Q4 2024 Altria Group Inc Earnings Call

January 30, 2025

So good morning, and thank you for joining us this morning, Billy Gifford, <unk>, CEO and Sal Mancuso, our CFO will discuss <unk> fourth quarter and full year business results.

And Sal Mancuso, our CFO will discuss <unk> fourth quarter and full year 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 <unk> Dot com.

During our call today, unless otherwise stated we're comparing results to the same period in 2023.

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.

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.

Today's call will contain various operating results on both a reported and adjusted basis.

Results exclude special items that affect comparisons with reported results disc.

Adjusted results exclude special items that affect comparisons with reported results descriptions.

Descriptions of these non-GAAP financial measures and reconciliation to the most comparable GAAP financial measures are included in today's earnings release and on our website at <unk> Dot com.

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 <unk> Dot 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 will turn the call over to bill.

Finally, all references in today's remarks to tobacco consumers for consumers within a specific tobacco category or segment refer to existing adult tobacco consumers 21 years of age or older with that I will turn the call over to Billy.

Bill: Thanks, Matt Good morning, and thank you for joining us.

Bill: 2024 was another pivotal year for our care.

Billy: Thanks, Matt Good morning, and thank you for joining us.

Bill: Headlined by meaningful progress toward our vision.

Billy: 2024 was another pivotal year for Altair.

Bill: <unk> financial results.

Billy: Headlined by meaningful progress toward our vision.

Bill: And significant cash returns to our shareholders.

Billy: <unk> financial results.

Bill: Our company's leading brands and talented teams.

Billy: And significant cash returns to our shareholders.

Bill: Enabled our core tobacco businesses.

Billy: Our company's leading brands and talented teams enabled our core tobacco businesses to deliver solid income growth and margin expansion.

Bill: To deliver solid income growth and margin expansion.

Bill: While we strategically invested in our future.

Bill: For the full year, we grew adjusted diluted earnings per share by three 4% and.

Billy: While we strategically invested in our future.

Billy: For the full year, we grew adjusted diluted earnings per share by three 4%.

Bill: <unk> continued our long history of rewarding shareholders with over $10 2 billion in.

Billy: And continued our long history of rewarding shareholders with over $10 2 billion in.

Bill: In dividends and share repurchases.

Bill: As the year progressed, our innovative smoke free products enjoying on.

Billy: In dividends and share repurchases.

Billy: As the year progressed, our innovative smoke free products enjoying on.

Bill: Demonstrated encouraging performance through volume and share growth in their respective categories.

Billy: Demonstrated encouraging performance through volume and share growth in their respective categories.

Bill: And we hit meaningful milestones that helped solidify our smoke free portfolio.

Billy: And we hit meaningful milestones that helped solidify our smoke free portfolio.

Bill: And position us for sustained success in the U S nicotine space, including.

Billy: And position us for sustained success in the U S nicotine space, including.

Bill: Enjoy receiving the first and only marketing granted orders.

Bill: The FDA for <unk> E vapor products.

Enjoy receiving the first and only marketing granted orders from the FDA for menthol E vapor products.

Bill: Submitting PMT applications to the FDA for.

Bill: For next generation enjoy and on products.

Billy: Submitting PMT applications to the FDA for.

Bill: Continuing preparations to commercialized plume through our joint venture with J T.

Billy: For next generation enjoy and on products.

Billy: Continuing preparations to commercialized plume through our joint venture with J T.

Bill: And advocating for a responsible and well regulated marketplace, including stepped up enforcement against illicit market activity.

Billy: And advocating for a responsible and well regulated marketplace, including stepped up enforcement against illicit market activity.

Bill: My remarks. This morning will focus on our view of the U S nicotine space.

Billy: My remarks. This morning will focus on our view of the U S nicotine space.

Bill: Smoke free progress and our earnings guidance for 2025.

Billy: Smoke free progress.

Sal: I'll, then hand, it over to Sal who.

Billy: And our earnings guidance for 2025.

Sal: We'll provide an update on consumer and industry dynamics.

Billy: I'll, then hand, it over to Sal, who will provide an update on consumer and industry dynamics.

Sal: Further detail on our smoke smokable business.

Sal: <unk> financial results.

Billy: Further detail on our smoke smokable business.

Sal: Let's begin with the operating environment and our view of the nicotine space.

Speaker Change: Financial results.

Speaker Change: Let's begin with the operating environment and our view of the nicotine space.

Sal: The potential for tobacco harm reduction in the U S is significant.

Speaker Change: The potential for tobacco harm reduction in the U S is significant.

Sal: And consumers are seeking smoke free alternatives at a faster pace than we've seen historically.

Speaker Change: And consumers are seeking smoke free alternatives at a faster pace than we've seen historically.

Sal: In fact over the past year the.

Sal: The estimated number of adult consumers and the E vapor and oral tobacco categories grew to approximately $28 million.

Speaker Change: In fact over the past year, the estimated number of adult consumers and the E vapor and oral tobacco categories grew to approximately $28 million.

Sal: Nearly as large as the adult smoker population.

Speaker Change: Nearly as large as the adult smoker population.

Sal: We estimate that smoke free alternatives represented approximately 45% of the total nicotine space.

Speaker Change: We estimate that smoke free alternatives represented approximately 45% of the total nicotine space.

Sal: Up five percentage points from the prior year.

Sal: For the total nicotine space industry equivalence nicotine volumes increased for the second consecutive year and grew by approximately 2% over the past five years on a compounded annual basis.

Speaker Change: Up five percentage points from the prior year.

Speaker Change: For the total nicotine space industry equivalence nicotine volumes increased for the second consecutive year and grew by approximately 2% over the past five years on a compounded annual basis.

Sal: The growing adoption of smoke free alternatives is encouraging and directly aligned with our vision and the growth aspirations.

Speaker Change: The growing adoption of <unk>.

Speaker Change: Free alternatives is encouraging and directly aligned with our vision and the growth aspirations.

Sal: Our smokefree businesses.

Sal: In addition decades of deliberate actions to prevent youth tobacco use are yielding results.

Speaker Change: Of our Smokefree businesses.

Speaker Change: In addition, <unk>.

Speaker Change: <unk> of deliberate actions to prevent youth tobacco use are yielding results.

Sal: And under age tobacco usage rates are at historic lows.

Speaker Change: And tobacco usage rates.

Sal: Together these trends are very encouraging for public health and the harm reduction opportunity.

Speaker Change: At historic lows.

Speaker Change: Together these trends are very encouraging for public health and the harm reduction opportunity.

Sal: However, the primary driver of industry and smoke free growth.

Speaker Change: However, the primary driver of industry and smoke free growth continues to be the widespread availability of illicit disposable E vapor products.

Sal: Continues to be the widespread availability of illicit disposable E vapor products.

Sal: Which is jeopardizing the long term opportunity for tobacco harm reduction.

Speaker Change: Which is jeopardizing the long term opportunity for tobacco harm reduction.

Sal: We estimate that the E vapor category grew by approximately 30% in 2024.

Speaker Change: We estimate that the E vapor category grew by approximately 30% in 2024.

Sal: And that illicit products represent more than 60% of the category.

Speaker Change: And that illicit products represent more than 60% of the category.

Sal: At year end, we estimate that there were $20 million papers up nearly 20% from the prior year.

Speaker Change: At year end, we estimate that there were $20 million papers up nearly 20% from the prior year.

Sal: Driven exclusively by disposable vapors.

Sal: Our data also show that approximately 40% of the growth in disposable vapors came from those with no prior cigarette usage.

Speaker Change: Driven exclusively by disposable vapors.

Speaker Change: Our data also show that approximately 40% of the growth in disposable vapors came from those with no prior cigarette usage.

Sal: It has become clear that two markets exist in the U S.

Speaker Change: It has become clear that two markets exist in the U S.

Sal: One for those who operate within the regulatory framework.

Speaker Change: One for those who operate within the regulatory framework.

And one for those who flagrantly violate and obey the rules.

Speaker Change: And one for those who flagrantly violate and obey the rules.

Sal: In the simplest terms.

Sal: We believe the regulatory structure is broken.

Speaker Change: Yes.

Speaker Change: In the simplest terms.

Sal: The tobacco marketplace is not operating that Congress intended.

Speaker Change: We believe the regulatory structure is broken.

Speaker Change: And the tobacco marketplace is not operating that Congress intended.

Sal: The FDA has not authorized enough smoke free products to meet consumer demand with legal products.

Speaker Change: The FDA has not authorized enough smoke free products to meet consumer demand with legal products.

Sal: And regulators are not holding bad actors accountable.

Sal: Illicit product manufacturers distributors and retailers have yet to experience any material consequences.

Speaker Change: And regulators are not holding bad actors accountable.

Speaker Change: Illicit product manufacturers distributors and retailers have yet to experience any material consequences.

Sal: For violating federal laws and regulations.

Sal: This dynamic continues to make the operating environment challenging for.

Speaker Change: For violating federal laws and regulations.

Speaker Change: This dynamic continues to make the operating environment challenging.

Sal: For responsible manufacturers and retailers and is confusing for consumers seeking FDA authorized products.

For responsible manufacturers and retailers and is confusing for consumers seeking FDA authorized products.

Sal: In 2023, we introduced our 2028 enterprise goals from Morley clear to more clearly define where we are headed.

Speaker Change: In 2023, we introduced our 2028 enterprise goals to morally to more clearly define where we are headed.

Sal: We believed our deep understanding of adult tobacco consumers are comprehensive smoke free portfolio and our industry, leading capabilities would help make them a reality.

Speaker Change: We believed our deep understanding of adult tobacco consumers are prehensile smoke free portfolio and our industry, leading capabilities would help make them a reality.

Sal: When we established these goals we were aware of a small illicit E vapor market.

Speaker Change: When we established these goals we were aware of a small illicit E vapor market.

Sal: Not dissimilar from illicit markets and other tobacco categories throughout our history.

Speaker Change: Not dissimilar from illicit markets and other tobacco categories throughout our history.

Sal: However, the illicit E vapor market has grown to a size and scale beyond our expectations.

Speaker Change: However, the illicit E vapor market has grown to a size and scale.

Sal: We believe this dynamic compromises our ability to achieve our 2028 smoke free volume and revenue goals.

Speaker Change: And our expectations.

Speaker Change: We believe this dynamic compromises our ability to achieve our 2028 smoke free volume and revenue goals.

Sal: In addition, we believe it compromises our ability to achieve the enjoy specific financial targets, we established in connection with that transaction.

Speaker Change: In addition, we believe it compromises our ability to achieve the enjoy specific financial targets, we established in connection with that transaction.

Sal: As a result, we are reassessing, the smoke free goals and enjoy targets.

Speaker Change: As a result, we are reassessing, the smoke free goals and enjoy targets.

Sal: We anticipate providing updates when we have more clarity on how the legitimate E vapor market may evolve.

Speaker Change: And anticipate providing updates when we have more clarity on how the legitimate E vapor market may evolve.

Sal: We will be looking for signs of material progress.

Sal: As a decline in the illicit growth and the growth of illicit products.

Speaker Change: We will be looking for signs of material progress.

Speaker Change: Such as a decline in the holistic growth and the growth of illicit products.

Sal: A meaningful increase in the number of illicit products <unk>.

Sal: Prevented from entering the U S.

Speaker Change: A meaningful increase in the number of illicit products.

Sal: And Doj are state Ags, bringing litigation against illicit manufacturers distributors and importers.

Speaker Change: Prevented from entering the U S.

Speaker Change: And Doj are state Ags, bringing litigation against illicit manufacturers distributors and importers.

Sal: Encouragingly earlier this month nine state Ags and the district of Columbia.

Speaker Change: Encouragingly earlier this month nine state Ags and the district of Columbia.

Sal: Various actions against the illicit E vapor importers distributors and retailers.

Speaker Change: Various actions against the illicit E vapor importers distributors and retailers.

Sal: We also believe the FDA can restore order to the market by authorizing more PMT as to establish a legal market of alternatives.

Speaker Change: We also believe the FDA can restore order to the market by authorizing more pmk's.

Sal: For consumers.

Speaker Change: To establish a legal market of alternatives.

Sal: And by partnering with other federal agencies to.

Speaker Change: For consumers and.

To prevent Melissa products from entering the country.

Speaker Change: And by partnering with other federal agencies to.

Sal: I am optimistic that these issues can and will be addressed.

Speaker Change: To prevent illicit products from entering the country.

Speaker Change: I am optimistic that these issues can and will be addressed.

Sal: Let me be clear, we remain steadfast in our commitment to our vision and to building a portfolio of FDA authorized smoke free products for adult smokers and adult consumers.

Speaker Change: Let me be clear, we remain steadfast in our commitment to our vision and to building a portfolio of FDA authorized smoke free products for adult smokers and adult consumers.

Sal: Currently using smoke free products.

Sal: This update to our 2028 enterprise goals does not impact our corporate financial goals.

Speaker Change: Currently using smoke free products.

Speaker Change: This update to our 2028 enterprise goals.

Sal: For long term growth goals.

Speaker Change: Does not impact our corporate financial goals.

Sal: And our progress on our goals can be found in the earnings release, we issued this morning.

Speaker Change: For long term growth goals.

Speaker Change: And our progress on our goals can be found in the earnings release, we issued this morning.

Sal: Let's now transition to our smoke free performance beginning with enjoy.

Speaker Change: Let's now transition to our smoke free performance beginning with enjoy.

Sal: 2024 was a year of growth and learning for enjoy and we are pleased with its performance in the context of the broader E vapor market.

Speaker Change: 2024 was a year of growth and learning for enjoy and we are pleased with its performance in the context of the broader E vapor market is.

Sal: <unk> enjoyed grew volume and share in a competitive pod segment.

Speaker Change: <unk> enjoyed grew volume and share in a competitive part segment.

Sal: Enjoys progress was driven by several actions taken throughout the year, which I'll briefly highlight.

Speaker Change: Enjoys progress was driven by several actions taken throughout the year, which I'll briefly highlight.

Sal: In 2024 and Joy.

Sal: Expanded distribution a base to over 100000 stores.

Speaker Change: In 2024 and Jordan.

Speaker Change: Expanded distribution a base to over 100000 stores.

Sal: Secured premium position at retail and more than 80% of contracted stores through enjoys first trade program.

Speaker Change: Secured premium position at retail and more than 80% of contracted stores through enjoys first trade program.

Sal: Executed a variety of trial generating activities with compelling results.

Speaker Change: Executed a variety of trial generating activities with compelling results.

Sal: And introduced a new brand equity campaign with impactful consumer messaging.

Speaker Change: And introduced a new brand equity campaign with impactful consumer messaging.

As a result of these efforts enjoy consumable shipment volume grew by more than 15% to $12 8 million units in the fourth quarter.

Speaker Change: As a result of these efforts enjoy consumable shipment volume grew by more than 15% to $12 8 million units in the fourth quarter.

Sal: Consumables shipment volume for the full year was 46 6 million units.

To deliver solid income growth and margin expansion.

Speaker Change: Consumables shipment volume for the full year was 46 6 million units.

Sal: And enjoyed device shipment volume for the fourth quarter grew by more than 22% to $1 1 million units.

Speaker Change: And enjoy device shipment volume for the fourth quarter grew by more than 22% to $1 1 million units.

Sal: <unk> was 5 million units for the full year.

Sal: In the fourth quarter enjoys retail share of consumables was six four share points.

Speaker Change: And was 5 million units for the full year.

And continued our long history of rewarding shareholders with over $10 2 billion.

Speaker Change: In the fourth quarter enjoys retail share of consumables was $6 four share points.

Sal: Up two eight share points versus the year ago period.

In dividends and share repurchases.

Sal: Enjoy grew its share of consumables by two tenths of a share point sequentially.

Speaker Change: Up two eight share points versus the year ago.

As the year progressed, our innovative smoke free products enjoying on.

Speaker Change: Both period.

Speaker Change: Enjoy grew its share of consumables by two tenths of a share point sequentially.

Demonstrated encouraging performance through volume and share growth in their respective categories.

Sal: While the retail price increased by over 20%, indicating strong demand for the brand.

Speaker Change: While the retail price increased by over 20%, indicating strong demand for the brand.

And we hit meaningful milestones that helped solidify our smoke free portfolio.

Sal: Before moving on I'll mentioned, the litigation before the U S International Trade Commission.

And position us for sustained success in the U S <unk> space, including.

Speaker Change: Before moving on I'll mentioned, the litigation before the U S International Trade Commission.

Sal: Yesterday, the ITC issued its final determination and joules case against injury.

Enjoy receiving the first and only marketing granted orders.

Speaker Change: Yesterday, the ITC issued its final determination and jewels case against injury.

Sal: The ITC agreed with duals claims with respect to the four patents in this case.

From the FDA for Menthol E vapor products.

Submitting PMT applications to the FDA for.

Speaker Change: The ITC agreed with duals claims with respect to the four patents in this case.

Sal: We disagree with the ITC decision and continue to believe that <unk> patents are invalid.

For next generation enjoy and on products.

Speaker Change: We disagree with the ITC decision and continue to believe that <unk> patents are invalid.

Continuing preparations for commercialized plume through our joint venture with J T.

Sal: And that <unk> does not infringe on these patents.

Sal: As a remedy the ITC issued an exclusion order and cease and desist orders barring the importation and sale of Ace.

And advocating for a responsible and well regulated marketplace, including stepped up enforcement against illicit market activity.

Speaker Change: And that <unk> does not infringe on these patents.

Speaker Change: As a remedy the ITC issued an exclusion order and cease and desist orders barring the importation and sale of Ace.

Sal: The ITC decision is currently under a 60 day review period by the office of the U S trade representative.

My remarks. This morning will focus on our view of the U S nicotine space.

Speaker Change: The ITC decision is currently under a 60 day review period by the office of the U S trade representative.

Smoke free progress.

Sal: Which could reject the itc's decision.

And our earnings guidance for 2025.

Sal: Enjoy continuous work when its product solution that addresses all of the patents at issue in the event the.

I'll, then hand, it over to Sal, who will provide an update on consumer and industry dynamics.

Speaker Change: Which could reject the ITC decision.

Speaker Change: Enjoy continuous work when its product solution that addresses all of the patents at issue in the event the.

Further detail on our smokers smokable business.

Sal: <unk> decision is not projected.

Financial results.

Sal: This decision would severely limit FDA authorized choices.

Speaker Change: <unk> decision is not projected.

Let's begin with the operating environment and our view of the nicotine space.

Sal: Including the only FDA authorized menthol E vapor products.

Speaker Change: This decision would severely limit FDA authorized choices.

The potential for tobacco harm reduction in the U S is significant.

Sal: And undermines public health is.

Speaker Change: Including the only FDA authorized menthol E vapor products and.

Sal: Especially in context of a market that is overrun by illicit products.

And consumers are seeking smoke free alternatives at a faster pace than we've seen historically.

Speaker Change: <unk> undermines public health.

Speaker Change: Especially in context of a market that is overrun by illicit products.

Sal: Regarding enjoys case against jewel.

In fact over the past year, the estimated number of adult consumers and the E vapor and oral tobacco categories grew to approximately $28 million.

Sal: In December the administrative law judge issued an initial determination.

Speaker Change: Regarding enjoys case against juul.

Sal: Net juul products did not infringe on enjoys patents.

Speaker Change: In December the administrative law judge issued an initial determination funds.

Sal: We have petitioned the ITC to review and reverse the Alj's initial determination.

Speaker Change: <unk> funding that juul products did not infringe on enjoys patents.

Nearly as large as the adult smoker population.

Speaker Change: We have petitioned the ITC to review and reverse the Alj's initial determination.

We estimate that smoke free alternatives represented approximately 45% of the total nicotine space.

Sal: We expect the ITC to issue a final determination in early April.

Speaker Change: We expect the ITC to issue a final determination in early April.

Up five percentage points from the prior year.

Sal: Moving to the oral tobacco category and.

Sal: In the fourth quarter or nicotine pouches grew nine six share points versus the prior year and represented over 45% of the category.

For the total nicotine space industry equivalence nicotine volumes increased for the second consecutive year and grew by approximately 2% over the past five years on a compounded annual basis.

Speaker Change: Moving to the oral tobacco category.

Speaker Change: In the fourth quarter or nicotine pouches grew nine six share points versus the prior year and represented over 45% of the category.

Sal: Oral nicotine pouches were the primary contributor to the estimated 8% increase in oral tobacco industry volume over the past six months.

Speaker Change: Oral nicotine pouches were the primary contributor to the estimated 8% increase in oral tobacco industry volume over the past six months.

The growing adoption of smoke free alternatives is encouraging and directly aligned with our vision and the growth aspirations.

Sal: <unk> continued to participate in the category growth as <unk> reported shipment volume grew by more than 44% year over year to nearly 44 million cans in the fourth quarter.

Of our Smokefree businesses.

Speaker Change: <unk> continued to participate in the category growth as <unk> reported shipment volume grew by more than 44% year over year to nearly 44 million cans in the fourth quarter.

In addition, <unk>.

Cadence of deliberate actions to prevent youth tobacco use are yielding results.

And under age tobacco usage rates.

Sal: <unk> performed well at retail growing its share of the oral tobacco category by two share points year over year to eight 9% in the fourth quarter.

At historic lows.

Together these trends are very encouraging for public health and the harm reduction opportunity.

Speaker Change: <unk> performed well at retail growing its share of the oral tobacco category by two share points year over year to eight 9% in the fourth quarter.

Sal: Foreign retail share was unchanged sequentially.

However, the primary driver of industry and smoke free growth continues to be the widespread availability of illicit disposable E vapor products.

Sal: Despite reduced promotional investments and increased competitive pressure.

Speaker Change: Foreign retail share was unchanged sequentially.

Sal: Consumer largely footworn continues to build and approximately 800000 consumers regularly purchase on in the fourth quarter on.

Speaker Change: Despite reduced promotional investments and increased competitive pressure.

Speaker Change: Consumer largely <unk> continues to build and approximately 800000 consumers regularly purchase on in the fourth quarter on.

Which is jeopardizing the long term opportunity for tobacco harm reduction.

Sal: An increase of more than 40% versus the prior year.

We estimate that the E vapor category grew by approximately 30% in 2024.

Sal: This growth included increased sourcing from competitive power brands.

Speaker Change: An increase of more than 40% versus the prior year.

And that illicit products represent more than 60% of the category.

Speaker Change: This growth included increased sourcing from competitive power brands.

Sal: <unk> performance was enabled by a variety of strategic investments helix made throughout the year, including.

At year end, we estimate that there were $20 million papers up nearly 20% from the prior year.

Speaker Change: <unk> performance was enabled by a variety of strategic investments helix made throughout the year, including.

A new trade program that created broader visibility.

Sal: And secured premium fixture position for nearly 80% of <unk> volume.

Driven exclusively by disposable vapors.

Speaker Change: A new trade program that created broader visibility.

Our data also show that approximately 40% of the growth in disposable vapors came from those with no prior cigarette usage.

Sal: And a fresh new look for on packaging and the its own equity campaign.

Speaker Change: And secured premium fixture position for nearly 80% of one's volume.

Speaker Change: And a fresh new look for on packaging and the its own equity campaign.

Sal: Further differentiate the brand.

As a result of these efforts <unk> achieved profitability for the first time in the fourth quarter ahead of its 2025 goal.

It has become clear that two markets exist in the U S.

Speaker Change: Further differentiate the brand.

One for those who operate within the regulatory framework.

Speaker Change: As a result of these efforts <unk> achieved profitability for the first time in the fourth quarter ahead of its 2025 goal.

Sal: And we anticipate helix will be profitable.

And one for those who flagrantly violate and obey the rules.

Sal: For the full year 2025.

Speaker Change: And we anticipate helix will be profitable.

In the simplest terms.

Sal: Outside of the U S on plus is competing in the nicotine pouch space in Sweden, and the United Kingdom.

Speaker Change: For the full year 2025.

We believe the regulatory structure is broken.

And the tobacco marketplace is not operating as Congress intended.

Speaker Change: Outside of the U S on plus is competing in the nicotine pouch space in Sweden, and the United Kingdom.

Sal: In both markets owned plus has been incremental to our total portfolio sourcing mainly from competitive brands.

The FDA has not authorized enough smoke free products to meet consumer demand with legal products.

Speaker Change: In both markets, one plus has been incremental to our total portfolio sourcing mainly from competitive brands.

And regulators are not holding bad actors accountable.

Sal: The one pluses flex Tek pouch offers a unique product experience.

Illicit product manufacturers distributors and retailers have yet to experience any material consequences.

Speaker Change: Glen Pluses Flex Tek pouch offers a unique product experience.

Sal: And we are encouraged by the steady momentum that own pluses building that retail.

Sal: And on E Commerce.

Speaker Change: And we are encouraged by the steady momentum that own buses building that retail.

For violating federal laws and regulations.

Sal: We are using consumer insights to inform our plans. So we are launching two new flavors raspberry lemon and Morten melin met in both markets to appeal to evolving consumer preferences.

This dynamic continues to make the operating environment challenging for.

Speaker Change: And on E Commerce.

Speaker Change: We are using consumer insights to inform our plans. So we are launching two new flavors raspberry lemon and Morten Melin net and both markets to appeal to evolving consumer preferences.

For responsible manufacturers and retailers and is confusing for consumers seeking FDA authorized products.

Sal: We look forward to bringing on plus to the U S wants to authorize.

In 2023, we introduced our 2028 enterprise goals to morally to more clearly define where we are headed.

Speaker Change: We look forward to bringing on plus to the U S. Once authorized.

Sal: In heated tobacco, we believe we are developing a portfolio of products.

Sal: That will appeal to adult smokers seeking innovative and available alternatives.

Speaker Change: In heated tobacco, we believe we are developing a portfolio of products.

We believed our deep understanding of adult tobacco consumers are comprehensive smoke free portfolio and our industry, leading capabilities would help make them a reality.

Sal: E vapor products.

Speaker Change: That will appeal to adult smokers seeking innovative and available alternatives.

Sal: We're moving forward with regulatory preparations to bring heated tobacco stick products to the U S through horizon, our joint venture with J T.

Speaker Change: E vapor products.

When we established these goals we were aware of a small illicit E vapor market.

Speaker Change: We are moving forward with regulatory preparations to bring heated tobacco stick products to the U S through horizon, our joint venture with J T.

Sal: During 2024, we made great progress towards our PMT and.

Not dissimilar from illicit markets and other tobacco categories throughout our history.

Sal: And accelerated our work on an MLR tpa submission for flu.

Speaker Change: During 2024, we made great progress towards our PMT.

However, the illicit E vapor market has grown to a size and scale.

Sal: We now expect to make a combined submission in midyear 2025.

Speaker Change: And accelerated our work on an MLR tpa submission for flu.

And our expectations.

We believe this dynamic compromises our ability to achieve our 2028 smoke free volume and revenue goals.

Speaker Change: We now expect to make a combined submission in midyear 2025.

Sal: And in December we commenced a small scale test launch of switch.

Speaker Change: And in December we commenced a small scale test launch of switch.

Sal: Our heated tobacco capsule product.

In addition, we believe it compromises our ability to achieve the injury specific financial targets, we established in connection with that transaction.

Sal: Through E Commerce and Great Britain.

Sal: We expect to use consumer insights from the test to further inform our strategies.

Speaker Change: Our heated tobacco capsule product.

Speaker Change: Through E Commerce and Great Britain.

Speaker Change: We expect to use consumer insights from the test to further inform our strategies.

Sal: Turning to our 2025 financial outlook.

As a result, we are reassessing, the smoke free goals and enjoy targets.

Sal: <unk>.

Sal: We remain committed to tobacco harm reduction in the U S.

Speaker Change: Turning to our 2025 financial outlook.

And anticipate providing updates when we have more clarity on how the legitimate E vapor market may evolve.

Sal: And continue to believe there is a significant opportunity.

Speaker Change: We can.

Speaker Change: We remain committed to tobacco harm reduction in the U S.

Sal: To ship millions of smokers to FDA authorized smoke free alternatives.

We will be looking for signs of material progress.

Speaker Change: And continue to believe there is a significant opportunity to.

Such as a decline in the holistic growth than the growth of illicit products.

Speaker Change: To ship millions of smokers to FDA authorized smoke free alternatives.

Sal: Our planned investment areas include market activities in support of our smoke free products.

A meaningful increase in the number of illicit products.

Speaker Change: Our planned investment areas include market activities in support of our smoke free products.

Sal: And continued smoke free product research development and regulatory preparations.

Vented from entering the U S.

And Doj or state Ags, bringing litigation against illicit manufacturers distributors and importers.

Speaker Change: <unk> continued to smoke free product research development and regulatory preparations.

Sal: We believe the external environment will remain dynamic in 2025.

Sal: And we will continue to monitor the economy, including the cumulative impact of inflation.

Speaker Change: We believe the external environment will remain dynamic in 2025.

Encouragingly earlier this month nine state Ags and the district of Columbia.

Speaker Change: And we will continue to monitor the economy, including the cumulative impact of inflation.

Sal: Tobacco consumer dynamics.

Sal: <unk> purchasing patterns and adoption of smoke free products.

Announced various actions against the illicit E vapor importers distributors and retailers.

Speaker Change: Tobacco consumer dynamics, Inc.

Sal: Melissa product enforcement.

Speaker Change: <unk> purchasing patterns and adoption of smoke free products.

Sal: And regulatory litigation and legislative developments.

We also believe the FDA can restore order to the market by authorizing more PMT as to establish a legal market of alternatives.

Speaker Change: Illicit product enforcement.

Sal: Considering these factors, we expect to deliver 2025 full year adjusted diluted EPS in a range of $5 22 to.

Speaker Change: And regulatory litigation and legislative developments.

Speaker Change: Considering these factors, we expect to deliver 2025 full year adjusted diluted EPS in a range of $5 22.

For consumers and.

And by partnering with other federal agencies to.

Sal: To $5 37.

To prevent illicit products from entering the country.

Sal: This range represents an adjusted diluted EPS growth rate of 2% to 5%.

I am optimistic that these issues can and will be addressed.

Speaker Change: To $5 37.

Speaker Change: This range represents an adjusted diluted EPS growth rate of 2% to 5% from a $5 12 set base.

Sal: From a $5 12 set base in 2024.

Let me be clear, we remain steadfast in our commitment to our vision and to building a portfolio of FDA authorized smoke free products for adult smokers and adult consumers.

Sal: Our guidance includes the impact of one fewer shipping day in 2025, which occurs in the fourth and the first quarter.

Speaker Change: In 2024.

Speaker Change: Our guidance includes the impact of one fewer shipping day in 2025.

Currently using smoke free products.

Sal: Assumes limited impact on combustible and E vapor product volumes from enforcement efforts.

Speaker Change: Occurs in the fourth and the first quarter.

This update to our 2028 enterprise goals.

Speaker Change: Assumes limited impact on combustible and E vapor product volumes from enforcement efforts in.

Sal: In the illicit E vapor market.

Does not impact our corporate financial goals.

Sal: And includes the reinvestment of anticipated cost savings related to our previously announced <unk>.

For long term growth goals.

Speaker Change: And the illicit E vapor market.

And our progress on our goals can be found in the earnings release, we issued this morning.

Speaker Change: And includes the reinvestment of anticipated cost savings related to our previously announced.

Sal: Optimize and accelerate initiatives.

Sal: In addition, the guidance range includes lower expected net periodic benefit income.

Let's now transition to our smoke free performance beginning with enjoy.

Speaker Change: Optimize and accelerate initiatives.

Speaker Change: In addition, the guidance range includes lower expected net periodic benefit income.

Speaker Change: I'd also like to welcome Rich Stoddart to our board of directors as announced this morning.

2024 was a year of growth and learning for enjoy and we are pleased with its performance in the context of the broader E vapor market is.

Speaker Change: Mr. <unk> extensive global marketing and executive leadership experience will be a tremendous asset.

Speaker Change: I'd also like to welcome Rich Stoddart to our board of directors as announced this morning.

Speaker Change: Mr. <unk> extensive global marketing and executive leadership experience will be a tremendous asset <unk>.

<unk> enjoyed grew volume and share in a competitive part segment.

Speaker Change: <unk>.

Speaker Change: I'll now turn it over to <unk> to provide additional detail on our business and financial results.

Enjoys progress was driven by several actions taken throughout the year, which I'll briefly highlight.

Speaker Change: <unk>.

Speaker Change: I'll now turn it over to Sal to provide additional detail on our business and financial results.

Speaker Change: Thanks Billy.

Speaker Change: Our core tobacco businesses generated solid financial performance again this year in a challenging external environment.

In 2020 for enjoying.

Sal: Thanks Billy.

Expanded distribution a base to over 100000 stores.

Sal: Our core tobacco businesses generated solid financial performance again this year in a challenging external environment.

Speaker Change: The smokable products segment delivered on its strategy of maximizing profitability, while appropriately balancing investments in Marlboro with funding the growth of smoke free products.

Secured premium position at retail and more than 80% of contracted stores through enjoys first trade program.

Sal: The smokable products segment delivered on its strategy of maximizing profitability, while appropriately balancing investments in Marlboro with funding the growth of smoke free products.

Executed a variety of trial generating activities with compelling results.

Speaker Change: The segment grew its adjusted operating companies income by five 5% in the fourth quarter and by 2% for the full year.

And introduced a new brand equity campaign with impactful consumer messaging.

Sal: This segment grew its adjusted operating companies income by five 5% in the fourth quarter and by 2% for the full year.

As a result of these efforts enjoy consumable shipment volume grew by more than 15% to $12 8 million units in the fourth quarter.

Speaker Change: Adjusted OCI margins expanded to 61, 2% and 61, 6% for the fourth quarter and full year respectively.

Sal: Like I said OCI margins expanded to 61, 2% and 61, 6% for the fourth quarter and full year respectively.

Consumables shipment volume for the full year was 46 6 million units.

Speaker Change: This performance was supported by robust net price realization of 11, 3% for the quarter and 10, 1% for the full year.

Sal: This performance was supported by robust net price realization of 11, 3% for the quarter and 10, 1% for the full year.

And enjoyed device shipment volume for the fourth quarter grew by more than 22% to $1 1 million units.

Speaker Change: Smokable products segment reported domestic cigarette volumes declined eight 8% in the fourth quarter.

And was 5 million units for the full year.

In the fourth quarter enjoys retail share of consumables was $6 four share points.

Sal: Smokable products segment reported domestic cigarette volumes declined eight 8% in the fourth quarter and 10, 2% for the full year.

Speaker Change: 10, 2% for the full year.

Speaker Change: When adjusted for calendar differences and trade inventory movements domestic cigarette volumes for the fourth quarter and the full year declined by an estimated 11%.

Up two eight share points versus the year ago period.

Enjoy grew its share of consumables by two tenths of a share point sequentially.

Sal: When adjusted for calendar differences and trade inventory movements domestic cigarette volumes for the fourth quarter and the full year declined by an estimated 11%.

Speaker Change: At the industry level, we estimate that adjusted domestic cigarette volumes declined by 8% in the fourth quarter and 9% for the full year.

While the retail price increased by over 20%, indicating strong demand for the brand.

At the industry level, we estimate that adjusted domestic cigarette volumes declined by 8% in the fourth quarter and 9% for the full year.

Before moving on I'll mentioned, the litigation before the U S International Trade Commission.

Speaker Change: As Billy described the pace of change within the nicotine space has been rapid over the past two years.

Yesterday, the ITC issued its final determination and joules case against injury.

Sal: As Billy described the pace of change within the nicotine space has been rapid over the past two years.

Speaker Change: These changes have resulted in significant shifts in adult tobacco consumer preferences with an increasing number of adult consumers entering the nicotine category, primarily through smoke free products.

The ITC agreed with duals claims with respect to the four patents in this case.

Sal: These changes have resulted in significant shifts in adult tobacco consumer preferences with an increasing number of adult consumers entering the nicotine category, primarily through smoke free products.

We disagree with the ITC decision and continue to believe that <unk> patents are invalid.

Speaker Change: We have been monitoring the ships and their effects on cigarette industry decline rates and are making two updates to our latest cigarette category decomposition estimates.

That <unk> does not infringe on these patents.

As a remedy the ITC issued an exclusion order and cease and desist orders barring the importation and sale of Ace.

Sal: We have been monitoring the ships and their effects on cigarette industry decline rates.

Sal: And we're making two updates to our latest cigarette category decomposition estimates.

Speaker Change: First.

The ITC decision is currently under a 60 day review period by the office of the U S trade representative.

Speaker Change: We believe that the cigarette category secular decline estimate of two 5% represents the impact to cigarette industry volume due to the decline in adult smokers, excluding any cross category movement.

Sal: First we.

Sal: We believe that the cigarette category secular decline estimate of two 5% represents the impact to cigarette industry volume due to the decline in adult smokers, excluding any cross category movement.

Which could reject the itc's decision.

Enjoy continues work on its product solution that addresses all of the patents at issue in the event the.

Speaker Change: Second we estimate cross category impacts contributed approximately 3% to 4% to the cigarette industry decline over the last 12 months.

Six decision is not projected.

This decision would severely limit FDA authorized choices.

Sal: Second we estimate cross category impacts contributed approximately 3% to 4% to the cigarette industry decline over the last 12 months.

Including the only FDA authorized menthol E vapor products.

Speaker Change: Turning now to share dynamics.

And undermines public health.

Speaker Change: Total discount segment share grew by one seven share points in the fourth quarter and.

Especially in context of a market that is overrun by illicit products.

Sal: Turning now to share dynamics.

Sal: Total discount segment share grew by one seven share points in the fourth quarter and.

Speaker Change: And by one three share points for the full year.

Speaker Change: Regarding enjoys case against juul.

Speaker Change: With most of the growth coming from deep discount.

Sal: And by one three share points for the full year.

Speaker Change: In December the administrative law judge issued an initial determination.

Speaker Change: Marlboro retail share of the cigarette category declined one share point in the fourth quarter and 0.3 share points sequentially.

Sal: With most of the growth coming from deep discount.

Speaker Change: Net juul products did not infringe on enjoys patents.

Sal: Marlboro retail share of the cigarette category declined one share point in the fourth quarter and 0.3 share points sequentially.

Speaker Change: We have petitioned the ITC to review and reverse the Alj's initial determination.

Speaker Change: Consistent with the recent historical seasonality in the fourth quarter.

Speaker Change: We expect the ITC to issue a final determination in early April.

Speaker Change: Within the highly profitable premium segment.

Sal: Consistent with the recent historical seasonality in the fourth quarter.

Speaker Change: <unk> expanded its share of premium to 59, 4% for the fourth quarter.

Sal: Within the highly profitable premium segment.

Speaker Change: Moving to the oral tobacco category and.

Speaker Change: In the fourth quarter, all nicotine pouches grew nine six share points versus the prior year and represented over 45% of the category.

Sal: <unk> expanded its share of premium to 59, 4% for the fourth quarter.

Speaker Change: An increase of 0.1 share point year over year and sequentially.

Sal: An increase of 0.1 share point year over year and sequentially.

Speaker Change: For the full year Marlboro grew its share of premium to 59, 3% an increase of zero four share points versus the prior year.

Speaker Change: Oral nicotine pouches were the primary contributor to the estimated 8% increase in oral tobacco industry volume over the past six months.

Sal: For the full year Marlboro grew its share of premium to 59, 3% an increase of zero four share points versus the prior year.

Speaker Change: We believe that <unk> remains the aspirational brand in the cigarette category.

Speaker Change: <unk> continued to participate in the category growth as <unk> reported shipment volume grew by more than 44% year over year to nearly 44 million cans in the fourth quarter.

Sal: We believe that <unk> remains the aspirational brand in the cigarette category.

Speaker Change: And we are encouraged by its performance in 2024.

Speaker Change: In cigars reported shipment volume increased two 9% in the fourth quarter.

Sal: And we are encouraged by its performance in 2024.

Sal: In cigars reported shipment volume increased two 9% in the fourth quarter.

Speaker Change: Middleton continued to contribute to smokable products segment financial results and black and mild to remain the leader in the highly profitable machine made large tipped cigars segment.

Speaker Change: <unk> performed well at retail grown its share of the oral tobacco category by two share points year over year to eight 9% in the fourth quarter.

Sal: Middleton continued to contribute to smokable products segment financial results and black and mild to remain the leader in the highly profitable machine made large tipped cigars segment.

Speaker Change: Foreign retail share was unchanged sequentially.

Speaker Change: The oral tobacco products segment reported strong fourth quarter results.

Speaker Change: Despite reduced promotional investments and increased competitive pressure.

Sal: The oral tobacco products segment reported strong fourth quarter results.

Speaker Change: Adjusted OCI and adjusted OCI margins increased in.

Speaker Change: Consumer largely footworn continues to build and approximately 800000 consumers regularly purchase on in the fourth quarter on.

Speaker Change: <unk> grew its retail share of the oral tobacco category year over year.

Sal: Adjusted OCI and adjusted OCI margins increased in.

Speaker Change: For the fourth quarter adjusted OCI grew 13% in the segment expanded adjusted OCI margins to 69, 5% an impressive increase of six four percentage points versus the prior year.

Sal: <unk> grew its retail share of the oral tobacco category year over year.

Speaker Change: An increase of more than 40% versus the prior year.

Speaker Change: This growth included increased sourcing from competitive power brands.

Sal: For the fourth quarter adjusted OCI grew 13% in the segment expanded adjusted OCI margins to 69, 5% an impressive increase of six four percentage points versus the prior year.

Speaker Change: <unk> performance was enabled by a variety of strategic investments helix made throughout the year.

Speaker Change: For the full year. The segment grew adjusted OCI by five 2% with adjusted OCI margins of 67, 8% up <unk> four percentage points.

Speaker Change: Including.

Speaker Change: A new trade program that created broader visibility.

Sal: For the full year.

Speaker Change: And secured premium fixture position for nearly 80% of <unk> volume.

Sal: <unk> grew adjusted OCI by five 2% with adjusted OCI margins of 67, 8%.

Speaker Change: And a fresh new look for on packaging and the its own equity campaign.

Speaker Change: Total segment reported shipment volume decreased by <unk>, 4% and 1% for the fourth quarter and full year respectively.

Sal: Zero four percentage points.

Speaker Change: Further differentiate the brand.

Sal: Total segment reported shipment volume decreased by <unk>, 4% and 1% for the fourth quarter and full year respectively.

Speaker Change: As a result of these efforts <unk> achieved profitability for the first time in the fourth quarter ahead of its 2025 goal.

Speaker Change: When adjusted for trade inventory movements and calendar differences.

Speaker Change: <unk> volumes were essentially unchanged for the fourth quarter and declined by an estimated 2%.

Speaker Change: And we anticipate helix will be profitable.

Sal: When adjusted for trade inventory movements and calendar differences.

Speaker Change: For the full year 2025.

Sal: Segment volumes were essentially unchanged for the fourth quarter and.

Speaker Change: For the full year.

Speaker Change: Outside of the U S on plus is competing in the nicotine pouch space in Sweden, and the United Kingdom.

Speaker Change: Oral tobacco products segment retail share declined by three one percentage points in the fourth quarter.

Sal: <unk> declined by an estimated 2% for the full year.

Sal: Oral tobacco products segment retail share declined by three one percentage points in the fourth quarter.

In both markets, one plus has been incremental to our total portfolio sourcing mainly from competitive brands.

Speaker Change: As declines in our MST brands were partially offset by on share gains.

Sal: As declines in our MST brands were partially offset by on share gains.

Speaker Change: Within the MST category for the fourth quarter and full year.

Speaker Change: Glen Pluses Flex Tek pouch offers a unique product experience.

Speaker Change: Copenhagen remain the undisputed leader.

Sal: Within the MST category for the fourth quarter and full year.

Speaker Change: And approximately one in every two MST cans purchased was a U S STC brand.

Speaker Change: And we are encouraged by the steady momentum that own pluses building that retail.

Sal: Copenhagen remain the undisputed leader in.

Speaker Change: And on E Commerce.

Sal: And approximately one in every two MST cans purchased was a U S STC brand.

Speaker Change: Turning to our investment in Abi.

Speaker Change: We recorded $159 million of adjusted equity earnings for the fourth quarter.

Sal: Turning to our investment in Abi.

Sal: We recorded $159 million of adjusted equity earnings for the fourth quarter.

Speaker Change: <unk> eight 1% versus the prior year.

Speaker Change: We look forward to bringing on plus to the U S wants to authorize.

Speaker Change: These earnings reflect the impact of our lower ownership interest compared to the year ago period due to the partial sale of our <unk> investment last year.

Sal: Down eight 1% versus the prior year.

Speaker Change: In heated tobacco, we believe we are developing a portfolio of products.

Sal: These earnings reflect the impact of our lower ownership interest compared to the year ago period due to the partial sale of our <unk> investment last year.

Speaker Change: That will appeal to adult smokers seeking innovative and available alternatives.

Speaker Change: We continue to view the abi's stake as a financial investment.

Speaker Change: E vapor products.

Speaker Change: And our goal remains to maximize the long term value of the investment for our shareholders.

Sal: We continue to view the abi's stake as a financial investment.

Speaker Change: We're moving forward with regulatory preparations to bring heated tobacco stick products to the U S through horizon, our joint venture with Jason.

Sal: And our goal remains to maximize the long term value of the investment for our shareholders.

Speaker Change: We demonstrated our commitment to returning significant value to shareholders and maintaining a strong balance sheet during 2024.

Speaker Change: During 2024, we made great progress towards our PMT and.

Sal: We demonstrated our commitment to returning significant value to shareholders and maintaining a strong balance sheet during 2024.

Speaker Change: For the full year.

Speaker Change: And accelerated our work on an MLR tpa submission for flu.

Speaker Change: We returned over $10 2 billion of cash to shareholders through dividends and share repurchases.

Speaker Change: We now expect to make a combined submission in midyear 2025.

Sal: For the full year, we returned over $10 2 billion of cash to shareholders through dividends and share repurchases.

Speaker Change: We paid $6 8 billion in dividends and our board raised our dividend by four 1% in August marking our 59 to increase in the last 55 years.

Speaker Change: And in December we commenced a small scale test launch of switch.

Sal: We paid $6 8 billion in dividends and our board raised our dividend by four 1% in August marking our 50 <unk> increase in the last 55 years.

Speaker Change: Our heated tobacco capsule product.

Speaker Change: Through E Commerce and Great Britain.

Speaker Change: We also completed our previously authorized share repurchase program.

Speaker Change: We expect to use consumer insights from the test to further inform our strategies.

Speaker Change: Purchasing 73 5 million shares for $3 4 billion.

Sal: We also completed our previously authorized share repurchase program.

Speaker Change: Turning to our 2025 financial outlook.

Sal: Purchasing 73 5 million shares for $3 4 billion.

Speaker Change: Representing our largest single year share repurchase in over two decades.

Speaker Change: <unk>.

Speaker Change: We remain committed to tobacco harm reduction in the U S.

Speaker Change: And continue to believe there is a significant opportunity.

Sal: Representing our largest single year share repurchase in over two decades.

Speaker Change: Our share repurchases were supported by the proceeds from our partial sale of our investment in Abi.

Speaker Change: To ship millions of smokers to FDA authorized smoke free alternatives.

Sal: Our share repurchases were supported by the proceeds from our partial sale of our investment in Abi.

Speaker Change: Our planned investment areas include market activities in support of our smoke free products.

Speaker Change: We effectively balanced our capital allocation priorities during the year.

Speaker Change: And we maintained a strong balance sheet.

We effectively balanced our capital allocation priorities during the year.

Speaker Change: And continued smoke free product research development and regulatory preparations.

Speaker Change: Our total debt to EBITDA ratio as of December 31 was two one times in line with our target of approximately two times.

Sal: And we maintained a strong balance sheet.

Speaker Change: We believe the external environment will remain dynamic in 2025.

Sal: Our total debt to EBITDA ratio as of December 31 was two one times in line with our target of approximately two times.

Speaker Change: And we will continue to monitor the economy, including the cumulative impact of inflation.

Speaker Change: Moving to 2025, I am pleased to announce that our board authorized a new $1 billion share repurchase program.

Speaker Change: Tobacco consumer dynamics, Inc.

Sal: Moving to 2025, I am pleased to announce that our board authorized a new $1 billion share repurchase program.

Speaker Change: <unk> purchasing patterns and adoption of smoke free products.

Speaker Change: Which we expect to complete by the end of this year.

Speaker Change: Illicit product enforcement.

Speaker Change: With that we'll wrap up and.

Speaker Change: And regulatory litigation and legislative developments.

Sal: Which we expect to complete by the end of this year.

Speaker Change: And Billy and I will be happy to take your questions.

Sal: With that we'll wrap up and.

Speaker Change: Considering these factors, we expect to deliver 2025 full year adjusted diluted EPS in a range of $5 22 to.

Speaker Change: While the calls are being compiled I'll remind you that today's earnings release, and our non-GAAP reconciliations are available on <unk> Dot com.

Sal: And Billy and I will be happy to take your questions.

Sal: While the calls are being compiled I'll remind you that today's earnings release, and our non-GAAP reconciliations are available on <unk> Dot com.

Speaker Change: To $5 37.

Speaker Change: We've also posted our usual quarterly metrics, which include pricing inventory and other items.

Speaker Change: This range represents an adjusted diluted EPS growth rate of 2% to 5% from a $5 12 set base in 2024.

Sal: We've also posted our usual quarterly metrics, which include pricing inventory and other items.

Speaker Change: Let's open the question and answer period.

Speaker Change: Operator, do we have any questions.

Sal: Let's open the question and answer period.

Speaker Change: Thank you.

Speaker Change: Our guidance includes the impact of one fewer shipping day in 2025, which occurs in the fourth and the first quarter.

Speaker Change: Once again as a reminder, if you would like to ask a question. Please press the star key followed by the number one on your Touchtone phone at this time investors analysts and media Representatives are now invited to participate in the question and answer session.

Sal: Operator, do we have any questions.

Andrew: Thank you Andrew.

Speaker Change: Assumes limited impact on combustible and E vapor product volumes from enforcement efforts.

Speaker Change: In the illicit E vapor market.

Speaker Change: We will take questions from the investment community first.

Speaker Change: And includes the reinvestment of anticipated cost savings related to our previously announced <unk>.

Speaker Change: We'll take our first question from Matt Smith with Stifel. Your line is open.

Andrew: We will take questions from the investment community first.

Speaker Change: Optimize and accelerate initiatives.

Speaker Change: In addition, the guidance range includes lower expected net periodic benefit income.

Andrew: We'll take our first question from Matt Smith with Stifel. Your line is open.

Matt Smith: Hi, Good morning, Billy maybe to start out the guidance for the year, the 2% to 5% EPS growth can you talk about the phasing of our earnings growth given lower MSA cost in the first three quarters, but one less shipping day in the first quarter. So just as we consider the shape of the year can you help us with.

Speaker Change: I'd also like to welcome Rich Stoddart to our board of directors as announced this morning.

Speaker Change: Mr. <unk> extensive global marketing and executive leadership experience will be a tremendous asset.

Speaker Change: Terms of phasing.

Billy: Yeah, you know, Matt we don't guide to the quarter, but I think as you think about the year nothing is really distorting in 2024 as we look towards 2025, Youll remember 'twenty four to 'twenty, three we ramped up spending and enjoy because we had a half year. So full year ownership of that brand nothing like.

Speaker Change: <unk>.

Speaker Change: I'll now turn it over to Sal to provide additional detail on our business and financial results.

Andrew: Terms of phasing.

Billy: Yeah, you know Matt.

Billy: Guidance for the quarter, but I think as you think about the year nothing is really distorting in 2024 as we look towards 2025, Youll remember 24 to <unk> 23, we ramped up spending and enjoy because we had a half year to a full year ownership of that brand nothing like that.

Sal: Thanks Billy.

Sal: Our core tobacco businesses generated solid financial performance again this year in a challenging external environment.

Speaker Change: That would.

Sal: The smokable products segment delivered on its strategy of maximizing profitability, while appropriately balancing investments in Marlboro with funding the growth of smoke free products.

Speaker Change: Standout for 2025 as we go forward, we did want to highlight the one less shipping day in the first quarter. So just to make sure people understood that that was occurring in the first quarter.

Billy: Standout for 2025 as we go forward, we did want to highlight the one less shipping day in the first quarter. So just to make sure people understood that that was occurring in the first quarter.

Speaker Change: Thank you Billy and as my follow up the Marvell continues to perform well in terms of market share of the premium segment, but discount share trends pick back up in the fourth quarter you called out continued discretionary income pressure on adult tobacco consumers can you talk about the trends youre seeing in those adult consumers is there incremental.

Sal: The segment grew its adjusted operating companies income by five 5% in the fourth quarter and by 2% for the full year.

Speaker Change: Thank you Bill.

Speaker Change: My follow up the Marvell continues to perform well in terms of market share of the premium segment, but discount share trends pick back up in the fourth quarter you called out continued discretionary income pressure on adult tobacco consumers can you talk about the trends youre seeing in those adult consumers is there incremental pressure or is this continued.

Sal: Adjusted OCI margins expanded to 61, 2% and 61, 6% for the fourth quarter and full year respectively.

Speaker Change: It'll pressure or is this continued cumulative impact over time and a mix shift given the proliferation of cigarette alternatives.

Sal: This performance was supported by robust net price realization of 11, 3% for the quarter and 10, 1% for the full year.

Speaker Change: How do you see that playing out through 2025.

Speaker Change: They've impact over time, and a mix shift given the proliferation of cigarette alternatives and how do you see that playing out through 2025.

Speaker Change: And that's one of the things we will continue to monitor Matt to your point, we do see that cumulative impact.

Yes, and Thats one of the things we will continue to monitor Matt to your point, we do see that cumulative impact.

Sal: Smokable products segment reported domestic cigarette volumes declined eight 8% in the fourth quarter.

Speaker Change: Really affecting our consumers and you can see it outside of the tobacco industry you can see it in.

Speaker Change: Credit card late payments things of that nature, and the amount of credit card debt. The consumers are carrying so that the consumer continues to feel that pressure and it really we believe is the cumulative impact of inflation. So we will see how that shapes up and 225, but we feel good about the guidance, we gave and as you know.

Speaker Change: Really affecting our consumers and you can see it outside of the tobacco industry you can see it in.

Sal: And 10, 2% for the full year.

Sal: When adjusted for calendar differences and trade inventory movements domestic cigarette volumes for the fourth quarter and the full year declined by an estimated 11%.

Sal: At the industry level, we estimate that adjusted domestic cigarette volumes declined by 8% in the fourth quarter and 9% for the full year.

Speaker Change: Very many things in the considerations before we provide that range.

Speaker Change: But it is something that we'll monitor as far as our cross category, we're continuing to see that pressure, we try to highlight that in our decomposition of cigarette industry volume.

Speaker Change: Very many things in the considerations before we provide that range.

Sal: As Billy described the pace of change within the nicotine space has been rapid over the past two years.

Speaker Change: It really is and you heard in my remarks.

Speaker Change: The illicit vapor market flooding the market with flavors. If you step back you can take an optimistic view, it's what we've been saying that consumers are ready to move if they can find alternatives, we just need a regulatory system that authorizes legal products and.

Speaker Change: It really is and you heard in my remarks.

The illicit E vapor market flooding the market with flavors.

Speaker Change: You step back you can take an optimistic view, it's what we've been saying that consumers are ready to move if they can find alternatives. We just need a regulatory system that authorizes legal products and enforces against illegal products.

Sal: We have been monitoring the shifts and their effects on cigarette industry decline rates and are making two updates to our latest cigarette category decomposition estimates.

Speaker Change: Thank you Bill and I'll pass it on.

Thank you.

Speaker Change: Take our next question from Bonnie Herzog with Goldman Sachs. Your line is open.

Speaker Change: And the ability of a person.

Speaker Change: Thank you will.

Sal: First we.

Speaker Change: We will take our next question from Bonnie Herzog with Goldman Sachs. Your line is open.

Speaker Change: Alright, Thank you good morning.

Speaker Change: Good morning, guys.

Good morning, I was hoping you could provide a little more color on the possible options you have for enjoy and what a potential settlement with she'll be on the table I guess, how are you guys thinking about playing in the E vapor category right now, especially given how the market has evolved with illicit et cetera.

Speaker Change: Right. Thank you good morning.

Speaker Change: Good morning, guys.

Speaker Change: I was hoping you could provide a little more color on the possible options you have for enjoy and what a potential settlement with she'll be on the table I guess.

Sal: Second we estimate cross category impacts contributed approximately 3% to 4% to the cigarette industry decline over the last 12 months.

Speaker Change: Are you guys thinking about playing in the E vapor category right now, especially given how the market has evolved with Elisa et cetera.

Speaker Change: Bill you did discuss some of the <unk>.

Speaker Change: It's also asking given your comments about no longer being able to hit your targets for <unk>. So.

Speaker Change: Bill you did discuss some of the <unk>.

Sal: Turning now to share dynamics.

Speaker Change: And also asking given your comments about no longer being able to hit your targets for <unk>. So.

Speaker Change: Is it may be not worth being in E vapor.

Sal: Total discount segment share grew by one seven share points in the fourth quarter and.

Speaker Change: Now in and possibly better to prioritize and protect the profitability you have in smokable drive growth and Nic pouches with on <unk>.

Speaker Change: Is it maybe not worth being in E vapor.

Sal: And by one three share points for the full year.

Speaker Change: Now and possibly better to prioritize and protect the profitability you have in smokable drive growth and Nic pouches with on as well.

Sal: With most of the growth coming from deep discount.

Speaker Change: Pursue H N b, while at the same time, returning cash to shareholders with your strong dividend and buyback program. So just kind of love to hear your thoughts on all of that.

Sal: Marlboro retail share of the cigarette category declined one share point in the fourth quarter and 0.3 share points sequentially.

Speaker Change: Pursue H N b, while at the same time, returning cash to shareholders with your strong dividend and buyback program. So just kind of love to hear your thoughts on all of that.

Speaker Change: Yes, you probably have a lot of good points Bonnie I'll try.

Sal: Consistent with the recent historical seasonality in the fourth quarter.

Speaker Change: Yeah.

Speaker Change: Give you a concise answer, but if I missed anything or you have follow up. Please do I think when you step back as far as pathways. There number of pathways. There is still some steps in the process.

Speaker Change: Yes, you probably have a lot of good points Bonnie I'll try.

Within the highly profitable premium segment.

Speaker Change: Yeah.

Speaker Change: Give you a concise answer, but if I Miss anything or you have follow up. Please do I think when you step back as far as pathways. There number of pathways theres still some steps in the process.

<unk> expanded its share of premium to 59, 4% for the fourth quarter.

Speaker Change: Talked about the review of the trade representative while that has been.

Sal: An increase of zero, one share point year over year and sequentially.

Speaker Change: Talked about the review of the trade representative while that has been.

Speaker Change: When you look back in history, it's been very rare I think there are special circumstances here, if you think about public health.

For the full year Marlboro grew its share of premium to 59, 3%.

Speaker Change: When you look back in history, it's been very rare I think there are special circumstances here, if you think about public health.

Speaker Change: You have a market that's flooded with illegal vapor products, specifically disposables that have completely shocked the regulatory process are in the market, while you have enjoyed which.

Sal: An increase of zero four share points versus the prior year.

Sal: We believe that <unk> remains the aspirational brand in the cigarette category.

Sal: And we are encouraged by its performance in 2024.

Authorized on the tobacco flavors and the only authorized us far on the menthol side. So when I think you think about that from a public health perspective.

Sal: In cigars reported shipment volume increased two 9% in the fourth quarter.

Speaker Change: Authorized on the tobacco flavors and the only authorized thus far on the menthol side. So when I think you think about that from a public health perspective.

Sal: Middleton continued to contribute to smokable products segment financial results and black and mild to remain the leader in the highly profitable machine made large tipped cigar segment.

Speaker Change: I really believe public health.

Speaker Change: And the improvement of public health through time should be a determining factor as we go through that process, but you know you mentioned settlement.

Speaker Change: I really believe public health.

Speaker Change: And the improvement of public health through time should be a determining factor as we go through that process, but you know you mentioned settlement.

And you mentioned the factors that will be considering one you need a reasonable party on the other side.

Sal: The oral tobacco products segment reported strong fourth quarter results.

Speaker Change: We're going to be disciplined about it when you think about the <unk> market the pod segment declining at roughly 15%.

Speaker Change: And you mentioned the factors that we will be considering one you need a reasonable party on the other side.

Sal: Adjusted OCI and adjusted OCI margins increased in.

Speaker Change: To be disciplined about it when you think about the <unk> market.

Sal: <unk> grew its retail share of the oral tobacco category year over year.

Speaker Change: Have to be.

Speaker Change: And we will be disciplined on what you consider a reasonable I think when you think about what's winning in the marketplace.

Speaker Change: <unk> segment declining at roughly 15%.

Sal: For the fourth quarter adjusted OCI grew 13% in the segment expanded adjusted OCI margins to 69, 5% an impressive increase of six four percentage points versus the prior year.

Speaker Change: You have to be.

Speaker Change: We will be disciplined on what you consider a reasonable I think when you think about what's winning in the marketplace.

Speaker Change: Illegal disposable products and Thats clearly the winner in the marketplace.

Speaker Change: Is illegal disposable products and Thats clearly the winner in the marketplace.

Speaker Change: The brands May change names, but that is what's winning and so we're certainly taking that into consideration as we consider pipeline products to meet consumer demands in the ebay per space.

Speaker Change: The brands May change names, but that is what's winning and so we're certainly taken that into consideration as we consider pipeline products to meet consumer demands in the E vapor space.

Sal: For the full year. The segment grew adjusted OCI by five 2% with adjusted OCI margins of 67, 8% up <unk> four percentage points.

Speaker Change: There are a number of avenues to continue we've shared with you previously we felt.

Speaker Change: There are a number of avenues to continue we've shared with you previously we filed <unk>.

Speaker Change: Exemptions for <unk>.

Speaker Change: <unk> patent.

Speaker Change: Where we work our engineers work to not infringe on the patents.

Sal: Total segment reported shipment volume decreased by <unk>, 4% and 1% for the fourth quarter and full year respectively.

Speaker Change: The exemptions for.

Speaker Change: Three patent.

Speaker Change: And I think when you come to the bottom line from the patent standpoint, nothing changes that goes into the product and nothing changes that comes out to the consumer it's really some modifications to the device itself and so.

We worked our engineers work to not infringe on the patents.

Sal: When adjusted for trade inventory movements and calendar differences.

Sal: <unk> volumes were essentially unchanged for the fourth quarter and declined by an estimated 2%.

Speaker Change: I'll pause there and see if I hit all your points, but that's how we're thinking about it.

Speaker Change: I think thats helpful, but to your point about the.

For the full year.

Speaker Change: I'll pause there and see if I hit all your points, but that's how we're thinking about it now.

Sal: Oral tobacco products segment retail share declined by three one percentage points in the fourth quarter.

Speaker Change: I think what's may be missing is that forth right.

Speaker Change: I think thats helpful, but to your point about the.

Speaker Change: Thanks, Paul for the fourth patent I guess I think you may be high.

Speaker Change: I mean, I think what's may be missing is that forth right.

Sal: As declines in our MSC brands were partially offset by on share gains.

Speaker Change: Right Okay.

Speaker Change: For the fourth patent I guess I think you may be high.

Speaker Change: Yes, I hear you Bonnie and their engineers are vigorously working on that final.

Sal: Within the MST category for the fourth quarter and full year.

Speaker Change: Right Okay.

Speaker Change: If you will.

Speaker Change: Yes, I hear you Bonnie and our engineers are vigorously working on that final.

Speaker Change: Change that would allow us not to infringe on the determination by the ITC.

Sal: Copenhagen remain the undisputed leader.

Sal: And approximately one in every two MST cans purchased was a U S STC brand.

Speaker Change: If you will.

Speaker Change: Change that would allow us not to infringe on the determination by the ITC.

Speaker Change: Okay. Thank you and then maybe just.

Speaker Change: Another quick question from me just on your guidance first I did want to verify that your guidance includes.

Speaker Change: Okay. Thank you and then maybe just.

Sal: Turning to our investment in Abi.

Speaker Change: Another quick question from me just on your guidance first I did want to verify that your guidance includes.

Speaker Change: The likely potentially youre going to have to Paul <unk> from the market at the end of March I think it does I just want to double check and then second and assuming that happens is it realistic to think about your ability to hit the high end of your EPS guidance range, just that being more likely given that Android is still operating at a loss and therefore has.

Sal: We recorded $159 million of adjusted equity earnings for the fourth quarter.

Speaker Change: The likely potentially youre going to have to Paul Andrew is from the market at the end of March I think it does I just want to double check and then second and assuming that happens is it realistic to think about your ability to hit the high end of your EPS guidance range are just that being more likely given that enjoy is still operating at a loss and therefore has.

Sal: <unk> eight 1% versus the prior year.

Sal: These earnings reflect the impact of a lower ownership interest compared to the year ago period due to the partial sale of our <unk> investment last year.

Speaker Change: It's been a drag on earnings and it's pulled that would actually boost your income this year.

Sal: We continue to view the abi's stake as a financial investment.

Speaker Change: It's been a drag on earnings and it's pulled that would actually boost your income this year.

Speaker Change: Bonnie we run as you know.

Speaker Change: A number of scenarios as we're thinking about 2025, they're all.

Sal: And our goal remains to maximize the long term value of the investment for our shareholders.

Speaker Change: Bonnie we run as you know a number of scenarios as we're thinking about 2025, there are always puts and takes across the plan and that's why we provided a range related to the EPS guidance. So we'll see how the year plays out obviously, we've got a lot of levers that we.

Speaker Change: <unk> puts and takes across the plan and that's why we provided a range related to the EPS guidance. So we'll see how the year plays out obviously, we've got a lot of levers that we can pull.

Sal: We demonstrated our commitment to returning significant value to shareholders and maintaining a strong balance sheet during 2024.

Speaker Change: To deal with anticipated.

Sal: For the full year, we returned over $10 $2 billion of cash to shareholders through dividends and share repurchases.

Speaker Change: Variability in the marketplace. So we feel good about the guidance we've provided.

Speaker Change: Can poll.

Speaker Change: To deal with.

Speaker Change: We anticipated.

Speaker Change: If there is anything to update as the year progresses of course, we will.

Speaker Change: Variability in the marketplace, we feel good about the guidance we've provided.

Sal: We paid $6 8 billion in dividends and our board raised our dividend by four 1% in August marking our 50 <unk> increase in the last 55 years.

Speaker Change: Okay I'll pass it on thank you.

Speaker Change: If there's anything to update as the year progresses of course, we will.

Speaker Change: Thank you.

Thank you and we'll take our next question from Tom Bank with UBS. Your line is open.

Speaker Change: Okay I'll pass it on thank you.

Speaker Change: Q.

Speaker Change: Thank you and we'll take our next question from Tom Bank with UBS. Your line is open.

Sal: We also completed our previously authorized share repurchase program.

Tom Bank: Good morning, guys.

Speaker Change: One follow up.

Sal: Purchasing 73 5 million shares for $3 4 billion.

Tom Bank: And then maybe to ask your questions.

Tom Bank: Good morning, guys I just have one follow up.

Tom Bank: Just going quickly back to the question on enjoy in the fourth patent that Youll engineers.

Sal: Representing our largest single year share repurchase in over two decades.

Speaker Change: And then maybe to actual questions.

Speaker Change: Just going quickly back to the question on enjoy and the fourth patent that Youll engineers.

Tom Bank: If you ever see working behind.

Sal: Our share repurchases were supported by the proceeds from our partial sale of our investment in Abi.

Tom Bank: If you are able to successfully navigate that that patent and are able to submit an application for that by when do you expect.

Speaker Change: If you ever see working behind if.

If you are able to successfully navigate that that patent and are able to submit an application for that by when do you expect.

Sal: We effectively balanced our capital allocation priorities during the year.

Tom Bank: To receive approval for that application.

Sal: And we maintained a strong balance sheet.

Tom Bank: You could be able to bring that.

Speaker Change: To receive approval for that.

Sal: Our total debt to EBITDA ratio as of December 31 was two one times in line with our target of approximately two times.

Tom Bank: And joy product back on the market.

Speaker Change: Application and thereby you you could be able to bring back.

Speaker Change: The second question that I have.

Speaker Change: And joy product back on the market.

Tom Bank: <unk> was just on the Q4 results.

Sal: Moving to 2025, I am pleased to announce that our board authorized a new $1 billion share repurchase program.

Speaker Change: The second question that I have.

Speaker Change: And in particularly in the smokable deficient.

Speaker Change: Your controllable costs and in the final quarter.

Speaker Change: Just on the Q4 results.

Speaker Change: And in particularly in the Smokable Division.

Speaker Change: <unk> was up around 13%, which is a sharp movement sharp movement, particularly from from the previous quarter could you just maybe explain.

Speaker Change: Your controllable costs in the final quarter.

Sal: Which we expect to complete by the end of this year.

Speaker Change: Was it was up around 13%, which is a sharp movement sharp movement, particularly from from the previous quarter could you just maybe explain.

Sal: With that we'll wrap up.

Sal: And Billy and I will be happy to take your questions.

Speaker Change: The dynamics in the fourth quarter, which resulted into that as well as how we should think about controllable costs going into.

Sal: While the calls are being compiled I'll remind you that today's earnings release, and our non-GAAP reconciliations are available on <unk> Dot com.

Speaker Change: The dynamics in the fourth quarter, which resulted into that as well as how should think about controllable costs going into.

Speaker Change: 2025.

Speaker Change: And the final question.

Sal: We've also posted our usual quarterly metrics, which include pricing inventory and other items.

Speaker Change: Is is on nicotine pouches.

Speaker Change: 2025.

Speaker Change: That was a bit surprised that.

Speaker Change: And the final question.

Speaker Change: The this the oral tobacco category it doesn't grow faster and 25 versus sorry, 24 versus <unk> 23.

Speaker Change: Is is on nicotine pouches.

Sal: Let's open the question and answer period.

Speaker Change: That was a bit surprised that.

Sal: Operator, do we have any questions.

Speaker Change: The this.

Speaker Change: The oral tobacco category it didn't grow faster than in 'twenty five versus sorry, 24 versus 23, given given the rapid growth, but how do you see the growth of nicotine pouches in 2025.

Sal: Thank you.

Speaker Change: Given the rapid growth, but how do you see the growth of nicotine pouches in 2025.

Speaker Change: And particularly the competitive dynamics.

Speaker Change: From from both fuel Eagle players as well as some of the illicit ones.

Speaker Change: And particularly the competitive dynamics.

Speaker Change: Yes.

Speaker Change: From from both pure legal players as well as some of the analysts at once.

Speaker Change: So the question on the fourth patent and the nicotine pouches and then I'll, let Lal answer the one on smokable cost I think when you think about that fourth patent it really depends on the final locked down.

Sal: We will take questions from the investment community first.

Speaker Change: Yes.

Speaker Change: Answer the question on the fourth patent in the nicotine pouches, and then I'll, let bill answer the one on smokable cost.

Speaker Change: We'll take our first question from Matt Smith with Stifel. Your line is open.

Speaker Change: The change that we would make to be able to not infringe on the dual pattern if.

Speaker Change: When you think about that fourth patent it really depends on the final locked down.

Speaker Change: If it follows the other three it would be due to the SEC exemption process and as you recall the <unk> exemption processes are more rapid.

Speaker Change: The change that we would make to be able to not infringe on the dual pattern.

Speaker Change: It follows the other three it would be due to the SEC exemption process and as you recall, the <unk> exemption and processes for more rapid while not predictable a more rapid process to get authorized by the FDA.

Speaker Change: While not predictable a more rapid process to get authorized by the FDA.

Speaker Change: As far as nicotine pouches, I think as you see introductions of new categories. They always have fits and starts as far as growth depending on what consumer base are reaching I think you saw nicotine pouches grow so rapidly and the introduction because you had the traditional moist smokeless tobacco consumer movement over who was.

Speaker Change: Terms of phasing.

Speaker Change: Yeah, you know, Matt we don't guide to the quarter, but I think as you think about the year nothing is really distorting in 2024 as we look towards 2025, Youll remember 'twenty four 'twenty three we ramped up spending and enjoy because we had a half year. So full year ownership of that brand nothing like.

Speaker Change: As far as nicotine pouches, I think as you see introductions of new categories. They always have fits and starts as far as growth depending on what consumer base, they're reaching I think you saw nicotine pouches grow so rapidly and the introduction because you had the traditional moist smokeless tobacco consumer movement over who was <unk>.

Speaker Change: Use the pudding.

Speaker Change: If you will tobacco or nicotine enjoyment products in their mouth, and so thats intuitive.

Speaker Change: That would.

Speaker Change: The pudding.

Speaker Change: Think what we will continue to grow is if it can speak to and consumers can make the change from other forms of nicotine such as cigarettes over to nicotine pouches and so while we don't guide on volume. We think we have a great product with <unk>, we're looking to on plus to be authorized so that we.

Speaker Change: If you will tobacco or nicotine enjoyment products in their mouth, and so thats intuitive I think what it will continue to grow is if it can speak to and consumers can make the change from other forms of nicotine such as cigarettes over to nicotine pouches and so while we don't guide on volume.

Speaker Change: Thank you Billy and as my follow up the Marlboro continues to perform well in terms of market share of the premium segment, but discount share trends pick back up in the fourth quarter.

Speaker Change: Called out continued discretionary income pressure on adult tobacco consumers can you talk about the trends youre seeing in those adult consumers is there incremental pressure or is this continued cumulative impact over time and a mix shift given the proliferation of cigarette alternatives and how do you see that playing out through 2025.

Speaker Change: Can bring that to market and continue to engage the consumers to switch them over to smoke free products.

Speaker Change: We think we have a great product with <unk>, we're looking to on plus to be authorized so that we can bring that to market and continue to engage the consumers to switch them over to smoke free products.

Speaker Change: And in terms of costs I think when you look at the fourth quarter I would just point to timing I think you've got to look at cost over a longer period than just one quarter.

Speaker Change: So timing definitely a factor in Q4 as far as 2025.

Speaker Change: And that's one of the things we'll continue to monitor Matt to your point, we do see the cumulative impact.

Speaker Change: We don't guide at that granularity.

Speaker Change: So timing definitely a factor in Q4 as far as 2025.

Speaker Change: Really affecting our consumers and you can see it outside of the tobacco industry you can see it in.

Speaker Change: A level for controllable costs I will tell you, though obviously, we're the smokable categories are declining category, we are going to be disciplined in how we think about resource allocation.

Speaker Change: Don't guide at that granularity.

Speaker Change: Credit card late payments things of that nature, and the amount of credit card debt the consumers to Karen so that the consumer continues to feel that pressure and it really we believe is the cumulative impact of inflation. So we will see how that shapes up and 225, but we feel good about the guidance, we gave and as you know.

Speaker Change: <unk>.

Speaker Change: I guess, one other thing I would point to when it comes to cost management. There are controllable costs and then of course, we are using data analytics and the revenue growth management tools to allow us to be more efficient with how we continue to allocate or promotional resources in support of our our cigarette.

Speaker Change: Yes, one other thing I would point to when it comes to cost management. There are controllable costs and then of course, we are using data analytics and the revenue growth management tools to allow us to be more efficient with how we continue to allocate or promotional resources in support of our our cigarette.

Speaker Change: Very many things in the considerations before we provide that range.

Speaker Change: Brand so there's more than just controllable costs, when we think about financial discipline.

Speaker Change: Brands, So there's more than just controllable costs, when we think about financial discipline.

Speaker Change: It really is and you heard in my remarks.

Speaker Change: Thanks, everyone.

Speaker Change: The illicit ebay per market flooding the market with flavors. If you step back you can take an optimistic view is what we've been saying that consumers are ready to move if they can find alternatives. We just need a regulatory system that authorizes legal products and enforces against illegal products.

Speaker Change: You.

Speaker Change: Thank you we'll take our next question from Gaurav Jain with Barclays. Your line is open.

Speaker Change: Thanks, everyone.

Speaker Change: Thank you.

We will take our next question from Gaurav Jain with Barclays. Your line is open.

Speaker Change: Hi.

Speaker Change: <unk>. Thank you for taking my questions.

Speaker Change: So a few for me.

Gaurav Jain: Hi, Good morning, everyone. Thank you for taking my questions.

Speaker Change: On.

Speaker Change: Thank you Bill and I'll pass it on.

Speaker Change: Pricing was up nicely in Q4.

Speaker Change: So a few for me.

Speaker Change: Thank you.

Speaker Change: And despite that the volume growth remains impressive.

Gaurav Jain: On the <unk>.

Speaker Change: Take our next question from Bonnie Herzog with Goldman Sachs. Your line is open.

Speaker Change: Pricing was up nicely in Q4.

Speaker Change: Is that something now how we should think of them that you can.

Speaker Change: And despite that the volume growth remains impressive so is that something now.

Bonnie Herzog: Alright, Thank you good morning.

Speaker Change: Pricing up given especially Brazil.

Speaker Change: Good morning, guys.

Speaker Change: Good morning, I was hoping you could provide a little more color on the possible options you have for enjoy and what a potential settlement with she'll be on the table I guess, how are you guys thinking about playing in the E vapor category right now, especially given how the market has evolved with illicit et cetera.

Guido: Still in the midst of the market Guido and yet your volumes continue to compound that.

Speaker Change: We should kick off on that.

Speaker Change: Pricing up given especially Brazil.

Speaker Change: Does it still exist in the market Guido and yet your volumes continue to compound.

Speaker Change: Which in midstream.

Speaker Change: Yes, I appreciate the question I think when you think about the nicotine space is getting more and more competitive both with illicit product in the marketplace as well as what we see is the FDA is applying enforcement discretion against synthetic nicotine products in the marketplace that had fallen MTA.

Speaker Change: Which in midstream.

Speaker Change: Yes, I appreciate the question I think when you think about the nicotine space is getting more and more competitive both with <unk>.

Speaker Change: Bill you did discuss some of the <unk>.

Speaker Change: Illicit product in the marketplace as well as what we see is the FDA is applying enforcement discretion against synthetic nicotine products in the marketplace that had fallen MTA.

Speaker Change: It's also asking given your comments about no longer being able to hit your targets for <unk>. So.

Speaker Change: Even though it appeared that the statute was pretty clear. So I think there are application of enforcement discretion has bled over to the synthetic in that area. I think when you think about <unk> I think it's the product itself it resonates with the consumer.

Speaker Change: Is it maybe not worth being in E vapor.

Speaker Change: Even though it appeared that the statute was pretty clear. So I think there are application of <unk>.

Speaker Change: Now and possibly better to prioritize and protect the profitability you have in smokable drive growth and Nic pouches with on <unk>.

Speaker Change: Enforcement discretion has bled over to the synthetic in that area I think when you think about <unk> I think it's the product itself. It resonates with the consumer we certainly have gotten a bit sharper with we put promotional spending in the marketplace. It allows us to continue to generate trial while.

Speaker Change: Certainly have gotten a bit sharper with how we put promotional spending in the marketplace. It allows us to continue to generate trial while.

Speaker Change: Pursue H N b, while at the same time, returning cash to shareholders with your strong dividend and buyback program. So just kind of love to hear your thoughts on all of that.

Speaker Change: Being able to increase if you will the profitability of the product in the marketplace.

Bonnie Herzog: Yes, you probably have a lot of good points Bonnie I'll try.

Speaker Change: <unk>.

Speaker Change: We're extremely pleased to be able to meet our profitability target ahead of time.

Speaker Change: Give you a concise answer, but if I Miss anything or you have follow up. Please do I think when you step back as far as pathways. There number of pathways. They are still some steps in the process.

Speaker Change: Being able to increase if you will the profitability of the product in the marketplace.

Speaker Change: We'll continue to use data analytics to get sharper to generate trial, but to keep loyalty with the brand as well and you heard in the remarks, the loyalty percentage of the consumers year over year, who are returning to purchase one we feel like is very impressive.

Speaker Change: We're extremely pleased to be able to meet our profitability target ahead of time.

Speaker Change: And we'll continue to use data analytics to get sharper to generate trial, but to keep loyalty with the brand as well and you heard in the remarks, the loyalty percentage of the consumers year over year, who are returning to purchase one we feel like is very impressive.

Speaker Change: Talked about the review of the trade representative while that has been.

Speaker Change: When you look back in history, it's been very rare I think there are special circumstances here, if you think about public health.

Speaker Change: Thank you and then a follow up on.

Speaker Change: To your comments on this and predict nicotine market so clearly.

Speaker Change: You have a market that is flooded with illegal vapor products, specifically disposables that have completely shirt. The regulatory process are in the market, while you have enjoyed which.

Speaker Change: Thank you and then the follow up on.

Speaker Change: Welcome to the Goldfield lager Molson predicting it will be market.

Speaker Change: To your comment on this and predict nicotine market.

Speaker Change: No.

Speaker Change: I mean.

Speaker Change: Welcome to the Goldfield lager Molson predict we will be market.

Speaker Change: The market.

Speaker Change: Tons of.

Speaker Change: No.

Speaker Change: Sure.

Speaker Change: Authorized on the tobacco flavors and the only authorized thus far on the menthol side. So when I think you think about that from a public health perspective.

Speaker Change: Will there be a time to do so.

Speaker Change: <unk>.

Speaker Change: The market.

Speaker Change: In terms of.

Speaker Change: Doctor market <unk> that not only on the liquid bulk side, but also on the esignature side because it makes a lot of.

Speaker Change: <unk>.

Speaker Change: <unk> does not do so.

Speaker Change: Doctor market <unk>.

Speaker Change: I really believe public health.

Speaker Change: New companies and launched products using synthetic nicotine than news.

Speaker Change: Not only on the nicotine pouch segment on the esignature side, because you make a lot of.

Speaker Change: And the improvement of public health through time should be a determining factor as we go through that process, but you know you mentioned settlement.

Speaker Change: You should always will be.

Speaker Change: When companies have launched product, creating synthetic nickelodeon than usual levels, we'll be evaluating that.

Speaker Change: Good luck.

Speaker Change: And you mentioned the factors that we will be considering one you need a reasonable party on the other side.

Speaker Change: Certainly and we have been evaluating it all along we were surprised with the application of enforcement discretion in that area based on what we felt like was clarity in the statute when it was passed but certainly with them apply an enforcement discretion is something thats moved up on our radar.

Speaker Change: We're going to be disciplined about it when you think about the <unk> market the pod segment declining at roughly 15%.

Speaker Change: Certainly and we have been evaluating that all along.

Speaker Change: We're surprised with the application of enforcement discretion in that area based on what we felt like was clarity in the statute when it was passed but certainly with them a client enforcement discretion is something thats moved up on our radar.

Speaker Change: Have to be.

Speaker Change: And we will be disciplined on what you consider a reasonable I think when you think about what's winning in the marketplace is illegal disposable products and Thats clearly the winner in the marketplace.

Matthew: Sure Matthew.

Matt Smith: On the cigarette market share loss.

Matt Smith: I think we all know that capability is that.

Speaker Change: Lastly, on the significant market share loss.

Matt Smith: You want to maximize profitability in cigarettes.

Speaker Change: I think we all have that capability is that.

Matt Smith: And then <unk>.

Matt Smith: Longer share loss levels.

Speaker Change: You want to maximize profitability in cigarettes, but.

Matt Smith: And our Robo investing go through both so those are the start from Commonwealth combined okay.

Speaker Change: <unk> share loss levels.

Speaker Change: There are a number of avenues to continue with.

Speaker Change: And a robo.

Speaker Change: I think when you backup gaurav.

Speaker Change: Shared with you previously we filed.

Speaker Change: Thank God for both so there's not this part from Commonwealth component of that.

Speaker Change: We've been highlighting for you that when you look historically when the consumers under pressure they react to their current economic situation and you see some down trading that takes place.

The exemptions for.

Speaker Change: <unk> patent.

Speaker Change: I think when you backup guara, we've been highlighting for you that when you look historically when the consumers under pressure they react to their current economic situation and you see some down trading that takes place.

Speaker Change: Where we worked our engineers work to not infringe on the patents.

Speaker Change: When you.

Speaker Change: Look at it historically, what you see is we certainly want to give consumers a safe place to stick with Marlboro because Marlboro is the aspirational brand and you'll see us apply those tools I think you see with the growth in premium through time of marble that we've been applying those tools correctly.

Speaker Change: I think when you.

Speaker Change: Look at it historically, what you see is we certainly want to give consumers a safe place to stick with marble because Marlboro is the aspirational brand and Youll see us apply those holes I think you see with the growth in premium through time of marble that we've been applying those tools correctly.

Speaker Change: I'll pause there and see if I hit all your points, but that's how we're thinking about it now.

I think thats helpful, but to your point about the <unk>.

Speaker Change: Certainly as I highlighted it's something that we'll continue to monitor I think the other thing is as we saw we've been highlighting for you elicit vape and that whole distribution process, we've been highlighting that it bled over to nicotine pouch and we're seeing it to begin to bleed over into cigarettes as well as we're seeing I'll call. It.

Speaker Change: I think what's may be missing is that force right and it doesn't call for the fourth patent I guess I think you may be high.

Speaker Change: Certainly as I highlighted it's something that we'll continue to monitor I think the other thing is as we saw we've been highlighting for you elicit base in that whole distribution process, we've been highlighting that it bled over to nicotine pouch and we're seeing it to begin to bleed over into cigarettes as well as we're seeing I'll call. It.

Speaker Change: Right Okay, yes.

Bonnie Herzog: Yes, I hear you Bonnie and our engineers are vigorously working on that final.

Speaker Change: If you will.

Speaker Change: Change that would allow us not to infringe on the determination by the ITC.

Speaker Change: White label product, but its product thats legal outside of the U S. But is starting to bleed into the U S.

Speaker Change: Okay. Thank you and then maybe just.

Speaker Change: White label product, but its product thats legal outside of the U S. But is starting to bleed into the U S.

Speaker Change: Another quick question from me just on your guidance first I did want to verify that your guidance includes.

Speaker Change: Thank you so much for taking my questions. Thank you.

Speaker Change: Thank you.

Speaker Change: The likely potentially youre going to have to Paul Andrew is from the market at the end of March I think it does.

Speaker Change: Thank you so much for taking my questions. Thank you.

Speaker Change: Take our next question from Eric <unk> with Morgan Stanley. Your line is open.

Speaker Change: Thank you.

Speaker Change: Double check and then second and assuming that happens is it realistic to think about your ability to hit the high end of your EPS guidance range are just that being more likely given that enjoy is still operating at a loss and therefore has been a drag on earnings and if it's pulled that would actually boost your income this year.

Speaker Change: We'll take our next question from Eric <unk> with Morgan Stanley. Your line is open.

Speaker Change: Great just wanted to circle back on the EPS guidance for 2025.

Speaker Change: You called out one.

Speaker Change: Well, there's obviously one less day in the first quarter.

Speaker Change: You called out one.

Speaker Change: Called out somewhat.

Speaker Change: Somewhat lower tax rate and <unk>.

Speaker Change: Well, there's obviously one less day in the <unk>.

Matt Smith: Bonnie we run as you know a number of scenarios as we're thinking about 2025, there are always puts and takes across the plan and that's why we provided a range related to the EPS guidance. So we'll see how the year plays out obviously, we've got a lot of levers that we.

Speaker Change: First quarter, but you called out.

Speaker Change: Lower pension income are there any other items that we shouldn't think of.

Somewhat lower tax rate and.

Speaker Change: Lower pension income are there any other items that we shouldn't think of.

Speaker Change: And can you help us quantify.

Speaker Change: Quantify the pension income just trying to bridge to mid single digit EPS algo.

Speaker Change: And can you help us quantify.

Speaker Change: Quantify the.

Speaker Change: We can pull.

Speaker Change: To deal with.

Speaker Change: Just trying to bridge to mid single digit EPS algo.

Speaker Change: Given you.

Matt Smith: We anticipated.

Speaker Change: You do have a benefit from the tax rate.

Matt Smith: Variability in the marketplace, we feel good about the guidance we've provided.

Speaker Change: To offset the pension income.

Speaker Change: Given.

Speaker Change: I'll start us off and then I'll ask <unk> to just mentioned on tax rate I think when you think about it every time you start a year you have puts and takes and you see that historically through time, what we tried to highlight is the things.

Speaker Change: You do have a benefit from the tax rate that kind of offset the pension income.

Matt Smith: If there's anything to update as the year progresses of course, we will.

Speaker Change: Yeah, I'll start us off and then I'll ask <unk> to just mentioned on tax rate I think when you think about it every time you start a year you have puts and takes and you see that historically through time, what we tried to highlight is the things.

Speaker Change: Okay I'll pass it on thank you.

Matt Smith: Q.

Speaker Change: Thank you and we'll take our next question from Hamzah <unk> with UBS. Your line is open.

Speaker Change: That we incorporated into that range of scenarios that we look at for the.

Speaker Change: The EPS growth rate.

Hamzah: Good morning, guys I just have one follow up.

Speaker Change: When you think about it that that Bunge shipping day is in the first quarter, but it's a total year impact when you think about the.

Speaker Change: And then maybe to actual questions.

Speaker Change: The EPS growth rate.

Speaker Change: Just going quickly back to the question on enjoy in the fourth patent engineers.

When you think about it that last that Bunge shipping day is in the first quarter, but it's a total year impact when you think about the.

Speaker Change: We wanted to highlight from enforcement, we don't really see any impact stepped up enforcement in 2025.

Speaker Change: If you obviously working behind if.

Speaker Change: We wanted to highlight from an enforcement, we don't really see any impact stepped up enforcement in 2025.

Speaker Change: If you are able to successfully navigate that that patent and are able to submit an application for that by when do you expect.

Speaker Change: We mentioned net periodic.

Speaker Change: Inc pension income.

Speaker Change: That's really just the performance in the marketplace of the asset that's related to the pension investment.

Speaker Change: Mentioned net periodic.

Speaker Change: Inc pension income.

Speaker Change: To receive approval for that.

Speaker Change: That's really just the performance in the marketplace of the asset that's related to the pension investment.

Speaker Change: And then I'll, let Seth speak to the tax rate, yes, and the only thing I would add to the pension as we have a very well funded pension.

Speaker Change: Application and thereby you you could be able to bring back.

Speaker Change: And then I'll, let <unk> speak to the tax rate, yes, and the only thing I would add to the pension as we have a very well funded pension.

Speaker Change: And joy product back on the market.

Speaker Change: Plan. So we feel really good about the management of the overall defined benefit plan.

Speaker Change: The second question that I have.

Speaker Change: Plan. So we feel really good about the management of the overall defined benefit plan.

Speaker Change: Just on the Q4 results.

Speaker Change: Tax rate is favorable on a year over year basis, Youre right to call that out if you look at the past few years, you have seen variability in the adjusted tax rate.

Speaker Change: And in particularly in the Smokable Division.

Speaker Change: Your controllable costs in the final quarter.

Speaker Change: Tax rate is favorable on a year over year basis, Youre right to call that out if you look at the past few years you have seen variability in the adjusted tax rate, it's been driven by various factors, including.

Speaker Change: <unk> was up around 13%, which is a sharp movement sharp movement, particularly from from the previous quarter could you just maybe explain.

Speaker Change: Driven by various factors, including.

Speaker Change: Tax credits changes in state taxes, and other business activities. So the guidance we've provided for the tax rate as is our best estimate based on the 2025 plans that we've put in place and we will continue to monitor it.

Speaker Change: Tax credits changes in state taxes, and other business activities. So the guidance we've provided for the tax rate as is.

Speaker Change: The dynamics in the fourth quarter, which resulted into that as well as how we should think about controllable costs going into.

Speaker Change: It's our best estimate based on the 2025 plans, we've put in place and we will continue to monitor. It you also asked about the <unk>.

Speaker Change: 2025.

Speaker Change: Also asked about the.

Speaker Change: And the final question.

Speaker Change: The mid single digit algorithm I would tell you. If you think about those coals for EPS is a compounded annual growth rate.

Speaker Change: Is is on nicotine pouches.

Speaker Change: That was a bit surprised that.

Speaker Change: Mid single digit algorithm I would tell you. If you think about those coals for EPS is a compounded annual growth rate.

Speaker Change: The this the oral tobacco category didn't grow faster than in 'twenty five versus sorry, 24 versus 23.

Speaker Change: We knew and we expected that would be some variability year to year issue, making investments.

Speaker Change: We knew and we expected that would be some variability year to year as you're making investments in.

Speaker Change: In the long term vision and in this smoke free products. So we feel really good about the guidance, we were able to provide today.

Speaker Change: Even given the rapid growth, but how do you see the growth of nicotine pouches in 2025.

Speaker Change: In the long term vision and in the smoke free products. So we feel really good about the guidance, we were able to provide today.

Speaker Change: And particularly the competitive dynamics.

Speaker Change: Okay, and then hoping to get some color as to what Youre seeing in terms of the tobacco consumer.

Speaker Change: From from both fuel legal players as well as some of the illicit ones.

Speaker Change: Okay, and then hoping to get some color as to what Youre seeing in terms of the tobacco consumer.

Speaker Change: Yes.

Speaker Change: It seems we've seen.

Speaker Change: So the question on the fourth patent in the nicotine pouches, and then I'll, let bill answer the one on smokable costs I think when you think about that fourth patent it really depends on the final lockdown.

Speaker Change: A modest pickup or a moderate pickup in sort of low end consumer spending in the convenience channel.

Speaker Change: It seems we've seen.

Speaker Change: A modest pick up or a moderate pickup in sort of low end consumer spending in the convenience channel coming from the depth of the summer too.

Speaker Change: The depth of the summer too.

Speaker Change: Infringe on the dual pattern.

Speaker Change: Kind of October and then post election.

Speaker Change: If it follows the other three it would be due to the SEC exemption process and as you recall the <unk> exemption processes for more rapid while not predictable a more rapid process to get authorized by the FDA.

Speaker Change: We've seen a number of other categories in the channel overall wondering if you have any color as to what youre seeing with respect to your consumer and those channel.

Speaker Change: Kind of October and then post election.

Speaker Change: We've seen a number of other categories in the channel overall wondering if you have any color as to what youre seeing with respect to your consumer and those channel.

Speaker Change: Yes, I mean, there are always headwinds and <unk> I would tell you that the <unk>.

Speaker Change: As far as nicotine pouches, I think as you see introductions of new categories.

Speaker Change: Biggest headwind is the cumulative impact of inflation when you look historically and I mentioned this earlier the consumer our consumer specifically is at the lower end of the socioeconomic status and so they react immediately to their current economic situations.

Speaker Change: Yes, I mean, there are always headwinds and <unk> I would tell you that the biggest headwind is the cumulative impact of inflation. When you look historically and I mentioned this earlier the consumer our consumer specifically is at the lower end of the socioeconomic status and so they react immediately to their current economic situations.

Speaker Change: Please have fits and starts as far as growth depending on what consumer base, they're reaching I think you saw nicotine pouches grow so rapidly and the introduction because you had the traditional moist smokeless tobacco consumer movement over who was used to putting it.

Speaker Change: If things stay steady for a period of time they adjust for that it's been this cumulative impact of inflation that they haven't been able to adjust to and Thats. Why we highlighted look we'll continue to watch the economy and the.

Speaker Change: If you will tobacco or nicotine enjoyment products in their mouth, and so thats intuitive.

Speaker Change: Thanks, Dave steady for a period of time, they adjust for that it's been this cumulative impact of inflation that they haven't been able to adjust to and Thats. Why we highlighted look we'll continue to watch the economy.

Speaker Change: I think what it will continue to grow is if it can speak to and consumers can make the change from other forms of nicotine such as cigarettes over to nicotine pouches and so while we don't guide on volume. We think we have a great product with one we're looking to on plus to be authorized so.

Impact of cumulative inflation if it continues to compound we would expect our consumer to stay under pressure. If it will moderate we expect the consumer to be able to adjust to that through time and that's what we'll continue to watch.

Speaker Change: That impact of cumulative inflation. If it continues to compound we would expect our consumer to stay under pressure. If it will moderate we expect the consumer to be able to adjust to that through time and that's what we'll continue to watch.

Speaker Change: Great. Thanks, I'll pass along.

Speaker Change: We can bring that to market and continue to engage the consumers to switch them over to smoke free products.

Speaker Change: Thank you.

Speaker Change: Thank you we'll take our last question from an R&D with Reuters Your line is open.

Speaker Change: Great. Thanks ill pass along thank.

Speaker Change: And in terms of costs I think when you look at the fourth quarter I would just point to timing I think you've got to look at cost over a longer period than just one quarter.

Speaker Change: Thank you.

Speaker Change: Thank you we'll take our last question from Ann Romney with Reuters Your line is open.

Speaker Change: Hi, guys. Thanks, a lot for attending the call and the opportunity to ask questions.

Speaker Change: I wanted to hear a little bit about your expectations that policy changes.

Ann Romney: Hi, guys. Thanks for attending the call and the opportunity to ask questions.

Speaker Change: So timing definitely a factor in Q4 as far as 2025, we don't guide at that granularity.

Speaker Change: Ministration, so first of all on combustibles.

Ann Romney: I wanted to hear a little bit about your expectations that policy changes under the new administration.

Speaker Change: It's all bond has been scrapped.

Speaker Change: A level for controllable costs I will tell you, though obviously, we're smokable categories are declining category, we are going to be disciplined in how we think about resource allocation I.

Speaker Change: About the Prepays nicotine cap do you see any prospect of that being picked up by the Trump administration.

Ann Romney: So first of all on combustibles.

Ann Romney: Then Phil Bonn has been scrapped.

Ann Romney: About the Prepays nicotine cap do you see any pushback to that being picked up by the Trump administration.

Yes, we'll wait and see on that we'll certainly be excited to hear the outcome of that I would remind you that that was a proposed rule at the time, we see it as completely technically feasible and we provided detailed comments to the FDA.

Ann Romney: Yes, we'll wait and see on that.

Ann Romney: We'll certainly be excited to hear the outcome of that I would remind you that that was a proposed rule at the time, we see it as is completely technically feasible and we provided detailed comments to the FDA.

Speaker Change: And we really believe that the future should be harm reduction.

Speaker Change: You heard me mentioned in my remarks earlier.

Ann Romney: And we really believe that the future should be harm reduction.

Speaker Change: We believe the regulatory system is broken and really not function in the way Congress intended.

Speaker Change: Brands, So there's more than just controllable costs, when we think about financial discipline.

Ann Romney: You heard me mentioned in my remarks earlier.

Speaker Change: If you.

Ann Romney: We believe the regulatory system is broken and really not functioning the way Congress intended.

Speaker Change: Step back and think about what that regulatory system was designed to do it was to have a third party look at the science.

Speaker Change: Thanks, everyone.

Speaker Change: Thank you.

Ann Romney: If you.

Ann Romney: Set back and think about what that regulatory system was designed to do it was to have a third party look at the science.

Speaker Change: Thank you we'll take our next question from Gaurav Jain with Barclays. Your line is open.

Speaker Change: Authorized products and enforce against illegal products and none of that is really happening to any scale. Thus far so what I believe.

Ann Romney: <unk> products and enforce against illegal products and none of that is really happening to any scale. Thus far so what I believe.

Speaker Change: Hi.

Speaker Change: <unk>.

Speaker Change: We expect from the current administration.

Speaker Change: Everyone. Thank you for taking my questions.

Speaker Change: Is that they will look at this and really get the agency function and the way it was intended to function.

Speaker Change: So a few for me.

Ann Romney: <unk>.

Ann Romney: We expect from the current administration.

Speaker Change: <unk>.

Speaker Change: Pricing was up nicely in Q4.

Ann Romney: Is that they will look at this and really get the agency function and the way it was intended to function.

Speaker Change: Okay, well that was kind of my next question.

Speaker Change: And despite that the volume growth remains impressive.

Speaker Change: Honestly around Batesville, only nicotine products and the Fda's approach I mean, it sounds like you think that.

Ann Romney: Okay, well that was kind of my next question.

Speaker Change: Is that something model Halloween clinical form that you can keep.

Ann Romney: See around Batesville, only nicotine products and the Fda's approach.

Speaker Change: The change in administration as an opportunity to push.

Speaker Change: Pricing up given especially Brazil.

Speaker Change: Push for some change.

Speaker Change: It's a long list of them Aqua Blue mill and yet your volumes continue to compound.

Ann Romney: It sounds like you think that sort of change.

Speaker Change: What kind of possible scenarios do you think that considering.

Ann Romney: Change in administration as an opportunity to.

Ann Romney: Push with some change.

Speaker Change: Mitch in midstream.

Speaker Change: Or are you are you sort of preparing for.

Speaker Change: What kind of possible scenarios do you think that considering.

Speaker Change: Yes, what we would like to see is that very similar to what I just mentioned, which is an agency we know that the adult cigarette consumer at least on slightly over half of them are looking for alternatives.

Ann Romney: Where are you are you sort of preparing for.

Ann Romney: Yes, what we would like to see is that very similar to what I just mentioned, which is an agency we know that the adult cigarette consumer at least on slightly over half of them are looking for alternatives.

Speaker Change: Scientists item and so what we need is an agency that is.

Even though it appeared that the statute was pretty clear so I think their application of <unk>.

Speaker Change: Expedient diligence, but expedient on authorizing products.

Ann Romney: <unk>.

Ann Romney: So what we need is an agency that is.

Speaker Change: Enforcement discretion has bled over to the synthetic in that area I think when you think about <unk> I think it's the product itself. It resonates with the consumer we certainly have gotten a bit sharper with how we put promotional spending in the marketplace. It allows us to continue to generate trial while.

Speaker Change: And in the agency that enforces against illicit products in the marketplace. I think you can go to a majority.

Ann Romney: Expedient diligent, but expedient on authorizing products and.

Ann Romney: And in the agency that enforces against illicit products in the marketplace. I think you can go to a majority.

Speaker Change: Alrighty of the states across the U S and see a plethora of these products that are just basically from their nose at the agency and the federal government and are being sold throughout the U S and so you need better authorization of.

Ann Romney: 80 of the states across the U S and see a plethora of these products that are just basically from their nose at the agency and the federal government and are being sold throughout the U S and so.

Speaker Change: Being able to increase if you will the profitability of the product in the marketplace.

Speaker Change: Legal products and enforcement against illegal that's what we'd be looking for.

Ann Romney: <unk>.

Ann Romney: Better authorization of.

Speaker Change: We're extremely pleased to be able to meet our profitability target ahead of time, and we'll continue to use data analytics to get sharper to generate trial, but to keep loyalty with the brand as well and you heard in the remarks the loyalty percentage.

Speaker Change: We think that is.

Ann Romney: Legal products and enforcement against illegal that's what we'd be looking for.

Speaker Change: That's the U S up for harm reduction through time.

Ann Romney: We think that is.

Speaker Change: Yes.

Speaker Change: Is there a risk.

Ann Romney: That's the U S up for harm reduction through time.

Speaker Change: The administration could just say.

Speaker Change: Let's just scrap this Pam Ta price has pulled together the FCA company its own deadlines sort of if you've got a pending application.

Ann Romney: Yes.

Speaker Change: Consumers year over year, who are returning to purchase one we feel like is very impressive.

Ann Romney: Is there a risk.

Ann Romney: The administration could just say.

Ann Romney: Just scrap this PMT a price tussle together, if the FCA company its own deadline sort of if you've got a pending application.

Speaker Change: Go ahead and market kind of thing is is that a threat.

Speaker Change: Thank you and then a follow up on <unk>.

Speaker Change: We would certainly prefer as we supported the FDA all along passing of it as it was intended is that you have a third party really regulate the marketplace. So that it's you have manufacturing standards you have a science standards for legitimate products in the marketplace and so we would.

Speaker Change: Your comments on the can predict nicotine market for PMA.

Go ahead and market kind of thing is is that a threat.

Speaker Change: Welcome to the Goldfield lager, Molson, particularly with the market.

Speaker Change: We would certainly prefer as we supported the FDA all along passing of it as it was intended is that you have a third party really regulate the marketplace. So that.

Speaker Change: Okay.

Speaker Change: Hello.

Speaker Change: The market.

Speaker Change: <unk>.

Speaker Change: Will there be a plan to do so.

Ann Romney: You have manufacturing standards.

Speaker Change: Doctor market you also want to participate not only on the nicotine pouch segment icon, they're using they're excited because an awful lot of.

Ann Romney: You have a science standards for legitimate products in the marketplace and so we would continue to want to see the FDA have authority over nicotine products in the marketplace. So it doesn't turn into what we were seeing in the EBIT per market early on which is a wild wild west and continues because of lack of enforcement, we just need an age.

Speaker Change: Can you to want to see the FDA have authority over nicotine products in the marketplace. So it doesn't turn into what we were seeing in the EBIT per market early on which is a wild wild west and continues because of lack of enforcement.

Speaker Change: New companies and launched products, creating synthetic nickelodeon than usual levels will be.

Speaker Change: I'll do anything yet.

Speaker Change: Just need an agency the function as always proposed to function.

Speaker Change: Certainly and we have been evaluating that all along we were surprised with the application of enforcement discretion in that area based on what we felt like was clarity in the statute when it was passed but certainly with them apply an enforcement discretion is something thats moved up on our radar.

Speaker Change: Okay, and just lastly, the other sort of policy uncertainties around tariffs, which I assume would impact <unk> business.

Ann Romney: See the function as always proposed to function.

Speaker Change: Okay, and just lastly, the other sort of policy uncertainties around tariffs, which I assume would impact <unk> business nicely all that correct me if I'm wrong on that point.

Speaker Change: Business, mostly all that correct me, if I'm wrong on that point.

Speaker Change: It'd be great to know if there would be an impact there how you might be able to mitigate that would it be three prior so could you do anything in terms of shifting production.

Speaker Change: Sure.

Speaker Change: We under significant market share loss.

Speaker Change: It'd be great to know if there would be an impact there how you might be able to mitigate that would it be three prior so could you do anything in terms of shifting production.

I think we all know Muskogee ability is that.

Speaker Change: Just be great to know what options you are considering your capacity come into force.

Speaker Change: You want to maximize profitability in cigarettes.

Speaker Change: Yes. It has been a lot of tariffs mentioned in the media I haven't seen any past I think if you're referring to E vapor.

Speaker Change: And just be great to know what options you are considering your capacity come into force.

Speaker Change: Got it.

Speaker Change: <unk> share loss levels.

Speaker Change: Yes. It has been a lot of tariffs mentioned in the media I haven't seen any past I think if you're referring to E. Vapor. We've heard some comments where everything is sourced out of China. We would have limited impact to any tariffs that were put in place in China.

Speaker Change: And a global index.

Speaker Change: Heard some comments, where everything is sourced out of China, We would have limited impact to any tariffs that were put in place in China.

Speaker Change: Please go through both Dunbar this part from canola combined okay.

Speaker Change: I think when you backup gaurav, we've been highlighting for you that when you look historically when the consumers under pressure they react to their current economic situation and you see some down trading that takes place.

Speaker Change: Okay.

Speaker Change: Sorry could you could you explain why because I still enjoy was produced in China again I might be wrong.

Speaker Change: Okay. So sorry could you could you explain why because I still enjoy was produced in China again I might be wrong.

Speaker Change: No we actually have alternative production facilities that we utilize that are outside of China.

Speaker Change: When you.

Speaker Change: No we actually have alternative production facilities that we utilize that are outside of China.

Speaker Change: Look at it historically, what you see is we certainly want to give consumers a safe place to stick with marble because Marlboro is the aspirational brand and you see us apply those pools I think you see with the growth in premium through time of marble that we've been applying those tools correctly.

Speaker Change: Okay, Okay and like Indonesia.

Yes, im not going to get into specifics for competitive reasons, but we have other we have other manufacturing facilities around the globe.

Speaker Change: Okay. Okay is that unlike Indonesia.

Speaker Change: Yes, im not going to get into specifics for competitive reasons, but we have other we have other manufacturing facilities around the globe.

Speaker Change: Okay. That's helpful. Thanks, very much guys. Thank you.

Speaker Change: Thank you and there appears to be no further questions. At this time I would like to turn the call back over to Matt Livingston for any closing remarks.

Speaker Change: Okay. That's helpful. Thanks, very much guys. Thank you.

Speaker Change: Thank you and there appears to be no further questions. At this time I would like to turn the call back over to Matt Livingston for any closing remarks.

Speaker Change: Great. Thanks to everybody again for joining us and have a great day.

Speaker Change: This concludes today's call. Thank you for your participation you may disconnect at any time.

Matt Livingston: Great. Thanks, everybody again for joining us and have a great day.

Matt Livingston: This concludes today's call. Thank you for your participation you may disconnect at any time.

Speaker Change: White label product, but its product thats legal outside of the U S. But is starting to bleed into the U S.

Speaker Change: Hum.

Speaker Change: [music].

Matt Livingston: Hum.

Speaker Change: Thank you so much for taking my questions. Thank you.

Speaker Change: Okay.

Matt Livingston:

Speaker Change: Yes.

Matt Livingston: Hum.

Speaker Change: Okay.

Speaker Change: Thank you will.

Matt Livingston: No.

Speaker Change: Okay.

Matt Livingston: Okay.

Speaker Change: Take our next question from Eric <unk> with Morgan Stanley. Your line is open.

Speaker Change: [music].

Matt Livingston: Okay.

Matt Livingston: [music].

Speaker Change: Great just wanted to circle back on the EPS guidance for 2025.

Speaker Change: Okay.

Speaker Change: You called out one.

Matt Livingston: Okay.

Speaker Change: Well there is obviously one less day in the first quarter, but you called out.

Speaker Change: Somewhat lower tax rate and <unk>.

Speaker Change: <unk> pension income are there any other items that we shouldn't think of.

Speaker Change: And can you help us quantify.

Speaker Change: Quantify the pension income just trying to bridge to mid single digit EPS algo.

Speaker Change: Given.

Speaker Change: Do have a benefit from the tax rate kind of offset by the pension on Kevin. Thank you yes.

Speaker Change: That we incorporated into that range of scenarios that we look at for the.

Speaker Change: The EPS growth rate when.

Speaker Change: When you think about it that last that Bunge shipping day is in the first quarter, but it's a total year impact when you think about the <unk>.

Speaker Change: Wanted to highlight from an enforcement, we don't really see any impact of stepped up enforcement in 2025.

Speaker Change: He mentioned net periodic.

Speaker Change: Inc pension income.

Speaker Change: That's really just the performance in the marketplace of the asset that's related to the pension investment.

Speaker Change: And then I'll, let itself speak to the tax rate, yes, and the only thing I would add to the pension as we have a very well funded pension.

Speaker Change: Plan. So we feel really good about the management of the overall defined benefit plan.

Speaker Change: Tax credits changes in state taxes, and other business activities. So the guidance we've provided for the tax rate as is.

Speaker Change: It's our best estimate based on the 2025 plans, we've put in place and we will continue to monitor. It you also asked about the <unk>.

Speaker Change: Mid single digit algorithm I would tell you. If you think about those coals for EPS is a compounded annual growth rate.

Speaker Change: We knew and we expected that would be some variability year to year as you are making investments in.

Speaker Change: In the long term vision and in this smoke free products. So we feel really good about the guidance, we were able to provide today.

Speaker Change: Okay, and then I'm, hoping to get some color as to what Youre seeing in terms of the tobacco consumer.

Speaker Change: It seems we've seen.

Speaker Change: A modest pickup or a moderate pickup in sort of low end consumer spending in the convenience channel.

Speaker Change: From the depth of the summer too.

Speaker Change: Kind of October and then post election.

Speaker Change: We've seen a number of other categories in the channel overall wondering if you have any color as to what youre seeing with respect to your consumer in those channels.

Yes, I mean, there are always headwinds and <unk> I would tell you that the biggest headwind is the cumulative impact of inflation. When you look historically and I mentioned this earlier the consumer our consumer specifically is at the lower end of the socioeconomic status and so they react immediately to their current economic situations.

Speaker Change: Things stay steady for a period of time, they adjust for that it's been this cumulative impact of inflation that they haven't been able to adjust to and Thats. Why we highlighted look we'll continue to watch the economy.

Speaker Change: That impact a cumulative inflation if it continues to compound we would expect our consumer to stay under pressure. If it will moderate we expect the consumer to be able to adjust to that through time and that's what we'll continue to watch.

Speaker Change: Great. Thanks ill pass along thank.

Speaker Change: Thank you.

Speaker Change: Thank you we'll take our last question from Ronny with Reuters Your line is open.

Speaker Change: Hi, guys. Thanks for attending the call and the opportunity to ask questions.

Ronny: I wanted to hear a little bit about your expectations that policy changes under the new administration.

Speaker Change: So first of all on combustibles.

Speaker Change: <unk> has been scrapped.

Speaker Change: About the proposed nicotine cap do you see any prospect of that being picked up by the Trump administration.

Speaker Change: Yes, we'll wait and see on that.

Speaker Change: We'll certainly be excited to hear the outcome of that I would remind you that that was a proposed rule at the time, we see it as is completely technically feasible and we provided detailed comments to the FDA.

Speaker Change: And we really believe that the future should be harm reduction.

Speaker Change: You heard me mentioned in my remarks earlier.

Speaker Change: We believe the regulatory system is broken and really not function of the way Congress intended.

Speaker Change: If you.

Speaker Change: Step back and think about what that regulatory system was designed to do it was to have a third party look at the science.

Speaker Change: Authorized products and enforce against illegal products and none of that is really happening to any scale. Thus far so what I believe.

Speaker Change: <unk>.

Speaker Change: We expect from the current administration.

Speaker Change: Is that they will look at this and really get the agency function and the way it was intended to function.

Speaker Change: Okay, well that was kind of my next question.

Speaker Change: Honestly around Batesville, only nicotine products and the Fda's approach.

Speaker Change: It sounds like you think that.

Speaker Change: The change in administration as an opportunity to push.

Speaker Change: Push for some change.

Speaker Change: What kind of possible scenario do you think that considering.

Speaker Change: Or are you are you sort of preparing for.

Speaker Change: Yes, what we would like to see is that very similar to what I just mentioned, which is an agency we know that the adult cigarette consumer at least slightly over half of them are looking for alternatives.

Speaker Change: Satisfy them and so what we need is an agency that is.

Speaker Change: Expedient diligence, but expedient on authorizing products.

Speaker Change: And in the agency that enforces against the lithium products in the marketplace. I think you can go to a majority of the states across the U S and see a plethora of these products that are just basically from their nose at the agency and the federal government and are being sold throughout the U S and so you need better authorization of.

Speaker Change: Legal products and enforcement against illegal that's what we'd be looking for.

Speaker Change: We think that is.

Speaker Change: That's the U S up for harm reduction through time.

Speaker Change: Yes.

Speaker Change: Is there a risk now.

Speaker Change: The administration could just say.

Speaker Change: Just scrap this Pam Ta price has pulled together the FCA company its own deadlines sort of if you've got a pending application.

Speaker Change: Go ahead and market kind of thing is is that a threat.

Speaker Change: We would certainly prefer as we supported the FDA all along passing of it as it was intended is that you have a third party really regulate the marketplace. So that.

Speaker Change: You have manufacturing standards.

Speaker Change: You have a science standards for legitimate products in the marketplace and so we would continue to want to see the FDA have authority over nicotine products in the marketplace. So it doesn't turn into what we were seeing in the EBIT per market early on which is a wild wild west and continues because of lack of enforcement, we just need an age.

Speaker Change: <unk> seen a function as always proposed to function.

Speaker Change: Okay, and just lastly, the other sort of policy uncertainties around tariffs, which I assume would impact <unk>.

Speaker Change: Business nicely.

Speaker Change: And if I'm wrong on that point.

Speaker Change: It would be great to know if there would be an impact that how you might be able to mitigate that would it be three prior so could you do anything in terms of shifting production.

Speaker Change: Great to know what options you are considering your capacity come into force.

Speaker Change: Yes, there's been a lot of tariffs mentioned in the media I haven't seen any past I think if you're referring to E vapor.

Speaker Change: Heard some comments, where everything is sourced out of China, We would have limited impact to any tariffs that were put in place in China.

Speaker Change: Okay.

Speaker Change: Sorry could you could you explain why because I still enjoy was produced in China again I might be wrong.

Speaker Change: No we actually have alternative production facilities that we utilize that are outside of China.

Speaker Change: Oh, Okay, Okay is that unlike Indonesia.

Speaker Change: Yes, im not going to get into specifics for competitive reasons, but we have other we have other manufacturing facilities around the globe.

Speaker Change: Okay. That's helpful. Thanks, very much guys.

Speaker Change: You.

Speaker Change: Thank you.

Speaker Change: And there appears to be no further questions at this time I would like to turn the call back over to Mac Livingston for any closing remarks.

Speaker Change: Great. Thanks to everybody again for joining us and have a great day.

Speaker Change: This concludes today's call. Thank you for your participation you may disconnect.

Speaker Change: At any time.

Speaker Change: Hum.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: [music].

Q4 2024 Altria Group Inc Earnings Call

Request a DemoDemo

Altria Group

Earnings