Altria Presents as Part of the Consumer Analyst Group of New York Conference; Reaffirms 2022 Full-Year Earnings Guidance

Rhea-AI Summary

Altria Group, Inc. (NYSE: MO) presented at the virtual Consumer Analyst Group of New York Conference, discussing its strategic investments aimed at leading the transition to a smoke-free future. CEO Billy Gifford emphasized the importance of this vision for tobacco consumers, shareholders, and society. Altria reaffirmed its 2022 full-year adjusted diluted earnings per share (EPS) guidance at $4.79 to $4.93, showing 4% to 7% growth from 2021. The company underscores that its guidance considers various economic factors, including inflation and regulatory developments, while planning substantial investments in smoke-free product initiatives.

Positive

• Reaffirmed 2022 adjusted diluted EPS guidance of $4.79 to $4.93, indicating 4% to 7% growth from 2021.
• Focus on investments in smoke-free product development and digital consumer engagement.
• Alignment with tobacco consumers and FDA on a smoke-free future initiative.

Negative

• Expectations that PM USA will not have access to the IQOS system in 2022.
• Guidance reflects a dynamic external environment with potential impacts from inflation and COVID-19 variants.

RICHMOND, Va.--(BUSINESS WIRE)-- Altria Group, Inc. (Altria) (NYSE: MO) is participating in the virtual Consumer Analyst Group of New York Conference (CAGNY) today. Billy Gifford, Altria’s Chief Executive Officer, and Sal Mancuso, Altria’s Executive Vice President and Chief Financial Officer, will discuss how Altria is investing to support its Vision, how its traditional tobacco businesses continue to support its strategies, and discuss its progress within critical environmental, social and governance (ESG) focus areas.

“We are advancing our Vision to responsibly lead the transition of adult smokers to a smoke-free future. In this respect, we are aligned with tobacco consumers and the FDA. It’s an ambitious goal, but one we believe will benefit tobacco consumers, Altria’s businesses, our shareholders and society,” said Billy Gifford.

Remarks and Presentation

The presentation is being webcast on www.altria.com in a listen-only mode, beginning at approximately 9:10 a.m. Eastern Time. Copies of the business presentation and prepared remarks and a replay of the webcast will be available at www.altria.com.

2022 Full-Year Guidance

Altria reaffirms its guidance for 2022 full-year adjusted diluted earnings per share (EPS) to be in a range of $4.79 to $4.93, representing a growth rate of 4% to 7% from an adjusted diluted EPS base of $4.61 in 2021, as shown in Schedule 1. Altria expects 2022 adjusted diluted EPS growth to be weighted toward the second half of the year. While the 2022 full-year adjusted diluted EPS guidance accounts for a range of scenarios, the external environment remains dynamic. Altria will continue to monitor conditions related to (i) the economy, including the impact of increased inflation, (ii) the impact of current and future COVID-19 variants and mitigation strategies, (iii) adult tobacco consumer (ATC) dynamics, including tobacco usage occasions, available disposable income, purchasing patterns and adoption of smoke-free products and (iv) regulatory and legislative developments.

Altria’s 2022 full-year adjusted diluted EPS guidance range includes planned investments in support of its Vision, such as (i) costs to enhance its digital consumer engagement system, (ii) increased smoke-free product research, development and regulatory preparation expenses and (iii) marketplace activities in support of Altria’s smoke-free products. The guidance range also includes anticipated inflationary increases in Master Settlement Agreement expenses and direct materials costs and Altria’s current expectation that PM USA will not have access to the IQOS system in 2022.

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, asset impairment charges, acquisition-related and disposition-related costs, COVID-19 special items, equity investment-related special items (including any changes in fair value of the equity investment and any related warrants and preemptive rights), certain 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 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 unusual or 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.

Altria’s Profile

Altria has a leading portfolio of tobacco products for U.S. tobacco consumers age 21+. Altria’s Vision by 2030 is to responsibly lead the transition of adult smokers to a smoke-free future (Vision). Altria is 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, Altria’s businesses and society.

Altria’s wholly owned subsidiaries include leading manufacturers of both combustible and smoke-free products. In combustibles, Altria owns Philip Morris USA Inc. (PM USA), the most profitable U.S. cigarette manufacturer, and John Middleton Co. (Middleton), a leading U.S. cigar manufacturer. Altria’s 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. Altria also enhances its 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).

Altria also owns 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 Altria’s tobacco operating companies include Marlboro®, Black & Mild®, Copenhagen®, Skoal® and on!®. Trademarks and service marks related to Altria referenced in this release are the property of Altria or its subsidiaries or are used with permission.

Learn more about Altria at www.altria.com and follow us on Twitter, Facebook and LinkedIn.

Forward-Looking and Cautionary Statements

This release contains projections of future results and other forward-looking statements that 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 release are described in Altria’s publicly filed reports, including its Annual Report on Form 10-K for the year ended December 31, 2020 and its Quarterly Report on Form 10-Q for the period ended September 30, 2021. These factors include the following:

• unfavorable litigation outcomes, including risks associated with adverse jury and judicial determinations, courts and arbitrators reaching conclusions at variance with our, our subsidiaries’ or 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 ATC acceptability of, or access to, tobacco products;

• tobacco product taxation, including lower tobacco product consumption levels and potential shifts in ATC purchases as a result of federal, state and local excise tax increases;

• unfavorable outcomes of any government investigations of Altria, our subsidiaries or 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 U.S. 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 financial performance and financial condition and on our subsidiaries’ and investees’ ability to continue manufacturing and distributing products, including as a result of labor shortages, and the impact of health epidemics and pandemics on general economic conditions (including any resulting recession or other economic crisis) and, in turn, adult consumer purchasing behavior, which may be further adversely impacted by any reductions in, or eliminations of, government stimulus or unemployment payments;

• the failure of our tobacco subsidiaries and our investees 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 tobacco subsidiaries’ and our investees’ 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 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;

• changes, including in economic conditions (due to the COVID-19 pandemic or otherwise), that result in adult consumers choosing lower-priced brands, including discount brands;

• the unsuccessful commercialization of adjacent products or processes by our tobacco subsidiaries and investees, including innovative tobacco products that may reduce the health risks associated with cigarettes and other traditional tobacco products, and that appeal to ATC;

• significant changes in price, availability or quality of tobacco, other raw materials or component parts, including as a result of the COVID-19 pandemic;

• the risks related to the reliance by our tobacco subsidiaries 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 investees, including as a result of the COVID-19 pandemic;

• 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 service providers’ information systems 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;

• 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, legislative and regulatory risks at the international, federal, state and local levels, including actions by the FDA, and adverse publicity; potential disruptions to our investees’ management or current or future plans and operations; domestic or international litigation developments, government investigations, tax disputes or otherwise; 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 adverse effects of risks encountered by ABI in its business, including effects of the COVID-19 pandemic, foreign currency exchange rates and the impact of movements in ABI’s stock price on our investment in ABI, including on our reported earnings from and carrying value of our investment in ABI, which could result in additional impairments of our investment, and the dividends paid by ABI on the shares we own;

• the risks related to our ownership percentage in ABI decreasing below certain levels, including the adverse effects of 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 business combination and the tax treatment of our equity investment; and

• the risks, including criminal, civil or tax liability for Altria, related to Altria’s or Cronos’s failure to comply with applicable laws, including cannabis laws.

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 Full-Year 2021 Adjusted Results
	Earnings before Income Taxes			Provision for Income Taxes			Net Earnings			Net Earnings Attributable to Altria			Diluted EPS
For the year ended December 31, 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
Tax items		—			3			(3	)		(3	)		—
Adjusted for Special Items	$	11,368		$	2,849		$	8,519		$	8,519		$	4.61

While Altria reports its financial results in accordance with GAAP, its 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.” 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 unusual or 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 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20220218005536/en/

Altria Client Services

Investor Relations

(804) 484-8222

Altria Client Services

Media Relations

(804) 484-8897

 

Source: Altria Group, Inc.

FAQ

What is Altria's EPS guidance for 2022?

Altria's adjusted diluted EPS guidance for 2022 is between $4.79 and $4.93, indicating a growth rate of 4% to 7% from 2021.

How is Altria planning to invest in smoke-free products?

Altria plans to invest significantly in research and development of smoke-free products and enhance its digital consumer engagement system.

What challenges might affect Altria's business in 2022?

Altria faces challenges from inflation, COVID-19 variants, and changes in adult tobacco consumer dynamics.

Will Altria have access to IQOS in 2022?

Altria currently expects that PM USA will not have access to the IQOS system in 2022.