AI interpretation based on checked source excerpts. Issuer assertions and evidence limitations remain explicit.
Policy quality-scores-2: six equally weighted categories. The overall score requires full coverage. Missing inputs are not zero. Qualitative grades are sourced interpretations, not probabilities. 4/6 · 18/10/2026
Moat63
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
structural advantage · 3/4 · Reported Marlboro loyalty and premium-segment leadership, together with realized pricing despite adverse volume/mix, demonstrate brand differentiation. This supports an intangible-assets advantage rather than an inference from margins alone.
durability · 2/4 · Strong existing brand demand and pricing coexist with demonstrated down-trading, shipment contraction and Skoal impairment. The evidence supports persistence with meaningful erosion, not exceptional durability.
customer dependency · 3/4 · Reported Marlboro loyalty above 95% in 2025 supports strong repeat preference. This is issuer-reported brand loyalty, not contractual dependency or proof that consumers cannot switch categories.
erosion resilience · 2/4 · First-half smokeables revenue and OCI grew despite volume/mix pressure, demonstrating current resilience. Discount gains, illicit-trade effects and realized intangible-asset setbacks show that resilience is uneven across the portfolio.
Pricing power—
Insufficient evidence for every rubric criterion; no category score is inferred.
realized pricing · 3/4 · First-half 2026 pricing contributed $639 million versus $475 million adverse volume/mix; second-quarter pricing contributed $309 million versus $279 million adverse volume/mix. These observed outcomes include higher promotional investments and demonstrate pricing realization, with a smaller offset cushion in the second quarter.
retention · 3/4 · The reported Marlboro loyalty rate above 95% demonstrates repeat brand demand in 2025. Coverage is limited to that brand and period; premium-volume pressure and falling cigarette shipments prevent extrapolation to portfolio-wide retention.
margin resilience · 3/4 · Smokeables first-half reported OCI margin increased from 63.7% to 64.0%, while adjusted margin increased from 64.5% to 64.9%. Pricing helped offset volume/mix and higher costs, although tax and duty refunds also contributed. Second-quarter reported margin fell, so protection is not uniform.
contractual freedom · — · Realized pricing shows successful price actions, but the passages do not disclose customer contract provisions governing repricing, consent requirements or price caps.
Predictability75
Five consecutive annual periods. Equal weights: nondeclining revenue frequency; revenue-growth volatility (5–40pp); positive FCF frequency; FCF-margin volatility (3–20pp). Stability indicator, not a growth forecast.
- Nondeclining revenue years (%)
- 0.00
- Revenue growth volatility (pp)
- 0.62
- Positive FCF years (%)
- 100.00
- FCF margin volatility (pp)
- 2.85
Financial strength50
Equal-weight grades: debt/FCF (1–8x), net debt/earnings before interest and tax (0–5x), interest service (1–12x), current ratio (0.75–2x). Earnings use reported operating income, or reported pretax profit plus reported interest expense when operating income is unavailable. Interest service uses earnings/interest expense; if unavailable, it uses reported operating cash flow/cash interest paid, without relabeling cash paid as accrued expense. Nonpositive cash flow/earnings score 0 for their service component; reported zero interest with a positive numerator scores 100. Net cash scores 100 for net leverage. Missing disclosures remain unavailable. General nonfinancial-company rubric, not a credit rating; exceptional and nonoperating gains are not normalized out. IFRS finance-cost and cash-flow classifications retain their reported scope.
- debtFcfGrade
- 73.81
- netDebtEbitGrade
- 57.10
- interestCoverageGrade
- 67.37
- currentRatioGrade
- 0.00
- Debt / FCF (x)
- 2.83
- Net debt / operating income (x)
- 2.15
- Interest coverage (x)
- 8.41
- Current ratio (x)
- 0.65
Capital allocation—
Missing required inputs: sbcRevenue. Three-year equal-weight indicators: pretax return on average invested capital (0–25%; equity + debt − cash, each year and its prior year), share-count growth (0–5%, lower better), share-based cost/revenue (2–20%, lower better), consolidated FCF/net income (0–1x). Return uses reported operating income or, if unavailable, EBIT calculated from reported pretax profit plus reported interest expense; exceptional/nonoperating gains are not normalized out. Share-based cost uses the reported cash-flow add-back or, if absent, separately reported recognized compensation expense; the latter never becomes an FCF adjustment. Nonpositive net income scores 0 for cash conversion; absent income/FCF stays unavailable. Nonpositive invested capital has no defined return and remains unavailable. Does not establish acquisition quality or buyback timing.
- 3-year pre-tax operating return (%)
- 57.40
- 3-year average dilution (%)
- -2.28
- cashConversionGrade
- 100.00
Management56
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
capital discipline · 2/4 · Annual operating cash generation, completed repurchases and first-half 2026 debt reduction demonstrate capital execution. However, first-half dividends and repurchases exceeded operating cash generation before capital expenditure, drawing on cash, and NJOY impairments reveal unsuccessful investment outcomes. Cash-return activity alone does not prove value creation.
incentive alignment · 2/4 · Actual 2025 PSU grants have performance-contingent payouts, equity awards have multiyear vesting, and disclosed safeguards include ownership requirements and hedging prohibitions. The plan was adopted and approved in 2025. Discretionary early vesting weakens rigidity, while missing ownership amounts, detailed targets and payout outcomes limit assessment of effective alignment.
execution · 2/4 · Operating results indirectly demonstrate effective management of traditional-tobacco pricing, and the reported on! PLUS authorization is a concrete milestone. NJOY restrictions and impairments, alongside Horizon's absence from the U.S. market, leave smoke-free execution mixed. Authorization does not establish commercial success.
governance · 3/4 · Disclosed existing practices include an independent chair, independent required committees, annual director elections, one share per vote, clawbacks and hedging prohibitions. These support strong formal governance. Nominee independence is prospective, and the disclosed JUUL-related investigation and subpoenas create unresolved concerns without establishing misconduct.
Evidence
The market for tobacco products is highly competitive, characterized by brand recognition and loyalty, with product quality, taste, price, product innovation, marketing, packaging, distribution and promotional activities constituting the significant methods of competition.
Business — Distribution, Competition and Raw Materials · Filed 25/02/2026
expanded Marlboro share of premium to 59.4%, supported by brand loyalty rates above 95% in 2025;
Executive Compensation — 2025 performance discussion · Filed 02/04/2026
Six Months Ended June 30, 2026 Compared with Six Months Ended June 30, 2025 Net revenues, which include excise taxes billed to customers, increased $171 million (1.7%), due primarily to higher pricing ($639 million), which includes higher promotional investments, lower shipment volume and a higher percentage of discount shipment volume relative to premium (“volume/cigarette mix”) ($475 million).
Smokeable Products — first-half 2026 revenue drivers · Filed 30/07/2026
Reported and adjusted OCI increased $216 million (4.0%) and $229 million (4.2%), respectively, due primarily to higher pricing, which includes higher promotional investments, higher refunds of taxes and duties paid on imported cigarettes ($78 million), partially offset by volume/cigarette mix ($381 million) and higher costs ($110 million).
Smokeable Products — first-half 2026 OCI drivers · Filed 30/07/2026
Operating Results Smokeable Products Segment Financial Results The following table summarizes operating results, includes reported and adjusted OCI margins, and provides a reconciliation of reported OCI to adjusted OCI for our smokeable products segment: Operating Results For the Six Months Ended June 30, For the Three Months Ended June 30, (in millions) 2026 2025 Change 2026 2025 Change Net revenues $ 10,150 $ 9,979 1.7 % $ 5,392 $ 5,357 0.7 % Excise taxes (1,380) (1,502) (732) (787) Revenues net of excise taxes $ 8,770 $ 8,477 $ 4,660 $ 4,570 Reported OCI $ 5,615 $ 5,399 4.0 % $ 2,942 $ 2,930 0.4 % NPM Adjustment Items (4) — — — Asset impairment, exit and implementation costs 14 26 9 13 Tobacco and health and certain other litigation items 69 40 67 4 Adjusted OCI $ 5,694 $ 5,465 4.2 % $ 3,018 $ 2,947 2.4 % Reported OCI margins (1) 64.0 % 63.7 % 0.3 pp 63.1 % 64.1 % (1.0) pp Adjusted OCI margins (1) 64.9 % 64.5 % 0.4 pp 64.8 % 64.5 % 0.3 pp (1) Reported and adjusted OCI margins are calculated as reported and adjusted OCI, respectively, divided by revenues net of excise taxes.
Smokeable Products — reported and adjusted segment results · Filed 30/07/2026
Overall discretionary income pressures on adult nicotine consumers have resulted in increased discount brand share and contributed to evolving adult nicotine consumer preferences, each of which has negatively impacted the sales volumes of certain of our operating companies’ premium brands.
Business Environment — realized premium-brand volume pressure · Filed 30/07/2026
For the second quarter of 2026, the discount retail share of the cigarette category reached 33.8%, an increase of 2.6 share points versus the second quarter of 2025 and 0.5 share points sequentially.
Business Environment — second-quarter 2026 discount category share · Filed 30/07/2026
When adjusted for trade inventory movements, our smokeable products segment domestic cigarette shipment volume declined by an estimated 4.5% in the second quarter of 2026 versus the second quarter of 2025.
Business Environment — inventory-adjusted cigarette shipment decline · Filed 30/07/2026
As a result of (i) lower projected revenue and income due to lower volume assumptions, (ii) a decrease in the perpetual growth rate to 0% (1% at October 1, 2023 valuation) and (iii) an increase in the discount rate to 11.5% (11.0% at October 1, 2023 valuation), we determined the estimated fair value of the Skoal trademark as of June 30, 2024, was below its carrying value and recorded a non-cash, pre-tax impairment of $354 million during the second quarter of 2024, which was recorded in our consolidated statement of earnings for the year ended December 31, 2024.
Goodwill and Other Intangible Assets — 2024 Skoal impairment · Filed 26/02/2025
In 2025, we recorded impairments of the values of the goodwill and other intangible assets within our e-vapor reporting unit as a result of the ITC exclusion order and cease-and-desist orders prohibiting the importation and sale of NJOY ACE into the United States and our expectation that effective enforcement against illicit flavored disposable e-vapor products would occur more gradually than initially anticipated.
Impairment discussion — NJOY restrictions and 2025 impairments · Filed 25/02/2026
In addition to the outcomes discussed above, actions and inaction by the FDA and other federal, state or local governments or agencies can (i) impact the adult nicotine consumer acceptability of or access to nicotine products (for example, through nicotine or constituent limits or menthol or other flavor bans), (ii) limit adult nicotine consumer choices, (iii) restrict communications to adult nicotine consumers, (iv) restrict the ability to differentiate nicotine products, (v) impose additional manufacturing, labeling or packaging requirements, (vi) interrupt manufacturing or otherwise significantly increase the cost of doing business, (vii) result in increased illicit trade in nicotine products, (viii) restrict or prevent the use of specified nicotine products in certain locations or the sale of nicotine products by certain retail establishments, (ix) require the recall of nicotine products due to a determination relating to product contamination or (x) otherwise require the removal of nicotine products from the marketplace (for example, due to a determination that one or more nicotine products fail to satisfy the statutory requirements for substantial equivalence, must proceed through the pre-market review process or must be removed from the marketplace for the protection of public health).
Risk Factors — potential regulatory restrictions and product removal · Filed 25/02/2026
Illicit Trade in Tobacco Products Illicit trade in tobacco products has had, and could continue to have, an adverse impact on our businesses, including the sales volumes and market shares of our operating companies’ innovative and smoke-free products and traditional tobacco products.
Business Environment — realized and potential illicit-trade impact · Filed 30/07/2026
At June 30, 2026, Horizon had no products in the U.S.
Note 1 — Horizon marketplace status at June 30, 2026 · Filed 30/07/2026
Three Months Ended June 30, 2026 Compared with Three Months Ended June 30, 2025 Net revenues, which include excise taxes billed to customers, increased $35 million (0.7%), due primarily to higher pricing ($309 million), which includes higher promotional investments, partially offset by volume/cigarette mix ($279 million).
Smokeable Products — second-quarter 2026 revenue drivers · Filed 30/07/2026
Financial Review Cash Provided by/Used in Operating Activities During 2025, net cash provided by operating activities was $9.3 billion compared with $8.8 billion during 2024.
Financial Review — annual operating cash generation · Filed 25/02/2026
Our total share repurchase activity was as follows for the years ended December 31: January 2025 Share Repurchase Program January 2024 Share Repurchase Program January 2023 Share Repurchase Program (in millions, except per share data) 2025 2024 (1) 2023 Total number of shares repurchased 17.1 73.5 22.7 Aggregate cost of shares repurchased $ 1,000 $ 3,400 $ 1,000 Average price per share of shares repurchased $ 58.50 $ 46.26 $ 43.96 (1) Includes 53.9 million shares repurchased under the ASR Agreements at an average price per share of $44.50.
Note 10 — completed annual share repurchases · Filed 25/02/2026
and Subsidiaries Condensed Consolidated Statements of Cash Flows (in millions of dollars) (Unaudited) _____________________ For the Six Months Ended June 30, 2026 2025 Cash Provided by (Used in) Operating Activities Net earnings $ 4,481 $ 3,455 Adjustments to reconcile net earnings to operating cash flows: Depreciation and amortization 112 142 Deferred income tax provision 33 33 Fair value adjustment for NJOY Transaction contingent payments — 25 (Income) losses from investments in equity securities (245) (291) Dividends from ABI 186 181 Exit costs, net of cash paid 11 (4) Impairment of goodwill — 873 Cash effects of changes: Receivables (43) (62) Inventories (48) 27 Accounts payable (47) (123) Income taxes 185 267 Accrued liabilities and other current assets (655) (489) Accrued settlement charges (1,009) (1,256) Pension plan contributions (8) (9) Pension and postretirement, net (11) (37) Other, net 101 193 Net cash provided by (used in) operating activities 3,043 2,925 Cash Provided by (Used in) Investing Activities Capital expenditures (150) (70) Other, net (16) (9) Net cash provided by (used in) investing activities (166) (79) Cash Provided by (Used in) Financing Activities Long-term debt issued — 997 Long-term debt repaid (1,069) (1,607) Repurchases of common stock (335) (600) Dividends paid on common stock (3,556) (3,454) Other, net (28) (29) Net cash provided by (used in) financing activities (4,988) (4,693) Cash, cash equivalents and restricted cash: (1) Increase (decrease) (2,111) (1,847) Balance at beginning of period 4,492 3,158 Balance at end of period $ 2,381 $ 1,311 (1) For a reconciliation to our condensed consolidated balance sheets, see Note 13.
Condensed Consolidated Statements of Cash Flows — first-half 2026 · Filed 30/07/2026
Long-Term Debt - At June 30, 2026 and December 31, 2025, our total long-term debt was $24.6 billion and $25.7 billion, respectively.
Liquidity and Capital Resources — long-term debt balances · Filed 30/07/2026
The number of PSUs granted to an executive represents a target number of shares; for PSUs awarded in 2025, the actual share payout can range from 0% to 200% of the target based on company performance against specified measures.
Executive Compensation — actual 2025 PSU grant payout terms · Filed 02/04/2026
Annual RSU and PSU awards based on prior year’s individual performance and factors such as potential for advancement, retention and role criticality, vesting after a three-year period.
Executive Compensation — equity award vesting design · Filed 02/04/2026
– 2026 Proxy Statement 9 Table of Contents Summary Governance Proposal 1 Audit Matters Proposal 2 Compensation Proposal 3 Ownership Q&A Exhibit A Board and Governance Matters Corporate Governance Highlights Board Structure and Independence ■ Nine of our 10 director nominees are independent ■ Five of our independent directors have been added since the beginning of 2021 ■ Separate Board Chair and CEO roles, with an independent Board Chair ■ All New York Stock Exchange (“NYSE”) required Board committees consist solely of independent directors ■ Independent committee chairs ■ Executive sessions of independent directors at each meeting ■ Director retirement guidelines ■ Limitations on other public company board service ■ Board diversity from various perspectives Shareholder Rights ■ Annual election of directors ■ Directors elected by majority voting, except in contested elections ■ Resignation policy for directors who fail to receive majority support in an uncontested election ■ One share, one vote standard ■ Proxy access with market terms ■ No shareholder rights plan or “poison pill” Board Performance and Key Responsibilities ■ Attendance by each director then serving of at least 75% of Board and committee meetings in 2025 ■ 100% director attendance at our 2025 Annual Meeting of Shareholders (“2025 Annual Meeting”) by directors then serving ■ Oversight of strategic plan development and execution ■ Oversight of key risk areas and risk management processes ■ Oversight of executive compensation, with assistance from an independent consultant ■ Participation in executive succession planning ■ Review of investor perspectives and engagement ■ Annual Board and committee self-evaluations ■ Oversight of human capital management and corporate culture initiatives ■ Oversight of ESG programs and activities, including stakeholder engagement ■ Oversight of public affairs activities Policies, Programs and Guidelines ■ Comprehensive Code of Conduct, Code of Business Conduct and Ethics for Directors and Corporate Governance Guidelines ■ Policies consistent with the Investor Stewardship Group’s Corporate Governance Principles ■ Robust political activity disclosure and compliance program ■ Extensive Corporate Responsibility Reports ■ Compensation “clawback” policies ■ Robust stock ownership and holding requirements for directors and executive officers ■ Policies prohibiting hedging and pledging of our shares by directors and executive officers ■ Comprehensive new director orientation and ongoing director education programs 10 Altria Group, Inc.
Corporate Governance Highlights — structure, rights and compensation safeguards · Filed 02/04/2026
The Committee has the discretion, however, to fully or partially vest any employee holding an RSU or PSU or to pay a cash amount with respect to a forfeited award upon early retirement or upon other terminations of employment, as well as to provide for prorated payments of awards under the Annual Incentive Award plan and LTIP in similar situations, and has exercised this discretion from time to time in appropriate circumstances.
Executive Compensation — discretionary vesting and termination payments · Filed 02/04/2026
received FDA authorization for on! PLUS in three flavors at two nicotine strengths in December 2025;
Executive Compensation — reported December 2025 on! PLUS authorization · Filed 02/04/2026
Securities and Exchange Commission commenced an investigation relating to our acquisition, disclosures and accounting controls in connection with the JUUL investment; and (iii) the New York State Office of the Attorney General and the Commonwealth of Massachusetts Office of the Attorney General, separately, issued independent subpoenas to us seeking documents relating to our former investment in and provision of services to JUUL.
Business Environment — disclosed JUUL-related investigation and subpoenas · Filed 30/07/2026
Note 11. Stock Plans In 2025, our Board adopted, and shareholders approved, the 2025 Performance Incentive Plan (“2025 Plan”).
Note 11 — adoption and shareholder approval of 2025 incentive plan · Filed 25/02/2026
