Continued Strong Revenue Growth in Tobacco
Segment, with First Quarter Tobacco Segment Revenues Increased by
15% from Prior Year Period
First Quarter 2022 Highlights:
- Consolidated revenues of $312.0 million, increased by 15.1%
or $41.1 million compared to the prior year period
- Tobacco Segment revenues of $309.0 million, increased by 15.1%
compared to the prior year period.
- Tobacco Segment unit volume increase of 18.7% compared to the
prior year period.
- Liggett’s wholesale and retail market share increases to 5.2%
from 3.9% and 4.2%, respectively, in the prior year period.
- Reported net income attributed to Vector Group of $32.5
million or $0.21 per diluted common share, compared to $32.0
million or $0.20 per diluted common share in the prior year period;
Adjusted Net Income from Continuing Operations of $26.6 million or
$0.17 per diluted common share, compared to $34.9 million or $0.22
per diluted common share in the prior year period
- Reported operating income of $75.1 million, declined by $0.8
million compared to the prior year period
- Tobacco Segment operating income of $77.6 million, declined by
4.9% or $4.0 million compared to the prior year period,
attributable to the investment in Montego’s significant volume and
market share growth.
- Adjusted EBITDA from Continuing Operations of $77.1 million,
declined by 1.2% or $0.9 million compared to the prior year
period
- Tobacco Segment Adjusted EBITDA from Continuing Operations of
$77.1 million, declined by 4.4% or $3.6 million compared to the
prior year period, attributable to the investment in Montego’s
significant volume and market share growth.
- Strong liquidity with cash and cash equivalents of $238
million and investment securities and long-term investments of $183
million at March 31, 2022
- Cash dividends of $32 million returned to stockholders at a
rate of $0.20 per common share
Vector Group Ltd. (NYSE:VGR) today announced financial results
for the three months ended March 31, 2022.
“Vector Group delivered strong tobacco business revenue
performance in the first quarter as we capitalized on favorable
market opportunities to substantially increase value and market
share,” said Howard M. Lorber, President and Chief Executive
Officer of Vector Group Ltd. “Our timely investments in expanding
our price-fighting Montego brand further demonstrate our proven
long-term strategy of optimizing long-term profit through the
effective management of volume, pricing, and market share
growth.”
GAAP Financial Results
First quarter 2022 revenues were $312.0 million, compared to
revenues of $271.0 million for the first quarter of 2021. The
Company recorded operating income of $75.1 million for the first
quarter of 2022, compared to operating income of $76.0 million for
the first quarter of 2021. Net income attributed to Vector Group
Ltd. for the first quarter of 2022 was $32.5 million, or $0.21 per
diluted common share, compared to net income of $32.0 million, or
$0.20 per diluted common share, for the first quarter of 2021.
Non-GAAP Financial Measures
Non-GAAP financial results include adjustments for litigation
settlements and judgment expense, impact of Master Settlement
Agreement settlements, transaction expenses, acceleration of stock
compensation expense (for purposes of Adjusted Net Income from
Continuing Operations and Adjusted Operating Income only), net
gains on sales of assets (for purposes of Adjusted EBITDA from
Continuing Operations and Adjusted Operating Income only), and loss
on extinguishment of debt (for purposes of Adjusted EBITDA from
Continuing Operations and Adjusted Net Income from Continuing
Operations). For purposes of Adjusted EBITDA from Continuing
Operations only, adjustments include equity in earnings from
investments, equity in (earnings) losses from real estate ventures,
stock-based compensation expense, litigation settlements and
judgment expense, impact of Master Settlement Agreement
settlements, transaction expenses, and other, net. For purposes of
Adjusted Net Income from Continuing Operations only, adjustments
include net interest expense capitalized to real estate ventures
and adjustments for a derivative associated with a guarantee.
Reconciliations of non-GAAP financial measures to the comparable
GAAP financial results for the last twelve months ended March 31,
2022 and the three months ended March 31, 2022 and 2021 are
included in Tables 2 through 6.
Three months ended March 31, 2022 compared to the three months
ended March 31, 2021
Adjusted EBITDA from Continuing Operations attributed to Vector
(as described in Table 2 attached hereto) were $77.1 million for
the first quarter of 2022, compared to $78.0 million for the first
quarter of 2021.
Adjusted Net Income from Continuing Operations (as described in
Table 3 attached hereto) was $26.6 million, or $0.17 per diluted
common share, for the first quarter of 2022, and $34.9 million, or
$0.22 per diluted common share, for the first quarter of 2021.
Adjusted Operating Income (as described in Table 4 attached
hereto) was $73.1 million for the first quarter of 2022, compared
to $73.3 million for the first quarter of 2021.
Consolidated Balance Sheet
Vector maintained significant liquidity at March 31, 2022 with
cash and cash equivalents of $238 million, including $46 million of
cash at Liggett. Vector also held investment securities of $133
million and long-term investments of $50 million.
Vector continued its longstanding practice of paying a quarterly
cash dividend in the first quarter of 2022. Vector returned $32
million to stockholders at a rate of $0.20 per common share.
Tobacco Segment Financial Results
For the first quarter of 2022, the Tobacco segment had revenues
of $309.0 million, compared to $268.5 million for the first quarter
of 2021.
Operating Income from the Tobacco segment was $77.6 million for
the three months ended March 31, 2022 compared to $81.6 million for
the three months ended March 31, 2021.
Non-GAAP Financial Measures
Tobacco Adjusted Operating Income (as described in Table 5
attached hereto) for the first quarter of 2022 was $75.6 million,
compared to $78.9 million for the first quarter of 2021.
For the three months ended March 31, 2022, the Tobacco segment
had conventional cigarette (wholesale) shipments of approximately
2.30 billion units, compared to 1.94 billion units for the first
quarter of 2021.
According to data from Management Science Associates, for the
first quarter of 2022, Liggett’s wholesale market share increased
to 5.2% compared to 3.9% for the first quarter of 2021. Liggett’s
wholesale market share is 4.4% for the last twelve months ended
March 31, 2022.
According to data from Management Science Associates, for the
first quarter of 2022, Liggett’s retail market share increased to
5.2% compared to 4.2% for the first quarter of 2021. Liggett’s
retail market share is 4.4% for the last twelve months ended March
31, 2022. Compared to the first quarter of 2021, Liggett’s retail
shipments in the first quarter of 2022 increased by 14.6% while the
overall industry’s retail shipments declined by 7.8%.
Non-GAAP Financial Measures
Adjusted EBITDA from Continuing Operations, Adjusted Net Income
from Continuing Operations, Adjusted Operating Income, Tobacco
Adjusted Operating Income, Tobacco Adjusted EBITDA, (“the Non-GAAP
Financial Measures”) are financial measures not prepared in
accordance with 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 6 is information relating to the Company’s
Non-GAAP Financial Measures for the last twelve months ended March
31, 2022 and the three months ended March 31, 2022 and 2021.
Conference Call to Discuss First Quarter 2022 Results
As previously announced, Vector will host a conference call and
webcast on Tuesday, May 10, 2022 at 8:30AM (ET) to discuss its
first quarter 2022 results. Investors can access the call by
dialing 800-420-1271 and entering 43785 as the conference ID
number. The call will also be available via live webcast at
https://www.webcaster4.com/Webcast/Page/2271/45487. 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 10, 2022 through May 24, 2022. To access the replay,
dial 888-566-0161 and enter 43785 as the conference ID number. The
archived webcast will also be available at
https://www.webcaster4.com/Webcast/Page/2271/45487.
About Vector Group Ltd.
Vector Group is a holding company for Liggett Group LLC, Vector
Tobacco Inc., and New Valley LLC. Additional information concerning
the Company is available on the Company’s website,
www.VectorGroupLtd.com.
Investors and others should note that we may post information
about the Company or its subsidiaries on our website at
www.VectorGroupLtd.com and/or at the websites of those subsidiaries
or, if applicable, on their accounts on LinkedIn, TikTok, Twitter
or other social media platforms. It is possible that the postings
or releases could include information deemed to be material
information. Therefore, we encourage investors, the media and
others interested in our company to review the information we post
on our website at www.VectorGroupLtd.com, on the websites of our
subsidiaries and on their social media accounts.
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 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,”
“continue’” “could,” “potential,” “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.
Risks and uncertainties that could cause our actual results to
differ significantly from our current expectations are described in
our 2021 Annual Report on Form 10-K and in our Quarterly Report on
Form 10-Q for the quarter ended March 31, 2022. 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)
On December 29, 2021, Vector Group Ltd.
completed the distribution of its real estate brokerage, services
and PropTech investment business into a new stand-alone public
company, Douglas Elliman Inc. (NYSE:DOUG) through a distribution of
Douglas Elliman’s common stock to Vector Group Ltd. stockholders.
The historical results of the real estate brokerage, services and
PropTech investment business owned by Douglas Elliman Inc. are
excluded from revenues and expenses below and reflected as income
from discontinued operations, net of income taxes, in Vector Group
Ltd.’s Consolidated Statements of Operations below.
Three Months Ended
March 31,
2022
2021
(Unaudited)
Revenues:
Tobacco*
$
309,048
$
268,463
Real estate
2,994
2,525
Total revenues
312,042
270,988
Expenses:
Cost of sales:
Tobacco*
211,537
164,031
Real estate
1,278
876
Total cost of sales
212,815
164,907
Operating, selling, administrative and
general expenses
24,029
30,101
Litigation settlement and judgment
expense
72
5
Operating income
75,126
75,975
Other income (expenses):
Interest expense
(25,098)
(28,721)
Loss on extinguishment of debt
—
(21,362)
Equity in (losses) earnings from
investments
(2,242)
577
Equity in (losses) earnings from real
estate ventures
(1,877)
1,589
Other, net
(1,145)
2,706
Income before provision for income
taxes
44,764
30,764
Income tax expense
12,222
9,214
Income from continuing operations
32,542
21,550
Income from discontinued operations, net
of income taxes
—
10,407
Net income
$
32,542
$
31,957
Per basic common share:
Net income from continuing operations
applicable to common shares
$
0.21
$
0.14
Net income from discontinued operations
applicable to common shares
—
0.06
Net income applicable to common shares
$
0.21
$
0.20
Per diluted common share:
Net income from continuing operations
applicable to common shares
$
0.21
$
0.14
Net income from discontinued operations
applicable to common shares
—
0.06
Net income applicable to common shares
$
0.21
$
0.20
* Revenues and cost of sales include
federal excise taxes of $116,079 and $97,714 for the three months
ended March 31, 2022 and 2021, respectively.
TABLE 2
VECTOR GROUP LTD. AND
SUBSIDIARIES
RECONCILIATION OF ADJUSTED
EBITDA FROM CONTINUING OPERATIONS
(Unaudited)
(Dollars
in Thousands)
Table 2 reflects a reconciliation of GAAP
to non-GAAP financial information on a continuing operations basis.
Because Douglas Elliman Inc.’s results are reflected within
discontinued operations, they are excluded from the financial
information provided below.
LTM
Year Ended
Three Months Ended
March 31,
December 31,
March 31,
2022
2021
2022
2021
Net income attributed to Vector Group
Ltd.
$
220,048
$
219,463
$
32,542
$
31,957
Net income attributed to Vector Group Ltd.
from discontinued operations
(61,902)
(72,309)
—
(10,407)
Interest expense
109,105
112,728
25,098
28,721
Income tax expense
65,815
62,807
12,222
9,214
Net loss attributed to non-controlling
interest
(190)
(190)
—
—
Depreciation and amortization
7,610
7,816
1,850
2,056
EBITDA
$
340,486
$
330,315
$
71,712
$
61,541
Equity in losses (earnings) from
investments (a)
144
(2,675)
2,242
(577)
Equity in (earnings) losses from real
estate ventures (b)
(6,784)
(10,250)
1,877
(1,589)
Loss on extinguishment of debt
—
21,362
—
21,362
Stock-based compensation expense (c)
14,286
14,799
2,147
2,660
Litigation settlement and judgment expense
(d)
278
211
72
5
Impact of MSA settlement (e)
(2,123)
(2,722)
(2,123)
(2,722)
Transaction expenses (f)
10,468
10,468
—
—
Net gains on sales of assets
(910)
(910)
—
—
Other, net
(6,836)
(10,687)
1,145
(2,706)
Adjusted EBITDA from continuing operations
attributed
to Vector Group Ltd.
$
349,009
$
349,911
$
77,072
$
77,974
Adjusted EBITDA from Continuing
Operations Attributed
to Vector Group Ltd. by Segment
Tobacco
$
360,830
$
364,399
$
77,076
$
80,645
Real Estate
4,063
4,125
1,035
1,097
Corporate and Other
(15,884)
(18,613)
(1,039)
(3,768)
Total
$
349,009
$
349,911
$
77,072
$
77,974
a. Represents equity in earnings
recognized from investments that the Company accounts for under the
equity method. b. Represents equity in earnings recognized from the
Company’s investment in certain real estate ventures that are
accounted for under the equity method and are not consolidated in
the Company’s financial results. c. Represents amortization of
stock-based compensation. Included in the year ended December 31,
2021 are expenses associated with the acceleration of stock
compensation in connection with the Company’s spin-off of Douglas
Elliman Inc. into a standalone public company. d. Represents
accruals for product liability litigation in the Company’s Tobacco
segment. e. Represents the Company’s Tobacco segment’s settlement
of long-standing disputes related to the Master Settlement
Agreement. f. Represents expenses incurred in connection with the
Company’s spin-off of Douglas Elliman Inc. into a standalone public
company.
TABLE 3
VECTOR GROUP LTD. AND
SUBSIDIARIES
RECONCILIATION OF ADJUSTED NET
INCOME FROM CONTINUING OPERATIONS
(Unaudited)
(Dollars
in Thousands, Except Per Share Amounts)
Table 3 reflects a reconciliation of GAAP
to non-GAAP financial information on a continuing operations basis.
Because Douglas Elliman Inc.’s results are reflected within
discontinued operations, they are excluded from the financial
information provided below.
Three Months Ended
March 31,
2022
2021
Net income attributed to Vector Group
Ltd.
$
32,542
$
31,957
Net (income) loss attributed to Vector
Group Ltd. from discontinued operations
—
(10,407)
Loss on extinguishment of debt
—
21,362
Litigation settlement and judgment expense
(a)
72
5
Impact of MSA settlement (b)
(2,123)
(2,722)
Impact of net interest expense capitalized
to real estate ventures
(3,696)
(310)
Adjustment for derivative associated with
guarantee
(1,681)
—
Total adjustments
(7,428)
7,928
Tax benefit (expense) related to
adjustments
1,483
(4,949)
Adjusted Net Income from continuing
operations attributed to Vector Group Ltd.
$
26,597
$
34,936
Per diluted common share:
Adjusted Net Income from continuing
operations applicable to common shares attributed
to Vector Group Ltd.
$
0.17
$
0.22
a. Represents accruals for product
liability litigation in the Company’s Tobacco segment. b.
Represents the Company’s Tobacco segment’s settlement of
long-standing disputes related to the Master Settlement
Agreement.
TABLE 4
VECTOR GROUP LTD. AND
SUBSIDIARIES
RECONCILIATION OF ADJUSTED
OPERATING INCOME
(Unaudited)
(Dollars
in Thousands)
Table 4 reflects a reconciliation of GAAP
to non-GAAP financial information on a continuing operations basis.
Because Douglas Elliman Inc.’s results are reflected within
discontinued operations, they are excluded from the financial
information provided below.
LTM
Year Ended
Three Months Ended
March 31,
December 31,
March 31,
2022
2021
2022
2021
Operating income
$
319,590
$
320,439
$
75,126
$
75,975
Litigation settlement and judgment expense
(a)
278
211
72
5
Transaction expenses (b)
10,468
10,468
—
—
Acceleration of stock compensation expense
(c)
4,317
4,317
—
—
Impact of MSA settlement (d)
(2,123)
(2,722)
(2,123)
(2,722)
Net gains on sales of assets
(910)
(910)
—
—
Total adjustments
12,030
11,364
(2,051)
(2,717)
Adjusted Operating Income
$
331,620
$
331,803
$
73,075
$
73,258
a. Represents accruals for product
liability litigation in the Company’s Tobacco segment. b.
Represents expenses include expenses incurred in connection with
the Company’s spin-off of Douglas Elliman Inc. into a standalone
public company. c. Represents expense related to the acceleration
of stock compensation in connection with the Company’s spin-off of
Douglas Elliman Inc. into a standalone public company. d.
Represents the Company’s Tobacco segment’s settlement of
long-standing disputes related to the Master Settlement
Agreement.
TABLE 5
VECTOR GROUP LTD. AND
SUBSIDIARIES
RECONCILIATION OF TOBACCO
ADJUSTED OPERATING INCOME
AND TOBACCO ADJUSTED
EBITDA
(Unaudited)
(Dollars
in Thousands)
LTM
Year Ended
Three Months Ended
March 31,
December 31,
March 31,
2022
2021
2022
2021
Tobacco Adjusted Operating
Income:
Operating income from Tobacco segment
$
356,357
$
360,317
$
77,639
$
81,599
Litigation settlement and judgment expense
(a)
278
211
72
5
Impact of MSA settlement (b)
(2,123)
(2,722)
(2,123)
(2,722)
Total adjustments
(1,845)
(2,511)
(2,051)
(2,717)
Tobacco Adjusted Operating Income
$
354,512
$
357,806
$
75,588
$
78,882
LTM
Year Ended
Three Months Ended
March 31,
December 31,
March 31,
2022
2021
2022
2021
Tobacco Adjusted EBITDA:
Operating income from Tobacco segment
$
356,357
$
360,317
$
77,639
$
81,599
Litigation settlement and judgment expense
(a)
278
211
72
5
Impact of MSA settlement (b)
(2,123)
(2,722)
(2,123)
(2,722)
Total adjustments
(1,845)
(2,511)
(2,051)
(2,717)
Tobacco Adjusted Operating Income
354,512
357,806
75,588
78,882
Depreciation and amortization
6,242
6,525
1,477
1,760
Stock-based compensation expense
76
68
11
3
Total adjustments
6,318
6,593
1,488
1,763
Tobacco Adjusted EBITDA
$
360,830
$
364,399
$
77,076
$
80,645
a. Represents accruals for
product liability litigation in the Company’s Tobacco segment. b.
Represents the Company’s Tobacco segment’s settlement of
long-standing disputes related to the Master Settlement
Agreement.
TABLE 6
VECTOR GROUP LTD. AND
SUBSIDIARIES
RECONCILIATION OF
REVENUES
(Unaudited)
(Dollars
in Thousands)
LTM
Year Ended
Three Months Ended
March 31,
December 31,
March 31,
2022
2021
2022
2021
Revenues:
Tobacco (a)
$
1,243,082
$
1,202,497
$
309,048
$
268,463
Real estate
18,672
18,203
2,994
2,525
Total revenues
$
1,261,754
$
1,220,700
$
312,042
$
270,988
a. Tobacco segment revenues include federal excise taxes of
$453,060 for the last twelve months ended March 31, 2022, $434,695
for the year ended December 31, 2021, $116,079 and $97,714 for the
three months ended March 31, 2022 and 2021, respectively.
View source
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Emily Claffey/Benjamin Spicehandler/Columbia Clancy Sard
Verbinnen & Co 212-687-8080
Abi Genis Sard Verbinnen & Co - Europe +44 (0)20 3178
8914
J. Bryant Kirkland III, Vector Group Ltd. 305-579-8000
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