Altria Group, Inc. Q3 FY2025 earnings call

• on! held steady in a competitive nicotine pouch market, with on! PLUS launched in select states, showing differentiation and positive research results. - Horizon filed PMTA and MRTPA for heated tobacco products. - NJOY and JUUL had litigation, and e-vapor market had illicit products but enforcement efforts ongoing. - Collaborated with KT&G for international modern oral and U.S. non-nicotine opportunities. - Returned nearly $6 billion to shareholders via dividends and share repurchases, with 60th dividend increase and share repurchase program expansion.

Smokeable Products Segment: Adjusted operating company's income (OCI) grew 0.7% to nearly $3 billion in the third quarter and 2.5% to $8.4 billion for the first 9 months. Domestic cigarette volumes declined, but Marlboro maintained premium segment leadership, and Basic grew in the discount segment. Cigars also contributed. Oral Tobacco Products Segment: Adjusted OCI declined less than 1% in the third quarter with 2.4 percentage points margin expansion to 69.2%, and increased 3.3% in the first 9 months with 1.8 percentage points margin expansion to 69%. Helix's performance was a contributor, with on! having steady retail takeaway despite competitive environment.

• 2025 adjusted diluted EPS guidance raised to $5.37-$5.45, up from $5.19 in 2024. - Q4 EPS growth expected to decelerate due to lapsing share repurchase and MSA legal fund expiration. - Strong financial performance in first 9 months allowed significant cash returns to shareholders, including dividend increase and share repurchase expansion.

• Intense competitive promotional activity affecting nicotine pouch pricing. - Litigation in e-vapor between NJOY and JUUL. - Regulatory uncertainties in FDA authorizations for smoke-free products. - Macroeconomic headwinds affecting consumer discretionary spending on tobacco products.

Q: Sal, you raised the low end of the guidance again, with fourth quarter implying deceleration. Any other key factors?

A: Mentioned lapping share repurchase and MSA legal fund expiration, and monitoring consumer spending.

Q: Bonnie Herzog asked about nicotine pouch category and KT&G partnership. How about on! PLUS rollout and operational efficiencies?

A: On! PLUS is early, excited about differentiation; KT&G partnership has modern oral, non-nicotine, and operational efficiency aspects.

Q: Eric Serotta asked about on! PLUS price and controllable costs. How?

A: on! PLUS is premium-priced, controllable costs managed long-term, with focus on cost management and data analytics.

Q: Faham Baig asked about duty drawbacks and FDA pilot program. How?

A: Duty drawbacks related to international partnerships, FDA pilot program for nicotine pouches is a start, with hope to expand to other categories.