Altria Group Inc. (NYSE:MO) Q1 2018 Earnings Conference Call - Final Transcript

Apr 26, 2018 • 09:00 am ET


Altria Group Inc. (NYSE:MO) Q1 2018 Earnings Conference Call - Final Transcript


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Good day and welcome to the Altria Group 2018 First Quarter Earnings Conference Call. Today's call is scheduled to last about one hour including remarks by Altria's management and 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. I would now like to turn the call over to Mr. Bill Marshall, Vice President, Investor Relations for Altria Client Services. Please go ahead, sir.

Bill Marshall

Thank you, Jennifer. 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 2018 first quarter business results. Earlier today, we issued a press release providing these results, which is available on our website at and through the Altria investor app. During our call today, unless otherwise stated, we're comparing results to the same period in 2017. (Forward-Looking Cautionary Statements).

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 a reported and adjusted basis. Adjusted results exclude special items that affect the comparability of reported results. Descriptions of these non-GAAP financial measures and reconciliations are included in today's earnings release. With that, I'll turn the call over to Marty.

Marty Barrington

Thanks, Bill. Good morning, everyone. We're off to a fast start to the strong year of EPS growth, to which we've guided with adjusted diluted earnings per share growth of 30.1% in the first quarter. Altria's leading tobacco businesses, diverse income streams and strong balance sheet provide us with numerous levers to deliver strong performance over the long-term.

For example, in the first quarter, we benefited from a lower tax rate as a result of federal income tax reform, something for which we long advocated. We also reported higher equity earnings from our investment in Anheuser-Busch InBev and higher adjusted operating company's income in the smokeless product segment.

We paid shareholders nearly $1.3 billion in dividends in the first quarter, announced an out-of-cycle quarterly dividend increase of 6.1% and repurchased $513 million in shares. We also continued our progress toward our aspiration of US leadership in authorized non-combustible reduced risk products. As we previously discussed, we are reinvesting about a third of our tax reform benefit into strategic areas for long-term growth. These include innovative product development and launches including IQOS, regulatory science, equity enhancements to our brands, retail fixtures and future retail concepts.

The timing of these investments will vary by operating segment and some may be impacted by external factors such as of the timing of an IQOS market order from the FDA. As a result, we once again encourage investors to focus on full year performance against our strategies rather than a quarter-by-quarter segment result, which may be noisier than usual.

We also continue to