Altria Q3 2026: adjusted EPS up 4.8% to $1.52, but $104M of duty refunds did most of the work

Altria's third quarter looks steady on the surface: net revenues rose 1.0% to $6.13 billion, reported diluted EPS rose 7.1% to $1.51, adjusted EPS rose 4.8% to $1.52, and management raised its full-year guidance. Underneath, the cigarette business is still selling fewer packs (domestic cigarette shipments fell 2.9%, Marlboro fell 6.4%), and the single largest contributor to profit growth was not smokers paying more but $104 million of higher refunds of taxes and duties on imported cigarettes. Meanwhile on!, the nicotine pouch brand Altria is counting on for growth, shipped more cans but lost share of the fast-growing pouch category, both against a year ago and against Q2.

The quarter in figures

"Revenues net of excise taxes" strips out the federal and state cigarette taxes Altria collects and passes on to governments, so it is closer to what the company actually keeps. "OCI" (operating companies income) is Altria's term for each segment's operating profit before corporate overhead.

Cigarettes: price still beats volume, barely

The smokeable products segment (cigarettes plus Black & Mild cigars) earned $3,053 million of OCI, up $111 million or 3.8%. The 10-Q gives the bridge: higher pricing, net of higher promotional spending, added $290 million to revenue, while what Altria calls "volume/cigarette mix" (fewer packs, and more of them at discount prices) took away $254 million. At the profit line, volume/mix cost $199 million and higher costs, mostly manufacturing, another $80 million, while higher refunds of taxes and duties paid on imported cigarettes added $104 million.

The volume picture keeps getting worse in the premium tier. Marlboro shipped 13.3 billion sticks, down 6.4%; other premium brands fell 6.3%; discount brands rose 40.5% to 1.7 billion. Adjusted for wholesaler inventory movements, Altria's cigarette volume fell an estimated 4% and the whole US industry an estimated 5%. Discount brands now hold 34.1% of the US cigarette market, up 2.0 points in a year, which Altria attributes to "continued discretionary income pressures on adult smokers." The one bright spot inside premium: Marlboro's share of the premium segment edged up 0.3 points to 60.0%.

Contract-manufactured export cigarettes, made for third parties who sell outside the US, jumped to 1,595 million sticks from 311 million. That business sits behind the refund line: the 10-Q describes "duty drawback," which lets a manufacturer recover duties and taxes paid on imported tobacco products when offsetting volumes are later exported.

Oral tobacco: dip in decline, on! growing slower than its category

The oral segment's net revenues were flat at $688 million, but reported OCI fell 5.4% to $434 million and the adjusted OCI margin dropped 2.8 points to 66.4%, on lower volume, higher costs (including the move of USSTC's Nashville manufacturing to Hopkinsville, Kentucky) and more promotion. Copenhagen cans fell 10.1% and Skoal 12.6%.

on! shipments rose 13.3% to 47.8 million cans after Helix took on! PLUS 12-milligram nationwide during the quarter. But nicotine pouches grew to 61.2% of the whole US oral tobacco market (up 5.8 points), and on!'s share of that pouch category fell to 13.5% from 14.8% a year ago and 14.4% in Q2. Altria's total oral share fell 2.7 points to 27.9%.

What the headline numbers hide

• GAAP vs adjusted: reported EPS grew faster (+7.1%) than adjusted EPS (+4.8%) because Altria's share of ABI (Anheuser-Busch InBev) results swung from a $34 million mark-to-market loss a year ago to a $37 million gain this quarter. Both are excluded from adjusted EPS, worth +$0.02 this year versus −$0.02 last year. Adjusted EPS also excludes $0.01 of litigation charges and $0.01 of intangible amortization.
• Refunds did much of the work in adjusted EPS too. The $104 million increase in tax and duty refunds is not excluded from adjusted results. After tax at Altria's roughly 23% adjusted rate, it is worth about $0.05 per share on 1,669 million shares, against total adjusted EPS growth of $0.07. Without it, adjusted EPS would have grown by roughly 1–2%. Management had flagged a larger import/export benefit in the second half, so this was expected, but it is a trade and tax mechanism tied to export volumes, not stronger demand from US smokers.
• ABI helped below the operating line. Income from equity investments rose to $242 million from $107 million. Even excluding the special items, the ABI contribution rose about $64 million. ABI is reported one quarter late, so this reflects the brewer's second quarter.
• Cash conversion was fine. Operating cash flow was about $3,108 million in the quarter (nine-month $6,151 million minus first-half $3,043 million), above net earnings of $2,518 million. For the nine months it was $6,151 million against $6,999 million of earnings, because the large annual State Settlement Agreement payments fall in the first half.
• Buybacks barely moved EPS. Altria repurchased $400 million of stock in Q3 (5.9 million shares at $68.52) and paid $1,774 million in dividends. Diluted shares were 1,669 million, down only 0.7% from 1,680 million, so less than one point of EPS growth came from the lower share count.
• Tax went the other way. The reported tax rate rose to 23.6% from 22.8%, because last year included a benefit from tax reserves tied to the ABI investment.

On balance the quarter is flattered: GAAP EPS +7.1% includes an ABI mark-to-market swing, and roughly $0.05 of the $0.07 adjusted EPS gain came from higher duty refunds rather than from US consumers.

Did last time's read hold up?

Our Q2 2026 report said the number to watch was on!'s share of the pouch category (14.4% in Q2) and whether the on! PLUS national rollout would continue Q2's sequential 1.0-point gain. It did not: share fell 0.9 points to 13.5% in the quarter the rollout happened, though shipments grew 13.3%. We also expected the import/export refund benefit to be weighted to the second half, and it was ($104 million higher year on year in Q3). The buyback, which had slowed to $55 million in Q2, picked up to $400 million.

Takeaway: Altria's 4.8% adjusted EPS growth leaned on $104 million of extra tax and duty refunds; strip that out and the underlying business grew earnings by only about 1–2%, while Marlboro volume fell 6.4% and on! lost pouch share in the quarter it went national.

Guidance and outlook

Management raised full-year 2026 adjusted diluted EPS guidance to $5.66–$5.74 (4.5% to 6.0% growth from $5.42), from $5.61–$5.72 in July. With $4.33 earned through nine months, that implies $1.33–$1.41 in Q4 against $1.30 a year ago, or roughly 2% to 8.5% growth. The guidance still assumes NJOY ACE does not return to the market in 2026 and continued macroeconomic pressure on nicotine consumers. The Board also added $1 billion to the share repurchase program, which now runs to the end of 2027, and raised the quarterly dividend 4.7% in August to an annualized $4.44 per share.

Our view: the full-year number looks achievable, again helped by the refund mechanism management says will continue into Q4. The harder question is 2027. Each quarter in which discount brands grow 40% while Marlboro shrinks 6% leaves price increases applying to a cheaper mix, and the e-vapor business (inside "all other," which lost $88 million in the quarter versus $76 million a year ago) still has no flagship product on the market. The things to watch next quarter are on!'s pouch share, now that PLUS is national and new flavors are on shelves, and whether the smokeable segment can grow OCI if refunds stop growing.