Earnings Call Insights: Altria Group, Inc. (MO) Q3 2025
Management View
- CEO William Gifford opened by highlighting “Altria continued to build significant momentum in the third quarter with exciting progress across our businesses. For the third quarter, we delivered strong financial performance growing adjusted diluted earnings per share by 3.6%, and we continue to make meaningful progress across our smoke-free portfolio and toward our long-term adjacency goals.”
- Gifford detailed the launch of on! PLUS, Helix’s next-generation oral product, now available in Florida, North Carolina, and Texas. He noted, “on! PLUS outperformed all competitive brands in the sample. on! PLUS achieved the highest purchase intent score driven by the comfort of the pouch.”
- The company announced a new collaboration with KT&G to explore international innovative smoke-free products and U.S. non-nicotine products, as well as an agreement to acquire an ownership interest in Another Snus Factory, manufacturer of the LOOP Nicotine Pouch brand.
- Gifford emphasized the expansion of the share repurchase program and the company’s “60th dividend increase in 56 years.”
- CFO Salvatore Mancuso stated, “Altria delivered strong third quarter and first 9 months financial performance. Adjusted diluted earnings per share increased 3.6% in the third quarter and by 5.9% for the first 9 months. In the smokeable products segment, adjusted operating company’s income grew by 0.7% to nearly $3 billion in the third quarter and by 2.5% to $8.4 billion for the first 9 months.”
Outlook
- Mancuso raised the lower end of 2025 guidance: “We now expect to deliver adjusted diluted EPS in a range of $5.37 to $5.45, representing a growth rate of 3.5% to 5% from a base of $5.19 in 2024.”
- He added, “We expect EPS growth to moderate in the fourth quarter as we lap the lower share count associated with the 2024 accelerated share repurchase program and the benefit of the MSA legal fund expiration.”
- Management remains mindful of consumer spending challenges and is closely monitoring purchasing behaviors.
Financial Results
- Third quarter adjusted diluted EPS increased by 3.6%.
- Smokeable products segment adjusted OCI grew by 0.7% to nearly $3 billion for the quarter; adjusted OCI margins expanded to 64.4% for the quarter and first 9 months.
- Reported domestic cigarette volumes declined by 8.2% in the third quarter; when adjusted for trade inventory and calendar differences, the decline was estimated at 9%.
- PM USA’s cigarette retail share increased sequentially for the second consecutive quarter to 45.4%.
- Basic grew 0.9 share point sequentially and 1.4 share points year-over-year for the third quarter, capturing over half of the discount segment’s growth.
- Middleton reported shipment volume increased 2% for the quarter in cigars.
- Oral Tobacco Products segment adjusted OCI margin expanded by 2.4 percentage points to 69.2% for the third quarter.
- Segment reported shipment volume decreased 9.6% for the quarter, as growth in on! was offset by lower MST volumes.
- Board authorized the expansion of the share repurchase program from $1 billion to $2 billion, expiring December 31, 2026.
- Debt-to-EBITDA ratio as of September 30 was 2x.
Q&A
- Matthew Smith, Stifel: Asked about the deceleration in earnings growth for Q4 and the drivers for smokeable OCI growth. Mancuso responded, “we did talk about the share repurchase and the MSA legal funnel…we feel really good about the ability to narrow guidance by raising the bottom.”
- Smith: Inquired about the moderation in cigarette industry decline. Gifford said, “you’re right, the 12-month doesn’t move quite as quickly. I think what you’re seeing in the marketplace — our consumer is still under pressure…And we’ve seen a bit of consistency around gas prices, inflation, things of that nature, and we’ll see how that continues through the year.”
- Bonnie Herzog, Goldman Sachs: Questioned on! performance and the competitive environment. Gifford responded, “We had that early on with the on! in the marketplace when we launched, and we’ve talked about how we’re bringing the revenue growth management tools over to the category. So we’re extremely pleased with the performance where we were moving up in retail price and the category was moving down significantly.”
- Herzog: Asked about the KT&G partnership. Gifford outlined three prongs: international expansion for on! and on! PLUS, U.S. non-nicotine products, and operational efficiencies for manufacturing and duty drawback.
- Eric Serotta, Morgan Stanley: Sought details on on! PLUS pricing and controllable costs. Gifford noted on! PLUS is a “premium-priced product because of the differentiation and the satisfaction we think it brings…we’ll certainly have introductory price promotions as we look to expand when appropriate.” Mancuso explained controllable costs should be viewed long term and highlighted ongoing cost management initiatives.
- Mirza Faham Baig, UBS: Asked about duty drawback and EPS growth targets. Gifford clarified, “I wouldn’t jump to a conclusion at this point in time…When you think about the pilot program, I want to be clear that we want a functioning regulatory system.” On EPS growth, he affirmed, “Our ambition is the goal. We haven’t changed our goals from an overall CAGR that we stated previously.”
Sentiment Analysis
- Analysts showed a neutral to slightly positive sentiment, probing details on competitive dynamics, pricing, and international expansion, while seeking confirmation on guidance and strategic initiatives.
- Management’s tone was confident during prepared remarks and remained measured but positive during Q&A, frequently highlighting ongoing strategy and cost discipline. Gifford repeatedly expressed confidence, saying, “I’m confident in our strategy, energized by the opportunities ahead.”
- Compared to the previous quarter, both management and analysts maintained a similar tone, but there was a greater focus on new product launches and operational initiatives this quarter.
Quarter-over-Quarter Comparison
- Management again raised the lower end of EPS guidance, now to $5.37-$5.45, compared to $5.35-$5.45 previously.
- Strategic focus expanded visibly this quarter with the launch of on! PLUS and new international partnerships, whereas the previous quarter emphasized brand equity and regulatory advocacy.
- Analysts continued to focus on guidance credibility, consumer pressures, and the regulatory landscape.
- Key metrics such as adjusted EPS growth and margin expansion remained positive, though smokable volume declines persisted.
- Management’s confidence in long-term objectives and new product initiatives was more pronounced this quarter, with multiple references to product differentiation and international growth.
Risks and Concerns
- Management noted “the marketplace remains dynamic,” and continues to monitor “consumer spending” and “purchasing behaviors.”
- Elevated competitor promotional activity in the nicotine pouch market was cited as a challenge, along with ongoing regulatory uncertainty, especially in e-vapor.
- Litigation risks in e-vapor were highlighted, with ongoing disputes involving NJOY and JUUL.
- The company remains cautious about macroeconomic headwinds, inflation, and their effects on consumer discretionary income.
- Regulatory and enforcement progress was acknowledged, but management emphasized the need for “sustained and coordinated enforcement.”
Final Takeaway
Altria’s third quarter demonstrated continued financial resilience, with margin expansion, steady core tobacco performance, and new growth initiatives in smoke-free categories. The launch of on! PLUS and the KT&G collaboration signal expanding international and adjacency ambitions. Management raised the lower end of full-year EPS guidance and increased share repurchase authorization, reinforcing its commitment to shareholder returns while navigating a competitive and shifting regulatory environment.