Financial Data and Key Metrics Changes - Adjusted diluted earnings per share increased by 8.3% to $1.44 in Q2 2025 and by 7.2% for the first half, driven by robust adjusted operating companies income growth and share repurchases [19][25] - Adjusted operating companies income for the Smokable Products segment grew by 4.2% to $2.9 billion in Q2 and by 3.5% to $5.5 billion in the first half [19][20] - Adjusted OCI margins expanded to 64.5% for both Q2 and the first half [20] Business Line Data and Key Metrics Changes - Oral nicotine pouches, particularly ON!, were the primary growth driver, with reported shipment volume increasing by 26.5% to 52.1 million cans year-over-year [9][23] - Domestic cigarette volumes in the Smokable Products segment declined by 10.2% in Q2 and 11.9% for the first half, with adjusted estimates showing declines of approximately 10.5% [20][21] - The Oral Tobacco Products segment saw adjusted OCI grow by 10.9% in Q2, primarily driven by ON!'s strong performance [23] Market Data and Key Metrics Changes - The e-vapor category included over 20.5 million vapers, up by 1.9 million year-over-year, with disposable vapers increasing to approximately 14.4 million [14][15] - The flavored disposable market continues to drive e-vapor category growth, representing over 60% of the category [15][16] Company Strategy and Development Direction - The company is focused on shaping a fully regulated industry and expanding product choices for adult nicotine consumers, while also advocating for enforcement against unregulated products [7][14] - The strategy includes targeted launches and promotions for the Basic brand to retain consumers in the portfolio while addressing macroeconomic pressures [21][49] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the strong performance of operating companies despite challenging market conditions and inflationary pressures [18][32] - The company raised the lower end of its 2025 guidance range, expecting adjusted diluted EPS to be in the range of $5.35 to $5.45, reflecting a growth rate of 3% to 5% from 2024 [25][26] Other Important Information - The company returned significant value to shareholders, paying approximately $3.5 billion in dividends and repurchasing 10.4 million shares for $600 million in the first half of the year [26][27] - The total debt to EBITDA ratio as of June 30 was 2.0 times, in line with the target [27] Q&A Session Summary Question: Discussion on the raised guidance range and expectations for the second half - Management acknowledged the strong first half results and the dynamic market conditions, emphasizing the need to monitor consumer behavior amid inflation [30][32] Question: Update on nJoy e-vapor product development - Management confirmed that product development for the new nJoy device is progressing, with plans to file for FDA approval once ready [34][36] Question: Long-term EPS growth outlook - Management remains confident in achieving mid-single-digit EPS growth through FY 2028, despite current economic strains on consumers [43][44] Question: Strategy for the Basic brand and discount share - The company is strategically repositioning Basic as a discount brand while using data analytics to target consumers effectively [49][50] Question: Impact of enforcement on illicit vapes and cigarette volumes - Management noted that while enforcement actions are increasing, it is too early to determine their full impact on the market [55][58] Question: Clarification on tariff impacts - Management indicated that while tariffs have affected costs, they do not view them as material to overall business performance [96][97]