GuruFocus -
- Adjusted Diluted EPS Growth: 7.8% in Q3 and 1.6% for the first nine months.
- Full-Year Adjusted Diluted EPS Guidance: $5.07 to $5.15, representing a growth rate of 2.5% to 4% from $4.95 in 2023.
- Smokeable Products Segment Adjusted Operating Income Growth: 7.1% in Q3 and 0.9% for the first nine months.
- Adjusted OCI Margins for Smokeable Products: 63.1% in Q3 and 61.7% for the first nine months.
- Net Price Realization for Smokeable Products: 10.6% in Q3 and 9.7% for the first nine months.
- Domestic Cigarette Volume Decline: 8.6% in Q3 and 10.6% for the first nine months.
- Oral Tobacco Products Segment Adjusted OCI Growth: 2% in Q3 and 2.7% for the first nine months.
- Adjusted OCI Margins for Oral Tobacco Products: 66.8% in Q3 and 67.2% for the first nine months.
- Oral Tobacco Products Segment Volume Change: Increased by 1.2% in Q3; decreased by 1.3% for the first nine months.
- Dividends Paid in Q3: Approximately $1.7 billion.
- Dividend Increase: 4.1% in August.
- Share Repurchases in Q3: 13.5 million shares for $680 million.
- Total Debt to EBITDA Ratio: 2.1 times as of September 30.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Altria Group Inc (NYSE:MO) delivered strong financial results in the third quarter, with a 7.8% increase in adjusted diluted earnings per share.
- The smokeable products segment showed solid operating income growth, supported by the resilience of the Marlboro brand.
- NJOY, Altria's e-vapor brand, demonstrated significant growth with a 15% increase in consumable shipment volume and a 6.2% retail share of consumables.
- The oral tobacco products segment, particularly the on! brand, experienced strong sales growth with a 46% increase in shipment volume.
- Altria Group Inc (NYSE:MO) continues to reward shareholders through dividends and share repurchases, with a recent 4.1% dividend increase.
- The illicit market for e-cigarettes remains a significant issue, with over 55% of youth using illicit disposable products.
- Domestic cigarette volumes declined by 8.6% in the third quarter, partly due to the growth of illicit flavored disposable e-vapor products.
- The oral tobacco products segment experienced a decline in retail share by 4.2 percentage points due to competition.
- Altria Group Inc (NYSE:MO) faces ongoing litigation with JUUL over patent infringement claims, which could impact NJOY's market presence.
- Economic pressures on consumers, such as inflation and rising debt, are affecting cigarette sales and contributing to downtrading.
A: Salvatore Mancuso, CFO, mentioned the expiration of the MSA legal fee as a benefit and noted an extra shipping day in the fourth quarter. He expressed confidence in the guidance provided.
Q: Marlboro performed well in the premium category, but discount share increased. Are there diverging trends between premium and discount consumers?
A: William Gifford, CEO, highlighted economic strain on consumers as a factor influencing these trends. He also noted the impact of illicit products on consumer behavior.
Q: Why did you maintain your guidance despite a strong Q3, and what factors could affect Q4 EPS growth?
A: William Gifford explained that the dynamic market and illicit products impact their categories. He noted the extra shipping day in Q3 and Q4, and emphasized that inventory fluctuations tend to balance out over time.
Q: Can you provide more details on the patent infringement lawsuit with JUUL and the status of NJOY's SE applications?
A: William Gifford stated that NJOY filed PMTA exemptions for three of the four patents and is working on avoiding the fourth. He mentioned ongoing conversations with the FDA and no significant updates on negotiations with JUUL.
Q: What are your expectations for the heated tobacco category over the next five years, and how might it impact cigarette trends?
A: William Gifford reiterated that e-vapor is expected to be the largest category, followed by nicotine pouches and heat-not-burn products. He mentioned the joint venture with Japan Tobacco for the Ploom device and plans to file a PMTA in 2025.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.