Altria Group Inc MO
Q1 2013 Earnings Call Transcript

Transcript Call Date 04/25/2013

Operator: Good day and welcome to the Altria Group 2013 First Quarter Earnings Conference Call. Today's call is scheduled to last about one hour including remarks by Altria's management and a question-and-answer session. Representatives of the investment community and media on the call will be able to ask questions following the conclusion of the prepared remarks.

I would now like to turn the call over to Mr. Brendan McCormick, Vice President, Investor Relations for Altria Client Services. Please go ahead, sir.

Brendan J. McCormick - IR: Good morning, and thank you for joining our call. I'm joined this morning by Marty Barrington, Altria's Chairman and Chief Executive Officer; and Howard Willard, Altria's Chief Financial Officer. This morning we will only be discussing Altria's 2013 business results for the first quarter, and will not be discussing the status of tobacco litigation.

Our remarks contain forward-looking and cautionary statements and projections of future results, and I direct your attention to the forward-looking and cautionary statement section at the end of our earnings release for the review of the various factors that could cause actual results to differ materially from projections. For a detailed review of Altria's business results, please review the earnings release that is available on our website,

Altria reports its financial results in accordance with U.S. generally accepted accounting principles. Today's call will contain various operating results both on a reported and adjusted basis, which excludes items that affect the comparability of reported results. Descriptions of these measures and reconciliations are included in the today's earnings press release and are available on our website. In addition, comparisons discussed in this conference call are to the same prior year period unless otherwise stated.

As previously announced, effective January 1, 2013, Altria's reportable segments are smokeable products, smokeless products and wine. In connection with this revision, result of the financial services business and the alternative products business are combined in all other category. Prior period segment data have been recast to conform to the current period segment presentation.

It gives me great pleasure to introduce Marty Barrington.

Martin J. Barrington - Chairman and CEO: Thanks, Brendan. Good morning everyone. Altria's diverse business model delivered strong financial results for the first quarter as the Company increased its adjusted diluted earnings per share by 10.2%. Higher pricing contributed to adjusted operating companies income and margin growth in all three of our reportable segments. Higher earnings from our equity investment in SABMiller and lower interest expense also drove adjusted EPS growth.

In the smokeable product segment, PM USA grew adjusted operating companies income and margins while increasing retail share for both Marlboro and PM USA.

PM USA continued to support Marlboro's new brand architecture with brand building activities that contributed to Marlboro's retail share gains for the first quarter. Earlier this year, PM USA expanded distribution of Marlboro Southern Cut nationally. Marlboro Southern Cut part of the Marlboro Gold family has a uniquely rich and smooth flavor. Each of Marlboro product families has exciting activities planned for the year to enhance brand strength.

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