Continued Strong Revenue Growth in Tobacco
Segment with First Quarter Tobacco Segment Revenues Increasing by
8% from Prior Year Period
First Quarter 2023 Highlights:
- Consolidated revenues of $334.1 million, up 7.1% or $22.1
million compared to the prior year period.
- Tobacco segment revenues of $334.1 million, up 8.1% or $25.1
million compared to the prior year period.
- Tobacco segment wholesale and retail market share increased to
5.7% and 5.8% from 5.2% and 5.2%, respectively, in the prior year
period.
- Reported operating income of $74.3 million, down $0.8
million compared to the prior year period.
- Tobacco segment operating income of $78.6 million, up 1.2% or
$1.0 million compared to the prior year period, primarily
attributable to the transition of the Montego brand strategy from
volume-based to income-based.
- Adjusted EBITDA of $78.1 million, up 1.3% or $1.0 million
compared to the prior year period.
- Tobacco Adjusted EBITDA of $80.0 million, up 3.8% or $2.9
million from $77.1 million in the prior year period.
Vector Group Ltd. (NYSE:VGR) today announced financial results
for the three months ended March 31, 2023.
“Vector Group delivered strong tobacco business revenue
performance in the first quarter as we continued to capitalize on
favorable market opportunities to substantially increase market
share and profitability,” said Howard M. Lorber, President and
Chief Executive Officer of Vector Group Ltd. “Our first quarter
results continue to validate our strategy of optimizing long-term
profit through the effective management of volume, pricing, and
market share.”
GAAP Financial Results
First quarter 2023 revenues were $334.1 million, compared to
revenues of $312.0 million for the first quarter of 2022. The
Company recorded operating income of $74.3 million for the first
quarter of 2023 compared to operating income of $75.1 million for
the first quarter of 2022. Net income for the first quarter of 2023
was $34.7 million, or $0.22 per diluted common share, compared to
net income of $32.5 million, or $0.21 per diluted common share, for
the first quarter of 2022.
Non-GAAP Financial Measures
Three months ended March 31, 2023 compared to the three months
ended March 31, 2022
Adjusted EBITDA (as described in Table 2 attached hereto) were
$78.1 million for the first quarter of 2023, compared to $77.1
million for the first quarter of 2022.
Adjusted Net Income (as described in Table 3 attached hereto)
was $34.0 million, or $0.22 per diluted common share, for the first
quarter of 2023, and $26.6 million, or $0.17 per diluted common
share, for the first quarter of 2022.
Adjusted Operating Income (as described in Table 4 attached
hereto) was $74.3 million for the first quarter of 2023, compared
to $73.1 million for the first quarter of 2022.
Consolidated Balance Sheet
Vector maintained significant liquidity at March 31, 2023 with
cash and cash equivalents of $282 million, including $52 million of
cash at Liggett. Vector also held investment securities of $107
million and long-term investments of $45 million.
Vector continued its longstanding practice of paying a quarterly
cash dividend in the first quarter of 2023, returning $32 million
to stockholders at a rate of $0.20 per common share.
Tobacco Segment Financial Results
For the first quarter of 2023, the Tobacco segment had revenues
of $334.1 million, compared to $309.0 million for the first quarter
of 2022.
Operating Income from the Tobacco segment was $78.6 million for
the first quarter of 2023, compared to $77.6 million for the first
quarter of 2022.
Non-GAAP Financial Measures
Tobacco Adjusted Operating Income (as described in Table 5
attached hereto) was $78.6 million for the first quarter of 2023,
compared to $75.6 million for the first quarter of 2022.
Operational Metrics
For the three months ended March 31, 2023, the Tobacco segment
had conventional cigarette (wholesale) shipments of approximately
2.35 billion units, compared to 2.30 billion units for the first
quarter of 2022.
According to data from Management Science Associates, for the
first quarter of 2023, Liggett’s wholesale market share increased
to 5.7% compared to 5.2% for the first quarter of 2022. Liggett’s
wholesale market share is 5.5% for the last twelve months ended
March 31, 2023. Compared to the first quarter of 2022, Liggett’s
wholesale shipments increased by 2.3% while industry wholesale
shipments declined by 6%.
According to data from Management Science Associates, for the
first quarter of 2023, Liggett’s retail market share increased to
5.8% compared to 5.2% for the first quarter of 2022. Liggett’s
retail market share is 5.7% for the last twelve months ended March
31, 2023. Compared to the first quarter of 2022, Liggett’s retail
shipments in the first quarter of 2023 increased by 1.6% while the
overall industry’s retail shipments declined by 8.9%.
Non-GAAP Financial Measures
Adjusted EBITDA, Adjusted Net Income, Adjusted Operating Income,
Tobacco Adjusted Operating Income, and Tobacco 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 enhance 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 does 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.
Reconciliations of Non-GAAP Financial Measures to the comparable
GAAP financial results for the last twelve months ended March 31,
2023 and the three months ended March 31, 2023 and 2022 are
included in Tables 2 through 6.
Conference Call to Discuss First Quarter 2023 Results
As previously announced, Vector will host a conference call and
webcast on Tuesday, May 9, 2023 at 8:30AM (ET) to discuss its first
quarter 2023 results. Investors can access the call via webcast at
https://www.webcaster4.com/Webcast/Page/2271/48350. Please join the
webcast at least 10 minutes prior to the start time.
A replay of the call will be available shortly after the call
ends on May 9, 2023 through May 23, 2023 at
https://www.webcaster4.com/Webcast/Page/2271/48350.
About Vector Group Ltd.
Vector Group is a holding company for Liggett Group LLC, Vector
Tobacco LLC, 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 the 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 2022 Annual Report on Form 10-K and, when filed, in our
Quarterly Report on Form 10-Q for the quarter ended March 31, 2023.
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,
2023
2022
(Unaudited)
Revenues:
Tobacco*
$
334,145
$
309,048
Real estate
—
2,994
Total revenues
334,145
312,042
Expenses:
Cost of sales:
Tobacco*
232,286
211,537
Real estate
—
1,278
Total cost of sales
232,286
212,815
Operating, selling, administrative and
general expenses
27,292
24,029
Litigation settlement and judgment
expense
270
72
Operating income
74,297
75,126
Other income (expenses):
Interest expense
(27,474
)
(25,098
)
Loss on extinguishment of debt
(141
)
—
Equity in losses from investments
(159
)
(2,242
)
Equity in losses from real estate
ventures
(1,893
)
(1,877
)
Other, net
3,620
(1,145
)
Income before provision for income
taxes
48,250
44,764
Income tax expense
13,509
12,222
Net income
$
34,741
$
32,542
Per basic common share:
Net income applicable to common shares
$
0.22
$
0.21
Per diluted common share:
Net income applicable to common shares
$
0.22
$
0.21
* Revenues and cost of sales include
federal excise taxes of $117,818 and $116,079 for the three months
ended March 31, 2023 and 2022, respectively.
TABLE 2
VECTOR GROUP LTD. AND
SUBSIDIARIES
RECONCILIATION OF ADJUSTED
EBITDA
(Unaudited)
(Dollars
in Thousands)
LTM
Year Ended
Three Months Ended
March 31,
December 31,
March 31,
2023
2022
2023
2022
Net income
$
160,900
$
158,701
$
34,741
$
32,542
Interest expense
113,041
110,665
27,474
25,098
Income tax expense
63,148
61,861
13,509
12,222
Depreciation and amortization
7,060
7,218
1,692
1,850
EBITDA
$
344,149
$
338,445
$
77,416
$
71,712
Equity in losses from investments (a)
2,912
4,995
159
2,242
Equity in losses from real estate ventures
(b)
5,962
5,946
1,893
1,877
(Gain) loss on extinguishment of debt
(271
)
(412
)
141
—
Stock-based compensation expense (c)
7,807
7,848
2,106
2,147
Litigation settlement and judgment expense
(d)
437
239
270
72
Impact of MSA settlement (e)
(311
)
(2,123
)
(311
)
(2,123
)
Other, net
(7,511
)
(2,746
)
(3,620
)
1,145
Adjusted EBITDA
$
353,174
$
352,192
$
78,054
$
77,072
Adjusted EBITDA by Segment
Tobacco
$
354,017
$
351,131
$
79,962
$
77,076
Real Estate
7,109
8,082
62
1,035
Corporate and Other
(7,952
)
(7,021
)
(1,970
)
(1,039
)
Total
$
353,174
$
352,192
$
78,054
$
77,072
______________________________
a.
Represents equity in losses recognized
from investments that the Company accounts for under the equity
method.
b.
Represents equity in losses 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.
d.
Represents accruals for product liability
litigation in the Tobacco segment.
e.
Represents the Tobacco segment’s
settlement of long-standing disputes related to the Master
Settlement Agreement.
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,
2023
2022
Net income
$
34,741
$
32,542
Loss on extinguishment of debt
141
—
Litigation settlement and judgment expense
(a)
270
72
Impact of MSA settlement (b)
(311
)
(2,123
)
Impact of net interest expense capitalized
to real estate ventures
(1,041
)
(3,696
)
Adjustment for derivative associated with
guarantee
—
(1,681
)
Total adjustments
(941
)
(7,428
)
Tax benefit related to adjustments
243
1,483
Adjusted Net Income
$
34,043
$
26,597
Per diluted common share:
Adjusted Net Income applicable to common
shares
$
0.22
$
0.17
______________________________
a.
Represents accruals for product liability
litigation in the Tobacco segment.
b.
Represents the 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)
LTM
Year Ended
Three Months Ended
March 31,
December 31,
March 31,
2023
2022
2023
2022
Operating income
$
338,181
$
339,010
$
74,297
$
75,126
Litigation settlement and judgment expense
(a)
437
239
270
72
Impact of MSA settlement (b)
(311
)
(2,123
)
(311
)
(2,123
)
Total adjustments
126
(1,884
)
(41
)
(2,051
)
Adjusted Operating Income
$
338,307
$
337,126
$
74,256
$
73,075
______________________________
a.
Represents accruals for product liability
litigation in the Tobacco segment.
b.
Represents the 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,
2023
2022
2023
2022
Tobacco Adjusted Operating
Income:
Operating income from Tobacco segment
$
348,004
$
347,044
$
78,599
$
77,639
Litigation settlement and judgment expense
(a)
437
239
270
72
Impact of MSA settlement (b)
(311
)
(2,123
)
(311
)
(2,123
)
Total adjustments
126
(1,884
)
(41
)
(2,051
)
Tobacco Adjusted Operating Income
$
348,130
$
345,160
$
78,558
$
75,588
LTM
Year Ended
Three Months Ended
March 31,
December 31,
March 31,
2023
2022
2023
2022
Tobacco Adjusted EBITDA:
Operating income from Tobacco segment
$
348,004
$
347,044
$
78,599
$
77,639
Litigation settlement and judgment expense
(a)
437
239
270
72
Impact of MSA settlement (b)
(311
)
(2,123
)
(311
)
(2,123
)
Total adjustments
126
(1,884
)
(41
)
(2,051
)
Tobacco Adjusted Operating Income
348,130
345,160
78,558
75,588
Depreciation and amortization
5,801
5,901
1,377
1,477
Stock-based compensation expense
86
70
27
11
Total adjustments
5,887
5,971
1,404
1,488
Tobacco Adjusted EBITDA
$
354,017
$
351,131
$
79,962
$
77,076
______________________________
a.
Represents accruals for product liability
litigation in the Tobacco segment.
b.
Represents the 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,
2023
2022
2023
2022
Revenues:
Tobacco (a)
$
1,450,222
$
1,425,125
$
334,145
$
309,048
Real estate
12,890
15,884
—
2,994
Total revenues
$
1,463,112
$
1,441,009
$
334,145
$
312,042
______________________________
a.
Tobacco segment revenues include federal
excise taxes of $522,499 for the last twelve months ended March 31,
2023, $520,760 for the year ended December 31, 2022, and $117,818
and $116,079 for the three months ended March 31, 2023 and 2022,
respectively.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230508005530/en/
Columbia Clancy/Catherine Livingston FGS Global 212-687-8080
(U.S.) +44 (0)20 3178 8914 (Europe) J. Bryant Kirkland III, Vector
Group Ltd. 305-579-8000
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