Altria Group (MO) Q4 2020 Earnings Call Transcript

Altria Group (MO 0.70%)
Q4 2020 Earnings Call
Jan 28, 2021, 9:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good day, and welcome to the Altria Group 2020 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. Representatives of the investment community and media on the call will be able to ask questions following the conclusion of the prepared remarks. [Operator instructions] I would now like to turn the call over to Mac Livingston, vice president of investor relations for Altria Client Services.

Please go ahead, sir.

Mac Livingston -- Vice President of Investor Relations

Thanks, Laurie. Good morning, and thank you for joining us. This morning, Billy Gifford, Altria's CEO; and Sal Mancuso, our CFO, will discuss Altria's fourth quarter and full-year business results. Earlier today, we issued a press release providing our results.

The release, presentation and quarterly metrics are all available on our website at altria.com. During our call today, unless otherwise stated, we're comparing results to the same period in 2019. 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 Altria's Board. Altria reports its 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.

Billy Gifford -- Chief Executive Officer

Thanks, Mac. Good morning, and thank you for joining us. Altria delivered outstanding results in 2020 and managed through the challenges presented by the COVID-19 pandemic. Our tobacco businesses were resilient, and our employees demonstrated unwavering commitment to their work, colleagues and communities.

Our employees continue to move Altria forward, and we believe we're making steady progress toward our 10-year vision to responsibly lead the transition of adult smokers to a noncombustible future. We continue to execute against the strategies we previously shared, including maximizing profits in our combustible businesses, responsibly expanding our noncombustible products, and demonstrating science-based leadership in the external environment. We remain active in our communities, supporting relief efforts for the pandemic and the West Coast wildfires. We're committed to driving positive change and addressing racial and economic inequities.

Change starts from within, and our employees are leading our efforts to build a more diverse inclusive and equitable organization. Our 11 employee resource groups are helping promote cultural awareness and diversity in our workplace and within our communities. Two of these organizations, Mosaic and C, were recently recognized for their contributions by the national LGBT Chamber of Commerce and by the Virginia Hispanic Chamber of Commerce, respectively. We also acknowledge the importance of addressing environmental challenges, and we've established ambitious goals for 2030.

Last month, we were among the 1% of companies awarded a AA rating from CDP for climate and water stewardship. We're proud of these efforts, and I look forward to sharing more details about our ESG initiatives next month at CAGNY. 2020 was a dynamic year in the tobacco industry, with notable changes in each category. Tobacco consumers continue to adopt noncombustible alternatives to cigarettes.

Most significantly in the oral tobacco space, with rapid growth in oral nicotine pouches off of a small base and a return to moderate volume growth in moist smokeless tobacco. The heated tobacco category also showed encouraging signs of smoker interest, though it remains in its early stages. The e-vapor category, however, which has been the biggest driver of smoker conversion over the last several years contracted in 2020 as it continues to undergo a transition period, pending FDA market determinations. And in combustibles, cigarette volumes were a little changed from 2019 as the COVID-19 pandemic alter smoker behaviors and purchasing patterns.

Looking at the tobacco space in total, estimated equivalized volumes remained stable. In fact, over the last five years, we estimate that total tobacco volumes have only decreased by 1% on a compounded annual basis. While 2020 represented a pause in some industry trends away from combustible products, our plans to achieve our 10-year vision remains centered around building a deep understanding of evolving tobacco consumer preferences, meeting these preferences by expanding the awareness and availability of our noncombustible product portfolio and when authorized by the FDA, engaging with smokers to educate them, on the benefits of switching to alternative products. Let's now turn to our 2020 business results.

Altria's full-year adjusted diluted earnings per share grew 3.6%, driven by strong performance from our tobacco businesses. We also returned nearly $6.3 billion in cash to our shareholders in the form of dividends. And our Board increased the dividend for the 55th time in the past 51 years. Our Smokable Product segment continues to be the engine that powers our 10-year vision.

Generating significant cash that can be invested in noncombustible products and return to shareholders. This segment has demonstrated strong profit growth in a variety of marketplace conditions. Over the last five years, smokeable segment adjusted OCI has grown by 5.5% on a compounded annual basis, and its segment has delivered excellent financial performance across varied volume and market share dynamics. We continue to be pleased with the performance of our combustible businesses, and Sal will provide more details on this segment in his remarks.

Moving to our noncombustible offerings. We're pleased with the continued strength of USSTC's most smokeless tobacco business and the encouraging results from our other noncombustible products. We believe our products and investments with the oral tobacco, e-vapor and heated tobacco categories present compelling options for the millions of U.S. smokers looking for alternatives to cigarettes.

In oral tobacco, we believe we have an unmatched portfolio of MST and all nicotine pouch products. Copenhagen remains the leading oral tobacco brand and delivered strong volume and profit performance for the year. We're also excited about the potential for on! and believe it's a satisfying product for both smokers and dippers. Helix made significant progress in its first full year of operations.

Over the last 12 months, our talented regulatory affairs team assist the Helix and falling PMTAs for the on! portfolio, which we believe demonstrate that the products are appropriate for the protection of public health. Our highly skilled engineers and machine operators supported Helix in establishing a manufacturing footprint for on! in our Richmond facility, and Helix has reached annualized capacity for on! of 50 million cans. The team continues to install a machinery, and Helix expects unconstrained manufacturing capacity for the U.S. market by midyear 2021.

And the Helix brand management and AGDC sales teams collaborated to steadily increase the retail distribution of on! during the year and executed innovative trial generating promotions that demonstrated the ability for on! to gain traction with smokers and dippers. on! was sold in approximately 78,000 stores at the end of 2020, up nearly 40% from the third quarter and more than five times the store count from the end of 2019. In stores with distribution, on! achieved a retail share of 2.4 percentage points of the oral tobacco category in 2020, with significant growth coming into the second half of the year. Helix has strong plans for the year ahead and is focused on removing capacity constraints, reaching its retail distribution targets, building brand equity and converting smokers.

We're confident in the on! proposition and believe its satisfying range of nicotine strengths and flavors and unique packaging position it well for success in the rapidly growing nicotine pouch space. Moving to e-vapor. We estimate that total category volumes decreased by 10% for the full year. The category continues to undergo a transition period as FDA prepares to make market determinations on the thousands of PMTAs filed by the September 2020 statutory deadline.

We continue to believe that e-vapor products can play an important role in tobacco harm reduction and that sustainable e-vapor category will be one that consists solely of FDA authorized products. We believe the category's long-term trajectory will be determined by regulatory decisions, legislative and tax policy and innovation that best addresses smoker and vapor preferences. In the heated tobacco category, PM USA continues to expand IQOS and Marlboro Heatsticks responsibly and in a disciplined manner. PM USA's 2020 accomplishments included: Launching in Charlotte with a more disruptive retail fixture; expanding the retail distribution of Heatsticks to approximately 1,000 total stores; introducing devices into select Charlotte convenience stores; developing an array of new digital tools, including mobile video chat capability, which gives p.m.

USA's customer care experts, a virtual option to build connections and support age-verified smokers through their conversion journey and communicating with smokers using the FDA-authorized reduced exposure claim about the benefits of switching from cigarettes. We're excited that the FDA has authorized the IQOS 3 device for sale in the U.S. The new device offers several enhancements compared to the current 2.4 version, including a longer battery life and a faster recharging time. PM USA expects to begin selling the new device shortly and it will be available across all existing retail channels in the Atlanta, Charlotte and Richmond markets.

PM USA also recently introduced new packaging for Heatsticks and has renamed the three currently authorized heatstick SKUs as Amber, Blue menthol and Green menthol. The new packs feature a cleaner look, and PM USA believes the naming convention will facilitate heatstick line extensions in the future should additional variants be authorized by the FDA. PM USA is focused on expanding the availability and awareness of IQOS, achieving its contractual performance requirements and remains on track with its 2021 plans to expand IQOS and heatsticks into four new metro markets and surrounding geographies. We believe that P.M.

USA has the right approach to maximize its store mover advantage while we're responsibly positioning the U.S. heated tobacco category for long-term growth and profitability. Let's now turn to our financial outlook for 2021. Our plans for the year ahead include accelerating investments in support of our 10-year vision, which we expect to fund through the financial strength of our tobacco businesses.

The external environment remains dynamic, however, and we're monitoring various factors, including unemployment rates, fiscal stimulus, tobacco consumer dynamics, including stay-at-home practices, disposable income, purchasing patterns and adoption of noncombustible products, regulatory and legislative developments, the timing and breadth of COVID-19 vaccine deployment and expectations for adjusted earnings contributions from our alcohol assets. Taking these factors into consideration, we expect to deliver 2021 full-year adjusted diluted EPS in a range of $4.49 to $4.62. This range represents an adjusted diluted EPS growth rate of 3% to 6% from a $4.36 base in 2020. Our 2021 guidance incorporates planned investments to drive smoker conversion to noncombustible products, including continued marketplace investments to expand the availability and awareness of our noncombustible offerings, building an industry-leading consumer engagement system that enhances data collection and insights in support of conversion and increased noncombustible product research and development.

We expect our 2021 adjusted EPS growth to come in the last three quarters of the year, primarily due to prior year comparisons, which includes one fewer smokable products shipping day in the first quarter. Altria's tobacco businesses delivered excellent results over the past year, and I'd like to thank our employees for their hard work. Their dedication drives their strong performance, and it's their passion and commitment that makes me excited for Altria's future. I'll now turn it over to Sal to provide more detail on the business environment and our financial performance.

Sal Mancuso -- Chief Financial Officer

Thanks, Billy. Let me begin by providing an update on U.S. tobacco consumers. Economic conditions remain challenging for consumers in the fourth quarter as unemployment rates remain high and the enhanced benefits from the original pandemic assistance package were fully exhausted.

However, we believe consumers continue their stay-at-home practices in the fourth quarter, contributing to more tobacco usage occasions and higher tobacco discretionary spending. At retail, we estimate that the fourth quarter, the number of tobacco consumer trips to the store was slightly lower than prior levels. But tobacco expenditures per trip remained elevated versus the year ago period. Turning now to our businesses.

The Smokable Products segment delivered excellent financial and marketplace results in 2020. The segment grew full-year adjusted OCI by over 10% and expanded its adjusted OCI margins by almost two percentage points. The Smokeable segment also achieved robust net price realization of 6.7% for the year, with PM USA's revenue growth management framework continuing to enhance the segment's top line performance. Smokeable segment reported domestic cigarette volumes declined by 0.0, I'm sorry, 0.4% in 2020 versus the prior year.

When adjusted for trade inventories, calendar differences and other factors, we estimate that full-year segment cigarette volumes declined by 2%. At the industry level, we estimate that full-year domestic cigarette volumes were unchanged versus the prior year after adjusting for the same factors. Looking ahead, we expect 2021 cigarette industry volume trends to be most influenced by smoker stay-at-home practices, unemployment rates, fiscal stimulus, cross-category movement, the timing and breadth of COVID-19 vaccine deployment and consumer purchasing behavior following the vaccine. Due to the uncertain timing and magnitude of each of these dynamics, we're not providing a cigarette industry outlook.

We believe the degree of cross-category movement will be influenced by several factors, including consumer perceptions of the relative risk of noncombustible products compared to cigarettes, FDA determinations on PMTA filings and legislative actions. We'll continue to monitor these factors and update you on the pandemic driven and underlying smoker behaviors that we observe in the category. Turning to marketplace performance. Marlboro's fourth quarter retail share was 43.3%, up 2/10 versus the prior year and unchanged sequentially.

Marlboro continued to benefit in the fourth quarter from smoker preferences toward familiar products during disruptive times and continued lower promotional spending among competitive brands versus the first half of 2020. For the full year, Marlboro's retail share declined 3/10 to 43%. Marlboro's full-year share performance was impacted by the movement of older consumers coming back into cigarettes from e-vapor, which we observed at the beginning of 2020. This demographic has a greater tendency to purchase discount cigarettes than the category average, which increased discount segment share to start the year.

We continue to be pleased with Marlboro's performance and believe its leading brand equity positions the brand well to deliver on its long-term profit potential. In discount, total segment retail share was 24.5% in the fourth quarter, unchanged versus the year ago period and up 2/10 sequentially. For the full year, discount segment retail share increased 3/10 to 24.5%, driven by the cross-category movement observed at the beginning of 2020 and growth in deep discount products. Moving to cigars, Middleton provided a strong contribution to the smokable segments financial results and continue to successfully navigate the regulatory environment.

Reported cigar shipment volumes increased 9% for the year. And Black & Mild remain the leading Tip cigar brand. Middleton has also received market orders or exemptions from FDA, covering over 97% of its volume. Turning to noncombustibles.

We're very pleased with the performance of the Oral Tobacco Products segment. Segment adjusted OCI increased 7.3% for the year. And it maintained its strong adjusted OCI margin of 71.7 percentage points despite increased investments behind on!. Reported oral tobacco segment volumes increased by 1.2% in 2020, driven by on! oral nicotine pouches.

In MST, Copenhagen reported shipment volumes were unchanged versus the prior year. When adjusted for calendar differences, trade inventory movements and other factors, full year oral tobacco segment volumes increased by an estimated 1%. Full-year 2020 retail share for the oral tobacco segment was 49.8%, down 2.7 percentage points due to the increased adoption of oral nicotine pouches. We remain pleased with the performance of Copenhagen in the MSC category, and we're excited about the growth potential of on! as we continue to expand capacity and distribution.

In alcohol, the pandemic negatively impacted the 2020 financial performance of both Ste. Michelle and our equity investment in ABI. Ste. Michelle's full-year adjusted OCI decreased approximately 30%, driven primarily by lower on-premise and direct-to-consumer sales, partially offset by higher pricing.

And in beer, we recorded $157 million of adjusted equity earnings in the fourth quarter, representing Altria's share of ABI's third quarter 2020 results, and a decrease of more than 19% from the same period last year. For the full year, we've recorded $540 million in adjusted equity earnings from ABI, down over 36% from 2019. In our all other operating category, we recorded $172 million in adjusted losses for the year, more than half of which related to noncash reductions and the estimated residual value of certain assets at Philip Morris Capital Corporation. As of year-end 2020, the net finance assets balance for PMCC was $320 million.

We expect to continue reducing this balance in 2021 through rent and asset sales and fully -- and expect to fully complete the PMCC wind down by the end of 2022. Moving to capital allocation. Our balance sheet remains strong, and our tobacco businesses are highly cash generative. Dividends remain our primary vehicle for returning cash to shareholders.

And our long-term objective is a dividend target payout ratio of approximately 80% of adjusted diluted earnings per share. We believe our dividend target payout ratio provide significant shareholder return while allowing for flexibility in our capital allocation. We perform rigorous analysis to determine the best use of excess cash, including evaluating options for reinvesting behind our 10-year vision, refinancing our long-term debt and repurchasing shares. Yesterday, our Board authorized a new $2 billion share repurchase program, which we expect to complete by June 30, 2022.

The new authorization reflects the significant value the Board believes exists in our shares today. 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.

Operator, do we have any questions?

Questions & Answers:

Operator

Thank you. [Operator instructions] Our first question comes from the line of Nik Modi of RBC.

Nik Modi -- RBC Capital Markets -- Analyst

Yes. Just two questions from my side. Just if you guys can give us maybe a state of the union of what you're seeing from the excise tax front, that would be helpful. And then the broader question is just on Marlboro.

I mean, very good share performance, which could be surprising given some of the stimulus was kind of was over. We didn't -- we had kind of an air pocket in terms of government stimulus. What really drove that? I mean, you spoke in your prepared comments about well recognized brands, but I'm just trying to get underneath that there's other drivers like price gap management or the Marlboro Rewards program and how that played a role in terms of kind of shifting the share trajectory because it's been losing share for a number of quarters now. Thanks.

Billy Gifford -- Chief Executive Officer

Thanks for the questions, Nik. We'll take them in the order. On the excise tax front, I would remind you that we had two state excise tax increases happened at the beginning of this year. Certainly with the build that the states have racked up responding to COVID, certainly it'd be a little bit more challenging excise tax environment.

We have a great government affairs team, as you know, Nik, and they engage on both sides of the aisle across the states and really know how to engage on that. From that standpoint, though, I think right now, most governments are focused on how to get the COVID-19 pandemic under control. And so there's a little bit of chatter across the states. But nothing to point out at this point.

But certainly, it will be a challenging environment as they look to pay the bills related to their response to COVID-19. On Marlboro, Nik, I think what you saw was -- and Sal highlighted in his comments. People were concerned at the beginning of the year. We tried to highlight for the analyst and investor community that what we saw was consumers moving back from e-vapor back into cigarettes and both premium brands and discount brands benefited from it, but because it tended to skew older adult smoker coming back, we know that they have a proclivity toward discount brands.

We didn't panic when that was taking place. We knew what -- we felt like we knew what was behind that. And I think you've just seen the strength of the mobile brand through time. Certainly, there were some competitive premium brands that had some extra resources in the marketplace at the beginning of 2020.

We saw those lessen as we progress through 2020. And to your point, the programs we have in place and the Marlboro brand team do an excellent job of engaging with the consumers and really building loyalty through time, whether you mentioned the rewards program but other programs as well. And I think that's the strength of the mobile brand, and we're excited about where it stands.

Nik Modi -- RBC Capital Markets -- Analyst

Great. Thanks, guys. I'll pass it on.

Operator

Your next question comes from the line of Bonnie Herzog of Goldman Sachs.

Bonnie Herzog -- Goldman Sachs -- Analyst

So I guess my first question is on your EPS guidance. I guess I'd be curious to hear, what does your guidance assume in terms of the tax increases that you just touched on? I mean I'm wondering, Billy, if it does consider a potential federal excise tax increase maybe at the low end? And then I guess I'm a bit surprised you were unable to provide even a wide range for your cig volume expectations this year. I certainly understand there's a lot of uncertainty right now in our world. But you must have, I guess, some sense of the range of your SIG volumes, again, given your EPS guidance.

So maybe you could touch on that for us a bit, just at a high level, whether or not you expect cig volumes this year will possibly revert back to historical declines, maybe below historical declines given the tough comps and the potential for greater excise tax increases?

Billy Gifford -- Chief Executive Officer

Bonnie, and we'll take those in turn as well. On the EPS guidance, really, when you think about the EPS guidance, and I know you're including kind of the cigarette volume in that, look, we run a range of scenarios around that. We really look at what do we -- our base expectations, we have a very strong forecasting group. They forecast across the various categories.

And then we run a range of scenarios around that, upside and downside. And we think about, OK, what do we feel confident about in providing a short range of EPS guidance for the year. And that's where we landed. As far as cigarette volume, it wasn't the -- that we didn't have a forecast for volume.

We feel very good about the way we go about forecasting volume. But to your point, there are a lot of uncertainties and a lot of fluidness in the environment, whether that's the consumer and how they're engaged with some of these noncombustible categories as they continue to grow or to the things we've highlighted in our remarks, whether it's unemployment or the fiscal stimulus if the government passes that. So there are a range of factors there. What we think really focusing on the consumer, and that's what we try to do and are trying to do is really give more information about how we're focused on the consumer and want to win where they go.

And that's exactly why we implemented the portfolio strategy is really looking at the consumer is going to make different decisions, depending on where they're at in their journey and how do we really focus on the consumer and have the best products and best brands in each of those categories as they make decisions. Don't get me wrong. This cigarette, as I said in my remarks, really fuels. It's the engine for fueling the 10-year vision.

But we think what you should hold us accountable to is our success in meeting the consumer where they're at regardless of what category they're in.

Bonnie Herzog -- Goldman Sachs -- Analyst

OK. That's helpful. And then speaking of your 10-year vision, I did want to just maybe ask you to help us with that and maybe update us on where you're out with it. I know it's in the beginning, but are there any guideposts you could share with us that you're expecting to see for your business, maybe even the next three to five years.

And I'm asking because, obviously, per your guidance and your comments, you're entering a period near-term here where you're stepping up spend to kind of accelerate this plan. So it would help us to understand maybe some targets, like for you to convert your business to the noncombustible products, as you mentioned, is it fair to assume 20%, 25%, for instance, in the next, I don't know, again, three, five or five-plus years? And then as you execute on that vision, are you also open to or considering future M&A to even accelerate this further? Or should we just assume this will all be done organically? And then I do want to hear about how you're incentivizing your employees to execute. Thanks.

Billy Gifford -- Chief Executive Officer

Sure. Look, I'll think of a reverse order. As far as the employees, they have such passion, but you're right, incentivizing them in the right direction certainly directs that passion. We've shared that 10-year vision that we have and how we expect to progress through time with our employee base.

They're passionate about it. They're excited to support that. And we think we have the right incentive program in place to warrant that excitement. As far as milestones, again, I won't go into a specific numerical value.

Remember, from an overall objective, we're looking to balance strong growth -- EPS growth for investors and the associated cash involved with that but, at the same time, making investments over the long-term to advance our noncombustible portfolio. And so what we're really trying to do is have that balance. And so we're certainly going to share with you, through time, how we're making progress, but it's really about the journey of the consumer. So if you think about really driving awareness of the consumer for new categories, incenting trial, ultimately purchase and then, at the final stage, conversion to these new categories.

That's the way we're thinking about the consumer journey. And we're really investing to get to as close to the consumer as we can because each consumer is going to be at a different point in that journey and make different decisions across the categories. And that's exactly the portfolio approach. And different actions are taken, whether they're regulatory actions, whether they're consumers really enjoying the category is being able to be agile enough to not starve any category that's growing and make the appropriate investments there.

So that's how we're thinking about the consumers' journey. And you'll see us share more through time of how we're progressing with those consumer journeys.

Bonnie Herzog -- Goldman Sachs -- Analyst

OK. Thanks. Just maybe quickly on the M&A. Would you be open to that as -- and I guess I'm thinking about in the next years, if there's a way to just further accelerate that, whether you've developed it internally? Or would you be open to looking outside?

Billy Gifford -- Chief Executive Officer

Yes. We'll keep our eyes open for everything, but we're extremely excited about the portfolio of products that we have currently. And it's really a focus on execution. And to your point, that's exactly why we talked about the investments in our product development, is making sure that we're staying abreast with the consumer and really keeping pace and meeting their needs and desires.

Bonnie Herzog -- Goldman Sachs -- Analyst

Al right. Thank you. I'll get back in queue. Appreciate it.

Operator

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

Vivien Azer -- Cowen and Company -- Analyst

So I wanted to also switch base on combustibles, please. So if we're looking at wholesale inventories for both you and the industry, they remain elevated at year-end relative to where you guys closed out each of the last two years. I appreciate that some of that probably is just safety stock because of COVID. But how should we think about inventory levels as we head into 2021, please? Thanks.

Billy Gifford -- Chief Executive Officer

Yes. Thanks for the question, Vivien. I think you nailed it. I think it was as wholesalers and retailers are making decisions around where they stood with the COVID-19 pandemic and what -- because in different parts across the U.S., the surges that are taking place and different state government decisions about shutdowns and the consumer mobility in the marketplace.

And so I think, certainly, there was a slight level of increase over what you've seen in previous years as they took those things into consideration. Certainly, as we've always said, through time, those wholesale inventories tend to balance out. And so we'll see as we progress through the COVID-19 pandemic and the vaccination rollout how wholesalers and retailers decide to what levels are appropriate for them.

Vivien Azer -- Cowen and Company -- Analyst

Understood. Thank you so much for that. And my follow-up question is on oral tobacco. So [Inaudible] suggested industry volume growth in the quarter and the year.

I was wondering whether you could unpack that at all and provide some color on what -- how much of that growth came from modern oral so we could have a better sense of what's happening with underlying MST.

Billy Gifford -- Chief Executive Officer

Yes. I would say, look, both pieces of that category did grow during the year. But certainly, the vast majority was the onset of the novel oral products, whether it be on! or Zyn or other products in that space. And so that's the vast majority, but both segments of that category did grow.

So we feel good about the offerings we have in brands in the traditional MST. And Copenhagen continues to lead that category, and we feel great about its position.

Vivien Azer -- Cowen and Company -- Analyst

Understood. Thank you very much.

Operator

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

Michael Lavery -- Piper Sandler -- Analyst

Could you just talk a little bit about what you're seeing with IQOS and what engagement is really proving the most effective, whether it's in the stores or digital or mail or anything else? And how does the IQOS 3 launch impact any of your marketing approach?

Billy Gifford -- Chief Executive Officer

Yes. It's a great question, Michael. Look, we're very excited about what we've experienced in the first three lead markets. From a standpoint of the exact way to engage with the consumer, what's most important we found is the consumer education, that they understand what the IQOS device delivers and the Marlboro HeatSticks, what flavor expectations they can have and then really how to use the device.

So from that standpoint, we're trying many things. Because remember, we launched in densely populated areas. So you have one strategy there. But then as you move from those densely populated areas out, that's exactly why we were testing the device sales in convenience stores to really meet consumers where they are.

And as you get to more rural locations, really having an outlet to engage with the consumer. We actually use all of those measures that you mentioned, whether it's direct mail, whether it's retail stores, the devices in the convenience stores, whether it's corners in various places or whether it's the mobile units. And certainly, in Charlotte, we have used the mobile units to a larger extent because what we found is as you meet a certain capacity, you can actually move those mobile devices -- mobile units from one location to another and really maximize the number of consumers you're engaging with. Now certainly, in the COVID world, we had some challenges there because there's a lot of engagement 101 with the consumer, but our team implemented digital tools.

We talked about the mobile chat capability that they installed. And so we're excited to continue to expand, and we'll have more to say on that.

Michael Lavery -- Piper Sandler -- Analyst

OK. Great. That's helpful. And then could you just give your latest thinking on Cronos? And would you expect to take full control if federal law were to change?

Billy Gifford -- Chief Executive Officer

Yes. I'm not going to speak to taking control or any M&A activities. Certainly, we think Cronos as -- is positioning themselves well to take a role in the U.S. if it becomes federally legal.

I think it's important to step back and really state what we believe. We believe it should be legal at the federal level, but it's got to have the right regulatory framework. So if you think about that total framework, what it should address is it should address underage use. It should establish industry product standards, and that includes safety standards.

It really needs to be guided by the science so that from a standpoint of everything should be science driven. And it really should deal with the social justice issues that are involved in that space. And so we believe it should be federalized at legal level. We support that.

We're engaged with that, but it's got to have the right comprehensive framework surrounding it.

Michael Lavery -- Piper Sandler -- Analyst

OK. Great. Thanks very much.

Operator

Your next question comes from the line of Chris Growe of Stifel.

Chris Growe -- Stifel Financial Corp. -- Analyst

I just had a question for you, first of all, on -- you've had an elevated rate of price realization in the cigarette business, in particular. And as we enter the year, certainly as you lap increases that occurred in 2020 as well as presuming you take increases in 2021 beyond what you've done already, it would seem to provide the backdrop for an even stronger rate of profit growth. So I want to understand, without getting into numbers, I realize that's going to be hard to get into, but just understand the concept of the desire behind the higher level of pricing and what you can do with that? So is that -- is there a heavier rate of investment in the business? Is this going to help fund more of your expansion of on! and the noncombustible sort of part of the 10-year vision. I'm just trying to understand the pricing strategy as it's evolving here.

Billy Gifford -- Chief Executive Officer

Yes. I appreciate the question. I'll be careful, Chris, as you mentioned, not to get into the future pricing strategies. Look, we recognize that pricing is an important part of the algorithm.

I would remind you that the strategy for the combustible segment, both cigarettes and cigars is to maximize profitability over the long-term while balancing investments in Marlboro and the funding the growth of our noncombustible portfolio. So certainly, profitability in the traditional tobacco space is what we're using to invest in the future in these noncombustible product arena. And so certainly, we look at that from a standpoint of -- when you look at pricing, a couple of the factors that we think about pricing as we move forward is really, where are our consumers on an economic standpoint. What are they feeling? How do they feel? What are they thinking about? It's the strength of our brands, how do we think about our brands and the strength in the consumer's mind.

And then certainly, business performance and objectives factor into that. I think when you look at price realization over the past couple of years, I think it's important to remember that's not all list price. It also has the price efficiencies we've been able to garner from the advanced analytics that we put in place. And so with the amount of data that we get in and the advanced analytics that we've invested in, I think you're seeing the benefit in price realization of being more efficient, but just as effective, if not, more in the marketplace with the promotional spend that we have.

So it's a combination of both, and we are extremely excited about what our advanced analytics team has been able to accomplish.

Chris Growe -- Stifel Financial Corp. -- Analyst

OK. I had one other question. That's -- and I hope it's not too general, but this is the -- I'm just curious as I look at like the cross-category movement, which was a modest factor throughout 2020. Is that more difficult to forecast in 2021? Again, I hope that's not having it meaning that.

But I guess what I'm getting to is this a year where your categories such as modern oral or heated tobacco, especially as they grow and become larger, could have a larger effect on the cigarette category, as an example. So is this a year where you see the potential for that transition or acceleration in some of those categories that could further influence cigarette volumes in 2021? Or is it just too soon for that?

Billy Gifford -- Chief Executive Officer

Yes. I don't think it's too soon for that, Chris. I'm hesitant to try to get much more on cigarette volume guidance. I think you're exactly right, though.

The success of those categories and our success in them will certainly impact the cigarette category. It's in line with our vision. But when you step back, Chris, that's exactly why we really went with this portfolio approach of products. It's about meeting the consumer where they're at.

Each consumer is going to make different decisions. And that's that objective we have of balancing strong growth in the associated cash for our investors and investing in these categories. As we progress through the year and we see a consumer following of one of these categories, we want to make sure we're not starting it for investments. So it provides us the flexibility we need to -- we feel to make the right decisions as we progress through the year.

Chris Growe -- Stifel Financial Corp. -- Analyst

OK. Thank you for your time today.

Billy Gifford -- Chief Executive Officer

Thank you, Chris.

Operator

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

Owen Bennett -- Jefferies -- Analyst

Just a quick one for me on -- you note the increase in the R&D spend around noncombustibles. I'm assuming this obviously can't be around vapor given and the agreement with JUUL. So I was just wondering what this R&D centers on. Is it your own heated product? Is it advancements in modern oral? Is it something else entirely? Thank you.

Billy Gifford -- Chief Executive Officer

Yes. You're exactly right, Owen. You're exactly right from an e-vapor standpoint. With the agreement we have in JUUL, we're not looking at product development in that space.

But it really is staying -- the key focus is on the consumer and staying where the consumer is going. And so it's across these categories that are growing is where we want to have product development, to make sure we're keeping pace with the consumers' needs and desires. And so I think any CPG having a strong product development is important. And that's why we think it's important for us to invest in that area.

Owen Bennett -- Jefferies -- Analyst

OK. And would that be, I mean, even kind of potentially looking at developing your own heated products? Is that a possibility in the future?

Billy Gifford -- Chief Executive Officer

Yes. I'm not going to get into specifics. Know that it's in the noncombustible space is where we're investing. And it's really about looking how the investor is, what they're desiring and what needs are unmet and developing against that.

And so that's about as far as I'm going to go today. I think as we make progress in that space and we feel excited about the progress we made thus far, we'll share more when it's appropriate.

Owen Bennett -- Jefferies -- Analyst

OK. Thanks very much. Appreciate it.

Operator

Your next question comes from the line of Steve Powers of Deutsche Bank.

Steve Powers -- Deutsche Bank -- Analyst

So Billy, when you -- I guess when you step back and you sum up the elective investments that you seem to be prioritizing in '21, both toward the vision of a noncombustible future and the new product development but also just the enhanced analytics around consumer insights and revenue growth management, is there a related dimension, maybe even just relative to similar investments in prior years, whether you are -- whether we should be viewing '21 as a year of acceleration, investment acceleration on those fronts? Or is it -- would you frame it more as a steady state glide path if you drew a line to the last few years?

Billy Gifford -- Chief Executive Officer

Yes. I hate to characterize it either way, Steve. We feel like we've made the appropriate investments. Certainly, it stepped up.

But I wouldn't say that we're just gliding along. We're going to move where the consumer moves. And so it's that keen focus on the consumer. It's about driving the portfolio that we have.

And so if you think about investments around on! and in the heated tobacco space with IQOS and Mobile Heatsticks, it's about driving investments there, driving awareness, getting the distribution we desire at retail and having it in the consumers' consideration. When you go to the next category about this digital platform, it's really about thinking about how do you -- we make great strides in analytics, and I think you've seen the benefit in the performance of our businesses. Now it's about those insights being really focused on the consumer and how do we get as close to the consumer and understand where each consumer is at on their journey to conversion for whatever category they're choosing and making sure that we're able to communicate and keep pace with them in that journey. And then the final one is as we've seen in all of these categories, continued development around the product space is extremely important to the consumer and investing there to make sure we're keeping pace with the consumer.

So that's how we're thinking about it. We're extremely excited about the portfolio we have. It's about getting it there to have it in the consumer consideration set, meeting them where they're at and communicating with them along the journey and then making sure that our products keep pace with the consumers' future wants and desires.

Steve Powers -- Deutsche Bank -- Analyst

OK. OK. If I could just maybe -- I think this is probably for Sal. Just a couple of cleanups.

Just as I think about the 2020 cost base, clearly, there were some incremental COVID related costs in that base and yet also some COVID related savings. As you think about the move into '21, is there a way to net out those dynamics in your base case? And then also, any -- if there's any way, any advice you might have for us on the outside as to how we should think about the earnings impact as we go forward just as you continue to wind down the PMCC business, just how we should think about that flowing through the P&L?

Sal Mancuso -- Chief Financial Officer

Sure, Steve. As far as the cost base, in 2020, remember, we were lapping the cost reduction program that we implemented in 2019. And of course, cost management remains top of mind for us. When you think about 2021, we think we have the right structure for the business and the right size of the business.

It's really about reallocating our spending, right? So we're moving spending from the combustible business as we invest into the noncombustible business. And our employees do a terrific job of thinking about efficiencies on their infrastructure and their processes and how that frees up resources to reinvest in our 10-year vision and in our noncombustible platform. So the right-sized organization, we feel really good about it. We have terrific employees.

They've done a wonderful job of continuing to provide productivity during the pandemic. And so that's how I would think about 2021 costs. As far as PMCC, the folks at PMCC over the last many years have done a wonderful job of really unwinding that business. And it has been lumpy at times.

We're selling assets. When you think about '21 and '22, we've got the net finance assets at a low level. It's significantly lower than when we began to wind down that business. And really, it's about rents received and the sale of assets.

So there might be some lumpiness in there, but we feel good about the portfolio that remains and the ability to unwind the business. And we expect to be completely wound down in 2022.

Steve Powers -- Deutsche Bank -- Analyst

OK. Thank you both. Appreciate it.

Operator

Your next question comes from Gaurav Jain of Barclays.

Gaurav Jain -- Barclays -- Analyst

I have three questions. So first is on the EPS guide for next year, which is 3% to 6%. And in that, there is some component of share repurchases, about 1% to 2%. So your pre-tax PBT, your PBT guidance for 2% to 5% growth.

So how are you incorporating the ABI equity income in that? Because that fell off quite a lot this year. And if I just look at consensus numbers, they asked for a very steep bounce back in ABI net income. So could you just help us understand that?

Billy Gifford -- Chief Executive Officer

Yes. Gaurav, I want to be careful not to get into the particular components. There is always puts and takes across the P&L. I think what's most important is, as I stated earlier, is this objective to have strong growth but then make appropriate investments in these -- or in our noncombustible portfolio.

And so as you think about as we progress through the year, if one area or another proposed well, well then that affords us as we're progressing through the year to make changes if necessary, but it also affords us the opportunity to invest in areas that we're seeing the consumer gravitate toward so that we're not starving any particular category for investments.

Gaurav Jain -- Barclays -- Analyst

Sure. That's helpful. Now second is on the price increases in the U.S. industry recently.

So your primary competitor is now pricing before you, and it doesn't seem you are following all the price increases in all the states. But does -- I mean, is there a risk that the pricing balance in the industry could deteriorate as you go forward?

Billy Gifford -- Chief Executive Officer

Yes, Gaurav. To be quite honest, we really don't pay attention to who goes first, who goes second or what order. Really, and I mentioned this earlier, that the major factors that go into our pricing considerations, nothing from a competitive standpoint. It's really about how our consumers are from their economic position.

What are they feeling? How are they positioned? And how do they feel about their future prospects? The next is the strength of our brands. How do we feel about our brands in the marketplace and in the consumer's mind. And then it is around business performance and objectives. Those are the three factors we think about when we build our plan around pricing.

And that's what drives our pricing decisions.

Gaurav Jain -- Barclays -- Analyst

Sure. That is very helpful. And my last question is just on this IQOS packaging, which you shared on Slide 15. So I don't see any of the MRTP risk messages that were authorized by the FDA.

So would there be a new packaging, which will incorporate that? And is Philip Morris involved in the feed design? Or is this under your sort of consideration that you could put whatever branding and packaging that you would like?

Billy Gifford -- Chief Executive Officer

Yes. Certainly, we collaborate with PMI, but those decisions are ours. And so from that standpoint, we wanted to make sure we had the flexibility as we move forward. We will be communicating the MRTP with consumers, and we want to do it in the most effective way that has an impact on them.

And so we'll be rolling that out, and we've started that process in some of our markets. And what we saw in research is it does bear into the consumer's mind of deciding to engage with the concept of IQOS and the Marlboro Heatsticks as well as their desire to stick with it. And so we're looking forward to bringing that MRTP, and we'll use the avenues that we think are most advantageous for us to get that message across to the consumer.

Gaurav Jain -- Barclays -- Analyst

OK. Thanks a lot.

Mac Livingston -- Vice President of Investor Relations

Laurie, before we go to the next question, we're aware that we've had a technical issue on the webcast and just want to make sure that investors listening on the webcast are aware that we're going to work to get our transcript and the replay up very quickly following the call. So we appreciate your patience on that.

Operator

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

Robert Rampton -- UBS -- Analyst

Three questions from me. The first is, so looking at -- over the quarter, I mean, for the first time, it seems like the lowest effective price and the net packed price moved in opposite directions. Curious to understand what drove this? Does it mean you're broadening the Marlboro price ladder? And if so, interested to hear why now?

Billy Gifford -- Chief Executive Officer

Yes. I think when you think about our pricing decisions, we -- as I mentioned earlier, the things that factor into our pricing decisions. And then -- and that price realization is really around the list price increases we take and the efficiencies garnered across our promotional spend. I think when you look at the rest of the pricing decisions, they're independent of us as manufacturers make those pricing decisions.

And then, of course, you have state excise taxes that get added to that and then how retailers themselves are competitive in the marketplace. So there are a lot of factors that go into that. And we feel good about where we're at.

Robert Rampton -- UBS -- Analyst

OK. Cool. The second question. So in your -- in the Annex, you suggest that macro factors were a 4% tailwind to industry volumes for 2020, which you said was primarily driven by stay at home.

In the event stay at home ends, I'm just trying to get an understanding of how that evolves. Does it go to minus 4% or 0? I mean, I'm not looking for a guide here. I'm just trying to better understand what you think the sensitivities are around the big uncertainties that you flagged, if you could -- anything you can share here. Maybe the experience in given states would be very helpful.

Billy Gifford -- Chief Executive Officer

Sure. And so really, what we think drove that was exactly what you mentioned, and we had highlighted, which was stay-at-home practices, which consumers themselves face less social friction. And also -- they also were benefiting from more discretionary income related to those stay-at-home practices. So less discretionary, whether it be movie tickets or going out to eat or even gas.

And so as we progress through the year, as we see consumers respond to how they -- their behavior is related to how comfortable they feel returning to some of those discretionary other items or even they decided to go fully back to work versus work remotely, it's something that we'll be monitoring. And whether the consumer decides to adapt their life a bit to those changes or whether they go back to, I'll call it, a completely normal state pre-COVID, and so that's something that we'll be monitoring. But certainly, in our guidance, we ran a range of scenarios and feel comfortable that we have levers across the business to be able to respond to that, regardless of whether those scenarios occur.

Robert Rampton -- UBS -- Analyst

OK. And then, sorry, my final question, just on heated tobacco. Any chance you can give us an update on the tax reductions you've secured in terms of number of states and the magnitude?

Billy Gifford -- Chief Executive Officer

Yes. So our government affairs team has been able to secure that reduction in six states. And then, of course, there's a slight definition change in the State of Virginia. So if you count that as a reduction, it would be seven states, but six that are part of, if you will, want to receive designation from the FDA, a step down taxation.

Robert Rampton -- UBS -- Analyst

And sorry, just a quick follow-up on that. Is that -- because I understand there was a kind of tiering element there with some saying 25 to 50, depending on what type of MRTP you get. Is that still a fair way of thinking about it?

Billy Gifford -- Chief Executive Officer

It is. It varies by state, but that is a fair way to think about it.

Robert Rampton -- UBS -- Analyst

Great. Thank you very much. Appreciate you taking the time.

Operator

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

Adam Spielman -- Citi -- Analyst

Just a handful of questions, really. So just to make sure I understand what you said, the first one is talking about Slide 10 of the presentation. That's the one where you have -- it's about on! and the heading is building on! momentum. And I just want to make sure I've understood it.

I think the left-hand side is saying there are more stores where you sell on! On the right-hand side, it's saying within stores, you have a higher market share. So I should -- the question is, am I right to believe this is sort of double effect. So obviously you've got a high percentage in more stores, and therefore, it's a sort of multiplicative effect. And overall, it looks better than you ever two charts alone.

Is that the right way of thinking about that slide?

Billy Gifford -- Chief Executive Officer

That is the right way of thinking about it, Adam. What we show on the left side is cumulative distribution in stores. And then on the right side, what we're showing is the quarterly share in those stores with distribution. So yes.

Adam Spielman -- Citi -- Analyst

Fine. And then on the slide -- I forget what number it is. There's a slide on the sort of extra pack you give that shows oral tobacco industry volume growth estimates. And in Q4, it's 6% versus Q3, it was 7%.

So it's grown and then shrunk again. And I was just wondering if there's any explanation about why it's slightly lower in Q4.

Billy Gifford -- Chief Executive Officer

Yes. I think you'll see fluctuations through time, Adam. Nothing grows in a straight line, and so you're going to have distribution efforts that will accelerate that in periods of time. And then you'll have, as distribution levels out in some areas, you'll have fluctuations.

I think we try to provide this. But if you think of this more as a line through time is the better way to think about continued distribution and growth in oral. I think it shows the desire of the consumer to find a noncombustible product that satisfies them. And as they move to those, you're going to see, through time, growth in these categories.

Adam Spielman -- Citi -- Analyst

And fine. Thank you. And just a final quick clarification question. I think Sal said, I just want to make sure I've got this right, that although there is clearly an incremental investment in 2021 in noncombustibles, we should think about this mainly as a reallocation from expense that would have been spent on combustibles as, for example, some of the sales force transition across to spend more time.

Sal Mancuso -- Chief Financial Officer

Good morning, Adam. I would -- let me clarify for you. We are increasing some of our investments in our noncombustible. Some of that will be offset through reallocation, but I don't want you to take away from my comments that it's 100% funded by reallocation.

So it helps us be more efficient across the full P&L. But as we stated in our earlier remarks, we are increasing our investment to achieve our 10-year vision.

Adam Spielman -- Citi -- Analyst

OK. And if I could just -- that was very helpful. Very clear. Can I just come back to clarify an answer that I didn't really understand before.

I know you're not going to give me the precise number of dollars and cents. But is the -- if I think about the increments in investment in 2021, is that roughly the same as the increment of investment in 2020 in the noncombustible area? Or is it more or less? In other words, is the investment accelerating or moving at the same speed? Or are we moving to sort of a more steady state situation?

Billy Gifford -- Chief Executive Officer

Yes. Adam, I will be hesitant to compare it. We think we're making the appropriate investments. And it goes back to really balancing strong growth for the investor and the related cash and the appropriate investments there.

And so we're going to make the appropriate investments. We're never going to starve a category for investment that we think we're making significant progress in. And so we're going to make the appropriate investments. I hesitate to say because the timing can be different during the year, and so one quarter compared to our previous quarter or vice versa.

But certainly, we feel good about the investments we've made.

Adam Spielman -- Citi -- Analyst

OK. Thank you.

Operator

[Operator instructions] Your next question comes from the line of Priya Ohri-Gupta of Barclays.

Priya Ohri-Gupta -- Barclays -- Analyst

I was wondering if you could walk us through how we should think about your cash balance just given the elevated nature of it at year-end? You have a few sort of things that are earmarked for that use. So you have $1.5 billion of maturity coming up, the share repurchase program, increased investments behind the noncombustible side. So how should we think about each of those relative to the elevated cash balance and sort of that cash balance getting back to more normalized levels?

Sal Mancuso -- Chief Financial Officer

This is Sal. I think you characterized it fairly. We do have an elevated cash balance, and we have had typically, Billy and I have talked about throughout 2020 the desire to have an elevated cash balance as we manage through the pandemic. Remember, last year, the Board of Directors receded the share buyback program, and we were very focused on it.

And I think you've articulated the uses of cash for this year. We're excited that the -- and really pleased that the Board of Directors authorized a new $2 billion share repurchase program, which we expect to complete by June 30, 2022. So we're excited about that. I think it's the appropriate level.

It reflects the value in our shares and enhances shareholder value, but we also maintain capital allocation flexibility. We remain committed to the 80% target payout ratio for our dividends against adjusted earnings per share. And when you think about our cash position, in a typical year after paying the dividend, making the necessary investments, capital investments in our business, we traditionally have about $1 billion in excess cash. And we will run through our capital allocation analysis to determine the best use of that cash.

Priya Ohri-Gupta -- Barclays -- Analyst

That's helpful. And I guess if we think that about sort of refinancing versus using the cash to pay down your upcoming maturity, could you walk us through some of the considerations that go into that specific decision?

Sal Mancuso -- Chief Financial Officer

Yes. And I don't want to get ahead of myself on how we think about debt refinancing or debt retirement. What I would tell you is that we take into a lot of factors, as many companies do, market conditions, best use of capitals to enhance shareholder value. So we have a very talented treasury team.

They work really hard on staying ahead of our debt maturities and thinking about capital allocation and the best use of our capital going forward.

Priya Ohri-Gupta -- Barclays -- Analyst

OK. That's helpful. One final just follow-up for me. How do you think about share repurchases in an accelerated manner versus sort of at an ongoing rate over the course of sort of the next 18 months?

Sal Mancuso -- Chief Financial Officer

Yes. I don't think it's helpful for me to share how quickly or the pace that we buy our shares back in a share repurchase program. I would tell you that we have communicated that it's an 18-month program, and we will buy our shares. And you're right.

It does depend on market conditions when it comes to the pace of share buyback. But I really don't think I should really provide much more detail than that.

Priya Ohri-Gupta -- Barclays -- Analyst

Thank you so much.

Operator

Your next question comes from the line of Jennifer Maloney of The Wall Street Journal.

Jennifer Maloney -- The Wall Street Journal -- Journalist

I wonder if you could talk about how you think consumer behavior may or may not change? I know that you've talked about different scenarios that you could envision, but a lot of consumer goods companies say that they expect there to be some permanent change in the way we behave moving forward even after the vaccine. People might continue to snack more or they'll work home part of the week. So what's your best guess as to how much of this change in consumer behavior is sticky and how much we go back to the way things were?

Billy Gifford -- Chief Executive Officer

Yes. It's a great question, Jennifer. It is something that we're going to monitor, engage with our consumers on a regular basis to be able to assess that. When you think about our consumer, they tend to be a bit at the lower end of the economic status.

And so from that standpoint, they definitely need to be able to work. It depends on their trade of what they are participating in the workforce end of how readily available they can choose to be completely remote versus having to report in at times. So I think it's going to vary greatly. And it remains to be seen how much they adjust their lifestyle back to, I'll call it, normal pre-COVID to now even past a COVID pandemic, how much they adapt and change.

So I think it remains to be seen, and it's something that we'll be engaged with our consumers to be able to assess through time.

Jennifer Maloney -- The Wall Street Journal -- Journalist

If people are smoking more now and their discretionary spending goes down because they want to spend more at the movie theater, how much of a lever is the discretionary spending? And how much of a lever is the fact that they are now sort of accustomed to and dependent on a higher number of cigarettes per day and that might be difficult to cut back moving forward?

Billy Gifford -- Chief Executive Officer

Yes. I mean, I think you can go back to '15, 2015. And if you look at that, really, what we saw take place was that the precipitous drop in gas prices gave our consumers extra discretionary spend. So to be able to answer your discretionary spend, I would go back in time.

And so as we saw them adapt to that, certainly, they added occasions to their day. But then they adapted those occasions back out. I think it's important to remember, the underlying trend of prevalence, that trend is pretty steady. It hasn't changed.

So it really is extra tobacco usage occasions in their day. And it goes back to your first question is how do they adapt their lifestyle? How quickly do they return to other types of discretionary spend, depending on -- that would be dependent on how they think about their usage occasions in a day.

Jennifer Maloney -- The Wall Street Journal -- Journalist

All right. Thanks very much.

Operator

Thank you. At this time, I would like to turn the call back to management for closing comments.

Billy Gifford -- Chief Executive Officer

Thank you, Laurie. Altria's tobacco businesses have a track record of delivering strong and consistent financial performance in challenging environments. Our outstanding 2020 results demonstrate the resilience of our business, and we continue to reward our shareholders by returning a significant amount of cash in the form of dividends. We have strong plans for 2021 in pursuit of our 10-year vision and believe our tobacco business platform has the winning brands and is unmatched.

Thanks again for joining us. Please stay safe and contact our investor relations team if you have any further questions. Thanks very much.

Operator

[Operator signoff]

Duration: 30 minutes

Call participants:

Mac Livingston -- Vice President of Investor Relations

Billy Gifford -- Chief Executive Officer

Sal Mancuso -- Chief Financial Officer

Nik Modi -- RBC Capital Markets -- Analyst

Bonnie Herzog -- Goldman Sachs -- Analyst

Vivien Azer -- Cowen and Company -- Analyst

Michael Lavery -- Piper Sandler -- Analyst

Chris Growe -- Stifel Financial Corp. -- Analyst

Owen Bennett -- Jefferies -- Analyst

Steve Powers -- Deutsche Bank -- Analyst

Gaurav Jain -- Barclays -- Analyst

Robert Rampton -- UBS -- Analyst

Adam Spielman -- Citi -- Analyst

Priya Ohri-Gupta -- Barclays -- Analyst

Jennifer Maloney -- The Wall Street Journal -- Journalist

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