Altria Group, Inc. (NYSE: MO) held its 2022 Annual Meeting of
Shareholders (Annual Meeting) today. During the Annual Meeting,
Billy Gifford, Altria’s Chief Executive Officer, summarized our
full-year 2021 and first-quarter 2022 financial results and
discussed our progress toward our Vision and Environmental, Social
and Governance (ESG) goals. Mr. Gifford also reaffirmed our
guidance for adjusted diluted earnings per share (EPS) and
addressed shareholder questions. Copies of these prepared remarks
and business presentation and a replay of the audio webcast of the
Annual Meeting are available on www.altria.com.
Preliminary Voting Results for Altria’s Annual
Meeting
The preliminary voting results at the Annual Meeting were as
follows: our shareholders elected to a one-year term each of the 12
nominees for our Board of Directors (Board) named in our proxy
statement, ratified the selection of PricewaterhouseCoopers LLP as
our independent registered public accounting firm for 2022,
approved, on an advisory basis, the compensation of our named
executive officers and approved one shareholder proposal. Final
voting results will be reported in a Current Report on Form 8-K
that we will file with the U.S. Securities and Exchange
Commission.
2022 Full-Year Guidance
In the remarks, Mr. Gifford reaffirmed our guidance to deliver
2022 full-year adjusted diluted EPS in a range of $4.79 to $4.93,
representing a growth rate of 4% to 7% from an adjusted diluted EPS
base of $4.61 in 2021, as shown in Schedule 1. This guidance range
excludes the special items for the first quarter of 2022 shown in
Schedule 1. We continue to expect that 2022 adjusted diluted EPS
growth will be weighted toward the second half of the year. While
the 2022 full-year adjusted diluted EPS guidance accounts for a
range of scenarios, the external environment remains dynamic. We
will continue to monitor conditions related to (i) the economy,
including the impact of increased inflation and global supply chain
disruptions, (ii) the impact of current and future COVID-19
variants and mitigation strategies, (iii) adult tobacco consumer
dynamics, including tobacco usage occasions, available disposable
income, purchasing patterns and adoption of smoke-free products,
(iv) regulatory and legislative developments and (v) the impacts of
the Russian invasion of Ukraine.
Our 2022 full-year adjusted diluted EPS guidance range includes
planned investments in support of our Vision, such as (i)
enhancement of our digital consumer engagement system, (ii)
increased smoke-free product research, development and regulatory
preparation expenses and (iii) marketplace activities in support of
our smoke-free products. The guidance range also includes
anticipated inflationary increases in Master Settlement Agreement
(MSA) expenses, direct materials costs and our current expectation
that PM USA will not have access to the IQOS system in 2022.
Our full-year adjusted diluted EPS guidance range 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, asset impairment charges, acquisition-related and
disposition-related costs, equity investment-related special items
(including any changes in fair value of our equity investment
recorded using the fair value option and any changes in the fair
value of related warrants and preemptive rights), certain income
tax items, charges associated with tobacco and health and certain
other litigation items, and resolutions of certain
non-participating manufacturer (NPM) adjustment disputes under the
MSA (such dispute resolutions are referred to as NPM Adjustment
Items).
Our 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 our reported diluted EPS
because these items, which could be significant, may be unusual or
infrequent, are difficult to predict and may be highly variable. As
a result, we do not provide a corresponding U.S. generally accepted
accounting principles (GAAP) measure for, or reconciliation to, our
adjusted diluted EPS guidance.
Regular Quarterly Dividend
Following the Annual Meeting, our Board declared a regular
quarterly dividend of $0.90 per share, payable on July 11, 2022, to
shareholders of record as of June 15, 2022. The ex-dividend date is
June 14, 2022. Future dividend payments remain subject to the
discretion of our Board.
Altria’s Profile
We have a leading portfolio of tobacco products for U.S. tobacco
consumers age 21+. Our Vision by 2030 is to responsibly lead the
transition of adult smokers to a smoke-free future (Vision). We are
Moving Beyond Smoking™, leading the way in moving adult smokers
away from cigarettes by taking action to transition millions to
potentially less harmful choices - believing it is a substantial
opportunity for adult tobacco consumers, our businesses and
society.
Our wholly owned subsidiaries include leading manufacturers of
both combustible and smoke-free products. In combustibles, we own
Philip Morris USA Inc. (PM USA), the most profitable U.S. cigarette
manufacturer, and John Middleton Co. (Middleton), a leading U.S
cigar manufacturer. Our smoke-free portfolio includes ownership of
U.S. Smokeless Tobacco Company LLC (USSTC), the leading global
moist smokeless tobacco (MST) manufacturer, and Helix Innovations
LLC (Helix), a rapidly growing manufacturer of oral nicotine
pouches. We also enhance our smoke-free product portfolio with
exclusive U.S. commercialization rights to the IQOS Tobacco Heating
System® and Marlboro HeatSticks®, and an equity investment in JUUL
Labs, Inc. (JUUL).
We also own equity investments in Anheuser-Busch InBev SA/NV
(ABI), the world’s largest brewer, and Cronos Group Inc. (Cronos),
a leading Canadian cannabinoid company.
The brand portfolios of our tobacco operating companies include
Marlboro®, Black & Mild®, Copenhagen®, Skoal® and on!®.
Trademarks and service marks related to Altria referenced in this
release are the property of Altria or its subsidiaries or are used
with permission.
Learn more about Altria at www.altria.com and 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 are subject to 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 to differ from
those contained in the forward-looking statements included in this
release are described in our publicly filed reports, including our
Quarterly Report on Form 10-Q for the quarter ended March 31, 2022
and our most recent Annual Report on Form 10-K for the year ended
December 31, 2021. These factors include the following:
- unfavorable litigation outcomes, including risks associated
with adverse jury and judicial determinations, courts and
arbitrators reaching conclusions at variance with our or any of our
investees’ understanding of applicable law, bonding requirements in
the jurisdictions that do not limit the dollar amount of appeal
bonds, and certain challenges to bond cap statutes;
- government (including the U.S. Food and Drug Administration
(FDA)) and private sector actions that impact adult tobacco
consumer acceptability of, or access to, tobacco products;
- tobacco product taxation, including lower tobacco product
consumption levels and potential shifts in adult tobacco consumer
purchases as a result of federal, state and local excise tax
increases, and excise taxes on e-vapor and oral nicotine products
and the impact on adult tobacco consumers’ transition to lower
priced tobacco products;
- unfavorable outcomes of any government investigations of us or
our investees;
- a successful challenge to our tax positions, an increase to the
corporate income tax rate or other changes to federal or state tax
laws;
- the risks related to our and our investees’ international
business operations, including failure to prevent violations of
various United States and foreign laws and regulations such as
foreign privacy laws and laws prohibiting bribery and
corruption;
- the risks associated with health epidemics and pandemics,
including the COVID-19 pandemic and similar outbreaks, such as
their impact on our and our investees’ ability to continue
manufacturing and distributing products (directly or indirectly due
to their impact on suppliers, distributors and distribution chain
service providers) and their impact on macroeconomic conditions
and, in turn, adult tobacco consumer purchasing behavior;
- the failure of our and our investees’ efforts to compete
effectively in their respective markets;
- the growth of the e-vapor category and other innovative tobacco
products, including oral nicotine pouches, contributing to
reductions in cigarette and MST consumption levels and sales
volume;
- our ability to promote brand equity successfully; anticipate
and respond to evolving adult tobacco consumer preferences;
develop, manufacture, market and distribute products that appeal to
adult tobacco consumers; promote productivity; and protect or
enhance margins through cost savings and price increases;
- our unsuccessful commercialization of innovative products or
processes, including innovative tobacco products that may reduce
the health risks associated with cigarettes and other traditional
tobacco products, and that appeal to adult tobacco consumers;
- changes, including in macroeconomic and geopolitical conditions
(including inflation), that result in shifts in adult tobacco
consumer disposable income and purchasing behavior, including
choosing lower-priced and discount brands;
- significant changes in price, availability or quality of
tobacco, other raw materials or component parts, including as a
result of changes in macroeconomic, climate and geopolitical
conditions, including the Russian invasion of Ukraine;
- the risks, including FDA regulatory risks, related to our and
our investees’ reliance on a few significant facilities and a small
number of key suppliers, distributors and distribution chain
service providers, and the risk of an extended disruption at a
facility of, or of service by, a supplier, distributor or
distribution chain service provider of our tobacco subsidiaries or
our investees;
- required or voluntary product recalls as a result of various
circumstances such as product contamination or FDA or other
regulatory action;
- the failure of our information systems or the information
systems of key suppliers or service providers to function as
intended, or cyber attacks or security breaches;
- our inability to attract and retain the best talent due to the
impact of decreasing social acceptance of tobacco usage, tobacco
control actions and other factors, including current labor market
dynamics;
- impairment losses as a result of the write down of intangible
assets, including goodwill;
- the adverse effect of acquisitions, investments, dispositions
or other events on our credit rating;
- our inability to acquire attractive businesses or make
attractive investments on favorable terms, or at all, or to realize
the anticipated benefits from an acquisition or investment and our
inability to dispose of businesses or investments on favorable
terms or at all;
- the risks related to disruption and uncertainty in the credit
and capital markets, including risk of access to these markets both
generally and at current prevailing rates, which may adversely
affect our earnings or dividend rate or both;our inability to
attract and retain investors due to the impact of decreasing social
acceptance of tobacco usage or unfavorable ESG ratings;
- the risk that any challenge to our investment in JUUL, if
successful, could result in a broad range of resolutions, including
divestiture of the investment or rescission of the
transaction;
- the risks generally related to our investments in JUUL and
Cronos, including our inability to realize the expected benefits of
our investments in the expected time frames, or at all, due to the
risks encountered by our investees in their businesses, such as
operational, competitive, compliance, litigation and reputational
risks, and legislative and regulatory risks at the international,
federal, state and local levels; and impairment of our investment
in Cronos and changes in the fair value of our investment in
JUUL;
- the risks related to our inability to acquire a controlling
interest in JUUL as a result of standstill restrictions or to
control the material decisions of JUUL, restrictions on our ability
to sell or otherwise transfer our shares of JUUL until December 20,
2024, and non-competition restrictions for the same time period
subject to certain exceptions;
- the risks associated with our investment in ABI, including
effects of the COVID-19 pandemic, foreign currency exchange rates
and macroeconomic and geopolitical conditions, including the
Russian invasion of Ukraine, on ABI’s business and the impact on
our earnings from, and carrying value of, our investment in
ABI;
- the risks related to our ownership percentage in ABI decreasing
below certain levels, including additional tax liabilities, a
reduction in the number of directors that we have the right to have
appointed to the ABI board of directors and our potential inability
to use the equity method of accounting for our investment in
ABI;
- the risk of challenges to the tax treatment of the
consideration we received in the ABI/SABMiller plc business
combination and the tax treatment of our equity investment;
and
- the risks, including criminal, civil or tax liability, related
to our or Cronos’s failure to comply with applicable laws,
including cannabis laws.
We caution that the foregoing list of factors is not complete
and we do not undertake to update any forward-looking statements
that we may make except as required by applicable law. All
subsequent written and oral forward-looking statements attributable
to Altria or any person acting on our 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
Full Year 2021 Adjusted Results
Earnings before Income
Taxes
Provision for Income
Taxes
Net Earnings
Net Earnings Attributable to
Altria
Diluted EPS
2021 Reported
$
3,824
$
1,349
$
2,475
$
2,475
$
1.34
NPM Adjustment Items
(76
)
(19
)
(57
)
(57
)
(0.03
)
Asset impairment, exit, implementation,
acquisition and disposition-related costs
120
21
99
99
0.05
Tobacco and health and certain other
litigation items
182
44
138
138
0.07
ABI-related special items
6,203
1,302
4,901
4,901
2.66
Cronos-related special items
466
(4
)
470
470
0.25
Loss on early extinguishment of debt
649
153
496
496
0.27
Income tax items
—
3
(3
)
(3
)
—
2021 Adjusted for Special Items
$
11,368
$
2,849
$
8,519
$
8,519
$
4.61
Reconciliation of Altria’s
First Quarter 2022 Adjusted Results
Earnings before Income
Taxes
Provision for Income
Taxes
Net Earnings
Net Earnings Attributable to
Altria
Diluted EPS
2022 Reported
$
2,673
$
714
$
1,959
$
1,959
$
1.08
NPM Adjustment Items
(60
)
(15
)
(45
)
(45
)
(0.02
)
Asset impairment, exit, implementation,
acquisition and disposition-related costs
7
2
5
5
—
Tobacco and health and certain other
litigation items
12
3
9
9
—
JUUL changes in fair value
100
—
100
100
0.05
ABI-related special items
(59
)
(12
)
(47
)
(47
)
(0.02
)
Cronos-related special items
61
—
61
61
0.03
Income tax items
—
(5
)
5
5
—
2022 Adjusted for Special Items
$
2,734
$
687
$
2,047
$
2,047
$
1.12
While we report our financial results in accordance with GAAP,
our management reviews certain financial results, including diluted
EPS, on an adjusted basis, which excludes certain income and
expense items, including those items noted under “2022 Full-Year
Guidance.” Our management does not view any of these special items
to be part of our underlying results as they may be highly
variable, may be unusual or infrequent, are difficult to predict
and can distort underlying business trends and results. Our
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. Our
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 required by, or calculated in accordance 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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