Altria Group, Inc. (Altria) (NYSE: MO) is participating today in
the Barclays Global Consumer Staples Conference in Boston,
Massachusetts. Billy Gifford, Altria’s Vice Chairman and Chief
Financial Officer, and Murray Garnick, Executive Vice President and
General Counsel, will discuss the company’s business fundamentals
and the regulatory environment.
This event is being webcast live at altria.com in a listen-only
mode, beginning at approximately 9:00 a.m. Eastern Time. A replay
of the audio webcast will be available at altria.com and via the
Altria Investor app.
2018 Full-Year Guidance
Altria reaffirms its guidance for 2018 full-year adjusted
diluted earnings per share (EPS) to be in a range of $3.94 to
$4.03. This range represents a growth rate of 16% to 19% from an
adjusted diluted EPS base of $3.39 in 2017 as shown in Schedule 1.
This guidance range excludes the special items for the first half
of 2018 shown in Schedule 1 and an additional $0.05 of tax expense
resulting from the Tax Cuts and Jobs Act expected in the second
half of 2018. This tax expense is related to a tax basis adjustment
to Altria’s AB InBev investment. Altria’s 2018 guidance reflects
investments in focus areas for long-term growth, including
innovative product development and launches, regulatory science,
brand equity, retail fixtures and future retail concepts.
Altria’s full-year adjusted diluted EPS guidance excludes the
impact of certain income and expense items that management believes
are not part of underlying operations. These items may include, for
example, loss on early extinguishment of debt, restructuring
charges, gain/loss on AB InBev/SABMiller plc (SABMiller) business
combination, AB InBev special items, certain tax items, charges
associated with tobacco and health litigation items, and
resolutions of certain non-participating manufacturer (NPM)
adjustment disputes under the Master Settlement Agreement (such
dispute resolutions are referred to as NPM Adjustment Items).
Altria’s management cannot estimate on a forward-looking basis
the impact of certain income and expense items, including those
items noted in the preceding paragraph, on its reported diluted EPS
because these items, which could be significant, may be infrequent,
are difficult to predict and may be highly variable. As a result,
Altria does not provide a corresponding U.S. generally accepted
accounting principles (GAAP) measure for, or reconciliation to, its
adjusted diluted EPS guidance.
The factors described in the “Forward-Looking and Cautionary
Statements” section of this release represent continuing risks to
Altria’s forecast.
Altria’s Profile
Altria’s wholly-owned subsidiaries include Philip Morris USA
Inc., U.S. Smokeless Tobacco Company LLC, John Middleton Co.,
Sherman Group Holdings, LLC and its subsidiaries, Nu Mark LLC, Ste.
Michelle Wine Estates Ltd. (Ste. Michelle) and Philip Morris
Capital Corporation. Altria holds an equity investment in
Anheuser-Busch InBev SA/NV (AB InBev).
The brand portfolios of Altria’s tobacco operating companies
include Marlboro®, Black & Mild®,
Copenhagen®, Skoal®, VERVE®, MarkTen®
and Green Smoke®. Ste. Michelle produces and markets premium
wines sold under various labels, including Chateau Ste.
Michelle®, Columbia Crest®, 14 Hands® and
Stag’s Leap Wine Cellars™, and it imports and markets
Antinori®, Champagne Nicolas Feuillatte™,
Torres® and Villa Maria Estate™ products in the
United States. Trademarks and service marks related to Altria
referenced in this release are the property of Altria or its
subsidiaries or are used with permission. More information about
Altria is available at altria.com and on the Altria Investor
app.
Forward-Looking and Cautionary Statements
This press release contains projections of future results and
other forward-looking statements that involve a number of risks and
uncertainties and are made pursuant to the Safe Harbor Provisions
of the Private Securities Litigation Reform Act of 1995.
Important factors that may cause actual results and outcomes to
differ materially from those contained in the projections and
forward-looking statements included in this press release are
described in Altria’s publicly filed reports, including its Annual
Report on Form 10-K for the year ended December 31, 2017 and its
Quarterly Report on Form 10-Q for the period ended June 30, 2018.
These factors include the following: significant competition;
changes in adult consumer preferences and demand for Altria’s
operating companies’ products; fluctuations in raw material
availability, quality and price; reliance on key facilities and
suppliers; reliance on critical information systems, many of which
are managed by third-party service providers; fluctuations in
levels of customer inventories; the effects of global, national and
local economic and market conditions; changes to income tax laws;
federal, state and local legislative activity, including actual and
potential federal and state excise tax increases; increasing
marketing and regulatory restrictions; the effects of price
increases related to excise tax increases and concluded tobacco
litigation settlements, consumption rates and consumer preferences
within price segments; health concerns relating to the use of
tobacco products and exposure to environmental tobacco smoke;
privately imposed smoking restrictions; and, from time to time,
governmental investigations.
Furthermore, the results of Altria’s tobacco businesses are
dependent upon their continued ability to promote brand equity
successfully; to anticipate and respond to evolving adult consumer
preferences; to develop, manufacture, market and distribute
products that appeal to adult tobacco consumers (including, where
appropriate, through arrangements with, and investments in, third
parties); to improve productivity; and to protect or enhance
margins through cost savings and price increases.
Altria and its tobacco businesses are also subject to federal,
state and local government regulation, including by the U.S. Food
and Drug Administration. Altria and its subsidiaries continue to be
subject to litigation, including risks associated with adverse jury
and judicial determinations, courts reaching conclusions at
variance with the companies’ understanding of applicable law,
bonding requirements in the limited number of jurisdictions that do
not limit the dollar amount of appeal bonds and certain challenges
to bond cap statutes.
In addition, the factors related to Altria’s investment in AB
InBev include the following: the risk that Altria’s equity
securities in AB InBev are subject to restrictions on transfer
until October 10, 2021; the risk that Altria’s reported earnings
from and carrying value of its equity investment in AB InBev and
the dividends paid by AB InBev on shares owned by Altria may be
adversely affected by unfavorable foreign currency exchange rates
and other factors, including the risks encountered by AB InBev in
its business; the risk that the tax treatment of Altria’s
transaction consideration from the AB InBev/SABMiller business
combination and the accounting treatment of its equity investment
are not guaranteed; and the risk that the tax treatment of Altria’s
investment in AB InBev may not be as favorable as Altria
anticipates.
Altria cautions that the foregoing list of important factors is
not complete and does not undertake to update any forward-looking
statements that it may make except as required by applicable law.
All subsequent written and oral forward-looking statements
attributable to Altria or any person acting on its behalf are
expressly qualified in their entirety by the cautionary statements
referenced above.
Schedule 1 ALTRIA GROUP, INC. and Subsidiaries
Reconciliation of GAAP and non-GAAP Measures (dollars in millions,
except per share data) (Unaudited)
Reconciliation of
Altria’s First Six Months of 2018 Adjusted Results
Earnings before
Income Taxes
Provision for Income
Taxes
Net Earnings
Net Earnings
Attributable to Altria
Diluted EPS For the six months ended June 30,
2018 2018 Reported $ 5,023 $
1,251 $ 3,772 $ 3,770 $
1.99 NPM Adjustment Items (145 ) (36 ) (109 ) (109 ) (0.06 )
Tobacco and health litigation items 98 25 73 73 0.04 AB InBev
special items (189 ) (40 ) (149 ) (149 ) (0.07 )
Asset impairment, exit and implementation
costs
9 2 7 7 —
Loss on AB InBev/SABMiller business
combination
33 7 26 26 0.01 Tax items — (95 ) 95
95 0.05
2018 Adjusted for Special
Items $ 4,829 $ 1,114
$ 3,715 $
3,713 $ 1.96
Reconciliation of Altria’s Full-Year
2017 Adjusted Results
Earnings before
Income Taxes
(Benefit) Provision for
Income Taxes
Net Earnings
Net Earnings
Attributable to Altria
Diluted EPS For the year ended December 31,
2017 2017 Reported $ 9,828 $
(399 ) $ 10,227 $ 10,222
$ 5.31 NPM Adjustment Items 4 2 2 2 — Tobacco and
health litigation items 80 30 50 50 0.03 AB InBev special items 160
55 105 105 0.05
Asset impairment, exit, implementation and
acquisition-related costs
89 34 55 55 0.03
Gain on AB InBev/SABMiller business
combination
(445 ) (156 ) (289 ) (289 ) (0.15 )
Settlement charge for lump sum pension
payments
81 32 49 49 0.03 Tax items — 3,674
(3,674 ) (3,674 ) (1.91 )
2017 Adjusted for
Special Items $ 9,797 $
3,272 $ 6,525
$ 6,520 $ 3.39
Altria reports its financial results in accordance with GAAP.
Altria’s management reviews certain financial results, including
diluted EPS, on an adjusted basis, which excludes certain income
and expense items, including those items noted under “2018
Full-Year Guidance.” Altria’s management does not view any of these
special items to be part of Altria’s underlying results as they may
be highly variable, may be infrequent, are difficult to predict and
can distort underlying business trends and results. Altria’s
management believes that adjusted financial measures provide useful
additional insight into underlying business trends and results and
provide a more meaningful comparison of year-over-year results.
Altria’s management uses adjusted financial measures for planning,
forecasting and evaluating business and financial performance,
including allocating resources and evaluating results relative to
employee compensation targets. These adjusted financial measures
are not consistent with GAAP and may not be calculated the same as
similarly titled measures used by other companies. These adjusted
financial measures should thus be considered as supplemental in
nature and not considered in isolation or as a substitute for the
related financial information prepared in accordance with GAAP.
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