Altria(US:MO)2025-10-30 14:00Financial 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 [18] - 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 [18] - 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 [18] 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 [18] - Marlboro expanded its share of the premium segment by 0.3 to 59.6% in Q3 [19] - The oral tobacco products segment saw adjusted OCI decline by less than 1% in Q3, but adjusted OCI margin expanded by 2.4 percentage points to 69.2% for the first nine months [22] 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 [5] - The e-vapor category included approximately 21 million vapers, up nearly 2 million versus a year ago [11] - Retail share for oral tobacco products was 31.1% for Q3 and 32.9% for the first nine months [23] Company Strategy and Development Direction - The company is focusing on expanding its smoke-free portfolio and exploring international opportunities in innovative smoke-free products [4][15] - A collaboration with KT&G was announced to explore opportunities in international innovative smoke-free products and non-nicotine products [4][16] - The company aims to maintain profitability in the premium segment while also investing in the discount segment to capture price-sensitive consumers [20][21] Management's Comments on Operating Environment and Future Outlook - Management noted that consumer spending remains under pressure due to macroeconomic factors, but they are optimistic about maintaining profitability [30] - The company raised the lower end of its 2025 guidance range, expecting adjusted diluted EPS in the range of $5.37 to $5.45 [24] - Management emphasized the importance of a functioning regulatory system and the need for accelerated product authorizations from the FDA [14][54] Other Important Information - The company returned nearly $6 billion to shareholders, including $5.2 billion in dividends and $712 million in share repurchases [25] - The board authorized the expansion of the share repurchase program from $1 billion to $2 billion, which now expires on December 31, 2026 [25] Q&A Session Summary Question: Insights on fourth quarter earnings growth deceleration - Management acknowledged the impact of share repurchase and MSA legal fund expiration on earnings growth, while monitoring consumer spending [29][30] Question: Drivers behind the moderation in cigarette industry decline - Management indicated that consistency in gas prices and inflation may have contributed to the moderation in decline [31][32] Question: Performance and positioning of ON in the nicotine pouch category - Management expressed satisfaction with ON's performance despite competitive pressures and highlighted the importance of retail takeaway volume [33][34] Question: Opportunities from the KT&G partnership - Management discussed three pronged opportunities: expanding ON internationally, exploring non-nicotine products, and improving operational efficiencies [36][39] Question: Clarification on duty drawbacks and EPS growth - Management stated that duty drawbacks are an additional benefit but emphasized the need for a functioning regulatory system for long-term decisions [52][54] Question: Impact of FDA pilot program on ON+ launch - Management clarified that decisions will be based on long-term interests and the functioning of the regulatory system [53][54]