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Reynolds American, Inc. (RAI)

  • 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.
    | Wed, Oct. 7, 1:26 PM | 23 Comments
  • 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.
    | Fri, Oct. 2, 7:35 AM | 30 Comments
  • Tue, Sep. 29, 7:02 AM
    | Tue, Sep. 29, 7:02 AM | 5 Comments
  • 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.
    | Thu, Sep. 24, 5:11 PM | 1 Comment
  • 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%)
    | Tue, Sep. 15, 1:00 PM | 35 Comments
  • Mon, Sep. 14, 9:14 AM
    • Reynolds American (NYSE:RAI) announces it was named to be included in the Dow Jones Sustainability Index for 2015-2016.
    • The index includes 145 companies meeting criteria on energy policies and climate change strategies.
    • Reynolds American press release (.pdf)
    | Mon, Sep. 14, 9:14 AM | 1 Comment
  • 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
    | Sat, Sep. 12, 10:27 AM | 33 Comments
  • Fri, Sep. 11, 8:04 AM
    • Reynolds American (NYSE:RAI) announces Debra Crew has been promoted to be the chief operating officer of the company.
    • Crew was serving as president and chief commercial officer at Reynolds.
    • In her new position, Crew will have responsibilities for manufacturing operations and R&D projects.
    | 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, Sep. 3, 10:38 AM | 30 Comments
  • 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.
    | Thu, Aug. 27, 2:01 PM | 2 Comments
  • 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, 7:09 AM | 1 Comment
  • Tue, Jul. 28, 7:06 AM
    • Reynolds American (NYSE:RAI): Q2 EPS of $1.02 beats by $0.05.
    • Revenue of $2.4B (+11.1% Y/Y) misses by $50M.
    • Press Release
    | Tue, Jul. 28, 7:06 AM | 1 Comment
  • Thu, Jun. 25, 9:02 AM
    • Reynolds American (NYSE:RAI) issues an update on the private exchange offers of Lorillard notes in relation to the merger between the tobacco firms.
    • All debt housekeeping steps have proceeded as scheduled.
    • Shares of RAI hit an all-time high last week as sentiment remains high on merger benefits.
    | Thu, Jun. 25, 9:02 AM | 3 Comments
  • Tue, Jun. 16, 9:08 AM
    • Goldman Sachs calls Reynolds American (NYSE:RAI) the "best in class" in the tobacco sector following the company's merger with Lorillard.
    • Reynolds American lands on the Conviction Buy List at Goldman due to its upside potential after clearing the regulatory hurdles associated with the Lorillard integration.
    • Despite being forced to shed some brands, Reynolds is seen having better pricing power due to its larger market share.
    • GS assigns Reynolds a price target of $81 based off a blended assumption of 17.5X 12-24 month P/E and M&A EBITDA gains.
    • RAI +1.0% premarket t0 $73.29.
    | Tue, Jun. 16, 9:08 AM | 2 Comments
  • Tue, Jun. 16, 7:06 AM
    | Tue, Jun. 16, 7:06 AM | 37 Comments
  • Tue, Jun. 9, 1:02 PM
    • Reynolds American (RAI +1.8%) is offering a seven-part bond deal in order to fund its acquisition of Lorillard (LO +0.5%).
    • The $9B bond sale will be one of the larger corporate offerings seen this year in the U.S.
    • The development in the bond market isn't being ignored by Moody's which downgraded the tobacco company's senior unsecured rating to Baa3 on a Stable outlook.
    • "The downgrade reflects our expectation of much higher leverage as a result of the transaction, as well as execution risk in achieving synergies in a timely fashion," summarizes Moody's.
    | Tue, Jun. 9, 1:02 PM | 5 Comments
RAI vs. ETF Alternatives
Company Description
Reynolds American Inc, through its subsidiaries, manufactures cigarettes and other tobacco products in the United States. The products brand include CAMEL, PALL MALL, WINSTON, among others.
Industry: Cigarettes
Country: United States