2017 CAGNY Investor Presentation February 22, 2017 Altria Client Services l Investor Relations l 2-22-17 l FINAL l Highly Confidential l 1
Management Team Howard Willard Billy Gifford Chief Operating Officer Chief Financial Officer Jim Dillard Murray Garnick SVP, Research, Development, Deputy General Counsel and Regulatory Affairs Altria Client Services l Investor Relations l 2-22-17 l FINAL l Highly Confidential l 2
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, 2015 and under “Cautionary Factors That May Affect Future Results” in its Quarterly Report on Form 10 -Q for the period ended September 30, 2016. 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. Altria Client Services l Investor Relations l 2-22-17 l FINAL l Highly Confidential l 3
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2016 Adjusted Diluted EPS* Performance +8.2% $3.03 $2.80 2015 2016 *For reconciliation of non-GAAP to GAAP measures visit altria.com Source: Altria company reports Altria Client Services l Investor Relations l 2-22-17 l FINAL l Highly Confidential l 5
Growing Our Dividend +8.0% $2.44 $2.26 50 th increase in the last 47 years Aug-15 Aug-16 Note: Dividend is based on the current annualized dividend (Last increased August 2016). Dividends are subject to the discretion of the Board. Source: Altria company reports Altria Client Services l Investor Relations l 2-22-17 l FINAL l Highly Confidential l 6
2016 Total Shareholder Return 20.5% 12.0% 8.8% Altria S&P 500 S&P Food, Beverage & Tobacco Note: Total shareholder return is simple price appreciation plus the reinvestment of the dividend as of the ex-dividend date Source: Bloomberg, 12/31/2015 to 12/30/2016 Altria Client Services l Investor Relations l 2-22-17 l FINAL l Highly Confidential l 7
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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 Altria Client Services l Investor Relations l 2-22-17 l FINAL l Highly Confidential l 9
Altria’s Strategies Maximize income from core 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 Altria Client Services l Investor Relations l 2-22-17 l FINAL l Highly Confidential l 10
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2016 U.S. Dollar Sales in Major Retail Channels $ in Billions $83 $71 $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: IRI Altria Client Services l Investor Relations l 2-22-17 l FINAL l Highly Confidential l 12
2016 U.S. Dollar Sales in Major Retail Channels $ in Billions $83 $71 $34 $34 $28 $22 Tobacco Cigarettes Beer Marlboro Marlboro 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: IRI Altria Client Services l Investor Relations l 2-22-17 l FINAL l Highly Confidential l 13
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Smokeable Products Segment Adjusted OCI* $ in Billions +7.6% CAGR $8.0 $6.4 2013 2016 *For reconciliation of non-GAAP to GAAP measures visit altria.com Source: Altria company reports Altria Client Services l Investor Relations l 2-22-17 l FINAL l Highly Confidential l 15
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Marlboro Brand Leadership Across the U.S. Altria Client Services l Investor Relations l 2-22-17 l FINAL l Highly Confidential l 17
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Smokeless Products Segment Adjusted OCI* $ in Billions +6.3% CAGR $1.2 $1.0 2013 2016 *For reconciliation of non-GAAP to GAAP measures visit altria.com Source: Altria company reports Altria Client Services l Investor Relations l 2-22-17 l FINAL l Highly Confidential l 19
Copenhagen and Skoal Combined Retail Share +1.5pp 52.2% 50.7% 2013 2016 Source: IRI InfoScan Altria Client Services l Investor Relations l 2-22-17 l FINAL l Highly Confidential l 20
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Altria’s Strategies Maximize income from core 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 Altria Client Services l Investor Relations l 2-22-17 l FINAL l Highly Confidential l 22
Innovative Products This space is blank because brand images which appeared in the original presentation have been removed. Altria Client Services l Investor Relations l 2-22-17 l FINAL l Highly Confidential l 23
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Continuum of Risk Conventional Cigarettes Smokeless Tobacco Products Medicinal Nicotine Smoking Cessation Most Harmful Least Harmful Risk continuum of tobacco products (directional only – not to scale; adapted from Hatsukami et al .) Source: D.K. Hatsukami et al., Developing the science base for reducing tobacco harm , Nic. & Tob. Res.; vol. 9: S537-S553 (2007) Altria Client Services l Investor Relations l 2-22-17 l FINAL l Highly Confidential l 25
Altria’s Role in Harm Reduction Understand adult tobacco consumer preferences Develop products that meet them Seek FDA authorization to market and communicate appropriately about them Altria Client Services l Investor Relations l 2-22-17 l FINAL l Highly Confidential l 26
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Heated Tobacco Exclusive license to sell IQOS system in U.S. PM USA’s dedicated team is building its commercialization plan Note: Third party trademarks are the property of their respective owners and are included for informational purposes only. Altria Client Services l Investor Relations l 2-22-17 l FINAL l Highly Confidential l 28
IQOS Retail Engagement – Japan (PMI) This space is blank because brand images which appeared in the original presentation have been removed. Altria Client Services l Investor Relations l 2-22-17 l FINAL l Highly Confidential l 29
IQOS Retail Engagement – Italy (PMI) This space is blank because brand images which appeared in the original presentation have been removed. Altria Client Services l Investor Relations l 2-22-17 l FINAL l Highly Confidential l 30
PM USA Commercialization of IQOS Develop robust marketing plans for a U.S. lead market - Integrated engagement model to educate at retail and in digital Create opportunities for guided trial using flexible retail concepts Altria Client Services l Investor Relations l 2-22-17 l FINAL l Highly Confidential l 31
This space is blank because brand images which appeared in the original presentation have been removed. For Investor Relations Purposes Only - CAGNY Conference, Feb. 17, 2016
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