Marlboro cigarette maker and Juul Labs stakeholder Altria (MO) - Get Report on Thursday reported earnings and sales that handily beat analysts’ forecasts amid ongoing demand for its smoking and smokeless products - though it beefed up its cash war chest by $3 billion amid the coronavirus pandemic.
The Richmond, Va.-based company said it earned $1.55 billion, or $1.09 an adjusted share, vs. $1.12 billion, or 92 cents a share, in the comparable year-ago quarter. Analysts polled by FactSet had been expecting earnings of 98 cents.
Revenue totaled $6.36 billion vs. $5.63 billion a year ago, well above analysts’ forecasts of $4.3 billion.
“We had an excellent start to the year, growing our first-quarter adjusted diluted EPS by 18.5%, driven by the strength of our smokeable and oral tobacco products segments,” CEO Billy Gifford said in a statement.
However, “due to the uncertainties related to the impact of the Covid-19 pandemic on our diverse business model and economic recovery scenarios, we’re withdrawing our full-year 2020 adjusted diluted EPS guidance and, as a result, we’re also withdrawing our compounded annual adjusted diluted EPS growth objective,” he said.
The company did bulk up on its cash position during the quarter, borrowing the full $3 billion capacity available under its revolving credit facility “as a precautionary measure.” It also rescinded its $1 billion stock buyback program.
With respect to its controversial investment in e-cigarette maker JUUL, Altria said it intends to “vigorously defend” the transaction after the Federal Trade Commission announced a complaint against Altria and Juul challenging Altria’s minority investment in the company.
The FTC on April 1 filed a lawsuit to undo Altria's $12.8 billion investment in Juul, citing violations of federal antitrust laws.
Shares of Altria were down 2% at $39.74 in trading on Thursday.