Altria Group, Inc. · NYSE:MO
Altria — Q4 2018 Earnings Presentation
19 slides from Altria's earnings presentation, Jan 31, 2019
Slide 1: Altria's Fourth-Quarter 2018 Earnings Conference Call
Altria’s Fourth-Quarter 2018 Earnings Conference Call January 31, 2019 ALCS l Q4/FY 2018 Earnings Call l 1.31.19 l 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: Safe Harbor Statement (Cont.)
Safe Harbor Statement (Cont.) disrupting Altria, JUUL or their respective management; and risks relating to the effect of the announcement of the transaction on JUUL’s ability to retain and hire key personnel or on its relationships with customers, suppliers and other third parties. Likewise, risks
Slide 4: Financial Performance
Financial Performance 2018 Performance Long-term Performance 2017 2018 2007 2018 +9.2% +9.7% +17.7% +21.2% CAGR CAGR $3.99 $3.99 $3.39 $3.20 $3.20 $2.64 $1.51 $1.16 Adjusted Diluted Dividend Per Adjusted Diluted Dividend Per EPS* Share EPS* Share * For reconciliations of non-GAAP to GAAP measures vi
Slide 5: Cigarette Category Decline Rates
Cigarette Category Decline Rates 2013 2014 2015 2016 2017 2018 (0.5)% (2.5)% (3.5)% (4.0)% (4.0)% (4.5)% Source: ALCS CMI estimates – rounded to nearest 0.5% ALCS l Q4/FY 2018 Earnings Call l 1.31.19 l For Investor Purposes ONLY 5
Slide 6: Cigarette Industry Volume Decomposition
Cigarette Industry Volume Decomposition 2017 2018 2019 E Secular Decline Rate* -2.5% -2.5% Additional Cross Category Movement (e-vapor & other) -0.2% -0.4% Total Secular Decline Rate -2.7% -2.9% Macroeconomic & Other Factors (including Gas Prices) 0.0% -0.5% Cigarette Price Elasticity -1.3% -1.1% Es
Slide 7: JUUL Performance
JUUL Performance JUUL Volume Category Share Refill Kit Pods (in Millions) +~600% 473 ~34% ~7% 68 ~3% ~2% 2017 2018 JUUL Vuse Blu Logic Note: Excludes starter kit pods. Note: Market share based on annual theoretical volume equivalized to cartridges (1 disposable = 1 cartridge = 1mL e-liquid) Source:
Slide 8: E-Vapor Category Growth
E-Vapor Category Growth (Estimated Annual Equivalized Volume, in billions of EQ units) 1.5 JUUL 1.1 1.1 0.5 1.0 1.0 0.1 0.6 0.0 2013 2014 2015 2016 2017 2018 Note: Volume equivalized to cartridges (1 disposable = 1 cartridge = 1mL e-liquid) Source: ALCS CMI estimates based on: IRI MOC; STARS; Capsto
Slide 9: JUUL's International Opportunity
JUUL’s International Opportunity 2018 Global E-Vapor and Heat-not-Burn Sales Estimate Currently in 8 International Markets ($, in billions) Canada Global UK $23 B France $17 Switzerland Italy Germany $6 Russia Israel North America International Note: International excludes China Sour
Slide 10: JUUL's Early International Performance
JUUL’s Early International Performance Canada United Kingdom Dollar Share of E-Vapor in Stores Selling JUUL (weekly) 100% JUUL Vype JUUL recently became the Other #1 e-vapor brand in the 62% Sainsbury’s chain with a dollar share in excess of 38% 23%, less than 12 weeks after launch. 0% 9/8/18 10/6/1
Slide 11: JUUL ― Altria's Key Transaction Assumptions
JUUL ― Altria’s Key Transaction Assumptions U.S. E-Vapor Category Growth: 15%-20% five-year CAGR JUUL continues to be the primary driver of e-vapor growth U.S. operating margin grows to that of current U.S. cigarettes in five years International revenue equal to domestic revenue by 2023 In
Slide 12: Addressing the Youth Vaping Epidemic
Addressing the Youth Vaping Epidemic JUUL has announced significant actions - Stopped shipping flavored products other than tobacco, menthol and mint products to retail - Enhanced 21+ online age-verification process on its website - Developing 21+ restricted distribution system for retailers - Sto
Slide 13: IQOS
IQOS Excited about the prospects for heat-not-burn in the U.S. Fully committed to IQOS’ success and excited to deploy our robust commercialization plans upon FDA authorization Establishing brick-and-mortar stores including in multiple cities within the first year of launch Already hired pers
Slide 14: Cronos Investment
Cronos Investment Delivers on key adjacency considerations including accretion to long-term financial performance and synergy with Altria’s capabilities Global sales estimates for 2028 range from $40 billion to more than $250 billion depending on legalization Cronos has unique capabilities to
Slide 15: Summary
Summary 2018 was a transformative year for the company - Stabilized Marlboro’s share - Made strategic investments in rapidly growing categories - Significant earnings and dividend growth We believe our strategic investments have strengthened our long-term financial profile allowing us to deliver
Slide 16: 2019 Guidance
2019 Guidance We expect to deliver full-year 2019 adjusted diluted EPS of $4.15 to $4.27. This range represents a growth rate of 4% to 7% from a 2018 adjusted diluted base of $3.99 ALCS l Q4/FY 2018 Earnings Call l 1.31.19 l For Investor Purposes ONLY 16
Slide 17: Long-term Financial Goals
Long-term Financial Goals We maintain our long-term financial goals to grow adjusted diluted EPS at an average annual rate of 7% to 9% and to maintain a dividend payout ratio target of approximately 80% of adjusted diluted EPS ALCS l Q4/FY 2018 Earnings Call l 1.31.19 l For Investor Purposes ONLY
Slide 18: ALCS l Q4/FY 2018 Earnings Call l 1.31.19 l For Investor Purposes ONLY
ALCS l Q4/FY 2018 Earnings Call l 1.31.19 l For Investor Purposes ONLY 18
Slide 19: Regulation G Disclosure
Regulation G Disclosure BM auia About Altria. Harm Reduction _ Responsibility Reducing Risk. Expanding Choice. Developing Products that Could be Lower Risk > Offering Adult Smokers More Choices > Responsibly Leading our Industry Forward > Press Releases > ‘Altria to Host Webcast to Discuss Atria's I