Altria HQ. Image source: Altria.

Tobacco giant Altria Group (NYSE:MO) has one of the best track records for shareholders in history. Even though some investors worry about the long-term declining trends in cigarette smoking in the U.S., Altria has found ways to keep growing. After Altria released its recent first-quarter financial report, executives discussed the results and how they fit into the company's long-term strategy. Let's take a closer look at what Altria said and its potential impact going forward.

1. SABMiller deal is on track

AB InBev and SABMiller report that they are targeting the second half of 2016 to obtain the necessary approvals needed to complete the transaction. We remain excited about the transaction.

-- CEO Marty Barrington

SABMiller's contribution to Altria's results during the first quarter got cut in half from the year-ago quarter to just $66 million in equity earnings. Altria said that its share of asset impairment charges held back its profits. However, from a strategic standpoint, Barrington believes that the merger combines "two great companies" and that there are opportunities that Altria will have as a result. Altria is working on preparing for the transition in its investment from SABMiller to Anheuser-Busch InBev (NYSE:BUD) and will have more details later.

2. Cigarette volumes fall despite favorable trends

Cigarette industry volume declines were moderate in the quarter, supported by lower gas prices and employment and wage growth, which continue to benefit adult tobacco consumers.

-- Barrington

Falling demand for cigarettes is a fact of life in the industry, but Altria once again managed to protect itself from the full brunt of the trend. The company's premium approach allows it to use pricing power to boost sales, and during the quarter, it also allowed the smokeable products segment to increase market share in posting less of a volume decline than its peers. It's good for Altria when customers have more disposable income, and economic factors have been in Altria's favor in that respect.

3. Smokeless tobacco keeps innovating

In mid-March, USSTC expanded Copenhagen Mint nationally with a strong awareness and trial-generating plan.

-- Barrington

The smokeless tobacco segment doesn't get much attention from Altria investors, but the Copenhagen line is a key player in the market. As Barrington described it, the new Copenhagen Mint product is "rooted in Copenhagen's essence of authenticity, masculinity, and craftsmanship," and it has quickly become a priority among Altria's sales teams to expand distribution. The move helped the smokeless division boost its overall market share, and Copenhagen will remain the leader for Altria in that segment.

4. Altria cuts costs

Altria announced a $300 million productivity initiative designed to maintain its operating companies' leadership and cost competitiveness. We've made significant progress on the program.

-- Barrington

In late January, Altria said that it wanted to take steps toward boosting profitability by containing expenses and encouraging greater productivity. Barrington explained that the design and realignment of the corporate organization is already complete, and the next step is to implement many of the ideas that emerged from initial organizing efforts. At that point, investors should see a direct impact on Altria's bottom line, which could support future dividend increases and buybacks.

5. Balance sheet is strong

Moody's and Standard & Poor's both upgraded Altria's long-term corporate credit rating ... reflecting our solid balance sheet, strong business fundamentals, and the leading market positions of our businesses.

-- CFO Billy Gifford

Most investors focus on Altria's dividends and buybacks as signs of its success, but the company hasn't sacrificed its own financial condition to return capital to shareholders. It got a one-notch increase in its credit ratings from both major agencies, with Moody's now giving Altria an A3 rating and S&P moving it to A-. Those upgrades will make debt maintenance cheaper in the future for Altria, creating a positive feedback loop that could bring on future improvement.

Altria's results were largely positive, but even more importantly, its management team remains committed to better times ahead. With continued effort, Altria can still produce the long-term growth that shareholders want to see.