Reynolds American Narrows Adj. EPS Guidance; Announces $2.0 Bln Share Buyback

(RTTNews) - Reynolds American Inc. (RAI) narrowed its 2016 adjusted EPS guidance to a range of $2.26 to $2.34. In April, the company projected its adjusted earnings per share in a range of $2.25 to $2.35. Analysts polled by Thomson Reuters expect the company to report profit per share of $2.35. Analysts' estimates typically exclude special items.

Reynolds American's second-quarter reported EPS was $0.56 decreased 66.9 percent from the prior year quarter, impacted primarily by the gain on divesture related to the Lorillard acquisition in June 2015. Second-quarter adjusted EPS was $0.58, up 13.7 percent from the prior-year quarter, benefitting from the addition of the Newport brand and higher cigarette and moist-snuff pricing. Second-quarter adjusted EPS excludes a charge of $0.02 per share related to Engle progeny lawsuits. On average, nine analysts polled by Thomson Reuters expected the company to report profit per share of $0.61 for the quarter. Analysts' estimates typically exclude special items.

Second-quarter net sales increased year-over-year to $3.20 billion from $2.40 billion. Analysts expected revenue of $3.26 billion, for the quarter.

RAI's board also approved a new $2.0 billion share repurchase program that is intended to be completed by year-end 2018. This is the first share repurchase program authorized by RAI's board since the announcement of the Lorillard acquisition in July 2014.

RAI announced its board has approved an increase in dividend payout target to 80 percent of adjusted net income. In line with the new dividend payout target, RAI's board approved a 9.5 percent increase in its quarterly cash dividend to $0.46 per share, or an annualized $1.84 per share. The dividend will be paid on Oct. 3, 2016, to shareholders of record as of Sept. 12, 2016.