Yahoo Finance Altria Group Inc (MO) (Q1 2024) Earnings Call Transcript Highlights: Navigating Market ...
Adjusted Diluted EPS: Declined by 2.5% in Q1 2024.
Full Year Adjusted Diluted EPS Guidance: $5.05 to $5.17, growth of 2% to 4.5% from $4.95 in 2023.
Smokeable Products Segment Income: Over $2.4 billion in adjusted operating company's income.
Net Price Realization: 8.5% increase in the smokeable products segment.
Adjusted OCI Margins: 60.2% for the quarter, slightly down from the previous year.
Cigarette Volumes: Reported and adjusted decline by 10% in Q1.
Marlboro Retail Share: Maintained at 42%, with a 0.7 share point increase in the premium segment to 59.3%.
Oral Tobacco Products Segment: Adjusted OCI grew by 4.6%, with margins expanding to 69.5%.
Oral Tobacco Products Volume: Reported shipment volume decreased by 3.1%.
Oral Tobacco Retail Share: Declined by 7.1 percentage points.
Capital Allocation: Expanded share repurchase program to $3.4 billion; $2.4 billion accelerated share repurchase program initiated.
Dividends: Paid approximately $1.7 billion in dividends.
Debt-to-EBITDA Ratio: 2.1x as of March 31.
Release Date: April 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: What considerations went into the modest raise of your full-year guidance following the ABI share sale despite plans to repurchase an incremental 3% of your stock? A: (Salvatore Mancuso, Executive VP & CFO) - The adjustment reflects confidence in our core businesses and provides flexibility for managing our overall business and investments in innovative tobacco products throughout the year. The guidance adjustment also accounts for the accretion from the ABI transaction.
Q: Is the strategy of maximizing operating profit by taking price in excess of cigarette volume declines sustainable given the changing operating backdrop? A: (William F. Gifford, CEO & Director) - The strategy remains to maximize profitability over the long term while making appropriate investments in Marlboro and growth segments. Despite economic pressures on consumers, we maintain strong price realization and are adjusting our promotional activities accordingly.
Q: Can you discuss the drivers behind the increase in controllable costs in the smokable per pack and your expectations for dollar profit growth in smokable in the second half of the year? A: (Salvatore Mancuso, Executive VP & CFO) - The increase in costs was due to adjustments related to industry profits and inventory valuation methods. We anticipate lower SG&A costs and continued margin growth in the smokable products segment moving forward.
Q: How are you managing the widening price gaps and down-trading pressures, especially with the proliferation of illicit e-cigs? A: (William F. Gifford, CEO & Director) - We are utilizing advanced data analytics for revenue growth management, which helps in making informed pricing decisions at the store level. This approach has helped Marlboro maintain its share and address economic pressures effectively.
Q: What impact is the growth of the vapor category having on cigarette volumes, and how are you addressing this? A: (William F. Gifford, CEO & Director) - The growth in the vapor category, primarily from illicit products, is impacting cigarette volumes. We are focusing on regulatory actions to manage the proliferation of illicit products and advocate for an effective regulatory environment for smoke-free products.
Q: With the ongoing pressure from Zyn in the oral tobacco category, how is Altria adjusting its strategy for Skoal, Copenhagen, and on!? A: (William F. Gifford, CEO & Director) - Our strategy is to maximize profitability while balancing investments in Copenhagen and on!. We are focusing on maintaining leadership in moist smokeless tobacco with Copenhagen and growing the on! brand through strategic retail positioning and upcoming product launches like on! PLUS.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
