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Altria (MO) Q1 Earnings Beat Estimates, Revenues Down Y/Y
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Altria Group Inc. (MO - Free Report) came out with first-quarter 2021 results, with the top and the bottom line declining year over year. Nevertheless, earnings surpassed the Zacks Consensus Estimate.
The company’s performance in the quarter was adversely impacted by reduced shipment volumes in the smokeable category. Nonetheless, the oral tobacco and wine segments witnessed growth, mainly on improved pricing. Moreover, shipment volumes improved in the oral tobacco unit, supported by growth in on! nicotine pouches. Further, management reiterated its adjusted earnings guidance for 2021.
Quarter in Detail
Adjusted earnings came in at $1.07 per share, which surpassed the Zacks Consensus Estimate of $1.04. However, the bottom line dropped 1.8% year over year due to higher adjusted income tax rate and unfavorable timing of interest expense.
Net revenues declined 5.1% year over year to $6,036 million. Revenues, after deducting excise taxes, declined 3.3% to $4,880 million. The consensus mark was pegged at $4,990 million. Revenues were affected by declines in the smokeable products segment.
Altria Group, Inc. Price, Consensus and EPS Surprise
Smokeable Products: Net revenues in the category declined 6.4% year over year to $5,250 million due to reduced shipment volume and higher promotional investments, partly offset by higher pricing. Revenues, net of excise taxes, fell 4.6% year over year to $4,129 million.
Total smokeable products shipment volumes fell 11.6%. Reported domestic cigarette shipment volumes declined 12% year over year, thanks to trade inventory movements, the industry’s rate of decline, one less shipping day and certain other factors. On adjusting for trade inventory movements and other factors, smokeable products’ domestic cigarette shipment volumes fell an estimated 3.5%. Meanwhile, Altria’s reported cigar shipment volumes increased 11.1%. Total cigarette retail share remained unchanged at 49%, year on year.
Adjusted OCI in the segment inched down 0.7% to $2,375 million owing to reduced shipment volumes, higher promotional investments as well as higher per unit settlement charges. Adjusted OCI margin increased 2.2 percentage points to 57.5%.
Oral Tobacco Products: Net revenues in the segment increased 4.2% from the year-ago quarter’s level to $626 million, driven by greater pricing, somewhat countered by elevated promotional investments. Revenues, net of excise taxes, increased 4.4% to $595 million.
Domestic shipment volumes for the segment rose 0.6% mainly due to growth of on! oral nicotine pouches as well as trade inventory movements. These were partly countered by retail share losses (owing to an increase in oral nicotine pouch sales) calendar differences and other factors. On an adjusted basis, oral tobacco products shipment volumes climbed an estimated 0.5%. Total oral tobacco products’ retail share went down 2.3 percentage points to 48.1%.
Adjusted OCI rose 3.1% to $429 million owing to improved pricing, partly offset by greater promotional investments and higher costs. Adjusted OCI margin contracted 0.9 percentage points to 72.1%.
Wine: Net revenues in the segment rose 2.7% year on year to $150 million due to higher pricing. The segment’s revenues, net of excise taxes, increased 2.8% to $146 million. Reported wine shipment volumes inched up 1.7% to about 1.7 million cases.
Adjusted OCI in the category went up 46.2% to $19 million, resulting from higher pricing and lower costs. Adjusted OCI margin expanded 3.8 percentage points to 13%.
Financial Updates
Altria ended the quarter with cash and cash equivalents of $5,792 million, long-term debt of $28,180 million and total stockholders’ equity of $2,995 million.
During the first quarter, Altria bought back 6.9 million shares for $325 million. As of Mar 31, 2021, the company had nearly $1.7 billion worth shares remaining under the current $2-billion share repurchase program. The buyback program is anticipated to conclude by Jun 30, 2022.
During the quarter, the company paid out dividends worth $1.6 billion. The company currently has an annualized dividend rate of $3.44 per share. Notably, the company maintains a long-term dividend payout ratio goal of about 80% of the adjusted EPS.
Other Developments & Guidance
Altria has been benefiting from its non-combustible products. In March 2021, PM USA introduced the new IQOS 3 device for sales across all markets. In June, PM USA plans to open an IQOS boutique in Northern Virginia metro market. Further, PM USA expanded Marlboro HeatSticks acoss retail stores. Moreover, as previously disclosed PM USA plans to expand IQOS and Marlboro HeatSticks to three new metro regions in 2021.
Management also informed that it has completed acquiring the remaining 20% ownership of the global on! business, for approximately $250 million. During the first quarter, Helix expanded its distribution of on!, by another 15,000 stores in the fourth quarter. on! is available in nearly 93,000 stores as of the end of the first quarter.
Apart from these, Altria noted that until now, its tobacco business has not witnessed any material disruption related to the government’s restrictions on consumer movements and business operations. Most of the retail stores where the company’s products are sold (like convenience stores) have been considered as essential businesses and remain open. However, the company continues to assess the macroeconomic impacts of the pandemic on adult tobacco consumers (ATCs), such as stay-at-home trends, disposable income and buying patterns.
For 2021, the company continues to expect adjusted earnings per share in the range of $4.49-$4.62, indicating growth of 3-6% from $4.36 recorded in 2020. Management stated that the company will continue assessing the external environmental factors like ATC dynamics, unemployment rates, buying power, fiscal stimulus as well as the timing and breadth of the coronavirus vaccine, among others.
We note that shares of this Zacks Rank #3 (Hold) company have gained 15.7% in the past three months compared with the industry’s growth of 13.3%.
Medifast, Inc. (MED - Free Report) , with a Zacks Rank #2 (Buy), has a trailing four-quarter earnings surprise of 17.4%, on average.
United Natural Foods, Inc. (UNFI - Free Report) , also with a Zacks Rank #2, has a trailing four-quarter earnings surprise of 13.6%, on average.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
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Altria (MO) Q1 Earnings Beat Estimates, Revenues Down Y/Y
Altria Group Inc. (MO - Free Report) came out with first-quarter 2021 results, with the top and the bottom line declining year over year. Nevertheless, earnings surpassed the Zacks Consensus Estimate.
The company’s performance in the quarter was adversely impacted by reduced shipment volumes in the smokeable category. Nonetheless, the oral tobacco and wine segments witnessed growth, mainly on improved pricing. Moreover, shipment volumes improved in the oral tobacco unit, supported by growth in on! nicotine pouches. Further, management reiterated its adjusted earnings guidance for 2021.
Quarter in Detail
Adjusted earnings came in at $1.07 per share, which surpassed the Zacks Consensus Estimate of $1.04. However, the bottom line dropped 1.8% year over year due to higher adjusted income tax rate and unfavorable timing of interest expense.
Net revenues declined 5.1% year over year to $6,036 million. Revenues, after deducting excise taxes, declined 3.3% to $4,880 million. The consensus mark was pegged at $4,990 million. Revenues were affected by declines in the smokeable products segment.
Altria Group, Inc. Price, Consensus and EPS Surprise
Altria Group, Inc. price-consensus-eps-surprise-chart | Altria Group, Inc. Quote
Segment Details
Smokeable Products: Net revenues in the category declined 6.4% year over year to $5,250 million due to reduced shipment volume and higher promotional investments, partly offset by higher pricing. Revenues, net of excise taxes, fell 4.6% year over year to $4,129 million.
Total smokeable products shipment volumes fell 11.6%. Reported domestic cigarette shipment volumes declined 12% year over year, thanks to trade inventory movements, the industry’s rate of decline, one less shipping day and certain other factors. On adjusting for trade inventory movements and other factors, smokeable products’ domestic cigarette shipment volumes fell an estimated 3.5%. Meanwhile, Altria’s reported cigar shipment volumes increased 11.1%. Total cigarette retail share remained unchanged at 49%, year on year.
Adjusted OCI in the segment inched down 0.7% to $2,375 million owing to reduced shipment volumes, higher promotional investments as well as higher per unit settlement charges. Adjusted OCI margin increased 2.2 percentage points to 57.5%.
Oral Tobacco Products: Net revenues in the segment increased 4.2% from the year-ago quarter’s level to $626 million, driven by greater pricing, somewhat countered by elevated promotional investments. Revenues, net of excise taxes, increased 4.4% to $595 million.
Domestic shipment volumes for the segment rose 0.6% mainly due to growth of on! oral nicotine pouches as well as trade inventory movements. These were partly countered by retail share losses (owing to an increase in oral nicotine pouch sales) calendar differences and other factors. On an adjusted basis, oral tobacco products shipment volumes climbed an estimated 0.5%. Total oral tobacco products’ retail share went down 2.3 percentage points to 48.1%.
Adjusted OCI rose 3.1% to $429 million owing to improved pricing, partly offset by greater promotional investments and higher costs. Adjusted OCI margin contracted 0.9 percentage points to 72.1%.
Wine: Net revenues in the segment rose 2.7% year on year to $150 million due to higher pricing. The segment’s revenues, net of excise taxes, increased 2.8% to $146 million. Reported wine shipment volumes inched up 1.7% to about 1.7 million cases.
Adjusted OCI in the category went up 46.2% to $19 million, resulting from higher pricing and lower costs. Adjusted OCI margin expanded 3.8 percentage points to 13%.
Financial Updates
Altria ended the quarter with cash and cash equivalents of $5,792 million, long-term debt of $28,180 million and total stockholders’ equity of $2,995 million.
During the first quarter, Altria bought back 6.9 million shares for $325 million. As of Mar 31, 2021, the company had nearly $1.7 billion worth shares remaining under the current $2-billion share repurchase program. The buyback program is anticipated to conclude by Jun 30, 2022.
During the quarter, the company paid out dividends worth $1.6 billion. The company currently has an annualized dividend rate of $3.44 per share. Notably, the company maintains a long-term dividend payout ratio goal of about 80% of the adjusted EPS.
Other Developments & Guidance
Altria has been benefiting from its non-combustible products. In March 2021, PM USA introduced the new IQOS 3 device for sales across all markets. In June, PM USA plans to open an IQOS boutique in Northern Virginia metro market. Further, PM USA expanded Marlboro HeatSticks acoss retail stores. Moreover, as previously disclosed PM USA plans to expand IQOS and Marlboro HeatSticks to three new metro regions in 2021.
Management also informed that it has completed acquiring the remaining 20% ownership of the global on! business, for approximately $250 million. During the first quarter, Helix expanded its distribution of on!, by another 15,000 stores in the fourth quarter. on! is available in nearly 93,000 stores as of the end of the first quarter.
Apart from these, Altria noted that until now, its tobacco business has not witnessed any material disruption related to the government’s restrictions on consumer movements and business operations. Most of the retail stores where the company’s products are sold (like convenience stores) have been considered as essential businesses and remain open. However, the company continues to assess the macroeconomic impacts of the pandemic on adult tobacco consumers (ATCs), such as stay-at-home trends, disposable income and buying patterns.
For 2021, the company continues to expect adjusted earnings per share in the range of $4.49-$4.62, indicating growth of 3-6% from $4.36 recorded in 2020. Management stated that the company will continue assessing the external environmental factors like ATC dynamics, unemployment rates, buying power, fiscal stimulus as well as the timing and breadth of the coronavirus vaccine, among others.
We note that shares of this Zacks Rank #3 (Hold) company have gained 15.7% in the past three months compared with the industry’s growth of 13.3%.
Consumer Staple Stocks to Bet On
Sanderson Farms, Inc. , flaunting a Zacks Rank #1 (Strong Buy), has a long-term earnings growth rate of 43.5%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Medifast, Inc. (MED - Free Report) , with a Zacks Rank #2 (Buy), has a trailing four-quarter earnings surprise of 17.4%, on average.
United Natural Foods, Inc. (UNFI - Free Report) , also with a Zacks Rank #2, has a trailing four-quarter earnings surprise of 13.6%, on average.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
See the 5 high-tech stocks now>>