Philip Morris International, Inc. (NYSE:PM) Q1 2018 Earnings Conference Call - Preliminary Transcript

Apr 19, 2018 • 09:00 am ET


Philip Morris International, Inc. (NYSE:PM) Q1 2018 Earnings Conference Call - Preliminary Transcript


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Good day, and welcome to the Philip Morris International First Quarter 2018 Earnings Conference Call. Today's call is scheduled to last about one hour including remarks by Philip Morris International management and the question-and-answer session. (Operator Instructions) Media representatives on the call will also be invited to ask questions at the conclusion of questions from the investment community.

I will now turn the call over to Mr. Nick Rolli, Vice President of Investor Relations and Financial Communications. Please go ahead, sir.

Nicholas Rolli

Welcome and thank you for joining us. Earlier today, we issued a press release containing detailed information on our 2018 first quarter results. You may access the release on or the PMI Investor Relations App. A glossary of terms, including the definition for reduced-risk products, or "RRPs," as well as adjustments, other calculations and reconciliations to the most directly comparable U.S. GAAP measures, are at the end of today's webcast slides, which are posted on our website.

As a reminder, effective January 1, 2018, we began managing our business in six reporting segments reflecting a new regional structure. Three years of historical data reflecting the new structure are available on our website and in the Form 8-K that we submitted to the SEC on March 23rd. Please also note that we are now using operating income to evaluate business segment performance and allocate resources, replacing operating companies income, or "OCI," which was used prior to January 1, 2018. OCI was defined as operating income, excluding general corporate expenses and the amortization of intangibles, plus equity income or loss in an unconsolidated subsidiaries, net.

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.

It's now my pleasure to introduce Martin King, our Chief Financial Officer. Martin.

Martin King

Thank you, Nick, and welcome, ladies and gentlemen. As announced this morning, we are increasing our 2018 reported diluted earnings per share guidance, at prevailing exchange rates, by $0.05 to a range of $5.25 to $5.40. The change reflects a lower estimated full-year effective tax rate of approximately 26%. Our guidance includes $0.16 of favorable currency, at prevailing exchange rates. Excluding currency, our guidance represents a growth rate of approximately 8% to 11% compared to our adjusted diluted EPS of $4.72 in 2017.

The reduction in our estimated effective tax rate for 2018 to approximately 26%, versus the 28% that we had previously communicated, is driven by two main factors. First, further analysis and interpretation of the Tax Cuts and Jobs Act , primarily related to foreign tax credit limitations due to the Global Intangible Low Taxed Income provisions of the Act; and second, revised foreign income tax estimates due to a change in the mix of our foreign earnings.

I must caveat that this estimate reflects our current capital structure, as well as our current