Reynolds American Inc. has released its third-quarter 2015 financial results, and the company is in a favorable position.
RAI has released third-quarter 2015 reported EPS of $0.46, up 4.5% from the prior-year quarter, benefitting from higher cigarette and moist-snuff pricing and volume, as well as the expiration of the federal tobacco-quota buyout.
Adjusted third-quarter EPS was 55 cents, up 17%. Adjusted results exclude charges for implementation costs, and asset impairment and exit costs.
For the first nine months of 2015, reported EPS was $2.45, up 99.2% from the prior-year period.
Nine-month adjusted EPS was $1.50, up 18.1% from the prior-year period. This excludes the above-referenced items, as well as charges for transaction-related and financing costs for the Lorillard acquisition and related divestiture, Engle progeny lawsuits, and tobacco-related and other litigation, and a benefit from the 2003 NPM adjustment claim and a gain on divestiture.
RAI tightened 2015 adjusted EPS guidance to a range of $1.94 to $2.00, up 13% to 17% from 2014’s adjusted EPS of $1.71. Guidance excludes the above-referenced items.
“Our operating companies delivered excellent key-brand performance in the third quarter, and that helped drive further gains in Reynolds American’s net sales, earnings and margin,” said Susan Cameron, president and CEO of RAI.
“In addition to these strong results, I’m pleased to report that the integration of Newport is going smoothly,” Cameron said. “Even with the route to market restrictions on retail merchandising in place through mid-November, Newport is demonstrating solid marketplace momentum, and R.J. Reynolds’ consumer marketing and sales teams are focused on identifying additional growth opportunities for the brand.”
R.J. Reynolds Vapor Company’s VUSE Digital Vapor Cigarette also performed well in the third quarter and remains the best-selling e-cigarette in the convenience/gas channel. “Four additional styles of VUSE were expanded nationally at the end of September, providing a broader variety of options for adult tobacco consumers,” Cameron said.
Other developments during the quarter include:
- A definitive agreement to sell the Natural American Spirit business outside the U.S. to JT Group for $5 billion
- A vapor technology-sharing and licensing term sheet signed between RAI and BAT
- The consolidation of VUSE manufacturing at R.J. Reynolds’ Tobaccoville facility
- RAI’s selection again to the Dow Jones Sustainability North America Index.
In addition, R.J. Reynolds reached a settlement on Oct. 20 with the state of New York on NPM disputed payments.
“RAI and its operating companies are focused on initiatives across a broad front that are advancing our transforming tobacco strategy while creating additional value for our shareholders,” Cameron said. “There’s still significant work to be done in our integration, but we’re making great progress.”
With a successful third quarter and nine months now behind it, RAI has tightened its adjusted earnings growth for the full year to a range of 13% to 17% over 2014’s adjusted earnings.