Altria Group, Inc. · NYSE:MO
Altria — Q3 2022 Earnings Presentation
36 slides from Altria's earnings presentation, Oct 27, 2022
Slide 1: Altria's Third-Quarter 2022 Earnings Conference Call
Altria’s Third-Quarter 2022 Earnings Conference Call October 27, 2022 1 | ALCS | Q3 2022 | 10.27.22 | 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: Responsibly lead the transition of adult smokers to a smoke free future
Responsibly lead | i the transition of adult SMOkers . to. a smoke: free future. Moving beyond smoking”
Slide 4: IQOS Agreement with Philip Morris International
IQOS Agreement with Philip Morris International Last week we entered into an agreement with Philip Morris International under which we will receive $2.7 billion in cash exchange for assigning our exclusive US. Commercialization rights to the IQOS System at the end of April 2024. All third-party trad
Slide 5: Global Smoke-Free Partnership
Global Smoke-Free Partnership All third-party trademarks remain the property of their respective owners. 5 | ALCS | Q3 2022 | 10.27.22 | For Investor Purposes ONLY | Final
Slide 6: Horizon Innovations Key Terms
Horizon Innovations Key Terms Commercial Financial Both parties will combine their scientific and PM USA has a 75% economic interest in regulatory expertise to jointly prepare PMTA Horizon, with JT having 25%. filings for the latest version of Ploom Heated Tobacco Stick (HTS) products. The parti
Slide 7: JT HTS Products
JT HTS Products JT launched Ploom X last year in Japan and since its introduction, JT’s share of the Japanese HTS segment has doubled. According to JT’s research, consumers perceive Ploom X as a stylish, credible and unique brand. JT also markets Ploom HTS products in three European countries.
Slide 8: Consumer Centric Product Development
Consumer Centric Product Development There are millions of adult smokers interested in innovative, inhalable products. Consumer Early-Stage We receive more consumer data on their Data & Regulatory preferences, purchasing patterns and friction Insights Alignment points than we ever have. We hav
Slide 9: Heated Tobacco Portfolio & Consumer Insights
Heated Tobacco Portfolio & Consumer Insights We believe heated tobacco products can appeal to smokers interested in innovative, inhalable products with real tobacco without the social friction associated with cigarettes. Ploom HTS Products Internal Development HTC Products Heated Tobacco Sticks (HTS
Slide 10: 10 | ALCS | Q3 2022 | 10.27.22 | For Investor Purposes ONLY |
10 | ALCS | Q3 2022 | 10.27.22 | For Investor Purposes ONLY | Final
Slide 11: E-Vapor Category Volume
E-Vapor Category Volume Estimated Equivalized Volume (in billions of units) Q3 2022 Category ∆ Quarterly Estimates Flat Q/Q (4%) Y/Y JUUL Balance 0.54 0.51 0.52 0.52 0.49 0.50 0.50 0.50 0.50 0.46 0.46 0.44 0.44 0.40 Q2 '19 Q3 '19 Q4 '19 Q1 '20 Q2 '20 Q3 '20 Q4 '20 Q1 '21 Q2 '21 Q3 '21 Q4 '21 Q1 '22
Slide 12: E-Vapor Update
E-Vapor Update We previously disclosed that we have exercised our option to be released from our non-compete obligations. While we retain our 35% economic stake in JUUL, we are exploring all options to build an FDA authorized portfolio of e-vapor products that will help smokers transition away fro
Slide 13: Oral Nicotine Pouch (ONP) Category Growth
Oral Nicotine Pouch (ONP) Category Growth Share of total U.S. oral tobacco category ONP Share +6.5pp 22.7 16.2 Q3 '21 Q3 '22 Source: IRI InfoScan Oral Tobacco MOC, WE 10/02/22 13 | ALCS | Q3 2022 | 10.27.22 | For Investor Purposes ONLY | Final
Slide 14: 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.) 5.2 4.9 +68% 21.0 4.1 3.8 3.0 12.5 Q3 '21 Q3 '22 Q3 '21 Q4 21 Q1 '22 Q2 '22 Q3 '22 Source: IRI InfoScan Oral Tobacco MOC, WE 10/02/22 14 | ALCS | Q3 2022 | 10.27.22 |
Slide 15: New on! Rewards Program
New on! Rewards Program 15 | ALCS | Q3 2022 | 10.27.22 | For Investor Purposes ONLY | Final
Slide 16: 2022 National Youth Tobacco Survey Results
2022 National Youth Tobacco Survey Results Current E-Vapor Use Among Middle & Usual Brand Used Among Middle &High High School Students Combined School E-Cigarette Users, 2022 30 20 14.5 20.0 12.5 Percentage (%) Percentage (%) 9.4 5.5 4.0 1.1 0 0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Slide 17: Leveraging Our Existing Scale & Infrastructure
Leveraging Our Existing Scale & Infrastructure 17 | ALCS | Q3 2022 | 10.27.22 | For Investor Purposes ONLY | Final
Slide 18: Macroeconomic Headwinds
Macroeconomic Headwinds Monthly Consumer Price Index Weekly Retail Gasoline Prices (∆ Year-over-Year) ($ per Gallon) $5.50 10% 9.1% $5.11 8.2% $3.83 1% $2.00 Apr-21 Feb-21 Mar-21 May-21 Oct-21 Feb-22 Mar-22 Apr-22 May-22 Jan-21 Jun-21 Jul-21 Nov-21 Dec-21 Aug-21 Sep-21 Jan-22 Jun-22 Jul-22 Aug-22 Se
Slide 19: Adult Tobacco Consumer Brand Loyalty
Adult Tobacco Consumer Brand Loyalty % Stick to My Preferred Brand Regardless of Price Tobacco Alcohol Groceries Household Items Source: Adult Tobacco Consumer Pulse Survey October 2022. N=550. % of Adult Tobacco Consumers 21+ surveyed who selected “stick to my preferred brand(s) regardless of price
Slide 20: Macroeconomic Trends
Macroeconomic Trends Wage Growth by Occupation 14% (Q3 2022 vs. Q3 2021) 11.5% 8.3% Average CPI Growth 6.9% Average Wage Growth 7.6% 7.6% 6.6% 6.1% 4.6% 4.1% 2.4% 2.1% 0.2% 0% Farming, Financial Maintenance Administrative Professional Transportation Production Construction Sales Service Fishing & Se
Slide 21: Adjusted Diluted Earnings Per Share (EPS)
Adjusted Diluted Earnings Per Share (EPS)* Q3: Adjusted Diluted EPS First Nine Months: Adjusted Diluted EPS +4.9% +4.0% $3.66 $3.52 $1.28 $1.22 Q3 2021 Q3 2022 Nine Months Ended Nine Months Ended Sept. 30, 2021 Sept. 30, 2022 *For reconciliations of non-GAAP to GAAP measures visit altria.com. 21 | A
Slide 22: Smokeable Products Segment
Smokeable Products Segment Adjusted Operating Companies Income* (OCI) Q3: Adjusted OCI First Nine Months: Adjusted OCI ($ in millions) ($ in millions) +1.8% +2.6% $7,920 $8,123 $2,761 $2,812 (0.4) Q3 2021 Q3 2022 Nine Months Ended Nine Months Ended Sept. 30, 2021 Sept. 30, 2022 *For reconciliations
Slide 23: Smokeable Products Segment
Smokeable Products Segment Adjusted OCI Margins* Q3: Adjusted OCI Margins First Nine Months: Adjusted OCI Margins +0.9pp +1.2pp 58.0% 58.9% 58.0% 59.2% (0.4) Q3 2021 Q3 2022 Nine Months Ended Nine Months Ended September 30,2021 September 30,2022 *For reconciliations of non-GAAP to GAAP measures visi
Slide 24: Q3 Adjusted Cigarette Decline Rates
Q3 Adjusted Cigarette Decline Rates Smokeable Segment Total Industry Q3 2021 Q3 2022 Q3 2021 Q3 2022 (6.5%) (7.0)% (8.0%) (10.0%) Source: ALCS CMII estimates – rounded to nearest 0.5% Note: Estimates are subject to revision due to wholesaler resubmission of inventory data 24 | ALCS | Q3 2022 | 10.27
Slide 25: Adjusted Cigarette Industry Decline Rates
Adjusted Cigarette Industry Decline Rates (First Nine Months ended Sept. 30, 2018-2022) 2018 2019 2020 2021 2022 5 yr Average 0.0% (4.5%) (4.5%) (5.0%) (5.5%) (7.5%) Source: ALCS CMII estimates – rounded to nearest 0.5% Note: Estimates are subject to revision due to wholesaler resubmission of invent
Slide 26: Discount Retail Share
Discount Retail Share Branded Discount Deep Discount Start of Lower Mobility and Gov’t Stimulus Support Increased Mobility, Inflation and Gas Prices Pandemic /Lower Gov’t Stimulus Support 27.1 26.1 26.4 26.4 25.4 25.1 25.2 25.4 25.1 25.5 24.8 15.0 15.2 15.3 14.8 14.9 15.3 15.1 14.9 14.8 14.9 14.7 10
Slide 27: Marlboro Retail Share
Marlboro Retail Share Start of Lower Mobility and Gov’t Stimulus Support Increased Mobility, Inflation and Gas Prices Pandemic 43.1 /Lower Gov’t Stimulus Support 43.1 43.0 43.0 43.0 42.5 42.6 42.6 42.6 42.7 42.6 Q1 '20 Q2 '20 Q3 '20 Q4 '20 Q1 '21 Q2 '21 Q3 '21 Q4' 21 Q1 '22 Q2 '22 Q3 '22 Source: IRI
Slide 28: Cigarette Share Change By Brand
Cigarette Share Change By Brand (Q1 ’20 vs. Q3 ’22) Virginia Slims & Marlboro Parliament Newport Camel Natural American Spirit Winston & Kool 0.3 0.1 0.1 (0.3) (0.7) (1.0) Source: IRI/MSAi InfoScan – Blended, WE 10/02/22 28 | ALCS | Q3 2022 | 10.27.22 | For Investor Purposes ONLY | Final
Slide 29: Premium Cigarette Brand Retail Share
Premium Cigarette Brand Retail Share Marlboro Share of Premium Segment 58.4% 57.7% Q3 2021 Q3 2022 Source: IRI/MSAi InfoScan – Blended, WE 10/02/22 29 | ALCS | Q3 2022 | 10.27.22 | For Investor Purposes ONLY | Final
Slide 30: John Middleton Cigars
John Middleton Cigars Reported Shipment Volume (in millions) 3.3% 425 439 Q3 2021 Q3 2022 30 | ALCS | Q3 2022 | 10.27.22 | For Investor Purposes ONLY | Final
Slide 31: Oral Tobacco Products Segment
Oral Tobacco Products Segment Adjusted OCI* Q3: Adjusted OCI First Nine Months: Adjusted OCI 4.9% (3.4%) $1,306 $1,262 $405 $425 Q3 2021 Q3 2022 First Nine Months Ended First Nine Months Ended Sept. 30, 2021 Sept. 30, 2022 *For reconciliations of non-GAAP to GAAP measures visit altria.com. 31 | ALCS
Slide 32: Oral Tobacco Industry Volume Growth Estimates
Oral Tobacco Industry Volume Growth Estimates Six Months Ended 7.0% 6.5% 6.0% 5.0% 5.0% 3.0% 2.0% 1.5% 0.0% 6/30/2020 9/30/2020 12/31/2020 3/31/2021 6/30/2021 9/30/2021 12/31/2021 3/31/2022 9/30/2022 (0.5)% Source: ALCS CMII Estimates - rounded to the nearest 0.5% Oral Tobacco industry includes MST,
Slide 33: Oral Tobacco Products Segment Retail Share
Oral Tobacco Products Segment Retail Share MST + Snus on! 47.7 47.6 46.9 46.7 46.2 3.0 3.8 4.1 4.9 5.2 44.7 43.8 42.8 41.8 41.0 Q3 '21 Q4 '21 Q1 '22 Q2 '22 Q3 '22 Source: IRI/MSAi InfoScan Oral Tobacco 2022 – MOC, WE 10/02/22 33 | ALCS | Q3 2022 | 10.27.22 | For Investor Purposes ONLY | Final
Slide 34: ABI Investment
ABI Investment All third-party trademarks remain the property of their respective owners. 34 | ALCS | Q3 2022 | 10.27.22 | For Investor Purposes ONLY | Final
Slide 35: Creating Long-Term Shareholder Value
Creating Long-Term Shareholder Value Cash Returned to Shareholders 2022 Guidance* We are narrowing our full-year 2022 guidance $6.4 B and now expect to deliver adjusted diluted Guidanc $5.8 B $1.5 B e EPS in a range of $4.81 to $4.89. This Share $1.0 B Repurchases represents a growth rate of 4.5% to
Slide 36: Moving toward a new day.
| Moving toward a new day.