Summary of British American Tobacco (BAT) 2026 Conference Call Company Overview - **Company**: British American Tobacco (NYSE: BTI) - **Event**: 2026 Conference Call held on February 18, 2026 - **Key Speakers**: Tadeu Marroco (CEO), David Waterfield (President of Reynolds American) Core Industry Insights - **Transformation Goal**: BAT aims to become predominantly smokeless by 2035, focusing on a smoke-free future while maintaining organic growth and shareholder returns [2][3] - **Market Growth**: The nicotine industry is projected to grow at a 4% CAGR over the next five years, driven by double-digit growth in new categories like nicotine pouches, which are expected to nearly triple in revenue by 2030 [3][4] - **Consumer Behavior**: There is a significant shift as smokers transition to less risky alternatives, with polyuse (using multiple nicotine products) doubling over the last five years [4][5] Financial Performance - **Cash Flow**: BAT has generated strong free cash flow, allowing for substantial shareholder returns through dividends and share buybacks [1] - **Revenue Growth Targets**: BAT aims for 3%-5% revenue growth, 4%-6% adjusted profit from operations growth, and 5%-8% adjusted diluted EPS growth in the midterm [25] Product Categories - **Nicotine Pouches**: Fastest-growing category, with VELO being a leading brand. VELO's consumer numbers, volume, and revenue have tripled over the last three years [9][11] - **Vapor Products**: Vuse is the global leader with a 39% market share, and the category is expected to grow significantly as regulatory environments improve [13][14] - **Heated Products**: The glo product line is positioned in a growing market, with a focus on premium segments [15][16] Regulatory Environment - **Regulatory Progress**: There are now 24 countries with regulatory frameworks for nicotine pouches, up from 4 in 2022. The FDA has initiated a pilot program to expedite the approval process for nicotine pouches [12][38] - **Enforcement Actions**: Increased enforcement against illegal products is crucial for the vapor market, with significant progress noted in 2025 [37][38] U.S. Market Focus - **U.S. Strategy**: The U.S. is a cornerstone of BAT's strategy, with Reynolds American positioned to capitalize on the evolving market. The U.S. nicotine revenue pool is projected to grow above a 4% CAGR through 2030 [26][28] - **Investment Commitment**: BAT is committing GBP 2.5 billion by 2030 to support U.S. growth, which is expected to create over 2,000 jobs [30][31] Competitive Positioning - **Market Leadership**: Reynolds is the number one choice for adult nicotine consumers, with nearly 22 million users. The company has seen growth in all product categories, particularly in smokeless and new categories [32][33] - **Value Share Growth**: Reynolds has increased its total nicotine volume share by over 100 basis points from December 2024 to December 2025, with significant contributions from smokeless categories [33][34] Conclusion - **Sustainable Value Creation**: BAT is focused on delivering sustainable value while preparing for future growth through a balanced portfolio of combustibles and new categories [42][43] - **Future Outlook**: The company is well-positioned to lead in the U.S. nicotine market, leveraging its multi-category portfolio and commitment to innovation and regulatory engagement [43][44]

Summary of British American Tobacco (NYSE:BTI) Conference Call - December 09, 2025 Company Overview - **Company**: British American Tobacco (BAT) - **Date**: December 09, 2025 - **Key Speakers**: Victoria Buxton (Group Head of Investor Relations), Tadeu Marocco (Chief Executive), Javed Iqbal (Interim Chief Financial Officer) Key Industry Insights - **Industry**: Global nicotine industry, particularly focusing on combustibles, modern oral products, and vapor categories - **Market Dynamics**: The industry is experiencing a transformation with adult smokers increasingly switching to new categories, particularly modern oral products and vapor Core Points and Arguments 1. **Revenue and Profit Growth**: BAT expects around 2% revenue and adjusted operating profit growth for the full year 2025, with positive momentum in the U.S. business driven by combustibles and VLO Plus performance [2][3] 2. **New Category Growth**: Anticipated acceleration in new category revenue growth to double digits in the second half of 2025, with mid-single-digit growth expected for the full year [2][3] 3. **Modern Oral Products**: Modern Oral is the fastest-growing category, with VLO gaining volume share up 590 basis points to 31.8% in key markets. The category is positioned as a lower-risk alternative to traditional cigarettes [4][5] 4. **FDA Support**: The FDA is recognized for its role in tobacco harm reduction, with a commitment to provide science-based information about nicotine products, which is expected to facilitate consumer transitions to reduced harm products [5][6] 5. **Velo Plus Performance**: Velo Plus has achieved significant growth, reaching a 21.9% volume share in October, up from 6.9% prior to its launch, and is driving triple-digit revenue growth in the U.S. [6][7] 6. **Heated Products**: The heated products segment is undergoing a transitional phase, with a new product, glo Halo, launched in Japan, aimed at capturing the premium segment [9][10] 7. **Vapor Category Recovery**: Vuse has regained volume and revenue growth in the U.S. after 18 months of decline, with a 50.4% value share, supported by increased federal enforcement against illicit products [11][12] 8. **Combustibles Performance**: The U.S. combustibles business is expected to deliver revenue and profit growth for the first time since 2022, with a decline in industry volume improving compared to previous years [15][16] 9. **Regulatory Challenges**: Significant regulatory headwinds in markets like Bangladesh and Australia are expected to impact overall revenue growth, with illicit trade accounting for over 85% of nicotine usage in these regions [16][17] 10. **Financial Discipline**: BAT maintains a strong cash generation profile, with operating cash conversion expected to exceed 95% in 2025 and a commitment to deleveraging [17][18] Additional Important Insights - **Market Exit Strategy**: BAT plans to exit underperforming markets like Mozambique and Cuba, which will impact organic growth figures [28][37] - **Investment in Innovation**: Continued investment in premium products and innovation is prioritized, with a focus on maintaining competitive advantages in the market [30][31] - **Future Guidance**: For 2026, BAT expects to achieve revenue growth at the lower end of its mid-term algorithm, with a focus on sustainable financial delivery and transformation [19][35] Conclusion - BAT is optimistic about its growth trajectory, particularly in the U.S. market, and is committed to delivering sustainable shareholder value through dividends and share buybacks while navigating regulatory challenges and market dynamics [18][47]