Altria Group, Inc. · NYSE:MO
Altria — 2014 Barclays Back-to-School Conference
64 slides from Altria's conference presentation, Sep 3, 2014
Slide 1: 2014 Barclays Back-to-School Investor Presentation
2014 Barclays Back-to-School Investor Presentation September 3, 2014 For Investor Purposes Only - Barclays Back-to-School Conference, Sept. 3, 2014
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: Management Team Participants
Management Team Participants Howard Willard EVP and Chief Financial Officer, Altria Group Billy Gifford Murray Garnick SVP, Strategy and Business SVP and Assoc. GC, Development, Altria Group Altria Client Services For Investor Purposes Only - Barclays Back-to-School Conference, Sept. 3, 2014
Slide 4: Long-Term Financial Goals
Long-Term Financial Goals Grow adjusted diluted EPS at average annual rate of 7% to 9% Maintain a target dividend payout ratio of approximately 80% of adjusted diluted EPS For Investor Purposes Only - Barclays Back-to-School Conference, Sept. 3, 2014
Slide 5: Altria's Strong Track Record
Altria’s Strong Track Record Adjusted Diluted EPS* Dividend Per Share +7.6% +8.4% CAGR CAGR $2.38 $1.92 $1.65 $1.28 2008 2013 2008 2013 *For reconciliation of non-GAAP to GAAP measures visit altria.com Note: Reflects fourth-quarter declared dividend, annualized Source: Altria company reports For Inv
Slide 6: Dividend Payout Ratio
Dividend Payout Ratio S&P Food, Beverage and Tobacco Index MO 80.9% RAI 79.3% LO 72.8% PM 72.7% KRFT 66.7% KO 58.7% GIS 57.1% PEP 57.1% HSY 52.6% K 50.1% NOTE: Altria’s dividend payout ratio is based on the current annualized dividend (Last increased August 2014) of $2.08 / $2.57 2014 estimated cons
Slide 7: Altria's 2014 Year-to-Date Performance and Guidance
Altria’s 2014 Year-to-Date Performance and Guidance Adjusted Diluted EPS* +5.2% Altria reaffirms it expects its 2014 full-year adjusted $1.16 $1.22 diluted EPS* to increase by 7% to 9% to a range of $2.54 to $2.59 from its 2013 adjusted diluted EPS base of $2.38 per share. 1H 2013 1H 2014 *For recon
Slide 8: Altria's Annualized Dividend
Altria’s Annualized Dividend +8.3% $2.08 $1.92 Aug. 2013 Aug. 2014 Note: Reflects annualized dividend rate at end of period shown. Source: Bloomberg For Investor Purposes Only - Barclays Back-to-School Conference, Sept. 3, 2014
Slide 9: Altria's Strategies
Altria’s Strategies Maximize income from core premium tobacco businesses over the long term Grow new income streams with innovative products Manage diverse income streams and strong balance sheet to deliver consistent financial performance For Investor Purposes Only - Barclays Back-to-School Confere
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This space is blank because brand images which appeared in the original presentation have been removed. For Investor Relations Purposes Only For Investor Purposes Only - Barclays Back-to-School Conference, Sept. 3, 2014
Slide 11: Premium Cigarettes Retail Share of Segment
Premium Cigarettes Retail Share of Segment ~+1.2pp +0.7pp per year 85.4% 85.2% 85.9% 79.6% Marlboro Marlboro Marlboro Marlboro 2008 2013 1H 2013 1H 2014 Source: IRI/MSAi Blended Share (2008 is estimated based on share changes derived from IRI/Capstone IRP Service) For Investor Purposes Only - Barcla
Slide 12: Marlboro's Cigarette Category Leadership
Marlboro’s Cigarette Category Leadership First-Half 2014 Retail Share 43.8% 42.5% Marlboro Marlboro Next 10 Largest Brands Source: IRI/MSAi For Investor Purposes Only - Barclays Back-to-School Conference, Sept. 3, 2014
Slide 13: Cigarette Category Volume Decline Rate Estimates
Cigarette Category Volume Decline Rate Estimates (3)% (3.5)% (4)% (4.5)% 2011 2012 2013 1H 2014 Source: ALCS Estimates For Investor Purposes Only - Barclays Back-to-School Conference, Sept. 3, 2014
Slide 14: Smokeable Products Segment Strategy
Smokeable Products Segment Strategy Maximize income while maintaining modest share momentum on Marlboro and Black & Mild over time. For Investor Purposes Only - Barclays Back-to-School Conference, Sept. 3, 2014
Slide 15: Smokeable Products Segment Adjusted OCI Growth
Smokeable Products Segment Adjusted OCI* Growth $ in Billions +4.2% +4.9% CAGR $6.4 $5.2 $3.1 $3.3 2008 2013 1H 2013 1H 2014 *For reconciliation of non-GAAP to GAAP measures visit altria.com Note: Percentage growth calculated in millions. Source: Altria company reports For Investor Purposes Only - B
Slide 16: Marlboro Retail Share Momentum
Marlboro Retail Share Momentum ~+0.2pp +0.1pp per year 42.9% 43.7% 43.7% 43.8% 2008 2013 1H 2013 1H 2014 Source: Altria company reports For Investor Purposes Only - Barclays Back-to-School Conference, Sept. 3, 2014
Slide 17: Smokeable Products Segment Pricing
Smokeable Products Segment Pricing Revenues Net of Excise Taxes /1000 Units* +5.2% +4.9% CAGR $116.60 $115.52 $121.18 $90.46 2008 2013 1H 2013 1H 2014 *For reconciliation of non-GAAP to GAAP measures visit altria.com Source: Altria company reports For Investor Purposes Only - Barclays Back-to-School
Slide 18: Smokeable Products Segment Cost Management
Smokeable Products Segment Cost Management Controllable Costs /1000 Units* +0.6% +2.0% CAGR $27.81 $28.69 $27.78 $28.33 2008 2013 1H 2013 1H 2014 *For reconciliation of non-GAAP to GAAP measures visit altria.com Source: Altria company reports For Investor Purposes Only - Barclays Back-to-School Conf
Slide 19: Smokeable Products Segment Adjusted OCI Margins
Smokeable Products Segment Adjusted OCI* Margins ~+1.7pp +1.6pp per year 42.5% 44.1% 42.2% 33.8% 2008 2013 1H 2013 1H 2014 *For reconciliation of non-GAAP to GAAP measures visit altria.com Source: Altria company reports For Investor Purposes Only - Barclays Back-to-School Conference, Sept. 3, 2014
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This space is blank because brand images which appeared in the original presentation have been removed. For Investor Purposes Only - Barclays Back-to-School Conference, Sept. 3, 2014
Slide 21: Marlboro 2013 Brand Equity Scores
Marlboro 2013 Brand Equity Scores Age Group: 21 - 54 70 70 0 0 Marlboro A B C D Marlboro 21 - 29 Marlboro 21 - 54 Competitive Brands Source: 2013 TNS Brand Equity Study, April 2014 For Investor Purposes Only - Barclays Back-to-School Conference, Sept. 3, 2014
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This space is blank because brand images which appeared in the original presentation have been removed. For Investor Purposes Only - Barclays Back-to-School Conference, Sept. 3, 2014
Slide 23: Marlboro Digital Engagement
Marlboro Digital Engagement Marlboro.com is among the largest CPG websites in the U.S. based on average number of This space is blank because brand unique adult images which appeared in the original visitors age 21+. presentation have been removed. comScore, 2014 Note: June 2014 Top CPG domain compa
Slide 24: Video
Video This space is blank because brand images which appeared in the original presentation have been removed. For Investor Purposes Only - Barclays Back-to-School Conference, Sept. 3, 2014
Slide 25: Mobile Value Delivery
Mobile Value Delivery This space is blank because brand images which appeared in the original presentation have been removed. For Investor Purposes Only - Barclays Back-to-School Conference, Sept. 3, 2014
Slide 26: Marlboro Long-Term Retail Share Growth
Marlboro Long-Term Retail Share Growth 50 43.8% 0 1954 1959 1964 1969 1974 1979 1984 1989 1994 1999 2004 2009 1st Half 2014 Source: Maxwell; MSAi Shipments; IRI/Capstone – Total Retail Panel; IRP IRI Group/Capstone Projected Retail Panel; IRI/MSAi For Investor Purposes Only - Barclays Back-to-School
Slide 27: Estimated Smokeless Category Growth Rates
Estimated Smokeless Category Growth Rates % Volume Growth 10 ~7% ~7% ~5.5% ~5% ~5% ~4.5% 0 2009 2010 2011 2012 2013 June 2014* * Based on 52 weeks ending June 29, 2014 Source: ALCS Estimates For Investor Purposes Only - Barclays Back-to-School Conference, Sept. 3, 2014
Slide 28: Smokeless Products Segment Strategy
Smokeless Products Segment Strategy Increase income by growing volume at or ahead of the category growth rate, while maintaining modest share momentum on Copenhagen and Skoal combined For Investor Purposes Only - Barclays Back-to-School Conference, Sept. 3, 2014
Slide 29: Smokeless Products Segment Adjusted OCI Growth
Smokeless Products Segment Adjusted OCI* Growth $ in Millions +12.9% +6.5% CAGR $1,026 $632 $492 $524 2009 2013 1H 2013 1H 2014 *For reconciliation of non-GAAP to GAAP measures visit altria.com Source: Altria company reports For Investor Purposes Only - Barclays Back-to-School Conference, Sept. 3, 2
Slide 30: Copenhagen and Skoal's Combined Retail Share
Copenhagen and Skoal’s Combined Retail Share ~+0.9pp +0.3pp per year 50.7% 50.7% 51.0% 47.3% 2009 2013 1H 2013 1H 2014 Source: Altria company reports For Investor Purposes Only - Barclays Back-to-School Conference, Sept. 3, 2014
Slide 31: 2013 Brand Equity Scores
2013 Brand Equity Scores Age Group: 21 - 54 70 0 Copenhagen Skoal A B C Competitive Brands Source: 2013 TNS Brand Equity Study, April 2014 For Investor Purposes Only - Barclays Back-to-School Conference, Sept. 3, 2014
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This space is blank because brand images which appeared in the original presentation have been removed. For Investor Purposes Only - Barclays Back-to-School Conference, Sept. 3, 2014
Slide 33: Skoal Classic Average C-Store Price Gaps
Skoal Classic Average C-Store Price Gaps Versus leading discount brand ~55% ~45% 2013 Q2 2014 Source: IRI Info Scan Smokeless 2014 – C-Stores, as of 06/29/14 For Investor Purposes Only - Barclays Back-to-School Conference, Sept. 3, 2014
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This space is blank because brand images which appeared in the original presentation have been removed. For Investor Purposes Only - Barclays Back-to-School Conference, Sept. 3, 2014
Slide 35: Copenhagen Retail Share of Smokeless
Copenhagen Retail Share of Smokeless +1.7pp +1.5pp per year 29.3% 30.4% 28.9% 22.5% 2009 2013 1H 2013 1H 2014 Source: Altria company reports For Investor Purposes Only - Barclays Back-to-School Conference, Sept. 3, 2014
Slide 36: Ste. Michelle Wine Estates Adjusted OCI
Ste. Michelle Wine Estates Adjusted OCI* $ in Millions +12.8% +11.1% CAGR $118 $73 $45 $50 2009 2013 1H 2013 1H 2014 * For reconciliations of non-GAAP to GAAP measures visit www.altria.com Source: Altria company reports For Investor Purposes Only - Barclays Back-to-School Conference, Sept. 3, 2014
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This space is blank because brand images which appeared in the original presentation have been removed. For Investor Purposes Only - Barclays Back-to-School Conference, Sept. 3, 2014
Slide 38: Altria's Strategies
Altria’s Strategies Maximize income from core premium tobacco businesses over the long term Grow new income streams with innovative products Manage diverse income streams and strong balance sheet to deliver consistent financial performance For Investor Purposes Only - Barclays Back-to-School Confere
Slide 39: Enhancing Marketplace Insights
Enhancing Marketplace Insights Changing Adult New Trade Consumer Evolving Products Channels Preferences Declining cigarette Dollar stores e-Vapor products volume - Disposable Vape shops Growth in - Rechargeable smokeless volume e-Commerce - Tank devices Heat-not-burn Rapid growth in
Slide 40: U.S. e-Vapor Dollar Sales Estimates
U.S. e-Vapor Dollar Sales Estimates $ in Billions ~40% growth rate +160% $1.8 growth rate $1.3 $0.5 2012 2013 June 2014 YTD Annualized Estimate Sources: ALCS estimates, Aug. 2014 For Investor Purposes Only - Barclays Back-to-School Conference, Sept. 3, 2014
Slide 41: e-Vapor Dynamics Among Adult Smokers and Vapers
e-Vapor Dynamics Among Adult Smokers and Vapers 97% 59% Awareness Trial Prevalence rates are based to total Past 7 Days adult cigarette smokers. Source: ALCS research (May & June 2014) For Investor Purposes Only - Barclays Back-to-School Conference, Sept. 3, 2014
Slide 42: U.S. Adult Tobacco Consumer Expenditures
U.S. Adult Tobacco Consumer Expenditures $ in Billions ~$85 $1.8 e-Vapor (2014 Est.) Total Tobacco (2013 Est.) Source: ALCS estimates For Investor Purposes Only - Barclays Back-to-School Conference, Sept. 3, 2014
Slide 43: e-Vapor Product Offerings
e-Vapor Product Offerings This space is blank because brand images which appeared in the original presentation have been removed. Note: Third party trademarks are the property of their respective owners and are included for informational purposes only. For Investor Purposes Only - Barclays Back-to-S
Slide 44: This space is blank because brand images which appeared in the original presentation have
This space is blank because brand images which appeared in the original presentation have been removed. For Investor Purposes Only - Barclays Back-to-School Conference, Sept. 3, 2014
Slide 45: MarkTen National Expansion
MarkTen National Expansion 60,000 stores Source: NuMark LLC, August 2014 ; Altria company reports For Investor Purposes Only - Barclays Back-to-School Conference, Sept. 3, 2014
Slide 46: MarkTen Retail Share Performance
MarkTen Retail Share Performance MarkTen is among the top 3 e-Vapor brands Source: IRITobacco Derived Nicotine – MOC as of August 2014 For Investor Purposes Only - Barclays Back-to-School Conference, Sept. 3, 2014
Slide 47: MarkTen National Expansion
MarkTen National Expansion Broad eastern U.S. expansion will begin in October Source: Nu Mark For Investor Purposes Only - Barclays Back-to-School Conference, Sept. 3, 2014
Slide 48: MarkTen Product Expansion
MarkTen Product Expansion This space is blank because brand images which appeared in the original presentation have been removed. For Investor Purposes Only - Barclays Back-to-School Conference, Sept. 3, 2014
Slide 49: Nu Mark's Product Pipeline
Nu Mark’s Product Pipeline Nu Mark acquired Green Smoke in April 2014 - Attractive technology and supply chain Nu Mark is building a product pipeline with offerings to complement current MarkTen e-vapor products For Investor Purposes Only - Barclays Back-to-School Conference, Sept. 3, 2014
Slide 50: Altria Strategic Agreements with PMI
Altria Strategic Agreements with PMI Altria has access to PMI’s heat-not-burn tobacco products PMI preparing for commercial tests of iQOS/Platform 1 outside the U.S. We are collaborating with PMI for Modified-Risk Tobacco Product application to be submitted to FDA This space is blank because b
Slide 51: Comments on Deeming Regulation
Comments on Deeming Regulation Submitted comments to FDA in August 2014 FDA has unprecedented opportunity to reduce the harm associated with cigarette use For Investor Purposes Only - Barclays Back-to-School Conference, Sept. 3, 2014
Slide 52: Comments on Deeming Regulation
Comments on Deeming Regulation We urged FDA to implement a regulatory framework for newly deemed tobacco products that: - Is grounded in science and evidence - Recognizes the differences between categories of tobacco products - Respects the rights of adult tobacco consumers to make informed choice
Slide 53: Encouraging Innovation
Encouraging Innovation Support manufacturers’ efforts to bring potentially reduced-risk products to market by: - Allowing manufacturers to rely on products on the market at the time FDA finalizes its deeming rule to support new product applications - Establishing an accelerated authorization proce
Slide 54: Preparing for the Future
Preparing for the Future Evolving adult consumer preferences Changing marketplace New regulation For Investor Purposes Only - Barclays Back-to-School Conference, Sept. 3, 2014
Slide 55: Altria's Strategies
Altria’s Strategies Maximize income from core premium tobacco businesses over the long term Grow new income streams with innovative products Manage diverse income streams and strong balance sheet to deliver consistent financial performance For Investor Purposes Only - Barclays Back-to-School Confere
Slide 56: SABMiller Delivers Strong Income Growth
SABMiller Delivers Strong Income Growth Adjusted Equity Earnings* - $ in Millions Market Value - $ in Billions +13.1% CAGR $23.5 $1,022 $552 $7.3 2008 2013 December 2008 July 31, 2014 *For reconciliation of non-GAAP to GAAP measures visit altria.com Source: Altria company reports Source: Bloomberg F
Slide 57: Returning Cash To Shareholders
Returning Cash To Shareholders $ in Billions $23.7 Share Repurchase Dividend 2008 to 1H 2014 Note: Includes dividends paid and share repurchases since spin-off of PMI in March 2008. Source: Altria company reports For Investor Purposes Only - Barclays Back-to-School Conference, Sept. 3, 2014
Slide 58: Altria's Strong Dividend
Altria’s Strong Dividend Current Yield 4.9% 2.4% 2.0% Altria 10-yr UST S&P 500 Note: As of August 22, 2014 Source: Bloomberg For Investor Purposes Only - Barclays Back-to-School Conference, Sept. 3, 2014
Slide 59: New Share Repurchase Program
New Share Repurchase Program July 2014, Altria’s Board of Directors authorized a new $1 billion share repurchase program Expect to complete program by end of 2015 Dividends and share repurchases are subject to the discretion of Altria’s Board of Directors For Investor Purposes Only - Barclays
Slide 60: Altria's Goals & Strategies
Altria’s Goals & Strategies Grow adjusted diluted EPS at average annual Long-term rate of 7% to 9% target Financial Goals Maintain a target dividend payout ratio of approximately 80% of adjusted diluted EPS Maximize income from core premium tobacco businesses over the long term Grow new inco
Slide 61: Total Shareholder Return
Total Shareholder Return 1/2009 – 12/2013 1/2014 – 8/22/2014 245% 131% 128% 13.7% 7.8% 9.0% Altria Group S&P Food, S&P 500 Altria Group S&P Food, S&P 500 Beverage Beverage and Tobacco and Tobacco Index Index Note: Assumes reinvestment of dividends as of the ex-dividend date. Source: Bloomberg Daily
Slide 62: Altria IR App
Altria IR App Note: Third party trademarks are the property of their respective owners and are included for informational purposes only. For Investor Purposes Only - Barclays Back-to-School Conference, Sept. 3, 2014
Slide 63: For Investor Purposes Only - Barclays Back-to-School Conference, Sept. 3, 2014
For Investor Purposes Only - Barclays Back-to-School Conference, Sept. 3, 2014
Slide 64: Regulation G Disclosure
Regulation G Disclosure For reconciliations and further explanations of non-GAAP financial measures, visit: altria.com For Investor Purposes Only - Barclays Back-to-School Conference, Sept. 3, 2014
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