Good day, and welcome to the Altria Group 2019 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. [Operator Instructions] I would now like to turn the call over to Mr. Mac Livingston, Vice President of Investor Relations for Altria Client Services. Please go ahead sir.

Thanks, Brandy. Good morning, and thank you for joining us. We’re here this morning with Howard Willard, Altria’s CEO; and Billy Gifford, our CFO to discuss Altria’s 2019 fourth quarter and full-year business results. Earlier today, we issued a press release providing these results. The release, presentation and quarterly metrics are all available on our website at altria.com and through the Altria Investor App. During our call today, unless otherwise stated, we’re comparing results to the same period in 2018. Our remarks contain forward-looking and cautionary statements and projections of future results. Please review the forward-looking and cautionary statement 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. Share repurchases also depends on marketplace conditions and other factors. Altria reports its financial results in accordance with U.S., Generally Accepted Accounting Principles. Today’s call will contain various operating results on both the 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. With that, I’ll turn the call over to Howard.

Thanks, Mac, and good morning everyone. 2019 was a dynamic year for the tobacco category. For Altria, it was a year characterized by two distinct stories. The outstanding performance of Altria’s core tobacco businesses and significant progress advancing our noncombustible business platform, alongside disappointing performance from our JUUL investment. Across our businesses, our employees accomplished more with less and responsibly delivered outstanding results despite unexpected challenges with our investment in JUUL, which led to impairment charges and reported losses, we grew adjusted diluted earnings per share by 5.8% and continue to reward our shareholders with growing cash dividends. In 2019, we paid $6 billion in dividends to shareholders and increased the dividend for the 54th time in 50 years. Our core tobacco businesses delivered strong financial performance, with each of the smokeable and smokeless product segments delivering high single-digit adjusted operating companies income growth, significantly expanding their adjusted operating companies income margins and maintaining strength on their leading premium brands. In fact, if you look at the performance of our smokeable and smokeless products segments on a combined basis over the past five years, 2019 was a high watermark for combined adjusted OCI and margin expansion. In addition, we exceeded our $575 million cost reduction target, made significant progress advancing and building our noncombustible business platform with the launch of IQOS in two lead markets and the completion of the on! transaction. And we successfully advocated for moving the legal age to purchase all tobacco products to 21 to address social access concerns among youth. Turning to JUUL. We are disappointed in the performance of our JUUL investment in 2019 and we recorded a second impairment of the JUUL investment, which Billy will discuss in more detail shortly. It’s a critical time for the e-vapor category, and we believe manufacturers…

Thanks, Howard, and good morning, everyone. We expect the tobacco category to remain dynamic with continued evolution in adult tobacco consumer preferences and tobacco regulation. We believe we’re well positioned to deliver steady performance in this environment and that our enhanced business platform allows us to continue to deliver strong financial results and generate significant cash return to shareholders, commercialize non-combustible tobacco products to provide satisfying alternatives for adult tobacco consumers, and participate in the adjacent and emerging cannabis category through our investment in Cronos. As Howard mentioned earlier, in 2019, our core tobacco segments were resilient and delivered excellent performance against their stated objectives. In the smokeable products segment, the segment grew adjusted OCI by 8.6% and expanded its adjusted OCI margins by 3.9 percentage points to 54.5%. Higher pricing, significant cost savings and more efficient promotional spending more than offset lower cigarette volume to drive strong income growth for the year. The smokeable products segment’s price realization was up 8.4% for the year. More efficient promotional spending enabled through data analytics contributed to the segment’s strong net pricing. Marlboro retail share remained stable at 43.1%, down a tenth versus prior year. Product expansions with innovative resale packaging and other brand equity investments continue to support Marlboro’s performance. The Marlboro Rewards equity program launched nationally a year ago continues to exceed our expectations, with over 2.6 million adult smokers enrolled and 200 million pack codes entered since its launch. Marlboro coupons are driving repeat purchases and remain the number one redeemed item. At the industry level, we estimate that U.S. cigarette volumes declined by 4.5% in the fourth quarter and by 5.5% for the full-year when adjusted for trade inventory movements and other factors. We continue to believe that accelerated movement of adult smokers to other categories, primarily e-vapor,…

Thank you. [Operator Instructions] Our first question comes from the line of Chris Growe of Stifel. One moment please.

Hi, good morning.

Good morning.

I just wanted to ask a question, if I could, first, on – just looking at volume, particularly in the cigarette category. You had a number of – there seemed [ph] to be a number of puts and takes to volume in 2020 as we look ahead. I guess, I want to understand, a little stronger performance for the category in the fourth quarter. As we look ahead, you have tobacco 21, which could be a drag on volume. I guess, I’m curious about the cross category movement. It seems like we’re seeing a pretty marked deceleration in e-cigarettes, which has been a big drag there. So, maybe tobacco 21 and how you expect the e-cigarette category to perform in 2020. And then, just to understand how that’s going to help affect the volume for cigarettes in 2020?

I think when you look at cigarette volume declines, our range is 4% to 6%. With regard to tobacco 21, in the first half of last year, we estimated about 2% of cigarette industry volume with legal age to 20. And so, certainly, that’s going to be an impact this year going forward. But I would say that you already had a certain number of states that were already at a legal age to purchase of 21 before we made that measurement. And some of that got factored in as more than 50% of the U.S. volume was covered by 21 by mid-year. So, some of that decline is in the base of the decline rate. I think with regard to e-vapor, it’s hard to precisely predict what’s going to happen to that category. But if you just turn to the fourth quarter of this year, its year-over-year growth rate was only 3%. And I think that we really expect that we’re going to see a continued slowdown or even maybe a decline in the e-vapor category over the next couple of years. And I think that’s going to result in less pressure on the cigarette category. The other products that potentially could impact the cigarette category, though, of course, our IQOS and heat-not-burn and the tobacco-derived nicotine pouch business.

Okay, thank you for that. I had just one other follow-up question, which is in relation to the cost savings you achieved in 2019. You noted that you had about a $600 million annualized rate you exited the year. Just to be clear, that puts you around $150 million in the fourth quarter. And is there any way to discuss what you have left in 2020 coming through from the actions you undertook in 2019?

Yes, Chris. You’re right. We were ramping up as we went through the year 2019. The biggest annualization will come from the headcount reduction related dollars because remember that most of the headcount exited toward the end of the first quarter. So, that will be the biggest part of the annualization.

And are you able to say, Billy, how much is left in terms of savings you expect in 2020?

Yes, I probably won’t go into that level of detail, but I think the $600 million is a good number from an annualized run rate.

Okay, thank you.

Your next question comes from line of Vivien Azer of Cowen.

Good morning.

Morning.

So, I wanted to just touch base on some of your market share aspirations, given how dynamic the cigarette industry volume backdrop has proven to be. So. Howard, as you think about possibly a worse outlook relative to what you guys used to think, it’s not a three to four anymore, does that change how you think about holding or modestly growing your cigarette market share? Thanks.

I have to say that we were pleased with our performance last year. We had stability on Marlboro. We had a modest step down in our share on L&M, but it’s at a much higher level of profitability and we had strong profit growth from the cigarette category. So, we believe that the performance we had last year was quite strong and quite acceptable.

Okay, that’s helpful. Thank you. And just to follow-up on JUUL, can you comment at all about what your expectations are now for revenue mix over the next few years for JUUL, domestic versus internationally?

Yes, Vivien. From a standpoint of – you know that JUUL has announced – we know there’s a reset that’s taken place in the U.S. and they’ve had some announcements of some resets that they are in the process of making internationally. We certainly incorporated both into the valuation analysis. But I’m going to be hesitant to go into the level of detail of the split up between both international and the U.S. until we see the continuation of their plans roll out.

Understood. Thank you very much.

Your next question comes from line of Nik Modi of RBC Capital Markets.

Yes. Good morning, everyone. Howard, can you maybe talk about this ceasing of helping JUUL with other areas outside of regulatory. Is that just in anticipation of FTC review? I mean, can you just provide any context around that? I am assuming that means no coupons and some of the shelf spacing that you’ve previously discussed. And then, just thinking about 2020, your overall thoughts and just areas that we should be watching out for potential excise tax increases? I haven’t reviewed some of the data out there, but maybe you could just give us any areas that you guys are looking at in terms of big tax hikes. Thanks.

Sure. With regard to the change in the services that we’re providing to JUUL, it’s not related to the FTC review. We’ve agreed to continue to provide them with regulatory affairs services, where the two teams are working together, I think quite effectively. And I think that’s one of their most important priorities, to file a complete and compelling application in May of 2020 this year. As you may recall last year, there were a number of services that we offered them. Some of them, they turned down and built their own infrastructure. And then in other places, they built their own infrastructure but on an ad hoc basis, utilized some of our services such as the sales force. What we found was that having both JUUL personnel and Altria personnel that were sometimes involved in executing for JUUL at retail, that it created confusion and that it wasn’t really an effective way to get the most out of the Altria sales organization. So, we ultimately agreed with JUUL that they’d continue to provide a number of the services exclusively and that we’d pull back. And I think that gives us the opportunity to really invest in our sales and distribution organization and having them focus on our two core tobacco segments as well as the expansion of IQOS and on!. And we know the kind of impact they can have when they are the sole supporter of our sales and distribution effort, and we’re pleased to have some of that capacity back for our other businesses.

Great. Thank you.

Thank you.

Your next question comes from the line of Pamela Kaufman of Morgan Stanley.

Hi, good morning. So, Billy touched on pricing elasticity in his comments, which do not have appeared to have changed. Are you surprised that there have not been changes to pricing elasticity in the cigarette category, given the availability of lower-priced alternatives? And do you see any risk to your ability to continue to increase your realized pricing at a high single-digit rate?

Yes, Pamela. When we look at price elasticity and you’ll recall, we’ve had significant price increases. If you go back in history, whether it was related to MSA or excise taxes in a given state, and the price elasticity is held at that negative 0.3% coefficient. From a standpoint of alternative products, when we talk to consumers, pricing doesn’t really factor into top reasons for switching out. There are other reasons mentioned. So it is not surprising that, that hasn’t changed. I’m going to be a little bit reluctant to talk about the future pricing. I will note that pricing is an important part of our algorithm, but there are also puts and takes across the P&L, and we’ll assess that as we move forward.

Okay, thanks. And I also wanted to ask about your outlook for JUUL’s PMTA submission. Is there any evidence of an improvement in JUUL’s youth usage trends based on recent surveys? And would you expect to see a meaningful improvement in JUUL’s performance in the next Youth Tobacco Survey?

Yes. I don’t know that there’s been government data released since about the second quarter of last year. But I do expect before the filing deadline of May, there is going to be that second quarter survey will be completed. And while it won’t be available publicly for a bit of time, it will certainly be available publicly before I would expect the FDA to make any decisions on the PMTAs that they accept as filed. I think that there is reason to be optimistic that there is going to be an improvement or a reduction in youth usage of e-vapor products because of I think, two very significant developments. The first one is that we now have a minimum age purchase of 21 nationwide. I think that will be an effect for a full three months before that survey starts to measure youth usage. And then secondly, the FDA has now provided nationwide guidance that’s in effect that is going to restrict, certainly for pod-based e-vapor products, the availability of flavors to tobacco and menthol. I think that should have a positive impact on driving down youth usage rates. And certainly, I would expect that the JUUL usage would decline as well. I think how fast it goes down, I think we’re going to have to wait and see.

Okay. Thank you.

Your next question comes from the line of Priya Ohri-Gupta with Barclays.

Okay. Thank you so much. Just a quick follow-up on that last question, around how you expect sort of disposable products to potentially mitigate some of the benefits from e-cigarette youth usage. And then secondly, you guys had a $1 billion bond that came due earlier this month. Just wanted to understand if we should expect you to refinance that or given sort of your healthy cash flows, expect you to just have paid that down. Thank you.

Sure. I think you’re referencing the fact that, when the FDA implemented their guidance restricting the availability of flavored products, they were quite clear that for pod-based closed system products that they were going to enforce against any product in the market other than tobacco and menthol. And they were not as clear with regard to some of the other product formats. But I think that they were also quite specific that any product they found that was contributing to youth usage of e-vapor products, they were certainly going to enforce regardless of the product format. So, I think if you see youth usage, switch to other product formats other than pod-based products, I would expect the FDA to step in and enforce against those products as well. I’ll turn it over to Billy on your bond question.

Yes, you’re exactly right. With the strong generation of the cash from our core businesses, we’d pay debt with available cash.

Okay. Thank you so much.

Your next question comes from line of Michael Lavery of Piper Sandler.

Good morning. Thank you.

Good morning.

On the JUUL equity income expectation now that that would not have any contribution over the next three years – three or four years, is that more related to the accounting treatment, recording cash dividends? Or does that reflect your expectations for what those earnings might look like?

Yes, Michael. When you look at the fair value option, you have two components that come through. You only record, if you will, equity income related to dividends. And then, you have, if you will, the change or adjustment to the fair value on a quarterly basis. And so since that equity line would include only dividends, we don’t have any expectations that we would receive dividends over the next three years.

That’s a helpful clarification. Thanks. And on the FTC review, obviously, you’d said you thought it would be resolved in the first quarter and now, it’s pushed out to the first half. Can you just give some color there? Is that delay any cause for concern?

I don’t think it is a cause for concern. There is a significant amount of activity going on. And there were some scheduling delays that pushed it likely out of the first quarter, but I don’t think it’s driven anything more than that.

Okay, that’s helpful. Just lastly, on the buybacks, you did the $500 million in the fourth quarter and now, are guiding to $500 million for the full year. Is there any reason why that pace would change or should we expect maybe a little bit of upside against that? How should we think about the outlook from here?

Yes. Yes, I think, Michael, as far as share repurchase, I’m not going to speak to the pace. We really look at the market and make those decisions. We’re in the current share repurchase program, and we’ll assess what the pace is and whether we make any changes to that in the future.

Okay. Thank you very much.

Your next question comes from the line of Adam Spielman of Citi.

Thank you very much. I have a couple of questions. Can I start with the tobacco 21? In the states, where you’ve seen that imposed for quite a while, can you say if there’s been a difference in the volume run rate, I guess? That would be my first question on tobacco 21.

Thanks for the question, Adam. I think when you look at the individual states; they differ in the way that the impact of that has happened. And so it’s a bit early. I know you’re referring to a couple of states that went much earlier, but it’s tough to tease out. We’ll certainly be able to see that now with the nationwide – on a federal level, the 21. So, we’ll be able to provide better input to that as we move forward.

Okay, thank you. So, also related to that, I guess the tobacco 21 has two impacts. Firstly, you might have fewer people almost immediately, because they just can’t buy it, but also you might think that the run rate of volume declines might get worse, because, I guess, you’re recruiting fewer smokers potentially in the future. And I was just wondering whether – how you think about that second point, whether you think tobacco – not only does it have an impact this year in 2020, but whether there also is the ongoing volume decline in the US.

Yes. I think as we think about the impact of tobacco 21, I don’t know that we divide it up the way you looked at it. Clearly, there are legal age to 20 tobacco users that were legal to purchase the product before that are no longer legal and we hope that they fall out of the category and end up obeying the law. I think secondly, we actually don’t advertise to non-tobacco users, but certainly, tobacco 21 could cause people to delay their consideration of entering the tobacco category. And while that might have a future impact on category volumes. We don’t do research on that.

Okay, thank you very much. And then just if I can come back to the change of the agreements in JUUL. And obviously, you’re now going to provide them with less services than you had previously agreed to provide. And I was just wondering if JUUL has got anything in return for what looks like less value to them.

Well, I think as you looked at the agreement with JUUL, I think that ultimately, there were a number of changes to the agreement. I think we both felt like that was an agreement that provided value to both sides and that’s ultimately why we agreed to it.

Fine. And just one final question. I noticed that the growth of the deep discount category, the sort of non-branded discount category, in terms of market share, was slightly higher in 2019 than it was in previous years, something about incrementally. Why do you think that was? And do you think we should – we will continue to see that and that increase switching to non-branded discount going forward?

Yes, Adam. I think related to that, we had been talking about it being churn for most of the year and I think that’s primarily what occurred in the year. You’re right, in 2019; it stepped slightly outside of just churn. I think as we see the aging of adult smokers, they tend to skew a bit more into the discount category, but I think there’s always present in the consumer base, a group of consumers that are looking for the – if you will, the cheaper or cheapest cigarette in the store. And as you’ve seen us and others take profitability on branded discount, you’re seeing that consumer move down to the – if you will, the AOM of the deep discount.

Okay. Thank you very much.

Your next question comes from line of Owen Bennett of Jefferies.

Good morning, guys. Hope you’re all well. And just had a question around the non-compete obligation and if a scenario did happen, where you release from that. A few questions around that, is it – would it be right in assuming, therefore, that it would be MarkTen that you tried to get back on the market? And then also, are you in a good spot, where you could get a PMTA in with MarkTen pretty quickly? And then finally, would you need to get PMTA in first before you can get it on to the market? Or is MarkTen available, like, for instance, in some little part of the U.S. So, it’s not completely been removed off the shelf. So, you could ramp that up again pretty quickly.

Sure. I wouldn’t read too much into our renegotiation with JUUL that in the future potentially gives us more flexibility to compete and I don’t think that we have a well-defined plan, if we were to decide to execute that. Certainly, we had some e-vapor products; although I would point out that they were not performing at a level that we found to be particularly satisfying. And certainly, any product that would be placed on the market would need to go through PMTA authorization, assuming that it was put on the market after May of 2020.

Okay. Thanks very much. Appreciate it.

Thank you.

Your next question comes from the line of Gaurav Jain of Barclays.

Good morning.

Gaurav, your line is open. Okay. Your next question comes from the line of Steve Powers of Deutsche Bank.

Yes, thanks. I guess going back a little bit to the – just the cigarette category and market share dynamics, I guess, just an update, if we could, about your satisfaction with the Marlboro brand in terms of its standing versus – and just overall brand equity. And clearly, we saw some share loss this year. We’ve discussed in the past. But is there anything that you see there that causes you any concern relative to what you discussed in the past that may need corrective action?

No. We are very pleased with the Marlboro brand. We think that PM USA team has done a fantastic job and really presented us with stability around the brand. They’ve had some excellent equity programs. I mentioned Marlboro Rewards earlier. I think that’s really driving repeat purchases with those consumers that want to be engaged with Marlboro. Yes. We saw a – I wouldn’t necessarily consider that a huge decline. I consider that stability. And if you look back and we provided it over the, call it, the last seven to eight quarters, you’ve seen very strong stability in the Marlboro brand itself.

Okay, great. And then I guess, secondly, the decision to remove your long-term cigarette volume outlook, does that simply reflect just a lack of visibility on your part or is the action more intended to maybe, focus us on other metrics that you kind of see as more important as you work towards managing to optimize profit growth across the portfolio? I’m just trying to understand, I guess, the motivation and impetus behind removing that number from your communication.

Sure. I think that we feel like it’s – we’re probably in a better position to forecast the one-year trend than we are for the three-year trend. And I think that if we’re going to provide forecast, we’d like to do it with a reasonable level of confidence about falling within it. And we’ve just found that, based on our past experience and based on the number of things that are impacting cigarette volumes going forward that we thought we were better off not continuing to provide that.

Okay. Thank you very much.

Thank you.

Your next question comes from the line of Robert Rampton of UBS.

Hello, thank you. My first question is, so it looks like JUUL volumes were down 15% quarter-on-quarter. How much of that came from after JUULpods Mint Pods? I’m trying to think about the implications of the imminent cartridge ban for the rest of the market. Thank you.

Sure. I don’t – I really can’t break down how much of that volume decline for JUUL, came after their November announcement of withdrawing mint and how much came before. But I think you are right that the primary driver of that volume decline was the impact of them removing mint from the market. And while that impacted JUUL in the fourth quarter, I think there is likely to be a volume step-down for the other companies that didn’t proactively remove their flavored products and instead waited for FDA to force them to remove those products and that, of course, will be an impact in the first quarter.

Okay, thank you. And then – so, my next question is assuming e-cigarette sales decline year-on-year for 2020 in total, I mean, looking at your estimate of two-point drag this year – for 2019, is the implication that that two-point drag disappears or am I interpreting that incorrectly?

Well, I think that it’s a little bit hard to measure precisely. We’ve given you our estimate of 4% to 6% volume decline for cigarettes. But I think that if you had an e-vapor category that declined, I think that the – any stepped up decline of cigarettes related to e-vapor would probably go away. The question would then be what are the potential impacts of either heat-not-burn or other movement to other categories. and then, of course, you’d have to factor in the impact of Tobacco 21.

Okay, thank you. That’s very helpful. And then sorry, my final question on iQOS. Any color on how that’s going on the spectrum of Germany to Japan? Are you happy to give any more color on where you think the U.S. will fall? Thank you.

Yes, it’s still a bit early. And I know you’re expecting us to say that, but I think what we are looking at is getting the learnings. We had learnings in Atlanta and we’ve started some adjustments both in Atlanta and our subsequent launch in Richmond. We do have future plans and we’ll be sharing much more at CAGNY.

All right. Thank you.

We will now take questions from the media. Your first question comes from line of Jennifer Maloney of Wall Street Journal.

Howard, my question is for you. You personally made the case for this big bet on JUUL. You made the case to shareholders, to your own board members. And I wonder what your feelings are now in this moment. Are you feeling frustrated that JUUL didn’t act sooner to address regulators’ concerns? Are you feeling regret for having invested in JUUL in the first place?

Well, I have to tell you, I’m highly disappointed in the financial performance of the JUUL investment. And I think that that is reflected in the most recent valuation, which is substantially below what we had expected. I think as you look at the drivers of that, there were a number of unexpected outcomes in the year. Probably, the one that I think was hardest to have forecast was the appearance of the serious lung injury. Essentially, you had the CDC recommending to all e-vapor consumers, both THC and nicotine consumers that they stop vaping and it took quite a bit of time to get clarification that the serious lung injury was primarily driven by THC black market products. So, I think it’s a disappointing performance. I would, however, note that JUUL was the market share leader and the volume growth leader in 2019. And I think while there is going to be a reset in the category that I think is an appropriate reset to drive down youth usage, I do think that they are well positioned following the reset to have more success in the future.

Thanks. And one more, if I may. This new revised agreement gives you an out on the non-compete and it acknowledges that JUUL might be taken off the market by federal law. So, do you see that as a higher possibility now than you did before?

I don’t think that our change in the agreement to have additional optionality of certain things happen in the future were necessarily driven by a change in our view of what might happen to JUUL. But clearly, we decided that there is always a chance that something like that could happen and we thought having the option to elect under those circumstances to be able to go back into the market and compete, we thought that had value. But I have to tell you right now; our primary focus is on helping JUUL file a compelling and complete PMTA with the FDA by the May 20 deadline.

Thanks very much.

Thank you.

Your next question is from the line of Tiffany Kary of Bloomberg.

Hello, good morning.

good morning.

Howard, a question for you. How are you calculating the litigation risk from JUUL? And are there steps you can take to isolate yourself, given the way the deal was structured in terms of the indemnification agreement? Or agreement not indemnifying?

Sure. Why don’t I let Billy take that?

Yes. So, if you look at the way we assessed it is, it was really a change in the discount rate for the fourth quarter impairment. We really looked at assessing – we did not assess the merits of the cases, whether they would be successful or not against JUUL. We really looked at assessing the risk of the uncertainty related to the litigation. You’ll recall, if you go back even in our tobacco history when we were facing AG suits and similar suits, the market itself put a higher level of discount on our share price compared to the S&P. Subsequent to that, that has gone from our share price, but that’s what was reflected in the fourth quarter impairment. As far as the structure of the agreement, I would remind you, we do assess the merits of the cases that we’re named in, and we think they are meritless and we will be filing for a motion to dismiss.

Thank you. And one more thing, if I may. PMI has just made another deal with a Korean company. You’re already moving on to iQOS 3. Would you ever sell in the U.S. other sorts of products that your sister company Philip Morris is selling overseas?

We’re always open-minded, but I won’t comment on that at this time.

Thank you.

Your next question comes from the line of Gaurav Jain of Barclays.

Hi, thank you. And apologies for the drop. I had a couple of questions. Number one was just on the cadence of volume through the year. So, Q4 2019 industry volumes were minus 4.5% when Q4 2018 comp was minus 5%. And Q1 2019 to Q2 2019 comps are very easy when industry volumes were down 7%. So, should we expect that volumes will be much better in the first half, and tobacco 21 impacts in the second half and that’s how volumes progress through the year?

Yes. I don’t know that it’s possible to predict each quarter’s cigarette volume decline with that level of precision. I think we provided you with kind of our perspective on what the puts and takes might be, but I would hesitate to forecast on a quarter-over-quarter basis.

Sure. My second question is on on! that you mentioned you will be filing a PMTA, but would you also be thinking of filing an MRTP? And could you also remind us where you are with the Copenhagen MRTP as well?

Sure. Right now, our first priority is to file the PMTA by the May deadline, but you are right to point out that, that is a product that I think has potential to receive an MRTP. And I think we’ll turn to that task after we get the May filing completed. And you are also right that it’s been about a year since the TPSAC hearing on Copenhagen. We thought that we had a good hearing with regard to Copenhagen as a potentially reduced risk product and we would expect to hear on Copenhagen anytime now.

Well, thanks a lot.

Thank you.

Thank you. I will now turn the floor back over to management for any closing comments.

Thank you. In summary, while the JUUL investment and e-vapor category remain challenging, our core tobacco businesses are strong and resilient, delivering significant cash and providing us with the flexibility to invest in our non-combustible business platform. We continue to believe that Altria’s enhanced business platform best positions us to succeed under various future category scenarios. Lastly, and most importantly, I want to thank our employees for their accomplishments and relentless dedication over the past year. Because of them, I have even greater confidence in our ability to succeed into the future. Thanks again, for joining us. And please contact our Investor Relations team if you have further questions.

Thank you. That does conclude today's conference call. You may now disconnect.