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Altria Q4 Adj. Earnings Matches Estimates, Revises Juul Investment Terms

Altria Group, Inc. (MO) on Thursday reported attributable net loss for the fourth quarter of $1.81 billion or $1.00 per share, compared to net income of $1.25 billion or earnings of $0.66 per share in the year-ago period.

The latest quarter's results include a non-cash pre-tax impairment charge of $4.1 billion related to Altria's investment in Juul.

Adjusted earnings per share were $1.02, compared to adjusted earnings of $0.95 per share in the same period last year.

Net revenues decreased 1.8 percent to $6.00 billion from $6.11 billion in the year-ago period, primarily due to lower net revenues in the smokeless products segment. Revenues net of excise taxes increased 0.3 percent to $4.80 billion.

On average, analysts polled by Thomson Reuters expected the company to report earnings of $1.02 per share on revenues of $4.88 billion. Analysts' estimates typically exclude special items.

For fiscal 2020, Altria forecast adjusted earnings per share in a range of $4.39 to $4.51, representing a growth rate of 4 percent to 7 percent from $4.22 in 2019. The Street expects the company to report earnings of $4.44 per share for the year.

Altria lowered its compounded annual adjusted earnings per share growth objective to 4 percent to 7 percent for the years 2020 through 2022, from its previously announced objective of 5 percent to 8 percent.

Altria said the company and Juul have agreed to revised terms governing Altria's minority investment in Juul. The companies are focusing on creating compelling pre-market tobacco product applications or PMTA based on rigorous scientific research and data-driven underage use prevention efforts.

As a result, Altria will provide regulatory affairs services to Juul, which includes supporting the company in preparing and submitting its PMTA. Altria will discontinue all other services by the end of March 2020 that were part of the original investment agreement.

After receiving antitrust clearance from the U.S. Federal Trade Commission, Juul will restructure its board of directors to consist of two directors designated by Altria, three independent directors, the Juul CEO and three directors designated by Juul stockholders other than Altria.

Altria also has the option to be released from its non-compete obligation if Juul is prohibited by federal law from selling e-vapor products in the U.S. for at least a year, or if Altria's carrying value of the Juul investment is not more than 10 percent of its initial carrying value of $12.8 billion.

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