What changed in this filing

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Item 1. Business

2025-02-26 compared with 2024-02-27 · 59 added, 72 removed, 144 unchanged (48% of the section changed)

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John Middleton Co.

(“Middleton”), which is engaged in the manufacture and sale of machine-made large cigars and pipe tobacco and is a wholly owned subsidiary of PM USA;

(“Middleton”), which is engaged in the manufacture and sale of machine-made large cigars and is a wholly owned subsidiary of PM USA;

UST LLC (“UST”), which, through its wholly owned subsidiary U.S.

Smokeless Tobacco Company LLC (“USSTC”), is engaged in the manufacture and sale of moist smokeless tobacco products (“MST”) and snus products;

Helix Innovations LLC (“Helix”), which operates in the United States and Canada, and Helix Innovations GmbH and its affiliates (“Helix ROW”), which operate internationally in the rest-of-world, are engaged in the manufacture and sale of oral nicotine pouches;

Smokeless Tobacco Company LLC (“USSTC”), is engaged in the manufacture and sale of moist smokeless tobacco (“MST”) products;

Helix Innovations LLC (“Helix”), which operates in the United States, and its foreign affiliates (“Helix International”), which operate in certain other countries, are engaged in the manufacture and sale of oral nicotine pouches;

and NJOY, LLC (“NJOY”), which is engaged in the manufacture and sale of e-vapor products.

Other wholly owned subsidiaries include Altria Group Distribution Company, which provides sales and distribution services to our domestic operating companies;

and Altria Client Services LLC (“ALCS”), which provides various support services to our companies in areas such as legal, regulatory, research and product development, consumer engagement, finance, human resources and external affairs.

Other wholly owned subsidiaries include Altria Group Distribution Company (“AGDC”), which provides sales and distribution services to our domestic operating companies, and Altria Client Services LLC (“ALCS”), which provides various support services to our companies in areas such as legal, regulatory, research and product development, consumer engagement, finance, human resources and external affairs.

On June 1, 2023, we completed our acquisition of NJOY Holdings, Inc.

(“NJOY Holdings”), the parent of NJOY, for total consideration of approximately $2.9 billion (“NJOY Transaction”), which consisted of approximately $2.75 billion in cash payments (net of cash acquired) plus the fair value of certain contingent consideration.

(“NJOY Holdings”), the parent of NJOY (“NJOY Transaction”).

As a result of the acquisition, NJOY became a wholly owned subsidiary of Altria.

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Financial Statements and Supplementary Data of this Form 10-K (“Item 8”).

In March 2023, we entered into a stock transfer agreement with JUUL Labs, Inc.

(“Stock Transfer Agreement”) pursuant to which we transferred to JUUL Labs, Inc.

(“JUUL”) all of our beneficially owned JUUL equity securities.

In exchange, we received a non-exclusive, irrevocable global license to certain of JUUL’s heated tobacco intellectual property.

In October 2022, we entered into a joint venture with JTI (US) Holding, Inc.

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commercialization of HTS products owned by either party.

PM USA holds a 75% economic interest in Horizon with JTIUH having a 25% economic interest.

The parties plan to collaborate on a global smoke-free partnership.

We own a 75% economic interest in Horizon with JTIUH owning a 25% economic interest.

Horizon is governed by a board of managers, which is comprised of four individuals designated by PM USA and three individuals designated by JTIUH.

For further information, see Other Tobacco Products below.

In October 2021, we sold International Wine & Spirits Ltd.

(“IWS”), which included Ste.

Michelle Wine Estates Ltd.

Michelle”), in an all-cash transaction with a net purchase price of approximately $1.2 billion and the assumption of certain liabilities of IWS and its subsidiaries (“Ste.

Michelle Transaction”).

In December 2020 and April 2021, we purchased the remaining 20% interest in (i) Helix ROW and (ii) Helix, respectively.

The total purchase price of the December 2020 and April 2021 transactions was approximately $250 million.

At December 31, 2024, our reportable segments were smokeable products and oral tobacco products.

Our all other category included (i) the financial results of NJOY (beginning June 1, 2023);

Our all other category included (i) NJOY (beginning June 1, 2023);

(ii) Horizon;

(iii) Helix ROW;

and (iv) the IQOS System (as defined below) heated tobacco business due to the relative financial contribution of these businesses to our consolidated results.

Prior to the Ste.

Michelle Transaction, wine produced and/or sold by Ste.

Michelle was a reportable segment.

(iii) Helix International;

and (iv) other business activities, all of which consists of research and development expense related to certain new product platforms and technologies.

For further information, see Note 17.

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(“Cronos”), which we account for under the equity method of accounting using a one-quarter lag.

For further discussion of our investments, see Note 7.

Investments in Equity Securities to our consolidated financial statements in Item 8 (“Note 7”).

In March 2024, we sold a portion of our investment in ABI (“ABI Transaction”).

We used the proceeds from the sale to fund the repurchase of our common stock through accelerated share repurchase (“ASR”) transactions.

In March 2023, we entered into a stock transfer agreement with JUUL Labs, Inc (“JUUL”) pursuant to which we transferred to JUUL all of our beneficially owned JUUL equity securities.

For further information on our current and former investments, the ABI Transaction and the ASR transactions, see Note 8.

Investments in Equity Securities to our consolidated financial statements in Item 8 (“Note 8”) and Note 12.

Capital Stock to our consolidated financial statements in Item 8 (“Note 12”), respectively.

Description of Business

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Management’s Discussion and Analysis of Financial Condition and Results of Operations of this Form 10-K (“Item 7”).

Our operating companies include PM USA, USSTC, Middleton, Helix and NJOY.

Our operating companies include PM USA, Middleton, USSTC, Helix and NJOY.

The products of our operating companies include:

(i) smokeable tobacco products, consisting of combustible cigarettes manufactured and sold by PM USA and machine-made large cigars and pipe tobacco manufactured and sold by Middleton;

(ii) oral tobacco products, consisting of MST and snus products manufactured and sold by USSTC and oral nicotine pouches manufactured and sold by Helix;

and (iii) e-vapor products contract manufactured by third-parties and sold by NJOY.

(i) smokeable tobacco products, consisting of combustible cigarettes manufactured and sold by PM USA and machine-made large cigars manufactured and sold by Middleton;

(ii) oral tobacco products, consisting of MST products manufactured and sold by USSTC and oral nicotine pouches manufactured and sold by Helix;

and (iii) e-vapor products manufactured and sold by NJOY.

▪ Cigarettes:

PM USA is the largest cigarette company in the United States and substantially all cigarettes are manufactured and sold to customers in the United States.

Marlboro , the principal cigarette brand of PM USA, has been the largest-selling cigarette brand in the United States for over 45 years.

Marlboro , the principal cigarette brand of PM USA, has been the largest-selling cigarette brand

in the United States for 50 years.

Total smokeable products segment’s cigarettes shipment volume in the United States was 68.6 billion units in 2024, a decrease of 10.2% from 2023.

Middleton is engaged in the manufacture and sale of machine-made large cigars and pipe tobacco.

Middleton is engaged in the manufacture and sale of machine-made large cigars.

Middleton contracts with a third-party importer to supply substantially all of its cigars and sells substantially all of its cigars to customers in the United States.

Black & Mild is the principal cigar brand of Middleton.

Total smokeable products segment’s cigars shipment volume was approximately 1.8 billion units in 2023, an increase of 2.8% from 2022.

Total smokeable products segment’s cigars shipment volume was approximately 1.8 billion units in 2024, a decrease of 1.5% from 2023.

▪ Oral tobacco products:

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NJOY ACE is the principal e-vapor product of NJOY.

NJOY is currently the only e-vapor manufacturer to receive market authorizations from the U.S.

Food and Drug Administration (“FDA”) for a pod-based e-vapor product.

NJOY’s commercialized product portfolio of tobacco and menthol e-vapor products is fully covered by marketing granted orders (“MGO”) from the U.S.

Food and Drug Administration (“FDA”).

▪ Other tobacco products:

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commercialization.

In October 2022, we agreed to assign to Philip Morris International Inc.

(“PMI”) exclusive U.S.

commercialization rights to the IQOS Tobacco Heating System (“ IQOS System”) effective April 30, 2024.

As of February 26, 2025, there are no products in the U.S.

marketplace from the joint venture.

On April 30, 2024, we assigned the exclusive U.S.

commercialization rights to the IQOS Tobacco Heating System (“ IQOS System”) to Philip Morris International Inc.

(“PMI”) pursuant to the terms of a purchase agreement entered into with PMI in October 2022.

For further discussion of the agreement with PMI see Note 6.

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Our tobacco subsidiaries believe there is an adequate supply of tobacco in the world markets to satisfy their current and anticipated production requirements.

For further discussion of the foregoing matters, the business environment, trends in market demand and competitive conditions, and related risks, see Item 1A.

Risk Factors of this Form 10-K (“Item 1A”) and Operating Results by Business Segment - Business Environment in Item 7.

Other Matters

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This is why we dedicate resources to promoting a vibrant, inclusive workplace;

attracting, developing, retaining and deploying talented, diverse employees;

attracting, developing, retaining and deploying talented employees to build a high-performing and diverse talent pipeline;

promoting a culture of compliance and integrity;

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Our Human Resources department is responsible for managing employment-related matters, including recruiting and hiring, onboarding, compensation and benefits design and implementation, performance management, career management and succession planning and professional and learning development.

Our inclusion, diversity and equity (“ID&E”) programs are managed by our Corporate Citizenship department.

Our Board of Directors (“Board of Directors” or “Board”) and the Compensation and Talent Development Committee provide oversight of human capital matters, including reviewing initiatives and programs related to corporate culture and enterprise-wide talent development, including our ID&E initiatives.

Inclusion, Diversity and Equity

We recognize the critical importance of ID&E in pursuing our Vision and believe in the value of a workforce composed of a broad spectrum of backgrounds and cultures.

In 2020, we established the following aspirational Inclusion & Diversity Aiming Points to help guide our efforts:

▪ Be an inclusive place to work for all employees, regardless of level, demographic group or work function.

▪ Have equal numbers of men and women among our vice president and director-level employees.

▪ Increase our vice president and director-level employees who are Asian, Black, Hispanic or two or more races to at least 30%.

▪ Increase our vice president and director-level employees who are LGBTQ+, a person with a disability or a veteran.

▪ Have diverse leadership teams that reflect the organizations they lead.

We maintain our commitment to building an inclusive organization and workforce that reflects the diversity of the labor market from which we hire.

Our data-driven efforts focus on removing barriers to equal opportunity in compliance with applicable law.

We strive for an organization that is more reflective of the diversity of the labor market from which we hire, and we remain committed to ID&E.

We monitor our ID&E progress through inclusive leadership ratings and other measures and report our ID&E progress annually through our corporate responsibility reporting.

Our inclusion, diversity and equity efforts are managed by our Corporate Citizenship department.

“Supporting our People and our Communities” is one of our Responsibility Focus Areas, which includes two goals related to developing a high-performing and diverse talent pipeline:

(i) enhance the diversity of our organization and leadership teams while building an inclusive and equitable culture;

and (ii) build employee capability and well-being to succeed in uncertain and rapidly changing environments.

Compensation and Benefits

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Depending on employee level, total compensation includes different elements – base salary, annual cash incentives, long-term equity and cash incentives and benefits.

We design our compensation program to deliver total compensation at levels between the 50th and 75th percentiles of compensation paid to employees in comparable positions at our peer companies.

Actual total compensation can exceed the 75th percentile or be below the 50th percentile depending on business and individual performance.

We are committed to pay equity across our companies.

Based on the most recent annual analysis we conducted in November 2023, for employees performing the same or similar duties regardless of any differentiating factors, such as performance and tenure, salaries of our female employees were 97.8% of those of our male employees, and salaries of our employees of color were 98.1% of those of our white employees.

Based on the most recent annual analysis we conducted in 2024, for employees performing the same or similar duties regardless of any differentiating factors, such as performance and tenure, salaries of our female employees were 98.2% of those of our male employees, and salaries of our employees of color were 98.2% of those of our white employees.

If we adjust for differentiating factors that legitimately influence pay, salaries of our female employees were 99.8% of those of our male employees, and salaries of our employees of color were 99.9% of those of our white employees.

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We also offer up to 12 weeks paid family leave to bond with a newborn child, the placement of a child for adoption or foster care, or to care for a family member who has a serious health condition.

Our benefits also include physical, emotional and financial wellness programs and family creation assistance benefits, such as reimbursement of surrogacy, adoption assistance and fertility expenses.

Our benefits also include physical, emotional and financial wellness programs and family creation assistance benefits, such as reimbursement of surrogacy, adoption assistance and doula expenses.

While there is some variability in employee benefits across our companies, the examples we provide are available to most employees.

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Attracting, Developing, Retaining and Deploying Talent

Our salaried entry-level recruitment efforts focus on recruiting relationships with universities, internship opportunities and partnerships with organizations that support diverse students.

We are focused on identifying the most qualified talent and investing in leader and employee development to build a diverse talent pipeline prepared and willing to lead at every level.

Additionally, we are dedicated to being an inclusive place to work for all employees, regardless of personal background or work function.

We recognize the critical importance of these efforts toward pursuing our Vision and believe in the value of a workforce composed of a broad and diverse spectrum of backgrounds, skills, experiences and cultures.

Our salaried entry-level recruitment efforts focus on building relationships with university students, internship opportunities and partnerships with organizations that support a broad range of students.

We complement these recruiting efforts with hiring experienced employees with demonstrated skills and/or leadership capabilities.

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We regularly conduct confidential employee engagement surveys to seek feedback on a variety of topics, including employee satisfaction, support from leadership, corporate culture and culture of compliance.

In addition, in 2023, these quarterly employee surveys sought feedback on topics such as workplace flexibility, workload, inclusion, development opportunities, management support, compliance and understanding of business strategy.

In addition, in 2024, these quarterly employee surveys sought feedback on topics such as workplace flexibility, workload, inclusion, equal opportunity, development opportunities, management support, compliance and understanding of business strategy.

Survey results, including comparisons to prior results, are shared with our employees and our Board and are used to modify or enhance our human capital management programs.

We also monitor our progress toward building a diverse organization through various metrics, including comparisons to external benchmarks, and report workforce data annually.

Our data-driven efforts focus on removing barriers to equal opportunity in compliance with applicable law.

Work Modernization

As part of our multi-phase Optimize & Accelerate initiative (“Initiative”), we plan to increase our organization’s speed, efficiency and effectiveness by centralizing work, outsourcing certain transactional tasks and streamlining, automating and standardizing processes.

Our Accelerated Business Solutions (“ABS”) organization will be responsible for driving efficiency and process improvement across our companies in partnership with external service providers.

We are implementing organizational design changes to support our enhanced business processes.

In addition, we are supporting the workforce with change management plans at the enterprise and function levels.

For additional information, see Our Business in Item 7.

Workplace Safety

Our goal is for every Altria employee to experience an injury-free career, which is supported by our Safety Management System (“SMS”).

Our goal is for every employee to experience an injury-free career, which is supported by our Safety Management System (“SMS”).

We strive for continuous improvement in our employee safety program through SMS infrastructure.

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At December 31, 2024, we employed approximately 6,200 people.

Twenty-seven percent of our employees were hourly manufacturing employees who are members of labor unions subject to collective bargaining agreements.

Twenty-six percent of our employees were hourly manufacturing employees who are members of labor unions subject to collective bargaining agreements.

We believe we engage and collaborate effectively with our hourly employees, as demonstrated by the positive working relationship between our companies and the unions.

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In addition, all suppliers of goods and services that maintain operations in high-risk countries are subject to social compliance audits of those operations.

More information about efforts discussed in this section can be found in our Corporate Responsibility Reports at www.altria.com/responsibility.

More information about efforts discussed in this section can be found in our Corporate Responsibility Reports at www.altria.com/ under Responsibility.

▪ Intellectual Property:

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We and our subsidiaries (and former subsidiaries) are also subject to various federal, state and local laws and regulations concerning the discharge of materials into the environment, or otherwise related to environmental protection, including, in the United States:

the Clean Air Act, the Clean Water Act, the Resource Conservation and Recovery Act and the Comprehensive Environmental Response, Compensation and Liability Act (commonly known as “Superfund”), which can impose joint and several liability on each responsible party.

Our subsidiaries (and former subsidiaries) are involved in several matters subjecting them to potential costs of remediation and natural resource damages under Superfund or other laws and regulations.

Altria and our former subsidiaries are involved in several matters subjecting them to potential costs of remediation and natural resource damages under Superfund or other laws and regulations.

Our subsidiaries expect to continue to make capital and other expenditures in connection with environmental laws and regulations.

As discussed in Note 2.

Summary of Significant Accounting Policies to our consolidated financial statements in Item 8 (“Note 2”), we provide for expenses associated with environmental remediation obligations on an undiscounted basis when such amounts are probable and can be reasonably estimated.

Such accruals are adjusted as new information develops or circumstances change.

Other than those amounts, it is not possible to reasonably estimate the cost of any environmental remediation and compliance efforts that our subsidiaries may undertake in the future.

In the opinion of management, however, compliance with environmental laws and regulations, including the payment of any remediation costs or damages and related expenditures, has not had, and is not expected to have, a material adverse effect on our business, results of operations, capital expenditures, financial position or cash flows.

In the opinion of our management, however, compliance with environmental laws and regulations, including the payment of any remediation costs or damages and related expenditures, has not had, and is not expected to have, a material adverse effect on our business, results of operations, capital expenditures, financial position or cash flows.

For further discussion of the foregoing matters, the business environment, trends in market demand and competitive conditions, and related risks, see Item 1A.

Risk Factors of this Form 10-K (“Item 1A”) and Critical Accounting Estimates and Operating Results by Business Segment - Business Environment in Item 7.

Available Information

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business