Altria Group, Inc. · NYSE:MO
Altria — Q2 2020 Earnings Presentation
35 slides from Altria's earnings presentation, Jul 28, 2020
Slide 1: Altria's Second-Quarter 2020 Earnings Conference Call
Altria’s Second-Quarter 2020 Earnings Conference Call July 28, 2020 ALCS I Q2 2020 Earnings Call I 07.28.20 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: Resilient First-Half 2020 Performance
Resilient First-Half 2020 Performance Adjusted Diluted Smokeable & Oral Tobacco Smokeable & Oral Tobacco Earnings Per Share* Adjusted OCI* ($ in billions) Adjusted OCI Margins* +8.5% +10.9% +2.4pp $5.8 58.5% $2.18 56.1% $5.2 $2.01 1H 2019 1H 2020 1H 2019 1H 2020 1H 2019 1H 2020 *For reconciliations
Slide 4: Juneteenth 2020
JUNETEENTH 2020 ALCS I Q2 2020 Earnings Call I 07.28.20 I For Investor Purposes ONLY 4
Slide 5: Our Initial Steps Include:
Our Initial Steps Include: ▪ Holding internal courageous conversations that provide a safe platform for our Black colleagues to share their experiences as others seek to listen and understand ▪ Partnering with UNIFI, our Black employee network, to identify internal opportunities and create action pl
Slide 6: Inclusion and Diversity Aiming Points by 2030
Inclusion and Diversity Aiming Points by 2030: At the VP and above levels, achieve: ▪ 50-50 gender parity ▪ A composition of at least 30% ethnically diverse executives, which was determined using the composition of the U.S. college educated workforce and projections of population demographic changes
Slide 7: Q2 2020 Adjusted Diluted Earnings Per Share
Q2 2020 Adjusted Diluted Earnings Per Share* +0.9% $1.08 $1.09 Q2 2019 Q2 2020 *For reconciliations of non-GAAP to GAAP measures visit altria.com. ALCS I Q2 2020 Earnings Call I 07.28.20 I For Investor Purposes ONLY 7
Slide 8: Q2 Adult Tobacco Consumer Influences
Q2 Adult Tobacco Consumer Influences Discretionary income increases ▪ Enhanced government assistance through stimulus checks and increased unemployment benefits ▪ Reductions in non-tobacco discretionary purchases (e.g. lower gas, transit, entertainment expenditures) Routine changes ▪ Changes in purc
Slide 9: Smokeable Products Segment
Smokeable Products Segment Adjusted OCI* ($ in millions) +3.3% +10.9% $4,900 $4,418 $2,427 $2,508 Q2 2019 Q2 2020 1H 2019 1H 2020 * For reconciliations of non-GAAP to GAAP measures visit altria.com. ALCS I Q2 2020 Earnings Call I 07.28.20 I For Investor Purposes ONLY 9
Slide 10: Adjusted Cigarette Decline Rate Estimates
Adjusted Cigarette Decline Rate Estimates Smokeable Segment Total Industry Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 Q3 Q4 Q1 Q2 2019 2019 2019 2019 2020 2020 2019 2019 2019 2019 2020 2020 0% (2.0)% (2.0)%* 1H 2020 = (3.5)%* (1.0%) 1H 2020 = (4.5)% (4.5)% (3.0%) (5.5)% (6.0)% (6.0)% (7.0)% (7.0)% (7.0)% We’ve revised
Slide 11: Smokeable Products Segment: Marlboro Retail Share
Smokeable Products Segment Marlboro Retail Share 45 43.3 43.4 43.3 43.1 42.8 42.8 35 Q1 '19 Q2 '19 Q3 '19 Q4 '19 Q1 '20 Q2 '20 Source: IRI/MSAi InfoScan Cigarette 2020 – Blended, as of 06/28/20 ALCS I Q2 2020 Earnings Call I 07.28.20 I For Investor Purposes ONLY 11
Slide 12: Discount Segment Retail Share Dynamics
Discount Segment Retail Share Dynamics Total Discount Segment (%) PM USA Discount (%) 30 6 24.3 23.7 23.6 23.8 24.2 24.8 24.5 4.1 4.1 4.0 4.1 4.0 3.9 15.4 15.3 15.1 17.6 17.0 16.5 15.9 8.8 9.5 9.4 6.7 6.7 7.1 7.9 0 0 2015 2016 2017 2018 2019 Q1 '20 Q2 '20 Q1 '19 Q2 '19 Q3 '19 Q4 '19 Q1 '20 Q2 '20 So
Slide 13: Our 10-Year Vision: Lead Transition to a Noncombustible Future
Our 10-Year Vision: Responsibly Lead The Transition of Adult Smokers to a Noncombustible Future To achieve our vision, we will... ▪ Lead the industry in operating responsibly and preventing underage use of adult products ▪ Develop and expand our portfolio of FDA–authorized, noncombustible products a
Slide 14: Our Unmatched Oral Tobacco Portfolio
Our Unmatched Oral Tobacco Portfolio ALCS I Q2 2020 Earnings Call I 07.28.20 I For Investor Purposes ONLY
Slide 15: Oral Tobacco Products Segment
Oral Tobacco Products Segment Adjusted OCI* ($ in millions) +8.1% +10.5% $872 $789 $456 $422 Q2 2019 Q2 2020 1H 2019 1H 2020 * For reconciliations of non-GAAP to GAAP measures visit altria.com. ALCS I Q2 2020 Earnings Call I 07.28.20 I For Investor Purposes ONLY 15
Slide 16: Oral Tobacco Industry Volume Growth Estimates
Oral Tobacco Industry Volume Growth Estimates Six Months Ended Q1 '19 Q2 '19 Q3 '19 Q4 '19 Q1 '20 Q2 '20 6.0% 5.0%* 3.0% 1.0% 0% (0.5)% Source: ALCS CMI estimates - rounded to the nearest 0.5% Oral Tobacco industry includes MST, snus and oral nicotine pouch products * Q1 2020 includes an adjustment
Slide 17: Oral Tobacco Retail Share
Oral Tobacco Retail Share Q2 2020 By Company (%) By Brand (%) 50.0 32.1 14.1 Swedish Match BAT Oral Tobacco Skoal Grizzly Copenhagen Products Segment Source: IRI/MSAi InfoScan Cigarette 2020 – Blended, as of 06/28/20 ALCS I Q2 2020 Earnings Call I 07.28.20 I For Investor Purposes ONLY 17
Slide 18: Expanding on! Store Count
Expanding on! Store Count on! Store Count (in thousands) 45 40 28 15 9 - Q3 '19* Q4 '19 Q1' 20 Q2 '20 *Transaction closed in August 2019 ALCS I Q2 2020 Earnings Call I 07.28.20 I For Investor Purposes ONLY 18
Slide 19: Encouraging on! Adult Tobacco Consumer Profile
Encouraging on! Adult Tobacco Consumer Profile % of Purchases by Exclusive Adult Cigarette Smokers % Adult Female Consumers 37% 30% 23% 5% Zyn on! Moist Smokeless Oral Nicotine Tobacco Pouches Source: POS Scan data December 2018 – May 2020 Source: ATCT May 2020 (Top 5 convenience store chain by oral
Slide 20: on! PMTA Moved Into FDA Scientific Review
on! PMTA Moved Into FDA Scientific Review ALCS I Q2 2020 Earnings Call I 07.28.20 I For Investor Purposes ONLY 20
Slide 21: E-Vapor Category Volume
E-Vapor Category Volume Estimated Equivalized Volume (in billions of units) Quarterly Estimates 0.7 0.50 0.51 0.46 0.47 0.40 0.44 0.0 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Source: ALCS CMI estimates Note: (i)Share based on volume equivalized to cartridges (1 disposable = 1 cartridge = 1mL
Slide 22: IQOS Receives Reduced Exposure Claim From FDA
IQOS Receives Reduced Exposure Claim From FDA All-third party trademarks remain the property of their respective owners. ALCS I Q2 2020 Earnings Call I 07.28.20 I For Investor Purposes ONLY 22
Slide 23: IQOS Charlotte Launch
IQOS Charlotte Launch All-third party trademarks remain the property of their respective owners. ALCS I Q2 2020 Earnings Call I 07.28.20 I For Investor Purposes ONLY 23
Slide 24: New IQOS Digital Marketing Tools
New IQOS Digital Marketing Tools Virtual Tutorials Expert Video Chat All-third party trademarks remain the property of their respective owners. Note: Virtual Tutorials currently available on IQOS website, Expert Video Chat available in Fall of 2020. ALCS I Q2 2020 Earnings Call I 07.28.20 I For Inve
Slide 25: IQOS Expansion Plans
IQOS Expansion Plans IQOS Today IQOS in 18 Months ▪ 3 metro markets ▪ 7 metro markets plus surrounding geographies ▪ IQOS devices available for sale in select retail channels ▪ Expanded availability of IQOS devices, including in retail trade ▪ Digital marketing, product partner stores education and
Slide 26: 2020 Full-Year Adjusted Diluted EPS Guidance
2020 Full-Year Adjusted Diluted EPS* Guidance ▪ We’re reestablishing full-year 2020 adjusted diluted EPS guidance due to: ▪ our strong first half performance ▪ better understanding of COVID-19 impacts on adult tobacco consumer purchasing behavior ▪ an additional quarter of equity earnings contributi
Slide 27: Smokeable Products Segment: Adjusted OCI Margins
Smokeable Products Segment Adjusted OCI Margins* +3.4pp +2.6pp 57.8% 56.5% 54.4% 53.9% Q2 2019 Q2 2020 1H 2019 1H 2020 * For reconciliations of non-GAAP to GAAP measures visit altria.com. ALCS I Q2 2020 Earnings Call I 07.28.20 I For Investor Purposes ONLY 27
Slide 28: John Middleton Cigars
John Middleton Cigars Shipment Volume % of Volume With (in millions) Pre-Market Authorization* ~90% +5.4% 854 810 1H 2019 1H 2020 Middleton Portfolio *Middleton expects to submit the remainder of its substantial equivalence applications by the September 9th deadline ALCS I Q2 2020 Earnings Call I 07
Slide 29: Copenhagen Packs
Copenhagen Packs Expanded into 20,000 stores across 36 states ALCS I Q2 2020 Earnings Call I 07.28.20 I For Investor Purposes ONLY
Slide 30: Oral Tobacco Products Segment: Adjusted OCI Margins
Oral Tobacco Products Segment Adjusted OCI Margins* (1.2pp) (0.2pp) 74.0% 72.8% 73.1% 72.9% Q2 2019 Q2 2020 1H 2019 1H 2020 * For reconciliations of non-GAAP to GAAP measures visit altria.com. ALCS I Q2 2020 Earnings Call I 07.28.20 I For Investor Purposes ONLY 30
Slide 31: Adjacent Assets - Alcohol
Adjacent Assets - Alcohol All-third party trademarks remain the property of their respective owners. ALCS I Q2 2020 Earnings Call I 07.28.20 I For Investor Purposes ONLY
Slide 32: Adjacent Assets - Cannabis
Adjacent Assets - Cannabis All-third party trademarks remain the property of their respective owners. ALCS I Q2 2020 Earnings Call I 07.28.20 I For Investor Purposes ONLY
Slide 33: 55th Dividend Increase in the Past 51 Years
55th Dividend Increase in the Past 51 Years ▪ The Board of Directors declared the quarterly dividend ahead of our normally scheduled declaration date. ▪ This increase marks the 55th increase in the past 51 years ▪ The new annualized dividend rate is $3.44 per share, a 2.4% increase The Q3 2020 regul
Slide 34: ALCS I Q2 2020 Earnings Call I 07.28.20 I For Investor Purposes ONLY
ALCS I Q2 2020 Earnings Call I 07.28.20 I For Investor Purposes ONLY
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