Altria Group, Inc. (NYSE: MO) today reports its 2022
second-quarter and first-half business results and reaffirms its
guidance for 2022 full-year adjusted diluted earnings per share
(EPS).
“Our tobacco businesses performed well in a challenging
macroeconomic environment for the first half of the year,” said
Billy Gifford, Altria’s Chief Executive Officer. “The smokeable
products segment delivered solid operating companies income growth
behind the resilience of Marlboro, and our moist smokeless tobacco
brands continued to drive profitability. We also continued to make
progress toward our Vision through the investments we laid out in
January, which included supporting the expansion of on!. We are
encouraged by on!’s retail momentum and significant share growth
since achieving unconstrained capacity last summer.”
“We believe this is a pivotal point in the U.S. tobacco
industry. The FDA has the opportunity to create a mature, regulated
marketplace of smoke-free products that can successfully realize
tobacco harm reduction and improve the lives of millions of adult
smokers. We share the FDA’s goal to transition adult smokers away
from cigarettes, but we continue to believe that harm reduction,
not prohibition, is the best path forward.”
“Our financial plans for the year remain on track, and we
reaffirm our guidance to deliver 2022 full-year adjusted diluted
EPS in a range of $4.79 to $4.93. This range represents an adjusted
diluted EPS growth rate of 4% to 7% from a $4.61 base in 2021.”
Altria Headline Financials1
($ in millions, except per share data)
Q2 2022
Change vs. Q2
2021
First Half 2022
Change vs. First Half
2021
Net revenues
$6,543
(5.7)%
$12,435
(4.1)%
Revenues net of excise taxes
$5,374
(4.3)%
$10,193
(2.9)%
Reported tax rate
44.5%
18.4 pp
33.4%
7.1 pp
Adjusted tax rate
24.8%
(0.1) pp
24.9%
– pp
Reported diluted EPS2
$0.49
(57.8)%
$1.57
(18.7)%
Adjusted diluted EPS2
$1.26
2.4%
$2.38
3.5%
1 “Adjusted” financial measures presented in this release
exclude the impact of special items. See “Basis of Presentation”
for more information.
2 “EPS” represents diluted earnings per share attributable to
Altria.
As previously announced, a conference call with the investment
community and news media will be webcast on July 28, 2022 at 9:00
a.m. Eastern Time. Access to the webcast is available at
www.altria.com/webcasts.
Cash Returns to Shareholders and Capital Markets
Activity
Share Repurchase Program
- In the second quarter, we repurchased 10.1 million shares at an
average price of $50.35, for a total cost of $507 million.
- In the first half, we repurchased 21.4 million shares at an
average price of $50.53, for a total cost of approximately $1.1
billion.
- As of June 30, 2022, we had approximately $750 million
remaining under our existing $3.5 billion share repurchase program,
which we expect to complete by December 31, 2022. Share repurchases
depend on marketplace conditions and other factors, and the program
remains subject to the discretion of our Board of Directors
(Board).
Dividends
- We paid dividends of approximately $1.6 billion in the second
quarter and approximately $3.3 billion in the first half.
- Our current annualized dividend rate is $3.60 per share,
representing a dividend yield of 8.2% as of July 25, 2022.
- We maintain our long-term objective of a dividend payout ratio
target of approximately 80% of our adjusted diluted EPS. Future
dividend payments remain subject to the discretion of our
Board.
Capital Markets Activity
- In August, we expect to retire $1.1 billion of notes coming due
with available cash.
Environmental, Social and Governance (ESG)
Our Corporate Responsibility Focus Areas are (i) reduce the harm
of tobacco products, (ii) prevent underage use, (iii) protect the
environment, (iv) drive responsibility through our value chain, (v)
support our people and communities and (vi) engage and lead
responsibly. Our corporate responsibility reports are available on
the Corporate Responsibility section of www.altria.com.
- Most recently, we published the following responsibility
reports:
- 2021 Engage and Lead Responsibly report;
- 2021 Focus Area Snapshots;
- Focus Areas Governance & Frameworks report, which
summarizes governance practices, policies and frameworks used to
manage our responsibility focus areas;
- ESG Data Tables, which provide full-year data and developments
across our key ESG metrics; and
- 2021 Lobbying and Political Activity Transparency &
Integrity report.
- In June, we were recognized as one of the most community-minded
businesses by the national service organization, Points of Light,
in its 2022 Civic 50 recognition. This is our tenth consecutive
year of recognition for our commitment to supporting communities
and advancing social causes.
Macroeconomic and Geopolitical Conditions Impacting Our
Businesses
Impact on Tobacco Business Operations
- We continue to monitor the evolving macroeconomic and
geopolitical landscape. High rates of inflation continued in the
second quarter of 2022, driven by increasing global energy,
commodity and food prices, which were further exacerbated by other
factors, including supply and demand imbalances, labor shortages
and the Russian invasion of Ukraine. While not material to date,
high inflation adversely impacted our Master Settlement Agreement
(MSA) expense and other direct and indirect costs.
- Volatility in domestic and global economies and disruptions in
the supply and distribution chains continued in the second quarter
of 2022, resulting from several factors, including the on-going
impacts of the COVID-19 pandemic and the Russian invasion of
Ukraine. While our operating companies focus on the manufacture and
sale of tobacco products in the U.S. and have little direct
exposure to Russia and Ukraine, we have experienced negative
effects on the cost and availability of certain raw materials and
component parts for our products.
- To date, we have not experienced any material adverse effects
on our businesses. However, as these trends and developments evolve
and new ones emerge, we will continue to evaluate the potential
impacts on our businesses and our Vision.
Impact on Adult Tobacco Consumers (ATCs)
- ATCs continue to face challenges from high inflation, high gas
prices, rising interest rates, the COVID-19 pandemic and the end of
federal government stimulus, which have impacted ATC disposable
income, resulting in volume declines across the tobacco space
during the second quarter. However, we believe that ATCs adapted
their purchasing patterns across a variety of goods and services to
compensate for the pressures on disposable income. We continue to
monitor the effect of these dynamics on ATCs and their purchasing
behaviors, including overall tobacco product expenditures, mix
between premium and discount brand purchases and adoption of
smoke-free products.
Impact on ABI Investment
- ABI’s business also continues to be impacted by macroeconomic
and geopolitical factors. ABI has been impacted by supply chain
constraints across certain markets, foreign exchange rate
fluctuations, inflation and commodity cost headwinds. ABI has a
joint venture with exposure to Russia and Ukraine, which it fully
impaired in the first quarter of 2022 and has announced plans to
sell. Additionally, the macroeconomic and geopolitical factors have
contributed to significant changes in certain foreign exchange
rates, including the Euro to U.S. dollar exchange rate, resulting
in the fair value of our investment in ABI declining below its
carrying value at June 30, 2022. Despite these headwinds, ABI has
delivered consistent business and earnings performance over the
past several quarters, demonstrating its ability to continue to
execute its strategies and navigate challenges. While we believe
that the decline in fair value is temporary, we will continue to
monitor our investment in ABI, including the impact on ABI’s
business, resulting from supply chain challenges, inflation,
foreign exchange rates and market valuation.
JUUL Investment Update
- In June 2022, the U.S. Food and Drug Administration (FDA)
issued marketing denial orders (MDOs) to JUUL ordering all of
JUUL’s products currently marketed in the U.S. off the market.
- In July 2022, the FDA administratively stayed the MDOs on a
temporary basis, citing its determination that there are scientific
issues unique to the JUUL pre-market tobacco product applications
that warrant additional agency review. This administrative stay
temporarily suspends the MDOs and JUUL’s products currently remain
on the market.
- In the second quarter of 2022, we recorded a non-cash pre-tax
unrealized loss of $1.2 billion as a result of a decrease in the
estimated fair value of our investment in JUUL. The decrease in the
estimated fair value was primarily driven by (i) a decrease in the
likelihood of a favorable outcome from the FDA for JUUL’s products
that are currently marketed in the U.S., which have received MDOs
and are now under additional administrative review, (ii) a decrease
in the likelihood of JUUL maintaining adequate liquidity to fund
projected cash needs, which could result in JUUL seeking protection
under bankruptcy or other insolvency law, and (iii) projections of
higher operating expenses resulting in lower long-term operating
margins. As of June 30, 2022, the estimated fair value of our
investment in JUUL was $450 million.
- Under the terms of our relationship agreement with JUUL, we
have the option to be released from our non-compete obligations if
(i) JUUL is prohibited by federal law from selling e-vapor products
in the U.S. for a continuous period of at least 12 months (subject
to tolling of this period in certain circumstances), (ii) if our
carrying value of the JUUL investment is not more than 10% of the
initial carrying value of $12.8 billion or (iii) if we are no
longer providing JUUL services as of December 20, 2024. However, if
we elect to be released from our non-compete obligations, we would
lose our board designation rights (other than the right to appoint
one independent director so long as our ownership continues to be
at least 10%), preemptive rights, consent rights and certain other
rights with respect to our investment in JUUL, and our JUUL shares
would be converted to single vote common stock, which would result
in a significant reduction in our voting power. At this time, we
continue to believe that these investment rights are beneficial to
us. Therefore, we have not opted to be released from our
non-compete obligations at this time, but we retain the option to
do so in the future in accordance with our relationship agreement
with JUUL.
- We continue to believe that e-vapor products, including JUUL,
can play an important role in tobacco harm reduction.
2022 Full-Year Guidance
We reaffirm 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. 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, rising
interest rates and global supply chain disruptions, (ii) the impact
of current and future COVID-19 variants and mitigation strategies,
(iii) ATC 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 MSA expenses and direct and
indirect 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). See Table 1 below for the income and expense items for the
first six months of 2022.
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.
ALTRIA GROUP, INC.
See “Basis of Presentation” below for an explanation of
financial measures and reporting segments discussed in this
release.
Financial Performance
Second Quarter
- Net revenues decreased 5.7% to $6.5 billion, primarily driven
by lower net revenues in the smokeable products segment, the sale
of our wine business in October 2021 and lower net revenues in the
oral tobacco products segment. Revenues net of excise taxes
decreased 4.3% to $5.4 billion.
- Reported diluted EPS decreased 57.8% to $0.49, primarily driven
by unfavorable results from our equity investments, substantially
all of which related to the changes in the estimated fair value of
our investment in JUUL (including the corresponding adjustment for
a tax valuation allowance) and lower reported operating companies
income (OCI), partially offset by the loss on Cronos-related
financial instruments in 2021 and fewer shares outstanding.
- Adjusted diluted EPS increased 2.4% to $1.26, driven by fewer
shares outstanding.
First Half
- Net revenues decreased 4.1% to $12.4 billion, primarily driven
by the sale of our wine business in October 2021 and lower net
revenues in the smokeable and oral tobacco products segments.
Revenues net of excise taxes decreased 2.9% to $10.2 billion.
- Reported diluted EPS decreased 18.7% to $1.57, primarily driven
by unfavorable results from our equity investments, substantially
all of which related to the changes in the estimated fair value of
our investment in JUUL (including the corresponding adjustment for
a tax valuation allowance), partially offset by 2021 losses on
early extinguishment of debt, fewer shares outstanding, higher
reported OCI and favorable interest expense.
- Adjusted diluted EPS increased 3.5% to $2.38, primarily driven
by fewer shares outstanding, higher adjusted OCI and favorable
interest expense.
Table 1 - Altria’s Adjusted
Results
Second Quarter
Six Months Ended June
30,
2022
2021
Change
2022
2021
Change
Reported diluted EPS
$ 0.49
$ 1.16
(57.8) %
$ 1.57
$ 1.93
(18.7) %
NPM Adjustment Items
—
—
(0.02)
(0.01)
Asset impairment, exit, implementation,
acquisition and disposition-related costs
—
—
—
0.02
Tobacco and health and certain other
litigation items
0.02
—
0.02
0.02
JUUL changes in fair value
0.64
(0.05)
0.70
0.05
ABI-related special items
0.05
0.02
0.02
(0.04)
Cronos-related special items
0.06
0.10
0.09
0.06
Loss on early extinguishment of debt
—
—
—
0.27
Adjusted diluted EPS
$ 1.26
$ 1.23
2.4 %
$ 2.38
$ 2.30
3.5 %
Note: For details of pre-tax, tax and after-tax amounts, see
Schedules 7 and 9.
Special Items
The EPS impact of the following special items is shown in Table
1 and Schedules 6, 7, 8 and 9.
NPM Adjustment Items
- In the first half of 2022 and 2021, we recorded pre-tax income
of $60 million (or $0.02 per share) and $32 million (or $0.01 per
share), respectively, for NPM Adjustment Items.
Tobacco and Health and Certain Other Litigation Items
- In the second quarter of 2022, we recorded pre-tax charges of
$46 million (or $0.02 per share) for tobacco and health and certain
other litigation items and related interest costs.
- In the first half of 2022 and 2021, we recorded pre-tax charges
of $58 million (or $0.02 per share) and $43 million (or $0.02 per
share), respectively, for tobacco and health and certain other
litigation items and related interest costs.
JUUL Changes in Fair Value
We recorded non-cash, pre-tax unrealized (income) losses from
equity investments as a result of changes in the estimated fair
value of our investment in JUUL consisting of the following:
Second Quarter
Six Months Ended June
30,
($ in millions, except per share
data)
2022
2021
2022
2021
(Income) losses from equity
investments
$
1,155
$
(100
)
$
1,255
$
100
Earnings per share
$
0.64
$
(0.05
)
$
0.70
$
0.05
We recorded corresponding adjustments to the JUUL tax valuation
allowance in 2022 and 2021.
ABI-Related Special Items
- In the second quarter of 2022, equity earnings from ABI
included net pre-tax losses of $112 million (or $0.05 per share),
consisting primarily of ABI’s non-cash impairment charge related to
its investment in a joint venture with direct exposure to Russia
and Ukraine.
- In the first half of 2022, equity earnings from ABI included
net pre-tax losses of $53 million (or $0.02 per share), consisting
primarily of ABI’s non-cash impairment charge related to its
investment in a joint venture with direct exposure to Russia and
Ukraine, partially offset by ABI’s net mark-to-market gains on
certain ABI financial instruments associated with its share
commitments.
- In the second quarter of 2021, equity earnings from ABI
included net pre-tax charges of $39 million (or $0.02 per share),
consisting primarily of charges associated with early bond
terminations by ABI.
- In the first half of 2021, equity earnings from ABI included
net pre-tax income of $89 million (or $0.04 per share), consisting
primarily of ABI’s completion of the issuance of a minority stake
in its U.S.-based metal container operations and net mark-to-market
gains on certain ABI financial instruments associated with its
share commitments, partially offset by charges associated with an
early bond termination by ABI.
The ABI-related special items above include our respective share
of the amounts recorded by ABI and additional adjustments related
to (i) conversion from international financial reporting standards
to GAAP and (ii) adjustments to our investment required under the
equity method of accounting.
Cronos-Related Special Items
We recorded net pre-tax (income) expense consisting of the
following:
Second Quarter
Six Months Ended June
30,
($ in millions, except per share
data)
2022
2021
2022
2021
(Gain) loss on Cronos-related financial
instruments 1
$
4
$
103
$
14
$
(7
)
(Income) losses from equity investments
2
110
78
161
118
Total Cronos-related special items -
(income) expense
$
114
$
181
$
175
$
111
Earnings per share
$
0.06
$
0.10
$
0.09
$
0.06
1 Amounts are related to the non-cash change in the fair value
of the warrant and certain anti-dilution protections.
2 Amounts include our share of special items recorded by Cronos
and additional adjustments, if required under the equity method of
accounting, related to our investment in Cronos including the $107
million non-cash, pre-tax impairment of our investment in Cronos in
the second quarter of 2022.
We recorded corresponding adjustments to the Cronos tax
valuation allowance in 2022 and 2021 relating to the special
items.
Loss on Early Extinguishment of Debt
- In the first half of 2021, we recorded pre-tax losses on early
extinguishment of debt of $649 million (or $0.27 per share).
SMOKEABLE PRODUCTS
Second Quarter
- Net revenues decreased 2.9%, primarily driven by lower shipment
volume, partially offset by higher pricing and lower promotional
investments. Revenues net of excise taxes decreased 0.7%.
- Reported OCI decreased 0.5%, primarily driven by lower shipment
volume, higher costs, higher per unit settlement charges and higher
tobacco and health and certain other litigation items, partially
offset by higher pricing and lower promotional investments.
- Adjusted OCI increased 0.6%, primarily driven by higher pricing
and lower promotional investments, partially offset by lower
shipment volume, higher costs and higher per unit settlement
charges. Adjusted OCI margins increased by 0.7 percentage points to
59.1%.
First Half
- Net revenues decreased 1.4%, primarily driven by lower shipment
volume, partially offset by higher pricing and lower promotional
investments. Revenues net of excise taxes increased 0.7%.
- Reported OCI increased 3.4%, primarily driven by higher
pricing, lower promotional investments and higher NPM Adjustment
Items, partially offset by lower shipment volume, higher costs and
higher per unit settlement charges.
- Adjusted OCI increased 2.9%, primarily driven by higher pricing
and lower promotional investments, partially offset by lower
shipment volume, higher costs and higher per unit settlement
charges. Adjusted OCI margins increased by 1.3 percentage points to
59.3%.
Table 2 - Smokeable Products: Revenues
and OCI ($ in millions)
Second Quarter
Six Months Ended June
30,
2022
2021
Change
2022
2021
Change
Net revenues
$ 5,873
$ 6,050
(2.9) %
$ 11,138
$ 11,300
(1.4) %
Excise taxes
(1,137)
(1,281)
(2,181)
(2,402)
Revenues net of excise taxes
$ 4,736
$ 4,769
(0.7) %
$ 8,957
$ 8,898
0.7 %
Reported OCI
$ 2,762
$ 2,776
(0.5) %
$ 5,321
$ 5,148
3.4 %
NPM Adjustment Items
—
—
(60)
(32)
Tobacco and health and certain other
litigation items
38
8
50
43
Adjusted OCI
$ 2,800
$ 2,784
0.6 %
$ 5,311
$ 5,159
2.9 %
Adjusted OCI margins 1
59.1 %
58.4 %
0.7 pp
59.3 %
58.0 %
1.3 pp
1 Adjusted OCI margins are calculated as adjusted OCI divided by
revenues net of excise taxes.
Shipment Volume
Second Quarter
- Smokeable products segment reported domestic cigarette shipment
volume decreased 11.1%, primarily driven by the industry’s decline
rate and retail share losses (both of which were impacted by
macroeconomic pressures on ATC disposable income) and trade
inventory movements, partially offset by other factors.
- When adjusted for trade inventory movements, smokeable products
segment domestic cigarette shipment volume decreased by an
estimated 10%.
- When adjusted for trade inventory movements and other factors,
total estimated domestic cigarette industry volume decreased by an
estimated 8.5%.
- Reported cigar shipment volume decreased 5.0%, driven by
macroeconomic pressures on ATC disposable income, trade inventory
movements and other factors.
First Half
- Smokeable products segment reported domestic cigarette shipment
volume decreased 8.9%, primarily driven by the industry’s decline
rate and retail share losses (both of which were impacted by
macroeconomic pressures on ATC disposable income) and trade
inventory movements, partially offset by other factors.
- When adjusted for trade inventory movements and other factors,
smokeable products segment domestic cigarette shipment volume
decreased by an estimated 9%.
- When adjusted for trade inventory movements and other factors,
total estimated domestic cigarette industry volume decreased by an
estimated 7.5%.
- Reported cigar shipment volume decreased 7.4%, driven by trade
inventory movements, macroeconomic pressures on ATC disposable
income and other factors.
Table 3 - Smokeable Products: Reported
Shipment Volume (sticks in millions)
Second Quarter
Six Months Ended June
30,
2022
2021
Change
2022
2021
Change
Cigarettes:
Marlboro
20,035
22,339
(10.3) %
38,325
41,754
(8.2) %
Other premium
1,017
1,157
(12.1) %
1,954
2,138
(8.6) %
Discount
1,457
1,810
(19.5) %
2,847
3,428
(16.9) %
Total cigarettes
22,509
25,306
(11.1) %
43,126
47,320
(8.9) %
Cigars:
Black & Mild
432
453
(4.6) %
865
932
(7.2) %
Other
1
3
(66.7) %
2
4
(50.0) %
Total cigars
433
456
(5.0) %
867
936
(7.4) %
Total smokeable products
22,942
25,762
(10.9) %
43,993
48,256
(8.8) %
Note: Cigarettes volume includes units sold as well as
promotional units, but excludes units sold for distribution to
Puerto Rico, and units sold in U.S. Territories, to overseas
military and by Philip Morris Duty Free Inc., none of which,
individually or in the aggregate, is material to the smokeable
products segment.
Retail Share and Brand Activity
Second Quarter
- Marlboro retail share of the total cigarette category decreased
0.4 share points to 42.7%, primarily due to increased macroeconomic
pressures on ATC disposable income. Marlboro retail share increased
0.1 share point from the first quarter of 2022.
- The cigarette industry discount retail share increased 1.3
share points to 26.4%, primarily due to the ATC factors mentioned
above. Cigarette industry discount retail share was unchanged from
the first quarter of 2022.
First Half
- Marlboro retail share of the total cigarette category decreased
0.4 share points to 42.6%, primarily due to increased macroeconomic
pressures on ATC disposable income.
- The cigarette industry discount retail share increased 1.2
share points to 26.4%, primarily due to the ATC factors mentioned
above.
Table 4 - Smokeable Products:
Cigarettes Retail Share (percent)
Second Quarter
Six Months Ended June
30,
2022
2021
Percentage point
change
2022
2021
Percentage point
change
Cigarettes:
Marlboro
42.7
%
43.1
%
(0.4
)
42.6
%
43.0
%
(0.4
)
Other premium
2.3
2.3
—
2.3
2.3
—
Discount
3.2
3.5
(0.3
)
3.3
3.6
(0.3
)
Total cigarettes
48.2
%
48.9
%
(0.7
)
48.2
%
48.9
%
(0.7
)
Note: Retail share results for cigarettes are based on data from
IRI/MSAi, a tracking service that uses a sample of stores and
certain wholesale shipments to project market share and depict
share trends. This service tracks sales in the food, drug, mass
merchandisers, convenience, military, dollar store and club trade
classes. For other trade classes selling cigarettes, retail share
is based on shipments from wholesalers to retailers (STARS). This
service is not designed to capture sales through other channels,
including the internet, direct mail and some illicitly
tax-advantaged outlets. It is IRI’s standard practice to
periodically refresh its services, which could restate retail share
results that were previously released in this service.
ORAL TOBACCO PRODUCTS
Revenues and OCI
Second Quarter
- Net revenues decreased 4.0%, primarily driven by lower shipment
volume, higher promotional investments in on! and a higher
percentage of on! shipment volume relative to MST versus the prior
year (mix change), partially offset by higher pricing. Revenues net
of excise taxes decreased 3.8%.
- Reported and adjusted OCI decreased 8.9%, primarily driven by
lower shipment volume, higher promotional investments in on!, mix
change and higher costs, partially offset by higher pricing.
Adjusted OCI margins declined by 3.8 percentage points to
67.9%.
First Half
- Net revenues decreased 3.1%, primarily driven by lower shipment
volume, higher promotional investments in on! and mix change,
partially offset by higher pricing. Revenues net of excise taxes
decreased 2.9%.
- Reported OCI decreased 3.1%, primarily driven by lower shipment
volume, higher promotional investments in on!, mix change and
higher costs, partially offset by higher pricing and 2021
acquisition-related costs.
- Adjusted OCI decreased 7.1%, primarily driven by lower shipment
volume, higher promotional investments in on!, mix change and
higher costs, partially offset by higher pricing. Adjusted OCI
margins declined by 3.1 percentage points to 68.8%.
Table 5 - Oral Tobacco Products:
Revenues and OCI ($ in millions)
Second Quarter
Six Months Ended June
30,
2022
2021
Change
2022
2021
Change
Net revenues
$ 665
$ 693
(4.0) %
$ 1,278
$ 1,319
(3.1) %
Excise taxes
(32)
(35)
(61)
(66)
Revenues net of excise taxes
$ 633
$ 658
(3.8) %
$ 1,217
$ 1,253
(2.9) %
Reported OCI
$ 430
$ 472
(8.9) %
$ 837
$ 864
(3.1) %
Asset impairment, exit, implementation,
acquisition and disposition-related costs
—
—
—
37
Adjusted OCI
$ 430
$ 472
(8.9) %
$ 837
$ 901
(7.1) %
Adjusted OCI margins 1
67.9 %
71.7 %
(3.8) pp
68.8 %
71.9 %
(3.1) pp
1 Adjusted OCI margins are calculated as adjusted OCI divided by
revenues net of excise taxes.
Shipment Volume
Second Quarter
- Oral tobacco products segment reported domestic shipment volume
decreased 4.4%, primarily driven by retail share losses, trade
inventory movements and the industry’s decline rate, partially
offset by other factors. The retail share losses and the industry’s
decline rate were impacted by macroeconomic pressures on ATC
disposable income. When adjusted for trade inventory movements,
oral tobacco products segment shipment volume decreased by an
estimated 2.5%.
First Half
- Oral tobacco products segment reported domestic shipment volume
decreased 3.2%, primarily driven by trade inventory movements,
retail share losses and the industry’s decline rate, partially
offset by other factors. The retail share losses and the industry’s
decline rate were impacted by macroeconomic pressures on ATC
disposable income. When adjusted for trade inventory movements,
oral tobacco products segment shipment volume decreased by an
estimated 1%.
- Total oral tobacco industry volume decreased by an estimated
0.5% for the six months ended, driven by macroeconomic pressures on
ATC disposable income and other factors, partially offset by growth
in oral nicotine pouches.
Table 6 - Oral Tobacco Products:
Reported Shipment Volume (cans and packs in millions)
Second Quarter
Six Months Ended June
30,
2022
2021
Change
2022
2021
Change
Copenhagen
123.1
134.1
(8.2) %
238.3
257.0
(7.3) %
Skoal
46.9
52.3
(10.3) %
90.8
100.5
(9.7) %
on!
20.3
12.9
57.4 %
38.6
22.1
74.7 %
Other
17.7
18.3
(3.3) %
34.4
35.9
(4.2) %
Total oral tobacco products
208.0
217.6
(4.4) %
402.1
415.5
(3.2) %
Note: Volume includes cans and packs sold, as well as
promotional units, but excludes international volume, which is
currently not material to the oral tobacco products segment. New
types of oral tobacco products, as well as new packaging
configurations of existing oral tobacco products, may or may not be
equivalent to existing MST products on a can-for-can basis. To
calculate volumes of cans and packs shipped, one pack of snus or
one can of oral nicotine pouches, irrespective of the number of
pouches in the pack, is assumed to be equivalent to one can of
MST.
Retail Share and Brand Activity
Second Quarter
- Oral tobacco products segment retail share was 46.7%, and
Copenhagen continued to be the leading oral tobacco brand with a
retail share of 27.2%. In the oral tobacco products segment,
macroeconomic pressures on ATC disposable income resulted in share
declines for MST products, which declines were partially offset by
the share growth of oral nicotine pouches.
- Total U.S. oral tobacco category share for on! nicotine pouches
grew to 4.9%, an increase of 2.9 percentage points.
- Copenhagen is celebrating its 200th anniversary this year. We
are extremely proud of Copenhagen’s long history and the fantastic
employees who have supported the brand over the years. To honor
this impressive milestone, we have introduced Cope Rewards, the
first and only national rewards program for an MST brand. Under the
program, dippers can earn points by entering codes from their
Copenhagen cans and can redeem them for coupons or rewards. We are
excited about Cope Rewards and its potential contributions to
Copenhagen’s sustained leadership in MST.
First Half
- Oral tobacco products segment retail share was 46.8%, and
Copenhagen continued to be the leading oral tobacco brand with a
retail share of 27.6%. In the oral tobacco products segment,
macroeconomic pressures on ATC disposable income resulted in share
declines for MST products, which declines were partially offset by
the share growth of oral nicotine pouches.
- Total U.S. oral tobacco category share for on! nicotine pouches
grew to 4.5% an increase of 2.7 percentage points.
Table 7 - Oral Tobacco Products: Retail
Share (percent)
Second Quarter
Six Months Ended June
30,
2022
2021
Percentage point
change
2022
2021
Percentage point
change
Copenhagen
27.2
%
29.8
%
(2.6
)
27.6
%
30.0
%
(2.4
)
Skoal
11.5
12.7
(1.2
)
11.6
12.8
(1.2
)
on!
4.9
2.0
2.9
4.5
1.8
2.7
Other
3.1
3.2
(0.1
)
3.1
3.3
(0.2
)
Total oral tobacco products
46.7
%
47.7
%
(1.0
)
46.8
%
47.9
%
(1.1
)
Note: The oral tobacco products retail share results exclude
international volume. Retail share results for oral tobacco
products are based on data from IRI InfoScan, a tracking service
that uses a sample of stores to project market share and depict
share trends. This service tracks sales in the food, drug, mass
merchandisers, convenience, military, dollar store and club trade
classes on the number of cans and packs sold. Oral tobacco products
is defined by IRI as moist smokeless, snus and oral nicotine
pouches. New types of oral tobacco products, as well as new
packaging configurations of existing oral tobacco products, may or
may not be equivalent to existing MST products on a can-for-can
basis. For example, one pack of snus or one can of oral nicotine
pouches, irrespective of the number of pouches in the pack, is
assumed to be equivalent to one can of MST. Because this service
represents retail share performance only in key trade channels, it
should not be considered a precise measurement of actual retail
share. It is IRI’s standard practice to periodically refresh its
InfoScan services, which could restate retail share results that
were previously released in this service.
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 our subsidiaries or are used
with permission.
Learn more about Altria at www.altria.com and follow us on Twitter, Facebook
and LinkedIn.
Basis of Presentation
We report our financial results in accordance with GAAP. Our
management reviews OCI, which is defined as operating income before
general corporate expenses and amortization of intangibles, to
evaluate the performance of, and allocate resources to, our
segments. Our management also reviews certain financial results,
including OCI, OCI margins and 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 also reviews income tax
rates on an adjusted basis. Our adjusted effective tax rate may
exclude certain income tax items from our reported effective tax
rate. 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. We
provide reconciliations of historical adjusted financial measures
to corresponding GAAP measures in this release.
We use the equity method of accounting for our investment in ABI
and Cronos and report our share of ABI’s and Cronos’s results using
a one-quarter lag because ABI’s and Cronos’s results are not
available in time for us to record them in the concurrent period.
The one-quarter reporting lag for ABI and Cronos does not affect
our cash flows.
Our reportable segments are (i) smokeable products, including
combustible cigarettes and cigars manufactured and sold by PM USA
and Middleton, respectively, and (ii) oral tobacco products,
including MST and snus products manufactured and sold by USSTC, and
oral nicotine pouches sold by Helix. Prior to the sale of Ste.
Michelle Wine Estates Ltd. (Ste. Michelle) on October 1, 2021, wine
produced and/or sold by Ste. Michelle was a reportable segment. We
have included results for innovative tobacco products and Philip
Morris Capital Corporation in “All Other.” Comparisons are to the
corresponding prior-year period unless otherwise stated.
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
materially from those contained in the forward-looking statements
included in this release are described in our publicly filed
reports, including our Annual Report on Form 10-K for the year
ended December 31, 2021 and our Quarterly Reports on Form 10-Q.
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 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 or prohibition on the
marketing or sale of our or any of our investees’ products as a
result of various circumstances such as FDA or other regulatory
action or product contamination;
- 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 losing access to these
markets, 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 changes in the fair value of
our investment in JUUL and impairment of our investment in
Cronos;
- 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 a successful challenge to the tax treatment of our
equity investment in ABI; 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
Consolidated Statements of
Earnings
For the Quarters Ended June
30,
(dollars in millions, except per
share data)
(Unaudited)
2022
2021
% Change
Net revenues
$
6,543
$
6,936
(5.7
) %
Cost of sales 1
1,708
1,882
Excise taxes on products 1
1,169
1,322
Gross profit
3,666
3,732
(1.8
) %
Marketing, administration and research
costs
489
469
Operating companies income
3,177
3,263
(2.6
) %
Amortization of intangibles
18
18
General corporate expenses
54
59
Operating income
3,105
3,186
(2.5
) %
Interest and other debt expense, net
280
295
Net periodic benefit income, excluding
service cost
(47
)
(46
)
(Income) losses from equity investments
1
1,263
(75
)
(Gain) loss on Cronos-related financial
instruments
4
103
Earnings before income taxes
1,605
2,909
(44.8
) %
Provision for income taxes
714
759
Net earnings
891
2,150
(58.6
) %
Net (earnings) losses attributable to
noncontrolling interests
—
(1
)
Net earnings attributable to
Altria
$
891
$
2,149
(58.5
) %
Per share data:
Diluted earnings per share attributable
to Altria
$
0.49
$
1.16
(57.8
) %
Weighted-average diluted shares
outstanding
1,809
1,849
(2.2
) %
1 Cost of sales includes charges for resolution expenses related
to state settlement agreements and FDA user fees. Supplemental
information concerning those items, excise taxes on products sold
and (income) losses from equity investments is shown in Schedule
5.
Schedule 2
ALTRIA GROUP, INC.
and Subsidiaries
Selected Financial Data
For the Quarters Ended June
30,
(dollars in millions)
(Unaudited)
Net Revenues
Smokeable Products
Oral Tobacco Products
Wine
All Other
Total
2022
$
5,873
$
665
$
—
$
5
$
6,543
2021
6,050
693
167
26
6,936
% Change
(2.9
) %
(4.0
) %
(100.0
) %
(80.8
) %
(5.7
) %
Reconciliation:
For the quarter ended June 30,
2021
$
6,050
$
693
$
167
$
26
$
6,936
Operations
(177
)
(28
)
(167
)
(21
)
(393
)
For the quarter ended June 30,
2022
$
5,873
$
665
$
—
$
5
$
6,543
Operating Companies Income
(Loss)
Smokeable Products
Oral Tobacco Products
Wine
All Other
Total
2022
$
2,762
$
430
$
—
$
(15
)
$
3,177
2021
2,776
472
27
(12
)
3,263
% Change
(0.5
) %
(8.9
) %
(100.0
) %
(25.0
) %
(2.6
) %
Reconciliation:
For the quarter ended June 30,
2021
$
2,776
$
472
$
27
$
(12
)
$
3,263
Tobacco and health and certain other
litigation items - 2021
8
—
—
—
8
8
—
—
—
8
Tobacco and health and certain other
litigation items - 2022
(38
)
—
—
—
(38
)
(38
)
—
—
—
(38
)
Operations
16
(42
)
(27
)
(3
)
(56
)
For the quarter ended June 30,
2022
$
2,762
$
430
$
—
$
(15
)
$
3,177
Schedule 3
ALTRIA GROUP, INC.
and Subsidiaries
Consolidated Statements of
Earnings
For the Six Months Ended June
30,
(dollars in millions, except per
share data)
(Unaudited)
2022
2021
% Change
Net revenues
$
12,435
$
12,972
(4.1
) %
Cost of sales 1
3,154
3,490
Excise taxes on products 1
2,242
2,478
Gross profit
7,039
7,004
0.5
%
Marketing, administration and research
costs
901
973
Operating companies income
6,138
6,031
1.8
%
Amortization of intangibles
35
35
General corporate expenses
114
120
Operating income
5,989
5,876
1.9
%
Interest and other debt expense, net
561
603
Loss on early extinguishment of debt
—
649
Net periodic benefit income, excluding
service cost
(93
)
(89
)
(Income) losses from equity investments
1
1,229
(126
)
(Gain) loss on Cronos-related financial
instruments
14
(7
)
Earnings before income taxes
4,278
4,846
(11.7
) %
Provision for income taxes
1,428
1,275
Net earnings
2,850
3,571
(20.2
) %
Net (earnings) losses attributable to
noncontrolling interests
—
2
Net earnings attributable to
Altria
$
2,850
$
3,573
(20.2
) %
Per share data2:
Diluted earnings per share attributable
to Altria
$
1.57
$
1.93
(18.7
) %
Weighted-average diluted shares
outstanding
1,813
1,853
(2.2
) %
1 Cost of sales includes charges for resolution expenses related
to state settlement agreements and FDA user fees. Supplemental
information concerning those items, excise taxes on products sold
and income (losses) from equity investments is shown in Schedule
5.
2 Diluted earnings per share attributable to Altria are computed
independently for each period. Accordingly, the sum of the
quarterly earnings per share amounts may not agree to the
year-to-date amounts.
Schedule 4
ALTRIA GROUP, INC.
and Subsidiaries
Selected Financial Data
For the Six Months Ended June
30,
(dollars in millions)
(Unaudited)
Net Revenues
Smokeable Products
Oral Tobacco Products
Wine
All Other
Total
2022
$
11,138
$
1,278
$
—
$
19
$
12,435
2021
11,300
1,319
317
36
12,972
% Change
(1.4
) %
(3.1
) %
(100.0
) %
(47.2
) %
(4.1
) %
Reconciliation:
For the six months ended June 30,
2021
$
11,300
$
1,319
$
317
$
36
$
12,972
Operations
(162
)
(41
)
(317
)
(17
)
(537
)
For the six months ended June 30,
2022
$
11,138
$
1,278
$
—
$
19
$
12,435
Operating Companies Income
(Loss)
Smokeable Products
Oral Tobacco Products
Wine
All Other
Total
2022
$
5,321
$
837
$
—
$
(20
)
$
6,138
2021
5,148
864
45
(26
)
6,031
% Change
3.4
%
(3.1
) %
(100.0
) %
23.1
%
1.8
%
Reconciliation:
For the six months ended June 30,
2021
$
5,148
$
864
$
45
$
(26
)
$
6,031
NPM Adjustment Items - 2021
(32
)
—
—
—
(32
)
Asset impairment, exit, implementation,
acquisition and disposition-related costs - 2021
—
37
1
—
38
Tobacco and health and certain other
litigation items - 2021
43
—
—
—
43
11
37
1
—
49
NPM Adjustment Items - 2022
60
—
—
—
60
Tobacco and health and certain other
litigation items - 2022
(50
)
—
—
—
(50
)
10
—
—
—
10
Operations
152
(64
)
(46
)
6
48
For the six months ended June 30,
2022
$
5,321
$
837
$
—
$
(20
)
$
6,138
Schedule 5
ALTRIA GROUP, INC.
and Subsidiaries
Supplemental Financial Data
(dollars in millions)
(Unaudited)
For the Quarters Ended June
30,
For the Six Months Ended June
30,
2022
2021
2022
2021
The segment detail of excise taxes on
products sold is as follows:
Smokeable products
$
1,137
$
1,281
$
2,181
$
2,402
Oral tobacco products
32
35
61
66
Wine
—
5
—
9
All other
—
1
—
1
$
1,169
$
1,322
$
2,242
$
2,478
The segment detail of charges for
resolution expenses related to state settlement agreements included
in cost of sales is as follows:
Smokeable products
$
1,054
$
1,126
$
1,933
$
2,067
Oral tobacco products
3
3
5
5
All other
—
1
—
1
$
1,057
$
1,130
$
1,938
$
2,073
The segment detail of FDA user fees
included in cost of sales is
as follows:
Smokeable products
$
69
$
69
$
137
$
137
Oral tobacco products
1
1
2
2
$
70
$
70
$
139
$
139
The detail of (income) losses from
equity investments is as follows:
ABI
$
(12
)
$
(74
)
$
(212
)
$
(392
)
Cronos
120
99
186
166
JUUL
1,155
(100
)
1,255
100
$
1,263
$
(75
)
$
1,229
$
(126
)
Schedule 6
ALTRIA GROUP, INC.
and Subsidiaries
Net Earnings and Diluted Earnings
Per Share - Attributable to Altria Group, Inc.
For the Quarters Ended June
30,
(dollars in millions, except per
share data)
(Unaudited)
Net Earnings
Diluted EPS
2022 Net Earnings
$
891
$
0.49
2021 Net Earnings
$
2,149
$
1.16
% Change
(58.5
) %
(57.8
) %
Reconciliation:
2021 Net Earnings
$
2,149
$
1.16
2021 Asset impairment, exit,
implementation, acquisition and
disposition-related costs
6
—
2021 Tobacco and health and certain other
litigation items
7
—
2021 JUUL changes in fair value
(100
)
(0.05
)
2021 ABI-related special items
29
0.02
2021 Cronos-related special items
186
0.10
2021 Income tax items
9
—
Subtotal 2021 special items
137
0.07
2022 Asset impairment, exit,
implementation, acquisition and
disposition-related costs
(2
)
—
2022 Tobacco and health and certain other
litigation items
(35
)
(0.02
)
2022 JUUL changes in fair value
(1,155
)
(0.64
)
2022 ABI-related special items
(89
)
(0.05
)
2022 Cronos-related special items
(106
)
(0.06
)
2022 Income tax items
(4
)
—
Subtotal 2022 special items
(1,391
)
(0.77
)
Fewer shares outstanding
—
0.03
Change in tax rate
3
—
Operations
(7
)
—
2022 Net Earnings
$
891
$
0.49
Schedule 7
ALTRIA GROUP, INC.
and Subsidiaries
Reconciliation of GAAP and
non-GAAP Measures
For the Quarters Ended June
30,
(dollars in millions, except per
share data)
(Unaudited)
Earnings before Income
Taxes
Provision for Income
Taxes
Net Earnings
Net Earnings Attributable to
Altria
Diluted EPS
2022 Reported
$
1,605
$
714
$
891
$
891
$
0.49
Asset impairment, exit, implementation,
acquisition and disposition-related costs
2
—
2
2
—
Tobacco and health and certain other
litigation items
46
11
35
35
0.02
JUUL changes in fair value
1,155
—
1,155
1,155
0.64
ABI-related special items
112
23
89
89
0.05
Cronos-related special items
114
8
106
106
0.06
Income tax items
—
(4
)
4
4
—
2022 Adjusted for Special Items
$
3,034
$
752
$
2,282
$
2,282
$
1.26
2021 Reported
$
2,909
$
759
$
2,150
$
2,149
$
1.16
Asset impairment, exit, implementation,
acquisition and disposition-related costs
8
2
6
6
—
Tobacco and health and certain other
litigation items
8
1
7
7
—
JUUL changes in fair value
(100
)
—
(100
)
(100
)
(0.05
)
ABI-related special items
39
10
29
29
0.02
Cronos-related special items
181
(5
)
186
186
0.10
Income tax items
—
(9
)
9
9
—
2021 Adjusted for Special Items
$
3,045
$
758
$
2,287
$
2,286
$
1.23
2022 Reported Net Earnings
$
891
$
0.49
2021 Reported Net Earnings
$
2,149
$
1.16
% Change
(58.5
) %
(57.8
) %
2022 Net Earnings Adjusted for Special
Items
$
2,282
$
1.26
2021 Net Earnings Adjusted for Special
Items
$
2,286
$
1.23
% Change
(0.2
) %
2.4
%
Schedule 8
ALTRIA GROUP, INC.
and Subsidiaries
Net Earnings and Diluted Earnings
Per Share - Attributable to Altria Group, Inc.
For the Six Months Ended June
30,
(dollars in millions, except per
share data)
(Unaudited)
Net Earnings
Diluted EPS1
2022 Net Earnings
$
2,850
$
1.57
2021 Net Earnings
$
3,573
$
1.93
% Change
(20.2
) %
(18.7
) %
Reconciliation:
2021 Net Earnings
$
3,573
$
1.93
2021 NPM Adjustment Items
(24
)
(0.01
)
2021 Asset impairment, exit,
implementation, acquisition and
disposition-related costs
43
0.02
2021 Tobacco and health and certain other
litigation items
33
0.02
2021 JUUL changes in fair value
100
0.05
2021 ABI-related special items
(71
)
(0.04
)
2021 Cronos-related special items
116
0.06
2021 Loss on early extinguishment of
debt
496
0.27
2021 Income tax items
3
—
Subtotal 2021 special items
696
0.37
2022 NPM Adjustment Items
45
0.02
2022 Asset impairment, exit,
implementation, acquisition and
disposition-related costs
(7
)
—
2022 Tobacco and health and certain other
litigation items
(44
)
(0.02
)
2022 JUUL changes in fair value
(1,255
)
(0.70
)
2022 ABI-related special items
(42
)
(0.02
)
2022 Cronos-related special items
(167
)
(0.09
)
2022 Income tax items
(9
)
—
Subtotal 2022 special items
(1,479
)
(0.81
)
Fewer shares outstanding
—
0.05
Change in tax rate
(1
)
—
Operations
61
0.03
2022 Net Earnings
$
2,850
$
1.57
1 Diluted earnings per share attributable to Altria are computed
independently for each period. Accordingly, the sum of the
quarterly earnings per share amounts may not agree to the
year-to-date amounts.
Schedule 9
ALTRIA GROUP, INC.
and Subsidiaries
Reconciliation of GAAP and
non-GAAP Measures
For the Six Months Ended June
30,
(dollars in millions, except per
share data)
(Unaudited)
Earnings before Income
Taxes
Provision for Income
Taxes
Net Earnings
Net Earnings Attributable to
Altria
Diluted EPS1
2022 Reported
$
4,278
$
1,428
$
2,850
$
2,850
$
1.57
NPM Adjustment Items
(60
)
(15
)
(45
)
(45
)
(0.02
)
Asset impairment, exit, implementation,
acquisition and disposition-related costs
9
2
7
7
—
Tobacco and health and certain other
litigation items
58
14
44
44
0.02
JUUL changes in fair value
1,255
—
1,255
1,255
0.70
ABI-related special items
53
11
42
42
0.02
Cronos-related special items
175
8
167
167
0.09
Income tax items
—
(9
)
9
9
—
2022 Adjusted for Special Items
$
5,768
$
1,439
$
4,329
$
4,329
$
2.38
2021 Reported
$
4,846
$
1,275
$
3,571
$
3,573
$
1.93
NPM Adjustment Items
(32
)
(8
)
(24
)
(24
)
(0.01
)
Asset impairment, exit, implementation,
acquisition and disposition-related costs
56
13
43
43
0.02
Tobacco and health and certain other
litigation items
43
10
33
33
0.02
JUUL changes in fair value
100
—
100
100
0.05
ABI-related special items
(89
)
(18
)
(71
)
(71
)
(0.04
)
Cronos-related special items
111
(5
)
116
116
0.06
Loss on early extinguishment of debt
649
153
496
496
0.27
Income tax items
—
(3
)
3
3
—
2021 Adjusted for Special Items
$
5,684
$
1,417
$
4,267
$
4,269
$
2.30
2022 Reported Net Earnings
$
2,850
$
1.57
2021 Reported Net Earnings
$
3,573
$
1.93
% Change
(20.2
) %
(18.7
) %
2022 Net Earnings Adjusted for Special
Items
$
4,329
$
2.38
2021 Net Earnings Adjusted for Special
Items
$
4,269
$
2.30
% Change
1.4
%
3.5
%
1 Diluted earnings per share attributable to Altria are computed
independently for each period. Accordingly, the sum of the
quarterly earnings per share amounts may not agree to the
year-to-date amounts.
Schedule 10
ALTRIA GROUP, INC.
and Subsidiaries
Reconciliation of GAAP and
non-GAAP Measures
For the Year Ended December 31,
2021
(dollars in millions, except per
share data)
(Unaudited)
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
Schedule 11
ALTRIA GROUP, INC.
and Subsidiaries
Condensed Consolidated Balance
Sheets
(dollars in millions)
(Unaudited)
June 30, 2022
December 31, 2021
Assets
Cash and cash equivalents
$
2,567
$
4,544
Inventories
1,144
1,194
Other current assets
375
345
Property, plant and equipment, net
1,557
1,553
Goodwill and other intangible assets,
net
17,549
17,483
Investments in equity securities
12,590
13,481
Other long-term assets
964
923
Total assets
$
36,746
$
39,523
Liabilities and
Stockholders’ Equity (Deficit)
Current portion of long-term debt
$
2,634
$
1,105
Accrued settlement charges
1,749
3,349
Other current liabilities
3,928
4,125
Long-term debt
25,046
26,939
Deferred income taxes
3,898
3,692
Accrued pension costs
197
200
Accrued postretirement health care
costs
1,437
1,436
Other long-term liabilities
260
283
Total liabilities
39,149
41,129
Total stockholders’ equity (deficit)
(2,403
)
(1,606
)
Total liabilities and stockholders’
equity (deficit)
$
36,746
$
39,523
Total debt
$
27,680
$
28,044
Schedule 12
ALTRIA GROUP, INC.
and Subsidiaries
Supplemental Financial Data for
Special Items
For the Quarters Ended June
30,
(dollars in millions)
(Unaudited)
Marketing, administration and
research costs
General corporate
expenses
Interest and other debt
expense, net
(Income) losses from equity
investments
(Gain) loss on Cronos-related
financial instruments
2022 Special Items - (Income)
Expense
Asset impairment, exit, implementation,
acquisition and
disposition-related costs
$
—
$
2
$
—
$
—
$
—
Tobacco and health and certain other
litigation items
38
7
1
—
—
JUUL changes in fair value
—
—
—
1,155
—
ABI-related special items
—
—
—
112
—
Cronos-related special items
—
—
—
110
4
2021 Special Items - (Income)
Expense
Asset impairment, exit, implementation,
acquisition and
disposition-related costs
$
—
$
8
$
—
$
—
$
—
Tobacco and health and certain other
litigation items
8
—
—
—
—
JUUL changes in fair value
—
—
—
(100
)
—
ABI-related special items
—
—
—
39
—
Cronos-related special items
—
—
—
78
103
Note: This schedule is intended to provide supplemental
financial data for certain income and expense items that management
believes are not part of underlying operations and their
presentation in Altria’s consolidated statements of earnings. This
schedule is not intended to provide, or reconcile, non-GAAP
financial measures.
Schedule 13
ALTRIA GROUP, INC.
and Subsidiaries
Supplemental Financial Data for
Special Items
For the Six Months Ended June
30,
(dollars in millions)
(Unaudited)
Cost of Sales
Marketing, administration and
research costs
General corporate
expenses
Interest and other debt
expense, net
Loss on early extinguishment
of debt
(Income) losses from equity
investments
(Gain) loss on Cronos-related
financial instruments
2022 Special Items - (Income)
Expense
NPM Adjustment Items
$
(60
)
$
—
$
—
$
—
$
—
$
—
$
—
Asset impairment, exit, implementation,
acquisition and
disposition-related costs
—
—
9
—
—
—
—
Tobacco and health and certain other
litigation items
—
50
7
1
—
—
—
JUUL changes in fair value
—
—
—
—
—
1,255
—
ABI-related special items
—
—
—
—
—
53
—
Cronos-related special items
—
—
—
—
—
161
14
2021 Special Items - (Income)
Expense
NPM Adjustment Items
$
(32
)
$
—
$
—
$
—
$
—
$
—
$
—
Asset impairment, exit, implementation,
acquisition and
disposition-related costs
1
37
18
—
—
—
—
Tobacco and health and certain other
litigation items
—
43
—
—
—
—
—
JUUL changes in fair value
—
—
—
—
—
100
—
ABI-related special items
—
—
—
—
—
(89
)
—
Cronos-related special items
—
—
—
—
—
118
(7
)
Loss on early extinguishment of debt
—
—
—
—
649
—
—
Note: This schedule is intended to provide supplemental
financial data for certain income and expense items that management
believes are not part of underlying operations and their
presentation in Altria’s consolidated statements of earnings. This
schedule is not intended to provide, or reconcile, non-GAAP
financial measures.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220727005497/en/
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