- Altria discusses evolved business
platform and recent strategic investments.
- Altria announces Annual Meeting
voting results.
- Altria reaffirms full-year 2019
earnings guidance.
- Altria declares regular quarterly
dividend of $0.80 per share.
Altria Group, Inc. (Altria) (NYSE: MO) held its 2019 Annual
Meeting of Shareholders (Annual Meeting) today. Howard Willard,
Altria’s Chairman and Chief Executive Officer, summarized Altria’s
full-year 2018 and first-quarter 2019 operating and financial
results, discussed Altria’s evolved business platform, recent
strategic investments and reaffirmed Altria’s guidance for 2019
full-year adjusted diluted earnings per share (EPS). Copies of Mr.
Willard’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.
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,
2019; approved, on an advisory basis, the compensation of Altria’s
named executive officers; and defeated two shareholder proposals.
Final voting results will be reported in a Current Report on Form
8-K filed with the Securities and Exchange Commission.
2019 Full-Year Guidance
During his remarks, Mr. Willard reaffirmed Altria’s guidance for
2019 full-year adjusted diluted EPS to be in a range of $4.15 to
$4.27, representing a growth rate of 4% to 7% from an adjusted
diluted EPS base of $3.99 in 2018, as shown in Schedule 1. This
guidance range excludes the special items for the first quarter of
2019 shown in Schedule 1 and additional estimated per share charges
of: (i) $0.03 of tax expense resulting from the Tax Cuts and Jobs
Act related to a tax basis adjustment to Altria’s AB InBev
investment; and (ii) $0.02 in charges associated with the cost
reduction program announced in December 2018.
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, restructuring charges, asset impairment charges,
acquisition-related costs, gain/loss on AB InBev/SABMiller plc
(SABMiller) business combination, AB InBev special items, gain/loss
on Cronos-related financial instruments, 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 $0.80 per share,
payable on July 10, 2019, to shareholders of record as of June 14,
2019. The ex-dividend date is June 13, 2019.
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), Ste. Michelle Wine Estates Ltd. (Ste.
Michelle) and Philip Morris Capital Corporation (PMCC). Altria
holds equity investments in Anheuser-Busch InBev SA/NV (AB InBev),
JUUL Labs, Inc. (JUUL) and Cronos Group Inc. (Cronos).
The brand portfolios of Altria’s tobacco operating companies
include Marlboro®, Black & Mild®,
Copenhagen® and Skoal®. 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, or follow us on Twitter, Facebook and
LinkedIn.
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, 2018 and its Quarterly
Report on Form 10-Q for the period ended March 31, 2019. 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 (FDA). 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.
The factors related to Altria’s investment in JUUL include the
following: the possibility that regulatory approvals required for
the conversion of the shares into voting shares may not be obtained
in a timely manner, if at all; and that such approvals may be
subject to unanticipated conditions; the possibility that the
expected benefits of the transaction may not materialize in the
expected manner or timeframe, if at all; the potential inaccuracy
of the financial projections (including projections relating to
JUUL’s domestic growth and international expansion); prevailing
economic, market, regulatory or business conditions, or changes in
such conditions, negatively affecting the parties; the risk of a
downgrade in Altria’s credit ratings; risks that the transaction
disrupts JUUL’s current plans and operations; the fact that
Altria’s reported earnings, financial position and expected use of
equity accounting and any future dividends paid by JUUL on shares
owned by Altria may be adversely affected by tax and other factors,
including the risks encountered (including regulatory and
litigation risks) and decisions made by JUUL in its business; risks
related to the investment disrupting Altria, JUUL or their
respective management; and risks relating to the effect of the
transaction on JUUL’s ability to retain and hire key personnel or
on its relationships with customers, suppliers and other third
parties.
The factors related to Altria’s investment in Cronos include the
following: the possibility that the expected benefits of the
transaction may not materialize in the expected manner or
timeframe, if at all; the potential inaccuracy of the financial
projections; prevailing economic, market, or business conditions
negatively affecting the parties; risks that the transaction
disrupts Cronos’s current plans and operations; the fact that
Altria’s reported earnings and financial position and any dividends
paid by Cronos on shares owned by Altria may be adversely affected
by unfavorable foreign currency exchange rates, tax and other
factors, including the risks encountered by Cronos in its business;
risks related to the disruption of the transaction to Altria,
Cronos and their respective management; and risks relating to the
effect of the transaction on Cronos’s ability to retain and hire
key personnel and maintain relationships with customers, suppliers
and other third parties.
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 2019 Adjusted
Results
Earnings before
Income Taxes
Provisionfor Income
Taxes
Net Earnings
Net Earnings Attributable to
Altria
Diluted EPS
For the quarter ended March 31, 2019 2019 Reported
$ 1,516 $ 395 $ 1,121
$ 1,120 $ 0.60 AB InBev special items
114 24 90 90 0.05 Asset impairment, exit, implementation and
acquisition-related costs 159 34 125 125 0.06 Tobacco and health
litigation items 17 4 13 13 0.01 Loss on Cronos-related financial
instruments 425 97 328 328 0.17 Tax items — (19 )
19 19 0.01
2019
Adjusted for Special Items $ 2,231
$ 535 $ 1,696
$ 1,695 $ 0.90
Reconciliation of Altria’s Full Year 2018 Adjusted
Results
Earnings
beforeIncomeTaxes
Provisionfor Income
Taxes
Net Earnings
Net Earnings Attributable to
Altria
Diluted EPS
For the year ended December 31, 2018 2018 Reported
$ 9,341 $ 2,374 $ 6,967
$ 6,963 $ 3.68 NPM Adjustment Items
(145 ) (36 ) (109 ) (109 ) (0.06 ) Tobacco and health litigation
items 131 33 98 98 0.05 AB InBev special items (85 ) (17 ) (68 )
(68 ) (0.03 ) Asset impairment, exit, implementation and
acquisition-related costs 538 106 432 432 0.23 Loss on AB
InBev/SABMiller business
combination
33 7 26 26 0.01 Tax items — (197 ) 197
197 0.11
2018 Adjusted for Special
Items $ 9,813 $ 2,270
$ 7,543 $
7,539 $ 3.99
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 “2019
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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