Tobacco segment continues to benefit from
Montego brand strategy
Second Quarter 2023 Highlights:
- Consolidated revenues of $365.7 million, down 5.6% or $21.5
million compared to the prior year period.
- Tobacco segment revenues of $365.7 million, down 2.3% or $8.7
million compared to the prior year period.
- Tobacco segment wholesale and retail market share increased to
5.4% and 5.8% from 5.3% and 5.5%, respectively, in the prior year
period.
- Operating income of $71.6 million, down 21.0% or $19.1
million compared to the prior year period.
- Tobacco segment operating income of $75.1 million, down 15.0%
or $13.2 million compared to the prior year period. The decline
resulted from an accrual of $18 million to settle long-standing
litigation and was partially offset by a higher gross margin from
price increases.
- Adjusted EBITDA of $94.1 million, down 1.1% or $1.0 million
compared to the prior year period.
- Tobacco Adjusted EBITDA of $94.7 million, up 5.3% or $4.8
million compared to the prior year period.
First Half 2023 Highlights:
- Consolidated revenues of $699.8 million, up 0.1% or $0.6
million compared to the prior year period.
- Tobacco segment revenues of $699.8 million, up 2.4% or $16.4
million compared to the prior year period.
- Tobacco segment wholesale and retail market share increased to
5.5% and 5.8% from 5.3% and 5.3%, respectively, in the prior year
period.
- Operating income of $145.9 million, down 12.0% or
$19.9 million compared to the prior year period.
- Tobacco segment operating income of $153.7 million, down 7.4%
or $12.3 million compared to the prior year period.
- Adjusted EBITDA remained flat at $172.2 million compared to
the prior year period.
- Tobacco Adjusted EBITDA of $174.6 million, up 4.6% or $7.7
million compared to the prior year period.
Vector Group Ltd. (NYSE:VGR) today announced financial results
for the three and six months ended June 30, 2023.
“Vector Group performed well in the first half of 2023 as we
continued to benefit from the gradual transition of our Montego
brand strategy,” said Howard M. Lorber, President and Chief
Executive Officer of Vector Group Ltd. “In the second half of 2023,
we remain focused on optimizing long-term profit by effectively
managing our volume, pricing and market share to generate long-term
value for our stockholders.”
GAAP Financial Results
Three months ended June 30, 2023 and 2022. Second quarter 2023
revenues were $365.7 million, compared to revenues of $387.2
million in the second quarter of 2022. The Company recorded
operating income of $71.6 million in the second quarter of 2023,
compared to operating income of $90.7 million in the second quarter
of 2022. Net income for the second quarter of 2023 was $38.1
million, or $0.24 per diluted common share, compared to net income
of $39.2 million, or $0.25 per diluted common share, in the second
quarter of 2022.
Six months ended June 30, 2023 and 2022. For the six months
ended June 30, 2023, revenues were $699.8 million, compared to
revenues of $699.2 million for the six months ended June 30, 2022.
The Company recorded operating income of $145.9 million for the six
months ended June 30, 2023, compared to operating income of $165.8
million for the six months ended June 30, 2022. Net income for the
six months ended June 30, 2023 was $72.8 million, or $0.46 per
diluted common share, compared to net income of $71.7 million, or
$0.45 per diluted common share, for the six months ended June 30,
2022.
Non-GAAP Financial Measures
Three months ended June 30, 2023 compared to the three months
ended June 30, 2022
Adjusted EBITDA (as described in Table 2 attached hereto) were
$94.1 million for the second quarter of 2023, compared to $95.1
million for the second quarter of 2022.
Adjusted Net Income (as described in Table 3 attached hereto)
was $50.8 million, or $0.32 per diluted share, for the second
quarter of 2023, compared to $40.2 million, or $0.25 per diluted
share, for the second quarter of 2022.
Adjusted Operating Income (as described in Table 4 attached
hereto) was $89.7 million for the second quarter of 2023, compared
to $90.8 million for the second quarter of 2022.
Six months ended June 30, 2023 compared to the six months ended
June 30, 2022
Adjusted EBITDA (as described in Table 2 attached hereto) were
$172.2 million for the six months ended June 30, 2023, compared to
$172.2 million for the six months ended June 30, 2022.
Adjusted Net Income (as described in Table 3 attached hereto)
was $84.8 million, or $0.54 per diluted share, for the six months
ended June 30, 2023, compared to $66.8 million, or $0.42 per
diluted share, for the six months ended June 30, 2022.
Adjusted Operating Income (as described in Table 4 attached
hereto) was $164.0 million for the six months ended June 30, 2023,
compared to $163.8 million for the six months ended June 30,
2022.
Consolidated Balance Sheet
Vector Group maintained significant liquidity at June 30, 2023
with cash and cash equivalents of $330.3 million, including $102.9
million of cash at its Tobacco segment, investment securities of
$116.1 million and long-term investments of $44.8 million.
Vector Group continued its longstanding history of paying a
quarterly cash dividend in the second quarter of 2023. For the six
months ended June 30, 2023, Vector Group returned a total of $64
million to stockholders at a quarterly rate of $0.20 per common
share.
Tobacco Segment Financial Results
For the second quarter of 2023, the Tobacco segment had revenues
of $365.7 million, compared to $374.3 million for the second
quarter of 2022. For the six months ended June 30, 2023, the
Tobacco segment had revenues of $699.8 million, compared to $683.4
million for the six months ended June 30, 2022.
Operating Income from the Tobacco segment was $75.1 million and
$153.7 million for the three and six months ended June 30, 2023,
respectively, compared to $88.3 million and $166.0 million for the
three and six months ended June 30, 2022, respectively.
Non-GAAP Financial Measures
Tobacco Adjusted Operating Income (as described in Table 5
attached hereto) for the second quarter of 2023 was $93.2 million
compared to $88.4 million for the second quarter of 2022. Tobacco
Adjusted Operating Income for the six months ended June 30, 2023
was $171.8 million, compared to $164.0 million for the six months
ended June 30, 2022.
Operational Metrics
For the second quarter of 2023, the Tobacco segment had
conventional cigarette (wholesale) shipments of approximately 2.52
billion units, compared to 2.74 billion units for the second
quarter of 2022. For the six months ended June 30, 2023, the
Tobacco segment had conventional cigarette (wholesale) shipments of
approximately 4.87 billion units, compared to 5.04 billion units
for the six months ended June 30, 2022.
According to data from Management Science Associates, Inc., for
the second quarter of 2023, the Tobacco segment’s wholesale market
share increased to 5.4%, up from to 5.3% for the second quarter of
2022. For the six months ended June 30, 2023, the Tobacco segment’s
wholesale market share increased to 5.5%, up from 5.3% for the six
months ended June 30, 2022. The Tobacco segment’s wholesale
shipments in the second quarter of 2023 declined by 7.9% compared
to the second quarter of 2022, while the overall industry’s
wholesale shipments declined by 8.9%. The Tobacco segment’s
wholesale shipments for the six months ended June 30, 2023 declined
by 3.2% compared to the six months ended June 30, 2022, while the
overall industry’s wholesale shipments declined by 7.6%.
According to data from Management Science Associates, Inc., for
the second quarter of 2023, the Tobacco segment’s retail market
share increased to 5.8%, up from 5.5% for the second quarter of
2022. For the six months ended June 30, 2023, the Tobacco segment’s
retail market share increased to 5.8%, up from 5.3% for the six
months ended June 30, 2022. The Tobacco segment’s retail shipments
in the second quarter of 2023 declined by 1.8% compared to the
second quarter of 2022, while the overall industry’s retail
shipments declined by 7.1%. The Tobacco segment’s retail shipments
for the six months ended June 30, 2023 declined by 0.2% compared to
the six months ended June 30, 2022, while the overall industry’s
retail shipments declined by 8.0%.
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 three and six months ended June 30,
2023 and 2022 are included in Tables 2 through 5.
Conference Call to Discuss Second Quarter 2023
Results
As previously announced, the Company will host a conference call
and webcast on Friday, August 4, 2023 at 8:30 AM (ET) to discuss
its quarterly period and six months results. Investors may access
the call via live webcast at
https://www.webcaster4.com/Webcast/Page/2271/48791. Please join the
webcast at least ten minutes prior to the start time.
A replay of the call will be available shortly after the call
ends on August 4, 2023 through August 18, 2023 at
https://www.webcaster4.com/Webcast/Page/2271/48791.
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 June 30, 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 (Unaudited) (Dollars
in Thousands, Except Per Share Amounts)
Three Months Ended
Six Months Ended
June 30,
June 30,
2023
2022
2023
2022
Revenues:
Tobacco*
$
365,662
$
374,312
$
699,807
$
683,360
Real estate
—
12,890
—
15,884
Total revenues
365,662
387,202
699,807
699,244
Expenses:
Cost of sales:
Tobacco*
248,984
265,189
481,270
476,726
Real estate
—
6,049
—
7,327
Total cost of sales
248,984
271,238
481,270
484,053
Operating, selling, administrative and
general expenses
26,930
25,196
54,222
49,225
Litigation settlement and judgment
expense
18,105
57
18,375
129
Operating income
71,643
90,711
145,940
165,837
Other income (expenses):
Interest expense
(27,124
)
(30,724
)
(54,598
)
(55,822
)
Loss on extinguishment of debt
(40
)
—
(181
)
—
Equity in earnings (losses) from
investments
959
(2,311
)
800
(4,553
)
Equity in earnings (losses) from real
estate ventures
2,954
(460
)
1,061
(2,337
)
Other, net
4,791
(3,094
)
8,411
(4,239
)
Income before provision for income
taxes
53,183
54,122
101,433
98,886
Income tax expense
15,094
14,969
28,603
27,191
Net income
$
38,089
$
39,153
$
72,830
$
71,695
Per basic common share:
Net income applicable to common shares
$
0.24
$
0.25
$
0.46
$
0.46
Per diluted common share:
Net income applicable to common shares
$
0.24
$
0.25
$
0.46
$
0.45
* Revenues and cost of sales include federal excise taxes of
$126,750, $137,884, $244,568 and $253,963 for the three and six
months ended June 30, 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
Six Months Ended
June 30,
December 31,
June 30,
June 30,
2023
2022
2023
2022
2023
2022
Net income
$
159,836
$
158,701
$
38,089
$
39,153
$
72,830
$
71,695
Interest expense
109,441
110,665
27,124
30,724
54,598
55,822
Income tax expense
63,273
61,861
15,094
14,969
28,603
27,191
Depreciation and amortization
6,998
7,218
1,731
1,793
3,423
3,643
EBITDA
$
339,548
$
338,445
$
82,038
$
86,639
$
159,454
$
158,351
Equity in (earnings) losses from
investments (a)
(358
)
4,995
(959
)
2,311
(800
)
4,553
Equity in losses (earnings) from real
estate ventures (b)
2,548
5,946
(2,954
)
460
(1,061
)
2,337
(Gain) loss on extinguishment of debt
(231
)
(412
)
40
—
181
—
Stock-based compensation expense (c)
7,881
7,848
2,644
2,570
4,750
4,717
Litigation settlement and judgment expense
(d)
18,485
239
18,105
57
18,375
129
Impact of MSA settlement (e)
(311
)
(2,123
)
—
—
(311
)
(2,123
)
Other, net
(15,396
)
(2,746
)
(4,791
)
3,094
(8,411
)
4,239
Adjusted EBITDA
$
352,166
$
352,192
$
94,123
$
95,131
$
172,177
$
172,203
Adjusted EBITDA by Segment
Tobacco
$
358,821
$
351,131
$
94,687
$
89,883
$
174,649
$
166,959
Real Estate
384
8,082
148
6,873
210
7,908
Corporate and Other
(7,039
)
(7,021
)
(712
)
(1,625
)
(2,682
)
(2,664
)
Total
$
352,166
$
352,192
$
94,123
$
95,131
$
172,177
$
172,203
- Represents equity in (earnings) losses recognized from
investments that the Company accounts for under the equity
method.
- Represents equity in losses (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.
- Represents amortization of stock-based compensation.
- Represents accruals for litigation in the Tobacco segment.
- 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
Six Months Ended
June 30,
June 30,
2023
2022
2023
2022
Net income
$
38,089
$
39,153
$
72,830
$
71,695
Loss on extinguishment of debt
40
—
181
—
Litigation settlement and judgment expense
(a)
18,105
57
18,375
129
Impact of MSA settlement (b)
—
—
(311
)
(2,123
)
Impact of net interest expense capitalized
to real estate ventures
(1,072
)
1,685
(2,113
)
(2,011
)
Expense related to Tax Disaffiliation
indemnification (c)
—
553
—
553
Adjustment for derivative associated with
guarantee
—
(783
)
—
(2,464
)
Total adjustments
17,073
1,512
16,132
(5,916
)
Tax (benefit) expense related to
adjustments
(4,407
)
(449
)
(4,164
)
1,034
Adjusted Net Income
$
50,755
$
40,216
$
84,798
$
66,813
Per diluted common share:
Adjusted Net Income applicable to common
shares
$
0.32
$
0.25
$
0.54
$
0.42
- Represents accruals for litigation in the Tobacco segment.
- Represents the Tobacco segment’s settlement of long-standing
disputes related to the Master Settlement Agreement.
- Represents amounts accrued under the Company’s Tax
Disaffiliation Agreement related to certain tax liabilities of
Douglas Elliman Inc. prior to its distribution on December 29,
2021.
TABLE 4 VECTOR GROUP
LTD. AND SUBSIDIARIES RECONCILIATION OF ADJUSTED OPERATING
INCOME (Unaudited) (Dollars in
Thousands)
LTM
Year Ended
Three Months Ended
Six Months Ended
June 30,
December 31,
June 30,
June 30,
2023
2022
2023
2022
2023
2022
Operating income
$
319,113
$
339,010
$
71,643
$
90,711
$
145,940
$
165,837
Litigation settlement and judgment expense
(a)
18,485
239
18,105
57
18,375
129
Impact of MSA settlement (b)
(311
)
(2,123
)
—
—
(311
)
(2,123
)
Total adjustments
18,174
(1,884
)
18,105
57
18,064
(1,994
)
Adjusted Operating Income
$
337,287
$
337,126
$
89,748
$
90,768
$
164,004
$
163,843
- Represents accruals for litigation in the Tobacco segment.
- 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
Six Months Ended
June 30,
December 31,
June 30,
June 30,
2023
2022
2023
2022
2023
2022
Tobacco Adjusted Operating
Income:
Operating income from Tobacco segment
$
334,794
$
347,044
$
75,122
$
88,332
$
153,721
$
165,971
Litigation settlement and judgment expense
(a)
18,485
239
18,105
57
18,375
129
Impact of MSA settlement (b)
(311
)
(2,123
)
—
—
(311
)
(2,123
)
Total adjustments
18,174
(1,884
)
18,105
57
18,064
(1,994
)
Tobacco Adjusted Operating Income
$
352,968
$
345,160
$
93,227
$
88,389
$
171,785
$
163,977
LTM
Year Ended
Three Months Ended
Six Months Ended
June 30,
December 31,
June 30,
June 30,
2023
2022
2023
2022
2023
2022
Tobacco Adjusted EBITDA:
Operating income from Tobacco segment
$
334,794
$
347,044
$
75,122
$
88,332
$
153,721
$
165,971
Litigation settlement and judgment expense
(a)
18,485
239
18,105
57
18,375
129
Impact of MSA settlement (b)
(311
)
(2,123
)
—
—
(311
)
(2,123
)
Total adjustments
18,174
(1,884
)
18,105
57
18,064
(1,994
)
Tobacco Adjusted Operating Income
352,968
345,160
93,227
88,389
171,785
163,977
Depreciation and amortization
5,745
5,901
1,419
1,475
2,796
2,952
Stock-based compensation expense
108
70
41
19
68
30
Total adjustments
5,853
5,971
1,460
1,494
2,864
2,982
Tobacco Adjusted EBITDA
$
358,821
$
351,131
$
94,687
$
89,883
$
174,649
$
166,959
- Represents accruals for litigation in the Tobacco segment.
- 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
Six Months Ended
June 30,
December 31,
June 30,
June 30,
2023
2022
2023
2022
2023
2022
Revenues:
Tobacco (a)
$
1,441,572
$
1,425,125
$
365,662
$
374,312
$
699,807
$
683,360
Real estate
—
15,884
—
12,890
—
15,884
Total revenues
$
1,441,572
$
1,441,009
$
365,662
$
387,202
$
699,807
$
699,244
- Tobacco segment revenues include federal excise taxes of
$511,365 for the last twelve months ended June 30, 2023, $520,760
for the year ended December 31, 2022, and $126,750, $244,568,
$137,884 and $253,963 for the three and six months ended June 30,
2023 and 2022, respectively.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230803949343/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
Vector (NYSE:VGR)
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