Vector Group Ltd. (NYSE:VGR) today announced financial results
for the three months ended March 31, 2020.
GAAP Financial Results
First quarter 2020 revenues were $454.5 million, compared to
revenues of $420.9 million for the first quarter of 2019. The
Company recorded operating income of $53.3 million for the first
quarter of 2020, compared to operating income of $42.6 million for
the first quarter of 2019. Net loss attributed to Vector Group Ltd.
for the first quarter of 2020 was $3.2 million, or $(0.03) per
diluted common share, compared to net income of $15.0 million, or
$0.08 per diluted common share, for the first quarter of 2019.
Non-GAAP Financial Measures
Non-GAAP financial measures also include adjustments for the
derivative associated with the 2018 acquisition of 29.41% of
Douglas Elliman Realty, LLC, litigation settlements and judgments,
impairment charges of goodwill and intangible assets, settlements
of long-standing disputes related to the Master Settlement
Agreement in the Tobacco segment, net interest expense capitalized
to real estate ventures, stock-based compensation expense (for
purposes of Adjusted EBITDA only) and non-cash interest expense
associated with the Company’s convertible debt. Reconciliations of
non-GAAP financial measures to the comparable GAAP financial
results for the three months ended March 31, 2020 and 2019 are
included in Tables 2 through 7.
Three months ended March 31, 2020 compared to the three months
ended March 31, 2019
Adjusted EBITDA attributed to Vector Group Ltd. (as described in
Table 2 attached hereto) were $60.2 million for the first quarter
of 2020, compared to $49.7 million for the first quarter of
2019.
Adjusted Net Income (as described in Table 3 attached hereto)
was $39.9 million, or $0.27 per diluted share, for the first
quarter of 2020, and $13.0 million, or $0.07 per diluted share, for
the first quarter of 2019.
Adjusted Operating Income (as described in Table 4 attached
hereto) was $53.3 million for the first quarter of 2020, compared
to $42.6 million for the first quarter of 2019.
Tobacco Segment Financial Results
For the first quarter of 2020, the Tobacco segment had revenues
of $287.1 million, compared to $256.8 million for the first quarter
of 2019.
Operating Income from the Tobacco segment was $69.2 million for
the three months ended March 31, 2020 compared to $60.1 million for
the three months ended March 31, 2019.
Non-GAAP Financial Measures
Tobacco Adjusted Operating Income (as described in Table 5
attached hereto) for the first quarter of 2020 was $69.2 million,
compared to $60.1 million for the for the first quarter of
2019.
For the three months ended March 31, 2020, the Tobacco segment
had conventional cigarette (wholesale) shipments of approximately
2.25 billion units, compared to 2.08 billion units for the first
quarter of 2019.
Liggett’s retail market share increased to 4.3% for the three
months ended March 31, 2020, compared to 4.2% for the three months
ended March 31, 2019. Compared to the three months ended March 31,
2019, Liggett’s retail shipments increased by 2.2% while the
overall industry’s retail shipments declined by 0.4%, according to
data from Management Science Associates, Inc.
Real Estate Segment Financial Results
For the first quarter of 2020, the Real Estate segment had
revenues of $167.4 million, compared to $164.2 million for the
first quarter of 2019. For the first quarter of 2020, the Real
Estate segment reported a net loss of $54.4 million, compared to a
net loss of $9.1 million for the first quarter of 2019.
Douglas Elliman’s results are included in Vector Group Ltd.’s
Real Estate segment. For the first quarter of 2020, Douglas Elliman
had revenues of $165.6 million, compared to $161.9 million for the
first quarter of 2019. For the first quarter of 2020, Douglas
Elliman reported a net loss of $69.0 million, compared to a net
loss of $10.4 million for the first quarter of 2019.
Results for the first quarter of 2020 for the Real Estate
segment and Douglas Elliman included non-cash impairment charges of
$58.3 million.
Non-GAAP Financial Measures
For the first quarter of 2020, Real Estate Adjusted EBITDA
attributed to the Company (as described in Table 6 attached hereto)
were a loss of $6.9 million, compared to a loss of $7.9 million for
the first quarter of 2019.
For the first quarter of 2020, Douglas Elliman’s Adjusted EBITDA
(as described in Table 7 attached hereto) were a loss of $7.7
million, compared to a loss of $9.0 million for the first quarter
of 2019.
For the three months ended March 31, 2020, Douglas Elliman
achieved closed sales of approximately $5.9 billion compared to
$5.8 billion for the three months ended March 31, 2019.
Non-GAAP Financial Measures
Adjusted EBITDA, Adjusted Net Income, Adjusted Operating Income,
Tobacco Adjusted Operating Income, Tobacco Adjusted EBITDA, New
Valley LLC Adjusted EBITDA and Douglas Elliman Realty, LLC Adjusted
EBITDA (“the Non-GAAP Financial Measures”) are financial measures
not prepared in accordance with generally accepted accounting
principles (“GAAP”). The Company believes that the Non-GAAP
Financial Measures are important measures that supplement
discussions and analysis of its results of operations and enhances
an understanding of its operating performance. The Company believes
the Non-GAAP Financial Measures provide investors and analysts with
a useful measure of operating results unaffected by differences in
capital structures and ages of related assets among otherwise
comparable companies.
Management uses the Non-GAAP Financial Measures as measures to
review and assess operating performance of the Company’s business,
and management and investors should review both the overall
performance (GAAP net income) and the operating performance (the
Non-GAAP Financial Measures) of the Company’s business. While
management considers the Non-GAAP Financial Measures to be
important, they should be considered in addition to, but not as
substitutes for or superior to, other measures of financial
performance prepared in accordance with GAAP, such as operating
income, net income and cash flows from operations. In addition, the
Non-GAAP Financial Measures are susceptible to varying calculations
and the Company’s measurement of the Non-GAAP Financial Measures
may not be comparable to those of other companies. Attached hereto
as Tables 2 through 7 is information relating to the Company’s
Non-GAAP Financial Measures for the three months ended March 31,
2020 and 2019.
Conference Call to Discuss First Quarter 2020 Results
As previously announced, the Company will host a conference call
and webcast on Friday, May 8, 2020 at 8:30AM (ET) to discuss its
first quarter 2020 results. Investors can access the call by
dialing 877-271-1828 and entering 52181623 as the conference ID
number. The call will also be available via live webcast at
https://www.webcaster4.com/Webcast/Page/2271/34015. Webcast
participants should allot extra time to register before the webcast
begins.
A replay of the call will be available shortly after the call
ends on May 8, 2020 through May 22, 2020. To access the replay,
dial 877-919-4059 and enter 52181623 as the conference ID number.
The archived webcast will also be available at
https://www.webcaster4.com/Webcast/Page/2271/34015 for one
year.
About Vector Group Ltd.
Vector Group is a holding company for Liggett Group LLC, Vector
Tobacco Inc., New Valley LLC, and Douglas Elliman Realty, LLC.
Additional information concerning the company is available on the
Company’s website, www.VectorGroupLtd.com.
Forward-Looking and Cautionary Statements
This press release includes forward-looking statements within
the meaning of the federal securities law. All statements other
than statements of historical or current facts, including
statements regarding the current or anticipated impact of the
COVID-19 pandemic on our business, made in this document are
forward-looking. We identify forward-looking statements in this
document by using words or phrases such as “anticipate,” “believe,”
“estimate,” “expect,” “intend,” “may be,” “objective,” “plan,”
“seek,” “predict,” “project” and “will be” and similar words or
phrases or their negatives. Forward-looking statements reflect our
current expectations and are inherently uncertain. Actual results
could differ materially for a variety of reasons. In particular,
the extent, duration and severity of the spread of the COVID-19
pandemic and economic consequences stemming from the COVID-19
crisis (including a potential significant economic contraction) as
well as related risks and the impact of any of the foregoing on our
business, results of operations and liquidity could affect our
future results and cause actual results to differ materially from
those expressed in forward-looking statements.
Risks and uncertainties that could cause our actual results to
differ significantly from our current expectations are described in
our 2019 Annual Report on Form 10-K and in our Quarterly Report on
Form 10-Q for the quarter ended March 31, 2020. We undertake no
responsibility to publicly update or revise any forward-looking
statement except as required by applicable law.
[Financial Tables Follow]
TABLE 1
VECTOR GROUP LTD. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Dollars
in Thousands, Except Per Share Amounts)
Three Months Ended
March 31,
2020
2019
(Unaudited)
Revenues:
Tobacco*
$
287,069
$
256,756
Real estate
167,419
164,168
Total revenues
454,488
420,924
Expenses:
Cost of sales:
Tobacco*
197,290
177,303
Real estate
113,333
108,717
Total cost of sales
310,623
286,020
Operating, selling, administrative and
general expenses
90,517
92,314
Operating income
53,348
42,590
Other income (expenses):
Interest expense
(35,627
)
(37,520
)
Change in fair value of derivatives
embedded within convertible debt
3,330
10,349
Impairments of goodwill and intangible
assets
(58,252
)
—
Equity in losses from real estate
ventures
(6,505
)
(2,439
)
Equity in earnings from investments
50,152
1,362
Other, net
(10,655
)
7,440
(Loss) income before provision for income
taxes
(4,209
)
21,782
Income tax (benefit) expense
(978
)
6,749
Net (loss) income
(3,231
)
15,033
Net income attributed to non-controlling
interest
—
(80
)
Net (loss) income attributed to Vector
Group Ltd.
$
(3,231
)
$
14,953
Per basic common share:
Net (loss) income applicable to common
share attributed to Vector Group Ltd.
$
(0.03
)
$
0.09
Per diluted common share:
Net (loss) income applicable to common
share attributed to Vector Group Ltd.
$
(0.03
)
$
0.08
* Revenues and cost of sales include
federal excise taxes of $113,139 and $104,633, respectively.
TABLE 2
VECTOR GROUP LTD. AND
SUBSIDIARIES
RECONCILIATION OF ADJUSTED
EBITDA
(Unaudited)
(Dollars
in Thousands)
LTM
Three Months Ended
March 31,
March 31,
2020
2020
2019
Net income (loss) attributed to Vector
Group Ltd.
$
82,790
$
(3,231
)
$
14,953
Interest expense
136,555
35,627
37,520
Income tax expense (benefit)
25,086
(978
)
6,749
Net (loss) income attributed to
non-controlling interest
(39
)
—
80
Depreciation and amortization
17,718
4,575
4,708
EBITDA
$
262,110
$
35,993
$
64,010
Change in fair value of derivatives
embedded within convertible debt (a)
(19,406
)
(3,330
)
(10,349
)
Equity in earnings from investments
(b)
(65,790
)
(50,152
)
(1,362
)
Equity in losses from real estate ventures
(c)
23,354
6,505
2,439
Stock-based compensation expense (d)
9,291
2,258
2,436
Litigation settlement and judgment expense
(e)
990
—
—
Impairments of goodwill and intangible
assets (f)
58,252
58,252
—
Other, net
(3,210
)
10,655
(7,440
)
Adjusted EBITDA attributed to Vector Group
Ltd.
$
269,892
$
60,181
$
49,734
Adjusted EBITDA Attributed to Vector
Group Ltd. by Segment
Tobacco
$
279,571
$
71,228
$
62,122
Real Estate (g)
7,101
(6,910
)
(7,908
)
Corporate and Other
(16,780
)
(4,137
)
(4,480
)
Total
$
269,892
$
60,181
$
49,734
a.
Represents income recognized from changes
in the fair value of the derivatives embedded in the Company’s
convertible debt.
b.
Represents equity in earnings recognized
from investments that the Company accounts for under the equity
method. Included in the amount are equity earnings from Castle
Brands Inc. of $16,427 and Ladenburg Thalmann Financial Services of
$52,148 for the twelve months ended March 31, 2020 and Ladenburg
Thalmann Financial Services of $53,052 for the three months ended
ended March 31, 2020.
c.
Represents equity in losses recognized
from the Company’s investment in certain real estate businesses
that are not consolidated in its financial results.
d.
Represents amortization of stock-based
compensation.
e.
Represents accruals for settlements of
judgment expenses in the Engle progeny tobacco litigation.
f.
Represents non-cash intangible asset
impairment charges within the Real Estate segment related to the
Douglas Elliman Realty, LLC reporting unit and trademark.
g.
Includes Adjusted EBITDA for Douglas
Elliman Realty, LLC of $6,620 for the last twelve months ended
March 31, 2020, losses of $7,704 and $8,991 for the three months
ended March 31, 2020 and 2019, respectively.
TABLE 3
VECTOR GROUP LTD. AND
SUBSIDIARIES
RECONCILIATION OF ADJUSTED NET
INCOME
(Unaudited)
(Dollars
in Thousands, Except Per Share Amounts)
Three Months Ended
March 31,
2020
2019
Net (loss) income attributed to Vector
Group Ltd.
$
(3,231
)
$
14,953
Change in fair value of derivatives
embedded within convertible debt
(3,330
)
(10,349
)
Non-cash amortization of debt discount on
convertible debt
4,517
8,525
Impact of net interest expense capitalized
to real estate ventures
1,519
(930
)
Adjustment for derivative associated with
acquisition of 29.41% of Douglas Elliman Realty, LLC
(2,065
)
—
Impairments of goodwill and intangible
assets (a)
58,252
—
Total adjustments
58,893
(2,754
)
Tax (expense) benefit related to
adjustments
(15,713
)
763
Adjusted Net Income attributed to Vector
Group Ltd.
$
39,949
$
12,962
Per diluted common share:
Adjusted Net Income applicable to common
shares attributed to Vector Group Ltd.
$
0.27
$
0.07
Represents non-cash intangible asset
impairment charges within the Real Estate segment related to the
Douglas Elliman Realty, LLC reporting unit and trademark.
TABLE 4
VECTOR GROUP LTD. AND
SUBSIDIARIES
RECONCILIATION OF ADJUSTED
OPERATING INCOME
(Unaudited)
(Dollars
in Thousands)
LTM
Three Months Ended
March 31,
March 31,
2020
2020
2019
Operating income
$
241,893
$
53,348
$
42,590
Litigation settlement and judgment expense
(a)
990
—
—
Total adjustments
990
—
—
Adjusted Operating Income
$
242,883
$
53,348
$
42,590
a.
Represents accruals for settlements and
judgment expenses in the Engle progeny tobacco litigation.
TABLE 5
VECTOR GROUP LTD. AND
SUBSIDIARIES
RECONCILIATION OF TOBACCO
ADJUSTED OPERATING INCOME
AND TOBACCO ADJUSTED
EBITDA
(Unaudited)
(Dollars
in Thousands)
LTM
Three Months Ended
March 31,
March 31,
2020
2020
2019
Tobacco Adjusted Operating
Income:
Operating income from tobacco segment
$
270,672
$
69,186
$
60,144
Litigation settlement and judgment expense
(a)
990
—
—
Total adjustments
990
—
—
Tobacco Adjusted Operating Income
$
271,662
$
69,186
$
60,144
LTM
Three Months Ended
March 31,
March 31,
2020
2020
2019
Tobacco Adjusted EBITDA:
Operating income from tobacco segment
$
270,672
$
69,186
$
60,144
Litigation settlement and judgment expense
(a)
990
—
—
Total adjustments
990
—
—
Tobacco Adjusted Operating Income
271,662
69,186
60,144
Depreciation and amortization
7,909
2,042
1,957
Stock-based compensation expense
—
—
21
Total adjustments
7,909
2,042
1,978
Tobacco Adjusted EBITDA
$
279,571
$
71,228
$
62,122
a.
Represents accruals for settlements of
judgment expenses in the Engle progeny tobacco litigation.
TABLE 6
VECTOR GROUP LTD. AND
SUBSIDIARIES
RECONCILIATION OF REAL ESTATE
SEGMENT (NEW VALLEY LLC) ADJUSTED EBITDA
(Unaudited)
(Dollars
in Thousands)
LTM
Three Months Ended
March 31,
March 31,
2020
2020
2019
Net loss attributed to Vector Group Ltd.
from subsidiary non-guarantors (a)
$
(56,787
)
$
(54,432
)
$
(9,085
)
Interest expense (a)
800
116
229
Income tax benefit (a)
(22,274
)
(19,809
)
(3,419
)
Net (loss) income attributed to
non-controlling interest (a)
(39
)
—
80
Depreciation and amortization
8,845
2,313
2,501
EBITDA
$
(69,455
)
$
(71,812
)
$
(9,694
)
Loss from non-guarantors other than New
Valley LLC
52
29
28
Equity in losses from real estate ventures
(b)
23,354
6,505
2,439
Impairments of goodwill and intangible
assets (c)
58,252
58,252
—
Other, net
(5,182
)
43
(704
)
Adjusted EBITDA attributed to New Valley
LLC
$
7,021
$
(6,983
)
$
(7,931
)
Adjusted EBITDA Attributed to New Valley
LLC by Segment
Real Estate (d)
$
7,101
$
(6,910
)
$
(7,908
)
Corporate and Other
(80
)
(73
)
(23
)
Total (e)
$
7,021
$
(6,983
)
$
(7,931
)
a.
Amounts are derived from Vector Group
Ltd.’s Condensed Consolidated Financial Statements. See Note
entitled “Condensed
Consolidating Financial Information”
contained in Vector Group Ltd.’s Form 10-Q for the three months
ended March 31, 2020.
b.
Represents equity in losses recognized
from the Company’s investment in certain real estate businesses
that are not consolidated in its financial results.
c.
Represents non-cash intangible asset
impairment charges within the Real Estate segment related to the
Douglas Elliman Realty, LLC reporting unit and trademark.
d.
Includes Adjusted EBITDA for Douglas
Elliman Realty, LLC of $6,620 for the last twelve months ended
March 31, 2020, losses of $7,704 and $8,991 for the three months
ended March 31, 2020 and 2019, respectively.
e.
New Valley’s Adjusted EBITDA does not
include an allocation of Vector Group Ltd.’s “Corporate and Other”
segment expenses (for purposes of computing Adjusted EBITDA
contained in Table 2 of this press release) of $16,780 for the last
twelve months ended March 31, 2020, $4,137 and $4,480 for the three
months ended March 31, 2020 and 2019, respectively.
TABLE 7
VECTOR GROUP LTD. AND
SUBSIDIARIES
RECONCILIATION OF DOUGLAS
ELLIMAN REALTY, LLC ADJUSTED EBITDA
AND DOUGLAS ELLIMAN REALTY,
LLC ADJUSTED EBITDA ATTRIBUTED TO REAL ESTATE SEGMENT
(Unaudited)
(Dollars
in Thousands)
LTM
Three Months Ended
March 31,
March 31,
2020
2020
2019
Net loss attributed to Douglas Elliman
Realty, LLC
$
(52,441
)
$
(69,040
)
$
(10,414
)
Interest expense
6
1
3
Income tax expense
368
—
—
Depreciation and amortization
8,461
2,223
2,400
Douglas Elliman Realty, LLC EBITDA
$
(43,606
)
$
(66,816
)
$
(8,011
)
Equity in earnings from real estate
ventures (a)
(7,846
)
(23
)
(649
)
Impairments of goodwill and intangible
assets (b)
58,252
58,252
—
Other, net
(180
)
883
(331
)
Douglas Elliman Realty, LLC Adjusted
EBITDA attributed to Real Estate Segment
$
6,620
$
(7,704
)
$
(8,991
)
a.
Represents equity in earnings recognized
from the Company’s investment in certain real estate businesses
that are not consolidated
in its financial results.
b.
Represents non-cash intangible asset
impairment charges within the Real Estate segment related to the
Douglas Elliman Realty, LLC reporting unit and trademark.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200508005133/en/
Emily Claffey/Benjamin Spicehandler /Columbia Clancy Sard
Verbinnen & Co 212-687-8080 Conrad Harrington Sard Verbinnen
& Co - Europe +44 (0)20 3178 8914 J. Bryant Kirkland III,
Vector Group Ltd. 305-579-8000
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