Altria Group, Inc. · NYSE:MO
Altria — Q3 2023 Earnings Presentation
29 slides from Altria's earnings presentation, Oct 26, 2023
Slide 1: Altria's Third-Quarter and Nine-Months 2023 Earnings Conference Call
Altria’s Third-Quarter and Nine-Months 2023 Earnings Conference Call October 26, 2023 1 | ALCS | Q3 2023 | 10.26.23 | 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 Nine Months Results
First Nine Months Results Adjusted Diluted Earnings Per Share (EPS)* Cash Returned to Shareholders +3.3% $5.7 B $0.7 B Share Repurchases $3.78 $3.66 $5.0 B Dividends Nine Months Ended Nine Months Ended Nine Months Ended Sept. 30, 2023 Sept. 30, 2022 Sept. 30, 2023 *For reconciliations of non-GAAP to
Slide 4: Agenda
Agenda Our progress with NJOY The state of the e-vapor category The encouraging third-quarter results from on! An update on consumer and industry dynamics Financial results and outlook for the remainder of 2023 4 | ALCS | Q3 2023 | 10.26.23 | For Investor Purposes ONLY | Final
Slide 5: NJOY – Growing the Business Responsibly & Sustainably
NJOY – Growing the Business Responsibly & Sustainably 5 | ALCS | Q3 2023 | 10.26.23 | For Investor Purposes ONLY | Final
Slide 6: NJOY – Initial Progress
NJOY – Initial Progress Strengthened NJOY’s supply chain Improved inventory conditions in stores and are actively working to close remaining inventory gaps Grew distribution of NJOY ACE (ACE) to ~42,000 stores ACE is now distributed in all the top-25 convenience store chains by e-vapor volum
Slide 7: NJOY – Fourth Quarter 2023
NJOY – Fourth Quarter 2023 Continue to expect ACE expansion to reach 70,000 stores by year-end, representing ~70% of e-vapor volume and ~55% of cigarette volume* Further enhancements to visibility and product fixture space at retail Sell-in period for NJOY’s Retail Trade Program Beginning to
Slide 8: NJOY – Moving into 2024
NJOY – Moving into 2024 Consumer engagement strategies will focus on: informing adult vapers and smokers of ACE’s attributes, such as battery capacity and pod size relative to other leading brands generating trial and growing brand loyalty Launch of NJOY’s new brand equity campaign 8 | ALCS
Slide 9: State of the E-Vapor Market
State of the E-Vapor Market Despite recent actions by the U.S. Food & Drug Administration (FDA), enforcement has been inadequate and ineffective We believe the FDA has the tools necessary to bring order to the market We are actively engaged with regulators, state and federal lawmakers, our tra
Slide 10: U.S. Oral Tobacco Category and on! Shipment Volume
U.S. Oral Tobacco Category and on! Shipment Volume Oral Tobacco Industry Volume Growth on! Shipment Volume (estimates, six months ended) (cans in millions) +36.7% 5.0% 28.7 21.0 3.0% 0.0% 9/30/2021 (0.5)% 9/30/2022 9/30/2023 Q3 '22 Q3 '23 Source: ALCS CMII Estimates. Rounded to the nearest 0.5%. Ora
Slide 11: Improved Profitability and Continued Brand Adoption
Improved Profitability and Continued Brand Adoption on! Increase in Retail Price per Can on! Retail Sales Volume (cans in millions) Estimated Repeat Purchase Estimated Trial 29 52% 5 20 33% 3 24 17 Q2 '23 v. Q3 '23 Q3 '22 v. Q3 '23 Q3 '22 Q3 '23 Source: CMII Estimates based on Circana Projected (MOC
Slide 12: on! Share Growth
on! Share Growth on! Share of Oral Tobacco Category (total U.S.) +1.7pp 6.9 5.2 Q3 '22 Q3 '23 Source: Circana Info Scan Oral Tobacco 2023 – MOC WE 10/01/23 12 | ALCS | Q3 2023 | 10.26.23 | For Investor Purposes ONLY | Final
Slide 13: on! PLUS
on! PLUS Our New Tobacco-Derived Nicotine Wet Pouch Product “The pouch is unique and not like anything else on the market.” “It’s one of the best nicotine pouches I’ve tried! Will definitely “I really like the on! buy again.” PLUS concept… I think it will be my daily oral product.” Source: CMII adul
Slide 14: 14 | ALCS | Q3 2023 | 10.26.23 | For Investor Purposes ONLY |
14 | ALCS | Q3 2023 | 10.26.23 | For Investor Purposes ONLY | Final
Slide 15: Consumer and Industry Dynamics
Consumer and Industry Dynamics Adjusted Cigarette Industry Decline Rates Q1 '22 Q2 '22 Q3 '22 Q4 '22 Q1 '23 Q2 '23 Q3 '23 (6.5)% (7.5)% (8.0)% (8.0)% (8.5)% (9.0)% (9.0)% Increase in Gas Prices Increased Macroeconomic Factors & Additional Cross Category Movement Source: ALCS CMII estimates – rounded
Slide 16: Cigarette Industry Volume Decomposition Estimates
Cigarette Industry Volume Decomposition Estimates Twelve Months Ended 12/31/22 3/31/23 6/30/23 9/30/23 Secular Decline Rate1 (2.5)% (2.5)% (2.5)% (2.5)% Cigarette Price Elasticity2 (2.0)% (2.0)% (1.9)% (1.9)% Macroeconomic, Additional Cross (3.5)% (4.0)% (4.1)% (4.1)%3 Category Movement & Other Fact
Slide 17: Smokeable Products Segment
Smokeable Products Segment Adjusted Operating Companies Income* (OCI) Q3: Adjusted OCI First Nine Months: Adjusted OCI ($ in millions) ($ in millions) (2.5)% +0.2% $8,123 $8,142 $2,812 $2,741 Q3 '22 Q3 '23 Nine Months Ended Nine Months Ended Sept. 30, 2022 Sept. 30, 2023 *For reconciliations of non-
Slide 18: Smokeable Products Segment
Smokeable Products Segment Adjusted OCI Margins* Q3: Adjusted OCI Margins First Nine Months: Adjusted OCI Margins +0.7pp +0.9pp 58.9% 59.6% 59.2% 60.1% Q3 '22 Q3 '23 Nine Months Ended Nine Months Ended Sept. 30, 2022 Sept. 30, 2023 *For reconciliations of non-GAAP to GAAP measures visit altria.com.
Slide 19: PM USA Revenue Growth Management
PM USA Revenue Growth Management Marlboro Retail Share 42.3 42.0 Q2 '23 Q3 '23 Source: Circana Info Scan Cigarette 2023 – Blended WE 10/01/2023 Marlboro retail share for the second quarter of 2023 was revised to 42.0 from 42.1, based upon the most recent periodic data refresh from Circana. 19 | ALCS
Slide 20: Share of Premium Segment
Share of Premium Segment Marlboro All Other PM USA BAT ITG ∆ vs. YAGO 6.6 6.7 6.7 6.5 6.5 (0.1)pp 31.8 31.7 31.6 31.7 31.4 (0.4)pp 3.1 3.2 3.2 3.2 3.2 +0.1pp 58.5 58.4 58.5 58.6 58.9 +0.4pp Q3 '22 Q4 '22 Q1 '23 Q2 '23 Q3 '23 Source: Circana Info Scan Cigarette 2023 – Blended WE 10/01/2023 20 | ALCS
Slide 21: Discount Retail Share
Discount Retail Share Branded Discount (Major Manufacturers) Deep Discount (All Other) 0.0pp 27.7 28.2 28.2 28.2 27.1 15.4 15.5 15.4 15.3 15.3 11.8 12.3 12.7 12.8 12.9 Q3 '22 Q4 '22 Q1 '23 Q2 '23 Q3 '23 Source: Circana Info Scan Cigarette 2023 – Blended WE 10/01/2023 21 | ALCS | Q3 2023 | 10.26.23 |
Slide 22: Adjusted Cigarette Decline Rates
Adjusted Cigarette Decline Rates Smokeable Products Segment Total Industry Q3 '22 Q3 '23 Q3 '22 Q3 '23 (8.0)% (8.0)% (10.0)% (10.0)% 9M: (10.5)% 9M: (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 23: John Middleton Cigars
John Middleton Cigars Reported Shipment Volume +4.2% 1,361 1,306 Nine Months Ended Nine Months Ended Sept. 30, 2022 Sept. 30, 2023 23 | ALCS | Q3 2023 | 10.26.23 | For Investor Purposes ONLY | Final
Slide 24: Q3 2023 Oral Tobacco Products Segment
Q3 2023 Oral Tobacco Products Segment Adjusted OCI* and Adjusted OCI Margins* Adjusted OCI Adjusted OCI Margins ($ in millions) +7.1% +2.9pp $455 69.3% 66.4% $425 Q3 '22 Q3 '23 Q3 '22 Q3 '23 *For reconciliations of non-GAAP to GAAP measures visit altria.com. 24 | ALCS | Q3 2023 | 10.26.23 | For Inve
Slide 25: Oral Tobacco Products Segment
Oral Tobacco Products Segment Retail Share MST + Snus on! 46.3 5.2 42.1 6.9 41.1 35.2 Q3 '22 Q3 '23 Source: Circana Info Scan Oral Tobacco 2023 - MOC, WE 10/01/23 25 | ALCS | Q3 2023 | 10.26.23 | For Investor Purposes ONLY | Final
Slide 26: Creating Long-Term Shareholder Value
Creating Long-Term Shareholder Value Cash Returned to Shareholders Raised our dividend per share by 4.3%, in-line with our new progressive dividend goal $1.9 B 58th dividend increase in the last 54 years Share $0.3 B Repurchases $268 million remaining under our current share repurchase program
Slide 27: Financial Outlook
Financial Outlook We are narrowing our full-year 2023 guidance range Expect to deliver adjusted diluted EPS* in a range of $4.91 to $4.98 This range represents a growth rate of 1.5% to 3% from a base of $4.84 in 2022 *For reconciliations of non-GAAP to GAAP measures visit altria.com. 27 | ALCS
Slide 28: Connect & Transform
Connect & Transform Open Innovation to Support Altria’s Existing Capabilities Subject Matter Expertise New Technologies Disruptive Innovations 28 | ALCS | Q3 2023 | 10.26.23 | For Investor Purposes ONLY | Final
Slide 29: 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.