We published our 2023 Lobbying and Political Activity Transparency & Integrity Annual Report, which examines our public policy activities – including lobbying at the federal, state and local levels, grassroots (indirect) lobbying activities, and support of public policy organizations, candidates and political committees – as well as our extensive compliance program that governs these activities.

2024 Full-Year Guidance

We reaffirm our 2024 full-year adjusted diluted EPS guidance range of $5.05 to $5.17, representing a growth rate of 2% to 4.5% from a base of $4.95 in 2023. We expect 2024 adjusted diluted EPS growth to be weighted to the second half of the year. Our guidance includes the impact of two additional shipping days in 2024 and assumes limited impact on combustible and e-vapor volumes from enforcement efforts in the illicit e-vapor market.

While the 2024 full-year adjusted diluted EPS guidance accounts for a range of scenarios, the external environment remains dynamic. We will continue to monitor conditions related to (i) the economy, including the cumulative impact of inflation, (ii) adult tobacco consumer (ATC) dynamics, including purchasing patterns and adoption of smoke-free products, (iii) illicit e-vapor enforcement and (iv) regulatory, litigation and legislative developments.

Our 2024 full-year adjusted diluted EPS guidance range includes planned investments in support of our Vision, such as (i) marketplace activities in support of our smoke-free products and (ii) continued smoke-free product research, development and regulatory preparation expenses.

The 2024 full-year adjusted diluted EPS guidance range excludes an estimated per share gain of $1.17 related to the sale of the IQOS Tobacco Heating System commercialization rights that we expect to occur in the second quarter of 2024.

Our full-year adjusted diluted EPS guidance range excludes the impact of certain income and expense items that our management believes are not part of underlying operations. These items may include, for example, loss on early extinguishment of debt, restructuring charges, asset impairment charges, acquisition, disposition and integration-related items, equity investment-related special items, certain income tax items, charges associated with tobacco and health and certain other litigation items, and resolutions of certain non-participating manufacturer (NPM) adjustment disputes under the MSA (NPM Adjustment Items). See Table 1 below for the income and expense items for the first quarter of 2024.

Our management cannot estimate on a forward-looking basis the impact of certain income and expense items, including those items noted in the preceding paragraph, on our reported diluted EPS because these items, which could be significant, may be unusual or infrequent, are difficult to predict and may be highly variable. As a result, we do not provide a corresponding U.S. generally accepted accounting principles (GAAP) measure for, or reconciliation to, our adjusted diluted EPS guidance.

ALTRIA GROUP, INC.

See “Basis of Presentation” below for an explanation of financial measures and reporting segments discussed in this release.

Financial Performance

• Net revenues decreased 2.5% to $5.6 billion, primarily driven by lower net revenues in the smokeable products segment, partially offset by higher net revenues in the oral tobacco products segment and the all other category. Revenues net of excise taxes decreased 1.0% to $4.7 billion.
• Reported diluted EPS increased 21.0% to $1.21, primarily driven by 2023 charges related to our former investment in JUUL Labs, Inc. (JUUL) equity securities, the partial sale of our investment in ABI and related favorable income tax items, lower tobacco and health and certain other litigation items, and fewer shares outstanding. These items were partially offset by lower reported operating companies income (OCI).
• Adjusted diluted EPS decreased 2.5% to $1.15, primarily driven by lower adjusted OCI, partially offset by fewer shares outstanding.

Note: For details of pre-tax, tax and after-tax amounts, see Schedule 5.

Special Items

The EPS impact of the following special items is shown in Table 1 and Schedules 4 and 5.

Tobacco and Health and Certain Other Litigation Items

In the first quarter of 2023, we recorded pre-tax charges of $111 million (or $0.04 per share), for tobacco and health and certain other litigation items and related interest costs.

Loss on Disposition of JUUL Equity Securities

As previously disclosed, in March 2023, we exchanged our entire minority economic interest in JUUL for a non-exclusive, irrevocable global license to certain of JUUL’s heated tobacco intellectual property. As a result of this transaction, in the first quarter of 2023, we recorded a non-cash, pre-tax loss of $250 million (or $0.14 per share) related to the disposition of our JUUL equity securities.

We recorded corresponding adjustments to the JUUL tax valuation allowance in 2023.

ABI-Related Special Items

In the first quarter 2024, ABI-related special items included net pre-tax income of $86 million (or $0.04 per share) primarily related to our pre-tax gain on the partial sale of our investment in ABI, partially offset by transaction costs.

The ABI-related special items include our respective share of the amounts recorded by ABI and additional adjustments related to (i) the conversion of ABI-related special items from international financial reporting standards to GAAP and (ii) adjustments to our investment required under the equity method of accounting.

Income Tax Items

In the first quarter 2024, we recorded income tax items of $71 million (or $0.04 per share), due primarily to an income tax benefit from the partial release of a valuation allowance in connection with the partial sale of our investment in ABI.

SMOKEABLE PRODUCTS

Revenues and OCI

• Net revenues decreased 3.6%, primarily driven by lower shipment volume and higher promotional investments, partially offset by higher pricing. Revenues net of excise taxes decreased 2.2%.
• Reported and adjusted OCI decreased 2.6% and 2.5%, respectively, primarily driven by lower shipment volume, higher promotional investments, higher per unit settlement charges and higher manufacturing costs, partially offset by higher pricing and lower selling, general and administrative (SG&A) costs. Adjusted OCI margins decreased by 0.2 percentage points to 60.2%.

¹ Reported and adjusted OCI margins are calculated as reported and adjusted OCI, respectively, divided by revenues net of excise taxes.

Shipment Volume

• Smokeable products segment reported and estimated adjusted domestic cigarette shipment volume decreased 10%, primarily driven by the industry’s decline rate (impacted by macroeconomic pressures on ATC discretionary income and the growth of illicit e-vapor products) and retail share losses.
• When adjusted for trade inventory movements and other factors, total estimated domestic cigarette industry volume decreased by an estimated 9%.
• Reported cigar shipment volume decreased 6.1%.

Note: Cigarettes volume includes units sold as well as promotional units but excludes units sold for distribution to Puerto Rico, U.S. Territories to overseas military and by Philip Morris Duty Free Inc., none of which, individually or in the aggregate, is material to our smokeable products segment.

Retail Share and Brand Activity

• Marlboro retail share of the total cigarette category was 42.0%, unchanged versus the prior year. Marlboro retail share decreased 0.3 share points sequentially. Additionally, Marlboro share of the premium segment was 59.3%, an increase of 0.7 share points versus the prior year and unchanged sequentially.
• The cigarette industry discount retail share was 29.1%, an increase of 0.8 share points versus the prior year and 0.4 share points sequentially, primarily due to increased macroeconomic pressures on ATC discretionary income.

Note: Retail share results for cigarettes are based on data from Circana, LLC (Circana) as well as, MSAi. Circana maintains a blended retail service that uses a sample of stores and certain wholesale shipments to project market share and depict share trends. Similar to prior reporting, this service tracks sales in the food, drug, mass merchandisers, convenience, military, dollar store and club trade classes. For other trade classes selling cigarettes, retail share is based on shipments from wholesalers to retailers through the Store Tracking Analytical Reporting System (STARS), as provided by MSAi. This service is not designed to capture sales through other channels, including the internet, direct mail and some illicitly tax-advantaged outlets. It is the standard practice of retail services to periodically refresh their retail scan services, which could restate retail share results that were previously released in these services.

ORAL TOBACCO PRODUCTS

Revenues and OCI

• Net revenues increased 3.7%, primarily driven by higher pricing and lower promotional investments, partially offset by lower MST shipment volume and a higher percentage of on! shipment volume relative to MST versus the prior year (mix change). Revenues net of excise taxes increased 4.3%.
• Reported and adjusted OCI increased 4.6%, primarily driven by higher pricing and lower promotional investments, partially offset by lower MST shipment volume and mix change. Adjusted OCI margins increased by 0.2 percentage points to 69.5%.

¹ Reported and adjusted OCI margins are calculated as reported and adjusted OCI, respectively, divided by revenues net of excise taxes.

Shipment Volume

• Oral tobacco products segment reported domestic shipment volume decreased 3.1%, primarily driven by retail share losses and trade inventory movements, partially offset by the industry’s growth rate, calendar differences and other factors. When adjusted for calendar differences and trade inventory movements, oral tobacco products segment shipment volume decreased by an estimated 4%.
• Total oral tobacco industry volume increased by an estimated 9.5% for the six months ended March 31, 2024, primarily driven by growth in oral nicotine pouches, partially offset by declines in MST volumes.

Note: Volume includes cans and packs sold, as well as promotional units, but excludes international volume, which is currently not material to our oral tobacco products segment. New types of oral tobacco products, as well as new packaging configurations of existing oral tobacco products, may or may not be equivalent to existing MST products on a can-for-can basis. To calculate volumes of cans and packs shipped, one pack of snus or one can of oral nicotine pouches, irrespective of the number of pouches in the pack, is assumed to be equivalent to one can of MST.

Retail Share and Brand Activity

• Oral tobacco products segment retail share was 37.8%, as share declines for MST products were primarily driven by oral nicotine pouch segment share growth.
• Total U.S. oral tobacco category share for on! nicotine pouches was 7.1%, an increase of 0.7 share points versus the prior year and 0.2 share points sequentially.
• The U.S. nicotine pouch category grew to 40.1% of the U.S. oral tobacco category, an increase of 13.8 share points versus the prior year. In addition, on!’s share of the nicotine pouch category was 17.6%, a decrease of 6.8 share points versus the prior year.

Note: Our oral tobacco products segment’s retail share results exclude international volume, which is currently not material to our oral tobacco products segment. Retail share results for oral tobacco products are based on data from Circana, a tracking service that uses a sample of stores to project market share and depict share trends. This service tracks sales in the food, drug, mass merchandisers, convenience, military, dollar store and club trade classes on the number of cans and packs sold. Oral tobacco products are defined by Circana as moist smokeless, snus and oral nicotine pouches. New types of oral tobacco products, as well as new packaging configurations of existing oral tobacco products, may or may not be equivalent to existing MST products on a can-for-can basis. For example, one pack of snus or one can of oral nicotine pouches, irrespective of the number of pouches in the pack, is assumed to be equivalent to one can of MST. Because this service represents retail share performance only in key trade channels, it should not be considered a precise measurement of actual retail share. It is the standard practice of retail services to periodically refresh their retail scan services, which could restate retail share results that were previously released in these services.

Altria’s Profile

We have a leading portfolio of tobacco products for U.S. tobacco consumers age 21+. Our Vision is to responsibly lead the transition of adult smokers to a smoke-free future (Vision). We are Moving Beyond Smoking™, leading the way in moving adult smokers away from cigarettes by taking action to transition millions to potentially less harmful choices – believing it is a substantial opportunity for adult tobacco consumers, our businesses and society.

Our wholly owned subsidiaries include leading manufacturers of both combustible and smoke-free products. In combustibles, we own Philip Morris USA Inc. (PM USA), the most profitable U.S. cigarette manufacturer, and John Middleton Co. (Middleton), a leading U.S. cigar manufacturer. Our smoke-free portfolio includes ownership of U.S. Smokeless Tobacco Company LLC (USSTC), the leading global moist smokeless tobacco (MST) manufacturer, Helix Innovations LLC (Helix), a leading manufacturer of oral nicotine pouches, and NJOY, LLC (NJOY), currently the only e-vapor manufacturer to receive market authorizations from the U.S. Food and Drug Administration (FDA) for a pod-based e-vapor product.

Additionally, we have a majority-owned joint venture, Horizon Innovations LLC (Horizon), for the U.S. marketing and commercialization of heated tobacco stick products.

Our equity investments include Anheuser-Busch InBev SA/NV (ABI), the world’s largest brewer, and Cronos Group Inc. (Cronos), a leading Canadian cannabinoid company.

The brand portfolios of our operating companies include Marlboro®, Black & Mild®, Copenhagen®, Skoal®, on!® and NJOY®. Trademarks related to Altria referenced in this release are the property of Altria or our subsidiaries or are used with permission.

Learn more about Altria at www.altria.com and follow us on X (formerly known as Twitter), Facebook and LinkedIn.