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): March 10, 2017
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)) | |
Item 7.01. Regulation FD Disclosure.
Vector Group Ltd. has prepared materials for presentations to investors. The materials are furnished (not filed) as Exhibits 99.1, 99.2 and 99.3 to this Current Report on Form 8-K pursuant to Regulation FD.
Non-GAAP Financial Measures
Exhibits 99.1, 99.2 and 99.3 contain the Non-GAAP Financial Measures discussed below.
Please refer to Current Reports on Form 8-K dated March 1, 2017, November 15, 2016 and October 2, 2015 for reconciliations of GAAP Financial Measures to Non-GAAP Financial Measures. Non-GAAP Financial Measures include adjustments for purchase accounting associated with the Company's acquisition of its additional 20.59% interest in Douglas Elliman Realty, LLC, as well as the related purchase accounting adjustments, and assume such acquisition occurred prior to the beginning of each period presented. Non-GAAP Financial Measures also include adjustments for litigation settlement and judgment expenses in the Tobacco segment, settlements of long-standing disputes related to the Master Settlement Agreement in the Tobacco segment, restructuring and pension settlement expenses in the Tobacco segment, non-cash stock compensation expenses (for purposes of Adjusted EBITDA only) and non-cash interest items associated with the Company's convertible debt.
Adjusted Revenues, New Valley LLC Adjusted Revenues and Douglas Elliman Realty, LLC Adjusted Revenues (hereafter referred to as "the Non-GAAP Revenue Financial Measures") and Adjusted EBITDA, Adjusted Net Income, Adjusted Operating Income, Tobacco Adjusted Operating Income, New Valley LLC Adjusted EBITDA and Douglas Elliman Realty, LLC Adjusted EBITDA (hereafter, along with the Non-GAAP Revenue Measures referred to as "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. In the case of the Non-GAAP Revenue Financial Measures, management believes revenue growth in its real estate segment is an important measure of growth because increased revenues generally result in increased gross margin as a result of absorption of fixed operating costs, which management believes will lead to increased future profitability as well as increased capacity to expand into new and existing markets. A key strategy of the Company is its ability to move into new markets and therefore gross revenues provide information with respect to the Company's ability to achieve its strategic objectives. Management also believes increased revenues generally indicate increased market share in existing markets as well as expansion into new markets. Consequently, management believes the Non-GAAP Revenue Financial Measures are meaningful indicators of operating performance.
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.
Adjusted Revenues is defined as revenues plus the additional revenues as a result of the consolidation of Douglas Elliman plus one-time purchase accounting adjustments to fair value for deferred revenues recorded in connection with the increase of the Company’s ownership of Douglas Elliman. EBITDA is defined as net income before interest, taxes, depreciation and amortization. Adjusted EBITDA is EBITDA, as defined above, and as adjusted for changes in fair value of derivatives embedded with convertible debt, equity gains (losses) on long-term investments, gains (losses) on sale of investment securities available for sale, equity income from non-consolidated real estate businesses, loss on extinguishment of debt, acceleration of interest expense related to debt conversion, stock-based compensation expense (for purposes of Adjusted EBITDA only), litigation settlement and judgment expense, settlements of long-standing disputes related to the Master Settlement Agreement (“MSA”), restructuring and pension settlement expense, gains on acquisition of Douglas Elliman, changes to EBITDA as a result of the consolidation of Douglas Elliman and other charges.
New Valley LLC ("New Valley"), the real estate subsidiary of the Company, owns real estate and 70.59% of Douglas Elliman, the largest residential brokerage firm in the New York metropolitan area, as well as a minority stake in numerous real estate investments. New Valley LLC Adjusted Revenues and New Valley LLC Adjusted EBITDA are defined as the portion of Adjusted Revenues and Adjusted EBITDA that relate to New Valley. New Valley's Adjusted EBITDA does not include an allocation of expenses from the Corporate and Other segment of Vector Group Ltd.
Forward-Looking Statements
This Current Report on Form 8-K contains forward-looking statements, which involve risk and uncertainties. The words "could", “believe,” “expect,” “estimate,” “may,” “will,” “could,” “plan,” or “continue” and similar expressions are intended to identify forward-looking statements. The Company’s actual results could differ significantly from the results discussed in such forward-looking statements. Factors that could cause or contribute to such differences in results and outcomes include, without limitation, those discussed under the heading “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this Current Report on Form 8-K. The Company undertakes no obligation to (and expressly disclaims any obligation to) revise or update any forward-looking statement, whether as a result of new information, subsequent events, or otherwise (except as may be required by law), in order to reflect any event or circumstance which may arise after the date of this Current Report on Form 8-K.
Item 9.01. Financial Statements and Exhibit
(d) Exhibit.
Exhibit No. | Exhibit | |
99.1 | Investor presentation of Vector Group Ltd. dated March 2017 (furnished pursuant to Regulation FD). | |
99.2 | Fact Sheet of Vector Group Ltd. dated March 2017 (furnished pursuant to Regulation FD). | |
99.3 | Fact Sheet of New Valley LLC dated March 2017 (furnished pursuant to Regulation FD). | |
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: March 10, 2017
March 2017
INVESTOR PRESENTATION
DISCLAIMER
This document and any related oral presentation does not constitute an offer or invitation to subscribe for, purchase or otherwise acquire any equity
securities or debt securities instruments of Vector Group Ltd. (“Vector”, “Vector Group Ltd.” or “the Company”) and nothing contained herein or its
presentation shall form the basis of any contract or commitment whatsoever.
The distribution of this document and any related oral presentation in certain jurisdictions may be restricted by law and persons into whose possession this
document or any related oral presentation comes should inform themselves about, and observe, any such restriction. Any failure to comply with these
restrictions may constitute a violation of the laws of any such other jurisdiction.
The information contained herein does not constitute investment, legal, accounting, regulatory, taxation or other advice and the information does not take
into account your investment objectives or legal, accounting, regulatory, taxation or financial situation or particular needs. You are solely responsible for
forming your own opinions and conclusions on such matters and the market and for making your own independent assessment of the information.
You are solely responsible for seeking independent professional advice in relation to the information and any action taken on the basis of the
information.
The following presentation may contain "forward-looking statements,” including any statements that may be contained in the presentation that
reflect Vector’s expectations or beliefs with respect to future events and financial performance, such as the expectation that the tobacco
transition payment program could yield substantial incremental free cash flow. These forward- looking statements are subject to certain risks and
uncertainties that could cause actual results to differ materially from those contained in any forward-looking statement made by or on behalf of the
Company, including the risk that changes in Vector’s capital expenditures impact its expected free cash flow and the other risk factors described in Vector’s
annual report on Form 10-K for the year ended December 31, 2016, as filed with the SEC. Please also refer to Vector's Current Reports on Forms 8-K, filed
on October 2, 2015, November 15, 2016 and March 1, 2017 (Commission File Number 1-5759) as filed with the SEC for information, including cautionary
and explanatory language, relating to Non-GAAP Financial Measures in this Presentation labeled "Adjusted".
Results actually achieved may differ materially from expected results included in these forward-looking statements as a result of these or other factors. Due
to such uncertainties and risks, potential investors are cautioned not to place undue reliance on such forward-looking statements, which speak only as of
the date on which such statements are made. The Company disclaims any obligation to, and does not undertake to, update or revise and forward-
looking statements in this presentation.
2
INVESTMENT HIGHLIGHTS & PORTFOLIO
Diversified Holding Company with two unrelated, but complementary, businesses with iconic brand names: tobacco (Liggett
Group) and real estate (Douglas Elliman)
History of strong earnings, and Adjusted EBITDA has increased from $178.3 million in 2011 (1) to $280.2 million for the twelve
months ended December 31, 2016(2)
Tobacco Adjusted EBITDA of $268.9 million for the twelve months ended December 31, 2016 (3)
Douglas Elliman, which is a 70.59%-owned subsidiary, produced Revenues of $675.3 million and Adjusted EBITDA of
$36.7 million for the twelve months ended December 31, 2016 (4)
Diversified New Valley portfolio of consolidated and non-consolidated real estate investments
Maintains substantial liquidity with cash, marketable securities and long-term investments of $651 million as of December
31, 2016(5) and has no significant debt maturities until February 2019
Uninterrupted quarterly cash dividends since 1995 and an annual 5% stock dividend since 1999
Seasoned management team with average tenure of 23 years with Vector Group
Management team and directors beneficially own approximately 13% of Vector Group
Perpetual cost advantage over the largest U.S. tobacco companies – annual cost advantage ranged between $163 million
and $169 million from 2011 to 2016(6)
3
Overview
(1) Vector’s Net income for the year ended December 31, 2011 was $74.5M. Adjusted EBITDA is a Non-GAAP Financial Measure. Please refer to Exhibit 99.2 of the Company’s Current Report on Form 8-K, dated November 15, 2016 (Table 2) for a reconciliation
of Net income to Adjusted EBITDA as well as the Disclaimer to this document on Page 2.
(2) Vector’s Net income for the twelve months ended December 31, 2016 was $71.1 million. Adjusted EBITDA is a Non-GAAP FinancialMeasure. Please refer to Exhibit 99.1 of the Company’s Current Report on Form 8-K, filed on March 1, 2017, for a
reconciliation of Net income to Adjusted EBITDA as well as the Disclaimer to this document on Page 2.
(3) All “Liggett” and “Tobacco” financial information in this presentation includes the operations of Liggett Group LLC, Vector Tobacco Inc., and Liggett Vector Brands LLC unless otherwise noted. Tobacco Adjusted EBITDA is a Non-GAAP Financial Measure and is
defined in Table 3 of Exhibit 99.1 to the Company’s Current Report on Form 8-K, dated March 1, 2017.
(4) Douglas Elliman’s revenues were $675.3 million and its Net income was $21.1 million for the twelve months ended December 31, 2016. Adjusted EBITDA is a Non-GAAP Financial Measure. Please refer to Exhibit 99.1 of the Company’s Current Report on
Form 8-K, dated March 1, 2017, for a reconciliation of Adjusted EBITDA to net income (Table 10) as well as the Disclaimer to this document.
(5) Excludes real estate investments.
(6) Cost advantage applies only to cigarettes sold below applicable market share exemption.
TOBACCO OPERATIONS
4
LIGGETT GROUP OVERVIEW
Fourth-largest U.S. tobacco company; founded in 1873
— Core Discount Brands – Pyramid, Grand Prix, Liggett Select, Eve and Eagle 20’s
— Partner Brands – USA, Bronson and Tourney
Consistent and strong cash flow
—Tobacco Adjusted EBITDA of $268.9 million for the twelve months ended December 31, 2016(1)
—Low capital requirements with capital expenditures of $6.4 million related to tobacco operations for the twelve months
ended December 31, 2016
Current cost advantage of approximately $0.70 per pack compared to the largest U.S. tobacco companies
expected to maintain volume and drive profit in core brands
— Pursuant to the MSA, Liggett has no payment obligations unless its market share exceeds a market share exemption of approximately
1.65% of total cigarettes sold in the United States, and Vector Tobacco has no payment obligations unless its market share exceeds a
market share exemption of approximately 0.28% of total cigarettes sold in the United States
— MSA exemption annual cost advantage ranged between $163 million and $169 million for Liggett and Vector Tobacco from 2011 to
2016.
5
(1) Tobacco Adjusted EBITDA is a Non-GAAP Financial Measure and is defined in the Company’s Current Report on Forms 8-K, dated November 15, 2016 and March 1, 2017. Please also refer to the Disclaimer to this document on Page 2.
LIGGETT GROUP HISTORY
6
Source: MSA CRA wholesale shipment database.
Note: The Liggett and Vector Tobacco businesses have been combined into a single segment for all periods since 2007.
(1) Tobacco Adjusted EBITDA is a Non-GAAP Financial Measure and is defined in Table 3 of Exhibit 99.1 of the Company’s Current Reports on Form 8-K, dated March 1, 2017 as well as Table 2 to Exhibit 99.2 of the Company’s Current Report son Form 8-K,
dated October 2, 2015 and November 15, 2016.
1998 1999 2005 2009 2013 Today
Signed the MSA as a Subsequent
Participating Manufacturer, which
established perpetual cost advantage over
three largest U.S. tobacco companies
Introduced deep discount brand Liggett Select taking advantage
of the Company’s cost advantage resulting from the MSA
Launched deep
discount brand
Grand Prix
Repositioned Pyramid as a deep-discount brand in response
to a large Federal Excise Tax increase
Introduced deep
discount brand
Eagle 20’s
Liggett focuses on margin
enhancement resulting in
continued earnings growth
with record Tobacco
Adjusted EBITDA1
$46
$79 $77
$121 $111
$127 $130
$144 $146
$158 $170 $165 $158
$174 $186
$199 $211
$245
$269
1.3% 1.2%
1.5%
2.2%
2.4% 2.5% 2.3% 2.2%
2.4% 2.5% 2.5%
2.7%
3.5%
3.8%
3.5%
3.3% 3.4% 3.3% 3.3%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
$0
$50
$100
$150
$200
$250
$300
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
To
b
ac
co
A
d
ju
st
e
d
EB
IT
D
A
(1
)
($
M
ill
io
n
s)
D
o
m
e
st
ic M
arke
t
Sh
are
7
ADJUSTED U.S. TOBACCO INDUSTRY MARKET SHARE (1, 2)
46.7%
48.8% 47.4% 47.6%
21.2% 19.6% 19.9% 19.5%
2.9% 3.7% 2.7% 2.2%
2.4% 2.4%
3.4% 3.3%
7.7% 8.8%
12.4% 13.3%
9.3% 8.8%
6.7% 6.5%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
2003 2006 2014 2016 2003 2006 2014 2016 2003 2006 2014 2016 2003 2006 2014 2016
28.9% 28.4%
32.4% 32.8%
Philip Morris USA R.J. Reynolds
2.89%
3.65%
2.71% 2.22%
2.44% 2.36%
3.36% 3.30%
9.26%
8.81%
6.74%
6.46%
0.00%
5.00%
10.00%
15.00%
2003 2006 2014 2016 2003 2006 2014 2016
12.15% 12.47%
9.45%
8.68%
ITG Brands Liggett Group
12.2% 12.5%
9.5% 8.7%
Newport – acquired by RJR in 2015
Brands acquired by ITG in 2015
Legacy brands
Source: The Maxwell Report’s sales estimates for the cigarette Industry for the years ended 2003 (February 2004), 2006 (February 2007) and 2015 (March 2016) and internal company estimates.
(1) Actual Market Share in 2003, 2006 and 2014 reported in the Maxwell Report for R.J. Reynolds was 29.6%, 27.6%, 23.1% and 32.6%, respectively, and, for ITG Brands, was 2.9%, 3.7%., 2.7% and 8.7%, respectively. Adjusted market share has been computed by Vector
Group Ltd. by applying historical market share of each brand to the present owner of brand. Thus, the graph assumes each company owned its current brands on January 1, 2003. The legacy brands market share of R.J. Reynolds in 2003 includes the market share of
Brown & Williamson, which was acquired by R.J. Reynolds in 2004. In 2015, R.J. Reynolds acquired Lorillard Tobacco Company, which manufactured the Newport brand, and sold a portfolio of brands, including the Winston, Salem, Kool and Maverick brands to ITG
Brands.
(2) Does not include smaller manufacturers, whose cumulative market shares were 9.8%, 7.9%, 8.8% and 7.6% in 2003, 2006, 2014 and 2016, respectively.
TOBACCO LITIGATION AND REGULATORY UPDATES
Liggett led the industry in acknowledging the addictive properties of nicotine while seeking a legislated settlement of
litigation
In 2013, Liggett reached a settlement with approximately 4,900 Engle progeny plaintiffs, which represented substantially all
of Liggett’s pending litigation
— Liggett agreed to pay $60 million in a lump sum in 2014 and the balance in installments of $3.4 million in the following 14
years (2015 – 2028)
In 2016, Liggett reached a settlement that resolved an additional 124 Engle progeny plaintiffs . Under the terms of the
agreement, Liggett will pay a total of $17.65 million, of which $14 million was paid in 2016 and the balance in 2018.
— Approximately 125 Engle progeny plaintiffs remain at December 31, 2016.
— Liggett is also a defendant in approximately 40 non-Engle smoking-related individual cases and 4 smoking-related actions
where either a class had been certified or plaintiffs were seeking class certification.
8
Litigation
Regulatory
Since 1998, the MSA has restricted the advertising and marketing of tobacco products
In 2009, Family Smoking Prevention and Tobacco Control Act granted the FDA power to regulate the manufacture, sale,
marketing and packaging of tobacco products
— FDA is prohibited from issuing regulations that ban cigarettes
Federal Excise Tax is $1.01/pack (since April 1, 2009) and additional state and municipal excise taxes exist.
REAL ESTATE OPERATIONS
9
REAL ESTATE OVERVIEW
New Valley, which owns 70.59% of Douglas Elliman Realty, LLC, is a diversified real estate company that is
seeking to acquire or invest in additional real estate properties or projects
New Valley has invested approximately $206 million1, as of December 31, 2016, in a broad portfolio of real
estate projects.
10
New Valley Adjusted EBITDA(2)
$51.3M
$40.2M
$26.9M
2013 2014 2015 2016
New Valley Revenues – December 31, 2016
$9M
$30M
$641M
$680M
Real Estate Brokerage Commissions
Property Management
Other
(1) Net of cash returned.
(2) New Valley’s net income was $59.4M, $21.4M, $11.7M and $13.5M for the periods presented. Adjusted EBITDA is a non-GAAP financial measure. For a reconciliation of Net income to Adjusted EBITDA, please see Vector Group Ltd.’s
Current Reports on Forms 8-K, filed on October 2, 2015 (Exhibit 99.2) and March 1, 2017 (Exhibit 99.1), Form 10-K for the fiscal year ended December 31, 2016 (Commission File Number 1-5759) as well as the Disclaimer to this document
on Page 2. New Valley’s Adjusted EBITDA do not include an allocation of Vector Group Ltd.’s Corporate and Other Expenses (for purposes of computing Adjusted EBITDA) of $13.5M, $11.4M, $13.2M and $15.3M for the periods presented,
respectively.
$27.9M
Douglas Elliman Adjusted EBITDA(1)
DOUGLAS ELLIMAN REALTY, LLC
11
Largest residential real estate brokerage firm in the highly
competitive New York metropolitan area and fourth-
largest residential brokerage firm in the U.S.
Approximately 6,000 affiliated agents and 90 offices in
the U.S.
Alliance with Knight Frank provides a network with 400
offices across 55 countries with 22,000 affiliated agents
Also offers title and settlement services, relocation
services, and residential property management services
through various subsidiaries
(1) Douglas Elliman’s net income was $38.1M, $38.4M, $22.2M and $21.1M for the periods presented. Adjusted EBITDA is a non-GAAP financial measure. For a reconciliation of Adjusted EBITDA to net income, please see Vector Group
Ltd.’s Current Reports on Forms 8-K, filed on October 2, 2015 (Exhibit 99.2), March 1, 2017 (Exhibit 99.1) and Form 10-K for the fiscal year ended December 31, 2016 (Commission File Number 1-5759) as well as the Disclaimer to this
document on Page 2.
Douglas Elliman Closed Sales – LTM December 31, 2016
$45.7M
$50.7M
$35.7M
2013 2014 2015 2016
$36.7M
Douglas Elliman
Closed Sales
$11.1B $12.4B
$14.9B
$18.2B
$22.4B
2011 2012 2013 2014 2015 2016
$24.6B
Douglas Elliman
Revenues – December 31, 2016
$4M
$30M
$641M
$675M
Real Estate Brokerage Commissions
Property Management
Other
Long Island,
Westchester,
Connecticut
$7.1B
New York City
$14B
South
Florida
$2.6B
Aspen
Los
Angeles
NEW VALLEY’S REAL ESTATE INVESTMENTS AT DECEMBER 31, 2016
12
87 Park
(Miami Beach)
Monad Terrace
(Miami Beach)
Sagaponack
(East Hampton)
Maryland Portfolio
(Baltimore County)
The Plaza at Harmon
Meadow (New Jersey)
West Hollywood Edition
(West Hollywood)
New York City
Investments
(see Page 13)
Escena
(Palm Springs)
Commercial Retail/
Office Assets
Apartments/
Condominiums/Hotels
Land Development/Real
Estate Held for Sale, net
Coral Beach
and Tennis Club
Bermuda
International Investments
Mosaic II
(ST Portfolio)
(Houston)
(1) For the percentage of each real estate project owned, please refer to the “Summary of Real Estate Investments” section of Item 7 -Management’s Discussion and Analysis of Financial Condition and Results of Operations” of Vector Group Ltd.’s Form 10-K
for the annual period ended December 31, 2016 (Commission File Number 1-5759).
Takanasee
(New Jersey)
(1)
Wynn Las Vegas
Retail (Nevada)
NEW VALLEY’S REAL ESTATE INVESTMENTS IN NEW YORK CITY
1. The Marquand Upper East Side
2. 10 Madison Square Park West Flatiron District/NoMad
3. 11 Beach Street TriBeCa
4. 20 Times Square Times Square
5. 111 Murray Street TriBeCa
6. 160 Leroy Street Greenwich Village
7. PUBLIC Chrystie House Lower East Side
8. The Dutch Long Island City
9. Queens Plaza Long Island City
10. Park Lane Hotel Central Park South
11. 125 Greenwich Street Financial District
12. 76 Eleventh Avenue West Chelsea
13
1
10
4
2
12
9
8
6
5 3
11
7
(1) For the percentage of each real estate project owned, please refer to the “Summary of Real Estate Investments” section of Item 7 -Management’s Discussion and Analysis of Financial Condition and Results of Operations -of Vector Group Ltd.’s Form 10-K for
the annual period ended December 31 2016 (Commission File Number 1-5759).
(1)
NEW VALLEY’S REAL ESTATE SUMMARY AS OF DECEMBER 31, 2016
14
Net cash
invested
Cumulative earnings /
(loss)(2)
Carrying
value(2)(3)
Projected
cumulative area
Projected construction
end date
Range of ownership
Number of
investments
Land owned
New York City SMSA $ 12,848 $ - $ 12,848 N/A 100.0% 1
All other U.S. areas 2,644 8,148 10,792 450 Acres N/A 100.0% 1
$ 15,492 $ 8,148 $ 23,640 2
Condominium and Mixed Use Development (Minority interest owned)
New York City SMSA(3) $ 92,371 $ 34,090 $ 126,461 2,846,700 Square feet 2015 - 2019 3.1% - 49.5% 11
All other U.S. areas 42,522 3,737 46,259 593,000 Square feet 2017 - 2019 15.0% - 48.5% 4
$ 134,893 $ 37,827 $ 172,720 3,439,700 Square feet 15
Apartments (Minority interest owned)
All other U.S. areas 7,025 1,262 8,287 6,005 Apartments N/A 7.6% - 16.3% 2
$ 7,025 $ 1,262 $ 8,287 2
Hotels (Minority interest owned)
New York City SMSA $ 27,778 $ (5,883) $ 21,895 628 Hotel rooms N/A 5.2% 1
International 5,869 (2,832) 3,037 101 Hotel rooms N/A 49.0% 1
$ 33,647 $ (8,715) $ 24,932 729 Hotel rooms 2
Commercial (Minority interest owned)
New York City SMSA $ 4,936 $ (1,646) $ 3,290 219,382 Square feet N/A 49.0% 1
All other U.S. areas 10,000 - 10,000 90,000 Square feed N/A 2.1% 1
$ 14,936 $ (1,646) $ 13,290 2
Total $ 205,993 $ 36,876 $ 242,869 23
SUMMARY
New York City SMSA(3) $ 137,933 $ 26,561 $ 164,494 14
All other U.S. areas 62,191 13,147 75,338 8
International 5,869 (2,832) 3,037 1
$ 205,993 $ 36,876 $ 242,869 23
(1) For the percentage of each real estate project owned, please refer to the “Summary of Real Estate Investments” section of Item 7 -Management’s Discussion and Analysis of Financial Condition and Results of Operations of Vector Group Ltd.’s Form 10-K for
the period ended December 31, 2016 (Commission File Number 1-5759).
(2) Includes interest expense capitalized to real estate ventures of $21,362.
(3) Carrying value includes non-controlling interest of $3,845.
(Dollars in thousands)
(1)
FINANCIAL DATA
$51 $40 $27 $28
$199 $211 $245
$269
2013 2014 2015 2016
ADJUSTED HISTORICAL FINANCIAL DATA
$483
$563 $680
$1,014
$1,021
$1,011
2013 2014 2015 2016
16
$9
$1,498
$1,691
$1,593
Tobacco Real Estate E-Cigarettes Corporate & Other
Adjusted Revenues(1) Adjusted EBITDA(1)
$236 $227
$280
$246
(1) Vector’s revenues for the periods presented were $1,096, $1,080, $1,591 and $1,691, respectively. Vector’s Net income for the periods presented was $30.7, $37.3, $36.9 and $71.1, respectively Adjusted Revenues and Adjusted
EBITDA are Non-GAAP Financial Measures. Please refer to the Company’s Current Report on Forms 8-K, filed on November 15, 2016 and March 1, 2017 (Exhibit 99.1) for a reconciliation of Non-GAAP financial measures to GAAP as well
as the Disclaimer to this document on Page 2.
($13) ($11) ($13)
($13)
$(1)
$(16)
(Dollars in millions)
($13)
Tobacco Real Estate E-Cigarettes Corporate & Other
$1,660
$1,017
$643
($1)
Vector Group Ltd. 100.0 112.1 143.4 112.5 135.4 192.7 227.0 219.3 279.5 411.4 513.2 557.6 558.6
S&P 500 100.0 115.8 122.2 77.0 97.4 112.0 114.4 132.7 175.6 199.7 202.4 226.6 240.1
S&P MidCap 100.0 110.3 119.1 76.0 104.3 132.1 129.8 152.9 204.1 224.0 219.1 264.5 276.0
NYSE ARCA Tobacco 100.0 140.2 154.2 123.0 173.7 207.4 243.9 289.5 319.0 317.0 384.1 484.4 496.9
Dow Jones Real Estate Total
Return
100.0 135.5 110.9 66.5 86.9 110.4 117.1 139.2 141.6 180.2 184.1 198.0 207.2
HISTORICAL STOCK PERFORMANCE
17
Note: The graph above compares the total annual return of Vector’s Common Stock, the S&P 500 Index, the S&P MidCap 400 Index, the NYSE ARCA Tobacco Index and the Dow Jones Real Estate Total Return for the period from December31,2005 through
February 28, 2017. The graph assumes that all dividends and distributions were reinvested. Source: Bloomberg LP
Value of $100 Invested – December 31, 2005
C
u
m
u
la
ti
ve
R
e
tu
rn
Vector Group Ltd. S&P 500 S&P MidCap NYSE ARCA Tobacco Dow Jones Real Estate Total Return
500%
400%
300%
200%
100%
0%
458.6%
396.9%
176.0%
140.1%
107.2%
Feb -17Dec-15Dec-14Dec-13Dec-12Dec-11Dec-10Dec-09Dec-08Dec-07Dec-06Dec-05 Dec -16
($13M)
Vector Group Ltd. owns Liggett Group, Vector Tobacco and New Valley.
New Valley owns a 70% interest in Douglas Elliman.
2016 Revenues
EXECUTIVE MANAGEMENT
Howard M. Lorber
President and Chief Executive Officer
Richard J. Lampen
Executive Vice President
J. Bryant Kirkland III
Senior Vice President, Chief Financial Officer and Treasurer
Marc N. Bell
Senior Vice President, General Counsel and Secretary
Ronald J. Bernstein
President and Chief Executive Officer of Liggett
Group LLC and Liggett Vector Brands LLC
10-Year Stockholder Return
• New Valley, which owns 70.59% of Douglas Elliman Realty, LLC, is a diversified real estate
company that is seeking to acquire additional operating companies and real estate properties.
• New Valley has invested approximately $206 million, as of December 31, 2016, in a broad portfolio
of 23 real estate investments.
• Douglas Elliman is the largest residential real estate brokerage firm in the New York metropolitan
area and the fourth-largest in the U.S.
• Douglas Elliman’s closings totaled $24.6 billion for the twelve months ended December 31,
2016, and it has approximately 6,000 affiliated agents and 90 offices throughout the New York
metropolitan area, South Florida, Aspen, Greenwich, and Los Angeles.
REAL ESTATE
Real Estate
Tobacco
This summary contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We have identified these forward-looking statements using words such as “could” and similar expressions. These statements reflect our
current beliefs. Accordingly, such forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause our actual results, performance or achievements to differ materially from those expressed in, or implied by, such statements.
TOBACCO
• Fourth-largest cigarette manufacturer in the U.S. with a strong family of brands — Pyramid,
Grand Prix, Liggett Select, Eve and Eagle 20’s — representing 12% share of the discount market.
• Focused on brand strength and long-term profit growth, while continuing to evaluate
opportunities to pursue incremental volume and margin growth.
• Annual cost advantage due to favorable treatment under the Master Settlement Agreement that
ranged between $163 million and $169 million from 2011 to 2016.
• The only cigarette company to have reached a comprehensive settlement resolving substantially all
of the individual Engle progeny product liability cases pending in Florida. The Engle progeny cases
have represented the most significant litigation against the U.S. cigarette industry in recent years.
COMPANY HIGHLIGHTS
• Headquartered in Miami with an executive office in
Manhattan and tobacco operations in North Carolina
• Employs approximately 1,400 people
• Executive management and directors beneficially own
13% of the Company
• Reported cash of $393.5 million and investments with
fair value of $257.7 million at December 31, 2016.
• Recognized as one of America’s Most Trustworthy
Companies by Forbes in 2013
Real Estate
Tobacco
Corporate and Other
$1.011B
$680M
TOTAL
$1.691B
Vector is a largely underfollowed
company with a highly competent
management team and numerous
ways to unlock value
“
“
Barron’s Online, August 14, 2014
Oppenheimer analyst Ian Zaffino
2 10-Year return from February 28, 2007 to February 28, 2017 and assumes reinvestment of dividends received
Net income attributable to Vector Group Ltd. for the periods presented was $37M, $37M, $59M and $71M, respectively. Adjusted EBITDA is a non-GAAP financial measure. For a reconciliation of Adjusted EBITDA to net income, please see Vector Group Ltd.’s Current Reports on Forms 8-K, filed on November 15,
2016 and March 1, 2017 (Commission File Number 1-5759). Please also see Vector Group Ltd.’s Form 10-K for the year ended December 31, 2016.
1
Adjusted EBITDA1
Contact: Emily Claffey / Ben Spicehandler / Columbia Clancy of Sard Verbinnen & Co (212) 687-8080
VGR Total Return 384.7% (17.1% Compounded) 2
S&P 500 Total Return 108.3% (7.6% Compounded) 2
www.vectorgroupltd.com
March 2017
E-Cigarettes
2016
$269M
$28M
($16M)
$280M
400
2013
$199M
$51M
$236M
($1M) ($1M)
2014
$211M
$40M
($11M)
$227M
2015
$245M
$27M
($13M)
$246M
($13M)($13M)
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
100
0
300
200
Please refer to form 10-K for the year ended December 31, 2016.1
New Valley LLC, the real estate subsidiary of Vector Group Ltd. (NYSE: VGR), owns real estate and 70% of Douglas
Elliman, the largest residential brokerage firm in the New York metropolitan area, as well as a minority stake1 in
numerous real estate investments.
New Valley has invested approximately $206 million2, as of December 31, 2016, in a broad portfolio
of real estate projects.
NEW VALLEY REAL ESTATE INVESTMENTS1
March 2017
DOUGLAS ELLIMAN
• Largest residential real estate brokerage firm in New York metropolitan area and fourth-largest
in United States.
• Closings of $24.6 billion for the last twelve months ended December 31, 2016; Douglas Elliman
has approximately 6,000 affiliated agents and 90 offices throughout the New York metropolitan
area, South Florida, Aspen, Greenwich, and Los Angeles.
• Strategic Marketing Partnership with Yahoo!-Zillow® Real Estate Network that provides advertising
exclusivity for Douglas Elliman’s listings.
• Maintains an alliance with Knight Frank— the largest independent residential brokerage in the
United Kingdom— to jointly market high-end properties, providing a network with 400 offices
across 55 countries with 20,000 affiliated agents.
• Revenues and Adjusted EBITDA of Douglas Elliman of $675 million and $36.7 million3, respectively,
for the last twelve months ended December 31, 2016.
COMPANY HIGHLIGHTS
• Executive offices in Manhattan and Miami
• Employs approximately 900 people
Douglas Elliman’s net income was $21.1M for the twelve months ended December 31, 2016. New Valley’s net income for the periods presented was approximately $59.4M, $21.4M, $11.7M and $13.5M, for the periods presented, respectively. Adjusted EBITDA is a non-GAAP financial measure. New Valley’s Adjusted EBITDA does
not include an allocation of Vector Group Ltd.’s Corporate and Other Expenses (for purposes of computing Adjusted EBITDA) of $13.5M, $11.4M, $13.2M and $15.3M, for the periods presented, respectively. For a reconciliation of Adjusted EBITDA to net income, please see Vector Group Ltd.’s Current Reports on Forms 8-K, filed on
October 2, 2015, November 15, 2016 and March 1, 2017. Please also see Vector Group Ltd.’s Form 10-K for the year ended December 31, 2016 (Commission File Number 1-5759).
Net of cash returned.2
3
2016
$27.9M
New Valley Adjusted EBITDA3
212
3
10
5
6
7
8
9
1
4
Maryland Portfolio
(Baltimore County)
New Valley’s Real Estate Investment Portfolio1
New Valley’s New York Real Estate Investments1
1. The Marquand Upper East Side
2. 10 Madison Square Park West Flatiron District/NoMad
3. 11 Beach Street TriBeCa
4. 20 Times Square Times Square
5. 111 Murray Street TriBeCa
6. 160 Leroy Street Greenwich Village
7. PUBLIC Chrystie House Lower East Side
8. The Dutch Long Island City
9. 1 QPS Tower Long Island City
10. Park Lane Hotel Central Park South
11. 125 Greenwich Street Financial District
12. 76 Eleventh Avenue West Chelsea
Coral Beach
and Tennis Club
Bermuda
International Investments1
Land Development/Real
Estate Held for Sale, net
Apartments/ Condo-
miniums/Hotels
Commercial Retail/
Office Assets
Monad Terrace
(Miami Beach)
www.newvalley.comContact: Emily Claffey / Ben Spicehandler / Columbia Clancy of Sard Verbinnen & Co (212) 687-8080
Escena
(Palm Springs)
Douglas Elliman Closings
2016
$24.6B
EXECUTIVE MANAGEMENT
Howard M. Lorber
President and Chief Executive Officer
Richard J. Lampen
Executive Vice President
J. Bryant Kirkland III
Senior Vice President, Treasurer and Chief Financial Officer
Marc N. Bell
Senior Vice President, Secretary and General Counsel
Bennett P. Borko
Executive Vice President of New Valley Realty division
Dorothy Herman
President and Chief Executive Officer of Douglas Elliman
NY City
Investments
New Valley Revenues – December 31, 2016
Other
Real Estate Brokerage Commissions
Property Management
11
West Hollywood Edition
(West Hollywood)
The Plaza at Harmon
Meadow (New Jersey)
Sagaponack
(East Hampton)
87 Park
(Miami Beach)
Mosaic II
(ST Portfolio)
(Houston)
Takanasee
(New Jersey)
$680M
$641M
$30M
$9M
2011
$11.1B
2012
$12.4B
2013
$14.9B
$18.2B
2014 2015
$22.4B
2013
$51.3M
2014
$40.2M
2015
$26.9M
Wynn Las Vegas
Retail (Nevada)