Altria Group, Inc. (Altria) (NYSE:MO) is participating today in
the Barclays Global Consumer Staples Conference in Boston,
Massachusetts. Billy Gifford, Altria’s Chief Financial Officer, and
Murray Garnick, Altria's Executive Vice President and General
Counsel, Law and Regulatory Affairs, will discuss the company’s
business fundamentals and the regulatory environment.
Presentation
The presentation is being webcast live at altria.com in a
listen-only mode, beginning at approximately 9:45 a.m. Eastern
Time. A replay of the audio webcast will be available at altria.com
and via the Altria Investor app.
2017 Full-Year Guidance
Altria reaffirms its guidance for 2017 full-year adjusted
diluted earnings per share (EPS), which excludes the 2017 special
items as shown in Schedule 1, to be in a range of $3.26 to $3.32.
This range represents a growth rate of 7.5% to 9.5% from an
adjusted diluted EPS base of $3.03 in 2016, as shown in Schedule
1.
Altria continues to expect higher adjusted diluted EPS growth in
the second half of the year compared to the first half, driven by
various factors. These include the financial effects of U.S.
Smokeless Tobacco Company LLC's voluntary recall of certain
smokeless tobacco products manufactured at its Franklin Park,
Illinois facility during the first quarter of 2017 and the benefit
of reporting four full quarters of equity income from
Anheuser-Busch InBev SA/NV (AB InBev) in 2017 versus three quarters
in 2016 from SABMiller plc (SABMiller).
Altria’s full-year adjusted diluted EPS guidance excludes the
impact of certain income and expense items that management believes
are not part of underlying operations. These items may include, for
example, loss on early extinguishment of debt, restructuring
charges, gain on AB InBev/SABMiller business combination, AB
InBev/SABMiller special items, certain tax items, charges
associated with tobacco and health litigation items, and
settlements of, and determinations made in connection with, certain
non-participating manufacturer (NPM) adjustment disputes under the
Master Settlement Agreement (such settlements and determinations
are referred to collectively as NPM Adjustment Items).
Altria’s 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 its reported diluted EPS
because these items, which could be significant, may be infrequent,
are difficult to predict and may be highly variable. As a result,
Altria does not provide a corresponding U.S. generally accepted
accounting principles (GAAP) measure for, or reconciliation to, its
adjusted diluted EPS guidance.
The factors described in the Forward-Looking and Cautionary
Statements section of this release represent continuing risks to
Altria’s forecast.
Altria’s Profile
Altria’s wholly-owned subsidiaries include Philip Morris USA
Inc., U.S. Smokeless Tobacco Company LLC, John Middleton Co.,
Sherman Group Holdings, LLC and its subsidiaries, Nu Mark LLC, Ste.
Michelle Wine Estates Ltd. (Ste. Michelle) and Philip Morris
Capital Corporation. Altria holds an equity investment in
Anheuser-Busch InBev SA/NV.
The brand portfolios of Altria’s tobacco operating companies
include Marlboro®, Black & Mild®,
Copenhagen®, Skoal®, MarkTen® and Green
Smoke®. Ste. Michelle produces and markets premium wines
sold under various labels, including Chateau Ste. Michelle®,
Columbia Crest®, 14 Hands® and Stag’s Leap Wine
Cellars™, and it imports and markets Antinori®,
Champagne Nicolas Feuillatte™, Torres® and Villa
Maria Estate™ products in the United States. Trademarks and
service marks related to Altria referenced in this release are the
property of Altria or its subsidiaries or are used with permission.
More information about Altria is available at altria.com and on the
Altria Investor app.
Forward-Looking and Cautionary
Statements
This press release contains projections of future results and
other forward-looking statements that involve a number of risks and
uncertainties and are made pursuant to the Safe Harbor Provisions
of the Private Securities Litigation Reform Act of 1995.
Important factors that may cause actual results and outcomes to
differ materially from those contained in the projections and
forward-looking statements included in this press release are
described in Altria’s publicly filed reports, including its Annual
Report on Form 10-K for the year ended December 31, 2016 and its
Quarterly Report on Form 10-Q for the period ended June 30,
2017.
These factors include the following: significant competition;
changes in adult consumer preferences and demand for Altria’s
operating companies’ products; fluctuations in raw material
availability, quality and price; reliance on key facilities and
suppliers; reliance on critical information systems, many of which
are managed by third-party service providers; fluctuations in
levels of customer inventories; the effects of global, national and
local economic and market conditions; changes to income tax laws;
federal, state and local legislative activity, including actual and
potential federal and state excise tax increases; increasing
marketing and regulatory restrictions; the effects of price
increases related to excise tax increases and concluded tobacco
litigation settlements on consumption rates and consumer
preferences within price segments; health concerns relating to the
use of tobacco products and exposure to environmental tobacco
smoke; privately imposed smoking restrictions; and, from time to
time, governmental investigations.
Furthermore, the results of Altria’s tobacco businesses are
dependent upon their continued ability to promote brand equity
successfully; to anticipate and respond to evolving adult consumer
preferences; to develop, manufacture, market and distribute
products that appeal to adult tobacco consumers (including, where
appropriate, through arrangements with, and investments in, third
parties); to improve productivity; and to protect or enhance
margins through cost savings and price increases.
Altria and its tobacco businesses are also subject to federal,
state and local government regulation, including by the U.S. Food
and Drug Administration. Altria and its subsidiaries continue to be
subject to litigation, including risks associated with adverse jury
and judicial determinations, courts reaching conclusions at
variance with the companies’ understanding of applicable law,
bonding requirements in the limited number of jurisdictions that do
not limit the dollar amount of appeal bonds and certain challenges
to bond cap statutes.
In addition, the factors related to Altria’s investment in AB
InBev include the following: AB InBev’s inability to achieve the
contemplated synergies and value creation from its business
combination with SABMiller; that Altria’s equity securities in AB
InBev are subject to restrictions on transfer until October 10,
2021; that Altria’s reported earnings from and carrying value of
its equity investment in AB InBev may be adversely affected by
unfavorable foreign currency exchange rates and other factors,
including the risks encountered by AB InBev in its business; the
risk that the tax treatment of Altria’s transaction consideration
from the AB InBev/SABMiller business combination and the accounting
treatment of its equity investment are not guaranteed; and the risk
that the tax treatment of the dividends Altria expects to receive
from AB InBev may not be as favorable as Altria anticipates.
Altria cautions that the foregoing list of important factors is
not complete and does not undertake to update any forward-looking
statements that it may make except as required by applicable law.
All subsequent written and oral forward-looking statements
attributable to Altria or any person acting on its behalf are
expressly qualified in their entirety by the cautionary statements
referenced above.
Schedule 1
ALTRIA GROUP, INC.
and Subsidiaries
Reconciliation of GAAP and non-GAAP
Measures
(dollars in millions, except per share
data)
(Unaudited)
Reconciliation of Altria’s First Six Months of 2017
Adjusted Results
Earnings
before
Provision
Net Earnings
Income
for Income
Net
Attributable to
Diluted
Taxes
Taxes
Earnings
Altria Group, Inc.
EPS
For the six months ended June 30, 2017 Reported
$ 5,001 $ 1,609 $ 3,392
$ 3,390 $ 1.75 NPM Adjustment Items (1
) — (1 ) (1 ) — Tobacco and health litigation items 18 6 12 12 0.01
AB InBev special items 75 26 49 49 0.03
Asset impairment, exit, implementation and
acquisition-related costs
60 24 36 36 0.02 Gain on AB InBev/SABMiller business combination
(408 ) (143 ) (265 ) (265 ) (0.14 ) Tax items — 166
(166 ) (166 ) (0.09 )
Adjusted for Special Items $
4,745 $ 1,688 $
3,057 $ 3,055 $
1.58 Reconciliation of Altria’s Full
Year 2016 Adjusted Results
Earnings
before
Provision
Net Earnings
Income
for Income
Net
Attributable to
Diluted
Taxes
Taxes
Earnings
Altria Group, Inc.
EPS
For the year ended December 31, 2016 Reported
$ 21,852 $ 7,608 $ 14,244
$ 14,239 $ 7.28 NPM Adjustment Items 18
7 11 11 0.01 Tobacco and health litigation items 105 34 71 71 0.04
SABMiller special items (89 ) (32 ) (57 ) (57 ) (0.03 ) Loss on
early extinguishment of debt 823 282 541 541 0.28
Asset impairment, exit, implementation and
acquisition-related costs
206 71 135 135 0.07 Patent litigation settlement 21 8 13 13 0.01
Gain on AB InBev/SABMiller business
combination
(13,865 ) (4,864 ) (9,001 ) (9,001 ) (4.61 ) Tax items — 30
(30 ) (30 ) (0.02 )
Adjusted for Special Items
$ 9,071 $ 3,144 $
5,927 $ 5,922 $
3.03
Altria reports its financial results in accordance with GAAP.
Altria’s management reviews certain financial results, including
diluted EPS, on an adjusted basis, which excludes certain income
and expense items, including those items noted under “2017
Full-Year Guidance” above. Altria’s management does not view any of
these special items to be part of Altria’s underlying results as
they may be highly variable, may be infrequent, are difficult to
predict and can distort underlying business trends and results.
Altria’s management believes that adjusted financial measures
provide useful additional insight into underlying business trends
and results and provide a more meaningful comparison of
year-over-year results. Altria’s management uses adjusted financial
measures for planning, forecasting and evaluating business and
financial performance, including allocating resources and
evaluating results relative to employee compensation targets. These
adjusted financial measures are not consistent with GAAP and may
not be calculated the same as similarly titled measures used by
other companies. These adjusted financial measures should thus be
considered as supplemental in nature and not considered in
isolation or as a substitute for the related financial information
prepared in accordance with GAAP.
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