Vector Group Reports First Quarter 2019 Financial Results
GAAP Financial Results
First quarter of 2019 revenues were
Non-GAAP Financial Measures
Non-GAAP financial measures also include adjustments for purchase
accounting associated with the Company’s 2013 acquisition of an
additional 20.59% interest in
Three months ended
Adjusted EBITDA attributed to
Adjusted Net Income (as described in Table 3 attached hereto) was
Adjusted Operating Income (as described in Table 4 attached hereto) was
Tobacco Segment Financial Results
For the first quarter of 2019, the Tobacco segment had revenues of
Operating Income from the Tobacco segment was
Non-GAAP Financial Measures
Tobacco Adjusted Operating Income for the first quarter of 2019 and 2018
was
For the first quarter of 2019, the Tobacco segment had conventional cigarette (wholesale) shipments of approximately 2.08 billion units compared to 2.24 billion units for the first quarter of 2018.
Liggett’s retail market share increased to 4.2% for the first quarter of
2019 from 4.0% for the first quarter of 2018. Compared to the first
quarter of 2018, Liggett’s retail shipments declined by 2.1% while the
overall industry’s retail shipments declined by 5.6%, according to data
from
Real Estate Segment Financial Results
For the first quarter of 2019, the Real Estate segment had revenues of
Douglas Elliman’s results are included in Vector Group Ltd.’s Real
Estate segment. For the first quarter of 2019, Douglas Elliman had
revenues of
Non-GAAP Financial Measures
For the first quarter of 2019, Real Estate Adjusted EBITDA attributed to
the Company were loss of
Douglas Elliman’s results are included in Vector Group Ltd.’s Real
Estate segment. For the first quarter of 2019, Douglas Elliman’s
Adjusted EBITDA (as described in Table 7 attached hereto) were negative
For the three months ended
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.
On
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
Conference Call to Discuss First Quarter 2019 Results
As previously announced, the Company will host a conference call and
webcast on
A replay of the call will be available shortly after the call ends
on
Vector Group is a holding company for
[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, | ||||||||
| 2019 | 2018 | |||||||
| (Unaudited) | ||||||||
| Revenues: | ||||||||
| Tobacco* | $ | 256,756 | $ | 267,116 | ||||
| Real estate | 164,168 | 161,850 | ||||||
| Total revenues | 420,924 | 428,966 | ||||||
| Expenses: | ||||||||
| Cost of sales: | ||||||||
| Tobacco* | 177,303 | 184,962 | ||||||
| Real estate | 108,717 | 109,313 | ||||||
| Total cost of sales | 286,020 | 294,275 | ||||||
| Operating, selling, administrative and general expenses | 92,314 | 89,076 | ||||||
| Litigation settlement and judgment income |
- |
(2,469 | ) | |||||
| Operating income | 42,590 | 48,084 | ||||||
| Other income (expenses): | ||||||||
| Interest expense | (37,520 | ) | (45,947 | ) | ||||
| Change in fair value of derivatives embedded within convertible debt | 10,349 | 10,567 | ||||||
| Equity in losses from real estate ventures | (2,439 | ) | (6,560 | ) | ||||
| Equity in earnings from investments | 1,362 | 1,162 | ||||||
| Net gains (losses) recognized on investment securities | 4,773 | (3,340 | ) | |||||
| Other, net | 2,667 | 1,646 | ||||||
| Income before provision for income taxes | 21,782 | 5,612 | ||||||
| Income tax expense | 6,749 | 1,948 | ||||||
| Net income | 15,033 | 3,664 | ||||||
| Net (income) loss attributed to non-controlling interest | (80 | ) | 3,547 | |||||
| Net income attributed to Vector Group Ltd. | $ | 14,953 | $ | 7,211 | ||||
| Per basic common share: | ||||||||
| Net income applicable to common share attributed to Vector Group Ltd. | $ | 0.09 | $ | 0.04 | ||||
| Per diluted common share: | ||||||||
| Net income applicable to common share attributed to Vector Group Ltd. | $ | 0.08 | $ | 0.04 | ||||
* Revenues and cost of sales include federal excise taxes of
|
TABLE 2 |
|||||||||||||
| LTM | Three Months Ended | ||||||||||||
| March 31, | March 31, | ||||||||||||
| 2019 | 2019 | 2018 | |||||||||||
| Net income attributed to Vector Group Ltd. | $ | 65,847 | $ | 14,953 | $ | 7,211 | |||||||
| Interest expense | 195,353 | 37,520 | 45,947 | ||||||||||
| Income tax expense | 26,353 | 6,749 | 1,948 | ||||||||||
| Net income (loss) attributed to non-controlling interest | 3,529 | 80 | (3,547 | ) | |||||||||
| Depreciation and amortization | 18,928 | 4,708 | 4,587 | ||||||||||
| EBITDA | $ | 310,010 | $ | 64,010 | $ | 56,146 | |||||||
| Change in fair value of derivatives embedded within convertible debt (a) | (44,771 | ) | (10,349 | ) | (10,567 | ) | |||||||
| Equity in earnings from investments (b) | (3,358 | ) | (1,362 | ) | (1,162 | ) | |||||||
| Net gains (losses) recognized on investment securities | 2,052 | (4,773 | ) | 3,340 | |||||||||
| Equity in (earnings) losses from real estate ventures (c) | (18,567 | ) | 2,439 | 6,560 | |||||||||
| Loss on extinguishment of debt | 4,066 | — | — | ||||||||||
| Stock-based compensation expense (d) | 10,003 | 2,436 | 2,384 | ||||||||||
| Litigation settlement and judgment expense (income) (e) | 685 | — | (2,469 | ) | |||||||||
| Impact of MSA settlement (f) | (2,808 | ) | — | (3,490 | ) | ||||||||
| Purchase accounting adjustments (g) | 426 | — | 182 | ||||||||||
| Other, net | (11,949 | ) | (2,667 | ) | (1,646 | ) | |||||||
| Adjusted EBITDA | $ | 245,789 | $ | 49,734 | $ | 49,278 | |||||||
| Adjusted EBITDA attributed to non-controlling interest | (7,015 | ) | — | 3,696 | |||||||||
| Adjustment to reflect additional 29.41% of Adjusted EBITDA from Douglas Elliman Realty, LLC (h) | 5,849 | — | (2,530 | ) | |||||||||
| Adjusted EBITDA attributed to Vector Group Ltd. | $ | 244,623 | $ | 49,734 | $ | 50,444 | |||||||
| Adjusted EBITDA by Segment | |||||||||||||
| Tobacco | $ | 249,352 | $ | 62,122 | $ | 61,979 | |||||||
| Real Estate (i) | 12,004 | (7,908 | ) | (8,758 | ) | ||||||||
| Corporate and Other | (15,567 | ) | (4,480 | ) | (3,943 | ) | |||||||
| Total | $ | 245,789 | $ | 49,734 | $ | 49,278 | |||||||
| Adjusted EBITDA Attributed to Vector Group Ltd. by Segment | |||||||||||||
| Tobacco | $ | 249,352 | $ | 62,122 | $ | 61,979 | |||||||
| Real Estate (i) | 10,838 | (7,908 | ) | (7,592 | ) | ||||||||
| Corporate and Other | (15,567 | ) | (4,480 | ) | (3,943 | ) | |||||||
| Total | $ | 244,623 | $ | 49,734 | $ | 50,444 | |||||||
| 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. | |
| c. | Represents equity in (earnings) 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 and proceeds received from a litigation award at Douglas Elliman Realty, LLC. | |
| f. | Represents the Company’s tobacco segment’s settlement of a long-standing dispute related to the Master Settlement Agreement. | |
| g. | Represents purchase accounting adjustments recorded in the periods presented in connection with the increase of the Company’s ownership of Douglas Elliman Realty, LLC, which occurred in 2013. | |
| h. | Represents 29.41% of Douglas Elliman Realty LLC's Adjusted EBITDA in the respective periods. On December 31, 2018, the Company increased its ownership of Douglas Elliman Realty, LLC from 70.59% to 100%. | |
| i. | Includes Adjusted EBITDA for Douglas Elliman Realty, LLC of $10,896 for the last twelve months ended March 31, 2019 and negative $8,991 and negative $8,603 for the three months ended March 31, 2019 and 2018, respectively. Amounts reported in this footnote reflect 100% of Douglas Elliman Realty, LLC’s entire Adjusted EBITDA. | |
|
TABLE 3 |
|||||||||
| Three Months Ended | |||||||||
| March 31, | |||||||||
| 2019 | 2018 | ||||||||
| Net income attributed to Vector Group Ltd. | $ | 14,953 | $ | 7,211 | |||||
| Change in fair value of derivatives embedded within convertible debt | (10,349 | ) | (10,567 | ) | |||||
| Non-cash amortization of debt discount on convertible debt | 8,525 | 18,193 | |||||||
| Litigation settlement and judgment income (a) | — | (2,469 | ) | ||||||
| Impact of MSA settlement (b) | — | (3,490 | ) | ||||||
| Impact of net interest expense capitalized to real estate ventures | (930 | ) | (1,953 | ) | |||||
| Douglas Elliman Realty, LLC purchase accounting adjustments (c) | — | 375 | |||||||
| Adjustment to reflect additional 29.41% of net income from Douglas Elliman Realty, LLC (d) | — | (2,381 | ) | ||||||
| Total adjustments | (2,754 | ) | (2,292 | ) | |||||
| Tax benefit related to adjustments | 763 | 655 | |||||||
| Adjusted Net Income attributed to Vector Group Ltd. | $ | 12,962 | $ | 5,574 | |||||
| Per diluted common share: | |||||||||
| Adjusted Net Income applicable to common shares attributed to Vector Group Ltd. | $ | 0.08 | $ | 0.03 | |||||
| a. | Represents accruals for settlements of judgment expenses in the Engle progeny tobacco litigation and proceeds received from a litigation award at Douglas Elliman Realty, LLC, net of non-controlling interest. | |
| b. | Represents the Company’s tobacco segment’s settlement of a long-standing dispute related to the Master Settlement Agreement. | |
| c. | Represents 100% of purchase accounting adjustments in the periods presented for assets acquired in connection with the Company’s acquisition of the 20.59% of Douglas Elliman Realty, LLC on December 31, 2013. | |
| d. | Represents 29.41% of Douglas Elliman Realty LLC's net income in the respective 2018 period. On December 31, 2018, the Company increased its ownership of Douglas Elliman Realty, LLC from 70.59% to 100%. | |
|
TABLE 4 |
|||||||||||||
| LTM | Three Months Ended | ||||||||||||
| March 31, | March 31, | ||||||||||||
| 2019 | 2019 | 2018 | |||||||||||
| Operating income | $ | 218,555 | $ | 42,590 | $ | 48,084 | |||||||
| Litigation settlement and judgment expense (income) (a) | 685 | — | (2,469 | ) | |||||||||
| Impact of MSA settlement (b) | (2,808 | ) | — | (3,490 | ) | ||||||||
| Douglas Elliman Realty, LLC purchase accounting adjustments (c) | 1,031 | — | 375 | ||||||||||
| Total adjustments | (1,092 | ) | — | (5,584 | ) | ||||||||
| Adjusted Operating Income (d) | $ | 217,463 | $ | 42,590 | $ | 42,500 | |||||||
| a. | Represents accruals for settlements of judgment expenses in the Engle progeny tobacco litigation and proceeds received from a litigation award at Douglas Elliman Realty, LLC. | |
| b. | Represents the Company’s tobacco segment’s settlement of a long-standing dispute related to the Master Settlement Agreement. | |
| c. | Amounts represent purchase accounting adjustments recorded in the periods presented in connection with the increase of the Company’s ownership of Douglas Elliman Realty, LLC, which occurred in 2013. | |
| d. | Does not include a reduction for 29.41% non-controlling interest in Douglas Elliman Realty, LLC. for the last twelve months ended March 31, 2019 and three months ended March 31, 2018. | |
|
TABLE 5 |
|||||||||||||
| LTM | Three Months Ended | ||||||||||||
| March 31, | March 31, | ||||||||||||
| 2019 | 2019 | 2018 | |||||||||||
| Tobacco Adjusted Operating Income: | |||||||||||||
| Operating income from tobacco segment | $ | 243,260 | $ | 60,144 | $ | 63,411 | |||||||
| Litigation settlement and judgment expense (a) | 685 | — | — | ||||||||||
| Impact of MSA settlement (b) | (2,808 | ) | — | (3,490 | ) | ||||||||
| Total adjustments | (2,123 | ) | — | (3,490 | ) | ||||||||
| Tobacco Adjusted Operating Income | $ | 241,137 | $ | 60,144 | $ | 59,921 | |||||||
|
LTM |
Three Months Ended |
||||||||||||
| March 31, | March 31, | ||||||||||||
| 2019 | 2019 | 2018 | |||||||||||
| Tobacco Adjusted EBITDA: | |||||||||||||
| Operating income from tobacco segment | $ | 243,260 | $ | 60,144 | $ | 63,411 | |||||||
| Litigation settlement and judgment expense (a) | 685 | — | — | ||||||||||
| Impact of MSA settlement (b) | (2,808 | ) | — | (3,490 | ) | ||||||||
| Total adjustments | (2,123 | ) | — | (3,490 | ) | ||||||||
| Tobacco Adjusted Operating Income | 241,137 | 60,144 | 59,921 | ||||||||||
| Depreciation and amortization | 8,130 | 1,957 | 2,037 | ||||||||||
| Stock-based compensation expense | 85 | 21 | 21 | ||||||||||
| Total adjustments | 8,215 | 1,978 | 2,058 | ||||||||||
| Tobacco Adjusted EBITDA | $ | 249,352 | $ | 62,122 | $ | 61,979 | |||||||
| a. | Represents accruals for settlements of judgment expenses in the Engle progeny tobacco litigation. | |
| b. | Represents the Company’s tobacco segment’s settlement of a long-standing dispute related to the Master Settlement Agreement. | |
|
TABLE 6 |
|||||||||||||
| LTM | Three Months Ended | ||||||||||||
| March 31, | March 31, | ||||||||||||
| 2019 | 2019 | 2018 | |||||||||||
| Net income (loss) attributed to Vector Group Ltd. from subsidiary non-guarantors (a) | $ | 14,238 | $ | (9,085 | ) | $ | (8,544 | ) | |||||
| Interest expense (a) | 247 | 229 | 49 | ||||||||||
| Income tax expense (benefit) (a) | 3,524 | (3,419 | ) | (2,994 | ) | ||||||||
| Net income (loss) attributed to non-controlling interest (a) | 3,529 | 80 | (3,547 | ) | |||||||||
| Depreciation and amortization | 9,792 | 2,501 | 2,289 | ||||||||||
| EBITDA | $ | 31,330 | $ | (9,694 | ) | $ | (12,747 | ) | |||||
| Loss from non-guarantors other than New Valley LLC | 80 | 28 | 34 | ||||||||||
| Equity in (earnings) losses from real estate ventures (b) | (18,567 | ) | 2,439 | 6,560 | |||||||||
| Purchase accounting adjustments (c) | 426 | — | 182 | ||||||||||
| Litigation settlement and judgment income (d) | — | — | (2,469 | ) | |||||||||
| Other, net | (2,087 | ) | (704 | ) | (342 | ) | |||||||
| Adjusted EBITDA | $ | 11,182 | $ | (7,931 | ) | $ | (8,782 | ) | |||||
| Adjusted EBITDA attributed to non-controlling interest | (7,015 | ) | — | 3,696 | |||||||||
| Adjustment to reflect additional 29.41% of Adjusted EBITDA from Douglas Elliman Realty, LLC (e) | 5,849 | — | (2,530 | ) | |||||||||
| Adjusted EBITDA attributed to New Valley LLC | $ | 10,016 | $ | (7,931 | ) | $ | (7,616 | ) | |||||
| Adjusted EBITDA by Segment | |||||||||||||
| Real Estate (f) | $ | 12,004 | $ | (7,908 | ) | $ | (8,758 | ) | |||||
| Corporate and Other | (822 | ) | (23 | ) | (24 | ) | |||||||
| Total (g) | $ | 11,182 | $ | (7,931 | ) | $ | (8,782 | ) | |||||
| Adjusted EBITDA Attributed to New Valley LLC by Segment | |||||||||||||
| Real Estate (f) | $ | 10,838 | $ | (7,908 | ) | $ | (7,592 | ) | |||||
| Corporate and Other | (822 | ) | (23 | ) | (24 | ) | |||||||
| Total (g) | $ | 10,016 | $ | (7,931 | ) | $ | (7,616 | ) | |||||
| 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, 2019. | |
| b. | Represents equity in (earnings) losses recognized from the Company’s investment in certain real estate businesses that are not consolidated in its financial results. | |
| c. | Represents purchase accounting adjustments recorded in the periods presented in connection with the increase of the Company’s ownership of Douglas Elliman Realty, LLC, which occurred in 2013. | |
| d. | Represents proceeds received from a litigation award at Douglas Elliman Realty, LLC. | |
| e. | Represents 29.41% of Douglas Elliman Realty LLC's Adjusted EBITDA in the respective periods. On December 31, 2018, the Company increased its ownership of Douglas Elliman Realty, LLC from 70.59% to 100%. | |
| f. | Includes Adjusted EBITDA for Douglas Elliman Realty, LLC of $10,896 for the last twelve months ended March 31, 2019 and negative $8,991 and negative $8,603 for the three months ended March 31, 2019 and 2018, respectively. Amounts reported in this footnote reflect 100% of Douglas Elliman Realty, LLC’s entire Adjusted EBITDA. | |
| g. | 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 $15,567 for the last twelve months ended March 31, 2019 and $4,480 and $3,943 for the three months ended March 31, 2019 and 2018, respectively. | |
|
TABLE 7 |
|||||||||||||
| LTM | Three Months Ended | ||||||||||||
| March 31, | March 31, | ||||||||||||
| 2019 | 2019 | 2018 | |||||||||||
| Net income (loss) attributed to Douglas Elliman Realty, LLC | $ | 2,880 | $ | (10,414 | ) | $ | (8,097 | ) | |||||
| Interest expense | 11 | 3 | 45 | ||||||||||
| Income tax expense (benefit) | 180 | — | 220 | ||||||||||
| Depreciation and amortization | 9,384 | 2,400 | 2,187 | ||||||||||
| Douglas Elliman Realty, LLC EBITDA | $ | 12,455 | $ | (8,011 | ) | $ | (5,645 | ) | |||||
| Equity in earnings from real estate ventures (a) | (1,267 | ) | (649 | ) | (625 | ) | |||||||
| Purchase accounting adjustments (b) | 426 | — | 182 | ||||||||||
| Litigation settlement and judgment income (c) | — | — | (2,469 | ) | |||||||||
| Other, net | (718 | ) | (331 | ) | (46 | ) | |||||||
| Douglas Elliman Realty, LLC Adjusted EBITDA | $ | 10,896 | $ | (8,991 | ) | $ | (8,603 | ) | |||||
| Douglas Elliman Realty, LLC Adjusted EBITDA attributed to non-controlling interest | (5,849 | ) | — | 2,530 | |||||||||
|
Adjustment to reflect additional 29.41% of Adjusted EBITDA from
Douglas Elliman Realty, LLC, |
5,849 | — | (2,530 | ) | |||||||||
| Douglas Elliman Realty, LLC Adjusted EBITDA attributed to Real Estate Segment | $ | 10,896 | $ | (8,991 | ) | $ | (8,603 | ) | |||||
| 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 purchase accounting adjustments recorded in the periods presented in connection with the increase of the Company’s ownership of Douglas Elliman Realty, LLC, which occurred in 2013. | |
| c. | Represents proceeds received from a litigation award at Douglas Elliman Realty, LLC. | |
| d. | Represents 29.41% of Douglas Elliman Realty LLC's Adjusted EBITDA in the respective periods. On December 31, 2018, the Company increased its ownership of Douglas Elliman Realty, LLC from 70.59% to 100%. | |
View source version on businesswire.com: https://www.businesswire.com/news/home/20190507005511/en/
Source:
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