MO — Altria Group, Inc.

Altria Group Q1 2026 Earnings Call Summary

1. Key Financial Results and Metrics:

• Adjusted diluted EPS increased by 7.3% year-over-year.
• Smokeable products segment adjusted operating income (OCI) grew by 6.3%, with adjusted OCI margins at 65.1%.
• Domestic cigarette volumes declined by 2.4%, with an adjusted decline of 4% when accounting for trade inventory movements.
• The oral tobacco products segment reported over $400 million in total adjusted OCI, with margins at 67.4%.
• Total dividends paid were approximately $1.8 billion, and 4.5 million shares were repurchased for $280 million.
• Total debt-to-EBITDA ratio stood at 1.9x.

2. Strategic Updates and Business Highlights:

• Marlboro maintained its leadership in the premium segment, increasing its share to 59.5%.
• The nicotine pouch brand, on!, saw significant growth, with reported shipment volume up nearly 18% and a nationwide rollout of on! PLUS.
• The company is focusing on enhancing retail visibility and marketing for on! PLUS, which is supported by a new trade program.
• Regulatory progress is being made with the FDA reviewing applications for additional flavors and strengths of on! PLUS.
• Altria's investment in ABI yielded $160 million in adjusted equity earnings, up 9.6% year-over-year.

3. Forward Guidance and Outlook:

• The company reaffirmed its full-year adjusted diluted EPS guidance of $5.56 to $5.72, reflecting a growth rate of 2.5% to 5.5% from a base of $5.42 in 2025.
• The guidance considers moderated growth in combustible and e-vapor product volumes and increased macroeconomic uncertainty.

4. Bad News, Challenges, or Points of Concern:

• Domestic cigarette volumes continue to decline, with a notable shift towards discount brands amidst economic pressures on consumers.
• The oral tobacco products segment saw a reported shipment volume decrease of 3.1%, impacted by lower MST volumes.
• The macroeconomic environment remains challenging, with elevated gas prices and inflation affecting discretionary income.
• The e-vapor category is still heavily influenced by illicit flavored disposable products, which constitute about 70% of the market volume.
• There are concerns about the sustainability of the recent growth in the discount segment and its impact on premium brands like Marlboro.

5. Notable Q&A Insights:

• Management noted that the stronger-than-expected Q1 performance was due to moderation in cross-category movement and effective execution of their total portfolio strategy.
• The company is cautious about the economic outlook, particularly regarding consumer spending, and is prepared to adjust strategies as needed.
• There is optimism about the enforcement of regulations against illicit e-vapor products, which could stabilize the market and support the company's e-vapor strategy.
• The introduction of Cowboy Cut under the Marlboro brand is aimed at price-sensitive consumers and is expected to be competitively priced to maintain market share.
• Management emphasized the importance of data analytics in driving distribution and promotional strategies for both Marlboro and Basic brands.

Overall, Altria reported a solid start to 2026, with strategic initiatives in the nicotine pouch market and a focus on shareholder returns, while navigating challenges in cigarette volumes and economic pressures.