2016 CAGNY Investor Presentation February 17, 2016 For Investor Relations Purposes Only - CAGNY Conference, Feb. 17, 2016
Management Team Participants Howard Willard Billy Gifford Chief Operating Officer Chief Financial Officer Jim Dillard SVP, Research, Development, Denise Keane EVP and General Counsel Regulatory Affairs and Chief Innovation Officer For Investor Relations Purposes Only - CAGNY Conference, Feb. 17, 2016
Safe Harbor Statement Statements, including earnings guidance, in this presentation that are not reported financial results or 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 on 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, 2014 and under “Cautionary Factors That May Affect Future Results” in its Quarterly Report on Form 10 -Q for the period ended September 30, 2015. 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 - CAGNY Conference, Feb. 17, 2016
2015 Adjusted Diluted EPS* Performance +8.9% $2.80 $2.57 2014 2015 *For reconciliation of non-GAAP to GAAP measures visit altria.com Source: Altria company reports For Investor Relations Purposes Only - CAGNY Conference, Feb. 17, 2016
Dividend Per Share Growth +8.7% $2.26 $2.08 2014 2015 Note: Dividend is based on the current annualized dividend (Last increased August 2015) Source: Altria company reports For Investor Relations Purposes Only - CAGNY Conference, Feb. 17, 2016
2015 Total Shareholder Return 23.1% 14.7% 1.4% Altria S&P Food, Beverage & S&P 500 Tobacco Note: Total shareholder return is simple price appreciation plus the reinvestment of the dividend as of the ex-dividend date Source: Bloomberg, 12/31/2014 to 12/31/2015 For Investor Relations Purposes Only - CAGNY Conference, Feb. 17, 2016
Three-Year Total Shareholder Return 34.5% 28.6% 23.1% 2013 2014 2015 Note: Total shareholder return is simple price appreciation plus the reinvestment of the dividend as of the ex-dividend date Source: Bloomberg, 12/31/2012 to 12/31/2015 For Investor Relations Purposes Only - CAGNY Conference, Feb. 17, 2016
2015 U.S. Dollar Sales in Major Retail Channels $ in Billions $82 $70 $34 $28 $22 Tobacco Cigarettes Beer Carbonated Salty Beverages Snacks Note: Total US MOC is comprised of Food, Drug, Mass Merchandisers, Club, Dollar, DeCA, Convenience and Walmart classes of trade with ACV of $2MM+ excluding Pharmaceutical sales. Carbonated Beverage and Beer (including Ale and Cider, not Liquor) exclude on-premise sales. Source: ALCS Estimates and IRI For Investor Relations Purposes Only - CAGNY Conference, Feb. 17, 2016
2015 U.S. Dollar Sales in Major Retail Channels $ in Billions $82 $70 $34 $34 $28 $22 Tobacco Cigarettes Marlboro Beer Carbonated Salty Marlboro Beverages Snacks Note: Total US MOC is comprised of Food, Drug, Mass Merchandisers, Club, Dollar, DeCA, Convenience and Walmart classes of trade with ACV of $2MM+ excluding Pharmaceutical sales. Carbonated Beverage and Beer (including Ale and Cider, not Liquor) exclude on-premise sales. Source: ALCS Estimates and IRI For Investor Relations Purposes Only - CAGNY Conference, Feb. 17, 2016
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Altria’s Alcohol Interests This space is blank because brand images which appeared in the original presentation have been removed. Note: Third party trademarks are the property of their respective owners and are included for informational purposes only. For Investor Relations Purposes Only - CAGNY Conference, Feb. 17, 2016
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 - CAGNY Conference, Feb. 17, 2016
Altria’s Strategies Maximize income from core premium tobacco businesses over the long term Grow new income streams with innovative tobacco products Manage diverse income streams and strong balance sheet to deliver consistent financial performance For Investor Relations Purposes Only - CAGNY Conference, Feb. 17, 2016
Our History in the Beer Category 1970 2002 Philip Morris Acquired Miller Combined Miller with SAB Brewing Co. $3.4 Billion in Shares + $230 Million ~$2.0 Billion in Cash Note: Third party trademarks are the property of their respective owners and are included for informational purposes only. Source: Altria company reports For Investor Relations Purposes Only - CAGNY Conference, Feb. 17, 2016
Market Value of Altria’s SABMiller Investment $ in Billions $19.5 $3.4 July 2002 September 14, 2015 Source: Bloomberg For Investor Relations Purposes Only - CAGNY Conference, Feb. 17, 2016
Contributions from SABMiller Investment 2002 to 2015 $8.7 billion in equity earnings $3.8 billion in dividends Note: Third party trademarks are the property of their respective owners and are included for informational purposes only. Source: Altria company reports For Investor Relations Purposes Only - CAGNY Conference, Feb. 17, 2016
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Objectives Continued participation in the global beer profit pool Tax efficiency Appropriate premium Appropriate board representation to assure that we maintained significant influence over the asset For Investor Relations Purposes Only - CAGNY Conference, Feb. 17, 2016
Strategic Rationale The first truly global beer company and one of the largest CPG companies Significant growth opportunity for leading brands Build on strength of the world’s great beer operators Prospects for cost synergies Note: Third party trademarks are the property of their respective owners and are included for informational purposes only. Source: AB InBev Investor Presentation on 11/11/2015 For Investor Relations Purposes Only - CAGNY Conference, Feb. 17, 2016
Impact to Altria Continue participation in the global beer profit pool with an approximately 10.5% stake in the new company Achieve continued tax efficiency Two seats on the new company’s board of directors Continue the use of equity accounting for the asset’s contribution to Altria’s earnings Receive approximately $2.5 billion in pre-tax cash Note: Ownership interest and pre-tax cash consideration are subject to any proration. Source: Altria company reports For Investor Relations Purposes Only - CAGNY Conference, Feb. 17, 2016
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SABMiller Transaction Premium - PSA £41.84 Total PSA Value as of 11/10/15 43% Premium Undisturbed Share Price £29.34 as of 9/14/15 SABMiller Share Price Note: PSA defined as Partial Share Alternative Source: ABI InBev 2.7 deal document For Investor Relations Purposes Only - CAGNY Conference, Feb. 17, 2016
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Marlboro Among the Top 10 Most Valuable Global Brands - 2015 Note: Third party trademarks are the property of their respective owners and are included for informational purposes only. Source: MillwardBrown – Top 100 Global Brands - 2015 For Investor Relations Purposes Only - CAGNY Conference, Feb. 17, 2016
2015 Smokeable Products Segment Results Adjusted OCI* increased 10.9% PM USA adjusted cigarette volume grew 0.5% Middleton cigar volume grew 4.2% Cigarette volume adjusted for trade inventory changes and other factors. *For reconciliation of non-GAAP to GAAP measures visit altria.com Source: Altria company reports For Investor Relations Purposes Only - CAGNY Conference, Feb. 17, 2016
Cigarette Retail Share PM USA Marlboro +0.4pp +0.2pp 51.3% 50.9% 44.0% 43.8% 2014 2015 2014 2015 Source: IRI/MSAi For Investor Relations Purposes Only - CAGNY Conference, Feb. 17, 2016
Marlboro ’s Strengths Innovation to maintain Marlboro’s vibrancy Scale and breadth at retail Our advantage in digital engagement For Investor Relations Purposes Only - CAGNY Conference, Feb. 17, 2016
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