- Howard Willard succeeds Marty
Barrington as Altria’s Chairman and CEO, following Mr. Barrington’s
retirement
- Altria announces Annual Meeting
voting results.
- Altria reaffirms full-year 2018
earnings guidance.
- Altria declares regular quarterly
dividend of $0.70 per share.
- Altria announces the expansion of
its $1 billion share repurchase program to $2 billion, to be
completed by the end of the second quarter of 2019.
Altria Group, Inc. (Altria) (NYSE:MO) held its 2018 Annual
Meeting of Shareholders (Annual Meeting) today. Altria’s Chairman,
Chief Executive Officer (CEO) and President, Marty Barrington,
summarized Altria’s full-year 2017 and first-quarter 2018 operating
and financial results, discussed Altria’s corporate responsibility
initiatives and reaffirmed Altria’s guidance for 2018 full-year
adjusted diluted earnings per share (EPS). A copy of Mr.
Barrington’s prepared remarks and business presentation and a
replay of the audio webcast of the Annual Meeting are available on
altria.com and via the Altria Investor app.
Appointment of Chairman and CEO
Following today’s Annual Meeting, Howard Willard succeeded Mr.
Barrington as Altria’s Chairman and CEO. Earlier this year, Mr.
Barrington announced his decision to retire after 25 years of
distinguished service.
“Howard is immensely qualified to lead Altria, having served in
numerous leadership positions during his 25 year career with us,
including as Chief Operating Officer and Chief Financial Officer,”
said Mr. Barrington.
Voting Results for Altria’s Annual Meeting
At the Annual Meeting, Altria’s shareholders elected to a
one-year term each of the 11 nominees for director named in
Altria’s proxy statement; ratified the selection of
PricewaterhouseCoopers LLP as Altria’s independent registered
public accounting firm for the fiscal year ending December 31,
2018; approved, on an advisory basis, the compensation of Altria’s
named executive officers; and defeated one shareholder proposal.
Final voting results will be reported in a Current Report on Form
8-K filed with the Securities and Exchange Commission.
2018 Full-Year Guidance
During his remarks, Mr. Barrington reaffirmed Altria’s guidance
for 2018 full-year adjusted diluted EPS to be in a range of $3.90
to $4.03, representing a growth rate of 15% to 19% from an adjusted
diluted EPS base of $3.39 in 2017, as shown in Schedule 1. This
guidance range excludes special items for the first quarter of 2018
shown in Schedule 1 and an additional $0.07 of tax expense
resulting from the Tax Cuts and Jobs Act. This tax expense is
related to a tax basis adjustment to Altria’s AB InBev
investment.
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/loss on AB InBev/SABMiller plc (SABMiller) business
combination, AB InBev special items, certain tax items, charges
associated with tobacco and health litigation items, and
resolutions of certain non-participating manufacturer (NPM)
adjustment disputes under the Master Settlement Agreement (such
dispute resolutions are referred to 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.
Regular Quarterly Dividend
Following the Annual Meeting, Altria’s Board of Directors
(Board) declared a regular quarterly dividend of $0.70 per share,
payable on July 10, 2018, to shareholders of record as of June 15,
2018. The ex-dividend date is June 14, 2018.
Expanded and Extended Share Repurchase Program
Altria’s Board also authorized a $1 billion expansion to the
existing $1 billion share repurchase program. Altria now expects to
complete the expanded $2 billion share repurchase program by the
end of the second quarter of 2019. The timing of share repurchases
depends upon marketplace conditions and other factors. This program
remains subject to the discretion of the Board.
Altria’s Profile
Altria’s wholly-owned subsidiaries include Philip Morris USA
Inc. (PM USA), U.S. Smokeless Tobacco Company LLC (USSTC), John
Middleton Co. (Middleton), Sherman Group Holdings, LLC and its
subsidiaries (Nat Sherman), Nu Mark LLC (Nu Mark), Ste. Michelle
Wine Estates Ltd. (Ste. Michelle) and Philip Morris Capital
Corporation (PMCC). Altria holds an equity investment in
Anheuser-Busch InBev SA/NV (AB InBev).
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 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 release are described
in Altria’s publicly filed reports, including its Annual Report on
Form 10-K for the year ended December 31, 2017 and its Quarterly
Report on Form 10-Q for the period ended March 31, 2018.
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, 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: the risk that Altria’s equity
securities in AB InBev are subject to restrictions on transfer
until October 10, 2021; the risk that Altria’s reported earnings
from and carrying value of its equity investment in AB InBev and
the dividends paid by AB InBev on shares owned by Altria 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 Altria’s
investment in 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 Quarter 2018 Adjusted
Results
EarningsbeforeIncomeTaxes
Provisionfor
IncomeTaxes
NetEarnings
Net EarningsAttributable
toAltria Group, Inc.
DilutedEPS
For the quarter ended March 31, 2018 2018 Reported
$ 2,466 $ 571 $
1,895 $ 1,894 $
1.00 NPM Adjustment Items (68 ) (17
)
(51
)
(51
)
(0.03
)
AB InBev special items (117 ) (25
)
(92
)
(92
)
(0.04
)
Asset impairment, exit and implementation costs 3 1 2 2 — Tobacco
and health litigation items 28 8 20 20 0.01 Loss on AB
InBev/SABMiller business
combination
33 7 26 26 0.01 Tax items —
(1
)
1 1 —
2018 Adjusted for Special Items $ 2,345
$ 544 $
1,801 $
1,800 $ 0.95
Reconciliation of Altria’s Full Year 2017 Adjusted
Results
EarningsbeforeIncomeTaxes
(Benefit)Provisionfor
IncomeTaxes
NetEarnings
Net EarningsAttributable
toAltria Group, Inc.
DilutedEPS
For the year ended December 31, 2017 2017 Reported
$ 9,828 $ (399
)
$ 10,227 $ 10,222
$ 5.31 NPM Adjustment Items 4 2 2 2 — Tobacco
and health litigation items 80 30 50 50 0.03 AB InBev special items
160 55 105 105 0.05 Asset impairment, exit, implementation and
acquisition-related costs
89 34 55 55 0.03 Gain on AB InBev/SABMiller business
combination
(445 ) (156
)
(289
)
(289
)
(0.15
)
Settlement charge for lump sum pension
payments
81 32 49 49 0.03 Tax items — 3,674
(3,674
)
(3,674
)
(1.91
)
2017 Adjusted for Special Items $ 9,797
$ 3,272 $
6,525 $
6,520 $ 3.39
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 “2018
Full-Year Guidance”. 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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