Altria Holds 2022 Annual Meeting of Shareholders; Reaffirms 2022 Full-Year Earnings Guidance; Declares Regular Quarterly Dividend of $0.90 Per Share
Altria Group, Inc. (NYSE: MO) held its 2022 Annual Meeting, where CEO Billy Gifford presented the 2021 financial results and 2022 guidance. Altria expects 2022 adjusted diluted EPS between $4.79 and $4.93, reflecting a 4% to 7% growth from 2021's $4.61, weighted towards the year's second half. Key factors include inflation, COVID-19 impacts, and regulatory changes. Preliminary voting results showed the election of 12 Board nominees and approval of executive compensation. Details, including the effect of special items, will be filed in a Current Report on Form 8-K.
- Full-year adjusted diluted EPS guidance of $4.79 to $4.93, indicating growth of 4%-7% from 2021.
- Continued investment in smoke-free products and digital consumer engagement.
- Potential challenges from inflation and global supply chain disruptions.
- Limited access to the IQOS system in 2022.
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
2022 Full-Year Guidance
In the remarks,
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
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
Regular Quarterly Dividend
Following the Annual Meeting, our Board declared a regular quarterly dividend of
Altria’s Profile
We have a leading portfolio of tobacco products for
Our wholly owned subsidiaries include leading manufacturers of both combustible and smoke-free products. In combustibles, we own
We also own equity investments in
The brand portfolios of our tobacco operating companies include Marlboro®, Black & Mild®,
Learn more about
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
- 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
Schedule 1 |
|||||||||||||||
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
|
Provision for
|
Net
|
Net
|
Diluted
|
||||||||||
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
|
Provision for
|
Net
|
Net
|
Diluted
|
||||||||||
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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