Altria (MO) 29 Jul 212021 Q2 Earnings call transcript

Good day, and welcome to Altria Group 2021 Second Quarter Earnings Conference Call. Today's call is scheduled to last about one hour, including remarks by Altria's management and a question-and-answer session. [Operator Instructions] Representatives of the investment community and media on the call will be able to ask questions following the conclusion of the prepared remarks. 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

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

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

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

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

businesses quarter, strength Altria the morning highly work for us. outstanding delivered results of and thanks thank of hard the second employees. you our to Good Mac. the talented continued and our tobacco Thanks in joining

of of by moving on smoke-free continued their voice harm our awareness tobacco availability product have and their understanding teams to beyond and portfolio, our preferences, expanding the amplifying can consumer responsibly and to future. me the adult Our smoking, of commitment greater lead Their we smokers public passion gives the vision a health even pursuit confidence of within our that transition communities. scientific smoke-free reduction deepening in

of turn adjusted diluted earnings of results. segment the to investments its Marlboro, grew businesses. second primarily while adjusted Let's XX.X% its on of with through maximizing and our Altria strength to lead company's now continued business appropriately category, Products combustibles, Smokeable while cigarette strategy operating profitability deliver smoke-free per The of $X.XX, to the our share in growth continued XX%. Marlboro second income balancing funding tobacco products. grew the to quarter quarter

to further of nicotine MST and quarter half, X.X% product The and X.X%. successfully investments first to segment, market delivered OCI the more tobacco MST broadening strength offset capacity, oral first lead driving Felix the by continue category performance. strong segment expanding increase has half pouch unconstrained on for for Helix team continued The X.X% category to For awareness support expected plans grew on!. distribution, grows, capacity as current a the adjusted the tobacco of trial. In generated OCI growth in The grow in focused the the and capacity in product as demand. U.S. by than the adjusted and oral manufacturing ahead achieved on! remained Copenhagen oral the segment category and profit second and

doubling more over consistent Helix on! was increased has competitive retail environment, up two made volume Additionally, second distribution, XX% and we transition In continue Helix approximately initiatives to smokers. three-tenths to the on! promotions. trail suite tobacco Helix achieved equity U.S. of believe and insights retail on! broadened XXXX a and and uses complemented believe generating and with points, In oral of share channels, we which better of goals, which having and are and point-of-sale of AGDC immersive volume. individual consumer broad represents its by capacity, cigarette educational disruptive to on! Retail and to against preferences sequentially. marketing unconstrained experience. dippers. progress a one-to-one resonate distribution tailored At stores, retail These half. Helix digital tools the retail quarter, U.S. retail, marketing smokers deploys and XXX,XXX brand communications heightened percentage providing on! based share communications manufacturing XX% first on and tobacco build are oral awareness nearly

Virginia, expanded is innovative North the helping PM This products. tobacco, through state IQOS channel. to South key about volume heated Carolina. scaling U.S. across stores two-thirds of garner to and new Over store PM Marlboro USA sold cigarette four USA expansion Carolina, Turning HeatSticks is retail and Georgia, learnings convenience

So, critical to the and is the effectively of to stores educate ability we about the system smokers C IQOS believe success product. long-term the

has to move Although large In new mobile to package journey. our IQOS early, sales HeatSticks the that penetrations the as Atlanta time some strong market. and kiosks, with fourth units, quarter rollouts. metro their help Charlotte continues impact a their Virginia, second metro in encouraged We've nearly of market, execution strong markets. deployed tools, highlights In device market such from smoker IQOS bringing a for early stores. range Virginia as team performance we marketing a Marlboro we're of smokers relationships Northern believe on IQOS population flexible experts. and percent into surpassed importance the the half results, USA key commercialization discussed Northern convenience device Virginia the of commercialization expanded have to PM markets, strategy full them and of we Metro of metro improve its came the and as salesforce Northern our our it's partners. line We retail to In our This to with build

from responsibility Mall, PM awareness that the built-up stated Virginia and of the the and opened previously which device channels, in IQOS is strategic expansion area. execution reflect our mindful to Tyson's the been IQOS Northern of IQOS USA We our Corner International Marlboro the approach. within Richmond boutique marketing locations point a progress an enhanced the make X also uncertainty, and the the may HeatSticks expansion the favorable for center the in IQOS these We We market. delayed importance results USA towards IQOS believe into the Commission and of Due has Trade we which pending quarter, of case, vision. Marlboro and importation this of ban United PM has HeatSticks. in States. result in Each discipline further on availability

and strong reasonable transparent in capabilities, of infrastructure. encouraged required the transition must post-market smoke-free robust strengthen consumer capabilities dialogue reduction our enhanced our which our harm the and and a that do collection, portfolio. and engagement employees sound quickly be believe to include evidence harm establishment supporting are regulatory to surveillance and develop engagement and reduction relationships; trade manufacturing to We smokers the redeploy As and skilled support capabilities that necessary constructive science, future PMTAs a system, responsibly. current compelling includes with executed critical including effectively innovative about we the These by existing system tobacco us to allows highly of to of all science product and talent so, Tobacco flexible regulation, have for data grounded smoker footprint portfolio we in believe it's products; products partner a smoke-free stakeholders. tools, we

presented published not that should policy at of all conferences. panels, far year, XX participants scientific scientific Recently, posters these this be industry Unfortunately, journals, we've articles participated stakeholders believe reduction believe in exchanges. organization So hurt impedes of exchange products. scientific smokers research XX and ban a participation and mistake part on We scientific at to and annual its decided that harm tobacco a industry and conference. for is this harmful looking less limiting the four

We of all essential addressing us. we open opportunity to for stakeholders, will the and front inclusive dialogue public to advocate significant health in continue believe among which is

continued be our $X.XX agreement in diluted our detail expected Wine to This smoke-free the business half, Sal I'll businesses, our to business. in represents to This environment $X.XX. to we've X% Michelle XXXX. turn $X.XX With in over the sell strong the of now and growth on from provide the XXXX to investment raised of Ste. performance end confidence guidance first turn year of the reflects recently guidance. range updated in it of impact announced EPS base products, rate X.X% now range results. adjusted a in our financial to a and Let's guidance lower full the Estates tobacco to more

we've Billy. quarter, behaviors the quarters Thanks past observed consumer the over continued. the In largely few second

pre-pandemic which levels. mobility unchanged, overall Although during to be consumer quarter to increased, workplace occasions appear we the believe mobility tobacco compared as usage more to relatively contributed

trip the income trips remained continued At March. in we federal expenditures pre-pandemic the to due depressed, residual estimate compared to to tobacco remained government per store elevated. stimulus the number effects be that disposable to tobacco but of elevated, third partially of package retail, consumer the levels, Additionally,

our We those continue on we behaviors, insights factors on are progresses. behaviors impacting the year and consumer eye provide a keeping will as close tobacco the to

efficient businesses. expanded leverages This our for guide percentage our of Smokeable growth performance The management and revenue supported to resources. to segment allocation X.X first and OCI margins the percentage promotional XX% points half. XX.X% was PM which the by quarter to the for Moving X.X second strategic to by by USA's framework, its advanced Products points adjusted analytics

in As quarter. segment by X.X% volumes in a second X.X% result, reported the Smokeable the cigarette of USA realization domestic first X.X% and price achieved half. PM net second quarter for strong increased the

differences, by level, and both the volumes to calendar sustained in cigarette In and up quarter the inventory was X% one-tenth we by the and category versus second declined performance one-tenth year period. strength second ago the share the total from quarter. among products first quarters and deep X.X%. segment domestic and drove and an trade industry continued segment the second five-tenth For and competitive X.X% estimated other Sequential in the volumes share the as estimate cigarette year-over-year share package but sequentially respectively. first by sequentially declined premium quarter movements second retail domestic total discount in brands. a domestic up reported federal retail third by discount, of cigarette from government's increased to Marlboro's consumers in quarter At second XX.X% declined promotional the adjusted the first premium demonstrated contraction three-tenth that stimulus adjusted the branded and overall losses spending heightened in for half, XX%. of factors, the When retail strong cigarette X% volumes half recent declined half. in benefited quarter Marlboro X%, benefited

We continue in a And the some lowest the result, gap within second the to remained cigarette price price branded to elevated effective Marlboro's activity during discount at observe segment elevated quarter. as promotional position Middleton Reported increased well cigars, by cigar half. volume leadership the and tipped within shipment first In Mild & X.X% XX%. profitable its maintained continues Black to the cigar perform segment.

for adjusted tobacco Segment margins to half. to Turning decreased and segment. first OCI to XX.X% quarter the products the oral second XX.X% for the

products impacted be on! overall and Total decline differences, driven in adjusted growth sequentially segment share nicotine and and oral margins products segment. moderate respectively. and to increased the category. volume pouches. quarter for increased percentage for and inventory X.X oral margins growth and We strong pouch nicotine X.X% by volume which on!, the X.X% more three-tenth increased offset the oral for expect the continued the for calendar pleased to the second When volumes. by and by the products MST quarter half. tobacco segment XX.X% oral remain for by The a between declined investments for due to MST prior points than the retail tobacco second We the segment shifting extremely X.X% reported was year mix segment's X% movements versus first Oral volume behind trade tobacco half, with second estimated first quarter an of by

leadership category statutory heightened The of year X% category. diligently in the Copenhagen to FDA quarter to period deadline. a increased transition our PMTAs second continues as stated, a in undergo MST result to filed its plans as determinations the prepares position e-vapor, work the And to ago we on Billy September XX% to of on! estimated sequentially and a volumes As market In to versus continue transition execute competitive total smokers XXXX the millions make maintained by activity.

an that e-vapor will sustainable believe that tobacco solely important and FDA-authorized can to e-vapor continue a reduction harm products. of products one that We role play in consists be category

Estates decisions, $XXX represents in we In regulatory earnings Altria's an was of best increase expect policy from year We second ABI's by innovation from first In and vapor of and recorded equity smoker and adjusted brand Michelle's products. and Leap, Ste. million. to that long-term weeks the approximately determined trended we preferences. luxury an OCI all-cash wine, tax Three certain brand from category's trajectory be and $X.X OCI ago preferences XX% pretax approximately in $XX ABI growth Ste. million alcohol, ago, to approximately adjusted quarter of second a the sell the Ste. agreement wine to as of addresses more This Michelle's legislative adjusted to XXXX billion results. period quarter. the was Chateau and share assumption higher the increased Wine price our quarter Michelle definitive for business Michelle announced XX% Ste. liabilities. to purchase including consumer Stag’s of primarily flagship volumes, Ste. transaction due Michelle premium the

allows smokers management expect for and brands, Altria's transaction outstanding shareholders and for of category, additional future. believe transitioning transaction this our talented premium progress our them the wish smoke-free to commitment we Capital Corporation. we we our have and wind-down employees and to the our in by in to continue to maintain operating value adult a of repurchases, year, our all And its proceeds built to We subject focus to use Morris close half of vision an on Michelle make second future success. Philip it wine to its expect other We Ste. team responsibly creation share portfolio demonstrates the to this net approval continued as Board. on

was As asset million first year $XXX quarters. end XXth, net due rents and of and sales second the the balance the received in June down last assets finance of million, to since $XX

reducing expect the XXXX wind-down We expect complete to by this to continue in balance end and of the XXXX. PMCC

fully various We PharmaCann cannabis of recorded first million, approximately to one and United the of of acquire quarter, is purchased legalization pretax in federal and we U.S. In factors, an upon had the market. Cronos, exercise a quarter we're Cronos In the announced investment legalization. equity Cronos' of The States. current loss $XX share -- results. cannabis regulatory our in status to an be option integrated encouraged Altria's in second Turning a by representing that it diluted for approvals. in regulated stake the support federal option federally Cronos. in largest legal, continue to based our a ownership basis. investment of XX.X% vertically PharmaCann companies on including will our towards cannabis of U.S. responsible the advocate momentum And

with allows We dividends quarter cash to Next, allocation. approximately returns. capital capital this, let's as -- while repaid highly to in $XXX in totaling believe tobacco contributes our rewarding in vision notes during discuss We balance invest the million. businesses of markets billion nature The shares continues were we cash-generative repurchased strong of the turn, maturity, $X.X sheet. second active our us upon and our million paid $X.X billion in shareholders X.X

under limited the June which subject authorized buybacks share XX, current approval. expect are have Michelle Because program, We current XXXX. additional repurchase billion, remaining by $X we is to of $X.XX billion program Ste. billion $X to to complete with connection Board the the in share sale

this Altria's following report data through morning. publishing and chain our of transparency to to release around our commitment Moving workforce the responsibility, updates ESG our disclosed data These a on updates in tables value we and section several ESG responsibility. corporate on included

that, reminder, altria.com. corporate found a up, As will your to Billy wrap responsibility be additional happy on we'll and can information I take and be With questions.

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

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

Kaufman Thank Morgan first from comes line Our Stanley. you. of Instructions] [Operator the question Pamela with

morning. good Hi,

morning Pamela. Good

are what existing you more what seems until U.S. more you're wanted adverse I ultimately give to if I But expanding to And understandable ITC. -- plans usual expansion what guess be markets I I as -- your delay it then there. operating more have from because clarity understand until it the ITC? once your in detail about from you you it's options an will in wanted your like IQOS have still visibility. there's decision on are you would can guess to you delay that So, the ask plans the

you correctly. for Yes. delay Pamela. question, I the Thanks the to Yes, want interpret

we the markets in. that So expansion are

staying in Northern of including previously complete by markets, we we're existing states the Virginia, where and four in, beyond announced expansions. that geographies guys let know we're had we was and the you volume. get some end be our that wanted we'll representing state the of that we'd just to until investors It know year, XX% cigarette that. around We delaying So the certainty

aware contingency you plans know the we're of well working As if to far as and sure I'm through plans. process actual us, we on with the go that But will you're ultimately related the should PMI step closely against case. process, it

bit a contingency or of too could be. details the those to think are it's early plans I share what

appropriate. And so when it's we'll those share

Great. growth half. intending kind of companies CPG the the I you the raise ability category elasticity are discuss for thinking you're guess on prices how price other And wanted pricing an you across in environment year puts higher and any industry the space prices. see relation seeing implications I inflationary the in might raising does to first cigarette And performance with the then the And takes categories? to that, about to of prices separately, influence relative the volumes think about to that elsewhere? we're to half about that, the and in second as ask way, influence in when cigarette what relative

it Pamela, I there in sure a Yes, get try the make to so was all dissect lot I'll that and pieces. question,

half. think mean that's I volume, talking fact the I -- know had that recognize you I you assuming you're refer so first and about you about. that volume, said appreciate cigarette a think what I industry I to when strong I'm we

or tailwinds, could when go way. think and about headwinds, the and takes these you either think I puts the

volume and are of we're I practices? stay-at-home out you've to to applications still major in for have lot be PMTAs. by unemployment the year? movement. decide they to seen that the practices the the go I associated important for on a our that that of keep site various Do any of that stimulus. back or -- consumer. know the watching required rates employee of factors has stay-at-home really to are an they across going front for play they remainder impact their to think I How the it's FDA do work news think category We does eye them think

could their they consumer what decisions it's impact purchasing But importantly, and how see we'll the So are most behavior. it.

nicotine we to day. their know, believe adding they're you occasions As

And how about that a is rates think gets out, does that question this, side. or -- they consumer behavior? so or Your vaccination rolled I'll do talk in vaccine the purchasing it's whether related how pricing resurgent how and first, about the to impact input

seen as As any our material the we really impact side business. input of far -- haven't inflation

as are company are As areas decisions, very And and of we pleased take health into I far extremely consideration the strength elevated we that -- and objectives portfolios they of feeling? well, think investing about in when investment earlier. really performing expanding How economic last discretionary income. the is It's and they that we Right our that. and we decisions And you we been our make of Marlboro's pricing utmost some see consumer. brand mentioned innovative with can and the product brand. still thinking have now, its how are the it's strength,

factors decisions. the So pricing go really into that our those are

you. Thank Great.

you Thank

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

Good morning. you. Thank

morning Bonnie. Good

the from back range end you be the guess, high to assume take wanted able growth I I'm also will year surprised circle If Billy. so, guess this delay I it I lowered. decision come your your Hi spending up year. this expansion at different to of EPS guidance to maybe weren't angle. IQOS first, actually the up and plan stepped a of on I

that? delay the to touch noncombustible to maybe you then deliver vision transition a could of to might out And in finally, like to the on rolling execute how you accelerate IQOS your future. understand smokers your So, ability I'd on XX-year and think impact

Yes, Bonnie.

let's with the So, first. deal guidance

no we run scenarios. along, all the run of a we of we we at beginning we range when year. guidance of progress say through a different It's year, the as range the established scenarios As

as takes. puts there as any So far always are individual category, and

our And so that's guidance. all in incorporated

As and XX-year far clear as the delay, the just vision. question delay I the your be on want about to --

XX-year and I you about to it's important years back remember vision, think when it's out. think step the XX

that's And time. so long a

are been If about industry and think today you whether XX -- significant you itself, look years, just take XX there's back or in where Altria the years. change we in

were those prudent so thought to move we delay consumer and wants of, And midst to we we want we move years, the have to to we know that but it and in the knowing products expansions finish the to. that have and to XX want the they

achieving XX-year there certainly, in think road, and could our a so we be the but confident great And have bumps vision. plan we feel about

That's just I forward mean behind of And just Okay. planned that we spend going been reconcile how Should we delayed assume just rollout now? IQOS? you I look the are thinking about you've and year this as that Or and-- year, to this about pulled of it, like beginning helpful that. But you mentioned of business. to a stepped-up as to understand the your spending has thinking back I aggressively was guess continuing and the still the what do to there spending I'd all be kind fair. -- of pivot level year, there

off. didn't cut I -- sorry, to Yes. Bonnie, mean I you

range So, our you scenarios. appreciate takes a able to it, and our are that think in of be We agile what recognizing We're can to prepared redeploy. when we of investments. about that run the you fact for in any categories I adjust place be

scenarios of that adjust. good we of was the certainly, it. about able beginning level that so plan we're there our around base so a year the investment at run of a Yes, but feel in plan, we base And range to

mentioned that in. we've of investing areas we the have were previously We business

that being certainty. about And able so end of today we the bottom provided good with feel and guidance very to bring guidance the we more up

I agreement, wanted just and on know Okay, Morris shared this course, IQOS. sense. have with clarify of those of something else you some to details. that you Philip And makes then

year a actually was it think ago. I

curious, And share or reason you I'm distribution in exclusive of in areas IQOS to, to that you So, the is which to XX think share of you've sold, bps that was get any with us dollar where was for markets can the asking, if agreement reached agreement with the because I'm to needed one IQOS. your the PM? I of maintain defined maintain

Yes, achieved believe Bonnie. The we to is yes. that have the We've moving data expansion saw and answer with it that's us you to shared other related why We PMI, exclusivity. areas.

Perfect. And then final question, on to oral if I switching may, gears just tobacco.

Just any color with down, business. a on us I in your asking you price your amount. look strategy with has realization, I as your oral fair tobacco I'm could share promos guess, which at stepped

and/or big of wondering, So, promote how volume in sustaining other any future In you terms this are you finding need more any concern this I'm for to growth could that I drive anticipated words, business. top of growth than line trial? possibly I'm be guess wondering a to

great a question, Bonnie. it's Yes,

you behind when in manufacturing limited. our approach constraints we been and think been think capacity I oral, a have somewhat about novel we've

that with behind really they're the and marketplace we channels. They disruptive as in we'll us loose, behind be decisions. disrupt fully and the us it can, purchasing can our marketing to one-to-one best allows brand as they us to with making engage can digital it their keep consumers Now, that's in and colleagues consumer turn

now, are we the have disrupting able which and so forward turn marketplace. And look to them loose, to they them being

have it to there think category, this and space. be I going think about in a is new competitive you about you to we've think seen whenever activity,

want outside point And going dislodge tobacco. so if typically in take you to those you're consumers. it But time, settles some at to of down, that even

in being now, able of on marketplace. product the aware very feel them good achieve we our making engagement we're focused to in Right consumer and so tobacco-like And future. margins about the on!

you much that. for Okay. Thank so

Thank you.

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

Hi.

Vivien. morning Good

So, IQOS. last one on housekeeping just item

you but decision please? sense give ITC, us a any Sorry kind of timing belabor to from of the issue, anticipated the can the of

Yes.

-- where that set the think on you just about we're level ITC in to at when So, process.

two favor about we the found you in law of administrative think of that plaintiff's So, in challenges. May, the judge patent the had

that system. health. scope and review judge on the And ALJ patent the for to earlier certain ITC the public infringement that and But IQOS will of you claims and recommended recommended recommendations they importation so the of accepted remedies, the saw on issues, administrative law and the the the findings benefit this ban that review they included week

And a ITC. different bit so with the it's

If IQOS, you it's FDA the found the in around smoke-free the authorized factors the would the inhalable, think health. authorizing IQOS, only the FDA. product about product by public And benefit that

Circuit. U.S. is take of Appeals the And Court And then ITC can decision for XX remember to or up it September decision in the the in so to expect days presidential after decision then ITC Federal it ITC to a have period a review final process after we would final. -- any And you from goes the be October. that can of the appealed is be can and

process be that And plays things so on progress. will that how depending the out

That's really helpful. for Thanks that.

Moving segment. on Smokeable your to

activity the competitive Marlboro of back on Would activity to some incremental year-over-year pared be out you of share. you Marlboro that a as contributor thinking durability willing how do called persist investments being see you expanding heightened that reinvest? that given your the that have with gained are heightened resources competitive to kind IQOS? about disposal extent be fine should price You you given gap. the Seemingly, that But you at to with

we're that performance pleased price specifically realized with we in the the in the to question specifically, that Smokeable look where Vivien. Marlboro at you your and the realization of Marlboro at five as pleased was look performance greatly independently, of with then quarters. over segment far as to those you very decisions Yes, at. Smokeable seen we're And segment, we're the when But Marlboro and in think we've somewhat last four

feel to it's far. we monitor, so strategy is something, always out good playing about but how the your And we point, thus

Perfect. Thanks very much.

Thank you.

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

Hi, good morning.

morning Good Chris.

where And I one was very to you know you as I inventories But that this a would and any and inventory, a it like just kind could are -- Good question quarter. this on -- for you, a to historically? moves. sets inventory of inventories future had in just about characterize that, quick how have don't talk where just that morning. believe relation you quarter you if -- been positive

with it's Chris. it's for we're think at and seen around history, up And end when the it's of I it's lot. seen back to we've slightly elevated down, where quarter -- the quarter, a you we've question, it through the and certainly maybe look and way look second the positions wholesalers a evolved great second carry. you It but Yes, not elevated pandemic the at bounce

remember through a the it bit has time, had But it we level what typically typical. than You'll more pandemic is around out. see certainly, bounce

And it bouncing than to rates where around inventory higher Is to fair expect I you be? the overall. been during missed pandemic, that have -- say would them

slightly maybe higher. wouldn't say would significant, slightly call out it I maybe as higher. I but something

about do think wholesalers pandemic in maybe was the short nervous pandemic to also, were a retailers the on got because I inventory they them. the going what of caught bit to well beginning as as

making they his in saw larger think I mentioned consumers, remarks, purchases. as Sal

demand. have to So, meet to I a more bit think position consumer inventory taking just a they're

on think Atlanta on you question markets And had IQOS. thinking markets, bit. a North that understand, especially there. Okay. And said a little one I just the were to like Carolina, what just and was thought couldn't there down your questions I earlier had where share more sequential be of It any a couple was I second more.

how overall -- and want moving early to that You Northern to more have resources I being stage, talked concept. I understand in Meaning about that just Virginia would dollars understand you those of committed this therefore, kind Northern expected Virginia. looked around. expected you to I But initial resources not of and how at from redeployed in markets. resources some just then want that moving

appreciate Yes, I the consideration. take couple that And question, a me into things that went Chris. of let

I disposal, units. remember, tools it flexible or you think foremost, kiosks consider had whether first you at and our marketing mobile we

from market those move launch you so And launch market. to

have Charlotte, we commercialization had have MRTP remember to that's forward. wanted as authorization is first X.X on we thing did said other always the through did not to think Charlotte, I we best put nor we to the that launched X.X. we device an our when authorization remember important got foot we've And

so And well results from best feel into both forward, foot right seen learnings think Northern to going -- put the and as the you MRTP is package. a three those as the version And you've that you're market, in we as move like the your I authorization Virginia.

populated so areas And some densely across it state, go those note launch you as move and we last consumer of know going And engagement, in and that. practice. markets doesn't fully to a move won't experience. those have U.S., we but to C-store evolve added benefits your to that thought was the to is the expanded to the consumer commercialization have it with mean you we prudent then the And we're from total to across relaunch back

C-store And so it's saw channel. remarks, perfecting in amount that. And heard the of sales the had about we -- you the you we the feel as that through device good -- in

overall the in look step back volume -- XX%. and just volume you takeaway up was second consumer If quarter,

would that I a great so achievement. And consider

Yes.

case, you fair changing markets So, at the representation most that and you don't these because best new that stand really, kind say? necessarily look regard, as of this today, model Is market, this in to we least is of your to where of recent back at -- you're other move in need the into selling Billy, markets.

say. the fair to had I commercialization certainly, we don't would if to -- best I know I it like feel package as think we've characterize that's date. that's

say, and is we going We're in is had put that But and to this early to as learnings we've to we're read commercialization get do Virginia. it's too evolve. going to I to exactly Northern date think forward. go yes, best the continue okay, to package we what

XXX%. did one I is having whether And just -- about more talked And think I being on! being think other in which quick oral Okay. that follow-up, on! have there it's getting point -- oral -- before at available products what XX% or sell stores tobacco -- in tobacco. to you've

you're to expect to through just the now manufacturing of we second half of continue to capacity? year the should unconstrained build kind So, that that on kind of

we're and right through one disrupting Yes, them we're the where them consider with at, on in now, the good stores us feel of consumer the channels. one through about qualities on of see on! marketplace, in, and time. the think aware the in you'll of engaging we amount can assess but I adjustments digital focused making We you really always

Okay. time. your much for Thanks so

you. Thank

Jain comes question next Your of Barclays. from Gaurav line with the

Hi, Billy. good morning

morning. Good

a have I So, couple of questions.

So one your volume is -- on cigarette decomposition quarterly metrics. industry the the which table in is

And point about know on share. percentage pouches oral have one also have presentation, data XX it So movement that the slide have your of point we only X.X% gained of XX the percentage And nicotine you the over additional one share. then e-cigarettes based minus is gained category cost on seems of months. last

Is would has So, what a looking -- in has data? the that way XXXX, it significantly that versus cross-category we that of like reduced correct XXXX. this saw at imply movement

And cross think above we of That outside X% about your that it, call category is cross Yes. to about Gaurav. secular decline, then When correct, decline out in X% decomp. you secular was anything that remember, category. what that point, of in is

in can X/XX/XX, as months And above XX X.X% chart a the ended, so see that was it you of that. on

And so is novel cigarette to what oral, and it the is it the from includes really e-vapor. that impact movement cross-category includes industry

your you'll It's taxes question, significant reduction, of what's and and all excise three about are in review. the will policy, it you remarks, really when FDA recall, the the how with future innovation, a gist about Sal's how e-vapor really understand from applying think legislative how the in harm think the in the to U.S., believe It's And evolve earlier if think impact that decisions. tax And e-vapor, regulatory can their innovating FDA. companies and in for I space. we will going things. the for I to play authorization products progresses is of role

be the is experienced XXXX. we will it those play. less So three in that major than But factors what yes,

consumption coming consumers guess the which other coming from, leads question these it as But where in are to leads consumers leading of and is additional well. and that then that in nicotine to are there questions additional I lot to a

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about the stacked five us up, years, down you've when Yes, space, and and the factors past that about I total equivalized volume nicotine before at total over you look you you historically, if whether -- think X%. the underneath, look seen think

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Sure. could if I And pricing. follow-up one quick on ask

that your your So, your quite key right competitor and also not key is realization stabilizing competitor. strong, this everybody the else. is pricing be will the which side investing more And some But is as I much now, taking aggressively thought volume discount and clearly on of pricing helping business have losses quite would you there. of as you share benefit your and

So, could understand discount us how the help of on you things? just you're thinking side

Yes and appreciate the question. I

while that you to time funding profitability the think it's maximize in category, in growth think Marlboro and about and we deploy balancing future back categories. when I step the through strategy investments

us. that's what so And guides

the health economic strength to our the or who objectives. are competitive and took of those and It's factors. its what factors As gave company as really they first, went earlier not far brand worries Pamela. I pricing consumer, about

the think so the don't that. into our about factor in And actions pricing we that's decisions way marketplace. Competitive

about is the -- I I X% in would both our nice pricing first when look, you price half we've is entire think have for company One price, based across which pleased two factors on We're Remember, over pretty quarter eight and the point think and say list realization. our into you're that to. the referring seen the with here. results that. we come

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I two think realization. you play our into see so And factors price those

lot a Billy. Thanks

you. Thank

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

Thank you. Good morning.

Good morning Michael.

confirming still start device decision, it would then only? Can just that ecosystem for for IQOS potential any just related because And I the actually an Or for it apply that -- you to there is that, have in production ITC really question, the just if is by too. to the that So, the be not correct? there U.S.? import would does, ban, not an is

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correct so that assessment. you're And in

they you judge's as the made far on As if decision, the and administrative read both decisions law HeatSticks. device around details -- the

apply would both. it so to And

early to come to be are to details As be the to sure I far we'll as and into ready contingency those the it's earlier, contingency get as plans, Michael, of stated too unveiled. bit as you a plans, back

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that it's it's a something are proud Yes, about. we Michael question, great and very

of the AGDC, I think our our the they speaks it and relationships retail. build force sales to strength at

includes about think paper those of mail, you it, regular one-to-one, when includes So, other all channels, it digital, it those.

do think is at with do retail disrupt about our really of more trial. how great a that our engaging look about team the AGDC think is smoker. them adult really at To doing display think to of been How purchase Our consumers I them job and able decision when But what XX a guided retailers making give XX-second point, you at has your to retail. where you they're the are to product the decision.

were the clerks heated to walked using and cigarettes through product. retail instance, that For built relationships tobacco previously this from smoking smokers they with them transition

think speak when that, experience I the retail personal their so from clerk decisions. can you also you about have disrupt now to And purchasing smokers to think

purchase. is really the disrupting so those about of about the trial. channels, them right through point at it's still And but engagement guided it's It

sense smoker give switch some usage just assume, rates? some And the maintains usage But who you Can a sense And a Thanks. how about it interesting. have on! more switches down? Okay. who of similar consumer on one and of a usage of I I'm Really go there. rate? up you is And around curious of what there's a specifically, a that? or Does dual completely sort and people dynamics obviously, progression do much

your to It's people we are it as certainly journey. an monitor Because point, to monitoring in basis. something close places that on their trying individual-by-individual we're and as we're can different at

I and transition cigarette rate that comes from comes too that to their here into understanding but usage at certainly somebody somebody in they're that the it's so where exactly got think get versus journey to dipping, we're help the because from early something of tracking over. to and And continue it's is you've meet them consumer

And so the think your understand details. I question, I but get again, into it's to completely too just early

Okay, great. Thanks so much.

you. Thank

the from Priya Barclays. of Thank you. Ohri-Gupta your And line comes question last with

practically for to of given two Au question. years? three recent next thinking wondering, the over your and maturities taking in Tiffany for how refinance the Priya. some our backdrop, about Hi, the this to you opportunities We're address is Thanks are the rate movement

sorry, apologize. missed Could repeat question. of you I the end I that it? I'm

Definitely, yes.

and refinance the thinking movement over some are years? maturities next two Given to about the three rate in backdrop, proactively address recent of the how you to guys your opportunities

to Yes, hear I I think it. was able

you with Sal it, our maturities are would those. have going upcoming not But market we we're with conditions the conditions going those it market what market when exactly we businesses, on when and conditions. we that see us would assess I certainly maturities. about at tell we any how do the assess We're we're gives think maturities. you based flexibility And look cash-generative going to think to guidance when give to what

you. Thank

approach while managing with I extend XXXX, you management agree us out transaction look on maturity Billy when earlier very Yes, allocation year we an in our allowed capital did low-interest have that at opportunistic liability we maturities to to would and towers. including point taken debt balanced the I that a execute

much. Thank very you

Thank you.

for closing turn I Mac At like to this to time, comments. Livingston the would back call

further for team if all day. you have joining Thank us. Please the Relations Investor a questions. Have great you contact

have us. Please Investor team further joining you contact the if Thank all Relations you questions. for

now may You disconnect.