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ALTRIA GROUP, INC. (MO)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 delivered modest top-line pressure but stable profitability: Revenues net of excise fell 1.7% YoY to $5.25B while adjusted diluted EPS grew 3.6% to $1.45, driven by higher adjusted OCI and lower share count .
  • Consensus: EPS slightly beat (Actual $1.45 vs $1.448*) while revenues net of excise modestly missed ($5.25B vs $5.31B*); management raised the lower end of FY25 EPS guidance to $5.37–$5.45 from $5.35–$5.45 (Q2) and $5.30–$5.45 (Q1) .
  • Smokeable margins expanded (adjusted OCI margin +1.3pp YoY to 64.4%) despite ~8% volume contraction; Oral margin expanded to 69.2% amid category-wide promotions; ON+ launched in three states; Ploom PMTA/MRTPA filed .
  • Capital returns accelerated: dividend raised 3.9% in August (annualized $4.24) and buyback authorization doubled to $2B through 2026—key stock reaction catalysts alongside narrowed guidance .

What Went Well and What Went Wrong

  • What Went Well

    • Adjusted EPS rose 3.6% YoY to $1.45 on higher adjusted OCI and fewer shares; reported EPS +5.2% to $1.41 .
    • Smokeable adjusted OCI margin expanded 1.3pp YoY to 64.4%; Oral adjusted OCI margin expanded 2.4pp YoY to 69.2%, underscoring pricing discipline and cost control despite mix/volume pressure .
    • Strategic progress: ON+ launched (FL, NC, TX) with premium positioning; Horizon filed PMTA/MRTPA for Ploom; KT&G MOU opens international oral and U.S. non‑nicotine adjacency pathways. “We believe ON+ is a premium, differentiated product...” (CEO) .

  • What Went Wrong

    • Top-line pressure: Net revenues declined 3.0% YoY to $6.07B; revenues net of excise down 1.7% amid smokeable volume declines and elevated oral pouch promotions .
    • Volume/Share headwinds: Cigarette shipments −8.2% YoY; Marlboro share −1.2pp YoY to 40.4% (total category) as discount segment mix rose +2.4pp YoY to 32.2% .
    • E‑vapor constraints persist: NJOY ACE remains off market (ITC), and litigation with Juul ongoing; flavored illicit disposable share >60% of category, sustaining competitive pressure (management) .

Financial Results

Headline metrics (oldest → newest)

MetricQ1 2025Q2 2025Q3 2025
Net Revenues ($B)$5.26 (−5.7% YoY) $6.10 (−1.7% YoY) $6.07 (−3.0% YoY)
Revenues net of excise ($B)$4.52 (−4.2% YoY) $5.29 (+0.2% YoY) $5.25 (−1.7% YoY)
Reported Diluted EPS$0.63 (−47.9% YoY) $1.41 (−36.2% YoY) $1.41 (+5.2% YoY)
Adjusted Diluted EPS$1.23 (+6.0% YoY) $1.44 (+8.3% YoY) $1.45 (+3.6% YoY)
Adjusted Tax Rate23.5% (−1.1pp YoY) 23.3% (−1.0pp YoY) 23.1% (−0.7pp YoY)

Consensus vs actual (Q3 2025)

MetricConsensusActualSurprise
Adjusted Diluted EPS$1.448*$1.45 +$0.00 (~+0.2% vs cons)*
Revenues net of excise ($B)$5.3066*$5.251 −$0.06B (~−1.0% vs cons)*

Values retrieved from S&P Global.

Segment performance (Q3 2025 vs Q3 2024)

SegmentNet Revenues ($MM)Revenues net of excise ($MM)Adjusted OCI ($MM)Adjusted OCI Margin
Smokeable$5,387 vs $5,540 (−2.8%) $4,590 vs $4,652 (−1.3%) $2,956 vs $2,935 (+0.7%) 64.4% vs 63.1% (+1.3pp)
Oral Tobacco$689 vs $722 (−4.6%) $665 vs $695 (−4.3%) $460 vs $464 (−0.9%) 69.2% vs 66.8% (+2.4pp)

KPIs

KPIQ3 2025YoY/Seq
Cigarette shipments (sticks, MM)16,192 (−8.2% YoY)
Marlboro share (total category)40.4% (−1.2pp YoY; −0.5pp seq)
Discount segment share (industry)32.2% (+2.4pp YoY; +1.0pp seq)
on! cans shipped (MM)42.2 (+0.7% YoY)
Total Oral shipments (MM cans)178.2 (−9.6% YoY)
on! share of total oral category8.7% (−0.1pp YoY; flat seq)
Nicotine pouches share of oral55.7% (+11.1pp YoY)
on! share within pouch subcategory15.6% (−4.1pp YoY)
Dividends paid$1.7B in Q3; annualized $4.24/sh rate post 3.9% increase
Share repurchase1.9MM shares; $112MM in Q3
Debt/EBITDA~2.0x at Sep 30 (CFO)

Non‑GAAP recon: Q3 adjusted EPS excludes amortization of intangibles ($0.02), ABI/Cronos special items, income tax items, and other special items as detailed in schedules .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted Diluted EPSFY 2025$5.30–$5.45 (Q1) $5.37–$5.45 (Q3) Raised lower end (narrowed range)
Adjusted Diluted EPSFY 2025$5.35–$5.45 (Q2) $5.37–$5.45 (Q3) Raised lower end
Adjusted Effective Tax RateFY 202523–24% (Q1) 23–24% (Q3) Maintained
Capital ExpendituresFY 2025$175–$225MM (Q1) $175–$225MM (Q3) Maintained
Depreciation & AmortizationFY 2025~ $290MM (Q1) ~ $290MM (Q3) Maintained
Dividend policyThrough 2028Target mid‑single digit DPS growth Target mid‑single digit DPS growth Reaffirmed
Share Repurchase AuthorizationThrough 2026$1B (Q2) $2B (expanded 10/29/25) Increased by $1B

Guidance caveats: assumes limited volume impact from illicit enforcement; NJOY ACE not returning in 2025; tariffs factored into costs; Q4 EPS growth to moderate due to 2024 ASR share count lap and MSA legal fund expiration .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 2025, Q2 2025)Current Period (Q3 2025)Trend
Illicit e‑vapor enforcementITC ban on NJOY ACE; $873MM e‑vapor goodwill impairment (Q1) Noted stepped‑up federal raids, 4MM units seized; illicit flavored disposables still >60% of category (CEO) Improving enforcement; market still distorted
Nicotine pouch competitive intensityon! growth; segment share declines for MST; pouch mix rising (Q1/Q2) Elevated competitor promotions; category avg retail price −7% nationally; on! price +1.5% (CEO) Promotional pressure peaking
Product pipelineNJOY modified ACE under evaluation; ON momentum (Q1/Q2) ON+ launched (3 states); Ploom PMTA/MRTPA filed; FDA pilot for pouch PMTAs includes ON+ (CEO) Execution milestones achieved
Macro/tariffsTariffs embedded in FY guide; consumer under pressure (Q1/Q2) Caution on ATC spending; stability in gas/inflation; tariffs still contemplated (Mgmt) Neutral to slightly improving
Mix/discount dynamicsDiscount share rising; Marlboro premium leadership maintained (Q2) Discount share +2.4pp YoY; PM USA investing in Basic; minimal cannibalization to Marlboro (CFO) Discount shift persists
Adjacencies/KT&G—MOU to pursue intl modern oral, U.S. non‑nicotine, ops efficiency; Loop investment noted (CEO) New optionality opening

Management Commentary

  • “Altria continued to build significant momentum in the third quarter with exciting progress across our businesses… We are raising the lower-end of our 2025 full-year guidance and now expect to deliver adjusted diluted EPS in a range of $5.37 to $5.45.” — CEO Billy Gifford .
  • “Helix recently launched on! PLUS in Florida, North Carolina and Texas… we believe on! PLUS is a premium, differentiated product…” — Press release .
  • “We believe we have completed the product design of a modified NJOY… evaluating the potential pathways to bring the modified ACE product to market.” — CEO (call) .
  • “We recorded $157 million of adjusted equity earnings in the third quarter [from ABI]… We now expect to deliver adjusted diluted EPS in a range of $5.37 to $5.45.” — CFO Sal Mancuso .
  • “These federal actions… are signs of progress. However, we believe sustained and coordinated enforcement is necessary to materially impact the state of the market.” — CEO (call) .

Q&A Highlights

  • Q4 deceleration and smokeable OCI path: Management cited lapping ASR share count and MSA legal fund benefits; reiterated confidence in smokeable profitability and Marlboro’s premium segment leadership .
  • Nicotine pouch competitiveness and ON+: Category promotions were “significant” (up to 70% in a major chain); on! maintained steady retail takeaway; ON+ early days with premium positioning and introductory promotions .
  • Cost trajectory: CFO advised against quarter‑to‑quarter reads; Optimize & Accelerate is about both cost and speed, with RGM/data analytics driving pricing productivity; YTD smokeable OCI +2.5% .
  • Duty drawback/KT&G: Too early to size duty drawback; focus is enabling international configurations and potential efficiency gains; FDA pouch pilot may accelerate authorizations in a more defined category .

Estimates Context

  • Q3 outcome vs S&P Global consensus: EPS beat marginally ($1.45 vs $1.448*), revenues net of excise slightly missed ($5.25B vs $5.31B*) .
  • Implications: Narrowed FY25 EPS guidance with higher floor suggests modest upward bias to the low end of Street EPS; revenue headwinds from volume/mix and elevated pouch promotions could temper top-line expectations into Q4 as management flagged moderation .

Values retrieved from S&P Global.

Key Takeaways for Investors

  • Quality of earnings intact: Adjusted EPS growth on margin expansion and buybacks despite top‑line softness; sequential adjusted EPS progression Q1→Q2→Q3 ($1.23 → $1.44 → $1.45) supports stability .
  • Capital returns stepping up: Dividend up 3.9% (annualized $4.24) and buyback doubled to $2B through 2026—supportive of TSR and downside protection .
  • Regulatory momentum: Increasing federal enforcement against illicit disposables and FDA pilot for pouches (including ON+) could improve the competitive set in 2026+; watch decisions and timing .
  • Near-term watch items: Q4 EPS growth moderation (ASR/MSA laps), continued discount trade‑down, and pouch promo intensity; smokeable volumes likely remain under pressure (−8–10% run‑rate) .
  • Pipeline catalysts: ON+ early readouts and potential broader rollout; Ploom U.S. authorization track; modified NJOY ACE pathway and ongoing litigation outcomes .
  • Segment resilience: Smokeable and Oral margins expanded YoY; RGM execution and cost programs offset declines—key for sustaining EPS growth within guidance .
  • Positioning into FY25 close: Narrowed EPS range with higher floor and robust cash returns favor a “buybacks + margin defense” setup; revenue expectations should remain conservative given volume/mix headwinds .