Vector Group Reports Fourth Quarter and Full Year 2013 Financial Results
On
GAAP Financial Results
Fourth quarter 2013 revenues were
For the year ended
Non-GAAP Financial Results
The Company's non-GAAP financial results are presented assuming the Company's acquisition of its additional 20.59% interest in
Three months ended
Fourth quarter 2013 Pro-forma Adjusted Revenues (as described in Table 2 attached hereto) were
Pro-forma Adjusted EBITDA attributed to
Pro-forma Adjusted Net Income (as described below and in Table 4 attached hereto) was
Pro-forma Adjusted Operating Income (as described below and in Table 5 attached hereto) was
Twelve months ended
Pro-forma Adjusted Revenues (as described in Table 2 attached hereto) were
Pro-forma Adjusted EBITDA attributed to
Pro-forma Adjusted Net Income (as described below and in Table 4 attached hereto) was
Pro-forma Adjusted Operating Income (as described below and in Table 5 attached hereto) was
Tobacco Business Financial Results
For the fourth quarter and year ended
Non-GAAP Financial Measures
Pro-forma Adjusted Revenues, Pro-forma Adjusted EBITDA, Pro-forma Adjusted Net Income, Pro-forma Adjusted Operating Income and Tobacco Adjusted Operating Income are financial measures not prepared in accordance with generally accepted accounting principles ("GAAP"). The Company believes that Pro-forma Adjusted Revenues, Pro-forma Adjusted EBITDA, Pro-forma Adjusted Net Income, Pro-forma Adjusted Operating Income and Tobacco Adjusted Operating Income are important measures that supplement discussions and analysis of its results of operations and enhances an understanding of its operating performance. The Company believes Pro-forma Adjusted Revenues, Pro-forma Adjusted EBITDA, Pro-forma Adjusted Net Income, Pro-forma Adjusted Operating Income and Tobacco Adjusted Operating Income provide investors and analysts with a useful measure of operating results unaffected by differences in capital structures, capital investment cycles and ages of related assets among otherwise comparable companies. Management uses Pro-forma Adjusted Revenues, Pro-forma Adjusted EBITDA, Pro-forma Adjusted Net Income, Pro-forma Adjusted Operating Income and Tobacco Adjusted Operating Income 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 (Pro-forma Adjusted Revenues, Pro-forma Adjusted EBITDA, Pro-forma Adjusted Net Income, Pro-forma Adjusted Operating Income and Tobacco Adjusted Operating Income) of the Company's business. While management considers Pro-forma Adjusted Revenues, Pro-forma Adjusted EBITDA, Pro-forma Adjusted Net Income, Pro-forma Adjusted Operating Income and Tobacco Adjusted Operating Income 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, Pro-forma Adjusted Revenues, Pro-forma Adjusted EBITDA, Pro-forma Adjusted Net Income, Pro-forma Adjusted Operating Income and Tobacco Adjusted Operating Income are susceptible to varying calculations and the Company's measurement of Pro-forma Adjusted Revenues, Pro-forma Adjusted EBITDA, Pro-forma Adjusted Net Income, Pro-forma Adjusted Operating Income and Tobacco Adjusted Operating Income may not be comparable to those of other companies. Attached hereto as Tables 2, 3, 4, 5 and 6 is information relating to the Company's Pro-forma Adjusted Revenues, Pro-forma Adjusted EBITDA, Pro-forma Adjusted Net Income, Pro-forma Adjusted Operating Income and Tobacco Adjusting Operating Income for the years ended December 31, 2013, and 2012, and the three months ended December 31, 2013 and 2012.
Conference Call to Discuss Fourth Quarter and Full Year 2013 Results
As previously announced, the Company will host a conference call and webcast on Monday, March 3, 2014 at
A replay of the call will be available shortly after the call ends on March 3, 2014 through
Vector Group is a holding company that indirectly owns Liggett Group LLC, Vector Tobacco Inc. and Zoom E-Cigs LLC and directly owns New Valley LLC, which owns a controlling interest in Douglas Elliman Realty, LLC. Additional information concerning the company is available on the Company's website, www.VectorGroupLtd.com.
[Financial Tables Follow]
TABLE 1 | ||||||||||||||||||
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||||
(Dollars in Thousands, Except Per Share Amounts) |
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Three Months Ended | Twelve Months Ended | |||||||||||||||||
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2013 | 2012 | 2013 | 2012 | |||||||||||||||
(Unaudited) | ||||||||||||||||||
Revenues* | $ | 295,162 | $ | 277,563 | $ | 1,056,200 | $ | 1,084,546 | ||||||||||
Expenses: | ||||||||||||||||||
Cost of goods sold* | 198,809 | 207,770 | 747,186 | 823,452 | ||||||||||||||
Operating, selling, administrative and general expenses | 34,175 | 32,427 | 108,872 | 106,161 | ||||||||||||||
Litigation settlement and judgment expense | 193 | — | 88,106 |
— |
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Operating income | 61,985 | 37,366 | 112,036 | 154,933 | ||||||||||||||
Other income (expenses): | ||||||||||||||||||
Interest expense | (33,102 | ) | (31,435 | ) | (132,147 | ) | (110,102 | ) | ||||||||||
Loss on extinguishment of debt | — | — | (21,458 | ) | — | |||||||||||||
Change in fair value of derivatives embedded within convertible debt | 10,636 | 13,544 | 18,935 | (7,476 | ) | |||||||||||||
Acceleration of interest expense related to debt conversion | (12,414 |
) |
— | (12,414 | ) | (14,960 | ) | |||||||||||
Equity income (loss) on long-term investments | 1,296 | (56 | ) | 2,066 | (1,261 | ) | ||||||||||||
Gain on sale of investment securities available for sale | 42 | — | 5,152 | 1,640 | ||||||||||||||
Equity income from non-consolidated real estate businesses | 6,151 | 8,795 | 22,925 | 29,764 | ||||||||||||||
Gain on acquisition of Douglas Elliman | 60,842 | — | 60,842 | — | ||||||||||||||
Other, net | 2,399 | 323 | 7,550 | 1,179 | ||||||||||||||
Income before provision for income taxes | 97,835 | 28,537 | 63,487 | 53,717 | ||||||||||||||
Income tax expense | 34,082 | 12,052 | 24,795 | 23,095 | ||||||||||||||
Net income | 63,753 | 16,485 | 38,692 | 30,622 | ||||||||||||||
Net loss attributed to non-controlling interest | 252 | — | 252 | — | ||||||||||||||
Net income attributed to |
$ | 64,005 | $ | 16,485 | $ | 38,944 | $ | 30,622 | ||||||||||
Per basic common share: | ||||||||||||||||||
Net income applicable to common shares attributed to |
$ | 0.67 | $ | 0.18 | $ | 0.41 | $ | 0.34 | ||||||||||
Per diluted common share: | ||||||||||||||||||
Net income applicable to common shares attributed to |
$ | 0.61 | $ | 0.14 | $ | 0.41 | $ | 0.34 | ||||||||||
Cash distributions and dividends declared per share | $ | 0.40 | $ | 0.36 | $ | 1.54 | $ | 1.47 | ||||||||||
* Revenues and Cost of goods sold include excise taxes of |
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TABLE 2 | |||||||||||||||||
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RECONCILIATION OF PRO-FORMA ADJUSTED REVENUES | |||||||||||||||||
(Unaudited) | |||||||||||||||||
(Dollars in Thousands) |
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Three Months Ended | Twelve Months Ended | ||||||||||||||||
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2013 | 2012 | 2013 | 2012 | ||||||||||||||
Revenues | $ | 295,162 | $ | 277,563 | $ | 1,056,200 | $ | 1,084,546 | |||||||||
Reclassification of revenues as a result of the consolidation of Douglas Elliman (a) | 100,732 | 105,899 | 416,453 | 378,175 | |||||||||||||
Purchase accounting adjustments (b) | 1,357 | — | 1,357 | — | |||||||||||||
Total adjustments | 102,089 | 105,899 | 417,810 | 378,175 | |||||||||||||
Pro-forma Adjusted Revenues | $ | 397,251 | $ | 383,462 | $ | 1,474,010 | $ | 1,462,721 | |||||||||
Pro-forma Adjusted Revenue by Segment | |||||||||||||||||
Tobacco | $ | 253,303 | $ | 277,563 | $ | 1,014,341 | $ | 1,084,546 | |||||||||
Real Estate © | 143,948 | 105,899 | 459,669 | 378,175 | |||||||||||||
Total | $ | 397,251 | $ | 383,462 | $ | 1,474,010 | $ | 1,462,721 | |||||||||
a. |
Represents revenues of |
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b. |
Amounts represent one-time purchase accounting adjustments to fair value for deferred revenues recorded in connection with the increase of the Company's ownership of |
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c. |
Includes Pro-Forma Adjusted Revenues from |
TABLE 3 | ||||||||||||||||||
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COMPUTATION OF PRO-FORMA ADJUSTED EBITDA | ||||||||||||||||||
(Unaudited) | ||||||||||||||||||
(Dollars in Thousands) |
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Three Months Ended | Twelve Months Ended | |||||||||||||||||
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2013 | 2012 | 2013 | 2012 | |||||||||||||||
Net income attributed to |
$ | 64,005 | $ | 16,485 | $ | 38,944 | $ | 30,622 | ||||||||||
Interest expense | 33,102 | 31,435 | 132,147 | 110,102 | ||||||||||||||
Income tax expense | 34,082 | 12,052 | 24,795 | 23,095 | ||||||||||||||
Depreciation and amortization | 4,626 | 2,660 | 12,631 | 10,608 | ||||||||||||||
EBITDA | $ | 135,815 | $ | 62,632 | $ | 208,517 | $ | 174,427 | ||||||||||
Change in fair value of derivatives embedded within convertible debt (a) | (10,636 | ) | (13,544 | ) | (18,935 | ) | 7,476 | |||||||||||
Equity loss (gain) on long-term investments (b) | (1,296 | ) | 56 | (2,066 | ) | 1,261 | ||||||||||||
Loss (gain) on sale of investment securities available for sale | (42 | ) | — | (5,152 | ) | (1,640 | ) | |||||||||||
Equity income from non-consolidated real estate businesses © | (6,151 | ) | (8,795 | ) | (22,925 | ) | (29,764 | ) | ||||||||||
Loss on extinguishment of debt | — | — | 21,458 | — | ||||||||||||||
Acceleration of interest expense related to debt conversion | 12,414 | — | 12,414 | 14,960 | ||||||||||||||
Stock-based compensation expense (d) | 586 | 3,129 | 2,519 | 5,563 | ||||||||||||||
Litigation settlement and judgment expense (e) | 193 | — | 88,106 | — | ||||||||||||||
Impact of MSA Settlement (f) | (860 | ) | — | (11,823 | ) | — | ||||||||||||
Gain on acquisition of Douglas Elliman | (60,842 | ) | — | (60,842 | ) | — | ||||||||||||
Reclassification of EBITDA as a result of the consolidation of Douglas Elliman (g) | 14,244 | 10,762 | 48,805 | 33,858 | ||||||||||||||
Other, net | (2,399 | ) | (323 | ) | (7,550 | ) | (1,179 | ) | ||||||||||
Pro-forma Adjusted EBITDA | $ | 81,026 | $ | 53,917 | $ | 252,526 | $ | 204,962 | ||||||||||
Pro-forma Adjusted EBITDA attributed to non-controlling interest |
(4,189 |
) | (3,165 | ) |
(14,354 |
) | (9,958 | ) | ||||||||||
Pro-forma Adjusted EBITDA attributed to |
$ |
76,837 |
$ | 50,752 | $ |
238,172 |
$ | 195,004 | ||||||||||
Pro-forma Adjusted EBITDA by Segment | ||||||||||||||||||
Tobacco | $ | 51,287 | $ | 48,234 | $ | 197,847 | $ | 185,797 | ||||||||||
Real Estate (h) |
29,486 |
6,488 |
52,929 |
22,301 | ||||||||||||||
Corporate and Other | (3,936 | ) | (3,970 | ) | (12,604 | ) | (13,094 | ) | ||||||||||
Total | $ |
76,837 |
$ | 50,752 | $ | 238,172 | $ | 195,004 | ||||||||||
a. |
Represents income or losses recognized from changes in the fair value of the derivatives embedded in the Company's convertible debt. |
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b. |
Represents income or losses recognized on long-term investments that the Company accounts for under the equity method. |
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c. |
Represents equity income recognized from the Company's investment in certain real estate businesses that are not consolidated in its financial results. |
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d. |
Represents amortization of stock-based compensation. |
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e. |
Represents expenses primarily associated with a comprehensive settlement resolving substantially all of the individual Engle progeny tobacco litigation cases pending in |
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f. |
Represents the Company's tobacco business's settlement of a long-standing dispute related to the Master Settlement Agreement. |
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g. |
Represents Adjusted EBITDA of |
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h. |
Includes |
TABLE 4 | ||||||||||||||||||
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RECONCILIATION OF PRO-FORMA ADJUSTED NET INCOME | ||||||||||||||||||
(Unaudited) | ||||||||||||||||||
(Dollars in Thousands, Except Per Share Amounts) |
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Three Months Ended | Twelve Months Ended | |||||||||||||||||
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2013 | 2012 | 2013 | 2012 | |||||||||||||||
Net income attributed to |
$ | 64,005 | $ | 16,485 | $ | 38,944 | $ | 30,622 | ||||||||||
Acceleration of interest expense related to debt conversion | 12,414 | — | 12,414 | 14,960 | ||||||||||||||
Change in fair value of derivatives embedded within convertible debt | (10,636 | ) | (13,544 | ) | (18,935 | ) | 7,476 | |||||||||||
Non-cash amortization of debt discount on convertible debt | 10,946 | 5,796 | 36,378 | 18,016 | ||||||||||||||
Loss on extinguishment of 11% Senior Secured Notes due 2015 | — | — | 21,458 | — | ||||||||||||||
Litigation settlement and judgment expense (a) | 193 | — | 88,106 | — | ||||||||||||||
Impact of MSA Settlement (b) | (860 | ) | — | (11,823 | ) | — | ||||||||||||
Interest income from MSA Settlement © | — | — | (1,971 | ) | — | |||||||||||||
Gain on acquisition of |
(60,842 | ) | — | (60,842 | ) | — | ||||||||||||
Adjustment to reflect additional 20.59% of net income from |
2,467 | 1,881 | 8,557 | 5,947 | ||||||||||||||
|
1,165 | — | 1,165 | — | ||||||||||||||
Total adjustments | (45,153 | ) | (5,867 | ) | 74,507 | 46,399 | ||||||||||||
Tax expense related to adjustments | 18,332 | 2,383 | (29,467 | ) | (19,332 | ) | ||||||||||||
Pro-forma Adjusted Net Income attributed to |
$ | 37,184 | $ | 13,001 | $ | 83,984 | $ | 57,689 | ||||||||||
Per diluted common share: | ||||||||||||||||||
Pro-forma Adjusted Net Income applicable to common shares attributed to |
$ | 0.36 | $ | 0.14 | $ | 0.89 | $ | 0.64 |
a. |
Represents expenses primarily associated with a comprehensive settlement resolving substantially all of the individual Engle progeny tobacco litigation cases pending in |
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b. |
Represents the Company's tobacco segment's settlement of a long-standing dispute related to the Master Settlement Agreement. |
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c. |
Represents interest income from the Company's tobacco segment's settlement of a long-standing dispute related to the Master Settlement Agreement. |
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d. |
Represents gain associated with the increase of ownership of |
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e. |
Represents 20.59% of |
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f. |
Amounts represent 70.59% of one-time purchase accounting adjustments to fair value for assets acquired in connection with the increase of the Company's ownership of |
TABLE 5 | |||||||||||||||||
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RECONCILIATION OF PRO-FORMA ADJUSTED OPERATING INCOME | |||||||||||||||||
(Unaudited) | |||||||||||||||||
(Dollars in Thousands) |
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Three Months Ended | Twelve Months Ended | ||||||||||||||||
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2013 | 2012 | 2013 | 2012 | ||||||||||||||
Operating income | $ | 61,985 | $ | 37,366 | $ | 112,036 | $ | 154,933 | |||||||||
Litigation settlement and judgment expense (a) | 193 | — | 88,106 | — | |||||||||||||
Impact of MSA Settlement (b) | (860 | ) | — | (11,823 | ) | — | |||||||||||
Reclassification of operating income as a result of the consolidation of |
13,352 | 9,747 | 44,802 | 30,194 | |||||||||||||
Douglas Elliman purchase accounting adjustments (d) | 1,650 | — | 1,650 | — | |||||||||||||
Total adjustments | 14,335 | 9,747 | 122,735 | 30,194 | |||||||||||||
Pro-forma Adjusted Operating Income (e) | $ | 76,320 | $ | 47,113 | $ | 234,771 | $ | 185,127 | |||||||||
a. |
Represents expenses primarily associated with a comprehensive settlement resolving substantially all of the individual Engle progeny tobacco litigation cases pending in |
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b. |
Represents the Company's tobacco segment's settlement of a long-standing dispute related to the Master Settlement Agreement. |
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c. |
Represents Adjusted Operating Income of |
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d. |
Amounts represent one-time purchase accounting adjustments to fair value for assets acquired in connection with the increase of the Company's ownership of |
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e. |
Does not include a reduction for 29.41% non-controlling interest in |
TABLE 6 | |||||||||||||||||
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RECONCILIATION OF TOBACCO ADJUSTED OPERATING INCOME | |||||||||||||||||
(Unaudited) | |||||||||||||||||
(Dollars in Thousands) |
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Three Months Ended | Twelve Months Ended | ||||||||||||||||
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2013 | 2012 | 2013 | 2012 | ||||||||||||||
Operating income from tobacco business | $ | 49,540 | $ | 45,773 | $ | 112,020 | $ | 176,017 | |||||||||
Litigation settlement and judgment expense (a) | 193 | — | 88,106 | — | |||||||||||||
Impact of MSA Settlement (b) | (860 | ) | — | (11,823 | ) | — | |||||||||||
Total adjustments | (667 | ) | — | 76,283 | — | ||||||||||||
Tobacco Adjusted Operating Income | $ | 48,873 | $ | 45,773 | $ | 188,303 | $ | 176,017 | |||||||||
a. |
Represents expenses primarily associated with a comprehensive settlement resolving substantially all of the individual Engle progeny tobacco litigation cases pending in |
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b. |
Represents the Company's tobacco segment's settlement of a long-standing dispute related to the Master Settlement Agreement. |
Sard Verbinnen & Co
212-687-8080
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