Altria (MO) 26 Apr 232023 Q1 Earnings call transcript

Good day, and welcome to the Altria Group 2023 First Quarter Earnings Conference Call. Today’s call is scheduled to last about one hour, including remarks with 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 Mac Livingston, Vice President of Investor Relations with Altria Client Services. Please go ahead, sir.

Katie. Thanks, thank us. and for you morning, joining Good

This our quarter CFO, Gifford, Altria’s business Sal Mancuso, CEO; and will morning, Billy results. discuss Altria’s first

results. metrics Earlier release, available responsibility at we issued press all providing today, a reports are presentation, our and our quarterly altria.com. latest corporate release The

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

earnings cautionary and release to Board. future our results. end the forward-looking cautionary Our could section results of of various cause remarks dividend remain of Please to from for projections and today’s contain factors that differ subject statements and share repurchases discretion forward-looking projections. the statements and payments at actual the review Future materially

call will various on at financial included and basis. of a in today’s with results our adjusted and website contain reported release in financial both, on Descriptions results. are report comparisons results these that U.S. affect results non-GAAP our items altria.com. Today’s measures and exclude generally reported special Adjusted with operating We principles. accordance accepted earnings accounting reconciliations

or in all consumers consumers a within XX consumers adult or to of to tobacco remarks category years age Finally, or specific segment tobacco tobacco refer today’s references existing older.

Billy. turn I’ll over the that, call With to

Good and us. Mac. for you joining Thanks, morning, thank

are to businesses strong deliver We off start track a our are against plans. on to and believe full year

environment, announced exciting we challenging progress and businesses vision. tobacco macroeconomic Our our well in a performed toward

and exciting and earnings our introduction unveiling pending our growth development, adjusted continued Investor share our and at resilient the strong including Highlights XXXX of smoke-free first brands, acquisition our performance diluted Goals. per of leading Enterprise Copenhagen our products included NJOY, of the in announcements on updates from share and Marlboro of and made quarter our on!, volume from from end-market growth including X.X%, Day,

under its pressure discretionary environment In now more remained first beginning active the effect income quarter, the due inflation first consumer review industry over and with the results volumes. quarter on past levels of impact higher year. detail, Let’s macroeconomic in to cigarette the

industry beginning higher cigarette purchasing the inflation smokers by were gas second reminder, result decline shifted experienced increase a quarter of the volume a rapid Russian rate that the as in the widespread a of behavior As exacerbated invasion of prices and of XXXX their as in Ukraine.

prices gas and of goods services the recede began year, inflation to remained While persisted volumes under in cigarette last other second pressure. and higher across half

inflation volumes. impact discretionary into continued Moving first the over quarter quarters consumers’ the cumulative of past tobacco of industry tobacco and to several XXXX, effects the income

and remarks. consumers color continue monitor volume throughout their factors tobacco industry in We will progress impact as Sal will on these additional to we year. his the on provide

turn Let’s the to now tobacco category. oral

the nicotine excited grew tobacco by and six oral the now pouches the growth nicotine the consecutive for products, continued over of grew was share represent past XX.X% total X.X total which volumes growth the to XXth tobacco pouch in pouch are continued category nicotine of the oral the contributor X% increase months. oral tobacco estimated category. primary Encouragingly, oral of share We year-over-year Oral quarter. points their oral

share outgrew increase to grew oral total shipment of On! reported category quarter, on! continued first its the its X.X tobacco continued XX.X during to by at share and the growing an of Helix share volume its retail sequentially quarter, grow cans to grew on! XX% points first million these nicotine momentum XX%. X.X% on!’s impressive X% on XX.X% Helix Notably, of percentage sequentially XX,XXX stores. pouch an price absolute the up reaching results Zen retail the year-ago and basis on versus X.X category, points. period. delivered as in in the

category investing demonstrates the its brand its is remains reducing as behind promotional to equity. investment committed share grow while in product achieving XXXX. portfolio the effectively its strategically focus profitability Helix continue We believe to and on!’s ability of grows continuing the and strength brand to while

now smokers and a believe significant alternative the volumes transitioning decreased U.S. move most year XX% in that first to the ago category been versus X% undergo we in We estimate e-vapor which a e-vapor, the sequentially. products. reset, has category quarter to successful to Let’s is continuing and

observed multi-outlet decline convenience in vape This and believe nontraditional a such a issued been have increased as volume we offset marketing has e-commerce stores. of and is volumes, channel We which decline primarily for traditional JUUL in result orders FDA the by partially myblu. and channels, denial volume

granted about e-vapor NJOY product. of acquisition NJOY our only portfolio receive its is pending products. order marketing and We excited of pod-based are for to a the company

the can expand and The believe stores and including closing vapors the distributed. has to been where completion of subject not in Trade resources Commission. across continue transaction NJOY our strength ACE benefit customary smoke-free to conditions, competition U.S. smokers is the commercial Federal from clearance of We the NJOY

make the the about of and the to million optimistic to Moving environment. remain regulatory XX more we the of the for the tobacco encourage progress future We benefit FDA harm-reduction continue to consumers. in U.S.,

FDA the Reagan-Udall response of provided operations. FDA’s Foundation’s February, In assessment to a the tobacco

should efforts. for learning We more and important increasing enforcement through ways nicotine pathways, exploring recognizes and denial improvement, agency forward efficient the areas are risk communicating We that improving a perceptions orders these more defining developing on encouraged and transparency to five-year including communication. agency look can some address the strategic details of plan, and marketing

toward addition, youth appropriate encourage making the continued In noncompliant we them to of And has manufacturers. enforcement reducing critical necessary The is tools. progress action against enforcement to take e-vapor FDA FDA the usage products.

clear public We menthol that the FDA’s continue harm to proposed submitted made we the the not response prohibition in to ban. best and forward reduction, believe comments path this have is we in

and are flavored effect of Unfortunately, unintended and markets. the a unregulated of consequences products where of development prohibition, those illicit highlight the adoption went the many believe number in comments playing late products of California, including a ban in nicotine Our we on into out XXXX. adulterated consequences

the continued and Copenhagen not were law. with state that brand’s determined immediately operating ceased share we sequentially. the in products Marlboro of retail California compliant companies That to Our with well growing perform the shipment wholesalers to

However, of we in the state concerned remain market. the in flavored with enforcement products some as the lack remained

new introduced to have or rebranded the products, law. manufacturers ones some the existing believe also of purpose We sidestep

XX% in from In March, the sold menthol California, increase still percentage points in an January. represented nearly multi-outlet channel of (sic) [X%] X.X the cigarettes of volumes

evidence we California Additionally, seen cigarettes self cards that smokers and drops. are such have flavor some products as mentholating alternative their menthol using

in e-vapor mislead some suggest have observed products to borders the to smokers states trade appear that menthol have are surrounding renamed to crossing flavored We regulators. also market that in state dynamics products. And state been purchase

believe to of greater menthol X.X total increased four menthol is Nevada over example, points the XX.X%. sequentially as the of this Nevada significant has XX.X% than share We For not years. percentage in in share in past first the quarter the been

our and are officials encourage teams California Compliance them government remains to affairs to engaging the to enhance enforcement same a manufacturers government all top with hold standard. and priority, to

the policymakers harm reduction as and framework product to for is tobacco goal embrace nicotine Our proper regulation. for

shows public moving In away opinion benefit strongly prohibition, products smokers from fact, a of public toward smoke-free combustible favors a over science significant harm health reduction and future.

continuing success I our tools believe the reduction for succeed. while As And at harm we conditions we confident in place and through dynamic, are in actions. described engagement environment succeed external Day, have positioned are the I the efforts to create for to well remains to our and am our advocacy, XXXX that Investor beyond. we we

and sound employees. strategies brands, have most importantly, We talented indebted amazing

a the guidance reaffirm X% XXXX of in rate diluted base to mind, to This diluted X% With of we these in an $X.XX range EPS adjusted full pending things in EPS and deliver of the our $X.XX potential a adjusted impacts $X.XX. transaction. from XXXX excludes to year financial represents NJOY growth range

now and it results. provide more I’ll Sal business the over our on turn to to detail environment

Billy. Thanks,

execute and of investments income profitability over In in segment the operating to long combustibles price while of segment the unchanged, XX.X%, appropriately Smokeable growth our adjusted in smokeable Marlboro smoke-free our products term continued by adjusted segment, we OCI driven strong realization expanded companies balancing the was its XX.X%. the funding margins essentially net portfolio. maximizing of strategy to

retail reminder, reflect price realization does a not change. manufacturer As the price

to XX.X% was cigars. When year. offset that segment price the smokeable At the in XX.X% net and reported as volumes declined X.X% volumes quarter by decline cigarette the by volumes declined factors, domestic volumes in first Total partially segment over shipment compared in by first quarter, estimate last retail, that pack an period. for declined differences cigarette Marlboro’s first movement, X% calendar we trade quarter in same other the for growth modest inventory industry by adjusted XX% and increased

quarter the sequentially. time segment as in inflation, by mentioned, grew been the the volume moderate to the impacted of expect higher retail, X.X At volume over macroeconomic and that trends cumulative declines environment X.X first negatively we As stabilizes. effects discount points and Billy believe industry share have we

of result a We smokers believe down conditions. as today trading are financial some adverse

offerings continue multiple priced X.X the to period, described. by year discount competitive levels. the see versus partially increased and I ago segment, discount sequentially at that discount in deep share driven Marlboro’s including We the dynamics activity discount declined X.X branded

seen the premium ban balance from We the of California competitive country. menthol a a increased flavor share also of in category decline Marlboro’s as result the in total have of activity menthol and brands the

other the of category that of share the premium sequentially as believe segment. segment of in its growing while increase brand in majority this we Marlboro to the year-over-year, retained X.X and its However, share environment, XX.X%, aspirational it challenging ceded in an the remains the share X.X brands

to tools this at PM environment. navigate believe the challenging appropriate has we And USA

example, introduction rich family Marlboro intended support is investments in May. be For bolster beginning the a products, for nationwide, we smooth to Gold products announced are within series these provide with of available of and which intended will behind the flavor the offerings smokers. taste. pack and Black Included additional family are Marlboro Black a the recently offerings Black These non-menthol Marlboro Marlboro of investments price-sensitive in products of to

strategic to state XX.X% Our California as overall and related these spend dynamics the allowing for in on our capabilities RGM first while shipments industry ban metrics our PM us supporting and for be in the that altria.com. analytics to a And more flavor with result while XX.X%. market reported segment. in retailers the quarter promotional is document shipments investments, precise advanced California, declined strategy declined our included USA We’ve available inform details rates the geographies to of retailers to California

OCI When reported quarter differences and delivered was volumes growth as an we estimate segment by the estimated margins lower adjusted on! calendar OCI offset quarter segment. declined to tobacco grew the X.X% volume oral and of first Total more first for products movements, that segment strong inventory X.X% XX.X%. MST shipment in than decreased tobacco X%. volumes. trade in segment adjusted by Moving oral the Adjusted

points declined Oral in as growth by the offset partially tobacco were of declines retail brands share products X.X MST segment continued percentage our on!.

share grow Copenhagen We encouraged by the of our category continue performance category the the tobacco to and products to leader. as continued in oral be on! remained

ABI. equity our of recorded to the million XX%. investment Turning We quarter, in $XXX up adjusted earnings for

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

Our notes $X.X billion we $X.X announced to debt-to-EBITDA retired International balance X.X. of last Philip with of And year. end the fall, Morris cash. agreement the plus sheet strong. of as receive July the came as In ratio part first was expect And IQOS billion quarter, from we the interest our February, remaining available remains of by this that due of we

announcing billion value to commitment $X.X and targets annually vision capital demonstrated in focus We We XXXX. new in returns. quarter, dividends the through this through our the growth goal our shareholder long-term of first significant dividend mid-single-digit remain paying and progressive committed dividend on that creating approximately a by pursuit

to first any the in timing of repurchase our quarter. of announcement the did Due we not transaction, shares the NJOY

the of share March of had current under we the expect by end XXst, which year. program, to As billion we repurchase complete remaining $X this

and With Billy take that, questions. will wrap happy I be we’ll up, your to and

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

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

Bonnie from Sachs. Goldman Our Instructions] comes Herzog first question [Operator with

actually quarter down guess is which my this and volumes, that’s pretty first comping your decline. XX%, question some were pretty significant cig I on pressured

you’re -- you take us know, consumer? is seeing don’t maybe and How on then your just I and pressure for are estimates that the like the category? thinking So us step the appears what give of a looks pressures in to much back which now could a of better for I’m strong. it industry, of mounting the attributable then the many Also, down-trading sense

more a maybe would just little on driving what’s color that be So change helpful.

for the Sure. question, Thanks Bonnie.

I think, take to in I’ll try it part.

impact in spending our seeing the the categories. to highlight think of of So, I consumer, their cumulative remarks you when high inflation we where think all you’re tried about across

high through of it’s So the quarter, impact it’s that the cumulative time. not just inflation in

think cards, rates the car decline which are all mortgages, consumer, is savings debt impacting underneath loans. climb, consumers, certainly, we you’re well to And as to interest rates. accelerated I as seeing respond of that, credit seeing

what So they’re they that. cumulative the It’s available the to space. of cigarette have impact not them. using But new it’s to

think came go back under a see I consumer other and in the you bit, where instances can history extreme pressure. we

the you taking the the place. see ‘XX You because period at in and or were recessions look ‘XX ‘XX, consumer pressure those instances were can that where ‘XX, under the period, of --

Here, feel the tools we like in described, the factors other have I we place.

of think discount at bottom, some investments that’s we’ve Marlboro profitability marketplace, in seen and cigarette see areas. term Marlboro I’ll while in I gaining your space. Bonnie, our maximize the Certainly, using over share the long discount competitors, resiliency brands of it deep they’re the where the premium at you think if pricing call And in strategy share appropriate making the really, to the the their you about levels. space, growth term, in

showed that into of anything elasticity I minor minor you XX-month moving. the the a really in over price Day. the But going the at we in Investor at made decomposition than think consistent don’t investment Day. changes the we elasticity, -- look standpoint you past any metrics, periods about yes, the see see provided other question even a that made on can there consumer adjustment four the you think we our that been We about we when that’s from pretty price if Investor

more widened price again just relates relative guess, right. and All quarter, question gaps it to share, gaps maybe this And one then as price XX%. just your I to have your

of a well pressured, about obvious in year. of we highlighted you pressures that and you sense obviously, actually the while price light was actions concerned the as of just maybe took from also some how some on the of strength Marlboro are So, share get as but you’ve frequency this you pricing given the your consumer increase guys

to just much your levels? is at for pricing of of are the how And trying to room in ways maybe how you get strategy So see offset promotional these flexible further a facing. do pressure you some sense of as consumer terms the

brand some consumers where Marlboro difficult it just to if there’s family. I’m wondering a Thanks. guess, I point the becomes keep of in the

a to you’ve appreciate Yes, a retail seen announcement, under the down and we marketplace. question, local menthol some were in where the separate announcement seeing we up as in Those connections the Bonnie. I’m Marlboro that are with your really highlighted part spend to menthol sure stepped his I And like And at remarks, level. of pockets spend price adjustments adjustments of felt made what promotional was in we pressure the promotional by competitor area Sal also making space. are

what on Marlboro packings localities. depending franchise in with So, various we’re the there using some resonates consumer adjustments those making within the

exactly in now shrink to we question, mainline. it within making the conditions extreme the whether the a keep give us on to be done to promotional in they aspires which the It’s aware, and under as franchise I’m do we new. other who Special allows is to to Blend Marlboro, where Marlboro marketplace. a then with economic history, can we’re and that the before, Select about some sure you consumer, engage is economic We’ve well discount actually not to Marlboro. Special this think their change, pressure, counteract Marlboro engage Marlboro are What consumer you’re spend consumer of to, adjustments with can where them see Marlboro the place Some related and your Bonnie. continue adjustments promotional

and we Blend some is a with stuck of some we much popped what through flavor they that was it we actually history back time as And more it going them when in in it’s that see Special efficient mainline and effective Special to did the consumers discount enjoyed. because with of see shrunk back because Blends, we

adjustments feel announced guidance. continue we May in available and all of we’ll the the that reaffirmation those were to we effective to like monitor So, we tools the have us, included

from Our TD will question Azer come Vivien with Cowen. next

so was helpful. expand any that? much willing did be you’d which Thanks. the commenting whether if particularly appreciated, through quarter to on wouldn’t in commentary. That through California. for was really that of January mind progress the you How And Thank Billy. intra-quarter share around wondering intra-quarter on I detail commentary, March, trends the I the noted incremental Marlboro first California, you I

the of in telling Marlboro Yes. continues up choose brand the as consumer that I was saw It’s Marlboro you mean to share. for overall that certainly, quarter, choice. the

I in to previous seeing with and line I banned, California quarter. where the is consumers some it’s to states. tend think non-menthol go no you and the they that’s longer that, of the when see access studies menthol you’re Marlboro think of And strength for the have when in what with

Understood. hear be That’s going you Thank it to pack. I introducing guys you. Gold that said are you I Marlboro, encouraging Black think to helpful. And believe was

you do or geography? relative course, price mainline to by in mind, a ASP recognizing, Marlboro it have So, targeted will vary a gap of

certainly will it by geography. Yes, vary

other on that it think in packings marketplace, in black the the that locale. that are I line being the think black depending and you pricing locale in in family of are if with the

dynamics the tax of consumer, like share increases. by of nuances we introduction and Perfect. But it premium my ‘XX macroeconomic course federal of And terms that those they were not of excise call where The periods, were it’s both the disruptive for ‘XX, one think out prior to some I the compounded is of were in also in ‘XX. mean, heads of their only quick of make one. last seems about segment, category I of the relative kind sense. in basically

do you this So, COVID recognizing backdrop about excise think incredibly increases disruptive right nuanced happening now? is because there’s but of how not maybe macroeconomic comps, that, tax

appreciate your Vivien. Yes. question, I

of is you’re subsidized pandemic, of actually what though exacerbation put that. and a the I inflation, the seeing saw the see benefited why since adjustments consumer The subsidy make large May and monitor the government brand to still when you it’s we’ll had that’s areas had like we that pressure, feel That’s to cigarette think where and the headed aspirational those you the that it. I by we been as category. cumulative Marlboro from consumer appropriate. adjustments they under into pressure. appropriate high the under in we’re pockets They raising And making what continue -- the consumer extent appreciate for

[Operator Instructions] UBS. Our next Condrea question will from come Andrei with

is now open. line Your

line. We no are hearing from the response

go to next We our will question.

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

the and down clearly cigarette creates pricing cycle, growth share grown increasingly line you was excess it drive trade a PM revenue the And whereby given that unprecedented that an to of PM in pressure. exception So virtuous market of USA It do XXXX. hasn’t drives believe time, pricing higher declines, which volume elevated XXXX, difficult top with of since USA through rate it’s becoming volumes? seems

driving you about about line you’re if growth how possible? So, talk top can you USA think thinking in PM and it’s

X.XX, percent nature on think you you to point really impact for Yes. about would price, that that’s elasticity, negative X.XX that is the volume. And think elasticity. when that Vivien, of you price expect increase I you a I price

space. industry other much than CPG in So categories the it’s much, lower

to the taking in can decomposition what’s down break see the cigarette try You in we category. place

macroeconomic factor big The steady. pretty around. that declines secular swings see is You

or if you it macroeconomic, consumer up under see the swing will back that the go think history, is in conditions down. I you’ll

were as stay volume you for period their under natural sometimes are conditions fluctuations These differently, us, XXXX, the sometimes consumer to You have take can think that in experiences place did one a pressure time? recall expect economic flat and call. we a they of asking I

continue can So I conditions where May, We’ll making level for analytics make the just adjustments monitor feel in it’s that tools of homogeneous, some of the the granular into consumers condition down see some local make at we the have and if we team that and we is the That’s across of different entire we natural. going versus mentioned those adjustments consumer earlier the of the level. to the adjustments will, a the down appropriate. at answers U.S. we’re you benefit

players just then at your you you’re And pointed the branded how what -- Okay. discount competitive these on landscape, are placing out branded in discount their seeing levels.

segment, within the reconsider in Given strategy deep And that participation on how L&M? you are thinking the would you growth your discount segment? about

would in Yes. remind I and appreciate the appropriate profitability changed going participate, strategy areas. long investments to over for into term maximize you us. making Marlboro while but we’re we’re it, the that in cigarette Certainly, I Pamela. space the premium hasn’t It’s the growth focused.

is things. previous pointed periods You similar it’s may new not something have answer, of the cigarette saw space. that to I a heard time in couple where my to we

consumer You the tends economic it on back for historical see as conditions to perspective. a revert through change time, the

we again, with It’s smoke-free Marlboro, to be want portfolio. So consumers. the whether about to on want they whether or with Marlboro keeping the long really our there term products journey to we the them our stay put in for consumer engaged

continuing And about time. the with really so, through engage it’s consumer to

Our Condrea will with from Andrei next come question UBS.

two. have I

just first total one level neighboring the on flavor to you versus first obviously, in just if other is menthol to than U.S. just this haircut? The -- state isn’t in California California could the terms you’ve ban the impact on seen net-net, the guess But the seen level. were as in we’ve the states, hazard of impact the a a you U.S. because on

say we far. we Yes. show what see to you was what I’d tried thus

the declare, to early is I think impact it’s the to U.S. total too oh, this

they’re going the the when we some the consequences with proposed the and to we’re provided that with we highlight menthol consideration to the based purpose into And enforce play unintended passes legislation really I to that. FDA need of California. comments is of law, consequences, seeing the think in ban what give on of were they to out how heavy their trying

that see early plays to about question net I think what’s to your as how out. it’s far tell too the As impact,

being my long heated a Thinking term. one Are your No, expansion more with is most seeing of whether that’s your time get your wondering or take second in the pilots, if PLUS got going And on! international one I’m current PLUS you off the I the on on! know about London. you foot for feedback fair. on! tobacco pedal you but online? because pouches, it’s your you’ve bit will any nicotine on you. until it’s capsules, on!. just Thank rather

appreciate your I Yes. question.

when the space, you it’s in on really about think consumer about with international their the feedback. I think it, receiving space early the learning in it’s

We’re certainly excited to be able to bring come with on! well PLUS to resonate the on international that. market. the We more think it to will but consumer,

[Operator with Matt Instructions] next Our come question from will Smith Stifel.

questions two me. for Just

the is brands? that The family? Marlboro the resilient has first you would have moved you Marlboro’s mix consumers price discount been share Could robust within the within in performance seeing acceleration an realization. Are down-trading otherwise of fairly volume discuss despite to Marlboro

I that would break. point as Nothing out trend

analytics. always going the Depending -- they’re was as moving I consumer around. parts advanced consumers referring You the locality, pressures U.S. of have as in And goes on different to the other of to that’s situation to really far face a than what back

what in And around sometimes as the they’re U.S. moving local so they’re at with the each sometimes each level way what other and far and is counter see and you’ll the they’re consumer to fluctuations other sync feeling. as

we under we’re occurring, believe engaged making pressure. economic now seeing it’s some the we’re widespread overall, Marlboro. though, right the our I think adjustments with spend reasons and locales, that in consumer want highlighted of to I And is some that to being we a with of the keep consumer the promotional takeaway the more

family positioning keep Marlboro back smokers to introduction And down to into mentioned Marlboro within this smokers some of Black Marlboro you Gold bring that to traded Pack. discount offering the and Are regain the more adult them family? you the or the of

the know aspires that Marlboro. be to consumer We

You up. heard the my in share comments they extra pandemic had income, went Marlboro actually earlier discretionary about when

So aspirational category. an Marlboro in that brand shows that it is

the where consumers both. if space pressure, continue a can under comes need they had engage consumer them felt the were reengage them franchise space And under Marlboro pressure, they because within to it’s so, it to with to a do Marlboro. out or gives it trade If to a gives economic

really the to So, consumers it’s as the want brand. their that with about engagement Marlboro choose

open this time we you. At will media. Thank lines the for

Our question Jennifer Maloney come will Street Wall with Journal. next from

Your line open. is now

wonder what if with you me menthol you California share XX%. is on increase to Hi. think to respect explain to in I could the in going

actually are be on playing out consumers up what you have it trying going lot cigarettes they and retailers who might is finding soon, like do a in on stores. the Is So I’m that because what’s imagine think not menthol then shelves or to still available think like stocking they’re it there?

said the by was appreciate XX% Yes. California. I question. was I that error. It in X%

So for unintended they ban I proposed. directly, I your the a menthol think is question take we seeing that. of to answer apologize place highlighted consequences But on FDA that number we’re comments what to the and that our

to purpose marketplace of the had the in And was. what is is what law of is of enforcement lack you’re take product we’re ways seeing the think the the law place the counter that a what -- seeing the is some I of purpose. purpose to and

going be really to achieve the enforced to enforcement the process it’s how of so, purpose the important extremely law. is thought behind And and

So, some seeing of we’re the the some of Jennifer, mentholating menthol cards for were menthol things we you, whether drops. consumers highlighted and that with self be

other menthol just stores then, And in of we a the saw spaces in in number We seeing flavored of are some renamed. California. still products

necessary, enforcement law. the the is they want of so, And to purpose the achieve if

normally with any of menthol you California in than volumes ban? a absence more would down are cigarette Overall expect

Yes.

were QX what standpoint, XXXX a think California, you in is for tried what about of if if to U.S. metrics to total the page, down about standpoint, You tried do X.X%. you they down QX we -- saw in to an industry we our of XX.X% think and XXXX, do rest from is

-- can So you see I’m that sorry.

ahead. go No,

total a basis, down even U.S. XX.X%, X.X%. down that So again, you on can sequential see California

it had shipments impact So, California. certainly in on an

We dynamics. cross-border also highlighted some of the

Right.

in So, shipment mitigate that you states bordering you might volumes volumes the -- in the highlighted California? in can Nevada, and I of uptick wonder might decline somewhat that all is -- quantify the in there

We an Yes. out we cross-border Nevada, that we years. net Nevada than I and too past what we to the over in to impact show example early try is four get in the say. using been think a an indication higher see think netting menthol to of has positives. as California is, certainly, What share. it’s Again, it of is Its of try to representation

you. Thank at for turn closing be to call will I Livingston over further questions no this This to remarks. back the time. appears Mac now

joining have great questions. for further us. again you day. everybody any Thanks, Thanks if for and contact Relations Please team have the Investor a

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

disconnect may You this time. at