Altria Group, Inc.

Good day and welcome to the Altria Group 2026 first quarter 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. If you'd like to ask a question during this time, and if you're joined by the webinar, please use the raise hand icon, which can be found at the bottom of your webinar application. If you have joined by phone, please dial star nine to raise your hand. And when prompted, star six will allow you to mute and unmute. 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. Please go ahead, sir.

Thanks, Ehalani. Good morning, and thank you for joining us. This morning, Billy Gifford, Altria's CEO, and Sal Mancuso, our CFO, will discuss Altria's 2026 first quarter business results. Earlier today, we issued a press release providing our results. The release, presentation, and quarterly metrics are all available at altria.com. During our call today, unless otherwise stated, we're comparing results to the same period in 2025. Our remarks contain forward-looking statements, including 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 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 nicotine consumers or consumers within a specific nicotine category or segment refer to existing adult nicotine 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 delivered a strong start to the year, growing adjusted diluted EPS by 7.3% in the first quarter. OUR HIGHLY CASH GENERATIVE BUSINESSES SUPPORTED SIGNIFICANT RETURNS TO SHAREHOLDERS THROUGH DIVIDENDS AND SHARE REPURCHASES WHILE WE CONTINUED TO INVEST IN SUPPORT OF OUR VISION. OUR SMOKEABLE PRODUCT SEGMENT GENERATED STRONG INCOME GROWTH. MARBLE STRENGTHENED ITS POSITION IN THE PREMIUM SEGMENT. AND PMUSA CONTINUED TO EXECUTE ITS TOTAL PORTFOLIO STRATEGY WITH DISCIPLINE. In the oil tobacco product segment, Orn performed well in a highly competitive marketplace, and Helix expanded Orn Plus nationwide. My remarks this morning will focus on first quarter performance from Orn and an update on the state of the eVapor category. I'll then turn it over to Sal, who will provide further detail on our business results and financial outlook. Let's begin with on and the nicotine pouch category. Over the past six months, oral nicotine pouches drove the estimated 9.5% increase in total oral tobacco industry volume. In the first quarter, the nicotine pouch category grew 9.1 share points and now represents more than 58% of total oral tobacco. Against this backdrop, Helix delivered solid results in a highly competitive environment. Reported shipment volume for the total OEM portfolio grew nearly 18% to over 46 million cans in the first quarter, reflecting continued demand for OEM Classic and the pipeline shipments for the OEM Plus national expansion. At retail, On and On Plus together represented 7.8% of the total oral tobacco category, down 0.8 share points year over year, and up 0.2 share points sequentially. We began shipping On Plus nationwide in March, and at the end of the first quarter, it was available in approximately 100,000 stores, representing 85% of nicotine pouch category volume. OnePlus is the first and only product authorized under the FDA's pilot program aimed at streamlining PMTA reviews for certain oral nicotine pouches. The brand is currently available in three flavors across two nicotine strengths and features our proprietary NICCO silk technology. To support the ARM Plus expansion, Helix recently launched a new retail trade program to strengthen execution across the full ARM portfolio. The program is focused on increasing visibility and securing incremental fixture space to support ARM Plus today and future innovations over time. Today, the Helix trade program has secured premium retail positioning in contracted stores representing approximately 90% of Helix volume. Additionally, OnePlus is prominently featured across key retail touchpoints with coordinated signage from curb to counter. OnePlus is supported by marketing that highlights the product experience, including visuals that showcase the pouch itself, communicate comfort, and reinforce its positioning as the softest pouch on the planet. These materials are designed to give nicotine consumers a clear understanding of how the pouch looks, feels, and fits. This messaging is complemented by initiatives such as in-person events, brand partnerships, paid social media, and streaming audio that aim to increase awareness, drive trial, and further strengthen on-brand equity. Importantly, these efforts are grounded in responsibility with safeguards to limit reach to underage audiences and with a strong focus on regulatory compliance. Through these actions, we believe we can position ONPLUS as a differentiated offering for adult nicotine consumers and responsibly grow the brand over the long term. On the regulatory front, the FDA is reviewing applications for ONPLUS mint, wintergreen, and tobacco in 12 milligram strengths under its POLIT program. And we have submitted applications for six additional flavor varieties across three nicotine strengths. We believe the science and evidence supporting all of these applications is compelling and provides a basis for FDA authorization within the 180-day statutory timeline. Let's now turn to the eVapor category. While illicit flavored disposable products remain prevalent, after several years of rapid growth, we began to see signs of moderation in the back half of 2025. We believe increased enforcement activity and supply-related marketplace disruption have slowed demand for these products, and those dynamics continued into the first quarter. At the end of March, we estimate there were approximately 20.5 million adult vapers in line with the year-ago period. Over the same timeframe, the estimated number of disposable e-vapor consumers declined modestly. Taken together, we believe these developments suggest early indications that the category's prior growth trajectory, driven largely by illicit flavored disposable products, may be evolving. From an enforcement perspective, we continue to see signs of a commitment from enforcement agencies and incremental progress. During the quarter, federal agencies worked alongside local law enforcement to combat illicit products, including a large-scale enforcement action in Northern Virginia supported by the Drug Enforcement Administration. In addition, in states where product directories are in place and properly enforced, we are seeing evidence that these frameworks are helping to reduce the presence of illicit products in tract channels. In our view, consumer demand for evapour products demonstrates the potential for the category's role in tobacco harm reduction in the U.S. However, progress continues to be constrained by the limited number of FDA authorized products. We see a clear pathway to restoring order and advancing harm reduction anchored in a more efficient and predictable authorization process that supports reasonable, responsible innovation and establishes a compliant legal marketplace of eVapor products. When combined with sustained enforcement, we believe this would allow compliant manufacturers to provide adult nicotine consumers with authorized, high-quality products that are appropriate for the protection of public health. Overall, we delivered a strong start to the year.