Altria Group, Inc. · NYSE:MO
Altria — Q4 2019 Earnings Presentation
30 slides from Altria's earnings presentation, Jan 30, 2020
Slide 1: Altria's Fourth-Quarter 2019 Earnings Conference Call
Altria’s Fourth-Quarter 2019 Earnings Conference Call January 30, 2020 ALCS I Q4/FY 2019 Earnings Call I 01.30.20 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: 2019 Adjusted Diluted EPS & Dividends Per Share
2019 Adjusted Diluted EPS* & Dividends Per Share Adjusted Diluted EPS Dividends Per Share +5.8% +5.0% $3.99 $4.22 $3.20 $3.36 2018 2019 2018 2019 * For reconciliations of non-GAAP to GAAP measures visit altria.com. Note: reported annualized dividend per share based on latest declared dividend ALCS I
Slide 4: Maximizing Profitability in Core Tobacco
Maximizing Profitability in Core Tobacco In 2019, the Smokeable and Smokeless Segments each: Delivered high single digit adjusted OCI Expanded adjusted OCI margins Maintained strength on leading premium brands ALCS I Q4/FY 2019 Earnings Call I 01.30.20 I For Investor Purposes ONLY 4
Slide 5: Core Tobacco Adjusted OCI & OCI Margin Growth
Core Tobacco Adjusted OCI* & OCI Margin* Growth Smokeable & Smokeless Product Segments Adjusted OCI ($ in billions) Adjusted OCI Margins $10.8 56.5% $9.9 $9.9 52.8% 52.6% $9.2 48.8% 49.7% $8.8 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 * For reconciliations of non-GAAP to GAAP measures visit
Slide 6: 2019 Strong Results
2019 Strong Results Exceeded our $575 million cost reduction target Made significant progress advancing and building our noncombustible business platform Successfully advocated for Tobacco 21 ALCS I Q4/FY 2019 Earnings Call I 01.30.20 I For Investor Purposes ONLY 6
Slide 7: JUUL Investment Update
JUUL Investment Update We’ve reached an agreement with JUUL to continue providing regulatory affairs services, including supporting JUUL’s efforts to prepare and submit its PMTA filings by May 2020 but we will discontinue all other services by the end of March 2020. We are committed to helping J
Slide 8: 2019 National Move to 21
2019 National Move to 21 January Altria Launches National Campaign July Half of U.S. Population governed by Tobacco 21 state laws December Congress enacts federal legislation ALCS I Q4/FY 2019 Earnings Call I 01.30.20 I For Investor Purposes ONLY 8
Slide 9: IQOS
IQOS 100+ Trained IQOS Professionals All-third party trademarks remain the property of their respective owners. ALCS I Q4/FY 2019 Earnings Call I 01.30.20 I For Investor Purposes ONLY 9
Slide 10: IQOS 3.0
IQOS 3.0 IQOS 2.4 Device (currently authorized) IQOS 3.0 Device (planned submission) All-third party trademarks remain the property of their respective owners. ALCS I Q4/FY 2019 Earnings Call I 01.30.20 I For Investor Purposes ONLY 10
Slide 11: on! Oral Nicotine Pouches
on! Oral Nicotine Pouches Expect to submit PMTAs by May Expect to begin manufacturing in Richmond this quarter Launching enhanced packaging this quarter Currently sold nationally in 15,000 stores, including 3 of the top 5 chains All-third party trademarks remain the property of their respect
Slide 12: Accounting Methodology for Investment in JUUL
Accounting Methodology for Investment in JUUL Upon antitrust clearance, Altria expects to account for its equity investment in JUUL using the fair value option. Altria’s income statement will include any cash dividends received from the investment and quarterly changes in the fair value of the i
Slide 13: Revised 2020-2022 Growth Objective
Revised 2020-2022 Growth Objective We don’t currently expect to receive equity earnings contributions from JUUL over the next three years. We revise our compounded annual adjusted diluted EPS* growth objective to 4% to 7% for the years 2020 through 2022. * For reconciliations of non-GAAP to GAAP
Slide 14: 2020 Guidance
2020 Guidance We expect to deliver full-year 2020 adjusted diluted EPS* of $4.39 to $4.51. This range represents a growth rate of 4% to 7% from a 2019 adjusted diluted base of $4.22. * For reconciliations of non-GAAP to GAAP measures visit altria.com. ALCS I Q4/FY 2019 Earnings Call I 01.30.20 I For
Slide 15: Altria's Enhanced Business Platform
Altria’s Enhanced Business Platform Combustible Noncombustible Tobacco Complementary Tobacco Portfolio Brands & Investments Assets Marlboro Copenhagen Leading Leading MST brand cigarette brand Top 10 domestic wine producer Black & Mild IQOS Leading Global heated tobacco leader tipped cigar brand (U.
Slide 16: Smokeable Products Segment
Smokeable Products Segment Adjusted OCI & OCI Margins* ($ in millions) Adjusted OCI Adjusted OCI Margins +8.6% +3.9pp $9,173 54.5% $8,449 50.6% 2018 2019 2018 2019 * For reconciliations of non-GAAP to GAAP measures visit altria.com. ALCS I Q4/FY 2019 Earnings Call I 01.30.20 I For Investor Purposes
Slide 17: Smokeable Products Segment
Smokeable Products Segment Marlboro Retail Share 43.2 43.2 43.1 Q4 2017 FY 2018 FY 2019 Source: IRI/MSAi InfoScan Cigarette 2019 – Blended, as of 12/29/19 ALCS I Q4/FY 2019 Earnings Call I 01.30.20 I For Investor Purposes ONLY 17
Slide 18: Cigarette Industry Decline Rate Estimates
Cigarette Industry Decline Rate Estimates Annual Estimates Quarterly Estimates Q3 Q4 Q1 Q2 Q3 Q4 2014 2015 2016 2017 2018 2019 2018 2018 2019 2019 2019 2019 (0.5)% (2.5)% (3.5)% (4.0)% (4.5)% (4.5)% (4.5)% (4.5)% (5.0)% (5.5)% (5.5)% (6.0)% Source: ALCS CMI estimates – rounded to nearest 0.5% Note:
Slide 19: Cigarette Industry Volume Decomposition Estimates
Cigarette Industry Volume Decomposition Estimates 2017 2018 2019 -2.5% -2.5% -2.5% -1.3% -1.1% -1.2% -0.2% -0.5% -0.4% (4.0%) 1 -2.0% (4.5%) 2 (5.5%) 3 Secular Decline Cigarette Price Elasticity Macroeconomic & Other Factors Additional Cross Category Movement Our 2020 U.S. cigarette industry volume
Slide 20: Discount Category Retail Share Dynamics
Discount Category Retail Share Dynamics Discount Category (%) PM USA Discount (%) Deep Discount Branded Discount 30 10 25.0 24.7 24.4 23.8 23.7 23.8 24.2 18.3 15.9 15.5 18.1 17.7 17.0 16.5 4.1 4.4 4.6 4.6 4.4 4.2 3.8 7.2 7.9 8.7 6.7 6.6 6.7 6.8 0 0 2013 2014 2015 2016 2017 2018 2019 2013 2014 2015 2
Slide 21: Black & Mild Strength
Black & Mild Strength ALCS I Q4/FY 2019 Earnings Call I 01.30.20 I For Investor Purposes ONLY 21
Slide 22: Smokeless Products Segment
Smokeless Products Segment Adjusted OCI & OCI Margins* ($ in millions) Adjusted OCI Adjusted OCI Margins +9.7% +3.0pp 71.7% $1,606 68.7% $1,464 2018 2019 2018 2019 * For reconciliations of non-GAAP to GAAP measures visit altria.com. ALCS I Q4/FY 2019 Earnings Call I 01.30.20 I For Investor Purposes
Slide 23: Smokeless Products Segment
Smokeless Products Segment Copenhagen Retail Share 34.8 34.5 34.0 2017 2018 2019 Source: IRI/MSAi InfoScan 2019 – Blended, as of 12/29/19 ALCS I Q4/FY 2019 Earnings Call I 01.30.20 I For Investor Purposes ONLY 23
Slide 24: E-Vapor Category Growth
E-Vapor Category Growth Estimated Equivalized Volume (in billions of units) Quarterly Estimates 4Q 2019 Category ∆ 8% Q/Q Decline 0.7 3% YOY Growth JUUL 0.50 0.51 0.46 0.45 0.47 0.42 0.36 0.32 0.0 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 JUUL’s estimated market share of the E-
Slide 25: JUUL Performance
JUUL Performance Estimated Equivalized Volume Share of Category 47 48 44 44 42 Q4 '18 Q1 '19 Q2 '19 Q3 '19 Q4 '19 Source: ALCS CMI estimates Note: Share based on volume equivalized to cartridges (1 disposable = 1 cartridge = 1mL e-liquid) Estimated category volume and share are subject to revisions
Slide 26: JUUL Q4 2019 Impairment
JUUL Q4 2019 Impairment We’ve recorded an additional $4.1 billion impairment to our JUUL investment, primarily driven by the increased number of legal cases pending against JUUL and the expectation that the number of legal cases against JUUL will continue to increase. Since October 31, 2019, law
Slide 27: Strategic Cannabis Investment
Strategic Cannabis Investment All-third party trademarks remain the property of their respective owners. ALCS I Q4/FY 2019 Earnings Call I 01.30.20 I For Investor Purposes ONLY 27
Slide 28: Complementary Alcohol Assets
Complementary Alcohol Assets All-third party trademarks remain the property of their respective owners. ALCS I Q4/FY 2019 Earnings Call I 01.30.20 I For Investor Purposes ONLY 28
Slide 29: Capital Allocation
Capital Allocation We repurchased $500 million in shares in the fourth quarter. We have $500 million remaining in the current authorized repurchase program, which we expect to complete by the end of 2020. Current annualized dividend is $3.36 per share; represents 6.8% yield*. *As of January 27
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