Lorillard Inc. ( LO )
delivered third quarter 2012 adjusted earnings (excluding expenses
incurred in conjunction with the acquisition of blu ecigs) of $2.17
per share, which exceeded the prior-year quarterly earnings of
$1.94 per share by 11.9%.
The results benefited from higher sales and a lower share count,
owing to the company's buyback program. However, results lagged the
Zacks Consensus Estimate of $2.24 per share.
Quarter in Detail
Net sales in the reported quarter went up 2.4% year over year to
$1.66 billion on the back of higher cigarette pricing offsetting
lower cigarette volumes. Revenue surpassed the Zacks Consensus
Estimate of $1.21 billion.
Total wholesale cigarette volume decreased 2.1% in the third
quarter including Puerto Rico and U.S. shipments, while total
domestic wholesale shipments excluding Puerto Rico and U.S.
Possessions slipped 2.1% year over year.
In the reported quarter, Lorillard's domestic retail market
share climbed 0.2 share points to 14.4%, whereas Lorillard's
domestic retail market share of the menthol market further
strengthened 0.5 share points to 39.6%.
Domestic retail market share of the company's flagship brand
Newport jumped 0.2 share points to 12.1% in the third quarter of
2012. Likewise, Newport's share of the menthol market also
increased 0.3 share points to 36.4%.
Both Newport's total unit volume and domestic volume slipped
2.3% in the quarter. Domestic wholesale shipments for the company's
leading discount brand Maverick climbed 1.1% in the quarter.
Gross profit margin expanded 150 basis points year over year to
36.2% of net sales, driven by higher pricing per cigarette. Gross
profit went up to $602.0 million compared with $563.0 million in
the third quarter of 2011, reflecting higher sales offset by higher
costs of raw material.
Other Financial Update
Lorillard ended the quarter with cash and cash equivalents of
$1.72 billion compared with $946 million at the end of the prior
quarter. Long-term debt was $3.1 billion at the end of September
30, 2012 as against $2.6 billion at the end of June 30, 2012.
The company paid a dividend of $1.55 per share on September 10
to shareholders of record as of August 31, 2012. Lorillard also
repurchased approximately 0.7 million shares at a cost of $86
million under its $500 million buyback program.
Lorillard, which competes with Reynolds American
Inc. ( RAI ) and Philip Morris International
Inc. ( PM ), currently holds a Zacks #3 Rank (a
short-term Hold rating).LORILLARD CO (LO): Free Stock Analysis ReportPHILIP MORRIS (PM): Free Stock Analysis ReportREYNOLDS AMER (RAI): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment