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Altria's (MO) Q2 Earnings Lag Estimates, Cigarette Volumes Drop
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Altria Group Inc. (MO - Free Report) posted second-quarter 2024 results, wherein the bottom line remained flat year over year and came below the Zacks Consensus Estimate. Also, the top line declined from the year-ago quarter’s level. While the company continued to benefit from pricing power, soft cigarette shipment volumes remained a downside. Altria narrowed its bottom-line view for 2024.
However, MO is demonstrating solid progress in its mission to transition adult smokers to a smoke-free future. In the second quarter, the company’s advanced smoke-free products showed robust market share and volume growth, achieving key milestones that are expected to drive future success. NJOY made a notable achievement by receiving the first FDA marketing orders for menthol e-vapor products, and Altria submitted PMTA applications for next-generation NJOY and on! products. Despite a difficult operating environment, Altria’s traditional tobacco businesses remained resilient.
Quarter in Detail
Adjusted earnings came in at $1.31 per share, which remained flat year over year and lagged the Zacks Consensus Estimate of $1.35. Reduced adjusted operating companies income (OCI) was offset by a lesser number of shares outstanding.
Altria Group, Inc. Price, Consensus and EPS Surprise
The company posted net revenues of $6,209 million, which declined 4.6% year over year. The downside can mainly be attributed to reduced net revenues in the smokeable products unit, somewhat made up by increased net revenues across the oral tobacco products segment. Revenues, net of excise taxes, fell 3% to $5,277 million. The consensus mark stood at $5,427 million.
Segment Details
Smokeable Products: Net revenues in the category decreased 5.6% year over year to $5,495 million, mainly due to reduced shipment volume and increased promotional investments. These were somewhat offset by higher pricing. Revenues, net of excise taxes, fell 4%.
Domestic cigarette shipment volumes tumbled 13%, mainly due to the industry’s decline rate, retail share losses and trade inventory movements. The industry’s decline was a result of macroeconomic pressure on Adult Tobacco Consumers’ (“ATC”) discretionary income and increases in illegitimate e-vapor products. Altria’s reported cigar shipment volumes dipped 0.9%.
Adjusted OCI in the segment declined 2% to $2,827 million due to lower shipment volumes, increased promotional investments, elevated per-unit settlement charges and escalated manufacturing costs. These were somewhat countered by improved pricing and reduced selling, general and administrative (SG&A) costs. The adjusted OCI margins grew 1.2 percentage points to 61.6%.
Oral Tobacco Products: Net revenues in the segment rose 4.6% from the year-ago quarter’s level to $711 million. The upside can be attributed to improved pricing and reduced promotional investments, partly negated by the increased percentage of on! shipment volumes relative to MST and reduced MST shipment volumes. Revenues, net of excise taxes, grew 5.5%.
Domestic shipment volumes plunged 1.8%, mainly due to retail share losses. This was somewhat offset by the industry’s growth rate, trade inventory movements and other aspects. Adjusted OCI increased 1.8% to $451 million, mainly due to increased pricing and a decline in promotional investments, somewhat negated by elevated costs, reduced MST shipment volume and mix change. Adjusted OCI margins contracted by 2.4 percentage points to 65.6%.
Other Updates
Altria ended the quarter with cash and cash equivalents of $1,799 million, long-term debt of $23,470 million and a total stockholders’ deficit of $3,016 million.
During the first half of 2024, the company returned more than $5.8 billion to shareholders through dividends and share buybacks. Dividends paid amounted to $1.7 billion in the second quarter and $3.4 billion in the first half.
Further, Altria concluded its accelerated share repurchase program of $2.4 billion, which was announced in the first quarter. As of Jun 30, 2024, the company had shares worth $990 million remaining under its existing authorized $3.4 billion share buyback program.
Guidance
For 2024, MO now envisions adjusted earnings per share (EPS) in the range of $5.07-$5.15, which suggests 2.5-4% growth from the $4.95 recorded in 2023. Earlier, the company projected 2024 adjusted EPS to come in the range of $5.05-$5.17, which indicated 2-4.5% growth. Management expects the bottom-line growth to be skewed toward the second half of 2024. The guidance includes the impact of two extra shipping days in 2024.
As the external landscape remains dynamic, Altria continues assessing economic factors like inflation, ATC dynamics (such as purchasing patterns and the adoption of smoke-free products), illegal e-vapor enforcement and regulatory developments.
The bottom-line view also considers planned investments associated with enhanced smoke-free product research, development and marketplace activities to support MO’s smoke-free products.
Shares of this Zacks Rank #3 (Hold) company have risen 15.4% in the past three months compared with the industry’s 18.9% growth.
3 Staple Bets Looking Good
BRF (BRFS - Free Report) , which engages in raising, producing and slaughtering poultry and pork for processing, production and sale of fresh meat, processed products, pasta, margarine, pet food and other products, currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for BRF’s current financial-year sales and earnings suggests growth of 7.5% and 210%, respectively, from the year-ago reported figures.
Vital Farms (VITL - Free Report) , which provides pasture-raised products, currently sports a Zacks Rank #1. The Zacks Consensus Estimate for Vital Farms’ current financial-year sales and earnings indicates growth of 24.9% and 66.1%, respectively, from the prior-year reported level.
VITL has a trailing four-quarter average earnings surprise of 102.1%.
Philip Morris (PM - Free Report) , a tobacco company, has a trailing four-quarter earnings surprise of 1.8%, on average. PM currently carries a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for Philip Morris’ current financial-year sales and earnings implies growth of 4.4% and 7.8%, respectively, from the prior-year reported level.
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Altria's (MO) Q2 Earnings Lag Estimates, Cigarette Volumes Drop
Altria Group Inc. (MO - Free Report) posted second-quarter 2024 results, wherein the bottom line remained flat year over year and came below the Zacks Consensus Estimate. Also, the top line declined from the year-ago quarter’s level. While the company continued to benefit from pricing power, soft cigarette shipment volumes remained a downside. Altria narrowed its bottom-line view for 2024.
However, MO is demonstrating solid progress in its mission to transition adult smokers to a smoke-free future. In the second quarter, the company’s advanced smoke-free products showed robust market share and volume growth, achieving key milestones that are expected to drive future success. NJOY made a notable achievement by receiving the first FDA marketing orders for menthol e-vapor products, and Altria submitted PMTA applications for next-generation NJOY and on! products. Despite a difficult operating environment, Altria’s traditional tobacco businesses remained resilient.
Quarter in Detail
Adjusted earnings came in at $1.31 per share, which remained flat year over year and lagged the Zacks Consensus Estimate of $1.35. Reduced adjusted operating companies income (OCI) was offset by a lesser number of shares outstanding.
Altria Group, Inc. Price, Consensus and EPS Surprise
Altria Group, Inc. price-consensus-eps-surprise-chart | Altria Group, Inc. Quote
The company posted net revenues of $6,209 million, which declined 4.6% year over year. The downside can mainly be attributed to reduced net revenues in the smokeable products unit, somewhat made up by increased net revenues across the oral tobacco products segment. Revenues, net of excise taxes, fell 3% to $5,277 million. The consensus mark stood at $5,427 million.
Segment Details
Smokeable Products: Net revenues in the category decreased 5.6% year over year to $5,495 million, mainly due to reduced shipment volume and increased promotional investments. These were somewhat offset by higher pricing. Revenues, net of excise taxes, fell 4%.
Domestic cigarette shipment volumes tumbled 13%, mainly due to the industry’s decline rate, retail share losses and trade inventory movements. The industry’s decline was a result of macroeconomic pressure on Adult Tobacco Consumers’ (“ATC”) discretionary income and increases in illegitimate e-vapor products. Altria’s reported cigar shipment volumes dipped 0.9%.
Adjusted OCI in the segment declined 2% to $2,827 million due to lower shipment volumes, increased promotional investments, elevated per-unit settlement charges and escalated manufacturing costs. These were somewhat countered by improved pricing and reduced selling, general and administrative (SG&A) costs. The adjusted OCI margins grew 1.2 percentage points to 61.6%.
Oral Tobacco Products: Net revenues in the segment rose 4.6% from the year-ago quarter’s level to $711 million. The upside can be attributed to improved pricing and reduced promotional investments, partly negated by the increased percentage of on! shipment volumes relative to MST and reduced MST shipment volumes. Revenues, net of excise taxes, grew 5.5%.
Domestic shipment volumes plunged 1.8%, mainly due to retail share losses. This was somewhat offset by the industry’s growth rate, trade inventory movements and other aspects. Adjusted OCI increased 1.8% to $451 million, mainly due to increased pricing and a decline in promotional investments, somewhat negated by elevated costs, reduced MST shipment volume and mix change. Adjusted OCI margins contracted by 2.4 percentage points to 65.6%.
Other Updates
Altria ended the quarter with cash and cash equivalents of $1,799 million, long-term debt of $23,470 million and a total stockholders’ deficit of $3,016 million.
During the first half of 2024, the company returned more than $5.8 billion to shareholders through dividends and share buybacks. Dividends paid amounted to $1.7 billion in the second quarter and $3.4 billion in the first half.
Further, Altria concluded its accelerated share repurchase program of $2.4 billion, which was announced in the first quarter. As of Jun 30, 2024, the company had shares worth $990 million remaining under its existing authorized $3.4 billion share buyback program.
Guidance
For 2024, MO now envisions adjusted earnings per share (EPS) in the range of $5.07-$5.15, which suggests 2.5-4% growth from the $4.95 recorded in 2023. Earlier, the company projected 2024 adjusted EPS to come in the range of $5.05-$5.17, which indicated 2-4.5% growth. Management expects the bottom-line growth to be skewed toward the second half of 2024. The guidance includes the impact of two extra shipping days in 2024.
As the external landscape remains dynamic, Altria continues assessing economic factors like inflation, ATC dynamics (such as purchasing patterns and the adoption of smoke-free products), illegal e-vapor enforcement and regulatory developments.
The bottom-line view also considers planned investments associated with enhanced smoke-free product research, development and marketplace activities to support MO’s smoke-free products.
Shares of this Zacks Rank #3 (Hold) company have risen 15.4% in the past three months compared with the industry’s 18.9% growth.
3 Staple Bets Looking Good
BRF (BRFS - Free Report) , which engages in raising, producing and slaughtering poultry and pork for processing, production and sale of fresh meat, processed products, pasta, margarine, pet food and other products, currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for BRF’s current financial-year sales and earnings suggests growth of 7.5% and 210%, respectively, from the year-ago reported figures.
Vital Farms (VITL - Free Report) , which provides pasture-raised products, currently sports a Zacks Rank #1. The Zacks Consensus Estimate for Vital Farms’ current financial-year sales and earnings indicates growth of 24.9% and 66.1%, respectively, from the prior-year reported level.
VITL has a trailing four-quarter average earnings surprise of 102.1%.
Philip Morris (PM - Free Report) , a tobacco company, has a trailing four-quarter earnings surprise of 1.8%, on average. PM currently carries a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for Philip Morris’ current financial-year sales and earnings implies growth of 4.4% and 7.8%, respectively, from the prior-year reported level.