Altria Group, Inc. · NYSE:MO
Altria — Q1 2023 Earnings Presentation
26 slides from Altria's earnings presentation, Apr 27, 2023
Slide 1: Altria's First-Quarter 2023 Earnings Conference Call
Altria’s First-Quarter 2023 Earnings Conference Call April 27, 2023 1 | ALCS | Q1 2023 | 04.27.23 | 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: First Quarter 2023 Highlights
First Quarter 2023 Highlights Strong adjusted diluted earnings per share growth of 5.4%*; resilient in-market performance from our leading brands, including Marlboro and Copenhagen, and continued volume and share growth from on!; and announcements made at our Investor Day, including updates on
Slide 4: Macroeconomic Headwinds
Macroeconomic Headwinds Adjusted Cigarette Industry Decline Rates Q1 '22 Q2 '22 Q3 '22 Q4 '22 Q1 '23 (6.5%) (8.0%) (8.5%) (9.0%) (9.0%) Increase in Gas Prices Higher Inflation Source: ALCS SCMI estimates – rounded to nearest 0.5% Note: Estimates are subject to revision due to wholesaler resubmission
Slide 5: Oral Nicotine Pouch (ONP) Category Growth
Oral Nicotine Pouch (ONP) Category Growth Share of total U.S. oral tobacco category ONP Share +7.1pp 26.2 19.1 Q1 '22 Q1 '23 Source: Circana Info Scan Oral Tobacco 2023 - MOC, WE 04/02/23 5 | ALCS | Q1 2023 | 04.27.23 | For Investor Purposes ONLY | Final
Slide 6: 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.) 6.5 +37.7% 5.8 25.2 5.2 4.9 4.1 18.3 Q1 '22 Q1 '23 Q1 '22 Q2 '22 Q3 '22 Q4 '22 Q1 '23 Source: Circana Info Scan Oral Tobacco 2023 – MOC WE 04/02/23 6 | ALCS | Q1 2023
Slide 7: E-Vapor Category Volume
E-Vapor Category Volume Estimated Equivalized Volume (in billions of units) Q1 2023 Category ∆ Quarterly Estimates (1)% Q/Q (11)% Y/Y 0.54 0.51 0.52 0.52 0.49 0.50 0.50 0.50 0.50 0.48 0.48 0.45 0.46 0.46 0.44 0.44 0.40 Q1 '19 Q2 '19 Q3 '19 Q4 '19 Q1 '20 Q2 '20 Q3 '20 Q4 '20 Q1 '21 Q2 '21 Q3 '21 Q4 '
Slide 8: Pending Acquisition of NJOY Holdings, Inc.
Pending Acquisition of NJOY Holdings, Inc. We are excited about our pending acquisition of NJOY and its portfolio of e-vapor products. NJOY is the only company to receive a marketing granted order for a pod-based product. The completion of the NJOY transaction is subject to customary condition
Slide 9: Tobacco Regulatory Update
Tobacco Regulatory Update In February, the U.S. Food and Drug Administration (FDA) provided a response to the Reagan-Udall Foundation’s assessment of FDA’s tobacco operations. We are encouraged that the agency recognizes some important areas for improvement, including: • developing and communicati
Slide 10: Tobacco Regulatory Update (continued)
Tobacco Regulatory Update (continued) We continue to believe that harm-reduction, not prohibition, is the best path forward, and we have made this clear in the public comments we submitted in response to the FDA’s proposed menthol ban. Our comments highlight the many unintended consequences of p
Slide 11: Lack of Enforcement in California
Lack of Enforcement in California All third-party trademarks remain the property of their respective owners. 11 | ALCS | Q1 2023 | 04.27.23 | For Investor Purposes ONLY | Final
Slide 12: Surrounding State Trade Dynamics
Surrounding State Trade Dynamics Nevada Menthol Retail Share (MOC) 37.4 36.5 36.4 36.5 36.4 36.3 36.4 36.3 36.1 36.1 36.1 35.3 34.7 34.8 34.3 34.2 33.8 Q1 '19 Q2 '19 Q3 '19 Q4 '19 Q1 '20 Q2 '20 Q3 '20 Q4 '20 Q1 '21 Q2 '21 Q3 '21 Q4 '21 Q1 '22 Q2 '22 Q3 '22 Q4 '22 Q1 '23 Source: Circana Info Scan Cig
Slide 13: Creating the Conditions for Harm Reduction
Creating the Conditions for Harm Reduction Establish a Market Advocate for Harm of Authorized Address Nicotine Lead the Way on Reduction, Not Reduced-Harm Misperceptions Responsibility Prohibition Products 13 | ALCS | Q1 2023 | 04.27.23 | For Investor Purposes ONLY | Final
Slide 14: 2023 Financial Outlook
2023 Financial Outlook We reaffirm our guidance to deliver 2023 full- year adjusted diluted EPS* in a range of $4.98 to $5.13. This range represents an adjusted diluted EPS growth rate of 3% to 6% from a $4.84 base in 2022. *For reconciliations of non-GAAP to GAAP measures visit altria.com. 14 | ALC
Slide 15: Q1 2023: Smokeable Products Segment
Q1 2023: Smokeable Products Segment Adjusted Operating Companies Income* (OCI) and Adjusted OCI Margins* Adjusted OCI Adjusted OCI Margins ($ in millions) +0.2% +0.9pp 59.5% 60.4% $2,511 $2,515 Q1 '22 Q1 '23 Q1 '22 Q1 '23 *For reconciliations of non-GAAP to GAAP measures visit altria.com. 15 | ALCS
Slide 16: Q1 Adjusted Cigarette Decline Rates
Q1 Adjusted Cigarette Decline Rates Smokeable Segment Total Industry Q1 '22 Q1 '23 Q1 '22 Q1 '23 (6.5%) (8.0)% (9.0%) (11.0%) Source: ALCS CMII estimates – rounded to nearest 0.5% Note: Estimates are subject to revision due to wholesaler resubmission of inventory data 16 | ALCS | Q1 2023 | 04.27.23
Slide 17: Discount Retail Share
Discount Retail Share Branded Discount Deep Discount 27.7 28.2 27.1 26.4 26.4 15.4 15.5 15.0 15.2 15.3 11.4 11.8 12.3 12.7 11.2 Q1 '22 Q2 '22 Q3 '22 Q4 '22 Q1 '23 Source: Circana Info Scan Cigarette 2023 – Blended WE 04/02/2023 17 | ALCS | Q1 2023 | 04.27.23 | For Investor Purposes ONLY | Final
Slide 18: Marlboro Retail Share
Marlboro Retail Share Marlboro Retail Share 42.6 42.0 Q1 '22 Q1 '23 Source: Circana Info Scan Cigarette 2023 – Blended WE 04/02/2023 18 | ALCS | Q1 2023 | 04.27.23 | For Investor Purposes ONLY | Final
Slide 19: Share of Premium Segment
Share of Premium Segment Marlboro All Other PMUSA BAT ITG ∆ vs. YAGO 6.6 6.5 6.6 6.7 6.7 +0.1pp 32.4 32.3 31.8 31.7 31.6 (0.8)pp 3.2 3.1 3.1 3.2 3.2 - +0.7pp 57.8 58.1 58.5 58.4 58.5 Q1 '22 Q2 '22 Q3 '22 Q4 '22 Q1 '23 Source: Circana Info Scan Cigarette 2023 – Blended WE 04/02/2023 19 | ALCS | Q1 20
Slide 20: PM USA Revenue Growth Management
PM USA Revenue Growth Management Illustrative Example* Store Group A Store Group B Lower Promotional Resources Higher *While PM USA makes its various Strategic Options available to all retailers, Altria Group Distribution Company makes store-level recommendations based on that store’s business dynam
Slide 21: California Flavor Ban – Q1 Cigarette Decline Rates
California Flavor Ban – Q1 Cigarette Decline Rates Shipments to Retail PM USA Total Industry Q1 '22 Q1 '23 Q1 '22 Q1 '23 (7.2)% (9.4%) (12.8%) (18.8%) Source: Unify STARS Week Ending 04/02/23 21 | ALCS | Q1 2023 | 04.27.23 | For Investor Purposes ONLY | Final
Slide 22: Q1 2023 Oral Tobacco Products Segment
Q1 2023 Oral Tobacco Products Segment Adjusted OCI* and Adjusted OCI Margins* Adjusted OCI Adjusted OCI Margins +2.2% (0.4pp) $416 69.7% 69.3% $407 Q1 '22 Q1 '23 Q1 '22 Q1 '23 *For reconciliations of non-GAAP to GAAP measures visit altria.com. 22 | ALCS | Q1 2023 | 04.27.23 | For Investor Purposes O
Slide 23: Oral Tobacco Products Retail Share
Oral Tobacco Products Retail Share Oral Tobacco Products Segment Retail Share MST + Snus on! 47.0 45.2 4.1 6.5 42.9 38.7 Q1 '22 Q1 '23 Source: Circana Info Scan Oral Tobacco 2023 - MOC, WE 04/02/23 23 | ALCS | Q1 2023 | 04.27.23 | For Investor Purposes ONLY | Final
Slide 24: Adjusted Equity Earnings From ABI Investment
Adjusted Equity Earnings* From ABI Investment $ in millions +27.7% $180 $141 Q1 '22 Q1 '23 *For reconciliations of non-GAAP to GAAP measures visit altria.com. All third-party trademarks remain the property of their respective owners. 24 | ALCS | Q1 2023 | 04.27.23 | For Investor Purposes ONLY | Fina
Slide 25: Cash Returns to Shareholders
Cash Returns to Shareholders • 2.1x debt-to-EBITDA* ratio as of March 31, 2023. Debt • InGuidance February, we retired $1.3 billion of notes that came due with available cash. • Paid $1.7 billion in dividends in the first quarter. Dividend • Guidance a new progressive dividend goal through 2028. Ann
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