Altria Group, Inc.
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Financial statements
data from SEC XBRL filings. Values are as-reported; restatements supersede originals.
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The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with the other sections in this Quarterly Report on Form 10-Q (“Form 10-Q”), including our condensed consolidated financial statements and related notes contained in Item 1. Financial Statements of this Form 10-Q (“Item 1”). All references to “Notes” in this MD&A are to Notes to our condensed consolidated financial statements in Item 1. When used in this Form 10-Q, the terms “Altria,” “we,” “us” and “our” refer to either (i) Altria Group, Inc. and its consolidated subsidiaries or (ii) Altria Group, Inc. only and not its consolidated subsidiaries, as appropriate in the context.
In this MD&A section, we refer to the following “adjusted” financial measures: adjusted operating companies income (loss) (“OCI”); adjusted OCI margins; adjusted net earnings; adjusted diluted earnings per share (“EPS”); and adjusted effective tax rates. We also refer to the ratio of debt-to-Consolidated EBITDA (earnings before interest, taxes, depreciation and amortization, as defined in our credit agreement, which includes certain adjustments). These financial measures are not required by, or calculated in accordance with, United States generally accepted accounting principles (“GAAP”) and may not be calculated the same as similarly titled measures used by other companies. These financial measures should thus be considered as supplemental in nature and not considered in isolation or as a substitute for the related financial information prepared in accordance with GAAP. For a further description of these non-GAAP financial measures, see the Non-GAAP Financial Measures section below.
Executive Summary
Our Business
We have a leading portfolio of nicotine products for U.S. nicotine consumers age 21+. We are Moving Beyond Smoking® by responsibly transitioning adult smokers to a smoke-free future, competing vigorously for existing smoke-free adult nicotine consumers and exploring new growth opportunities - beyond the United States and beyond nicotine (“Vision”). We previously established our 2028 Enterprise Goals (“2028 Goals”) to provide our investors with specific metrics to measure our progress as we execute on our Vision. For further discussion of our 2028 Goals, see our Annual Report on Form 10-K for the year ended December 31, 2025 (“2025 Form 10-K”).
Our wholly owned subsidiaries include leading manufacturers of both combustible and smoke-free products. In combustibles, we own Philip Morris USA Inc. (“PM USA”), the most profitable U.S. cigarette manufacturer, and John Middleton Co. (“Middleton”), a leading U.S. cigar manufacturer.
In smoke-free products, we own U.S. Smokeless Tobacco Company LLC (“USSTC”), the leading global moist smokeless tobacco (“MST”) manufacturer, Helix Innovations LLC (“Helix”), a leading manufacturer of oral nicotine pouches, and NJOY, LLC (“NJOY”), an e-vapor manufacturer with products covered by marketing granted orders (“MGO”) from the U.S. Food and Drug Administration
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(“FDA”). Additionally, we have a majority-owned joint venture, Horizon Innovations LLC (“Horizon”), for the U.S. marketing and commercialization of heated tobacco stick products. As of the date of this Form 10-Q, Horizon had no products in the U.S. marketplace.
The brand portfolios of our operating companies include Marlboro®, Black & Mild®, Copenhagen®, Skoal®, on!® and NJOY®. Trademarks related to Altria referenced in this Form 10-Q are the property of Altria or our subsidiaries or are used with permission.
Our investments in equity securities include Anheuser-Busch InBev SA/NV (“ABI”), the world’s largest brewer, and Cronos Group Inc. (“Cronos”), a leading Canadian cannabinoid company.
Trends and Developments
In this section of the MD&A, we discuss certain factors that have impacted our businesses as of the date of this Form 10-Q. In addition, we are aware of and address certain trends and developments that could, individually or in the aggregate, have a material impact on our businesses, including the value of our investments in equity securities, in the future. In this section, we focus on the discretionary income pressures on adult nicotine consumers, evolving consumer preferences, illicit flavored disposable e-vapor products and supply chain disruptions. Other trends and developments are discussed elsewhere in this MD&A.
Through the first quarter of 2026, U.S. adult nicotine consumers continued to face inflationary pressure on discretionary income, with impacts more pronounced among lower-income consumers. Heightened geopolitical risk and uncertainty following the recent developments in the Middle East contributed to increased energy price volatility, with gas prices increasing to an average of $3.64 per gallon during March. The increase in gas prices contributed to elevated inflation in March of 3.3%, above the Federal Reserve’s 2% target and the highest level since early 2024. These macroeconomic pressures were partially offset by incremental near-term liquidity support, as Internal Revenue Service data indicates average tax refunds through the end of March increased versus the prior year.
Overall discretionary income pressures on adult nicotine consumers have resulted in increased discount brand share and contributed to evolving adult nicotine consumer preferences, each of which has negatively impacted the sales volumes of certain of our operating companies’ premium brands. For the first quarter of 2026, the discount retail share of the cigarette category reached 33.3%, an increase of 2.4 share points versus the first quarter of 2025 and 0.5 share points sequentially. Additionally, we believe that a significant number of adult nicotine consumers switch among nicotine categories, use multiple forms of nicotine products and try innovative nicotine products, such as e-vapor products and oral nicotine pouches. The U.S. nicotine pouch category continued to grow throughout the first quarter of 2026 to 58.1% of the U.S. oral tobacco category, an increase of 9.1 share points versus the first quarter of 2025. When adjusted for trade inventory movements, our smokeable products segment domestic cigarette shipment volume declined by an estimated 4% in the first quarter of 2026 versus the first quarter of 2025. When adjusted for trade inventory movements, total estimated domestic cigarette industry volume declined by 5% in the first quarter of 2026 versus the first quarter of 2025. In the fourth quarter of 2025, we estimated the industry decline rate to be 6.5% versus the fourth quarter of 2024. We believe that the 1.5 percentage points change in the domestic cigarette industry volume decline rate in the first quarter of 2026 was due primarily to reduced cross-category movement between cigarettes and illicit flavored disposable e-vapor products. As innovative smoke-free products evolve to better address the preferences of adult nicotine consumers, these consumers continue to transition from cigarettes and MST products to innovative smoke-free products, which has reduced the sales volumes of our operating companies’ cigarette and MST products.
In response to the proliferation of illicit flavored disposable e-vapor products, states and the federal government have taken various regulatory and enforcement actions. For example, the FDA and U.S. Customs and Border Protection have made it more difficult to import properly declared illicit e-vapor products, seized unauthorized e-vapor products and issued warning letters to importers. Despite these enforcement measures, insufficient actions against manufacturers, distributors and retailers of nicotine products requiring FDA review for which no PMTAs have been submitted have allowed such products to continue to proliferate in the market. We expect that effective enforcement against illicit flavored disposable e-vapor products will occur more gradually than initially anticipated.
Additionally, we continue to see increased illicit activity across multiple nicotine categories, including nicotine pouch products and cigarettes. In 2026, traditional tobacco retailers continued to carry various synthetic oral nicotine pouch products. We continue to track the overall dynamics across multiple nicotine categories as well as competitive threats to our brands.
We are monitoring volatility in domestic and global economies and disruptions in the supply and distribution chains. This volatility and disruption are the result of several factors, including macroeconomic conditions, raw materials availability and geopolitical events. We continue to work to mitigate the potential negative impacts of these macroeconomic and geopolitical dynamics on our businesses through, among other actions, proactive engagement with current and potential suppliers and distributors and the development of alternative sourcing strategies.
See Operating Results by Business Segment - Business Environment for additional information on the trends and developments discussed above.
The trends and developments above have not had a material adverse impact on our results of operations, cash flows or financial position or our ability to achieve our Vision. As the trends and developments evolve and new ones emerge, we will continue to evaluate the potential impacts on our businesses, investments and Vision.
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Consolidated Results of Operations for the Three Months Ended March 31, 2026
The changes in net earnings and diluted EPS for the three months ended March 31, 2026, from the three months ended March 31, 2025, were due primarily to the following:
| (in millions, except per share data) | Net Earnings | Diluted EPS | ||||||||
For the three months ended March 31, 2025 | $ | 1,077 | $ | 0.63 | ||||||
2025 Acquisition-related items | 65 | 0.04 | ||||||||
2025 Asset impairment, exit and implementation costs | 884 | 0.52 | ||||||||
2025 Tobacco and health and certain other litigation items | 30 | 0.02 | ||||||||
2025 Amortization of intangibles | 31 | 0.02 | ||||||||
2025 ABI-related special items | 17 | 0.01 | ||||||||
2025 Cronos-related special items | (18) | (0.01) | ||||||||
2025 Income tax items | 3 | — | ||||||||
Subtotal 2025 special items | 1,012 | 0.60 | ||||||||
2026 NPM Adjustment Items | 9 | — | ||||||||
2026 Acquisition-related items | (2) | — | ||||||||
2026 Asset impairment, exit and implementation costs | (5) | — | ||||||||
2026 Tobacco and health and certain other litigation items | (2) | — | ||||||||
2026 Amortization of intangibles | (20) | (0.01) | ||||||||
2026 ABI-related special items | (1) | — | ||||||||
2026 Cronos-related special items | (2) | — | ||||||||
2026 Income tax items | (12) | (0.01) | ||||||||
Subtotal 2026 special items | (35) | (0.02) | ||||||||
| Fewer shares outstanding | — | 0.01 | ||||||||
| Change in tax rate | 11 | 0.01 | ||||||||
| Operations | 118 | 0.07 | ||||||||
For the three months ended March 31, 2026 | $ | 2,183 | $ | 1.30 | ||||||
2026 Reported Net Earnings and Reported Diluted EPS | $ | 2,183 | $ | 1.30 | ||||||
2025 Reported Net Earnings and Reported Diluted EPS | $ | 1,077 | $ | 0.63 | ||||||
| % Change | 100%+ | 100%+ | ||||||||
2026 Adjusted Net Earnings and Adjusted Diluted EPS | $ | 2,218 | $ | 1.32 | ||||||
2025 Adjusted Net Earnings and Adjusted Diluted EPS | $ | 2,089 | $ | 1.23 | ||||||
| % Change | 6.2 | % | 7.3 | % | ||||||
For a discussion of special items and other business drivers affecting the comparability of statements of earnings amounts and reconciliations of adjusted earnings and adjusted diluted EPS, see Consolidated Operating Results below.
▪Fewer Shares Outstanding: Fewer shares outstanding were due to shares we repurchased under our share repurchase programs.
▪Operations: The increase of $118 million in operations (which excludes the impact of special items shown in the table above) was due primarily to higher OCI.
For further details, see Consolidated Operating Results and Operating Results by Business Segment below.
Non-GAAP Financial Measures
We report our financial results in accordance with GAAP. However, our management also reviews certain financial results, including OCI, OCI margins, net earnings and diluted EPS, on an adjusted basis, which excludes certain income and expense items that our management believes are not part of underlying operations. These items may include, for example, loss on early extinguishment of debt, restructuring charges, asset impairment charges, acquisition, disposition and integration-related items, equity investment-related special items, certain income tax items, charges associated with tobacco and health and certain other litigation items, resolutions of certain non-participating manufacturer (“NPM”) adjustment disputes under the Master Settlement Agreement (“NPM Adjustment Items”) and amortization expense associated with definite-lived intangible assets (“amortization of intangibles”). While amortization of intangibles is excluded from our adjusted financial measures, net revenues generated from these definite-lived intangible assets during the periods
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presented, if applicable, are included in our adjusted financial measures. In addition, our management reviews the ratio of debt-to-Consolidated EBITDA, which we use as a factor to determine our ability to access the capital markets and make investments in pursuit of our Vision. Consolidated EBITDA is calculated in accordance with our Credit Agreement (defined below in Liquidity and Capital Resources) and includes certain adjustments. Our management does not view any of these special items to be part of our underlying results as they may be highly variable, may be unusual or infrequent, are difficult to predict and can distort underlying business trends and results. Our management also reviews income tax rates on an adjusted basis, which may exclude certain income tax items from our reported effective tax rate.
Our management believes that the foregoing financial measures provide useful additional insight into underlying business trends and results, and provide a more meaningful comparison of year-over-year results. Our management uses these financial measures and regularly provides these to our chief operating decision maker (“CODM”) for planning, forecasting and evaluating business and financial performance, including allocating capital and other resources and evaluating results relative to employee compensation targets. The foregoing financial measures are not required by, or calculated in accordance with, GAAP and may not be calculated the same as similarly titled measures used by other companies. The foregoing financial measures should thus be considered as supplemental in nature and not considered in isolation or as a substitute for the related financial information prepared in accordance with GAAP. When we provide a non-GAAP measure in this Form 10-Q, we also provide a reconciliation of that non-GAAP financial measure to the most directly comparable GAAP financial measure.
Discussion and Analysis
Our critical accounting policies and estimates are discussed in our 2025 Form 10-K; there have been no updates to these critical accounting estimates, except as noted below.
Critical Accounting Estimates
Goodwill and Other Intangible Assets Impairment Testing
We conduct a required annual review of goodwill and indefinite-lived intangible assets for potential impairment as of October 1 of each year, in accordance with our accounting policy, and more frequently if an event occurs or circumstances change that would require an interim quantitative impairment assessment. There have been no events or changes in circumstances that indicate an interim quantitative impairment assessment was required as of March 31, 2026.
E-Vapor Reporting Unit Goodwill
In 2025, we recorded impairments of the values of the goodwill and other intangible assets within our e-vapor reporting unit as a result of the U.S. International Trade Commission (“ITC”) exclusion order and cease-and-desist orders prohibiting the importation and sale of NJOY ACE into the United States and our expectation that effective enforcement against illicit flavored disposable e-vapor products would occur more gradually than initially anticipated. As of December 31, 2025, the estimated fair value and carrying value of the e-vapor goodwill was $610 million after recording impairments during the first and fourth quarters of 2025. In addition, the carrying value of the e-vapor reporting unit’s net assets (including the effect of intercompany debt), which was negative, approximated its estimated fair value.
We believe that the estimated fair value of the e-vapor reporting unit at December 31, 2025 remains reasonable and there are no events or circumstances indicating an impairment for the three months ended March 31, 2026. Fair value calculations are sensitive to changes in certain judgments and assumptions. The significant judgments and assumptions that drive the fair value of the reporting unit are the (i) timing and extent of effective enforcement against illicit flavored disposable e-vapor products; (ii) timing and likelihood of regulatory authorizations of e-vapor products, including of NJOY’s products; (iii) timing of the commercialization of NJOY e-vapor products in the United States; (iv) long-term growth of the e-vapor category; and (v) conversion rates of illicit flavored disposable e-vapor consumers to FDA-authorized e-vapor products and, specifically, NJOY’s e-vapor products. Fair value calculations can be negatively affected by changes in these judgments and assumptions, some of which relate to broader macroeconomic conditions and governmental actions outside of our control. If these assumptions or judgments regarding the expectations for the future state of the e-vapor category and NJOY’s business fail to materialize as anticipated, if we experience unfavorable outcomes with respect to litigation proceedings (including actions alleging patent infringement), or if the discount rate used to estimate the fair value increases, we could have additional non-cash impairments of our e-vapor reporting unit goodwill in future periods, which could be material. Based on our 2025 annual impairment test, a hypothetical 1% increase in the discount rate used to estimate the fair value of the e-vapor reporting unit would have resulted in a goodwill impairment charge of approximately $150 million. For further discussion of these factors, see Operating Results by Business Segment - Business Environment below.
Skoal Trademark Indefinite-Lived Intangible Asset
At December 31, 2025, the estimated fair value of the Skoal trademark exceeded its carrying value by approximately 7% ($0.3 billion). MST products, including Skoal, continued to be negatively impacted due in part to evolving adult nicotine consumer preferences, which have continued to contribute to reductions in sales volumes for MST products, including Skoal. For further discussion, see Trends and Developments above and Operating Results by Business Segment - Business Environment - Summary below.
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We believe that the estimated fair value of the Skoal trademark at December 31, 2025 remains reasonable and there are no events or circumstances indicating an impairment for the three months ended March 31, 2026. If the decline in sales volume for Skoal is higher than currently estimated and results in material revenue declines, we believe there may be a material adverse effect on the significant assumptions used in performing our valuation. If Skoal’s actual revenue and income or long-term outlook are significantly unfavorable compared to forecasted performance used to estimate the fair value or if the discount rate used to estimate the fair value increases, we could have material non-cash impairments of the Skoal trademark in future periods. Based on the 2025 annual impairment test, a hypothetical 1% increase in the discount rate used to estimate the fair value of Skoal trademark would have resulted in an impairment charge of approximately $90 million. For further discussion of these factors, see Operating Results by Business Segment - Business Environment below.
For further discussion of goodwill and other intangible assets see Note 2. Goodwill and Other Intangible Assets, net (“Note 2”).
Consolidated Operating Results
| For the Three Months Ended March 31, | |||||||||||||||||||
| (in millions) | 2026 | 2025 | |||||||||||||||||
| Net Revenues: | |||||||||||||||||||
| Smokeable products | $ | 4,758 | $ | 4,622 | |||||||||||||||
| Oral tobacco products | 669 | 654 | |||||||||||||||||
| All other | 1 | (17) | |||||||||||||||||
| Net revenues | $ | 5,428 | $ | 5,259 | |||||||||||||||
| Excise Taxes on Products: | |||||||||||||||||||
| Smokeable products | $ | 648 | $ | 715 | |||||||||||||||
| Oral tobacco products | 22 | 25 | |||||||||||||||||
| Excise taxes on products | $ | 670 | $ | 740 | |||||||||||||||
| Operating Income: | |||||||||||||||||||
| OCI: | |||||||||||||||||||
| Smokeable products | $ | 2,673 | $ | 2,469 | |||||||||||||||
| Oral tobacco products | 435 | 433 | |||||||||||||||||
| All other | (76) | (1,014) | |||||||||||||||||
| Amortization of intangibles | (23) | (37) | |||||||||||||||||
| General corporate expenses | (53) | (63) | |||||||||||||||||
| Operating income | $ | 2,956 | $ | 1,788 | |||||||||||||||
As discussed further in Note 9. Segment Reporting (“Note 9”), our CODM reviews OCI, which is defined as operating income before general corporate expenses and amortization of intangibles, to evaluate the performance of, and allocate resources to, our segments. Our management believes it is appropriate to disclose this measure to help investors analyze our business performance and trends.
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The following table provides a reconciliation of adjusted net earnings and adjusted diluted EPS for the three months ended March 31:
| (in millions of dollars, except per share data) | Earnings before Income Taxes | Provision for Income Taxes | Net Earnings | Diluted EPS | ||||||||||||||
2026 Reported | $ | 2,859 | $ | 676 | $ | 2,183 | $ | 1.30 | ||||||||||
| NPM Adjustment Items | (11) | (2) | (9) | — | ||||||||||||||
| Acquisition-related items | 2 | — | 2 | — | ||||||||||||||
| Asset impairment, exit and implementation costs | 6 | 1 | 5 | — | ||||||||||||||
Tobacco and health and certain other litigation items | 2 | — | 2 | — | ||||||||||||||
| Amortization of intangibles | 23 | 3 | 20 | 0.01 | ||||||||||||||
| ABI-related special items | 1 | — | 1 | — | ||||||||||||||
| Cronos-related special items | 2 | — | 2 | — | ||||||||||||||
| Income tax items | — | (12) | 12 | 0.01 | ||||||||||||||
2026 Adjusted for Special Items | $ | 2,884 | $ | 666 | $ | 2,218 | $ | 1.32 | ||||||||||
2025 Reported | $ | 1,683 | $ | 606 | $ | 1,077 | $ | 0.63 | ||||||||||
| Acquisition-related items | 79 | 14 | 65 | 0.04 | ||||||||||||||
| Asset impairment, exit and implementation costs | 888 | 4 | 884 | 0.52 | ||||||||||||||
| Tobacco and health and certain other litigation items | 40 | 10 | 30 | 0.02 | ||||||||||||||
Amortization of intangibles | 37 | 6 | 31 | 0.02 | ||||||||||||||
| ABI-related special items | 21 | 4 | 17 | 0.01 | ||||||||||||||
| Cronos-related special items | (18) | — | (18) | (0.01) | ||||||||||||||
| Income tax items | — | (3) | 3 | — | ||||||||||||||
2025 Adjusted for Special Items | $ | 2,730 | $ | 641 | $ | 2,089 | $ | 1.23 | ||||||||||
The following special items affected the comparability of statements of earnings amounts for the three months ended March 31, 2026 and 2025:
▪Acquisition-Related Items: We recorded net pre-tax charges reflecting expenses primarily related to the ITC exclusion order and cease-and-desist orders prohibiting the importation and sale of NJOY ACE in the United States. These charges are net of any insurance recoveries from insurance contracts associated with the acquisition of NJOY Holdings, Inc. (“NJOY Transaction”). For further information on the ITC’s determination, see E-vapor Product Litigation - JUUL Patent Litigation in Note 12. Contingencies (“Note 12”). We recorded these items as follows:
| For the Three Months Ended March 31, | |||||||||||||||||||||
| (in millions) | 2026 | 2025 | |||||||||||||||||||
Net revenues (1) | $ | — | $ | 34 | |||||||||||||||||
Cost of sales (1) | — | 37 | |||||||||||||||||||
Marketing, administration and research costs (2) | 1 | (17) | |||||||||||||||||||
| Total | $ | 1 | $ | 54 | |||||||||||||||||
(1) Included in our all other category.
(2) Recorded as general corporate expense. Amount is net of $22 million of insurance recoveries for the three months ended March 31, 2025. To date, we incurred total costs of $152 million, primarily associated with the ITC exclusion order and cease-and desist orders prohibiting the importation and sale of NJOY ACE in the United States and patent infringement lawsuits related to the NJOY Transaction, which were offset by insurance recoveries of $64 million.
Additionally, we recorded a non-cash, pre-tax charge of $25 million for the three months ended March 31, 2025 for the change in the fair value of the contingent payments associated with the NJOY Transaction, which was recorded as general corporate expense and included in marketing, administration and research costs in our condensed consolidated statements of earnings. For further information, see Contingent Payments in Note 5. Financial Instruments.
▪Asset Impairment: We recorded a non-cash impairment charge of $873 million to reduce the carrying value of the e-vapor reporting unit goodwill to its estimated fair value for the three months ended March 31, 2025 in our all other category. For further discussion, see Note 2.
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▪Tobacco and Health and Certain Other Litigation Items: For a discussion of tobacco and health and certain other litigation items and a breakdown of these costs by segment, see Note 12 and Tobacco and Health and Certain Other Litigation Items in Note 9, respectively.
▪Amortization of Intangibles: We recorded pre-tax amortization expense of definite-lived intangible assets of $23 million and $37 million for the three months ended March 31, 2026 and 2025, respectively, in marketing, administration and research costs in our condensed consolidated statements of earnings.
Three Months Ended March 31, 2026 Compared with Three Months Ended March 31, 2025
Net revenues, which include excise taxes billed to customers, increased $169 million (3.2%), due primarily to higher net revenues in our smokeable products segment.
Cost of sales decreased $18 million (1.4%), due primarily to lower NJOY costs and lower shipment volume in our smokeable products segment, partially offset by higher manufacturing costs in our smokeable products segment.
Excise taxes on products decreased $70 million (9.5%), due primarily to 2026 refunds of taxes and duties paid on imported cigarettes and lower shipment volume in our smokeable products segment.
Marketing, administration and research costs decreased $38 million (6.5%), due primarily to lower tobacco and health and certain other litigation items, lower amortization of intangibles, lower general corporate expenses and lower costs related to our Optimize & Accelerate initiative (“Initiative”), partially offset by higher spending in our smokeable products and oral tobacco products segments.
Operating income increased $1,168 million (65.3%), due primarily to higher OCI (which includes the impact of a non-cash impairment of the e-vapor reporting unit goodwill in 2025).
(Income) losses from investments in equity securities were favorable $15 million (10.5%), due primarily to favorable results from our investment in ABI.
Reported net earnings of $2,183 million increased $1,106 million (100%+), due primarily to higher operating income. Reported basic and diluted EPS of $1.30, each increased by 100%+, due primarily to higher reported net earnings.
Adjusted net earnings of $2,218 million increased $129 million (6.2%), due primarily to higher OCI. Adjusted diluted EPS of $1.32 increased by 7.3%, due primarily to higher adjusted net earnings and fewer shares outstanding.
Operating Results by Business Segment
Business Environment
Summary
The U.S. nicotine industry faces a number of business, legal and regulatory challenges that have materially adversely affected and may continue to materially adversely affect our business, results of operations, cash flows or financial position or our ability to achieve our Vision. These challenges, some of which are discussed in more detail in Note 12, and in Part I, Item 1A Risk Factors in our 2025 Form 10-K, include:
▪pending and threatened litigation and bonding requirements;
▪restrictions and requirements imposed by the Family Smoking Prevention and Tobacco Control Act (“FSPTCA”) and restrictions and requirements (and related enforcement actions) that have been, and in the future will be, imposed by the FDA;
▪the FDA’s failure to effectively address illicit nicotine products on the market, including illicit disposable e-vapor and oral nicotine pouch products;
▪illicit trade in nicotine products, including cigarettes, e-vapor products and oral nicotine pouch products;
▪actual and proposed excise tax increases, as well as changes in tax structures and tax stamping requirements;
▪bans and restrictions on nicotine product use imposed by governmental entities and private establishments and employers;
▪other federal, state and local government actions, including:
▪restrictions on the sale of certain nicotine products, the sale of nicotine products by certain retail establishments, the sale of nicotine products with characterizing flavors and the sale of nicotine products in certain package sizes;
▪additional restrictions on the advertising and promotion of nicotine products;
▪other actual and proposed tobacco- or nicotine-related legislation and regulation;
▪prohibitions on the sale of tobacco products based on environmental concerns and the imposition of responsibility on manufacturers for the disposal, recycling or other treatment of post-consumer goods such as plastic packaging; and
▪governmental investigations;
▪reductions in consumption levels of cigarettes and MST products resulting in lower shipment volumes;
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▪increased efforts by tobacco control advocates and other private sector entities (including retail establishments) to further restrict the availability and use of nicotine products or the ability to communicate with adult consumers through third-party digital platforms;
▪changes in adult nicotine consumer purchase behavior, which is influenced by various factors such as macroeconomic and geopolitical conditions (including inflation, tariffs and the economic impacts of international armed conflicts), the proliferation of illicit disposable e-vapor products, excise taxes and product price gap relationships, each of which has resulted and may in the future result in adult nicotine consumers switching to lower-priced nicotine products and lower shipment volumes;
▪the highly competitive nature of all nicotine categories, including competitive disadvantages related to the impact on cigarette prices due to the settlement of certain healthcare cost recovery litigation, the growth of innovative nicotine products, such as e-vapor and oral nicotine pouch products, and the ability of competitors to receive refunds of certain duties, taxes and fees paid on imported tobacco products when offsetting volumes of those products or substantially similar products are subsequently exported;
▪the growth of products using nicotine analogues that are designed to imitate the effects of nicotine but are not subject to the FDA regulatory framework for tobacco products; and
▪potential adverse changes in prices, availability and quality of tobacco, other raw materials and component parts, including as a result of changes in macroeconomic, geopolitical, climate and environmental conditions.
We continue to monitor the evolving business, legal and regulatory challenges within our business environment to assess potential impacts on us. Changes in these and other conditions could have a material adverse effect on our business, results of operations, cash flows, financial position and our ability to achieve our Vision.
FSPTCA and FDA Regulation
▪The Regulatory Framework: The FSPTCA and its related regulations establish broad FDA regulatory authority over all tobacco products and, among other provisions:
▪impose restrictions on the advertising, promotion, sale and distribution of tobacco products (see Final Tobacco Marketing Rule below);
▪establish premarket review pathways for new and modified tobacco products (see Premarket Review Pathways for Tobacco Products and Market Authorization Enforcement below);
▪prohibit any express or implied claims that a tobacco product is or may be less harmful than other tobacco products without FDA authorization;
▪authorize the FDA to impose tobacco product standards that are appropriate for the protection of public health (see Potential Product Standards below); and
▪equip the FDA with a variety of investigatory and enforcement tools, including the authority to inspect product manufacturing and other facilities (see Investigation and Enforcement below).
Effective April 2022, the U.S. Congress expanded the statutory definition of tobacco products to include products containing nicotine derived from any source, including synthetic nicotine. See Premarket Review Pathways for Tobacco Products and Market Authorization Enforcement below for additional information. Currently, however, the statutory definition of tobacco products does not cover products containing nicotine analogues, which are designed to imitate the effects of nicotine. As a result, products containing nicotine analogues are not subject to the FDA regulatory framework for tobacco products.
▪Final Tobacco Marketing Rule: As required by the FSPTCA, the FDA has promulgated a wide range of advertising and promotion restrictions for cigarettes and smokeless tobacco(1) products (the “Final Tobacco Marketing Rule”), which the FDA has subsequently amended to expand specific provisions to all tobacco products, including cigars, pipe tobacco and e-vapor and oral nicotine products containing tobacco-derived nicotine or other tobacco derivatives such as synthetic nicotine. The Final Tobacco Marketing Rule currently does not apply to products containing nicotine analogues.
▪Rulemaking and Guidance: From time to time, the FDA issues proposed regulations and guidance, which may be issued in draft or final form, that generally involve public comment and may include scientific review. We actively engage with the FDA to develop and implement the FSPTCA’s regulatory framework, including submission of comments to various FDA policies and proposals and participation in public hearings and engagement sessions.
The FDA’s implementation of the FSPTCA and related regulations and guidance also may have an impact on enforcement efforts by states, territories and localities of their laws and regulations as well as of the State Settlement Agreements (see State Settlement Agreements below). Such enforcement efforts may adversely affect our operating companies’ abilities to market and sell tobacco products in those states, territories and localities.
(1) “Smokeless tobacco,” as used in this section of this Form 10-Q, refers to smokeless tobacco products first regulated by the FDA in 2009, including MST. It excludes oral nicotine pouches, which were first regulated by the FDA in 2016.
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▪Premarket Review Pathways for Tobacco Products and Market Authorization Enforcement: The FSPTCA permits the sale of tobacco products on the market as of February 15, 2007 and not subsequently modified (“Pre-existing Tobacco Products”) and new or modified products authorized through the pre-market tobacco product application (“PMTA”), Substantial Equivalence (“SE”) or SE Exemption pathways. Subsequent FDA rules also provide a Supplemental PMTA pathway designed to increase the efficiency of submission and review for modified versions of previously authorized products.
For products currently on the market, the FDA premarket authorization enforcement policy varies based on product type and date of availability on the market, specifically:
▪Pre-existing Tobacco Products are exempt from the premarket authorization requirement;
▪cigarette and smokeless tobacco products that were modified or first introduced into the market between February 15, 2007 and March 22, 2011 are generally considered “Provisional Products” for which SE reports were required to be filed by March 22, 2011. These reports must demonstrate that the product has the same characteristics as a product on the market as of February 15, 2007 or to a product previously determined to be substantially equivalent, or has different characteristics but does not raise different questions of public health;
▪tobacco products that were first regulated by the FDA in 2016, including cigars, e-vapor products and oral nicotine pouches that are not Pre-existing Tobacco Products, are generally products for which either an SE report or PMTA needed to be filed by September 9, 2020; and
▪tobacco products containing nicotine from any source other than tobacco (e.g., synthetic nicotine) that were on the market between March 15, 2022 and April 14, 2022 and are not Pre-existing Tobacco Products are generally products for which a manufacturer must have filed a PMTA by May 14, 2022. A manufacturer was permitted to keep such a product on the market until July 13, 2022 provided that a PMTA was filed by May 14, 2022. Thereafter, unless the FDA granted the product a marketing order, the product is subject to possible FDA enforcement.
The FSPTCA requires the FDA to issue a marketing order (either an MGO or a marketing denial order (“MDO”)) with respect to a PMTA no later than 180 days after receipt of the PMTA. Following the 180-day FDA review period, the FSPTCA allows any party that receives an MDO to seek expedited judicial review of the ruling in a federal appellate court within 30 days. Together, these statutory deadlines for FDA action and judicial review create a structure and timeline for manufacturers seeking to market new products. While it is possible that the FDA may bring an enforcement action relating to commercialized products for which a PMTA has been pending longer than the 180-day review period, we believe that any such enforcement action would conflict with the FSPTCA. Our operating companies may decide to commercialize products that have not received MGOs from the FDA if the operating company submitted a PMTA with respect to any such product in compliance with the FSPTCA and the FDA failed to issue a marketing order within the statutory review period.
Modifications to currently marketed products, including modifications that result from, for example, changes to the quantity of tobacco product(s) in a package, a manufacturer being unable to acquire ingredients or a supplier or contract manufacturer being unable to maintain the consistency required in ingredients or manufacturing processes, could trigger the FDA’s premarket review process. Additionally, a manufacturer may be unable to maintain consistency in manufacturing processes as it increases the scale of its manufacturing operations in response to market expansion or product introduction. These circumstances could cause a manufacturer to receive (i) a “not substantially equivalent” determination or (ii) a denial or withdrawal of a PMTA, either of which could result in a product being removed from the market. In addition, new scientific data continues to be developed relating to innovative nicotine products, which could impact the FDA’s determination as to whether a product is, or continues to be, appropriate for the protection of public health and could, therefore, result in the removal of one or more products from the market. Any such actions affecting our operating companies’ products could have a material adverse impact on our business, results of operations, cash flows or financial position.
Products Regulated in 2009: Most cigarette and smokeless tobacco products currently marketed by PM USA and USSTC are “Provisional Products.” PM USA and USSTC timely submitted SE reports for these Provisional Products and have received SE determinations on certain Provisional Products. Those products that were found by the FDA to be not substantially equivalent (certain smokeless tobacco products) had been discontinued for business reasons prior to the FDA’s determinations; therefore, those determinations did not impact business results. PM USA and USSTC have other Provisional Products that continue to be subject to the FDA’s premarket review process. In the meantime, they can continue marketing these products unless the FDA determines that a specific Provisional Product is not substantially equivalent.
Next expected filings
- ~2026-07-30 10-Q expected by 2026-08-10 (in 90 days)
- ~2026-10-30 10-Q expected by 2026-11-10 (in 182 days)
- ~2027-02-25 10-K expected by 2027-02-28 (in 300 days)
- ~2027-04-30 10-Q expected by 2027-05-11 (in 364 days)
Predicted from historical filing cadence; not an SEC commitment.
Recent SEC filings
- 2026-04-30 8-K Earnings Release; Financial Statements and Exhibits
- 2026-04-30 10-Q Quarterly Report
- 2026-02-25 10-K Annual Report
- 2026-01-29 8-K Other Events; Financial Statements and Exhibits
- 2026-01-29 8-K Earnings Release; Officer/Director Change; Financial Statements and Exhibits
- 2025-12-11 8-K Officer/Director Change; Regulation FD Disclosure; Financial Statements and Exhibits
- 2025-10-30 10-Q Quarterly Report
- 2025-10-30 8-K Earnings Release; Other Events; Financial Statements and Exhibits
- 2025-10-09 8-K Officer/Director Change; Regulation FD Disclosure; Financial Statements and Exhibits
- 2025-08-06 8-K Other Events; Financial Statements and Exhibits
- 2025-07-30 10-Q Quarterly Report
- 2025-07-30 8-K Earnings Release; Financial Statements and Exhibits
- 2025-07-23 8-K Material Agreement Entered; Financial Statements and Exhibits
- 2025-06-04 10-K/A Annual Report (Amended)
- 2025-06-03 8-K Trading Blackout; Financial Statements and Exhibits