Altria Group, Inc. · NYSE:MO
Altria — 2018 CAGNY Conference (Consumer Analyst Group of New York)
68 slides from Altria's conference presentation, Feb 21, 2018
Slide 1: 2018 CAGNY Investor Presentation
2018 CAGNY Investor Presentation February 21, 2018 For Investor Purposes Only
Slide 2: Howard Willard and Billy Gifford
Howard Willard Chief Operating Officer Billy Gifford Chief Financial Officer For Investor Purposes Only
Slide 3: For Investor Purposes Only
For Investor Purposes Only
Slide 4: Murray Garnick and Jim Dillard
Murray Garnick EVP, General Counsel, Law & Regulatory Affairs Jim Dillard SVP, Research, Development & Sciences, Chief Innovation Officer For Investor Purposes Only
Slide 5: 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 6: For Investor Purposes Only
For Investor Purposes Only
Slide 7: For Investor Purposes Only
For Investor Purposes Only
Slide 8: Smokeable Products Segment Performance
Smokeable Products Segment Performance Adjusted OCI* Adjusted OCI Margins* in Billions +6.4% +10.0pp CAGR $10 60% $8.6 51.2% $6.3 41.2% $0 30% 2012 2017 2012 2017 *For reconciliation of non-GAAP to GAAP measures visit altria.com Source: Altria company reports For Investor Purposes Only
Slide 9: Smokeless Products Segment Performance
Smokeless Products Segment Performance Adjusted OCI* Adjusted OCI Margins* in Billions +7.4% +7.0pp CAGR $2 70% 67.8% $1.4 60.8% $1.0 $0 50% 2012 2017 2012 2017 *For reconciliation of non-GAAP to GAAP measures visit altria.com Source: Altria company reports For Investor Purposes Only
Slide 10: Alcohol Assets
Alcohol Assets Note: Third party trademarks are the property of their respective owners and are included for informational purposes only. For Investor Purposes Only
Slide 11: Five-Year Financial Performance
Five-Year Financial Performance Adjusted Diluted EPS* +8.9% CAGR $3.39 $2.21 2012 2017 * For reconciliations of non-GAAP to GAAP measures visit altria.com. Source: Altria company reports For Investor Purposes Only
Slide 12: Five-Year Shareholder Returns
Five-Year Shareholder Returns Total Shareholder Return 181% Paid $21 billion in dividends 108% 98% Repurchased $6 billion in shares Altria Group S&P 500 S&P Food, Beverage and Tobacco Note: Total shareholder return is simple price appreciation plus the reinvestment of the dividend as of the ex-d
Slide 13: For Investor Purposes Only
For Investor Purposes Only
Slide 14: Encourage innovative, less harmful non-combustible products
“…encourage innovative, less harmful and satisfying non-combustible products for adults who want or need nicotine.” For Investor Purposes Only
Slide 15: Aspire to be U.S. leader in reduced-risk products
We aspire to be the U.S. leader in authorized, non-combustible, reduced-risk products.
Slide 16: Non-combustible Product Platforms
Non-combustible Product Platforms Smokeless/Oral Tobacco E-Vapor Heated Tobacco For Investor Purposes Only
Slide 17: Altria's Strategies
Altria’s Strategies Maximize income from combustible tobacco businesses Grow income over time with non-combustible tobacco products Manage diverse income streams and strong balance sheet to deliver consistent financial performance over the long term For Investor Purposes Only
Slide 18: Investment Areas
Investment Areas Innovative Regulatory Equity Retail Products Science Enhancements For Investor Purposes Only
Slide 19: For Investor Purposes Only
For Investor Purposes Only
Slide 20: Cigarette Category Decline Rates
Cigarette Category Decline Rates 2013 2014 2015 2016 2017 (0.5)% (2.5)% (3.5)% (4.0)% (4.0)% Source: ALCS estimates – rounded to nearest 0.5% For Investor Purposes Only
Slide 21: For Investor Purposes Only
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Slide 22: Marlboro's Equity
Marlboro’s Equity 70 30 Marlboro Camel Newport Source: 2017 TNS Brand Equity Study (Age Group: 21 – 54), January 2018 For Investor Purposes Only
Slide 23: For Investor Purposes Only
For Investor Purposes Only
Slide 24: PM USA's Enhanced Retail Trade Programs
PM USA’s Enhanced Retail Trade Programs For Investor Purposes Only
Slide 25: Digital Enhancements
Digital Enhancements Intuitive Design Personalization Value Ease of Relevant Content Efficient Value Navigation Display Delivery For Investor Purposes Only
Slide 26: For Investor Purposes Only
Note: Third party trademarks are the property of their respective owners and are included for informational purposes only. For Investor Purposes Only
Slide 27: For Investor Purposes Only
For Investor Purposes Only
Slide 28: For Investor Purposes Only
For Investor Purposes Only
Slide 29: For Investor Purposes Only
For Investor Purposes Only
Slide 30: Black & Mild's Performance
Black & Mild’s Performance Shipment Volume (Sticks in Millions) +10.7% 1,527 1,379 2016 2017 Source: Altria company reports For Investor Purposes Only
Slide 31: For Investor Purposes Only
For Investor Purposes Only
Slide 32: Altria's Strategies
Altria’s Strategies Maximize income from combustible tobacco businesses Grow income over time with non-combustible tobacco products Manage diverse income streams and strong balance sheet to deliver consistent financial performance over the long term For Investor Purposes Only
Slide 33: Be the leading smokeless and oral nicotine company
Be the leading smokeless tobacco and oral nicotine products company with products that appeal to a diverse set of adult tobacco consumers and have the potential to reduce harm. For Investor Purposes Only
Slide 34: USSTC's Portfolio
USSTC’s Portfolio For Investor Purposes Only
Slide 35: For Investor Purposes Only
* ~~ - WARRUNG. Tix SS “SNUFF OU WARNING: Smokeless tohaccois: addictive. YF For Investor Purposes Only
Slide 36: For Investor Purposes Only
For Investor Purposes Only
Slide 37: Plan to file MRTPA on Copenhagen Snuff in 1Q 2018
Plan to file MRTPA on Copenhagen Snuff in 1Q 2018 For Investor Purposes Only
Slide 38: For Investor Purposes Only
For Investor Purposes Only
Slide 39: For Investor Purposes Only
WARNING: This prowict can cause mouth cancer
Slide 40: For Investor Purposes Only
NOTE x. i. « » TOBA cs For Investor Purposes Only
Slide 41: Lead the U.S. e-vapor category
Lead the U.S. e-vapor category with a portfolio of superior, potentially reduced- risk products that adult smokers and vapers choose over cigarettes. For Investor Purposes Only
Slide 42: For Investor Purposes Only
ar Rian) MARKT EN’ MAR boom ARK | CLASSIC fl MARK? =’ CLASSIC MARKTEN MENTHOL, MARKTEN’ SMOOTH CLASSIC MARKTEN’ SMOOTH MENTHOL EVAPOR DEVICE USB CHARGER Sears USB CHARGER qe TEN For Investor Purposes Only
Slide 43: For Investor Purposes Only
For Investor Purposes Only
Slide 44: Plan to file PMTAs in 2018 with MRTPAs to follow
Plan to file PMTAs in 2018 with MRTPAs to follow For Investor Purposes Only
Slide 45: For Investor Purposes Only
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Slide 46: Apex, Vim, CYNC by MarkTen
Apex Vim CYNC by MarkTen by MarkTen For Investor Purposes Only
Slide 47: NuMark
NuMark An Alttia lanovetion Gompany
Slide 48: For Investor Purposes Only
For Investor Purposes Only
Slide 49: IQOS
lIQOS THIS CHANGES EVERYTHING For Investor Purposes Only
Slide 50: For Investor Purposes Only
For Investor Purposes Only
Slide 51: Lead Market Learning Objectives
Lead Market Learning Objectives Adult smoker perceptions of product and branding Adult smoker conversion rates Pricing dynamics Market performance For Investor Purposes Only
Slide 52: For Investor Purposes Only
Us, Department of Health and Human cS Food and Drug aq ministration
Slide 53: Substantial Equivalence Process
Substantial Equivalence Process Process remains overly burdensome, inconsistent, and restrictive FDA should issue clarifying regulations on the SE process We will continue to work constructively with the FDA, while insisting that it observe the statute and regulate manufacturers fairly For Inv
Slide 54: Altria's Strategies
Altria’s Strategies Maximize income from combustible tobacco businesses Grow income over time with non-combustible tobacco products Manage diverse income streams and strong balance sheet to deliver consistent financial performance over the long term For Investor Purposes Only
Slide 55: Long-Term Financial Goals
Long-Term Financial Goals For Investor Purposes Only
Slide 56: Consistent Financial Performance
Consistent Financial Performance Adjusted Diluted EPS* Dividend Per Share Growth +8.4% +8.6% CAGR CAGR $3.39 $2.64 $1.51 $1.16* 2007 2017 2007 2017 * For reconciliations of non-GAAP to GAAP measures visit altria.com. Note: Dividend is based on the current annualized dividend Source: Altria company r
Slide 57: For Investor Purposes Only
For Investor Purposes Only
Slide 58: Beer Investment
Beer Investment 1970 2017 $230 Million ~$22 Billion Note: Third party trademarks are the property of their respective owners and are included for informational purposes only. Source: Altria company reports For Investor Purposes Only
Slide 59: Productivity savings, leverage and cash after dividends
Over $300 million in savings from 2016 productivity initiative Debt-to-EBITDA of 1.3 to 1* Weighted average coupon of 4.9% ~$1 billion in cash after dividends annually *For reconciliation of non-GAAP to GAAP measures visit altria.com Source: Altria company reports For Investor Purposes Only
Slide 60: Note: Third party trademarks are the property of their respective owners and are included
Note: Third party trademarks are the property of their respective owners and are included for informational purposes only. For Investor Purposes Only
Slide 61: 2018 Investment Examples
2018 Investment Examples Marlboro Equity Enhancements Innovative Products For Investor Purposes Only
Slide 62: Tax Reform Benefit
Tax Reform Benefit Plan to reinvest about one-third of tax reform benefit in 2018 Moderating level of investment in subsequent years We believe this balanced approach will deliver annual adjusted diluted EPS growth rates above our long-term 7% - 9% aspiration through 2020 For Investor Purposes O
Slide 63: 2018 Guidance
2018 Guidance We reaffirm our guidance to deliver 2018 adjusted diluted EPS in a range of $3.90 to $4.03, representing a growth rate of 15% to 19% from our adjusted diluted EPS base of $3.39* in 2017. * For reconciliation of non-GAAP to GAAP measures visit altria.com Source: Altria company reports F
Slide 64: For Investor Purposes Only
For Investor Purposes Only
Slide 65: For Investor Purposes Only
For Investor Purposes Only
Slide 66: For Investor Purposes Only
For Investor Purposes Only
Slide 67: Regulation G Disclosure
Regulation G Disclosure For reconciliations and further explanations of non-GAAP financial measures, visit: altria.com For Investor Purposes Only
Slide 68: For Investor Purposes Only
For Investor Purposes Only
Altria Group — 2018 CAGNY Conference (Consumer Analyst Group of New York) on 6ix