Andrei Condrea: Hi. Thank you for taking my question and good morning, Billy. Good morning, Sal. One from me, please. When thinking just about your price increases. Obviously, one you took in Q4 was larger than your previous increases over the past, call it, two years. Should — basically, my question is should we kind of expect this higher and higher level of price taken from you and your peers as volumes come under pressure from macro factors? Sorry, it was very long-winded. And …
Billy Gifford: That’s right. I think I followed it. Did you have any more there? I didn’t want to cut you off.
Andrei Condrea: Yeah. I got — I got another one after that.
Billy Gifford: Okay. Yeah. I’ll be careful not to talk about future pricing. But I think when you think about it, again, I would give this an advice that I gave to Bonnie is I wouldn’t get hung up on one price increase that took place. We really look at the factors that go into pricing and we’ve mentioned those before. But I think you see with the stability of Marlboro share in the marketplace. We feel good about the strength of the brand, and we have been able to take those price increases. I would remind you that price elasticity for the industry is a negative 0.35 coefficient factor. We haven’t seen anything that would determine that that would need to move, and we feel good about that. So I think when you think about pricing, again, typically, we look at it as price realization versus specific list price.
And remember, our price realization is made up of two pieces. One is list price that you saw us take and the other is promotional spend in the marketplace, and that can drive it one way or the other on any given quarter and then through time.
Andrei Condrea: Thank you. That makes sense. And secondly, I mean we saw — obviously, you filed a lot of litigation versus illicit vapor manufacturers and well, BAT did the same went by another avenue. Probably what we’d be looking for is any inkling on how long this would take to crystallize, one way or the other?
Billy Gifford: Yeah. Certainly, the legal system will be the legal system. So it’s hard to predict how that will transpire. I think there, what we’re looking for is an injunction. These products are illegal. And with the lack of enforcement that’s taken place by the FDA, we felt like we needed to take action. And so we did that with litigation, and we’ve done that in other ways with communications to the FDA, meeting with government officials to really show the intolerable nature of what’s taking place in the marketplace. Again, you heard it in my remarks, but regulation without enforcement is truly indistinguishable from any — from having no regulation. If you don’t enforce it, it’s basically words on paper. So we want to protect harm reduction and the opportunity for the 30 million smokers in the US.
So we really need to have enforcement where the smokers can make informed choices as they are moving across categories. I think that there’s an underlying positive is that we see adult smokers moving over. So they’re ready to have potentially reduced harm products. We just need them to be regulated and based on science to be in the marketplace.
Andrei Condrea: Very clear. Thank you. I will pass it on. Thank you very much.
Billy Gifford: Thank you.
Operator: Thank you. We’ll take our next question from Vivien Azer with TD Cowen. Please go ahead.
Vivien Azer: Hi. Thank you. Good morning.
Billy Gifford: Good morning, Vivien.
Vivien Azer: So I wanted to talk about your smokeless margins, just to start very healthy margin improvement. I was wondering if you could just dimensionalize the magnitude of the benefit that you guys saw from the reduction in promo spend on versus kind of the normalized operating leverage that you get from pricing on MSP? Thanks.
