Altria Group, Inc. · NYSE:MO
Altria — Q2 2023 Earnings Presentation
28 slides from Altria's earnings presentation, Aug 1, 2023
Slide 1: Altria's Second-Quarter and First-Half 2023 Earnings Conference Call
Altria’s Second-Quarter and First-Half 2023 Earnings Conference Call August 1, 2023 1 | ALCS | Q2 2023 | 08.01.23 | For Investor Purposes ONLY | Final
Slide 2: Safe Harbor Statement
Safe Harbor Statement Statements, including earnings guidance, in this presentation that are not reported financial results or other historical information are “forward-looking statements” within the meaning of Private Securities Litigation Reform Act of 1995. Such forward-looking statements are bas
Slide 3: Adjusted Diluted Earnings Per Share (EPS)
Adjusted Diluted Earnings Per Share (EPS)* Second Quarter First Half +4.0% +5.0% $2.50 $2.38 $1.26 $1.31 Q2 '22 Q2 '23 1H '22 1H '23 *For reconciliations of non-GAAP to GAAP measures visit altria.com. 3 | ALCS | Q2 2023 | 08.01.23 | For Investor Purposes ONLY | Final
Slide 4: Agenda
Agenda ▪ Our enhanced smoke-free product portfolio, including our recent acquisition of NJOY ▪ Consumer dynamics impacting our core tobacco businesses ▪ Update on the California flavor ban and its impact on the market ▪ Our second-quarter and first-half results 4 | ALCS | Q2 2023 | 08.01.23 | For In
Slide 5: Completed Acquisition of NJOY Holdings, Inc.
Completed Acquisition of NJOY Holdings, Inc. 5 | ALCS | Q2 2023 | 08.01.23 | For Investor Purposes ONLY | Final
Slide 6: Complementary Knowledge and Capabilities
Complementary Knowledge and Capabilities Vapor Product Device Manufacturing U.S. Sales & Adult Tobacco Consumer Development Partnerships Distribution Understanding International Supply Regulatory & Marketing Regulatory & Chain Expertise Legal Strategy Capabilities Legal Strategy All third-party trad
Slide 7: NJOY Retail Presence
NJOY Retail Presence Prior to Transaction Close Limited Retail Visibility Frequent Inventory Gaps (stores with existing distribution) 95% Lack complete inventory of the ACE device & five pod SKUs Source: STARS YTD 2023 as of week ending 5/28/2023 7 | ALCS | Q2 2023 | 08.01.23 | For Investor Purposes
Slide 8: NJOY Initial Expansion Plan
NJOY Initial Expansion Plan Q3 2023 ▪ Enhance retail presence through premium fixture space ▪ Improve retail inventory ▪ Broaden distribution to a total of approximately 43,000 stores By End of 2023 ▪ Further expand distribution to a total of 70,000 stores, which represents approximately 70% of e-va
Slide 9: U.S. Oral Tobacco Category
U.S. Oral Tobacco Category Oral Tobacco Industry Volume Growth Oral Nicotine Pouch (ONP) Share (Estimates, Six Months Ended) (of total U.S. oral tobacco category) +8.4pp 5.0% 29.1 20.7 2.5% 2.0% 1.5% 6/30/2021 12/31/2021 (0.5)% 12/31/2022 6/30/2023 Q2 '22 Q2 '23 Source: ALCS CMII Estimates. Rounded
Slide 10: Continued on! Shipment Volume and Share Growth
Continued on! Shipment Volume and Share Growth on! Shipment Volume on! Share of Oral Tobacco Category (cans in millions) (total U.S.) 7.0 +47.8% 30.0 6.5 5.8 20.3 5.2 4.9 Q2 '22 Q2 '23 Q2 '22 Q3 '22 Q4 '22 Q1 '23 Q2 '23 Source: Circana Info Scan Oral Tobacco 2023 – MOC WE 07/02/23 10 | ALCS | Q2 202
Slide 11: on! PLUS
on! PLUS Our New Tobacco-Derived Nicotine Wet Pouch Product ▪ In September, our teams plan to begin an international test of on! PLUS. ▪ The product will be available via e-commerce in Sweden, where our teams plan to take a disciplined approach to gain learnings that can inform a future U.S. launch.
Slide 12: Macroeconomic Headwinds and Cigarette Volumes
Macroeconomic Headwinds and Cigarette Volumes Adjusted Cigarette Industry Decline Rates Q1 '22 Q2 '22 Q3 '22 Q4 '22 Q1 '23 Q2 '23 (6.5)% (7.5)% (8.0)% (8.5)% (9.0)% (9.0)% Increase in Gas Prices Higher Inflation Source: ALCS CMII estimates – rounded to nearest 0.5% Note: Estimates are subject to rev
Slide 13: PM USA Revenue Growth Management
PM USA Revenue Growth Management Marlboro Retail Share 42.0 42.1 Q1 '23 Q2 '23 Source: Circana Info Scan Cigarette 2023 – Blended WE 07/02/2023 13 | ALCS | Q2 2023 | 08.01.23 | For Investor Purposes ONLY | Final
Slide 14: California Flavor Ban & Market Dynamics
California Flavor Ban & Market Dynamics OCB Flavor Card Sales Volume Other 49 States Combined California ~65,000 27,750 ~20,200 - 1H '22 1H '23 Source: STARS as of week ending 7/2/2023 All third-party trademarks remain the property of their respective owners. 14 | ALCS | Q2 2023 | 08.01.23 | For Inv
Slide 15: Third-Party Discarded Tobacco Product Study
Third-Party Discarded Tobacco Product Study Study Findings ▪ ~45% of cigarettes were not tax stamped for sale in California. ▪ ~20% of cigarette packs were menthol or products we believe other manufacturers recently introduced to sidestep the purpose of the law. ▪ 98% of collected e-vapor products1
Slide 16: Majority Support for Tobacco Harm Reduction
Majority Support for Tobacco Harm Reduction % of Adults Who Support the Preferred Approach Concept of Tobacco Harm Reduction Policy Professionals Adult Smokers 21+ General Population Adults 21+ 85% 72% 66% 62% 59% 55% 27% 22% 19% 17% 16% 10% Policy Adult General Population Tobacco Harm Tobacco Unsur
Slide 17: 17 | ALCS | Q2 2022 | 07.28.22 | For Investor Purposes ONLY |
17 | ALCS | Q2 2022 | 07.28.22 | For Investor Purposes ONLY | DRAFT
Slide 18: Smokeable Products Segment
Smokeable Products Segment Adjusted Operating Companies Income* (OCI) Q2: Adjusted OCI 1H: Adjusted OCI ($ in millions) ($ in millions) +3.1% +1.7% $5,311 $5,401 $2,800 $2,886 Q2 '22 Q2 '23 1H '22 1H '23 *For reconciliations of non-GAAP to GAAP measures visit altria.com. 18 | ALCS | Q2 2023 | 08.01.
Slide 19: Smokeable Products Segment
Smokeable Products Segment Adjusted OCI Margins* Q2: Adjusted OCI Margins 1H: Adjusted OCI Margins +1.3pp +1.1pp 59.1% 60.4% 59.3% 60.4% Q2 '22 Q2 '23 1H '22 1H '23 *For reconciliations of non-GAAP to GAAP measures visit altria.com. 19 | ALCS | Q2 2023 | 08.01.23 | For Investor Purposes ONLY | Final
Slide 20: Adjusted Cigarette Decline Rates
Adjusted Cigarette Decline Rates Smokeable Products Segment Total Industry Q2 '22 Q2 '23 Q2 '22 Q2 '23 (7.5)% (8.5)% (10.0)% (10.0)% 1H: (10.5)% 1H: (8.0)% Source: ALCS CMII estimates – rounded to nearest 0.5% Note: Estimates are subject to revision due to wholesaler resubmission of inventory data 2
Slide 21: Discount Retail Share
Discount Retail Share Branded Discount (Major Manufacturers) Deep Discount (All Other) 27.7 28.2 28.2 27.1 26.4 15.4 15.5 15.4 15.2 15.3 11.8 12.3 12.7 12.8 11.2 Q2 '22 Q3 '22 Q4 '22 Q1 '23 Q2 '23 Source: Circana Info Scan Cigarette 2023 – Blended WE 07/02/2023 21 | ALCS | Q2 2023 | 08.01.23 | For I
Slide 22: Share of Premium Segment
Share of Premium Segment Marlboro All Other PMUSA BAT ITG ∆ vs. YAGO 6.5 6.6 6.7 6.7 6.5 - 32.2 31.8 31.7 31.6 31.7 (0.5)pp 3.2 3.1 3.2 3.2 3.2 - +0.5pp 58.1 58.5 58.4 58.5 58.6 Q2 '22 Q3 '22 Q4 '22 Q1 '23 Q2 '23 Source: Circana Info Scan Cigarette 2023 – Blended WE 07/02/2023 22 | ALCS | Q2 2023 |
Slide 23: John Middleton Cigars
John Middleton Cigars Reported Shipment Volume +5.0% 910 867 1H '22 1H '23 23 | ALCS | Q2 2023 | 08.01.23 | For Investor Purposes ONLY | Final
Slide 24: Q2 2023 Oral Tobacco Products Segment
Q2 2023 Oral Tobacco Products Segment Adjusted OCI* and Adjusted OCI Margins* Adjusted OCI Adjusted OCI Margins ($ in millions) +3.0% +0.1pp $443 $430 67.9% 68.0% Q2 '22 Q2 '23 Q2 '22 Q2 '23 *For reconciliations of non-GAAP to GAAP measures visit altria.com. 24 | ALCS | Q2 2023 | 08.01.23 | For Inve
Slide 25: Oral Tobacco Products Retail Share
Oral Tobacco Products Retail Share Oral Tobacco Products Segment Retail Share MST + Snus on! 46.8 44.0 4.9 7.0 41.9 37.0 Q2 '22 Q2 '23 Source: Circana Info Scan Oral Tobacco 2023 - MOC, WE 07/02/23 25 | ALCS | Q2 2023 | 08.01.23 | For Investor Purposes ONLY | Final
Slide 26: Adjusted Equity Earnings From ABI Investment
Adjusted Equity Earnings* From ABI Investment $ in millions +6.5% $132 $124 Q2 '22 Q2 '23 *For reconciliations of non-GAAP to GAAP measures visit altria.com. All third-party trademarks remain the property of their respective owners. 26 | ALCS | Q2 2023 | 08.01.23 | For Investor Purposes ONLY | Final
Slide 27: Creating Long-Term Shareholder Value
Creating Long-Term Shareholder Value Cash Returned to Shareholders $3.8 B Share $472 M Repurchases Dividends $3.4 B 1H 2023 *For reconciliations of non-GAAP to GAAP measures visit altria.com. 27 | ALCS | Q2 2023 | 08.01.23 | For Investor Purposes ONLY | Final
Slide 28: All new products subject to FDA approval. Third-party trademarks remain the property of their
All new products subject to FDA approval. Third-party trademarks remain the property of their respective owners.