Why wasn't there more benefit from the double duty drawback in Q2 despite increased export volumes? What drove the smokable OCI growth and is it sustainable?

The CFO explained that the timing of applying for credit and product staging caused the drawback not to perfectly align in Q2, but they expect increased export volume and a more balanced benefit across Q3 and Q4. Smokable OCI growth was driven by strong Marlboro price realization and Basic's incremental contribution to PM USA's total volume and share. “For double duty drawback, you're absolutely right to point out, export volumes increased Q1 to Q2. Really, what you're seeing is the timing factor. And so there are 2 components to that, why that's not truing up to the FET credit. One is the time in terms of when we apply for that credit. The other is just staging of product, some inventory movement, and that's why that's not perfectly lining up.”

What is driving the moderation in SIG volume declines, and is it expected to continue? How will tough comps for Basic impact 2H SIG volumes, and what are the current consumer elasticities?

The CEO attributed moderated declines to increased enforcement against illicit e-vapor and consumers having already moved to those categories. He noted that the secular decline and price elasticity (coefficient of -0.35%) remain, with trade-down to discount driven by economic pressure. He stated PM USA's strategy is to participate in discount without accelerating its growth, focusing on premium profitability. “So the drivers, you have the secular decline in the price elasticity and then the third bucket is this cross-category movement macroeconomic conditions. You are expecting right that the macroeconomic conditions are unsettled. You have, again, as we talked about earlier, high levels and persistent inflation, higher elevated gas prices, but that is somewhat being offset by the moderation in -- essentially more than offset by the moderation in category movement.”

What is the consumer feedback on on PLUS, including retention rates and sourcing? Why haven't volumes accelerated significantly despite national expansion, and is it due to inventory movements?

The CEO expressed pleasure with on PLUS, noting its incremental share gain (0.8 sequentially) and appeal to both on and competitive nicotine pouch consumers, as well as MST users. He confirmed that Q2 shipment volumes were impacted by difficult prior-year comparisons (promotional activity due to competitor supply disruptions) and timing related to national launch preparations, but expressed excitement for future product pipeline. “You are right when you talk about shipments, there were some comp issues related to the second quarter. So if you look at 2025, volume was up due to some promotional activity as a major competitor was having some supply chain disruption. It was important for Helix to promote the on product.”

Altria Group (MO) Q2 FY26 earnings call: guidance and Q&A

Q: Why is the low end of guidance below first-half performance, given anticipated benefits from duty drawback and new product launches like on PLUS and Cowboy Cut? Are investments stepping up in the second half?

Management noted that the timing of benefits played out differently than initially expected. They highlighted continued consumer pressure due to elevated gas prices and inflation, and confirmed increased investment for the national expansion of on PLUS 12mg and flavor extensions. They expressed satisfaction with narrowing guidance despite these factors. “As you go into the second half of the year. I think it's important to keep an eye on the financial health of the consumer. The consumer remains under pressure, gas prices and inflation remain elevated, driven primarily by the uncertainty and the geopolitical climate that they are living in today. So -- and then I think you are right to point out. We talked about national expansion of the 12-milligram on PLUS, we've talked about flavor -- introduction of flavor extensions across the portfolio. And yes, that will require a level of investment.”

Earnings call· Jun 2026 (Q2 FY26)· Consumer Staples· Jul 30, 2026

Source: earnings call transcript

Executive summary

Altria Group Q2 FY26 — Narrowed EPS Guidance on Strong First Half Performance

Altria delivered strong first-half results, driven by robust smokable products performance and the expansion of its smoke-free portfolio, particularly on PLUS. The company narrowed its full-year adjusted EPS guidance, reflecting confidence in its strategy amidst persistent consumer economic pressures and an evolving regulatory landscape for e-vapor and nicotine pouches. Management emphasized disciplined execution and strategic investments in both traditional and smoke-free categories.

Highlights

Adjusted diluted EPS grew by 4.9% to $2.80 in the first half of 2026.
Smokable products adjusted OCI grew by 4.2% to $5.7 billion in the first half.
on retail share reached 8.6%, up 0.8 share points sequentially, driven by on PLUS.
PM USA total retail share expanded 0.1 share point sequentially and 0.3 share points year-over-year.
ABI adjusted equity earnings increased 21.5% versus the prior year to $158 million.

Concerns

on reported shipment volume was down 4.2% versus the prior year due to trade inventory movements.
Marlboro's overall retail share declined 1.5 share points versus the year-ago period.
Oral Tobacco Products segment adjusted OCI decreased by 8% in the second quarter.
Total segment reported shipment volume decreased 8.5% for the second quarter due to lower MST volumes.

Guidance & targets

Category	Target	Timeline	Confidence
Adjusted diluted EPS	$5.61 to $5.72 high materiality	FY26	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Smokable Products Robust adjusted OCI growth driven by strong Marlboro price realization and strategic contribution from Basic. Volume declines moderated, but Marlboro's overall share was impacted by trade-down to discount. Adjusted OCI: $3 billionAdjusted OCI growth: 2.4% YoYAdjusted OCI margin (H1): 64.9%Reported domestic cigarette volumes decline: 3.2% YoYAdjusted domestic cigarette volumes decline: 4.5% YoYDiscount retail share growth: 2.6 share pointsMarlboro overall retail share decline: 1.5 share points YoYMarlboro premium share: 59.6%Basic retail share expansion: 0.3 sequentially, 2.3 share points YoYPM USA total retail share expansion: 0.1 sequentially, 0.3 year-over-yearSmokable price realization: 4.5%Middleton reported shipment volume growth: 5% YoY	—	—	—	64.8%
Oral Tobacco Products Segment performance impacted by difficult prior-year comparisons and strategic investments in on PLUS. Growth in on was offset by lower MST volumes. Retail share remained stable due to on growth and MST brand resiliency. Adjusted OCI decrease: 8% YoYAdjusted OCI margin (H1): 67%Total segment reported shipment volume decrease: 8.5% YoYAdjusted total segment shipment volume decline: 2% YoYRetail share: 29%on reported shipment volume: 49.9 million canson reported shipment volume decrease: 4.2% YoYon retail share: 8.6%on retail share increase: 0.8 share points sequentially, 0.3 share points YoY	—	—	—	66.7%
ABI (Equity Earnings) Adjusted equity earnings from the ABI stake increased significantly year-over-year.	—	21.5%	—	$158 million

MO operating KPIs by quarter

MO operating KPIs stated on its earnings calls, by fiscal quarter
KPI	Dec 2024 Q4 FY24	Mar 2025 Q1 FY25	Jun 2025 Q2 FY25	Dec 2025 Q4 FY25	Mar 2026 Q1 FY26	This call Jun 2026 Q2 FY26	Change vs prior quarter
Shipment volume on!	<44M reported shipment volume grew by more than 44% year-over-year to nearly 44 million cans in the fourth quarter. Source: earnings call transcript	39M+ reported shipment volume to over 39 million cans, representing 18% growth. Source: earnings call transcript	52.1M reported shipment volume increasing by 26.5% to 52.1 million cans versus the year ago period. Source: earnings call transcript	44M+ reported shipment volume to more than 44 million cans. Source: earnings call transcript	46M+ portfolio grew nearly 18% and to over 46 million cans in the first quarter, reflecting continued demand for on! Source: earnings call transcript	49.9M In the second quarter, on reported shipment volume was 49.9 million cans, down 4.2% versus the prior year due to trade inventory movements. Source: earnings call transcript	—
Share of oral tobacco category on!	8.9% performed well at retail, growing its share of the oral tobacco category by 2 share points year-over-year to 8.9% in the fourth quarter. Source: earnings call transcript	8.8% continued its momentum at retail, expanding its share of the oral tobacco category to 8.8%, an increase of 1.8 share points versus the prior year and 0.10 share points sequentially. Source: earnings call transcript	8.7% on!'s retail share of the total oral tobacco category was 8.7%, an increase of 0.7 share points versus the prior year. Source: earnings call transcript	7.7% on!'s retail share of the total oral tobacco category was 7.7% for the fourth quarter and 8.2% for the full year. Source: earnings call transcript	—	8.6% In the second quarter, on retail share reached 8.6%, up 0.8 share points sequentially and 0.3 share points year-over-year, driven by the introduction of on PLUS. Source: earnings call transcript	—
Share of premium segment Marlboro	59.4% Within the highly profitable premium segment, Marlboro expanded its share of premium to 59.4% for the fourth quarter, an increase of 0.1 share point year-over-year and sequentially. Source: earnings call transcript	59.3% In the first quarter, Marlboro expanded its share of the premium segment by 0.1 share point to 59.3% while other competitive brands ceded share. Source: earnings call transcript	—	59.2% In the premium segment, competitive dynamics during the fourth quarter contributed to Marlboro's share premium decreasing 0.1 share points to 59.2%. Source: earnings call transcript	59.5% In the first quarter, Marlboro expanded its share of the premium segment to 59.5%, up 0.1 share point versus the prior year and 0.2 share points sequentially. Source: earnings call transcript	59.6% In the second quarter, Marlboro's share premium was 59.6%, unchanged versus the prior year and up one-tenth sequentially. Source: earnings call transcript	+0.1 pt
Stores on! PLUS	—	—	—	—	~100K And at the end of the first quarter, it was available in approximately 100,000 stores, representing 85% of nicotine pouch category volume. Source: earnings call transcript	120K In smoke-free, Helix expanded on PLUS to 120,000 stores nationwide. Source: earnings call transcript	—

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Product announcements

Product	Type	Timeline
on PLUS 12-milligram	expansion	Q3 FY26
on PLUS flavor extensions (Blueberry Mint, Mango Pineapple)	launch	Q4 FY26
Marlboro Cowboy Cut	launch	—

Risks & headwinds

Consumer economic pressure

Persistent discretionary income pressures, especially among low-income consumers; elevated gas prices and inflation exceeding overall wage growth.

Mitigation:PM USA's total portfolio approach, including Basic and Marlboro Cowboy Cut, to engage value-sensitive consumers and capture share that would otherwise be lost to competitive discount brands.

Illicit e-vapor products

Federal seizures totaling more than $250 million; estimated 20 million adult vapors, essentially unchanged YoY, with disposable e-vapor consumers declining modestly.

Mitigation:Increased enforcement activity, including supply-related disruptions at the border, helping slow demand for illicit products. FDA's updated enforcement priorities are a positive step.

Trade inventory movements Q2 FY26

on reported shipment volume down 4.2% YoY; Oral Tobacco Products segment reported shipment volume down 8.5% YoY.

Mitigation:Management expects export volume and related tax refunds to be higher in the second half of the year with a more balanced benefit across Q3 and Q4.

What to watch in Q3 FY26

on PLUS 12mg and flavor extension impact

next quarter

Current on retail share 8.6%, up 0.8 sequentially

Target Continued share gains and consumer adoption for on PLUS

Why it matters

Verifying the success of new product launches and expansions is crucial for the growth trajectory of Altria's smoke-free portfolio.

In the second quarter, Helix resumed shipments of on PLUS 12-milligram in 3 flavors in Florida, North Carolina and Texas with a national expansion planned for the third quarter. Helix also plans to introduce flavor extensions across 6, 9 and 12-milligram strengths, beginning with blueberry Mint and mango pineapple in the fourth quarter.

Find out whether MO delivers this. Inve re-checks your case every morning.

Q&A highlights

Why is the low end of guidance below first-half performance, given anticipated benefits from duty drawback and new product launches like on PLUS and Cowboy Cut? Are investments stepping up in the second half?

Management noted that the timing of benefits played out differently than initially expected. They highlighted continued consumer pressure due to elevated gas prices and inflation, and confirmed increased investment for the national expansion of on PLUS 12mg and flavor extensions. They expressed satisfaction with narrowing guidance despite these factors.

“As you go into the second half of the year. I think it's important to keep an eye on the financial health of the consumer. The consumer remains under pressure, gas prices and inflation remain elevated, driven primarily by the uncertainty and the geopolitical climate that they are living in today. So -- and then I think you are right to point out. We talked about national expansion of the 12-milligram on PLUS, we've talked about flavor -- introduction of flavor extensions across the portfolio. And yes, that will require a level of investment.”

asked by Unknown Analyst · answered by Salvatore Mancuso

2 min read 6 chapters

Detailed narrative

Smoke-Free Portfolio Expansion and Performance

Helix expanded on PLUS to 120,000 stores nationwide, driving on's retail share to 8.6%, up 0.8 share points sequentially. The company plans to introduce on PLUS 12-milligram in 3 flavors nationally in Q3 and flavor extensions (blueberry Mint and mango pineapple) across 6, 9, and 12-milligram strengths in Q4.

Early data suggests on PLUS resonates with consumers, driving incremental volume and share, supported by encouraging repeat purchase rates and strategic marketing investments.

Traditional Tobacco Business Strength

PM USA advanced its data-driven total portfolio approach, with Marlboro Cowboy Cut generating strong interest among premium smokers and Basic gaining traction in discount. Marlboro maintained its leadership in the premium segment with 59.6% share, while Basic's retail share expanded by 0.3 sequentially and 2.3 share points year-over-year.

This balanced approach contributed to PM USA's total retail share expansion of 0.1 share point sequentially and 0.3 year-over-year, supporting long-term profitability.

Evolving Regulatory Environment and Illicit Products

The FDA's updated enforcement priorities for e-vapor and nicotine pouch products are viewed as a positive step towards regulatory clarity. Federal seizures of illicit products totaled over $250 million during the quarter, and illicit-driven e-vapor growth is beginning to moderate.

Altria believes increased enforcement and a more efficient authorization process are critical for a level playing field and expanding access to regulated, high-quality smoke-free products for adult consumers.

Consumer Dynamics and Economic Pressures

Economic pressure on adult smokers continues to impact cigarette industry dynamics, with persistent discretionary income pressures driving growth in the discount segment. This led to Marlboro's overall retail share decline of 1.5 share points. However, the decline in smokable volumes moderated, with reported domestic cigarette volumes down 3.2% in Q2, partly due to reduced cross-category movement between cigarettes and illicit flavored disposable e-vapor products.

Shareholder Returns and Financial Position

Altria returned nearly $3.9 billion to shareholders in the first half through dividends and share repurchases. The company paid approximately $3.6 billion in dividends and repurchased 5.3 million shares for $335 million. At the end of Q2, $665 million remained in the current share repurchase program. The balance sheet remains strong with a debt-to-EBITDA ratio of 1.9x, in line with the target of approximately 2x.

ABI Investment Performance

Altria recorded $158 million in adjusted equity earnings from its ABI stake in the second quarter, representing a 21.5% increase versus the prior year. The company continues to view its ABI stake as a financial investment aimed at maximizing long-term value for shareholders.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.