MO Altria 10-Q 2026-09-30 section summaries

Altria Group (MO) — Q3 and nine months ended September 30, 2026

Altria’s revenue and earnings increased modestly. The year-to-date operating-income comparison is also affected by a prior-year e-vapor goodwill impairment; excluding that charge, 9M 2025 operating income was $9.121B.

Consolidated results

Q3 marketing, administration and research costs rose to $625M from $580M. Equity-security investment income increased to $242M from $107M in Q3 and to $487M from $398M for 9M, primarily reflecting ABI investment gains. Interest and other debt expense was $270M versus $278M in Q3 and $823M versus $815M for 9M.

Segment performance

OCI is the segment profit measure reported by Altria. Reconciliation to consolidated operating income: amortization was $(21)M versus $(38)M, and general corporate expenses were $(65)M versus $(57)M. E-vapor is included in “all other” in 2026 because it no longer met the reportable-segment thresholds or was expected to be of continuing significance.

Cash flow and shares

Altria repurchased $735M of stock versus $712M. Shares outstanding were approximately 1.674B at December 31, 2025 and 1.664B at September 30, 2026. Weighted-average diluted shares were 1.669B versus 1.680B in Q3 and 1.671B versus 1.685B for 9M.

Balance sheet and debt

The company’s negative equity, less goodwill and other intangible assets, implies tangible equity of negative $19.789B. Net intangible assets included $8.627B in oral tobacco, $2.890B in smokeable products and $312M in other; indefinite-lived intangibles were $11.089B, including MST trademarks of $8.5B and cigar trademarks of $2.6B. The 2025 ITC orders barring NJOY ACE imports and U.S. sales contributed to an $873M noncash e-vapor goodwill impairment in Q1 2025; Q4 2025 also included $285M of goodwill and $970M of definite-lived intangible impairments. Management reported no interim impairment trigger at September 30, 2026; the annual test is scheduled for October 1.

Altria repaid $0.5B of 2.625% notes at maturity in September and approximately $1.1B of 4.400% notes in February. Its $3.0B revolving credit facility was extended to October 2030. The company complied with the facility’s minimum 4.0x trailing-four-quarter EBITDA-to-interest covenant. Cash and restricted cash totaled $2.711B at September 30, 2026.

Business actions, returns and key risks

The Board raised the quarterly dividend 4.7% in August to $1.11 per share ($4.44 annualized). Q3 repurchases were 5.9M shares for $400M, versus 1.9M shares for $112M; 9M repurchases were 11.2M shares for $735M, versus 12.3M shares for $712M. In October, the Board added $1.0B to the buyback authorization and extended it to December 31, 2027.

The State Settlement Agreements, including estimated NPM adjustments, generated $2.228B of 9M 2026 cost-of-sales charges versus $2.278B, and $775M in Q3 versus $792M. Participating manufacturers’ annual payments are approximately $10.4B, subject to adjustments. PM USA has received $1.57B in NPM credits since 2014 and expects annual credits through 2041.

Tobacco litigation liabilities, including related interest, were $141M at the end of both 9M 2026 and Q3 2026, versus $68M at the comparable 2025 period-ends. The Fontaine case has a $92M accrual including interest and associated costs. In September 2026, the Lipp Engle progeny verdict awarded $50M compensatory damages, of which PM USA’s share was $38M, with no punitive damages; PM USA intends to appeal. The number of U.S. individual smoking-and-health cases rose to 282 from 181 a year earlier. Management says many potential losses cannot be estimated, while warning that adverse outcomes could materially affect results or cash flows.

The most immediate e-vapor commercial risk remains the ITC exclusion and cease-and-desist orders against NJOY ACE, in effect since March 2025 during appeal. Separately, the ITC remanded a JUUL patent case in August 2026; proceedings and determinations are expected in 2027. Altria’s NJOY-related ITC action against JUUL had a September 2026 hearing. Other exposures include 17 putative JUUL antitrust class actions, with class certification under appellate review, and continuing patent litigation.

The USSTC manufacturing transition to a new Hopkinsville facility is expected to be substantially complete in Q1 2028, with estimated pretax charges of approximately $180M; $87M was incurred in 9M 2026. The Optimize & Accelerate program has incurred $143M of estimated $175M pretax costs, with most remaining charges expected by end-2027. The Horizon heated-tobacco joint venture had no U.S. products at period-end.

Altria (MO) — Part I, Item 2

Financial results

Net revenue growth was modest and primarily reflected smokeable products. Cost of sales rose $61M (4.2%) in Q3 and $139M (3.4%) in 9M, mainly from higher manufacturing and facilities-consolidation costs. Marketing, administration and research costs increased $45M in Q3 and $51M in 9M. Lower excise taxes reflected refunds on imported-product duties and taxes and lower cigarette shipments.

Reported earnings grew substantially faster than adjusted earnings largely because 2025 included a $873M non-cash e-vapor goodwill impairment. Excluding special items, operations increased earnings by $97M in Q3 and $250M in 9M, primarily through higher segment income and ABI investment income. Share repurchases added $0.01 to Q3 EPS and $0.04 to 9M EPS. ABI-related income benefited from favorable mark-to-market items in Q3; 9M ABI special items included a $41M pre-tax loss, mainly from dilution associated with ABI share activity.

Segment performance

OCI is Altria’s segment performance measure, before corporate expenses and intangible amortization. Smokeable Q3 OCI rose 3.8%, supported by pricing and $104M of higher tax-and-duty refunds, partly offset by $199M of volume/mix pressure and $80M of higher costs. Oral tobacco OCI fell as lower volume and higher costs outweighed pricing; Q3 included $9M of facility-consolidation costs.

Business and operating trends

Inventory-adjusted cigarette shipments declined an estimated 4%, versus an estimated 5% industry decline. Consumers’ shift toward lower-priced cigarettes pressured premium brands: 9M Marlboro shipments fell 7.2%, while discount shipments rose 69.7%. Smokeable pricing contributed $929M to 9M net revenue, partly offset by $729M from lower volume and less favorable mix.

Oral tobacco shipments declined 5.4% in 9M. On! shipments grew 13.3% in Q3, but its share of the pouch category was 13.5%, down year over year. The company is pursuing a transition toward smoke-free products, but cigarette and moist smokeless tobacco declines, consumer trade-down and competition from innovative nicotine products remain pressures.

Liquidity, debt and capital allocation

Operating cash flow benefited from lower settlement and excise-tax payments and higher smokeable revenue, partly offset by higher income-tax payments. Investing outflows increased with investment in manufacturing capabilities and innovative products. Financing outflows reflected, among other factors, higher dividends.

At September 30, 2026, Altria had $2.7B of cash and cash equivalents, $24.061B of total debt ($1.175B current and $22.886B long-term), and $3.0B available under its revolving credit agreement; it was covenant-compliant. It repaid $500M of 2.625% notes at maturity in September and approximately $1.1B of 4.400% notes in February. Debt was 3.0x trailing-12-month net earnings and 1.9x consolidated EBITDA. Moody’s, S&P and Fitch ratings were stable. The board raised the quarterly dividend 4.7% to $1.11 per share in August; the annualized rate is $4.44.

Altria estimates an average $3.0B annually in State Settlement Agreement and FDA user-fee charges to cost of sales over the next three years, excluding potential NPM Adjustment Items. It paid approximately $2.6B for these obligations in 9M 2026, versus $2.9B in 9M 2025. As a holding company, Altria relies primarily on subsidiary dividends, distributions and intercompany interest for liquidity.

Principal risks and strategy

FDA authorization and enforcement uncertainty is central to the smoke-free strategy. Product changes may trigger review, and adverse decisions or enforcement could remove products from market. FDA issued marketing orders for specified on! products in December 2025 and August 2026; NJOY has authorized tobacco variants, but NJOY ACE remains subject to ITC exclusion and cease-and-desist orders barring U.S. importation and sale. In September 2026, Helix, NJOY and trade partners sued the FDA over PMTA decision delays; the court stayed the case in October to allow FDA rulemaking. Illicit flavored disposable e-vapor products remain a competitive threat despite enforcement efforts.

Other material exposures include further excise taxes and product restrictions, litigation and settlement obligations, declining cigarette and MST consumption, inflation-driven trade-down, supply and input-cost disruption, and impairment. At year-end 2025, e-vapor goodwill was $610M with estimated fair value approximately equal to carrying value; a 1-percentage-point higher discount rate in the impairment test would have implied about $150M of impairment. Skoal trademark fair value exceeded carrying value by approximately 7% ($0.3B); a 1-point higher discount rate would have implied about a $90M charge. Altria says the identified industry pressures had not materially adversely affected results, cash flows, financial position or strategy through the period.

Market risk — long-term debt

All long-term debt is fixed-rate, so changes in market interest rates affect its fair value. Fair value declined to $21.0B at September 30, 2026, from $24.3B at December 31, 2025.

The fair-value decline was $3.3B (13.6%). The estimated fair-value sensitivity to a 1% rate change was lower at September 30, 2026, than at year-end 2025.

Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of the end of the reporting period. No changes in internal control over financial reporting during the quarter materially affected, or were reasonably likely to materially affect, those controls. This section reported no financial results or business developments.

The company reported no material changes to the risk factors disclosed in its 2025 Form 10-K. This section identifies no new financial metrics, business risks, or strategic developments.

For the quarter ended September 30, 2026, none of Altria’s directors or officers adopted, modified, or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement.