Altria Group, Inc. · NYSE:MO
Altria — Q3 2020 Earnings Presentation
28 slides from Altria's earnings presentation, Oct 30, 2020
Slide 1: Altria's Third-Quarter 2020 Earnings Conference Call
Altria’s Third-Quarter 2020 Earnings Conference Call October 30, 2020 ALCS I Q3 2020 Earnings Call I 10.30.20 I For Investor Purposes ONLY 1
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: Strong Tobacco Business Performance…
Strong Tobacco Business Performance… Smokeable & Oral Tobacco Smokeable & Oral Tobacco Adjusted OCI* ($ in billions) Adjusted OCI Margins* +9.1% +2.0pp $3.3 57.2% 59.2% $3.0 Q3 2019 Q3 2020 Q3 2019 Q3 2020 *For reconciliations of non-GAAP to GAAP measures visit altria.com. ALCS I Q3 2020 Earnings Ca
Slide 4: …And Steady Progress Against Our Vision
…And Steady Progress Against Our Vision All-third party trademarks remain the property of their respective owners. ALCS I Q3 2020 Earnings Call I 10.30.20 I For Investor Purposes ONLY 4
Slide 5: Adjusted Diluted Earnings Per Share
Adjusted Diluted Earnings Per Share* -% +5.6% $3.37 $3.19 $1.19 $1.19 Q3 2019 Q3 2020 Nine Months Ended Nine Months Ended Sept. 30, 2019 Sept. 30, 2020 *For reconciliations of non-GAAP to GAAP measures visit altria.com. ALCS I Q3 2020 Earnings Call I 10.30.20 I For Investor Purposes ONLY 5
Slide 6: Q3 Adult Tobacco Consumer (ATC) Influences
Q3 Adult Tobacco Consumer (ATC) Influences Discretionary income changes ▪ An increasing number of Americans, including many ATCs, faced economic hardships by the end of the third quarter ▪ Non-tobacco discretionary spending (e.g. gas and entertainment) remained below pre-pandemic levels, helping off
Slide 7: Smokeable Products Segment
Smokeable Products Segment Adjusted OCI* ($ in millions) +9.9% +10.5% $7,723 $6,986 $2,568 $2,823 Q3 2019 Q3 2020 Nine Months Ended Nine Months Ended Sept. 30, 2019 Sept. 30, 2020 * For reconciliations of non-GAAP to GAAP measures visit altria.com. ALCS I Q3 2020 Earnings Call I 10.30.20 I For Inves
Slide 8: Adjusted Cigarette Volume Decline Rate Estimates
Adjusted Cigarette Volume Decline Rate Estimates Smokeable Products Segment Total Industry Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2019 2019 2019 2019 2020 2020 2020 2019 2019 2019 2019 2020 2020 2020 1.0% 0% (1.0)% (2.0)% (2.0)% 2020 YTD = (3.5)% 0% 2020 YTD = (4.5)% (4.5)% (2.0)% (5.5)% (6.0)% (
Slide 9: Smokeable Products Segment: Marlboro Retail Share
Smokeable Products Segment Marlboro Retail Share 45 43.3 43.4 43.3 43.3 43.1 42.8 42.8 35 Q1 '19 Q2 '19 Q3 '19 Q4 '19 Q1 '20 Q2 '20 Q3 '20 Source: IRI/MSAi InfoScan Cigarette 2020 – Blended, as of 09/27/20 ALCS I Q3 2020 Earnings Call I 10.30.20 I For Investor Purposes ONLY 9
Slide 10: Discount Segment Retail Share
Discount Segment Retail Share 30 24.3 24.2 24.8 24.6 24.3 23.7 23.6 23.8 15.3 15.1 14.9 15.4 17.6 16.5 15.9 17.0 8.8 9.5 9.5 9.4 6.7 6.7 7.1 7.9 0 FY FY FY FY FY Q1 Q2 Q3 '15 '16 '17 '18 '19 '20 '20 '20 Sources: ALCS CMI Estimates; IRI Unify Note: Estimates are subject to revision based on IRI datab
Slide 11: Our 10-Year Vision: Responsibly Lead The Transition of Adult Smokers to a Noncombustible Future
Our 10-Year Vision: Responsibly Lead The Transition of Adult Smokers to a Noncombustible Future To achieve our vision, we will... ▪ Lead the industry in operating responsibly and preventing underage use of adult products ▪ Develop and expand our portfolio of FDA–authorized, noncombustible products a
Slide 12: Our Unmatched Oral Tobacco Portfolio
Our Unmatched Oral Tobacco Portfolio ALCS I Q3 2020 Earnings Call I 10.30.20 I For Investor Purposes ONLY 12
Slide 13: Increasing on! Retail Store Count
Increasing on! Retail Store Count In Thousands 60 56 40 28 15 9 - Q3 '19* Q4 '19 Q1' 20 Q2 '20 Q3 '20 In stores with distribution, on! achieved a retail share of 2.1% of the oral tobacco category in the first nine months of 2020 *Transaction closed in August 2019 ALCS I Q3 2020 Earnings Call I 10.30
Slide 14: Strong Trade Partnerships Drive on! Trial
Strong Trade Partnerships Drive on! Trial ▪ Helix continues to test different trial generating promotions and has benefitted from strong trade partnerships ▪ In the third quarter, Helix tested promotions using retailer platforms ▪ We believe these tests were highly successful as they generated signi
Slide 15: September 9th PMTA Deadline
September 9th PMTA Deadline ▪ The September 9th deadline for PMTA submissions represented an important milestone in the regulatory process for the e-vapor category ▪ We believe it’s important that e-vapor remain an alternative for adult smokers and believe that a sustainable e-vapor category will be
Slide 16: E-Vapor Category Volume
E-Vapor Category Volume Estimated Equivalized Volume (in billions of units) Quarterly Estimates Category ∆ vs. YAGO 0.7 Q3: (13)% YTD: (13)% 0.50 0.51 0.46 0.47 0.44 0.44 0.40 0.0 Q1 '19 Q2 '19 Q3 '19 Q4 '19 Q1 '20 Q2 '20 Q3 '20 Source: ALCS CMI estimates Note: Share based on volume equivalized to c
Slide 17: Q3 JUUL Investment Update
Q3 JUUL Investment Update ▪ In preparing our Q3 financial statements, we performed a valuation analysis on our investment in JUUL, which considered both its international prospects and current U.S. e-vapor category dynamics ▪ As a result, we’ve recorded a $2.6 billion impairment to our JUUL investme
Slide 18: IQOS MRTP Marketing Communications
IQOS MRTP Marketing Communications All-third party trademarks remain the property of their respective owners. ALCS I Q3 2020 Earnings Call I 10.30.20 I For Investor Purposes ONLY 18
Slide 19: Enhanced IQOS Engagement & Trial Options
Enhanced IQOS Engagement & Trial Options Mobile Video Chat* Expanded Device Availability All-third party trademarks remain the property of their respective owners. * The mobile video chat option is only available for age-verified adult tobacco consumers ALCS I Q3 2020 Earnings Call I 10.30.20 I For
Slide 20: 2020 Full-Year Adjusted Diluted EPS Guidance
2020 Full-Year Adjusted Diluted EPS* Guidance ▪ We’re narrowing our full-year 2020 adjusted diluted EPS guidance due to: ▪ our year-to-date performance and ▪ insight into an additional quarter of equity earnings contributions from ABI ▪ We now expect to deliver full-year 2020 adjusted diluted EPS* o
Slide 21: Smokeable Products Segment: Adjusted OCI Margins
Smokeable Products Segment Adjusted OCI Margins* +2.2pp +2.5pp 57.5% 56.9% 55.3% 54.4% Q3 2019 Q3 2020 Nine Months Ended Nine Months Ended Sept. 30, 2019 Sept. 30, 2020 * For reconciliations of non-GAAP to GAAP measures visit altria.com. ALCS I Q3 2020 Earnings Call I 10.30.20 I For Investor Purpose
Slide 22: John Middleton Cigars
John Middleton Cigars ALCS I Q3 2020 Earnings Call I 10.30.20 I For Investor Purposes ONLY 22
Slide 23: Oral Tobacco Products Segment
Oral Tobacco Products Segment Adjusted OCI* ($ in millions) +4.3% +8.3% $1,312 $1,211 $422 $440 Q3 2019 Q3 2020 Nine Months Ended Nine Months Ended Sept. 30, 2019 Sept. 30, 2020 * For reconciliations of non-GAAP to GAAP measures visit altria.com. ALCS I Q3 2020 Earnings Call I 10.30.20 I For Investo
Slide 24: Oral Tobacco Products Segment: Adjusted OCI Margins
Oral Tobacco Products Segment Adjusted OCI Margins* +0.6pp +0.1pp 71.9% 72.5% 72.7% 72.8% Q3 2019 Q3 2020 Nine Months Ended Nine Months Ended Sept. 30, 2019 Sept. 30, 2020 * For reconciliations of non-GAAP to GAAP measures visit altria.com. ALCS I Q3 2020 Earnings Call I 10.30.20 I For Investor Purp
Slide 25: Oral Tobacco Products Segment: Q3 2020 Retail Share
Oral Tobacco Products Segment Q3 2020 Retail Share By Company (%) By Brand (%) 49.9 31.8 13.6 Swedish Match BAT Oral Tobacco Skoal Grizzly Copenhagen Products Segment Source: IRI/MSAi InfoScan Cigarette 2020 – Blended, as of 09/27/20 ALCS I Q3 2020 Earnings Call I 10.30.20 I For Investor Purposes ON
Slide 26: Our Alcohol Assets
Our Alcohol Assets All-third party trademarks remain the property of their respective owners. ALCS I Q3 2020 Earnings Call I 10.30.20 I For Investor Purposes ONLY 26
Slide 27: Capital Allocation
Capital Allocation ▪ Our balance sheet remains strong and our core tobacco businesses are highly cash generative ▪ Our current annualized dividend is $3.44 per share, representing a dividend yield of 9.3%1 ▪ Dividends remain our primary vehicle for returning cash to shareholders and our long-term ob
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