Altria (MO) 28 Jan 212020 Q4 Earnings call transcript

Good day and welcome to Altria Group 2020 Fourth Quarter and Full Year Earnings Conference Call. Today's call is scheduled to last about one hour, including remarks by Altria management and a question-and-answer session. Representatives of the investment community and media on the call will be able to ask questions following the conclusion of the prepared remarks. [Operator Instructions] I would now like to turn the call over to Mr. Mac Livingston, Vice President of Investor Relations for Altria Client Services. sir. ahead, go Please

year Good release, Billy thank Altria.com. Sal Gifford, discuss all providing our and CFO, [ph]. issued on today, us. press available and a Mancuso, for quarterly This will release full quarter fourth morning, Altria's results. Altria's at results. morning Lori Earlier you we The and our joining our business presentation Thanks, website CEO, are and metrics

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

accordance Our Statements contain statements exclude reconciliations Accepted today's contain subject board. reported to financial projections US the and remarks in non-GAAP results Adjusted various its differ factors and and that forward-looking and of Descriptions to from our Altria discretion the financial reported of altria.com. reports measures the of results various materially today's results these of cautionary included results. payments review share Please projections. that repurchases Principles. will Forward-Looking and on website future actual operating dividend Altria's with could in earnings end and both a section on remain affect comparisons results. release release for and cause Cautionary at special Today's at basis. call earnings with are results Generally items adjusted Accounting Future

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

pandemic. and presented us. in thank morning delivered Good joining managed by outstanding the XXXX and Mac. through Thanks, challenges Altria the COVID-XX for results you

employees colleagues communities. and commitment their tobacco to were unwavering Our demonstrated resilient our businesses and work,

we transition Altria adult progress smokers non-combustible a continue forward making the vision XX-year to believe employees steady Our future. of to responsibly lead move we're to our toward and

in Wildfires. strategies combustible addressing inequities. non-combustible to employees Coast the within businesses. and demonstrating a West shared the efforts profits and Responsibly and we leadership We against including We're and and communities, science-based products and remained organization. positive in supported economic We've pandemic inclusive continue previously active maximizing our our leading efforts expanding diverse, to equitable change our the for build external driving execute environment. in our committed to are the more Change starts our from racial relief

are of workplace for Our LGBT communities. recognized and our resource Two XX Chamber Commerce and and these mosaic Virginia employee and in groups the the by organizations cultural promote contributions within respectively. National Chamber by helping our of Hispanic diversity were of Si! awareness recently their Commerce

all And FDA The initiatives acknowledged of challenges Last also our tobacco adopt ambitious sharing remains oral purchasing in significantly industry in to in through and conversion market years smoker transition been which the tobacco determinations. growth in at oral month the The have early to period next behaviors alternatives moist in We Most XXXX awarded a biggest e-vapor continue proud of COVID-XX these last in importance rapid buying CAGNY. for undergo each pending details environmental climate among driver also smokeless the about volumes smoker with the addressing and contracted it over growth nicotine as smoker companies of and in the were changes small were little with in Tobacco more the however cigarettes consumers from of look patterns. combustibles I return and to continues tobacco XXXX heated change still it efforts year category. of as to XXXX a cigarettes. space several the XXXX. was pandemic a we off category interest forward stewardship. pouches rating AA X% ESG base a to from non-combustible dynamic of CDP double notable established category goals tobacco. and water encouraging a we've We're month, moderate its showed stages. signs for

the stable. space remained [indiscernible] at total volumes estimated tobacco Looking in

the compounded fact that total decreased by over estimate have last years volumes five basis. X% on annual tobacco only we In a

XXXX to some and trends expanding by benefits tobacco of our achieve switching While on a away products, centered XX-year plans from the in product preferences, combustible non-combustible represented to authorized deep a availability engaging pause products. portfolio the with and meeting preferences the understanding when our building alternative of remains vision evolving of our to smokers these industry educate FDA by awareness them around consumer

now business driven X.X% full from diluted earnings our results. to per Let's Altria's our businesses. by strong performance grew adjusted year turn XXXX share tobacco

returned shareholders dividends our also in of past for board nearly the the time years. and cash in increased to in the the form $X.X XXth We XX dividend our billion

return our products powers that smokeable to profit to demonstrated strong segment Our This non-combustible continues vision. a of in be invested variety the segment growth XX-year and marketplace cash engine that be shareholders. in products significant conditions. has can Generating

the performance Over this volume five annual X.X% segment share dynamics. market and segment across a and grown various has compounded on delivered OCI has by smokeable years last basis adjusted excellent financial

We continue segment our performance pleased to and be his Sal will this more of in provide with details businesses combustible the on remarks.

Copenhagen smokeless leading tobacco continued the our our tobacco to volume pouch millions and profit delivered products heated believe results year. non-combustible we alternatives with for performance compelling brand remains the strong non-combustible all cigarettes. for looking of an tobacco offerings, of and tobacco, investments for the tobacco, and other USSTC's categories we US from and oral we're In oral business believe present We the products. have the options of e-vapor oral encouraging Moving our nicotine moist and to strength pleased portfolio unmatched with the and smokers products. MST

and Helix full excited both for dippers. in significant it's We for and operations. are also the year progress satisfying believe its a about on! smokers potential made product first of

the that products believe appropriate are assist regulatory team protection Helix the last health. for the in PMTAs portfolio of we XX on! Over the affairs following the demonstrate talented public for months, which our

with from partners, distribution, from coming the store share highly and of up five third brand achieved of XXXX. annualized operators US Helix facility for supported second of quarter its position success on space. XXXX. strengths unconstrained the Helix XX,XXX reaching proposition We're Helix significant on! stores nicotine teams year. ability nicotine percentage converting directly with in management Helix in market year by retail nearly XXXX strong times half steadily Our removing equity on! the increase the and and and plans satisfying X.X count XX was distribution unique with to AGDC's Helix and of sales points and for it executed the of constraints, retail in the growth of expects and pouch a demonstrate the capacity reached of has In one sold gain XX% promotions end the brand the collaborated distribution in mid-year oral in that trial team retail XXXX building of ahead million manufacturing stores category with our the smokers. and end range and on! tobacco the dippers. year growing and generating to the engineers skilled Richmond the for The in during at packaging continues cans. traction well approximately manufacturing the focused and established on! for for smokers capacity on! its innovative believe a has footprint of machinery And on! machine and install flavors to is confident the for capacity

FDA XX% decreased we the Moving PMTAs thousands period by as total September for that estimate determinations undergo volumes of The year. market to the category e-vapor, on to filed to prepares by deadline. make statutory category continues a transition XXXX the full

tax categories in contractual line The to and expects PM all in with the would retail oral e-vapor switching that new their longer play compared across offers [ph] authorized advantage new and Marlboro heated X USA's customer IQOS expand PM the and the recently has feature device also connections the the the journey devices the sale geographies. category launching that and HeatSticks begin Achieving cleaner developing smokers PM that and the channels plans production HeatSticks convenience awareness determined device and that its heated we're responsibly stores, its to continue X,XXX for authorized stores, by expand and category disciplined regulatory We're focused important the array selling the green remains a current USA total by a FDA PM facilitate authorized blue its long-term into and Charlotte the which category, USA additional trajectory packaging in benefits X.X life USA introducing FDA. believe claim cigarettes. verified on version be for decisions, be USA and excited distribution continues IQOS experts it about conversion digital Richmond to packs the and HeatSticks USA's tools variance preferences. from three tobacco will growth of amber, surrounding HeatSticks authorized consist and including best PM HeatSticks communicating convention support believes of and Charlotte available long-term on the should skews an several in products. age menthol. as a be FDA US. and e-vapor Charlotte that new has maximize solely We will a policy and has markets XXXX to first sustainable the to extensions markets. tobacco more expanding track using battery USA option availability gives Atlanta, fixture to IQOS through capability including of approach renamed retail to responsibly reduced will smokers in believe requirements four new and with manner. US the authorized a recharging PM is PM legislative approximately device the HeatSticks in and faster enhancements expanding positioning exposure existing care the included The addresses time. role introduced mobile new We accomplishments of shortly IQOS. tobacco the for performance an one look profitability. In mover and [ph] future select of and new be with XXXX vapor and right virtual believe PM USA products chat metro smoker that innovation video menthol into build naming to disruptive the while FDA currently a We retail

now for Let's to turn XXXX. financial our out

for Our plans investments the include accelerating in vision. XX-year support of our year ahead

vaccine year products, we're of dynamics consumer deliver including regulatory from a to earnings and businesses. X% purchasing growth diluted factors factors disposable into financial to and The non-combustible and stay environment expect and This strength stimulus, including consideration, breadth the expectations X% and range dynamic the Taking XXXX these home $X.XX. however diluted base rate external fund adjusted from developments, income, tobacco $X.XX through a expect our remains of various legislative timing at adjusted We fiscal an assets. adjusted deployment adoption EPS range full monitoring of in COVID-XX in practices, rates, of for contributions patterns tobacco of our to $X.XX represents to EPS alcohol XXXX. we unemployment

incorporates XXXX research the investments system building planned support availability and marketplace consumer product enhances offerings, non-combustible leading continued of conversion conversion and non-combustible guidance to to of investments in increased engagement data collections awareness drive development. an expand products industry smoker non-combustible that and and insights Our our to including

XXXX three Altria's to results over prior the excellent our day which past the in quarter. growth primarily smokeable tobacco business one adjusted includes due year the We fewer in comparisons first to expect delivered has shipping year of year I'd last EPS their the turn and and quarters products now like future. to our that makes financial hard it to detail Altria's dedication me strong employees performance. passion thank our Their business and excited and drives Sal over to environment it's their provide for more for work. commitment our performance the on I'll come

Billy. Thanks

and high from conditions exhausted. on for remained providing Economic package as fully consumers enhanced rates the in quarter an update challenging the Let me tobacco were US consumers. the begin unemployment assistance fourth original pandemic benefits remain by

year spending. However, the trips their we prior discretionary practices was of per remained in tobacco elevated tobacco continued that retail, quarter the to usage than estimate At levels. believe fourth and we to expenditures contributing more the the consumers the trip period. stay-at-home tobacco store slightly tobacco number fourth quarter consumer lower The occasions versus higher ago

points. reported OCI The to to segment our price for margins the framework management grew almost The percentage by with excellent now delivered continuing robust When revenue unchanged of the top adjusted business, line USA's growth industry in full domestic adjusted XXXX cigarette net PM were over XX% other and the smokeable X year adjusting differences marketplace volumes the segment calendar financial prior volumes Smokeable adjusted OCI and factors, Turning in smokeable full segment same by segment estimate the its year volumes versus achieved results for X.X% by and cigarette year declined the product that enhance factors. segment trade performance. expanded estimate XXXX. for declined also we segments versus by the cigarette X.X% realization after domestic we inventories full that level, prior year. year X%. At year

vaccine. outlook. deployment movement ahead, monitor We'll continue cross of We category. not including the by of on consumer to practices, magnitude of legislative at determinations pandemic products of and industry smokers perceptions driven and factors the category underlying cross to a stay cigarette be compared influenced cigarette cigarettes, rates, breadth uncertain influenced we we're that these actions. COVID-XX and behavior several the the be and vaccine FDA in Looking purchasing smoker most XXXX volume will degree the on movement, PMTA believe timing Due following providing observe relative you update we timing expect to non-combustible the and stimulus, category fiscal dynamics, filings each factors the consumer behaviors these to trends industry and of home by risk unemployment of

continued two-tenths to was marketplace fourth XXXX. year of versus in versus during quarter promotional preferences lower toward Turning times benefit disruptive unchanged from quarter the Marlboro to XX.X% smoker competitive and the Marlboro's sequentially. retail performance, familiar and products among prior fourth first continued the up half share brands spending

the into declined Marlboro's Marlboro's year, to start we discount by share XXXX. to full back category full three-tenths which e-vapor the has observed cigarettes consumers This than cigarettes share XX%, purchase coming older impacted year. to increased of from average which the a discount beginning of at For movement performance share year tendency the demographic the retail greater segment was

pleased In unchanged XX.X% was be long-term segment deliver in ago to share brand the and and equity to profit to two-tenths up continue year leading positions on discount, performance sequentially. with quarter the We period total this brand Marlboro's retail believe versus its well potential. fourth

observed products. XX.X% growth in the driven For three-tenths by beginning the full discount XXXX year segment the cross-category increased movement of retail share and to discount at deep

Moving to financial strong & provided covering Black orders environment. XX% or market results volume. of also and brand. to a for segments contribution its has and X% received the cigar cigars, the increased the navigate to from smokeable successfully over Mild Reported exemptions continued Middleton leading regulatory the cigars FDA tip shipment remained year Middleton volumes

by shipping of the versus When points the increased full volumes for the other segment year. unchanged an adjusted for oral volumes increased points adjusted OCI driven Turning to Ste. share higher performance Michelle's third with of the decreased retail excited on In in year from XXXX than investment due a nicotine to beer, Reported product driven the growth the XXXX and year XX% and adjusted million approximately consumer oral estimated of tobacco We with more for Altria And continue XX% segment premise earnings $XXX sales on! we're adjusted oral and to oral volumes segment both of factors pouches. percentage In results on! and X.X% as percentage financial primarily trade of were and same by the our we and differences to pandemic by direct non-combustibles, XX.X% Segment X.X Copenhagen pleased Full calendar performance representing OCI performance decrease capacity pleased very it lower of about expand we're inventory year MSC the Copenhagen quarter the increased X%. oral year. reported by full XX.X its offset pouches. X.X% nicotine movements last equity potential ABI's increased share in in in oral adoption Michelle impacted XXXX on!. in equity the strong year prior margin we the of ABI. negatively by partially MST, down period and investments tobacco despite fourth quarter tobacco alcohol, recorded of the Ste. adjusted was remained behind maintained segment. distribution. XXXX increased the to of OCI tobacco category pricing.

our to and from year, Corporation. ABI down More all In Capital than For value we've adjusted the reductions full earnings from XX% million non-cash operating for equity we've Morris related residual of assets at other in category, the year. Philip of certain recorded XXXX. million in losses $XXX which $XXX half adjusted the over estimated recorded

finance PMCC of year-end As assets was balance XXXX $XXX the net for million.

to XXXX expect expect and the wind asset We through to fully and sales rent complete XXXX. by PMCC in balance reducing continue the this of down end

our ratio allocation, cash we billion capital use of $X expect board authorization our by up for dividend perform be our allocation. we'll businesses The shares reflects our to our Billy I that, sheet and believes believe complete the today. shareholders the target allowing your XXXX. a and a best and capital happy to analyses are Dividends of including Yesterday vision, payout ratio evaluating will wrap new behind questions. which vehicle long-term returning refinancing value approximately significant With June in our for long-term share. XX, to tobacco XX-yaer take to exists shareholder significant excess options repurchase new to authorized our board and adjusted shares. share debt our primary target reinvesting diluted program repurchasing return rigorous strong flexibility provides determine cash for objective of the highly We cash our earnings our We generative. in XX% per dividend remain Moving while remained balance and payout is

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

you. first of of from Nik Instructions] Thank the our comes question Modi RBC. line [Operator

side. Just two from questions my

mean of question of give had share guys stimulus the tax in could you would maybe was well kind And surprising been that? on excise be that trying union pocket played Marlboro quarters really of but rewards in trajectory over, shifting Thanks. the prepared can role very us what now? a stimulus. a there's from be terms brands, we your number stated to mean just because you If the good of front broader which that spoke losing terms What programs how then helpful. gap and government a I other it's drove performance the in seeing I I'm you're price drivers for some underneath of comments the just share air of kind is like Marlboro management or about get given share is recognized it of

the Thanks for Nik. take order. an We'll questions, them in

the we the that the two environment. Certainly front, will excise little with had a year. that challenging On happened have bills tax excise you at up more state be states I the of this it tax beginning excise COVID. bit responding to remind increases tax Certainly would racked

a seen that place, panic because tended coming a that back, towards beginning to have knew bit community it premiums are related little proclivity we we engaging back look point pandemic chatter XXXX. consumers governments that, right cigarettes of from taking had we Marlboro at they was we team that tried concerned Nik the year. bills We analyst states. for there across some We have highlight certainly was and strength didn't [ph] programs certainly their through of The your focused comment Nik, response the benefitted were strength highlighted what Sal standpoint behind engage you environment about we be well through as through felt COVID-XX to But to and a the the have will on with to in his of think the mentioned time this get and the now discount team but the I you From both some marketplace other brands people of it brands you what saw adults and challenging to discount felt XXXX consumers but that. time the brands government when we smoker though, progressed the both in think what of stands. how of brand Marlboro in that that excited and it know across We was e-vapor like great with Marlboro but a excellent saw COVID-XX. nothing they brand skew and that they so [ph] building lessen brands. saw the I those back older engage it the really and we're Marlboro to whether how programs as and I pay at to competitive I the most as from at on know you do in premium and control is the think where to loyalty extra just the on the out sides the aisle resources brand as nearly On investor place and an We rewards point. of states point, moving programs there's affairs and know think to job under at beginning into

Great, thanks guys. pass it on. I'll

comes of of Your line Goldman Herzog next the Bonnie question from Sachs.

your some a right cig lot the range end. I'm certainly year. I'd curious to this wide But guide. is expectations world. understand what given our low uncertainty sense So even your I your EPS I volumes bit of terms your on if I'm assume your tax then must surprised my a on? that of guess cig wondering it EPS were to And of excise in guidance for just range be tax unable you touched I a guess the Billy you did again question there's of you I mean does potential in guess guess increase now maybe provide a I guidance. have the federal increases consider at volume hear, first I

for could just bit the given or increases. Thanks. So not comps expect touch Maybe tough back will that volumes below potential for year historical us you level, tax declines the this cig maybe in greater a and whether possibly declines. you revert historical on excise at high

we'll turn and as those Bonnie take in you well. Thank

EPS On really about - you cigarette our guidance We including I the when a guidance, range at that. scenarios We and look think the EPS in of volume what of kind that. around really run you're the know base expectations.

We have a and forecast the scenarios very categories think of run range that They then about. strong forecasting various a around group. upside we we across then and downside

As the Okay, in very have what as the fluidness of point environment didn't of of whether for whether engage and stimulus we of way to good lot do are the in a if a forecast volume. volume, a that's government passes range - these as to some we and how about unemployment the feel feel the guidance or highlighted and where that. landed? about we the uncertainties providing categories it lot or continue it's at the was year grow a your the we've consumer cigarette that remarks, fiscal things for confident with in non-combustible they there they that's to we But forecasting about short EPS We volume. far got

fuels give at we consumer really consumer products the exactly on make portfolio range cigarette focus as the what we you hold fueling the going at really in to accountable they're go my are strategy. It's is for and said factors. are more and as they're we're why what they're the meeting on best that's I think at. should remarks those decisions implemented that's information they us each really different in in But consumer brands we think where the vision. me category their at of regardless make depending on XX-year the and What when have they we journey our best focusing the to or about categories on customer and is and get of how how where do trying and looking do engine there The really the wrong. Don't focused the is what So success really of what and consumer to we decisions.

us, know Okay, where that speaking I maybe helpful. to just XX-year stepping your with here posts see with comments and where and could three obviously the but that did you're any then in there five of guide to term beginning, to a years I appreciate per us spend are kind you that's it's your business share I'm you're I you out your your you're in expecting period near plan. and because for the entering vision. want even with ask to this us to guidance maybe up and next help update of maybe that. asking you're accelerate

mentioned. XX%, Is your or plus would the future business products again know to don't So you instance to five employees assume your some XX% years? vision, it next three, it help all about then convert as be accelerate to to to I fair the this also non-combustible incentivizing are us to open I maybe organically. execute as you understand targets five like then considering on in assume should you will for And And that hear you're want do further or this M&A you just to execute? or even we done Thanks. for how to

incentive far incentivizing vision them direction that We've we Look. But directs passionate through XX-year that employee our the them reverse They certainly place the passion. to time support expect They're progress we have They're we in base. to program excited how and work with about to that Sure. you're the right in have as shared that as such it. that right have in employees. orders, take and I'll passion. right think excitement. we

and won't investors from far balance go But making a an into value. associated same non-combustible advance specific portfolio. As for at strong EPS with we're that. growth, over again growth overall numerical time objective the as involved looking to to the cash I milestones Remember our long-term investments the

we're we're we're with and about progress. making time, balance to going to share really of So do how certainly is have you the consumer. trying that journey so it's the really what But through

that think the as stage really So we're purchase the whether consumers at being whether consumer about to category. ultimately taken appropriate in new investing make different the be we in and approach categories are awareness going and as for we're make that's any [indiscernible] final journey and to the the there. investments new not really to enough that's if consumer they're driving get categories, different consumers close the be actions, a agile then able to way growing each across thinking portfolio the of these different a is regulatory conversion decisions that's because the as point trial, to enjoying to consumer Is categories can you starve and exactly to journey category really and actions about they're

we're that's how journeys. those and about how a see you'll of progressing share consumer time the consumer more through journey So thinking we're with

- quickly develop would Maybe accelerate about M&A, thanks. whether it be be if that to something or on that the further outside would open the open internally you just capabilities? you to an Okay, as a to you way year looking next there's

and desires. keeping point sure on have about meeting we're we'll eyes execution about with open the our and keep abreast product the really staying and extremely talked exactly we and Yes, their really and your that that's investments for But why and making development. is pace portfolio consumer needs to we a the currently focus we're excited products everything. Is that their

you. Appreciated. in thank get back I'll right, All queue.

Vivien comes of Cowen. line next of from Azer Your question the

on So speak wanted please. [ph] to combustibles, I

two out of the wholesale to industry. into remain stock looking think for [indiscernible] inventories of we is probably last into just COVID. at we But we're you because please. Appreciate where if head elevated should you levels They how inventory end at So year and guys years. some about relative that closed both Thanks. the XXXX

Yes, question thanks for the Vivien.

you think I it. nailed

was about different think as at place COVID-XX I are The that are marketplace. and it pandemic state mobility stood wholesalers consumers surges the retailers in downs parts the decisions where around making the and and decisions with US. shut what because they across taking the and different government

as balance wholesalers we retailers those wholesale took seen things so level to there pandemic what always and in are those certainly to inventories consideration. to vaccination for And a what time the as as through previous years levels appropriate the Certainly think I COVID-XX we them. said decide increase so how they over out is rollout, through and progress see you've we'll of tend and slight

Understood. Thank on for you tobacco. And is my much that. oral question follow-up so

MST. growth So so a [indiscernible] and year. sense volume industry you have of and modern came in with underlying the from that at the quarter all color unpack could provide how much better was that what's on oral we some wondering Thanks. I of growth could happening whether

majority. vast both in Zen say vast the grow of that be space year. the that's category products so was would on! products the I did novel category or of But certainly did or majority grow. other oral it whether of segments Yes, But the the both and [ph] during pieces onset that that

its in So traditional Copenhagen we feel And good brands great about have the position. we and to that we category, offerings about MST. feel the continues lead

Understood. very Thank much. you

Piper of Lavery Michael of line the from comes Sandler. question next The

digital what what Could you X marketing and or you're or IQOS is the any a with in mail And of the impact stores seeing anything just bit it's your IQOS or effective about approach? most proving else? really talk how whether the does engagement little launch

very consumer expectations the Michael. the is device. question really then important can - the way Marlboro From We're in excited consumers, that great experienced the a understand the about engage and the they to standpoint a use what with we education the it's what three device what's most what HeatSticks, have first delivers markets. exact we've and we've IQOS flavor how found of Yes, to

from many in launch we standpoint we're things populated areas. because So that densely remember trying

of populated really whether units we testing with. you're all with So used to there so direct number it's expand have capability one location a why stores you rural capacity in [indiscernible] challenges the engaging from densely we consumer. and another whether consumers maximize convenience in and extent one on those or some we convenience to were from what mobile a and installed the you continue that mentioned. chat it's store, strategy various get is device and of the move more certain out We But mobile and the to have because units we're tools. areas digital as the consumer. sales that a measures that. exactly have those actually had as retail as, We Charlotte, then meet engage an to location one-on-one more stores, lot places with is certainly And larger found Most because in team move you implemented to the say use those they certainly can COVID engagement really we that's outlet mobile there to we'll you whether unit. you corners there. the But of to our to the in where Whether they meet mail, mobile about talked have world, you consumers really the excited it's actually the its are

just change? expect Okay, your federal full to great. would if on and That's were latest Cronos you could take helpful control, give you to thinking and then law

to speak think I'm positioning becomes to Yes, it legal. has well if Certainly taking going roll activities. to not in control federally themselves US, M&A any we take the a Cronos or

framework. I think back the the We we step at it right and it's really regulatory to it's stake level. got have federal important be to legal believe. believe should But what

should about if justice you establish address So and it use, driven be to needs social that should is product that industry that what It should should underage be science space. framework, standards. that should with address guided deal think really a the in involved total from standards really by of everything issues it so the safety it it standpoint and science that are includes

federalized surrounding right we it's We that. it the have that. We're level. in framework to But with comprehensive so support be should it. believe legal got engaged And

very Okay, much. great. Thanks

next Stifel. from Growe line of Your comes Chris question of the

I a question for just you. had

in growth. an XXXX elevated we as as profit take provide even the rate done stronger for well the had already. what in beyond increase in you've certainly enter backdrop lap you all, increases you've of the and First presuming cigarette you as year to business XXXX rate realization that price of particular of as occurred in an It would seem

help on! investment of strategy here. going So the of just as pricing pricing that, I more concept, trying to But which realized fund so just the there understand in of higher numbers with desire and into. be to [indiscernible] evolving can is I the in that's to the the a getting do rate understand level your expansion of is to you to business, vision. into without is get the hard XX-yaer want behind going understand I'm it's heavier this part of

I'll and tobacco that balancing as we're careful get look the maximize for pricing growth part and that mobile into in to over the you segment mentioned important question. strategies; combustible certainly what so non-combustible profitability space Chris funding you the appreciate I would an product to investments strategy to Yes, the cigarettes of cigars be in not portfolio, remind non-combustible we is recognized invest pricing profitability the future I using the future both of while is the is long-term arenas. in the in these traditional algorithm.

what feel, into brands, about? consumers in how feeling, think strength about economic our is the business an certainly our where pricing, when and we'd brands performance look on pricing as What mind It's do we certainly the strength they are are are do of of a So standpoint. at at think that. consumers they then and the about of how look move our factors standpoint and we thinking the forward really, they a couple you factor we from that that objectives

when look I price past think the years. of over couple at realization you

that think invested also that the and important put garner it we've all it and get advanced so with the price efficiencies list remember that's to been has place in. in the the we've of amount from not I we able analytics that price, it's to we data advanced analytics

as price spend of been more more have, you're being in about think extremely the benefit it's in excited so But to has what just accomplish. not both that we're [indiscernible] with team effective combination efficient. the a we the of able seeing our if marketplace I promotional realization and

in category Okay, not to forecast year potential is factor general. larger or that thank an XXXX. you too XXXX, getting that's a again at you categories question other that? for for influence just movement so to some was one I have for that as or is transition year become that just how oral throughout that. cross difficult But is look grow volumes on which a further curious I'm cigarette they on that. could just hope as example, heated or just I a as effect especially your seeing I too those you're modest I and soon the category like where the acceleration that's to larger Like I more hope this had guess cigarette could of modern tobacco XXXX in category it the where and see it's

on that Yes, I to volume to don't try hesitant Chris. too think it's more for guidance. give I'm soon much cigarette

meeting cigarette decisions in objective the in right balancing investors went associated and think different we back vision. for success their we'll I going make these our you our growth why about It's and the success we where in strong products. the approached portfolio consumer that each But is and of exactly when have The to they're line certainly at, investing consumer cash though. categories. impact with exactly Chris this you're really step those that's category categories and

to year the these We to through of and see a progressed of we investments. modeling As one sure consumer want make we're for starting we categories. not

we So make it's progressed - right to through the as year. the provides the we flexibility feel decisions

today. you thank Okay, your time for

you, Thank Chris.

Bennett from Your next of Owen question comes the of line Jefferies.

Just you JUUL. around with vapor obviously given the the assuming from me, non-combustibles one be I'm the and agreement increase it's quick note R&D and around in spend can't

product, oral, advancements what is is else spend modern wondering entirely. on, in Thank you. is own something this just it it R&D your is it I'm heated So

for right, Thank Owen. exactly you're you question. Yes, the

at - the from staying we consumer I and keen an think CPG e-vapor we across why where where with the categories that in not want is development important keeping product development focus that pace and we're is going really looking so to are these the invest have it' development product desires it have for growing is sure that's the in important staying is and any needs is and standpoint right consumer with to exactly area. on we But You're us think having product to is strong JUUL a we're and in agreement it's the that consumers' make so space.

of even be, kind and in at the Okay that looking heated your that own future? mean developing potentially would products, is I possibility

we no unmet excited think and so and it's not progress into about to what really against developing it's share and go appropriate. that as we'll that's today, we're as the I'm we the and to I are in specifics, space going going get far they're space desiring when investor made where progress the what make non-combustible how and is that's looking I'm as needs far, feel investing more is thus that Yes, about about we in

Okay, thanks very much. Appreciated.

from of Your line next question comes Powers of the Steve Bank. Deutsche

growth those analytics sum elective around Billy, But I XXXX and way the in to vision development. back be of the the and that future any guess management. you non-combustible consumer when also both would year is frame Is it, that more as path seem maybe investments you insights prioritizing there up and step towards product you enhanced revenue the a just new you or XXXX a have prior is investment mentioned in viewing as acceleration glide should years fronts years? whether if state you to a line even it drew relative the we on to steady been of similar just investments last

it's it distribution you keen performance and When moves great and We're appropriate the it having and analytics characterize in so space driving wouldn't investments that portfolio and up. investments and strides consumer how Steve. you we've the do go there, platform retail digital consideration. this seen driving - the around It's to you thinking think about next on! the investments certainly like we've about gliding made heated consumers it's really way, on we going our consumer. to desire benefit think the you've if driving category and we're I focus either the it's say getting the so tobacco Marlboro that of in along. we about just the I it's and that have about businesses. about the the But at where awareness, IQOS with to made stepped HeatSticks, feel We move Yes, about

to them consumer, the choosing the this Now really to is it desires. on wants consumers, it's they're the them along to able with and being pace that the and consumer and as it where for making there journey the their with it's consumers, consumer that have, investing have we thinking close to then with and extremely about about sure do our future about all it. to where we're they're category keep journey. keep how product conversion the get we're one focused We're those products there we've pace continued important how final at consumer And the in development about is, excited of is each consumer that extremely meeting around keeping communicate and getting set, them space making that seen to in that's make categories we're the and with the understand so and pace consideration whatever portfolio communicating insights in we sure on journey then sure these

probably these maybe Okay, if for just are Sal, I could clean think a just ups. of couple I

related incremental some cost As and some yet about were think there COVID COVID-related in that XXXX base the costs cost also base. I Clearly savings.

the And As might outside for to earnings should business, out about the flowing about about think we P&L? case? the Thanks. have on how impact think you as just the that if PMCC your should continue is we think we base forward net you down how you wind through there just in XXXX, the go as move also there's way in those dynamics to any us advice is to

good Sure, and morning. Steve

have business base as program us. that in and of our we The processes we infrastructure cost non-combustible remember, about think employees good XXXX their course the the we As When cost spending of far or platform. spending, our implemented reallocating our business. really think up we for size management as size So in that XXXX, how about right? thinking moving the of and reduction feel you right do in. for a really XX-year It's structure in and about the in combustible lapping mind efficiencies remains business the the our non-combustible and job XXXX resources the vision we on were cost we business into freeze right right reinvest to we're about. terrific invest from and their top organization

wonderful provide terrific the employees. about done pandemic costs. job have We would think of continuing They've during productivity how that's I to a so and XXXX

selling level. it's done net lower job PMCC, a As when business unwinding many at the wonderful asset. business significantly the We're years the a think the of has wind that as been when got finance we've of to received began rents last XXXX; you that of and than sale times. at and over lumpy assets, down PMCC and assets folks about and it XXXX far It's we low really about really, have

and there lumpiness to remains there. some portfolio XXXX. and in the ability the good be But business So might to that the we down we be feel about expect in unwind wound completely

appreciated. Okay, thank you both,

comes Gaurav next question Barclays. Your of from Jain

X% three for is the to in repurchases there questions on that X%, is so which is about to first EPS year X% X%. I've some of share guide next component

consensus back X% quite off growth, they very So pre-tax to a that numbers income. net I look in fell a ABI your incorporating lot PBT, because for guide for are ABI so bounce equity this that the if if steep is ask year you how X% at income and in PBT just your

us help just you that? understand could So

P&L. to Yes, takes There's get the Gaurav. I components want puts to particular across not careful and into be there. the always

most portfolio. non-combustible strong think make in to important stated early, I investments is as our but is it appropriate have then growth what's subjective I

through another to you one any make gravitate investments. consumer or so we're as that changes areas area through us So the we're affords But invest about progressing year as in think as starving seeing category that if to within us opportunity affords year, for also the particular to progressed that the well the we it necessary. we're if performs towards

Sure, that's helpful.

in second industry is Now on recently. US increases the the price

and is primary streak then would you that the the the pricing as all your forward? balance doesn't following and the So seem deteriorate go I we states. is increases competitor mean, now pricing in it [indiscernible] before all there you're price

It's is first, about go factors We they be feeling? feel who they we brands Those it prospects? our in or that of the three are pay Yes, attention what they how their who goes pricing consideration will really the think economic in mentioned decisions. pricing and The honest. our a position to marketplace are do when brands, about what their from consumers do really factors the our are and goes order. strength plan positions, Really pricing major Gaurav how standpoint. competitive from next what we and feel business is the minds drives our the and about how don't our build we and second that's in early, and around to performance nothing future consumers' around quite I this about How objectives. then

packaging Sure, my Slide is shared that very last which the you and XX. question is helpful on on just IQOS

be FDA, so in would there under the authorized that which is like? see of could put packaging by and new or that this design of you a any packaging don't messages I MRTP risk So you and branding that is would that Philip involved sort fee whatever the would were Morrison your incorporate consideration

the those are research them be to the we IQOS where we collaborate the the make of in Yes, and rolling well and flexibility has consumers markets. to MRTP as that decisions the deciding we that want we move stick had saw as it. it our an to standpoint, communicating mind processes impact with as so and some out in we're desire and we on with of we to the effective but - to does forward, that it certainly HeatSticks PMI and started will of consumer's with their we that Marlboro And from with do concept ours is the and way we so most sure wanted engage what bearing

looking forward advantageous that us, most the to get we're that to message MRTP we So the we'll that for to consumers. across are avenues and use bringing think

a lot. thanks Okay,

issue go very to going get that we before following listening transcript and to a to want the work webcast question. make aware quickly we've sure We're that just the are up Lori the call. had investors replay and to aware on we're our technical on the webcast next [ph]

on patience that. your appreciate we So

the Your next Robert of question from UBS. comes of Rampton line

Three questions from me.

opposite pack time for it broadening understand so like to this, first looking at the if it seems lowest does the first effective so, ladder the interested price is, drove net The directions. mean Marlboro and moved mean hear, over you're in price price quarters Curios now? why I to and the what

I into pricing our decisions efficiency the our price as realization when the we that decisions the garnered take and and promotional think about list factor mentioned I [indiscernible] spend. is pricing is think that really our you earlier price things around across increases

rest you state as have and those then how of added marketplace. the think I the pricing are when that manufacturers make look get decision. then in to excise decisions of us independent of the competitive course at retailers themselves you and They're taxes pricing

where of lot good factors we're are there at. feel and go about that we So that into

Okay, cool.

I'm uncertainties to understand suggest macro trying volumes by think go you ends, it very minus just flanked, were does not to home. anything said the to share around you states better Second the X% tailwind the mean I'm experience given of was are industry event I'm how which In get would just a the that an maybe to that question, guide at big what XXXX you factors or understanding zero? sensitivities the [ph] annex in for at be X% helpful. home can primarily so stay for trying stay evolves, driven you I that you here, here in looking

and had to at home the so you mentioned and were income related friction. more benefitting exactly what think what faced was which themselves Sure social practices really stay-at-home we discretionary We're we highlighted consumers practices. less which drove from stay that

discretionary tickets eat So even going gas. out or whether less it'd movie or be to

in state those the to related a to I'll changes we of comfortable be back year their be it we something completely ran as those that business or to they occur. and bit some we and certainly respond to one But items the feel able adapt back as fully we'll our we whether decided so that normal ranges through to scenario levers to other to of discretionary of have work to that something pre-COVID that call go consumers across so versus respond they've It's of guidance even monitoring life how whether comfortable we'll scenarios go monitoring. decides regardless feel that's how be progress consumer to their see they to or those And the behaviors and remotely. returning work

then and the reductions much. tax an us in question, final you've terms Okay states and give just you can my magnitude. heated on on the update chance of Any tobacco. very numbered and you Thank secured

designation down has part so so team there you then a six of taxation. government if receives you change step in slight is the there as and would states. FDA able Virginia, if from that reduction, the of in will are definition reduction be our course once Yes, to states it count been affairs state seven six secure that of a that But

I some that there that MRTP element tearing what understand quick depending kind XX of follow-up there, to a on about And get, it? still sorry of as a thinking type fairway just you on XX with is a saying of was

But by varies a fair way It's that is. think It stake. is it. to about

Thank Great. you time. Appreciate taking you very much. the

of question comes Spielman next Adam line Your Citi. from the of

of handful questions really. Just

to sure heading the it. where it's on! to is one about presentation have Just the want about Slide make XX one first the I understand make I on! Building Momentum. that's sure talking I've of what is said, you you just understood and

saying more there side sell on!. think are you is I left-hand stores the where

stores right-hand share. market a the have saying it's you within On higher side

of am is effect. this I to is, believe, question the sort double So right

about right is it two therefore I the slide? and thinking stores more effect. in is percentage that higher alone, charts got You've way know [indiscernible] that of multiplicative

the is What it, of showing stores the yes. way stores That on thinking in is side shown share those we've what right Adam. the so about the side, distribution distribution, quarterly left is then and with right in cumulative in we're

don't tobacco industry the estimates. it's that X% pack There's says oral volume QX, sort know versus And then And growth the a number it slide in I slide X%. give it extra what is. on on you Fine. was QX of

and shrunk in explanation grown slightly wondering, about it's I if then So And lower just QX. was again. why there's any

to accelerate grows distribution in out fluctuations a efforts and see periods time, a you'll in in think through Adam. I Nothing that will Yes, then you're straight so time of going line and have levels you'll that have distribution some areas.

fluctuations. have You'll

I to oral. a is try think to this way But of and in more if continued about time this. think think, through line growth better a distribution provide we as you

time in through that I think find consumer move of it satisfies you're see those, non-combustible to growth the them they going shows the these categories. to product and desire to as a

final And fine, just thank quick And you. clarification question.

and We in more [indiscernible] think got although clearly Sal in make time. to think across there have that spent as a just of on should been incremental as expense said, is mainly I spend want an reallocation that this example from investment non-combustible. XXXX about this I some right, would transition combustibles sure I for

Good morning, Adam.

clarify investments I take some be non-combustible some want my that will our funded of increasing in to you. our from But reallocation. away that through comments me by reallocation. is for of don't you XXX% We're offset Let

the vision. stated earlier our full our XX-year across achieve helps are we to but more as we our increasing P&L. investment it in remarks, us So be efficient

not clear. on! we I back continue [ph]? to the you if the clarify number really full give could and understand Okay I But cents. think if - helpful. you're I to very just going Thank precise me to about come a investment of a I XXXX, Can very I is and accelerating didn't in that's know dollars moving at the of to the same Is state are in of a or is that more non-combustible XXXX increment speed roughly increments investment situation? investment sort steady more or moving in area it or the less? the and same as in the

and think significant be goes Yes, be hesitant investments we're appropriate starve hate progress one related compare the because and I versa. the appropriate Adam year about so the it feel We're so we're But vice in make the we during going to the and compared appropriate in to a think investments. previous never can to cash make to strong for year to growth making different a we've to we and making investments investor we'll made. say the so appropriate that category the back going and it. We to or investments balancing we're and the investment there we're for certainly timing going the really investments. quarter good

Okay, thank you.

next of [Operator Instructions] Ohri-Gupta the Priya question Barclays. line from your comes of

walk if elevated about I through year end. you it us as was think should could your the wondering we given nature cash how balance, of

investments you How the repurchase think have maturity program, earmarked billion increased relative each to few are that coming cash back that cash we of balance $X.X sort a to should getting to things side. use haven't that Thank level? the you. of for normalized that behind up, balance share those more You the elevated non-combustible about and

is Good Sal. morning, this

in position use excess to the We [indiscernible] investments, about business. balance pandemic. to buyback our characterized and We're investments of uses it a you capital Board necessary program after of that cash. cash making through share fairly. program the paying billion the run excited think of year elevated analyses dividend, to capital cash our billion I determine rescinded and I board allocation and cash talked in by a in a excited the typical do our as the the about of Billy desire new throughout $X that share we pleased will a We year. have about we have I cash reflects and I we and think appropriate per that shareholder which you've the an think dividends directors ratio it's an had flexibility. you have complete Remember We've in when enhances We're allocation And capital through on we've share typically payout for against last maintained earnings remained the we the also really XX% repurchase target cash to our value. XXXX were for our adjusted But than authorized the June it. and level. traditionally XXXX. balance manage $X have shares elevated we about XX, focused expect It committed value this Directors best very think articulated year

that think you the specific considerations and of your upcoming us to That's using we I of go versus refinancing if about that the through helpful maturity. some cash Could down walk sort pay into guess decisions?

to about take best many that. time is of do, use on would Yes, into what or companies market of we capitals I debt or We refinancing value. you and I how enhance as of don't lot conditions, a debt to - think tell get shareholder ahead myself want factors

of our treasury hard best debt a team of have our work talented and allocation use capital we going forward. really So they on very the capital staying maturities thinking and ahead about

repurchases helpful. for accelerated ongoing manner share you do course Okay, of in that about sort just me. months? One How the an next rate final in sort over follow-up that's of think XX of the versus

buy think it program me you're that share does buyback. to buy will than helpful pace right, depend don't our when quickly detail think that. of XX-month the that more conditions I shares shares. that communicated on pace much program. we don't it's back an And you and provide it have it's should tell I really I comes to really share market how a Yes, But would our repurchase share we for or we in the I

so you Thank much.

The comes question Journal. Jennifer Maloney Street of line next Your of the Wall from

it say might we the more permanent vaccine. continue change in moving may after change. different behave some consumer how behavior People the of But snuck part if scenarios you home consumer or they'll the talk I think wonder way even to lot envision. I week. about could you you know could that that about company you they a that forward expect goods not or be talked to may work of

consumer guess what's So the were? way and change sticky how we how much behavior in back best things to as much this is to go of your

what their participating It about to It's bit status a choose report tend our to trade something be can of we're able a of there standpoint are versus to think to they is to our to completely consumer, be to so at able you end on how monitor, from question basis at that engage they remote lower economic great they consumers asses Jennifer. When going the that. in be that It with be having available work. definitely in, the depends a the workforce need to regular and times. on readily

their they to how and I to a even So it adjust lifestyle be back very COVID pre-COVID [indiscernible] greatly. to think now they remains I'll much It adapt past seen call pandemic, much normal change. how

through seen engaged we'll So something it be our remains to and that be consumers to I with think able time. it's assess to be

how that If might accustomed are and now discretionary at lever and cut much they're now down they because smoking dependent a and a more per to number spend their discretionary the to goes moving spending theater. cigarettes is is of movie people How lever of forward? a day of on the difficult more spending the want of that to higher be sort and fact back much

spend. back you drop take and gave Yes, to we I the gas really what XXXX look go discretionary our price mean I that in consumers think can precipitous was extra at if saw place that you

back as them occasions spend. and they to So in discretionary But added adapt answer we so day. to back to those that will saw adapted occasions able certainly be time their your go to then they I out.

is important the pretty prevalence remember undergoing It hasn't trend trend to to think that I changed. it's steady.

to goes day quickly discretionary How they to adapt question, do first depending in is other So of it occasions think usage dependent really types on about extra they do they how lifestyle? day? it on a and return back tobacco your occasions their would usage how is that their be their spend in

All thanks very much. right,

comments. for you. would the this like turn call to closing to I back time management Thank At

strong is Lori in of Thank consistent performance [ph]. financial you, record Altria's and tobacco challenging environment. business having delivering track

in outstanding dividend. cash Our to shareholders and business results we continue the demonstrate our form resilience returning of reward of of a by XXXX amount significant our the

and We safe for Relations us. vision much. Thanks our for have you have XX-year our the believe winning unmatched. and contact strong business very plans Investor brands if stay Please Thanks our XXXX questions. team again and pursuit is in platform further has joining tobacco of any

full in and Group earnings year call. participating Altria the quarter you for conference XXXX Thank fourth

disconnect may lines your wonderful You now have and day. a