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Altria (MO) Q1 Earnings & Revenues Top Estimates, Pricing Aids
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Altria Group Inc. (MO - Free Report) delivered first-quarter 2022 results, wherein the top and bottom lines cruised past the Zacks Consensus Estimate and the latter increased year over year. Increased pricing remained an upside, though soft volumes were a concern.
Quarter in Detail
Adjusted earnings came in at $1.12 per share, which increased 4.7% year over year and beat the Zacks Consensus Estimate of $1.09. The year-over-year increase was backed by greater adjusted operating companies income (OCI), reduced number of shares outstanding and lower interest expenses. These upsides were partially countered by reduced adjusted earnings from the company’s investment in ABI.
Altria Group, Inc. Price, Consensus and EPS Surprise
This Zacks Rank #4 (Sell) company’s net revenues dipped 2.4% year over year to $5,892 million due to the lack of revenues from the wine segment, which was divested in October 2021. Excluding the wine segment, net revenues remained nearly unchanged year over year. After deducting excise taxes, revenues were down 1.3% to $4,819 million. The Zacks Consensus Estimate for revenues was pegged at $4,804 million.
Image Source: Zacks Investment Research
Segment Details
Smokeable Products: Net revenues in the category rose 0.3% year over year to $5,265 million due to increased pricing and reduced promotional investments. This was somewhat negated by a reduced shipment volume. Revenues, net of excise taxes, climbed 2.2%.
Domestic cigarette shipment volumes were down 6.3% year over year, mainly driven by the industry’s rate of decline and retail share losses, somewhat compensated by trade inventory movements. On adjusting for trade inventory movements and other factors, smokeable products’ domestic cigarette shipment volumes fell an estimated 8%. Altria’s reported cigar shipment volumes declined by 9.6%. The total cigarette retail share remained unchanged at 49% year over year.
Adjusted OCI in the segment increased 5.7% to $2,511 million due to higher pricing and reduced promotional investments, partly offset by reduced shipment volumes and increased per unit settlement charges. The adjusted OCI margin increased 2 percentage points to 59.5%.
Oral Tobacco Products: Net revenues in the segment declined by 2.1% from the year-ago quarter’s level to $613 million due to increased promotional investments in on! and a mix shift between MST and on! shipment volumes leading to the increased percentage of on! volumes compared with the year-ago period. This was somewhat made up by greater pricing. Revenues, net of excise taxes, fell 1.8% to $584 million.
Domestic shipment volumes in the segment went down 1.9%, mainly due to trade inventory movements and retail share losses, partly compensated by the industry’s rate of growth and calendar differences, among other factors. On adjusting for trade inventory movements and calendar differences, oral tobacco products shipment volumes remained unchanged. The total oral tobacco products’ retail share fell 1.1 percentage points to 46.9%.
Adjusted OCI declined by 5.1% to $407 million due to elevated costs, increased promotional investments in on!, a mix shift and reduced shipment volumes. These were partially countered by increased pricing. The adjusted OCI margin contracted by 2.4 percentage points to 69.7%.
On Oct 1, 2021, MO, through its subsidiary UST LLC, completed the divestiture of Ste. Michelle Wine Estates (Ste. Michelle).
Financial Updates
Altria ended the quarter with cash and cash equivalents of $5,353 million, long-term debt of $25,405 million and a total stockholders’ deficit of $1,760 million.
During the quarter, Altria bought back 11.3 million shares for $576 million. As of Mar 31, 2022, Altria had shares worth roughly $1.2 billion remaining under its $3.5 billion share repurchase program, which is anticipated to conclude by Dec 31, 2022.
During the quarter, MO paid out dividends worth $1.6 billion. The company maintains a long-term dividend payout ratio goal of about 80% for adjusted earnings per share (EPS).
Other Developments & Guidance
Russia’s invasion of Ukraine worsened the rising global energy price scenario, which, along with other macroeconomic factors like demand-supply imbalances and the shortage of labor, led to a historic spike in the inflation rate. Apart from this, the pandemic-led volatility continues to impact the global economy in terms of supply-chain bottlenecks and changing consumer behavior.
Altria noted that its tobacco business has not witnessed any material disruption related to the pandemic. For 2022, the company envisions an adjusted earnings view in the range of $4.79-$4.93 per share. The bottom line indicates growth of 4-7% from the $4.61 recorded in 2021. The company expects the bottom line to be weighted toward the second half of the year. Management stated that the company will continue assessing external environmental factors like global supply-chain hurdles, elevated inflation, adult tobacco consumers or ATC dynamics, purchasing patterns, the adoption of smoke-free products, the impacts of Russia’s invasion of Ukraine, disposable income and tobacco usage occasions, among others.
The bottom line also takes into account planned investments associated with costs to improve the digital consumer engagement system, enhanced smoke-free product research, development and regulatory preparation expenses and marketplace activities to support the company’s smoke-free products. The view also includes anticipation of the inflation of Master Settlement Agreement expenses and direct material costs. MO does not expect PM USA to have access to the IQOS system in 2022. On Nov 29, 2021, the importation ban and cease-and-desist orders forced by the International Trade Commission on the IQOS device, Marlboro HeatSticks and infringing components went into effect.
Shares of the company have rallied 9.8% in the past three months compared with the industry’s rise of 1.7%.
Sysco, which engages in the marketing and distribution of various food and related products, carries a Zacks Rank #2 (Buy) at present. Shares of Sysco have jumped 12.9% in the past three months. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Sysco’s current financial-year sales and EPS suggests growth of 30.4% and 120.1%, respectively, from the year-ago reported number. SYY has a trailing four-quarter earnings surprise of 3.7%, on average.
McCormick, the manufacturer, marketer and distributor of spices, seasoning mixes and condiments, currently carries a Zacks Rank #2. Shares of McCormick have risen 2% in the past three months.
The Zacks Consensus Estimate for McCormick’s current financial-year sales and EPS suggests growth of nearly 5% and 3.9%, respectively, from the year-ago reported figure. MKC has a trailing four-quarter earnings surprise of around 1.3%, on average.
Inter Parfums, which manufactures, markets and distributes a range of fragrances and fragrance-related products, currently carries a Zacks Rank #2. Shares of Inter Parfums have dropped 17.4% in the past three months.
The Zacks Consensus Estimate for Inter Parfums’ current financial-year sales and EPS suggests growth of 12.5% and 10.3%, respectively, from the year-ago reported figure. IPAR has a trailing four-quarter earnings surprise of 46.7%, on average.
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Altria (MO) Q1 Earnings & Revenues Top Estimates, Pricing Aids
Altria Group Inc. (MO - Free Report) delivered first-quarter 2022 results, wherein the top and bottom lines cruised past the Zacks Consensus Estimate and the latter increased year over year. Increased pricing remained an upside, though soft volumes were a concern.
Quarter in Detail
Adjusted earnings came in at $1.12 per share, which increased 4.7% year over year and beat the Zacks Consensus Estimate of $1.09. The year-over-year increase was backed by greater adjusted operating companies income (OCI), reduced number of shares outstanding and lower interest expenses. These upsides were partially countered by reduced adjusted earnings from the company’s investment in ABI.
Altria Group, Inc. Price, Consensus and EPS Surprise
Altria Group, Inc. price-consensus-eps-surprise-chart | Altria Group, Inc. Quote
This Zacks Rank #4 (Sell) company’s net revenues dipped 2.4% year over year to $5,892 million due to the lack of revenues from the wine segment, which was divested in October 2021. Excluding the wine segment, net revenues remained nearly unchanged year over year. After deducting excise taxes, revenues were down 1.3% to $4,819 million. The Zacks Consensus Estimate for revenues was pegged at $4,804 million.
Image Source: Zacks Investment Research
Segment Details
Smokeable Products: Net revenues in the category rose 0.3% year over year to $5,265 million due to increased pricing and reduced promotional investments. This was somewhat negated by a reduced shipment volume. Revenues, net of excise taxes, climbed 2.2%.
Domestic cigarette shipment volumes were down 6.3% year over year, mainly driven by the industry’s rate of decline and retail share losses, somewhat compensated by trade inventory movements. On adjusting for trade inventory movements and other factors, smokeable products’ domestic cigarette shipment volumes fell an estimated 8%. Altria’s reported cigar shipment volumes declined by 9.6%. The total cigarette retail share remained unchanged at 49% year over year.
Adjusted OCI in the segment increased 5.7% to $2,511 million due to higher pricing and reduced promotional investments, partly offset by reduced shipment volumes and increased per unit settlement charges. The adjusted OCI margin increased 2 percentage points to 59.5%.
Oral Tobacco Products: Net revenues in the segment declined by 2.1% from the year-ago quarter’s level to $613 million due to increased promotional investments in on! and a mix shift between MST and on! shipment volumes leading to the increased percentage of on! volumes compared with the year-ago period. This was somewhat made up by greater pricing. Revenues, net of excise taxes, fell 1.8% to $584 million.
Domestic shipment volumes in the segment went down 1.9%, mainly due to trade inventory movements and retail share losses, partly compensated by the industry’s rate of growth and calendar differences, among other factors. On adjusting for trade inventory movements and calendar differences, oral tobacco products shipment volumes remained unchanged. The total oral tobacco products’ retail share fell 1.1 percentage points to 46.9%.
Adjusted OCI declined by 5.1% to $407 million due to elevated costs, increased promotional investments in on!, a mix shift and reduced shipment volumes. These were partially countered by increased pricing. The adjusted OCI margin contracted by 2.4 percentage points to 69.7%.
On Oct 1, 2021, MO, through its subsidiary UST LLC, completed the divestiture of Ste. Michelle Wine Estates (Ste. Michelle).
Financial Updates
Altria ended the quarter with cash and cash equivalents of $5,353 million, long-term debt of $25,405 million and a total stockholders’ deficit of $1,760 million.
During the quarter, Altria bought back 11.3 million shares for $576 million. As of Mar 31, 2022, Altria had shares worth roughly $1.2 billion remaining under its $3.5 billion share repurchase program, which is anticipated to conclude by Dec 31, 2022.
During the quarter, MO paid out dividends worth $1.6 billion. The company maintains a long-term dividend payout ratio goal of about 80% for adjusted earnings per share (EPS).
Other Developments & Guidance
Russia’s invasion of Ukraine worsened the rising global energy price scenario, which, along with other macroeconomic factors like demand-supply imbalances and the shortage of labor, led to a historic spike in the inflation rate. Apart from this, the pandemic-led volatility continues to impact the global economy in terms of supply-chain bottlenecks and changing consumer behavior.
Altria noted that its tobacco business has not witnessed any material disruption related to the pandemic. For 2022, the company envisions an adjusted earnings view in the range of $4.79-$4.93 per share. The bottom line indicates growth of 4-7% from the $4.61 recorded in 2021. The company expects the bottom line to be weighted toward the second half of the year. Management stated that the company will continue assessing external environmental factors like global supply-chain hurdles, elevated inflation, adult tobacco consumers or ATC dynamics, purchasing patterns, the adoption of smoke-free products, the impacts of Russia’s invasion of Ukraine, disposable income and tobacco usage occasions, among others.
The bottom line also takes into account planned investments associated with costs to improve the digital consumer engagement system, enhanced smoke-free product research, development and regulatory preparation expenses and marketplace activities to support the company’s smoke-free products. The view also includes anticipation of the inflation of Master Settlement Agreement expenses and direct material costs. MO does not expect PM USA to have access to the IQOS system in 2022. On Nov 29, 2021, the importation ban and cease-and-desist orders forced by the International Trade Commission on the IQOS device, Marlboro HeatSticks and infringing components went into effect.
Shares of the company have rallied 9.8% in the past three months compared with the industry’s rise of 1.7%.
Looking for Consumer Staple Stocks? Check These
Some better-ranked stocks are Sysco Corporation (SYY - Free Report) , McCormick & Company (MKC - Free Report) and Inter Parfums (IPAR - Free Report) .
Sysco, which engages in the marketing and distribution of various food and related products, carries a Zacks Rank #2 (Buy) at present. Shares of Sysco have jumped 12.9% in the past three months. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Sysco’s current financial-year sales and EPS suggests growth of 30.4% and 120.1%, respectively, from the year-ago reported number. SYY has a trailing four-quarter earnings surprise of 3.7%, on average.
McCormick, the manufacturer, marketer and distributor of spices, seasoning mixes and condiments, currently carries a Zacks Rank #2. Shares of McCormick have risen 2% in the past three months.
The Zacks Consensus Estimate for McCormick’s current financial-year sales and EPS suggests growth of nearly 5% and 3.9%, respectively, from the year-ago reported figure. MKC has a trailing four-quarter earnings surprise of around 1.3%, on average.
Inter Parfums, which manufactures, markets and distributes a range of fragrances and fragrance-related products, currently carries a Zacks Rank #2. Shares of Inter Parfums have dropped 17.4% in the past three months.
The Zacks Consensus Estimate for Inter Parfums’ current financial-year sales and EPS suggests growth of 12.5% and 10.3%, respectively, from the year-ago reported figure. IPAR has a trailing four-quarter earnings surprise of 46.7%, on average.