Segment Reporting

12 Months Ended

Dec. 31, 2024

Segment Reporting [Abstract]

Segment Reporting

Segment Reporting

At December 31, 2024, our reportable segments were (i) smokeable products, consisting of combustible cigarettes and machine-made large cigars; and (ii) oral tobacco products, consisting of MST products and oral nicotine pouches.

Our all other category included (i) NJOY (beginning June 1, 2023); (ii) Horizon; (iii) Helix International; and (iv) other business activities, all of which consists of research and development (“R&D”) expense related to certain new product platforms and technologies.

Our chief operating decision maker (“CODM”), which is Altria’s Chief Executive Officer, reviews operating companies income (loss) (“OCI”) to evaluate the performance of, and allocate resources to, our segments. OCI for our segments is defined as operating income before general corporate expenses and amortization of intangibles. Our CODM uses OCI for planning, forecasting and evaluating business and financial performance of the segments, including allocating capital and other resources and evaluating results relative to employee compensation targets. Interest and other debt expense, net, along with net periodic benefit income, excluding service cost, and provision for income taxes are centrally managed at the corporate level and, accordingly, such items are not presented by segment since they are excluded from the measure of segment profitability reviewed by our CODM. We do not disclose information about total assets by segment because such information is not reported to or used by our CODM. Substantially all of our long-lived assets were located in the United States at December 31, 2024. Segment goodwill and other intangible assets, net, are disclosed in Note 6. Goodwill and Other Intangible Assets, net. The accounting policies of the segments were the same at December 31, 2024 as those described in Note 2. Summary of Significant Accounting Policies.

Segment data were as follows:

	For the Years Ended December 31,
(in millions)	2024		2023		2022
Net revenues:
Smokeable products	$	21,204	$	21,756	$	22,476
Oral tobacco products	2,776		2,667		2,580
All other	38		60		40
Net revenues	$	24,018	$	24,483	$	25,096
Earnings before income taxes:
OCI:
Smokeable products	$	10,821	$	10,670	$	10,688
Oral tobacco products	1,449		1,722		1,632
All other	(414)		(74)		(36)
Amortization of intangibles	(139)		(128)		(73)
General corporate expenses	(476)		(643)		(292)
Operating income	11,241		11,547		11,919
Interest and other debt expense, net	1,037		989		1,058
Net periodic benefit income, excluding service cost	(102)		(127)		(184)
(Income) losses from investments in equity securities	(652)		(243)		3,656
Gain on the sale of IQOS System commercialization rights	(2,700)		—		—
Earnings before income taxes	$	13,658	$	10,928	$	7,389

Smokeable products segment OCI consisted of the following, including expenses under the significant expense principle in accordance with ASU No. 2023-07:

	For the Years Ended December 31,
(in millions)	2024		2023		2022
Net revenues	$	21,204	$	21,756	$	22,476
Settlement charges (1)	(3,460)		(3,711)		(3,908)
Excise taxes on products sold	(3,469)		(3,869)		(4,289)
Other segment items (2)	(3,454)		(3,506)		(3,591)
Operating companies income	$	10,821	$	10,670	$	10,688

(1) Represents charges related to State Settlement Agreements included in cost of sales. For additional information, see Health Care Cost Recovery Litigation in Note 20. Contingencies.

(2) Other segment items includes manufacturing, marketing, administration and research costs, FDA user fees and other costs.

For the oral tobacco products segment, we did not identify any expenses under the significant expense principle in accordance with ASU No. 2023-07. Other segment items for our oral tobacco products segment include manufacturing, asset impairment, marketing, administration and research costs, excise taxes on products sold and other costs. Total oral tobacco products other segment items were $1,327 million, $945 million and $948 million for the years ended December 31, 2024, 2023 and 2022, respectively. The CODM reviews total oral tobacco products segment expenses in the aggregate in conjunction with the review of budget-to-actual OCI variances to manage segment operations.

The smokeable products segment included net revenues of $20,066 million, $20,665 million and $21,457 million for the years ended December 31, 2024, 2023 and 2022, respectively, related to cigarettes and net revenues of $1,138 million, $1,091 million and $1,019 million for the years ended December 31, 2024, 2023 and 2022, respectively, related to cigars.

Substantially all of our consolidated net revenues for the years ended December 31, 2024, 2023 and 2022 were from sales generated in the United States. For the years ended December 31, 2024, 2023 and 2022, we had one customer that accounted for approximately 22%, 25% and 24% of our consolidated net revenues, respectively, and one customer that accounted for approximately 20%, 23% and 23% of our consolidated net revenues, respectively. Substantially all the net revenues from these customers were reported in the smokeable products and oral tobacco products segments. No other customer accounted for more than 10% of our consolidated net revenues for the years ended December 31, 2024, 2023 and 2022.

Details of our depreciation expense and capital expenditures were as follows:

	For the Years Ended December 31,
(in millions)	2024		2023		2022
Depreciation expense:
Smokeable products	$	67	$	73	$	87
Oral tobacco products	42		37		33
General corporate and other	38		34		33
Total depreciation expense	$	147	$	144	$	153
Capital expenditures:
Smokeable products	$	54	$	77	$	68
Oral tobacco products	39		59		90
General corporate and other	49		60		47
Total capital expenditures	$	142	$	196	$	205

The comparability of OCI for our reportable segments was affected by the following:

▪Non-Participating Manufacturer (“NPM”) Adjustment Items: We recorded net pre-tax income for NPM adjustment items as follows:

	For the Years Ended December 31,
(in millions)	2024		2023		2022
Smokeable products segment	$	(29)	$	(29)	$	(63)
Interest and other debt expense, net	2		(21)		(5)
Total	$	(27)	$	(50)	$	(68)

We recorded the amounts shown in the table shown above in our smokeable products segment as reductions to cost of sales in our consolidated statements of earnings, which resulted in increased OCI in our smokeable products segment. NPM adjustment items result from the resolutions of certain disputes with states and territories related to the NPM adjustment provision under the Master Settlement Agreement (“NPM Adjustment Items”). For further discussion, see Health Care Cost Recovery Litigation in Note 20. Contingencies.

▪Asset Impairment, Exit and Implementation Costs: We recorded a non-cash, pre-tax impairment of the Skoal trademark of $354 million for the year ended December 31, 2024 in our oral tobacco products segment. In addition, we recorded exit and implementation costs of $68 million related to the Initiative for the year ended December 31, 2024. For a breakdown of these costs by segment, see Note 7. Asset Impairment, Exit and Implementation Costs.

▪Tobacco and Health and Certain Other Litigation Items: We recorded pre-tax charges related to tobacco and health and certain other litigation items as follows:

	For the Years Ended December 31,
(in millions)	2024		2023		2022
Smokeable products segment	$	70	$	69	$	101
General corporate expenses	30		350		27
Interest and other debt expense, net	1		11		3
Total	$	101	$	430	$	131

We recorded the amounts shown in the table above in our smokeable products segment and general corporate expenses in marketing, administration and research costs in our consolidated statements of earnings. For further discussion, see Note 20. Contingencies.

▪Other Business Activities: Our R&D investments have evolved and shifted from our traditional tobacco businesses to new product platforms and technologies. Beginning January 1, 2024, our R&D expense is aligned with how our CODM now evaluates performance results and allocates resources for segment reporting. For the year ended December 31, 2024, using this approach, we recorded the majority of our pre-tax R&D expense of $208 million in our all other category, which now includes other business activities related to R&D expense for certain new product platforms and technologies. For the years ended December 31, 2023 and 2022, the majority of our pre-tax R&D expense of $220 million and $162 million, respectively, was recorded in our smokeable products segment.