Altria Group Inc. (NYSE:MO) Q3 2017 Earnings Conference Call Transcript

Oct 26, 2017 • 09:00 am ET

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Altria Group Inc. (NYSE:MO) Q3 2017 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good day, and welcome to the Altria Group 2017 Third Quarter Earnings Conference Call. Today's call is scheduled to last about one hour, including remarks by Altria's management and a question-and-answer session. Representatives of the investment community and media on the call will be able to ask questions following the conclusion of the prepared remarks. [Operator Instructions]

I would now like to turn the call over to Mr. Bill Marshall [Phonetic], Vice President, Investor Relations for Altria Client Services. Please go ahead, sir.

Executive
Bill Marshall

Thank you, Lori. Good morning and thank you for joining us. We're here this morning with Marty Barrington, Altria's CEO; and Billy Gifford, Altria's CFO, to discuss Altria's 2017 third quarter and first nine months business results. Earlier today, we issued a press release providing these results, which is available on our website at altria.com and through the Altria investor app. During our call today, unless otherwise stated, we're comparing results to the same period in 2016.

Our remarks contain forward-looking and cautionary statements and projections of future results. Please review the forward-looking and cautionary statement section at the end of today's earnings release for various factors that could cause actual results to differ materially from projections. Future dividend payments and share repurchases remain subject to the discretion of Altria's board. The timing of share repurchases depends on marketplace conditions and other factors.

Altria reports its financial results in accordance with US Generally Accepted Accounting Principles. Today's call will contain various operating results on both the reported and adjusted basis. Adjusted results exclude special items that affects the comparability of reported results. Descriptions of these non-GAAP financial measures and reconciliations are included in today's earnings release.

Now, I'll turn the call over to Marty.

Executive
Martin J. Barrington

Thanks, Bill. Good morning, everybody. Altria delivered outstanding financial performance in the third quarter contributing to a strong first nine months of 2017. We grew adjusted diluted earnings per share of 9.8% in the third quarter and 5.5% for the first nine months. As we expected, our earnings growth is accelerating as we move through the second half of the year. We continue to return a significant amount of cash to shareholders through both dividends and share repurchase, as Billy will describe in more detail, and in August, our board of directors voted to increase our quarterly dividend by 8.2%, and that's the 51st increase in the past 48 years.

Our core tobacco businesses were the primary drivers of our earnings growth. In the quarter, the smokeable products segment delivered 7.7%, adjusted operating company's income growth, a strong pricing and lower cost more than offset volume declines. For the first nine months, smokeable products segment adjusted operating company's income grew 7.4%.

Reported cigarette volumes were challenged in the quarter due to the industry's rate of decline, trade inventory movements, retail share declines and one fewer shipping day. We're very pleased with the financial performance in the smokeable segment. Our strategy continues to be to maximize income, while maintaining momentum on Marlboro and Black &