Catching up on the notables from Altria’s (MO) recent earnings call.
– Repurchased 53.5 million shares during the quarter at an average price per share of $21.81. Additionally, Altria declared a quarterly dividend of $0.29 per common share paid to stockholders of records as of June 13, 2008. This equates to approximately $600 million in dividend payments. Combined, the stock buyback and dividends totaled approximately $1.8 billion. This represents over 4% of Altria’s June 30th market capitalization.
– John Middleton (cigar) delivered $50 million in operating company’s income and grew its total cigar shipment volume by 11% to 355 million units in the second quarter. John Middleton is capitalizing on PM USA’s sales and distribution infrastructure and expertise to help grow Black & Mild.
The call was a bit disappointing as a number if the questions focused around the FDA bill (below) and even though management said at least seven times I counted they would not comment, the questions kept coming. Smokeless was what I wanted to hear about and neither the prepared remarks nor any of the questions really broached the subject in any type of detail.
With smoking rates dropping about 3% a year and both smokeless and cigar usage climbing, wouldn’t you think the “analysts” would have placed a bit more focus on Altria’s entrance into the area? Frustrating….
Here is the sole exchange on it:
David Adelman – Morgan Stanley
“Okay and then secondly Dave I am curious about your reactions to the observation particularly given some increased pace of movement within tobacco but outside the cigarette category that you are not moving more aggressively with respect to moist smokeless tobacco and particular and perhaps Snus the, the test market I think in Atlanta of moist smokeless started last October, its almost the year ago its really has an expanded materially and I just wonder the outside perception is there is a lack of urgency on those types of efforts because you are not moving. It would appear with great speed. So I am just curious about your reaction that observation.”
David R. Beran – Executive Vice President and Chief Financial Officer
“Yes, and out of it not characterize it as a lack of urgency, I would characterize it as and we want to make sure that we do this in a financially disciplined way, and when I say financially disciplined that we go out. We have tested all elements of the overall value equation behind both snus and with snuff and we got it completely right, then we won’t incorporate that into our plans. And right now, both of those initiatives are investment spent for us and our goal is to take it from investment spend to being, making a profit. But right we are in… these test markets are what I call burning laboratories and make sure we get it right.”
In other news, the much talked about Tobacco / FDA legislation passed the house but faces serious hurdles. Read more about the FDA and Altria here.
Disclosure (“none” means no position):Long MO
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