Vector Group Reports First Quarter 2023 Financial Results
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.
-
Tobacco segment revenues of
-
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.
-
Tobacco segment operating income of
-
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.
-
Tobacco Adjusted EBITDA of
“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
GAAP Financial Results
First quarter 2023 revenues were
Non-GAAP Financial Measures
Three months ended
Adjusted EBITDA (as described in Table 2 attached hereto) were
Adjusted Net Income (as described in Table 3 attached hereto) was
Adjusted Operating Income (as described in Table 4 attached hereto) was
Consolidated Balance Sheet
Vector maintained significant liquidity at
Vector continued its longstanding practice of paying a quarterly cash dividend in the first quarter of 2023, returning
Tobacco Segment Financial Results
For the first quarter of 2023, the Tobacco segment had revenues of
Operating Income from the Tobacco segment was
Non-GAAP Financial Measures
Tobacco Adjusted Operating Income (as described in Table 5 attached hereto) was
Operational Metrics
For the three months ended
According to data from
According to data from
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
Conference Call to Discuss First Quarter 2023 Results
As previously announced, Vector will host a conference call and webcast on
A replay of the call will be available shortly after the call ends on
About
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,
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
[Financial Tables Follow]
|
TABLE 1
CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in Thousands, Except Per Share Amounts) |
|||||||
|
|
Three Months Ended |
||||||
|
|
|
||||||
|
|
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 |
|
TABLE 2
RECONCILIATION OF ADJUSTED EBITDA (Unaudited) (Dollars in Thousands) |
|||||||||||||||
|
|
LTM |
|
Year Ended |
|
Three Months Ended |
||||||||||
|
|
|
|
|
|
|
||||||||||
|
|
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
RECONCILIATION OF ADJUSTED NET INCOME (Unaudited) (Dollars in Thousands, Except Per Share Amounts) |
|||||||
|
|
Three Months Ended |
||||||
|
|
|
||||||
|
|
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
RECONCILIATION OF ADJUSTED OPERATING INCOME (Unaudited) (Dollars in Thousands) |
|||||||||||||||
|
|
LTM |
|
Year Ended |
|
Three Months Ended |
||||||||||
|
|
|
|
|
|
|
||||||||||
|
|
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
RECONCILIATION OF TOBACCO ADJUSTED OPERATING INCOME AND TOBACCO ADJUSTED EBITDA (Unaudited) (Dollars in Thousands) |
|||||||||||||||
|
|
LTM |
|
Year Ended |
|
Three Months Ended |
||||||||||
|
|
|
|
|
|
|
||||||||||
|
|
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 |
||||||||||
|
|
|
|
|
|
|
||||||||||
|
|
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
RECONCILIATION OF REVENUES (Unaudited) (Dollars in Thousands) |
|||||||||||||
|
|
|
LTM |
|
Year Ended |
|
|
Three Months Ended |
||||||
|
|
|
|
|
|
|
|
|
||||||
|
|
|
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 |
View source version on businesswire.com: https://www.businesswire.com/news/home/20230508005530/en/
FGS Global
212-687-8080 (
+44 (0)20 3178 8914 (
J. Bryant Kirkland III,
305-579-8000
Source: