Altria Group (MO) Q3 2026 Earnings Call: Q&A Summary

Q: Mirza Faham Baig at UBS asked why cigarette volumes remain resilient and if consumer pressure is easing, and requested the long-term strategy for Cowboy Cut.

A: Sal Mancuso stated nicotine is historically resilient and volume declines are moderating due to reduced illicit e-vapor usage. He explained Cowboy Cut is a premium option to retain value-sensitive smokers, similar to previous launches like Marlboro Black, with pricing managed via data analytics.

Q: Matt Smith at Stifel asked what drove the guidance raise and if investment levels have increased.

A: Heather Newman stated the raise to $5.66 to $5.74 reflects strong performance in the first 9 months, inclusive of investments in the smoke-free vision like on! PLUS. She noted they remain confident despite macroeconomic pressures.

Q: Matt Smith at Stifel asked if the $124 million duty drawback benefit in the third quarter is a reasonable run rate for the fourth quarter.

A: Heather Newman confirmed expectations have not changed, noting the benefit is balanced across the second half of the year.

Q: Bonnie Herzog at Goldman Sachs asked how the duty drawback benefit will ramp next year with the PMI contract.

A: Heather Newman clarified the PMI agreement starts in 2027, so current benefits reflect existing contract manufacturing arrangements, and the second half of the year remains balanced.

Q: Bonnie Herzog at Goldman Sachs asked when NJOY will return to market and how the business will be managed differently.

A: Sal Mancuso confirmed they plan to return to the e-vapor market but will do so in a disciplined and profitable manner, focusing on innovation and regulatory compliance.

Q: Andrei Andon-Ionita at Jefferies asked if legal flavored vapes will pressure cigarettes or illicit vapes, and what the expectations are for on! volume growth.

A: Sal Mancuso stated flavors attract smokers to less harmful products, but illicit products remain the primary issue. He attributed on! volume trends to the transition from moist smokeless tobacco and expressed excitement about the on! PLUS pipeline.

Q: Pallav Mittal at Barclays asked why there is a discrepancy between reported on! volume growth and scanner data.

A: Sal Mancuso explained there is some pipeline inventory movement from new product launches like the 12-milligram version, and differences in how scanner data measures pouches versus cans.

Q: Pallav Mittal at Barclays asked how the company plans to grow cigarette profit as volumes face tougher comparisons.

A: Sal Mancuso defended the segment's performance, citing strong OCI growth, the success of the total portfolio approach, and the ability to manage pricing and costs effectively.

Q: Pallav Mittal at Barclays asked for a range for the duty drawback benefit next year.

A: Sal Mancuso declined to provide a specific range, reiterating that the volume builds over time and the PMI agreement impact will be seen next year.

Q: Eric Serotta at Morgan Stanley asked how the nicotine pouch category will evolve given the competitive landscape and innovation.

A: Sal Mancuso noted the category is growing, driven by moist smokeless tobacco users and social friction, and remains confident in the long-term harm reduction opportunity despite high competition.

Q: Eric Serotta at Morgan Stanley asked what is driving the reduction in price elasticity and macro cross-category lines.

A: Sal Mancuso clarified the price elasticity coefficient remains -0.35, with changes driven by year-over-year price movements, while macro cross-category movement is lowering due to the moderation of illicit product usage.