Altria Group, Inc. · NYSE:MO
Altria — Shareholder Meeting (May 2014)
61 slides from Altria's shareholder meeting presentation, May 14, 2014
Slide 1: Annual Meeting of Shareholders
Annual Meeting of Shareholders May 14, 2014
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: Business Update
Business Update
Slide 4: Our Mission
Our Mission is to own and develop financially disciplined businesses that are leaders in responsibly providing adult tobacco and wine consumers with superior branded products. ral Altria
Slide 5: Four Core Strategies
Four Core Strategies Create Invest in Align with Satisfy Adult Substantial Leadership Society Consumers Value for Shareholders
Slide 6: 2013 Adjusted Diluted EPS
2013 Adjusted Diluted EPS* +7.7% $2.38 $2.21 2012 2013 *For reconciliation of non-GAAP to GAAP measures visit altria.com Source: Altria company reports
Slide 7: Brand images removed
This space is blank because brand images which appeared in the original presentation have been removed.
Slide 8: Nu Mark Portfolio
Nu Mark Portfolio This space is blank because brand images which appeared in the original presentation have been removed.
Slide 9: Reportable Segments Adjusted OCI Growth
Reportable Segments Adjusted OCI* Growth Smokeable Smokeless Wine +2.4% +7.0% +13.5% ($ in Millions) ($ in Millions) ($ in Millions) $7,500 $1,200 $125 $118 $6,271 $6,421 $1,026 $104 $959 $0 $0 $0 2012 2013 2012 2013 2012 2013 *For reconciliation of non-GAAP to GAAP measures visit altria.com Source:
Slide 10: Annualized Productivity Savings
Annualized Productivity Savings $400 million Completed 2013 Note: Savings resulting from cost management program Q4 2011-Q4 2013 Source: Altria company reports 10
Slide 11: 2013 Dividend Growth
2013 Dividend Growth Dividends Paid in Billions Dividend per Share +9.1% $3.4 $3.6 $1.92 $1.76 2012 2013 2012 2013 We increased the dividend rate by 9.1% -- our 47th increase in the last 44 years. Source: Altria company reports Note: Annualized rate
Slide 12: 2013 Total Shareholder Return
2013 Total Shareholder Return 28.6% 23.9% Altria S&P Food, Beverage & Tobacco Index Note: Assumes reinvestment of dividends as of the ex-dividend date. Source: Bloomberg Daily Return (12.31.2012 – 12.31.2013)
Slide 13: Managing Litigation
Managing Litigation Continued to achieve success in managing litigation, though substantial challenges remain Comprehensive tobacco-related litigation discussion in the 2014 Q1 Form 10-Q Will continue to defend these cases vigorously
Slide 14: Long-Term Financial Goals
Long-Term Financial Goals Grow adjusted diluted EPS at average annual rate of 7% to 9% Maintain a target dividend payout ratio of approximately 80% of adjusted diluted EPS
Slide 15: EPS and Dividend Growth
EPS and Dividend Growth Adjusted Diluted EPS* Dividend Per Share +7.8% +8.1% CAGR CAGR $2.38 $2.21 $2.05 $1.92 $1.64 $1.76 2011 2012 2013 2011 2012 2013 Note: Three-year compounded annual growth rate (CAGR) based on 2010 adjusted diluted EPS of $1.90 Note: Annualized dividend. Three-year CAGR based
Slide 16: Returning Value to Shareholders
Returning Value to Shareholders Dividends Paid Share Repurchases $10.2 billion $3.0 billion $3.6 $3.4 $3.2 2011 2012 2013 2011-2013 Source: Altria company reports
Slide 17: Total Shareholder Return 2011–2013
Total Shareholder Return 2011–2013 Current Program ($ in Billions) 83% 57% Altria S&P 500 Index Note: Assumes reinvestment of dividends as of the ex-dividend date. Source: Bloomberg Daily Return (12/31/10 – 12/31/13) For Investor Relations Purposes only - Barclays Back-To-School Consumer Conference,
Slide 18: Invest in Leadership
Invest in Leadership We will invest in excellent people, leading brands and stakeholders important to our businesses’ success.
Slide 19: Employee Engagement Survey
Employee Engagement Survey “I would recommend Altria as a great place to work.” “I see a clear link between my work and Altria’s Mission and goals.”
Slide 20: Key Opportunities
Key Opportunities Enhancing our culture to support: - innovation - diversity and inclusion
Slide 21: Our Values
Our Values Integrity, Passion to Executing Trust & Succeed with Quality Respect Driving Creativity into Sharing with Everything Others We Do
Slide 22: Enhancing Our Culture
Enhancing Our Culture Emphasized innovation and inclusion through our Values Supplemented leadership development programs Adding training, communication, and recognition programs
Slide 23: Diversity & Inclusion Progress
Diversity & Inclusion Progress Established an Executive Diversity Council Expanded employee resource groups Launched mentoring
Slide 24: Slide 24
Slide 25: Investing in Communities
Investing in Communities Positive youth development Environment Arts and culture Civic initiatives Veterans support Emergency relief ~$1 billion in cash and in-kind contributions Note: Third party trademarks are the property of their respective owners and are included for informational p
Slide 26: 2013 Contributions Highlights
2013 Contributions Highlights Note: Third party trademarks are the property of their respective owners and are included for informational purposes only.
Slide 27: Altria Employee Involvement
Altria Employee Involvement ACECF awarded $3 million to ~140 organizations Altria matched $1.2 million in employees’ charitable donations Employees volunteered 34,000+ hours Note: Third party trademarks are the property of their respective owners and are included for informational purposes onl
Slide 28: Align with Society
Align with Society We will actively participate in resolving societal concerns that are relevant to our businesses.
Slide 29: Note: Third party trademarks are the property of their respective owners and are included
Note: Third party trademarks are the property of their respective owners and are included for informational purposes only.
Slide 30: In 2013, we invested more than $21 million in Success360°
In 2013, we invested more than $21 million in Success360°. Note: Third party trademarks are the property of their respective owners and are included for informational purposes only.
Slide 31: Underage Tobacco Use
Underage Tobacco Use 17.0% National Survey on Drug Use and Health (% of 12 to 17 year olds reporting past 30-day tobacco use) 15.2% 13.0% 8.6% Tobacco Products 6.6% Cigarettes 4.5% Cigars 2.6% 2.0% 2.1% Smokeless Tobacco 0.0% 2002 2012 Source: Results from the 2012 National Survey on Drug Use and He
Slide 32: Preventing Youth Access in E-Vapor
Preventing Youth Access in E-Vapor All tobacco and nicotine-containing products should have a minimum purchase age of 18 Encouraged FDA and states to enact such requirements FDA issued proposed regulations including minimum purchase age of 18
Slide 33: PhilipMorrisUSA Quit Assist
PhilipMorrisUSA Company Company Cigarettes > Products ‘Smoking & Disease in Smokers Responsibility 4p Morris USA agrees withthe overwhelming medical and scientfic consens: aretie smolang Causes hing cancer heat disease emphysema and 0 » Careers» Media» Social r1 Ls Quit Assist* Information Resource
Slide 34: Environmental Stewardship
Environmental Stewardship
Slide 35: Reducing Environmental Impact
Reducing Environmental Impact Helped restore 1.3 billion gallons of water in river basins near Ste. Michelle Wine Estates’ vineyards Replacing boilers to reduce greenhouse gas emissions and costs More than 500,000 adult smokers signed up to reduce cigarette litter
Slide 36: Corporate Responsibility
Corporate Responsibility We welcome the opportunity to work on issues relevant to our businesses.
Slide 37: External Recognition
External Recognition 2nd consecutive year Ranked #30 among “most community-minded companies” 4th year on list of 100 Best Corporate “Noteworthy Companies Citizens for Diversity” Note: Third party trademarks are the property of their respective owners and are included for informational purposes only.
Slide 38: Satisfy Adult Consumers
Satisfy Adult Consumers We will convert our deep understanding of adult tobacco and wine consumers into better and more creative products that satisfy their preferences.
Slide 39: Brand images removed
This space is blank because brand images which appeared in the original presentation have been removed.
Slide 40: Marlboro Long-Term Retail Share Growth
Marlboro Long-Term Retail Share Growth 50 43.7% 0 1954 1959 1964 1969 1974 1979 1984 1989 1994 1999 2004 2009 2013 Source: Maxwell; MSAi Shipments; IRI/Capstone – Total Retail Panel; IRP IRI Group/Capstone Projected Retail Panel; IRI/MSAi
Slide 41: Brand images removed
This space is blank because brand images which appeared in the original presentation have been removed.
Slide 42: OF xk & x
OF xk & x MEN OPENHAGEN aN - r% GOD r
Slide 43: Brand images removed
This space is blank because brand images which appeared in the original presentation have been removed.
Slide 44: Combined Retail Share Growth
Combined Retail Share Growth +2.8pp 50.7% 47.9% 2010 2013 Source: IRI InfoScan
Slide 45: Ste. Michelle Wine Estates 90+ Ratings
Ste. Michelle Wine Estates 90+ Ratings 221 193 187 159 2010 2011 2012 2013 Source: Altria company reports
Slide 46: Innovative Tobacco Products
Innovative Tobacco Products We are focused on: Meeting evolving preferences Developing potentially lower-risk products
Slide 47: MarkTen Launch
Launched MarkTen in Indiana and Arizona MarkTen rolling national launch begins in June Nu Mark’s long-term goal is to achieve leadership in the U.S. e-vapor category.
Slide 48: Acquired Green Smoke
Acquired Green Smoke Adding significant e-vapor experience Complementing Nu Mark’s portfolio
Slide 49: Strategic Agreements with PMI
Strategic Agreements with PMI Licensed PMI exclusively to sell Nu Mark’s e-vapor products internationally Received an exclusive U.S. license to commercialize two of PMI’s heated tobacco products
Slide 50: Harm Reduction Engagement
Harm Reduction Engagement Timely evaluation of potentially less harmful products Accurate and scientifically-grounded consumer communication Note: Third party trademarks are the property of their respective owners and are included for informational purposes only.
Slide 51: Compliance and Engagement with FDA
Compliance and Engagement with FDA Facility inspections Audits of marketing programs Presentations Submissions on proposed regulations We will continue to build a long-term constructive relationship with FDA.
Slide 52: Our Mission and Core Strategies
Our Mission is to own and develop financially disciplined businesses that are leaders in responsibly providing adult tobacco and wine consumers with superior branded products. Create Invest in Align with Satisfy Adult Substantial Leadership Society Consumers Value for Shareholders
Slide 53: Q1 2014 Highlights
Q1 2014 Highlights Smokeable, Smokeless and Wine Adjusted Diluted EPS* segments grew key metrics in-line with their strategies: +5.6% - Adjusted OCI $0.57 $0.54 - Adjusted OCI margins - Retail share Q1 2013 Q1 2014 * For reconciliations of non-GAAP to GAAP measures visit www.altria.com. Source: Al
Slide 54: Rewarding Shareholders
Rewarding Shareholders Dividend Yield 4.8% 2.6% 2.0% Altria paid $957 million in dividends and purchased $272 million in shares in Q1 2014. Altria 10-yr UST S&P 500 Note: As of April 30, 2014 Source: Bloomberg
Slide 55: 2014 Guidance
2014 Guidance Altria reaffirms it expects its 2014 full-year adjusted diluted EPS* to increase by 6% to 9% to a range of $2.52 to $2.59 from its 2013 adjusted diluted EPS base of $2.38 per share. *For reconciliation of non-GAAP to GAAP measures visit altria.com Source: Altria company reports
Slide 56: Proposals for Voting
Proposals for Voting Election of Altria’s Board of Directors Ratification of PricewaterhouseCoopers LLP as Altria’s independent registered public accounting firm Business presentation Advisory vote to approve the compensation of Altria’s named executive officers
Slide 57: Executive Compensation
Executive Compensation Executive compensation programs: - Contribute to business results and strong shareholder returns - Align with shareholder interests - Promote Altria’s Mission and business strategies - Reward achievement of corporate and individual performance goals In 2013, more than 95% of
Slide 58: Slide 58
Slide 59: Slide 59
Slide 60: Slide 60
Slide 61: Regulation G Disclosure
Regulation G Disclosure For reconciliations and further explanations of non-GAAP financial measures, visit altria.com