Altria Group, Inc. · NYSE:MO
Altria — Q2 2019 Earnings Presentation
25 slides from Altria's earnings presentation, Jul 30, 2019
Slide 1: Altria's Second-Quarter 2019 Earnings Conference Call
Altria’s Second-Quarter 2019 Earnings Conference Call July 30, 2019 = Altria
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: Adjusted Diluted EPS
Adjusted Diluted EPS* +8.9% +2.0% 1.10 $1.01 § $1.96 $2.00 Q2 2018 Q2 2019 H1 2018 H1 2019 * For reconciliations of non-GAAP to GAAP measures visit altria.com. = Altria For Investor Purposes ONLY 3
Slide 4: Altria's Enhanced Business Platform
Altria’s Enhanced Business Platform Combustible Tobacco Portfolio a Marla Marlboro Leading cigarette brand AY = Black & Mild we Leading L tipped cigar brand . | Cigarette Parl Portfolio Highly profitable niche brands Non-Combustible Tobacco Brands & Investments Copenhagen Leading MST brand IQOS Glob
Slide 5: Smokeable Products Segment
Smokeable Products Segment Adjusted OCI* ($ in millions) +11.0% +5.7% $4,418 $4,181 $2,427 $2,186 Q2 2018 Q2 2019 1H 2018 1H 2019 * For reconciliations of non-GAAP to GAAP measures visit altria.com. = Altria For Investor Purposes ONLY 5
Slide 6: Smokeable Products Segment
Smokeable Products Segment California SET 43.8 436 433 432 433 433 432 431 431 433 Q1 2017! Q2 2017 Q3 2017 Q4 2017 Q12018 Q2 2018 Q3 2018 042018 Q12019 Q2 2019 Source: IRI/MSAi InfoScan Cigarette 2019 - Blended, as of 6/30/19 a “ Altria For Investor Purposes ONLY 6
Slide 7: Deep Discount Branded Discount
Deep Discount Branded Discount 10 30 0 0
Slide 8: H1 2019: Smokeable Products Segment
H1 2019: Smokeable Products Segment PM USA Estimated Wholesale Inventories (in billions) 1H 2018 1H 2019 -0.4 +01 Q4 2017 Q2 2018 Q4 2018 Q2 2019 Source: ALCS CMI estimates = Altria For Investor Purposes ONLY
Slide 9: Cigarette Industry Decline Rate Estimates
Cigarette Industry Decline Rate Estimates Annual Estimates Quarterly Estimates Qi Q2 Q3 Q4 QI Q2 2014 2015 2016 2017 2018 2018 2018 2018 2018 2019 2019 (0.5)% (2.5)% (3.5)% (4)% (4.5)% )% (5)% (5)% (6)% H1 2019 (5.5)% (5.5)% Source: ALCS CMI estimates - rounded to nearest 0.5% a 9 = Altria For Inves
Slide 10: Cigarette Industry Volume Decomposition Estimates
Cigarette Industry Volume Decomposition Estimates Last 12 Months | Last 12 Months ending 3/31/19 | ending 6/30/19 Secular Decline Rate* (2.5)% (2.5)% Additional Cross Category Movement (e-vapor & other) (0.5)% (1.3)% Total Secular Decline Rate (3.0)% (3.8)% Macroeconomic & Other Factors (0.3)% (01)%
Slide 11: Smokeable Products Segment Performance Over Time
Smokeable Products Segment Performance Over Time Cigarette Industry Adjusted Smokeable Products Segment (8)% , Volume Decline Estimates Adjusted OCI* Growth 5.7% (5.5)% 5.2% 0% - 2014-2018 CAGR H119 vs H118 2014-2018 CAGR) ~—-H119 vs H118 Source: ALCS CMI estimates - rounded to nearest 0.5% * For re
Slide 12: Smokeless Products Segment
Smokeless Products Segment Adjusted OCI* ($ in millions) +10.8% +9.4% $789 $721 $422 $381 Q2 2018 Q2 2019 1H 2018 1H 2019 * For reconciliations of non-GAAP to GAAP measures visit altria.com. = Altria For Investor Purposes ONLY 12
Slide 13: Smokeless Products Segment
Smokeless Products Segment 348 30 2. 34.3 342 342 343 343 345 ; 33.4 Q12017 Q2 2017 Q32017 Q42017 Q12018 Q2 2018 Q3 2018 Q42018 Q12019 Q2 2019 Source: IRIInfoScan Smokeless 2019, as of 6/30/19 a 4 Altria For Investor Purposes ONLY
Slide 14: on! Transaction
on! Transaction = Agreement to acquire 80% ownership of certain companies that commercialize on! oral nicotine pouches worldwide. = on! offers a broad portfolio of 35 SKUs. = Transaction expected to close in the second half of 2019. = AGDC began expanding retail availability of on! in July through a
Slide 15: IQOS FDA and Commercialization Plan Update
IQOS FDA and Commercialization Plan Update = First NGP to receive FDA pre-market authorization = Expect the first QOS store to open in Atlanta in September Alkthird party trademarks remain the property of their respective owners. Gly Altria For Investor Purposes ONLY 15
Slide 16: IQOS Mobile Retail Unit
!QOS Mobile Retail Unit = 5 aT Alkthird party trademarks remain the property of their respective owners. For Investor Purposes ONLY 16
Slide 17: E-Vapor Category Growth
E-Vapor Category Growth Adult Vapers in Millions Past 30-Day Usage, 12 Month Moving 20 7 Vapers Who Also Smoke Cigarettes 51 m@ Vapers Who Do Not Smoke Cigarettes : 13.8 12.9 12.2 10.4 2014 2015 2016 2017 2018 June 2019 Source: ATCT Jul 2013 to June 2019 Note: LA+ :, Altria For Investor Purposes ONL
Slide 18: 2.0 2.0 0.0 0.0 0.0 2013 2014 2015 2016 2017 2018 1H 2018 1H
2.0 2.0 0.0 0.0 0.0 2013 2014 2015 2016 2017 2018 1H 2018 1H 2019
Slide 19: Q2 2019: JUUL E-Vapor Category Share
Q2 2019: JUUL E-Vapor Category Share Across Open and Closed Systems and All Trade Channels ~48% -44% ~33% FY 2018 Q1 2019 Q2 2019 Source: ALCS CMI estima’ | MOC; STARS; Capstone; & comScore, ATCT. Note: Share based on voli xd to cartridges (1 disposable = 1 cartridge = ImL e- liquid), estimated cé i
Slide 20: E-Vapor Category Share Flavor %
E-Vapor Category Share Flavor % (excluding Tobacco, Menthol & Mint) of total Q2 2019 Cartridge Shipments to Retail 87% 74% 62% JUUL Vuse Alto MyBlu Intense NJOY Ace EONSMOKE For Investor Purposes ONLY 20
Slide 21: JUUL's International Expansion and Portfolio
JUUL’s International Expansion and Portfolio = JUUL recently expanded into new markets including: = Canada = France =" Germany = Israel = Italy = Russia = Spain = Altria Switzerland United Kingdom Ireland South Korea Austria Philippines
Slide 22: Percentage of U.S. Population with a Legal Age of Purchase 21 Law
Percentage of U.S. Population with a Legal Age of Purchase 21 Law 52% Bipartisan federal =2019 legislation has been introduced to raise the legal age to purchase = Before Solo NR tobacco to 21. % of U.S. Population Data as of 7/26/2019 Note: Before 2 By Altria = i Pending: Pennsylvania, Michigan, Rh
Slide 23: Regulatory Update
Regulatory Update = In July, a federal court in Maryland revised PMTA deadlines for new tobacco products on the market as of August 8, 2016 to May 2020. = According to the court order, new products for which applications have not been filed within this period will be subject to FDA enforcement discr
Slide 24: Q2 2019 Summary and Guidance
Q2 2019 Summary and Guidance = Our 2019 plans are on-track. = Industry is changing rapidly as adult consumers adopt new products with the potential for lower risk. « First-half dynamics validate our long-standing strategy to support FDA regulation and invest in a leading portfolio of non-combustible
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