Document


 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 7, 2019
VECTOR GROUP LTD.
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE
(State or Other Jurisdiction of Incorporation)
1-5759
 
65-0949535
(Commission File Number)
 
(I.R.S. Employer Identification No.)
 
 
 
4400 Biscayne Boulevard, Miami, Florida
 
33137
(Address of Principal Executive Offices)
 
(Zip Code)
(305) 579-8000
(Registrant’s Telephone Number, Including Area Code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o
 
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 
 
o
 
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 
 
o
 
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
 
 
o
 
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Securities Registered Pursuant to 12(b) of the Act:
Title of each class:
Trading
Name of each exchange
 
Symbol(s)
on which registered:
Common stock, par value $0.10 per share
VGR
New York Stock Exchange

 





Item 2.02. Results of Operations and Financial Condition

On August 7, 2019, Vector Group Ltd. announced its financial results for the three and six months ended June 30, 2019. The full text of the press release issued in connection with the announcement is attached as Exhibit 99.1 to this Current Report on Form 8-K.

The information in this Current Report on Form 8-K and the Exhibit attached hereto is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing.

Item 9.01. Financial Statements and Exhibit

(c)
Exhibit.

Exhibit No.
 
Exhibit
 
Press Release issued on August 7, 2019






SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
VECTOR GROUP LTD.
 
 
 
By:
/s/ J. Bryant Kirkland III  
 
 
J. Bryant Kirkland III 
 
 
Senior Vice President, Treasurer and Chief Financial Officer 
Date: August 7, 2019



Exhibit


http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=13046381&doc=3
FOR IMMEDIATE RELEASE
Contact:
 
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
VECTOR GROUP REPORTS SECOND QUARTER 2019 FINANCIAL RESULTS

 
MIAMI, FL, August 7, 2019 - Vector Group Ltd. (NYSE:VGR) today announced financial results for the three and six months ended June 30, 2019.

GAAP Financial Results

Second quarter 2019 revenues were $538.4 million, compared to revenues of $481.5 million in the second quarter of 2018. The Company recorded operating income of $76.2 million in the second quarter of 2019, compared to operating income of $61.9 million in the second quarter of 2018. Net income attributed to Vector Group Ltd. for the second quarter of 2019 was $39.3 million, or $0.27 per diluted common share, compared to net income of $17.8 million, or $0.12 per diluted common share, in the second quarter of 2018.

For the six months ended June 30, 2019 revenues were $959.4 million, compared to revenues of $910.5 million for the six months ended June 30, 2018. The Company recorded operating income of $118.8 million for the six months ended June 30, 2019, compared to operating income of $109.9 million for the six months ended June 30, 2018. Net income attributed to Vector Group Ltd. for the six months ended June 30, 2019 was $54.3 million, or $0.35 per diluted common share, compared to a net income of $25.0 million, or $0.15 per diluted common share, for the six months ended June 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 six months ended June 30, 2019 and 2018 are included in Tables 2 through 7.






Three months ended June 30, 2019 compared to the three months ended June 30, 2018
Second quarter of 2019 Adjusted EBITDA attributed to Vector Group (as described in Table 2 attached hereto) were $83.5 million, compared to $67.5 million for the second quarter of 2018.
Adjusted Net Income (as described in Table 3 attached hereto) was $43.2 million, or $0.29 per diluted share, for the second quarter of 2019, and $27.8 million or $0.19 per diluted share for the second quarter of 2018.
Adjusted Operating Income (as described in Table 4 attached hereto) was $76.9 million for the second quarter of 2019, compared to $60.0 million for the second quarter of 2018.
Six months ended June 30, 2019 compared to the six months ended June 30, 2018
Adjusted EBITDA attributed to Vector Group Ltd. (as described in Table 2 attached hereto) were $133.2 million for the six months ended June 30, 2019 compared to $118.0 million for the six months ended June 30, 2018.
Adjusted Net Income (as described in Table 3 attached hereto) was $56.1 million, or $0.37 per diluted share, for the six months ended June 30, 2019, and $33.4 million, or $0.21 per diluted share for the six months ended June 30, 2018.
Adjusted Operating Income (as described in Table 4 attached hereto) was $119.5 million for the six months ended June 30, 2019 compared to $102.5 million for the six months ended June 30, 2018.

Tobacco Segment Financial Results
For the second quarter of 2019, the Tobacco segment had revenues of $294.5 million, compared to $274.8 million for the second quarter of 2018. For the six months ended June 30, 2019, the Tobacco segment had revenues of $551.3 million, compared to $541.9 million for the six months ended June 30, 2018.
Operating Income from the Tobacco segment was $68.7 million and $128.8 million for the three and six months ended June 30, 2019, compared to $62.5 million and $125.9 million for the three and six months ended June 30, 2018.
Non-GAAP Financial Measures
Tobacco Adjusted Operating Income (as described in Table 5 attached hereto) for the second quarter of 2019 and 2018 was $69.3 million and $60.2 million, respectively. Tobacco Adjusted Operating Income for the six months ended June 30, 2019 and 2018 was $129.5 million and $120.2 million, respectively.
For the second quarter of 2019, the Tobacco segment had conventional cigarette (wholesale) shipments of approximately 2.38 billion units, compared to 2.30 billion units for the second quarter of 2018. For the six months ended June 30, 2019, the Tobacco segment had conventional cigarette (wholesale) shipments of approximately 4.46 billion units compared to 4.54 billion units for the six months ended June 30, 2018.
Liggett’s retail market share increased to 4.2% for both the second quarter and the six months ended June 30, 2019, compared to 4.1% for both the second quarter and the six months ended June 30, 2018. Compared to the second quarter of 2018, Liggett’s retail shipments declined by 3.4% while the overall industry’s retail shipments declined by 6.1%. Compared to the six months ended June 30, 2018, Liggett’s retail shipments declined by 2.8% while the overall industry’s retail shipments declined by 5.8%, according to data from Management Science Associates, Inc.

Real Estate Segment Financial Results
For the second quarter of 2019, the Real Estate segment had revenues of $243.9 million, compared to $206.7 million for the second quarter of 2018. For the six months ended June 30, 2019, the Real Estate segment had revenues of $408.1 million, compared to $368.5 million for the six months ended June 30, 2018. For the second quarter of 2019, the Real Estate segment reported net income of $15.3 million, compared to a net income of $2.9 million for the second quarter of 2018. For the six months ended June 30, 2019, the Real Estate segment reported a net income of $6.2 million, compared to net loss of $5.6 million for the six months ended June 30, 2018.
Douglas Elliman’s results are included in Vector Group Ltd.’s Real Estate segment. For the second quarter of 2019, Douglas Elliman had revenues of $243.0 million, compared to $205.6 million for the second quarter of 2018For the six months ended June 30, 2019, Douglas Elliman had revenues of $404.8 million, compared to $365.0 million for the six months ended June 30, 2018. For the second quarter of 2019, Douglas Elliman reported a net income of $15.1 million, compared to net income of $5.9 million for the second quarter of 2018. For the six months ended June 30, 2019, Douglas Elliman reported net income of $4.7 million, compared to net loss of $2.2 million for the six months ended June 30, 2018.





Non-GAAP Financial Measures
For the second quarter of 2019, Real Estate Adjusted EBITDA attributed to the Company (as described in Table 6 attached hereto) were $16.5 million, compared to $9.0 million for the second quarter of 2018.
For the six months ended June 30, 2019, Real Estate Adjusted EBITDA attributed to the Company were $8.6 million, compared to $1.4 million for the six months ended June 30, 2018.
Douglas Elliman’s results are included in Vector Group Ltd.’s Real Estate segment. For the second quarter of 2019, Douglas Elliman’s Adjusted EBITDA (as described in Table 7 attached hereto) were $16.6 million, compared to $8.4 million for the second quarter of 2018.
For the six months ended June 30, 2019, Douglas Elliman’s Adjusted EBITDA were $7.7 million, compared to a loss of $0.2 million for the six months ended June 30, 2018.
For the three and six months ended June 30, 2019, Douglas Elliman achieved closed sales of approximately $8.9 billion and $14.7 billion, respectively, compared to $7.5 billion and $13.6 billion for the three and six months ended June 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 six months ended June 30, 2019 and 2018, respectively, as well as the twelve months ended June 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 six months ended June 30, 2019 and 2018.

Conference Call to Discuss Second Quarter 2019 Results

As previously announced, the Company will host a conference call and webcast on Wednesday, August 7, 2019 at 8:30 AM (ET) to discuss its second quarter 2019 results. Investors can access the call by dialing 800-859-8150 and entering 92558590 as the conference ID number. The call will also be available via live webcast at https://www.investornetwork.com/event/presentation/51729. 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 August 7, 2019 through August 21, 2019. To access the replay, dial 877-656-8905 and enter 92558590 as the conference ID number. The archived webcast will also be available at https://www.investornetwork.com/event/presentation/51729 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
 
Six Months Ended
 
June 30,
 
June 30,
 
2019
 
2018
 
2019
 
2018
 
(Unaudited)
 
(Unaudited)
Revenues:
 
 
 
 
 
 
 
   Tobacco*
$
294,501

 
$
274,833

 
$
551,257

 
$
541,949

   Real estate
243,931

 
206,655

 
408,099

 
368,505

       Total revenues
538,432

 
481,488

 
959,356

 
910,454

 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 Cost of sales:
 
 
 
 
 
 
 
   Tobacco*
204,461

 
192,761

 
381,764

 
377,723

   Real estate
163,713

 
140,005

 
272,430

 
249,318

       Total cost of sales
368,174

 
332,766

 
654,194

 
627,041

 
 
 
 
 
 
 
 
Operating, selling, administrative and general expenses
93,359

 
86,336

 
185,673

 
175,412

Litigation settlement and judgment expense (income)
655

 
525

 
655

 
(1,944
)
Operating income
76,244

 
61,861

 
118,834

 
109,945

 
 
 
 
 
 
 
 
Other income (expenses):
 
 
 
 
 
 
 
Interest expense
(32,753
)
 
(48,421
)
 
(70,273
)
 
(94,368
)
Change in fair value of derivatives embedded within convertible debt
3,788

 
10,717

 
14,137

 
21,284

Equity in earnings (losses) from real estate ventures
6,391

 
(2,112
)
 
3,952

 
(8,672
)
Other, net
3,096

 
9,711

 
11,898

 
9,179

Income before provision for income taxes
56,766

 
31,756

 
78,548

 
37,368

Income tax expense
17,459

 
12,760

 
24,208

 
14,708

 
 
 
 
 
 
 
 
Net income
39,307

 
18,996

 
54,340

 
22,660

 
 
 
 
 
 
 
 
Net loss (income) attributed to non-controlling interest

 
(1,178
)
 
(80
)
 
2,369

 
 
 
 
 
 
 
 
Net income attributed to Vector Group Ltd.
$
39,307

 
$
17,818

 
$
54,260

 
$
25,029

 
 
 
 
 
 
 
 
Per basic common share:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income applicable to common share attributed to Vector Group Ltd.
$
0.27

 
$
0.12

 
$
0.36

 
$
0.15

 
 
 
 
 
 
 
 
Per diluted common share:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income applicable to common share attributed to Vector Group Ltd.
$
0.27

 
$
0.12

 
$
0.35

 
$
0.15


* Revenues and cost of sales include federal excise taxes of $119,943, $115,970, $224,576 and $228,771, respectively.





TABLE 2
VECTOR GROUP LTD. AND SUBSIDIARIES
RECONCILIATION OF ADJUSTED EBITDA
(Unaudited)
(Dollars in Thousands)
 
LTM
 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
 
June 30,
 
2019
 
2019
 
2018
 
2019
 
2018
 
 
 
 
 
 
Net income attributed to Vector Group Ltd.
$
87,336

 
$
39,307

 
$
17,818

 
$
54,260

 
$
25,029

Interest expense
179,685

 
32,753

 
48,421

 
70,273

 
94,368

Income tax expense
31,052

 
17,459

 
12,760

 
24,208

 
14,708

Net income (loss) attributed to non-controlling interest
2,351

 

 
1,178

 
80

 
(2,369
)
Depreciation and amortization
18,403

 
4,224

 
4,749

 
8,932

 
9,336

EBITDA
$
318,827

 
$
93,743

 
$
84,926

 
$
157,753

 
$
141,072

Change in fair value of derivatives embedded within convertible debt (a)
(37,842
)
 
(3,788
)
 
(10,717
)
 
(14,137
)
 
(21,284
)
Equity in (earnings) losses from real estate ventures (b)
(27,070
)
 
(6,391
)
 
2,112

 
(3,952
)
 
8,672

Loss on extinguishment of debt
4,066

 

 

 

 

Stock-based compensation expense (c)
9,885

 
2,338

 
2,456

 
4,774

 
4,840

Litigation settlement and judgment expense (income) (d)
815

 
655

 
525

 
655

 
(1,944
)
Impact of MSA settlement (e)

 

 
(2,808
)
 

 
(6,298
)
Purchase accounting adjustments (f)
247

 

 
179

 

 
361

Other, net
(6,640
)
 
(3,096
)
 
(9,711
)
 
(11,898
)
 
(9,179
)
Adjusted EBITDA
$
262,288

 
$
83,461

 
$
66,962

 
$
133,195

 
$
116,240

Adjusted EBITDA attributed to non-controlling interest
(5,109
)
 

 
(1,906
)
 

 
1,790

Adjustment to reflect additional 29.41% of Adjusted EBITDA from Douglas Elliman Realty, LLC (g)
3,385

 

 
2,464

 

 
(66
)
Adjusted EBITDA attributed to Vector Group Ltd.
$
260,564

 
$
83,461

 
$
67,520

 
$
133,195

 
$
117,964

 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA by Segment
 
 
 
 
 
 
 
 
 
Tobacco
$
258,280

 
$
71,256

 
$
62,328

 
$
133,378

 
$
124,307

Real Estate (h)
20,017

 
16,477

 
8,464

 
8,569

 
(294
)
Corporate and Other
(16,009
)
 
(4,272
)
 
(3,830
)
 
(8,752
)
 
(7,773
)
Total
$
262,288

 
$
83,461

 
$
66,962

 
$
133,195

 
$
116,240

 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA Attributed to Vector Group Ltd. by Segment
 
 
 
 
 
 
 
 
 
Tobacco
$
258,280

 
$
71,256

 
$
62,328

 
$
133,378

 
$
124,307

Real Estate (h)
18,293

 
16,477

 
9,022

 
8,569

 
1,430

Corporate and Other
(16,009
)
 
(4,272
)
 
(3,830
)
 
(8,752
)
 
(7,773
)
Total
$
260,564

 
$
83,461

 
$
67,520

 
$
133,195

 
$
117,964

                                      

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) losses recognized from the Company’s investment in certain real estate businesses that are not consolidated in its financial results.
c.
Represents amortization of stock-based compensation.
d.
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.
e.
Represents the Company’s tobacco segment’s settlement of a long-standing dispute related to the Master Settlement Agreement.
f.
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.
g.
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%.
h.
Includes Adjusted EBITDA for Douglas Elliman Realty, LLC of $19,166 for the last twelve months ended June 30, 2019 and $16,649, $8,379, $7,658 and negative $224 for the three and six months ended June 30, 2019 and 2018, respectively. Amounts reported in this footnote reflect 100% of Douglas Elliman Realty, LLC’s entire Adjusted EBITDA.





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,
 
2019
 
2018
 
2019
 
2018
 
 
 
 
Net income attributed to Vector Group Ltd.
$
39,307

 
$
17,818

 
$
54,260

 
$
25,029

 
 
 
 
 
 
 
 
Change in fair value of derivatives embedded within convertible debt
(3,788
)
 
(10,717
)
 
(14,137
)
 
(21,284
)
Non-cash amortization of debt discount on convertible debt
5,447

 
20,386

 
13,972

 
38,579

Litigation settlement and judgment income (a)
655

 
525

 
655

 
(1,944
)
Impact of MSA settlement (b)

 
(2,808
)
 

 
(6,298
)
Impact of net interest expense capitalized to real estate ventures
3,006

 
4,324

 
2,076

 
2,371

Douglas Elliman Realty, LLC purchase accounting adjustments (c)

 
380

 

 
755

Adjustment to reflect additional 29.41% of net income from Douglas Elliman Realty, LLC (d)

 
1,737

 

 
(644
)
Total adjustments
5,320

 
13,827

 
2,566

 
11,535

 
 
 
 
 
 
 
 
Tax expense related to adjustments
(1,467
)
 
(3,868
)
 
(705
)
 
(3,213
)
 
 
 
 
 
 
 
 
Adjusted Net Income attributed to Vector Group Ltd.
$
43,160

 
$
27,777

 
$
56,121

 
$
33,351

 
 
 
 
 
 
 
 
Per diluted common share:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted Net Income applicable to common shares attributed to Vector Group Ltd.
$
0.29

 
$
0.19

 
$
0.37

 
$
0.21


                                      

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
VECTOR GROUP LTD. AND SUBSIDIARIES
RECONCILIATION OF ADJUSTED OPERATING INCOME
(Unaudited)
(Dollars in Thousands)


 
LTM
 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
 
June 30,
 
2019
 
2019
 
2018
 
2019
 
2018
 
 
 
 
 
 
Operating income
$
232,938

 
$
76,244

 
$
61,861

 
$
118,834

 
$
109,945

 
 
 
 
 
 
 
 
 
 
   Litigation settlement and judgment expense (income) (a)
815

 
655

 
525

 
655

 
(1,944
)
Impact of MSA settlement (b)

 

 
(2,808
)
 

 
(6,298
)
Douglas Elliman Realty, LLC purchase accounting adjustments (c)
651

 

 
380

 

 
755

Total adjustments
1,466

 
655

 
(1,903
)
 
655

 
(7,487
)
 
 
 
 
 
 
 
 
 
 
Adjusted Operating Income (d)
$
234,404

 
$
76,899

 
$
59,958

 
$
119,489

 
$
102,458


                                      

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 June 30, 2019 and three and six months ended June 30, 2018.






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
 
Six Months Ended
 
June 30,
 
June 30,
 
June 30,
 
2019
 
2019
 
2018
 
2019
 
2018
 
 
 
 
 
 
Tobacco Adjusted Operating Income:
 
 
 
 
 
 
 
 
 
Operating income from tobacco segment
$
249,396

 
$
68,651

 
$
62,515

 
$
128,795

 
$
125,926

 
 
 
 
 
 
 
 
 
 
   Litigation settlement and judgment expense (a)
815

 
655

 
525

 
655

 
525

Impact of MSA settlement (b)

 

 
(2,808
)
 

 
(6,298
)
Total adjustments
815

 
655

 
(2,283
)
 
655

 
(5,773
)
 
 
 
 
 
 
 
 
 
 
Tobacco Adjusted Operating Income
$
250,211

 
$
69,306

 
$
60,232

 
$
129,450

 
$
120,153


 
LTM
 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
 
June 30,
 
2019
 
2019
 
2018
 
2019
 
2018
 
 
 
 
 
 
 
 
 
 
Tobacco Adjusted EBITDA:
 
 
 
 
 
 
 
 
 
Operating income from tobacco segment
$
249,396

 
$
68,651

 
$
62,515

 
$
128,795

 
$
125,926

 
 
 
 
 
 
 
 
 
 
   Litigation settlement and judgment expense (a)
815

 
655

 
525

 
655

 
525

Impact of MSA settlement (b)

 

 
(2,808
)
 

 
(6,298
)
Total adjustments
815

 
655

 
(2,283
)
 
655

 
(5,773
)
 
 
 
 
 
 
 
 
 
 
Tobacco Adjusted Operating Income
250,211

 
69,306

 
60,232

 
129,450

 
120,153

 
 
 
 
 
 
 
 
 
 
Depreciation and amortization
8,005

 
1,950

 
2,075

 
3,907

 
4,112

Stock-based compensation expense
64

 

 
21

 
21

 
42

Total adjustments
8,069

 
1,950

 
2,096

 
3,928

 
4,154

 
 
 
 
 
 
 
 
 
 
Tobacco Adjusted EBITDA
$
258,280

 
$
71,256

 
$
62,328

 
$
133,378

 
$
124,307



                                      

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
VECTOR GROUP LTD. AND SUBSIDIARIES
RECONCILIATION OF REAL ESTATE SEGMENT (NEW VALLEY LLC) ADJUSTED EBITDA
(Unaudited)
(Dollars in Thousands)
 
LTM
 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
 
June 30,
 
2019
 
2019
 
2018
 
2019
 
2018
 
 
 
 
 
 
Net income (loss) attributed to Vector Group Ltd. from subsidiary non-guarantors (a)
$
26,619

 
$
15,307

 
$
2,926

 
$
6,222

 
$
(5,618
)
Interest expense (a)
468

 
228

 
7

 
457

 
56

Income tax expense (benefit) (a)
10,236

 
5,909

 
(803
)
 
2,490

 
(3,797
)
Net income (loss) attributed to non-controlling interest (a)
2,351

 

 
1,178

 
80

 
(2,369
)
Depreciation and amortization
9,398

 
2,024

 
2,418

 
4,525

 
4,707

EBITDA
$
49,072

 
$
23,468

 
$
5,726

 
$
13,774

 
$
(7,021
)
Loss from non-guarantors other than New Valley LLC
75

 
14

 
19

 
42

 
53

Equity in (earnings) losses from real estate ventures (b)
(27,070
)
 
(6,391
)
 
2,112

 
(3,952
)
 
8,672

Purchase accounting adjustments (c)
247

 

 
179

 

 
361

Litigation settlement and judgment income (d)

 

 

 

 
(2,469
)
Other, net
(2,383
)
 
(632
)
 
(336
)
 
(1,336
)
 
(678
)
Adjusted EBITDA
$
19,941

 
$
16,459

 
$
7,700

 
$
8,528

 
$
(1,082
)
Adjusted EBITDA attributed to non-controlling interest
(5,109
)
 

 
(1,906
)
 

 
1,790

Adjustment to reflect additional 29.41% of Adjusted EBITDA from Douglas Elliman Realty, LLC (e)
3,385

 

 
2,464

 

 
(66
)
Adjusted EBITDA attributed to New Valley LLC
$
18,217

 
$
16,459

 
$
8,258

 
$
8,528

 
$
642

 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA by Segment
 
 
 
 
 
 
 
 
 
Real Estate (f)
$
20,017

 
$
16,477

 
$
8,464

 
$
8,569

 
$
(294
)
Corporate and Other
(76
)
 
(18
)
 
(764
)
 
(41
)
 
(788
)
Total (g)
$
19,941

 
$
16,459

 
$
7,700

 
$
8,528

 
$
(1,082
)
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA Attributed to New Valley LLC by Segment
 
 
 
 
 
 
 
 
 
Real Estate (f)
$
18,293

 
$
16,477

 
$
9,022

 
$
8,569

 
$
1,430

Corporate and Other
(76
)
 
(18
)
 
(764
)
 
(41
)
 
(788
)
Total (g)
$
18,217

 
$
16,459

 
$
8,258

 
$
8,528

 
$
642

             
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 and six months ended June 30, 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 $19,166 for the last twelve months ended June 30, 2019 and $16,649, $8,379, $7,658 and negative $224 for the three and six months ended June 30, 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 $16,009 for the last twelve months ended June 30, 2019 and $4,272, $3,830, $8,752 and $7,773 for the three and six months ended June 30, 2019 and 2018, respectively.






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
 
Six Months Ended
 
June 30,
 
June 30,
 
June 30,
 
2019
 
2019
 
2018
 
2019
 
2018
 
 
 
 
 
 
 
 
Net income (loss) attributed to Douglas Elliman Realty, LLC
$
12,113

 
$
15,138

 
$
5,905

 
$
4,724

 
$
(2,192
)
Interest expense
10

 
2

 
3

 
5

 
48

Income tax expense
15

 
101

 
266

 
101

 
486

Depreciation and amortization
8,991

 
1,922

 
2,315

 
4,322

 
4,502

Douglas Elliman Realty, LLC EBITDA
$
21,129

 
$
17,163

 
$
8,489

 
$
9,152

 
$
2,844

Equity in earnings from real estate ventures (a)
(1,300
)
 
(285
)
 
(252
)
 
(934
)
 
(877
)
Purchase accounting adjustments (b)
247

 

 
179

 

 
361

Litigation settlement and judgment income (c)

 

 

 

 
(2,469
)
Other, net
(910
)
 
(229
)
 
(37
)
 
(560
)
 
(83
)
Douglas Elliman Realty, LLC Adjusted EBITDA
$
19,166

 
$
16,649

 
$
8,379

 
$
7,658

 
$
(224
)
Douglas Elliman Realty, LLC Adjusted EBITDA attributed to non-controlling interest
(3,385
)
 

 
(2,464
)
 

 
66

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)
3,385

 

 
2,464

 

 
(66
)
Douglas Elliman Realty, LLC Adjusted EBITDA attributed to Real Estate Segment
$
19,166

 
$
16,649

 
$
8,379

 
$
7,658

 
$
(224
)
             
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%.