Financial Data and Key Metrics Changes - The Smokable Products segment grew adjusted operating company's income (OCI) by 2.7%, with adjusted OCI margins increasing by 4.2 percentage points to 64.4% [16][18] - Total domestic cigarette volumes declined by 13.7%, with an adjusted decline of 12% when accounting for calendar differences and trade inventory movements [17][18] - The company paid approximately $1.7 billion in dividends and repurchased 5.7 million shares in the first quarter [23] Business Line Data and Key Metrics Changes - The Oral Tobacco Products segment delivered over $400 million in total adjusted OCI, with adjusted OCI margins at 69.2%, slightly down from the previous year [20] - The Oral Tobacco Products segment reported a shipment volume decrease of 5%, with ON! brand growing while MST volumes declined [20][21] - The e-vapor category saw an increase in illicit products, with over 60% of the market comprised of these products [10][42] Market Data and Key Metrics Changes - The e-vapor category included more than 20 million vapers, an increase of over 2.6 million from the previous year [10] - The nicotine pouch category's share increased to 17.9%, up by 0.5 share points year-over-year [9] - The discount cigarette segment grew by 1.8 share points, while Marlboro's retail share declined by one share point [18][19] Company Strategy and Development Direction - The company aims to refine and strengthen its e-vapor product portfolio, particularly following the exit of EnjoyAce from the market [14][42] - The focus remains on maximizing profitability in the combustibles segment while balancing investments in smoke-free categories [51] - The company is advocating for regulatory reforms to address the illicit e-vapor market and enhance enforcement against illicit actors [10][11] Management's Comments on Operating Environment and Future Outlook - Management noted that consumers are under economic pressure due to inflation, impacting purchasing behavior [17][30] - The company expects full-year adjusted diluted EPS in the range of $5.3 to $5.45, reflecting a growth rate of 2% to 5% from 2024 [24][25] - Management expressed confidence in the Marlboro brand's resilience despite economic challenges [19][51] Other Important Information - The company recorded a non-cash impairment charge of $873 million due to ITC orders affecting Enjoy [22] - The total debt to EBITDA ratio as of March 31 was 2.1 times, in line with the target of approximately two times [23] Q&A Session Summary Question: Current state of the consumer and inflationary pressure - Management acknowledged that consumers are under pressure from cumulative inflation, impacting their purchasing decisions [30][31] Question: Confidence in pricing strategy for cigarettes - Management highlighted the strength of the Marlboro brand and the use of data analytics to manage pricing effectively [32][34] Question: Approach to the discount segment with the Basic brand - Management clarified that the repositioning of Basic is not a strategy shift but a response to market dynamics [36][38] Question: Growth trajectory of ON! brand and competition - Management expressed confidence in ON!'s growth, despite competitive pressures, and highlighted upcoming product innovations [39][41] Question: Strategy for e-cigarettes and market exit - Management emphasized the importance of participating in the e-vapor category and plans to address regulatory challenges [42][44] Question: Impact of tariffs on imports and consumer sentiment - Management noted that while tariffs may impact costs, the overall effect on consumer sentiment is still being assessed [68][70] Question: Future of synthetic nicotine products - Management indicated that synthetic nicotine is now on their radar, and they are exploring opportunities in this area [61][62] Question: Drivers behind decreased settlement payments - Management explained that the decrease in settlement payments is due to the expiration of the legal fund [63] Question: Long-term planning amidst tariff uncertainty - Management stated that they are monitoring the situation closely and have a robust supply chain strategy to manage costs [74][75]