ALTRIA GROUP, INC.
For the period ended Jun 30, 2025. Filed Jul 30, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2025 · Filed Jul 30, 2025
MO$76.12-1.9%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-03-31; filed 2025-04-29.
0000764180-25-000049
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-06-30; filed 2025-07-30.
0000764180-25-000111
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 382 previous paragraphs and 389 current paragraphs.
235 unchanged; 102 reworded; 32 added; 40 removed; 5 previous and 20 current paragraphs rearranged.
Tables are not compared: 14 previous and 16 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (32)
Current report
During the first half of 2025, U.S. adult tobacco consumers continued to face pressure on discretionary income due to the cumulative effects of inflation, particularly impacting lower income consumers. Although the inflation rate during this period saw marginal decreases in line with most economists’ forecast, it remained above the Federal Reserve’s target of 2%. Persistent high prices for essentials such as groceries and housing continued to constrain consumer spending. While gas prices declined compared to the prior year, the average price of gas remained above $3.00 per gallon. Additionally, tariffs introduced in April of 2025 remained at historically high levels. Ongoing trade negotiations, along with potential inflation and unemployment concerns, have weighed on consumer confidence creating a likelihood of continued headwinds for discretionary spending. While we have not seen a material impact on adult tobacco consumer purchasing behavior as a result of tariffs and tariff speculation, we continue to monitor the additional pressure that tariff-related price increases may have. In addition, we are monitoring other effects of tariffs on our businesses, including the price, availability and quality of raw materials and ingredients, and component parts for production. While we expect higher tariffs to impact our costs in 2025, we do not expect the impact to be material based on presently available information on tariffs.
Current report
Product assortment, regulation and enforcement continue to evolve in the e-vapor category. Flavored disposable e-vapor products have continued driving growth in the e-vapor category. We estimate that flavored disposable e-vapor products, the majority of which we believe have evaded the regulatory process, represent more than 60% of the e-vapor category. 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 Customs and Border Protection have made it more difficult to import properly declared illicit e-vapor products, seized unauthorized vapor products and issued warning letters to importers. However, although the FDA, in conjunction with other federal entities, has increased enforcement activity, insufficient actions against manufacturers, distributors and retailers of tobacco products requiring FDA review for which no pre-market tobacco product applications (“PMTA”) have been submitted have allowed such products to continue to proliferate in the market.
Current report
▪Operations: The increase of $117 million in operations (which excludes the impact of special items shown in the table above) was due primarily to higher OCI, partially offset by lower income from our equity investment in ABI and higher interest and other debt expense, net.
Current report
We recorded a pre-tax gain of $2.7 billion upon the assignment of the IQOS Tobacco Heating System(“IQOS System”) commercialization rights to Philip Morris International Inc. in April 2024, for the six and three months ended June 30, 2024.
Current report
Marketing, administration and research costs decreased $187 million (13.4%), due primarily to lower acquisition-related items discussed above and transaction costs associated with the ABI Transaction in 2024, both of which are included in general corporate expenses.
Current report
Provision for income taxes decreased $577 million (30.0%), due primarily to lower earnings before income taxes, partially offset by unfavorable tax items as discussed above.
Current report
Net revenues, which include excise taxes billed to customers, decreased $107 million (1.7%), due primarily to lower net revenues in our smokeable products segment, partially offset by higher net revenues in our oral tobacco segment.
Current report
Marketing, administration and research costs decreased $169 million (21.4%), due primarily to lower acquisition-related items discussed above.
Current report
Operating income increased $697 million (27.5%), due primarily to higher OCI (which includes the non-cash impairment of the Skoal trademark in 2024 in our oral tobacco product segment) and lower general corporate expenses.
Current report
(Income) losses from investments in equity securities were favorable $29 million (24.4%), due primarily to higher income from our equity investment in ABI (due primarily to favorable special items, partially offset by lower ownership interest).
Current report
Provision for income taxes decreased $573 million (43.6%), due primarily to lower earnings before income taxes.
Current report
Reported net earnings of $2,378 million decreased $1,425 million (37.5%), due primarily to the gain on the sale of the IQOS System commercialization rights in 2024, partially offset by higher operating income. Reported basic and diluted EPS of $1.41, each decreased by 36.2% due to lower reported net earnings, partially offset by fewer shares outstanding.
Current report
Adjusted net earnings of $2,433 million increased $145 million (6.3%), due primarily to higher OCI, partially offset by lower income from our equity investment in ABI and higher interest and other debt expense, net. Adjusted diluted EPS of $1.44 increased by 8.3%, due to higher adjusted net earnings and fewer shares outstanding.
Current report
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. We are unaware of any FDA enforcement actions relating to products for which a PMTA has been pending longer than the 180-day review period. Although it is possible that the FDA may bring such an action in the future, we believe that any enforcement action against sales in the United States of products with PMTAs pending for more than 180 days would conflict with the FSPTCA and FDA enforcement practice to date. In the future, 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.
Current report
Also, adverse FDA determinations or enforcement actions concerning innovative tobacco products could have a material adverse effect on our innovative tobacco businesses and our ability to achieve our Vision.
Current report
Although the FDA, in conjunction with other federal entities, has increased enforcement activity, insufficient actions against manufacturers, distributors and retailers of tobacco products requiring FDA review for which no PMTA has been submitted have allowed such products to proliferate on the market. In addition, the FDA’s failure to clearly define product pathways and issue marketing orders within the statutory review period has resulted in a market with few authorized smoke-free products available to adult tobacco consumers.
Current report
Net revenues, which include excise taxes billed to customers, decreased $422 million (4.1%), due primarily to lower shipment volume ($1,414 million), partially offset by higher pricing ($968 million), which includes higher promotional investments.
Current report
Adjusted OCI increased $187 million (3.5%), due primarily to higher pricing, which includes higher promotional investments, lower per unit settlement charges and lower costs, partially offset by lower shipment volume.
Current report
Net revenues, which include excise taxes billed to customers, decreased $138 million (2.5%), due primarily to lower shipment volume ($639 million), partially offset by higher pricing ($477 million), which includes higher promotional investments.
Current report
Reported OCI increased $123 million (4.4%), due primarily to higher pricing, which includes higher promotional investments, lower per unit settlement charges, lower costs ($26 million) and lower tobacco and health and certain other litigation items ($16 million), partially offset by lower shipment volume ($432 million) and costs associated with our Optimize & Accelerate initiative in 2025 ($13 million).
Current report
Adjusted OCI increased $120 million (4.2%), due primarily to higher pricing, which includes higher promotional investments, lower per unit settlement charges and lower costs, partially offset by lower shipment volume.
Current report
Our smokeable products segment’s reported domestic cigarettes shipment volume decreased 10.2%, driven primarily by the industry’s decline rate (impacted by the continued growth of flavored disposable e-vapor products, the majority of which we believe have evaded the regulatory process, and discretionary income pressures on adult tobacco consumers) and retail share losses. When adjusted for trade inventory movements, our smokeable products segment domestic cigarette shipment volume decreased by an estimated 10.5%. When adjusted for trade inventory movements, total estimated domestic cigarette industry volume decreased by an estimated 8.5%.
Current report
Marlboro share of the premium segment was 59.5%, an increase of 0.2 share points versus the prior year and sequentially.
Current report
Reported OCI increased $399 million (75.0%), due primarily to a non-cash impairment of the Skoal trademark ($354 million) in 2024 and higher pricing, which includes higher promotional investments, partially offset by lower volume/mix ($90 million).
Current report
Adjusted OCI increased $49 million (5.5%), due to higher pricing, which includes higher promotional investments, and lower costs ($11 million), partially offset by lower volume/mix.
Current report
Net revenues, which include excise taxes billed to customers, increased $42 million (5.9%), as higher pricing ($70 million), which includes higher promotional investments, was partially offset by lower volume/mix ($28 million).
Current report
Reported OCI increased $401 million (100+%), due primarily to a non-cash impairment of the Skoal trademark ($354 million) in 2024 and higher pricing, which includes higher promotional investments, partially offset by lower volume/mix ($33 million).
Current report
Adjusted OCI increased $49 million (10.9%), due to higher pricing, which includes higher promotional investments, and lower costs ($12 million), partially offset by lower volume/mix.
Current report
Total U.S. oral tobacco category share foron! nicotine pouches was 8.7%, an increase of 0.7 share points versus the prior year, and a decrease of 0.1 share point sequentially.
Current report
▪Effective July 22, 2025, USSTC increased the list price on its Copenhagenand Red Seal brands by $0.12 per can. USSTC also increased the list price on its Skoal brands by $0.17 per can and Husky brands by $0.25 per can.
Current report
(1) On May 14, 2025, S&P changed its long-term debt credit rating to BBB+ from BBB and outlook to Stable from Positive.
Current report
▪the risk that regulators, including the FDA, and courts may interpret laws, rules and regulations applicable to our operating companies’ products differently than we do;
Removed paragraphs (40)
Previous report
U.S. adult tobacco consumers remained under pressure throughout the first quarter of 2025 largely due to the compounding effects of high prices exceeding overall wage growth and historically high levels of consumer credit and delinquency rates, which are beginning to moderate. Although inflation rates moderated in the first quarter of 2025, increased prices and anticipation of higher prices from increased tariffs may further pressure adult tobacco consumers. We have not yet seen a material impact on adult tobacco consumer purchasing behavior from the impact of tariffs and tariff speculation. We will continue to monitor these and other conditions that impact adult tobacco consumer discretionary income and purchasing behaviors, including overall tobacco product expenditures, mix between premium and discount brand purchases, and adoption of smoke-free products; however, we expect discretionary income pressures will continue to influence adult tobacco consumers’ purchase behaviors through 2025. In addition, we are monitoring the effects of tariffs on our businesses, including prices and the availability and quality of raw materials and ingredient and component parts for production. While we expect higher tariffs to impact our costs in 2025, we do not expect the impact to be material based on presently available information on tariffs.
Previous report
As discussed above in Our Business, the ITC orders related to NJOY ACE became effective March 31, 2025. As a result, we performed an interim impairment assessment for the e-vapor reporting unit and recorded a non-cash impairment of our e-vapor reporting unit goodwill. For further discussion, see Note 4. Goodwill and Other Intangible Assets, net to our condensed consolidated financial statements in Item 1 (“Note 4”).
Previous report
ABI’s business is exposed to foreign exchange rate fluctuations, inflation, commodity price movements and other macroeconomic factors that could impact financial performance from time to time. We will continue to monitor these conditions and other factors as they could affect our equity earnings, our other comprehensive earnings/losses and the dividends that we receive from ABI, and the fair value of our investment in ABI. For additional information on our investment in ABI, see Note 6. Investments in Equity Securities to our condensed consolidated financial statements in Item 1 (“Note 6”).
Previous report
Investment in Cronos
Previous report
The fair value of our investment in Cronos is based on unadjusted quoted prices in active markets for Cronos’s common shares and is classified in Level 1 of the fair value hierarchy. At March 31, 2025, the fair value of our investment in Cronos was less than its carrying value by approximately $25 million, or approximately 8%. Based on our evaluation of the duration and magnitude of the fair value decline, our evaluation of Cronos’s financial condition (including its strong cash position) and near- term prospects, and our intent and ability to hold our investment in Cronos until recovery, we concluded that the decline in fair value of our investment in Cronos below its carrying value is temporary and, therefore, no impairment was recorded. At April 24, 2025, the fair value of our investment in Cronos was less than its carrying value by approximately $18 million or approximately 6%.
Previous report
We will continue to monitor our investment in Cronos. If we were to conclude that the decline in fair value is other than temporary, we would determine and recognize, in the period identified, the impairment of our investment.
Previous report
Marketing, administration and research costs decreased $18 million (3.0%), due primarily to lower general corporate expenses, partially offset by higher tobacco and health and certain other litigation items. The lower general corporate expenses were due primarily to transaction costs associated with the ABI Transaction in 2024, partially offset by acquisition-related items in 2025 discussed above.
Previous report
We work to meet these evolving adult tobacco consumer preferences over time by developing, manufacturing, marketing and distributing products both within and outside the United States through innovation and other growth strategies (including, where appropriate, arrangements with, or investments in, third parties and acquisitions).
Previous report
We estimate that, when adjusted for calendar differences and trade inventory movements, total estimated domestic cigarette industry volume declined by 9% in the first quarter of 2025. PM USA reported domestic cigarette volumes declined by 13.7% in the first quarter of 2025 versus the first quarter of 2024. When adjusted for calendar differences and trade inventory movements, PM USA volumes for the first quarter of 2025 declined by an estimated 12% versus the first quarter of 2024. In the first quarter, Marlboro share of the total cigarette category was 41.0%, a decrease of 1.0 share point versus the first quarter of 2024 and 0.3 share points sequentially. Marlboro share performance is discussed further in the Operating Results - Smokeable Products Segment below.
Previous report
For the 12 months ended March 31, 2025, we estimate the e-vapor category grew approximately 30% versus the prior 12-month period, driven by the growth of illicit flavored disposable e-vapor products. We estimate that illicit products now represent more than 60% of the e-vapor category. These illicit disposable e-vapor products are largely distributed through non-traditional retail channels (including e-commerce and vape retail channels), making them more difficult to track. We believe the FDA’s inadequate enforcement and slow pace of smoke-free product authorizations enables bad actors to disregard regulation and illicit products to proliferate. Through our competitive intelligence tracking, we continue to monitor these growing trends and evaluate the impacts on the overall nicotine and tobacco categories.
Previous report
The U.S. nicotine pouch category continued to grow significantly throughout the first quarter of 2025 to 49.1% of the U.S. oral tobacco category, an increase of 8.7 share points versus the first quarter of 2024. on! maintained year-over-year share momentum through the first quarter of 2025 to achieve 8.8% of the total oral tobacco category, an increase of 1.8 share points versus the first quarter of 2024 and an increase of 0.1 share point sequentially.
Previous report
For the first quarter 2025, the traditional smokeless category (including MST) share of the total oral tobacco category declined to 50.9%, down 8.7 share points versus the first quarter of 2024. Copenhagen had an oral tobacco category share of 16.9% for the first quarter of 2025, a decrease of 3.2 share points when compared to the first quarter of 2024. We continue to track the growth of nicotine pouch volumes and the related impact on the size of the MST category. Decreases in the size of the MST category could impact the carrying value of our assets, such as our smokeless tobacco product goodwill and trademarks. For example, in the second quarter of 2024, we recorded a non-cash, pre-tax impairment on the value of the Skoal trademark.
Previous report
Throughout the first quarter of 2025, U.S. adult tobacco consumers remained under pressure largely due to the continued compounding effects of high prices exceeding overall wage growth, especially among low income consumers. Although the year-over-year increases in the rate of inflation moderated in the first quarter of 2025, high prices on every day expenses, such as groceries and housing, continued to constrain consumers’ disposable income. While gas prices in the first quarter of 2025 were lower than in the prior year, the average price remained above $3.00 per gallon. In addition, consumer credit and delinquency rates remain at historically high levels, and potential tariff activity induced consumer fear of price hikes and rising inflation. Throughout the first quarter of 2025, this speculation drove a decline of nearly 13% in consumer sentiment versus the fourth quarter of 2024 to the lowest levels since 2022. We will continue to monitor the additional pressure that tariff-related price increases may have on adult tobacco consumer purchase behavior.
Previous report
The FSPTCA also bans descriptors such as “light,” “low” or “mild” when used as descriptors of modified risk, unless expressly authorized by the FDA.
Previous report
The Final Tobacco Marketing Rule, as amended, among other things:
Previous report
▪restricts the use of non-tobacco trade and brand names on cigarettes and smokeless tobacco products;
Previous report
▪prohibits sampling of all tobacco products except that sampling of smokeless tobacco products is permitted in qualified adult-only facilities;
Previous report
▪prohibits the sale or distribution of items such as hats and tee shirts with cigarette or smokeless tobacco brands or logos;
Previous report
▪prohibits cigarettes and smokeless tobacco brand name sponsorship of any athletic, musical, artistic or other social or cultural event, or any entry or team in any event; and
Previous report
▪requires the development by the FDA of graphic warnings for cigarettes, establishes warning requirements for other tobacco products and gives the FDA the authority to require new warnings for any type of tobacco product (see FDA Regulatory Actions - Graphic Warnings below).
Previous report
In October 2021, the FDA authorized the marketing and sale of four of USSTC’s Verve oral nicotine products, including Green Mint and Blue Mint varieties, representing the first flavored product authorizations issued by the FDA for newly deemed innovative products. These products are not currently marketed or sold.
Previous report
In March 2023, the FDA authorized USSTC to communicate a modified risk claim about its Copenhagen Classic Snuff MST product. This product is not currently marketed or sold. The authorized claim for Copenhagen Classic Snuffis “IF YOU SMOKE, CONSIDER THIS: Switching completely to this product from cigarettes reduces risk of lung cancer.” In February 2025, USSTC filed a notice with the FDA withdrawing its modified risk application.
Previous report
▪establishing tobacco product design and development controls;
Previous report
▪ensuring that finished and bulk tobacco products are manufactured according to established specifications;
Previous report
▪minimizing the manufacture and distribution of tobacco products that do not meet specifications;
Previous report
▪requiring manufacturers to take appropriate measures to prevent contamination of tobacco products;
Previous report
▪requiring investigation and identification of products that do not meet specifications and requiring manufacturers to institute appropriate corrective actions, such as a recall; and
Previous report
▪establishing the ability to trace all components or parts, ingredients, additives and materials, as well as each batch of finished or bulk tobacco products, to aid in investigations of those that do not meet specifications.
Previous report
Various excise tax increases are under consideration or have been proposed. For example, in April 2025, the Indiana state legislature passed a budget proposal that, if signed by the governor of Indiana, would increase the state’s cigarette excise tax to $2 per pack and increase the state’s excise taxes on both e-vapor and oral nicotine products, in each case effective July 1, 2025. Additionally, in April 2025, the Washington state legislature passed a bill that, if signed by the governor of Washington, would subject oral nicotine pouches to the same state taxes currently applicable to other tobacco products, effective January 1, 2026.
Previous report
Net revenues, which include excise taxes billed to customers, decreased $284 million (5.8%), due primarily to lower shipment volume ($775 million), partially offset by higher pricing ($491 million), which includes lower promotional investments.
Previous report
Adjusted OCI increased $67 million (2.7%), due primarily to higher pricing, which includes lower promotional investments, lower per unit settlement charges and manufacturing costs ($73 million) and lower marketing, administration and research costs ($18 million), partially offset by lower shipment volume.
Previous report
Reported OCI was essentially unchanged, as lower volume/mix ($57 million), was mostly offset by higher pricing, which includes higher promotional investments.
Previous report
Adjusted OCI was unchanged, as higher pricing, which includes higher promotional investments, was mostly offset by lower volume/mix.
Previous report
E-Vapor
Previous report
Our NJOY e-vapor business is reported in our all other category.
Previous report
Reported domestic shipment volumes for NJOY consumables(1)increased 23.9% to 13.5 million units. Reported domestic shipment volume for NJOY devices decreased 70% to 0.3 million units.
Previous report
NJOY retail share of consumables in the U.S. multi-outlet and convenience channel increased 2.4 share points to 6.6%.
Previous report
(1) E-vapor shipment volume includes NJOY ACE pods and NJOY DAILY disposables.
Previous report
For a discussion regarding the growth of illicit e-vapor products and the ITC’s exclusion order and cease-and-desist orders prohibiting the importation and sale of NJOY ACE in the United States, see Note 14. For more information on the impairment of the e-vapor reporting unit goodwill, see Note 4.
Previous report
(1)On April 28 2025, Moody’s changed its outlook to Stable from Negative.
Reworded paragraphs (102)
Previous wording
The following discussion 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”). 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.
Current wording
The following discussion 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”). When used in this Form 10-Q, the terms“Altria,” “we,” “us” and “our” refer to either (i)
Previous wording
We have a leading portfolio of tobacco products for U.S. tobacco consumers age 21+. Our Vision is to responsibly lead the transition of adult smokers to a smoke-free future (“Vision”). We are Moving Beyond Smoking™, leading the way in moving adult smokers away from cigarettes by taking action to transition millions to potentially less harmful choices - believing it is a substantial opportunity for adult tobacco consumers, our businesses and society. As we execute on our Vision, we established our 2028 Enterprise Goals (“2028 Goals”) to provide our investors with specific metrics to measure our progress. For further discussion of our 2028 Goals, see our Annual Report on Form 10-K for the year ended December 31, 2024 (“2024 Form 10-K”).
Current wording
We have a leading portfolio of tobacco products for U.S. tobacco 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, 2024 (“2024 Form 10-K”).
Previous wording
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”), a manufacturer of tobacco and menthol e-vapor products covered by marketing granted orders (“MGO”) from the U.S. Food and Drug Administration (“FDA”). In January 2025, the U.S. International Trade Commission (“ITC”) issued an exclusion order and cease-and-desist orders prohibiting the importation and sale of NJOY ACE (NJOY’s pod-based e-vapor product) in the United States, which became effective on March 31, 2025. For further discussion, see Note 14. Contingencies to our condensed consolidated financial statements in Item 1 (“Note 14”). 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 this Form 10-Q, Horizon had no products in the U.S. marketplace.
Current wording
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”), a manufacturer of tobacco and menthol e-vapor products covered by marketing granted orders (“MGO”) from the U.S. Food and Drug Administration (“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 this Form 10-Q, Horizon had no products in the U.S. marketplace.
Previous wording
In this section of 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 tobacco consumers, illicit flavored disposable e-vapor products, the ITC orders on NJOY ACE, recent regulatory actions and tariffs and their effects or potential effects on our businesses. Other trends and developments are discussed elsewhere in MD&A.
Current wording
In this section of 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 tobacco consumers, illicit flavored disposable e-vapor products, tariffs and evolving consumer preferences. Other trends and developments are discussed elsewhere in this MD&A.
Previous wording
In addition to and in connection with the foregoing, evolving adult tobacco consumer preferences continue to impact the tobacco industry, including negatively impacting cigarette and MST shipment volumes. We believe that a significant number of adult tobacco consumers switch among tobacco categories, use multiple forms of tobacco products and try innovative tobacco products, such as e-vapor products and oral nicotine pouches. As innovative smoke-free products evolve to better address the preferences of adult tobacco consumers, these consumers continue to transition from cigarettes and MST products to exclusive use of innovative smoke-free tobacco product alternatives, which aligns with our Vision.
Current wording
Overall discretionary income pressures on adult tobacco consumers have resulted in increased discount brand share performance and evolving adult tobacco consumer preferences, each of which have negatively impacted the sales volumes of our companies’ premium brands. For the second quarter of 2025, the discount share of the cigarette category reached 31.2%, an increase of 1.9 share points versus the second quarter of 2024. Additionally, we believe that a significant number of adult tobacco consumers switch among tobacco categories, use multiple forms of tobacco products and try innovative tobacco products, such as e-vapor products and oral nicotine pouches. We estimate that, when adjusted for calendar differences, trade inventory movements and other factors, total estimated domestic cigarette industry volume declined by 8.5% in the second quarter of 2025 versus the second quarter of 2024. In addition, the U.S. nicotine pouch category continued to grow throughout the second quarter of 2025 to 52.0% of the U.S. oral tobacco category, an increase of 10.0 share points versus the second quarter of 2024. As innovative smoke-free products evolve to better address the preferences of adult tobacco consumers, these consumers continue to transition from cigarettes and MST products to innovative smoke-free tobacco products, which has negatively impacted the sales volumes of our companies’ cigarette and MST products.
Previous wording
Product assortment, regulation and enforcement continue to evolve in the e-vapor category. For the 12 months ended March 31, 2025, we estimate the e-vapor category grew by approximately 30% versus the prior 12-month period, driven by the growth of illicit flavored disposable e-vapor products. We estimate that illicit products now represent more than 60% of the e-vapor category. In response to the proliferation of illicit disposable e-vapor products, states and the federal government took various regulatory and enforcement actions throughout the year in 2024, but these actions have failed to slow this trend. Select states have established e-vapor product registries based on pre-market tobacco product application (“PMTA”) submissions or MGOs. Additionally, we continue to see increased illicit activity across multiple tobacco categories, including nicotine pouch products and cigarettes. Throughout 2024 and into the first quarter of 2025, various synthetic oral nicotine pouch products emerged in traditional tobacco retailers. We continue to track the overall dynamics across multiple tobacco categories as well as competitive threats to our brands.
Current wording
Additionally, we continue to see increased illicit activity across multiple tobacco categories, including nicotine pouch products and cigarettes. Throughout 2024 and the first half of 2025, various synthetic oral nicotine pouch products emerged in traditional tobacco retailers. We continue to track the overall dynamics across multiple tobacco categories as well as competitive threats to our brands.
Previous wording
With the exception of the impact of the ITC orders on NJOY, the trends and developments above have not had a material adverse impact on our businesses. We do not believe the trends and developments discussed above have materially impacted 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.
Current wording
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 and Vision.
Previous wording
▪Operations: The increase of $11 million in operations (which excludes the impact of special items shown in the table above) was due primarily to higher OCI, partially offset by lower income from our equity investment in ABI and lower net periodic benefit income, excluding service cost.
Current wording
▪Operations: The increase of $128 million in operations (which excludes the impact of special items shown in the table above) was due primarily to higher OCI, partially offset by lower income from our equity investment in ABI and higher interest and other debt expense, net.
Previous wording
Beginning in the first quarter of 2025, we changed our treatment of our amortization of intangibles that we previously included in our adjusted results, including adjusted net earnings and adjusted diluted EPS, and now treat this expense as a special item and exclude it from our adjusted results. Amortization of definite-lived intangibles is significantly impacted by the timing, frequency and size of acquisitions, each with unique facts and circumstances, which could result in amortization charges that could be inconsistent in size and timing. Net revenues generated from these definite-lived intangible assets during the periods presented, if applicable, are included in our adjusted financial measures.
Current wording
Beginning in the first quarter of 2025, we changed our treatment of our amortization of intangibles that we previously included in our adjusted results, including adjusted net earnings and adjusted diluted EPS, and now treat this expense as a special item and exclude it from our adjusted results. Amortization of intangibles is significantly impacted by the timing, frequency and size of acquisitions, each with unique facts and circumstances, which could result in amortization charges that could be inconsistent in size and timing. Net revenues generated from these definite-lived intangible assets during the periods presented, if applicable, are included in our adjusted financial measures.
Previous wording
We conduct a required annual review of goodwill and indefinite-lived intangible assets for potential impairment, and more frequently if an event occurs or circumstances change that would require an interim quantitative impairment assessment.
Current wording
We conduct a required annual review of goodwill and indefinite-lived intangible assets for potential impairment, 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 for the three months ended June 30, 2025. We will perform our annual impairment testing during the fourth quarter of 2025.
Previous wording
At December 31, 2024, the estimated fair value of the e-vapor reporting unit exceeded its carrying value by approximately 28% ($0.3 billion). As further discussed in Note 4, we determined the estimated fair value of the e-vapor reporting unit as of March 31, 2025 was below its carrying value and recorded a non-cash goodwill impairment of $873 million for the three months ended March 31, 2025 in our condensed consolidated statements of earnings. As of March 31, 2025, after recording the goodwill impairment, the carrying value of goodwill within the e-vapor reporting unit was $895 million. 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.
Current wording
At December 31, 2024, the estimated fair value of the e-vapor reporting unit exceeded its carrying value by approximately 28% ($0.3 billion). As further discussed in Note 4. Goodwill and Other Intangible Assets, net to our condensed consolidated financial statements in Item 1 (“Note 4”), we determined the estimated fair value of the e-vapor reporting unit as of March 31, 2025 was below its carrying value and recorded a non-cash goodwill impairment of $873 million for the three months ended March 31, 2025 in our condensed consolidated statements of earnings. As of March 31, 2025, after recording the goodwill impairment, the carrying value of goodwill within the e-vapor reporting unit was $895 million. 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.
Previous wording
We used an income approach to estimate the fair value of the e-vapor reporting unit. Due to the uncertainties discussed below, our discounted cash flows are based on a range of scenarios that consider certain potential regulatory and market outcomes. In performing the discounted cash flow analysis, we made various judgments, estimates and assumptions, the most significant of which were volume, revenue, income, operating margins, perpetual growth rate and discount rates. The discount rates used in performing the valuation ranged from 12.0% to 15.0%.
Current wording
At March 31, 2025, we used an income approach to estimate the fair value of the e-vapor reporting unit. Due to the uncertainties discussed below, our discounted cash flows are based on a range of scenarios that consider certain potential regulatory and market outcomes. In performing the discounted cash flow analysis, we made various judgments, estimates and assumptions, the most significant of which were volume, revenue, income, operating margins, perpetual growth rate and discount rates. The discount rates used in performing the valuation ranged from 12.0% to 15.0%.
Previous wording
While our management believes that the estimated fair value of the e-vapor reporting unit at March 31, 2025 is reasonable, if the assumptions or judgments regarding the expectations for the future state of the e-vapor category and NJOY’s business discussed above fail to materialize as anticipated 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. A hypothetical 1% increase to the discount rate used to estimate the fair value of the e-vapor reporting unit would have resulted in an additional goodwill impairment charge of approximately $275 million in the first quarter of 2025.
Current wording
Our management believes that the estimated fair value of the e-vapor reporting unit at March 31, 2025 remains reasonable and no events or circumstances exist indicating an impairment for the three months ended June 30, 2025. If the assumptions or judgments regarding the expectations for the future state of the e-vapor category and NJOY’s business discussed above fail to materialize as anticipated 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. A hypothetical 1% increase to the discount rate used to estimate the fair value of the e-vapor reporting unit as of March 31, 2025 would have resulted in an additional goodwill impairment charge of approximately $275 million in the first quarter of 2025.
Previous wording
At December 31, 2024, 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 tobacco consumer preferences, which have continued to contribute to reductions in sales volumes for MST products, including Skoal. For further discussion, see Operating Results by Business Segment - Business Environment below.
Current wording
At December 31, 2024, 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 tobacco 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.
Previous wording
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. We believe that the estimated fair value of the Skoal trademark at December 31, 2024 was reasonable and no events or circumstances existed indicating an impairment at March 31, 2025. 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 2024 annual impairment test, a hypothetical 1% increase to the discount rate used would have resulted in a pre-tax impairment charge to the Skoal intangible asset of approximately $85 million.
Current wording
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. We believe that the estimated fair value of the Skoal trademark at December 31, 2024 remains reasonable and no events or circumstances exist indicating an impairment for the three months ended June 30, 2025. 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 2024 annual impairment test, a hypothetical 1% increase to the discount rate used would have resulted in a pre-tax impairment charge to the Skoal intangible asset of approximately $85 million.
Previous wording
For further discussion of goodwill and other intangible assets, including the impairment of the e-vapor reporting unit goodwill in the first quarter of 2025, see Note 4.
Current wording
For further discussion of goodwill and other intangible assets, including the impairments of the e-vapor reporting unit goodwill in the first quarter of 2025 and the Skoal trademark in the second quarter of 2024, see Note 4.
Previous wording
The following special items affected the comparability of statements of earnings amounts for the three months ended March 31, 2025 and 2024:
Current wording
The following special items affected the comparability of statements of earnings amounts for the six and three months ended June 30, 2025 and 2024:
Previous wording
▪Acquisition-related items: We recorded net pre-tax charges of $54 million for the three months ended March 31, 2025, primarily due to expenses 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 include insurance recoveries from insurance contracts associated with the acquisition of NJOY Holdings (“NJOY Transaction”). For further information on the ITC’s determination, see E-vapor Product Litigationin Note 14. We recorded these items for the three months ended March 31, 2025 as follows:
Current wording
▪Acquisition and disposition-related items: We recorded net pre-tax charges of $70 million and $16 million for the six and three months ended June 30, 2025, respectively, due to expenses related to the U.S International Trade Commission (“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 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 Litigationin Note 14. Contingencies to our condensed consolidated financial statements in Item 1 (“Note 14”). We recorded these items as follows:
Previous wording
(2)Recorded as general corporate expense, net of $22 million in insurance recoveries. Total costs incurred to date associated with the ITC determination and patent infringement lawsuits related to the NJOY Transaction were $137 million, which were offset by insurance recoveries of $47 million. These total amounts include $61 million of costs offset by $25 million of insurance recoveries recorded in 2024.
Current wording
(2)Recorded as general corporate expense, net of $25 million in insurance recoveries. In 2024 and 2025, we incurred total costs of $156 million associated with the ITC determination and patent infringement lawsuits related to the NJOY Transaction, which were offset by insurance recoveries of $50 million. These total amounts include $61 million of costs offset by $25 million of insurance recoveries recorded in 2024.
Previous wording
Additionally, we recorded a non-cash, pre-tax charge of $25 million for the three months ended March 31, 2025 for the increase in the fair value of the contingent payments associated with the NJOY Transaction. This charge 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 Paymentsin Note 7. Financial Instruments.
Current wording
Additionally, we recorded a non-cash, pre-tax charge of $25 million for the six months ended June 30, 2025 for the change in the fair value of the contingent payments associated with the NJOY Transaction. In connection with the June 2024 issuance by the FDA of MGOs for four NJOY menthol e-vapor products, we recorded a pre-tax charge of approximately $140 million for the six and three months ended June 30, 2024 for the change in the fair value of the contingent payments associated with the NJOY Transaction. These charges were 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 Paymentsin Note 7. Financial Instruments.
Previous wording
▪Asset Impairment, Exit and Implementation Costs: 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. There is no income tax benefit associated with the impairment of the e-vapor reporting unit goodwill as the impairment is non-deductible for tax purposes. For further discussion, see Note 4.
Current wording
▪Asset Impairment, Exit and Implementation Costs: We recorded pre-tax charges of $903 million, which consisted primarily of 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 six months ended June 30, 2025 in our all other category. There was no income tax benefit associated with the impairment of the e-vapor reporting unit goodwill as the impairment is non-deductible for tax purposes. We recorded a non-cash, pre-tax impairment of the Skoal trademark of $354 million for the six and three months ended June 30, 2024 in our oral tobacco products segment. For further discussion, see Note 4.
Previous wording
▪Amortization of Intangibles: We recorded pre-tax amortization expense of definite-lived intangible assets of $37 million and $27 million for the three months ended March 31, 2025 and 2024, respectively, in marketing, administration and research costs in our condensed consolidated statements of earnings.
Current wording
▪Amortization of Intangibles: We recorded pre-tax amortization expense of definite-lived intangible assets of $74 million and $64 million for the six months ended June 30, 2025 and 2024, respectively, and $37 million for the three months ended June 30, 2025 and 2024, respectively, in marketing, administration and research costs in our condensed consolidated statements of earnings.
Previous wording
▪ABI-Related Special Items: We recorded net pre-tax income of $86 million from our investment in ABI for the three months ended March 31, 2024, which consists primarily of a gain related to our sale of a portion of our investment in ABI (“ABI Transaction”), net of transaction costs. For further information on the gain related to the ABI Transaction, see Note 6.
Current wording
▪ABI-Related Special Items: We recorded net pre-tax income of $62 million from our investment in ABI for the six months ended June 30, 2024, which consisted primarily of a gain related to our sale of a portion of our investment in ABI (“ABI Transaction”), net of transaction costs. For further information on the gain related to the ABI Transaction, see Note 6. Investments in Equity Securities to our condensed consolidated financial statements in Item 1.
Previous wording
▪Income Tax Items: We recorded income tax items of $71 million, for the three months ended March 31, 2024, due primarily to an income tax benefit from the partial release of a valuation allowance on our losses related to our former investment in JUUL Labs, Inc. (“JUUL”). The valuation allowance release was due to our capital gain on the ABI Transaction.
Current wording
▪Income Tax Items: We recorded income tax items of $52 million for the six months ended June 30, 2024, due primarily to an income tax benefit from the partial release of a valuation allowance associated with our losses related to our former investment in JUUL Labs, Inc. (“JUUL”), partially offset by interest expense on tax reserves recorded in prior years. The valuation allowance release was due to our capital gain on the ABI Transaction.
Previous wording
Net revenues, which include excise taxes billed to customers, decreased $317 million (5.7%), due primarily to lower net revenues in our smokeable products segment.
Current wording
Net revenues, which include excise taxes billed to customers, decreased $424 million (3.6%), due primarily to lower net revenues in our smokeable products segment.
Previous wording
Cost of sales decreased $167 million (11.6%), due primarily to lower shipment volume and lower per unit settlement charges in our smokeable products segment, partially offset by higher NJOY costs.
Current wording
Cost of sales decreased $329 million (10.8%), due primarily to lower shipment volume and lower per unit settlement charges in our smokeable products segment, partially offset by higher NJOY costs.
Previous wording
Excise taxes on products decreased $119 million (13.9%), due to lower shipment volume in our smokeable products segment.
Current wording
Excise taxes on products decreased $239 million (13.3%), due primarily to lower shipment volume in our smokeable products segment.
Previous wording
Operating income decreased $886 million (33.1%), due primarily to lower OCI (which includes a non-cash impairment of the e-vapor reporting unit goodwill and acquisition-related items in 2025 in our all other category), partially offset by lower general corporate expenses.
Current wording
Operating income decreased $189 million (3.6%), due primarily to lower OCI (which includes the net impact of a non-cash impairment of the e-vapor reporting unit goodwill in 2025 and a non-cash impairment of the Skoal trademark in our oral tobacco product segment in 2024), partially offset by lower general corporate expenses.
Previous wording
(Income) losses from investments in equity securities were unfavorable $152 million (51.5%), due primarily to lower income from our equity investment in ABI (due primarily to our gain on the ABI Transaction in 2024 and lower ownership interest), partially offset by favorable Cronos-related special items.
Current wording
(Income) losses from investments in equity securities were unfavorable $123 million (29.7%), due primarily to lower income from our equity investment in ABI (due primarily to our gain on the ABI Transaction in 2024 and lower ownership interest), partially offset by favorable Cronos-related special items.
Previous wording
Reported net earnings of $1,077 million decreased $1,052 million (49.4%), due primarily to lower operating income, unfavorable results from our investments in equity securities and unfavorable income tax items, partially offset by lower state income tax expense. Reported basic and diluted EPS of $0.63, each decreased by 47.9% due to lower reported net earnings, partially offset by fewer shares outstanding.
Current wording
Reported net earnings of $3,455 million decreased $2,477 million (41.8%), due primarily to the gain on the sale of the IQOS System commercialization rights in 2024, lower operating income, unfavorable results from our equity investment in ABI and unfavorable income tax items. Reported basic and diluted EPS of $2.04, each decreased by 40.2% due to lower reported net earnings, partially offset by fewer shares outstanding.
Previous wording
Adjusted net earnings of $2,089 million increased $43 million (2.1%), due primarily to higher OCI and a lower adjusted tax rate, partially offset by lower income from our equity investment in ABI and lower net periodic benefit income, excluding service cost. Adjusted diluted EPS of $1.23 increased by 6.0%, due to fewer shares outstanding and higher adjusted net earnings.
Current wording
Adjusted net earnings of $4,522 million increased $188 million (4.3%), due primarily to higher OCI and a lower adjusted tax rate, partially offset by lower income from our equity investment in ABI and higher interest and other debt expense, net. Adjusted diluted EPS of $2.67 increased by 7.2%, due to higher adjusted net earnings and fewer shares outstanding.
Previous wording
The U.S. tobacco industry faces a number of business and legal 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 14, and in Part I, Item 1A. Risk Factors in our 2024 Form 10-K, include:
Current wording
The U.S. tobacco industry faces a number of business and legal 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, which we discuss below and in more detail in Note 14, and in Part I, Item 1A. Risk Factors in our 2024 Form 10-K and in Part II, Item 1A. Risk Factors of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2025 (“First Quarter Form 10-Q”), include:
Previous wording
▪restrictions and requirements imposed by the FSPTCA and restrictions and requirements (and related enforcement actions) that have been, and in the future will be, imposed by the FDA;
Current wording
▪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;
Previous wording
▪the highly competitive nature of all tobacco categories, including competitive disadvantages related to the impact on cigarette prices due to the settlement of certain healthcare cost recovery litigation and the proliferation of innovative tobacco products, such as e-vapor and oral nicotine pouch products;
Current wording
▪the highly competitive nature of all tobacco categories, including competitive disadvantages related to the impact on cigarette prices due to the settlement of certain healthcare cost recovery litigation and the growth of innovative tobacco products, such as e-vapor and oral nicotine pouch products;
Previous wording
▪the proliferation 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
Current wording
▪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
Previous wording
▪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 and climate and environmental conditions.
Current wording
▪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.
Previous wording
We continue to monitor the evolving regulatory, macroeconomic (including inflation and tariffs) and consumer dynamics within our business environment to assess potential impacts on our businesses. Changes in these and other conditions could have a material adverse effect on our business, results of operations, cash flows or financial position.
Current wording
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.
Previous wording
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 Pre-Market Review Pathways for Tobacco Products and Market Authorization Enforcement below for additional information on the effects of the statutory change. 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, including the requirements that manufacturers submit a PMTA to, and receive an MGO from, the FDA before marketing such products in the United States.
Current wording
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 Pre-Market 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.
Previous wording
▪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. The FDA also may request comments on broad topics through an Advanced Notice of Proposed Rulemaking (“ANPRM”). 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.
Current wording
▪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.
Previous wording
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’ ability to market and sell tobacco products in those states, territories and localities.
Current wording
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.
Showing the first 40 of 102 pairs. Open the source sections for the rest.
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Current report — wording carried from elsewhere
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
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Altria Group, Inc. and its consolidated subsidiaries or (ii) Altria Group, Inc. only and not its consolidated subsidiaries, as appropriate in the context.
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Consolidated Results of Operations for the Six Months Ended June 30, 2025
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The changes in net earnings and diluted EPS for the six months ended June 30, 2025, from the six months ended June 30, 2024, were due primarily to the following:
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(1)Prior period amounts have been recast to conform with current period presentation for amortization of intangibles, which we did not previously identify as a special item and we now exclude from our adjusted financial measures. See Non-GAAP Financial Measures below.
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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.
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▪Fewer Shares Outstanding: Fewer shares outstanding were due to shares we repurchased under our share repurchase programs.
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For further details, see Consolidated Operating Results and Operating Results by Business Segment below.
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The following table provides a reconciliation of adjusted net earnings and adjusted diluted EPS for the six months ended June 30:
Current report — wording carried from elsewhere
(1)Prior period amounts have been recast to conform with current period presentation for amortization of intangibles, which we did not previously identify as a special item and we now exclude from our adjusted financial measures. See Non-GAAP Financial Measures above.
Current report — wording carried from elsewhere
Cost of sales decreased $162 million (10.1%), due primarily to lower shipment volume and lower per unit settlement charges in our smokeable products segment.
Current report — wording carried from elsewhere
Excise taxes on products decreased $120 million (12.9%), due primarily to lower shipment volume in our smokeable products segment.
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▪FDA’s Five-Year Strategic Plan for Tobacco and Nicotine Regulation: In December 2023, the FDA released its five-year strategic plan to address concerns raised by the Reagan-Udall Foundation’s operational evaluation of the FDA’s
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Six Months Ended June 30, 2025 Compared with the Six Months Ended June 30, 2024
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Shipments of premium cigarettes accounted for 95.3% and 95.7% of our smokeable products segment’s reported domestic cigarettes shipment volume for the six months ended June 30, 2025 and 2024, respectively.
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Total cigarettes industry discount category retail share was 31.2%, an increase of 1.9 share points versus the prior year and 0.4 share points sequentially, primarily due to continued discretionary income pressures on adult tobacco consumers.
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▪Effective July 20, 2025, PM USA increased the list price of Marlboro (excluding Mainline Menthol and 72s Menthol) and L&M by $0.17 per pack. PM USA also increased the list price of all its other premium cigarette brands by $0.22 per pack.
Current report — wording carried from elsewhere
Our oral tobacco products segment’s reported domestic shipment volume decreased 1.0%, primarily driven by retail share losses and other factors, partially offset by the industry’s growth rate and trade inventory movements. When adjusted for trade inventory movements, our oral tobacco products segment’s reported domestic shipment volume decreased by an estimated 4%.
Current report — wording carried from elsewhere
Our oral tobacco products segment’s retail share was 33.1%, as share declines for MST products were partially offset by oral nicotine pouch segment share growth.
Current report — wording carried from elsewhere
The U.S. nicotine pouch category grew to 52.0% of the U.S. oral tobacco category, an increase of 10.0 share points versus the prior year. In addition, on!’s share of the nicotine pouch category was 16.7%, a decrease of 2.3 share points versus the prior year.
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Tobacco companies are subject to broad and evolving regulatory and legislative frameworks that could have a material impact on our businesses. For example, the FDA proposed a tobacco product standard that would establish a maximum nicotine level in cigarettes and certain other combustible tobacco products significantly lower than the average concentration in these products on the market today with the aim of making such products minimally or non-addictive. The proposed rule, if not withdrawn, may proceed through the rulemaking process.
Previous report — wording carried elsewhere
Except for the factors leading us to perform a quantitative assessment for the e-vapor reporting unit as discussed below, there have been no events or changes in circumstances that indicate an interim quantitative impairment assessment was required as of March 31, 2025. We will perform our annual impairment testing during the fourth quarter of 2025.
Previous report — wording carried elsewhere
Overall discretionary income pressures on adult tobacco consumers have increased discount brand share performance and negatively impacted the sales volumes of our companies’ premium brands. For the first quarter of 2025, the discount share of the cigarette category reached 30.9%, an increase of 0.6 share points sequentially and an increase of 1.8 share points versus the first quarter of 2024.
Previous report — wording carried elsewhere
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.
Previous report — wording carried elsewhere
We engaged with the FDA through the rulemaking process, including during the notice-and-comment period, which closed in October 2023. OMB currently lists the rule as a long-term action. If the proposed rule were to take effect, our operating companies could experience increased costs to comply with the rule.