Good day, and welcome to the Altria Group 2022 third quarter and nine months earnings conference call. Today's call is scheduled to last about one hour, including remarks by Altria's management and a Q and A session. You may register to ask a question at any time by pressing star one on your touch-tone phone. You may withdraw yourself from the queue by pressing star two. 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 conference over to Mac Livingston, Vice President of Investor Relations for Altria Client Services. Please go ahead, sir. Thanks, Katie. Good morning, and thank you for joining us. This morning, Billy Gifford, Altria's CEO, and Sal Mancuso, our CFO, will discuss Altria's third quarter and first nine months business results. Earlier today, we issued a press release providing our results. The release, presentation, quarterly metrics, and our latest corporate responsibility reports are all available at altria.com. During our call today, unless otherwise stated, we're comparing results to the same period in 2021. Our remarks contain forward-looking and cautionary statements and projections of future results. Please review the forward-looking and cautionary statements section at the end of today's earnings release for various factors that could cause actual results to differ materially from projections. Future dividend payments and share repurchases remain subject to the discretion of Altria's board. Altria reports its financial results in accordance with U.S. Generally Accepted Accounting Principles. Today's call will contain various operating results on both a reported and adjusted basis. Adjusted results exclude special items that affect comparisons with reported results. Descriptions of these non-GAAP financial measures and reconciliations are included in today's earnings release and on our website at altria.com. Finally, all references in today's remarks to tobacco consumers or consumers within a specific tobacco category or segment refer to existing adult tobacco consumers 21 years of age or older. With that, I'll turn the call over to Billy. Thanks, Mac. Good morning, and thank you for joining us. This is an exciting moment on our journey towards moving beyond smoking. Our tobacco businesses remained resilient during the first nine months of the year, and we continue to reward shareholders while making investments in pursuit of our vision. We have deepened our consumer understanding, enhanced our capabilities, and built the science to support smoker transition away from cigarettes. The tobacco harm reduction opportunity remains in front of us, and we continue to believe Altria is uniquely positioned to responsibly lead adult smokers to a smoke-free future. Our remarks this morning will focus on our progress to date and several exciting steps we have recently taken that we believe will accelerate our progress toward harm reduction. I will then turn it over to Sal, who will provide further detail on our business and financial results. Let's begin with the heated tobacco category. Last week, we entered into an agreement with Philip Morris International, under which we will receive $2.7 billion in cash in exchange for assigning our exclusive U.S. commercialization rights to the IQOS system at the end of April 2024. We believe this agreement provides us with fair compensation and greater flexibility to allocate resources toward moving beyond smoking. The heated tobacco category is still undeveloped in the U.S., and we believe we can lead in this space, supported by our robust infrastructure and deep understanding of the U.S. tobacco consumers. This morning, we announced the pursuit of a global smoke-free partnership with JT Group. We signed a non-binding memorandum of understanding with JT, signifying the commitment of both parties towards further smoke-free collaboration. JT is a leading international tobacco company committed to investing and growing in reduced risk products. We believe that together, Altria and JT can accelerate global harm reduction by collaborating on the product development and global commercialization of smoke-free products. We believe this potential collaboration can leverage the strengths and resources of both companies to transition more smokers away from cigarettes. As a first step in this partnership, we announced the formation of Horizon Innovations, a joint venture between Altria and JT for the U.S. commercialization of heated tobacco stick, or HTS products. We believe that HTS products can appeal to certain smokers as they provide a more familiar, tactile, and sensorial experience to cigarettes. Under the terms of the JT, both parties will combine their scientific and regulatory expertise to jointly prepare PMTA filings for the latest version of the Ploom HT-HTS products, which are not yet commercially available. The parties expect to file a PMTA in the first half of 2025. Upon authorization, Horizon will become the exclusive entity through which the parties market and commercialize stick products in the U.S. JTI will supply Ploom heated tobacco stick devices, and PM USA will manufacture Marlboro HTS consumables for U.S. commercialization. The parties have agreed to commercialization milestones for Horizon, which include distribution requirements and minimal levels of cumulative marketing investment. Under the financial terms of the JT, PM USA has a 75% economic interest in Horizon, with JTI having 25%. We're excited about the prospect of introducing the latest version of Ploom HTS products to U.S. smokers. JT has demonstrated success innovating in the heated tobacco space. For example, JT launched Ploom X last year in Japan, and since its introduction, JT's doubled its share of the Japanese HTS segment. JT estimates that there are more than 1 million Ploom X consumers, and according to their research, these consumers perceive Ploom X as a stylish, credible, and unique brand. Consumers also describe the product as easy to use. We look forward to bringing the newest version of this exciting product to U.S. smokers. We have discussed our increased focus and investment on an internal wholly-owned heated tobacco product development. Our approach puts the consumer at the center of everything that we do. We receive more data on their preferences, purchasing patterns, and friction points than we ever have. Additionally, we embedded a regulatory sciences team early in the process to align our product development efforts with FDA expectations. We believe these efforts are building a promising pipeline of wholly owned heated tobacco products and intellectual property consisting of heated tobacco capsule or HTC formats and new-to-market technologies. We believe capsule products can appeal to smokers who are open to novel smoke-free products but have not yet found a satisfying alternative to cigarettes. This audience includes the millions of U.S. smokers who tried but ultimately rejected e-vapor products. We expect to finalize the design of our first capsule product by the end of this year, and we expect to file a PMTA by the end of 2024. We also expect to partner with JT to launch this product in an international test market using JT's sales and distribution network. We plan to share more on this product platform once the design is finalized. We believe moving beyond smoking in the U.S. requires multiple FDA-authorized products within each smoke-free category to appeal to a diverse range of smokers and help them transition away from cigarettes. We believe that our pipeline of heated tobacco products and partnership with JT, combined with the internal capabilities I described earlier, positions us well to increase adoption of smoke-free products for the millions of smokers interested in these products. Let's now move to the e-vapor category. In the third quarter, total estimated e-vapor volumes declined by 4% versus a year ago and were flat sequentially. We believe the regulatory uncertainty related to Juul caused market disruptions in the quarter, and we observed a reduction in Juul purchases throughout the supply chain. We previously disclosed that we have exercised our option to be released from our non-compete obligations related to our Juul investment. While we retain our 35% economic stake in Juul, we're exploring all options to build an FDA-authorized portfolio of e-vapor products that will help smokers transition away from cigarettes. For example, our teams are conducting consumer research, performing external scans, and evaluating internal product development options. We're excited about the opportunity to increase our participation in the largest smoke-free category in the U.S. Turning to oral tobacco, we remain encouraged by the growth of novel oral tobacco products, which grew its share of the total oral tobacco category for the 18th consecutive quarter. The category grew 6.5 share points year-over-year and now represents approximately 23% of the overall oral tobacco category. In the third quarter, on! reported shipment volume increased nearly 70% to 21 million cans, and on! retail share increased 0.3 sequentially, reaching 5.2 share points of the oral tobacco category in the third quarter. We believe these strong results were driven by increased brand awareness and adoption of on!, supported by continued equity and promotional investment. Building on its second-quarter launch of the Carry On! brand equity campaign, Helix recently introduced on! Rewards, a digital program that enables on! consumers to track their rewards balance online and redeem their points for coupons or other items. We're excited about on!'s continued momentum, increasing brand loyalty, and the opportunity for future growth. Let's now turn to our view of the regulatory environment. We continue to believe that more should be done to advance harm reduction in the U.S. That the FDA should move more deliberately toward creating a market of authorized smoke-free products to help accelerate smoker transition away from cigarettes. The fact remains that today only a small percentage of e-vapor volume has been authorized, and no oral nicotine pouch products have received market authorization. We believe collaboration and accountability from all stakeholders are required for this market transition to take place. We also believe that smoke-free products should serve as an off-ramp for smokers, not an on-ramp for youth users. We remain encouraged that youth smoking rates in the U.S. are at the lowest levels ever recorded. In fact, the latest Monitoring the Future study estimated that in 2021, the combined past 20 day smoking rates among eighth, 10th, and 12th graders was 2.3%, a nearly 92% reduction from its 1997 peak. Additionally, data from the 2022 National Youth Tobacco Survey indicate that while e-vapor usage remains high among middle and high schoolers, the levels were significantly lower than the peak observed in 2019. Per the 2022 NYTS survey, 50% of the middle and high school current e-vapor users indicated that they most often used disposable e-cigarettes such as Puff Bar. Moving forward, we hope to see timely science and evidence-based determinations on pending PMTA applications across all smoke-free categories and further enforcement on non-compliant manufacturers. Our journey towards responsibly moving beyond smoking continues, and we're optimistic that the actions we have taken to date have strengthened our portfolio in the three major smoke-free categories. We have built a compelling portfolio in the heated tobacco, enhanced our ability to compete in e-vapor, and continue to strengthen on! position in the oral tobacco category. We believe that we are able to maximize the value of these actions by leveraging our existing scale and infrastructure, such as our manufacturing centers and sales force. For example, our flagship Richmond manufacturing center began production of on! nicotine pouches in 2020. We now expect to add production of heated tobacco sticks for our new JT. Our sales and distribution system, driven by our world-class sales force, gives us the ability to responsibly market products in over 200,000 stores. We have decades of experience navigating dynamic U.S. regulatory and political environments through the strength of our regulatory and government affairs organizations. These functions, together with our many other talented employees, gives me confidence that we can achieve our vision. Before I conclude, I'd like to thank Leo Kiely for his distinguished service to Altria's board. Leo has served on the board since 2011 and will retire at the completion of his term early next year. I'd also like to welcome José Soares de Pina to our board of directors effective November 1st. José Soares de Pina brings a significant and deep understanding of the tobacco landscape following his years as an investment analyst covering the tobacco industry. José Soares de Pina will serve on the finance and innovation committees. I'll now turn it over to Sal Mancuso to provide more detail on the business environment and our results. Thanks, Billy. I'd like to begin with the review of the macroeconomic backdrop and its impact on U.S. tobacco consumers. In the third quarter, consumer discretionary income levels remained under pressure as higher gas prices and inflation persisted. However, we saw signs of continued brand loyalty in the tobacco space. In September, we conducted research to understand how tobacco consumers were managing their spending in several categories, including tobacco, alcohol, groceries, and household items. Our research indicates that tobacco consumers continue to stick with their preferred tobacco brands at a higher rate compared to other categories when experiencing higher prices. These results were consistent with the results from our previous surveys. We believe inflation and the rise in gas prices was partially offset for some consumers by a strong job market and wage growth. Overall, average wages increased 6.9% in the third quarter compared to an average 8.3% increase in CPI. For some occupations, including the service industry, wage growth outpaced inflation. We continue to monitor tobacco consumer behaviors and changes in marketplace conditions. Despite these macroeconomic challenges, our core businesses performed extremely well in the third quarter, underpinned by the strength of our premium brands. Marlboro, Copenhagen, and Black & Mild continued to grow profitably, and on! momentum and growth reflected strong positioning in the marketplace. This strong business performance, combined with fewer shares outstanding, drove Altria's adjusted diluted earnings per share results. Altria grew adjusted diluted EPS by 4.9% in the third quarter and by 4% in the first nine months. Turning to our business results, the smokable products segment continued to deliver on its strategy of maximizing profitability and combustibles while appropriately balancing investments in Marlboro with funding the growth of smoke-free products. The segment grew its adjusted operating companies income by 1.8% in the third quarter and by 2.6% in the first nine months. The smokable product segment expanded its adjusted OCI margins to 58.9%, an increase of 0.9 percentage points for the third quarter and 1.2 percentage points for the first nine months. This performance was supported by strong net price realization of 10.2% in the third quarter and 10.3% for the first nine months. I'll remind you that manufacturer price realization does not reflect retail price change for smokers. For example, Marlboro price per packet retail increased 6% in the third quarter compared to last year, which was below overall inflation for the quarter. Smokable segment reported domestic cigarette volumes declined 9.2% in the third quarter and 9% for the first nine months, driven in part by the continued macroeconomic pressures I described. When adjusted for trade inventory movement and other factors, domestic cigarette volumes for the third quarter and first nine months declined by an estimated 10% and 9.5% respectively. At the industry level, we estimate that the adjusted domestic cigarette volumes declined by 8.8% in the third quarter and by 7.5% in the first nine months. We believe it's important to analyze cigarette volume trends over the longer term, as decline rates in any one period can be influenced by various factors. In fact, Q3 year-to-date adjusted industry cigarette volumes have declined by an average of 4.5% over the past five years. In the third quarter, the total discount segment retail share of the cigarette category increased 1.6 percentage points versus the year ago period and 0.7 sequentially, reflecting increased competitive activity and the challenging macroeconomic environment. We are encouraged that the discount segment share growth largely sourced from just 0.1 sequentially and 0.4 versus the year ago period. We are pleased with Marlboro's performance and stability over the long term. In the first quarter of 2020, Marlboro's retail share was 42.5 percentage points. We believe that increased discretionary income, driven in part by government stimulus checks and lower consumer mobility, led to an increase in Marlboro's retail share throughout the pandemic. As consumer mobility returned to pre-pandemic levels and federal stimulus checks ended, Marlboro's share returned to its pre-pandemic levels and has remained stable through the subsequent quarters. In fact, since the first quarter of 2020, Marlboro has performed better than many of the other premium brands in the category. As a result, Marlboro continued to grow its share of the premium segment to 58.4%, an increase of 0.4 sequentially and 0.7 versus a year ago. We believe its performance over the long term is a testament to its positioning within the premium segment as the aspirational brand with strong consumer loyalty. In cigars, reported cigar shipment volume increased by 3.3% in the third quarter. Black & Mild continued its long-standing leadership in the profitable little cigar segment, and John Middleton continued to provide a strong contribution to smokable segment financial results. Turning to the oral tobacco product segment. Adjusted OCI grew 4.9% in the third quarter, but declined 3.4% for the first nine months, primarily due to higher investments behind on!. We're pleased with the strong overall margins for the segment and excited about ONP's performance in the marketplace. Total reported oral tobacco product segment volume increased by 1.3% for the third quarter and decreased 1.8% for the first nine months. When adjusted for trade inventory movement and calendar differences, segment volume decreased by an estimated 2% for the third quarter and 1.5% for the first nine months. Oral tobacco product segment retail share declined 1.5 percentage points as declines in MST were partially offset by the continued growth of on!. Turning to our investment in ABI. We recorded a non-cash pretax impairment charge of approximately $2.5 billion for the third quarter and first nine months of 2022. This impairment reflects the difference between the fair value and carrying value of our investment in ABI as of September 30th. We continue to believe that ABI's share price performance is not reflective of its underlying long-term equity value and that ABI's share price will recover. However, we believe that it will take longer than previously expected as macroeconomic and geopolitical factors may continue to impact foreign exchange rates and ABI's financial results and share price performance in the near term. As we have previously shared, we view our ABI stake as a financial investment, and our goal is to maximize the long-term value of the investment for our shareholders. We remain committed to creating long-term shareholder value through the pursuit of our vision and our significant capital returns, which we demonstrated in the third quarter by paying approximately $1.6 billion in dividends and raising the dividend for the 57th time in 53 years, and repurchasing 8.5 million shares totaling $368 million. We have approximately $375 million remaining under the currently authorized $3.5 billion share repurchase program, which we expect to complete by the end of this year. Our balance sheet remains strong, and as of the end of the third quarter, our debt-to-EBITDA ratio was 2.1 times. In August, we retired $1.1 billion of notes that came due with available cash. As Billy stated, we will receive $2.7 billion as a part of the IQOS agreement. We received $1 billion upon entry into the agreement and will receive the remaining $1.7 billion plus interest by July of 2023. Our expected use of the cash proceeds may include investments in pursuit of our vision, debt repayment, share repurchases, or general corporate purposes. Share repurchases depend on marketplace conditions and other factors and remain subject to the discretion of our board of directors. Turning to our financial outlook, we are narrowing our full-year 2022 guidance and now expect to deliver adjusted diluted EPS in a range of $4.81-$4.89. This range represents a growth of 4.5%-6% from a base of $4.61 in 2021. We believe this range allows us the flexibility to react to marketplace conditions. With that, we'll wrap up, and Billy and I will be happy to take your questions. While the calls are being compiled, I'll remind you that today's earnings release and our non-GAAP reconciliations are available on Altria.com. We've also posted our usual quarterly metrics, which include pricing, inventory, and other items. Let's open the question-and-answer period. Operator, do we have any questions? Thank you. Once again, as a reminder, if you would like to ask a question, please press the star key followed by the number one on your touchtone phone at this time. Investors, analysts, and media representatives are now invited to participate in the question-and-answer session. We will take questions from the investment community first. Our first question will come from Bonnie Herzog with Goldman Sachs. Your line is now open. Thank you. Good morning, everyone. Good morning, Bonnie. A lot going on with a lot of announcements, but I wanted to maybe touch on what you announced this morning related to your JV with JT. I just was hoping, Billy, maybe you could help us better understand the opportunity potential for HTC versus HTS formats and then the target consumers for each. Also just wanted to verify something, the timeline with, I think HTC is earlier, and it's 100% owned and controlled by you. Is that correct? Yeah. There was a lot in that, Bonnie, so I'll take them in reversal. The HTC is 100% owned by us. It is not part of the JV. I think when you think about HTS and HTC, you've got this huge group of adult smokers looking for products that satisfy and meet their desires and needs. You have some that want a familiar experience as close as they can get to cigarettes, and that's what we believe the HTS product fulfills for them. There are other consumers, as we've pointed out before, a lot of consumers have never tried e-vapor, so they were willing to go with a more novel type product. We believe the HTC fulfills those desires and needs. We actually see room for both to be successful, and it actually allows us to reach a larger group of consumers that are looking to switch. Okay. Just to follow up on that, you know, how do we think about this potentially changing either your near or long-term growth algorithm? You know, I'm just thinking through it, in terms of future investments required. You know, I assume there will be some other than the initial $250 million to develop and ultimately commercialize these products. Could you touch on that? Yeah, I think, look, we certainly are gonna, as we said previously. Remember our overall strategy, even in the smokable products category, is to maximize our income over time, but to make appropriate investments both in Marlboro and balancing that with investments in the growth areas. There are always puts and takes. I don't want you to think all of the investments that we make are completely incremental to the P&L. We try to leverage, and we try to point out some of that in our remarks this morning. For instance, the manufacturing center where we expanded our production for on! in that facility. The HeatSticks for the JV will be produced by the manufacturing center. There you have the infrastructure in place. You have a strong, talented group of employees that are familiar with running those machines. You leverage some. Yeah, they're investments, and you have reallocation across the P&L, but it's not all incremental investment. Okay. Just maybe my final question is, you know, related to your guidance, which you narrowed this morning. You narrowed it slightly, I guess 20 basis points at the midpoint. You know, you stated just, you know, to give you more flexibility to react to, you know, marketplace conditions. I just wanted to, you know, maybe hear from you what got a little bit worse or uncertain. Is it the pressures on the consumer, or is there something else that we should be mindful of? Thank you. Yeah, I appreciate the question, Bonnie. I think you could think of most of that narrowing as the passage of time, right? We have more certainty because remember we're on a quarter lag with ABI, and you saw them release results this morning. Certainly it's no surprise that our consumers are under pressure and we wanna maintain that flexibility, but nothing out of the ordinary that I would point out. All right, thanks. I'll pass it on. Thank you. Our next question will come from Pamela Kaufman with Morgan Stanley. Your line is now open. Hi. Good morning. Good morning, Pamela. I wanted to follow up on Bonnie's question and ask about how you're thinking about the evolution of the U.S. tobacco market over the next five to 10 years. How do you think about the relative size of the e-vapor versus heat-not-burn categories over time? Now that you have greater flexibility to invest in e-vapor, given the non-compete termination with Juul and the partnership with JT, how are you going to prioritize your investment between heat-not-burn and e-vapor? Yeah, it's a great question, Pamela. I think it's important to remember as you step back, and that's why we tried to highlight in the remarks that the reduced harm in the U.S. is really undeveloped. The reason I say that is from an authorization standpoint, take the two that exist today, e-vapor and novel oral. A very low percentage has been authorized by the FDA in e-vapor, and we believe that's gonna go through a period of transition as those authorizations come out, and some make it and some get denied. When you move to the novel oral, really no authorizations have been received in that space. That, again, depending on how the regulatory body goes about assessing and authorizing those, there could be a bit of transition there. Then in the heated tobacco space, it's really nonexistent. I think when you think about those three categories, we believe the extent of those three categories will really be shaped by three factors. One I mentioned is the regulatory decisions that are taken in each of the individual categories. It'll be legislative and tax policy. How does that develop through time related to the individual categories? Really through time is the innovation in the spaces that best address the consumer preferences based on what they desire. That's really what's gonna shape the size of the three individual categories. We believe those are the three categories that will grow through time as consumers continue to move away from cigarettes to the smoke-free products. As far as prioritizing, we're gonna prioritize based on where we see the consumer moving and how we see the consumer moving. It's gonna be completely consumer driven, and that's why we're excited to be able to leverage, the sales force to get the products in the right stores, as well as the amount of data we receive and the insights that we can garner from that. Great. Thank you. My second question is on ABI. You previously expected the shares to recover and decided to hold on to your investment when your lock-up expired. It seems that now you expect this recovery to take longer than expected. How does this impact your thinking around the investment, and does this further extend your plans to hold on to the stake, or does it increase your willingness to sell it at a lower price? Good morning, Pamela. The impairment of the ABI asset, the reduction in our carrying value is really accounting driven. You know, when you think about whether an impairment is temporary or not, you have to look at timing of your expected recovery. As far as the ABI asset, you know, as we stated, we view it as a financial investment. Our focus is to maximize the value for our shareholders. Share price value is one of many variables that go into that analysis. It's an analysis that we do on an ongoing basis, and we'll continue to focus on what's best for our stakeholders over the long term. Thanks. Maybe if I could squeeze one more in. Can you just talk about what you plan to do with the proceeds from the IQOS termination agreement, and if there's any e-vapor assets that would be attractive to you to help accelerate your entry into the category? Thanks. Thanks, Pamela. You know, we mentioned them in our opening remarks. I don't have a lot to add to that. I mean, obviously, the proceeds provide us with increased flexibility, which is always a good thing. So there's really nothing more to add. I mean, we're going to continue to look at all capital allocations through the lens of what's best for our shareholder, be it investments in our long-term vision, continuing to manage a strong balance sheet or provide further returns to our shareholders. Again, that's part of our broader capital allocation strategies. Thank you. You're welcome. Thank you. Our next question will come from Chris Growe with Stifel. Your line is now open. Hi. Good morning. Good morning, Chris. Good morning. I had a question for you, a bit of a follow-on to the agreement with JT. Obviously, it's very encouraging to get you back into that category. Given the timeline for development of your products and obviously FDA review, do you have a reasonable time frame for launching a product in the U.S.? And if I could ask related to that, you'll have this international capability in terms of launching a product. Should we expect that you'd be able to develop products to kind of test and learn internationally to refine those for an ultimate PMTA application in the U.S. Yeah, Chris, thanks for the question. You're right, we are excited about the opportunities we have in front of us. I think when you think about the timeline for launch, what we try to provide you is when we would anticipate being able to file PMTAs, then it will be dependent on how long it takes the FDA to authorize those products. I believe through time, those authorizations will become more predictable and quicker. Whether that's the next product that they authorize or it takes a couple for them to get used to the new categories remains to be seen. I think when you think about the launch internationally, yeah, we're excited about the potential there for being able to test products in a live market in the international realm. We're excited about the ability to, whether it's in any of the new categories, to be able to leverage that. I don't want to get ahead of myself. You know, we mentioned the memorandum of understanding about future collaboration, and we'll share more when it's appropriate to share. Just to be clear on that, Billy, giving your timeline for when you expect to have PMTA in for the product you're developing, would it be reasonable to assume we'd see that, like, next year in international market being tested at least, and then moving to an application in 2024? Or am I getting too far ahead of myself here? I think you're getting a little bit ahead of yourself. I think from an international launch, you know, we tried to say, look, when we would anticipate being able to launch that into international market. Maybe your question underlying that is why are you taking so long? I think it really goes back to, look, we wanna be, disciplined. We wanna conduct preliminary studies to certify that we can consistently meet the high standards for product quality that we hold ourselves to, as well as the constituent reductions. We're gonna go about it in a thoughtful manner. Yes, we are excited to get it into an international market and look forward to it. Okay. I had a question just in relation to your, as part of your guidance, you have this flexibility to react to current marketplace conditions. You know, as I look at your business today on the smokable side, in particular, you're gaining share in the premium segment. Obviously, premium's losing share though overall. I guess as I think about where you need to invest, I would be curious, is it in the premium brands, in the premium category to take back share from discount? Or is it more on the discount side where you're losing share, do you want to invest going forward? Yeah, I understand your question, Chris. I really would look at the narrowing of guidance as a passage of time. Look, we wanted to make everybody aware that our consumer is under pressure just like consumers across all industry, and we like the flexibility. That's more of the range we had maintained for the establishment of the guidance. I wouldn't point out to anything specific. We're very excited about the price realization we've been able to realize, being on track for our guidance for the total year and the stability that Marlboro's experienced in the marketplace. I mean, when you look at pre-pandemic to post-pandemic, and Sal mentioned this in his comments, when you saw government stimulus and less mobility in the marketplace, we actually saw it as encouraging. We weren't attempting to gain share. We were performing the business like we normally do. It shows that Marlboro is still the aspirational brand in the cigarette space, and that's what we saw take place during the pandemic. Disposable income's got a little bit tighter, and mobility is affecting that as well. We see that some of that share back, but pre-pandemic to post-pandemic, call it roughly flat, maybe up a tenth, and we're extremely pleased with where we're at. Okay. Thank you for your time today. Thank you. Thank you. Our next question will come from Gaurav Jain with Barclays. Your line is now open. Hi, good morning. Good morning, Gaurav. Hi. A few questions from me. First is on the oral tobacco pricing this quarter, which was I think up 5.5%, and it was flat in managed, just 3% last year. If I look at Copenhagen's pricing based on your disclosure, it is still running at the same level of +7%. Does it mean that you are pulling back on promotions or you know you are increasing actually on pricing now that on! is coming up as a part of your portfolio and it has hit maybe some critical market share? Yeah, look, Gaurav, we're excited about what on! been able to perform, how it's been able to perform and grow in the marketplace. Certainly with the learnings we've had in the other two categories where we have the analytics and the RGM tools that we have in place, we certainly see the opportunity to be able to apply that in the new spaces as we gain volume and market share. Overall, I think from a standpoint of the strategy in the oral space, it's really to maximize profitability through the long term with the strength of Copenhagen while balancing investments with on!. I think that's exactly what you see taking place in that space. Sure. My second question is on, you know, the logic MRTP on menthol e-cigarettes. I appreciate it's not your product. You know, just broadly, like if FDA now goes ahead and starts denying menthol e-cigarettes, would it make any sense to invest in U.S. e-cigarettes right now? Because maybe all the menthol e-cigarettes get denied. Yeah, I think it remains to be seen, and that's what we try to highlight for the size of each category. You highlighted an important one that's in front of the entire industry in all of these spaces is regulatory decisions. That will decide how large the individual categories can be. I would also highlight the other two. It's really legislative and tax policy. How does that mature through time? Then the last would be innovation. But I hear you, and that's why we try to highlight those three factors that could ultimately decide the size of each of those categories relative to each other. Yes. You know, under California flavor ban, that could happen next quarter. How are you planning to approach that? Yeah. We've engaged with our government affairs team. We don't believe the science supports it from a standpoint, and we've highlighted that and we've been pretty vocal with that, even with the FDA as they've looked at some of these things. We think those decisions are better based with the FDA, where it's science and evidence-based. When you think about the overall category in California, certainly it could have an industry impact. We, as a reminder, skew non-menthol and cigarettes, and we skew non-flavored products in the more smokeless space. Again, I think it could have an impact to the industry. The science doesn't support it, but I just wanted to remind you of our positions from a SKU standpoint. Sure. If I could just please the last one on CapEx, like you reduced the CapEx guidance slightly. Would you be able to help us understand why that happened? Can you repeat that, Gaurav? The CapEx number. Oh, yes. The CapEx guidance was reduced. I apologize. What are the factors driving that? Yeah. You know, if you think about capital projects, Gaurav, the spending is not necessarily linear, right? The projects are moving along quite well. The year time has passed throughout the year, so we're three quarters through the year. We just lowered our forecast for spending, so that's more timing. The projects remain on track. Of course, there are some delays in supply chain when you're ordering equipment, but nothing material. We've been able to manage that quite well. It's not uncommon for fluctuations in capital forecast as the year progresses. Sure. Thank you. You're welcome. Thank you. Our next question will come from Vivien Azer with Cowen. Your line is now open. Hi. Good morning. Good morning, Vivien. I also wanted to touch on heat-not-burn, please. I apologize, maybe it's just a lack of imagination on my part, Billy, but when you describe the HTCs, the capsules, it reminds me of the original Ploom innovation that JT launched in 2016-2017. Can you just expand on how that's different, if at all? Because that didn't really resonate with consumers in Japan. Thanks. Sure. I don't want to get too far ahead of myself. We'll come forward with the actual product, and I know you'll be excited about it when we're able to bring it forward once we complete design. If you think about the stick, that's pretty evident because everybody's seen that in the marketplace. If you think about the capsule, the tobacco is contained within a capsule. It's different than the technology you're familiar with Ploom, but again, I don't want to get too far ahead of myself from a standpoint of describing the device before we're ready. Okay, fair enough. It is different in terms of the nicotine delivery? That is correct. Okay, perfect. Thank you. I do look forward to seeing that for sure. Maybe just pivoting to the smokable segment, please. You know, understanding perfectly well that your objectives are really focused on profit growth, it's hard to ignore the fact that your price gap is now the highest it's been since 2009. I'm just curious how you think about operating leverage for that segment. You know, modest market share declines are fine. You're right, you know, obviously you know on a three-year basis, industry declines haven't gotten that much worse. But you know, your two-year stack is deteriorating on an industry-adjusted basis. How do you think about operating leverage in that segment from a volume perspective? Thanks. Yeah, sure. I think when you look at the price gap, I just wanna remind you, Vivien, and I know you know this, but that 40% price gap that we disclosed is really a barometer for the national level. We put that out because it allows you all to have a barometer, but we manage it much lower than that. I think you see as the introduction and execution against the data analytics and the revenue growth management, most people refer to it as, those tools that we have available allows us to manage the price gap at a much lower level. That is, I think, what you're seeing in the success of the Marlboro market share through time. We're extremely pleased with where we're at. We feel good about the performance of Marlboro and being able to expand the price gap and increase the profitability through time the way we've done. Absolutely. That segues really nicely into my last question, which is on the performance of the discount category. It's, you know, obvious that deep discount share gains are now re-accelerating. You've articulated, I think very helpfully, the puts and takes in terms of the backdrop of the consumer. Just any updates on how you're thinking about kind of strategically positioning your discount brands against that backdrop? Thanks. Yeah. In your recall, Vivien, we're premium-focused. We participate in a discount because it's important to our retailers to have a portfolio that services all of their customers that visit their stores. But we're premium-focused. You know that we ceded share in L&M. We felt like we would cede share in L&M as we increase profitability. But we're pleased with the increased profitability we've experienced on L&M and with the willingness to cede some of that share to deep discount. You remember our consumers at the lower end of that socioeconomic status. Loyalty's extremely high, over 90% for premium brands. You always have that group of consumers when they get under pressure are gonna shop around and move around depending on what their individual situations are. Absolutely. Thank you so much. Thank you. Thank you. Once again, if you'd like to ask a question, please press star one on your touchtone phone. Our next question will come from Carla Casella with JP Morgan. Your line is now open. Hi, this is Oliver Brotman in for Carla. Thanks for the question. Just a couple from us. With regards to the announcement made last week on the agreement reached with Philip Morris, is there any risk to the remaining $1.7 billion that Philip Morris owes? I mean, could that value change between now and then? Yeah. With that value, it was an exchange of 2.7. The only thing that would change the 1.7 is the interest that would accumulate through time, depending on when they made that payment. Exclusivity remains with us until the final payment's made. Got it. Thank you. Then just secondly on Juul. While the non-compete is no longer in place and, you know, you're turning your focus to varying options to build out the portfolio, you still retain that 35% stake. Is there a plan longer term what you would maybe do with that stake? Really no plan at this point. We hold the economic stake. We'll see what their performance is in the marketplace, but we thought it was important at that point in time to get out of the non-compete to open up our flexibility in the e-vapor category. Got it. Thank you so much. Thank you. Our next question will come from Priya Ohri-Gupta with Barclays. Your line is now open. Hi, thank you for taking my question. This is Priya Ohri-Gupta. One quick question. You have a euro debt maturity early next year. Do you need to have that euro exposure, or could you be flexible in refinancing that in U.S. dollars? Yeah. I don't wanna get ahead of ourselves on that maturing debt. How we retire that debt and the process we go through, we'll wait and see. Obviously, we'll do the necessary analytics from a market perspective, from a capital allocation perspective. To your question, though, while we have flexibility on where we could issue debt, we do not necessarily need to have the euro exposure, no. Thank you. One last one. What are your thoughts on the relative attractiveness of the U.S. dollar market versus the European market in terms of swap rates? Well, obviously, FX exchange rates are a factor that goes into that allocation. I don't wanna necessarily predetermine what's more attractive. But for us, what's important is to have flexibility in the marketplace. We are fortunate in that we have a strong balance sheet. We've got operating companies that do a tremendous job of converting income to cash. As debt comes due, we can refinance, or we can think about other methods of retiring the debt. For us, it's really the flexibility to determine how we wanna handle that debt coming due, but also what markets we may or may not wanna enter. FX exchange is definitely part of that process, though. Thank you. You're welcome. Thank you. Our next question will come from Callum Elliott with Bernstein. Your line is now open. Hi. Thank you for the question. I wanted to ask you guys a little bit more about Horizon, if that's okay. I guess our sense is it feels like giving away a 25% economic share is a huge amount given that candidly this is a poorly performing product, it's a weak number four brand globally without regulatory approval in the U.S. And so hoping you can just talk about the drivers behind why you entered this JV, how you arrived at a 75/25 economic split. It feels just to us and based on the conversations we've had this morning to investors as well, that this is gonna be very difficult for this to be economically viable for you. Yeah. We think about it a bit differently, and let me describe. You'll recall when we equalized volumes across the nicotine space in the U.S., it greatly reduces the decline rate. If you look over the past five years, decline's at about 1%. We think it's important to have a portfolio of products in each of these categories and across the categories that attract consumers to them from a standpoint of being able to participate in those categories, have strong products and brands across those categories, which will be a benefit to volume and attract a larger group of consumers to transition from cigarettes over to the smoke-free space. I think it's important to remember that the JV that's in place is for a product that hasn't even been commercialized yet, as they continue to garner learnings and consumer insight and feedback. We're extremely excited, and we think this is a foundation for future collaboration and potential exposure to international revenue as well. Okay, thanks, Billy. I guess just one follow-up, unrelated. I wonder if I can get you to talk a little bit about cannabis as well. I think, well, you obviously still have your stake in Cronos, your warrants are set to expire in a few months. Presumably, you're not likely to exercise them given their way out of the money. More broadly, my question is how your thinking about the cannabis category has changed over the past three and a half years since you made that investment. Where does it sit on the list of capital allocation priorities today? Yeah. I think when you think back, we highlighted when we made that investment in cannabis that it was gonna be a long-term investment. We still believe it has long-term potential in the U.S. Certainly with the current political environment, it doesn't feel imminent that anything will switch in the U.S. I think the president made an important first step in some departments, but it's a first step, and it's a lot more to take place before the industry dynamics change in the U.S. to be able to capitalize on that. We still believe it has long-term potential in the U.S., but certainly in the political environment, nothing is imminent. Okay. Thank you. Thank you. Thank you. Once again, we will hold for a moment for additional questions. Please press star one now if you would like to ask a question. Thank you. At this time, I would now turn the call back over to Billy Gifford for closing remarks. Yeah. Thank you, Katie. I'd like to conclude our remarks by going back to where I started. We're in an exciting period of Altria's history and have an unprecedented opportunity in moving beyond smoking. We expect that our actions will lead to a strengthened portfolio across the three major smoke-free categories that will help smokers transition away from cigarettes. In heated tobacco, we believe we have taken a huge step forward with our new joint venture with JT and our internal product development efforts. We now have the ability to compete in the e-vapor category and are already assessing our options in this space. We have demonstrated progress in the growing novel oral category with on! continued growth. I continue to be confident in my belief that we can achieve our vision and create long-term value for our shareholders. Thank you for joining us, and have a great day.