Altria Group, Inc. (Altria) (NYSE: MO) is participating in the
Consumer Analyst Group of New York Conference (CAGNY) in Boca
Raton, Fla. today. Marty Barrington, Altria’s Chairman, Chief
Executive Officer and President, and other members of Altria’s
senior management team will highlight Altria’s legacy of success,
strategies to create long-term value for shareholders and the
strengths of its diverse business model.
Remarks and Presentation
The presentation is being webcast live at altria.com in a
listen-only mode, beginning at approximately 1:00 p.m. Eastern
Time. A copy of the business presentation and prepared remarks, and
a replay of the audio webcast, will be available at altria.com and
via the Altria Investor app.
2018 Full-Year Guidance
Altria reaffirms its guidance for 2018 full-year adjusted
diluted earnings per share (EPS) to be in a range of $3.90 to
$4.03, which excludes a $0.09 tax expense for a tax basis
adjustment related to the deemed repatriation tax. This range
represents a growth rate of 15% to 19% from a 2017 adjusted diluted
EPS base of $3.39, as shown in Schedule 1. Altria’s 2018 guidance
reflects investments in focus areas for long-term growth, including
innovative product development and launches, regulatory science,
brand equity, retail fixtures and future retail concepts.
Altria’s full-year adjusted diluted EPS guidance excludes the
impact of certain income and expense items that management believes
are not part of underlying operations. These items may include, for
example, loss on early extinguishment of debt, restructuring
charges, gain on Anheuser-Busch InBev SA/NV (AB InBev)/SABMiller
plc (SABMiller) business combination, AB InBev special items,
certain tax items, charges associated with tobacco and health
litigation items, and resolutions of certain non-participating
manufacturer (NPM) adjustment disputes under the Master Settlement
Agreement (such dispute resolutions are referred to as NPM
Adjustment Items).
Altria’s management cannot estimate on a forward-looking basis
the impact of certain income and expense items, including those
items noted in the preceding paragraph, on its reported diluted EPS
because these items, which could be significant, may be 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.
The factors described in the Forward-Looking and Cautionary
Statements section of this release represent continuing risks to
Altria’s forecast.
Altria’s Profile
Altria’s wholly-owned subsidiaries include Philip Morris USA
Inc., U.S. Smokeless Tobacco Company LLC, John Middleton Co.,
Sherman Group Holdings, LLC and its subsidiaries, Nu Mark LLC, Ste.
Michelle Wine Estates Ltd. (Ste. Michelle) and Philip Morris
Capital Corporation. Altria holds an equity investment in
Anheuser-Busch InBev SA/NV.
The brand portfolios of Altria’s tobacco operating companies
include Marlboro®, Black & Mild®,
Copenhagen®, Skoal®, MarkTen® and Green
Smoke®. Ste. Michelle produces and markets premium wines
sold under various labels, including Chateau Ste. Michelle®,
Columbia Crest®, 14 Hands® and Stag’s Leap Wine
Cellars™, and it imports and markets Antinori®,
Champagne Nicolas Feuillatte™, Torres® and Villa
Maria Estate™ 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.
More information about Altria is available at altria.com and on the
Altria Investor app.
Forward-Looking and Cautionary
Statements
This press 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 today’s remarks are
described in Altria’s publicly filed reports, including its Annual
Report on Form 10-K for the year ended December 31, 2016 and its
Quarterly Report on Form 10-Q for the period ended September 30,
2017.
These factors include the following: significant competition;
changes in adult consumer preferences and demand for Altria’s
operating companies’ products; fluctuations in raw material
availability, quality and price; reliance on key facilities and
suppliers; reliance on critical information systems, many of which
are managed by third-party service providers; fluctuations in
levels of customer inventories; the effects of global, national and
local economic and market conditions; changes to income tax laws;
federal, state and local legislative activity, including actual and
potential federal and state excise tax increases; increasing
marketing and regulatory restrictions; the effects of price
increases related to excise tax increases and concluded tobacco
litigation settlements, consumption rates and consumer preferences
within price segments; health concerns relating to the use of
tobacco products and exposure to environmental tobacco smoke;
privately imposed smoking restrictions; and, from time to time,
governmental investigations.
Furthermore, the results of Altria’s tobacco businesses are
dependent upon their 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 tobacco 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.
Altria and its tobacco businesses are also subject to federal,
state and local government regulation, including by the U.S. Food
and Drug Administration. Altria and its subsidiaries continue to be
subject to litigation, including risks associated with adverse jury
and judicial determinations, courts reaching conclusions at
variance with the companies’ understanding of applicable law,
bonding requirements in the limited number of jurisdictions that do
not limit the dollar amount of appeal bonds and certain challenges
to bond cap statutes.
In addition, the factors related to Altria’s investment in AB
InBev include the following: AB InBev’s inability to successfully
execute its business plans and strategies; that Altria’s equity
securities in AB InBev, which it received in AB InBev’s business
combination with SABMiller, are subject to restrictions on transfer
until October 10, 2021; the risk that Altria’s reported earnings
from and carrying value of its equity investment in AB InBev may be
adversely affected by unfavorable foreign currency exchange rates
and other factors, including the risks encountered by AB InBev in
its business; the risk that the tax treatment of Altria’s
transaction consideration from the AB InBev/SABMiller business
combination and the accounting treatment of its equity investment
are not guaranteed; and the risk that the tax treatment of the
dividends Altria expects to receive from AB InBev may not be as
favorable as Altria anticipates.
Altria cautions that the foregoing list of important factors is
not complete and does not undertake to update any forward-looking
statements that it may make except as required by applicable law.
All subsequent written and oral forward-looking statements
attributable to Altria or any person acting on its behalf are
expressly qualified in their entirety by the cautionary statements
referenced above.
Schedule 1
ALTRIA GROUP, INC.
and Subsidiaries
Reconciliation of GAAP and non-GAAP
Measures
(dollars in millions, except per share
data)
(Unaudited)
Reconciliation of Altria’s Full-Year 2017 Adjusted
Results
Earnings before
Income Taxes
(Benefit) Provision for
Income Taxes
Net Earnings
Net Earnings Attributable to
Altria Group, Inc.
Diluted EPS
For the year ended December 31, 2017 Reported
$ 9,828 $ (399 ) $
10,227 $ 10,222 $ 5.31 NPM
Adjustment Items 4 2 2 2 — Tobacco and health litigation items 80
30 50 50 0.03 AB InBev special items 160 55 105 105 0.05 Asset
impairment, exit, implementation and
acquisition-related costs
89 34 55 55 0.03 Gain on AB InBev/SABMiller business
combination
(445 ) (156 ) (289 ) (289 ) (0.15 ) Settlement charge for lump sum
pension
payments
81 32 49 49 0.03 Tax items — 3,674 (3,674 ) (3,674 )
(1.91 )
Adjusted for Special Items $ 9,797
$ 3,272 $ 6,525
$ 6,520 $ 3.39
Altria reports its financial results in accordance with GAAP.
Altria’s management reviews certain financial results, including
diluted EPS, on an adjusted basis, which excludes certain income
and expense items, including those items noted under “2018
Full-Year Guidance” above. 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 infrequent, are difficult to
predict and can distort underlying business trends and results.
Altria’s management believes that adjusted financial measures
provide useful additional insight into underlying business trends
and results and provide a more meaningful comparison of
year-over-year results. Altria’s management uses adjusted financial
measures for planning, forecasting and evaluating business and
financial performance, including allocating resources and
evaluating results relative to employee compensation targets. These
adjusted financial measures are not 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.
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