Altria Group, Inc. · NYSE:MO
Altria — Q3 2019 Earnings Presentation
24 slides from Altria's earnings presentation, Oct 31, 2019
Slide 1: Altria's Third-Quarter 2019 Earnings Conference Call
Altria’s Third-Quarter 2019 Earnings Conference Call October 31, 2019 ALCS I Q3 2019 Earnings Call I 10.31.19 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: 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 4: E-Vapor Category Inflection Point
E-Vapor Category Inflection Point We support raising the legal minimum age to purchase all tobacco products to 21 at the federal and state levels. We urge swift action from: The FDA to take appropriate actions regarding flavored e-vapor products The public health authorities to identify the
Slide 5: Heated Tobacco Opportunity
Heated Tobacco Opportunity U.S. Adult Smoker (AS) Population 40% of US adult smokers have tried, Experience with E-Vapor Products but ultimately rejected, e-vapor ~40 million U.S. Adult Smokers products 45% Unlike e-vapor products, the IQOS 15% heated tobacco system: Contains real tobacco 40%
Slide 6: Oral Tobacco is a Compelling Alternative
Oral Tobacco is a Compelling Alternative Communication pending FDA authorization ALCS I Q3 2019 Earnings Call I 10.31.19 I For Investor Purposes ONLY 6
Slide 7: Q3 2019 Adjusted Diluted EPS
Q3 2019 Adjusted Diluted EPS* +10.2% +4.9% $3.04 $3.19 $1.19 $1.08 Q3 2018 Q3 2019 Nine Months Ended Nine Months Ended Sept 30, 2018 Sept 30, 2019 * For reconciliations of non-GAAP to GAAP measures visit altria.com. ALCS I Q3 2019 Earnings Call I 10.31.19 I For Investor Purposes ONLY 7
Slide 8: Smokeable Products Segment
Smokeable Products Segment Adjusted OCI* ($ in millions) +12.6% +8.1% $6,986 $6,462 $2,568 $2,281 Q3 2018 Q3 2019 Nine Months Ended Nine Months Ended Sept 30, 2018 Sept 30, 2019 Smokeable Products segment strategy: Maximize income while maintaining momentum on Marlboro * For reconciliations of non-G
Slide 9: Smokeable Products Segment: Marlboro Retail Share
Smokeable Products Segment Marlboro Retail Share California SET 43.8 43.6 43.3 43.2 43.3 43.3 43.2 43.1 43.1 43.3 43.1 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Source: IRI/MSAi InfoScan Cigarette 2019 – Blended, as of 9/29/19 ALCS I Q3 2019 Earnings Cal
Slide 10: Discount Category Retail Share Dynamics
Discount Category Retail Share Dynamics PM USA Discount (%) Discount Category (%) Deep Discount Branded Discount 10 30 25.0 24.7 24.4 23.8 23.7 23.8 24.1 24.2 24.2 18.3 18.1 17.7 17.0 16.5 15.9 15.6 15.5 15.4 4.4 4.5 4.6 4.4 4.2 3.8 4.1 4.1 4.1 8.5 8.7 8.8 6.7 6.6 6.7 6.8 7.2 7.9 0 0 2013 2014 2015
Slide 11: Cigarette Industry Decline Rate Estimates
Cigarette Industry Decline Rate Estimates Annual Estimates Quarterly Estimates YTD 2014 2015 2016 2017 2018 2019 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2018 2018 2018 2018 2019 2019 2019 (0.5)% (2.5)% (3.5)% (3.5)% (4)% (4.5)% (4.5)% (5)% (5)% (5.5)% (5.5)% (5.5)% (6)% We continue to believe that increased adult smok
Slide 12: E-Vapor Category Growth
E-Vapor Category Growth Adult Vapers 21+ in Millions Past 30-Day Usage, 12 Month Moving 20 13.5 12.6 11.6 10.3 9.2 8.2 4.4 4.8 6.0 4.0 3.3 3.8 0 2014 2015 2016 2017 2018 Sept 2019 Note: Beginning July 2019, ATCT changed from LA+ to 21+. All historical data above represents 21+. Source: ATCT July 201
Slide 13: Cigarette Industry Volume Decomposition Estimates
Cigarette Industry Volume Decomposition Estimates Twelve Months Ending 12/31/2018 3/31/2019 6/30/2019 9/30/2019 -2.5% -2.5% -2.5% -2.5% -1.1% -1.2% -1.1% -1.1% -0.5% -0.3% -0.1% -0.4% -0.5% -1.3% -2.1% (4.5%) (4.5%) (5.0%) 1 (5.5%) 2 Secular Decline Cigarette Price Elasticity Macroeconomic & Other F
Slide 14: Smokeless Products Segment
Smokeless Products Segment Adjusted OCI* ($ in millions) +10.2% +9.7% $1,211 $1,104 $422 $383 Q3 2018 Q3 2019 Nine Months Ended Nine Months Ended Sept 30, 2018 Sept 30, 2019 * For reconciliations of non-GAAP to GAAP measures visit altria.com. ALCS I Q3 2019 Earnings Call I 10.31.19 I For Investor Pu
Slide 15: Smokeless Products Segment: Copenhagen Retail Share
Smokeless Products Segment Copenhagen Retail Share 34.8 35.0 34.5 34.6 34.7 34.3 34.2 34.2 34.3 34.3 33.4 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Source: IRI InfoScan Smokeless 2019, as of 9/29/19 ALCS I Q3 2019 Earnings Call I 10.31.19 I For Investor
Slide 16: JUUL Investment Update
JUUL Investment Update We revised our transaction assumptions due to dramatic shifts in the e-vapor regulatory and marketplace environments. Our third quarter valuation analysis considered multiple regulatory and marketplace scenarios; in aggregate, we are now projecting lower e-vapor category v
Slide 17: IQOS
IQOS Atlanta Retail Ecosystem Boutiques Mobile Kiosks Pop-Up Adult Smoker Pods Corners HeatSticks® Retailers All-third party trademarks remain the property of their respective owners. ALCS I Q3 2019 Earnings Call I 10.31.19 I For Investor Purposes ONLY 17
Slide 18: IQOS
IQOS All-third party trademarks remain the property of their respective owners. ALCS I Q3 2019 Earnings Call I 10.31.19 I For Investor Purposes ONLY 18
Slide 19: IQOS
IQOS Richmond, VA Expansion – Q4 2019 All-third party trademarks remain the property of their respective owners. ALCS I Q3 2019 Earnings Call I 10.31.19 I For Investor Purposes ONLY 19
Slide 20: on! Oral Nicotine Pouches
on! Oral Nicotine Pouches Transaction closed in Q3 2019 Initial focus areas: Expand retail distribution & visibility Adult tobacco consumer engagement Richmond, VA production capacity Preparing PMTAs ALCS I Q3 2019 Earnings Call I 10.31.19 I For Investor Purposes ONLY 20
Slide 21: on! Oral Nicotine Pouches
on! Oral Nicotine Pouches Broadest Portfolio in the U.S. Market Oral Nicotine Pouch Variants* by Nicotine Level (in mg) 1 2 3 4 6+ on! Zyn Velo All-third party trademarks remain the property of their respective owners. * As commercially available at the end of Q3 2019 ALCS I Q3 2019 Earnings Call I
Slide 22: 2020 – 2022 Adjusted EPS Growth Objective
2020 – 2022 Adjusted EPS Growth Objective Noncombustible Tobacco Announcing a compounded annual Brands & Investments adjusted diluted EPS growth objective Copenhagen of 5% to 8% for the years 2020 Leading MST brand through 2022 Expect to maintain dividend payout IQOS Global heated tobacco leader
Slide 23: 2019 Summary and Guidance
2019 Summary and Guidance Dynamic environment Strong Q3 and year-to-date performance Resilient core tobacco businesses Talented and committed employee base We reaffirm our guidance to deliver full-year 2019 adjusted diluted earnings per share of $4.19 to $4.27. This range represents a growth
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