Altria Group, Inc. · NYSE:MO
Altria — 2015 Barclays Global Consumer Staples Conference
73 slides from Altria's conference presentation, Sep 9, 2015
Slide 1: 2015 Barclays Global Consumer Staples Conference Presentation
2015 Barclays Global Consumer Staples Conference Presentation September 9, 2015 For Investor Purposes Only - Barclays GCS Conference, Sept. 9, 2015 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 ba
Slide 3: Agenda
Agenda Goals and strategies Track record of consistent financial performance Questions and answers For Investor Purposes Only - Barclays GCS Conference, Sept. 9, 2015 3
Slide 4: Track Record of Value Creation
Track Record of Value Creation FACT Altria’s 20.2% annualized shareholder return leads all companies named to each FORTUNE 500 list since 1955. Note: Third party trademarks are the property of their respective owners and are included for informational purposes only. Source: Fortune.com, June 9, 2015
Slide 5: Altria's Long-Term Financial Goals
Altria’s Long-Term Financial Goals • Grow adjusted diluted EPS at an 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 GCS Conference, Sept. 9, 2015 5
Slide 6: Consistent Adjusted Diluted EPS Growth
Consistent Adjusted Diluted EPS* Growth +8.0% CAGR $2.57 $1.75 2009 2014 *For reconciliation of non-GAAP to GAAP measures visit altria.com Source: Altria company reports For Investor Purposes Only - Barclays GCS Conference, Sept. 9, 2015 6
Slide 7: Strong Dividend Growth
Strong Dividend Growth +8.9% $2.50 CAGR 8.3% $2.08 9.1% 7.3% 7.9% 8.6% $1.36 2.9% $0.00 2009 Feb-10 Aug-10 Aug-11 Aug-12 Aug-13 Aug-14 2014 In 2014, we paid shareholders $3.9 billion in dividends. Note: Year-end annualized rate: 5-year CAGR. Source: Altria company reports For Investor Purposes Only
Slide 8: Altria's Performance Against Long-Term Goals
Altria’s Performance Against Long-Term Goals Adjusted Diluted EPS* Performance Dividend per Share** +13.1% +8.7% $1.38 $2.26 $2.08 $1.22 1H 2014 1H 2015 Aug-14 Aug-15 Altria increased its dividend 49 times in the past 46 years. *For reconciliation of non-GAAP to GAAP measures visit altria.com ** Ann
Slide 9: Reaffirms 2015 Guidance
Reaffirms 2015 Guidance Altria reaffirms its guidance for 2015 full-year adjusted diluted EPS in the range of $2.76 to $2.81, representing a growth rate of 7.5% to 9.5% from an adjusted diluted EPS base of $2.57* in 2014. *For reconciliation of non-GAAP to GAAP measures visit altria.com Source: Al
Slide 10: Changing Industry Dynamics
Changing Industry Dynamics RJ Reynolds and Reynolds American Brown & Williamson Inc. acquires Tobacco merge Lorillard 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Master Settlement Federal Excise Tax Increase Agreement signed and FDA Regulation enacted Fo
Slide 11: For Investor Purposes Only - Barclays GCS Conference, Sept. 9, 2015
For Investor Purposes Only - Barclays GCS Conference, Sept. 9, 2015 11
Slide 12: Marlboro Long-Term Performance
Marlboro Long-Term Performance 50 +6.9pp 43.8 36.9 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Marlboro Camel Winston Newport Note: IRI/MSAi was implemented to read market share in 2011. Share prior to that reflects estimates based on share changes derived
Slide 13: Total Shareholder Return 1998-2014
Total Shareholder Return 1998-2014 1,081% 330% 190% Altria Group S&P 500 S&P Food, Beverage & Tobacco Note: Total shareholder return is simple price appreciation plus the reinvestment of the dividend as of the ex-dividend date. Excludes spin-offs. Source: Bloomberg 12/31/1997-12/31/2014 For Investor
Slide 14: Altria's Strategies
Altria’s Strategies Maximize income from core premium tobacco businesses over the long term Grow new income streams with innovative tobacco products Manage diverse income streams and strong balance sheet to deliver consistent financial performance For Investor Purposes Only - Barclays GCS Conference
Slide 15: Altria's Strategies
Altria’s Strategies Maximize income from core premium tobacco businesses over the long term Grow new income streams with innovative tobacco products Manage diverse income streams and strong balance sheet to deliver consistent financial performance For Investor Purposes Only - Barclays GCS Conference
Slide 16: Altria's Strategies
Altria’s Strategies Maximize income from core premium tobacco businesses over the long term Grow new income streams with innovative tobacco products Manage diverse income streams and strong balance sheet to deliver consistent financial performance For Investor Purposes Only - Barclays GCS Conference
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Slide 18: U.S. Tobacco Manufacturers' Profits
U. S. Tobacco Manufacturers’ Profits $ in Billions +5.5% CAGR $15.5 $11.8 2009 2014 Source: ALCS estimates; other public company reports For Investor Purposes Only - Barclays GCS Conference, Sept. 9, 2015 18
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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 20: Premium Segment Retail Share Performance
Premium Segment Retail Share Performance 75.6% 74.8% 75.1% Q2 2013 Q2 2014 Q2 2015 Source: IRI/MSAi For Investor Purposes Only - Barclays GCS Conference, Sept. 9, 2015 20
Slide 21: Marlboro Retail Share Leadership
Marlboro Retail Share Leadership 44.1% Next 10 Largest Cigarette Brands = 43.0% Marlboro Source: IRI/MSAi, Cigarettes ending 6/30/15 (1H 2015) For Investor Purposes Only - Barclays GCS Conference, Sept. 9, 2015 21
Slide 22: Unmatched Brand Equity
Unmatched Brand Equity Overall Equity Overall Opinion 70 70 0 0 Marlboro Camel Newport Marlboro Camel Newport Source: 2014 TNS Brand Equity Study (Age Group: 21 – 54), February 2015 For Investor Purposes Only - Barclays GCS Conference, Sept. 9, 2015 22
Slide 23: Cigarette Category Decline Rate Estimates
Cigarette Category Decline Rate Estimates (0.5)% (3.0)% (3.5)% (3.5)% (4.0)% (5.0)% 2010 2011 2012 2013 2014 1H 2015 Source: ALCS estimates For Investor Purposes Only - Barclays GCS Conference, Sept. 9, 2015 23
Slide 24: Smokeable Products Strategy
Smokeable Products Strategy For Investor Purposes Only - Barclays GCS Conference, Sept. 9, 2015 24
Slide 25: Smokeable Products Performance
Smokeable Products Performance Adjusted OCI* - $ in Billions Adjusted OCI* Margins Marlboro’s Retail Share +14.3% +2.9pp +0.3pp $3.8 47.0% 44.1% 43.8% 44.1% $3.3 1H 2014 1H 2015 1H 2014 1H 2015 1H 2014 1H 2015 *For reconciliation of non GAAP to GAAP measures visit altria.com Source: Altria company r
Slide 26: Smokeable Products Segment Price Realization
Smokeable Products Segment Price Realization Net Revenues Net of Excise Taxes /1000 Units* +4.9% $121.18 $127.08 1H 2014 1H 2015 *For reconciliation of non-GAAP to GAAP measures visit altria.com Source: Altria company reports For Investor Purposes Only - Barclays GCS Conference, Sept. 9, 2015 26
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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 28: Marlboro Long-Term Retail Share Growth
Marlboro Long-Term Retail Share Growth 44.1% 1954 1964 1974 1984 1994 2004 1H ‘15 Source: Maxwell; MSAi Shipments; IRI/Capstone – Total Retail Panel; IRP IRI Group/Capstone Projected Retail Panel; IRI/MSAi For Investor Purposes Only - Barclays GCS Conference, Sept. 9, 2015 28
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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 30: Active Digital Engagement with Adult Smokers
Active Digital Engagement with Adult Smokers This space is blank because brand images which appeared in the original presentation have been removed. For Investor Purposes Only - Barclays GCS Conference, Sept. 9, 2015 30
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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 32: Marlboro Retail Share Among Adult Smokers
Marlboro Retail Share Among Adult Smokers 45% 35% Total Marlboro AS 21-29 Source: CATTS 6mm May'15 For Investor Purposes Only - Barclays GCS Conference, Sept. 9, 2015 32
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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 34: Marlboro App: Convenient Adult Smoker Interaction
Marlboro App: Convenient Adult Smoker Interaction This space is blank because brand images which appeared in the original presentation have been removed. For Investor Purposes Only - Barclays GCS Conference, Sept. 9, 2015 34
Slide 35: Increased Mobile Engagement
Increased Mobile Engagement Mobile Logins - in Millions ~+1,000% 10 0 2011 2014 Note: Total mobile interactions (Adult Smokers 21+) Source: PM USA For Investor Purposes Only - Barclays GCS Conference, Sept. 9, 2015 35
Slide 36: Marlboro's Mobile Presence
Marlboro’s Mobile Presence Marlboro.com is among the leading CPG mobile websites. Source: comScore, 1H 2015 For Investor Purposes Only - Barclays GCS Conference, Sept. 9, 2015 36
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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 38: Smokeless Products Category Adjusted Volume Growth
Smokeless Products Category Adjusted Volume Growth Cans in Millions ~+5% CAGR 2,000 0 2009 2014 As of June 30th, USSTC estimates that smokeless category volumes have grown ~3% on a trailing 12-month basis. Note: Volume adjusted for trade inventory changes, calendar differences and product discontinu
Slide 39: Smokeless Products Strategy
Smokeless Products Strategy For Investor Purposes Only - Barclays GCS Conference, Sept. 9, 2015 39
Slide 40: Smokeless Products Shipment Volume Performance
Smokeless Products Shipment Volume Performance Cans in Millions Reported Shipment Volume +2.6% +3.5% (6.1)% 389.9 400.1 352.2 364.7 37.7 35.4 1H 2014 1H 2015 1H 2014 1H 2015 1H 2014 1H 2015 Copenhagen & Skoal Skoal Other Note: Other includes Red Seal, Husky, Weyman’s Best and Marlboro Snus. Source:
Slide 41: Smokeless Products Income Growth
Smokeless Products Income Growth Adjusted OCI* - $ in Millions Adjusted OCI* Margins +4.6% +0.4pp $548 $524 64.5% 64.9% 1H 2014 1H 2015 1H 2014 1H 2015 *For reconciliation of non GAAP to GAAP measures visit altria.com Source: Altria company reports For Investor Purposes Only - Barclays GCS Conferenc
Slide 42: Copenhagen & Skoal Combined Retail Share
Copenhagen & Skoal Combined Retail Share +0.3pp 50.8% 51.1% 1H 2014 1H 2015 Source: IRI InfoScan For Investor Purposes Only - Barclays GCS Conference, Sept. 9, 2015 42
Slide 43: Smokeless Products Segment Performance
Smokeless Products Segment Performance The two leading premium brands with over 51% combined retail share for the first half of 2015 Source: Altria company reports as of Q2 2015 For Investor Purposes Only - Barclays GCS Conference, Sept. 9, 2015 43
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Slide 45: Copenhagen Retail Share Strength
Copenhagen Retail Share Strength ~+1.6pp Average Annual 30.7% 26.0% 2011 2014 Source: IRI Group InfoScan Smokeless Tobacco Database (FY 2012 – Retail Share) Source: IRI InfoScan For Investor Purposes Only - Barclays GCS Conference, Sept. 9, 2015 45
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Slide 47: Maximizing the Core, Innovating for the Future
Maximizing the Core, Innovating for the Future Maximize income from core premium tobacco businesses over the long term Grow new income streams with innovative tobacco products Manage diverse income streams and strong balance sheet to deliver consistent financial performance For Investor Purposes Onl
Slide 48: Estimated U.S. E-Vapor Category Growth
Estimated U.S. E-Vapor Category Growth Consumer Expenditures Year over Year % Change ~150% ~100% ~50% <25% 2012 2013 2014 2015 We estimate full-year 2015 consumer expenditures in the e-vapor category to be nearing ~$2.5 billion. Source: ALCS estimates For Investor Purposes Only - Barclays GCS Confer
Slide 49: E-Vapor Desired Attributes
E-Vapor Desired Attributes Fullness of vapor Familiar taste and form Flavor variety Dependable quality Good battery life Long-lasting cartridge Reasonable value For Investor Purposes Only - Barclays GCS Conference, Sept. 9, 2015 49
Slide 50: Nu Mark's E-Vapor Portfolio
Nu Mark’s E-Vapor Portfolio This space is blank because brand images which appeared in the original presentation have been removed. For Investor Purposes Only - Barclays GCS Conference, Sept. 9, 2015 50
Slide 51: MarkTen XL Features
MarkTen XL Features Longer-lasting cartridge and battery Familiar taste and form More flavor variety For Investor Purposes Only - Barclays GCS Conference, Sept. 9, 2015 51
Slide 52: Expanded Green Smoke Retail Presence
Expanded Green Smoke Retail Presence This space is blank because brand images which appeared in the original presentation have been removed. For Investor Purposes Only - Barclays GCS Conference, Sept. 9, 2015 52
Slide 53: Expansion of Agreement with PMI
Expansion of Agreement with PMI Expanded agreement with Philip Morris International includes joint research, development and technology-sharing agreement on e-vapor products. This supplements the 2013 agreement with PMI. The latest step in our ongoing portfolio approach to product development
Slide 54: Innovative Products Portfolio Approach
Innovative Products Portfolio Approach This space is blank because brand images which appeared in the original presentation have been removed. For Investor Purposes Only - Barclays GCS Conference, Sept. 9, 2015 54
Slide 55: Regulatory Landscape
Regulatory Landscape • We support FDA extending its regulatory authority over all tobacco products. • We believe FDA has an unprecedented opportunity to advance public health goals. • Proposed regulations recognized a continuum of risk for different tobacco products. • Implementation of a comprehens
Slide 56: Altria's Strategies
Altria’s Strategies Maximize income from core premium tobacco businesses over the long term Grow new income streams with innovative tobacco products Manage diverse income streams and strong balance sheet to deliver consistent financial performance For Investor Purposes Only - Barclays GCS Conference
Slide 57: Alcohol Assets
Alcohol Assets This space is blank because brand images which appeared in the original presentation have been removed. For Investor Purposes Only - Barclays GCS Conference, Sept. 9, 2015 57
Slide 58: Wine Strategy
Wine Strategy For Investor Purposes Only - Barclays GCS Conference, Sept. 9, 2015 58
Slide 59: Wine Segment Performance
Wine Segment Performance OCI - $ in Millions OCI Margins +24.0% +2.9pp $62 $50 21.8% 18.9% 1H 2014 1H 2015 1H 2014 1H 2015 Source: Altria company reports For Investor Purposes Only - Barclays GCS Conference, Sept. 9, 2015 59
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Slide 61: SABMiller Market Value
SABMiller Market Value Adjusted Equity Earnings* Market Value ($ in Millions) ($ in Billions) +8.3% CAGR $20.2 $1,031 $812 2011 2014 Aug-15 *For reconciliation of non GAAP to GAAP measures visit altria.com Note: Market value as of 8.31.2015 Source: Bloomberg as of 8.31.2015 For Investor Purposes Onl
Slide 62: A Compelling Investment
A Compelling Investment • Diverse business model Return large amounts of cash • Strong balance sheet to shareholders and cash flow For Investor Purposes Only - Barclays GCS Conference, Sept. 9, 2015 62
Slide 63: Dividend Payout Ratio
Dividend Payout Ratio S&P Food, Beverage and Tobacco Index MO 80.9% PM 79.7% RAI 78.4% LO 73.2% KRFT 69.8% GIS 60.7% KO 59.8% PEP 56.6% HSY 53.8% DPS 52.6% NOTE: Altria’s dividend payout ratio is based on the August 2014 annualized dividend of $2.08 / $2.57 2014 adjusted diluted EPS. In addition, Al
Slide 64: An Attractive Dividend Yield
An Attractive Dividend Yield 4.2% Altria’s dividend yield was higher than virtually 2.2% 2.2% all S&P Food, Beverage and Tobacco peers. Altria 10-year U.S. S&P 500 Treasury Note: as of August 31, 2015 Source: Bloomberg For Investor Purposes Only - Barclays GCS Conference, Sept. 9, 2015 64
Slide 65: Strong Dividend Growth
Strong Dividend Growth $ per Share +8.8% CAGR $2.26 $1.36 Aug-09 Aug-15 Note: Dividend shown annualized as of August 2009 and August 2015. Source: Altria company reports For Investor Purposes Only - Barclays GCS Conference, Sept. 9, 2015 65
Slide 66: Returning Value to Shareholders
Returning Value to Shareholders $ in Billions $16.1 $3.1 Share Repurchase $13.0 Dividend 2012 to Q2 2015 In July 2015, Altria’s Board of Directors authorized a new $1 billion share repurchase program. Source: Altria company reports For Investor Purposes Only - Barclays GCS Conference, Sept. 9, 2015
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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 68: Investing For Our Future
Investing For Our Future This space is blank because brand images which appeared in the original presentation have been removed. For Investor Purposes Only - Barclays GCS Conference, Sept. 9, 2015 68
Slide 69: For Investor Purposes Only - Barclays GCS Conference, Sept. 9, 2015
For Investor Purposes Only - Barclays GCS Conference, Sept. 9, 2015 69
Slide 70: Earnings Per Share Performance
Earnings Per Share Performance Annual % Change 2007 to 2014 CAGR 50% 40% 7.9% 30% 20% 10% 4.6% 0% -10% Altria's Adjusted Diluted EPS* -20% S&P 500 Operating EPS -30% -40% -50% 2008 2009 2010 2011 2012 2013 2014 Altria's Adjusted S&P 500 Operating Diluted EPS* EPS *For reconciliation of non-GAAP to G
Slide 71: Seven-Year Total Shareholder Return
Seven-Year Total Shareholder Return 218% 117% 63% Altria Group S&P 500 S&P Food, Beverage & Tobacco Note: Total shareholder return is simple price appreciation plus the reinvestment of the dividend as of the ex-dividend date. Excludes spin-offs. Source: Bloomberg 12/31/2007-12/31/2014 For Investor P
Slide 72: For Investor Purposes Only - Barclays GCS Conference, Sept. 9, 2015
For Investor Purposes Only - Barclays GCS Conference, Sept. 9, 2015 72
Slide 73: Regulation G Disclosure
Regulation G Disclosure For reconciliations and further explanations of non-GAAP financial measures, visit: altria.com For Investor Purposes Only - Barclays GCS Conference, Sept. 9, 2015 73
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