Key Takeaways MO's cigarette shipment volumes fell 8.2% in Q3, pushing it to accelerate the smoke-free strategy.MO launched on! PLUS, a premium nicotine pouch aimed at smokeless tobacco users and rival pouch customers.Altria submitted FDA applications for the Ploom heated tobacco system through its Horizon joint venture.Altria Group, Inc. ((MO) is reshaping the growth strategy as cigarette demand weakens, raising questions about whether its smoke-free push can stabilize growth over time. In the third quarte ...

Valuation and Market Position - Altria Group, Inc. is trading at a forward 12-month price-to-earnings (P/E) ratio of 10.46, which is below the Tobacco industry's average of 13.89, the Consumer Staples sector's 16.02, and the S&P 500's 23.46, indicating an attractive valuation [1] - Compared to major peers, Altria remains discounted, with Philip Morris International Inc. at 18.12, Turning Point Brands, Inc. at 24.78, and British American Tobacco p.l.c. at 11.82 [1] Stock Performance - Over the past month, Altria's stock rose 1.1%, outperforming Turning Point Brands' 0.9% gain and Philip Morris' 3% decline, while British American Tobacco led with a 3.4% increase [6] - The Consumer Staples sector and the tobacco industry saw declines of 0.3% and 1.2%, respectively, while the S&P 500 gained 0.8%, highlighting Altria's strong positioning [7] Financial Fundamentals - In Q3 2025, Altria's adjusted earnings per share (EPS) increased by 3.6% to $1.45, with year-to-date EPS up 5.9%, driven by higher adjusted operating companies income (OCI) and a lower share count [11] - The smokeable products segment maintained impressive adjusted OCI margins of 64.4%, supported by effective pricing strategies [11] Product Strategy - Marlboro's premium-segment share expanded to 59.6%, reinforcing Altria's pricing power and brand strength, while the Basic brand gained share without detracting from Marlboro [12] - Altria's oral tobacco portfolio, particularly the on! brand, showed growth with a nearly 1% increase in volume and adjusted OCI margins expanding to 69.2% [13] Strategic Initiatives - Altria's collaboration with KT&G aims to enhance international modern oral expansion and explore operational efficiencies in traditional tobacco [14] - The company has consistently returned cash to shareholders, marking its 60th dividend increase in 56 years, which supports its stability and long-term growth [14] Volume Challenges - Altria faces significant volume pressures, with cigarette shipment volumes falling 8.2% in Q3 and 10.6% year-to-date, attributed to macroeconomic strains and competition from unregulated flavored disposable e-vapor products [15] Earnings Estimates - The Zacks Consensus Estimate for Altria's earnings has seen mixed revisions, with the 2025 EPS estimate increasing by 1 cent to $5.44, while the 2026 estimate decreased by 1 cent to $5.56 [18] - Altria is projected to deliver solid earnings growth of 6.3% in 2025 and 2.3% in 2026, despite modest adjustments [18]

Core Insights - Altria Group, Inc. is at a critical juncture as nicotine pouches capture 55.7% of the U.S. oral tobacco market, marking an 11.1-point year-over-year increase, which is altering market dynamics [1][8] - The company faces challenges in maintaining its market share in the rapidly growing oral segment, with its on! brand holding an 8.7% share of the total U.S. oral tobacco category and a reduced 15.6% share in the nicotine pouch segment, down 4.1 points due to competitive promotional activities [1][8] Market Dynamics - Competitor promotions have led to a 7% decrease in average retail prices for nicotine pouches nationally, with some major retail chains experiencing price drops exceeding 70% [2] - Altria's on! brand saw a retail price increase of approximately 1.5% during the same period, indicating a divergence from the broader category pricing trends [2] - Despite the promotional environment, Altria reported steady retail takeaway for on!, suggesting consistent consumer demand [2] Product Development - To enhance its competitive position, Altria is launching on! PLUS, a next-generation nicotine pouch aimed at improving comfort, nicotine delivery, and flavor satisfaction [3] - The product has been introduced in Florida, Texas, and North Carolina, with early research indicating higher purchase intent compared to several competing brands [3] Competitive Landscape - Philip Morris International Inc. reported a 16.9% increase in global pouch shipments and a 39% growth in U.S. ZYN offtake, supported by extensive commercial activities and investments in capacity [5] - Turning Point Brands, Inc. experienced a remarkable 627.6% year-over-year growth in modern oral segment net sales, reaching $36.7 million, which now constitutes nearly 30.8% of its total revenues [6] Financial Performance - Altria's shares have declined by 9.8% over the past month, contrasting with a 1.8% decline in the industry [7] - The company trades at a forward price-to-earnings ratio of 10.47X, lower than the industry average of 14.12X [10] - Zacks Consensus Estimates project year-over-year earnings growth of 6.1% for 2025 and 2.5% for 2026 [11]

Core Insights - Altria Group, Inc. demonstrated resilience in Q3 2025, maintaining profitability despite volume declines in traditional cigarettes through strategic pricing, cost discipline, and investment in smoke-free alternatives [1][6][19] Financial Performance - Adjusted earnings increased by 3.6% year-over-year to $1.45, while net revenues decreased by 3% to $6.07 billion, primarily due to lower revenues in smokeable and oral tobacco segments [6][8] - Adjusted operating companies income (OCI) in the Smokeable Products segment rose by 0.7%, with margins expanding to 64.4% [7][11] Shareholder Returns - Altria increased its quarterly dividend by 3.9% to $1.06 per share, marking the 60th dividend increase in 56 years, and expanded its share repurchase program to $2 billion through 2026 [9][10] Smoke-Free Initiatives - The Oral Tobacco Products segment's adjusted OCI margin improved to 69.2%, despite a 4.6% revenue decline, with the on! nicotine pouch brand achieving a 0.7% increase in shipment volumes [11][12] - The launch of on! PLUS and a partnership with KT&G Corporation aim to enhance Altria's smoke-free product portfolio and explore global opportunities [12][13] Market Position and Valuation - Altria's stock is trading at a forward P/E ratio of 10.53X, significantly lower than the industry average of 14.17X and the S&P 500's average of 23.66X, indicating a potential value opportunity for investors [15][16] Outlook - The near-term outlook for Altria remains cautious but stable, with adjusted earnings guidance narrowed to $5.37-$5.45, reflecting expected growth of 3.5-5% from 2024 [14]

Core Insights - Altria Group, Inc.'s oral tobacco segment showed strong margin performance in Q3 2025, driven by Helix's effective execution and the launch of the on! PLUS nicotine pouch [1][8] - Despite a 9.6% decline in total oral tobacco domestic shipment volumes, the segment's adjusted operating companies income (OCI) margin increased by 2.4 percentage points to 69.2% [2] - The launch of on! PLUS comes amid intense price competition, with average nicotine-pouch prices down 7% nationally, yet Altria managed to increase retail prices by approximately 1.5% in Q3 [3] Product Launch and Market Position - The on! PLUS product emphasizes consumer comfort, nicotine delivery, and flavor satisfaction, outperforming rival brands in early tests [4] - The FDA's inclusion of on! PLUS in its pilot program for pouch reviews may provide Altria with regulatory advantages [4] - Management remains cautious about expansion timing but is optimistic about the product's differentiation and market potential [4] Competitive Landscape - Philip Morris International Inc. continues to lead the global oral nicotine market with its ZYN brand, achieving a 17.7% growth in smoke-free net revenues in Q3 2025 [5] - Turning Point Brands, Inc. reported nearly eightfold year-over-year growth in modern oral revenues, reaching $30.1 million in Q2 2025, and raised its full-year guidance to $100-$110 million [6] Financial Performance and Valuation - Altria's shares have decreased by 13.5% in the past month, compared to a 7.1% decline in the industry [7] - The company's forward price-to-earnings ratio is 10.3X, lower than the industry's average of 13.79X [9] - The Zacks Consensus Estimate indicates year-over-year earnings growth of 6.1% for 2025 and 2.6% for 2026 [10]

Financial Data and Key Metrics Changes - Adjusted diluted earnings per share increased by 3.6% in Q3 and by 5.9% for the first nine months [20] - Adjusted operating companies income (OCI) for smokeable products grew by 0.7% to nearly $3 billion in Q3 and by 2.5% to $8.4 billion for the first nine months [20] - Adjusted OCI margins expanded to 64.4% for both Q3 and the first nine months, representing margin growth of 1.3 percentage points and 2.7 percentage points respectively [20] Business Line Data and Key Metrics Changes - Domestic cigarette volumes declined by 8.2% in Q3 and 10.6% for the first nine months when adjusted for trade inventory movements [21] - The oral tobacco products segment saw adjusted OCI decline by less than 1% in Q3, but adjusted OCI increased by 3.3% with margin expansion of 1.8 percentage points to 69% [24][25] - Helix's reported shipment volume for on! increased by nearly 1% in Q3 and approximately 15% for the first nine months [8] Market Data and Key Metrics Changes - The nicotine pouch category grew to 55.7 share points, an increase of 11.1 share points year-over-year [7] - The e-vapor category included approximately 21 million vapers, up nearly 2 million versus a year ago [13] - The discount segment of the industry expanded by 2.4 share points year-over-year, with Basic capturing over half of that growth [23] Company Strategy and Development Direction - The company is focusing on expanding its smoke-free portfolio and exploring international opportunities through a collaboration with KT&G [5][18] - The launch of on! PLUS is seen as a premium product aimed at appealing to both adults who dip and competitive nicotine pouch consumers [10] - The company is committed to returning value to shareholders, as evidenced by a recent dividend increase and an expansion of the share repurchase program [5][27] Management Comments on Operating Environment and Future Outlook - Management noted that consumers are under pressure but are seeing some consistency in gas prices and inflation [33] - The company is optimistic about the regulatory environment, particularly with recent FDA actions that may streamline product authorizations [16] - The company raised the lower end of its 2025 guidance range, expecting adjusted diluted EPS in the range of $5.37-$5.45, representing a growth rate of 3.5%-5% from a base of $5.19 in 2024 [26] Other Important Information - The company returned nearly $6 billion to shareholders in the first nine months, including $5.2 billion in dividends and $712 million in share repurchases [27] - The balance sheet remains strong, with a debt to EBITDA ratio of 2x as of September 30 [28] Q&A Session Summary Question: Insights on fourth quarter earnings growth and smokeable OCI - Management acknowledged the impact of share repurchase and MSA legal fund expiration on earnings growth, while monitoring consumer spending in a dynamic marketplace [31] Question: Drivers behind the moderation in cigarette industry decline - Management indicated that consistency in consumer pressures and stepped-up enforcement in e-vapor are influencing market dynamics [34] Question: Performance and positioning of on! in a competitive environment - Management expressed satisfaction with on!'s performance despite competitive pressures, highlighting steady retail takeaway volume [37] Question: Opportunities from the KT&G partnership - Management outlined three prongs of the partnership: expanding modern oral initiatives, exploring non-nicotine opportunities, and improving operational efficiencies [40] Question: Pricing strategy for on! PLUS - Management confirmed that on! PLUS is positioned as a premium product, with introductory price promotions planned for its launch [48] Question: Impact of FDA pilot program on product launches - Management emphasized the importance of a functioning regulatory system and indicated that decisions will be made in the long-term best interest of the company [57]

Financial Performance - Altria's adjusted diluted EPS increased by 3.6% from $1.40 in Q3 2024 to $1.45 in Q3 2025[8] - For the first nine months of 2025, Altria returned nearly $6 billion to shareholders, including $5.2 billion in dividends and $712 million in share repurchases[98] - Altria increased its quarterly dividend by 3.9% to $1.06 per share[19] - The company expanded its existing share repurchase program from $1 billion to $2 billion[19] - The company is raising the lower-end of its full-year 2025 guidance range and now expects to deliver adjusted diluted EPS in a range of $5.37 to $5.45, representing a growth rate of 3.5% to 5.0% from 2024[95] Oral Tobacco Category - The oral tobacco industry volume increased by 14.5% for the six months ended September 30, 2025[22] - Oral nicotine pouches retail share of the oral tobacco category increased by 11.1 percentage points from Q3 2024 to Q3 2025, reaching 55.7%[22] - on! reported shipment volume increased by 0.7% in Q3 2025, with 42.2 million cans shipped[25] - For the nine months ended September 30, 2025, on! reported shipment volume increased by 14.8% to 133.6 million cans[25] - on!'s share of the oral tobacco category increased by 0.8 percentage points to 8.7% for the nine months ended September 30, 2025[28] Regulatory and Enforcement - Horizon submitted a combined PMTA & MRTPA to the FDA[32] - The FDA launched a pilot program to streamline PMTA reviews for oral nicotine pouches, and applications for on! PLUS are included in the program[47, 49]