Altria Group, Inc. · NYSE:MO

Altria — Consumer Analyst Group of New York (CAGNY) Conference 2019

57 slides from Altria's conference presentation, Feb 20, 2019

  1. Slide 1: For Investor Presentation ONLY

    For Investor Presentation ONLY

  2. Slide 2: For Investor Presentation ONLY

    For Investor Presentation ONLY

  3. Slide 3: For Investor Presentation ONLY

    For Investor Presentation ONLY

  4. Slide 4: For Investor Presentation ONLY

         Trademarks used for discussion purposes only. All third-party trademarks remain the property of their respective owners. * Subject to shareholder and regulatory approvals and customary closing conditions For Investor Presentation ONLY

  5. Slide 5: Grow adjusted diluted EPS at an average annual rate of 7% to 9%

    Grow adjusted diluted earnings per share (EPS) at an average annual rate of 7% to 9% Maintain a dividend payout ratio target of approximately 80% of adjusted diluted EPS For Investor Presentation ONLY

  6. Slide 6: For Investor Presentation ONLY

        For Investor Presentation ONLY

  7. Slide 7: Consumer Expenditure Estimates and Retail Volume Performance Estimates

    Consumer Expenditure Estimates at Retail Volume Performance Estimates $ in Billions 8% 5% $73 $66 (4)% Major Tobacco Cigarettes Cigarettes Machine-made Smokeless Categories Large Cigars Products * Total tobacco in pounds Source: ALCS CMI estimates based on TTB data through December 2007 and IRI/Caps

  8. Slide 8: Middleton and USSTC WACC

    Middleton USSTC 14% 14% 7.3% WACC 7.2% ~7% 0% 0% 2008 2010 2012 2014 2016 2018 2009 2011 2013 2015 2017 Source: Altria estimates Note: 10-year weighted average cost of capital as calculated by Bloomberg For Investor Presentation ONLY

  9. Slide 9: Combined net revenues, adjusted operating companies income and margins growth

    Grew their Grew adjusted Expanded combined net operating combined revenues, net companies adjusted OCI of FET* by income* by margins* by 1 1 1.8% 5.1% 13.3 percentage points Source: Altria Company Reports. * For reconciliations of non-GAAP to GAAP measures visit altria.com. 1 2009 – 2018 CAGR For In

  10. Slide 10: Adjusted Diluted EPS and Dividends Per Share

    Adjusted Diluted EPS* Dividends Per Share +9.6% +10.0% CAGR CAGR $3.99 $3.20 $1.75 $1.36 2009 2018 2009 2018 Source: Altria company reports * For reconciliations of non-GAAP to GAAP measures visit altria.com. Note: Reported annualized dividend per share is based on the latest declared dividend. For

  11. Slide 11: Adult Past 30-Day Users by Category and E-vapor Category Growth

    Adult Past 30-Day Users by Category E-vapor Category Growth (in millions) as of 12/31/18 (Est. Annual Equivalized Volume, in billions of EQ units) JUUL 1.5 ~12 1.1 1.1 0.5 1.0 1.0 0.1 ~6 ~4 0.6 0.0 E-Vapor Smokeless Machine-made 2013 2014 2015 2016 2017 2018 Cigars *LA+, Source: ATCT Dec 2018 12MM,

  12. Slide 12: For Investor Presentation ONLY

          Trademarks used for discussion purposes only. All third-party trademarks remain the property of their respective owners. For Investor Presentation ONLY

  13. Slide 13: E-vapor adult consumer conversion study

    +57 +54 +54 +53 Trademarks used for discussion purposes only. All third-party trademarks remain the property of their respective owners. Source: ALCS E-vapor Adult Consumer Conversion Study, August 2018; https://experiencematters.blog/2018/10/01/report-net-promoter-score-benchmark-study-2018/ For In

  14. Slide 14: Compelling Harm Reduction Opportunity

    Compelling Harm Reduction Opportunity Trademarks used for discussion purposes only. All third-party trademarks remain the property of their respective owners. For Investor Presentation ONLY

  15. Slide 15: For Investor Presentation ONLY

    For Investor Presentation ONLY

  16. Slide 16: 2018 Global E-Vapor and Heat-not-Burn Sales Estimate

    2018 Global E-Vapor and Heat-not-Burn Sales Estimate ($, in billions) Global $17 $23B $6 North America International Note: International excludes China Source: Euromonitor For Investor Presentation ONLY

  17. Slide 17: JUUL international expansion and dollar share of e-vapor

    Canada Dollar Share of E-Vapor in Stores Selling JUUL (weekly)  UK: #1 e-vapor brand in Sainsbury 100% JUUL Chain* Vype Other  Italy & Germany: initial 62% distribution to more than 2,000 stores 38% 0% 9/8/18 9/29/18 10/20/18 11/10/18 12/1/18 Source: JUUL, Nielsen Note: Sainsbury data of 12 weeks

  18. Slide 18: For Investor Presentation ONLY

         For Investor Presentation ONLY

  19. Slide 19: Share of 21-29 Indexed to Overall Share

    Share of 21-29 Indexed to Overall Share 171 149 143 100 Natural Newport Camel Marlboro American Spirit Source: ALCS CMI estimates Source: CATTS 3.0 – 6mm ending Mar'18; E-Vapor Adult Consumer Conversion Study – August 2018 For Investor Presentation ONLY

  20. Slide 20: Projected return would exceed our current ~8% WACC in 5 years

    ―      Under these assumptions, projected return would exceed our current ~8% WACC in 5 years. Note: Return calculated using traditional ROIC framework with Altria’s share of estimated JUUL net operating profit after tax (NOPAT) adjusted for the tax impact of equity earnings. For Investor Prese

  21. Slide 21: For Investor Presentation ONLY

       For Investor Presentation ONLY

  22. Slide 22: E-Vapor, Heat-not-Burn, Smokeless

    E-Vapor Heat-not-Burn Smokeless Note: Third party trademarks are the property of their respective owners and are included for informational purposes only. For Investor Presentation ONLY

  23. Slide 23: For Investor Presentation ONLY

        Note: Third party trademarks are the property of their respective owners and are included for informational purposes only. For Investor Presentation ONLY

  24. Slide 24: TPSAC voted modified risk claim for Copenhagen Snuff supported

    TPSAC overwhelmingly voted that our proposed modified risk claim for Copenhagen Snuff is fully supported by scientific evidence. Note: Vote of 8 in favor and 1 abstention For Investor Presentation ONLY

  25. Slide 25: For Investor Presentation ONLY

    Note: Third party trademarks are the property of their respective owners and are included for informational purposes only. For Investor Presentation ONLY

  26. Slide 26: For Investor Presentation ONLY

        Trademarks used for discussion purposes only. All third-party trademarks remain the property of their respective owners. For Investor Presentation ONLY

  27. Slide 27: For Investor Presentation ONLY

       Trademarks used for discussion purposes only. All third-party trademarks remain the property of their respective owners. For Investor Presentation ONLY

  28. Slide 28: For Investor Presentation ONLY

    For Investor Presentation ONLY

  29. Slide 29: For Investor Presentation ONLY

    Note: Third party trademarks are the property of their respective owners and are included for informational purposes only. For Investor Presentation ONLY

  30. Slide 30: For Investor Presentation ONLY

    Note: Third party trademarks are the property of their respective owners and are included for informational purposes only. For Investor Presentation ONLY

  31. Slide 31: For Investor Presentation ONLY

    • • For Investor Presentation ONLY

  32. Slide 32: For Investor Presentation ONLY

          For Investor Presentation ONLY

  33. Slide 33: For Investor Presentation ONLY

       For Investor Presentation ONLY

  34. Slide 34: For Investor Presentation ONLY

       For Investor Presentation ONLY

  35. Slide 35: For Investor Presentation ONLY

         Trademarks used for discussion purposes only. All third-party trademarks remain the property of their respective owners. For Investor Presentation ONLY

  36. Slide 36: Core Tobacco Business Performance

    Core Tobacco Business Performance For Investor Presentation ONLY

  37. Slide 37: Cigarette volumes expected to decline 4% to 5% annually

    Long-term Decline Rate 2000 to 2006 2007 to 2018 5% CAGR (2.1)% CAGR (3.8)% 0% -5% -10% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 We believe that cigarette volumes will decline at an average annual rate of 4% to 5% over the next five years. Source

  38. Slide 38: Adult Smoker Prevalence

    Adult Smoker Prevalence - Past 30 day, 12mm 25% 10% Source: LA+, Source: ATCT June 14 to Nov. 18 For Investor Presentation ONLY

  39. Slide 39: Smoker prevalence by age group

    ~38% ~25% ~20% 21-29 30-39 40+ LA+, P30D Source: 12MM December 2018, Includes LA-20 in base %’s computed on population weights For Investor Presentation ONLY

  40. Slide 40: For Investor Presentation ONLY

    For Investor Presentation ONLY

  41. Slide 41: For Investor Presentation ONLY

    Note: Third party trademarks are the property of their respective owners and are included for informational purposes only. For Investor Presentation ONLY

  42. Slide 42: New to Marlboro.com registrants

    ―  New to Marlboro.com* (000’s)  ~155% 163 64 Marlboro Promotion Jan-19 Benchmark* *Source: Teradata ATCD As 1/31/19 **Average new M.Com registrants for Marlboro’s 2 largest 2018 promotions over the same time frame For Investor Presentation ONLY

  43. Slide 43: Marlboro Retail Share

    YoY Marlboro Retail Share Change Marlboro Retail Share Q1 18 Q2 18 Q3 18 Q4 18 43.1% 43.1% -0.1pp -0.1pp -0.3pp -0.5pp Q4 2017 FY 2018 Source: Altria company reports For Investor Presentation ONLY

  44. Slide 44: Adult Smokers brand preference 21-54 and 21-29

    Adult Smokers 21-54 Adult Smokers 21-29 65 65 58 56 53 51 51 49 Marlboro Camel Newport Natural Marlboro Camel Newport Natural American American Spirit Spirit Source: Altria 2018 Brand Equity Report For Investor Presentation ONLY

  45. Slide 45: Deep Discount, Branded Discount and Premium segment share

    Deep Discount Branded Discount Premium 100 75.9 76.1 24.1 23.9 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: Q1 2001 – Q4 2007: IRI/Capstone TRP Projected Retail Database; Q1 2008 – Q4 2010:SymphonyIRI Group/Capstone IRP Projected Retail Database

  46. Slide 46: Per Pack Price as a % of Daily Consumer Expenditure

    Per Pack Price as a % of Daily Consumer Expenditure 100% 0% Sources: Euromonitor 2017, ALCS Estimates For Investor Presentation ONLY

  47. Slide 47: Copenhagen Adjusted OCI and FY Retail Share

    Adjusted OCI* Copenhagen FY Retail Share $, in millions +7.5% +0.4pp $1,464 34.0% 34.4% $1,362 2017 2018 2017 2018 * For reconciliation of non-GAAP to GAAP measures see appendix. Source: Altria company reports 47 For Investor Presentation ONLY | CAGNY 2019 | 02.20.2019 |

  48. Slide 48: Adult Dippers 21-54 and 21-29

    Adult Dippers 21-54 Adult Dippers 21-29 69 63 61 58 58 58 Copenhagen Skoal Grizzly Copenhagen Skoal Grizzly Source: Altria 2018 Brand Equity Study For Investor Presentation ONLY

  49. Slide 49: Strengthening USSTC's Position in Mint and Wintergreen

    Strengthening USSTC’s Strong Position in Mint and Wintergreen For Investor Presentation ONLY

  50. Slide 50: For Investor Presentation ONLY

    For Investor Presentation ONLY

  51. Slide 51: Reducing bureaucracy, decentralizing decision-making

    We are reducing bureaucracy, decentralizing decision-making and more effectively using data analytics to drive strategy. For Investor Presentation ONLY

  52. Slide 52: For Investor Presentation ONLY

         * For reconciliations of non-GAAP to GAAP measures visit altria.com. For Investor Presentation ONLY

  53. Slide 53: Altria's Historical Debt to EBITDA

    Altria’s Historical Debt to EBITDA* LTM Debt to EBITDA 5.5 5.5 Tobacco Peers 2.5X 2.5X 1.9X 1.3X 0 0 2009 2017 2018 * For reconciliations of non-GAAP to GAAP measures visit altria.com. Source: Altria company reports, FactSet (most recent filing as of 02/07/19) Source: Altria company reports For Inve

  54. Slide 54: For Investor Presentation ONLY

    * For reconciliations of non-GAAP to GAAP measures visit altria.com. For Investor Presentation ONLY

  55. Slide 55: For Investor Presentation ONLY

    Note: Third party trademarks are the property of their respective owners and are included for informational purposes only. For Investor Presentation ONLY

  56. Slide 56: For Investor Presentation ONLY

    For Investor Presentation ONLY

  57. Slide 57: For Investor Presentation ONLY

     For Investor Presentation ONLY

Altria Group — Consumer Analyst Group of New York (CAGNY) Conference 2019 on 6ix