Altria (MO) 27 Oct 222022 Q3 Earnings call transcript

Good day, and welcome to the Altria Group 2022 Third Quarter and Nine Months Earnings Conference Call. Today's call is scheduled to last about one hour, including remarks by Altria's management and a Q&A 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 conference over to Mac Livingston, Vice President of Investor Relations for Altria Client Services. Please go ahead, sir.

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

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

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

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

joining an us. Good smoking. is moment for Mac. our thank moving This you journey beyond Thanks, morning, and on exciting towards

investments of vision. first Our while continue of reward the pursuit tobacco months year, our nine making we the to during resilient and shareholders businesses remained in

Altria support science of smoke-free The from reduction cigarettes. remains a lead tobacco transition we believe our capability is front We have deepened away uniquely consumer positioned our responsibly and smoker to adult and to to in smokers built future. opportunity continue harm the us, enhanced to understanding,

that exciting Sal, over Our recently steps reduction. our will further results. remarks it accelerate provide our progress several toward will and business our harm to progress taken on we to we on this who believe focus have I date turn details financial and morning will then will

heated free smoking. receive on which and can reduced tobacco in space signed global collaborating agreement commitment collaboration. provides from fair parties and both of of partnership into of products. Philip to us and and free risk the accelerate XXXX. The products. committed global international and to of smoke free billion global this US entered tobacco we strengths development commercialization exchange cash We announced more supported resources leverage companies nonbinding potential this with consumers. will investing greater exclusive is company JT end with JT can under this is we of the a undeveloped Morris the assigning morning, with understanding a in a smokers the transition of smoke US, category together, resources by believe reduction the all believe can lead Altria collaboration category. our that product away the harm and to beyond We in April toward cigarettes. both JT rights JT by Last with towards leading smoke robust believe tobacco $X.X pursuit of International, We understanding an growing commercialization system Group. we This our we flexibility IQOS begin Let's believe week, memorandum we compensation the with signifying to US and We the at further allocate agreement in infrastructure still moving heated and tobacco the deep for

will appeal believe to Under Horizon venture to investment. JV, Horizon of between supply US which devices experience the HTS a JT expect heated has parties have with PM stick We XX% financial prospect JV, HTS of excited Horizon we innovating tobacco expertise joint Horizon, heated products, smokers introducing demonstrated manufacture to familiar, the We're milestones announced the version commercialize of they economic HTS marketing Innovations, which not latest the JTI HTS space. and commercialization distribution HTS partnership, XX%. JT parties yet the first Marlboro or commercialization smokers. commercially having sensorial which interest both USA certain to Tobacco tobacco and The cumulative Upon of a in for products Ploom parties for as products. As are PMTA of jointly the a step provide and and products Stick the terms agreed US. the will a in of in tactile PM regulatory success the Ploom their market prepare exclusive can available. more the Altria products version scientific levels to about combine and this will the file formation the requirements the USA terms of the parties Ploom has commercialization. in the US XXXX. first for entity latest in cigarettes. to through authorization, will of a become stick include for The of Under half Heated PMTA consumables filings minimal US JTI that and

to more segment. Ploom in doubled Japanese exciting there HTS as X brand. X And For product and Consumers its their stylish, of We last the its describe and also US that to newest credible consumers consumers X a look example, Ploom as smokers. Japan. the JT's perceive since to unique use. forward bringing estimates easy this research, product Ploom these share according version JT JT are X than of to million launched the introduction, year

on development. discussed tobacco wholly and owned have increased an our We heated product internal investment focus

receive than puts the purchasing we friction data approach ever that Our have. everything of at the patterns consumer their on and preferences, points center we do. more We

products have and smoke of This efforts intellectual believe novel, free US We property of building team We millions tobacco appeal capsule includes embedded we are consisting can product heated sciences with process or HTC early products of tried promising in tobacco align these Additionally, open are pipeline found our regulatory our market audience cigarettes. FDA the the heated formats owned believe technologies. efforts smokers development e-vapor to and rejected a expectations. to satisfying products. new capsule but not to but to who a to yet alternative who ultimately products wholly smokers

end we We expect capsule by of our this XXXX. the of end to of PMTA year, first to by follow finalize expect design the product the and

expect range design plan believe combined is internal network. a moving once authorized and earlier, beyond believe I to the from within this products We test of help international more smokers diverse a in market also share to with sales with JT's multiple to well in in JT finalized. with US that appeal products smoking capabilities increase We of heated requires of pipeline distribution partnership free We category on interested smokers to them away described positions product to cigarettes. these partner platform the the launch and products. millions and transition our JT tobacco adoption product the for of to We an smoke us using FDA free products this smoke

flat by In our Let's chain. noncompete reduction we volumes total the third X% disruptions throughout were JUUL regulatory sequentially. the the from e-vapor related quarter, released to ago exercised We We now e-vapor and JUUL to move versus believe observed previously and we caused JUUL quarter, uncertainty the declined to related to investment. purchases category. disclosed a that have in year supply the our market be obligations option a in our estimated

products in that JUUL, transition economic FDA XX% stake we to we're our from help While will retain smokers an build all of options portfolio away e-vapor cigarettes. exploring authorized

example, increase teams our smoke our development about We're free participation and conducting to in US. For external product the options. opportunity in the research, evaluating consumer category are the excited scans performing internal largest

a We or shipment results on! other category. of increased million the reaching digital grew retail program by points oral category balance on! Turning the on brand brand its quarter second by excited opportunity of enables Rewards, products, its novel about We're awareness the We increased supported points on! by encouraged and in brand on!] points of the total equity nearly recently equity momentum, share driven category the category on!'s items. sequentially overall represents these introduced for and quarter. to year-over-year quarter. tobacco X.X increasing online tobacco coupons on!, track adoption continued increased consecutive were share future third launch oral investment. oral XX% [X.XXs] [carry for Building third tobacco. consumers The the In the redeem to now growth. oral the of growth of believe share XXth XX% tobacco promotional share XX strong and continued rewards Helix tobacco the loyalty for campaign, and the that their on! oral quarter, And approximately of cans. and grew remain to reported X.X which volume

Let's now environment. turn of view the our to regulatory

We be the from to authorized of transition more in free believe more to and advance cigarettes. should continue harm The help accelerate that that reduction a FDA market to US, toward done and smoker percentage deliberately remains nicotine have volume required transition to smoke the creating should move products away small from stakeholders take and collaboration pouch no fact received authorization. are that products for has today place. oral market market this accountability been believe a We all of authorized only e-vapor

ramp serve as youth an smoke at for We lowest We for that not smoking remain free also on users. the youth the recorded. that rates should offering believe ever encouraged an levels products are US in smokers,

XXth The X.X%, reduction past smoking In a XXXX study peak. in fact, and its XXXX the the nearly XXth day XX was latest Monitoring estimated graders that XX% combined rates from Xth, among Future

while school significantly Tobacco the e-cigarettes and e-vapor data most high they Per disposable than Youth middle XX% in Bar. as from the often Survey use high National high current schoolers, users XXXX. the indicated observed levels the XXXX such usage XXXX e-vapor survey, NYTS that were among of middle that and remains the peak Puff indicate lower Additionally,

free to hope we further on all see noncompliant on pending forward, and based science across applications determinations manufacturers. and categories enforcement smoke Moving timely PMTA evidence

journey our taken that moving portfolio into we we three Our have continues are responsibly actions have free date and towards categories. strengthened to major optimistic beyond smoking smoke the

in value built to we our in a portfolio force. sales our leveraging compelling the the and tobacco the to of And manufacturing and strengthen existing as believe we have in on!'s infrastructure, position by actions such continue We maximize that e-vapor tobacco, centers enhanced to able are these our ability heated category. scale and oral compete

pouches example, new to For of began manufacturing in heated of production our flagship nicotine now expect for sticks JV. center We tobacco XXXX. Richmond production oral our add

Our us our of decades have responsibly experience world class gives in distribution system and sales products dynamic the And by navigating with gives regulatory and the force can ability other our market we regulatory that stores. to over through of sales talented driven vision. our confidence strength XXX,XXX government together employees, affairs environments our US we organizations. achieve functions, many and political These me

Jase brings provide covering significant Sal our analyst investment more his industry. conclude, turn of business welcome at thank our served also and I Hernandez results. landscape Board on serve to and his the has and Leo like Altria's Before next will to Board will of completion to understanding like Xst. environment following to his early deep the now Leo tobacco the over of for innovation committees. Directors I'd distinguished Board. Jase an to the since term finance service Kiely retire a effective XXXX I'll on I'd year. and tobacco on the detail as to the it Jase November years

Thanks, on remained Billy. and US higher consumer its a gas backdrop tobacco third prices begin inflation of and I'd review quarter, pressure In macroeconomic impact discretionary levels the consumers. under as to the like persisted. income with

space. their alcohol, how loyalty tobacco continued the household of to were items. However, and research spending understand signs in categories, we consumers groceries including we brand managing In several saw conducted in September, tobacco tobacco,

growth with consumers previous wages and to and wage brands an consumers prices gas increase stick Inflation tobacco offset rise quarter for Overall, preferred results higher their surveys. other some occupations, tobacco compared prices. that indicates in in from strong average the believe consistent were These outpaced results service a average to at for market research increased wage growth. rate Our including some We our third inflation. X.X% was experiencing continue compared a X.X% in higher CPI. categories the when And the industry, the by job to with partially

in of Black shares behaviors changes strength continue conditions. these by to our to fewer third consumer extremely months. our the and in in marketplace. reflected brands. the monitor well and continued X% combined drove earnings outstanding, per grew performance, Despite businesses grow positioning tobacco challenges, the adjusted quarter, in business premium EPS first We underpinned & macroeconomic and results. core momentum X.X% Mild This diluted in strong third quarter marketplace and and strong profitably, Marlboro, performed by the on!’s share Altria's Copenhagen the growth with by diluted adjusted Altria nine

XX. products Turning adjusted the with strategy The funding results. business appropriately operating X.X% while segment price I'll This on for for X.X% months. an products. in you price The XX.X%, the nine combustibles months. not first for the of for nine does and of its in investments segment margins third remind to our change segment first and by first continued deliver increase by X% company's of net in products balancing reflect realization manufacturer was its expanded smokable X.X OCI third of realization in the strong points its growth adjusted percentage smokers. that nine percentage profitability X.X in third the to to the by price months. grew XX.X% smoke-free retail quarter quarter Marlboro quarter points and the income maximizing performance smokeable The supported

by first packet domestic cigarette year, was which rates we example, below by X.X% in first Marlboro that At overall the declined be period Smokable X.X% the We inventory X.X% the the declined believe any over quarter first XX% for factors, price reported third for important third retail the in cigarette it's nine I various For X% by the pressures third can for driven volumes trade domestic X.X% an quarter and in months. the estimate analyze and movement decline one to respectively. volume for by increased influenced term cigarette nine quarter. domestic in other level, adjusted declined third compared continued trends the and segment to volumes quarter last inflation industry as and macroeconomic and part per When volumes described. in quarter longer factors. the in the by cigarette adjusted nine the X% months, months estimated

over year year-to-date QX years. sequentially, versus fact, the by quarter, ago the challenging total increased past In macroeconomic an adjusted increased discount points cigarette declined environment. share retail the X.X% cigarette percentage of and [X.XXs] segment period X.X reflecting have the of volumes category industry five the third competitive average activity the In and

and largely [X.XXs] the sourced are from share Difficulty] We period. segment encouraged year that [Technical the ago discount growth versus sequentially

and first term. discretionary retail led and Marlboro's the part lower in Marlboro's checks quarter the share pandemic. We We stability of consumer performance increase are percentage long to was pleased points. XXXX, by that with throughout retail government over in XX.X the share In mobility an believe increased stimulus Marlboro's income driven

returned levels mobility remained has Marlboro's stimulus returned to consumer As its the prepandemic and ended, and subsequent federal levels checks share through stable to quarters. prepandemic

in performed first quarter the In XXXX, better fact, Marlboro the of than has premium since other brands of many category. the

year In performance premium testament ago. over the share within of a versus its brand sequentially the term the volume smokable quarter. shipment strong to with aspirational financial & cigars, consumer strong reported the in leadership results. third increased continued profitable tipped segment Mild in grow [X.XXs] a segment a [X.XXs] As increase believe to premium Marlboro We continued Black positioning is loyalty. to to long its to a the contribution by the of cigar longstanding as segment segment an and XX.X%, and result, its its Middleton provide continued cigar X.X%

strong decreased excited for the grew volume but were percentage the with X.X% and the third points for declines marketplace. declined X.X% in on!'s X.X% the Turning an differences, performance tobacco segment and Tobacco pleased continued investments the by segment. the the nine months. adjusted first nine first the months, estimated When nine by trade offset for on!. tobacco as decreased to quarter of volume inventory growth increased segment movement on!. for months. MST We're due segment declined X.X X.X% third oral the Adjusted X.X% quarter share behind in calendar about for the reported Products higher Total oral first to for quarter, in overall products segment by product for Oral retail primarily margins and partially and OCI X% the third

investment Turning the a months for This pretax impairment $X.X in and impairment ABI. in We approximately third difference of the as fair XXth. September to XXXX. recorded value billion value noncash, of nine quarter and carrying our of between first charge reflects of investment our the ABI

long price that continue recover. and believe performance ABI's its term of price equity underlying to reflective not We that share ABI's will value share is

However, we will price and the longer results near believe it share financial performance ABI's continue that may impact to factors rates than previously and term. geopolitical exchange macroeconomic as and foreign in take expected

significant we and We long the to maximize long our of our ABI's remain stake repurchasing our for view quarter we our time dividends $XXX to for approximately and term raising committed XX paying demonstrated shareholders. value returns, in $X.X dividend and the goal in X.X by third term XX the and shareholder totaling of investment capital the have the shared, which financial our investment previously as vision through billion shares we As in creating a million. the is million value pursuit years

which $XXX approximately have the remaining complete year. of repurchase billion this currently to $X.X under share by We we program, end the expect authorized million

was remains the Our the as cash. with available balance due quarter, came debt-to-EBITDA third notes we In of that billion end of strong X.X August, sheet ratio retired and of times. our $X.X

into plus will received a remaining of billion July As will We part XXXX. billion $X upon the we Billy billion the $X.X stated, of entry by and the IQOS interest receive receive as agreement. $X.X agreement

repayment, purposes. the depend and debt other repurchases of general vision, of factors Board and Our of Directors. subject in of repurchases to discretion corporate proceeds on investments our may marketplace use the Share conditions remains share cash our pursuit expected include or

financial our to outlook. Turning

our narrowing now are from a base guidance to year This full XXXX. a adjusted represents $X.XX. of diluted to growth X.X% deliver EPS $X.XX of in We to X% and expect range XXXX range happy flexibility $X.XX to take of that, conditions. in Billy to we'll be With your We range will and up, and us wrap believe the allows questions. react to this marketplace I

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

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

first. the We will community take investment Instructions] [Operator questions from

Goldman will question from with first Herzog Our Bonnie come Sachs.

potential A lot announced for just Billy, touch I wanted related it's help this your you hoping, I HTC time us I the I announcements. a Is could that what just But versus with you. correct? lot HTC consumers was morning going to HTS The understand to and each? of on maybe something. on with the target is wanted owned for also, controlled JV maybe and earlier JT. and better opportunity to formats And with, line by verify then think, XXX% you

Yes.

a there Bonnie. So was that, lot in

So XXX% of I'll take HTC is us. owned The them It in the is by reverse order. part JV. not

think HTC, their meet you you've group huge of products this and I looking needs. HTS adult and satisfy desires got smokers and for when that about think

lot novel we fulfills those out type -- more to other and lot And the can where a of desires consumers have over went that with believe we tried some e-vapor, are product. close that's so And product before, for and HTS the so go they you them. experience There they a cigarettes, want as consumers needs. and and a fulfills a familiar of to HTC were we've get as believe willing as pointed

reach So that us for to be both we larger allows group consumers are actually to it to actually looking see switch. successful and of a room

Could How either there million think follow-up required. algorithm? to And of than assume changing terms I'm long other and be initial potentially ultimately in on commercialize or investments I just do growth touch through this your on a thinking And some near future will then then products. we just these that. that? develop the term about XXX you

investments both -- we is to to strategy, appropriate Marlboro in overall remember, as in we category income I investments, through previously, said with that think smokeable but products our make time the balancing growth and going maximize areas. -- are to even look, the in our certainly but

always all point to to We’ve morning. puts don't to completely that tried incremental leverage the investments in we are takes. and that the try and there you out want to make this So P&L. our some I think of of remarks we are

production the So for JV we sticks for for in The manufacturing heat manufacturing produced facility. instance, the center, that by where will on! be our the center. expanded

So there you place. in have infrastructure the

with group have strong You machines. a of familiar talented running are employees that those

leverage you some. So

you it's investment. investments yes, have So the incremental but there P&L, reallocation not across all are and

which And maybe related question narrowed final this morning. guidance, just you your is my to then

it I midpoint. You slightly, guess, XX at narrowed bps the

marketplace just flexibility stated more conditions. to react give You to you -- to

what something So on I uncertain? or Is the hear maybe mindful worse be got consumer, the bit we you to from just else little of? pressures wanted is that a it should or there

Yes, appreciate I Bonnie. question, the

narrowing our think a the results consumers no more surprise we're could I maintain out most as that certainty passage nothing certainly, remember, this that it's would because point and ABI, and have quarter we of time, pressure lag think you I want the with that flexibility, you to them of of released on but ordinary out. saw of right? under But are that We morning.

will with come Our from Morgan Kaufman Stanley. question next Pamela

Bonnie's and thinking greater market size the over invest five the do question termination in to flexibility about evolution over categories follow you're and the now of I XX investment wanted not given years? to with on have to How relative the tobacco how And between burn JUUL you burn prioritize going partnership heat time? are the e-vapor, the your and think that versus ask about noncompete you JT, how e-vapor? about not the with up heat you to next US of e-vapor

to that a standpoint, reduced remarks why and say is to we it's reason back, today, highlight the US through and e-vapor very been I two the A the by and think have that make that an remember that's step novel And and you I great some in from important in exists space. that's e-vapor, Pamela. as percentage the authorization really take undeveloped. the the oral, in to you go tried out transition of no to come it's denied. really low that as question, harm received authorizations FDA Yes, in going And is and believe get When period been the has authorizations we move some those authorized a oral. novel it

so And that, heated there. depending could regulatory the and goes on it's then really tobacco again, body the there a those, be of transition how space, nonexistent. authorizing assessing And bit a in about

I three you think the factors. think extent when three be by those about those three categories, shaped we of really will believe categories

So to in taken that one, innovation each how does mentioned, It I the spaces regulatory consumer be through preferences the individual through then tax that of they is related the policy, best in based decisions on what the and time really develop the are categories. in that categories legislative the address is will time individual desire.

away three what's will cigarettes really three the time categories through believe individual to grow that from those We that's categories. to of as the are going free the consumers size move products. So to the shape continue smoke

consumer and It's the data as that's and we completely to amount far to consumer in from to we're the going the prioritizing, well moving the right prioritize able see how insights the of that garner to the we get the can that. sales leverage stores why force we As receive on be driven, to as products we and as where excited see based going be consumer we're moving.

question on ABI. second is My

hold expect lockup investment and You recovery that to expired. decided your to previously this to when than shares It to your the on longer take now expected. expected you recover seems

around their So on the does sell stake, at the lower hold how to further investment? And it it price? your this willingness or to does a extend does impact thinking your increase this plans to

the have driven. look an ABI reduction not, expected asset, is of about timing is of impairment or impairment the really at accounting your to our value temporary carrying recovery. you you The think in When whether

the it we as As financial asset, ABI stated, a as investment. we far as view

is we'll many to value basis, that go focus analysis continue an share variables an stakeholders our that ongoing value do analysis. price the Our our best the what's that shareholders. focus term. to is into for over we of It's long on for But one and on maximize

your squeeze agreement? any if one accelerate I the Can just could attractive in. And if that into from the termination And more proceeds plan e-vapor with would talk entry the assets category? do to about what maybe to you IQOS you to there you be is help

our to them mentioned that. in flexibility, mean, have a which add obviously, don't a remarks. the with us to is I thing. opening We always lot I provide increased proceeds good

returns capital strategies. to there's lens best the nothing vision, to our investments be add. continuing So or manage all strong broader our at to of balance our I But allocation mean sheet we're further that's to capital through look long continue for term allocations really what's going our shareholders, more to it provide shareholders. in a again, part of

Stifel. will Growe question from Chris with next come Our

to question back JT. to a you Obviously, follow-on bit you, get for it's of into very agreement a the category. a had encouraging I with that

launching launching that, have you'll product. reasonable ask I in to capability your line review, if international And related US? time do have the the a development for terms a of time of obviously, this for the could products Given FDA you and in product frame

products So internationally develop able should we you'll test and expect ultimate US? an kind application to the and that to of in learn PMTA refine for be those

Yes, for you're And thanks question. Chris, right. the

front We us. the we are opportunities of in have excited about

dependent to PMTA I for product that's takes you how would be they file to FDA be will the believe authorize it be I long we the takes time, them we the so tried think to quicker those next anticipate is launch, new to what more about think products. couple a it when and for the enable when to that through remains you authorize provide those on used predictable then to time line or become seen. authorizations whether will categories it get

don't about think excited you -- in excited we'll I more to future the be in of yes, about it’s the to categories memorandum to about that. ability being able when appropriate internationally, We the the any whether test collaboration market about the understanding to realm. to potential we're there But want and of for able myself. it's think of when in We're I launch new international the share leverage get products the mentioned ahead live to share.

And we'd of ahead market to an just next expect for your be when in on Billy, reasonable to time and PMTA far product line clear see that least be for at be myself international I'm application assume you're getting the the tested or in you here? and to then given -- XXXX like year moving it being developing, too would would it that,

I think bit yourself. you're little of ahead getting a

I that tried it we underlying an say, I question think long? think really when are you And market, into from your maybe would so getting launch, goes why launch is we international it international anticipate that back the taking look, consistently be -- disciplined. that preliminary product we to want hold reductions. ourselves we conduct We well can quality that constituent to for to we certify high meet studies want look, to as to as the to standards

international And are look get thoughtful forward so an it to. we're But about and to we yes, manner. into going market in it to go excited a

premium business marketplace share, conditions. your just the in relation guidance smokable current side, your the losing particular, premium And to this today in just segment. flexibility look I And had -- share to Obviously, as gaining overall. in I a at react your question to you're part though, on is of

the be share side the back or premium invest, going in more on guess I premium where is it think where I to invest in as I you brands discount it would forward? do category is discount, to need share about you want curious, So the losing from to you're take

aware the maybe and the of for the the I wouldn't experienced we've We're make guidance. very our price like being consumers would realize, marketplace. of that anything Look, wanted consumers has to Marlboro more really mean all that year guidance are as understand narrowing been we our like stimulus in the Marlboro mentioned we in normally do. actually encouraging. in on got everybody as we place aspirational gain you to question, passage like I up out bit excited it But we the our total shows little of to we just the We of that specific. what for attempting able Sal the the his cigarette it, some the is at you saw weren't space, at. pressure look marketplace, maintained to less track mobility extremely has to share. in prepandemic your with look pandemic. still as It a tighter brand pre-pandemic I see and the realization flexibility. affecting were back. we're post-pandemic, business When ceded when stability government disposable I about this across range point the [XXth] under the industry. that's income the for Chris. roughly And guidance time. We at mobility That's establishment had a and well, where comments. that that during saw we saw and is the up that we post-pandemic, pleased we're take performing flat call and share and we And

with question Barclays. will Our Gaurav Jain come from next

from questions me. few a So

tobacco at oral up based same your look plus I disclosure, pricing, the pricing Copenhagen's at year. it running on I X.X%, is this to if on And X% just think, was first X%. it quarter, which So the of is manage, last and flat level was, still

on! part pulling that share? that your or back increasing on!'s pricing market hit on! on So mean and has is does it actually you critical becoming a you're maybe some are it of now promotions bigger portfolio,

we we the apply into RGM have see new share. market that able and what have be categories in certainly the the marketplace. to been we're Look, Gaurav, place, we about and the how opportunity where with perform, as on!'s the spaces the that other had we it's we been in Certainly, gain able excited tools two grow volume analytics to learnings able and to to perform in

standpoint And with I think in strength space, -- on! a you really of strategy think of so And with I the overall, term while from the balancing to that on!. in place the exactly maximize profitability Copenhagen the space. long through that's taking what see investments it's

goes menthol right Logic the menthol the denied? e-cigarettes your like and it invest all e-cigarettes e-cigarettes. FDA starts US in on My sense But just to MDO second focused denying Would menthol now make if is get maybe e-cigarettes product. ahead because not it's I on question now any and appreciate broadly,

Yes.

category. try highlight seen, hear that's decide factors can highlight other all and and industry important decide each of why to what does an remains the I the that's then you It's of would in will for categories That three relative the those And large you I we last But to of two. think time, is size each it the in of of the to we and entire ultimately those these front could innovation. also that that the regulatory try each mature individual that's highlighted categories really be tax spaces, legislative and other. would to highlight how decisions. I one how be policy, size through be.

flavor next to How ban the are planning quarter. California you happen approach could that? that On

So pretty they it evidence But standpoint, that. have things. team. smokeless with vocal the where supports about science decisions with We in we've and impact. California, But FDA, think that we've looked and could even in We as at we've government our we highlighted the from non-flavored you the some with finds cigarettes think with better based are affairs SKU FDA believe a products the non-menthol category as don't these the SKU reminder, an And been engaged it those more overall space. an base. industry a it certainly, and we, of when

to just doesn't have industry, I standpoint. our So an positions science you wanted to of SKU it, from the it but again, I think could support impact a the remind

why help on And that CapEx, CapEx if you reduced like guidance Would one could you us able understand just be last happened? I squeeze slightly. to the the

that Can you repeat Gaurav?

CapEx the guidance number, reduced. was CapEx The

factors are driving what the that? So

projects right? you the quite is the has capital Gaurav, year If think The about necessarily well. spending are passed year. not -- The along moving linear, throughout time projects,

through year. the So quarters three we're

So we just lowered our forecast for spending.

So on timing. that's more track. projects The remain

supply Of ordering delays but We've nothing when well. able there equipment, to quite course, material. manage chain you're are been some that in

year for So as fluctuations uncommon the it's progresses. in capital forecast not

Vivien next Azer Cowen. from Our with come will question

you of that's to just when burn, guide a But because Can lack Billy. on how also not really didn't with JT touch me that capsules, consumers imagination if expand HTCs, just original you the of heat the wanted my launched innovation resonate it different, XXXX. on Ploom the on XXXX, all, in in So just I that please. I apologize, Japan. at part, reminds maybe it's

Sure. when you'll of complete I I get we it We'll don't myself. And too forward able want far ahead bring know design. actual we're excited come once be it to product, to forward and with the about

about that seen the think everybody’s because stick, that's pretty marketplace. in evident you If the

capsule, from contained tobacco different familiar get of but want Ploom, than It's myself device a don't the you're the is within about think you ahead I standpoint If a we're ready. to the capsule. of with the technology the far describing before again, too

in different terms nicotine of [indiscernible]? is it But the

correct. is That

for to I seeing do since perfectly smokeable on hard please. XXXX. it's pivoting objectives to is the that, segment, look price are focused just really to profit your that growth. forward Maybe highest fact your the Understanding well the sure. gap ignore It's now been that

fine. And curious for how segment, about leverage market so I'm modest think are that operating just declines share you

an two gotten a basis. basis, Obviously, deteriorating three industry But right. haven't stack declines that adjusted year year on on industry is that worse. You're your much

that segment And in a operating do so perspective? you leverage volume from how think about

at that. execution a tools Vivien, manage it out allows because I look put gap I but barometer, XX% revenue and manage us as most we see growth the allows people management lower those and think available I have as lower disclosed refer the much analytics that you the level. to gap to price against price to it introduction know than this, the to you, And we but that just a that data much want you all at we really know gap, for think barometer I price remind when national and that you the the We a is that you have level.

is, in that time. Marlboro think, the seeing share so of the what market success I through you're And

And able so good we're being way done. time and and we're price profitability through extremely feel at. about where We gap of the the increase pleased expand the we've Marlboro performance with to the

really of discount is question, are which nicely And that segues on reaccelerating. gains deep category. last discount Obviously, share the now into the my performance

thinking the backdrop backdrop? about helpfully, strategically on updates of how very takes you're kind your against terms think, puts just any and of I the consumer. articulated, the in discount You've of that positioning brands But

recall, Vivien, their but a to you'll of that our premium portfolio we're premium retailers have discount focused. visit in we're And services We participate that customers it's their because to a stores, all focused. important

share on profitability. we L&M profitability share willingness experienced pleased of we're with felt deep in You we discount. share But see the to L&M, the with L&M, know that would like we cede cede and increase to ceded we in as that we've some increased

end is premium for of that extremely Loyalty remember lower status. You'll the at our consumers socioeconomic brands. XX% over high

their have going around always get you when so they are that consumers individual and under situations And are. on move pressure of to around shop group depending what

Cacia next with Instructions] Our come [Operator question Carla will from JPMorgan.

Oliver is on This for Brotman Carla.

us. from couple a Just

there risk So and $X.X owed, announcement remaining the with Philip the change agreement between Is billion with to regards that made to Philip Morris. on value the then? could now Morris week any that last reached

an the until would exchange payment's time, remains made with is accumulate payment. change X.X the Exclusivity made. on was it interest they X.X. when depending value, that With of that thing would through the The only us that that final

secondly just JUUL. then And on

turning what would build portfolio, to place options you're no to your the While XX% stake? retain maybe there longer in still stake. the noncompete that do you you a is and that Is bearing longer focus term at out plan

performance Really the of state. flexibility e-vapor open category. it no the in our point. the their out get was up plan at marketplace, we point We'll in at to time see hold We this to but economic what that important noncompete is the thought in

come Barclays. question will Our from Priya Ohri-Gupta next with

One Priya. This question. is [Argus] for quick in

next have euro year. you a in be debt that could you maturity US to early refinancing that need have in euro or exposure Do You dollars? flexible

of debt. don't I on get want maturing ourselves that to ahead

and the question debt we exposure the do Obviously, and retire allocation capital flexibility a that to on market perspective, have we'll So from see. wait need necessarily analytics we from while issue how we go do though, we'll not where your To we now. could process debt, we necessary perspective. the have euro through, a

market rates? European versus attractiveness terms your the What one. of the last on relative US of the market in one dollar And thoughts are swap

exchange Well, attractive. marketplace. have rates important are predetermine is factor that necessarily I allocation. for that more But the us goes want what's to in obviously, a don't FX to flexibility what's into

We've balance fortunate sheet. a the companies are cash. We converting operating tremendous do that have a that got in strong job of we income,

can we or comes So think debt. other about we of due, can as the methods retiring refinance debt

of the process So may or flexibility to want that also but exchange it's to due part want we not coming may really though. handle to debt for is enter. us, markets definitely FX how determine with that we

Our next question will come from Callum Elliott Bernstein. with

is bit a given a like love giving XX% Horizon, in a I away little candidly regulatory amount, ask is without approval that's sense for our performing globally I'd about a okay. poorly is the weak that share huge economic a if feels more to this guess US. it you guys product, number brand

morning for well on And you economically be to as you this the to about to why us talk a how we've at difficult entered so hoping the for you behind viable just conversations arrived you. split? drivers based JV, to is this feels that XX-XX this and can then very had just It investors be this economic going

I me differently. let describe. mean about it think We a bit

we nicotine it in the the reduces space when [indiscernible] greatly decline rates. across recall the You'll US,

each look to those attract which to categories, group to them of at the across space. in over have products So five important and brands that to to across the decline of categories categories, We in attract cigarettes transition a of larger products these those and being consumers is from will strong participate years, past consumers have free about a the categories benefit standpoint smoke X%. able a from a be if over of and think you it's to portfolio volume

they consumer insights that I for even important to think product that's as the garner place hasn't continue and that in is learnings a JV been remember to and yet, commercialized it's feedback.

collaboration international well. as revenue so And exposure a potential this and excited for and future think to extremely we're we foundation is

talk wonder just guess get follow-up, I And unrelated. bit you to one as well. little I I can a cannabis about if

where the my in made But since you priorities your given likely set to of exercise your investment, today? out to Cronos, question changed are money. the and has capital not about and warrants allocation how on the half thinking years you're you over you're category a past think list in does it few Presumably, cannabis that more three the have the and sit is expire I way stake to still months. obviously broadly,

feel I we think you potential investment imminent political believe We when the cannabis to current in in with term that highlighted investment. it Certainly, that still has when the think environment, doesn't that term long made it it was going be the anything back, US. we long a in will US. switch

departments, place the first first able think but lot the made take to in some dynamics to before an step important a the it's on President be step US to I a change industry more in and it's capitalize that.

nothing we political So but term in still believe imminent. US, certainly has the long is in the environment, potential it

for this you. call the to Gifford remarks. now [Operator will turn Billy time, Instructions] At back over I closing Thank

to Yes. Thank like you, where I remarks by back I'd going conclude started. our Katie. to

in period and Altria's have in opportunity history unprecedented of We exciting smoking. moving are an beyond an

confident we progress And term smoke We Thank continued categories taken our three will and our cigarettes. the with shareholders. away I great space. to huge our to have assessing are joint and create believe for our in our that we ability lead continue strengthened forward joining vision that free portfolio the our novel category development expect have We growing from to category be new have step a In this we will heated product the we day. now with for tobacco, my that in transition e-vapor help the actions in us, a smokers a internal you in and major with on!'s long efforts. belief demonstrated value across already options oral can venture JT growth. and achieve have compete

Thank you [Technical Difficulty].