Altria Group, Inc.

and welcome to the Altria Group 2022 First Quarter Earnings Conference Call. Today's call is scheduled to last about an hour, including remarks by Altria's management and a question and answer session. Representatives of the investment community and media on the call will be able to ask questions following the conclusion of their prepared remarks. I would now like to turn the call over to Mack Livingston, Vice President of Investor Relations for Altria Client Services. Please go ahead, sir.

Thanks, Gretchen. Good morning, and thank you for joining us. This morning, Billy Gifford, Altria's CEO, and Sal Mancuso, our CFO, will discuss Altria's first quarter business results. Earlier today, we issued a press release providing our results. The release, presentation, quarterly metrics, and our latest corporate responsibility reports are all available at altria.com. During our call today, unless otherwise stated, We're comparing results to the same period in 2021. Our remarks contain forward-looking and cautionary statements and projections of future results. Please review the forward-looking and cautionary statements section at the end of today's earnings release for various factors that could cause actual results to differ materially from projections. Future dividend payments and share repurchases remain subject to the discretion of Altria's board. Altria reports its financial results in accordance with U.S. generally accepted accounting principles. Today's call will contain various operating results on both a reported and adjusted basis. Adjusted results exclude special items that affect comparisons with reported results. Descriptions of the non-GAAP financial measures and reconciliations are included in today's earnings release and on our website at altria.com. Finally, all references in today's remarks to tobacco consumers or consumers within a specific tobacco category or segment refer to existing adult tobacco consumers 21 years of age or older. With that, I'll turn the call over to Billy.

Thanks, Mac. Good morning and thank you for joining us. We're off to a strong start to the year and believe our businesses are on track to deliver against their full-year plans. Our tobacco businesses perform well in a challenging macroeconomic environment, and we continue to make progress toward our vision to responsibly lead the transition of adult smokers to a smoke-free future. Let's start with a review of the macroeconomic backdrop and its impact on U.S. tobacco consumers. In January, the surge of Omicron cases disrupted consumers' routines and purchasing patterns. resulting in short-term decreases in retail trips and overall tobacco volumes. Increased inflation throughout the quarter pressured discretionary income levels as the consumer price index reached a four-year high in March and higher gas prices were exacerbated by the Russian invasion of Ukraine. However, the rise in inflation was partially offset by improved employment metrics and increased wage growth for some consumers. The unemployment rate was 3.6% at the end of March, down from 6% in March of 2021. Total wages grew by nearly 5% in the first quarter, compared to 8% average inflation. For some occupations, wage growth outpaced inflation, including occupations that over-indexed toward tobacco consumers. For example, wages grew 11% for production-related jobs and nearly 10% for jobs pertaining to transportation and materials moving. Additionally, the pressures of inflation were also offset for some consumers by higher federal income tax refunds. In the first quarter, the average federal income tax refund payment issued by the IRS increased by approximately 12%. We do expect inflation to persist for the balance of the year, however, and we will continue to monitor its effect on tobacco consumers. Moving to our consolidated results, Altra delivered strong first quarter performance in this dynamic environment, growing adjusted diluted earnings per share by 4.7%. Adjusted EPS growth was primarily driven by higher operating companies' income and fewer shares outstanding, partially offset by lower adjusted earnings from our ABI investment. In the smokable product segment, we continued to execute our strategy on maximizing profitability in combustibles while appropriately balancing investments in Marlboro with funding the growth of smoke-free products. First quarter, smokable segment adjusted OCI increased 5.7%, and Marlboro retail share was stable sequentially. We believe Marlboro's share performance through this period reflects its continued strong brand equity among smokers. We believe the investments we have made behind data analytics and revenue growth management provide us with the right tools to support the smokable strategies. These tools include PMUSA's Manufactured Supported Off-Invoice Program, which enables more efficient resource deployment for Marlboro. as well as retail trade programs with multiple options designed to provide retailers with store-level solutions for our brands. We believe these capabilities position our smokable businesses to navigate the current environment and to continue to deliver strong profitability in support of our vision and shareholder returns. Turning to our smoke-free product portfolios, We're excited by the performance of OIN in oral nicotine pouches. OIN reported shipment volume nearly doubled to 18 million cans in the first quarter. At retail, OIN share of oral tobacco increased by 2.5 percentage points, reaching 4.1%. As we shared at CAGNI, OIN share growth has been primarily driven by repeat purchases from existing OIN consumers and increased tobacco consumer trials. We are encouraged that these dynamics continued into the first quarter. At the category level, oral nicotine pouches reached a total oral tobacco retail share of 19.3 percentage points in the first quarter. The category grew 6.1 share points year-over-year, with OANN representing more than 40% of this growth. We believe the brand continues to be a highly competitive product in this space, and it continues to perform well in all regions of the U.S. As a reminder, our premarket tobacco applications for the entire ORM portfolio remain pending with the FDA, and we believe the FDA should determine that the marketing of these products is appropriate for the protection of public health. We are also actively working on modified risk tobacco product applications for ONN. We believe MRTP claims would provide impactful points of differentiation for the brand and important tools in educating and ultimately transitioning smokers to less harmful products. In eVapor, we estimate the total category volume increased 10% versus the year-ago period and increased 4% sequentially as a result of increased volume in the vape store channel. Our minority investment in Juul remains subject to challenge by the U.S. Federal Trade Commission. In February, an administrative law judge found in favor of Altria and Juul and dismissed the entirety of the FTC's claims. The FTC is appealing that decision to the FTC. Any decision by the FTC is subject to appeal in federal appellate court. In heated tobacco, our teams are continuing to work with PMI on ICO's reentry plans, and we will keep you informed on developments as circumstances warrant. There is no change to our expectations regarding ICO's product availability. Moving to the regulatory environment. President Biden signed a bill last month to bring synthetic nicotine products under FDA regulation by updating the definition of a tobacco product within the Food, Drug, and Customatic Act to include any product that contains nicotine, including synthetic nicotine products. The bill allows manufacturers of synthetic nicotine products currently on market to keep those products on the market for 120 days after the bill's enactment. provided that they have submitted a PMTA for those products by May 14th. Unless the FDA grants a PMTA within that time period, the products become unlawful and subject to the FDA's enforcement discretion. The bill creates a certain exception for this review period for those circumstances where the FDA issued a denial of a marketing order and the manufacturer thereafter marketed the product with synthetic nicotine. We believe this legislation is an important step toward the creation of a responsible, smoke-free marketplace consisting solely of FDA-authorized products. In combustibles, the FDA has indicated that it is on track to issue proposed product standards this month regarding mint ball in cigarettes and characterizing flavors in cigars. As a reminder, the FDA rulemaking process has multiple steps and provides several opportunities for stakeholders to provide input. Underage smoking is at the lowest level in a generation, and efforts to prohibit the legal sale of products to adults, as we have seen with alcohol prohibition and cannabis criminalization, have consistently failed. Prohibition pushes products into illegal markets that lack regulatory oversight and lack underage prevention. We believe equitable harm reduction is a better public policy approach to reducing smoking and improving public health. This means manufacturers must develop and the FDA authorize an array of potentially reduced harm alternatives that can appeal to and transition smokers across all backgrounds and demographic groups. We expect to be actively engaged in providing a perspective to the FDA throughout the process. We remain optimistic about the future of harm reduction in the U.S. We believe we have an unprecedented opportunity to lead the way in shifting millions of smokers away from cigarettes. We're encouraged that the FDA has started authorizing smoke-free products. But more needs to be done to build a marketplace of authorized, reduced harm products that smokers can consider as they move away from cigarettes. Our tobacco businesses delivered extraordinary results in a challenging and dynamic environment. And this could not be done without the passion, resiliency, and fierce determination of our employees. Their talent and dedication continue to give me confidence in our ability to move beyond smoking. I'll now turn it over to Sal to provide more detail on the business environment and our results.