Altria(US:MO)2025-10-30 14:02Financial Performance - For the third quarter, adjusted diluted earnings per share increased by 3.6%, and for the first nine months, it grew by 5.9% [5][20] - Adjusted operating companies income (OCI) for the smokeable products segment grew by 0.7% to nearly $3 billion in the third quarter and by 2.5% to $8.4 billion for the first nine months [20] - Adjusted OCI margins expanded to 64.4% for both the third quarter and first nine months, representing margin growth of 1.3 percentage points and 2.7 percentage points, respectively [20] Business Segment Performance - Domestic cigarette volumes declined by 8.2% in the third quarter and 10.6% for the first nine months when adjusted for trade inventory movements and calendar differences [21][22] - Marlboro expanded its share of the premium segment by 0.3 to 59.6% in the third quarter, while the discount segment of the industry expanded by 2.4 share points year over year, with Basic capturing over half of that growth [22][23] - In the oral tobacco products segment, adjusted OCI declined by less than 1% in the third quarter, but adjusted OCI margin expanded by 2.4 percentage points to 69.2% for the first nine months [24][25] Market Data - The nicotine pouch category saw an estimated 14.5% increase in industry volume over the past six months, with ON's retail share of the total oral tobacco category at 8.7% for the third quarter [6][8] - The e-vapor category included approximately 21 million vapers at the end of the third quarter, up nearly 2 million from a year ago, with flavored disposable e-vapor products representing over 60% of the category [13][15] Company Strategy and Industry Competition - The company announced a collaboration with KT&G to explore opportunities in international innovative smoke-free products and non-nicotine products [5][18] - The FDA's pilot program to streamline PMTA reviews for oral nicotine pouches is seen as a positive development, with ON+ applications included in the program [16][17] Management Commentary on Operating Environment and Future Outlook - Management noted that consumers are under pressure but are seeing some consistency in gas prices and inflation, which may influence purchasing behavior [33] - The company raised the lower end of its 2025 guidance range, now expecting adjusted diluted EPS in the range of $5.37 to $5.45, representing a growth rate of 3.5% to 5% from a base of $5.19 in 2024 [26][27] 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 board authorized the expansion of the share repurchase program from $1 billion to $2 billion, which now expires on December 31, 2026 [27] 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, emphasizing the need to monitor consumer spending in a dynamic marketplace [30][31] Question: Drivers behind moderation in cigarette industry decline - Management indicated that consistency in consumer pressures, such as gas prices and inflation, may be contributing to the moderation observed [32][33] Question: Performance and initiatives for the nicotine pouch category - Management expressed satisfaction with ON's performance despite competitive pressures and highlighted the importance of retail takeaway volume as a measure of consumer demand [36][38] Question: KT&G partnership and operational efficiencies - Management outlined three prongs of the partnership: expanding ON and ON+ internationally, exploring non-nicotine opportunities, and improving operational efficiencies [39][41] Question: ON+ pricing strategy and controllable costs - Management confirmed ON+ is positioned as a premium product and discussed the importance of long-term cost management strategies in the smokeable category [46][49]