Published
# Altria Group, Inc. (NYSE: MO) — Narrative
## 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.