Altria Group, Inc. (Altria) (NYSE: MO) today reports its 2021
second-quarter and first-half business results and narrows its 2021
full-year adjusted diluted earnings per share (EPS) guidance.
“Altria delivered outstanding results in the second quarter,
thanks to the continued strength of our tobacco businesses and the
hard work of our highly talented employees,” said Billy Gifford,
Altria’s Chief Executive Officer. “Our teams have continued their
commitment to Moving Beyond SmokingTM by deepening their
understanding of adult tobacco consumer preferences, expanding the
awareness and availability of our smoke-free product portfolio, and
amplifying our voice on harm reduction within the scientific and
public health communities.”
“With our strong financial performance in the first half, we
have raised the lower end of our full-year 2021 adjusted diluted
EPS guidance range and now expect full-year adjusted diluted EPS to
be in the range of $4.56 to $4.62, representing a growth rate of
4.5% to 6% from a $4.36 base in 2020. This updated guidance
reflects continued confidence in our tobacco businesses,
investments in smoke-free products and the expected impact of the
recently announced agreement to sell our Ste. Michelle Wine Estates
business.”
Altria Headline Financials1
($ in millions, except per share data)
Q2 2021
Change vs.
Q2 2020
First Half 2021
Change vs.
First Half 2020
Net revenues
$6,936
8.9%
$12,972
1.9%
Revenues net of excise taxes
$5,614
10.9%
$10,494
3.8%
Reported tax rate
26.1%
1.7 pp
26.3%
0.9 pp
Adjusted tax rate
24.9%
0.5 pp
24.9%
0.7 pp
Reported diluted EPS2
$1.16
11.5%
$1.93
2.7%
Adjusted diluted EPS2
$1.23
12.8%
$2.30
5.5%
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 29, 2021 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
Dividends
- In the second quarter, Altria paid $1.6 billion in
dividends.
- Altria’s current annualized dividend rate is $3.44 per share,
representing a dividend yield of 7.2% as of July 26, 2021.
- Altria maintains its long-term objective of a dividend payout
ratio target of approximately 80% of its adjusted diluted EPS.
Future dividend payments remain subject to the discretion of
Altria’s Board of Directors (Board).
Share Repurchase Program
- In the second quarter, Altria repurchased 6.6 million shares at
an average price of $49.21, for a total cost of $325 million.
- In the first half, Altria repurchased 13.5 million shares at an
average price of $48.09, for a total cost of $650 million.
- As of June 30, 2021, Altria had $1.35 billion remaining under
its existing $2 billion share repurchase program, which Altria
expects to complete by June 30, 2022. Share repurchases depend on
marketplace conditions and other factors, and the program remains
subject to the discretion of Altria’s Board.
Debt Maturity
In May, Altria repaid $1.5 billion of its senior unsecured
notes.
Smoke-free Products Business Platform
Heated Tobacco
- In the second quarter, PM USA expanded IQOS and Marlboro
HeatSticks (i) into retail stores statewide across Georgia,
Virginia, North Carolina and South Carolina and (ii) to the
Northern Virginia metro market. To support the expansion, PM USA
opened an IQOS boutique in the Tysons Corner Mall, a center point
for the area.
- In the second quarter, Marlboro HeatSticks retail sales volume
increased by nearly 40% sequentially, primarily driven by expanded
distribution in retail stores.
- In the second quarter, the cigarette category retail share for
Marlboro HeatSticks in stores with distribution was (i) 0.8% in
Atlanta, a decrease of 0.3% sequentially, and (ii) 0.5% in
Charlotte, a decrease of 0.5% sequentially. The sequential share
losses were primarily driven by the reallocation of promotional and
commercialization resources in these markets to Northern Virginia.
With a full range of marketing tools, Marlboro HeatSticks achieved
a cigarette category retail share of 1.1% in Northern Virginia
stores with distribution for the last four weeks of the second
quarter.
- In May 2021, in the IQOS heated tobacco system proceedings, an
International Trade Commission (ITC) Administrative Law Judge (ALJ)
found that the IQOS system infringes two of the plaintiff’s patents
and recommended imposition of a ban on the importation of the IQOS
system. In July 2021, the ITC accepted review of the ALJ’s findings
and recommendations on certain issues, including issues relating to
the patent infringement claims and potential remedies, including a
ban on the importation of the IQOS electronic device, Marlboro
HeatSticks and component parts into the United States and on the
sale of any such products previously imported into the United
States. The ITC’s ultimate order is subject to review by the U.S.
Trade Representative and federal court. Due to this uncertainty, PM
USA has delayed further expansion of IQOS and Marlboro
HeatSticks.
Oral Tobacco
- In the second quarter, Helix achieved unconstrained on!
manufacturing capacity for the U.S. market. Helix plans to further
increase on! capacity ahead of expected demand.
- As of June 30, 2021, Helix had broadened the U.S distribution
of on! to approximately 105,000 stores, representing approximately
80% of total U.S. industry oral tobacco volume and 70% of U.S.
cigarette volume.
- Total U.S oral tobacco category share for on! was 2.0% in the
second quarter, an increase of 0.3% sequentially.
Agreement to Sell Ste. Michelle Wine Estates
In July, Altria announced that its subsidiary, UST LLC, entered
into a definitive agreement to sell its Ste. Michelle Wine Estates
business to Sycamore Partners Management, L.P (Sycamore Partners)
in an all-cash transaction for a purchase price of approximately
$1.2 billion and the assumption of certain Ste. Michelle
liabilities (Ste. Michelle Transaction).
- Altria’s net cash proceeds will be subject to customary net
working capital and other adjustments at closing.
- Altria expects the Ste. Michelle Transaction to close during
the second half of 2021, subject to Sycamore Partners obtaining the
necessary financing and the satisfaction of customary closing
conditions, including antitrust regulatory clearance.
- Altria expects to record a charge on the Ste. Michelle
Transaction and related disposition items, which it does not
anticipate being material to Altria, in the second half of 2021.
Altria intends to treat these amounts as special items and exclude
them from its adjusted diluted earnings per share. Altria does not
expect to account for the results of Ste. Michelle as discontinued
operations.
- Altria expects to use the net proceeds from the Ste. Michelle
Transaction for additional share repurchases. Altria’s existing
share repurchase authorization is limited to $2 billion; therefore,
additional share repurchases in connection with the Ste. Michelle
Transaction are subject to Altria’s Board approval.
Environmental, Social and Governance (ESG)
Altria’s Corporate Responsibility Focus Areas are (i) reducing
the harm of tobacco products, (ii) preventing underage use, (iii)
protecting the environment, (iv) driving responsibility through our
value chain, (v) supporting our people and communities and (vi)
engaging and leading responsibly. Altria’s corporate responsibility
reports can be found on the Corporate Responsibility Reports page
at www.altria.com/responsibility.
- In May, Altria filed its 2020 Consolidated EEO-1 report, which
is available on www.altria.com. The EEO-1 report reflects data as
of December 31, 2020 and is inclusive of all of Altria's operating
and service companies. The report has not yet been approved by the
Equal Employment Opportunity Commission (EEOC) and Altria expects
to provide any updates on www.altria.com once the approved
consolidated report becomes available. Additionally, Altria’s
Supporting Our People and Communities corporate responsibility
report includes further detail on Altria’s inclusion and diversity
progress.
- In July, Altria released its 2020-2021 Drive Responsibility
Through Our Value Chain corporate responsibility report. During the
remainder of 2021, Altria intends to release two additional
corporate responsibility reports that address Altria’s efforts in
the areas of harm reduction, underage use prevention and the
environment.
- In July, Altria released its ESG Data Tables, which provide a
consolidated view of Altria’s key environmental, social and
governance data. Altria expects to update these tables periodically
as new data becomes available.
- In May, Altria’s Board elected Kathryn McQuade to serve as
Altria’s independent Chair of the Board.
Impact of COVID-19 Pandemic
Impact on Tobacco Business Operations
- To date, Altria’s tobacco businesses have not experienced any
material adverse effects associated with governmental actions to
restrict consumer movement or business operations. There is
continued uncertainty as to how the COVID-19 pandemic (including
changes in COVID-19-related restrictions and guidelines) may impact
the adult tobacco consumers (ATC) in the future.
- Altria continues to monitor the macroeconomic risks of COVID-19
and its effect on ATC, including stay-at-home practices, disposable
income (which may be impacted by unemployment rates, fiscal
stimulus and increased inflation), purchasing patterns and adoption
of smoke-free products.
Impact on Wine Business Operations
- As the U.S Center for Disease Control and Prevention relaxed
its COVID-19 guidelines and local government ordinances regarding
consumer movement and business operations eased, Ste. Michelle
restarted certain on-premise events, which resulted in higher
on-premise sales compared to prior quarters.
Impact on ABI, JUUL and Cronos Investments
- ABI has been, and continues to be, impacted by the COVID-19
pandemic. However, ABI’s performance in the first half of 2021
improved meaningfully versus the same period in 2020, including
top-line growth in the second quarter of 2021 ahead of second
quarter of 2019 pre-pandemic levels. The extreme market disruption
and volatility associated with the COVID-19 pandemic resulted in a
steep decline in ABI’s stock price in the first half of 2020. While
there has been significant recovery in ABI’s stock price since the
first half of 2020, including renewed momentum in the second
quarter of 2021, ABI’s stock price remains volatile as demonstrated
by its recent decline in July 2021. The fair value of Altria’s
investment in ABI continues to be below the carrying value. Altria
believes that this decline is temporary and will continue to
monitor its investment in ABI, including the impact of the COVID-19
pandemic on ABI’s business and market valuation.
- JUUL’s operations were negatively impacted in 2020 by the
COVID-19 pandemic due to stay-at-home practices and
government-mandated restrictions. While the impact was considered
in Altria’s quantitative valuations conducted in connection with
the preparation of its financial statements, Altria does not
believe the COVID-19 pandemic was a primary driver of the non-cash
pre-tax impairment charge recorded during 2020 or the changes in
fair value recorded during 2020 and during the six and three months
ended June 30, 2021. Altria will continue to monitor the impact of
the COVID-19 pandemic on JUUL’s business in its quarterly
valuations of JUUL.
- Cronos has been, and continues to be, impacted by the COVID-19
pandemic, due in part to government actions limiting access to
retail stores in the U.S. and Canada. However, the continued
rollout of vaccines in the United States and Canada has resulted in
the removal of COVID-19 related restrictions in most of the United
States and the gradual easing of COVID-19 restrictions in Canada at
the end of the second quarter of 2021. Altria will continue to
monitor its investment in Cronos, including the impact of the
COVID-19 pandemic on Cronos’s business and market valuation.
Update on Wind-Down of Philip Morris Capital
Corporation
As of June 30 2021, Altria’s net finance assets balance was $261
million, down $59 million since the end of 2020 due to rents
received and asset sales in the first and second quarters of 2021.
Altria expects to continue reducing its net finance assets balance
in 2021 and expects to fully complete the PMCC wind-down by the end
of 2022.
2021 Full-Year Guidance
Altria narrows its guidance for 2021 full-year adjusted diluted
EPS to be in a range of $4.56 to $4.62, representing a growth rate
of 4.5% to 6% from an adjusted diluted EPS base of $4.36 in 2020.
This range includes the estimated impact of the recently announced
Ste. Michelle Transaction, which is expected to close in the second
half of 2021. While the 2021 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 unemployment rates
and the impact of increased inflation), (ii) fiscal stimulus, (iii)
ATC dynamics, including stay-at-home practices, disposable income,
purchasing patterns and adoption of smoke-free products, (iv)
regulatory and legislative (including excise tax) developments, (v)
the timing and extent of COVID-19 vaccine administration and the
impact of COVID-19 variants and (vi) expectations for adjusted
earnings contributions from its alcohol assets.
Altria’s 2021 full-year adjusted diluted EPS guidance range
includes planned investments in support of its Vision, such as (i)
marketplace investments to expand the availability and awareness of
Altria’s smoke-free products, (ii) costs associated with building
an industry-leading consumer engagement platform that enhances data
collection and insights in support of ATC transition to smoke-free
products and (iii) increased smoke-free product research and
development expense. The full-year adjusted diluted EPS guidance
range excludes the special items for the first six months of 2021
shown in Table 1 and the charge that Altria will record in the
second half of 2021, which Altria does not expect to be material to
its financial statements, related to the Ste. Michelle
Transaction.
Altria continues to expect its 2021 full-year adjusted effective
tax rate will be in a range of 24.5% to 25.5%.
Altria’s full-year adjusted diluted EPS guidance and full-year
forecast for its adjusted effective tax rate exclude 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 litigation items, and resolutions of certain
non-participating manufacturer (NPM) adjustment disputes under the
1998 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
or its reported effective tax rate 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 or its adjusted effective tax rate
forecast.
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 increased 8.9% to $6.9 billion, primarily driven
by higher net revenues in all reportable segments. Revenues net of
excise taxes increased 10.9% to $5.6 billion.
- Reported diluted EPS increased 11.5% to $1.16, primarily driven
by higher reported operating companies income (OCI), an increase in
the estimated fair value of Altria’s investment in JUUL and lower
net charges on ABI-related special items. These drivers were
partially offset by unfavorable Cronos-related special items.
- Adjusted diluted EPS increased 12.8% to $1.23, primarily driven
by higher adjusted OCI.
First Half
- Net revenues increased 1.9% to $13.0 billion, primarily driven
by higher net revenues in all reportable segments. Revenues net of
excise taxes increased 3.8% to $10.5 billion.
- Reported diluted EPS increased 2.7% to $1.93, primarily driven
by higher reported OCI, favorable ABI-related special items and
fewer shares outstanding. These drivers were partially offset by
losses on early extinguishment of debt, higher net charges on
Cronos-related special items, a decrease in the estimated fair
value in Altria’s investment in JUUL and higher income taxes.
- Adjusted diluted EPS increased 5.5% to $2.30, primarily driven
by higher adjusted OCI and fewer shares outstanding, partially
offset by higher income taxes.
Table 1 - Altria’s Adjusted
Results
Second Quarter
Six Months Ended June
30,
2021
2020
Change
2021
2020
Change
Reported diluted EPS
$
1.16
$
1.04
11.5
%
$
1.93
$
1.88
2.7
%
NPM Adjustment Items
—
—
(0.01)
—
Implementation and acquisition-related
costs
—
—
0.02
0.16
Tobacco and health litigation items
—
0.01
0.02
0.02
JUUL changes in fair value
(0.05)
—
0.05
—
ABI-related special items
0.02
0.05
(0.04)
0.07
Cronos-related special items
0.10
(0.05)
0.06
—
Loss on early extinguishment of debt
—
—
0.27
—
COVID-19 special items
—
0.02
—
0.02
Tax items
—
0.02
—
0.03
Adjusted diluted EPS
$
1.23
$
1.09
12.8
%
$
2.30
$
2.18
5.5
%
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.
Implementation and Acquisition-Related Costs
- In the first half of 2021, Altria recorded pre-tax charges of
$56 million (or $0.02 per share), primarily related to
acquisition-related costs for the settlement of an arbitration
related to the 2019 on! transaction.
- In the first half of 2020, Altria recorded pre-tax charges of
$403 million (or $0.16 per share), due primarily to
inventory-related charges recorded by Ste. Michelle consisting of
$292 million for a wine inventory write-off and $100 million for
estimated losses on future, non-cancelable grape purchase
commitments (both recorded in the first quarter of 2020) that Ste.
Michelle believed no longer had a future economic benefit.
Tobacco and Health Litigation Items
- In the first half of 2021, Altria recorded pre-tax charges of
$43 million (or $0.02 per share) for tobacco and health
litigation-related items and interest costs.
- In the first half of 2020, Altria recorded pre-tax charges of
$42 million (or $0.02 per share) for tobacco and health
litigation-related items and interest costs.
ABI-Related Special Items
- 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
early bond terminations by ABI.
- In the second quarter of 2020, earnings from Altria’s equity
investment in ABI included net pre-tax charges of $120 million (or
$0.05 per share), consisting primarily of net mark-to-market losses
on certain ABI financial instruments associated with its share
commitments, partially offset by a gain resulting from ABI’s hedge
on a portion of the expected proceeds from ABI’s sale of its
Australia subsidiary.
- In the first half of 2020, earnings from Altria’s equity
investment in ABI included net pre-tax charges of $176 million (or
$0.07 per share), consisting primarily of net mark-to-market losses
on certain ABI financial instruments associated with its share
commitments, partially offset by a gain resulting from ABI’s hedge
on a portion of the expected proceeds from ABI’s sale of its
Australia subsidiary and an additional net gain related to ABI’s
completion of its initial public offering of a minority stake of
its Asia Pacific subsidiary. The ABI-related special items above
include Altria’s respective share of the amounts recorded by ABI
and may also include additional adjustments related to (i)
conversion from international financial reporting standards to GAAP
and (ii) adjustments to Altria’s investment required under the
equity method of accounting.
COVID-19 Special Items
- In the second quarter of 2020, Altria recorded net pre-tax
charges of $50 million (or $0.02 per share), directly related to
costs for disruptions caused by or efforts to mitigate the impact
of the COVID-19 pandemic. These pre-tax charges included premium
pay, personal protective equipment and health screenings, partially
offset by certain employment tax credits. The COVID-19 special
items do not include the inventory-related implementation costs
associated with the wine business strategic reset.
Cronos-Related Special Items
In the second quarter and first half of 2021, Altria recorded
net pre-tax (income) expense consisting of the following:
Second Quarter
Six Months Ended June
30,
($ in millions, except per
share data)
2021
2020
2021
2020
(Gain) loss on Cronos-related financial
instruments 1
$
103
$
(40)
$
(7)
$
97
(Income) losses from equity investments
2
78
(48)
118
(96)
Total Cronos-related special items -
(income) expense
$
181
$
(88)
$
111
$
1
Earnings per share
$
0.10
$
(0.05)
$
0.06
$
—
1 The 2021 and 2020 amounts are related to the non-cash change
in the fair value of the warrant and certain anti-dilution
protections acquired in the Cronos transaction.
2 Amounts primarily include Altria’s share of Cronos’s non-cash
change in the fair value of Cronos’s derivative financial
instruments associated with the issuance of additional shares.
JUUL Changes in Fair Value
- In the second quarter of 2021, Altria recorded a non-cash
pre-tax unrealized gain of $100 million (or $0.05 per share) as a
result of an increase in the estimated fair value of its investment
in JUUL. A corresponding adjustment was made to the JUUL tax
valuation allowance.
- In the first half of 2021, Altria recorded a non-cash pre-tax
unrealized loss of $100 million (or $0.05 per share) as a result of
a decrease in the estimated fair value of its investment in JUUL. A
corresponding adjustment was made to the JUUL tax valuation
allowance.
- As of June 30, 2021, the estimated fair value of Altria’s JUUL
investment was $1.6 billion.
Loss on Early Extinguishment of Debt
- In the first half of 2021, Altria recorded pre-tax losses on
early extinguishment of debt of $649 million (or $0.27 per share),
which was recorded in the first quarter.
Tax Items
- In the second quarter and first half of 2020, Altria recorded
income tax charges of $27 million (or $0.02 per share) and $51
million (or $0.03 per share), respectively, primarily related to a
tax basis adjustment to its equity investment in ABI and
adjustments as a result of amended returns and audit adjustments
related to prior years.
SMOKEABLE PRODUCTS
Revenues and OCI
Second Quarter
- Net revenues increased 8.0%, primarily driven by higher pricing
and higher shipment volume, partially offset by higher promotional
investments. Revenues net of excise taxes increased 9.9%.
- Reported OCI increased 13.3%, primarily driven by higher
pricing, higher shipment volume and 2020 COVID-19 special items,
partially offset by higher promotional investments, higher
resolution expenses and higher costs.
- Adjusted OCI increased 11.0%, primarily driven by higher
pricing and higher shipment volume, partially offset by higher
promotional investments, higher resolution expenses and higher
costs. Adjusted OCI margins increased by 0.6 percentage points to
58.4%.
First Half
- Net revenues increased 0.8%, primarily driven by higher
pricing, partially offset by lower shipment volume and higher
promotional investments. Revenues net of excise taxes increased
2.7%.
- Reported OCI increased 6.8%, primarily driven by higher
pricing, 2020 COVID-19 special items and 2021 NPM Adjustment Items,
partially offset by lower shipment volume, higher promotional
investments and higher resolution expenses.
- Adjusted OCI increased 5.3%, primarily driven by higher
pricing, partially offset by lower shipment volume, higher
promotional investments and higher resolution expenses. Adjusted
OCI margins increased by 1.5 percentage points to 58.0%.
Table 2 - Smokeable Products: Revenues
and OCI ($ in millions)
Second Quarter
Six Months Ended June
30,
2021
2020
Change
2021
2020
Change
Net revenues
$
6,050
$
5,603
8.0
%
$
11,300
$
11,209
0.8
%
Excise taxes
(1,281)
(1,265)
(2,402)
(2,543)
Revenues net of excise taxes
$
4,769
$
4,338
9.9
%
$
8,898
$
8,666
2.7
%
Reported OCI
$
2,776
$
2,450
13.3
%
$
5,148
$
4,820
6.8
%
NPM Adjustment Items
—
—
(32)
—
Tobacco and health litigation items
8
17
43
39
COVID-19 special items
—
41
—
41
Adjusted OCI
$
2,784
$
2,508
11.0
%
$
5,159
$
4,900
5.3
%
Adjusted OCI margins 1
58.4
%
57.8
%
0.6 pp
58.0
%
56.5
%
1.5 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 increased 1.4%, primarily driven by trade inventory
movements, partially offset by the industry’s rate of decline.
- When adjusted for trade inventory movements, smokeable products
segment domestic cigarette shipment volume decreased by an
estimated 4.5%.
- When adjusted for trade inventory movements, total estimated
domestic cigarette industry volumes decreased by an estimated
5%.
- Reported cigar shipment volume increased 8.1%.
First Half
- Smokeable products segment reported domestic cigarette shipment
volume decreased 5.3%, primarily driven by the industry’s rate of
decline, calendar differences and other factors.
- When adjusted for calendar differences, trade inventory
movements and other factors, smokeable products segment domestic
cigarette shipment volume decreased by an estimated 4%.
- When adjusted for calendar differences, trade inventory
movements and other factors, total estimated domestic cigarette
industry volumes decreased by an estimated 4%.
- Reported cigar shipment volume increased 9.6%.
Table 3 - Smokeable Products: Shipment
Volume (sticks in millions)
Second Quarter
Six Months Ended June
30,
2021
2020
Change
2021
2020
Change
Cigarettes:
Marlboro
22,339
21,790
2.5
%
41,754
43,632
(4.3)
%
Other premium
1,157
1,128
2.6
%
2,138
2,265
(5.6)
%
Discount
1,810
2,030
(10.8)
%
3,428
4,075
(15.9)
%
Total cigarettes
25,306
24,948
1.4
%
47,320
49,972
(5.3)
%
Cigars:
Black & Mild
453
419
8.1
%
932
849
9.8
%
Other
3
3
—
%
4
5
(20.0)
%
Total cigars
456
422
8.1
%
936
854
9.6
%
Total smokeable products
25,762
25,370
1.5
%
48,256
50,826
(5.1)
%
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 increased
0.5 share points to 43.2%. Sequentially, Marlboro retail share of
the total cigarette category increased 0.1 share point.
- The industry retail share for the discount cigarette segment
increased 0.1 share point to 25.0%. Sequentially, it decreased 0.3
share points.
First Half
- Marlboro retail share of the total cigarette category increased
0.5 share points to 43.2%.
- The industry retail share for the discount cigarette segment
remained unchanged at 25.1%.
Table 4 - Smokeable Products:
Cigarettes Retail Share (percent)
Second Quarter
Six Months Ended June
30,
2021
2020
Percentage point
change
2021
2020
Percentage point
change
Cigarettes:
Marlboro
43.2
%
42.7
%
0.5
43.2
%
42.7
%
0.5
Other premium
2.3
2.3
—
2.3
2.3
—
Discount
3.5
3.9
(0.4
)
3.5
4.0
(0.5
)
Total cigarettes
49.0
%
48.9
%
0.1
49.0
%
49.0
%
—
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 increased 5.0%, primarily driven by higher
pricing, partially offset by higher promotional investments in on!.
Revenues net of excise taxes increased 5.1%.
- Reported OCI increased 5.6%, primarily driven by higher
pricing, partially offset by higher promotional investments in
on!.
- Adjusted OCI increased 3.5%, primarily driven by higher
pricing, partially offset by higher promotional investments in on!
and higher costs. Adjusted OCI margins declined by 1.1 percentage
points to 71.7%, due to changes in shipment volume mix between the
segment’s moist smokeless tobacco (MST) and oral nicotine pouch
products.
First Half
- Net revenues increased 4.6%, primarily driven by higher
pricing, partially offset by higher promotional investments in on!.
Revenues net of excise taxes increased 4.8%.
- Reported OCI was essentially unchanged as higher pricing was
mostly offset by higher costs (including acquisition-related costs)
and higher promotional investments in on!.
- Adjusted OCI increased 3.3%, primarily driven by higher
pricing, partially offset by higher promotional investments in on!,
higher costs and unfavorable shipment volume mix. Adjusted OCI
margins declined by 1.0 percentage points to 71.9%, due to changes
in shipment volume mix between the segment’s MST and oral nicotine
pouch products.
Table 5 - Oral Tobacco Products:
Revenues and OCI ($ in millions)
Second Quarter
Six Months Ended June
30,
2021
2020
Change
2021
2020
Change
Net revenues
$
693
$
660
5.0
%
$
1,319
$
1,261
4.6
%
Excise taxes
(35)
(34)
(66)
(65)
Revenues net of excise taxes
$
658
$
626
5.1
%
$
1,253
$
1,196
4.8
%
Reported OCI
$
472
$
447
5.6
%
$
864
$
861
0.3
%
Acquisition-related costs
—
—
37
2
COVID-19 special items
—
9
—
9
Adjusted OCI
$
472
$
456
3.5
%
$
901
$
872
3.3
%
Adjusted OCI margins 1
71.7
%
72.8
%
(1.1) pp
71.9
%
72.9
%
(1.0) 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
increased 1.8%, primarily driven by the growth of oral nicotine
pouches, trade inventory movements, calendar differences and other
factors, partially offset by retail share losses (primarily due to
the growth of oral nicotine pouches). When adjusted for trade
inventory movements and calendar differences, oral tobacco products
segment shipment volume increased by an estimated 1%.
First Half
- Oral tobacco products segment reported domestic shipment volume
increased 1.2%, primarily driven by the growth of oral nicotine
pouches and trade inventory movements, partially offset by retail
share losses (primarily due to the growth of oral nicotine
pouches), calendar differences and other factors. When adjusted for
trade inventory movements and calendar differences, oral tobacco
products segment shipment volume increased by an estimated
0.5%.
- Total oral tobacco industry volume increased by an estimated 5%
over the past six months, driven by growth in oral nicotine
pouches.
Table 6 - Oral Tobacco Products:
Shipment Volume (cans and packs in millions)
Second Quarter
Six Months Ended June
30,
2021
2020
Change
2021
2020
Change
Copenhagen
134.1
138.9
(3.5)
%
257.0
263.9
(2.6)
%
Skoal
52.3
53.6
(2.4)
%
100.5
104.9
(4.2)
%
Other (includes Red Seal and
on!)
31.2
21.3
46.5
%
58.0
41.7
39.1
%
Total oral tobacco products
217.6
213.8
1.8
%
415.5
410.5
1.2
%
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 & Brand Activity
Second Quarter
- Oral tobacco products segment retail share was 47.8% and
Copenhagen continued to be the leading oral tobacco brand with a
retail share of 29.9%. Share losses in the oral tobacco products
segment, including Copenhagen, were due to the growth of oral
nicotine pouches.
First Half
- Oral tobacco products segment retail share was 48.0% and
Copenhagen retail share was 30.0%. Share losses in the oral tobacco
products segment, including Copenhagen, were due to the growth of
oral nicotine pouches.
Table 7 - Oral Tobacco Products: Retail
Share (percent)
Second Quarter
Six Months Ended June
30,
2021
2020
Percentage point
change
2021
2020
Percentage point
change
Copenhagen
29.9
%
32.0
%
(2.1)
30.0
%
32.2
%
(2.2)
Skoal
12.8
14.2
(1.4)
12.9
14.3
(1.4)
Other (includes Red Seal and
on!)
5.1
3.8
1.3
5.1
3.7
1.4
Total oral tobacco products
47.8
%
50.0
%
(2.2)
48.0
%
50.2
%
(2.2)
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.
WINE
Revenues, OCI and Shipment Volume
Second Quarter
- Net revenues increased 27.5%, primarily driven by higher
shipment volume and improved mix.
- Reported OCI increased +100.0% to $27 million, primarily driven
by higher shipment volume and improved mix.
- Adjusted OCI increased 80% to $27 million, primarily driven by
higher shipment volume and improved mix.
- Reported wine shipment volume increased 17.9% to approximately
1.9 million cases.
First Half
- Net revenues increased 14.4%, primarily driven by higher
shipment volume, improved mix and higher pricing.
- Reported OCI increased +100.0% to $45 million, primarily driven
by 2020 inventory-related charges (included in implementation costs
in Table 8 below).
- Adjusted OCI increased 64.3% to $46 million, primarily driven
by higher shipment volume, higher pricing and improved mix.
- Reported wine shipment volume increased 9.5% to approximately
3.6 million cases.
Table 8 - Wine: Revenues and OCI (Loss)
($ in millions)
Second Quarter
Six Months Ended June
30,
2021
2020
Change
2021
2020
Change
Net revenues
$
167
$
131
27.5
%
$
317
$
277
14.4
%
Excise taxes
(5)
(5)
(9)
(9)
Revenues net of excise taxes
$
162
$
126
28.6
%
$
308
$
268
14.9
%
Reported OCI (Loss)
$
27
$
13
100.0%+
$
45
$
(366)
100.0%+
Implementation costs
—
2
1
394
Adjusted OCI
$
27
$
15
80.0
%
$
46
$
28
64.3
%
Adjusted OCI margins 1
16.7
%
11.9
%
4.8 pp
14.9
%
10.4
%
4.5 pp
1 Adjusted OCI margins are calculated as adjusted OCI divided by
revenues net of excise taxes.
Altria’s Profile
Altria has a leading portfolio of tobacco products for U.S.
tobacco consumers age 21+. Altria’s Vision through 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 the most profitable
tobacco companies in their categories: Philip Morris USA Inc. (PM
USA), U.S. Smokeless Tobacco Company LLC (USSTC) and John Middleton
Co. (Middleton). Altria’s smoke-free portfolio includes Helix
Innovations LLC (Helix), the maker of on! oral nicotine pouches,
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 Ste. Michelle Wine Estates (Ste. Michelle) and
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!®.
Ste. Michelle produces and markets premium wines sold under various
labels, including Chateau Ste. Michelle®, 14 Hands® and Stag’s Leap
Wine Cellars™, and it imports and markets Antinori® and Champagne
Nicolas Feuillatte™ 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.
Learn more about Altria at www.altria.com and follow us on Twitter, Facebook
and LinkedIn.
Basis of Presentation
Altria reports its financial results in accordance with GAAP.
Altria’s 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, the segments. Altria’s 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 “2021 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
also reviews income tax rates on an adjusted basis. Altria’s
adjusted effective tax rate may exclude certain tax items from its
reported effective tax rate. 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.
Reconciliations of historical adjusted financial measures to
corresponding GAAP measures are provided in this release.
Altria uses the equity method of accounting for its investment
in ABI and Cronos and reports its 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 to record them in the concurrent period.
The one-quarter reporting lag for ABI and Cronos does not affect
Altria’s cash flows. In the fourth quarter of 2020, Altria elected
to account for its investment in JUUL under the fair value option.
Prior to this date, Altria accounted for its investment in JUUL as
an investment in an equity security.
Altria’s reportable segments are smokeable products, including
combustible cigarettes and cigars manufactured and sold by PM USA
and Middleton; oral tobacco products, including MST and snus
products manufactured and sold by USSTC, and oral nicotine pouches
sold by Helix; and wine, produced and/or distributed by Ste.
Michelle. Results for innovative tobacco products and Philip Morris
Capital Corporation (PMCC) are included 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 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. 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 adult tobacco
consumer acceptability of, or access to, tobacco products;
- tobacco product taxation, including lower tobacco product
consumption levels and potential shifts in adult consumer 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 or an increase to
the corporate income tax rate;
- 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, 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 impacted
by any changes in government stimulus or unemployment
payments;
- the failure of our tobacco and wine 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 and wine 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 adult tobacco consumers;
- 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 and wine
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 or wine 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 risks related to Ste. Michelle’s wine business, including
competition, unfavorable changes in grape supply, and changes in
adult consumer preferences that have resulted and may continue to
result in increased inventory levels and inventory write offs, and
governmental regulations;
- 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;
- our inability to consummate the sale of Ste. Michelle as
expected (including uncertainties related to Sycamore Partners’
ability to obtain the necessary financing to consummate the Ste.
Michelle Transaction); the risks that one or more of the conditions
to the consummation of the Ste. Michelle Transaction may not be
satisfied; the risks that regulatory approvals required for the
Ste. Michelle Transaction may not be obtained in a timely manner,
if at all; and our inability to meet expectations regarding the
timing, completion and other matters relating to the Ste. Michelle
Transaction, including its expected benefits;
- 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 equity investment in ABI, including on our reported
earnings from and carrying value of our investment in ABI, which
could result in impairment of our investment, and the dividends
paid by ABI on the shares we own;
- the risks related to our inability to transfer our equity
securities in ABI until October 10, 2021, and, if our ownership
percentage decreases below certain levels, 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
Consolidated Statements of
Earnings
For the Quarters Ended June
30,
(dollars in millions, except per
share data)
(Unaudited)
2021
2020
% Change
Net revenues
$
6,936
$
6,367
8.9
%
Cost of sales 1
1,882
1,775
Excise taxes on products 1
1,322
1,305
Gross profit
3,732
3,287
13.5
%
Marketing, administration and research
costs
469
428
Operating companies income
3,263
2,859
14.1
%
Amortization of intangibles
18
18
General corporate expenses
59
45
Operating income
3,186
2,796
13.9
%
Interest and other debt expense, net
295
308
Net periodic benefit income, excluding
service cost
(46)
(28)
(Income) losses from equity investments
1
(75)
(9)
(Gain) loss on Cronos-related financial
instruments
103
(40)
Earnings before income taxes
2,909
2,565
Provision for income taxes
759
627
Net earnings
2,150
1,938
10.9
%
Net (earnings) losses attributable to
noncontrolling interests
(1)
5
Net earnings attributable to
Altria
$
2,149
$
1,943
10.6
%
Per share data:
Diluted earnings per share attributable
to Altria
$
1.16
$
1.04
11.5
%
Weighted-average diluted shares
outstanding
1,849
1,859
(0.5)
%
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
2021
$
6,050
$
693
$
167
$
26
$
6,936
2020
5,603
660
131
(27)
6,367
% Change
8.0
%
5.0
%
27.5
%
100%+
8.9
%
Reconciliation:
For the quarter ended June 30,
2020
$
5,603
$
660
$
131
$
(27)
$
6,367
Operations
447
33
36
53
569
For the quarter ended June 30,
2021
$
6,050
$
693
$
167
$
26
$
6,936
Operating Companies Income
(Loss)
Smokeable Products
Oral Tobacco Products
Wine
All Other
Total
2021
$
2,776
$
472
$
27
$
(12)
$
3,263
2020
2,450
447
13
(51)
2,859
% Change
13.3
%
5.6
%
100%+
76.5
%
14.1
%
Reconciliation:
For the quarter ended June 30,
2020
$
2,450
$
447
$
13
$
(51)
$
2,859
Implementation costs - 2020
—
—
2
—
2
Tobacco and health litigation items -
2020
17
—
—
—
17
COVID-19 special items - 2020
41
9
—
—
50
58
9
2
—
69
Tobacco and health litigation items -
2021
(8)
—
—
—
(8)
(8)
—
—
—
(8)
Operations
276
16
12
39
343
For the quarter ended June 30,
2021
$
2,776
$
472
$
27
$
(12)
$
3,263
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)
2021
2020
% Change
Net revenues
$
12,972
$
12,726
1.9
%
Cost of sales 1
3,490
3,948
Excise taxes on products 1
2,478
2,618
Gross profit
7,004
6,160
13.7
%
Marketing, administration and research
costs
973
901
Operating companies income
6,031
5,259
14.7
%
Amortization of intangibles
35
37
General corporate expenses
120
90
Operating income
5,876
5,132
14.5
%
Interest and other debt expense, net
603
583
Loss on early extinguishment of debt
649
—
Net periodic benefit income, excluding
service cost
(89)
(55)
(Income) losses from equity investments
1
(126)
(166)
(Gain) loss on Cronos-related financial
instruments
(7)
97
Earnings before income taxes
4,846
4,673
3.7
%
Provision for income taxes
1,275
1,185
Net earnings
3,571
3,488
2.4
%
Net (earnings) losses attributable to
noncontrolling interests
2
7
Net earnings attributable to
Altria
$
3,573
$
3,495
2.2
%
Per share data2:
Diluted earnings per share attributable
to Altria
$
1.93
$
1.88
2.7
%
Weighted-average diluted shares
outstanding
1,853
1,859
(0.3)
%
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
2021
$
11,300
$
1,319
$
317
$
36
$
12,972
2020
11,209
1,261
277
(21)
12,726
% Change
0.8
%
4.6
%
14.4
%
100.0%+
1.9
%
Reconciliation:
For the six months ended June 30,
2020
$
11,209
$
1,261
$
277
$
(21)
$
12,726
Operations
91
58
40
57
246
For the six months ended June 30,
2021
$
11,300
$
1,319
$
317
$
36
$
12,972
Operating Companies Income
(Loss)
Smokeable Products
Oral Tobacco Products
Wine
All Other
Total
2021
$
5,148
$
864
$
45
$
(26)
$
6,031
2020
4,820
861
(366)
(56)
5,259
% Change
6.8
%
0.3
%
100.0%+
53.6
%
14.7
%
Reconciliation:
For the six months ended June 30,
2020
$
4,820
$
861
$
(366)
$
(56)
$
5,259
Implementation and acquisition-related
costs - 2020
—
2
394
—
396
Tobacco and health litigation items -
2020
39
—
—
—
39
COVID-19 special items - 2020
41
9
—
—
50
80
11
394
—
485
NPM Adjustment Items - 2021
32
—
—
—
32
Implementation and acquisition-related
costs - 2021
—
(37)
(1)
—
(38)
Tobacco and health litigation items -
2021
(43)
—
—
—
(43)
(11)
(37)
(1)
—
(49)
Operations
259
29
18
30
336
For the six months ended June 30,
2021
$
5,148
$
864
$
45
$
(26)
$
6,031
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,
2021
2020
2021
2020
The segment detail of excise taxes on
products sold is as follows:
Smokeable products
$
1,281
$
1,265
$
2,402
$
2,543
Oral tobacco products
35
34
66
65
Wine
5
5
9
9
All other
1
1
1
1
$
1,322
$
1,305
$
2,478
$
2,618
The segment detail of charges for
resolution expenses related to state settlement agreements included
in cost of sales is as follows:
Smokeable products
$
1,126
$
1,050
$
2,067
$
2,123
Oral tobacco products
3
3
5
5
All other
1
—
1
—
$
1,130
$
1,053
$
2,073
$
2,128
The segment detail of FDA user fees
included in cost of sales is
as follows:
Smokeable products
$
69
$
69
$
137
$
140
Oral tobacco products
1
1
2
2
$
70
$
70
$
139
$
142
The detail of (income) losses from
equity investments is as follows:
ABI
$
(74)
$
22
$
(392)
$
(112)
Cronos
99
(31)
166
(54)
JUUL
(100)
—
100
—
$
(75)
$
(9)
$
(126)
$
(166)
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
2021 Net Earnings
$
2,149
$
1.16
2020 Net Earnings
$
1,943
$
1.04
% Change
10.6
%
11.5
%
Reconciliation:
2020 Net Earnings
$
1,943
$
1.04
2020 Implementation and
acquisition-related costs
6
—
2020 Tobacco and health litigation
items
13
0.01
2020 ABI-related special items
95
0.05
2020 Cronos-related special items
(94)
(0.05)
2020 COVID-19 special items
37
0.02
2020 Tax items
27
0.02
Subtotal 2020 special items
84
0.05
2021 Implementation and
acquisition-related costs
(6)
—
2021 Tobacco and health 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 Tax items
(9)
—
Subtotal 2021 special items
(137)
(0.07)
Change in tax rate
(17)
(0.01)
Operations
276
0.15
2021 Net Earnings
$
2,149
$
1.16
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
2021 Reported
$
2,909
$
759
$
2,150
$
2,149
$
1.16
Implementation and acquisition-related
costs
8
2
6
6
—
Tobacco and health 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
Tax items
—
(9)
9
9
—
2021 Adjusted for Special Items
$
3,045
$
758
$
2,287
$
2,286
$
1.23
2020 Reported
$
2,565
$
627
$
1,938
$
1,943
$
1.04
Implementation and acquisition-related
costs
8
2
6
6
—
Tobacco and health litigation items
18
5
13
13
0.01
ABI-related special items
120
25
95
95
0.05
Cronos-related special items
(88)
6
(94)
(94)
(0.05)
COVID-19 special items
50
13
37
37
0.02
Tax items
—
(27)
27
27
0.02
2020 Adjusted for Special Items
$
2,673
$
651
$
2,022
$
2,027
$
1.09
2021 Reported Net Earnings
$
2,149
$
1.16
2020 Reported Net Earnings
$
1,943
$
1.04
% Change
10.6
%
11.5
%
2021 Net Earnings Adjusted for Special
Items
$
2,286
$
1.23
2020 Net Earnings Adjusted for Special
Items
$
2,027
$
1.09
% Change
12.8
%
12.8
%
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
2021 Net Earnings
$
3,573
$
1.93
2020 Net Earnings
$
3,495
$
1.88
% Change
2.2
%
2.7
%
Reconciliation:
2020 Net Earnings
$
3,495
$
1.88
2020 Implementation and
acquisition-related costs
306
0.16
2020 Tobacco and health litigation
items
32
0.02
2020 ABI-related special items
139
0.07
2020 Cronos-related special items
1
—
2020 COVID-19 special items
37
0.02
2020 Tax items
51
0.03
Subtotal 2020 special items
566
0.30
2021 NPM Adjustment Items
24
0.01
2021 Implementation and
acquisition-related costs
(43)
(0.02)
2021 Tobacco and health 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 Tax items
(3)
—
Subtotal 2021 special items
(696)
(0.37)
Fewer shares outstanding
—
0.01
Change in tax rate
(44)
(0.02)
Operations
252
0.13
2021 Net Earnings
$
3,573
$
1.93
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
2021 Reported
$
4,846
$
1,275
$
3,571
$
3,573
$
1.93
NPM Adjustment Items
(32)
(8)
(24)
(24)
(0.01)
Implementation and acquisition-related
costs
56
13
43
43
0.02
Tobacco and health 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
Tax items
—
(3)
3
3
—
2021 Adjusted for Special Items
$
5,684
$
1,417
$
4,267
$
4,269
$
2.30
2020 Reported
$
4,673
$
1,185
$
3,488
$
3,495
$
1.88
Implementation and acquisition-related
costs
403
97
306
306
0.16
Tobacco and health litigation items
42
10
32
32
0.02
ABI-related special items
176
37
139
139
0.07
Cronos-related special items
1
—
1
1
—
COVID-19 special items
50
13
37
37
0.02
Tax items
—
(51)
51
51
0.03
2020 Adjusted for Special Items
$
5,345
$
1,291
$
4,054
$
4,061
$
2.18
2021 Reported Net Earnings
$
3,573
$
1.93
2020 Reported Net Earnings
$
3,495
$
1.88
% Change
2.2
%
2.7
%
2021 Net Earnings Adjusted for Special
Items
$
4,269
$
2.30
2020 Net Earnings Adjusted for Special
Items
$
4,061
$
2.18
% Change
5.1
%
5.5
%
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,
2020
(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
2020 Reported
$
6,890
$
2,436
$
4,454
$
4,467
$
2.40
NPM Adjustment Items
4
1
3
3
—
Asset impairment, exit, implementation
and acquisition-related costs
431
89
342
342
0.18
Tobacco and health litigation items
83
21
62
62
0.03
JUUL changes in fair value
(100)
—
(100)
(100)
(0.05)
Impairment in JUUL equity securities
2,600
—
2,600
2,600
1.40
ABI-related special items
763
160
603
603
0.32
Cronos-related special items
51
(2)
53
53
0.03
COVID-19 special items
50
13
37
37
0.02
Tax items
—
(50)
50
50
0.03
2020 Adjusted for Special Items
$
10,772
$
2,668
$
8,104
$
8,117
$
4.36
Schedule 11
ALTRIA GROUP, INC.
and Subsidiaries
Condensed Consolidated Balance
Sheets
(dollars in millions)
(Unaudited)
June 30, 2021
December 31, 2020
Assets
Cash and cash equivalents
$
1,877
$
4,945
Inventories
1,794
1,966
Other current assets
513
206
Property, plant and equipment, net
1,933
2,012
Goodwill and other intangible assets,
net
17,757
17,792
Investments in equity securities
19,831
19,529
Other long-term assets
683
964
Total assets
$
44,388
$
47,414
Liabilities and Stockholders’
Equity
Current portion of long-term debt
$
—
$
1,500
Accrued settlement charges
1,980
3,564
Other current liabilities
3,803
3,999
Long-term debt
28,241
27,971
Deferred income taxes
4,779
4,532
Accrued pension costs
413
551
Accrued postretirement health care
costs
1,515
1,951
Other long-term liabilities
357
381
Total liabilities
41,088
44,449
Redeemable noncontrolling interest
41
40
Total stockholders’ equity
3,259
2,925
Total liabilities and stockholders’
equity
$
44,388
$
47,414
Total debt
$
28,241
$
29,471
Schedule 12
ALTRIA GROUP, INC.
and Subsidiaries
Supplemental Financial Data for
Special Items
For the Quarters Ended June
30,
(dollars in millions)
(Unaudited)
Cost of Sales
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
2021 Special Items - (Income)
Expense
Implementation and acquisition-related
costs
—
—
8
—
—
—
Tobacco and health litigation items
—
8
—
—
—
—
JUUL changes in fair value
—
—
—
—
(100)
—
ABI-related special items
—
—
—
—
39
—
Cronos-related special items
—
—
—
—
78
103
2020 Special Items - (Income)
Expense
Implementation and acquisition-related
costs
$
2
$
—
$
6
$
—
$
—
$
—
Tobacco and health litigation items
—
17
—
1
—
—
ABI-related special items
—
—
—
—
120
—
Cronos-related special items
—
—
—
—
(48)
(40)
COVID-19 special items
50
—
—
—
—
—
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
2021 Special Items - (Income)
Expense
NPM Adjustment Items
$
(32)
$
—
$
—
$
—
$
—
$
—
$
—
Implementation and acquisition-related
costs
1
37
18
—
—
—
—
Tobacco and health 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
—
—
2020 Special Items - (Income)
Expense
Implementation and acquisition-related
costs
$
394
$
2
$
7
$
—
$
—
$
—
$
—
Tobacco and health litigation items
—
39
—
3
—
—
—
ABI-related special items
—
—
—
—
—
176
—
Cronos-related special items
—
—
—
—
—
(96)
97
COVID-19 special items
50
—
—
—
—
—
—
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/20210729005530/en/
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