Sign in
AG

ALTRIA GROUP, INC. (MO)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered mixed headline results: adjusted diluted EPS rose to $1.23 (+6.0% YoY), while revenues net of excise taxes fell 4.2% to $4.519B; management reaffirmed and raised full-year adjusted EPS guidance to $5.30–$5.45 (recast to exclude amortization), maintaining 2–5% growth off a $5.19 base .
  • Adjusted EPS beat consensus by ~$0.04, while revenues net of excise missed by ~$$0.096B; beats were driven by strong pricing and margin expansion in Smokeables, while top line headwinds reflected elevated cigarette volume declines amid illicit e‑vapor growth and consumer pressure [GetEstimates]*.
  • Segment performance: Smokeables adjusted OCI +2.7% with margin expansion to 64.4%; Oral Tobacco adjusted OCI flat with margins at a strong 69.2%; NJOY took an $873M non-cash goodwill impairment after ITC orders on ACE, skewing reported EPS ($0.63) lower .
  • Capital return stayed robust: $1.7B dividends in Q1, 5.7M shares repurchased for $326M, $674M buyback capacity remaining; Board later declared a regular quarterly dividend of $1.02 for July 10, 2025 .
  • Stock catalysts: guidance raised/recast, margin resilience, accelerating regulatory narrative (enforcement and tariffs) vs. NJOY ACE exit and illicit e‑vapor dynamics; watch policy signals and e‑vapor pipeline disclosures for sentiment inflection .

What Went Well and What Went Wrong

What Went Well

  • Smokeables pricing and margin strength: adjusted OCI +2.7% YoY; margins up 420 bps to 64.4%, supported by 10.8% net price realization .
  • ON! momentum: shipments +18% to 39.3M cans; oral nicotine pouch share reached 49.1% of oral category; ON! retail share rose to 8.8% (+1.8 pp YoY) as equity investments boosted impressions and awareness .
  • Capital returns: $1.7B dividends; 5.7M shares repurchased for $326M; buyback expected to complete by year-end, signaling confidence in cash generation .

Management quote: “Our highly profitable traditional tobacco businesses performed well in a challenging environment... shareholders continued to benefit from strong cash returns...” .

What Went Wrong

  • Reported results impacted by NJOY impairment: $873M non-cash goodwill charge related to ITC orders, dragging reported diluted EPS to $0.63 .
  • Elevated cigarette volume declines: reported domestic cigarette shipments −13.7%; adjusted domestic volumes −12% amid illicit e‑vapor and consumer discretionary pressures; Marlboro total category share −1.0 pp YoY .
  • E‑vapor challenges: NJOY ACE shipments ceased to wholesale due to ITC exclusion order; management highlighted >60% of category is illicit, complicating legal market participation and consumer conversion .

Financial Results

Headline Results vs Prior Periods

MetricQ1 2024Q4 2024Q1 2025
Net Revenues ($USD Billions)$5.576 $5.974 $5.259
Revenues net of excise taxes ($USD Billions)$4.719 (calc from release change; see exact 2024: $4.519 −4.2% YoY → $4.719) — use consolidated statements instead: $4.719 not explicitly listed$5.106 $4.519
Reported Diluted EPS ($)$1.21 $1.79 $0.63
Adjusted Diluted EPS ($)$1.16 $1.29 $1.23
Adjusted Tax Rate (%)24.3% (FY recast context) 24.1% 23.5%

Note: Q1 2024 revenues net of excise are implied from headline change; consolidated statements provide net revenues (not net of excise). All other figures cited explicitly.

Actual vs Wall Street Consensus (Q1 2025)

MetricActualConsensusSurprise
Adjusted Diluted EPS ($)$1.23 $1.188*+$0.04; bold beat
Revenues net of excise taxes ($USD Billions)$4.519 $4.615*−$0.096; bold miss

Values retrieved from S&P Global.*

Segment Performance

MetricQ1 2024Q4 2024Q1 2025
Smokeables Revenues net of excise ($USD Millions)$4,072 $4,424 $3,907
Smokeables Adjusted OCI ($USD Millions)$2,451 $2,709 $2,518
Smokeables Adjusted OCI Margin (%)60.2% 61.2% 64.4%
Oral Revenues net of excise ($USD Millions)$626 $663 $629
Oral Adjusted OCI ($USD Millions)$435 $461 $435
Oral Adjusted OCI Margin (%)69.5% 69.5% 69.2%

KPIs

KPIQ1 2024Q4 2024Q1 2025
Total Cigarette Shipments (sticks, millions)16,450 16,593 14,204
Marlboro Retail Share (total cigarette category, %)42.0% 41.3% 41.0%
ON! Shipments (cans, millions)33.3 43.9 39.3
ON! Retail Share of Oral Tobacco (%)7.0% 8.9% 8.8%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted Diluted EPSFY 2025$5.22–$5.37 (base $5.12, 2–5% growth) $5.30–$5.45 (base $5.19, 2–5% growth, recast to exclude amortization) Raised range; methodology recast (amortization excluded), growth rate unchanged
Adjusted Effective Tax RateFY 202523%–24% Not updated in Q1 PR; adjusted tax rate printed Q1 2025: 23.5% Maintained prior outlook; quarterly rate consistent
Capital ExpendituresFY 2025$175–$225M Not updated in Q1 PRMaintained prior outlook
Depreciation & AmortizationFY 2025~ $290M Not updated; amortization now treated as special item in adjusted metrics Presentation change (adjusted basis excludes amortization)
Share Repurchase Program2025$1B authorized; $310M remaining at 12/31/24 $674M remaining at 3/31/25; expected completion by 12/31/25 Maintained; updated remaining capacity
DividendNext payable$1.02 per share declared for July 10, 2025 —Maintained regular dividend cadence

Earnings Call Themes & Trends

TopicQ3 2024 (Oct)Q4 2024 (Jan)Q1 2025 (Apr)Trend
Illicit e‑vapor enforcementCalled for stronger federal/state action; noted 19M vapers, 12.4M disposables, enforcement actions beginning Reiterated broken regulatory structure; >60% illicit; NJOY strategies, SE exemptions; policy optimism >20M vapers; >60% illicit; legislative directories in states; engaging Congress/Administration; NJOY ACE exit and appeal Intensifying focus; advocacy/outreach increasing
Consumer macro pressureDiscount share growth; cumulative inflation impact; down‑trading pressures Continued pressure; pricing with RGM tools; monitoring tailwinds/headwinds Elevated declines; smokers seeking price relief; discount +1.8 pp; Marlboro total share −1.0 pp Persistent headwind
NJOY legal/opsITC timeline; SE exemptions path discussed ITC final determination; ACE potential exit; pipeline enhancements; legal challenges ongoing ITC orders effective Mar 31; ACE shipments ceased; $873M impairment; appeal planned Legal setback; pivot to pipeline
ON! brand equity & growthStrong repeat purchases; retail share gains Profitability achieved in Q4; pricing up, volumes grew Shipments +18%; retail share 8.8%; awareness >60%; “It’s On!” campaign scaled Sustained momentum
Tariffs/policyProposed PMTA import tracking rule; early seizures Administration shift; menthol/flavored cigars rule removed; limited impact expected from tariffs on costs Early days; monitoring costs (aluminum/tin), limited cost impact; consumer sentiment watch Watchful; potential enforcement tailwind
Pricing/RGM strategyStore-level RGM; managing price gaps Robust net realization; RGM supports Marlboro Removing national price gap metric; emphasis on store-level execution Execution refinement

Management Commentary

  • CEO on ON! and e‑vapor: “Oral nicotine pouches… now represent nearly half of the oral tobacco category… We estimate illicit e‑vapor products now represent more than 60% of the category” .
  • CFO on margins: “The smokeable products segment grew adjusted operating companies income by 2.7%. Adjusted OCI margins were 64.4%, an increase of 4.2 percentage points versus a year ago” .
  • CEO on NJOY ACE: “To comply with the [ITC] orders, NJOY discontinued the importation of NJOY ACE and ceased shipments… NJOY intends to appeal… and our teams continue to work to finalize a product solution” .

Q&A Highlights

  • Consumer strain and cross‑category movement: Analysts probed inflation’s role vs illicit e‑vapor; management cited cumulative inflation and flavor/price drivers moving consumers cross‑category .
  • Pricing and RGM: Discussion on price increases and flexibility to reinvest behind Marlboro; store‑level RGM enables targeted support; removal of national price gap metric to reduce confusion .
  • Discount segment and brand strategy: Basic repositioning tests to capture consumers unable to move up; premium focus remains; Marlboro dollar share exceeds volume share .
  • Synthetic nicotine: Enforcement discretion appears to elevate synthetic products; Altria “looking at all available opportunities” .
  • Settlement payments: ~20% decline YoY driven by expiration of the legal fund, benefiting first three quarters .
  • Tariffs: Too early to assess; limited cost impact given U.S. supply chain; monitoring consumer effects .

Estimates Context

  • Adjusted EPS beat consensus ($1.23 vs $1.188*) by ~$0.04, supported by pricing and lower adjusted tax rate; expect estimate revisions to reflect resilient margins despite volume declines [GetEstimates]*.
  • Revenues net of excise missed consensus ($4.519B vs $4.615B*), as illicit e‑vapor and consumer pressures weighed on combustibles; topline estimate cuts likely where models over‑assumed volume stability [GetEstimates]*.

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Margin defense intact: Smokeables margins widened meaningfully despite volume pressure, reinforcing the cash flow and dividend/buyback story .
  • Guidance upgrade/recast: FY25 adjusted EPS range raised to $5.30–$5.45 with amortization excluded from adjusted metrics, a presentational change that clarifies underlying performance; growth rate unchanged .
  • E‑vapor overhang and pivot: NJOY ACE exit is a near‑term headwind; pipeline emphasis and potential synthetic participation could re‑open category optionality pending regulatory signals .
  • ON! as growth ballast: Continued share and volume gains with improving equity support profitability and offset MST declines; international ON! PLUS authorization would be incremental .
  • Policy watch: Enforcement and tariff actions could curb illicit imports, favoring legal portfolios; any acceleration in PMTA authorizations is a positive catalyst .
  • Trading setup: Near term, stock may react to the mix of guidance raise vs NJOY impairment/top‑line miss; medium term thesis centers on margin durability, capital returns, and regulatory normalization .
  • Monitor quarterly metrics: Cigarette discount share trends and Marlboro store‑level RGM efficacy, ON! pricing elasticity, and ABI contribution cadence (equity earnings) .