Reynolds American Inc. (NYSE:RAI) Q4 2014 Earnings Conference Call - Final Transcript

Feb 10, 2015 • 09:00 am ET


Reynolds American Inc. (NYSE:RAI) Q4 2014 Earnings Conference Call - Final Transcript


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Good day, ladies and gentlemen, and welcome to the Reynolds American Fourth Quarter 2014 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time.

[Operator Instructions]

As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Mr. Morris Moore, Vice President of Investor Relations. Sir, you may begin.

Morris Moore

Good morning, and thank you for joining our call. Today, we will review Reynolds American's results for the fourth quarter and full year as well as our outlook for 2015. As usual, our discussion will focus on adjusted results as management believes this provides better perspective on our underlying business performance.

A reconciliation of reported to adjusted earnings is in our press release, which is available on our website at Joining me this morning are RAI's President and CEO, Susan Cameron; and Tom Adams, our CFO.

The information we're about to discuss includes forward-looking statements. When we talk about future results or events, a number of factors could generate results that are materially different from our projections today. These factors include, but are not limited to, items detailed in our press release and SEC filings. Except as provided by Federal Securities Laws, we are not required to publicly update or revise any forward-looking statements.

And now I'll turn the call over to Susan.

Susan M. Cameron

Thank you, Morris, and good morning, everyone. Reynolds American reported another great quarter overall in what can only be characterized as a fantastic year. With our continued earnings growth momentum and excellent returns to our shareholders in 2014, I'm hopeful that our investors are as pleased as we are with the year's results. Our companies made substantial progress in many areas, but I'd like to call out a few of our key achievements over the past year.

Our companies strengthened the profitability of their core cigarette and moist snuff operations through smart business strategies and execution and a tight focus on efficiency and productivity. And they also continued to invest in the equity of their powerful key brands, growing market share and profitability. The marketplace is quite competitive, so that kind of brand performance is a tribute to our companies' highly engaged and expert consumer and trade marketing teams. And in keeping with our commitment to our investors, our companies' outstanding performance yielded excellent value for shareholders. Total shareholder return, which included a dividend increase of more than 6%, was just under 35% for the year, again, significantly outpacing the S&P 500.

Before I get into more details on the quarter, I want to give you a quick update on our proposed acquisition of Lorillard and the divestiture of certain assets to Imperial.As you know, the shareholders of RAI, Lorillard and Imperial Tobacco approved the transaction last month, which was an important milestone. And RAI has substantially complied with the second request for information from the Federal Trade Commission. We do not