PM

This article first appeared on GuruFocus. - Q3 Net Revenue: $11.4 billion, up 5.5% in dollar terms and 7.1% organically. - Q3 Gross Profit: Grew organically by more than 8%. - Q3 Adjusted Operating Income: Exceeded $5 billion for the first time; up 10.5% organically and 9.6% in dollar terms. - Q3 Adjusted OI Margin: Close to 45%, with organic expansion of 130 basis points. - Q3 Adjusted Diluted EPS: Record quarterly level of $2.36, up 5.4% (including $0.01 unfavorable currency impact). - Q3 Total Shipment Growth: Plus 0.6%. - Q3 Smoke-Free Shipments: Up 2.7%. - Q3 IQOS HTU Shipments: 41.5 billion units; adjusted IMS volume growth of 7.1% (10% excluding Japan and Poland). - Q3 Oral Smoke-Free Volumes: Up 1.8%; Zyn U.S. shipments up 4% (13% excluding prior-year promotions). - Q3 E-Vapor Shipments: Up 62% (Veev). - Q3 Cigarette Shipments: Flat, outperforming industry decline of 1.1%. - Year-to-Date Net Revenues: Nearly $33 billion; organic growth of 5.9% and 8.2% in dollar terms. - Year-to-Date Adjusted OI: More than $14 billion; up 7.7% organically and 10.6% in dollar terms. - Year-to-Date Adjusted Diluted EPS: $6.52, up 8.4% excluding currency and 11.8% in dollar terms. - Year-to-Date Adjusted Operating Margin: Organic expansion of 60 basis points; gross margin expansion of 80 basis points. - Year-to-Date Pricing Contribution: Plus 6.2 points of growth, including combustible pricing of 9.1%. - Year-to-Date Smoke-Free Shipments: Up 6.4%; IQOS HTU growth of 6.7%. - Year-to-Date Cigarette Volumes: Down 1.2%. - International Business: 93% of year-to-date net revenues; organic net revenue growth of 7% and gross profit growth of 9.1%, with gross margin expansion of 140 basis points to 68.8%. - International Smoke-Free: Organic net revenue growth of almost 10% and gross profit growth of 12%; gross margin expansion of 120 basis points to 70%. - International Combustibles: Organic net revenue growth of 5.2% and gross profit growth of 7.4%; gross margin expansion of 140 basis points. - U.S. Net Revenues: Up almost 23%; gross profit up 24%; gross margin expansion of 60 basis points to 64.4%. - U.S. Adjusted OCI: Up 1.5% in Q3; Q4 expected around zero or slightly negative. - U.S. Segment SG&A: Around $370 million in Q3; expected further sequential increase of around 10% in Q4. - Cost Savings: More than $2 billion cumulative gross cost savings since 2024, achieving three-year objective ahead of schedule. - Full-Year Operating Cash Flow: Record level of approximately $13.5 billion expected. - Dividend: Raised for 19th consecutive year to $6.40 per share, an increase of almost 9%. - Full-Year Outlook: Organic net revenue growth of 5%7%; organic OI growth of 7%9%; currency-neutral adjusted diluted EPS growth of 7.5%9.5%; adjusted diluted EPS of $8.29$8.44 (approximately 10%12% growth in dollar terms). - Warning! GuruFocus has detected 8 Warning Signs with PM. - Is PM fairly valued? Test your thesis with our free DCF calculator. Release Date: October 21, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. - Philip Morris International Inc (NYSE:PM) delivered strong Q3 2026 results with organic net revenue growth of 7.1% and adjusted operating income growth of 10.5%, exceeding $5 billion for the first time. - Smoke-free products continued to drive growth, with IQOS HTU shipments at the high end of expectations and adjusted IMS growth of 7.1% in Q3, or 10% excluding Japan and Poland. - Veev e-vapor shipments grew 62% in Q3, and Zyn nicotine pouches showed accelerating international growth and a 4% increase in U.S. shipments (13% excluding prior-year promotions). - Combustible business outperformed with flat cigarette volumes versus an industry decline of 1.1%, supported by strong pricing ( 8.9% in Q3) and market share gains led by Marlboro. - The company achieved over $2 billion in cumulative gross cost savings ahead of schedule and expects a sixth consecutive year of total shipment growth, with operating cash flow of approximately $13.5 billion. - Philip Morris International Inc (NYSE:PM) faces incremental cost pressures from geopolitical conflicts in the Middle East and Ukraine, impacting full-year adjusted diluted EPS growth by about 1 percentage point. - The U.S. segment is expected to have abnormally low profitability in Q4 2026, with adjusted OCI around zero or slightly negative, due to significant investments and a portfolio transition to 20-pouch cans. - IQOS growth was slower in Q3 due to shipment timing comparisons and headwinds in Japan and Poland, with full-year HTU shipment growth now expected to be slightly below adjusted IMS growth. - The company anticipates a softer Q4 in Japan as pantry loading reverses and consumers adapt to a price increase, with underlying growth of only 1.3% in Q3 excluding pantry loading. - Full-year guidance for organic operating income and EPS growth is now expected at the midpoint or lower half of the range, reflecting higher costs and increased investments. Q: Q3 beat on both top-line and EPS versus guidance, yet full-year organic OI and EPS growth are now pointed to the middle or lower half of the range. Is higher U.S. spending on initiatives like the 20-pouch Zyn transition also a factor, and how should we think about these costs next year? A: Group CFO Massimo Andolina attributed the guidance shift mainly to two items: roughly 0.5 point of EPS drag from geopolitical cost pressures (mostly flowing into H2) and about 0.5 point from Ukraine supply-chain disruptions. Absent these, PMI would be at the mid-to-upper end of the range. The exceptional U.S. investment includes migrating the flagship Zyn portfolio from 15- to 20-pouch cans at the 15-count priceabout 25% less revenue per pouchplus retail support and a Q4 SG&A step-up of around 10% versus Q3's ~$370 million. He said the Q3 spend level is a good proxy for the 2027 run rate. Q: How are the recent Zyn innovations performing versus internal expectations, how incremental are they to flagship Zyn, and how might the move to 20 pouches per can affect consumer behavior? A: CFO Massimo Andolina said initial results are very encouraging: expanded dry flavors and higher-nicotine Ultra (9mg/11mg) have drawn positive consumer feedback, attracted legal-age smokers into the category, and brought back consumers who had left Zyn for competitor higher-nicotine offers. Zyn's category share rose an estimated 1.4 points from June to September. On 20-count cans, he expects consumption could rise with more pouches on hand, noting U.S. daily consumption is in the low single digits versus high single digits in mature markets. Q: On inflation, should we think of the Q4 impact as over a one-point drag on profit, and what levers exist to offset it going forward? A: CFO Massimo Andolina said the situation is volatile, driven mainly by Middle East conflict-related energy costs, with Q4 the quarter feeling it most as higher-priced inputs flow through. He highlighted supply-chain resiliencebroadly sourced materials and protective contractsnoting PMI's ~0.5-point full-year impact is well below many peers. He pointed to strong pricing power and margin expansion (80 bps gross, 60 bps operating year-to-date) as buffers entering 2027. Q: Guidance now has heated tobacco shipments slightly trailing IMS growth. Can you explain the gap and inventory levels exiting 2026? A: CFO Massimo Andolina said 2026 was unusual for heat-not-burn due to Japan's two-step excise-driven pricing. Shipments were front-loaded in H1 ahead of the April JPY40 increase, while the smaller October JPY20 rise means less pantry loading in H2, so IMS will run slightly ahead of shipments and inventories will come downremaining at healthy levels and benefiting working capital. Q: What are the puts and takes for international smoke-free growth next year, including Japan's tax environment, the Poland flavor-ban comparison, and Germany's tax changes? A: CFO Massimo Andolina declined to guide but was upbeat: IQOS adjusted IMS growth of 10.8% year-to-date excluding Japan and Poland is running ahead of 2025's 10.6%, with growth broadening across Italy, Greece, Spain, the Netherlands, the U.K., Germany, Indonesia, Mexico, Saudi Arabia, Taiwan, and global travel retail. Japan's 2027 increase (JPY12 across HTUs and cigarettes) should be less disruptive than 2026's asymmetric HTU-only hikes, and the bonds/blends proposition is converting entrenched smokers. New market openings, including Argentina, add optionality. Q: International smoke-free price/mix looked softer in Q3around 70 bps versus ~3.5% in H1. What drove that, and how should we think about it going forward? A: CFO Massimo Andolina cited three factors: a tougher shipment comparison (total smoke-free shipments grew 2.7%, with IQOS the drag while Veev and Zyn grew strongly), category mix within smoke-free, and the timing of certain IQOS pricing decisions. He said none of this is of concern. Q: Germany passed a law sharply raising excise taxes over the next four years. How will that affect combustibles and heated tobacco volumes and pricing in 2027 and beyond? A: CFO Massimo Andolina said PMI is well versed in large tax steps (Belgium, the Netherlands, Poland, India, Mexico) and noted Germany retained the HTU tax differential. He flagged the risk of illicit trade and lower government collections, but said PMI is ideally positioned with Marlboroone of its strongest brand equities globallyplus L&M and formats like Marlboro Crafted. IQOS Germany is posting double-digit IMS growth. Q: U.S. Zyn shipments grew just over 4% in Q3, ahead of scanner data suggesting mid-single-digit declines. Is restocking the explanation? A: CFO Massimo Andolina said shipments grew 4.2%, or 13% excluding last September's one-off promotion. The quarter also included distribution build for new dry flavors and Ultra variants, which are now fully distributed, with 1.5mg and 8mg rollouts still building. Q: With U.S. investments continuing into next year and Q4 U.S. adjusted OCI around zero or slightly negative, is it fair to assume U.S. EBIT declines next year? A: CFO Massimo Andolina declined to guide but offered considerations: nicotine pouch volumes have grown sequentially for three quarters, the category is expected to grow at strong double digits, and Q3's cost level is a good 2027 proxy. Better cost absorption should follow as volumes grow, though the 25% price optimization will lag revenue for about three quarters. Q: What is driving the strong Q3 combustible performance, and what is the outlook for pricing and share? A: CFO Massimo Andolina cited stable volumes, pricing of +8.9% in Q3 (+9.1% year-to-date), and a benefit from restructuring distribution terms in certain markets that won't repeat meaningfully in Q4. International category share rose 0.4 points to 25.9%, with Marlboro at a record 11 For the complete transcript of the earnings call, please refer to the full earnings call transcript.

- Philip Morris International (NYSE:PM) has warned that ongoing global conflicts are disrupting parts of its business operations. - Management said these geopolitical events are clouding its earnings outlook and adding uncertainty to future financial performance. - The company highlighted that evolving conflict zones are affecting planning for distribution, supply chains and regulatory risk management. - Philip Morris International's comments on conflict related disruption only tell part of the story for this tobacco group. Our analysis turns up 3 other big wins for Philip Morris International as well. Wider geopolitical risk can affect a broad set of cash-generative businesses, so it is worth scanning for resilient undervalued shares through 30 high quality undervalued stocks. Philip Morris International is a large tobacco group with a reported market value of $307.8b. Disruption linked to global conflicts affects a sizeable slice of the sector rather than a niche corner of the industry. We've flagged 1 risk for Philip Morris International. See which could impact your investment. Philip Morris International has reported Q3 2026 sales of US$11,438m compared with US$10,845m a year earlier, while net income moved from US$3,478m to US$3,313m. For the first nine months of 2026, revenue was US$32,776m versus US$30,286m, with net profit shifting from US$9,207m to US$8,568m. That pattern suggests pressure on profitability even as overall turnover remains sizeable. The Narrative leans on smoke free products with roughly 70% gross margins, cost savings of US$2b from 2024 to 2026 and combustibles as a cash engine. Conflict related disruption and a softer earnings line introduce extra execution risk around that plan, especially if supply chains or regulation slow IQOS and ZYN expansion while fixed costs stay high. See how these catalysts shape Philip Morris International's path to a $208 fair value. The clearest checkpoint is the next few quarterly reports through 2027 and whether adjusted earnings per share stay aligned with the 2026 guidance range of US$8.29 to US$8.44 that management has affirmed. A material cut to that band or repeated references to conflict driven operating income impact would point to a more persistent drag on the business model. Analyst models already sketch out where Philip Morris International could be a few years from now, and those projections tell a story that today's headlines do not even hint at. See where analysts expect Philip Morris International to be in a few years. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include PM. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Philip Morris International PM posted third-quarter 2026 results on Oct. 21, with both top and bottom lines beating the Zacks Consensus Estimate and rising year over year. PM has a Zacks Rank #3 (Hold) and a Momentum Score of A. Philip Morris has gained about 23% year to date and approximately 13% since the start of the second half of 2026. However, PM shares initially fell 4.8% following the earnings release amid concerns over rising costs stemming from escalating conflicts in the Middle East and Ukraine, but later rebounded about 3.8% during the same trading session. PM posted quarterly adjusted earnings of $2.36 per share, which increased 5.4% year over year and beat the Zacks Consensus Estimate of $2.30 by 2.61%. Excluding currency effects, adjusted earnings jumped 5.8% year over year. Net revenues of $11,438 million increased 5.5% on a reported basis and 7.1% organically year over year. Revenues beat the Zacks Consensus Estimate of $11,409 million by 0.26%. Growth was driven by favorable combustible pricing and smoke-free product demand. Gross profit rose 6.7% and 8.3% organically, supported by strong combustible pricing, economies of scale, and a favorable smoke-free product (SFP) mix. Operating income saw double-digit growth in the reported quarter, rising 14.1% from the year-ago quarter. Total shipment volumes increased 0.6% to 206.2 billion units, supported by a 2.7% increase in SFP shipments during the quarter. SFP's E-Vapor unit's shipments rose 61.6% in the quarter from the previous year. Management now expects total cigarette and smoke-free product shipment volumes to grow in 2026, compared with its previous forecast of broadly stable to slightly growing volumes. The smoke-free business (SFB) of the world's largest tobacco company accounted for more than 40% of total net revenues in the third quarter and approximately 42% in the first nine months of the year. Net revenues in the International Smoke-Free segment increased 0.7%, up 3.4% organically, to $3,867 million, reflecting favorable volume/mix from higher heated tobacco unit ("HTU") and e-vapor volumes, alongside favorable HTU pricing. As quoted in the company's earnings release, while the ongoing conflict in the Middle East has had a manageable impact on the group overall, its effects on PM's business have become more pronounced. Energy-related inflation contributed to additional cost pressures in the third quarter, and the company expects these pressures to intensify slightly in the fourth quarter as a larger share of higher input prices takes effect. The long-term implications of the ongoing conflict remain uncertain, making it difficult to assess its broader effects on consumers and the global cost environment. Ongoing disruptions in Ukraine, including strikes affecting supply chains and logistics, are creating operational challenges for PM. The company expects these disruptions to weigh on its operating income this year. Here, we have highlighted some ETFs with significant exposure to Philip Morris. Hexis Active Nicotine Engagement ETF has 23.79% exposure to PM. NICO charges an annual fee of 0.70%. iShares U.S. Consumer Staples ETF has 11.51% exposure to PM. IYK charges an annual fee of 0.37%. Global X PureCap MSCI Consumer Staples ETF has an exposure of 9.85% to PM. GXPS has an expense ratio of 0.15%. VanEck Consumer Staples TruSector ETF has an exposure of 7.59% to PM. TRUO charges an annual fee of 0.14%. Consumer Staples Select Sector SPDR Fund has 6.39% exposure to PM. XLP charges an annual fee of 0.08%. First Trust Morningstar Dividend Leaders Index Fund has an exposure of 6.39% in PM. FDL charges an annual fee of 0.43%. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Philip Morris International Inc. (PM) : Free Stock Analysis Report State Street Consumer Staples Select Sector SPDR ETF (XLP): ETF Research Reports First Trust Morningstar Dividend Leaders ETF (FDL): ETF Research Reports iShares U.S. Consumer Staples ETF (IYK): ETF Research Reports Global X PureCap MSCI Consumer Staples ETF (GXPS): ETF Research Reports This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Philip Morris International Inc. PM emphasized accelerating smoke-free demand and resilient combustible pricing during the third-quarter 2026 earnings call, while outlining significant U.S. investments and geopolitical cost pressures affecting its near-term profitability outlook. Management maintained its full-year earnings guidance but indicated that operating income and earnings growth would trend toward the middle or lower portions of their projected ranges. Philip Morris reported adjusted earnings of $2.36 per share for the third quarter of 2026, surpassing the Zacks Consensus Estimate of $2.30. Net revenues totaled $11.44 billion, exceeding the Zacks Consensus Estimate of $11.41 billion. Philip Morris International Inc. price-consensus-eps-surprise-chart | Philip Morris International Inc. Quote Group chief financial officer Massimo Andolina reaffirmed the company's 2026 organic revenue growth forecast of 5-7%, with performance expected in the middle or upper half of that range. However, organic operating income growth of 7-9% is now expected toward the middle or lower half. Adjusted earnings per share are projected at $8.29-$8.44. During a Goldman Sachs analyst's questioning, Andolina attributed the cautious outlook primarily to geopolitical disruptions. Energy-related inflation and Ukraine supply-chain damage each represent approximately half a percentage point of full-year earnings growth pressure. Andolina highlighted the expansion of ZYN's U.S. portfolio, including higher-nicotine ULTRA products, additional flavors and new nicotine-strength variants. The company is transitioning its flagship portfolio from 15-pouch to 20-pouch cans without increasing the price per can. This effectively reduces revenue per pouch by approximately 25%. U.S. selling, general and administrative expenses reached approximately $370 million in the third quarter. Management expects another sequential increase of approximately 10% during the fourth quarter, alongside transitional retail support. Andolina expects fourth-quarter U.S. adjusted operating companies income to approach zero or turn slightly negative as spending intensifies and the portfolio transition progresses. A Barclays analyst questioned whether continued investments could depress U.S. profitability in 2027. Andolina declined to provide next-year guidance but identified third-quarter spending as a reasonable benchmark for future quarterly investment levels. ZYN shipments increased 4.2% to 3.2 billion pouches, while category share gained an estimated 1.4 percentage points between June and September. Management expects fourth-quarter shipments to remain broadly stable or modestly higher sequentially. IQOS adjusted in-market sales volumes increased 7.1%, accelerating from 5.1% in the second quarter. Excluding Japan and Poland, growth reached approximately 10%. Andolina emphasized expanding demand across Europe and newer markets, including Indonesia, Mexico and Taiwan. VEEV shipments also increased approximately 62%, reinforcing the company's multicategory strategy. Responding to Morgan Stanley's questions, Andolina explained that Japanese excise-driven price increases affected shipment timing and consumer purchasing. He expects IQOS shipment growth to trail underlying in-market sales growth slightly for 2026. International combustible pricing increased 8.9% during the quarter, supporting organic segment revenue growth of 7.8% despite broadly flat cigarette shipments. Andolina attributed the performance to pricing power, brand strength and favorable changes in certain distribution agreements. He cautioned that the distribution-related benefit would not meaningfully recur in the fourth quarter. A Jefferies analyst also questioned upcoming German excise increases. Andolina emphasized PMI's diversified cigarette portfolio and the continued tax advantage of heated tobacco products, while acknowledging potential pressure on legal cigarette consumption. Andolina reiterated the company's commitment to funding smoke-free expansion while maintaining operating discipline. PMI achieved more than $2 billion in cumulative gross cost savings since 2024, ahead of its original three-year schedule. Management also expects approximately $13.5 billion in 2026 operating cash flow, supporting investment, deleveraging and dividends. Its priorities remain smoke-free volume growth, commercial execution and managing inflationary pressures. PM currently carries a Zacks Rank #3 (Hold), indicating a neutral near-term earnings-revision outlook. Its Growth Score of A and Momentum Score of B reflect favorable growth characteristics and price momentum, respectively. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. However, Value Score of F indicates relatively unattractive valuation characteristics, while VGM Score of C reflects a less compelling combination. These mixed signals warrant distinction from stocks carrying stronger combinations of Zacks Rank and Style Scores. The Zacks Rank may change as analysts revise earnings estimates following the latest results. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Philip Morris International Inc. (PM) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Third-Quarter Reported Diluted EPS declined by 4.9% to $2.12; Adjusted Diluted EPS grew by 5.4% to $2.36; and by 5.8% excluding currency; STAMFORD, CT, October 21, 2026--(BUSINESS WIRE)--Regulatory News: Philip Morris International Inc. (PMI) (NYSE: PM) today announces its 2026 third-quarter results.1 "We delivered another excellent quarter, with growing total volumes, double-digit organic operating income growth and robust margin expansion," said Jacek Olczak, Group CEO PMI. "With continued strong offtake momentum for our smoke-free brands and the exceptional results of our combustible business, we are in a strong position to continue delivering best-in-class performance, and firmly on track for a sixth consecutive year of volume growth." _________________________ 1 Explanation of PMI's use of non-GAAP measures cited in this document and reconciliations to the most directly comparable U.S. GAAP measures can be found in the "Non-GAAP Measures, Glossary and Explanatory Notes" section of this release, in Exhibit 99.2 to the company's Form 8-K dated October 21, 2026, and here. Results Highlights - Third Quarter 2026 Shipments increased by 0.6% in the quarter, driven by a 2.7% increase in smoke-free products (SFP), with shipment growth across all categories, supported by high single-digit growth in SFP adjusted in-market sales (IMS), which is the closest proxy to consumer offtake. This was complemented by the continuing resilience of the combustible segment, notably in markets where SFPs are banned or have a limited market presence. Net revenues increased by 5.5% (7.1% organically) to $11.4 billion, with growth across both smoke-free (up by 4.1%, 6.3% organically) and combustibles (up by 6.4%, 7.7% organically). Our smoke-free business accounted for more than 40% of total net revenues in the third quarter, and around 42% on a year-to-date basis, with more than 30 markets above 50%. PMI smoke-free products are now available in 110 markets. Gross profit increased by 6.7% (8.3% organically), expanding gross margins through strong combustible pricing, scale and SFP mix benefits. Operating income increased by 14.1% (10.5% organically), reflecting the underlying strength of the business. This strong financial performance represents a new record quarterly high of net revenue, gross profit and operating income for the group. Reported diluted EPS of $2.12 declined by 4.9%, mainly due to the non-cash fair value adjustment for equity security investments. Adjusted diluted EPS grew by 5.4%, or by 5.8% excluding a one cent unfavorable currency impact to reach $2.36, another quarterly all-time high. International Smoke-Free Segment Net revenue growth of 0.7% (3.4% organically) was driven by 2.7% volume growth, against the backdrop of a challenging HTU comparison due to the phasing of shipments between periods, notably in Japan. Strong adjusted IMS momentum continued, with an acceleration to 8.0% growth. Gross profit grew by 0.8% (3.3% organically). Heat-not-burn SFP: IQOS continued to lead the growth of the global category, in which PMI holds around three-quarters of HTU volume share. IQOS HTUs gained 1.0pp to reach 9.9% of combined cigarette and HTU industry volumes in markets where present and grew shipment volumes by 1.5% to 41.5 billion units, at the high end of our previously disclosed expectations. HTU adjusted IMS grew by 7.1%. Excluding Japan and Poland, adjusted IMS continued to grow in the double digits, increasing by 10%, reflecting broad-based growth across a variety of markets, underscoring the increasing geographic diversification of IQOS. - In Japan, PMI HTU adjusted IMS grew by 3.4%, or by 1.3% excluding the estimated consumer pantry-loading impact ahead of the October 1 excise-driven price increase (JPY20 per pack). This continues to be broadly in line with our expectations as consumers adjust following the first excise-driven price increase (JPY40 per pack) on April 1. IQOS maintained a strong category share at 68%, with SENTIA continuing to play a key role in capturing price-sensitive TEREA consumers. - In Europe, IQOS HTU adjusted IMS growth strengthened to an estimated 6.0%, notwithstanding ongoing disruptions in Ukraine and the continued impact of the characterizing flavor ban in Poland. IQOS HTU adjusted market share increased by 0.9pp to 11.6%. This growth was led by strong performance in many markets, notably Germany, Greece, Spain and Romania. Adjusted IMS in Italy continued its strong growth trajectory, underscoring the category's significant potential across the region. Excluding Poland, adjusted IMS volumes grew by around 8%. - Outside Europe and Japan, adjusted IMS grew by 12.7% and offtake share increased in key cities across the globe, including Riyadh, Kuala Lumpur, Mexico City, Jakarta and Taipei, underlining the global growth potential of the heat-not-burn category. Oral SFP: Total oral SFP volumes turned positive, increasing by 0.5%, as growth in modern oral of 20.6% to 0.5 billion pouches more than offset declines in the legacy Nordic snus business. We continue to expand ZYN's footprint, with ZYN now available in 62 international markets and showing promising growth in geographies such as Global Travel Retail, Poland, and the Philippines, as well as sequential improvements in Sweden. E-vapor SFP: We continue to drive outstanding growth in VEEV, with quarterly shipments up by 61.6%. VEEV further reinforced its leadership position in Europe, with strong growth across a range of markets, notably Romania, Greece, France and Spain. VEEV is also demonstrating promising results in markets outside of Europe, such as Indonesia, Global Travel Retail, Egypt, Malaysia and South Korea following the launch in August. PMI remains committed to building and commercializing the brand in a focused, responsible and profitable manner, leveraging its key role as part of our multicategory portfolio. International Combustibles Segment The combustibles segment delivered an exceptional quarter, with cigarette volume continuing to show strong resilience with broadly flat shipments. This was notably due to strong growth in markets such as Turkey, Indonesia and Egypt, which offset declines in other markets. Net revenues grew by 6.5% (7.8% organically), driven by another impressive quarter of 8.9% pricing, partly offset by geographic mix. This quarter also benefited from the favorable restructuring of distribution terms in certain markets, which is not expected to recur at the same level in future quarters. Gross profit grew by 8.6% (9.8% organically). Our cigarette category volume share stood at 25.9% (up by 0.4pp) despite adverse market mix. Marlboro continued to gain share (up by 0.5pp) reaching a record category share of 11.4%. U.S. Segment In the U.S., total ZYN shipments grew by 4.2% to 3.2 billion pouches, despite challenging comparisons against a special promotional campaign last year and supported by the ongoing launches of ZYN ULTRA, new flagship dry flavors, 1.5mg and 8mg flagship variants. These portfolio extensions enable ZYN to cover a broader range of consumer preferences and compete in the most dynamic growing segments of the category. Segment net revenues grew by 22.7% and gross profit by 24.2% (23.8% organically), driven by volume growth combined with favorable pricing comparisons due to prior year promotional activities. Operating companies income decreased by 3.3% (increased by 1.5% organically), including a significant increase in commercial investments to support the expansion of our ZYN portfolio, which increased its category share by over 100 basis points between June and September, as estimated by Nielsen. As part of our previously announced plans to accelerate investments in the second half, and with distribution of the extended range of ZYN products continuing to progress, we plan to further increase investments to support the brand in the fourth quarter. This reflects a ramp-up in consumer communications, notably an expansion of the 'When It Clicks' brand campaign, and the transition of the majority of the ZYN flagship portfolio to 20-pouch cans (from 15-pouch cans today), including associated transitional support programs. The change to 20-pouch cans is designed to align the value proposition across the portfolio and optimize ZYN's price premium to support future growth in the dynamic U.S. nicotine pouch category. On August 21, the FDA granted PMTA authorization to 11 variants of ZYN ULTRA, our higher-nicotine moist offering. ZYN now has PMTA authorization of 31 variants in total, more than any other nicotine brand on the market. This, combined with the MRTP authorization of 20 ZYN flagship variants on June 30, underlines the robustness of the science behind our products and their potential to reduce the harm caused by smoking. Dividend: Increased regular quarterly dividend by 8.8% to $1.60 per share, or an annualized $6.40 per share. Third-Quarter 2026 Performance Highlights Shipment Volume(billion equivalent units) | | PMI | | International Smoke-Free | | International Combustibles | | U.S. | Q3 | vs. PY | | Q3 | vs. PY | | Q3 | vs. PY | | Q3 | vs. PY Total | | 206.2 | 0.6% | | 44.5 | 2.7% | | 158.0 | —% | | 3.7 | 2.3% Cigarettes | | 158.0 | —% | | | | | 158.0 | —% | | | SFP | | 48.2 | 2.7% | | 44.5 | 2.7% | | | | | 3.7 | 2.3% HTU | | 41.5 | 1.5% | | 41.5 | 1.5% | | | | | – | (14.3)% Oral SFP | | 5.3 | 1.8% | | 1.6 | 0.5% | | | | | 3.7 | 2.3% E-Vapor | | 1.4 | 61.6% | | 1.4 | 61.6% | | | | | | "-" indicates zero volumes or less than 50 million units | | PMI | | International Smoke-Free | | International Combustibles | | U.S. | | | | | | | | Net Revenues ($ bn) | | $11.4 | | $3.9 | | $6.7 | | $0.8 reported vs. Q3 2025 | | 5.5% | | 0.7% | | 6.5% | | 22.7% organic vs. Q3 2025 | | 7.1% | | 3.4% | | 7.8% | | 22.7% | | | | | | | | Gross Profit ($ bn) | | $7.9 | | $2.7 | | $4.6 | | $0.5 reported vs. Q3 2025 | | 6.7% | | 0.8% | | 8.6% | | 24.2% organic vs. Q3 2025 | | 8.3% | | 3.3% | | 9.8% | | 23.8% | | | | | | | | OCI ($ bn) | | $4.9 | | $4.9 | | $— reported vs. Q3 2025 | | 13.0% | | 12.9% | | (3.3)% organic vs. Q3 2025 | | 10.5% | | 10.8% | | 1.5% | | | | | | | | Operating Income ($ bn) | | $4.9 | | | | | | reported vs. Q3 2025 | | 14.1% | | | | | | organic vs. Q3 2025 | | 10.5% | | | | | | Note: Sums might not foot to total due to rounding. | | 2026 | | 2025 | | Change Reported Diluted EPS | | $2.12 | | $2.23 | | (4.9)% Amortization of intangibles | | 0.13 | | 0.13 | | Fair value adjustment for equity security investments | | 0.06 | | (0.07) | | Income tax impact associated with Swedish Match AB financing | | 0.01 | | – | | Dutch pension plan buy-out loss | | 0.04 | | – | | Germany excise tax classification litigation charge | | – | | 0.10 | | RBH (Canada) Plan Implementation, including dividend income, net | | – | | (0.10) | | Impairment of Wellness business related equity investment | | – | | 0.09 | | Tax items | | – | | (0.14) | | Adjusted Diluted EPS | | $2.36 | | $2.24 | | 5.4% Less: Currency | | (0.01) | | | | Adjusted Diluted EPS, excluding Currency | | $2.37 | | $2.24 | | 5.8% First Nine-Months 2026 Performance Highlights Shipment Volume(billion equivalent units) | | PMI | | International Smoke-Free | | International Combustibles | | U.S. | YTD | vs. PY | | YTD | vs. PY | | YTD | vs. PY | | YTD | vs. PY Total | | 595.6 | 0.5% | | 133.3 | 7.4% | | 452.2 | (1.2)% | | 10.1 | (5.8)% Cigarettes | | 452.2 | (1.2)% | | | | | 452.2 | (1.2)% | | | SFP | | 143.4 | 6.4% | | 133.3 | 7.4% | | | | | 10.1 | (5.8)% HTU | | 124.5 | 6.7% | | 124.5 | 6.7% | | | | | – | +100% Oral SFP | | 14.9 | (5.3)% | | 4.8 | (4.0)% | | | | | 10.0 | (5.8)% E-Vapor | | 4.0 | 68.1% | | 4.0 | 68.1% | | | | | | "-" indicates zero volumes or less than 50 million units | | PMI | | International Smoke-Free | | International Combustibles | | U.S. | | | | | | | | Net Revenues ($ bn) | | $32.8 | | $11.6 | | $18.9 | | $2.3 reported vs. YTD 2025 | | 8.2% | | 12.3% | | 7.7% | | (5.2)% organic vs. YTD 2025 | | 5.9% | | 9.9% | | 5.2% | | (5.5)% | | | | | | | | Gross Profit ($ bn) | | $22.4 | | $8.1 | | $12.8 | | $1.5 reported vs. YTD 2025 | | 9.4% | | 14.3% | | 9.9% | | (14.8)% organic vs. YTD 2025 | | 7.1% | | 11.8% | | 7.4% | | (14.6)% | | | | | | | | OCI ($ bn) | | $13.6 | | $13.7 | | $(0.1) reported vs. YTD 2025 | | 13.4% | | 17.6% | | -(100)% organic vs. YTD 2025 | | 7.6% | | 11.4% | | (41.1)% | | | | | | | | Operating Income ($ bn) | | $13.3 | | | | | | reported vs. YTD 2025 | | 15.4% | | | | | | organic vs. YTD 2025 | | 7.7% | | | | | | Note: Sums might not foot to total due to rounding. | | 2026 | | 2025 | | Change Reported Diluted EPS | | $5.48 | | $5.89 | | (7.0)% Amortization of intangibles | | 0.37 | | 0.37 | | Fair value adjustment for equity security investments | | 0.22 | | (0.33) | | Restructuring charges | | 0.02 | | 0.13 | | Income tax impact associated with Swedish Match AB financing | | 0.07 | | (0.24) | | Impairment related to the RBH equity investment | | 0.33 | | – | | Egypt sales tax settlement adjustment | | (0.01) | | – | | Dutch pension plan buy-out loss | | 0.04 | | – | | Impairment of goodwill | | – | | 0.03 | | Germany excise tax classification litigation charge | | – | | 0.10 | | RBH (Canada) Plan Implementation, including dividend income, net | | – | | (0.10) | | Impairment of Wellness business related equity investment | | – | | 0.09 | | Tax items | | – | | (0.11) | | Adjusted Diluted EPS | | $6.52 | | $5.83 | | 11.8% Less: Currency | | 0.20 | | | | Adjusted Diluted EPS, excluding Currency | | $6.32 | | $5.83 | | 8.4% Impact of Geopolitical Conflicts While the impact of the ongoing Middle East conflict on the group remains manageable, it has had an increasing effect on our business, with energy-related inflation driving incremental cost pressures in the third quarter. In our full-year forecast, we assume the observed rise in energy-related input prices to have a slightly higher impact in the fourth quarter, as a larger proportion of input price increases take effect. The long-term situation remains unpredictable, and it is difficult to assess the broader implications for consumers or the global cost environment. In addition, the evolution of the situation in Ukraine has caused certain disruptions to our business this year, including the impact of strikes on our supply chain and logistics infrastructure in certain locations. We expect this disruption to have an impact on our operating income this year. 2026 Full-Year Forecast | | 2026Forecast | | 2025 | | Growth | | | | | | | | | | Reported Diluted EPS | | $7.11 | - | $7.26 | | $ 7.26 | | | | Adjustments | | | | | | | | | | Amortization of intangibles | | 0.50 | | 0.50 | | | | Fair value adjustment for equity security investments | | 0.22 | | (0.18) | | | | Restructuring charges | | 0.03 | | 0.14 | | | | Income tax impact associated with Swedish Match AB financing | | 0.07 | | (0.25) | | | | Impairment related to the RBH equity investment | | 0.33 | | — | | | | Egypt sales tax settlement adjustment | | (0.01) | | — | | | | Dutch pension plan buy-out loss | | 0.04 | | — | | | | Other 2025 adjustments(1) | | — | | 0.07 | | | | Total Adjustments | | 1.18 | | 0.28 | | | | Adjusted Diluted EPS | | $8.29 | - | $8.44 | | $ 7.54 | | 9.9% | - | 11.9% Less: Currency | | 0.18 | | | | | | Adjusted Diluted EPS, excluding currency | | $8.11 | - | $8.26 | | $ 7.54 | | 7.5% | - | 9.5% (1) Includes: $0.10 Germany excise tax classification litigation charge; ($0.10) RBH (Canada) Plan Implementation, including dividend income, net; $0.09 Impairment of Wellness business related equity investment; $0.06 Loss on expected sale of consumer accessories and other businesses; $0.03 Impairment of goodwill; ($0.11) Tax items Reported diluted EPS is forecast to be in a range of $7.11 to $7.26, at prevailing exchange rates. Excluding a total 2026 adjustment of $1.18 per share, this forecast represents a projected increase of 9.9% to 11.9% versus adjusted diluted EPS of $7.54 in 2025. This includes a favorable currency impact of $0.18, at prevailing exchange rates (previously $0.24). Excluding currency, this forecast represents a projected increase of 7.5% to 9.5% versus adjusted diluted EPS of $7.54 in 2025, as outlined in the above table. 2026 Full-Year Forecast Assumptions - Growing (previously broadly stable to slightly growing) total PMI cigarette and SFP shipment volume, with high single-digit SFP shipment growth, led by high single-digit SFP adjusted IMS growth, and a cigarette shipment volume decline at a similar level to the year-to-date trend (previously around 2% to 3%); - Net revenue growth of 5% to 7% on an organic basis; with a greater likelihood to be in the middle or upper-half of the range, supported by a fourth-quarter reacceleration in international smoke-free; - Organic operating income growth of 7% to 9%; with a greater likelihood to be in the middle or lower-half of the range, with a corresponding flow through to our EPS forecast range, given the cost impacts of ongoing geopolitical tensions and the previously communicated step-up in U.S. growth investments; - Full-year amortization of acquired intangibles of $0.50 per share; - Broadly stable net financing costs; - An effective tax rate, excluding discrete tax events, of around 21.5%; - Operating cash flow around $13.5 billion at prevailing exchange rates, subject to year-end working capital requirements; - Capital expenditures of $1.4 to $1.6 billion, predominantly supporting the smoke-free business; - Further net debt to adjusted EBITDA ratio improvement as we target a ratio of close to 2.0x by the end of 2026, at prevailing exchange rates; and - No share repurchases. Factors described in the Forward-Looking and Cautionary Statements section of this release represent continuing risks to these projections. Third-Quarter 2026 Operating Review Net Revenues(in millions) | | PMI | | International Smoke-Free | | International Combustibles | | U.S. 2025 | | $10,845 | | $3,839 | | $6,316 | | $689 Price | | 739 | | 21 | | 565 | | 153 Volume/Mix/Other | | 36 | | 108 | | (75) | | 4 Acquisitions & Divestitures | | (27) | | (27) | | — | | — Currency | | (155) | | (74) | | (81) | | (1) 2026 | | $11,438 | | $3,867 | | $6,725 | | $845 vs. Q3 2025 | | 5.5% | | 0.7% | | 6.5% | | 22.7% Organic growth | | 7.1% | | 3.4% | | 7.8% | | 22.7% Gross Profit(in millions) | | PMI | | International Smoke-Free | | International Combustibles | | U.S. 2025 | | $7,361 | | $2,683 | | $4,244 | | $434 Price | | 739 | | 21 | | 565 | | 153 Volume/Mix/Other | | (23) | | 87 | | (99) | | (9) Cost | | (104) | | (18) | | (48) | | (39) Acquisitions & Divestitures | | (7) | | (7) | | — | | — Currency | | (112) | | (60) | | (52) | | — 2026 | | $7,854 | | $2,705 | | $4,610 | | $539 vs. Q3 2025 | | 6.7% | | 0.8% | | 8.6% | | 24.2% Adjustments* | | 6 | | 1 | | — | | 5 2026 Adjusted Gross Profit | | $7,860 | | $2,705 | | $4,610 | | $544 vs. Q3 2025 | | 6.7% | | 0.8% | | 8.6% | | 23.9% Organic growth | | 8.3% | | 3.3% | | 9.8% | | 23.8% | | | | | | | | 2026 Adj. Gross Profit Margin | | 68.7% | | 70.0% | | 68.5% | | 64.4% vs. Q3 2025 | | 0.8pp | | 0.1pp | | 1.3pp | | 0.7pp Organic growth | | 0.8pp | | —pp | | 1.3pp | | 0.6pp (*) For a list of adjusting items refer to the "Non-GAAP Measures, Glossary and Explanatory Notes" section of this release, in Exhibit 99.2 to the company's Form 8-K dated October 21, 2026. PMI(in millions) | | | | | | | | VarianceFavorable / (Unfavorable) | 2026 | | 2025 | | Change | | Total | | Price | | Volume / Mix / Other | | Cost | | Acq. / Divest. | | Currency Net Revenues | | 11,438 | | | 10,845 | | | 5.5 | % | | 593 | | | 739 | | 36 | | | – | | | (27 | ) | | (155 | ) Cost of Sales(1) | | (3,584 | ) | | (3,484 | ) | | (2.9 | )% | | (100 | ) | | – | | (59 | ) | | (104 | ) | | 20 | | | 43 | Gross Profit | | 7,854 | | | 7,361 | | | 6.7 | % | | 493 | | | 739 | | (23 | ) | | (104 | ) | | (7 | ) | | (112 | ) Marketing, Administration and Research Costs(2) | | (2,993 | ) | | (3,058 | ) | | 2.1 | % | | 65 | | | – | | – | | | 40 | | | 4 | | | 21 | Corporate Expenses & Other | | 5 | | | (40 | ) | | +100 | % | | 45 | | | – | | – | | | (7 | ) | | – | | | 52 | Operating Income | | 4,866 | | | 4,263 | | | 14.1 | % | | 603 | | | 739 | | (23 | ) | | (71 | ) | | (3 | ) | | (39 | ) Adjustments* | | (251 | ) | | (407 | ) | | 38.3 | % | | 156 | | | – | | – | | | 156 | | | – | | | – | Adj. Operating Income | | 5,117 | | | 4,670 | | | 9.6 | % | | 447 | | | 739 | | (23 | ) | | (227 | ) | | (3 | ) | | (39 | ) | | | | | | | | | | | | | | | | | | Adj. OI Margin | | 44.7 | % | | 43.1 | % | | 1.6 | pp | | | | | | | | | | | | (1) Includes $6 million in 2026 and $5 million in 2025 related to the adjusting items shown below Operating Income (2) Includes $245 million in 2026 and $402 million in 2025 related to the adjusting items shown below Operating Income (*) For a list of adjusting items refer to the "Non-GAAP Measures, Glossary and Explanatory Notes" section of this release, in Exhibit 99.2 to the company's Form 8-K dated October 21, 2026. _________________________ Note: Sums might not foot to total due to rounding. Total PMI - Estimated industry volume (excluding China and the U.S.) for cigarettes and HTUs was broadly stable, decreasing by 0.1%. - Net revenues increased by 7.1% organically, mainly reflecting: a favorable pricing variance driven by international combustibles and the U.S. segment. - Operating income increased by 10.5% on an organic basis, largely reflecting the same factors as for net revenues. International Smoke-Free Segment - Shipment volume grew by 2.7%, with broad-based growth across markets, notably Taiwan, Global Travel Retail, Greece, Germany, and Bulgaria, notwithstanding a challenging HTU comparison due to phasing of shipments between periods. - Net revenues increased by 3.4% on an organic basis, reflecting: a favorable volume/mix driven by higher HTU and e-vapor volumes and a favorable pricing variance due to HTUs. - Gross profit increased by 3.3% organically mainly due to the same factors as for net revenues. International Combustibles Segment - Shipment volumes were broadly flat with notable increases in Turkey, Indonesia, and Egypt, offsetting declines in markets such as Russia, Poland and Japan. - Net revenues increased by 7.8% on an organic basis, reflecting: a favorable pricing variance, the restructuring of distribution terms in certain markets, and partially offset by unfavorable geographic mix. - Gross profit increased by 9.8% organically due to the same factors as for net revenues, slightly offset by higher costs due to increases in energy-related input prices. U.S. Segment - Net revenues increased by 22.7%, primarily reflecting: growing ZYN shipments of 4.2%, and a favorable price variance against prior year promotions, supported by growth in the Wellness business and cigars. - Gross profit increased by 23.8% on an organic basis reflecting the same factors as for net revenues, partly offset by higher manufacturing costs linked to the expansion of our footprint. - Adjusted OCI increased by 1.5% organically, to $171 million, reflecting the same factors as for adjusted gross profit and the start of increased marketing investments to support the expanded ZYN portfolio. First Nine-Months 2026 Operating Review Net Revenues(in millions) | | PMI | | International Smoke-Free | | International Combustibles | | U.S. 2025 | | $30,286 | | $10,310 | | $17,525 | | $2,451 Price | | 1,889 | | 195 | | 1,607 | | 88 Volume/Mix/Other | | (89) | | 823 | | (689) | | (222) Acquisitions & Divestitures | | (44) | | (44) | | — | | — Currency | | 734 | | 297 | | 429 | | 8 2026 | | $32,776 | | $11,580 | | $18,872 | | $2,324 vs. YTD 2025 | | 8.2% | | 12.3% | | 7.7% | | (5.2)% Organic growth | | 5.9% | | 9.9% | | 5.2% | | (5.5)% Gross Profit(in millions) | | PMI | | International Smoke-Free | | International Combustibles | | U.S. 2025 | | $20,497 | | $7,088 | | $11,679 | | $1,729 Price | | 1,889 | | 195 | | 1,607 | | 88 Volume/Mix/Other | | (261) | | 575 | | (621) | | (214) Cost | | (179) | | 65 | | (116) | | (128) Acquisitions & Divestitures | | (11) | | (11) | | — | | — Currency | | 483 | | 194 | | 290 | | (1) 2026 | | $22,418 | | $8,105 | | $12,839 | | $1,473 vs. YTD 2025 | | 9.4% | | 14.3% | | 9.9% | | (14.8)% Adjustments* | | 18 | | 2 | | — | | 16 2026 Adjusted Gross Profit | | $22,436 | | $8,107 | | $12,839 | | $1,489 vs. YTD 2025 | | 9.4% | | 14.3% | | 9.9% | | (14.6)% Organic growth | | 7.1% | | 11.8% | | 7.4% | | (14.6)% | | | | | | | | 2026 Adj. Gross Profit Margin | | 68.5% | | 70.0% | | 68.0% | | 64.1% vs. YTD 2025 | | 0.8pp | | 1.2pp | | 1.4pp | | (7.1)pp Organic growth | | 0.8pp | | 1.2pp | | 1.4pp | | (6.9)pp (*) For a list of adjusting items refer to the "Non-GAAP Measures, Glossary and Explanatory Notes" section of this release, in Exhibit 99.2 to the company's Form 8-K dated October 21, 2026. PMI(in millions) | | | | | | | | VarianceFavorable / (Unfavorable) | 2026 | | 2025 | | Change | | Total | | Price | | Volume / Mix / Other | | Cost | | Acq. / Divest. | | Currency Net Revenues | | 32,776 | | | 30,286 | | | 8.2 | % | | 2,490 | | | 1,889 | | (89 | ) | | – | | | (44 | ) | | 734 | Cost of Sales(1) | | (10,358 | ) | | (9,789 | ) | | (5.8 | )% | | (569 | ) | | – | | (172 | ) | | (179 | ) | | 33 | | | (251 | ) Gross Profit | | 22,418 | | | 20,497 | | | 9.4 | % | | 1,921 | | | 1,889 | | (261 | ) | | (179 | ) | | (11 | ) | | 483 | Marketing, Administration and Research Costs(2) | | (8,831 | ) | | (8,474 | ) | | (4.2 | )% | | (357 | ) | | – | | – | | | (76 | ) | | 6 | | | (287 | ) Impairment of Goodwill | | — | | | (41 | ) | | +100 | % | | 41 | | | – | | – | | | 41 | | | – | | | – | Corporate Expenses & Other | | (298 | ) | | (463 | ) | | 35.6 | % | | 165 | | | – | | – | | | (18 | ) | | – | | | 183 | Operating Income | | 13,289 | | | 11,519 | | | 15.4 | % | | 1,770 | | | 1,889 | | (261 | ) | | (232 | ) | | (5 | ) | | 379 | Adjustments* | | (769 | ) | | (1,187 | ) | | 35.2 | % | | 418 | | | – | | – | | | 418 | | | – | | | – | Adj. Operating Income | | 14,058 | | | 12,706 | | | 10.6 | % | | 1,352 | | | 1,889 | | (261 | ) | | (650 | ) | | (5 | ) | | 379 | | | | | | | | | | | | | | | | | | | Adj. OI Margin | | 42.9 | % | | 42.0 | % | | 0.9 | pp | | | | | | | | | | | | (1) Includes $18 million in 2026 and $16 million in 2025 related to the adjusting items shown below Operating Income (2) Includes $751 million in 2026 and $1,130 million in 2025 related to the adjusting items shown below Operating Income (*) For a list of adjusting items refer to the "Non-GAAP Measures, Glossary and Explanatory Notes" section of this release, in Exhibit 99.2 to the company's Form 8-K dated October 21, 2026. _________________________ Note: Sums might not foot to total due to rounding. Total PMI - Estimated industry volume (excluding China and the U.S.) for cigarettes and HTUs declined by 0.4%. - Net revenues increased by 5.9% organically, mainly reflecting: a favorable pricing variance mainly driven by international combustibles; higher international smoke-free volumes; partly offset by unfavorable volume/mix, mainly driven by lower international combustibles and U.S. volumes in the first quarter. - Operating income increased by 7.7% on an organic basis, reflecting the same factors as for net revenues, partially offset by higher marketing, administration and research costs. International Smoke-Free Segment - Shipment volume grew by 7.4%, notably due to Taiwan, Greece, Italy, and Global Travel Retail. - Net revenues increased by 9.9% on an organic basis, reflecting: a favorable volume/mix driven by higher HTU and e-vapor volumes and a favorable pricing variance due to higher HTU pricing. - Gross profit increased by 11.8% organically mainly due to the same factors as for net revenues, supported by favorable manufacturing efficiencies. International Combustibles Segment - Shipment volume declined by 1.2% with notable decreases in Russia, Mexico, and Germany, partly offset by Turkey and Egypt. - Net revenues increased by 5.2% on an organic basis, reflecting: a favorable pricing variance and the previously mentioned restructuring of distribution terms in certain markets, partially offset by unfavorable volume/mix. - Gross profit increased by 7.4% organically due to the same factors as for net revenues, and slightly offset by increases in energy-related input prices. U.S. Segment - Net revenues decreased by 5.5% organically, reflecting: unfavorable dynamics in the first quarter with ZYN volumes impacted by distributor and trade inventory movements, slightly offset by favorable price comparisons against higher promotional activities in the third quarter last year. - Gross profit decreased by 14.6% on an organic basis reflecting the same factors as for net revenues and higher manufacturing costs. - Adjusted OCI decreased by 41.1% organically, to $550 million, reflecting the same factors as for gross profit and increased investments in marketing, administration and research costs. Conference Call A conference call hosted by Massimo Andolina, Group Chief Financial Officer, will be webcast at 9:00 a.m., Eastern Time, on October 21, 2026. The webcast can be accessed here. Further market data will be provided in an appendix to the webcast presentation. Philip Morris International: A Global Smoke-Free Champion Philip Morris International is a leading international consumer goods company, actively delivering a smoke-free future and evolving its portfolio for the long term to include products outside of the tobacco and nicotine sector. The company's current product portfolio primarily consists of cigarettes and smoke-free products, including heat-not-burn, nicotine pouch and e-vapor products. Our smoke-free products are available for sale in 110 markets as of September 30, 2026. As of December 31, 2025 PMI estimates they were used by over 43 million legal-age consumers around the world, many of whom have moved away from cigarettes or significantly reduced their consumption. The smoke-free business accounted for more than 40% of PMI's third-quarter 2026 total net revenues. Since 2008, PMI has invested over $16 billion to develop, scientifically substantiate and commercialize innovative smoke-free products for legal-age adults who would otherwise smoke or use other nicotine-containing consumer products, with the goal of completely ending the sale of cigarettes. This includes the building of world-class scientific assessment capabilities, notably in the areas of pre-clinical systems toxicology, clinical and behavioral research, as well as post-market studies. Following a robust science-based review, the U.S. Food and Drug Administration has authorized the marketing of Swedish Match's General snus and ZYN nicotine pouches and versions of PMI's IQOS devices and consumables - the first-ever such authorizations in their respective categories. Versions of IQOS devices and consumables, General snus and 20 ZYN nicotine pouch variants also obtained the first-ever Modified Risk Tobacco Product authorizations from the FDA. With a strong foundation and significant expertise in life sciences, PMI has a long-term ambition to expand into wellness areas. References to "PMI", "we", "our" and "us" mean Philip Morris International Inc., and its subsidiaries. For more information, please visit www.pmi.com and www.pmiscience.com. Forward-Looking and Cautionary Statements This release contains projections of future results and goals and other forward-looking statements, including statements regarding expected financial or operational performance; capital allocation plans; investment strategies; regulatory outcomes; market expectations; business plans and strategies. Achievement of future results is subject to risks, uncertainties and inaccurate assumptions. In the event that risks or uncertainties materialize, or underlying assumptions prove inaccurate, actual results could vary materially from those contained in such forward-looking statements. Pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, PMI is identifying important factors that, individually or in the aggregate, could cause actual results and outcomes to differ materially from those contained in any forward-looking statements made by PMI. PMI's business risks include: marketing and regulatory restrictions that could reduce our competitiveness, disrupt our SFP commercialization efforts, eliminate our ability to communicate with adult consumers, or ban certain of our products in certain markets or countries; excise tax increases and discriminatory tax structures; health concerns relating to the use of tobacco and other nicotine-containing products; litigation related to tobacco and/or nicotine products and intellectual property rights; intense competition; inability to anticipate changes in adult consumer preferences; use and reliance on third-parties; the adverse effects of global and individual country economic, regulatory and political developments, natural disasters and conflicts; geopolitical instability; the impact and consequences of Russia's invasion of Ukraine; changes in legal-age adult smoker behavior; continued decline of tax-paid cigarettes; lost revenues as a result of counterfeiting, contraband and cross-border purchases; governmental investigations; unfavorable currency exchange rates and currency devaluations, sustained periods of elevated inflation, and limitations on the ability to repatriate funds; adverse changes in applicable corporate tax laws; disruptions in the credit markets or changes to its credit ratings; recent and potential future tariffs imposed by the U.S. and other countries; adverse changes in the cost, availability, and quality of tobacco and other agricultural products and raw materials, as well as product components for its electronic devices; and the integrity of its information systems and effectiveness of its data privacy policies. PMI's future profitability may also be adversely affected should it be unsuccessful, in key markets or systemically, in its efforts to introduce, commercialize, and grow smoke-free products or if regulation or taxation do not differentiate between such products and cigarettes; if it is unable to successfully introduce new products, and promote brand equity; if there are prolonged disruptions of facilities used to produce its products; if it is unable to enter new markets or improve its margins through increased prices and productivity gains; if other market participants are more successful in their SFP commercialization efforts; if it is unable to attract and retain the best global talent; or if it is unable to successfully integrate and realize the expected benefits from recent transactions and acquisitions. Future results are also subject to the lower predictability of our smoke-free products performance. PMI is further subject to other risks detailed from time to time in its publicly filed documents, including PMI's Annual Report on Form 10-K for the fourth quarter and year ended December 31, 2025, and the Quarterly Report on Form 10-Q for the third quarter ended September 30, 2026, which will be filed in the coming days. PMI cautions that the foregoing list of important factors is not a complete discussion of all potential risks and uncertainties. PMI does not undertake to update any forward-looking statement that it may make from time to time, except in the normal course of its public disclosure obligations. Non-GAAP Measures, Glossary and Explanatory Notes Reconciliations of non-GAAP measures in this release to the most directly comparable U.S. GAAP measures can be found in Exhibit 99.2 to the Form 8-K dated October 21, 2026, and here. A glossary of key terms, definitions and explanatory notes is available in the aforementioned Exhibit 99.2 and on the same webpage, where additional financial schedules, as well as adjustments and other calculations have also been made available. Management reviews net revenues, gross profit, operating companies income, operating income, operating cash flow and earnings per share, or "EPS," on an adjusted basis, which may exclude the impact of currency and other items such as acquisitions, divestitures, restructuring costs, tax items and other adjusting items. Additionally, starting in 2022 and on a comparative basis, for these measures other than net revenues and operating cash flow, PMI includes adjustments to add back amortization expense on acquisition related intangible assets that are recorded as part of purchase accounting and contribute to PMI's revenue generation, as well as impairment of intangible assets, if any. While amortization expense on acquisition related intangible assets is excluded in these adjusted measures, the net revenues generated from these acquired intangible assets are included in the company's adjusted measures, unless otherwise stated. Currency-neutral and organic growth rates reflect the way management views underlying performance for these measures. PMI believes that such measures provide useful insight into underlying business trends and results. Management reviews these measures because they exclude changes in currency exchange rates and other factors that may distort underlying business trends, thereby improving the comparability of PMI's business performance between reporting periods. Furthermore, PMI uses several of these measures in its management compensation program to promote internal fairness and a disciplined assessment of performance against company targets. PMI discloses these measures to enable investors to view the business through the eyes of management. Non-GAAP measures used in this release should neither be considered in isolation nor as a substitute for the financial measures prepared in accordance with U.S. GAAP. View source version on businesswire.com: https://www.businesswire.com/news/home/20261020324974/en/ Contacts Philip Morris International Investor Relations: [email protected] Stamford, CT: +1 (203) 905 2413 Media: [email protected] Stamford, CT: +1 (203) 905 2410 Lausanne: +41 582 424 500

- Interested in Philip Morris International Inc.? Here are five stocks we like better. - Strong third-quarter performance: Organic net revenue rose 7.1%, reported revenue increased 5.5% to $11.4 billion, and adjusted EPS reached a record $2.36. Growth was supported by smoke-free products, pricing and resilient cigarette volumes. - Smoke-free products remain the main growth engine: IQOS, VEEV and international ZYN shipments all increased, with VEEV shipments up 62% and IQOS in-market sales growing about 10% excluding Japan and Poland. - U.S. ZYN investment weighs on near-term profits: Despite strong revenue and volume growth, higher marketing and capacity costs are expected to push fourth-quarter U.S. adjusted operating income to around breakeven or slightly negative. PMI maintained its full-year outlook but expects results toward the midpoint or lower end due to geopolitical and supply-chain cost pressures. - Philip Morris Trimmed Guidance, But Its Growth Story Looks Unshaken Philip Morris International (NYSE:PM) reported third-quarter results marked by higher revenue, operating income and adjusted earnings per share, as growth in smoke-free products and resilient cigarette performance helped offset increased costs tied to geopolitical disruptions and U.S. investments. Group Chief Financial Officer Massimo Andolina said the company delivered 7.1% organic net revenue growth in the quarter, with reported net revenue rising 5.5% to $11.4 billion. Adjusted operating income increased 10.5% organically and 9.6% in dollar terms, surpassing $5 billion for the first time in a quarter. Adjusted operating margin approached 45%, while adjusted diluted earnings per share rose 5.4% to a quarterly record of $2.36. → The AI Sell-Off Continues—These 3 Stocks Keep Raising Guidance Anyway - Doubt the Market? 3 Stocks to Rideout Fear, Uncertainty and Doubt "We delivered excellent performance in the third quarter," Andolina said, citing volume momentum, pricing, favorable category mix and cost management. The company reported total shipment growth of 0.6%, outperforming what it described as a broadly stable industry, despite difficult comparisons for heated tobacco unit shipments. Smoke-free shipments grew 2.7% in the third quarter and 6.4% year to date, led by IQOS heated tobacco products. IQOS heated tobacco unit shipments reached 41.5 billion units during the quarter, while adjusted in-market sales volume rose 7.1%. Excluding Japan and Poland, where the company faced pricing and flavor-ban-related headwinds, IQOS adjusted in-market sales grew about 10%. → Tesla's Roadster Reveal Hints at 2 Much Bigger Moves - 3 Dividend Kings Outshining the Market in 2025 Andolina said IQOS growth was broad-based, with double-digit shipment progression in markets including Germany, Greece, Spain, Indonesia, the United Kingdom, the Netherlands and global travel retail. Italy, Greece and Spain each posted double-digit adjusted in-market sales growth year to date, while the company also highlighted performance in Mexico, the Philippines, Saudi Arabia and Taiwan. In Japan, heated tobacco in-market sales returned to growth in the third quarter, increasing 3.4%, after a second-quarter decline related to consumer pantry de-loading. Excluding pantry-loading effects ahead of an October price increase, underlying growth was 1.3%, according to the company. PMI said it expects a softer fourth quarter in Japan as consumer inventory effects reverse, though it continues to anticipate full-year growth. → Luxury's Middle Market Is Cracking—These 3 Stocks Could Win The company's VEEV e-vapor business recorded a 62% increase in third-quarter shipments. Year-to-date VEEV shipments climbed 68% to 4 billion equivalent units. PMI said VEEV strengthened its position as the leading closed-pod brand in Europe and continued to gain ground in markets including Egypt, Malaysia, South Korea and travel retail. International ZYN nicotine-pouch shipments grew 7% in the third quarter and 6.3% year to date on a like-for-like basis. The company cited new flavor variants and growth in markets including Poland, Mexico and travel retail, partly offset by inventory movements in the United Kingdom and Pakistan. In the U.S., ZYN shipment volumes rose 4.2% to 3.2 billion pouches in the third quarter. Excluding a September 2025 promotional comparison, shipments rose 13%, PMI said. U.S. net revenue increased nearly 23%, while gross profit rose 24% and gross margin expanded 60 basis points to 64.4%. However, adjusted operating company income in the U.S. increased just 1.5%, reflecting higher commercial investment behind ZYN portfolio expansion. The company said total U.S. segment selling, general and administrative expense rose to about $370 million in the third quarter and is expected to increase another approximately 10% sequentially in the fourth quarter. PMI is expanding the ZYN lineup through new flavors, nicotine strengths and its higher-nicotine ZYN Ultra range. It also began shifting key flagship variants from 15-pouch cans to 20-pouch cans while maintaining the prior can price. Andolina said the transition represents approximately 25% less revenue per pouch, before considering other factors, and will affect fourth-quarter revenue. The company expects fourth-quarter U.S. adjusted operating company income to be around zero or slightly negative due to portfolio-transition costs, commercial spending and manufacturing-capacity expansion. PMI said the third-quarter expense level should be a "good proxy" for the U.S. commercial investment run rate next year, though it did not provide formal 2027 guidance. Andolina said the new ZYN variants have received encouraging initial consumer feedback. PMI estimated that ZYN's category offtake share increased 1.4 percentage points between June and September, supported by the expanded product range. PMI's cigarette shipment volumes were flat in the third quarter despite strong pricing, outperforming an industry decline of 1.1%, according to the company. Year-to-date cigarette shipments declined 1.2%. International combustible pricing increased 8.9% in the third quarter and 9.1% year to date. PMI now expects full-year combustible pricing above 8%, although it said geographic mix will partially offset the revenue benefit. International category share rose 0.4 percentage points to 25.9%, led by Marlboro, which reached an all-time high share of 11.4%. The company said volumes were particularly resilient in markets where smoke-free alternatives are unavailable or have limited presence, including Turkey, Indonesia and Egypt. PMI maintained its full-year outlook for 5% to 7% organic net revenue growth, 7% to 9% organic operating income growth and 7.5% to 9.5% currency-neutral adjusted diluted EPS growth. At prevailing exchange rates, the company expects adjusted EPS of $8.29 to $8.44, representing approximately 10% to 12% growth in dollar terms. Management said results are now more likely to land around the midpoint or lower half of its guidance ranges because of increased costs from energy, shipping and other inputs associated with Middle East tensions, along with supply-chain disruptions in Ukraine. PMI estimated these factors would collectively reduce full-year adjusted EPS growth by about one percentage point. The company expects fourth-quarter heated tobacco shipments of 39.5 billion to 40.5 billion units and said it anticipates strong international smoke-free revenue and operating-income performance. PMI also forecast record operating cash flow of approximately $13.5 billion for the year. In September, PMI raised its annual dividend for the 19th consecutive year to $6.40 per share, an increase of nearly 9%. Philip Morris International Inc (NYSE:PM) is a global tobacco and nicotine company headquartered in Stamford, Connecticut. It was established as an independent company in 2008 following the separation of Philip Morris International from Altria Group. The company develops, manufactures and markets tobacco, nicotine and other related consumer products primarily outside the United States. Its portfolio includes internationally recognized cigarette brands such as Marlboro, Parliament, L&M, Chesterfield and Bond Street. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Philip Morris International Q3 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for October 2026.

Philip Morris International's (PM) third-quarter results topped Wall Street's views driven by accelerating demand for smoke-free products, while the company affirmed its full-year outlook. The tobacco company posted third-quarter adjusted earnings, excluding currency fluctuations, of $2.37, up from $2.24 a year earlier. The consensus on FactSet was $2.30. Net revenue jumped 5.5% annually to $11.44 billion, exceeding Wall Street's estimate of $11.32 billion. Philip Morris' total shipment volume edged up 0.6% year-over-year to 206.2 billion units, as smoke-free products grew 2.7% and cigarettes remained flat. Within smoke free, electronic vapor volume surged nearly 62% in the quarter ended Sept. 30, with heated tobacco units climbing 1.5%. "With continued strong offtake momentum for our smoke-free brands and the exceptional results of our combustible business, we are in a strong position to continue delivering best-in-class performance, and firmly on track for a sixth consecutive year of volume growth," Chief Executive Jacek Olczak said in a statement. The company maintained its full-year 2026 adjusted EPS guidance of $8.11 to $8.26. Analysts expect $8.40. Phillip Morris affirmed its organic revenue growth estimate of 5% to 7% for the current year, noting that international smoke-free products' performance in the fourth quarter could push results toward the middle or upper half of its guidance. Analysts polled by FactSet expect reported revenue growth of 7.1% year over year. "We continue to expect another year of high quality, best in class volume, sales and profit growth as we continue to invest behind our leading smoke free platforms to drive long term value," Group Chief Financial Officer Massimo Andolina said during an earnings call, according to a FactSet Transcript. The company's stock fell 1.6% in Wednesday trade, reducing its year-to-date gain to 23%. While the impact of the Middle East conflict remains "manageable," energy costs rose in the third quarter and could further impact the fourth quarter's cost base amid an uncertain long-term outlook, the company said. US and Iran are engaged in indirect negotiations regarding a seven-day ceasefire proposal, which was previously rejected by President Donald Trump last month, CBS News reported, citing Iranian Foreign Minister Abbas Araghchi. Altria Group (MO) will report third-quarter results on Oct. 29.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. - Achieved a sixth consecutive year of total shipment growth, driven by the structural expansion of the smoke-free portfolio which more than offset combustible declines. - IQOS momentum remains robust with 10.8% adjusted IMS growth excluding Japan and Poland, demonstrating broad-based geographic diversification across Europe and emerging markets. - Combustible performance was exceptionally resilient, characterized by high single-digit pricing and category share gains led by Marlboro, which reached a record 11.4% international share. - The U.S. ZYN business saw a 13% volume increase excluding prior-year promotional impacts, supported by the rollout of new variants and a sequential 1.4 point category share gain. - Operating margins expanded by 130 basis points in Q3, fueled by favorable smoke-free mix and manufacturing productivity gains despite significant growth investments. - Management attributed a one-percentage-point headwind to EPS growth from geopolitical disruptions in Ukraine and energy-related inflationary pressures in the Middle East. - Full-year organic net revenue growth is projected at 5% to 7%, with management signaling performance likely in the middle or upper half of this range. - The U.S. segment expects a unique quarter of elevated investment in Q4, with adjusted OCI projected to be around zero or slightly negative due to portfolio transitions. - ZYN's U.S. value proposition is being optimized by transitioning flagship variants from 15 to 20 pouches, effectively a 25% price reduction per pouch to drive long-term competitiveness. - Guidance for 2026 adjusted diluted EPS growth remains at 7.5% to 9.5% on a currency-neutral basis, though results are expected at the midpoint or lower half due to U.S. reinvestment and macro headwinds. - Management anticipates a re-acceleration in international smoke-free performance in Q4, supported by robust adjusted IMS growth and stabilized inventory levels. - Geopolitical tensions in the Middle East are driving energy and shipping cost increases, which began flowing through the P&L more meaningfully in the second half of the year. - Supply chain disruptions in Ukraine, including the bombing of three facilities, resulted in a half-percentage-point drag on full-year EPS growth. - The transition to 20-pouch ZYN cans in the U.S. will create a short-term revenue headwind in Q4 as the company supports the sell-out of existing 15-pouch inventory. - The three-year productivity program has already exceeded its $2 billion gross cost savings objective ahead of schedule. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. - Management clarified that Q3 spend levels are a good proxy for the 2027 run rate, though Q4 2026 will see an exceptional 10% sequential increase. - The 25% price optimization per pouch will have a lagging revenue effect for three quarters, but is expected to be offset by volume growth and improved manufacturing absorption in Colorado. - Management noted that while the tax increase is significant, the differential between heated tobacco and cigarettes was preserved, maintaining IQOS's relative advantage. - The company's strong brand equity with Marlboro and diverse packaging formats are expected to mitigate the impact of illicit trade and consumer down-trading. - The gap between IMS growth and shipments in Japan is due to pantry loading ahead of excise-driven price increases in April and October. - Inventories are expected to normalize by year-end as IMS runs ahead of shipments in Q4, providing a working capital benefit.

Major U.S. indexes closed higher Wednesday, led by big gains for tech stocks on another busy day of earnings reports. The tech-focused Nasdaq, blue-chip Dow Jones Industrial Average, and benchmark S&P 500 ended up 1.1%, 0.7%, and 0.6%, respectively. Wednesday marked the third straight day of gains for the S&P 500. SpaceX (SPCX) shares soared nearly 8% to lead the Nasdaq 100 Wednesday, a day after the space, AI, and social media company announced that it posted its first-ever quarterly profit and CEO Elon Musk said that the board and Tesla's formed committees to discuss a merger. Shares of Tesla (TSLA) rose almost 3.5% ahead of its results after markets closed. (Read our tech earnings blog here.) In other post-earnings moves, AT&T (T) retreated 6.5% to pace S&P 500 decliners, Netflix (NFLX) shares fell more than 5%, Abbott Laboratories (ABT) declined 2%, and Philip Morris International (PM) pulled back 1.5%. Super Micro Computer (SMCI) shares surged 9%, United Airlines (UAL) jumped 4%, and Thermo Fisher Scientific (TMO) gained 1%. Shares of Meta Platforms (META) and International Business Machines (IBM) rose less than 1% and about 4%, respectively, ahead of their results after the markets closed. AI-tied stocks rose after slipping yesterday. Roundhill's Memory ETF (DRAM) was up 3%, while the broader iShares Semiconductor ETF (SOXX) advanced 2%. The Roundhill Magnificent Seven ETF (MAGS), which tracks the Magnificent Seven mega-cap tech stocks, was about 1% higher, aided by Tesla's advance and a 2.5% rise in Nvidia (NVDA) shares. Oil prices, which declined yesterday on unconfirmed reports that mediators were trying to bring the U.S. and Iran to discuss an end to the Middle East conflict, were little changed Wednesday. U.S. benchmark West Texas Intermediate crude futures declined 0.4% to $97.50 a barrel around 4 p.m. ET. Brent crude futures, the international benchmark, were 0.5% higher at $109.40. The 10-year Treasury yield was near 5.13% in late-afternoon trading, up one basis point from Tuesday's close. The price of bitcoin was around $84,500, up from overnight lows around $82,400. The U.S. dollar index, which tracks the value of the greenback against a basket of foreign currencies, was near flat at 101.69. Gold futures rose 0.1% to $4,145 an ounce. Go beyond the day's market moves with Investopedia's Value Add, where you'll find sharp analysis, investing ideas, and practical guidance on what today's biggest financial stories could mean for your money. Explore Value Add and subscribe on Substack. Read the original article on Investopedia

Image source: The Motley Fool. Oct. 21, 2026 - Group Chief Financial Officer - Massimo Andolina - Vice President of Investor Relations and Financial Communications - James Bushnell Operator: Good day, and thank you for standing by. Welcome to the Philip Morris International 2026 Third Quarter results. At this time, all participants on a listen-only mode. After the speaker's presentation, we will open up for questions with a limit of 2 questions per person before joining the queue. To ask a question during the session, you will need to press star one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one again. Please be advised that today's call is being recorded. I want to hand it over to our first speaker, James Bushnell, Vice President of Investor Relations and Financial Communications. Please go ahead. James Bushnell: Welcome. Thank you for joining us. Earlier today, we issued a press release containing detailed information on our 2026 third quarter results. The press release is available on our website at pmi.com. A glossary of terms, including the definition for Smoke-Free Products, as well as adjustments, other calculations, and reconciliations to the most directly comparable U.S. GAAP measures for non-GAAP financial measures cited in this presentation, are available in the exhibit to our Form 8-K, dated today, and on our Investor Relations website. Today's remarks contain forward-looking statements and projections of future results. I direct your attention to the forward-looking and cautionary statements disclosure in today's presentation and press release for a review of the various factors that could cause actual results to differ materially from projections or forward-looking statements. I am joined today by Massimo Andolina, Group Chief Financial Officer. Massimo, over to you. Massimo Andolina: Thank you, James, and welcome everyone. We delivered excellent performance in the third quarter. We continued volume momentum, putting us firmly on track for a sixth consecutive year of total shipment growth and yet another year of best-in-class results in 2026. The strong underlying momentum of our smoke-free business continued, with IQOS HTU shipments at the high end of our expectations and accelerated growth fundamentals across all 3 of our flagship brands. Coupled with standout combustibles performance, we achieved +7% organic growth in Q3 net revenues and more than 10% growth in operating income, despite challenging comparisons on smoke-free shipments and incremental cost pressures, notably due to the ongoing conflicts in the Middle East and Ukraine. Q3 adjusted OI exceeded $5 billion for the first time, while our adjusted OI margin reached close to 45%. Our strong operational performance supported better-than-expected adjusted diluted EPS growth of +6%, excluding currency, to a record quarterly level of $2.36. IQOS continued to deliver strong and broad-based progress, with adjusted IMS volume growth increasing to +7.1% in the quarter, or +10%, excluding Japan and Poland, where we faced specific headwinds from the impact of excise-driven pricing and the characterizing flavor ban, respectively. In nicotine pouches, ZYN's Q3 shipment growth accelerated in international markets and reached +4% in the U.S., or +13%, excluding the special promotional activity of September 2025. This performance was supported by the ongoing rollout of new variants as we invest significantly in the accelerated expansion of our product offer and align the portfolio value proposition over the second half of this year. We are pleased with the initial consumer reaction and sequential increase in category share, even as we have yet to reach full commercial deployment of the first wave of expansion. We remain focused on further strengthening the brand, building consumer awareness of the expanded portfolio, and continuing to invest behind the significant growth opportunity ahead. In E-Vapor, VEEV continued its outstanding progress with a step-up in shipment growth to +62%. We delivered strong performance across key markets and continued to build our leading position in Europe, the primary international profit pool. Our combustible business delivered a standout Q3 performance, exceeding our expectations through a combination of stable volumes, high single-digit pricing, and a specific benefit from the restructuring of distribution terms in certain markets. Volumes were especially resilient in markets where smoke-free alternatives remain unavailable or have limited presence, while the continued strength of our brand portfolio, led by Marlboro, supported category share gains and further margin expansion. This is in line with our objective of maximizing combustible value over time to support the growth of our smoke-free business. Our overall year-to-date performance further demonstrates the sustainability of our growth model. We continue to expect another year of high-quality, best-in-class volume, sales, and profit growth as we continue to invest behind our leading smoke-free platforms to drive long-term value. Turning now to our headline financials for the third quarter. We delivered shipment growth of +0.6%, outperforming a broadly stable industry despite unfavorable comparisons on HTUs. Together with robust pricing and favorable category mix, this drove organic net revenue growth of +7.1%, or +5.5% in dollar terms, to reach $11.4 billion. Gross profit grew organically by more than +8%, and adjusted operating income increased +10.5% organically and +9.6% in dollar terms. This reflects strong top-line growth and effective cost management, even as we accelerated our growth investments, notably in the U.S. Adjusted diluted EPS increased +5.4% to a new quarterly high of $2.36. This includes an unfavorable currency impact of $0.01 due to dollar strength and lower positive transactional impacts than previously expected, mainly due to the strengthening of the Russian ruble. As flagged last quarter, this growth also includes an unfavorable comparison against a low tax rate in the prior year period, which reduced Q3 EPS growth by approximately 4 percentage points. Our outstanding year-to-date results further demonstrate the strength and quality of our business fundamentals, with shipment volume growth of +0.5%, strong pricing, and favorable category mix. This drove organic net revenue growth to +5.9%, or +8.2% in dollar terms, bringing year-to-date net revenues to nearly $33 billion. Adjusted gross profit increased by +7.1% organically, while adjusted OI grew by 7.7% organically and +10.6% in dollar terms, reaching more than $14 billion. We delivered adjusted diluted EPS of $6.52, representing growth of +8.4% excluding currency and +11.8% in dollar terms. Turning to shipment volumes, we achieved solid growth in both the third quarter and year-to-date. Consistent with recent years, the structural growth of our smoke-free portfolio more than offset declines in combustibles, and we are firmly on track to achieve our sixth consecutive year of growth. Smoke-free shipments increased by +2.7% in the quarter, despite the strong prior year comparison, and by +6.4% year-to-date, driven by IQOS. We continue to expect high single-digit growth in smoke-free adjusted IMS volumes and shipments for the year, with the latter subject to year-end inventory movements. IQOS HTU shipments reached 41.5 billion units in Q3, with year-to-date growth of +6.7%. We now expect HTU shipment growth to be slightly below adjusted IMS growth for the full year, with the Q3 dynamic of adjusted IMS growing faster than shipments to continue in Q4, notably due to the in-year phasing impact of price changes in Japan. Q3 shipment growth was supported by a wide range of markets, including Germany, Greece, Spain, Indonesia, the U.K., the Netherlands, and global travel retail, all of which delivered strong double-digit progression. Oral smoke-free volumes increased by +1.8% in the quarter, supported by our readiness and ability to introduce new product variants in the U.S., alongside an acceleration in international ZYN growth and share gains in Swedish snus. E-Vapor shipments grew by a remarkable +62%, demonstrating the increasing scale and importance of our multi-category portfolio and VEEV's role within it. Cigarette shipments were flat in the quarter despite strong pricing, outperforming an industry decline of 1.1%. This reflects both the strength of our brands and the resilience of the category in markets where smoke-free products are banned or have limited presence, such as Turkey, Indonesia, and Egypt. On a year-to-date basis, cigarette volumes declined by 1.2%. While the markets driving this better-than-expected performance generate an unfavorable geographic mix, the continued resilience of our combustible portfolio means we now expect full-year cigarette volumes to decline by a similar level, subject to year-end inventory movements. We continue to generate strong top-line growth from the fundamental pillars of our business model, namely volume growth, pricing power, and the mixed benefits of smoke-free unit economics. Year-to-date, pricing remained the largest contributor, adding +6.2 points of growth. This reflects continued combustible strength with pricing of +9.1%, together with a positive contribution from our smoke-free portfolio, including low single-digit pricing on IQOS HTUs. The increasing contribution of smoke-free products in our international business provided a further +1.5, I repeat, +1.5 points of growth. Notwithstanding a lower impact in Q3 due to timing factors. This was partly offset by a 0.6 point headwind from the U.S., driven predominantly by the impact of lower ZYN shipment volumes and challenging comparisons earlier in the year. With these headwinds moderating significantly in the third quarter. Combustible geographic mix and other factors reduced growth by 1.7 points. These headwinds were partially mitigated in Q3 by the impact of restructuring of certain distribution terms I mentioned earlier, which we do not expect to be significant in the fourth quarter. As a result, year-to-date organic net revenue growth reached +5.9% and +7.1% for Q3. Currency contributed a further +2.3 percentage points year to date, bringing reported net revenue growth to +8.2%. Moving further down the P&L, our adjusted operating margin organically expanded by +60 basis points year to date and +130 basis points in Q3, reaching a very strong level of almost 45% in the quarter. Gross margin expansion remained the primary driver, contributing +80 basis points in both Q3 and year-to-date, bolstered by strong pricing, favorable smoke-free mix, increasing scale benefits across our smoke-free business, and manufacturing productivity gains. At the same time, we continue to invest strongly behind future growth opportunities. While SG&A organically increased by less than net revenues in Q3, this reflects the ongoing benefits of our G&A productivity initiatives and the favorable comparison against the prior year period, which included certain combustible-related items. Both international and U.S. smoke-free commercial investments continued to grow ahead of the top line, accelerating versus the second quarter. For the full year, we expect SG&A to grow broadly in line with net revenues as we continue to work on our back-office costs while strongly increasing commercial investments behind our growth platforms and consumer-facing initiatives across the world. This includes increased investments in the U.S. to support our ZYN portfolio expansion and competitiveness. Indeed, our productivity program continues to deliver strong results. We have now generated more than $2 billion of cumulative gross cost savings across both cost of goods sold and SG&A since 2024, achieving our three-year objective ahead of schedule. Focusing now on our international business, which continues to be the primary engine of group performance and represents 93% of our year-to-date net revenues. International smoke-free delivered excellent year-to-date results, with organic growth of almost 10% in net revenues and +12% in gross profit, driving +120 basis points of gross margin expansion to 70%. This reflects the continued growth and increasing profitability of IQOS, with additional contributions from our expanding smoke-free portfolio, particularly VEEV. As expected, Q3 growth was slower due to shipment timing comparisons and related category mix. Importantly, IQOS gross margins continued to expand meaningfully despite additional cost disruption in Ukraine. Our international combustible business also delivered a strong year-to-date performance. Higher category share, robust pricing, and efficient execution drove organic net revenue growth of +5.2% and gross profit growth of +7.4%, supporting +140 basis points of organic gross margin expansion. Together, our international smoke-free and combustible businesses drove +7% organic net revenue growth and +9.1% gross profit growth with +140 basis points of gross margin expansion to 68.8%. This performance supported international organic OCI growth of around +11% in both Q3 and year-to-date, comfortably exceeding the targeted OI growth rates for total PMI. Focusing on international smoke-free, we drove +8.6% growth in total adjusted IMS year-to-date, including an acceleration to +8% in Q3 and despite the impacts from Japan and Poland. Excluding these 2 markets, growth was +11.8% year-to-date, consistent with the strong growth rates delivered over recent years. Importantly, our smoke-free portfolio continues to outgrow the comparable industry by approximately 1 percentage point, with our share increasing to 62%, reflecting the increasing strength of our multi-category strategy. I also note that our international market share of cigarettes and HTUs exceeded 30% in the quarter for the first time, underscoring the combined strength of our smoke-free and combustible portfolios. IQOS remains the driving force behind our smoke-free growth. Adjusted IMS volume growth accelerated from +5.1% in Q2 to +7.1% in the third quarter. We are especially pleased with the delivery of +7.7% growth year-to-date, despite the known headwinds in Japan and Poland. Excluding these 2 markets, adjusted IMS growth remained around +10% in the quarter and almost +11% year-to-date, consistent with the strong underlying trajectory of the business and the durability of demand across our geographic footprint. Key European geographies, including Italy, Greece, and Spain, all delivered double-digit adjusted IMS growth year-to-date, complemented by excellent performance in markets such as Indonesia, Mexico, the Philippines, Saudi Arabia, and Taiwan, as well as global travel retail, highlighting the increasing geographic diversification of our IQOS business. Our device and consumables pipeline remains active, supporting both legal-age consumer acquisition and brand loyalty. We continue to enrich our premium TEREA and LEVIA HTU offerings with new taste experiences. Our mainstream price variants of DELIA and SENTIA are also supporting acquisition and exceed the size of our closest category competitor. In addition, the expansion of our alternative heating technology, BONDS by IQOS, is ongoing and is resonating well with harder-to-reach entrenched smokers in initial launch areas. The strength of IQOS is exemplified by excellent key city offtake share progress across the world, a strong indicator of national-level growth potential. We recorded further strong Q3 share gains across established IQOS markets, including Germany, Greece, Italy, Japan, Romania, the Netherlands, and the United Kingdom, alongside global travel retail. We also continue to see very promising momentum in newer growth markets such as Mexico, Indonesia, and Taiwan, in which IQOS increased its national category share to more than 80%. Switching to VEEV, whose momentum remains very strong, year-to-date shipment volumes increased by +68% to 4.0 billion equivalent units. This includes continued gains and increasing category leadership across European markets, with VEEV further extending its lead over established competitors as the number one closed pod brand in the region. Elsewhere, we continue to see promising growth in markets such as Egypt, Malaysia, global travel retail, and in South Korea following its recent launch. The business continues to benefit from our unique multi-category deployment using the unparalleled commercial infrastructure and consumer reach of IQOS, while also benefiting from the structural shift toward closed pod systems across international markets. This trend aligns with our portfolio and commercial strategy as we drive momentum with meaningful innovation, such as the current rollout of our new beautiful VEEV ONE PLUS device, which you can see here on the slide. Moving now to ZYN, which continues to generate promising growth in international markets as we invest to build the category. Year-to-date international shipment volumes reached 1.5 billion pouches, representing growth of +6.3% on a like-for-like basis. This includes a sequential step-up of +7% in Q3, supported by improving sequential trends in Sweden following the launch of new ZYN flavor variants. Strong double-digit progression continued in markets such as Poland, global travel retail, and Mexico, partly offset by inventory movements in the United Kingdom and Pakistan. Growth was supported through portfolio innovation such as ZYN Black Menthol, continued category expansion, and growing consumer adoption across a broad range of markets. ZYN's year-to-date ex-Nordics IMS growth reached +30%, outperforming the industry and growing ahead of shipments. In Europe, our most advanced multi-category region, combined smoke-free IMS volumes for IQOS, ZYN, and VEEV increased by approximately +8.6% year-to-date and +8.9% in Q3, reflecting strong momentum. IQOS adjusted IMS growth strengthened to +6% in Q3, notably driven by an acceleration in Germany and Spain. Performance was broad-based across the region, with strong growth continuing in Italy, Greece, the United Kingdom, and Bulgaria, more than offsetting the impact of disruptions in Ukraine. Excluding headwinds in Poland due to the characterizing flavor ban implementation earlier this year, adjusted IMS growth in Europe was around +8%. Our other smoke-free categories continue to scale rapidly. VEEV shipment volumes increased by +75% year-to-date, and +66% in Q3, with outstanding growth in Romania, Greece, Germany, France, Bulgaria, and Spain. ZYN volumes reached 1 billion pouches year-to-date, accelerating to almost +6% growth in Q3 on a like-for-like basis as we invest behind the category. This was supported by strong progress in markets such as Poland, Austria, and Finland, in addition to the better Swedish delivery. In Japan, IQOS fundamentals remain strong amidst the volatility of the two-step excise increase on heated tobacco this year. Following a Q2 decline in adjusted IMS volumes due to pantry de-loading, HTUs returned to growth in Q3 with an increase of +3.4%. As in Q1, before the April excise-driven price increase of JPY 40 per pack, Q3 IMS growth includes a favorable impact from consumer pantry loading ahead of our JPY 20 increase in October. Excluding this impact, underlying growth was +1.3% as consumers gradually adjust to higher prices in an environment where combustible cigarettes did not yet face any excise change. This remains in line with our expectations, and we continue to expect growth for the year, notwithstanding a likely softer Q4 as pantry loading again reverses and consumers adapt to a further price increase. Our adjusted heat-not-burn category share remained stable at approximately 68%, despite taking more pricing than competitors in April, highlighting the strength of the IQOS proposition. Looking forward, the excise calendar for the next 3 years looks less disruptive, with moderate increases on both combustibles and heated tobacco-like each April. While the April 2027 increase will mark the third change in 12 months, with a potential cumulative impact on the consumer, we remain excited about the category's midterm growth potential in Japan. Although heated tobacco continues to account for over 50% of total nicotine offtake, there remains a substantial pool of smokers yet to switch, supporting our confidence in the capacity for strong IQOS performance in the years ahead. Turning now to the U.S., where we delivered strong financial performance in Q3, supported by ZYN volume growth of +4.2% to 3.2 billion pouches, or +13%, excluding the impact of one-off promotions in September last year. Sequentially, shipments increased by 10% versus Q2, reflecting category expansion and the ongoing launch of new portfolio variants, which have contributed to an improvement in our category share and should position us well for future growth. We expect Q4 shipment volumes to be broadly in line to modestly above Q3 levels as we continue to expand distribution and support the rollout of the enhanced portfolio. U.S. net revenues increased by almost 23%, and gross profit by +24%, with gross margins expanding organically by +60 basis points to 64.4%. This was supported by favorable pricing comparisons against the same prior year promotions, notwithstanding the impact of higher manufacturing overheads and startup costs from our new ZYN facility in Colorado, which is gradually ramping up production. Adjusted operating company income grew by +1.5% as we meaningfully increased commercial investments to support the expansion of our ZYN portfolio. Supported by our readiness and ability to launch new products, we are taking significant actions across the second half of this year to strengthen ZYN's competitive position as the leading and premium U.S. smoke-free brand. The first action is the expansion of the ZYN offering in 2 waves to address a broader range of legal-age nicotine consumer preferences. The first wave of expansion comprises the higher nicotine moist range of ZYN Ultra and an expanded flavor lineup for our flagship dry portfolio, which are now approaching full distribution. While we are still building consumer awareness around our new range, especially for ZYN Ultra, we are encouraged by the initial consumer reaction. Indeed, following several quarters of volume progress below the category growth rate, ZYN's category offtake share increased by an estimated 1.4 points from June to September, demonstrating the incremental contribution of the new variants and interest from competitor pouch consumers. We also began shipments of the second wave of product introductions in the quarter with new flagship variants in both 1.5 mg and 8 mg strengths, further broadening the consumer offer and supporting our objective of encouraging legal age nicotine users to switch to the category. The second important action is to align the value proposition across the portfolio and optimize ZYN's per pouch price positioning. We began this process over the summer with the launch of ZYN Ultra in 20 pouch cans, and starting in October, we are now transitioning our 1.5 mg, our 3 mg, and our 6 mg flagship variants from 15 to 20 pouches. These variants represent a large majority of our volumes, and as we work to execute the change smoothly for both consumers and trade partners, we expect the transition to be largely complete in the fourth quarter. As we flagged at Q2 earnings and in subsequent communications, these actions are accompanied by a need to step up investments. Total U.S. segment SG&A increased significantly to around $370 million in Q3, and we expect a further exceptional sequential increase of around 10% in Q4. This reflects increased consumer communication to build awareness of the expected portfolio and enhance value proposition together with the ramp-up of our When It Clicks brand campaign. Looking beyond Q4, we view the Q3 level of spend to be sufficient to support the brand. The transition to 20 pouch cans represents a significant investment in consumer value, which all else equal, translates into approximately 25% less revenue per pouch. Combined with additional short-term support on the existing 15 pouch variants to manage the sell-out at retail, this will impact Q4 net revenues. Indeed, taking the aggregate impact of these actions and the expansion of our manufacturing capacity to support future growth, Q4 will be a unique quarter of investment. We expect an abnormally low level of U.S. profitability in the fourth quarter with adjusted OCI around 0 or slightly negative. Our leading global position and strong growth profile reflects continuous investment for mid and long-term growth, and we are excited to be implementing the significant improvements to our ZYN consumer offer. With a fast-growing category and ZYN's leading brand equity, we believe we are positioning the brand for strong and sustainable growth over the coming years. Finally, turning to combustibles, which posted an exceptional Q3 performance. Pricing remained a key driver, reaching +8.9% in the third quarter and +9.1% year-to-date, with broad-based contributions across markets including Turkey, the Philippines, Indonesia, and Poland. We now expect full-year pricing of above 8% with the net revenue impact partially offset by a more unfavorable geographic mix. Despite this strong pricing, our portfolio increased Q3 international category share by 0.4 points to 25.9%, driven by Marlboro, which reached an all-time record high of 11.4%. The strong share performance and robust pricing drove another quarter of excellent profitability with international combustible gross profit increasing by +9.8% in Q3 and +7.4% year-to-date. This brings me to our outlook for the full year, where we're targeting a second consecutive year of double-digit adjusted diluted EPS growth in dollar terms. Indeed, following our strong first 9 months, we're on track for another year of excellent performance as we continue to invest behind smoke-free growth. We now expect growing total shipment volumes for the year, making 2026 our sixth consecutive year of growth. For net revenues, we continue to forecast +5% to +7% organic growth. Moreover, given the strong year-to-date delivery and our expectation for a robust fourth quarter led by international smoke-free, we believe the business could deliver in the middle or upper half of this range. At the operating income level, we continue to expect organic growth of 7%-9%, reflecting strong inherent margin expansion from our top-line performance and productivities, and despite our substantial ongoing investment in SAP internationally and in the U.S. Our forecast range for currency neutral adjusted diluted EPS growth also remains at 7.5%-9.5%. With a favorable currency impact at prevailing exchange rates of approximately $0.18, notably including recent weakness in the euro. This results in an adjusted diluted EPS range of $8.29-$8.44, representing growth of approximately +10% to +12% in dollar terms. However, considering the significant H2 step-up in U.S. investments and the cost impact of ongoing geopolitical tensions, we see the full year delivery more likely to be at the midpoint or lower half of both brackets. Although the inflationary outlook remains uncertain, most notably the persistence of energy-related inflation linked to the conflict in the Middle East, the prices of certain inputs have begun to reflect the increases in energy and shipping costs. While we are less exposed than many other areas of consumer goods, and this remains manageable overall, these factors were a headwind in the third quarter and are expected to evolve further in Q4 as a greater proportion of increased input prices flow through. Overall, we estimate the impact on full-year adjusted diluted EPS growth to be around half percentage point, in addition to a similar-sized headwind from disruptions in Ukraine. This results in a combined impact of approximately one point of growth for the year. For Q4 more broadly, we anticipate a strong net revenue and OCI performance from our international business, including a re-acceleration in smoke-free performance. We expect continued robust adjusted IMS growth and HTU shipment volumes of 39.5 billion-40.5 billion units, consistent with our comments on shipment phasing. In contrast, this will be a unique quarter of elevated investment and portfolio transition for the U.S., for the reasons I explained. Despite this special quarter for the U.S., we expect a strong delivery for the group overall, as captured in our full-year outlook. We also expect to generate a record level of approximately $13.5 billion in operating cash flow, testament to our strong cash flow generation. This provides substantial flexibility to invest behind future growth while continuing to deleverage and deliver attractive shareholder returns. Let me now conclude with a few key takeaways. Our year-to-date performance reflects the quality of our underlying fundamentals, positioning us for another year of superior top and bottom-line growth as we continue to invest substantially behind future opportunities. This reflects the durability of our model, supported by category-leading brands, strong pricing power, disciplined cost management, and the increasing scale of IQOS, ZYN, and VEEV. We remain a highly cash generative business with an unwavering commitment to our progressive dividend policy and to rewarding shareholders. In September, we raised our dividend for the 19th consecutive year to $6.40 per share, with another increase of almost 9%. Looking ahead, we remain confident in our mid- and long-term trajectory, which reflects the unique strengths of PMI's growth model. Structural smoke-free momentum built on science, innovation, commercial strength, and brand building, allied to combustible resilience and effective reinvestment. We look forward to sharing more on these elements at our next Investor Day, which we plan to hold in Q2 next year. Thank you very much for listening, and we are now happy to answer your questions. Operator: Thank you. At this time, we will conduct a question-and-answer session. As a reminder, to ask a question, you will need to press star one on your telephone and wait for a name to be announced. To withdraw your question, please press star one again. Please limit yourself to 2 questions and rejoin the queue again for further questions. Please stand by while we compile the Q&A roster. One moment for our first question. Our first question will come from the line of Bonnie Herzog from Goldman Sachs. Your line is open. Bonnie Herzog: All right. Thank you. Hi, how are you? I guess my first question is on your guidance. Your Q3 came in better on both the top line and EPS versus your guidance for the quarter. Yet, as you mentioned, you are pointing to the middle or lower half of your full-year organic OI growth guidance, and it sounds like on your EPS growth guidance as well. I know you called out the higher cost pressures from the ongoing geopolitical tensions, but I really did want to verify if you are also now planning on spending more in the U.S. For instance, are you finding that it is now costing you more to implement some of the strategic initiatives that you have called out, such as putting 20 pouches in all ZYN cans? How should we think about some of these higher costs and spending in the U.S. on your profitability and EPS growth next year? Massimo Andolina: Thank you very much, Bonnie. Nice to hear from you. You are right. Our guidance points for the OI and for the EPS for the full year towards the mid or lower half of the range. As you could read, the predominant element that we have in there are 2 predominant elements fundamentally. One is the cost pressure that is coming from geopolitical elements. This cost pressure has been increasing over the year, and we start feeling more the impact of that during Q3 and Q4. We guided you through a full year impact of half a point of EPS. You could read that therefore, the flow in is mostly in H2. We guided you to another half a point that is coming from disruptions, which are kind of one-off things that have happened in Ukraine due to, sadly, 3 events of bombing of some of our supply chain facilities, and therefore destruction of goods. Quite frankly, if you look at that and you look at our guidance, that constitutes one point, and it means that just that one, if we had not had those impacts, we would be mid to higher half of the range. The other important element that there is in the quarter, and especially in Q4, is the exceptional level of investment that we are making in the U.S. I assume you will all acknowledge that the investment that we are making in the U.S. over the course of Q3 and Q4 is exceptional, by all means. I would point you out to a couple of elements in that. First and foremost, the fact that we are moving our flagship portfolio to an optimized premium price positioning, which de facto means a better value proposition for the consumers, and in practical terms, it means a 25% price reduction on a per pouch basis. We are migrating our entire flagship portfolio from 15 to 20 count at the price of the 15 counts. That alone, as you can understand, has an impact on the revenue line of it. As we go through a phase of transition over the course of Q4, we will accompany that with commercial activities at retail level, which are revenue line impacting activities in order to ease the sellout of the remaining 15 count cans in the market. The third step that we take is an exceptional investment that is already flowing in Q3, and we guided to a potential increase over Q4 exceptionally by 10% versus the Q3 impact. We said about $370 million in Q3 and a 10% increase exceptionally in Q4, in order to continue to do a couple of things. The first one is continue to build ZYN into the strongest smoke-free brand in the U.S. The second element is we have practically tripled our portfolio of variants of nicotine pouches over the course of the year, and we are making this value optimization in terms of price adjustment. Therefore, we want to step up both branding communication with the When It Clicks campaigns and continue to expand that. At the same time, we want to do something very important, that is continue to build the awareness of consumers around the existence of these new variants, but also the awareness on the new price of the product. You should interpret all these elements as elements that for Q4 are going to be even ramped up versus Q3. But as we said in the guidance, you could assume that the Q3 level of cost would be a good proxy for what the level of commercial investment is going to be over the course of next year. So when you put all of these things together, Bonnie, quite frankly, I see strength in the guidance that we are giving for the bottom line and for the EPS in that we are moving it to the mid and bottom half of the range just for the correction of the cost that I detailed before. We are de facto almost absorbing the strong investments that we are making in the U.S., supported by the strength in all the rest of the business. In other words, if it were not for those inflationary pressures, which we have felt to a much lower extent from what I am seeing in the disclosures of other FMCG companies in the areas, that we have felt to a much, much more manageable level than many other companies. If it were not for those, we would actually be in the mid to upper end of the range. I hope I addressed your questions. Bonnie Herzog: No, definitely. That was helpful. Just to confirm, Massimo, that as I think about next year, the spend levels in the U.S. this year, I think about that continuing next year. Did I hear that correctly? Massimo Andolina: I think what we- Bonnie Herzog: Maybe even more Massimo Andolina: Guided towards is the fact that the spend level that you are seeing in Q3 is a good proxy for the run rate that we're going to have next year. Bonnie Herzog: Makes sense. Okay. Massimo Andolina: In Q3, consider that there is another element which is a higher cost the fact that we have just started up our Colorado facility. The level of loading in that facility is low, and therefore the impact from the overheads there. You are going to find yourself next year with a cost level where Q3 is a good proxy, and obviously we are banking on the future growth of the category next year, and we are bolstered by the share results that we have seen from June until now. Bonnie Herzog: Okay. And maybe just a couple of quick follow-ups on ZYN, because you touched on it. I would be curious to hear, from your perspective, how some of the recent ZYN innovations that you have rolled out have been performing relative to your internal expectations and maybe ultimately, how incremental do you think the innovations will be to flagship ZYN? And then second, on the move to 20 pouches in each of the ZYN can, I am curious how you see this impacting consumer behavior, if at all. For instance, do you see it, I do not know, as a headwind to volumes, or could it be a possible tailwind if consumers now consume more since they have more pouches in each can they buy? Just trying to think through that. Thank you. Massimo Andolina: Okay. We are very excited with the initial results of both the expansion of flavors on our flagship dry portfolio and the introduction of the higher nicotine levels of 9 mg and 11 mg in our Ultra portfolio. I must tell you that the feedback that we have gotten from consumers, and I had the opportunity a couple of weeks ago to be in the U.S. and do a deep dive on that, has been overwhelmingly positive. This includes both existing ZYN consumers that were really looking forward to having more flavor options at the 3 mg or 6 mg levels that they were used to. The feedback on those flavors of dry have been really super positive. Also consumers that were wondering why ZYN did not have a higher nicotine level proposition, and that might have otherwise considered going to competition. Where frankly, in data that we have seen from our consumer research, we see that there has been high interest in what we have launched. We have seen an inflow, both of legal-age smokers that are coming to the category, but also of competitors' users and people, in the case of 9 mg and 11 mg, that had left ZYN to go to competitors' propositions in higher nicotine levels and who have come back into ZYN, thanks to those launches. We see all of that in the share. As you see, the share is positive since June and since we started these launches. Therefore, I can only imagine that with the adaptation at this point of the price premium, we should be seeing even more competitiveness and more strength going forward. Regarding your question on consumer behavior. Well, Bonnie, let's wait and see. I can tell you my personal experience. When I have more in the pocket, I tend to consume more. Bonnie Herzog: Yeah. Massimo Andolina: I see it with my kids when they buy. Bonnie Herzog: Yeah. Massimo Andolina: Juices and other things. Bonnie Herzog: Yeah. Massimo Andolina: The more you have in the fridge, the more you take. Bonnie Herzog: Yeah. Massimo Andolina: We can only assume that's going to be the case. There is one thing that I will comment on, however, from my experience in international. As consumers come into the category and get used to it, and they stay with the category, we see 2 things happening. Consumers tend to trend up a little bit on the nicotine, but as they stay in the category, their average daily consumption tends to trend up. You may argue that in the U.S. today, where the category is at its beginning, you are probably in the low single digit in terms of average daily consumption. If you go to markets where the category has been present for longer, you are actually seeing more high single digit daily consumption. So that is another element of category growth that we can all look forward to. Bonnie Herzog: Okay, great. Thank you for all of that. I will pass it on. Massimo Andolina: Thank you very much, Bonnie. Operator: Thank you. Our next question will come from the line of Matt Smith from Stifel. Your line is open. Matt Smith: Hi, thank you for taking my question. I wanted to follow up on your inflationary comments and the impact. You called out the half a point of drag on EPS for the year with some impact in Q3 and higher in Q4. If you just isolate the fourth quarter, should we think of that as over a one-point drag on profit, and how do you view levers to offset the impact going forward? You realized your cost savings target ahead of schedule and pricing has run above historical levels, but how do you view both of those now going forward? Thank you. Massimo Andolina: Thank you, Matt. Well, let's first of all say one thing. This is a very volatile situation that this inflation is coming from, because it's coming from a geopolitical conflict predominantly in the Middle East that is driving energy prices up and therefore a variety of inputs and services. As we have showed in the past, we have a certain resilience in our supply chain. In fact, despite the fact that the conflict has been lasting also for the first half of the year, we're only seeing these elements of cost flowing more meaningfully into our P&L in the second half of the year. I'm not going to guide you, Matt, on the precise split of those elements across the various quarters. The Q4 is probably the quarter in which we are feeling it the most, purely from a timely perspective, because those higher priced inputs are coming in now. What I would tell you is we have been through this before. You may remember at the times of the beginning of the war in Ukraine, and we have showed repeatedly the resilience of our model and our ability to mitigate those costs. Quite frankly, you're seeing it now again, because when you compare our half a point that we're guiding for this year to what is being guided by many of our other peer companies who operate in the area, you see significantly higher impacts from that. Which is testament to the resilience of our supply chain and the fact that we have a broadly sourced set of materials that come from all over the world, and also contracts which protect us over a period of time that will allow us to navigate this. Having said that, all of those protections cannot last forever. The situation is very volatile. In the same way as it is impacting now, it may disappear the moment that the conditions on the ground go back to normal. To your last point, look, we have demonstrated this year and also in previous years that we have very strong pricing power, and we are entering 2027 with probably a super strong P&L at this point, and balance sheet, by the way, as well, with margins expanding at gross level, at operating income level. You have seen that year-to-date, we have expanded 80 points, the margin at gross level and 60 at operating level. We are entering 2027 strong and therefore in an excellent position to be able to manage those impacts, should that move forward. Matt Smith: Thank you for that. If I could ask a follow-up. You changed your guidance a bit for the heated tobacco IQOS shipment versus in-market sales growth guidance. I think now you expect shipments to slightly trail IMS. Can you talk about or give more detail on that gap, and how do you view inventory levels as you are exiting 2026? Are those at a normal level, or is this gap an opportunity to further catch up as you go forward? Thank you. Massimo Andolina: Thank you for that question, Matt. Look, we have to take the fact that 2026 has been a bit of a peculiar year for heat-not-burn in that there has been especially one event. There has been this taxation and therefore, tax-driven pricing in Japan, not once but twice. Therefore, a variety of preparatory steps for that unprecedented event took place both last year when, in the end of the year, the shipments were higher. Exactly for us to prepare for pantry loading that happens from consumers that are not used to that level of price change, both at retailer level and at consumer level. You saw that there is a phasing of shipments where we have significantly higher shipments in the first half of the year, in H1, and lower shipments in H2. When you look at what we just showed, you saw that the trend in IMS also reflects the pantry loading in Japan. Given that our April pricing was of JPY 40, but our October pricing is of JPY 20, we are seeing obviously less pantry loading from the consumers given the smaller increase that is happening in the second half of the year as we saw in the first half of the year. Which means we entered into well-equipped from a shipment level and therefore with that phasing of shipments, IMS are going to run ahead slightly of shipments and therefore you will see inventories coming down, but always at a very healthy level, and therefore we also take the benefit on the working capital side. Matt Smith: Thank you. I will pass it on. Massimo Andolina: Thank you, Matt. Operator: Thank you. One moment for our next question. Our next question will come from the line of Eric Serotta from Morgan Stanley. Your line is open. Eric Serotta: Great. Thanks for taking the question, and thanks Massimo. First, could you talk a little bit about puts and takes for international smoke-free growth next year? Realizing you are not going to give us guidance today. But clearly 2026 was an extraordinary year. You talked about some less unfavorable or a more normal tax environment in Japan next year. You will be cycling the flavor ban in Poland. Any other big considerations to keep in mind as we start to think about international smoke-free IQOS next year? I know there is tax changes in Germany, much smaller than Japan, but I believe impacts HTUs. But anything more broadly in terms of puts and takes for next year for IQOS internationally? Massimo Andolina: Thank you very much, Eric, for the question. Well, look, I am not going to provide guidance for next year. We are going to talk about that one in February. As you said, puts and takes, I will give you my takes on this. My first take that I would give is, if you look at our IQOS performance over the course of the year, we have displayed that there is strong momentum in terms of IMS of IQOS. The thing that I would remark here is that the geographical base over which that growth spread is becoming wider and wider. You saw that we presented year-to-date 7.7% adjusted IMS growth. If you take out the impact from Japan and Poland, we are at 10.8% IMS growth. You could compare that with 2025, which was at 10.6%, which means that you see that the momentum is there and is actually increasing. This increase is also related to the fact that there are more and more markets that have double-digit growth in IMS and sizable markets. You have in double digit at this point, Italy, Greece, Spain, the Netherlands, the United Kingdom, Germany. Many of these markets were not markets that were on the list previously, meaning these were markets where we started investing a few years ago and where we are seeing the results coming. We are seeing Indonesia with excellent growth, Mexico, Saudi, Taiwan, where we have captured more than 80% of the share in the category. GTR, Global Travel Retail, that continues to contribute positively. You see that the momentum from an IMS perspective, when you take out those one-time event of Japan and Poland is there, and the geographic diversification of the growth gives me confidence for the resilience of that growth. The Japan event of this year, I would say that was a little bit atypical because you have asymmetrically only one category that takes a pretty important tax and price increase. If you look at the price increases that we had to pass on the IQOS consumables alone, you are looking for the Japanese consumer that is not used to seeing price increases, over a 10% price increase over the course of one year with the cigarettes not moving. Now that we move into next year and you have a JPY 12 increase across the board for HTUs and for cigarettes, you may argue that is a more progressive increase and something by which there is going to be less of a shock wave for the category itself. The other thing that I would ask you to consider is that at this point, we have launched also our new proposition, that is BONDS and BLENDS, in a variety of markets, including, by the way, in some of the prefectures in Japan. You remember that one of the elements that we wanted to really crack, especially in a place like Japan, where you have more than 50% penetration of the category among nicotine users, is for those that are still entrenched and haven't moved yet, what is a proposition that may actually encourage them to move. We're at this point with BONDS and BLENDS in a number of markets. The proposition is actually doing, and we see that the consumer feedback tells us that the proposition does what we wanted it to do. That is, it's managing to convince entrenched smokers to actually move because they find the more similar experience to cigarettes in BONDS and BLENDS that they're looking for. Therefore, we're seeing less or fewer HTU users moving to BONDS and BLENDS. They actually tell us, "Hmm, too strong for me," but more smokers moving there, meaning it's working exactly as we want. We're at the beginning of that journey. I cannot but be just encouraged by what I'm seeing. I will say one last thing. My answer has already been long, but we are starting to see also some new markets opening up. We saw Taiwan that opened up last year, and you see what a quick run we have had in Taiwan, where the business is growing strongly, and we have become absolutely the category leader in the category ahead of the traditional leading player in the CC business there. More recently, you have seen regulatory changes in Argentina, which is a positive step towards the ability next year to be able to enter the market in Argentina as well. Which means that there may be more markets that come on board. It's not a matter of whether they're going to come on board. It's more a matter of when. So our sentiment towards the trajectory for HNB remains extremely strong, Eric. Eric Serotta: Great. Very thorough and very helpful. One quick follow-up. Realizing pricing has never been the primary lever for IQOS growth, it's really mostly about driving penetration. It does seem like the price mix or the implied price mix in international smoke-free was a little bit softer this quarter. I think it ran about 3.5% in the first half, closer to, I get 70 basis points in the third quarter. Just wondering what's happening there. Is it simply the comparisons from last year? Is it some geographic mix? Is it product mix with BONDS by IQOS? Just wondering what happened in the quarter and how to think about price mix for international smoke-free going forward. Massimo Andolina: Excellent question, Eric. There are 2 things that I would mention when it comes to the revenue growth of IQOS in the quarter. 2 things to keep in mind. The first one is, it's obviously hit by the comparison on the shipments versus previous year. You saw that our shipment volume in total SFP was at 2.7% growth, which is a lower level of growth that you have seen in previous quarters. Obviously, being IQOS such a large part of our smoke-free portfolio, the comparison on IQOS shipment volumes is the one that is actually holding that down because you have seen excellent growth in the other 2 categories. There is a second element to consider. There is therefore category mix within that, when you want to take that to revenues. And one third element, there have been certain pricing decisions, timing of certain pricing decisions, especially in IQOS, that have been made and which have hit the quarter, and that's all, but nothing else on that is of any concern to us. Eric Serotta: Great. Thanks so much. I'll pass it on. Massimo Andolina: Thank you, Eric. Operator: Thank you. Our next question will come from the line of Pallav Mittal from Barclays. Your line is open. Pallav Mittal: Hi, good morning. Thanks for taking my question. The first one is on ZYN and Ultra. Clearly, there have been some concerns around the pickup in volume over the last couple of months. The EBIT this quarter in the U.S. is growing only 1.5% on a very easy comp. For Q4, you are saying it would be 0 or slightly negative. Given that the investments will continue into next year, is it fair to assume that the U.S. EBIT would decline next year? Massimo Andolina: The U.S.? Pallav Mittal: The EBIT- Massimo Andolina: Can you repeat the last? Pallav Mittal: in the U.S. The EBIT in U.S. would decline next year? James Bushnell: Pallav, sorry, your line's not very clear, but I think you're asking about U.S. EBIT for next year. Massimo Andolina: Yeah, for next year. Look, as I said before, I'm not going to provide guidance for next year here. I can provide some considerations for you to make your own conclusions on it. You have seen that we have now nicotine pouch volumes that have grown quarter-on-quarter over the past 3 quarters, and we guided over the performance in Q4. You know that we are bold about the category going forward, and we said that it's going to be in strong double-digit growth going forward. And you have seen our share performance. Quite frankly, we also guided, and I explained that in the question before from Bonnie, on the cost level that you can expect for next year and taking Q3 as a good proxy for the run rate for next year. Therefore, you can assume that with volume growth continuing from the category and from our ability to retain or even increase share, the absorption of those costs is going to be better, including the investments that we have made in Colorado for the manufacturing facility. Therefore, you can derive what the possible trajectory for the EBIT is going to be. One thing to keep in mind is the fact that obviously the 25% price optimization that we are making in Q4 will have a lagging effect for 3 quarters on the revenue level, but on a growing volume. That is what I would keep in mind, and then we can provide better guidance when we talk again in February. James Bushnell: Pallav, your line is very unclear, so I am afraid we will have to move to the next question. Please do contact us if you have a follow-up to that. Operator: Thank you. Our next question will come from the line of Andrei Andon from Jefferies. Your line is open. Andrei Andon: Hi, Massimo and James. It is Andrei Andon from Jefferies here. Thank you very much for taking my questions. 2 quick ones from me, please. First of all, in Germany, we have had this law that means excise taxes will increase much more sharply in the next 4 years. It was passed last week. How do you expect this to affect combustibles and heated tobacco in Germany in terms of volumes and pricing ability in 2027 and beyond? Then the second question, we have had this shipment growth for ZYN in the U.S. just over 4% year-on-year in Q3. It does seem like it is fairly ahead of third-party scanner data, which seems to suggest volumes down mid-single digits in Q3. Is this due to a restocking benefit, or are there any other factors that would help explain this difference? Thank you. Massimo Andolina: Thank you very much, Andrei. I will start from the Germany question. As you know, we operate across a variety of countries around the world, and this is not the first time that we find ourselves confronted with higher than usual taxation passed in one time. If you look at the recent past, similar events of actually higher magnitude have happened past couple of years in Belgium and the Netherlands, 2 years ago in Poland, more recently in India, in Mexico. We are actually quite well-versed to deal with events like this one. The German government came with a higher than usual tax pass on because now it's ranging between EUR 0.83 and EUR 0.88, I understand, starting on January 1st. I would point you, Andrei, to certain positive elements of this, which are the following. First and foremost, the differential with HTU has been retained, and therefore, HTU retains a tax advantage versus the underlying cigarette tax. The second element that I would bring you to is, if there is a market where we are perfectly positioned to be super competitive, even in an environment with higher tax, that's Germany. We have the strongest brand in the market, which is Marlboro. Marlboro's equity in Germany is one of the highest that we have in the entire world, accompanied by a few other brands, second to it, L&M, that is accompanying it. Marlboro and the entire portfolio has been well deployed across a variety of formats, including very large stick counts packs, but also banded with the launch last year of Marlboro Crafted. That has been extremely successful, which means that it allows us to compete at all the various price segments, and therefore, to compete very powerfully. I've had to tell you, is it welcome that the German government comes with a tax increase of that magnitude? No, it's not, because we know what that trajectory does. We have seen that well in the U.K. We have seen that well in France, in Belgium, in the Netherlands. Fundamentally, it moves more volume to illicit players, and ultimately, the government collects fewer taxes, and sometimes the lawful industry collects fewer revenues. But if there is one company in Germany that is well-versed to compete in that environment, that is us, thanks to the portfolio that we have and the strengths of the brands that we have. At this point, I would say, with cigarette prices going up, yes, the HTUs are going to go up, but by a lesser extent, given the tax differential, and we're going to continue to be focused on the growth of IQOS in Germany, which, as I said before, is recording double-digit IMS growth this year, and that is, for us, super important. I'll come to your question on the ZYN growth. Andrei, if I may ask you to clarify your question on the ZYN growth again, please. Andrei Andon: Mm-hmm. The reported shipment number, the just over +4% in the U.S. on volumes, does seem to be ahead of the scanner data that we've seen, which would have suggested around mid-single digit volume decline in Q3. I was just wondering if that delta is explained by a degree of restocking or if there are other factors in play that would explain this difference. Massimo Andolina: Well, what I can tell you is, this is the shipment data that we have, so we're growing 4.2% in the quarter. And actually, what you can consider is that if you consider the comparison to the fact that in September last year, we had the nicotine pouch promotion that hit the month of September. We are actually removing that unfavorable comparison, growing 13% in the quarter net of that comparison. That is maybe the element that you may want to keep in mind in order to reconcile your figures. The second thing that I would point out to you is that obviously in the quarter, there is the rollout and pipelining and increase of distribution of our new variants and the flavors on the dry portfolio and the launch of the ULTRA variants. So over the course of the quarter, there was obviously increase of distribution. We believe that for those variants, we are now fully covered in terms of distribution. We're now building the 1 for 1.5 at 8, but those obviously have contributed to the growth of shipments for us in the quarter. Does that address your question, Andrei? Andrei Andon: Yeah. Thank you very much. Massimo Andolina: Thank you. Operator: Thank you. That is all the time we have for Q&A today. I want to turn it back over to management for closing remarks. James Bushnell: Thank you very much. Sorry if we did not manage to address everybody's question. Please do follow up with the Investor Relations team. That concludes our call today. Thank you for joining us, and have a great day. Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone have a great day. Before you buy stock in Philip Morris International, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Philip Morris International wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. 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