MO - Earnings call transcript Q4 2024

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Operator

Good day, and welcome to the Altria Group 2024 Fourth Quarter and Full Year Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to Mac Livingston, Vice President of Investor Relations for Altria Client Services. Please go ahead, sir.

Mac Livingston

Thanks, Shelby. Good morning, and thank you for joining us. Altria's fourth Sal business quarter Gifford, will our results. Billy Altria's discuss and morning, CEO; Mancuso, and CFO, This full year Earlier providing a issued results. today, press we our release reports and latest metrics altria.com. quarterly presentation, available at release, corporate The responsibility are all our

unless During comparing results in stated, to our otherwise we're same the call period today, XXXX.

could cautionary to statements, release the at differ end Future discretion repurchases today's earnings our accordance report forward-looking projections. including Accepted materially subject results. contain Board remain section of remarks future results results Generally review statement Please financial We various cause factors that for Our projections the share actual from forward-looking and Accounting and payments dividend Principles. Directors. to in of the U.S. our with of of

on results today's included both special the of reconciliations website at operating various most a altria.com. results and these and GAAP basis. reported contain are and will that non-GAAP financial call items in results. adjusted on exclude to our earnings comparable comparisons release Adjusted affect with Descriptions measures reported financial Today's measures

Finally, older. the Billy. to XX or of specific or within a tobacco I'll that, segment tobacco category to existing years remarks all or in consumers [indiscernible] consumers refer age consumers call to references over turn With today's adult

William Gifford

shareholders. ], Thanks, financial was you Altria, vision cash Mac. [ results Good for for morning, and and XXXX pivotal strong to another progress returns our thank for year joining us. headlined meaningful significant by

talented teams future. strategically growth our brands our invest Our income we and to and company's while solid tobacco expansion leading enabled core businesses margin deliver in

our share and long billion per diluted with in repurchases. continued dividends year, history and over For we shareholders the full adjusted X.X% $XX.X earnings grew of share rewarding by

And our position NJOY volume smoke-free hit demonstrated and innovative our portfolio we progressed, performance category. meaningful us in growth and year success. for through on!, their that milestones solidify products, respective the helped As and share encouraging smoke-free sustained

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Operator

proceed with you for your been patience resolved. issue conference. may holding. in has The your you Thank Speakers,

Mac Livingston

Thanks, technical over the difficulties, for the again we'll apologize without and Shelby. We start music.

joining for fourth This presentation, our Altria's and metrics providing CFO, reports are and So issued CEO; good discuss today, all Altria's release, full Sal and year Billy results. our Earlier Gifford, our us. press release morning, The quarter a you quarterly latest corporate and morning, Mancuso, business results. at we thank available will altria.com. responsibility

our to the period in During we're results otherwise XXXX. unless call today, comparing stated, same

cautionary Future cause remarks statements, Our contain projections release statements the at Accounting U.S. review to of repurchases payments forward-looking projections. dividend end with today's for Board the financial subject results actual our results. and accordance Generally share results from and remain our the in to could Principles. future of that factors including Please Accepted earnings of forward-looking section materially We differ discretion various Directors. of report

both today's and Adjusted results results. reconciliations these Descriptions altria.com. various and included on contain are GAAP will and exclude in measures the comparisons most at items that affect adjusted results on of to website operating comparable non-GAAP measures financial basis. earnings call Today's special reported a our with release reported financial

existing consumers refer the turn that, consumers tobacco specific over within to or segment references tobacco Billy. call remarks all Finally, consumers to category With I'll adult of today's years or to older. or in a age XX tobacco

William Gifford

strong by returns our you pivotal thank headlined Good for cash toward to significant results Thanks, Altria, for progress XXXX meaningful Mac. financial morning, and another shareholders. vision, us. was year and joining our

in we strategically brands core margin invested expansion leading company's and our businesses growth our deliver tobacco enabled Our income while future. talented solid to and teams

and rewarding shareholders share billion with we continued dividends For adjusted history the full by year, $XX.X in diluted earnings our long repurchases. per and grew share X.X% over of

that granted FDA and the joint marketplace, next-generation respective Ploom categories. market helped marketing innovative orders ] products; encouraging only for solidify preparations with responsible and through against growth U.S. NJOY meaningful venture milestones performance demonstrated products, and volume enforcement portfolio for in space, e-vapor success us PMTA first on! commercialize in continuing on!, the we and from our to FDA to receiving the mid-vol including and progressed, share products; NJOY smoke-free smoke-free nicotine for year the our and and and their stepped-up applications a advocating through activity. submitting position the hit As sustained for our including JT; well-regulated NJOY And [ illicit

nicotine Sal, our our XXXX. smokable update on who U.S. financial for our an earnings My remarks and business it on and industry over results. of then provide view consumer this and further dynamics, will to progress smoke-free space, morning will guidance focus the I'll our on hand detail

the Let's environment seen historically. in nicotine of harm alternatives faster significant, The and space. and reduction a are operating seeking we've the tobacco pace for begin U.S. smoke-free view the consumers our than at is potential with

categories large the as nearly population. over approximately fact, and adult grew In tobacco number adult million, past consumers estimated as e-vapor XX year, oral of in smoker to the the the

We year. the XX% estimate points total represented nicotine prior X from up of smoke-free that percentage the alternatives approximately space,

[ smoke-free with smoke-free aligned the consecutive by over the growth the X% grew increased on and ] For basis. compounded approximately annual X businesses. vision a past industry volumes growing adoption our our alternatives and of space, equivalized nicotine year directly and nicotine total is The years of aspirations second for encouraging the

Together, In tobacco tobacco to are very public addition, actions are for are and health lows. prevent the historic And encouraging rates opportunity. youth usage use yielding results. these reduction of deliberate trends at harm underage decades

products, the e-vapor illicit However, of reduction. be which disposable the were and illicit up availability category. and We is category prior grew represent estimate the driver to jeopardizing more than the tobacco we continues that approximately At the primary opportunity that smoke-free vapers, harm industry of growth from for exclusively that the XX% long-term by e-vapor widespread XX% products disposable XX% in nearly year, vapers. million XXXX, by there driven year-end, estimate XX of

the with of approximately in disposable growth those from came usage. showed XX% prior also Our cigarette vapers that data no

to seeking the demand products. products, and material for This laws smoke-free exist to the have regulations. retailers simplest markets are distributors the terms, and any responsible holding enough X that federal broken within for with authorized product evade and legal those those meet is clear not the the the manufacturers In has X rules. environment to who and violating operate U.S., is regulators as accountable. framework violate Congress and who tobacco we become in consumer believe and experience products FDA-authorized continues flagrantly the FDA regulatory intended. The is for consumers challenging operating and actors bad make operating dynamic regulatory structure not confusing manufacturers, not marketplace X retailers for and has Illicit It consequences for yet

XXXX, e-vapor understanding where we clearly our goals these list help small In adult in we established our We headed. of introduced our history. illicit portfolio categories deep from to enterprise make them smoke-free a we define aware comprehensive When and our were consumers, not industry-leading of tobacco believe of are markets goals, capabilities reality. a our XXXX market more dissimilar a other would we tobacco throughout

compromises to revenue XXXX grown scale believe However, the this goals. has dynamic our volume ability a expectations. our beyond illicit and e-vapor achieve market size and We our smoke-free to

achieve to established with In our in we ability transaction. financial addition, connection it NJOY targets the that compromises believe specific we

goals have market the more may are illegitimate we and clarity result, we targets smoke-free e-vapor NJOY when reassessing a on evolve. anticipate these updates how As and providing

of illicit illicit a DOJ such material against in We illicit in for of the AGs the will progress, looking be importers. a litigation as and products, the manufacturers, from state prevented of bringing meaningful or signs entering decline increase growth number products and distributors U.S.

various announced Encouragingly, state of against importers, earlier e-vapor and AGs this month, the Columbia distributors X actions District illicit and retailers.

issues the and legal of agencies by believe can PMTAs to partnering addressed. FDA for consumers illicit from and can be am will that order optimistic the also by to more the country. with We other authorizing establish to prevent alternatives products restore I a entering market market federal these

long-term this goals. does corporate be remain currently clear, our This to to in and the found consumers enterprise smoke-free on we steadfast impact goals be for our adult we morning. commitment vision building goals our me And progress our smokers of smoke-free adult or and using in earnings to portfolio update our release growth products our FDA-authorized a products. goals issued can XXXX financial not Let

and several Let's context segment. in of the actions NJOY. learning a and of was I'll XXXX first XXX,XXX campaign of e-vapor a messaging. secured NJOY, stores, the growth position compelling smoke-free performance introduced of year was than trade with to broader trial-generating briefly at its a our in to more variety through In ] executed for and driven impactful as with in transition highlight. over and with the [ performance, contracted ACE taken of distribution expanded brand NJOY activities with which results stores share a beginning NJOY's progress year, NJOY new by retail pod we XXXX, now premium NJOY's equity volume program, market, XX% are throughout pleased consumer grew competitive

a than As NJOY quarter. the consumables million volume to grew these more of fourth XX% by efforts, result units in XX.X

over X full full more retail volume grew X.X while X.X million XX%, up the consumables for point points, volume was by for grew of of the NJOY points year. fourth brand. shipment NJOY year million period. by million its XX.X X.X versus for NJOY's and units share the consumables the was Consumables share indicating the strong quarter, And shipment units. price ago share fourth units demand was increased In device the to year retail than share share sequentially, by the quarter X.X XX% of for a

X are continue We I'll final Trade patents JUUL's NJOY. not in to and the infringe with JUUL's its on, mention case. ITC case these patents. The moving that determination with disagree believe Yesterday, the decision JUUL's International with U.S. that and on the claims before respect the patents agreed the ITC to Before this does ITC's issued invalid litigation Commission. against ACE in

ITC's a issued U.S. decision. of cease Representative, barring the XX-day As the which of importation decision and Office period order ITC's remedy, orders ITC sale and The could and currently desist review by an a ACE. the under reject Trade exclusion is the the

by the its FDA-authorized is illicit addresses in of and all NJOY issue event This e-vapor not overrun the product menthol continues would work in that decision limit projected. undermines a products. products, ITC's choices, health, the on that of the that ] including especially is [ public only context FDA-authorized patents market decision severely solution

NJOY's finding NJOY's Regarding administrative in JUUL, determination, the infringe not December, that law issued an did judge JUUL's against products case patents. on initial

ITC petitioned initial ALJ's the to have reverse determination. review and the We

issue a We expect in to ITC April. early final the determination

to and on! more as nicotine share quarter. increase oral the unchanged in growth, retail category an the This the reported represented shipment the reduced build the prior brands. the to investments the growth category. consumers tobacco Helix than over pressure. program from differentiate sequentially that performance on!'s well a ON! cans campaign the made look the by in oral in packaging ] increased on! year-over-year million to year. and of trade to of and quarter. in X.X the was volume nearly continues pouch versus a fresh purchased premium over Consumer fourth created prior points the XX% on! competitive competitive share by investments fixture on!'s points new to XX% increased were the to secured X% variety nearly [ of nicotine sourcing more fourth despite oral throughout past the Oral versus estimated growing Moving performed at an participate the grew further increase regularly position volume equity retail, volume pouches XX months tobacco promotional category enabled X approximately to fourth tobacco year-over-year of locally continued of primary quarter, XXX,XXX on! quarter, in grew included share than X Helix for XX% on! category. fourth strategic pouches and a was oral year year, by In and visibility for for contributor its share brand. IT'S new broader X.X% XX% the industry on! the including

be both we XXXX. of And achieved profitability retail offers encouraged of year unique are FlexTech on! the e-commerce. pouch on! In the for been first Outside has is the of Helix Kingdom. PLUS ahead Helix we our fourth for will in to and a quarter, full in portfolio, pouch that on Sweden the brands. profitable its efforts, nicotine XXXX experience, United As PLUS U.S., time is anticipate sourcing steady competing result goal. space momentum mainly on! the these the competitive the incremental on! at total from PLUS building a by PLUS's and product markets, and in

e-vapor Watermelon Mint consumer look launching are to flavors: preferences. developing that to appeal heated as Lemon to Raspberry we We to portfolio tobacco, markets both U.S. evolving are once using on! appeal seeking products to in insights adult our we consumer innovative are In authorized. to of X plans forward inform a smokers we believe inhalable products. the bringing We and new PLUS to will alternatives

We U.S. JT. with through to to with regulatory Horizon, bring preparations are heated moving the joint products forward stick venture tobacco our

XXXX, towards in tobacco submission We PMTA an Britain. now During a in our our commenced e-commerce in made we midyear Great we December, for great on XXXX. make MRTPA Ploom. our small-scale launch test submission combined accelerated and SWIC, through progress And expect to a heated of capsule product, work

strategies. expect inform to further We insights from consumer our the use test to

smoke-free shift to the authorized of outlook. and committed Turning continue our U.S. there to to We XXXX financial smokers to a reduction harm FDA alternatives. tobacco opportunity in believe is remain millions significant to

continue of legislative investment the developments. smoke-free impact preparations. including areas the We continued litigation development product remain and products, and will the product and smoke-free we illicit cumulative and will adoption smoke-free And market regulatory enforcement planned inflation, our support and external dynamics, monitor purchasing tobacco believe of of patterns in economy, dynamic including products to in consumer XXXX. Our regulatory activities research, environment include

adjusted Considering diluted range growth This of diluted to base these we an year $X.XX. deliver represents factors, to expect in $X.XX adjusted $X.XX of in range EPS full X% a XXXX to a from XXXX. X% EPS rate

on assumes initiative. of and guidance e-vapor e-vapor the savings in market includes the limited in impact volumes which of to impact & illicit quarter, occurs first Accelerate XXXX, -- Optimize day shipping reinvestment X cost from and efforts combustible a fewer previously enforcement product in the Our announced the includes the fourth related in anticipated our

the includes range lower periodic addition, In expected benefit net guidance income.

will Mr. and Stoddart our a to and morning. to Directors marketing tremendous detail I'd executive Board be extensive Sal global this provide to it welcome as over experience business Altria. to on our I'll to also like announced of Rich results. turn asset additional Stoddart's leadership financial now

Salvatore Mancuso

Thanks, Billy.

for year the full growth volumes external inventory while industry generated segment volumes tobacco segment X% X% investments with robust of the in this movements, that for for a in full products full When adjusted the was the and estimate the fourth fourth its quarter domestic to net an by At year. X% environment. businesses XX.X% XX%. core declined year cigarette quarter company's for X.X% its estimated cigarette Our solid maximizing by the and and price by declined year. adjusted and for grew the margins expanded of the quarter funding and calendar year. Smokeable trade year, differences realization on respectively. for XX.X% strategy again we level, segment volumes the by The quarter XX.X% domestic for OCI by delivered and smoke-free quarter income fourth profitability full of cigarette year. in products domestic appropriately and declined XX.X% full the Marlboro performance the and reported in financial for The fourth X.X% balancing XX.X% operating quarter smokeable adjusted Adjusted performance supported the the fourth challenging full products. This in

products. consumers pace As an change of adult resulted nicotine space rapid shifts entering has with over category, Billy increasing have These consumer smoke-free the described, nicotine tobacco within adult changes years. through been the preferences, in past number in primarily of X significant the the

monitoring decline We are to X these cigarette on latest have cigarette decomposition been estimates. effects our industry category updates their and making rates shifts and

decline any adult decline that volume the excluding smokers, to cigarette industry of cross-category in impact the movement. estimate believe represents to due secular we X.X% First, the cigarette category

the to over cross-category decline XX to last X% estimate industry cigarette we approximately X% months. the impacts Second, contributed

sequentially, in dynamics. X.X consistent Turning with from the the share share X.X X.X share deep now the category quarter year, quarter. point to and by by segment share points the share discount for recent of fourth declined share retail grew points fourth Total points Marlboro share the historical discount. most full seasonality cigarette the coming fourth growth and X quarter with of in in the

of expanded share to share and Marlboro profitable XX.X% an of year-over-year the premium for fourth highly sequentially. its quarter, X.X the point premium increase Within segment,

its XX.X%, an that we and year. year, points are Marlboro grew full X.X category, the share share cigarette of performance aspirational the We believe versus For Marlboro prior premium the increase to the its brand of encouraged by remains XXXX. in in

reported and the results. increased, & retail the continued year-over-year. cigars, large financial shipment strong highly results, Mild in oral tip X.X% tobacco fourth contribute its category reported machine-made share In grew profitable OCI volume the segment Black in increased to margins products oral OCI smokable Adjusted the cigar segment remain Middleton leader tobacco quarter on! products quarter. segment. adjusted and and fourth of The to

the the to increase OCI margins adjusted percentage For fourth of quarter, the prior XX%, and expanded adjusted XX.X%, segment an grew X.X impressive OCI versus points year.

adjusted grew year, segment For OCI full percentage the X.X%, the by OCI of XX.X%, X.X adjusted points. up margins with

quarter declined shipment for segment the were points by essentially quarter, fourth for segment respectively. differences, trade by were partially the calendar volumes and full by by our brands full for products Total the segment MST adjusted and decreased Oral retail X% volume X.X% fourth an movements offset and gains. unchanged and declined year, quarter reported on! estimated When for as tobacco X% declines X.X year. fourth share percentage in in the share inventory

the Within brand. purchased quarter MST STC remained the MST a and fourth Copenhagen undisputed the U.S. X and X every approximately cans full leader, category year, for in was

compared our to ABI earnings adjusted year. the reflect ABI. X.X% due prior partial ownership a the We impact year. last period down interest earnings year These fourth Turning investment ago recorded to sale to investment our versus of the quarter, the the in of million for lower $XXX equity of

to as the our long-term remains shareholders. our value the and a investment, for continue maximize ABI We of stake the financial goal to investment view

a our demonstrated commitment and balance We during significant returning to shareholders to value XXXX. strong maintaining sheet

$XX.X to year, Board in XXth cash by X.X% $X.X XX dividend our shareholders increase through We dividends and billion raised dividends, our in repurchases. of full the the marking paid billion our over and August, returned For we last years. share in

completed authorized decades. $X.X repurchase We XX.X over repurchase our largest program, billion, year single shares our share million in X also representing share repurchasing previously for

the Our of in sale investment were proceeds by supported our from share our ABI. repurchases partial

strong We effectively balance during maintained a year, our capital the balanced sheet. allocation we priorities and

of December with ratio total in Xx. as Our was approximately target debt-to-EBITDA of XX our line X.Xx,

to that to be Board new our am Billy happy a XXXX. billion we questions. this Moving to announce and your will take to that, expect I program, repurchase I end by With authorized pleased of up, $X year. and we'll wrap which share the complete

While remind quarterly the compiled, inventory non-GAAP which also calls are altria.com. earnings I'll our other metrics, and today's our posted items. being available that We've are release usual include on you and reconciliations pricing,

any open questions? period. Let's Operator, the have we question-and-answer do

Operator

[Operator question take Smith We'll our Matt Instructions] Stifel. first from with

Matthew Smith

Billy, year, day can X guidance earnings quarters, maybe the have to growth? You in the phasing about X the lower X% in but for to you MSA less of start the first the shipping quarter. out, X% growth, talk costs EPS the first

So you of just of terms us the phasing? as can with year, -- can help we shape consider the in

William Gifford

nothing in quarter. as the you XXXX. forward guide think Matt, Yes. XXXX think I distorting don't to to year, we as look But the we is really about

full XXXX less the as ownership had brand. You'll We highlight day a Nothing of half because in like did forward. out quarter. want to to remember, we spending for go we NJOY year that X year stand first that up we in 'XX shipping the to would 'XX, ramped

that quarter. that occurring sure So just understood make in to first the was people

Matthew Smith

perform the terms Marlboro picked continues of in discount share but the well market quarter. trends premium my segment, fourth back up follow-up, in As to share of

alternatives? the continued you're Can XXXX? given pressure see about adult you shift tobacco seeing there called continued discretionary cumulative trends do out impact Or a and through adult the on that you You consumers. And in is how those out playing pressure? proliferation this time mix Is over of consumers? income cigarette talk incremental

William Gifford

outside affecting we'll things consumers. see can point. our the your And the of tobacco continue you impact really to monitor, of We cumulative X that's to industry. And the Matt, Yes. it see do

see and that You payments, carrying. consumers credit are of in card, amount credit it of things that can late nature the card the

feel believe, to cumulative it pressure, the is consumer of and we So impact really, continues inflation. that the

know, XXXX, it So guidance we'll as provide that many we consideration we how that is into we before very the we about take in gave. but we'll feel monitor. range. things see up but shapes good something And that you

pressure. We that As volume. the illicit you we're my and remarks, far highlight continuing the in try market -- with industry decomposition It heard our that e-vapor as in category, flavors. really cross to to market is cigarette of flooding see

a been against back, system products view. If alternatives. step move saying optimistic regulatory what and It's you an We consumers they that are ready can that enforces to products. we've just you take illegal can if authorizes find legal need

Operator

Thank question Herzog take Bonnie our you. next Goldman Sachs. with We'll from

Bonnie Herzog

guys right provide especially JUUL ] about asking, to cetera. discuss with more NJOY. evolved how color category All right. et How playing this, table, the I longer also of now, with market targets a comments you has your I you and little Billy, was in on could what hoping have what e-vapor for potential are being a illicit, for some settlement hit [ you your no given the did you options given about And be NJOY? on the possible thinking guess? the

as now H&B at strong nic in just not kind well profitability e-vapor shareholders you is protect your have program? growth prioritize worth as on smokable, being to and of time, of while pouches in possibly with So with same all and and better it returning on! love this. maybe in cash the buyback dividend right to pursue thoughts to hear the your So drive

William Gifford

Yes.

Bonnie. to please follow-up, if have concise do. you anything or you a answer, good missed of I'll give I lot but points, You brought up a try a

review as of back in a as trade still of steps some are far about the pathways, there pathways, step are representative. you when the number there think the talked process. I I

back very rare. that in has -- been look history, it's been you While

here. circumstances special are there think I

with products, If disposables a specifically process public shirked vaper the have you regulatory market. or flooded market about completely that the have think that's in you illegal health,

tobacco the only thus which you the While the and authorized have menthol side. NJOY, on on authorized flavors far

think that mentioned considering. you think a process. health funding be We're the think And factors ] be So through you believe health But settlement. the public of public you other the as we it. perspective, you determining side. on about I we're market, improvement about that we'll to factor that health segment, when go reasonable time mentioned I really should need you from and One, party the [ through public a be about e-vapor pods disciplined going the When at roughly a XX%.

be disciplined You reasonable. will we you be have to -- and what on consider

clearly I what's that winner about illegal is think the in marketplace. what's may The when names, marketplace winning. products. that's you but is brands the winning And disposable change in think the

certainly ] we we we're [ you are shared engineers products to So of the previously, worked meet It's out to really with nothing our avenues itself. I the the and that for pipeline nothing to not We've e-vapor come the line some from you when think device into continue. consider infringe consideration changes in where changes that to to filed the on modifications patents. taking consumer product patent patents work And SE a we the standpoint, that exemptions goes comes demands bottom as consumer. into space. to the -- There X number

but points, it. And so I'll we're about all how thinking and if that's pause your there of hit see I

Bonnie Herzog

the right? think I I point it is doesn't what's No, I SEs But And to mean, the guess. your maybe about ], that's patent, [ for solve that fourth I helpful. fourth, think missing

So be... I you think may

William Gifford

Yes, the ITC. would us you that the that if change I hear our to are on Bonnie, infringe by not on final, working you, allow and will, vigorously determination engineers

Bonnie Herzog

maybe then your quick And on guidance. me, just just question Okay. another for

it it want operating earnings? going market to the your to think being ability did range ACE the to about the from has your that think includes it's is check. I of high drag if have to or guidance is income and end NJOY NJOY First, potential to guidance to pulled, does. that happens, I pull actually verify end second, double want given at loss the this March? on just then year? assuming of at hit you're would And more just your realistic EPS a that likely therefore, a still that been likely that boost your I And

Salvatore Mancuso

a plan. range XXXX. are always Bonnie, the number we know, And run, thinking There as we of takes related puts that's a across EPS why the as we're to scenarios and provided you about guidance.

how year Obviously, So to a marketplace. got variability we'll in levers with see out. of we've lot we deal the pull can the that anticipated plays

the provided. update feel of good we about If guidance we've there's the we to So anything progresses, as year course, will.

Operator

And we'll with from UBS. next take question Faham our Baig

Mirza Faham Baig

have questions. and just then follow-up X I X actual maybe

patent Just the your the fourth question going and on furiously engineers quickly back to NJOY that are working behind.

do approval and SE able be could market? to SE to are that, thereby, If the NJOY you you able receive to for on submit application that and able application when expect to for successfully back you product patent are by navigate that bring an that

previous And the was up the I around smokeable in fourth going quarter just you about think that from The which sharp which particularly quarter quarter. that movement, explain second the Could sharp XXXX? costs a results. dynamics have how final maybe question was as into resulted costs just is move -- division, controllable your we well into particularly controllable QX on as the should in the in XX%, the

But ones? from 'XX players league 'XX, well in on how illicit growth both the you rapid of given 'XX the question oral bit growth. in tobacco category sorry, in as as your pouches XXXX faster the some do And versus nicotine grow pouches. I that competitive -- is of the dynamics see and the was particularly the versus didn't surprised final a nicotine

William Gifford

smokeable answer Yes, on let Sal then costs. and patent will nicotine I fourth I'll question the the answer on and one pouches, the the

SE on think JUUL the when authorized the the process process. exemption make depends to it think not follows -- patent. it the predictable, the change would it you patent, If other exemption we not to is able the that rapid more on final SE really lockdown of about be X, get the process more I to fourth a infringe FDA. the that would And to recall, by you while rapid due as be

nicotine depending reaching. as far starts categories, pouches, as have as think you as As far of I base on consumer and they're they see always fits introductions growth, what new

I moist used mouth. tobacco grow tobacco nicotine putting, who enjoyment their over the in had because you to you think you saw so introduction was traditional products if moving nicotine rapidly the will, in or consumer pouches smokeless

And so that's intuitive.

can can forms I from think if speak as nicotine of make over what nicotine consumers will and to continue the such other grow to pouches. it is change cigarettes to

while volume, so can think that on! continue we over so we smoke-free to to looking a them the guide on to with to bring authorized to PLUS engage we We're on! consumers that product market have great switch and be products. And we to don't

Salvatore Mancuso

Yes. fourth And in at look you the terms of I just quarter, costs, I timing. would point when to think

look at I over think longer costs got just a you than to period quarter. X

timing in So a definitely factor QX.

guide will smokeable though, controllable costs. granularity a XXXX, is as a tell the I for we obviously, far level we're category don't at category. that you As of -- declining

in how to going we be think allocation. resource are disciplined about We

there support revenue us would resources to I cigarette thing we efficient using with are allocate And the cost allow more of tools our and we other in data point of controllable are it then, to comes management promotional brands. X how management, our course, guess costs. analytics to I be continue to growth to when

financial when So think controllable there's about costs discipline. more than just we

Operator

with our from question Barclays. Jain next Gaurav take We'll

Gaurav Jain

me. few a for So

up So QX. that, impressive. nicely is the on the growth first Pricing in volume remains And was on! despite

exists it that rate can we up especially spread market is how to with leader can is on! the the volumes at still something pricing So the your growing? yet which that should -- keep which continue and compound of now at you given think industry

William Gifford

Yes, appreciate I question. the

you in against clear. think think as enforcement illicit I is is FDA space, though in when appeared product synthetic a was competitive about filed it the we nicotine discretion marketplace as the Even getting and more it's had statute PMTA. the products pretty both see the that the marketplace more what applying with that well nicotine

over the bled that to application synthetic of think area. their in So has discretion I enforcement

We you it I product increase, spending And pleased lote think think keep continue think to to percentage the time. put to the to heard with to in it's to brand And be who able to while when purchase but It on!, how in sharper the target loyalty product the you gotten the if [ returning continue marketplace. will, extremely sharper of to bit the allows to we'll the in profitability able profitability consumers a impressive. ahead ] we with are very get the were as data you feel generate of generate with our year-over-year trial resonates consumer. like being marketplace. have itself, trial, well. remarks, use promotional the of on!, about certainly us to We the analytics meet is we I

Gaurav Jain

Then comments market. follow-up on a actually, your the -- on nicotine synthetic

in cannot or the market, the So are in do. of [indiscernible] what market do they competitor FDA clearly, can seeing your nicotine differently terms

companies, you in on market the the new but not pouch product be a only nicotine a large of on also want also also synthetic have that have Because e-cigarette side? then to participate side, you should we nicotine, So lot that. isn't evaluating in,

William Gifford

we on it with that with application was we clarity have it in moved when certainly We passed. But radar. and is all that's what felt them the the based like of surprised along. discretion been discretion on enforcement our applying statute area Certainly, up something enforcement in was were evaluating

Gaurav Jain

like discussed that does cigarette where is you Sure. are point So losses, over losses it some which. start time? share profitability of have on confirming years, growth rate the industry at you I lastly, all want and worsening And the maximize that so there larger [indiscernible] versus is? market But share we think to

William Gifford

when highlighting down think place. economic back to up, you been Gaurav, you consumer situation, pressure, under that takes their is look you react current you see trading we've when for I that and they when the some historically,

tools. place with to I it want is you Marlboro those stick to Marlboro apply And because think when us brand. at certainly is what give aspirational you a safe historically, look we the you consumers see see

something think Marlboro, time that continue I highlighted, premium to see it's growth in tools you applying through correctly. Certainly, the I those we've monitor. that with as we'll of been

highlighting we're as been we've you, -- it pouch. thing other think highlighting that distribution illicit seeing for been I is, process. bled we that saw over And We've in whole vape the it well into to the cigarettes it's as label but a outside over bleed bleed but of product I'll white to it, U.S., begin as into seeing, we're legal call product, to that's to starting is U.S. the nicotine

Operator

our Morgan We'll Stanley. Eric from take Serotta you. Thank with next question

Eric Serotta

Great.

XXXX. guidance to wanted EPS for Just back on circle the

less And lower any you rate day lower mid-single-digit offset you items bridge You of income? that income? out a benefit a trying there's tax less Are the obviously help well, the quarter. tax pension pension you out somewhat Just the -- in income. pension But other quantify that X should have X called the from can do first EPS and of? think we us called by rate algo, kind to given to there

William Gifford

just and Yes. off, tax rate. mention ask Sal I'll start I'll this to then on

you stepped-up And that's let investment. things That's start performance I rate. speak look of think that really pension of When EPS then puts I'll periodic the you you it's that total highlight XXXX. [ have is to related impact about but that last into shipping you marketplace the scenarios is any think wanted incorporated a it, see the asset year it, really income. think that about we bunch day and tried through for highlight quarter, we that the -- first that We the we every net growth the in -- when you we mentioned to enforcement, What the time. When about don't the a you we of enforcement in see look, in year, to just takes, historically rate. to time pension Sal at think ] range impact. and from tax

Salvatore Mancuso

I add would Yes. well-funded only thing have And plan. the very a is to pension the pension we

good management is overall the benefit the defined year-over-year really plan. a of Tax favorable feel we rate basis. about on So

that call to right out. You're

in the by adjusted driven It's taxes years, variability rate. you been If have and state in credits, activities. business other tax you changes look the seen few past at various factors, tax including

place, the monitor plans to in rate So provided the and tax we'll best for we've that the continue on based it. estimate put our is guidance we've XXXX

growth algorithm. and you, year-to-year you rate. it if is tell think that You the mid-single-digit some knew would you're EPS, annual would expected we also product. for the those variability long-term about I about a the in We as vision goals in and be smoke-free asked compounded making investments

So we feel about today. really we the were good provide to able guidance

Eric Serotta

if It seen the to then summer of as hoping tobacco we've the or in modest consumer channel a color Wondering some in Okay. channel, of low-end the that a other seen to And post seems in from categories of pickup terms We've to of the overall. seeing and then what you're convenience to of pickup respect the you're of have consumer. what spending as your to sort get moderate consumer any color a depth October in number in election. those kind seeing in channels? you with kind

William Gifford

consumer is I historically inflation. there Yes. the mentioned lower status. are you look I When the headwind always that end this the at the socioeconomic you the I and tailwinds. -- is earlier, of mean, -- tell headwinds consumer biggest and specifically impact of cumulative our would

economic they we'll watch continue watch. they compound, cumulative moderate, situations. If we able haven't that so we'll react the If to it It's through inflation. highlighted, period would been to expect current that's this to. consumer adjust adjust time, economy that's cumulative And been their steady expect stay time. to that. a inflation to stay and we And to of be If our for consumer things of to that to to under the will what able that continue they look, to adjust impact we immediately of And why continues impact pressure. it to

Operator

with Romney Emma [ from question last our Reuters. ] take We'll

Unknown Analyst

hear your administration. new for the under changes policy about a to little wanted bit expectations I

combustibles, first of nicotine Do the you all, the scrapped. proposed by ban prospect been administration? has being see Trump the of obviously, What any cap? that So on menthol up about picked

William Gifford

Yes. We'll wait and see on that.

you provided be my would We a heard remarks comments proposed really as we that And see of Congress hear completely be it functioning will certainly in that we we at future rule And intended. that. the is to system detailed feasible. really believe excited was the time. not me mention believe I the And remind and outcome technically We you that in to the earlier, should FDA. regulatory way harm the the reduction. broken

illegal regulatory thus about a that science, to step products was none you and and at designed was of back have far. to against any scale what system happening third-party to look think enforce products, is that If it authorize the do, really and

look really it function believe I in is what agency this the current expect will So that function. was way we the to and they administration the from get at intended

Unknown Analyst

Yes.

you possible administration to next was FDA's products question or policy around for? my What sort on of some of you kind think nicotine that sort considering do Well, think change the change. approach. Okay. the they're of vapes sort of new scenarios sounds of I for kind you or opportunity mean, are preparing in and the is the an it like push

William Gifford

that know them is like satisfy adult them. slightly Yes. would that looking similar of which consumer, What we least mentioned, -- at half cigarette an that agency is see for to are we -- very the I to what over just alternatives

and an products but is authorizing what diligent so expedient an that enforces the products illicit marketplace. agency expedient, we against that And in need on is agency

see and the at federal I think and are go nose can thumb sold plethora the and U.S. you the U.S. of majority products just throughout a that agency the a basically to of these across government states have the being their

for reduction through you what that's for. be looking That's enforcement so think better We And and up U.S. the would products harm legal need against authorization time. of illegal. we

Unknown Analyst

just altogether threat? and of kind scrap application just the a its own sort administration Yes. that And is a ahead let's could thing? say of if meet market this there if process Is go can't a pending risk, the you've FDA PMTA though, that got deadline,

William Gifford

we really as of that intended all the FDA along, prefer, supported you marketplace. have passing is party it third certainly regulate was would the a We it as

have a that So marketplace. for manufacturing science -- have standards, standards products you it's in the you legitimate

just market e-vapor products to the a it so it and on, as would we what function. FDA want enforcement. see early to lack need which in have into over proposed Wild, so continue function Wild in were seeing agency marketplace doesn't And because the we an West to of turn the to authority was continues is of We nicotine

Unknown Analyst

is know great could how to wrong do there, policy it? if that shifting Okay. terms uncertainty sort production? although might come which be if to price? correct into And just It'd through know an point? on to options business you there be impact assume impact tariffs, other would just would force. I'm do Would me mitigate be be around I lastly, of Or great if Altria's be what anything It considering vaping able in tariffs you would the it mostly, you're of

William Gifford

seen of tariffs Yes. pass. been any lot media. haven't I mentioned a There the in has

would think some we've I that if on limited China. you're e-vapor, place heard were where any in everything referring put to China. of We comments have sourced to tariffs impact out is

Unknown Analyst

Okay.

And you might why? explain I be was thought sorry, again, Because I in could but NJOY produced China, wrong.

William Gifford

we that are China. that we actually outside have No, utilize facilities production alternative of

Unknown Analyst

Okay.

Indonesia? like, in Okay. Is that

William Gifford

specifics reasons, I'm globe. for Yes, not but into facilities have get to competitive the around we manufacturing going other

Operator

to like Livingston And remarks. any I the turn there for closing further appears questions back would to Mac call this be over at time. to no

Mac Livingston

again, Great. a for day. great us, and Thanks, have everybody, joining

Operator

This call. your participation. you Thank for concludes today's

You may any at time. disconnect

Altria (MO) 30 Jan 252024 Q4 Earnings call transcript