Altria Reports 2024 Second-Quarter and First-Half Results; Narrows 2024 Full-Year Earnings Guidance

RICHMOND, Va.–(BUSINESS WIRE)–$MO #ALTRIA–Altria Group, Inc. (NYSE: MO) today reports our 2024 second-quarter and first-half business results and narrows our guidance for 2024 full-year adjusted diluted earnings per share (EPS).

“Altria’s momentum continues to build as we pursue our Vision to responsibly lead the transition of adult smokers to a smoke-free future,” said Billy Gifford, Altria’s Chief Executive Officer. “In the second quarter, our companies’ innovative smoke-free products delivered strong share and volume performance, and we hit meaningful milestones that we believe set us up for future success. NJOY received the first and only marketing granted orders from the FDA for menthol e-vapor products, and we submitted PMTA applications to the FDA for next generation NJOY and on! products.”

“Our traditional tobacco businesses also remained resilient, despite a challenging operating environment. Our highly cash generative businesses supported continued investments in our innovative product efforts, and we returned significant value to shareholders during the first half of the year, with more than $5.8 billion delivered to shareholders through share repurchases and dividends.”

First-half adjusted diluted EPS declined by 1.6%, consistent with our guidance expectations for growth to be weighted to the second half of the year. We are narrowing our full-year 2024 guidance and now expect to deliver adjusted diluted EPS in a range of $5.07 to $5.15. This range represents an adjusted diluted EPS growth rate of 2.5% to 4.0% from a base of $4.95 in 2023.

¹ “Adjusted” financial measures presented in this release exclude the impact of special items. See “Basis of Presentation” for more information and see the schedules to this press release for reconciliations to corresponding GAAP measures.

² “EPS” represents diluted earnings per share.

As previously announced, a conference call with the investment community and news media will be webcast on July 31, 2024 at 9:00 a.m. Eastern Time. Access to the webcast is available at www.altria.com/webcasts.

NJOY

Business Results

Second Quarter:

• NJOY consumables reported shipment volume increased 14.7% sequentially to 12.5 million units.
• NJOY devices reported shipment volume increased 80.0% sequentially to 1.8 million units.
• NJOY retail share in the U.S. multi-outlet and convenience channel increased 1.3 share points sequentially to 5.5%.

First Half:

• NJOY consumables reported shipment volume was 23.4 million units.
• NJOY devices reported shipment volume was 2.8 million units.
• NJOY retail share in the U.S. multi-outlet and convenience channel was 4.8%.

Smoke-free Product Portfolio Update

Marketing Granted Orders (MGOs)

• In June 2024, NJOY received marketing authorizations from the FDA for four menthol e-vapor products, including NJOY ACE Pod Menthol 2.4% and 5%, NJOY DAILY Menthol 4.5% and NJOY DAILY Extra Menthol 6%. NJOY has the first and only menthol e-vapor products authorized by the FDA.
• Under the terms of the agreement pursuant to which we acquired NJOY (the Merger Agreement), we were obligated to make cash payments totaling $250 million if the FDA issued MGOs for NJOY menthol pod products. As a result, once the FDA issued MGOs for NJOY menthol products in June 2024, we made these payments in July 2024. Additionally, we recorded a pre-tax charge of approximately $140 million during the second quarter of 2024, related to a change in the fair value of the contingent payments as part of the NJOY acquisition.

Premarket Tobacco Product Application (PMTA) Submissions

• NJOY submitted a supplemental PMTA to the FDA to commercialize and market the NJOY ACE 2.0 device, which incorporates access restriction technology designed to prevent underage use. In addition, NJOY re-submitted PMTAs for blueberry and watermelon pod products that work exclusively with the 2.0 device. Under the terms of the Merger Agreement, upon the FDA issuance of MGOs with respect to NJOY blueberry and watermelon pod products, we are obligated to make cash payments totaling $250 million.
• Helix submitted PMTAs to the FDA for on! PLUS, an innovative pouch product made using our proprietary “soft-feel” material. The PMTAs were submitted for three varieties: tobacco, mint and wintergreen, each in three different nicotine strength options.

Cash Returns to Shareholders

Share Repurchase Program

• We completed our $2.4 billion accelerated share repurchase program (ASR program), which was announced during the first quarter of 2024. Under the ASR program, we repurchased 53.9 million shares at an average price of $44.50.
• As of June 30, 2024, we had $990 million remaining under our currently authorized $3.4 billion share repurchase program, which we expect to complete by December 31, 2024. Share repurchases depend on marketplace conditions and other factors, and the program remains subject to the discretion of our Board of Directors (Board).

Dividends

• We paid dividends of $1.7 billion and $3.4 billion in the second quarter and first half, respectively. Future dividend payments remain subject to the discretion of our Board.

Environmental, Social and Governance

Our Corporate Responsibility Focus Areas are: (i) reduce the harm of tobacco products, (ii) prevent underage use, (iii) protect the environment, (iv) drive responsibility through our value chain, (v) support our people and communities and (vi) engage and lead responsibly. Our corporate responsibility reports are available on the Responsibility section of www.altria.com.

• We recently published the following materials that highlight our responsibility efforts and initiatives:
  • 2023 Reduce Harm of Tobacco Products Snapshot;
  • 2023 Prevent Underage Use Snapshot;
  • 2023 Support Our People & Communities Snapshot; and
  • 2023 Engage & Lead Responsibly Report.

2024 Full-Year Guidance

We narrow our guidance for 2024 full-year adjusted diluted EPS to be in a range of $5.07 to $5.15, representing a growth rate of 2.5% to 4.0% from a base of $4.95 in 2023. We expect 2024 adjusted diluted EPS growth to be weighted to the second half of the year. Our guidance includes the impact of two additional shipping days in 2024, both of which occur in the second half, and assumes limited impact on combustible and e-vapor product volumes from enforcement efforts in the illicit e-vapor market.

While our 2024 full-year adjusted diluted EPS guidance accounts for a range of scenarios, the external environment remains dynamic. We will continue to monitor conditions related to (i) the economy, including the cumulative impact of inflation, (ii) adult tobacco consumer (ATC) dynamics, including purchasing patterns and adoption of smoke-free products, (iii) illicit e-vapor enforcement and (iv) regulatory, litigation and legislative developments.

Our 2024 full-year adjusted diluted EPS guidance range includes planned investments in support of our Vision, such as (i) marketplace activities in support of our smoke-free products and (ii) continued smoke-free product research, development and regulatory preparation expenses.

We now expect our 2024 full-year adjusted effective tax rate to be in a range of 24.0% to 25.0%.

Our full-year adjusted diluted EPS guidance range and full-year forecast for our adjusted effective tax rate exclude the impact of certain income and expense items that our 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, disposition and integration-related items, equity investment-related special items, 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 (NPM Adjustment Items). See Table 1 below for the income and expense items for the second quarter and first half of 2024.

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 or our 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, we do not provide a corresponding U.S. generally accepted accounting principles (GAAP) measure for, or reconciliation to, our adjusted diluted EPS guidance or our 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 decreased 4.6% to $6.2 billion, primarily driven by lower net revenues in the smokeable products segment, partially offset by higher net revenues in the oral tobacco products segment. Revenues net of excise taxes decreased 3.0% to $5.3 billion.
• Reported diluted EPS increased 85.7% to $2.21, primarily driven by the gain on the sale of the IQOS Tobacco Heating System commercialization rights, lower tobacco and health and certain other litigation items and fewer shares outstanding, partially offset by lower reported operating companies income (OCI), which includes a non-cash impairment of the Skoal trademark, and a change in the fair value of contingent payments associated with the acquisition of NJOY.
• Adjusted diluted EPS was unchanged at $1.31, as lower adjusted OCI was offset by fewer shares outstanding.

First Half

• Net revenues decreased 3.6% to $11.8 billion, driven by lower net revenues in the smokeable products segment, partially offset by higher net revenues in the oral tobacco products segment and the all other category. Revenues net of excise taxes decreased 2.0% to $10.0 billion.
• Reported diluted EPS increased 56.4% to $3.41, primarily driven by the gain on the sale of the IQOS Tobacco Heating System commercialization rights, 2023 charges related to our former investment in JUUL Labs, Inc. (JUUL), lower tobacco and health and certain other litigation items, fewer shares outstanding and the partial sale of our investment in ABI and related favorable income tax items. These items were partially offset by lower reported OCI, which includes a non-cash impairment of the Skoal trademark, and a change in the fair value of contingent payments associated with the acquisition of NJOY.
• Adjusted diluted EPS decreased 1.6% to $2.46, primarily driven by lower adjusted OCI, partially offset by fewer shares outstanding.

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 4 and 5.

Acquisition and Disposition-Related Items

In the second quarter and first half of 2024, we recorded acquisition and disposition-related items of $2.6 billion (or $1.09 per share), primarily related to a pre-tax gain of $2.7 billion upon the assignment of the IQOS Tobacco Heating System commercialization rights to Philip Morris International Inc. in April 2024, partially offset by a pre-tax charge related to a change in the fair value of the contingent payments associated with the acquisition of NJOY.

Asset Impairment

In the second quarter and first half of 2024, we recorded a non-cash, pre-tax charge of $354 million (or $0.15 per share) for an impairment of the Skoal trademark.

Tobacco and Health and Certain Other Litigation Items

In the second quarter and first half of 2024, we recorded pre-tax charges of $44 million (or $0.02 per share) and $68 million (or $0.03 per share), respectively, for tobacco and health and certain other litigation items.

In the second quarter and first half of 2023, we recorded pre-tax charges of $290 million (or $0.12 per share) and $401 million (or $0.17 per share), respectively, for tobacco and health and certain other litigation items and related interest costs. The charges in the second quarter of 2023 were primarily driven by our settlement of JUUL-related litigation.

Loss on Disposition of JUUL Equity Securities

In the first half of 2023, we recorded a non-cash, pre-tax loss of $250 million (or $0.14 per share) related to the disposition of our former investment in JUUL. We recorded a corresponding adjustment to the JUUL tax valuation allowance.

ABI-Related Special Items

In the first half of 2024, ABI-related special items included net pre-tax income of $62 million (or $0.02 per share), primarily related to our pre-tax gain on the partial sale of our investment in ABI, partially offset by transaction costs.

The ABI-related special items include our respective share of the amounts recorded by ABI and additional adjustments related to (i) the conversion of ABI-related special items from international financial reporting standards to GAAP and (ii) adjustments to our investment required under the equity method of accounting.

Cronos-Related Special Items

In the first half of 2023, Cronos-related special items included pre-tax losses of $30 million (or $0.02 per share), substantially all of which related to our share of special items recorded by Cronos. We recorded a corresponding adjustment to the Cronos tax valuation allowance.

Income Tax Items

In the first half of 2024, we recorded income tax items of $52 million (or $0.03 per share), due primarily to an income tax benefit from the partial release of a valuation allowance on JUUL-related losses, partially offset by interest expense on tax reserves recorded in prior years. The valuation allowance release was due to the capital gain associated with the partial sale of our investment in ABI.

SMOKEABLE PRODUCTS

Revenues and OCI

Second Quarter

• Net revenues decreased 5.6%, primarily driven by lower shipment volume and higher promotional investments, partially offset by higher pricing. Revenues net of excise taxes decreased 4.0%.
• Reported OCI decreased 1.4%, primarily driven by lower shipment volume, higher promotional investments, higher per unit settlement charges and higher manufacturing costs, partially offset by higher pricing and lower selling, general and administrative (SG&A) costs, which include lower tobacco and health and certain other litigation items.
• Adjusted OCI decreased 2.0%, primarily driven by lower shipment volume, higher promotional investments, higher per unit settlement charges and higher manufacturing costs, partially offset by higher pricing and lower SG&A costs. Adjusted OCI margins increased by 1.2 percentage points to 61.6%.

First Half

• Net revenues decreased 4.7%, primarily driven by lower shipment volume and higher promotional investments, partially offset by higher pricing. Revenues net of excise taxes decreased 3.2%.
• Reported OCI decreased 1.9%, primarily driven by lower shipment volume, higher promotional investments, higher per unit settlement charges and higher manufacturing costs, partially offset by higher pricing and lower SG&A costs, which include lower tobacco and health and certain other litigation items.
• Adjusted OCI decreased 2.3%, primarily driven by lower shipment volume, higher promotional investments, higher per unit settlement charges and higher manufacturing costs, partially offset by higher pricing and lower SG&A costs. Adjusted OCI margins increased by 0.6 percentage points to 61.0%.

¹ Reported and adjusted OCI margins are calculated as reported and adjusted OCI, respectively, divided by revenues net of excise taxes.

Shipment Volume

Second Quarter

• Smokeable products segment reported domestic cigarette shipment volume decreased 13.0%, primarily driven by the industry’s decline rate (impacted by macroeconomic pressures on ATC discretionary income and the growth of illicit e-vapor products), trade inventory movements and retail share losses.
• When adjusted for trade inventory movements, smokeable products segment domestic cigarette shipment volume decreased by an estimated 11%.
• When adjusted for trade inventory movements, total estimated domestic cigarette industry volume decreased by an estimated 9.5%.
• Reported cigar shipment volume decreased 0.9%.

First Half

• Smokeable products segment reported domestic cigarette shipment volume decreased 11.5%, primarily driven by the industry’s decline rate (impacted by macroeconomic pressures on ATC discretionary income and the growth of illicit e-vapor products), retail share losses and trade inventory movements.
• When adjusted for trade inventory movements, smokeable products segment domestic cigarette shipment volume decreased by an estimated 10.5%.
• When adjusted for trade inventory movements and other factors, total estimated domestic cigarette industry volume decreased by an estimated 9%.
• Reported cigar shipment volume decreased 3.4%.

Note: Cigarettes volume includes units sold as well as promotional units but excludes units sold for distribution to Puerto Rico, U.S. Territories to overseas military and by Philip Morris Duty Free Inc., none of which, individually or in the aggregate, is material to our smokeable products segment.

Retail Share and Brand Activity

Second Quarter

• Marlboro retail share of the total cigarette category was 42.0%, a decrease of 0.1 share point versus the prior year and unchanged sequentially. Additionally, Marlboro share of the premium segment was 59.4%, an increase of 0.7 share points versus the prior year and 0.1 share point sequentially.
• The cigarette industry discount retail share was 29.3%, an increase of 1.0 share point versus the prior year and 0.2 share points sequentially, primarily due to increased macroeconomic pressures on ATC discretionary income.

First Half

• Marlboro retail share of the total cigarette category was 42.0%, a decrease of 0.1 share point. Additionally, Marlboro share of the premium segment was 59.3%, an increase of 0.7 share points.
• The cigarette industry discount retail share was 29.2%, an increase of 0.9 share points, primarily due to increased macroeconomic pressures on ATC discretionary income.

Note: Retail share results for cigarettes are based on data from Circana, LLC (Circana) as well as MSAi. Circana maintains a blended retail 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 through the Store Tracking Analytical Reporting System (STARS), as provided by MSAi. This service is not designed to capture sales through other channels, including the internet, direct mail and some illicitly tax-advantaged outlets. It is the standard practice of retail services to periodically refresh their retail scan services, which could restate retail share results that were previously released in these services.

ORAL TOBACCO PRODUCTS

Revenues and OCI

Second Quarter

• Net revenues increased 4.6%, primarily driven by higher pricing and lower promotional investments, partially offset by a higher percentage of on! shipment volume relative to MST versus the prior year (mix change) and lower MST shipment volume. Revenues net of excise taxes increased 5.5%.
• Reported OCI decreased 78.1%, primarily driven by a non-cash impairment of the Skoal trademark, mix change, higher costs and lower MST shipment volume, partially offset by higher pricing and lower promotional investments.
• Adjusted OCI increased 1.8%, primarily driven by higher pricing and lower promotional investments, partially offset by mix change, higher costs and lower MST shipment volume. Adjusted OCI margins decreased by 2.4 percentage points to 65.6%.

First Half

• Net revenues increased 4.1%, primarily driven by higher pricing and lower promotional investments, partially offset by lower MST shipment volume and mix change. Revenues net of excise taxes increased 5.0%.
• Reported OCI decreased 38.1%, primarily driven by a non-cash impairment of the Skoal trademark, lower MST shipment volume, mix change and higher costs, partially offset by higher pricing and lower promotional investments.
• Adjusted OCI increased 3.1%, primarily driven by higher pricing and lower promotional investments, partially offset by lower MST shipment volume, mix change and higher costs. Adjusted OCI margins decreased by 1.2 percentage points to 67.5%.

Contacts

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