![]() 2009 Barclays Capital Back-To-School Consumer Conference Presentation September 9, 2009 Exhibit 99.2 |
![]() Cliff Fleet Vice President Investor Relations Altria Client Services |
![]() Safe Harbor Statement Statements in this presentation that are not reported financial results or other historical information are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on current plans, estimates and expectations, and are not guarantees of future performance. They are based on management’s expectations that involve a number of business risks and uncertainties, any of which could cause actual results to differ materially from those expressed in or implied by the forward-looking statements. The Company undertakes no obligation to publicly update or revise any forward-looking statement other than in the normal course of its public disclosure obligations. The risks and uncertainties relating to the forward-looking statements in this presentation include those described under the caption “Cautionary Factors that May Affect Future Results” in the Company’s 2008 Annual Report and its Quarterly Report on Form 10-Q for the quarter ended June 30, 2009 Reconciliations of non-GAAP measures included in this presentation to the most comparable GAAP measures are available on the Company’s website at www.altria.com |
![]() Mike Szymanczyk Chairman and Chief Executive Officer Altria Group, Inc. |
![]() Altria’s Executive Management Mike Szymanczyk Chairman and Chief Executive Officer, Altria Dave Beran EVP and Chief Financial Officer, Altria Craig Johnson EVP, Altria; and President, PM USA Marty Barrington EVP, Chief Compliance & Administrative Officer, Altria Murray Garnick SVP and Associate General Counsel, ALCS |
![]() Reshaping Altria Completed the integration of John Middleton Co. Executing the integration of UST LLC Reshaped the corporate structure with three central support organizations – Altria Client Services – Altria Sales & Distribution – Altria Consumer Engagement Services Continuing to reduce cigarette infrastructure ahead of volume declines |
![]() External Environment Economy has remained in recession Tobacco excise taxes have significantly increased FDA was granted regulatory authority over tobacco products |
![]() Economic Conditions Source: U.S. Department of Labor Bureau of Labor Statistics http://stats.bls.gov/news.release/empsit.nr0.htm; Blue Chip Economic Indicators, The Conference Board (http://www.conference-board.org/economics/ConsumerConfidence.cfm) Unemployment Rate Consumer Confidence 9.7 7.3 3 10 Jan-93 Aug-09 54 77 20 200 Jan-93 Aug-09 |
![]() Excise Tax Environment Federal excise tax on cigarettes increased 62¢ per pack to $1.01 per pack |
![]() Cigarette State Excise Taxes Enacted in 2009 Source: ALCS Government Affairs NJ HI WA ID OK LA AL IL IN OH ME VT NY CA OR MT IA NM MI UT NE CO KY TN GA MA AZ NH CT DE FL TX MS MN DC AR ND KS SC MO NC PA AK MD RI VA WV WI WY NV SD Increased SET PR |
![]() Weighted State Excise Tax - Cigarettes Source: ALCS Estimates (SET and User Fees Per Pack –Year End & Quarter-end) * through September 1, 2009 $0.78 $0.87 $0.88 $1.01 $1.12 $1.13 $1.15 $1.24 $0.00 $1.50 2004 2005 2006 2007 2008 1Q 09 2Q 09 3Q 09 TD* |
![]() C-Store Pack Price +25% Cigarette Industry Dynamics Source: IRI/Capstone Integrated Retail Panel * Adjusted for trade inventory changes Estimated Volume* Change Q2 08 Q2 09 ~ (8%) Q2 08 Q2 09 |
![]() Long-term Tobacco Category Growth Rates Source: ALCS Estimates: Note: Smokeless is defined as moist smokeless and spit-less tobacco products ~7% ~3% 0% 10% Machine-made Large Cigars Smokeless |
![]() Profit Pool ($ in Billions) Tobacco Manufacturers’ Profit Pool Source: ALCS Estimates +7.5% 48% 55% 0% 100% 1H 2008 1H 2009 Altria’s Share of Profit Pool +7.0pp $5.2 $5.6 $5.0 $6.0 1H 2008 1H 2009 |
![]() FDA Legislation of Tobacco Products President Obama signed legislation granting FDA authority to regulate tobacco products Regulation should benefit adult tobacco consumers in the long- term Promote more predictability in tobacco industry |
![]() FDA Legislation of Tobacco Products Do not agree with every element of new law Supported enactment Intend to work constructively with agency and others in the industry |
![]() FDA Regulation Implementation Implementation of law will take place over time Several areas require the FDA to take action through rule making |
![]() FDA Regulation Timeline 2009 September Initial quarterly User Fee 2010 March FDA issues regulations on sale, promotion & advertising 2011 June FDA issues color graphic warning requirements 2010 June Remove descriptors from cigarette packs Source: FDA legislation (HR 1256) 2010 August Report on Menthol |
![]() Altria’s Approach to FDA Regulation History of successfully adapting to change Preparing for federal regulation for many years Created Regulatory Affairs department |
![]() Cigarettes Segment’s First-half 2009 Performance +8.8% Source: Altria company reports, IRI/Capstone Integrated Retail Panel Adjusted OCI* ($ in Billions) * For reconciliations of non-GAAP to GAAP numbers visit www.altria.com 41.9% 41.9% 40% 43% 1H 2008 1H 2009 +0.0pp Marlboro Retail Share $2.7 $2.4 $2.3 $2.9 1H 2008 1H 2009 ’s |
![]() Smokeless Segment’s First-half 2009 Performance Adjusted Operating Companies Income* of $339 million Integration proceeding smoothly Enhanced value equations on Copenhagen & Skoal Source: Altria company reports * For reconciliations of non-GAAP to GAAP numbers visit www.altria.com |
![]() USSTC’s Premium Retail Share Source: InfoScan Smokeless Tobacco Database (4wm) Q2 2009 Premium MST Retail Share 48.5% 48.5% 43% 52% March 28, 2009 June 27, 2009 |
![]() Cigars Segment’s First-half 2009 Performance Adjusted OCI* ($ in Millions) +3.2% Black & Mild Retail Share 29.2% 27.3% 25% 31% 1H 2008 1H 2009 +1.9pp Source: Altria company reports * For reconciliations of non-GAAP to GAAP numbers visit www.altria.com $97 $94 $85 $105 1H 2008 1H 2009 ’s |
![]() Wine Segment’s First-half 2009 Performance Adjusted OCI* of $24 million Continues to show underlying strength Negatively impacted by trade inventory depletions and weakness in on-premise sales Source: Altria company reports * For reconciliations of non-GAAP to GAAP numbers visit www.altria.com |
![]() Financial Services Segment’s Performance Source: Altria company reports OCI ($ in Millions) $104 $203 $0 $250 1H 2008 1H 2009 |
![]() Altria’s Cost Management Program ($ in Millions) Source: Altria company reports $805 $695 $1,500 $0 $1,500 2007- 1H 2009 Savings Add. Cost Savings Expected by 2011 2007 - 2011 |
![]() Altria’s Headcount Source: ALCS; Note: Includes headcount for Altria and all its subsidiary companies ~10,200 ~10,400 0 13,000 Dec-08 Aug-09 |
![]() 7.5% 8.7% 10.3% 6.3% 9.6% 2005 2006 2007 2008 2009 Historical Increase Altria’s Dividend $1.28 $1.36 $1.00 $1.50 Aug-08 Aug-09 2009 Increase +6.3% Source: Altria company reports and press releases (Note: Annualized Dividend Rate) |
![]() Altria’s First-half 2009 Performance +8.5% Source: Altria company filings; Total Shareholder Return – Bloomberg ending 8.31.09 Adjusted Earnings Per Share* * For reconciliations of non-GAAP to GAAP numbers visit www.altria.com 26% 15% 10% 0% 30% Altria S&P 500 S&P Food, Beverage & Tobacco Total Shareholder Return $0.82 $0.89 $0.60 $1.10 1H 2008 1H 2009 |
![]() Altria Reaffirms 2009 Guidance Due to FET-related pricing strategies, the third and fourth quarters of 2009 are planned to have lower adjusted EPS growth when compared to the first and second quarters of 2009 Altria reaffirms that its 2009 adjusted diluted earnings per share* from continuing operations is expected to increase to a range of $1.72 to $1.77, representing a 4% to 7% growth rate from an adjusted base of $1.65 per share in 2008 Source: Altria company filings, Note: Federal Excise Tax (FET) * For reconciliations of non-GAAP to GAAP numbers visit www.altria.com |
![]() Altria’s Growth Objectives Maximize income while maintaining share momentum on Marlboro in cigarette category Return Copenhagen and Skoal to volume growth in-line or slightly ahead of category growth Profitably assume share leadership in the machine-made large cigar category driven by Black & Mild Continue to grow Ste. Michelle Wine Estates’ income and improve its return on assets |
![]() Leadership Brands’ Characteristics Sizeable share of category Strong adult demographics High brand loyalty Growth opportunities for share and income with innovative products |
![]() Cigarettes Segments’ First-half 2009 Performance Source: Altria company filings, IRI/Capstone Integrated Retail Panel Retail Share 50.2% |
![]() Cigarette Category Segments Source: IRI/Capstone Integrated Retail Panel - 1H 2009 Non-Menthol Segment 71% Menthol Segment 29% |
![]() Share of Non-Menthol Segments - Cigarettes Source: IRI/Capstone Integrated Retail Panel - 1H 2009 (Cigarettes) 59% 57% 62% 58% 0% 100% Total Non-Menthol FF Non-Menthol Lights Non-Menthol UL Non-Menthol PM USA Balance of Industry |
![]() Source: Maxwell Reports; MSA Shipments; IRI/Capstone (Cigarettes) Menthol Segment’s Share Performance - Cigarettes 28.8% 29.0% 10% 40% 1982 1985 1988 1991 1994 1997 2000 2003 2006 1H 09 |
![]() Share of Menthol Segments - Cigarettes Source: IRI/Capstone - 1H 2009 (Cigarettes) 28% 20% 41% 0% 100% Total Menthol FF Menthol Lights/UL Menthol PM USA Balance of Industry |
![]() Menthol Retail Share Performance - Cigarettes 24.5% 28.0% 2002 1H 2009 PM USA’s Share of Menthol +3.5pp 2.8% 5.6% 2002 1H 2009 Marlboro Menthol’s Retail Share +2.8pp Source: IRI/Capstone - 1H 2009 (Cigarettes) |
![]() Source: InfoScan Smokeless Tobacco Database – 1H 2009; Note: Smokeless is defined as moist smokeless and spit-less tobacco products, includes smokeless products manufactured by USSTC and PM USA Smokeless Segments’ First-half 2009 Performance Retail Share 55.5% |
![]() Mint 11% Other 6% 39% Natural 33% Straight 11% Smokeless Tobacco Category Flavor Segments Source: InfoScan Smokeless Tobacco Database – 1H 2009; Note: Smokeless is defined as moist smokeless and spit-less tobacco products Wintergreen |
![]() Share of Flavor Segments – Smokeless Tobacco Source: InfoScan Smokeless Tobacco Database – 1H 2009; Note: Smokeless is defined as moist smokeless and spit-less tobacco products, includes smokeless products manufactured by USSTC and PM USA 35% 79% 44% 51% 82% 0% 100% Wintergreen Natural Straight Mint Other USSTC & PM USA Balance of Industry |
![]() Smokeless Tobacco Category - Form Segments Source: InfoScan Smokeless Tobacco Database – 1H 2009; Note: Smokeless is defined as moist smokeless and spit-less tobacco products Pouches 10% Fine Cut 28% Long Cut 62% |
![]() Share of Form Segments – Smokeless Tobacco Source: InfoScan Smokeless Tobacco Database – 1H 2009; Note: Smokeless is defined as moist smokeless and spit-less tobacco products, includes smokeless products manufactured by USSTC and PM USA 46% 76% 59% 0% 100% Long Cut Fine Cut Pouches USSTC & PM USA Balance of Industry |
![]() Smokeless Tobacco Pouches USSTC and PM USA are planning initiatives In market late 2009 and 2010 |
![]() Source: InfoScan Cigar Database – 1H 2009 Machine-made Large Cigars - Size Segments Tipped Cigarillo 35% Untipped Cigarillo 43% Non- Cigarillo 22% |
![]() Share of Machine-made Large Cigars Segments Source: InfoScan Cigar Database – 1H 2009 84% 0% 100% Tipped Cigarillo Untipped Cigarillo Non-Cigarillo Middleton Balance of Industry |
![]() Cigar Growth Opportunity Untipped cigarillos represent the largest incremental opportunity Untipped cigarillo growing segment Middleton currently does not participate in this growing segment Source: InfoScan Cigar Database |
![]() New Tobacco Products Build businesses in growing segments Many new products in market by December 2009 Full impact on volume, share and income expected in 2010 and beyond |
![]() Altria’s Tobacco Operating Companies |
![]() Tobacco Categories are Important to Retailers Cigarettes represented 33% of in-store revenues and 17% of profits Other tobacco products are one of the fastest-growing segments Source: Convenience Store News, Convenience stores in 2008 |
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![]() Trade Relationships Principles Having the best brands in the best positions Allocating shelf space to brand share to assure in-stock inventory Communicating new products and promotions to adult tobacco consumers Encouraging underage sales prevention through non-self service merchandising Source: Altria Sales & Distribution |
![]() Benefits of Integrated Tobacco Categories Higher profitability per square foot Improving visibility for smokeless tobacco and machine-made large cigars to adult consumers Reducing youth access to tobacco products Source: Altria Sales & Distribution |
![]() Cigarette Launch Introductions Effective introduction of new and innovative products Improved speed to market for new product launches by 30% since 2006 |
![]() Assisting Retailers Tobacco products important to many retailers’ financial success Altria Sales & Distribution assists retailers by providing them with tools for insights and information |
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![]() Litigation Environment Substantial success in managing the litigation environment; however significant challenges remain Detailed discussion in Altria’s recent Form 10-Q |
![]() Approach to Litigation Approach to litigation remains the same Continue vigorously defending claims |
![]() Altria’s 2009 Performance Adjusted EPS* up 8.5% in the first-half of 2009 Increased dividend by 6.3% Altria’s total shareholder return is 26% * For reconciliations of non-GAAP to GAAP numbers visit www.altria.com, adjusted diluted EPS from continuing operations Source: Altria company reports; Bloomberg (8/31/09) |
![]() Long-term Growth Target of 8% - 10% adjusted EPS per year Continue to believe it is an achievable objective Operating environment impacts ability to reach objective in any given year |
![]() Strategies to Achieve Long-term Growth Grow income by investing in four strong brands, Marlboro, Copenhagen, Skoal and Black & Mild, while continuing to optimize cost structures |
![]() Strategies to Achieve Long-term Growth Grow income by investing in four strong brands, Marlboro, Copenhagen, Skoal and Black & Mild, while continuing to optimize cost structures Return cash to shareholders in the form of dividends |
![]() Altria’s Dividends Plans to maintain its targeted 75% payout ratio and increase dividends in-line with future adjusted EPS growth Increased dividend 42 times in 40 years Commitment to return a large amount of cash to shareholders through dividends |
![]() Strategies to Achieve Long-term Growth Grow income by investing in four strong brands, Marlboro, Copenhagen, Skoal and Black & Mild, while continuing to optimize cost structures Return cash to shareholders in the form of dividends Preserve strong balance sheet |
![]() SABMiller Investment Helping solidify Altria’s investment grade credit rating Growing earnings per share Strengthening Altria’s financial profile |
![]() SABMiller Investment (Pre-tax $ - Billions) Source: Bloomberg as of August 31, 2009 $10.0 $3.4 $0 $14 Jul-02 Aug-09 |
![]() SABMiller Investment Benefits to Altria Contributed $3.1 billion in equity earnings since 2002 Paid $1.3 billion in dividends since 2002 Currently plan to maintain economic interest in SABMiller |
![]() Strategies to Achieve Long-term Growth Grow income by investing in four strong brands, Marlboro, Copenhagen, Skoal and Black & Mild, while continuing to optimize cost structures Return cash to shareholders in the form of dividends Preserve strong balance sheet Focus on reducing the cost of debt |
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![]() Non-GAAP Financial Measures Altria reports its consolidated financial results in accordance with generally accepted accounting principles (GAAP). Today’s remarks may contain various operating results on both a reported basis and on an adjusted basis, which excludes items that affect the comparability of report results. Altria’s management reviews OCI, which is defined as operating income before corporate expenses and amortization of intangibles, to evaluate segment performance and allocate resources. Altria’s management also reviews OCI, operating margins and earnings per share (EPS) on an adjusted basis, which excludes certain income and expense items that management believes are not part of underlying operations because such items can obscure underlying business trends. Management believes it is appropriate to disclose these measures to help investors analyze underlying business performance and trends. Such adjusted measures are regularly provided to management for use in the evaluation of segment performance and allocation of resources. All references in the remarks are to continuing operations, unless otherwise noted. Reconciliations of any non-GAAP financial measures to the most directly comparable GAAP measures can be found posted to our website at www.altria.com |
![]() Cigarettes Segment’s Adjusted Operating Companies Income (OCI) for Six Months Ended June 30, 2008 (dollars in millions) Reported OCI $2,377 Exit costs 29 Implementation costs 32 Adjusted OCI $2,438 Source: ALCS Finance, reconciliation between GAAP and non-GAAP financial measures |
![]() Cigarettes Segment’s Adjusted Operating Companies Income (OCI) for Six Months Ended June 30, 2009 (dollars in millions) Reported OCI $2,569 Exit costs 34 Implementation costs 50 Adjusted OCI $2,653 Source: ALCS Finance, reconciliation between GAAP and non-GAAP financial measures |
![]() Cigarettes Segment’s Adjusted Operating Companies Income (OCI) for Six Months Ended June 30 (dollars in millions) 2008 adjusted OCI $2,438 2009 adjusted OCI $2,653 % change 2009 adjusted OCI versus prior-year period 8.8% Source: ALCS Finance, reconciliation between GAAP and non-GAAP financial measures |
![]() Smokeless Products Segment’s Adjusted Operating Companies Income (OCI) for Six Months Ended June 30, 2009 (dollars in millions) Reported OCI $175 Exit costs 123 Integration costs 28 UST acquisition-related costs* 13 Adjusted OCI $339 Source: ALCS Finance, reconciliation between GAAP and non-GAAP financial measures * Excludes exit and integration costs |
![]() Cigars Segment’s Adjusted Operating Companies Income (OCI) for Six Months Ended June 30, 2008 (dollars in millions) Reported OCI $91 Integration costs 3 Adjusted OCI $94 Source: ALCS Finance, reconciliation between GAAP and non-GAAP financial measures |
![]() Cigars Segment’s Adjusted Operating Companies Income (OCI) for Six Months Ended June 30, 2009 (dollars in millions) Source: ALCS Finance, reconciliation between GAAP and non-GAAP financial measures Reported OCI $90 Integration costs 7 Adjusted OCI $97 |
![]() Cigars Segment’s Adjusted Operating Companies Income (OCI) for Six Months Ended June 30 (dollars in millions) 2008 adjusted OCI $94 2009 adjusted OCI $97 % change 2009 adjusted OCI versus prior-year period 3.2% Source: ALCS Finance, reconciliation between GAAP and non-GAAP financial measures |
![]() Wine Segment’s Adjusted Operating Companies Income (OCI) for Six Months Ended June 30, 2009 (dollars in millions) Reported OCI $10 Exit costs 2 Integration costs 2 UST acquisition-related costs* 10 Adjusted OCI $24 Source: ALCS Finance, reconciliation between GAAP and non-GAAP financial measures * Excludes exit and integration costs |
![]() Adjusted Diluted Earnings per Share (EPS) from Continuing Operations Attributable to Altria for Six Months Ended June 30, 2008 Reported diluted EPS from continuing operations $0.73 Exit, integration and implementation costs 0.09 Gain on sale of corporate headquarters building (0.12) Loss on early extinguishment of debt 0.12 Adjusted diluted EPS from continuing operations $0.82 Source: ALCS Finance, reconciliation between GAAP and non-GAAP financial measures |
![]() Adjusted Diluted Earnings per Share (EPS) from Continuing Operations Attributable to Altria for Six Months Ended June 30, 2009 Reported diluted EPS from continuing operations $0.77 Exit, integration and implementation costs 0.08 UST acquisition-related costs* 0.06 SABMiller gains on issuances of common stock (0.06) SABMiller intangible asset impairments 0.04 Adjusted diluted EPS from continuing operations $0.89 Source: ALCS Finance, reconciliation between GAAP and non-GAAP financial measures * Excludes exit and integration costs |
![]() 2008 adjusted diluted EPS from continuing operations $0.82 2009 adjusted diluted EPS from continuing operations $0.89 % change in 2009 adjusted diluted EPS from continuing operations versus prior-year period 8.5% Source: ALCS Finance, reconciliation between GAAP and non-GAAP financial measures Adjusted Diluted Earnings per Share (EPS) from Continuing Operations Attributable to Altria for Six Months Ended June 30 |
![]() Adjusted Diluted Earnings per Share (EPS) from Continuing Operations Attributable to Altria for Year Ended December 31, 2008 Reported diluted EPS from continuing operations $1.48 Tax Items (0.03) Gain on sale of corporate headquarters building (0.12) Loss on early extinguishment of debt 0.12 SABMiller intangible asset impairments 0.03 UST acquisition-related costs* 0.02 Exit, integration and implementation costs 0.15 Adjusted diluted EPS from continuing operations $1.65 * Excludes exit and integration costs Source: ALCS Finance, reconciliation between GAAP and non-GAAP financial measures |
![]() Projected Full-Year Adjusted Diluted Earnings per Share (EPS) from Continuing Operations Attributable to Altria for Year Ending December 31, 2009 Projected reported diluted EPS from continuing operations $1.51 to $1.56 Exit, integration and implementation costs 0.17 UST acquisition-related costs* 0.06 SABMiller gains on issuances of common stock (0.06) SABMiller intangible asset impairments 0.04 Projected adjusted diluted EPS from continuing operations $1.72 to $1.77 * Excludes exit and integration costs Source: ALCS Finance, reconciliation between GAAP and non-GAAP financial measures |
![]() Projected Full-Year Adjusted Diluted Earnings per Share (EPS) from Continuing Operations Attributable to Altria for Year Ending December 31 2008 adjusted diluted EPS from continuing operations $1.65 2009 projected adjusted diluted EPS from continuing operations $1.72 to $1.77 % change in 2009 projected full-year adjusted diluted EPS from continuing operations versus the prior-year period 4% - 7% Source: ALCS Finance, reconciliation between GAAP and non-GAAP financial measures |
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