Consumer Staples Conference Presentation September 9, 2015 For - - PowerPoint PPT Presentation

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Consumer Staples Conference Presentation September 9, 2015 For - - PowerPoint PPT Presentation

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2015 Barclays Global Consumer Staples Conference Presentation September 9, 2015 For Investor Purposes Only - Barclays GCS Conference, Sept. 9, 2015 1 Safe Harbor Statement Statements, including earnings guidance, in this presentation that are

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September 9, 2015

2015 Barclays Global Consumer Staples Conference Presentation

1 For Investor Purposes Only - Barclays GCS Conference, Sept. 9, 2015

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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 Altria’s 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 June 30, 2015. Reconciliations of non-GAAP financial measures included in this presentation to the most comparable GAAP financial measures are available on Altria’s website at altria.com.

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Agenda

  • Goals and strategies
  • Track record of consistent

financial performance

  • Questions and answers

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Track Record of Value Creation

FACT Altria’s 20.2% annualized shareholder return leads all companies named to each FORTUNE 500 list since 1955.

4 Note: Third party trademarks are the property of their respective owners and are included for informational purposes only. Source: Fortune.com, June 9, 2015 For Investor Purposes Only - Barclays GCS Conference, Sept. 9, 2015

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Altria’s Long-Term Financial Goals

  • Grow adjusted diluted EPS at an average

annual rate of 7% to 9%

  • Maintain a target dividend payout ratio of

approximately 80% of adjusted diluted EPS

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Consistent Adjusted Diluted EPS* Growth

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

$1.75 $2.57

2009 2014 +8.0%

CAGR

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$1.36 $2.08 2.9% 8.6% 7.9% 7.3% 9.1% 8.3%

$0.00 $2.50 2009 Feb-10 Aug-10 Aug-11 Aug-12 Aug-13 Aug-14 2014

Strong Dividend Growth

Note: Year-end annualized rate: 5-year CAGR. Source: Altria company reports

+8.9%

CAGR

In 2014, we paid shareholders $3.9 billion in dividends.

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Altria’s Performance Against Long-Term Goals

$1.22 $1.38

1H 2014 1H 2015

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

Altria increased its dividend 49 times in the past 46 years.

+13.1%

Adjusted Diluted EPS* Performance

$2.08 $2.26

Aug-14 Aug-15 +8.7%

Dividend per Share**

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Reaffirms 2015 Guidance

  • Altria reaffirms its guidance for 2015 full-year adjusted diluted EPS in the range
  • f $2.76 to $2.81, representing a growth rate of 7.5% to 9.5% from an adjusted

diluted EPS base of $2.57* in 2014.

Source: Altria company reports *For reconciliation of non-GAAP to GAAP measures visit altria.com 9 For Investor Purposes Only - Barclays GCS Conference, Sept. 9, 2015

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1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Changing Industry Dynamics

Reynolds American

  • Inc. acquires

Lorillard RJ Reynolds and Brown & Williamson Tobacco merge Master Settlement Agreement signed Federal Excise Tax Increase and FDA Regulation enacted

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36.9 43.8

50

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Marlboro Camel Winston Newport

Marlboro Long-Term Performance

+6.9pp

Source: MSAi Shipments; IRI/Capstone IRP and TRP; IRI/MSAi Note: IRI/MSAi was implemented to read market share in 2011. Share prior to that reflects estimates based on share changes derived from previous services. 12 For Investor Purposes Only - Barclays GCS Conference, Sept. 9, 2015

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1,081% 190% 330%

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

Total Shareholder Return 1998-2014

Source: Bloomberg 12/31/1997-12/31/2014 Note: Total shareholder return is simple price appreciation plus the reinvestment of the dividend as of the ex-dividend date. Excludes spin-offs. 13 For Investor Purposes Only - Barclays GCS Conference, Sept. 9, 2015

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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

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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

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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

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For Investor Relations Purposes Only

For Investor Purposes Only - Barclays Back-to-School Conference, Sept. 3, 2014

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  • U. S. Tobacco Manufacturers’ Profits

$11.8 $15.5

2009 2014 +5.5% CAGR

Source: ALCS estimates; other public company reports

$ in Billions

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74.8% 75.1% 75.6%

Q2 2013 Q2 2014 Q2 2015

Premium Segment Retail Share Performance

Source: IRI/MSAi 20 For Investor Purposes Only - Barclays GCS Conference, Sept. 9, 2015

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44.1%

Marlboro

Marlboro Retail Share Leadership

Source: IRI/MSAi, Cigarettes ending 6/30/15 (1H 2015)

Next 10 Largest Cigarette Brands = 43.0%

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Unmatched Brand Equity

70 Camel Newport Marlboro 70 Camel Newport Marlboro

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

Overall Equity Overall Opinion

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Cigarette Category Decline Rate Estimates

(5.0)% (3.5)% (3.0)% (4.0)% (3.5)% (0.5)%

2010 2011 2012 2013 2014 1H 2015

Source: ALCS estimates 23 For Investor Purposes Only - Barclays GCS Conference, Sept. 9, 2015

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Smokeable Products Strategy

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$3.3 $3.8

1H 2014 1H 2015

Smokeable Products Performance

Adjusted OCI* - $ in Billions

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

+14.3% 1H 2014 1H 2015

Adjusted OCI* Margins

+2.9pp

44.1% 47.0%

Marlboro’s Retail Share

+0.3pp 1H 2014 1H 2015

43.8% 44.1%

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$121.18 $127.08

1H 2014 1H 2015

Smokeable Products Segment Price Realization

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

Net Revenues Net of Excise Taxes /1000 Units*

+4.9%

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1954 1964 1974 1984 1994 2004

Marlboro Long-Term Retail Share Growth

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

44.1%

1H ‘15

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Active Digital Engagement with Adult Smokers

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Marlboro Retail Share Among Adult Smokers

35% 45% AS 21-29 Total Marlboro

Source: CATTS 6mm May'15 32 For Investor Purposes Only - Barclays GCS Conference, Sept. 9, 2015

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Marlboro App: Convenient Adult Smoker Interaction

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Increased Mobile Engagement

Mobile Logins - in Millions

10 2011 2014 ~+1,000%

Note: Total mobile interactions (Adult Smokers 21+) Source: PM USA 35 For Investor Purposes Only - Barclays GCS Conference, Sept. 9, 2015

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Marlboro’s Mobile Presence

Marlboro.com is among the leading CPG mobile websites.

Source: comScore, 1H 2015 36 For Investor Purposes Only - Barclays GCS Conference, Sept. 9, 2015

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Smokeless Products Category Adjusted Volume Growth

2,000 2009 2014

Source: IRI InfoScan, ALCS Estimate

~+5% CAGR

Note: Volume adjusted for trade inventory changes, calendar differences and product discontinuation.

Cans in Millions

As of June 30th, USSTC estimates that smokeless category volumes have grown ~3% on a trailing 12-month basis.

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Smokeless Products Strategy

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389.9 400.1

1H 2014 1H 2015

Smokeless Products Shipment Volume Performance

Source: Altria company reports

+2.6%

Note: Other includes Red Seal, Husky, Weyman’s Best and Marlboro Snus.

Reported Shipment Volume

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352.2 37.7 364.7 35.4

Copenhagen & Skoal Other 1H 2014 1H 2015 1H 2014 1H 2015 +3.5% (6.1)% Copenhagen & Skoal

Cans in Millions

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64.5% 64.9%

1H 2014 1H 2015

$524 $548

1H 2014 1H 2015

Smokeless Products Income Growth

Source: Altria company reports

+4.6%

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

Adjusted OCI* - $ in Millions Adjusted OCI* Margins

+0.4pp

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Copenhagen & Skoal Combined Retail Share

50.8% 51.1%

1H 2014 1H 2015

Source: IRI InfoScan

+0.3pp

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Smokeless Products Segment Performance

Source: Altria company reports as of Q2 2015

The two leading premium brands with over 51% combined retail share for the first half of 2015

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Copenhagen Retail Share Strength

26.0% 30.7%

2011 2014

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

~+1.6pp

Average Annual

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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 Grow new income streams with innovative tobacco products Maximize income from core premium tobacco businesses over the long term

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~100% ~150% ~50% <25%

2012 2013 2014 2015

Estimated U.S. E-Vapor Category Growth

Source: ALCS estimates

Consumer Expenditures Year over Year % Change

We estimate full-year 2015 consumer expenditures in the e-vapor category to be nearing ~$2.5 billion.

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  • Fullness of vapor
  • Familiar taste and form
  • Flavor variety
  • Dependable quality
  • Good battery life
  • Long-lasting cartridge
  • Reasonable value

E-Vapor Desired Attributes

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Nu Mark’s E-Vapor Portfolio

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MarkTen XL Features

  • Longer-lasting cartridge and battery
  • Familiar taste and form
  • More flavor variety

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Expanded Green Smoke Retail Presence

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Expansion of Agreement with PMI

  • Expanded agreement with Philip Morris International includes joint research,

development and technology-sharing agreement on e-vapor products.

  • This supplements the 2013 agreement with PMI.
  • The latest step in our ongoing portfolio approach to product development and

commercialization.

Note: Third-party trademarks are the property of their respective owners and are included for informational purposes only. 53 For Investor Purposes Only - Barclays GCS Conference, Sept. 9, 2015

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Innovative Products Portfolio Approach

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Regulatory Landscape

  • We support FDA extending its regulatory authority over all

tobacco products.

  • We believe FDA has an unprecedented opportunity to advance

public health goals.

  • Proposed regulations recognized a continuum of risk for different

tobacco products.

  • Implementation of a comprehensive tobacco harm reduction

strategy would be among the most meaningful actions FDA could take to reduce the health effects of tobacco use.

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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

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Alcohol Assets

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Wine Strategy

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$50 $62

1H 2014 1H 2015

Wine Segment Performance

Source: Altria company reports

OCI - $ in Millions

+24.0%

18.9% 21.8%

1H 2014 1H 2015

OCI Margins

+2.9pp

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For Investor Relations Purposes Only

For Investor Purposes Only - Barclays Back-to-School Conference, Sept. 3, 2014

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SABMiller Market Value

Source: Bloomberg as of 8.31.2015 Note: Market value as of 8.31.2015

$20.2

Aug-15

Market Value

($ in Billions)

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

2011 2014

Adjusted Equity Earnings*

($ in Millions) +8.3%

CAGR

$812 $1,031

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A Compelling Investment

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  • Diverse business

model

  • Strong balance sheet

and cash flow Return large amounts of cash to shareholders

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Dividend Payout Ratio

80.9% 79.7% 78.4% 73.2% 69.8% 60.7% 59.8% 56.6% 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 August 2014 annualized dividend 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 2014 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. Source: Bloomberg and Thomson First Call 63 For Investor Purposes Only - Barclays GCS Conference, Sept. 9, 2015

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An Attractive Dividend Yield

Source: Bloomberg

4.2% 2.2% 2.2%

Altria 10-year U.S. Treasury S&P 500

Altria’s dividend yield was higher than virtually all S&P Food, Beverage and Tobacco peers.

Note: as of August 31, 2015 64 For Investor Purposes Only - Barclays GCS Conference, Sept. 9, 2015

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Strong Dividend Growth

$1.36 $2.26

Aug-09 Aug-15 +8.8%

CAGR

Source: Altria company reports Note: Dividend shown annualized as of August 2009 and August 2015.

$ per Share

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Returning Value to Shareholders

$13.0 $3.1 $16.1

2012 to Q2 2015 Share Repurchase Dividend

Source: Altria company reports

In July 2015, Altria’s Board of Directors authorized a new $1 billion share repurchase program.

$ in Billions

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Investing For Our Future

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Earnings Per Share Performance

  • 50%
  • 40%
  • 30%
  • 20%
  • 10%

0% 10% 20% 30% 40% 50% 2008 2009 2010 2011 2012 2013 2014

Altria's Adjusted Diluted EPS* S&P 500 Operating EPS

Source: Altria company reports; Standard and Poor’s *For reconciliation of non-GAAP to GAAP measures visit altria.com

7.9% 4.6%

Altria's Adjusted Diluted EPS* S&P 500 Operating EPS

2007 to 2014 CAGR Annual % Change

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218% 63% 117%

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

Seven-Year Total Shareholder Return

Source: Bloomberg 12/31/2007-12/31/2014 Note: Total shareholder return is simple price appreciation plus the reinvestment of the dividend as of the ex-dividend date. Excludes spin-offs. 71 For Investor Purposes Only - Barclays GCS Conference, Sept. 9, 2015

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Regulation G Disclosure

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

altria.com

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