I’m having Claude (not fun Claude – no room!) run the base analysis using the Quarterly Report and the Conference call (MO, in this case) and then letting Shelbot add new information and perform a valuation:
👺 Based on reviewing the 10-Q, earnings call transcript, and analyst reports on Altria’s Q3 2023 results, here is a full analysis of the company’s current situation and outlook:
Financial Performance
– Q3 revenue of $6.3B, down 4% year-over-year, missed expectations by $155M
– Q3 adjusted EPS of $1.28, down 2% YoY, missed by $0.02
– For the first 9 months, revenue fell 2.5% and adjusted EPS grew 3.3%
– Full year adjusted EPS guidance narrowed to $4.91-$4.98 (1.5-3% growth), lowering midpoint from prior $4.96
Key Factors:
– Cigarette shipment volumes fell 10.5% for the quarter, worse than the industry decline of 8%
– Smokeable products OCI down 2.5% for the quarter due to higher promotional spending and volume declines
– Oral tobacco OCI grew 7% with higher pricing and more efficient promotions for on!
– Progress made expanding NJOY distribution, but minimal financial contribution so far
Market Share and Pricing
– Marlboro retail share was stable sequentially, grew in premium segment
– Net price realization up 8.6% for smokeables, showing ability to raise prices
– Total discount cigarette segment grew 1.1 points to 28.2% of market
– On! gained 0.7 points of share in oral tobacco, now at 6.9%
Industry/Regulatory Issues
– Cigarette industry volume under pressure from economy and illicit flavored e-cigs
– Altria estimates illicit e-vapor depressing cigarette volume by 1.5-2.5 points
– Calling for FDA enforcement against illegally marketed disposable e-vapor products
– Awaiting FDA action on potential menthol ban and nicotine limits in cigarettes
Capital Allocation
– $5.1B in dividends paid and $732M in share repurchases YTD
– Remain committed to dividend growth and share repurchases within cash flow
Outlook:
– Results reflect challenging cigarette industry dynamics negatively impacting volumes
– Pricing power and efficiencies helping protect profitability for now
– Transition to smoke-free portfolio advancing but remains long-term endeavor
– Uncertainty persists around regulatory environment for tobacco/nicotine
– Stock may remain rangebound near-term amid volatility and uncertainty
Overall, Altria faces headwinds from cigarette volume declines and regulatory challenges, but continues working to transition business to smoke-free while returning cash to shareholders.
