Altria Group, Inc. (MO) FY2025 10-K and Q2 FY2026 10-Q Summary

Business

From the FY2025 Annual Report on Form 10-K, accession 0000764180-26-000017.

Altria sells nicotine products to U.S. consumers age 21 and over, operating almost entirely inside the United States and generating substantially all of its revenue from domestic customers. Cigarettes are the overwhelming majority of the business: Philip Morris USA Inc. ("PM USA") is the largest cigarette company in the country, and Marlboro, its principal brand, has been the largest-selling cigarette brand in the United States for over 50 years. Products are sold principally to wholesalers, distributors and large retail organizations including chain stores. In the year ended December 31, 2025, net revenues of $23,279 million (including excise taxes billed to customers) broke down as $20,485 million from smokeable products, $2,802 million from oral tobacco products, and the balance negligible or negative in the e-vapor and all other lines.

The operating companies are organized by product form:

• Smokeable products. PM USA manufactures and sells combustible cigarettes;

John Middleton Co. ("Middleton"), a PM USA subsidiary, manufactures and sells machine-made large cigars under the Black & Mild brand, contracting with a third-party importer for substantially all of its cigars. Segment domestic cigarette shipment volume was 61.8 billion units in 2025, down 10.0% from 2024; cigar shipment volume was approximately 1.8 billion units, up 1.8%. Premium cigarettes were 93.6% of reported domestic cigarette shipment volume in 2025, down from 95.9% in 2024.

• Oral tobacco products. U.S. Smokeless Tobacco Company LLC ("USSTC") is the leading

producer and marketer of moist smokeless tobacco ("MST"), with premium brands Copenhagen and Skoal and value brand Red Seal; Helix Innovations LLC ("Helix") sells on! oral nicotine pouches. Segment shipment volume was 732.4 million cans in 2025, down 5.5%.

• E-vapor products. NJOY, LLC sells e-vapor products supplied by third-party

importers. Its portfolio of tobacco and menthol products is covered by FDA marketing granted orders ("MGO"), but its principal product, NJOY ACE, is subject to a U.S. International Trade Commission ("ITC") exclusion order and cease-and-desist orders barring importation and sale in the United States.

At December 31, 2025 the reportable segments were smokeable products, oral tobacco products and e-vapor products, with an all other category comprising Horizon Innovations LLC ("Horizon"), Helix International and other activities, chiefly research and development on new product platforms. Horizon is a joint venture in which Altria held a 75% economic interest at December 31, 2025, with JTI (US) Holding, Inc. ("JTIUH"), a subsidiary of Japan Tobacco Inc., holding 25%. Horizon is responsible for U.S. marketing and commercialization of heated tobacco stick ("HTS") products owned by either party; upon FDA authorization of Ploom HTS products, JTIUH would supply devices and PM USA would manufacture Marlboro HTS consumables. As of February 25, 2026 the joint venture had no products in the U.S. marketplace.

Support entities include Altria Group Distribution Company ("AGDC") for domestic sales and distribution and Altria Client Services LLC ("ALCS") for legal, regulatory, research and product development, consumer engagement, finance, human resources and external affairs. Altria also holds equity-method investments, reported on a one-quarter lag, in Anheuser-Busch InBev SA/NV ("ABI"), the world's largest brewer, and Cronos Group Inc. ("Cronos"), a Canadian cannabinoid company.

Raw material sourcing is split by company: PM USA buys the majority of its burley and flue-cured leaf directly from domestic growers under a contract growing program, with the remainder through leaf merchants; USSTC contracts similarly for dark fire-cured, dark air-cured and burley leaf; Middleton buys through leaf merchants with no growing program; Helix and NJOY purchase tobacco-derived nicotine materials from suppliers. The company describes the tobacco products market as highly competitive on brand recognition and loyalty, product quality, taste, price, innovation, marketing, packaging, distribution and promotion.

The stated strategy, "Moving Beyond Smoking", is to transition adult smokers to a smoke-free future, compete for existing smoke-free nicotine consumers, and pursue growth beyond the United States and beyond nicotine. Against that, management set 2028 Enterprise Goals: a mid-single-digit adjusted diluted EPS compound annual growth rate in 2028 from a recast $4.87 base in 2022; mid-single-digit annual dividend per share growth through 2028; a target debt-to-Consolidated EBITDA ratio of approximately 2.0x; maintaining U.S. tobacco leadership; maintaining total adjusted operating companies income ("OCI") margin of at least 60% in each year through 2028; competing internationally in top innovative oral tobacco markets while developing a path into heated tobacco and e-vapor; and entering non-nicotine categories with broad commercial distribution of at least five products by 2028. The U.S. smoke-free goals are explicitly under reassessment because of market disruption from illicit e-vapor products, with updated goals promised when the legitimate e-vapor market becomes clearer.

At December 31, 2025 Altria employed approximately 5,900 people, 26% of whom were hourly manufacturing employees covered by collective bargaining agreements. The Optimize & Accelerate initiative announced in October 2024 centralizes work, outsources certain transactional activities and standardizes processes enterprise-wide.

Risk factors

From the FY2025 Form 10-K, accession 0000764180-26-000017.

Volume decline and down-trading. The portfolio is concentrated in premium brands, Marlboro, Copenhagen, Skoal, whose buyers are sensitive to macroeconomic conditions. In periods of inflation and economic uncertainty, consumers reduce consumption, shift to discount brands and move to lower-priced nicotine products. If pricing cannot offset volume declines, results suffer. Evolving preferences, consumers moving across nicotine categories and buying illicit flavored e-vapor, have primarily driven domestic cigarette industry volume declines.

Illicit trade. Illicit flavored disposable e-vapor usage has increased sharply and such products now comprise the majority of the e-vapor category. This depresses FDA-authorized e-vapor volume and increases cross-category movement away from cigarettes. Altria states that enforcement actions to date have not materially curbed the proliferation, that it has increased engagement with the FDA and other agencies, and that it has taken its own legal action. Illicit trade also appears across nicotine pouches and cigarettes.

Competitive cost disadvantage from settlements. PM USA competes against lower-priced brands from manufacturers not party to settlements of healthcare cost recovery litigation and therefore not required to make the inflation-adjusted annual settlement payments that have driven substantial cigarette price increases. Additional price competition comes from diversion, counterfeiting and untaxed internet sales. A further risk is unequal access to "duty drawback" refunds of duties, taxes and fees on imported tobacco products.

Failure to commercialize innovative products. Growth depends on e-vapor, heated tobacco and oral nicotine pouches. The ITC bans on NJOY ACE importation and sale are under appeal to the U.S. Court of Appeals for the Federal Circuit but remain in effect during the appeal. JUUL Labs, Inc. ("JUUL") has filed similar patent infringement actions in the District of Arizona and with the ITC over NJOY Daily. FDA pre-market tobacco application ("PMTA") review periods are lengthy and unpredictable, and the FDA may bring enforcement against products commercialized while a PMTA has been pending beyond the statutory review period. Horizon's success depends on regulatory authorizations, commercialization milestones and consumer preferences, among other factors.

Impairment. In 2025 Altria recorded impairments of goodwill and other intangible assets in the e-vapor reporting unit as a result of the ITC orders and an expectation that effective enforcement against illicit flavored disposable e-vapor would occur more gradually than anticipated. Further non-cash impairments are possible if judgments about the e-vapor category or NJOY's business fail to materialize, if litigation goes badly, or if the discount rate rises. Separately, the Skoal trademark was impaired in the second quarter of 2024 as the MST category shrank under nicotine pouch growth, and a further Skoal impairment is possible.

Acquisitions and investments. Altria may be unable to realize the expected benefits of the NJOY Holdings, Inc. acquisition ("NJOY Transaction"). The filing notes the former investment in JUUL did not produce, and the investment in Cronos has not to date produced, the economic and competitive advantages expected.

Litigation. Proceedings pending or threatened in U.S. and foreign jurisdictions cover product liability, unfair trade practices, antitrust, tax, contraband, intellectual property, breach of contract, employment, environmental and RICO claims. Damages claimed have ranged into the billions, and non-monetary remedies are possible, in the Federal Government's RICO case the district court imposed no monetary penalties but ordered "corrective statements". The vast majority of tobacco cases historically have been filed in Florida, but filings against PM USA outside Florida have increased in recent years. Bonding relief may not be obtainable in all cases, though 47 states and Puerto Rico limit or waive bond amounts; the constitutionality of Florida's bond cap has been challenged.

Regulation. The Family Smoking Prevention and Tobacco Control Act ("FSPTCA") gives the FDA broad authority over advertising, pre-market review, product standards and enforcement. Altria cannot predict whether the FDA will authorize particular innovative products or impose a burdensome framework, nor whether it will enforce against violators, and it argues that FDA inaction creates competitive disadvantage by letting illicit products establish share while authorized products wait.

Excise taxes. Nicotine products carry substantial and rising excise taxes, pushing consumption down and shifting purchases toward discount, lower-taxed, counterfeit and contraband products. Substantial increases on e-vapor and oral nicotine products could also discourage smokers from switching.

Supply. Crop shifts, government price and production controls, trade sanctions, tariffs, labor disruption, inflation, geopolitical instability and climate events can raise cost or cut supply and quality of tobacco and other inputs (wood tips for cigars, aluminum for packaging are cited). Notably, the nicotine used in the innovative smoke-free products is extracted from tobacco produced in a single country. Altria also relies on a small number of manufacturing facilities and key suppliers and distributors. Single-use plastic bans and extended producer responsibility mandates could affect packaging.

Financing and ratings. Altria typically accesses the commercial paper market in the second quarter to help fund Master Settlement Agreement ("MSA") payments, tax obligations and dividends; credit market disruption or high rates would hurt liquidity and the dividend rate. A downgrade, as occurred following the JUUL investment, would raise borrowing costs and could impair commercial paper access.

Other. Risks also include recall exposure; public health emergencies; difficulty attracting and retaining skilled talent given declining social acceptance of tobacco; compliance with foreign laws including anti-bribery statutes; tax position challenges and rate changes; climate and sustainability regulation; investor responses to corporate responsibility performance (some investors will not hold tobacco companies at all); dependence on information technology largely managed by third-party providers, with artificial intelligence intensifying cyber risk; data protection and privacy compliance; currency translation, ABI business results, ABI share price and potential impairment on the ABI investment, plus reduced board nomination rights and possible loss of equity-method treatment if ownership falls below certain levels; and Cronos's exposure to cannabis laws including the U.S. Controlled Substances Act. Outsourcing under the Optimize & Accelerate initiative is itself flagged as raising risks to internal control, data protection and regulatory compliance.

Management's discussion, fiscal year 2025

From the FY2025 Form 10-K, accession 0000764180-26-000017.

Consolidated. Net revenues of $23,279 million decreased $739 million (3.1%), driven primarily by lower smokeable products revenue. Cost of sales fell $480 million (7.9%) on lower shipment volume and lower per unit settlement charges. Excise taxes on products fell $434 million (12.1%). Marketing, administration and research costs fell $230 million (8.4%), mainly lower acquisition-related items and the absence of 2024 transaction costs for the partial sale of the ABI investment (the "ABI Transaction"). Operating income fell $1,342 million (11.9%) to $9,899 million, principally on lower OCI, the 2025 e-vapor goodwill and definite-lived intangible impairments against the 2024 Skoal trademark impairment, partly offset by lower general corporate expenses.

Reported net earnings of $6,947 million fell $4,317 million (38.3%), driven mainly by the 2024 gain on the sale of the IQOS System commercialization rights and lower operating income; reported basic and diluted EPS of $4.12 each fell 37%. Adjusted net earnings of $9,148 million rose $212 million (2.4%) on higher OCI and a lower adjusted tax rate, partly offset by lower net periodic benefit income and higher net interest and other debt expense; adjusted diluted EPS of $5.42 rose 4.4%. (Income) losses from investments in equity securities were unfavorable by $142 million (21.8%), mainly lower ABI income including the prior-year gain on the ABI Transaction.

Special items in the year included: non-cash pre-tax impairment charges of $2,128 million to write the e-vapor reporting unit goodwill and definite-lived intangibles down to estimated fair value; pre-tax exit and implementation costs of $56 million for the Optimize & Accelerate initiative (2024: $68 million); pre-tax amortization of definite-lived intangibles of $132 million (2024: $139 million); a $25 million non-cash pre-tax charge for the change in fair value of NJOY contingent payments; and net pre-tax losses of $95 million on ABI-related special items, mostly mark-to-market losses on ABI financial instruments tied to its share commitments. Beginning in the first quarter of 2025 Altria began treating amortization of intangibles as a special item excluded from adjusted results, recasting prior periods. Across 2024 and 2025 combined, total costs of $151 million were incurred primarily in connection with the ITC orders and NJOY-related patent litigation, offset by $64 million of insurance recoveries. The Optimize & Accelerate initiative is expected to deliver cumulative savings of at least $600 million by the end of 2029, with estimated pre-tax charges revised up to approximately $175 million from approximately $125 million as all phases were finalized.

Trends. Through 2025 inflation stayed above the Federal Reserve's 2% target and discretionary income pressure was most acute among lower-income consumers. In the fourth quarter of 2025 the discount retail share of the cigarette category reached 32.9%, up 2.6 share points year over year and 0.7 sequentially. Adjusted for trade inventory movements and other factors, total domestic cigarette industry volume declined an estimated 6.5% in the fourth quarter versus 8% in the third quarter; management attributed the 1.5-point improvement primarily to illicit flavored disposable e-vapor growth moderating slightly. Altria also cut its estimate of cross-category movement's contribution to 2025 cigarette industry volume decline to roughly 2%–3% from a prior 3%–4%. The U.S. nicotine pouch category grew to 56.9% of the U.S. oral tobacco category in the fourth quarter, up 10.4 share points year over year. Flavored disposable e-vapor products, most of which Altria believes evaded the regulatory process, are estimated at approximately 70% of the e-vapor category. Management stated it did not observe a material impact on consumer purchasing behavior from tariffs and does not expect tariffs to materially affect 2026 costs on presently available information.

Smokeable products. Net revenues fell $719 million (3.4%) to $20,485 million as lower shipment volume ($2,426 million) outweighed higher pricing ($1,680 million, net of higher promotional investments). Reported OCI rose $163 million (1.5%) to $10,984 million and adjusted OCI rose $142 million (1.3%) to $11,064 million, on pricing and lower per unit settlement charges. Reported domestic cigarette shipment volume fell 10.0%, an estimated 9.5% adjusted for calendar differences, against an estimated 8% industry decline adjusted for calendar differences, trade inventory movements and other factors. Marlboro retail share of the premium segment was 59.4%, up 0.1 point; total industry discount category retail share was 31.8%, up 2.2 points. PM USA product liability defense costs were $113 million (2024: $125 million).

Oral tobacco products. Net revenues rose $26 million (0.9%) to $2,802 million as higher pricing ($263 million) was mostly offset by lower shipment volume and adverse volume/mix ($237 million). Reported OCI rose $379 million (26.2%) to $1,828 million, largely because of the prior year's $354 million Skoal trademark impairment; adjusted OCI rose $24 million (1.3%) to $1,835 million. Reported domestic shipment volume fell 5.5% (an estimated 4.5% adjusted for calendar differences and trade inventory movements). Segment retail share was 31.9%, down 5.4 points on MST declines. The U.S. nicotine pouch category reached 53.3% of the oral tobacco category, up 10.0 points, while on! share of the nicotine pouch category was 15.4%, down 3.4 points. Prior-period retail share and industry volume data were restated from the first quarter of 2025 to include synthetic oral nicotine pouch products.

E-vapor products. For 2025 the segment reported net revenues of $(13) million and reported OCI of $(2,297) million, which on an adjusted basis, excluding $2,128 million of impairments and $67 million of acquisition and disposition-related items, was $(102) million. Total company adjusted OCI was $12,568 million on an adjusted OCI margin of 62.4%.

Liquidity. Cash and cash equivalents were $4.5 billion at December 31, 2025, alongside commercial paper access and full availability of a $3.0 billion senior unsecured five-year revolving credit agreement. Total long-term debt was $25.7 billion (2024: $24.9 billion), all fixed rate, at a weighted-average coupon of approximately 4.5% (2024: 4.3%). During 2025 Altria issued $1.0 billion of senior unsecured notes in each of the first and third quarters ($2.0 billion total) and, in the second quarter, repaid at maturity $750 million of senior unsecured notes and €750 million ($857 million) of senior unsecured Euro notes. Net cash provided by operating activities was $9.3 billion (2024: $8.8 billion). Investing activities used $0.3 billion against $2.2 billion provided in 2024, which had included ABI Transaction proceeds. Capital expenditures rose 52.1% to $216 million. Financing activities used $7.6 billion (2024: $11.5 billion). Dividends paid were approximately $6,960 million, up 1.7%; in the third quarter of 2025 the Board raised the quarterly dividend 3.9% to $1.06 per share, an annualized rate of $4.24. In October 2025 the Board expanded the existing share repurchase program from $1.0 billion to $2.0 billion, expiring December 31, 2026. Payments under the State Settlement Agreements and FDA user fees were approximately $3.5 billion (2024: $3.9 billion), with $3.0 billion on average estimated as the annual charge to cost of sales for the next three years.

Current quarter, second quarter and first half of 2026

From the Form 10-Q for the quarter ended June 30, 2026, accession 0000764180-26-000094, and the earnings release furnished as Exhibit 99.1 to the Form 8-K filed July 30, 2026, accession 0000764180-26-000093.

Segment change. During the first quarter of 2026 Altria concluded that the e-vapor products operating segment was no longer expected to be of continuing significance and no longer met the quantitative thresholds of ASC 280. E-vapor was therefore removed as a reportable segment and folded back into the all other category for all periods presented. At June 30, 2026 the reportable segments were smokeable products and oral tobacco products; all other comprises e-vapor (NJOY), Horizon, Helix International and other business activities, principally research and development. This reverses the presentation used in the FY2025 Form 10-K, where the 2025 e-vapor impairments had pushed that operating segment over the reportable threshold.

Consolidated results. Second-quarter net revenues were essentially unchanged at $6,111 million (up 0.1%), as higher smokeable products and all other revenue offset lower oral tobacco revenue; revenues net of excise taxes rose 1.2% to $5,356 million. Operating income fell $94 million (2.9%) to $3,136 million on lower OCI and higher general corporate expenses. Reported net earnings of $2,298 million fell $80 million (3.4%) and reported basic and diluted EPS of $1.37 each fell 2.8%. Adjusted net earnings of $2,480 million rose $47 million (1.9%) and adjusted diluted EPS of $1.48 rose 2.8%. The reported effective tax rate was 21.5% (down 2.2 points) and the adjusted rate 23.0%.

For the six months, net revenues rose $178 million (1.6%) to $11,539 million and revenues net of excise taxes rose 3.1% to $10,114 million. Operating income rose $1,074 million (21.4%) to $6,092 million, largely because the prior-year period carried the e-vapor goodwill impairment. Reported net earnings of $4,481 million rose $1,026 million (29.7%) and reported diluted EPS of $2.67 rose 30.9%. Adjusted net earnings of $4,698 million rose $176 million (3.9%) and adjusted diluted EPS of $2.80 rose 4.9%. The six-month reported income tax rate was 22.6% against 28.0% a year earlier, the decline driven mainly by the prior year's non-deductible e-vapor goodwill impairment and by tax benefits from the effective settlement with the IRS in May 2026 of the 2017 tax year audit. That settlement excluded Altria's 2017 refund claim arising from the Tax Cuts and Jobs Act's removal of downward attribution rules relevant to the ABI investment; the claim was denied in September 2025 and Altria is pursuing appellate remedies.

USSTC Facilities Consolidation. In May 2026 Altria announced a plan to move USSTC's manufacturing operations from the Nashville, Tennessee plant to a new facility to be built on the existing Hopkinsville, Kentucky campus, expected to be substantially complete in the first quarter of 2028. Total pre-tax charges are estimated at approximately $180 million, cash employee separation and associated costs plus non-cash asset-related charges for inventory and machinery and equipment. Charges of $78 million were recorded in the second quarter ($59 million non-cash asset-related, $19 million employee separation), with no cash paid as of June 30, 2026. Separately, cumulative Optimize & Accelerate pre-tax charges since inception reached $140 million of an estimated $175 million total, with most of the remainder expected by the end of 2027.

Leadership transition. William F. Gifford, Jr. retired as Chief Executive Officer and as a director effective May 14, 2026, at the conclusion of the 2026 Annual Meeting of Shareholders, a succession announced in the Form 8-K filed December 11, 2025, accession 0000764180-25-000133. Salvatore Mancuso, previously Executive Vice President and Chief Financial Officer, became Chief Executive Officer and Heather A. Newman became Executive Vice President and Chief Financial Officer, both effective the same date. Mr. Gifford is providing transition consulting services through December 31, 2026 under a Consulting Agreement dated May 15, 2026, which appears in the exhibit index to the Form 10-Q for the quarter ended June 30, 2026 as item 10.3, alongside an Agreement and General Release of the same date as item 10.1.

Smokeable products. Second-quarter net revenues rose $35 million (0.7%) to $5,392 million as higher pricing ($309 million) outweighed adverse volume/cigarette mix ($279 million); revenues net of excise taxes rose 2.0% to $4,660 million. Reported OCI rose $12 million (0.4%) to $2,942 million, helped by pricing and $27 million of higher refunds of taxes and duties on imported cigarettes but held back by volume/cigarette mix ($221 million), higher tobacco and health and certain other litigation items ($63 million) and higher costs ($44 million). Adjusted OCI rose $71 million (2.4%) to $3,018 million, with adjusted OCI margin up 0.3 points to 64.8%; reported OCI margin fell 1.0 point to 63.1%. Reported domestic cigarette shipment volume fell 3.2% to 15,554 million sticks, an estimated 4.5% adjusted for trade inventory movements, against an estimated 5% industry decline. Marlboro volume fell 7.4% while discount volume rose 67.3%; cigar shipment volume rose 5.0%. Contract manufactured export cigarettes rose 54.9% to 736 million sticks. Marlboro retail share of the total cigarette category was 39.5%, down 1.5 points year over year, though its share of the premium segment held at 59.6%. Industry discount retail share was 33.8%, up 2.6 points. For the six months, net revenues rose $171 million (1.7%) and both reported and adjusted OCI rose, by $216 million (4.0%) and $229 million (4.2%) respectively, with adjusted OCI margin up 0.4 points to 64.9%.

Oral tobacco products. Second-quarter net revenues fell $40 million (5.3%) to $713 million on lower shipment volume ($74 million) partly offset by higher pricing ($31 million). Reported OCI fell $117 million (23.5%) to $381 million, driven by the $78 million of USSTC Facilities Consolidation costs and lower volume; adjusted OCI fell $40 million (8.0%) to $460 million and adjusted OCI margin fell 2.0 points to 66.7%, while reported OCI margin fell 13.2 points to 55.2%. Reported domestic shipment volume fell 8.5% to 181.7 million cans, an estimated 2% decline adjusted for trade inventory movements. Copenhagen shipments fell 10.9% and Skoal 13.7%, while on! fell 4.2%. Segment retail share was 29.0%, down 3.7 points year over year and unchanged sequentially. The nicotine pouch category reached 59.9% of the oral tobacco category, up 8.1 points year over year and 1.8 sequentially; on! share of the nicotine pouch category was 14.4%, down 1.7 points year over year but up 1.0 point sequentially, and on! share of the total oral tobacco category was 8.6%, up 0.3 points. For the six months, net revenues fell $25 million (1.8%), reported OCI fell $115 million (12.4%) and adjusted OCI fell $39 million (4.2%).

Smoke-free portfolio. Helix expanded on! PLUS to 120,000 stores nationwide, resumed shipments of 12-milligram on! PLUS in Florida, North Carolina and Texas in Mint, Wintergreen and Tobacco with national expansion planned for the third quarter, and plans additional flavors across 6-, 9- and 12-milligram strengths beginning with Blueberry Mint and Mango Pineapple in the fourth quarter. The FDA issued MGOs in December 2025 for on! PLUS in tobacco, mint and wintergreen at 6 mg and 9 mg; as of July 27, 2026 no further marketing order had been issued for other on! PLUS products. Helix filed additional on! PLUS PMTAs in November 2025 and June 2026. In May 2026 the FDA issued guidance that it generally will not prioritize enforcement against e-vapor and oral nicotine pouch products with pending PMTAs undergoing scientific review, or pending supplemental PMTAs (other than flavored e-vapor) accepted and pending more than 180 days, while reserving case-by-case enforcement. Horizon still had no products in the U.S. marketplace at June 30, 2026.

Trends. Through the second quarter of 2026, inflationary pressure on discretionary income continued, most acutely among lower-income consumers; gas prices averaged $4.05 per gallon during June amid Middle East-driven energy volatility, and June inflation ran at 3.5%. Management believes the moderating domestic cigarette industry volume decline that began in the third quarter of 2025 continues to be driven primarily by reduced cross-category movement between cigarettes and illicit flavored disposable e-vapor products.

Balance sheet and capital returns. Cash and cash equivalents were $2,367 million at June 30, 2026 against $4,474 million at December 31, 2025. Total long-term debt was $24.6 billion, down from $25.7 billion, after repaying approximately $1.1 billion of 4.400% senior unsecured notes at maturity in February 2026; there were no short-term borrowings and the $3.0 billion credit agreement, which expires October 24, 2029, was fully available. Short- and long-term credit ratings carried stable outlooks from Moody's, S&P (BBB+) and Fitch (BBB+). Net cash provided by operating activities for the first half was $3,043 million (2025: $2,925 million); investing used $166 million (2025: $79 million); financing used $4,988 million (2025: $4,693 million). Dividends paid in the first half were $3,556 million, up 3.0%, at an annualized rate of $4.24 per share. Altria repurchased 0.8 million shares in the quarter at an average $65.11 for $55 million, and 5.3 million shares in the half at an average $62.78 for $335 million, leaving $665 million under the $2.0 billion program expiring December 31, 2026. Payments under the State Settlement Agreements and FDA user fees were approximately $2.6 billion in the first half (2025: $2.9 billion).

Investments. At June 30, 2026 Altria held an approximate 8.1% interest in ABI (approximately 125 million restricted shares and 34 million ordinary shares) carried at $8,577 million against a fair value of $13.2 billion, a 54% excess over carrying value versus 24% at December 31, 2025. The Cronos stake was approximately 42.2% (about 157 million shares), carried at $319 million against $432 million fair value. ABI-related special items were net pre-tax losses of $77 million in the quarter and $78 million in the half, driven by a $114 million pre-tax dilution loss from ABI share activity that reduced Altria's ownership interest, partly offset by mark-to-market gains.

Impairment testing. No events or circumstances indicated an interim quantitative impairment assessment was required as of June 30, 2026. E-vapor reporting unit goodwill remained $610 million. Based on the 2025 annual test, a hypothetical one-point increase in the discount rate would have produced an approximately $150 million e-vapor goodwill impairment; the Skoal trademark's fair value exceeded carrying value by approximately 7% ($0.3 billion) at December 31, 2025, and a one-point discount rate increase would have implied an approximately $90 million charge.

Litigation. As of July 27, 2026 there were 247 individual smoking and health cases pending against Altria in the United States (195 a year earlier), 24 e-vapor cases, three other tobacco-related cases and no health care cost recovery actions. Approximately 43 state court Engle progeny cases were pending. Of 148 federal and state Engle progeny cases that have gone to verdict involving PM USA, 88 were returned for plaintiffs (four since reversed and still pending) and 60 for PM USA. Since October 2004 PM USA has paid judgments and settlements totaling approximately $1.2 billion plus approximately $245 million of interest, including approximately $454 million of Engle progeny judgments and $62 million of related interest. The accrued liability for tobacco and health and certain other litigation items rose to $156 million at June 30, 2026 from $71 million at the start of the year. In October 2025 a Minnesota court found PM USA owes the State of Minnesota $10 million plus interest in a State Settlement Agreement enforcement action; PM USA has appealed. NJOY's September 2025 ITC action against JUUL has an ALJ hearing scheduled for September 2026, with an initial determination expected in December 2026 and an ITC final determination expected in April 2027.

Guidance. Altria narrowed its 2026 full-year adjusted diluted EPS guidance to a range of $5.61 to $5.72, a growth rate of 3.5% to 5.5% from the $5.42 base in 2025, raising the lower end of the prior range. The guidance contemplates moderated e-vapor industry growth affecting combustible and e-vapor volumes; increased macroeconomic uncertainty for adult nicotine consumers; investments supporting contract manufacturing capabilities; NJOY ACE not returning to the marketplace in 2026; reinvestment of anticipated Optimize & Accelerate savings; and investments supporting the Vision. Management expects a greater benefit from cigarette import and export activity in the second half than the first, more evenly balanced between the third and fourth quarters than previously expected. Capital expenditures for 2026 are now expected at $375 million to $450 million, up from $300 million to $375 million, primarily reflecting the USSTC Facilities Consolidation.

Subsequent events

Altria's Form 10-Q for the quarter ended June 30, 2026 (accession 0000764180-26-000094) contains no separate subsequent events note; material post-period developments are disclosed within the individual notes and the pricing-action tables, and in Current Reports on Form 8-K filed after the quarter end. Those developments are:

• Pricing action (July 19, 2026). Effective July 19, 2026, PM USA increased the list

price of Marlboro (excluding Mainline Menthol and 72s Menthol) and L&M by $0.17 per pack, and increased the list price of all its other premium cigarette brands by $0.22 per pack. (Form 10-Q, accession 0000764180-26-000094.)

• Canadian class certification (July 2026). The court in a British Columbia e-vapor

class action certified a nationwide class of Canadian residents who used and directly or indirectly purchased JUUL e-vapor products for primarily personal purposes starting in August 2018. The class seeks compensatory and punitive damages, including for personal injuries allegedly suffered from using JUUL e-vapor products. Altria intends to appeal the class certification order. Altria is named as a defendant in four e-vapor class actions in Canada. (Form 10-Q, accession 0000764180-26-000094.)

• JUUL-related settlement payment (July 2026). In the second quarter of 2026 Altria

recorded an additional pre-tax provision of $4 million relating to the previously agreed settlement with Native American tribes in the JUUL e-vapor litigation and paid that amount in July 2026. (Form 10-Q, accession 0000764180-26-000094.)

• Second-quarter results and narrowed guidance (July 30, 2026). Altria issued its

second-quarter and first-half 2026 earnings release and narrowed full-year 2026 adjusted diluted EPS guidance to $5.61–$5.72, raising the lower end of the range. (Form 8-K, accession 0000764180-26-000093, Exhibit 99.1.)

• Board expansion and director election (August 27–28, 2026). The Board increased its

size from 10 to 11 directors and elected Steven W. Presley as a director, both effective August 27, 2026, announced by press release on August 28, 2026. Mr. Presley is Chief Executive Officer of Refresco Benelux B.V. and previously held senior roles at Nestlé S.A., including Executive Vice President and Chief Executive Officer Zone Americas. He joins the Compensation and Talent Development, Innovation and Finance Committees. (Form 8-K, accession 0000764180-26-000098, and Exhibit 99.1 thereto.)

No acquisitions, divestitures, financings or new borrowings were disclosed as occurring after June 30, 2026 in these filings.