Altria Group, Inc.

Good day and welcome to the Altria Group 2025 Second Quarter and First Half Earnings Conference Call. Today's call is scheduled to last about one hour, including remarks by Altria's management and a question and answer session. In order to ask a question, please press star followed by the number one on your touchtone phone at any time. Representatives of the investment community and media on the call will be able to ask questions following the conclusion of the prepared remarks. I would now like to turn the call over to Mac Livingston, Vice President of Investor Relations for Altria Client Services. Please go ahead, sir.

Thanks, Leo. Good morning and thank you for joining us. This morning, Billy Gifford, Altria's CEO, and Sal Mancuso, our CFO, will discuss Altria's Second Quarter and First Half 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 2024. Our remarks contain forward-looking statements, including projections of future results. Please review the forward-looking and cautionary statement 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 our Board of Directors. We report our 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 these non-GAAP financial measures and reconciliations to the most comparable GAAP financial measures 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.

Billy Johnson Thanks, Mack. Good morning and thank you for joining us. In the second quarter, we continued the pursuit of our vision while maintaining our strong and profitable core businesses. In oral tobacco, OAN delivered strong performance and was the substantial driver of the segment's growth in the quarter. We continue to press for actions that will shape a fully regulated industry and provide expanded product choices for adult nicotine consumers. And we returned significant value to our loyal shareholders during the first half of the year with more than $4 billion delivered through dividends and share repurchases. Our operating companies delivered strong financial results in a dynamic marketplace, allowing us to raise the lower end of our 2025 guidance range. My remarks this morning will focus on second quarter and first half results from OAN, next steps for Enjoy and the state of the regulatory environment. I'll then turn it over to Sal, who will provide further detail on our business results and 2025 outlook. Let's begin with OAN and the nicotine pouch category. Oral nicotine pouches continue to be the primary growth driver of the estimated 11 percent increase in oral tobacco industry volume over the past six months. In the second quarter, oral nicotine pouches grew 10 share points year over year and now represent more than half of the category. Within this increasingly competitive environment, Helix continue to grow volume and share with OAN reported shipment volume increasing by 26.5 percent to 52.1 million cans versus the year ago period. OAN's retail share of the total oral tobacco category was 8.7 percent, an increase of 0.7 share points versus the prior year. Last year, Helix launched the It's OAN campaign to differentiate the OAN brand from competitive products, build emotional connections with its target audience and drive greater brand awareness. As part of the campaign rollout, the team used in-person activations to engage directly with adult consumers at action-packed events such as music festivals, NASCAR races, and premier golf tournaments. These -to-one interactions allow consumers to connect with brand representatives, gain deeper insights into the product, and experience the brand in a tangible, memorable way. In the first half of 2025, Helix reached over 170,000 adult tobacco consumers through these in-person activations. Helix's digital marketing channels amplified these experiences, reinforcing OAN's unique brand positioning across multiple touch points. In the second quarter, digital impressions more than doubled to approximately 190 million. As a result of these combined efforts and continued strong presence at retail, OAN brand awareness among adult tobacco consumers increased seven percentage points in the first half of 2025 versus a year ago. Helix will continue to focus on driving trial, building long-term equity, and increasing profitability. In fact, OAN's improving financial performance drove the majority of the oral segment's substantial profit growth for the quarter. Moving to our eVapor business and Enjoy, in June, the Patent, Trial, and Appeal Board did not agree with our argument to invalidate Jules' patent. While this is not the outcome we hoped for, we are actively exploring all potential next steps, including an appeal. Meanwhile, we completed the product design of a modified EnjoyA solution that we believe addresses all four distributed patents. Additionally, our product development teams are actively building a broader vapor portfolio of products that align with evolving expectations of today's consumers. Let's now turn to the state of regulation in the U.S. nicotine market, where we continue to believe significant progress needs to be made to fulfill the promise of tobacco harm reduction. For some time, we've been advocating for enforcement against products that have completely evaded the regulatory process and for an acceleration in FDA market authorizations to create a responsible marketplace of smoke-free products for all adult consumers. As it relates to enforcement, the flavored disposable market continues to drive eVapor category growth. At the end of the quarter, we estimated eVapor category included more than 20.5 million vapors, up over 1.9 million versus a year ago. During this same period, disposable vapors increased by an estimated 2.7 million to approximately 14.4 million. We continue to estimate that flavored eVapor disposable products, the majority of which we believe have evaded the regulatory process, represent more than 60 percent of the category. While this issue remains significant, we see signs that enforcement actions have picked up momentum. Key government officials at the Department of Health and Human Services and the FDA have publicly acknowledged the severity of the issue, and there is bipartisan support in Congress for urgent action across government agencies. We're encouraged by recent actions by Customs and Border Protection, FDA, state legislatures, and state attorneys general to prevent the importation of illicit eVapor products evading the regulatory system. Key actions from these stakeholders this year include FDA strengthening its import policy, reducing the possibility of imported vapor products bypassing FDA review, tighter border controls, which have resulted in a higher percentage of rejections of properly declared eVapor shipments from China than ever before, FDA issuing warning letters to 24 importers responsible for importing illicit products, and state attorneys general issuing warnings and bringing civil litigation addressing illicit Chinese vapor importers and distributors. The net effect of these recent actions is that it is becoming more difficult to import illicit eVapor products. In fact, some wholesalers have recently reported supply shortages of some of the most popular disposable brands, citing enforcement at the ports and tariffs. We believe these changes have prompted eVapor importers to mis-declare their shipments, resulting in illicit products entering the country undetected. While we're seeing some progress, more consistent action needs to be taken to deliver sustainable long-term results. We continue to advocate at the federal and state levels for more coordinated and decisive actions against illicit actors. Illicit eVapor enforcement is also a key component of the FDA's decision to implement a new regulatory system. There is only one area where the regulatory system is failing. The FDA must accelerate product authorizations across all tobacco categories. By law, the FDA is required to review and decide PMTAs within 180 days. We have waited over five years for a decision on some product applications. We believe these steps are critical to establishing a nicotine marketplace that offers adult smokers expanded choices in smoke-free products and gives consumers comfort in the oversight of the products available to them. In summary, we remained encouraged by the short term performance of our operating companies in challenging marketplace conditions. Our highly cash generative core businesses supported continued investments in our smoke-free products. And the increased focus by key stakeholders on cleaning up the illicit market reinforces our confidence in the long-term outlook for our smoke-free portfolio. I'll now turn it over to Sal to provide more detail on our business results.