Altria Group, Inc. · NYSE:MO
Altria — Q1 2020 Earnings Presentation
32 slides from Altria's earnings presentation, Apr 30, 2020
Slide 1: Altria's First-Quarter 2020 Earnings Conference Call
Altria’s First-Quarter 2020 Earnings Conference Call April 30, 2020 ALCS I Q1 2020 Earnings Call I 04.30.20 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: ALCS I Q1 2020 Earnings Call I 04.30.20 I For Investor Purposes ONLY
ALCS I Q1 2020 Earnings Call I 04.30.20 I For Investor Purposes ONLY 3
Slide 4: We Rise To The Challenge, Together
We Rise To The Challenge, Together COVID-19 Update ▪ We’re focusing on the health and welfare of our employees, maintaining business continuity and supporting our communities ▪ We’ve implemented remote working for many of our employees and the recommended social distancing protocols ▪ Our teams are
Slide 5: We Care For Each Other & Do What's Right
We Care For Each Other & Do What’s Right COVID-19 Community Response ▪ We’ve committed an initial $1 million to support COVID-19 relief efforts in the communities where we live and work All-third party trademarks remain the property of their respective owners. ALCS I Q1 2020 Earnings Call I 04.30.20
Slide 6: Q1 2020 Adjusted Diluted Earnings Per Share
Q1 2020 Adjusted Diluted Earnings Per Share* +18.5% $1.09 $0.92 1 Q1 2019 Q1 2020 *For reconciliations of non-GAAP to GAAP measures visit altria.com. 1 Prior period recast for certain ABI-related items. See our press release for more details at altria.com ALCS I Q1 2020 Earnings Call I 04.30.20 I Fo
Slide 7: Our 10-Year Vision: Responsibly Lead The Transition of Adult Smokers
Our 10-Year Vision: Responsibly Lead The Transition of Adult Smokers to a Noncombustible Future To achieve our vision, we will... ▪ Lead the industry in operating responsibly and preventing underage use of adult products ▪ Develop and expand our portfolio of FDA–authorized, noncombustible products a
Slide 8: Smokeable Products Segment
Smokeable Products Segment Adjusted OCI & OCI Margins* ($ in millions) Adjusted OCI Adjusted OCI Margins +20.1% +2.0pp $2,392 53.3% 55.3% $1,991 Q1 2019 Q1 2020 Q1 2019 Q1 2020 * For reconciliations of non-GAAP to GAAP measures visit altria.com. ALCS I Q1 2020 Earnings Call I 04.30.20 I For Investor
Slide 9: Adjusted Cigarette Decline Rate Estimates
Adjusted Cigarette Decline Rate Estimates Smokeable Segment Total Industry Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 2019 2019 2019 2019 2020 2019 2019 2019 2019 2020 (3.5)%* (4.5)% (4.5)% (5.0)%* (5.5)% (6.0)% (6.0)% (7.0)% (7.0)% (7.0)% *Q1 2020 includes special adjustment for estimated COVID-19 consumer pant
Slide 10: Smokeable Products Segment: Marlboro Retail Share
Smokeable Products Segment Marlboro Retail Share Marlboro Share of Total Category Marlboro Share of Premium Segment 45 58 56.9 57.1 57.0 57.1 56.9 43.3 43.4 43.3 43.1 42.8 35 48 Q1 '19 Q2 '19 Q3 '19 Q4 '19 Q1 '20 Q1 '19 Q2 '19 Q3 '19 Q4 '19 Q1 '20 Source: IRI/MSAi InfoScan Cigarette 2020 – Blended,
Slide 11: Shipments to Retail Volume (Decline) / Growth Rate
Shipments to Retail Volume (Decline) / Growth Rate Gross Volumes Premium Branded Discount Deep Discount Cigarette Segment Cigarette Segment Cigarette Segment 14.4% 7.0% 7.8% 5.3% 3.7% Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 2019 2019 2019 2019 2020 2019 2019 2019 2019 2020 Q1 Q2 Q3 Q4 Q1 2019 2019 2019 2019 2
Slide 12: Marlboro
Marlboro ALCS I Q1 2020 Earnings Call I 04.30.20 I For Investor Purposes ONLY 12
Slide 13: Discount Segment Retail Share Dynamics
Discount Segment Retail Share Dynamics Total Discount Segment (%) PM USA Discount (%) 30 6 24.3 24.2 24.8 23.7 23.6 23.8 4.1 4.1 4.0 4.1 4.0 15.4 15.3 17.6 17.0 16.5 15.9 8.8 9.5 6.7 6.7 7.1 7.9 0 0 2015 2016 2017 2018 2019 Q1 '20 Q1 '19 Q2 '19 Q3 '19 Q4 '19 Q1 '20 Sources: ALCS CMI Estimates; IRI U
Slide 14: John Middleton Cigars
John Middleton Cigars Shipment Volume % of Volume With (in millions) Pre-Market Authorization* ~90% +13.1% 432 382 Q1 2019 Q1 2020 Middleton Portfolio *Middleton expects to submit the remainder of its substantial equivalence applications by the September 9th deadline ALCS I Q1 2020 Earnings Call I 0
Slide 15: Our 10-Year Vision: Responsibly Lead The Transition of Adult Smokers
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 16: Our Unmatched Oral Tobacco Portfolio
Our Unmatched Oral Tobacco Portfolio ALCS I Q1 2020 Earnings Call I 04.30.20 I For Investor Purposes ONLY 16
Slide 17: Oral Tobacco Products Segment
Oral Tobacco Products Segment Adjusted OCI & OCI Margins* ($ in millions) Adjusted OCI Adjusted OCI Margins +13.4% +0.9pp $416 72.1% 73.0% $367 Q1 2019 Q1 2020 Q1 2019 Q1 2020 * For reconciliations of non-GAAP to GAAP measures visit altria.com. ALCS I Q1 2020 Earnings Call I 04.30.20 I For Investor
Slide 18: Oral Tobacco Industry Volume Growth Estimates
Oral Tobacco Industry Volume Growth Estimates Six Months Ending Q1 '19 Q2 '19 Q3 '19 Q4 '19 Q1 '20 5.0%* 3.0% 1.0% -% (0.5)% *Q1 2020 includes adjustment for estimated retail and consumer pantry loading due to COVID-19. Oral tobacco industry volume growth estimate without the pantry loading adjustme
Slide 19: Oral Tobacco Retail Share
Oral Tobacco Retail Share First-Quarter 2020 By Company (%) By Brand (%) 50.4 32.4 14.3 Swedish Match BAT Oral Tobacco Skoal Grizzly Copenhagen Products Segment Source: IRI/MSAi InfoScan Cigarette 2020 – Blended, as of 03/29/20 ALCS I Q1 2020 Earnings Call I 04.30.20 I For Investor Purposes ONLY 19
Slide 20: on! Oral Nicotine Pouches
on! Oral Nicotine Pouches ▪ on! was sold in over 28,000 stores at the end of Q1, including the top 5 convenience store chains by oral tobacco volume ▪ The newly redesigned on! cans are now available for purchase and we’re enhancing its retail visibility through premium fixture space in most stores A
Slide 21: Increasing on! Retail Velocity
Increasing on! Retail Velocity Cans per store per week Chain 1 – Colorado Chain 2 – North Carolina* 110 40 Promo Promo Period Period 35 80 77 29 27 6 18 9 5 4 4 3 0 0 Q3 ‘19 07/07/19 Q4 ‘19 Q1 ‘20 07/07/19 Q3 ‘19 Q4 ‘19 Q1 ‘20 Velocity: average weekly cans sold per store that sold any oral tobacco p
Slide 22: We Expect to Submit Our PMTA for on! in May
We Expect to Submit Our PMTA for on! in May ALCS I Q1 2020 Earnings Call I 04.30.20 I For Investor Purposes ONLY 22
Slide 23: E-Vapor Category Volume
E-Vapor Category Volume Estimated Equivalized Volume (in billions of units) Quarterly Estimates Q1 2020 Category ∆ 0.7 (12%) QoQ Decline (10%) YoY Decline 0.50 0.51 0.46 0.47 0.41 0.0 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Source: ALCS CMI estimates Note: (i)Share based on volume equivalized to car
Slide 24: Minority Investment in JUUL
Minority Investment in JUUL ▪ The U.S. Federal Trade Commission (FTC) recently announced its decision to file an administrative complaint challenging our minority investment in JUUL ▪ The FTC alleges that our minority investment is anti-competitive due to our decision to close the Nu Mark operating
Slide 25: IQOS Commercialization Plans
IQOS Commercialization Plans All-third party trademarks remain the property of their respective owners. ALCS I Q1 2020 Earnings Call I 04.30.20 I For Investor Purposes ONLY 25
Slide 26: IQOS 3 – Supplemental PMTA Submitted By PMI
IQOS 3 – Supplemental PMTA Submitted By PMI IQOS 2.4 Device (currently authorized) IQOS 3 Device (PMTA submitted) All-third party trademarks remain the property of their respective owners. ALCS I Q1 2020 Earnings Call I 04.30.20 I For Investor Purposes ONLY 26
Slide 27: Adjacent Assets - Alcohol
Adjacent Assets - Alcohol All-third party trademarks remain the property of their respective owners. ALCS I Q1 2020 Earnings Call I 04.30.20 I For Investor Purposes ONLY 27
Slide 28: Adjacent Assets - Cannabis
Adjacent Assets - Cannabis All-third party trademarks remain the property of their respective owners. ALCS I Q1 2020 Earnings Call I 04.30.20 I For Investor Purposes ONLY 28
Slide 29: Liquidity Update
Liquidity Update ▪ Our businesses are highly cash generative and convert income to cash at over 90% ▪ However, due to the uncertain impacts of COVID-19, we believed it was prudent to take the following additional actions to further strengthen our liquidity position and preserve financial flexibility
Slide 30: Adjusted Diluted EPS Guidance & Growth Objective
Adjusted Diluted EPS* Guidance & Growth Objective ▪ Due to the uncertainties related to the impact of the COVID-19 pandemic and economic recovery scenarios, we’ve withdrawn our full-year 2020 adjusted diluted EPS guidance and, as a result, we’ve also withdrawn our three-year compounded annual adjust
Slide 31: Cash Returns to Shareholders
Cash Returns to Shareholders ▪ We understand that our dividend is important to shareholders and it remains a top priority for us ▪ Our objective continues to be a dividend payout ratio target of approximately 80% of adjusted diluted EPS* ▪ Since we’ve withdrawn our 2020 adjusted diluted EPS guidance
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