Good day, and welcome to the Altria Group 2022 Fourth Quarter and Full Year Earnings Conference Call. Today's call is scheduled to last about one hour, including remarks by Altria's management and a question and answer session. Representatives of the investment community and media on the call will be able to ask questions following the conclusion of the prepared remarks. I would now like to turn the call over to Mac Livingston, Vice President of Investor Relations for the Altria Client Services. Please go ahead, sir. Thanks, Todd. Good morning, thank you for joining us. This morning, Billy Gifford, Altria's CEO, and Sal Mancuso, our CFO, will discuss Altria's fourth quarter and full year 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. 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, thank you for joining us. It was an exciting year for Altria as our businesses delivered strong financial performance, and we continued to strategically invest toward our vision. We grew our adjusted diluted earnings per share by 5%, and our tobacco businesses remained resilient and successfully executed their strategies. We also returned significant cash to shareholders through dividends and share repurchases. Last year, we returned more than $8.4 billion to shareholders, outpacing our record returns from 2021 and representing the largest single-year cash return since 2002. Our vision guided our actions, and we believe we made meaningful progress on our journey toward moving beyond smoking. Our teams took several steps forward during the year, including accelerating the growth of on! Nicotine pouches, creating long-term optionality for our inhalable smoke-free product portfolio, enhancing our digital consumer engagement, and continuing to advocate for tobacco harm reduction. Helix grew on! reported shipment volume to 82.5 million cans during its first full year of unconstrained manufacturing capacity, an increase of more than 70% versus the prior year. At retail, on! share momentum continued in the fourth quarter as the brand reached 5.9% of the total oral tobacco category and 24% of the nicotine pouch category. This impressive performance was driven by continued increases in brand awareness and adoption by smokers and dippers. Additionally, we believe Helix effectively managed on! promotional spend as the year progressed and reduced on! promotional spend per can by approximately 15% during the second half of the year compared to the first half. In oral tobacco product development, we're excited to announce we have finalized a new product design which will provide tobacco consumers more smoke-free options within our portfolio. We also began regulatory preparations for the product, and we are encouraged by the initial research results and the response we have received from dippers and nicotine pouch users. We look forward to sharing more details and unveiling this innovative product at our Investor Day next month. Turning to our inhalable smoke-free portfolio. We created long-term optionality in the heated tobacco and e-vapor spaces. Internally, we have not yet finalized the design of our heated tobacco capsule product, but our teams continue to make progress. The consumer remains the focal point of our innovation system, and our teams are tailoring the product to appeal to smokers who have not yet found a satisfying alternative to cigarettes. We also look forward to unveiling this exciting new product at our Investor Day next month as well. In October, we announced a strategic partnership with JT Group, including a joint venture for the U.S. commercialization of heated tobacco stick products. We're encouraged by the initial collaboration between our teams and the pace at which they are operating. Horizon is optimizing Ploom for the U.S. market and plans to begin regulatory preparations later this year. We're excited about the opportunity and are working diligently to bring Ploom to smokers in the U.S. In e-vapor, we previously announced we elected to be released from the non-compete obligations related to our JUUL investment. We retain our economic stake in JUUL. E-vapor remains the largest smoke-free category in the U.S. and the most successful category in transitioning U.S. smokers away from cigarettes. We believe the category can play an important role in harm reduction, and we're continuing to evaluate all options to best compete in the category. Next, let's discuss the progress we made to enhance our digital consumer engagement. We launched a new digital trade program last spring, and we believe this program enhances our ongoing commitment to responsible retailing. The program includes multiple participation options for retailers. For those participating at the highest level, we introduced incentives for retailers to include age and identity verification solutions in their digital platforms. Once the consumer is verified, retailers can then provide offers and messaging from our brands within the retailer's app. I'm excited to share that we implemented these solutions in more than 33,000 stores, exceeding the goal we outlined last year at CAGNY. Currently, consumers can view offers from our smokable and moist smokeless tobacco brands. Going forward, we expect to expand the program to include on! and other smoke-free brands. As we continue to broaden our digital reach, data will help us better understand each smoker's journey and help them successfully transition to other smoke-free alternatives in our portfolio. Moving to the regulatory environment. We remain optimistic about the future of harm reduction in the U.S. We believe we have an unprecedented opportunity to lead the way in shifting millions of smokers to smoke-free alternatives if we follow the science and foster innovation with the support of reasonable regulation. In December, the Reagan-Udall Foundation published its operational evaluation of the FDA's Center for Tobacco Products. We were among the stakeholders who provided input into this evaluation. Among its recommendation, the report urges the FDA to clearly define product pathways and accelerate PMTA decision-making, take enforcement actions against manufacturers and products in violation of the law, and address the need for risk communications to tobacco consumers. We agree these are important opportunities and believe that the FDA should direct its focus toward implementing a framework to advance harm reduction rather than focusing on prohibition policies that we believe will further expand the illicit market and create other unintended consequences. Let's now move to the operating environment. We estimate that total equivalized tobacco volumes declined 6% for the year and 1.7% over the past five years on a compounded annual basis. Combustible volumes declined by an estimated 7.8% last year as smokers faced increasing economic challenges. We are encouraged that smoke-free volumes were stable compared to the prior year at 3.8 billion equivalized units and now represent an estimated 26% of the total tobacco space. E-vapor has been a major contributor to the growth of smoke-free products over the five-year period. Although volumes declined by an estimated 1% year-over-year amid considerable regulatory uncertainty, such as the FDA's marketing denial order and subsequent temporary stay on JUUL products, which caused market disruptions for both consumers and retailers. In all tobacco, volumes grew by an estimated 0.5%, driven by the continued adoption of on! nicotine pouches. Turning to our financial outlook. Our plans for 2023 include a continuation of our strategy to balance earnings growth and shareholder returns with strategic investments towards our vision. For 2023, our planned investment areas include continued smoke-free product research, development, and regulatory preparations, digital consumer engagement, and marketplace activities in support of our smoke-free products. We believe the external environment will remain dynamic in 2023. We will continue to monitor the economy, including the impact of high inflation, tobacco consumer dynamics, and regulatory and legislative developments. Considering these factors, we expect to deliver 2023 full-year adjusted diluted EPS in a range of $4.98-$5.13. This range represents an adjusted diluted EPS growth rate of 3%-6% from a $4.84 base in 2022. Before I turn it over to Sal, I would like to send a sincere thank you to our employees. I continue to be impressed by the talent within our companies and our ability to adapt and overcome challenges in a dynamic operating environment. The passion and dedication of our employee base is evident, and I'm confident in our ability to execute our vision because of you. Also, I'd like to honor the memory of Leo Kiely, the longstanding member of our board who recently passed away. Leo served on our board since 2011 and made many contributions to Altria, including as chair of the Compensation and Talent Development Committee and as a member of the Innovation Committee. We will miss his leadership, guidance, and friendship. I'll now turn it over to Sal. Thanks, Billy. We were very fortunate to have Leo's 12 years of service at Altria, and our thoughts remain with the Kiely family. Moving to our results, our tobacco businesses generated strong financial performance again this year and were responsive to changes in a dynamic external environment. In the fourth quarter, the smokable products segment grew its adjusted operating company's income by 4% and expanded its adjusted OCI margins to 58.4%. The segment also reported robust net price realization of 13.5%. As a reminder, manufacturer price realization does not reflect retail price changes for smokers. For example, Marlboro net retail pack price increased 6.4% in the fourth quarter compared to last year. We continue to successfully execute against our strategy in the smokable segment, maximizing profitability while balancing investments in Marlboro with funding the growth of smoke-free products. For the full year, smokable segment adjusted OCI grew 2.9% to $10.7 billion and adjusted OCI margins expanded by 1.4 percentage points to 59%. Smokable segment net price realization for the year was 11.1%. In addition, over the past five years, the smokable segment has grown adjusted OCI by $2.2 billion, representing a compounded annual growth rate of 4.7%. Over the same time period, adjusted OCI margins have expanded from 51% to 59%, an impressive increase of 8 percentage points. Turning to volumes, our smokable products segment reported domestic cigarette volumes declined 12.1% in the fourth quarter and 9.7% for the full year. When adjusted for calendar differences and trade inventory movements, domestic cigarette volumes for the fourth quarter and full year declined by an estimated 11% and 9.5% respectively. At the industry level, when adjusted for trade inventory movements, calendar differences, and other factors, we estimate that adjusted domestic cigarette volumes declined by 9% in the fourth quarter and by 8% for the full year. Let's discuss retail share performance. Full year retail share for the industry discount segment increased 1.4 share points. We believe these results were driven by an increased pressure on smokers' disposable income and increased competitive activity, including multiple branded discount offerings priced at deep discount levels. Marlboro retail share declined by 0.4 for the full year. Most of the full-year share losses were attributable to the value options within the Marlboro brand family, such as Special Select and Marlboro 72s, as some price-sensitive consumers continued to seek additional price relief. The brand's mainline non-menthol offerings, including the iconic red and gold pack varieties, were resilient and performed well for the year. Marlboro's share of the premium segment grew to 58.2% for the full year. Marlboro has performed better than many other premium brands over the last several years. Over the past three years, Marlboro grew its share of premium by 1 full share point. We are encouraged by Marlboro's resilient performance as the brand celebrates 50 years of leadership in the cigarette category. In cigars, reported cigar shipment volume decreased 4% for the full year, while Black & Mild continued to maintain its leadership in the profitable machine-made tipped cigar segment. Next, we will move to the oral tobacco products segment. Full year segment adjusted OCI and adjusted OCI margins contracted as we continued to invest behind on!. Total segment reported shipment volume declined 2.4% for the year as growth in on! volume was more than offset by lower reported MST volumes. When adjusted for trade inventory movements and calendar differences, we estimate that full year total oral tobacco segment volumes declined by an estimated 2%. Full year oral tobacco products segment retail share declined 1.3 percentage points as declines in MST were partially offset by the continued growth of on!. Within the traditional smokeless category of MST and snus products, Copenhagen share performance has been stable over the last three years, declining only 0.3 from 2019, whereas the second largest traditional smokeless brand has ceded 1.6 share points. Overall, we continue to be encouraged by the performance of our oral tobacco products as on! grew volume and share in a competitive category, and Copenhagen remains the category leader. Turning to our investment in ABI, we recorded $571 million of adjusted equity earnings for the full year, down 10.6% versus 2021. We continue to view the ABI stake as a financial investment and our goal remains to maximize the long-term value of the investment for our shareholders. In our all other operating category, we have completed our wind down of Philip Morris Capital Corporation and no finance assets remain. I would like to thank the many PMCC employees who contributed to its success over the years and to the other Altria employees who helped complete a successful wind down. We continue to effectively manage our balance sheet while generating strong financial performance and returning significant cash to shareholders. These results were driven by our tobacco businesses that continue to be highly cash generative. Our year-end credit metrics remain strong. Our debt to EBITDA ratio was 2.1 times, down 0.4 over the past three years, and our weighted average coupon was 4%, a decrease of 0.2 over the past three years. We also expect to retire approximately $1.3 billion of notes coming due later this month with available cash. In addition, we returned more than $8.4 billion in cash to shareholders last year through dividends and share repurchases. These record cash returns included paying $6.6 billion in dividends and raising the dividend for the 57th time in 53 years. We also repurchased more than 38 million shares during the year, totaling $1.8 billion, which completed our previously authorized program. Earlier this week, our board authorized a new $1 billion share repurchase program, which we expect to complete by the end of 2023. I'll now turn it back to Billy to conclude our remarks. Thanks, Sal. 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. As we mentioned during the call, we have exciting topics to discuss at our Investor Day next month. We look forward to having a fulsome conversation about our smoke-free future, and we are excited to share more about our journey toward moving beyond smoking. Todd will now transition to the Q&A period. Thank you. At this time, if you would like to ask a question, please press the star key followed by the number one on your touchtone phone. 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. Again, to ask a question, please press star one. Our first question comes from Vivien Azer with Cowen. Hi. Good morning. Good morning, Vivien. I just wanted to start with the industry volume backdrop. I recognize you guys have kind of suspended the historical practice of offering industry guidance, and that makes good sense to me. Just hoping to get some color on how you're thinking about the potential impact of the menthol ban in California, if you think that's an incremental headwind for the year? Thanks. Sure. Yeah, I think it's a little early to say exactly what that headwind will be, Vivien. Certainly it will be a headwind, from the state of California having banned it. It went into effect, you remember, in December. We'll see how that proceeds. Yeah, I would say that would be a headwind as we enter 2023. Fantastic. Thanks for that. Just pivoting to the oral tobacco segment, encouraging to hear some rationalization on the on! promo having fallen 15% in two half 2022. Can you offer a little color on where that positions on! relative to the competitive set? We think it actually we were very pleased with the results. We, as you mentioned, we reduced it 15% first half to second half, and it continued its momentum and grew share. We think it's a growing category, Vivien, and that the entire segment is growing, and we wanna participate in that growth. We're continue to invest behind it. As we move forward, I think you see the benefit of data analytics and then in the future, the application of what most people refer to as revenue growth management that we've seen success in the traditional smokeless as well as cigarettes. That's what you can expect from us as we move forward. Perfect. Thanks for that, Billy. just one last one for you. Sal, please, I recognize it's premature for us to start modeling, royalties from the IP litigation with British American Tobacco, because there's certainly an appeals process. if you could just contextualize how we should be thinking about that incremental revenue stream, as litigation draws to a conclusion, please. Thank you. Yeah, sure. Vivien, you're right, there is an appeals process. You know, we developed our guidance. We have not considered the royalty, any potential royalties in that guidance. As you know, with any year, you put plans in place and there are always puts and takes. I think it's early to really think about how you might model that. Let's see how the appeals process plays out. Fair enough. Thank you so much. Looking forward to the Analyst Day. Thank you. Thank you. Our next question comes from Pamela Kaufman with Morgan Stanley. Good morning. Good morning, Pamela. How would you characterize the current state of your consumer? This builds on Vivien's question, but just wanted to hear how you're thinking about the puts and takes to cigarette volumes in 2023. Volume declines were clearly very elevated in 2022. Do you expect a more normalized year of mid-single-digit volume declines given easier comparisons and moderating gas prices? Yeah, Vivien, I mean, I'm sorry, Pamela, you're looking for guidance on upcoming volume. Let's talk about the headwinds and tailwinds as we progress through the year. I'll talk about the consumer first because that's the most important when you think about volumes. I think the consumer remains under pressure. You know, we tried to highlight that it was the compounding of the inflation's impact as we progressed through 2022. I think you've heard as many predictions as I have. Soft landing, no deep recession. I think even the experts in from an economist standpoint are all over the board. We feel good about the guidance that we put out. We feel good about where the consumer is, but we want the adaptability and the flexibility to be able to move with the consumer needs. I think the consumer will remain under pressure until we see some relief, if you will, from inflationary pressures in the marketplace. Gas prices is just one aspect. That's, you know, we certainly have seen a decline, but nowhere near the lows we were seeing as we were pre-pandemic levels. Gas prices can move around depending on China reopening and things of that nature. We'll see where that goes. I think when you think about volumes, it's specifically combustible volume, it's important to remember that what we're looking at is how the consumer is impacted. Tobacco, the industry, is not immune to macroeconomic environment. It's just less impacted than other industry categories. From that standpoint, historically what we've seen, Pamela, is that as the consumer is experiencing this rapid change in their economic condition, whether up or down, they make changes in their purchasing behavior, and then it becomes more comfortable to them through time, and they adjust various factors in their purchasing basket. It remains to be seen. We'll see how the macroeconomic shapes up. I would say that's the biggest thing and how that macroeconomic impacts purchasing behavior. Thanks. That's helpful. My other question is just on your 2023 earnings guidance, which reflects a slightly lower growth rate compared to your 4%-7% guidance over the last several years. Can you talk about the puts and takes influencing the outlook for 2023? How much incremental investment does this reflect behind reduced risk? Are there any other discrete factors contributing to the slight shift in the growth rate? Yeah, I think the last comment you made, I would see it as a slight shift. We're very excited about the guidance we put out. I think when you think about it's really the uncertainty around the macroeconomic environment was the biggest impact to the overall guidance. You mentioned it when you asked about that earlier. It's where does the macroeconomic environment go through as we progress through 2023, and how does that specifically impact our tobacco consumer across all categories? Great. Thank you. Thank you. Thank you. Our next question comes from Bonnie Herzog with Goldman Sachs. All right. Thanks. Good morning, everyone. Good morning, Bonnie. I had a question about, you know, your pricing. You know, just thinking about the strength in your net price realization in smokables over the past several quarters. You know, it's been so darn robust. I just wanted to hear from you how sustainable you think this is, especially in considering, I guess, the pressure on the consumer and some of the other things you called out. Sure, Bonnie. I'll be careful not to talk about future price increases, but the way we think about pricing, as you know, it's an important part of the algorithm when you're in a declining category. Remember, our strategy in that category is maximize profitability over the long term while making appropriate investments in Marlboro in the growth areas. We see that as the engine that does that. When you think about pricing, I think it's important to really focus in on what Sal mentioned in his remarks. You see high price realization, but at retail to the consumer, from a consumer facing, Marlboro on average went up about just shy of 6.5%, 6.4%. The price increase to the consumer is much lower than what you see in the price realization. You know, we mentioned before, price realization is really two components for us. It's list price, as you would expect across the industry, but it's also the implementation of RGM. With that price realization, and usually, Bonnie, you or one of the other analysts will ask us about price gap, and it's at 41%. I think it's important to remember as we get the data, and really that data is that's somewhat impersonal. It's consumer purchasing behavior through time. As we analyze that, what we're able to do is the price gap varies locality to locality. It can vary store to store, and it can vary within even within the Marlboro franchise. You know, you heard Sal talk about if you think about that overall price gap of 41%. You have the packing. Take red and gold in the Marlboro franchise. If you look at total year 2022 to total year 2021, you can see it was very stable. Where we're seeing it is in those packings or SKUs we have within Marlboro that are there for price-sensitive consumers to have a safe landing point. We'll continue to implement those tools. As far as how do we think about pricing going forward, you know, we've shared with you whether it's percentage of discretionary income or minutes worked, and when you benchmark the U.S. against other countries around the world, we're still at the very low end of that. No, that actually super helpful, and that was gonna be a question of mine, so I'm pleased you kind of walked through the GAAP. That's useful context. Just switching gears, if I may, a question on your oral tobacco business. You know, you highlighted how strong, you know, on! volume growth has been and but in the context of that, you know, your total oral tobacco revenue and, you know, profit growth have been under pressure with a fair amount of margin contraction. You did sort of touch on this, but hoping maybe you could talk a little bit further about, you know, maybe your strategy for turning around the entire, you know, oral tobacco business. You know, any key initiatives that you could highlight for us, and maybe you'll talk about this more in March. We're certainly excited to be able to talk about it in March. You're exactly right. Within the oral tobacco space, if you think about that total space, you have traditional moist smokeless tobacco, and you have novel oral pouches. Some of the margin contraction you're seeing is just true mix, right? As consumers are moving from traditional moist smokeless tobacco and novel oral is growing, you're gonna have some mixed impacts on that overall margin. We highlighted for you the reductions we made in promotional spend per can, but still having a minimum share. I think the biggest thing that we're excited is to be able to unveil the product that we have designed and have locked down and be able to show at Investor Day what that product is and some of the research related to that. More to come at Investor Day. Final one for me. Just, you know, speaking of that, you know, any more color you could provide, you know, on your smoke-free vision today, and maybe, you know, just how confident you are that you're gonna be able to deliver on your long-term strategy? You know, I'm sure you're gonna talk through this at Investor Meeting, and I'm excited to hear about it. You know, any sneak preview as to what you're most excited about? I won't necessarily give you a sneak preview because I don't wanna get ahead of myself for Investor Day. We'd like to unveil it in total context and paint the total picture for investors. I appreciate the question. I look forward to be able to unveil that for you at Investor Day. All right. I'll be patient. Thank you. Thanks, Bonnie. Thank you. Our next question comes from Callum Elliott with Bernstein. Hi, guys. Thank you for the question. Billy, you spoke in the release and in your prepared remarks about making, quote, "meaningful progress on the smoke-free portfolio," and you also mentioned strategic investments in the vision. At the same time, your CapEx guide is flat versus last year's guidance. You're continuing to deliver on algorithm EPS growth, and I think as you said to Pam, that any slight reduction is more driven by the macro environment, which presumably also implies little or no incremental P&L investment in NGPs as well. My question is: What are the strategic investments that you're talking about? How meaningful are they, and where can we see them in the financial statements? I think it's a great question. I appreciate it. I think when you think about where those investments show up, it's important to remember they're not all incremental spend. There are always puts and takes. You're gonna shift some of those... the infrastructure that the combustible or traditional MST has bore the cost through history, and you're gonna shift that to the NGP space. We do have incremental investments around NGP product development, the regulatory preparations associated with that and the research associated with that. Here's an example for you, Callum. If you think about, like, even the digital consumer engagement, that we're implementing in traditional smokable or combustible and MST, and we mentioned in the remarks being able to transition that over. You'll see those costs will actually appear in the combustible and the smokeless before it appears in the NGP categories. There's a lot going underneath the surface, if you will, from an investment standpoint, but there are always puts and takes. We're trying to be wise with the investment, but not restrict growing categories. Thanks for that, Billy. I guess the natural follow-up is if I benchmark relative to your big competitors, both in the U.S. and internationally, the two biggest amongst them are spending literally billions of dollars a year. My guess is instinctively, if you're just talking about switching a portion of your cigarette spend over into NGPs, you're not gonna get anywhere close to that billions of dollars a year. The question is, you know, do you genuinely believe you can be successful if you're spending so much less than those competitors, and how? Yeah, we do believe it. We're trying to really be driven by the consumer, learning from the global marketplace, the products in the marketplace, and use those as, if you will, a launch point for products and really trying to meet what the desires and needs of the consumers are in the marketplace that aren't met by those existing products in the marketplace. We feel like we can achieve the vision. You know, we've highlighted for you guys that we really believe we can navigate strong returns to shareholders at the same time making the appropriate investments in these growing categories. And we believe we can do that. I think you'll continue to hear us talk about investments, and we'll provide a lot more detail of some of the progress we've made at Investor Day. Okay, thank you. Thank you. Thank you. Our next question comes from Gaurav Jain with Barclays. Hi, good morning, Billy. Good morning, Sal. Good morning. Hi. I have three questions. First one to you, Billy. you know, we will have a new competitor next year in the U.S. market with IQOS. When you were distributing IQOS, then the volumes were much lesser than any of us had expected. What did you find were the challenges when U.S. consumers came to IQOS? Yeah, it's a great question, and I appreciate you asking it, Gaurav. I think when you think about IQOS, it was really about the disciplined approach that we were taking introducing a new category. The consumer in the U.S. was used to the e-vapor space. They had understood that. When you're introducing a new category that requires some education on how to use the product and how to maintain the product, that there is investment there that takes place. You know, we talked about the learnings we had as we went along the way. I would say the biggest challenge is educating the consumer on the product and then meeting their desires. I think there's still unmet needs in the marketplace. Sure. The next question, and perhaps to you, Sal, is around MSA payments next year and how we should factor in inflation. If you could just help us understand, because I think there is a confusion that how does that 3% number work versus inflation, or is it the change of inflation that we should be looking at? Gaurav, you are correct to point out that inflation is a factor when you think about MSA expense. You know, a couple of points I'll make. One is the high rate of inflation in 2022 has been accounted for and is already in the base. You are correct to point out that when you think about inflation related to MSA, there's a 3% floor. So even if inflation were measured below 3%, there'd be a 3% increase in the MSA expense. I'll also remind you that inflation is measured at a point in time, December 31st current year to December 31st prior year. So we have considered that when you think about 2023, there will be an elevated level of inflation. We have seen some receding of the rate of inflation, still expect it to be elevated. We have considered that when we put together our guidance. Finally, I'll say, you know, there are other factors besides inflation to consider when you think about MSA expense, including volume, ship and share and other such factors. Sure. My last question is on share repurchases for next year at which at $1 billion are below what we thought, and I think where most people were. Even though your EBITDA is growing, you know, you're generating free cash flow after dividends, so your leverage will anywhere be down when you have the ABI stake. What makes you buy $2 billion of stock and not $1 billion? Well, first, let me say, you know, we're very happy that the board authorized the $1 billion share repurchase. If you think about capital allocation, I think we have a history of taking a balanced approach. As I noted in our opening remarks, we plan on paying back about $1.3 billion in notes coming due with available cash. We continue to pay a strong dividend as well as the $1 billion share repurchase. Gaurav, I really have nothing to report on the ABI asset. You know, we continue to do the analysis that we do with all capital allocations. Currently, we believe the best thing for the shareholder over the long term is to hold the asset. Sure. Thank you so much. You're welcome. Thank you. Our next question will come from Chris Growe with Stifel. Hi, good morning. Good morning, Chris. Hi. I just had a quick question for you on Marlboro. You have to be very happy with the resilient performance of Marlboro, and obviously a rounded out discount and deep discount share is accelerating, which has seemed to provide some risk to the brand. I'm sure we're not gonna get your promotional program on this call, but I wonder if you could talk about how you see the brand performing in 2023. Maybe more pointedly, have you increased promotions at a faster rate behind Marlboro to preserve that share where it's doing so well there? Yeah, it's very great questions, Chris. I think when you think about the resiliency of Marlboro, we're very pleased with it. We're pleased with how it's positioned with the consumer. We are pleased with that it's still the aspirational brand within the cigarette space. I think when you think about your question around promotions, I would point to you that the high price realization actually shows that we're able to be more effective and efficient on our Marlboro price promotion. I think it may be useful to, y ou know, I talked about Marlboro Red and Gold versus some of the price senses, but some of the tools that we have in place actually allow the precision. I'll just walk through a quick example with three consumers. You have one consumer that's purchasing premium brands and occasionally pops out and buys a discount brand. The other consumer is continually flip-flopping between premium and discount. The third consumer is a discount consumer that occasionally pops up and smokes a premium cigarette. When you think about those consumers, you're gonna treat those differently, to make them more of a continuous premium brand smoker. That discount smoker, you may never be able to get them to convert to a premium because of the condition, the economic, condition that they're in. As we move to personal value delivery, as close as we can get to the consumer, we can tailor that across those three. That's where I refer to the price gap being at the national level. We're doing this down at the local level on our journey to move as close as we can get to the consumer. That allows us to have Marlboro be resilient, address the consumer's needs on a case-by-case basis if we can get really close to the consumer, and spend that, those resources accordingly to have a more consistent premium consumer through time. Thanks for that and that color. I appreciate that. I had one other, follow-up, which would be, you do have two, you know, relatively unique kind of profit drags this year with PMCC winding down, obviously pensions moving around. Could you give some more color around or in context around how much that's weighing on profitability this year? Chris, you know, let's talk about pensions for a moment. If you think about pensions, obviously there's a P&L impact related to return on assets, changes in discount rate. I would say, you know, the pension is really well funded. We have strong funding in that pension plan. It's actually fully funded, so we feel really good about that. I would say the changes in pension expense, I'll remind you, are non-cash. We have successfully completed the wind down of PMCC. You are correct in that we had earnings and cash flow last year and this year we will not. It is a year-over-year basis is a slight lag. Remember, PMCC was part of our all other category. It was we consider it fairly immaterial to the total earnings of Altria. Okay. Thank you very much. Welcome. Thank you. Thank you. Our next question comes from Andrei Condrea with UBS. Hey, good morning. Good day to you, Sal. Thanks for taking my question. One for me, please, if you don't mind. On your smokeless business, especially on!, from what we've seen, the brand has been driven by strong discounting versus the main peer. Do you expect that to continue going forward or rather just closing the price gap between you and your main peer, even if your product or your promo spend per can is decreasing? Thank you. Sure. Thank you. I think when you think about it, and this is not an excuse, it's just facts. They had a first-mover advantage. When consumers, to get consumers to have new brands in their consideration set, you have to induce trial. That's what we feel like we're doing. I would say from a consumer standpoint, it's still very small compared to the total nicotine space. We're going to spend and invest while the overall category is growing so we can participate in that growth. You know, we mentioned previously it was intuitive that the adult dipper would move to the product pretty quickly, and that the adult cigarette consumer, you're going to have to induce trial, and that's what we're in the process of doing, and are excited about the results thus far. I think through time, you know, we did reduce the promotional spend per can. When you think about the price gap, if you will, the way you referred to it, to a competitive product in the marketplace, you're going to invest while the category is growing, so you get these products in the consideration set. I talked about bringing some of the data analytics. I think you saw the benefit of that in this past year, we have more to do there. I think as we continue to progress and move forward, we feel good about it. I don't want you to think, though, it's all discount, it's all price off. That's to induce trial. We really see it as a complete marketing ecosystem, if you will, and I hate to use a business term, but it's surrounding the consumer and really meeting them where they're at in their journey and then supporting them in that journey to fully transition over, if you will, from cigarettes to this novel oral pouch. That's where we're at. We feel good about the progress we've made thus far. We certainly have to continue to drive awareness and induce trial. No, that's very clear. Thank you. Yeah, you are completely right. It's been fantastic progress from them. If I could squeeze in just one more, if you don't mind, is that Marlboro has indeed done very well, and congratulations for that. For the rest of your portfolio, as small as it is versus Marlboro, what steps are you taking to defend your market share versus pressure both from peers on the very top end of the price band and the bottom end? Thank you. Yeah. I would say if you look at growth, I would say the growth, if you look at competitors, has really been at the very bottom end. You know, Sal highlighted in his comment, there are a number of major manufacturers that have what we would consider branded discount priced in deep discount space. When we look at total portfolios for some of those, we don't see the benefit of having gone down to that low price tier. They may grow one brand to the detriment of another brand within the discount space. We want to participate in the discount category. We think it's important, but we certainly don't want to grow the discount category. I think being premium focused, where we feel the profitability and the high loyalty is in the cigarette space, is an important place to play, that's where we're focused. You know, Sal highlighted for you, our premium brands are growing. Total premium share of the premium space is growing through time on the backs of Marlboro. We're pleased with that. We talked about the RGM tools, I won't repeat that, but being able to continue to get closer to it on a consumer-by-consumer basis and meet them where they're at when they have needs is where we're headed, we're excited about that progress. Thank you. That was very clear. Thank you. Thank you. Once again, if you would like to ask a question, please press star one. Our next question comes from Priya Ohri-Gupta with Barclays. Good morning. Thank you so much for the question. Really appreciate your commentary, Sal, around the intent to pay down your upcoming euro maturity later this month. I guess as we take a step back, your euro-denominated debt has really sort of come down, I guess partly driven by sort of the income that you're receiving from the ABI stake, given that that was sort of a natural hedge. Given where sort of your euro exposure stands now in terms of your debt portfolio, are you pretty comfortable with where that is? Or is there a need to continue to grow that EUR exposure over time, either synthetically or through outright issuance in that market? Priya, f irst I'm gonna start my answer by just reiterating I really have nothing to report in, as it pertains to ABI. We continue to believe holding the asset is in the best interest, long-term interest of our stakeholders. Second, I would tell you that, you know, while we have flexibility, it's really a market-by-market analysis and a transaction-by-transaction analysis related to what markets we may or may not enter as we think about managing our debt going forward. That's kind of how I would answer your question. Thank you. That's helpful. Sure. Thank you. At this time, we will open the Q&A to members of the media. As a reminder, to ask a question, please press star one. We'll take our next question from Jennifer Maloney with The Wall Street Journal. Good morning. Good morning, Jennifer. My first question is about your JUUL valuation. I saw that you lowered the value of your stake to a price that values JUUL at $714 million, and I wondered if you could explain the reasoning behind that valuation decrease. I was a little surprised because in the fourth quarter, JUUL resolved a large part of the litigation that it faced, which eliminates some of the uncertainty around the company. Could you explain that valuation? Sure. Good morning, Jennifer. First I'll remind you that we had taken an impairment related to litigation, and we really captured it within kind of our overall discount rate of the JUUL assets. We had accounted for that. You know, on a quarterly basis, the way we account for JUUL is has us run an analysis of the fair market value of the investment. It's not publicly traded, so we have to do an independent analysis. You know, from quarter to quarter, there's gonna be changes. We've been pretty communicative about that. This quarter it did, our investment was reduced $100 million. It's really macro-driven. It's really macroeconomics and other factors that are considered when doing that analysis. Things like inflation and possible recession? Yes. Macro market conditions, inflation, discount rates, things like interest rates, consumer dynamics, all of that goes into the analysis. Got it. Yeah, you'll note, Jennifer, when you build a discount rate, it starts with a risk-free rate. Certainly the interest rate increases we've seen through time are gonna continue to impact it as long as they're still on a upper trajectory. Got it. My second question is a little more color around consumer purchasing patterns right now. Can you talk a little bit more about what you're seeing consumers doing? You know, the volume has come down. Is it because people are making fewer trips to the store to purchase cigarettes, or are they buying less each time? Can you sort of talk about what the actual pattern is? Yeah, it's a great question. What we're seeing is as we see mobility increase as, if you will, the U.S. is coming out of the COVID pandemic, we're actually seeing a return to more frequent trips. Remember, our consumer pre-COVID would go either every day or every other day. I think what you're seeing and what consumers tend to do when they get under economic pressure is they reduce their number of nicotine occasions in a day. Through time, that factors into their purchasing behavior. You see a little bit, and we highlighted that, which was the consumers that are under dire economic conditions at times will either switch out or trade out to a cheaper brand. We try to give them a safe landing place within the Marlboro franchise. As far as number of trips, we haven't seen a reduction in the number of trips. It's more about through time reducing their nicotine occasions. I see. They're smoking fewer cigarettes per day. That's correct. Remember, there's no change in the overall trend, if you will, the long-term trend. As we went through COVID and there was less mobility, less societal pressures, we actually saw what we believe nicotine occasions go up. When the economic conditions or the macroeconomic environment is greatly impacting the consumer, they'll restrict their nicotine occasions. As they become more comfortable with that, they tend to return to a normal trend. All right. Thanks very much. Thank you. Thank you. It appears at this time we have no further questions. I'll turn the call back over to Mac Livingston for any additional or closing remarks. Thanks to everyone for joining us. Please contact the investor relations team if you have further questions. Thanks, and have a great day. This concludes today's call. Thank you for your participation. You may disconnect at any time.