Group 1 - Philip Morris International Inc. (PM) is recognized as one of the 13 Best Long-Term Dividend Stocks to invest in currently [1] - Argus has raised its price target for PM from $190 to $210, maintaining a Buy rating, citing the expected growth from ZYN nicotine pouches [2] - During the Q4 2025 earnings call, PM reported a 12.8% increase in smoke-free product volumes and an 18.7% rise in organic smoke-free gross profit, indicating strong growth and profitability in this segment [3] Group 2 - CEO Jacek Olczak highlighted that IQOS remains the primary growth driver for PM, with shipment volumes and adjusted in-market sales both increasing by approximately 11% [4] - PM has expanded its smoke-free product presence to 106 markets, showcasing its global rollout strategy [4] - The company reported that shipment volumes for ZYN outside the Nordic region and VEEV in international markets more than doubled, with ZYN gaining significant market share [4][5]

Core Insights - Philip Morris International Inc. (PM) is recognized as one of the 14 Best Low Volatility Dividend Stocks to Invest in [1] - Citi analyst Simon Hales raised the price target for PM to $210 from $200, maintaining a Buy rating, reflecting confidence in the company's growth, particularly in smoke-free products [2] Financial Performance - In Q4 2025, PM reported a strong year with total net revenue exceeding $40 billion, with smoke-free products contributing 41.5% or nearly $17 billion [5] - The adjusted operating margin improved to above 40%, indicating enhanced efficiency and profitability [5] - The company reaffirmed its three-year CAGR targets for organic operating income and currency-neutral EPS [6] Product Growth and Strategy - Smoke-free product volumes increased by 12.8% in 2025, with organic smoke-free gross profit rising by 18.7%, indicating both growth and profitability in this segment [3] - IQOS remains the primary growth driver, with shipments and adjusted IMS increasing by about 11%, and the smoke-free footprint expanded to 106 markets [4] - ZYN and VEEV saw their shipment volumes more than double in international markets, with ZYN gaining traction outside traditional regions and VEEV becoming the fastest-growing closed pod brand globally [4] Market Position and Future Outlook - 27 markets have reached a tipping point where over half of total net revenue comes from smoke-free products, showcasing the shift from traditional cigarettes to reduced-risk alternatives [5] - The company is focused on strengthening its balance sheet, aiming to reduce its leverage ratio to around 2x by the end of 2026 [6]

Summary of Philip Morris International (PMI) Conference Call Company Overview - **Company**: Philip Morris International (NYSE: PM) - **Event**: 2026 Conference on February 18, 2026 - **Key Speakers**: CEO Jacek Olczak, CFO Emmanuel Babeau Core Industry Insights - PMI is undergoing a significant transformation towards smoke-free products, with over **40%** of revenues and gross profit now derived from these products [1][3] - The company has achieved **$17 billion** in smoke-free revenues and **180 billion** units in volume, exceeding its target of being present in **100 markets** by 2025, now reaching **106 markets** [6][7] - PMI aims for **two-thirds** of its revenues to come from smoke-free products by **2030** [7] Financial Performance and Growth Strategy - PMI is targeting **double-digit EPS growth** over the next several years, with a focus on margin expansion and free cash flow generation [1] - The company expects **high single-digit to low teen growth** for smoke-free volumes from **2026 to 2028**, which will offset declines in combustible products [40] - Projected organic revenue growth is between **6%-8%**, with operating income growth of **8%-10%** [41] - Adjusted EPS growth is targeted between **9%-11%** [42] Market Dynamics - The company has seen a **5-fold** acceleration in volume decline in markets where smoke-free products are available, compared to those where they are not [15] - In regions where smoke-free products are established, they represent **62%** of total revenues in the top five operating income markets [9] - PMI has successfully penetrated markets like Taiwan, achieving a **6%** market share in combined cigarettes and heated tobacco products within three months of entry [11] Regulatory Environment - There is a growing recognition of the potential of smoke-free products, with more mature discussions around nicotine and its role in smoking-related diseases [17][18] - Regulatory momentum is shifting positively, with increasing acceptance of smoke-free products globally [20] - Major markets like India, Turkey, Brazil, and Vietnam, which currently do not allow smoke-free products, represent significant future opportunities [21] Consumer Trends - The company is observing a growing interaction with smoke-free products, indicating an openness among consumers to transition from combustible cigarettes [26] - The multi-category strategy, offering heat-not-burn, vape, and pouches, is accelerating growth, with markets showing over **15%** growth when multiple products are available [31] Investment and Infrastructure - PMI has established a robust infrastructure with **1.5 million** points of sale for smoke-free products and **8,000** brand retail networks [33] - The company is focusing on productive investments in marketing and brand building while seeking efficiencies in back-office costs [51] Shareholder Returns - PMI has a target payout ratio of **75%** of net profit into dividends, with a **9%** increase in dividends noted in 2025 [53] - The company has consistently outperformed indices like the S&P 500 and the MSI Tobacco Index in total shareholder return [54] Conclusion - PMI is positioned as a leader in the transition to smoke-free products, with a clear growth strategy, strong financial performance, and a commitment to shareholder returns. The ongoing transformation is supported by favorable regulatory trends and increasing consumer acceptance of smoke-free alternatives.

Championing a Smoke-Free World CAGNY Conference February 18, 2026 Jacek Olczak, Group CEO PMI Emmanuel Babeau, Group CFO PMI Introduction • A glossary of terms as well as adjustments, other calculations and reconciliations to the most directly comparable U.S. GAAP measures for non-GAAP financial measures cited in this presentation are available on our Investor Relations website with additional non-GAAP reconciliations available at the end of this presentation 2 Introduction • A glossary of terms as well as ...

Investment Rating - The industry investment rating is "Positive" [2] Core Insights - The report highlights that Philip Morris International (PMI) has set a three-year growth plan focusing on new tobacco products, targeting a revenue CAGR of 6%-8% and an operating profit CAGR of 8%-10% from 2026 to 2028 [3] - PMI's revenue for 2025 reached $40.65 billion, a year-on-year increase of 7.3%, with new tobacco product revenue at $16.85 billion, growing by 15.0% [2][3] - The report anticipates significant growth in the U.S. market, particularly with the launch of IQOS ILUMA, which is expected to stimulate the heat-not-burn (HNB) segment [3] Summary by Sections Financial Performance - In Q4 2025, PMI's revenue was $10.36 billion, up 6.8% year-on-year, with new tobacco revenue at $4.35 billion, reflecting a 12.0% increase and accounting for 42% of total revenue [2][3] Market Dynamics - PMI's HNB sales reached 155.1 billion units in 2025, a growth of 11.0%, maintaining a global market share of approximately 76% [4] - In Japan, HNB product penetration reached 32.6% in Q4, with HNB revenue exceeding 50% in December [4] Product Growth - The report notes significant growth in smokeless products, with sales of oral tobacco and vaping products increasing by 18.5% and 100% year-on-year, respectively [5] - The U.S. market for oral tobacco has reached high single-digit penetration, with ZYN maintaining a market share close to two-thirds [5]

Investment Rating - The industry investment rating is "Positive" [2] Core Insights - The report highlights that Philip Morris International (PMI) has set a three-year growth plan focusing on new tobacco products, targeting a revenue CAGR of 6%-8% and an operating profit CAGR of 8%-10% from 2026 to 2028 [3] - PMI's revenue for 2025 reached $40.65 billion, a year-on-year increase of 7.3%, with new tobacco product revenue at $16.85 billion, up 15.0% [2][3] - The report anticipates significant growth in the U.S. market, particularly with the launch of IQOS ILUMA, which is expected to stimulate the heat-not-burn (HNB) segment [3] Revenue and Market Performance - In 2025, PMI's total revenue was $40.65 billion, with Q4 revenue at $10.36 billion, reflecting a 6.8% year-on-year increase [2] - The HNB segment achieved a global market share of approximately 76%, with annual sales of 155.1 billion units, marking an 11.0% increase [4] - In Q4, HNB sales reached 38.4 billion units, a 7.5% increase year-on-year, with Japan's HNB penetration rate reaching 32.6% [4] Product Growth and Strategy - The report notes that sales of oral tobacco and vaping products increased by 18.5% and 100% year-on-year, respectively, with Q4 growth rates of 7.3% and 91.4% [5] - The U.S. oral tobacco market, particularly the ZYN brand, continues to grow rapidly, maintaining a market share close to two-thirds [5] - PMI's vaping product VEEV has launched in 47 markets, showing a doubling growth trend and achieving the top market share in eight markets [5]

Core Insights - Philip Morris International (PMI) reported strong financial results for 2025, highlighting significant growth in smoke-free products and overall positive shipment volumes [4][6][3] Financial Performance - Organic net revenue increased by 6.5% in 2025, with a 7.9% increase when excluding the "technical Indonesia impact" [1] - Adjusted operating income grew by 11.8% to $16.4 billion, and adjusted diluted EPS rose by 14.2% at constant currency and 15% in dollar terms to $7.54 [1] - Operating cash flow reached a record-matching $12.2 billion [6] Product Performance - Smoke-free product volumes increased by 12.8% in 2025, contributing to organic smoke-free gross profit growth of 18.7% [3][6] - IQOS remained the largest driver of growth, with shipments and adjusted in-market sales rising about 11% for the year [2] - PMI's total net revenues exceeded $40 billion in 2025, with 41.5% generated by the smoke-free business [7] Market Expansion - Smoke-free products are now available in 106 markets, with 52 deploying a multi-category strategy [8] - The company estimated its smoke-free volume share at around 60% across competing markets and categories, with over 70% share of category growth in 2025 [8] Future Outlook - For 2026, PMI targets organic net revenue growth of 5-7% and organic operating income growth of 7-9%, with adjusted diluted EPS projected at $8.39 to $8.54 [5][14] - Management warned of transitory headwinds, including excise hikes in Japan and inventory normalization in the U.S. [5][17] - PMI renewed its medium-term targets, aiming for compound annual growth rates of 6-8% in organic net revenue and 8-10% in organic operating income from 2026 to 2028 [18] Cost Management - PMI has achieved around $1.5 billion in gross cost savings since 2024 and is on track to reach a $2 billion objective for 2024-2026 [20]

Financial Data and Key Metrics Changes - In 2025, total net revenues exceeded $40 billion, with 41.5% or nearly $17 billion generated from smoke-free products [9] - Adjusted diluted EPS grew by 15% in dollar terms, marking the strongest growth since 2011, excluding the pandemic recovery year of 2021 [7] - Organic top-line growth was reported at 6.5%, with adjusted operating income growth at 10.6%, reflecting a 140 basis points organic margin expansion [12][19] - Adjusted diluted EPS reached $7.54, at the high end of guidance, with currency-neutral adjusted diluted EPS growth of 14.2% [14] Business Line Data and Key Metrics Changes - Smoke-free product volumes grew by 12.8%, with IQOS shipments increasing by 11% [4][15] - The nicotine pouch category, particularly ZYN, saw a 37% increase in shipments in the U.S., contributing significantly to growth [7][24] - Combustibles delivered low single-digit growth, with Marlboro achieving a historic high market share [7][36] Market Data and Key Metrics Changes - The international business generated the majority of total PMI organic net revenue growth, with smoke-free products leading the way [7] - In Japan, the heat-not-burn category surpassed 50% of total industry volumes, driven by IQOS [10][28] - The U.S. market for nicotine pouches is rapidly growing, with ZYN capturing around 50% of category growth [32] Company Strategy and Development Direction - PMI is focused on leading the transition to smoke-free products, with a multi-category strategy enhancing consumer offerings [5][10] - The company aims to achieve a leverage ratio close to 2x by the end of 2026, supporting strong returns to shareholders [8] - Continued investment in innovation and digitalization is planned to sustain growth and market leadership [10][44] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving strong growth despite transitory headwinds, with a forecast of 5%-7% organic net revenue growth for 2026 [38] - The competitive landscape is evolving, particularly in Japan, but IQOS is expected to maintain its strong market position [62] - The company anticipates significant growth opportunities in the U.S. and other international markets, supported by new product launches [31][43] Other Important Information - PMI's smoke-free gross profit contribution has doubled in five years to 43% of total PMI [9] - The company has delivered around $1.5 billion in gross cost savings since 2024, on track to achieve a $2 billion objective for 2024-2026 [20] - The number of legal-age consumers of PMI's smoke-free products reached approximately 43.5 million, an increase of around 10 million users in two years [22] Q&A Session Summary Question: Can you expand on the reacceleration in smoke-free volume growth compared to the 2026 growth guidance? - Management indicated that the acceleration is expected due to tax changes in Japan and competitive portfolio adjustments in the U.S. [51][52] Question: How are you thinking in terms of IQOS, HTU shipments, and IMS for 2026? - Management noted that while Japan faces challenges, other markets like Italy and Germany are showing strong growth, contributing positively to the overall outlook for IQOS [60][63] Question: What are the key growth drivers for the upcoming year? - Management highlighted the importance of FDA approvals for new products like ZYN Ultra and the ongoing growth of IQOS and VEEV in international markets [75]

Financial Data and Key Metrics Changes - In 2025, total net revenues exceeded $40 billion, with 41.5% or nearly $17 billion generated from smoke-free products [8][12] - Adjusted diluted EPS grew by 15% in dollar terms, marking the strongest growth since 2011, excluding the pandemic recovery year of 2021 [6][12] - Organic top-line growth was reported at 6.5%, with a currency-neutral adjusted diluted EPS growth of 14.2% [11][12] - Adjusted operating income grew by 11.8% to $16.4 billion, with an organic operating income growth of 10.6% [11][12] Business Line Data and Key Metrics Changes - Smoke-free product volumes grew by 12.8%, with IQOS shipments increasing by 11% [3][14] - The nicotine pouch category, represented by ZYN, saw a shipment growth of 37% in the U.S. [5][14] - Combustibles delivered robust performance despite a 1.5% decline in cigarette shipments, with Marlboro reaching a historic high share [6][14] Market Data and Key Metrics Changes - The international business generated the majority of total PMI organic net revenue growth, particularly from smoke-free products [5][6] - In Japan, the heat-not-burn category surpassed 50% of total industry offtake volumes, driven by IQOS [25][26] - The U.S. market for nicotine pouches is rapidly growing, with ZYN capturing around 50% of category growth [29][30] Company Strategy and Development Direction - PMI continues to lead the shift towards smoke-free alternatives, with a multi-category strategy enhancing consumer adoption [3][9] - The company aims to achieve a leverage ratio close to 2x by the end of 2026, supporting strong returns to shareholders [7][42] - A focus on innovation and digitalization is expected to drive future growth, with a pipeline of initiatives planned for the next three years [9][41] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving strong growth despite transitory headwinds, with a forecast for 2026 organic net revenue growth of 5%-7% [36][39] - The competitive landscape in the U.S. and Japan is acknowledged, with expectations for continued strong performance in smoke-free products [35][36] - Management highlighted the importance of brand equity and innovation in driving future growth, particularly for ZYN and IQOS [31][32] Other Important Information - The company has achieved around $1.5 billion in gross cost savings since 2024, on track to meet a $2 billion objective for 2024-2026 [19][42] - The number of legal-age consumers of smoke-free products reached an estimated 43.5 million, reflecting broad-based growth across categories [20][21] - PMI's dividend payout ratio is now close to 75% of adjusted diluted EPS, allowing for potential dividend growth aligned with earnings growth [42][43] Q&A Session Summary Question: Can you expand on the reacceleration in smoke-free volume growth compared to the 2026 growth guidance? - Management indicated that the acceleration is expected due to tax changes in Japan and competitive dynamics in the U.S. [48][50] Question: How are you thinking in terms of IQOS, HTU shipments, and IMS for 2026? - Management noted that while Japan faces challenges, other markets like Italy and Germany are showing strong growth, contributing positively to IQOS's outlook [57][61] Question: What are the key growth drivers for the upcoming year? - Management highlighted the importance of ZYN's pending applications with the FDA and the overall growth of smoke-free products as key drivers for 2026 [72][74]

Financial Data and Key Metrics Changes - In 2025, total net revenues exceeded $40 billion, with 41.5% or nearly $17 billion generated from smoke-free products [8][11] - Adjusted diluted EPS grew by 15% in dollar terms, marking the strongest growth since 2011, excluding the pandemic recovery year of 2021 [5][11] - Organic top-line growth was +6.5%, with adjusted operating income growth at +10.6%, reflecting +140 basis points of organic margin expansion [11][12] Business Line Data and Key Metrics Changes - Smoke-free product volumes grew by 12.8%, with organic smoke-free gross profit growth of 18.7% [3][12] - IQOS shipments grew by approximately 11%, with a notable acceleration in the fourth quarter [3][15] - ZYN shipments in the U.S. increased by 37%, contributing significantly to smoke-free product growth [5][14] Market Data and Key Metrics Changes - The international business generated the majority of total PMI organic net revenue growth, with smoke-free products leading the way [5][19] - In Japan, the heat-not-burn category surpassed 50% of total industry volumes, driven by IQOS [25][26] - The U.S. market for nicotine pouches saw ZYN capturing around 50% of category growth, with a volume share of 61.5% [30][22] Company Strategy and Development Direction - The company continues to focus on a multi-category strategy, expanding its smoke-free product offerings and geographic reach [4][9] - There is a strong emphasis on innovation and digitalization to support long-term growth [9][43] - The company targets a leverage ratio of close to 2x by the end of 2026, indicating a focus on financial flexibility and shareholder returns [7][44] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving strong growth despite transitory headwinds, with a forecast of 5%-7% organic net revenue growth for 2026 [36][37] - The company anticipates continued strong cash generation, with operating cash flow projected at around $13.5 billion [38][43] - Management highlighted the importance of navigating regulatory environments and enhancing brand equity for future growth [32][33] Other Important Information - The company achieved a historic high share for Marlboro, reaching 11% of the international category, excluding China [34][5] - The number of legal-age consumers of smoke-free products reached an estimated 43.5 million, reflecting broad-based growth across categories [20][19] - The company is committed to delivering superior shareholder value, with a target dividend payout ratio of around 75% of adjusted diluted EPS [44][45] Q&A Session Summary Question: Can you expand on the reacceleration in smoke-free volume growth compared to the 2026 growth guidance? - Management indicated that the acceleration is expected due to tax changes in Japan and competitive dynamics in the U.S. market [49][50] Question: How are you thinking in terms of IQOS, HTU shipments, and IMS for 2026? - Management noted that while Japan faces challenges, other markets like Italy and Germany are showing strong growth, contributing positively to IQOS's outlook [58][62] Question: What are the key growth drivers for the upcoming year? - Management emphasized the importance of ZYN and IQOS, along with ongoing investments in marketing and innovation, as key drivers for growth [72][75]