Altria Group (NYSE:MO) reported what CEO Billy Gifford called a “strong start to the year,” highlighted by 7.3% growth in first-quarter adjusted diluted earnings per share. Management attributed the quarter’s performance to continued strength in smokeable products, disciplined execution across Philip Morris USA’s brand portfolio, and ongoing investment behind its oral nicotine pouch business.
Smokeable segment posts income growth as volume declines moderate
CFO Sal Mancuso said the smokeable segment delivered “strong financial performance” in the quarter, with segment adjusted operating companies income (OCI) up 6.3% and adjusted OCI margins expanding 0.7 percentage points to 65.1%. Mancuso said the results were supported by “solid net price realization of 6.3%” and moderating volume declines.
Mancuso also described ongoing pressure on adult smokers from the macro environment. He said elevated everyday expenses and higher gas prices late in the quarter weighed on discretionary income for more price-sensitive smokers, though he noted higher-than-normal tax refunds provided some short-term relief. Those pressures, he said, drove year-over-year discount-segment retail share growth of 2.4 share points.
The trade-down dynamic weighed on Marlboro’s overall retail share, which Mancuso said declined 1.4 share points year-over-year and 0.1 share point sequentially. However, in the premium segment, Marlboro expanded share to 59.5%, up 0.1 share point from a year ago and 0.2 share points sequentially.
Basic gains share as PM USA leans on revenue growth management
On brand performance, Mancuso said Basic “continued to capture share in the discount segment,” supported by Philip Morris USA’s “data-driven total portfolio approach.” Basic’s retail share grew 0.5 share point sequentially and 2.4 share points year-over-year, while total Philip Morris USA retail share grew 0.1 share point sequentially and 0.4 share points versus a year ago.
In response to analyst questions about how discount growth intersects with Marlboro, Mancuso said Basic promotions are in “limited retail distribution” and driven by data analytics to target stores that “over-index discount.” That approach, he said, is intended to capture purchases that might have gone to other discount brands “and not having an over-index impact on Marlboro.”
Altria also discussed Marlboro’s upcoming “Cowboy Cut” expansion. Mancuso said distribution would broaden “later in the Q2” and characterized the product as “a tool within our RGM toolbox” that provides “price-sensitive Marlboro consumers with an option.” He added that it should be “competitively priced,” with pricing potentially varying by store.
ON! shipments rise; On+ expands nationwide amid heavy competition
Gifford focused much of his prepared remarks on oral nicotine pouches, which he said have been driving category growth. Over the past six months, he said oral nicotine pouches drove an estimated 9.5% increase in total oral tobacco industry volume. In the first quarter, he said, the nicotine pouch category “grew nine point one share points and now represents more than 58% of total oral tobacco.”
Against that backdrop, Altria’s Helix Innovations reported shipment volume growth for the total ON! portfolio of nearly 18% to more than 46 million cans, which Gifford said reflected continued demand for ON! Classic and pipeline shipments tied to the On+ national expansion. At retail, ON! and On+ combined represented 7.8% of the total oral tobacco category, down 0.8 share points year-over-year but up 0.2 share points sequentially.
Gifford said Helix began shipping On+ nationwide in March and that, by the end of the quarter, the product was in approximately 100,000 stores representing 85% of nicotine pouch category volume. He described On+ as “the first and only product authorized under the FDA’s Pilot program aimed at streamlining PMTA reviews for certain oral nicotine pouches,” and said it is available in three flavors across two nicotine strengths and uses Helix’s “proprietary NICOSILK technology.”
To support the rollout, Gifford said Helix launched a new retail trade program focused on increasing visibility and securing incremental fixture space for On+ and future innovations. He said the trade program has secured premium retail positioning in contracted stores representing about 90% of Helix volume, and that On+ is being supported by marketing across retail touchpoints and adult-focused awareness and trial efforts, with safeguards intended to limit underage reach and maintain regulatory compliance.
Regulatory updates: Pilot program reviews and additional flavor filings
On the regulatory front, Gifford said the FDA is reviewing applications for On+ Mint, Wintergreen, and Tobacco in 12 mg strengths under the Pilot program. He added that Altria has submitted applications for six additional flavor varieties across three nicotine strengths. Gifford said the company believes the evidence supporting the applications is “compelling” and expects a basis for authorization “within the 180-day statutory timeline.”
During the Q&A, Gifford clarified that the six additional flavors are “not part of the Pilot program at this point.” He argued the FDA’s review should be more straightforward because, in his view, the underlying science for the pouch remains the same aside from changes to flavoring ingredients that are generally recognized as safe (GRAS).
E-vapor moderation, enforcement activity, and guidance reaffirmed
Gifford said Altria has seen signs that U.S. e-vapor category growth is moderating after several years of rapid expansion, driven largely by illicit flavored disposables. He said increased enforcement activity and “supply-related marketplace disruption” appeared to slow demand in late 2025, with those dynamics continuing into the first quarter. As of the end of March, he estimated there were about 20.5 million adult vapers, “in line with the year ago period,” while the number of disposable e-vapor consumers declined modestly.
Gifford pointed to enforcement actions during the quarter, including a “large-scale enforcement action in Northern Virginia” supported by the Drug Enforcement Administration, and said that in states with product directories “in place and properly enforced,” the company is seeing evidence those frameworks reduce illicit product presence in tracked channels. Still, he said progress is constrained by a limited number of FDA-authorized products, and he reiterated Altria’s call for a more efficient authorization process alongside sustained enforcement.
During the Q&A, Gifford said the category remains “upside down,” estimating that about 70% of volume is still illicit flavored disposables. He also said Altria is making “significant progress” on resolving an International Trade Commission issue related to patent infringements and expects to return its product to the market “at the appropriate time,” but “in a disciplined fashion” given current market conditions.
Mancuso said Altria reaffirmed its 2026 full-year adjusted diluted EPS guidance range of $5.56 to $5.72, representing 2.5% to 5.5% growth from a 2025 base of $5.42. He said that, due to the strong first quarter, Altria now expects earnings growth to be “more balanced between the first half and the second half of the year,” with the guidance reflecting moderated e-vapor industry growth and increased macro uncertainty for adult nicotine consumers.
On capital returns and balance sheet, Mancuso said Altria paid about $1.8 billion in dividends and repurchased 4.5 million shares for $280 million during the quarter. The company had $720 million remaining under its current share repurchase program, which expires at year-end. Mancuso also said Altria retired just over $1 billion of debt that matured in February, and that its total debt-to-EBITDA ratio was 1.9x as of March 31, “in line with our target.”
In closing remarks during the call, Mancuso thanked Gifford for his leadership and said the company is “committed to building upon the strong foundation he’s fostered.”
About Altria Group (NYSE:MO)
Altria Group, Inc (NYSE: MO) is a U.S.-based consumer goods company whose principal business is the manufacture and sale of tobacco products. Headquartered in Richmond, Virginia, the company’s operations are focused primarily on the U.S. market and include the production, marketing and distribution of cigarettes, smokeless tobacco and cigars. Its flagship cigarette franchise in the United States is sold through its operating subsidiaries and is among the most recognizable cigarette brands in the country.
Altria’s principal operating businesses include Philip Morris USA (cigarettes), U.S.
