Altria Group, Inc. (MO) Earnings & Analysis

Latest quarter

Altria’s third-quarter consensus-comparable revenue was $5.4 billion, above the $5.3 billion consensus. Adjusted earnings per share were $1.52, compared with the $1.51 consensus.

Altria reported total revenue of $6.1 billion, up 0.99% from a year earlier, when revenue also rounded to $6.1 billion. Its filing attributed the increase primarily to higher smokeable-products revenue. Reported diluted earnings per share rose to $1.51 from $1.41; the filing attributed higher net earnings partly to investment results and operating income.

CFO Heather Newman said smokeable products’ adjusted operating companies income rose 3.9% to $3.1 billion, while reported domestic cigarette volumes fell 2.9%. In oral tobacco, adjusted operating companies income fell 3.7% to $443 million as Altria invested in on! PLUS and moist smokeless tobacco volumes declined.

Altria’s gross margin increased to 64.3% from 62.8%, and its operating margin rose to 54.0% from 53.2%. The company reported free cash flow of $3.0 billion, compared with $3.0 billion a year earlier.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

CFO Heather Newman said adult smokers remained under economic pressure, with higher gas prices further constraining discretionary income. She said discount cigarettes accounted for 34.1% of the category in the third quarter, while Marlboro’s overall retail share was unchanged sequentially and down from a year earlier.

Newman said smokeable price realization was 4.4% for the quarter, reflecting the mix of Marlboro Cowboy Cut and Basic volume growth. After adjusting for trade inventories, she estimated Altria’s domestic cigarette volumes fell 4%, compared with a 5% industry decline. She said Marlboro’s share of the premium segment reached 60%.

Asked about Cowboy Cut, CEO Salvatore Mancuso described it as a premium option intended to retain price-sensitive Marlboro smokers. He said PM USA had used introductory pricing on other products before raising their prices or margins over time. Asked about cigarette margins, Mancuso pointed to pricing, cost management and duty drawback as components rather than isolating one item.

In oral tobacco, Mancuso said on! shipments rose 13.3% to 47.8 million cans, although its 8.3% retail share was down sequentially. He said Helix had expanded on! PLUS 12-milligram products nationally and introduced new flavors amid elevated competitive investment. Newman said growth in on! shipments was more than offset by lower moist smokeless tobacco volumes.

Mancuso said Helix and NJOY had brought legal action seeking a more predictable FDA product-review process. He also said enforcement against illicit e-vapor products appeared to affect the supply chain and needed to continue.

On the quarter ahead, Newman said the guidance included investment in smoke-free products and reflected continuing consumer pressure. Discussing contract manufacturing arrangements, she expected the benefit to be balanced across the third and fourth quarters. Asked for a further range, Mancuso declined to provide one and said the PMI contract manufacturing agreement would begin contributing the following year.

Guidance

Altria raised its FY2026 adjusted diluted earnings-per-share guidance to $5.66 to $5.74, which Newman said represents growth of 4.5% to 6% from the 2025 base. In the first quarter, Altria had reaffirmed a range of $5.56 to $5.72, representing growth of 2.5% to 5.5%.