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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Vector Group Ltd | NYSE:VGR | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
-0.07 | -0.67% | 10.33 | 10.515 | 10.32 | 10.47 | 1,426,608 | 01:00:00 |
Vector Group Ltd. (NYSE:VGR) today announced financial results for the three and nine months ended September 30, 2019.
GAAP Financial Results
Third quarter 2019 revenues were $504.8 million, compared to revenues of $513.9 million in the third quarter of 2018. The Company recorded operating income of $66.7 million in the third quarter of 2019, compared to operating income of $66.0 million in the third quarter of 2018. Net income attributed to Vector Group Ltd. for the third quarter of 2019 was $36.0 million, or $0.23 per diluted common share, compared to net income of $12.0 million, or $0.07 per diluted common share, in the third quarter of 2018.
For the nine months ended September 30, 2019 revenues were $1.464 billion, compared to revenues of $1.424 billion for the nine months ended September 30, 2018. The Company recorded operating income of $185.6 million for the nine months ended September 30, 2019, compared to operating income of $176.0 million for the nine months ended September 30, 2018. Net income attributed to Vector Group Ltd. for the nine months ended September 30, 2019 was $90.3 million, or $0.56 per diluted common share, compared to a net income of $37.0 million, or $0.22 per diluted common share, for the nine months ended September 30, 2018.
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 Douglas Elliman Realty, LLC, the impact of non-controlling interest associated with the 29.41% of Douglas Elliman Realty, LLC that was purchased by the Company on December 31, 2018, litigation settlements and judgments, 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 and nine months ended September 30, 2019 and 2018 are included in Tables 2 through 7.
Three months ended September 30, 2019 compared to the three months ended September 30, 2018
Third quarter of 2019 Adjusted EBITDA attributed to Vector Group (as described in Table 2 attached hereto) were $73.7 million, compared to $73.4 million for the third quarter of 2018.
Adjusted Net Income (as described in Table 3 attached hereto) was $36.2 million, or $0.23 per diluted share, for the third quarter of 2019, and $23.1 million, or $0.15 per diluted share, for the third quarter of 2018.
Adjusted Operating Income (as described in Table 4 attached hereto) was $67.0 million for the third quarter of 2019, compared to $66.4 million for the third quarter of 2018.
Nine months ended September 30, 2019 compared to the nine months ended September 30, 2018
Adjusted EBITDA attributed to Vector Group Ltd. (as described in Table 2 attached hereto) were $206.9 million for the nine months ended September 30, 2019, compared to $191.4 million for the nine months ended September 30, 2018.
Adjusted Net Income (as described in Table 3 attached hereto) was $92.3 million, or $0.59 per diluted share, for the nine months ended September 30, 2019, and $56.5 million, or $0.35 per diluted share, for the nine months ended September 30, 2018.
Adjusted Operating Income (as described in Table 4 attached hereto) was $186.4 million for the nine months ended September 30, 2019, compared to $168.9 million for the nine months ended September 30, 2018.
Tobacco Segment Financial Results
For the third quarter of 2019, the Tobacco segment had revenues of $303.3 million, compared to $302.0 million for the third quarter of 2018. For the nine months ended September 30, 2019, the Tobacco segment had revenues of $854.5 million, compared to $844.0 million for the nine months ended September 30, 2018.
Operating Income from the Tobacco segment was $72.8 million and $201.6 million for the three and nine months ended September 30, 2019, respectively, compared to $63.3 million and $189.2 million for the three and nine months ended September 30, 2018, respectively.
Non-GAAP Financial Measures
Tobacco Adjusted Operating Income (as described in Table 5 attached hereto) for the third quarter of 2019 and 2018 was $73.0 million and $63.3 million, respectively. Tobacco Adjusted Operating Income for the nine months ended September 30, 2019 and 2018 was $202.5 million and $183.4 million, respectively.
For the third quarter of 2019, the Tobacco segment had conventional cigarette (wholesale) shipments of approximately 2.44 billion units, compared to 2.59 billion units for the third quarter of 2018. For the nine months ended September 30, 2019, the Tobacco segment had conventional cigarette (wholesale) shipments of approximately 6.90 billion units, compared to 7.13 billion units for the nine months ended September 30, 2018.
Liggett’s retail market share increased to 4.3% for the third quarter of 2019 and 4.2% for the nine months ended September 30, 2019, compared to 4.2% for the third quarter of 2018 and 4.1% for the nine months ended September 30, 2018. Compared to the third quarter of 2018, Liggett’s retail shipments declined by 3.5% while the overall industry’s retail shipments declined by 6.4%. Compared to the nine months ended September 30, 2018, Liggett’s retail shipments declined by 2.9% while the overall industry’s retail shipments declined by 5.9%, according to data from Management Science Associates, Inc.
Real Estate Segment Financial Results
For the third quarter of 2019, the Real Estate segment had revenues of $201.5 million, compared to $211.9 million for the third quarter of 2018. For the nine months ended September 30, 2019, the Real Estate segment had revenues of $609.6 million, compared to $580.4 million for the nine months ended September 30, 2018. For the third quarter of 2019, the Real Estate segment reported net income of $7.2 million, compared to a net income of $4.7 million for the third quarter of 2018. For the nine months ended September 30, 2019, the Real Estate segment reported a net income of $13.5 million, compared to net loss of $0.9 million for the nine months ended September 30, 2018.
Douglas Elliman’s results are included in Vector Group Ltd.’s Real Estate segment. For the third quarter of 2019, Douglas Elliman had revenues of $201.2 million, compared to $211.5 million for the third quarter of 2018. For the nine months ended September 30, 2019, Douglas Elliman had revenues of $606.0 million, compared to $576.5 million for the nine months ended September 30, 2018. For the third quarter of 2019, Douglas Elliman reported net income of $1.9 million, compared to net income of $10.0 million for the third quarter of 2018. For the nine months ended September 30, 2019, Douglas Elliman reported net income of $6.6 million, compared to net income of $7.8 million for the nine months ended September 30, 2018.
Non-GAAP Financial Measures
For the third quarter of 2019, Real Estate Adjusted EBITDA attributed to the Company (as described in Table 6 attached hereto) were $2.9 million, compared to $11.6 million for the third quarter of 2018.
For the nine months ended September 30, 2019, Real Estate Adjusted EBITDA attributed to the Company were $11.4 million, compared to $13.0 million for the nine months ended September 30, 2018.
For the third quarter of 2019, Douglas Elliman’s Adjusted EBITDA (as described in Table 7 attached hereto) were $3.4 million, compared to $12.0 million for the third quarter of 2018.
For the nine months ended September 30, 2019, Douglas Elliman’s Adjusted EBITDA were $11.0 million, compared to $11.8 million for the nine months ended September 30, 2018.
For the three and nine months ended September 30, 2019, Douglas Elliman achieved closed sales of approximately $7.4 billion and $22.1 billion, respectively, compared to $7.8 billion and $21.4 billion for the three and nine months ended September 30, 2018, respectively.
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 December 31, 2018, New Valley LLC, the real estate subsidiary of Vector Group Ltd, acquired the 29.41% interest in Douglas Elliman Realty, LLC it did not previously own. Vector Group Ltd. has adjusted its presentation of Non-GAAP Financial Measures in Tables 2, 3, 6 and 7 to assume the transaction occurred on January 1, 2018 and to improve comparability between the three and nine months ended September 30, 2019 and 2018, respectively, as well as the twelve months ended September 30, 2019. Please refer to Vector Group Ltd.’s Form 8-K, which is dated May 3, 2019, for additional information.
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 and nine months ended September 30, 2019 and 2018.
Conference Call to Discuss Third Quarter 2019 Results
As previously announced, the Company will host a conference call and webcast on Tuesday, November 5, 2019 at 4:30 PM (ET) to discuss its third quarter 2019 results. Investors can access the call by dialing 800-859-8150 and entering 38104109 as the conference ID number. The call will also be available via live webcast at https://www.investornetwork.com/event/presentation/56439. 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 November 5, 2019 through November 19, 2019. To access the replay, dial 877-656-8905 and enter 38104109 as the conference ID number. The archived webcast will also be available at https://www.investornetwork.com/event/presentation/56439 for one year.
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.
[Financial Tables Follow]
TABLE 1
VECTOR GROUP LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands, Except Per Share Amounts)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2019
2018
2019
2018
(Unaudited)
(Unaudited)
Revenues:
Tobacco*
$
303,260
$
302,009
$
854,517
$
843,958
Real estate
201,530
211,860
609,629
580,365
Total revenues
504,790
513,869
1,464,146
1,424,323
Expenses:
Cost of sales:
Tobacco*
209,192
219,769
590,956
597,492
Real estate
136,264
140,533
408,694
389,851
Total cost of sales
345,456
360,302
999,650
987,343
Operating, selling, administrative and general expenses
92,374
87,549
278,047
262,961
Litigation settlement and judgment expense (income)
240
—
895
(1,944
)
Operating income
66,720
66,018
185,554
175,963
Other income (expenses):
Interest expense
(32,963
)
(51,084
)
(103,236
)
(145,452
)
Change in fair value of derivatives embedded within convertible debt
6,182
10,005
20,319
31,289
Equity in earnings (losses) from real estate ventures
8,050
294
12,002
(8,378
)
Other, net
1,755
4,481
13,653
13,660
Income before provision for income taxes
49,744
29,714
128,292
67,082
Income tax expense
13,736
14,686
37,944
29,394
Net income
36,008
15,028
90,348
37,688
Net income attributed to non-controlling interest
—
(3,026
)
(80
)
(657
)
Net income attributed to Vector Group Ltd.
$
36,008
$
12,002
$
90,268
$
37,031
Per basic common share:
Net income applicable to common share attributed to Vector Group Ltd.
$
0.23
$
0.07
$
0.57
$
0.23
Per diluted common share:
Net income applicable to common share attributed to Vector Group Ltd.
$
0.23
$
0.07
$
0.56
$
0.22
* Revenues and cost of sales include federal excise taxes of $122,951, $130,428, $347,527 and $359,199, respectively.
TABLE 2
VECTOR GROUP LTD. AND SUBSIDIARIES
RECONCILIATION OF ADJUSTED EBITDA
(Unaudited)
(Dollars in Thousands)
LTM
Three Months Ended
Nine Months Ended
September 30,
September 30,
September 30,
2019
2019
2018
2019
2018
Net income attributed to Vector Group Ltd.
$
111,342
$
36,008
$
12,002
$
90,268
$
37,031
Interest expense
161,564
32,963
51,084
103,236
145,452
Income tax expense
30,102
13,736
14,686
37,944
29,394
Net (loss) income attributed to non-controlling interest
(675
)
—
3,026
80
657
Depreciation and amortization
18,126
4,430
4,707
13,362
14,043
EBITDA
$
320,459
$
87,137
$
85,505
$
244,890
$
226,577
Change in fair value of derivatives embedded within convertible debt (a)
(34,019
)
(6,182
)
(10,005
)
(20,319
)
(31,289
)
Equity in (earnings) losses from real estate ventures (b)
(34,826
)
(8,050
)
(294
)
(12,002
)
8,378
Loss on extinguishment of debt
4,066
—
—
—
—
Stock-based compensation expense (c)
9,649
2,348
2,584
7,122
7,424
Litigation settlement and judgment expense (income) (d)
1,055
240
—
895
(1,944
)
Impact of MSA settlement (e)
—
—
—
—
(6,298
)
Purchase accounting adjustments (f)
63
—
184
—
545
Other, net
(3,914
)
(1,755
)
(4,481
)
(13,653
)
(13,660
)
Adjusted EBITDA
$
262,533
$
73,738
$
73,493
$
206,933
$
189,733
Adjusted EBITDA attributed to non-controlling interest
(1,471
)
—
(3,638
)
—
(1,848
)
Adjustment to reflect additional 29.41% of Adjusted EBITDA from Douglas Elliman Realty, LLC (g)
(158
)
—
3,543
—
3,477
Adjusted EBITDA attributed to Vector Group Ltd.
$
260,904
$
73,738
$
73,398
$
206,933
$
191,362
Adjusted EBITDA by Segment
Tobacco
$
267,921
$
74,980
$
65,339
$
208,358
$
189,646
Real Estate (h)
11,188
2,868
11,697
11,437
11,403
Corporate and Other
(16,576
)
(4,110
)
(3,543
)
(12,862
)
(11,316
)
Total
$
262,533
$
73,738
$
73,493
$
206,933
$
189,733
Adjusted EBITDA Attributed to Vector Group Ltd. by Segment
Tobacco
$
267,921
$
74,980
$
65,339
$
208,358
$
189,646
Real Estate (h)
9,559
2,868
11,602
11,437
13,032
Corporate and Other
(16,576
)
(4,110
)
(3,543
)
(12,862
)
(11,316
)
Total
$
260,904
$
73,738
$
73,398
$
206,933
$
191,362
TABLE 3
VECTOR GROUP LTD. AND SUBSIDIARIES
RECONCILIATION OF ADJUSTED NET INCOME
(Unaudited)
(Dollars in Thousands, Except Per Share Amounts)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2019
2018
2019
2018
Net income attributed to Vector Group Ltd.
$
36,008
$
12,002
$
90,268
$
37,031
Change in fair value of derivatives embedded within convertible debt
(6,182
)
(10,005
)
(20,319
)
(31,289
)
Non-cash amortization of debt discount on convertible debt
5,746
22,871
19,718
61,450
Litigation settlement and judgment expense (income) (a)
240
—
895
(1,944
)
Impact of MSA settlement (b)
—
—
—
(6,298
)
Impact of net interest expense capitalized to real estate ventures
412
(596
)
2,488
1,775
Douglas Elliman Realty, LLC purchase accounting adjustments (c)
—
385
—
1,140
Adjustment to reflect additional 29.41% of net income from Douglas Elliman Realty, LLC (d)
—
2,931
—
2,287
Total adjustments
216
15,586
2,782
27,121
Tax expense related to adjustments
(59
)
(4,459
)
(764
)
(7,672
)
Adjusted Net Income attributed to Vector Group Ltd.
$
36,165
$
23,129
$
92,286
$
56,480
Per diluted common share:
Adjusted Net Income applicable to common shares attributed to Vector Group Ltd.
$
0.23
$
0.15
$
0.59
$
0.35
TABLE 4
VECTOR GROUP LTD. AND SUBSIDIARIES
RECONCILIATION OF ADJUSTED OPERATING INCOME
(Unaudited)
(Dollars in Thousands)
LTM
Three Months Ended
Nine Months Ended
September 30,
September 30,
September 30,
2019
2019
2018
2019
2018
Operating income
$
233,640
$
66,720
$
66,018
$
185,554
$
175,963
Litigation settlement and judgment expense (income) (a)
1,055
240
—
895
(1,944
)
Impact of MSA settlement (b)
—
—
—
—
(6,298
)
Douglas Elliman Realty, LLC purchase accounting adjustments (c)
265
—
385
—
1,140
Total adjustments
1,320
240
385
895
(7,102
)
Adjusted Operating Income (d)
$
234,960
$
66,960
$
66,403
$
186,449
$
168,861
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
Nine Months Ended
September 30,
September 30,
September 30,
2019
2019
2018
2019
2018
Tobacco Adjusted Operating Income:
Operating income from tobacco segment
$
258,936
$
72,799
$
63,259
$
201,594
$
189,185
Litigation settlement and judgment expense (a)
1,055
240
—
895
525
Impact of MSA settlement (b)
—
—
—
—
(6,298
)
Total adjustments
1,055
240
—
895
(5,773
)
Tobacco Adjusted Operating Income
$
259,991
$
73,039
$
63,259
$
202,489
$
183,412
LTM
Three Months Ended
Nine Months Ended
September 30,
September 30,
September 30,
2019
2019
2018
2019
2018
Tobacco Adjusted EBITDA:
Operating income from tobacco segment
$
258,936
$
72,799
$
63,259
$
201,594
$
189,185
Litigation settlement and judgment expense (a)
1,055
240
—
895
525
Impact of MSA settlement (b)
—
—
—
—
(6,298
)
Total adjustments
1,055
240
—
895
(5,773
)
Tobacco Adjusted Operating Income
259,991
73,039
63,259
202,489
183,412
Depreciation and amortization
7,887
1,941
2,059
5,848
6,171
Stock-based compensation expense
43
—
21
21
63
Total adjustments
7,930
1,941
2,080
5,869
6,234
Tobacco Adjusted EBITDA
$
267,921
$
74,980
$
65,339
$
208,358
$
189,646
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
Nine Months Ended
September 30,
September 30,
September 30,
2019
2019
2018
2019
2018
Net income (loss) attributed to Vector Group Ltd. from subsidiary non-guarantors (a)
$
29,162
$
7,246
$
4,703
$
13,468
$
(915
)
Interest expense (a)
689
228
7
685
63
Income tax expense (benefit) (a)
11,288
3,023
1,971
5,513
(1,826
)
Net (loss) income attributed to non-controlling interest (a)
(675
)
—
3,026
80
657
Depreciation and amortization
9,240
2,240
2,398
6,765
7,105
EBITDA
$
49,704
$
12,737
$
12,105
$
26,511
$
5,084
Loss from non-guarantors other than New Valley LLC
72
15
18
57
71
Equity in (earnings) losses from real estate ventures (b)
(34,826
)
(8,050
)
(294
)
(12,002
)
8,378
Purchase accounting adjustments (c)
63
—
184
—
545
Litigation settlement and judgment income (d)
—
—
—
—
(2,469
)
Other, net
(3,849
)
(1,808
)
(342
)
(3,144
)
(1,020
)
Adjusted EBITDA
$
11,164
$
2,894
$
11,671
$
11,422
$
10,589
Adjusted EBITDA attributed to non-controlling interest
(1,471
)
—
(3,638
)
—
(1,848
)
Adjustment to reflect additional 29.41% of Adjusted EBITDA from Douglas Elliman Realty, LLC (e)
(158
)
—
3,543
—
3,477
Adjusted EBITDA attributed to New Valley LLC
$
9,535
$
2,894
$
11,576
$
11,422
$
12,218
Adjusted EBITDA by Segment
Real Estate (f)
$
11,188
$
2,868
$
11,697
$
11,437
$
11,403
Corporate and Other
(24
)
26
(26
)
(15
)
(814
)
Total (g)
$
11,164
$
2,894
$
11,671
$
11,422
$
10,589
Adjusted EBITDA Attributed to New Valley LLC by Segment
Real Estate (f)
$
9,559
$
2,868
$
11,602
$
11,437
$
13,032
Corporate and Other
(24
)
26
(26
)
(15
)
(814
)
Total (g)
$
9,535
$
2,894
$
11,576
$
11,422
$
12,218
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
Nine Months Ended
September 30,
September 30,
September 30,
2019
2019
2018
2019
2018
Net income attributed to Douglas Elliman Realty, LLC
$
4,041
$
1,893
$
9,965
$
6,617
$
7,773
Interest expense
8
1
3
6
51
Income tax expense (benefit)
365
265
(85
)
366
401
Depreciation and amortization
8,831
2,135
2,295
6,457
6,797
Douglas Elliman Realty, LLC EBITDA
$
13,245
$
4,294
$
12,178
$
13,446
$
15,022
Equity in earnings from real estate ventures (a)
(1,484
)
(458
)
(274
)
(1,392
)
(1,151
)
Purchase accounting adjustments (b)
63
—
184
—
545
Litigation settlement and judgment income (c)
—
—
—
—
(2,469
)
Other, net
(1,338
)
(468
)
(40
)
(1,028
)
(123
)
Douglas Elliman Realty, LLC Adjusted EBITDA
$
10,486
$
3,368
$
12,048
$
11,026
$
11,824
Douglas Elliman Realty, LLC Adjusted EBITDA attributed to non-controlling interest
158
—
(3,543
)
—
(3,477
)
Adjustment to reflect additional 29.41% of Adjusted EBITDA from Douglas Elliman Realty, LLC, which represents the additional interest acquired on December 31, 2018 (d)
(158
)
—
3,543
—
3,477
Douglas Elliman Realty, LLC Adjusted EBITDA attributed to Real Estate Segment
$
10,486
$
3,368
$
12,048
$
11,026
$
11,824
View source version on businesswire.com: https://www.businesswire.com/news/home/20191105006042/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
1 Year Vector Chart |
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