Altria Group Updates 2023 Full-Year Earnings Guidance Following Acquisition of NJOY Holdings By Investing.com

Altria Group , Inc. (Altria) (NYSE:) announces that we have completed our acquisition of NJOY Holdings, Inc. (Transaction). We have also updated our guidance for 2023 full-year adjusted diluted earnings per share (EPS) in connection with the Transaction.

“The completion of this Transaction is a transformative step in our goal of Moving Beyond Smoking,” said Billy Gifford, Altria’s Chief Executive Officer (CEO). “We are pleased to have received antitrust clearance and we are now fully focused on responsibly accelerating U.S. adult smoker and adult vaper adoption of NJOY ACE, currently the only pod-based e-vapor product to receive marketing authorization from the FDA.”

“Our updated 2023 full-year EPS guidance range includes planned investments behind the U.S. commercialization of NJOY ACE and reflects our goal to deliver strong shareholder returns while making progress toward our Vision.”

“We are excited to combine our resources with NJOY’s talented team to benefit adult tobacco consumers across the country,” said Shannon Leistra, the new President and CEO of NJOY, LLC.

E-Vapor Marketing and Commercialization Plans

• NJOY e-vapor products will be marketed by NJOY, LLC (NJOY), a wholly owned subsidiary of Altria. The new President and CEO of NJOY is Shannon Leistra, who previously served as Senior Vice President and Consumer Experience Officer (CXO), Altria Client Services LLC. Prior to the CXO role, Ms. Leistra held various operating company leadership positions, including President and CEO of USSTC. Ms. Leistra also led the integration of Helix and has extensive leadership experience across our sales and brand management organizations.

• NJOY’s products will be distributed by Altria Group Distribution Company. Our sales force has significant U.S. retail coverage and decades of experience supporting the responsible retailing of tobacco products.

• Our teams will be immediately focused on optimizing the NJOY ACE (ACE) brand proposition, including (i) enhancing ACE’s brand equity to increase the brand’s awareness and appeal among adult smokers and adult vapers and (ii) identifying and addressing opportunities in existing stores, such as distribution gaps and merchandising improvements.

• We are working to strengthen NJOY’s global supply chain to provide sustainable support for the anticipated volume increase associated with our long-term ACE expansion plans.

• We have identified a total of approximately 70,000 U.S. retail stores (including existing stores) for our initial ACE expansion phase. The stores in the initial phase represent approximately 70% of e-vapor volume and 55% of cigarette volume sold in the U.S. multi-outlet and convenience channel.

Transaction-related Financial Implications

• We funded the Transaction cash payments of approximately $2.75 billion through a combination of a $2 billion term loan, commercial paper and available cash.

• We expect to receive final payment of $1.7 billion (plus interest) from Philip Morris International Inc. (PMI) by July 15, 2023 as a part of our total $2.7 billion transition agreement for the IQOS Tobacco Heating System®. We will use these proceeds to reduce the outstanding term loan balance.

• Beginning in the second quarter of 2023, financial results for NJOY will be reported within the “All Other” category.

• We expect the Transaction to be accretive to cash flow in 2025 and accretive to adjusted diluted EPS in 2026. We also expect the return on invested capital for the Transaction to exceed our current weighted-average cost of capital by 2027.

• The previously announced Transaction terms also include up to $500 million in additional cash payments that are contingent upon regulatory outcomes with respect to certain NJOY products.

Updated 2023 Full-Year Guidance

As a result of the Transaction, we expect to deliver 2023 full-year adjusted diluted EPS in a range of $4.89 to $5.03, representing a growth rate of 1% to 4% from an adjusted diluted EPS base of $4.84 in 2022. Our 2023 full-year adjusted diluted EPS guidance range includes planned investments in support of our Vision, such as (i) continued smoke-free product research, development and regulatory preparation expenses, (ii) enhancement of our digital consumer engagement system and (iii) marketplace activities in support of our smoke-free products, including planned investments behind the U.S. commercialization of ACE. Our updated guidance range also includes estimated amortization charges of approximately $50 million for the remainder of 2023 related to intangible assets acquired in the Transaction.

While the 2023 full-year adjusted diluted EPS guidance accounts for a range of scenarios, the external environment remains dynamic. We will continue to monitor conditions related to (i) the economy, including the impact of inflation, interest rates and global supply chain disruptions, (ii) adult tobacco consumer dynamics, including disposable income, purchasing patterns and adoption of smoke-free products, and (iii) regulatory and legislative developments.

We continue to expect our 2023 full-year adjusted effective tax rate to be in a range of 24.5% to 25.5% and our 2023 capital expenditures to be between $175 million and $225 million. As a result of the Transaction, we have revised our estimate for 2023 depreciation and amortization expenses to be approximately $280 million.

We reaffirm our expectation to complete our previously authorized $1 billion share repurchase program by the end of 2023. Share repurchases depend on marketplace conditions and other factors, and the program remains subject to the discretion of our Board of Directors.

Our full-year adjusted diluted EPS guidance and full-year forecast for our adjusted effective tax rate exclude the impact of certain income and expense items that our management believes are not part of underlying operations. Additional items that may be excluded from our full-year adjusted diluted EPS guidance and full-year forecast for our adjusted effective tax rate include, for example, loss on early extinguishment of debt, restructuring charges, asset impairment charges, acquisition-related and disposition-related costs, equity investment-related special items (including any changes in fair value of our equity investment recorded at fair value and any changes in the fair value of related warrants and preemptive rights), certain income tax items, charges associated with tobacco and health and certain other litigation items, and resolutions of certain non-participating manufacturer (NPM) adjustment disputes under the Master Settlement Agreement (such dispute resolutions are referred to as “NPM Adjustment Items”). See Schedule 1 for the income and expense items excluded from our guidance range.

Our management cannot estimate on a forward-looking basis the impact of certain income and expense items, including those items noted in the preceding paragraph, on our reported diluted EPS or our reported effective tax rate because these items, which could be significant, may be unusual or infrequent, are difficult to predict and may be highly variable. As a result, we do not provide a corresponding U.S. generally accepted accounting principles (GAAP) measure for, or reconciliation to, our adjusted diluted EPS guidance or our adjusted effective tax rate forecast.