2018 CAGNY Investor Presentation February 21, 2018 For Investor - - PowerPoint PPT Presentation

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2018 CAGNY Investor Presentation February 21, 2018 For Investor - - PowerPoint PPT Presentation

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2018 CAGNY Investor Presentation February 21, 2018 For Investor Purposes Only Howard Willard Chief Operating Officer Billy Gifford Chief Financial Officer For Investor Purposes Only For Investor Purposes Only Murray Garnick EVP, General

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February 21, 2018

2018 CAGNY Investor Presentation

For Investor Purposes Only

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Howard Willard Chief Operating Officer Billy Gifford Chief Financial Officer

For Investor Purposes Only

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Murray Garnick EVP, General Counsel, Law & Regulatory Affairs Jim Dillard SVP, Research, Development & Sciences, Chief Innovation Officer

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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, 2016 and under “Cautionary Factors That May Affect Future Results” in its Quarterly Report on Form 10-Q for the period ended September 30, 2017. 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 Purposes Only

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41.2% 51.2%

30% 60% 2012 2017

Smokeable Products Segment Performance

$6.3 $8.6

$0 $10 2012 2017

Adjusted OCI* Adjusted OCI Margins*

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

+10.0pp

in Billions

+6.4% CAGR

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Smokeless Products Segment Performance

Adjusted OCI* Adjusted OCI Margins* $1.0 $1.4

$0 $2 2012 2017

60.8% 67.8%

50% 70% 2012 2017

in Billions

+7.4% CAGR +7.0pp

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

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Alcohol Assets

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

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$2.21 $3.39

2012 2017

Five-Year Financial Performance

Adjusted Diluted EPS*

+8.9% CAGR

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

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181% 108% 98%

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

Five-Year Shareholder Returns

Source: Bloomberg, 12/31/2012-12/29/2017 Note: Total shareholder return is simple price appreciation plus the reinvestment of the dividend as of the ex-dividend date

  • Paid $21 billion in

dividends

  • Repurchased $6 billion

in shares

Total Shareholder Return

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“…encourage innovative, less harmful and satisfying non-combustible products for adults who want or need nicotine.”

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Non-combustible Product Platforms

Smokeless/Oral Tobacco E-Vapor Heated Tobacco

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Altria’s Strategies

Grow income over time with non-combustible tobacco products Maximize income from combustible tobacco businesses Manage diverse income streams and strong balance sheet to deliver consistent financial performance over the long term

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Equity Enhancements

Investment Areas

Innovative Products Regulatory Science Retail

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Cigarette Category Decline Rates

(4.0)% (3.5)% (0.5)% (2.5)% (4.0)%

2013 2014 2015 2016 2017

Source: ALCS estimates – rounded to nearest 0.5% For Investor Purposes Only

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Marlboro’s Equity

30 70

Camel Newport

Source: 2017 TNS Brand Equity Study (Age Group: 21 – 54), January 2018

Marlboro

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PM USA’s Enhanced Retail Trade Programs

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Digital Enhancements

Value Efficient Value Delivery Personalization Relevant Content Display Intuitive Design Ease of Navigation

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

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1,379 1,527

2016 2017

Black & Mild’s Performance

Source: Altria company reports

Shipment Volume

(Sticks in Millions)

+10.7%

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Altria’s Strategies

Grow income over time with non-combustible tobacco products Maximize income from combustible tobacco businesses Manage diverse income streams and strong balance sheet to deliver consistent financial performance over the long term

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Be the leading smokeless tobacco and oral nicotine products company with products that appeal to a diverse set of adult tobacco consumers and have the potential to reduce harm.

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USSTC’s Portfolio

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Plan to file MRTPA

  • n Copenhagen

Snuff in 1Q 2018

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Lead the U.S. e-vapor category with a portfolio of superior, potentially reduced- risk products that adult smokers and vapers choose over cigarettes.

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Plan to file PMTAs in 2018 with MRTPAs to follow

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CYNC Vim

by MarkTen

Apex

by MarkTen

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Lead Market Learning Objectives

  • Adult smoker perceptions of product and branding
  • Adult smoker conversion rates
  • Pricing dynamics
  • Market performance

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Substantial Equivalence Process

  • Process remains overly burdensome, inconsistent, and restrictive
  • FDA should issue clarifying regulations on the SE process
  • We will continue to work constructively with the FDA, while insisting that it
  • bserve the statute and regulate manufacturers fairly

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Altria’s Strategies

Grow income over time with non-combustible tobacco products Maximize income from combustible tobacco businesses Manage diverse income streams and strong balance sheet to deliver consistent financial performance over the long term

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Long-Term Financial Goals

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Consistent Financial Performance

$1.51 $3.39

2007 2017

$1.16* $2.64

2007 2017

Adjusted Diluted EPS* Dividend Per Share Growth

+8.4% CAGR +8.6% CAGR

Source: Altria company reports * For reconciliations of non-GAAP to GAAP measures visit altria.com. Note: Dividend is based on the current annualized dividend * First declared dividend post-spin For Investor Purposes Only

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Beer Investment

Source: Altria company reports

2017 ~$22 Billion 1970 $230 Million

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

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  • Over $300 million in savings from 2016 productivity initiative
  • Debt-to-EBITDA of 1.3 to 1*
  • Weighted average coupon of 4.9%
  • ~$1 billion in cash after dividends annually

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

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

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Marlboro Equity Enhancements

2018 Investment Examples

Innovative Products

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Tax Reform Benefit

  • Plan to reinvest about one-third of tax reform benefit in 2018
  • Moderating level of investment in subsequent years

We believe this balanced approach will deliver annual adjusted diluted EPS growth rates above our long-term 7% - 9% aspiration through 2020

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2018 Guidance

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

We reaffirm our guidance to deliver 2018 adjusted diluted EPS in a range of $3.90 to $4.03, representing a growth rate of 15% to 19% from our adjusted diluted EPS base of $3.39* in 2017.

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Regulation G Disclosure

  • For reconciliations and further

explanations of non-GAAP financial measures, visit: altria.com

For Investor Purposes Only

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For Investor Purposes Only