Wed, Nov. 18, 7:22 AM
- E-cigarette sales growth is down in recent months, while sales declines for traditional cigarettes have moderated to better-than-anticipated levels, according to industry data.
- Wells Fargo analysts Bonnie Herzog thinks some consumers have become "disenchanted" with e-cigs and returned to cigarettes. Cigalikes sales have also slumped over the last month.
- A backlog of e-cigarette inventory could pressure pricing.
- Related stocks: MO, BTI, LO, PM, OTCQB:ECIG, OTCQB:VAPE, OTCPK:HPNN, OTCQB:MCIG, OTCQB:NTRR, OTCPK:VAPR, RAI, OTC:AHII, OTCQX:ITYBY, OTCPK:VTCQ, VPCO, BTI, OTCQX:ITYBY, OTCPK:JAPAY.
Tue, Oct. 27, 7:12 AM
- Reynolds American (NYSE:RAI) reported a 65% jump in non-GAAP operating income to $1.41B in Q3.
- Total domestic cigarette volumes were up 29.5% during the quarter as the addition of the Newport brand factored in. Retail market share +30 bps to 33.9%.
- Reynolds' operating margin improved 640 bps to 44.4%.
- The company ended the quarter with $2.9B in cash.
- Reynolds American earnings press release (.pdf)
- Previously: Reynolds American EPS in-line, beats on revenue (Oct. 27 2015)
- RAI +0.65% premarket to $49.84.
Tue, Oct. 27, 7:05 AM
Mon, Oct. 26, 5:30 PM
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Wed, Oct. 7, 1:26 PM
- Lower gas prices in the U.S. continue to give a boost to some pockets of the retail sector. The benefit might be most dramatic with the so-called "sin" stocks.
- Tobacco stocks Reynolds American (RAI -0.5%) and Altria (MO +0.5%) have both outperformed the S&P 500 over the last year by a wide margin. Though there's a lot going on in the tobacco sector, stronger demand and solid pricing in the U.S. has been a factor. Cigarette sales in the U.S. are poised to show their first year-over-year annual gain since 2006. Shipments for the first half of the year actually rose, according to government data (Full report from the Alcohol and Tobacco Tax and Trade Bureau (.pdf)).
- Casino traffic has also been higher since gas started its tumble to as low as $2 per gallon in parts of the country. U.S-focused casino stocks have smashed the returns of their larger Macau-tainted peers. Isle of Capri (NASDAQ:ISLE) is +148% over the last 52 weeks, while Churchill Downs (NASDAQ:CHDN) and Pinnacle Entertainment (NYSE:PNK) are both up over 40%. Most regional casino stocks are ahead of the broad market.
- Lower gas prices could also be a factor in the alcohol sector. Constellation Brands (NYSE:STZ) and Brown-Forman (BF.A, BF.B) have both cited strong sales in the U.S. off of improved demand trends that fell roughly in line with the drop in gas.
Fri, Oct. 2, 7:35 AM
- The Obama administration is pushing for a provision in the Trans-Pacific Partnership to limit the ability of tobacco companies to use tribunals to attack anti-smoking laws. The industry has used the tribunals aggressively in emerging markets.
- Bipartisan support in Washington will be needed to pass the trade agreement next year.
- Tobacco stocks: LO, PM, MO, VGR, RAI, OTCQX:ITYBY, BTI, OTCPK:BTAFF, OTC:BATMF, OTCPK:JAPAF, OTCPK:JAPAY.
Tue, Sep. 29, 7:02 AM
- Reynolds American (NYSE:RAI) announces the sale of Natural American Spirit international businesses to Japan Tobacco (OTCPK:JAPAF).
- The value of the all-cash transaction is close to $5B.
- The company expects to close the deal in early 2016 after gaining regulatory approval.
- Previously: Bloomberg: Japan Tobacco in talks to buy $5B in Reynolds assets (Sep. 24 2015)
- RAI press release (.pdf)
Thu, Sep. 24, 5:11 PM
- Japan Tobacco (OTCPK:JAPAF) is in talks to buy ~$5B in cigarette assets from Reynolds American (NYSE:RAI), as it aims to expand outside of its shrinking home market, Bloomberg reports.
- The available assets could include some of the Natural American Spirit tobacco brand that is part of a RAI operating company, according to the report.
- The Natural American Spirit brand is facing pressure from the FDA, which last month sent a letter to RAI saying the company needs to prove cigarettes labeled as "natural” or "additive-free” are less harmful in order to keep marketing them in such a manner.
Tue, Sep. 15, 1:00 PM
- The FDA issued orders today that will stop the sale and distribution of four cigarette brands from R.J. Reynolds (RAI -0.4%): Camel Crush Bold, Pall Mall Deep Set Recessed Filter, Pall Mall Deep Set Recessed Filter Menthol and Vantage Tech 13. According to the agency, it took action because the company's submissions for the products did not meet the requirements set forth in the Federal Food, Drug and Cosmetics Act.
- Specifically, the FDA's evaluation found that the products were not substantially equivalent (NSE) to their respective "predicate" products (commercially available as of February 15, 2007) as specified by the company. The agency concluded that the products have different characteristics than the predicate products and Reynolds failed to show that the new products do not raise different questions of public health when compared to them.
- The four products entered the market during a provisional period established by the Family Smoking Prevention and Tobacco Control Act of 2009. The provision specified that the company had to submit a substantial equivalence (SE) application to the FDA by March 22, 2011 in order for the products to remain on the market.
- The scientific basis for the action include a failure to demonstrate that increased yields of harmful or potentially harmful constituents, higher levels of menthol and/or the addition of new ingredients versus the predicates do not raise different questions of public health.
- The NSE order means that it is illegal to sell or distribute the products in interstate commerce, including products currently in inventory.
- Related tickers: (MO +2.3%)(BTI +0.9%)(LO)(PM +1%)
Mon, Sep. 14, 9:14 AM
Sat, Sep. 12, 10:27 AM
- There's a different approach to electronic cigarettes developing in the U.S. and U.K.
- Health advocates in the U.S. continue to raise concerns on the impact on teenagers, including a damaging article in JAMA Pediatrics, and politicians are eyeing taxing the product. No great surprise, but Chicago and New York are out in front of the e-cig tax movement.
- U.S. sales have been held back a bit by efforts to demonize the product, according to some company officials.
- The reception in the U.K. to the burgeoning e-cig industry has been warmer. A government health body determined last month that e-cigarettes could be prescribed by doctors in the nation as an effective way to help smokers break their addiction.
- A study by the same group estimated e-cigs are 95% less harmful than traditional cigarettes and found no evidence the product acts as a gateway to smoking for children or non-smokers. That last part was also backed up in a concise breakdown by FiveThirtyEight.com.
- Related stocks: MO, BTI, LO, PM, OTCPK:ECIG, OTCQB:VAPE, OTCPK:HPNN, OTCQB:MCIG, OTCQB:NTRR, OTCPK:VAPR, RAI, OTC:AHII, OTCQX:ITYBY, OTCPK:VTCQ, VPCO, BTI, OTCQX:ITYBY, OTCPK:JAPAY.
Fri, Sep. 11, 8:04 AM| Fri, Sep. 11, 8:04 AM | Comment!
Thu, Sep. 3, 10:38 AM
- There's a significant windfall for Big Tobacco in place with the expiration of the Tobacco Transition Payment Program.
- The government program designed to compensate tobacco farmers cut into industry revenue by $9.6B over the last ten years.
- USA Today dissected the potential benefit by company.
- Altrai (NYSE:MO): The cigarette maker kicked out $1.1B of the final three years of the program, including $300M last year.
- Reynolds American (NYSE:RAI): Payments of $583M were made between 2012 and 2014.
- Lorillard (part of RAI): The company paid out $330M for the tax over the last three years.
- Tobacco executives have been asked about the extra cash during recent conference calls, but kept their answers on the vague side.
Thu, Aug. 27, 2:01 PM
- Reynolds American (RAI +1.6%) and Imperial Tobacco (OTCQX:ITYBY, OTCPK:ITYBF) have received a warning from the FDA over advertising.
- The agency says the companies need to prove that cigarette brands labeled as "natural" or "additive-free" are lower risk to consumers than traditional cigarettes.
- Reynolds and Imperial have 15 days to respond to the directive.
Tue, Jul. 28, 7:09 AM
- Reynolds American (NYSE:RAI) reports domestic cigarette volume increased 5.6% in Q2.
- Domestic retail market share improved 20 bps to 33.6% during the quarter.
- Adjusted operating margin was up 470 bps to 42.1%.
- The company says the deleveraging the balance sheet will be a top priority after its bond offering related to the Lorillard purchase.
- Guidance: Reynolds increase full-year EPS guidance to $1.90-$2.00 vs. $1.83-$1.90 prior.
- Earnings release (.pdf)
- Previously: Reynolds American beats by $0.05, misses on revenue
Tue, Jul. 28, 7:06 AM
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