(Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q For the quarterly period ended June 30, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 001-33708 Philip Morris International Inc. | (Exact name of registrant as specified in its charter) | | | | | --- | ...

Core Viewpoint - Philip Morris (PM) is experiencing significant selling pressure, with a 10.4% decline over the past four weeks, but is now positioned for a potential trend reversal as it enters oversold territory, supported by analyst expectations of better-than-previously predicted earnings [1]. Group 1: Technical Indicators - The Relative Strength Index (RSI) is a key technical indicator used to identify oversold conditions, with a reading below 30 typically indicating that a stock is oversold [2]. - PM's current RSI reading is 27.52, suggesting that the heavy selling may be exhausting itself, indicating a potential bounce back towards equilibrium in supply and demand [5]. - The RSI helps investors identify entry opportunities when a stock is undervalued due to unwarranted selling pressure [3]. Group 2: Fundamental Indicators - There is a strong consensus among sell-side analysts that PM will report better earnings, leading to a 0.5% increase in the consensus EPS estimate over the last 30 days [7]. - An upward trend in earnings estimate revisions is typically associated with price appreciation in the near term, further supporting the potential for a rebound in PM's stock price [7]. - PM holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate trends and EPS surprises, indicating a strong potential for a turnaround [8].

Financial Performance - Philip Morris International shares sank after missing quarterly sales estimates [1] Market Trends - Demand for cigarettes continued to decline [1]

Group 1 - Philip Morris International Inc. held its Q2 2025 earnings call on July 22, 2025, with key participants including CFO Emmanuel Babeau and VP of Investor Relations James R. Bushnell [1][2] - The company released detailed information regarding its Q2 2025 results, which is accessible on its website [3] - A glossary of terms and reconciliations for non-GAAP financial measures is available in the company's Form 8-K and on the Investor Relations website [4]

Group 1 - The article emphasizes the advantages of a dividend-focused value investment strategy, highlighting capital preservation and steady income growth as key benefits [1] - The author discusses a diversified dividend stock portfolio that prioritizes high-quality value stocks, which are expected to provide meaningful growth and long-term safety [1] Group 2 - The author has disclosed a beneficial long position in the shares of PM and PG, indicating a personal investment interest in these companies [2] - The article is presented as a personal opinion and does not constitute investment or tax advice, emphasizing the author's status as a private investor [3]

Company Performance - Philip Morris International CEO Jacek Olczak discusses Q2 earnings [1] Product Strategy - Focus on smoke-free products [1]

Core Insights - Philip Morris International Inc. (PM) reported strong second-quarter 2025 results, with both net sales and earnings increasing year over year, although net sales missed the Zacks Consensus Estimate while earnings exceeded it [1][10] - The company has raised its full-year guidance reflecting robust momentum across regions and product categories, particularly in smoke-free products like IQOS and ZYN [1][10] Financial Performance - Adjusted earnings per share (EPS) for the second quarter were $1.91, a 20.1% increase year over year, beating the Zacks Consensus Estimate of $1.85 [2][10] - Net revenues reached $10,140 million, a 7.1% increase on a reported basis and 6.8% on an organic basis, but fell short of the Zacks Consensus Estimate of $10,255 million [3][10] - Adjusted operating income rose 16.1% to $4,246 million, driven by improved pricing and positive volume/mix, despite increased costs in marketing and administration [6][10] Product Performance - Revenues from smoke-free products increased 15.2%, accounting for 41% of total revenues, with strong performance in both IQOS and ZYN [5][10] - Net revenues from combustible products grew 2.1% year over year, supported by strong pricing despite expected volume declines [4][10] Regional Performance - European region net revenues grew 8.7% to $4,234 million, driven by positive pricing and volume mix, although total shipment volumes decreased [8][10] - In the Americas, revenues rose 12.7% to $1,272 million, primarily due to nicotine pouch sales, with total shipment volumes increasing [11][10] - The SSEA, CIS & MEA regions saw net revenues increase by 5.6% to $2,926 million, while the EA, AU & PMI GTR regions grew 2.1% to $1,708 million [8][9] Future Outlook - For 2025, adjusted EPS is now projected in the range of $7.43-$7.56, indicating 13-15% growth, up from the previous range of $7.36-$7.49 [13][10] - PM expects net revenues to increase 6-8% on an organic basis and operating income to rise 11-12.5% [15][10] - The company anticipates operating cash flow exceeding $11.5 billion in 2025, with capital expenditures around $1.6 billion to support smoke-free business investments [15][10]

Group 1 - Proactive provides fast, accessible, informative, and actionable business and finance news content to a global investment audience [2] - The news team covers medium and small-cap markets, as well as blue-chip companies, commodities, and broader investment stories [3] - Proactive has bureaus and studios in key finance and investing hubs including London, New York, Toronto, Vancouver, Sydney, and Perth [2] Group 2 - The company is focused on sectors such as biotech and pharma, mining and natural resources, battery metals, oil and gas, crypto, and emerging digital and EV technologies [3] - Proactive adopts technology to enhance workflows and improve content production [4] - Automation and software tools, including generative AI, are used, but all content is edited and authored by humans [5]

Core Insights - Philip Morris reported $10.14 billion in revenue for Q2 2025, a year-over-year increase of 7.1%, with an EPS of $1.91 compared to $1.59 a year ago, indicating positive growth despite a slight revenue miss against estimates [1] - The company’s revenue fell short of the Zacks Consensus Estimate by 1.12%, while the EPS exceeded the consensus estimate by 3.24% [1] Financial Performance - Shipment Volume for Cigarettes and HTUs totaled 194.06 billion, slightly below the average estimate of 195.25 billion [4] - Shipment Volume for EA, AU & PMI DF was 28.33 billion, surpassing the average estimate of 27.1 billion [4] - Shipment Volume for SSEA, CIS & MEA reached 95.33 billion, close to the average estimate of 95.56 billion [4] - Shipment Volume for Americas was 15.33 billion, below the average estimate of 16.46 billion [4] Geographic Revenue Breakdown - Net Revenues for EA, AU & PMI DF were $1.71 billion, slightly below the average estimate of $1.77 billion, reflecting a year-over-year change of +2.1% [4] - Net Revenues for Europe amounted to $4.23 billion, slightly below the estimated $4.26 billion, with a year-over-year increase of +11% [4] - Net Revenues for SSEA, CIS & MEA were $2.93 billion, matching the average estimate, with a year-over-year change of +5.6% [4] - Net Revenues for Americas were $1.27 billion, below the average estimate of $1.33 billion, showing a year-over-year change of +12.7% [4] Smoke-Free and Combustible Tobacco Revenue - Net Revenues from Smoke-Free Excl. W&H in SSEA, CIS & MEA were $365 million, below the average estimate of $398.54 million, with a year-over-year change of +7.7% [4] - Net Revenues from Smoke-Free Excl. W&H in EA, AU & PMI DF were $1.05 billion, slightly below the estimated $1.07 billion, reflecting a -0.2% change year-over-year [4] - Total Net Revenues from Smoke-Free Excl. W&H were $4.1 billion, below the average estimate of $4.23 billion, with a year-over-year increase of +16.3% [4] - Total Net Revenues from Combustible Tobacco were $5.98 billion, below the average estimate of $6.08 billion, with a year-over-year change of +2.1% [4] Stock Performance - Philip Morris shares have returned -2.4% over the past month, contrasting with the Zacks S&P 500 composite's +5.9% change, indicating underperformance relative to the broader market [3] - The stock currently holds a Zacks Rank 2 (Buy), suggesting potential for outperformance in the near term [3]

Financial Data and Key Metrics Changes - The company reported record net revenues of $4 billion from its smoke-free portfolio in Q2 2025, contributing to strong double-digit adjusted diluted EPS growth in both constant currency and dollar terms [6][10] - Q2 shipment volume growth was 1.2%, with organic top-line growth of 6.8%, reaching over $10 billion in quarterly net revenues for the first time [10][11] - Adjusted diluted EPS increased by 20% to $1.91, reflecting strong top-line momentum and positive margin evolution [11][12] Business Line Data and Key Metrics Changes - The smoke-free business saw a 13% growth in shipment volumes, with heated tobacco unit (HTU) shipment volume growing by 9.2% to 38.8 billion units in Q2 [12][16] - ZYN experienced a significant acceleration in U.S. consumer offtake growth, reaching 26% for Q2 and 36% in June [7][35] - E-vapor shipments more than doubled year-on-year, contributing to gross margin expansion [8][16] Market Data and Key Metrics Changes - In Europe, the smoke-free product market is recovering from the characterizing flavor ban, with notable growth in Italy and other markets [7][25] - The U.S. market for ZYN is showing strong recovery, with shipments increasing by 41% year-on-year [36][37] - Combustible net revenues increased by 2.9%, with robust pricing contributing to gross profit growth despite volume declines [17][41] Company Strategy and Development Direction - The company is focused on maximizing the growth of its smoke-free products, particularly IQOS, ZYN, and VIVE, while maintaining a resilient combustible business model [24][48] - Continuous innovation in devices and consumables is a key pillar for growth, with the rollout of Illumi Eye technology and new product variants [25][30] - The company aims to achieve a fifth consecutive year of total volume growth, driven by its smoke-free portfolio [15][42] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong fundamentals of the business, raising the adjusted diluted EPS full-year forecast to 13% to 15% growth [10][42] - The company anticipates continued strong momentum in smoke-free products, while acknowledging potential challenges in combustible volumes [14][88] - Management highlighted the importance of addressing the illicit trade issue in the EU, which poses a risk to market growth [24][64] Other Important Information - The company achieved over $500 million in gross cost savings year-to-date through efficiency initiatives [20] - The regulatory environment is seen as a key enabler for smoke-free growth, with positive developments in several markets [22][24] - The company is on track to meet its three-year CAGR targets, demonstrating strong financial performance across all categories [46][48] Q&A Session Summary Question: ZYN restocking and future growth expectations - Management acknowledged that restocking was lower than expected but emphasized the strong momentum in ZYN's growth, with June showing 36% consumer offtake growth [53][60] Question: EU tax proposals and updates - Management refrained from elaborating on specific tax proposals, noting that the process is in its early stages and requires further clarity [62][64] Question: IQOS ILUMA U.S. approval timing - Management remains hopeful for a second-half approval but acknowledged the heavy workload at the FDA, which could delay the timeline [71][73] Question: Combustible volume expectations - Management confirmed a target of around a 2% decline in combustible volumes for the year, aligning with long-term trends [77][78] Question: Increase in underlying guidance - Management indicated that the second half is expected to align with previous expectations, despite some phasing and comparison dynamics affecting performance [83][90]