Good day, and welcome to the Altria Group 2023 First Quarter Earnings Conference Call. Today’s call is scheduled to last about one hour, including remarks with Altria’s management and a question-and-answer session. Representatives of the investment community and media on the call will be able to ask questions following the conclusion of the prepared remarks. I would now like to turn the call over to Mac Livingston, Vice President of Investor Relations with Altria Client Services. Please go ahead, sir.

Thanks, Katie. Good morning, and thank you for joining us. This morning, Billy Gifford, Altria’s CEO, and Sal Mancuso, our CFO, will discuss Altria’s first quarter business results. Earlier today, we issued a press release providing our results. The release, presentation, quarterly metrics, and our latest corporate responsibility reports are all available at altria.com. During our call today, unless otherwise stated, we’re comparing results to the same period in 2022. Our remarks contain forward-looking and cautionary statements and projections of future results. Please review the forward-looking and cautionary statements 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 our Board. We report our financial results in accordance with U.S. generally accepted accounting principles. Today’s call will contain various operating results on both a 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. Finally, all references in today’s remarks to tobacco consumers or consumers within a specific tobacco category or segment refer to existing adult tobacco consumers 21 years of age or older. With that, I’ll turn the call over to Billy.

Thanks, Mac. Good morning, and thank you for joining us. We are off to a strong start and believe our businesses are on track to deliver against full-year plans. Our tobacco businesses performed well in a challenging macroeconomic environment, and we announced exciting progress toward our vision. Highlights from our first quarter included strong adjusted diluted earnings per share growth of 5.4%, resilient end-market performance from our leading brands, including Marlboro and Copenhagen, and continued volume and share growth from on! Additionally, we made announcements at our Investor Day, including updates on our pending acquisition of NJOY, the unveiling of our exciting smoke-free products in development, and the introduction of our 2028 Enterprise Goals. Let’s now review first-quarter results in more detail, beginning with the macroeconomic environment and its impact on industry cigarette volumes. In the first quarter, consumer discretionary income levels remained under pressure due to the active effect of higher inflation over the past year. As a reminder, the cigarette industry experienced a higher rate of volume decline beginning in the second quarter of 2022 as smokers shifted their purchasing behavior as a result of widespread inflation and the rapid increase in gas prices that were exacerbated by the Russian invasion of Ukraine. While gas prices began to recede in the second half of last year, higher inflation persisted across other goods and services, and cigarette volumes remained under pressure. Moving into the first quarter of 2023, the cumulative effects of inflation over the past several quarters continued to impact tobacco consumers’ discretionary income and tobacco industry volumes. We will continue to monitor these factors and their impact on tobacco consumers as we progress throughout the year. Sal will provide additional color on industry volume in his remarks. Let’s now turn to the oral tobacco category. We are excited by the continued growth of oral nicotine pouch products, which grew their share of the total oral tobacco category for the 20th consecutive quarter. Oral nicotine pouches grew 7.1 share points year-over-year and now represent 26.2% of the oral tobacco category. Encouragingly, continued oral nicotine pouch growth was the primary contributor to the estimated 1% increase in total oral tobacco volumes over the past six months. Helix grew on! reported shipment volume to 25.2 million cans during the first quarter, an increase of 38%. On! continued its momentum at retail, growing its share of the total oral tobacco category by 2.4 share points to 6.5%, and on! continued to grow its share of the nicotine pouch category, reaching 24.6% in the first quarter, up 3.3 percentage points. Notably, on! outgrew Zen sequentially on an absolute basis in 50,000 stores. Helix delivered these impressive results as on!’s retail price grew 7% sequentially and 32% versus the year-ago period. We believe on!’s ability to continue to grow share while effectively reducing its promotional investment demonstrates the strength of its product portfolio and brand equity. Helix is continuing its focus while strategically investing behind the brand as the category grows and remains committed to achieving profitability in 2025. Let’s now move to e-vapor, which has been the most successful category in the U.S. in transitioning smokers to alternative products. We believe the category is continuing to undergo a significant reset, and we estimate that first-quarter e-vapor volumes decreased 11% versus a year ago and 1% sequentially. We have observed a decline in traditional multi-outlet and convenience channel volumes, which we believe is primarily a result of the FDA marketing denial orders issued for JUUL and myblu. This volume decline has been partially offset by increased volume in nontraditional channels, such as e-commerce and vape stores. We are excited about our pending acquisition of NJOY and its portfolio of e-vapor products. NJOY is the only company to receive a marketing granted order for a pod-based product. We continue to believe the strength of our commercial resources can benefit smokers and vapers across the U.S. and expand smoke-free competition in stores where NJOY ACE has not been distributed. The completion of the NJOY transaction is subject to customary closing conditions, including clearance from the Federal Trade Commission. Moving to the regulatory environment. We remain optimistic about the future of harm reduction in the U.S., and we continue to encourage the FDA to make more progress for the benefit of the 47 million tobacco consumers. In February, the FDA provided a response to the Reagan-Udall Foundation’s assessment of FDA’s tobacco operations. We are encouraged that the agency recognizes some important areas for improvement, including developing and communicating a five-year strategic plan, improving transparency and defining more efficient pathways, increasing enforcement of marketing denial orders, and exploring ways the agency can and should address nicotine risk perceptions through communication. We look forward to learning more details on these efforts. Additionally, FDA enforcement is critical to making continued progress toward reducing youth usage of e-vapor products. The FDA has the necessary enforcement tools, and we encourage them to take the appropriate action against noncompliant manufacturers. We continue to believe that harm reduction, not prohibition, is the best path forward, and we have made this clear in the public comments we submitted in response to the FDA’s proposed menthol ban. Our comments highlight the many unintended consequences of prohibition, including the adoption of adulterated and unregulated products and the development of illicit markets. Unfortunately, we believe a number of those consequences are playing out in California, where a ban on flavored nicotine products went into effect in late 2022. Our operating companies immediately ceased the shipment of products to California wholesalers that we determined were not compliant with the law. That brand continued to perform well in the state, with Marlboro and Copenhagen growing retail share sequentially. However, we remain concerned with the lack of enforcement in the state as some flavored products remained in the market. We also believe some manufacturers have introduced new products or rebranded existing ones to sidestep the purpose of the law. In March, menthol cigarettes still represented nearly 4% of the volumes sold in the multi-outlet channel in California, an increase of 1.3 percentage points from January. Additionally, we have seen evidence that some California smokers are self-mentholating their cigarettes using alternative products such as flavor cards and menthol drops. We have also observed flavored e-vapor products in the market that appear to have been renamed to mislead state regulators. Trade dynamics in surrounding states suggest that some smokers are crossing state borders to purchase menthol products. For example, the share of menthol in Nevada increased 1.3 percentage points sequentially in the first quarter to 37.4%. We believe this is significant as the total share of menthol in Nevada has not been greater than 36.5% over the past four years. Compliance remains a top priority, and our government affairs teams are engaging with California government officials to encourage them to enhance enforcement and to hold all manufacturers to the same standard. Our goal is for policymakers to embrace harm reduction as the proper framework for tobacco and nicotine product regulation. Public opinion strongly favors harm reduction over prohibition, and science shows a significant public health benefit of moving smokers away from combustible products toward a smoke-free future. As we described at our Investor Day, we are continuing our efforts to create the conditions for harm reduction to succeed through advocacy, engagement, and our actions. I believe we are well positioned for success in 2023 and beyond. While the external environment remains dynamic, I am confident that we have the tools in place to succeed. We have amazing brands, sound strategies, and most importantly, talented dedicated employees. With these things in mind, we reaffirm our guidance to deliver 2023 full-year adjusted diluted EPS in a range of $4.98 to $5.13. This range represents an adjusted diluted EPS growth rate of 3% to 6% from a $4.84 base in 2022 and excludes the potential financial impacts of the pending NJOY transaction. I’ll now turn it over to Sal to provide more detail on the business environment and our results.

Thanks, Billy. In the smokeable products segment, we continued to execute our strategy of maximizing profitability in combustibles over the long term while appropriately balancing investments in Marlboro funding the growth of our smoke-free portfolio. Smokeable segment adjusted operating companies income was essentially unchanged, and the segment expanded its adjusted OCI margins to 60.4%, driven by strong net price realization of 10.9%. As a reminder, manufacturer price realization does not reflect the retail price change. At retail, Marlboro’s net pack price increased 6.8% in the first quarter compared to last year. Total smokeable segment reported shipment volumes declined by 11.1% in the first quarter, as an 11.4% decline in cigarette volumes was partially offset by modest growth in cigars. When adjusted for trade inventory movement, calendar differences and other factors, we estimate that segment domestic cigarette volumes for the first quarter declined by 11% and that industry volumes declined by 9% over the same period. As Billy mentioned, we believe that industry volume trends have been negatively impacted by the cumulative effects of higher inflation, and we expect volume declines to moderate over time as the macroeconomic environment stabilizes. At retail, the discount segment grew 1.8 share points in the first quarter and 0.5 sequentially. We believe some smokers today are trading down as a result of adverse financial conditions. We continue to see increased competitive activity in the discount segment, including multiple branded discount offerings priced at deep discount levels. Marlboro’s share declined 0.2 sequentially and 0.6 versus the year-ago period, partially driven by the discount dynamics that I described. We have also seen a decline in Marlboro’s menthol share of the total category as a result of the California flavor ban and increased competitive activity from premium menthol brands in the balance of the country. However, we believe that Marlboro remains the aspirational brand in the category as it retained the majority of its share in this challenging environment, growing its share of the premium segment to 58.5%, an increase of 0.1 sequentially and 0.7 year-over-year, while other brands ceded share in the segment. We believe PM USA has the appropriate tools to navigate this challenging environment. For example, we recently announced a series of investments behind the Marlboro Black family of products, which are intended to provide additional support for price-sensitive Marlboro smokers. Included in these investments is the introduction of Marlboro Black Gold pack non-menthol offerings with a smooth flavor and rich taste. These products are intended to bolster the offerings within the Marlboro Black family of products and will be available nationwide, beginning in May. Our RGM and advanced analytics capabilities inform the geographies and promotional rates for these strategic investments, allowing us to be precise with our spend while supporting our overall strategy for the segment. As a result of the flavor ban in California, PM USA shipments to California retailers declined 12.8% in the state, while reported industry shipments to retailers declined 18.8%. We’ve included more details related to first-quarter California market dynamics in our metrics document that is available on altria.com. Moving to the oral tobacco products segment. Adjusted OCI grew 2.2% in the first quarter and the segment delivered strong adjusted OCI margins of 69.3%. Total segment reported shipment volume decreased 1.8% as growth in on! was more than offset by lower MST volumes. When adjusted for calendar differences and trade inventory movements, we estimate that first-quarter oral tobacco segment volumes declined by an estimated 3%. Oral tobacco products segment retail share declined 1.8 percentage points as declines in our MST brands were partially offset by the continued growth of on!. We continue to be encouraged by the performance of our oral tobacco products as on! continued to grow share in the category and Copenhagen remained the category leader. Turning to our investment in ABI. We recorded $180 million of adjusted equity earnings for the quarter, up 28%. We continue to view the ABI stake as a financial investment, and our goal remains to maximize the long-term value of the investment for our shareholders. Our balance sheet remains strong. As of the end of the first quarter, our debt-to-EBITDA ratio was 2.1. In February, we retired $1.3 billion of notes that came due with available cash. As part of the IQOS agreement we announced last fall, we expect to receive the remaining $1.7 billion plus interest from Philip Morris International by July of this year. We remain committed to creating long-term shareholder value through the pursuit of our vision and our focus on significant capital returns. We demonstrated this commitment in the first quarter by paying approximately $1.7 billion in dividends and announcing a new progressive dividend goal that targets mid-single-digit dividend growth annually through 2028. Due to the timing of our announcement of the NJOY transaction, we did not repurchase any shares in the first quarter. As of March 31st, we had $1 billion remaining under the current share repurchase program, which we expect to complete by the end of this year. With that, we’ll wrap up, and Billy and I will be happy to take your questions. While the calls are being compiled, I’ll remind you that today’s earnings release and our non-GAAP reconciliations are available on altria.com. We’ve also posted our usual quarterly metrics, which include pricing, inventory, and other items. Let’s now open the question-and-answer period.

Our first question comes from Bonnie Herzog with Goldman Sachs.

My first question is regarding your cigarette volumes, which experienced significant pressure this quarter with an 11% decline, compounding on a notable previous drop. Could you provide some insight into what you're observing in this category? How much of the pressure is due to consumers down-trading and the growing pressures they face? Additionally, it seems many of your industry estimates now look robust. It would be helpful to have more context on what is driving this change.

Thank you for the question, Bonnie. I'll address it in parts. When considering the consumer, it's important to acknowledge the cumulative effect of high inflation across all spending categories, not just in this quarter. Interest rates are rising, which is affecting consumers regarding mortgages, credit cards, and car loans. Additionally, we are observing increased debt and declining savings rates. Consumers are relying on what they have available, and this situation is not new to the cigarette industry. Historically, there have been moments where consumers faced significant pressure, such as during the recessions in 2008-2009 and 2001-2002. In light of the other factors I mentioned, we believe we have the right tools in place. Marlboro shows resilience in the marketplace and is gaining share within the premium segment. Competitors have been aggressively discounting their lower-end brands. Our strategy in the cigarette market focuses on maximizing long-term profitability while investing appropriately in Marlboro and growth areas. Regarding price elasticity, we made a minor adjustment at Investor Day, but the data we've shared indicates consistency over the last four periods on a 12-month moving basis. We haven't noticed any significant changes in consumer price elasticity apart from this small adjustment made before Investor Day.

All right. And then just maybe one more question just as it relates to price gaps and your share, your relative price gaps have widened again this quarter, I guess, to 43%. So, while we get a sense from you how concerned are you about that as well as Marlboro share was pressured, obviously, given some of the obvious pressures you’ve highlighted on the consumer but maybe also in light of the frequency and strength of some of the pricing actions you guys actually just took your price increase this year. So just trying to get a sense of how much room do you see for further pricing at these levels? And how flexible maybe are you in terms of your promotional strategy as ways to offset some of the pressure the consumer is facing? I guess, I’m just wondering if there’s a point where it becomes difficult to keep some of the Marlboro consumers in the brand family. Thanks.

Yes, I appreciate the question, Bonnie. I’m sure you’ve seen with your connections to retail as part of that price announcement, we also made a separate announcement making some adjustments to promotional spend in the marketplace. Those adjustments are really down at the local level. And what we are seeing were pockets of areas where we felt like Marlboro menthol was under pressure, and Sal highlighted in his remarks, stepped up promotional spend by a competitor in the menthol space. So, we’re making some adjustments there using various packings within the Marlboro franchise depending on what resonates with the consumer in those localities. Some of the other adjustments are related to, exactly your question, where we see the consumer under extreme economic pressure, and we’re making some adjustments within the Marlboro franchise on promotional spend to counteract and give them a place where they can continue to engage with Marlboro. It’s not new. We’ve done this before, Bonnie. I’m sure you’re well aware, whether you think about Marlboro Special Blend in history, which is now Special Select in the marketplace. What it allows us to do is to keep the consumer who aspires to be a Marlboro consumer, engage with Marlboro, and then as their economic conditions change, we can actually shrink that promotional discount to the Marlboro mainline. And what we see through time is it’s actually much more efficient and effective because we see in going back in history when we did it with Special Blends, some of the consumers as we shrunk that discount popped back to mainline, and some of them stuck with Special Blend because it was a flavor that they enjoyed. So, we feel like we have the tools available to us, and we’ll continue to monitor all those adjustments that we announced effective May were included in the reaffirmation of the guidance.

Our next question will come from Vivien Azer with TD Cowen.

Thank you so much for the incremental detail around California. That was particularly helpful. And I noted the intra-quarter commentary, the January through March, which I really appreciated, Billy. I was wondering whether you’d be willing to expand on any of that intra-quarter commentary. How did Marlboro share trends progress through the first quarter in California, if you wouldn’t mind commenting on that? Thanks.

Yes. I mean certainly, you saw that overall for the quarter, Marlboro was up in share. It’s telling that the consumer continues to choose Marlboro as the brand of choice. I think when you see that, it’s in line with some of the previous studies where consumers, when menthol is banned, and they no longer have access, tend to go to the non-menthol states. I think that’s what you’re seeing with Marlboro and the strength in California for the quarter.

Understood. That’s helpful. Thank you. And I think encouraging to hear that you guys are going to be introducing Marlboro, I believe you said it was Black Gold pack. So, do you have a targeted ASP or a price gap relative to mainline Marlboro in mind, recognizing, of course, it will vary by geography?

Yes, it will certainly vary by geography. I think if you think of it as being in line with other black packings that are in the black family that are in the marketplace, depending on the locale and the pricing in that locale.

Perfect. And my last quick one. The callout about kind of some of the category dynamics relative to 2009 and 2001 makes sense. I mean, it seems like in terms of premium share of the segment, it’s basically where we were in 2009. But I think one of the nuances of course is that in both of those prior periods, not only were there macroeconomic heads for the consumer, they were also compounded by the introduction of disruptive federal excise tax increases. So, how do you think about that, recognizing maybe this macroeconomic backdrop is incredibly nuanced because of COVID comps, but there’s not disruptive excise tax increases happening right now?

Yes, I appreciate your question, Vivien. What you're observing is the worsening impact of ongoing high inflation that has put pressure on consumers. They have received considerable support from the government since the pandemic, and I’m glad you brought that up. We noticed that during the time of this support, Marlboro actually gained from it. The brand remains the aspirational choice in the cigarette category. That’s why we are making what we believe are the right adjustments as we approach May for the areas experiencing consumer pressure, and we will keep monitoring the situation and make further adjustments as needed.

Our next question will be from Andrei Condrea with UBS. Your line is now open. We are hearing no response from that line. We will proceed to our next question, which will come from Pamela Kaufman with Morgan Stanley.

So given the elevated rate of cigarette volume declines, do you believe that it’s becoming increasingly difficult to drive PM USA revenue growth through pricing in excess of volumes? It seems that higher pricing creates a virtuous cycle, whereby it drives trade down and market share pressure. And with the exception of 2020, which was clearly an unprecedented time, PM USA top line hasn’t grown since 2017. So, can you talk about how you’re thinking about driving top-line growth in PM USA and if you think it’s possible?

Yes. Vivien, I think I would really point you to price elasticity. And when you think about price elasticity, that’s the nature of a negative 0.35, is that for percent that you increase price, you expect that 0.35 impact on volume. So it’s much, much lower than other industry categories in the CPG space. You can see in the decomposition we try to break down what’s taking place in the cigarette category. You see secular declines pretty steady. The big factor is macroeconomic that swings around. I think if you go back in history, you’ll see macroeconomic conditions that the consumer is under will swing it up or down. You can recall in 2015, I think you were asking us, did we expect volume to stay flat for a period of time? These are natural fluctuations that take place as the consumer experiences their economic conditions differently, sometimes under pressure and sometimes they have a windfall. So it’s natural. We’ll continue to monitor and make the adjustments that we feel are appropriate. I mentioned in earlier answers some of the adjustments we’re making going into May, down at the local level where we see different conditions for consumers versus just a homogeneous, if you will, condition of the consumer across the entire U.S. That’s some of the benefits of the tools and the analytics team that we have is we can make those adjustments down at the granular level.

Okay. Regarding the competitive landscape, you've noted that branded companies are offering significant discounts. Considering the growth in the deep discount segment, will you rethink your strategy on L&M? How do you plan to engage with that segment?

Yes. I appreciate it, Pamela. Certainly, we’re going to participate, but we’re premium focused. I would remind you that the strategy hasn’t changed in the cigarette space for us. It’s maximize profitability over the long term while making appropriate investments in Marlboro and into the growth areas. You may have heard in my previous answer, it’s not something that is new to the cigarette space. I pointed to a couple of time periods where we saw similar things. You see, as the economic conditions for the consumer change through time, it tends to revert back on a historical perspective. So again, we want to be there for our consumers. It’s really about keeping the consumer engaged with Marlboro, whether they want to stay with Marlboro long-term or whether we put them on the journey to the smoke-free products in our portfolio. It’s really about continuing to engage with the consumers through time.

Our next question will come from Andrei Condrea with UBS.

I have two questions. The first one is about the California menthol ban. This isn't the first flavor restriction we've observed at the state level in the U.S. Given that, can you estimate the impact in California compared to other neighboring states, and what it might look like on a national level in terms of the overall effect?

Yes. I’d say what we tried to show you was what we see thus far. I think it’s too early to declare, oh, this is the total impact to the U.S. I think what we were trying to highlight is when legislation passes with the purpose of the law, they really need to give heavy consideration into how they’re going to enforce that. And based on the comments we provided to the FDA with their proposed menthol ban and some of the consequences, the unintended consequences of that we’re seeing play out in California. As far as your question about what’s the net impact, I think it’s too early to tell to see how that plays out.

No, that’s fair. Thank you. And my second one is it’s a bit more long term. Thinking about your international expansion with your heated tobacco capsules, but most of your nicotine pouches, whether it’s on! PLUS or on!. Are you seeing any feedback for the time being on your current on! pilots, because I know you’ve got one going on in London. I’m just wondering if you will take rather the foot off the pedal until you get on! PLUS online?

Yes. I appreciate your question. I think when you think about it, it’s early on in the international space; it’s really about learning in the space with the consumer receiving their feedback. We’re certainly excited to be able to bring on! PLUS to the international market. We think it will resonate well with the consumer, but more to come on that.

Our next question will come from Matt Smith with Stifel.

Just two questions for me. The first is Marlboro’s share performance has been fairly resilient despite the robust price realization. Could you discuss the mix of volume within the Marlboro family? Are you seeing an acceleration in consumers down-trading within Marlboro that would have otherwise moved to discount brands?

Nothing that I would point out as a trend break. You always have consumers moving around. And that really goes back to what I was referring to as far as advanced analytics. Depending on the situation of the consumer in a locality, they’re going to face different pressures than other parts of the U.S. And so, you’ll see fluctuations at the local level around the U.S., and sometimes they’re in sync with each other and sometimes they’re counter to each other as far as what way the consumer is moving and what they’re feeling. I think overall though, the takeaway right now is with the adjustments that we’re making to our promotional spend in some locales, we’re seeing a more widespread of the consumer being under economic pressure. I highlighted some of the reasons we believe that it’s occurring, and we want to keep the consumer engaged with Marlboro.

And you mentioned the introduction of Marlboro Black Gold Pack. Are you positioning this offering to regain some of the adult smokers that traded down into discount and bring them back to the Marlboro family or more to keep Marlboro smokers within the family?

We know that the consumer aspires to be Marlboro. You heard my comments earlier about in the pandemic when they had extra discretionary income, Marlboro share actually went up. So, it shows that Marlboro is an aspirational brand in that category. So, it’s to do both. If consumers had felt the need to trade out because they were under economic pressure, it gives them a space within the Marlboro franchise where they can re-engage, or if a consumer comes under pressure, it gives them a space to continue to engage with Marlboro. So, it’s really about the engagement with the consumers that want to choose Marlboro as their brand.

Thank you. At this time we will open the lines for media. Our next question will come from Jennifer Maloney with Wall Street Journal. Your line is now open.

Hi. I wonder if you could explain to me what you think is going on in California with respect to the increase in menthol share to 40%. So I’m trying to like imagine what’s actually playing out in stores. Is it like consumers are finding retailers who still have menthol cigarettes on the shelves and then they’re stocking up a lot because they think that it might not be available soon, or what do you think is going on there?

Yes, I appreciate the question. I mentioned 40% by mistake; it was actually 4% in California. I apologize for that. To directly answer your question, we are witnessing several unintended consequences that we previously discussed with the FDA regarding the proposed menthol ban. The law was intended to serve a specific purpose, but we're observing a lack of enforcement and ways in which products are still available in the market that contradict that purpose. For instance, some consumers are self-mentholating using menthol cards and menthol drops. We still see menthol products on store shelves in California, and in some areas, many flavored products have simply been renamed. Enforcement is essential if we want to achieve the law's intended goals.

Overall in California are cigarette volumes down more than you would normally expect with any absence of a menthol ban?

In our metrics page, we attempted to analyze industry trends by comparing Q1 of 2023 to Q1 of 2022. In California, there was an 18.8% decline, and across the entire U.S., the decrease was 8.9%.

No, go ahead.

So you can see that even on a sequential basis, again, California down 11.1%, total U.S. down 6.1%. So, it certainly had an impact on shipments in California. We also highlighted some of the cross-border dynamics.

You mentioned Nevada, and I’m curious if you can provide any figures on the increase in volumes from the neighboring states that could offset the decline in shipment volumes in California.

Yes. Again, I think it’s too early to say. We try to get to a net impact of California and netting out the positives. What we try to show is, certainly, we see what we think is an indication of cross-border in Nevada, using that as an example of menthol share. Its representation in Nevada is higher than it has been over the past four years.

Thank you. This appears to be no further questions at this time. I will now turn the call back over to Mac Livingston for closing remarks.

Thanks again for everybody for joining us. Please contact the Investor Relations team if you have any further questions. Thanks, and have a great day.

This concludes today’s call. Thank you for your participation. You may disconnect at this time.