2015 CAGNY Investor Presentation February 18, 2015 For Investor - - PowerPoint PPT Presentation

▶
2015 cagny
SMART_READER_LITE
LIVE PREVIEW

2015 CAGNY Investor Presentation February 18, 2015 For Investor - - PowerPoint PPT Presentation

Jun 18, 2023 148 likes •1.15k views

2015 CAGNY Investor Presentation February 18, 2015 For Investor Relations Purposes Only Management Team Participants Howard Willard Dave Beran EVP and Chief Financial President and Chief Operating Officer, Altria Group Officer, Altria Group

slide-1
SLIDE 1

February 18, 2015

2015 CAGNY Investor Presentation

For Investor Relations Purposes Only

slide-2
SLIDE 2

Management Team Participants

Murray Garnick

  • Sr. Vice President and Associate

General Counsel, ALCS Howard Willard EVP and Chief Financial Officer, Altria Group Billy Gifford SVP, Strategy and Business Development, Altria Group Dave Beran President and Chief Operating Officer, Altria Group

For Investor Relations Purposes Only

slide-3
SLIDE 3

Safe Harbor Statement

Statements, including earnings guidance, in this presentation that are not reported financial results

  • r other historical information are “forward-looking statements” within the meaning of Private

Securities Litigation Reform Act of 1995. Such forward-looking statements are based on current plans, estimates and expectations, and are not guarantees of future performance. They are based

  • n management’s expectations that involve a number of business risks and uncertainties, any of

which could cause actual results to differ materially from those expressed in or implied by the forward-looking statements. Altria undertakes no obligation to publicly update or revise any forward- looking statement other than in the normal course of its public disclosure obligations. The risks and uncertainties relating to the forward-looking statements in this presentation include those described under “Risk Factors” in its Annual Report on Form 10-K for the year ended December 31, 2013 and under “Cautionary Factors That May Affect Future Results” in its Quarterly Report on Form 10-Q for the period ended September 30, 2014. Reconciliations of non-GAAP financial measures included in this presentation to the most comparable GAAP measures are available on Altria’s website at altria.com.

For Investor Relations Purposes Only

slide-4
SLIDE 4

2014 Results

Altria Results Segment Results

  • Grew adjusted diluted earnings

per share* 8%

  • Grew dividend 8.3%
  • Paid shareholders $3.9 billion in

dividends

  • Smokeable products segment grew

adjusted operating companies income* 6.7%

  • Marlboro achieved retail share of

43.8%

  • Copenhagen & Skoal achieved

combined retail share of 51.2%

Source: Altria company reports *For reconciliation of non-GAAP to GAAP measures visit altria.com

Altria delivered total shareholder return of 34.5%.

For Investor Relations Purposes Only

slide-5
SLIDE 5

Agenda

  • Financial Goals
  • Strategies
  • Performance
  • Outlook for 2015

For Investor Relations Purposes Only

slide-6
SLIDE 6

Long-Term Financial Goals

  • Grow adjusted diluted EPS at average annual rate of 7% to 9%

For Investor Relations Purposes Only

slide-7
SLIDE 7

Adjusted Diluted EPS* Performance

$1.75 $2.57

2009 2014 +8.0%

CAGR

Source: Altria company reports *For reconciliation of non-GAAP to GAAP measures visit altria.com

For Investor Relations Purposes Only

slide-8
SLIDE 8

Long-Term Financial Goals

  • Grow adjusted diluted EPS at average annual rate of 7% to 9%
  • Maintain a target dividend payout ratio of approximately 80% of

adjusted diluted EPS

For Investor Relations Purposes Only

slide-9
SLIDE 9

Dividend Payout Ratio

Source: Bloomberg and Thomson Reuters

80.9% 79.7% 78.4% 73.2% 70.3% 60.7% 59.8% 57.1% 53.8% 52.6%

MO PM RAI LO KRFT GIS KO PEP HSY DPS

S&P Food, Beverage and Tobacco Index

NOTE: Altria’s dividend payout ratio is based on the current annualized dividend (Last increased August 2014) of $2.08 / $2.57 2014 adjusted diluted EPS. In addition, Altria’s announced targeted dividend payout ratio is ~80% of adjusted EPS. All dividend payout ratios have been calculated using each company’s current annualized dividend rate / 2014 actual and estimated consensus adjusted diluted EPS. Dividend payout ratio ranks companies in the Food, Beverage and Tobacco Index in these respective categories as of February 10, 2015. Source: Bloomberg and Thomson First Call

For Investor Relations Purposes Only

slide-10
SLIDE 10

Dividend Per Share Growth

$1.36 $2.08

2009 2014 +8.9%

CAGR

Note: Year-end annualized rate: 5-year CAGR. Dividend is based on the current annualized dividend (Last increased August 2014)

Altria increased its dividend 48 times in the past 45 years.

Source: Altria company reports

For Investor Relations Purposes Only

slide-11
SLIDE 11

Altria’s Strategies

Grow new income streams with innovative tobacco products Maximize income from core premium tobacco businesses over the long term Manage diverse income streams and strong balance sheet to deliver consistent financial performance

For Investor Relations Purposes Only

slide-12
SLIDE 12

A View of Altria on Key Measures

Source: FactSet; Altria company reports *For reconciliation of non-GAAP to GAAP measures visit altria.com Note: Trailing 12-month data from latest reporting date of 1/20/2015. All Altria Group, Inc. calculations use net revenue net of excise taxes

Net Income (as a % of Revenues)

Altria S&P Beverage S&P Food

Net Income as a % of Revenues* 24.4% 14.3% 8.6%

Revenues per Employee ($ in Millions)

Altria S&P Beverage S&P Food

Revenues* per Employee ($ in Millions) $1.97 $0.60 $0.70

Free Cash Flow* (as a % of Revenues)

Altria S&P Beverage S&P Food

Free Cash Flow as a % of Revenues* 24.9% 13.8% 7.9%

For Investor Relations Purposes Only

slide-13
SLIDE 13

230% 94% 116%

Altria Group S&P Beverage S&P Food

Total Shareholder Return 2010-2014

Source: FactSet, 12/31/2009-12/31/2014 Note: Total shareholder return is simple price appreciation plus the reinvestment of the dividend as of the ex-dividend date

For Investor Relations Purposes Only

slide-14
SLIDE 14

U.S. Tobacco Manufacturers’ Profit Pool

$11.8 $15.5

$0 $20 2009 2014

Source: Altria company reports; ALCS estimates; other public company reports

+5.5%

CAGR

$ in Billions

For Investor Relations Purposes Only

slide-15
SLIDE 15

2014 Share of the U.S. Tobacco Profit Pool

Note: Altria’s Profit Pool share is calculated by combining the adjusted OCI* for Altria’s Smokeable & Smokeless Products segments divided by Total Profit Pool. *For reconciliation of non-GAAP to GAAP measures visit altria.com

51% 23% 14% 12%

Altria Reynolds American Lorillard Other

Source: Altria company reports; ALCS estimates; other public company reports

For Investor Relations Purposes Only

slide-16
SLIDE 16

Altria’s Strategies

Grow new income streams with innovative tobacco products Maximize income from core premium tobacco businesses over the long term Manage diverse income streams and strong balance sheet to deliver consistent financial performance

For Investor Relations Purposes Only

slide-17
SLIDE 17

Smokeable Products Companies’ Strategy

Maximize income while maintaining modest share momentum on Marlboro and Black & Mild over time.

For Investor Relations Purposes Only

slide-18
SLIDE 18

Cigarette Category Decline Rate Estimates

(4.0)% (8.0)% (5.0)% (3.5)% (3.0)% (4.0)% (3.5)%

2008 2009 2010 2011 2012 2013 2014

Source: ALCS estimates

Primarily due to FET increase

For Investor Relations Purposes Only

slide-19
SLIDE 19

$6.4 $6.9

$0.0 $10.0 2013 2014

Smokeable Products Income Growth

Source: Altria company reports *For reconciliation of non-GAAP to GAAP measures visit altria.com

Adjusted OCI*

+6.7%

$ in Billions

42.2% 44.1%

0% 60% 2013 2014

Adjusted OCI* Margins

+1.9pp

For Investor Relations Purposes Only

slide-20
SLIDE 20

$5.5 $6.9

$0.0 $10.0 2009 2014

Smokeable Products Income Growth

Source: Altria company reports *For reconciliation of non-GAAP to GAAP measures visit altria.com

Adjusted OCI*

+4.5%

CAGR

37.1% 44.1%

0% 60% 2009 2014

Adjusted OCI* Margins

+7.0pp

$ in Billions

For Investor Relations Purposes Only

slide-21
SLIDE 21

This space is blank because brand images which appeared in the original presentation have been removed.

For Investor Relations Purposes Only

slide-22
SLIDE 22

Smokeable Products Segment Pricing

2009 2014

Source: Altria company reports *For reconciliation of non-GAAP to GAAP measures visit altria.com

+4.4%

CAGR

2013 2014

Revenues Net of Excise Taxes /1000 Units*

+5.1%

$116.60 $122.56 $98.77 $122.56

For Investor Relations Purposes Only

slide-23
SLIDE 23

This space is blank because brand images which appeared in the original presentation have been removed.

For Investor Relations Purposes Only

slide-24
SLIDE 24

Smokeable Products Cost Management

$28.69 $29.57

2013 2014

Source: Altria company reports * For reconciliations of non-GAAP to GAAP measures visit www.altria.com

Controllable Costs/1000 Units* $28.73 $29.57

2009 2014

The end of the federal quota buyout will reduce the cost

  • f goods sold by $300 million versus 2014.

+0.6%

CAGR

+3.1%

For Investor Relations Purposes Only

slide-25
SLIDE 25

43.8%

Marlboro

2014 Marlboro Retail Share

Source: IRI/MSAi

Next 10 Largest Brands = 42.6%

For Investor Relations Purposes Only

slide-26
SLIDE 26

This space is blank because brand images which appeared in the original presentation have been removed.

For Investor Relations Purposes Only

slide-27
SLIDE 27

2011 2014

Marlboro Mobile Engagement

Source: PM USA

~+1,000%

Note: Total mobile interactions (Adult Smokers 21+)

Mobile Logins

This space is blank because brand images which appeared in the

  • riginal presentation have

been removed.

For Investor Relations Purposes Only

slide-28
SLIDE 28

Marlboro Digital Engagement

Marlboro.com is among the largest CPG websites in the U.S. based on the average number of unique visitors.

comScore, 2014

Note: Dec .2014 Top CPG domain comparison of 6 month Unique Visitor avg. from PC traffic

This space is blank because brand images which appeared in the

  • riginal presentation have

been removed.

For Investor Relations Purposes Only

slide-29
SLIDE 29

Marlboro’s Modest Retail Share Momentum

Note: _____________________________________________________________________________

42.8% 43.8%

2009 2014

Source: IRI/MSAi

Average Annual Growth = ~0.2pp

This space is blank because brand images which appeared in the

  • riginal presentation have

been removed.

For Investor Relations Purposes Only

slide-30
SLIDE 30

Marlboro Brand Equity Scores 2014

70

Marlboro Competitor A Competitor B

Source: 2014 TNS Brand Equity Study (Age Group: 21 – 54), February 2015

For Investor Relations Purposes Only

slide-31
SLIDE 31

This space is blank because brand images which appeared in the original presentation have been removed.

For Investor Relations Purposes Only

slide-32
SLIDE 32

Cigars 2014 Performance

Source: IRI InfoScan

88.8% 91.4%

2013 2014

1,198 1,271

2013 2014

Black & Mild Retail Share of Tipped Segment Middleton Reported Shipment Volume

+2.6pp +6.1%

Note: Cigars volume (sticks in millions)

For Investor Relations Purposes Only

slide-33
SLIDE 33

This space is blank because brand images which appeared in the original presentation have been removed.

For Investor Relations Purposes Only

slide-34
SLIDE 34

Black & Mild’s Retail Share

28.9% 28.6%

2013 2014

Source: IRI InfoScan

(0.3)pp

31.0% 28.6%

2009 2014

Average Annual Growth = ~(0.5)pp

For Investor Relations Purposes Only

slide-35
SLIDE 35

Litigation Update

  • Comprehensive discussion of tobacco

litigation is found in the 8-K filed on January 30

For Investor Relations Purposes Only

slide-36
SLIDE 36

Status Update: “Lights” Litigation

  • Obtained dismissals of “lights” cases pending in federal court
  • Handful of cases remain in state courts
  • Aspinall in Massachusetts may be tried later this year
  • Illinois Supreme Court granted review of Miles/Price

For Investor Relations Purposes Only

slide-37
SLIDE 37

Status Update: “Engle Progeny” Litigation

  • Substantial success managing Engle suits in Florida
  • Some losses in 2014
  • Of the 9,400 claims filed in 2008, less than half remain pending
  • Obtained a defense verdict or mistrial in over half of cases tried in 2014
  • Federal appeals court affirmed dismissal of almost 750 cases

For Investor Relations Purposes Only

slide-38
SLIDE 38

2014 Litigation Update

  • Continued to effectively manage

the litigation environment

  • Significant challenges remain

We will continue to protect the interests of our shareholders by vigorously defending these claims.

For Investor Relations Purposes Only

slide-39
SLIDE 39

Smokeless Products Strategy

Increase income by growing volume at or ahead of the category growth rate, while maintaining modest share momentum on Copenhagen and Skoal combined

For Investor Relations Purposes Only

slide-40
SLIDE 40

This space is blank because brand images which appeared in the original presentation have been removed.

For Investor Relations Purposes Only

slide-41
SLIDE 41

~7% ~7% ~5% ~5% ~5% to 6% ~2%

2009 2010 2011 2012 2013 2014

Source: ALCS Estimates

Estimated Smokeless Category Growth Rates

~+5%

CAGR

For Investor Relations Purposes Only

slide-42
SLIDE 42

Smokeless Products Segment Performance

~2% ~2.5%

Industry USSTC

50.7% 51.2%

2013 2014

Source: Altria company reports

Copenhagen & Skoal Combined Retail Share 2014 Smokeless Adjusted Volume Growth

+0.5pp

Source: IRI InfoScan

For Investor Relations Purposes Only

slide-43
SLIDE 43

Smokeless Products Adjusted OCI*

Source: Altria company reports *For reconciliation of non-GAAP to GAAP measures visit altria.com

$ in Millions

$1,026 $1,060

2013 2014 +3.3%

For Investor Relations Purposes Only

slide-44
SLIDE 44

This space is blank because brand images which appeared in the original presentation have been removed.

For Investor Relations Purposes Only

slide-45
SLIDE 45

Copenhagen Retail Share

29.3% 30.8%

2013 2014

Source: IRI Group InfoScan Smokeless Tobacco Database (FY 2012 – Retail Share) Source: IRI InfoScan

+1.5 pp

This space is blank because brand images which appeared in the

  • riginal presentation have

been removed.

For Investor Relations Purposes Only

slide-46
SLIDE 46

This space is blank because brand images which appeared in the original presentation have been removed.

For Investor Relations Purposes Only

slide-47
SLIDE 47

Skoal Retail Share Performance

(1.3)% (1.1)% (1.0)% (0.7)%

Q1 2014 Q2 2014 Q3 2014 Q4 2014

Source: IRI InfoScan

This space is blank because brand images which appeared in the

  • riginal presentation have

been removed.

For Investor Relations Purposes Only

slide-48
SLIDE 48

Mobile Engagement

This space is blank because brand images which appeared in the original presentation have been removed.

For Investor Relations Purposes Only

slide-49
SLIDE 49

Copenhagen and Skoal Mobile Engagement

2013 2014

Source: USSTC

Mobile Logins*

+680%

* Adult Tobacco Consumers 21+

For Investor Relations Purposes Only

slide-50
SLIDE 50

Marlboro Long-Term Retail Share Growth

50 1954 1959 1964 1969 1974 1979 1984 1989 1994 1999 2004 2009 2014

Source: Maxwell; MSAi Shipments; IRI/Capstone – Total Retail Panel; IRP IRI Group/Capstone Projected Retail Panel; IRI/MSAi

43.8%

For Investor Relations Purposes Only

slide-51
SLIDE 51

Leading Sales Organization

This space is blank because brand images which appeared in the original presentation have been removed.

For Investor Relations Purposes Only

slide-52
SLIDE 52

Leading Sales and Distribution Capability

Cigarettes ~95% of Volume Smokeless ~96% of Volume

Breadth of Coverage ~240K Stores Speed of Distribution*

Examples 2 Weeks 8 Weeks Marlboro Edge 85%+ 90%+ Copenhagen Southern Blend 85%+ 90%+

Source: MIConnect STARS Data Wk Ending 12/27/14 * % of targeted stores

For Investor Relations Purposes Only

slide-53
SLIDE 53

Maximizing the Core, Innovating for the Future

Grow new income streams with innovative tobacco products Maximize income from core premium tobacco businesses over the long term Manage diverse income streams and strong balance sheet to deliver consistent financial performance

For Investor Relations Purposes Only

slide-54
SLIDE 54

Altria’s Strategies

Grow new income streams with innovative tobacco products Maximize income from core premium tobacco businesses over the long term Manage diverse income streams and strong balance sheet to deliver consistent financial performance

For Investor Relations Purposes Only

slide-55
SLIDE 55

$0.3 $0.5 ~$1.3 ~$2

$0.0 $2.5 2011 2012 2013 2014 +90%

CAGR

E-Vapor Estimated U.S. Consumer Expenditures

Source: ALCS estimates

$ in Billions

For Investor Relations Purposes Only

slide-56
SLIDE 56

~$2 ~$86

e-Vapor Total Tobacco

2014 U.S. Adult Tobacco Consumer Spending

Source: ALCS estimates

$ in Billions

For Investor Relations Purposes Only

slide-57
SLIDE 57

E-Vapor Category Status

  • Adult smokers and vapers have a variety of performance, taste and form

expectations

  • Adoption rates remain low
  • Current products generally fall short of fully meeting their expectations

For Investor Relations Purposes Only

slide-58
SLIDE 58

“Leading” E-Vapor Brands Over Time

Note: Total US – Multi-Outlet & Convenience – 4wm Source: IRI Tobacco Derived Nicotine – MOC as of 12/28/14

2011 2012 2013 2014 Brand A #1 Brand B #1 Brand C #1 Brand D #1 Brand E #1

For Investor Relations Purposes Only

slide-59
SLIDE 59

Our Aspiration and Approach

  • Long-term success
  • Financial discipline
  • Adult tobacco consumer focused
  • Portfolio of products

For Investor Relations Purposes Only

slide-60
SLIDE 60

This space is blank because brand images which appeared in the original presentation have been removed.

For Investor Relations Purposes Only

slide-61
SLIDE 61

For Investor Relations Purposes Only

slide-62
SLIDE 62

This space is blank because brand images which appeared in the original presentation have been removed.

For Investor Relations Purposes Only

slide-63
SLIDE 63

MarkTen National Expansion

Source: Altria company reports

+130,000 stores

For Investor Relations Purposes Only

slide-64
SLIDE 64

This space is blank because brand images which appeared in the original presentation have been removed.

For Investor Relations Purposes Only

slide-65
SLIDE 65

E-Vapor Supply Chain

  • Improved efficiency, diversification

and cost structure

  • Investing in quality

For Investor Relations Purposes Only

slide-66
SLIDE 66

E-Vapor Regulatory Capabilities

  • Advocating with FDA and other stakeholders
  • Supporting minimum age requirements
  • Establishing strict product standards

For Investor Relations Purposes Only

slide-67
SLIDE 67

Our View on Regulation

  • Include common sense approach to harm reduction based on science and

evidence

  • Recognize the differences in product types
  • Create a level playing field among diverse product types
  • Support right of informed adults to make choices
  • Encourage manufacturers to bring potentially lower-risk products to market

We believe the public health potential here is significant and FDA has an unprecedented opportunity.

For Investor Relations Purposes Only

slide-68
SLIDE 68

Heat-Not-Burn Platform

  • Offers a familiar taste for adult smokers with no ash
  • Working to support PMI in the research needed for an FDA modified risk

tobacco product application

  • Developing brand and go-to-market strategies
  • Building capability in modified risk tobacco products

Note: Third party trademarks are the property of their respective owners and are included for informational purposes only.

For Investor Relations Purposes Only

slide-69
SLIDE 69

PMI Licensing of e-Vapor

  • Expect to begin shipping e-vapor products for the international market in first

quarter

For Investor Relations Purposes Only

slide-70
SLIDE 70

This space is blank because brand images which appeared in the original presentation have been removed.

For Investor Relations Purposes Only

slide-71
SLIDE 71

Harm Reduction

  • Adult tobacco consumers are interested in innovative tobacco products
  • U.S. regulatory framework in place to assess products and guide our

communication

  • New technologies are showing promise

We continue to embrace the opportunities and challenges of bringing lower risk tobacco products to adult tobacco consumers.

For Investor Relations Purposes Only

slide-72
SLIDE 72

Altria’s Strategies

Grow new income streams with innovative tobacco products Maximize income from core premium tobacco businesses over the long term Manage diverse income streams and strong balance sheet to deliver consistent financial performance

For Investor Relations Purposes Only

slide-73
SLIDE 73

Enhancing Productivity

  • Altria delivered ~$2 billion in savings between 2007-2013
  • Simplifying our businesses
  • Redesigning 100+ processes
  • Realigning people resources
  • Investing against Altria priorities

Continuing to manage costs by streamlining, balancing and investing.

For Investor Relations Purposes Only

slide-74
SLIDE 74

Investment in Our Priorities

  • Expect to continue making disciplined investments in innovative tobacco

products, including:

  • New product development
  • Awareness and trial
  • Regulatory science needed to bring reduced risk products to market

For Investor Relations Purposes Only

slide-75
SLIDE 75

Howard Willard

For Investor Relations Purposes Only

slide-76
SLIDE 76

Altria’s Strategies

Grow new income streams with innovative tobacco products Maximize income from core premium tobacco businesses over the long term Manage diverse income streams and strong balance sheet to deliver consistent financial performance

For Investor Relations Purposes Only

slide-77
SLIDE 77

* Net of FET Source: Altria company reports

Smokeable and Smokeless Products Segments

2014 Combined Results

  • Net revenues* of $17.2 billion
  • Reported OCI of $7.9 billion

For Investor Relations Purposes Only

slide-78
SLIDE 78

Altria’s Alcohol Interests

Note: Third party trademarks are the property of their respective owners and are included for informational purposes only.

This space is blank because brand images which appeared in the original presentation have been removed.

For Investor Relations Purposes Only

slide-79
SLIDE 79

This space is blank because brand images which appeared in the original presentation have been removed.

For Investor Relations Purposes Only

slide-80
SLIDE 80
  • Ste. Michelle Wine Estates

$118 $134

2013 2014

Source: Altria company reports * For reconciliations of non-GAAP to GAAP measures visit www.altria.com

Adjusted OCI* - $ in Millions

+13.6%

$73 $134

2009 2014 +12.9%

CAGR

For Investor Relations Purposes Only

slide-81
SLIDE 81

SABMiller Investment

$991 $1,006

2013 2014

Source: Altria company reports

+1.5%

$600 $1,006

2009 2014 +10.9%

CAGR

Reported Equity Earnings - $ in Millions

For Investor Relations Purposes Only

slide-82
SLIDE 82

Market Value of SABMiller Investment

$12.7 $22.5

December 2009 December 2014

Source: Bloomberg

$ in Billions

+12.1%

CAGR

For Investor Relations Purposes Only

slide-83
SLIDE 83

This space is blank because brand images which appeared in the original presentation have been removed.

For Investor Relations Purposes Only

slide-84
SLIDE 84

Philip Morris Capital Corporation

$9.4 $1.7

$0 $10 2002 2014

Source: Altria company reports

$2.0 $1.7

$0 $5 2013 2014

Net Finance Receivable - $ in Billions

Note: Net Finance Receivable reflects PMCC’s investments in finance leases excluding the allowance for losses.

For Investor Relations Purposes Only

slide-85
SLIDE 85

2014 Capital Markets Activities

  • $525 million of 7.75% notes matured
  • $300 million of 5.75% UST notes redeemed
  • $1.0 billion of new 2.625% notes issued

Source: ALCS

For Investor Relations Purposes Only

slide-86
SLIDE 86

Reduced Weighted Average Coupon Rate

9.1% 5.7%

December 2009 December 2014

Source: ALCS

(3.4)pp

In March 2014, Standard & Poor’s upgraded Altria to BBB+.

For Investor Relations Purposes Only

slide-87
SLIDE 87

Returning Cash to Shareholders

$1.92 $2.08

Aug-13 Aug-14 Dividend Growth +8.3% $ in Billions

$4.8

2014 Share Repurchase Dividend

Source: Altria company reports Note: Dividend is based on the current annualized dividend (Last increased August 2014)

For Investor Relations Purposes Only

slide-88
SLIDE 88

Returning Cash To Shareholders

$21.1

2010 - 2014 Share Repurchase Dividend

Source: Altria company reports

$ in Billions

For Investor Relations Purposes Only

slide-89
SLIDE 89

Source: ALCS Estimates

2014 Tobacco Category Consumer Expenditures

~$73 ~$6 ~$6 ~$2

Cigarettes Smokeless Large Mass Cigars e-Vapor

$ in Billions

For Investor Relations Purposes Only

slide-90
SLIDE 90

Cigarette Category Decline Rate Estimates

(3.5)% (3.0)% (4.0)% (3.5)%

2011 2012 2013 2014

Source: ALCS estimates

For Investor Relations Purposes Only

slide-91
SLIDE 91

Weighted Average State Excise Tax on Cigarettes

$1.19 $1.31 $1.37 $1.39 $1.44 $1.48

$0.00 $2.00 2009 2010 2011 2012 2013 2014

Note: Weighted Average SET is a full-year average SET volume weighted by State Source: ALCS

4.5%

CAGR

For Investor Relations Purposes Only

slide-92
SLIDE 92

2015 Guidance

  • Altria reaffirms it expects its 2015 full-year adjusted diluted EPS to increase by

7% to 9% to a range of $2.75 to $2.80 from its 2014 adjusted diluted EPS base

  • f $2.57* per share.

Source: Altria company reports

We believe we are well positioned to continue our track record of delivering solid earnings per share growth.

*For reconciliation of non-GAAP to GAAP measures visit altria.com

For Investor Relations Purposes Only

slide-93
SLIDE 93

A Compelling Investment

  • Adjusted diluted EPS growth at average annual rate of 7% to 9%
  • Dividend payout ratio of approximately 80% of adjusted diluted EPS
  • Dividend yield of 3.9%

Source: Bloomberg as of February 9, 2015

For Investor Relations Purposes Only

slide-94
SLIDE 94

Total Shareholder Return History

230% 105% 116%

Altria Group S&P 500 S&P Food, Beverage and Tobacco Index

Source: Bloomberg Note: Total shareholder return is simple price appreciation plus the reinvestment of the dividend as of the ex-dividend date (12/31/2009 to 12/31/2014).

For Investor Relations Purposes Only

slide-95
SLIDE 95

Altria’s Leadership

  • Brands
  • Market leadership
  • Talented employees

For Investor Relations Purposes Only

slide-96
SLIDE 96

Our Business Model

  • Strong core businesses and premium brand leadership
  • Building a leading position in e-vapor over time
  • Our diverse business model helps Altria deliver consistent performance

For Investor Relations Purposes Only

slide-97
SLIDE 97
slide-98
SLIDE 98

Regulation G Disclosure

  • For reconciliations and further explanations of non-GAAP financial measures, visit:

altria.com

For Investor Relations Purposes Only