VECTOR GROUP LTD. |
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) |
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)) |
(c) | Exhibit. |
Exhibit No. | Exhibit | |
99.1 | Press Release issued on May 5, 2017 |
VECTOR GROUP LTD. | ||
By: | /s/ J. Bryant Kirkland III | |
J. Bryant Kirkland III | ||
Senior Vice President, Treasurer and Chief Financial Officer |
Contact: | Emily Claffey/Benjamin Spicehandler/Columbia Clancy | |
Sard Verbinnen & Co | ||
212-687-8080 | ||
Jonathan Doorley/Conrad Harrington | ||
Sard Verbinnen & Co - Europe | ||
+44 (0)20 3178 8914 | ||
J. Bryant Kirkland III, Vector Group Ltd. | ||
305-579-8000 |
Three Months Ended | |||||||
March 31, | |||||||
2017 | 2016 | ||||||
(Unaudited) | |||||||
Revenues | |||||||
Tobacco* | $ | 257,454 | $ | 221,015 | |||
Real estate | 157,754 | 159,747 | |||||
E-cigarettes | — | 38 | |||||
Total Revenues | 415,208 | 380,800 | |||||
Expenses: | |||||||
Cost of sales: | |||||||
Tobacco* | 175,754 | 136,738 | |||||
Real estate | 100,169 | 99,678 | |||||
E-cigarettes | — | 6 | |||||
Total cost of sales | 275,923 | 236,422 | |||||
Operating, selling, administrative and general expenses | 84,769 | 79,828 | |||||
Litigation settlement and judgment expense | 1,585 | 2,350 | |||||
Restructuring charges | — | 41 | |||||
Operating income | 52,931 | 62,159 | |||||
Other income (expenses): | |||||||
Interest expense | (46,221 | ) | (30,720 | ) | |||
Loss on extinguishment of debt | (34,110 | ) | — | ||||
Change in fair value of derivatives embedded within convertible debt | 8,571 | 9,694 | |||||
Equity in earnings (losses) from real estate ventures | 11,113 | (507 | ) | ||||
Equity in losses from investments | (1,061 | ) | (1,671 | ) | |||
Gain on sale of investment securities available for sale | 150 | 567 | |||||
Impairment of investment securities available for sale | (39 | ) | (4,813 | ) | |||
Other, net | 1,659 | 1,047 | |||||
(Loss) income before provision for income taxes | (7,007 | ) | 35,756 | ||||
Income tax (benefit) expense | (2,782 | ) | 14,363 | ||||
Net (loss) income | (4,225 | ) | 21,393 | ||||
Net income attributed to non-controlling interest | (2 | ) | (2,055 | ) | |||
Net (loss) income attributed to Vector Group Ltd. | $ | (4,227 | ) | $ | 19,338 | ||
Per basic common share: | |||||||
Net (loss) income applicable to common share attributed to Vector Group Ltd. | $ | (0.03 | ) | $ | 0.15 | ||
Per diluted common share: | |||||||
Net (loss) income applicable to common share attributed to Vector Group Ltd. | $ | (0.03 | ) | $ | 0.15 | ||
Dividends declared per share | $ | 0.40 | $ | 0.38 |
LTM | Three Months Ended | ||||||||||
March 31, | March 31, | ||||||||||
2017 | 2017 | 2016 | |||||||||
Net income (loss) attributed to Vector Group Ltd. | $ | 47,562 | $ | (4,227 | ) | $ | 19,338 | ||||
Interest expense | 158,483 | 46,221 | 30,720 | ||||||||
Income tax expense (benefit) | 32,018 | (2,782 | ) | 14,363 | |||||||
Net income attributed to non-controlling interest | 4,086 | 2 | 2,055 | ||||||||
Depreciation and amortization | 22,224 | 5,029 | 5,164 | ||||||||
EBITDA | $ | 264,373 | $ | 44,243 | $ | 71,640 | |||||
Change in fair value of derivatives embedded within convertible debt (a) | (30,587 | ) | (8,571 | ) | (9,694 | ) | |||||
Equity in losses from investments (b) | 2,144 | 1,061 | 1,671 | ||||||||
Gain on sale of investment securities available for sale | (2,490 | ) | (150 | ) | (567 | ) | |||||
Impairment of investment securities available for sale | 607 | 39 | 4,813 | ||||||||
Equity in (earnings) losses from real estate ventures (c) | (16,820 | ) | (11,113 | ) | 507 | ||||||
Loss on extinguishment of debt | 34,110 | 34,110 | — | ||||||||
Stock-based compensation expense (d) | 10,751 | 3,006 | 2,307 | ||||||||
Litigation settlement and judgment expense (e) | 19,235 | 1,585 | 2,350 | ||||||||
Impact of MSA settlement (f) | (648 | ) | (895 | ) | — | ||||||
Restructuring charges | — | — | 41 | ||||||||
Purchase accounting adjustments (g) | 5,143 | 113 | 200 | ||||||||
Other, net | (5,344 | ) | (1,659 | ) | (1,047 | ) | |||||
Adjusted EBITDA | $ | 280,474 | $ | 61,769 | $ | 72,221 | |||||
Adjusted EBITDA attributed to non-controlling interest | (8,542 | ) | (485 | ) | (2,639 | ) | |||||
Adjusted EBITDA attributed to Vector Group Ltd. | $ | 271,932 | $ | 61,284 | $ | 69,582 | |||||
Adjusted EBITDA by Segment | |||||||||||
Tobacco | $ | 265,456 | $ | 62,901 | $ | 66,335 | |||||
E-cigarettes | (1,287 | ) | (77 | ) | (193 | ) | |||||
Real Estate (h) | 31,515 | 2,955 | 10,156 | ||||||||
Corporate and Other | (15,210 | ) | (4,010 | ) | (4,077 | ) | |||||
Total | $ | 280,474 | $ | 61,769 | $ | 72,221 | |||||
Adjusted EBITDA Attributed to Vector Group Ltd. by Segment | |||||||||||
Tobacco | $ | 265,456 | $ | 62,901 | $ | 66,335 | |||||
E-cigarettes | (1,287 | ) | (77 | ) | (193 | ) | |||||
Real Estate (i) | 22,973 | 2,470 | 7,517 | ||||||||
Corporate and Other | (15,210 | ) | (4,010 | ) | (4,077 | ) | |||||
Total | $ | 271,932 | $ | 61,284 | $ | 69,582 |
a. | Represents income or losses recognized from changes in the fair value of the derivatives embedded in the Company's convertible debt. |
b. | Represents equity in losses recognized from investments that the Company accounts for under the equity method. |
c. | Represents equity in (earnings) losses recognized from the Company's investment in certain real estate businesses that are not consolidated in its financial results. |
d. | Represents amortization of stock-based compensation. |
e. | Represents accruals for settlements of judgment expenses in the Engle progeny tobacco litigation. |
f. | Represents the Company's tobacco segment's settlement of a long-standing dispute related to the Master Settlement Agreement. |
g. | 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. |
h. | Includes Adjusted EBITDA for Douglas Elliman Realty, LLC of $29,349 for the last twelve months ended March 31, 2017 and $1,756 and $9,064 for the three months ended March 31, 2017 and 2016, respectively. Amounts reported in this footnote reflect 100% of Douglas Elliman Realty, LLC's entire Adjusted EBITDA. |
i. | Includes Adjusted EBITDA for Douglas Elliman Realty, LLC less non-controlling interest of $20,717 for the last twelve months ended and $1,240 and $6,398 for the three months ended March 31, 2017 and 2016, respectively. Amounts reported in this footnote have adjusted Douglas Elliman Realty, LLC's Adjusted EBITDA for non-controlling interest. |
Three Months Ended | |||||||
March 31, | |||||||
2017 | 2016 | ||||||
Net (loss) income attributed to Vector Group Ltd. | $ | (4,227 | ) | $ | 19,338 | ||
Change in fair value of derivatives embedded within convertible debt | (8,571 | ) | (9,694 | ) | |||
Non-cash amortization of debt discount on convertible debt | 12,053 | 8,286 | |||||
Loss on extinguishment of debt | 34,110 | — | |||||
Litigation settlement and judgment expense (a) | 1,585 | 2,350 | |||||
Impact of interest expense capitalized to real estate ventures, net | (445 | ) | (3,520 | ) | |||
Impact of MSA settlement (b) | (895 | ) | — | ||||
Restructuring charges | — | 41 | |||||
Douglas Elliman Realty, LLC purchase accounting adjustments (c) | 321 | 476 | |||||
Total adjustments | 38,158 | (2,061 | ) | ||||
Tax expense related to adjustments | (15,492 | ) | 858 | ||||
Adjusted Net Income attributed to Vector Group Ltd. | $ | 18,439 | $ | 18,135 | |||
Per diluted common share: | |||||||
Adjusted Net Income applicable to common shares attributed to Vector Group Ltd. | $ | 0.14 | $ | 0.14 |
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. |
c. | Represents 70.59% of purchase accounting adjustments in the periods presented for assets acquired in connection with the increase of the Company's ownership of Douglas Elliman Realty, LLC, which occurred in 2013. |
LTM | Three Months Ended | ||||||||||
March 31, | March 31, | ||||||||||
2017 | 2017 | 2016 | |||||||||
Operating income | $ | 223,769 | $ | 52,931 | $ | 62,159 | |||||
Litigation settlement and judgment expense (a) | 19,235 | 1,585 | 2,350 | ||||||||
Restructuring expense | — | — | 41 | ||||||||
Impact of MSA settlement (b) | (648 | ) | (895 | ) | — | ||||||
Douglas Elliman Realty, LLC purchase accounting adjustments (c) | 6,945 | 455 | 674 | ||||||||
Total adjustments | 25,532 | 1,145 | 3,065 | ||||||||
Adjusted Operating Income (d) | $ | 249,301 | $ | 54,076 | $ | 65,224 |
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. |
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. |
LTM | Three Months Ended | ||||||||||
March 31, | March 31, | ||||||||||
2017 | 2017 | 2016 | |||||||||
Tobacco Adjusted Operating Income: | |||||||||||
Operating income from tobacco segment | $ | 236,580 | $ | 59,770 | $ | 61,483 | |||||
Litigation settlement and judgment expense (a) | 19,235 | 1,585 | 2,350 | ||||||||
Restructuring expense | — | — | 41 | ||||||||
Impact of MSA settlement (b) | (648 | ) | (895 | ) | — | ||||||
Total adjustments | 18,587 | 690 | 2,391 | ||||||||
Tobacco Adjusted Operating Income | $ | 255,167 | $ | 60,460 | $ | 63,874 |
LTM | Three Months Ended | ||||||||||
March 31, | March 31, | ||||||||||
2017 | 2017 | 2016 | |||||||||
Tobacco Adjusted EBITDA: | |||||||||||
Operating income from tobacco segment | $ | 236,580 | $ | 59,770 | $ | 61,483 | |||||
Litigation settlement and judgment expense (a) | 19,235 | 1,585 | 2,350 | ||||||||
Restructuring expense | — | — | 41 | ||||||||
Impact of MSA settlement (b) | (648 | ) | (895 | ) | — | ||||||
Total adjustments | 18,587 | 690 | 2,391 | ||||||||
Tobacco Adjusted Operating Income | 255,167 | 60,460 | 63,874 | ||||||||
Depreciation and amortization | 10,204 | 2,420 | 2,440 | ||||||||
Stock-based compensation expense | 85 | 21 | 21 | ||||||||
Total adjustments | 10,289 | 2,441 | 2,461 | ||||||||
Tobacco Adjusted EBITDA | $ | 265,456 | $ | 62,901 | $ | 66,335 |
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. |
LTM | Three Months Ended | ||||||||||
March 31, | March 31, | ||||||||||
2017 | 2017 | 2016 | |||||||||
Net income attributed to Vector Group Ltd. from subsidiary non-guarantors (a) | $ | 17,539 | $ | 7,105 | $ | 3,043 | |||||
Interest expense (a) | 23 | 6 | 3 | ||||||||
Income tax expense (a) | 11,865 | 4,953 | 2,423 | ||||||||
Net income attributed to non-controlling interest (a) | 4,086 | 2 | 2,055 | ||||||||
Depreciation and amortization | 10,425 | 2,222 | 2,282 | ||||||||
EBITDA | $ | 43,938 | $ | 14,288 | $ | 9,806 | |||||
Loss from non-guarantors other than New Valley LLC | 110 | 46 | 34 | ||||||||
Equity in (earnings) losses from real estate ventures (b) | (16,820 | ) | (11,113 | ) | 507 | ||||||
Purchase accounting adjustments (c) | 5,143 | 113 | 200 | ||||||||
Other, net | (908 | ) | (379 | ) | (410 | ) | |||||
Adjusted EBITDA | $ | 31,463 | $ | 2,955 | $ | 10,137 | |||||
Adjusted EBITDA attributed to non-controlling interest | (8,542 | ) | (485 | ) | (2,639 | ) | |||||
Adjusted EBITDA attributed to New Valley LLC | $ | 22,921 | $ | 2,470 | $ | 7,498 | |||||
Adjusted EBITDA by Segment | |||||||||||
Real Estate (d) | $ | 31,515 | $ | 2,955 | $ | 10,156 | |||||
Corporate and Other | (52 | ) | — | (19 | ) | ||||||
Total (f) | $ | 31,463 | $ | 2,955 | $ | 10,137 | |||||
Adjusted EBITDA Attributed to New Valley LLC by Segment | |||||||||||
Real Estate (e) | $ | 22,973 | $ | 2,470 | $ | 7,517 | |||||
Corporate and Other | (52 | ) | — | (19 | ) | ||||||
Total (f) | $ | 22,921 | $ | 2,470 | $ | 7,498 |
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 months ended March 31, 2017. |
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. | 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. | Includes Adjusted EBITDA for Douglas Elliman Realty, LLC of $29,349 for the last twelve months ended March 31, 2017 and $1,756 and $9,064 for the three months ended March 31, 2017 and 2016, respectively. Amounts reported in this footnote reflect 100% of Douglas Elliman Realty, LLC's entire Adjusted EBITDA. |
e. | Includes Adjusted EBITDA for Douglas Elliman Realty, LLC less non-controlling interest of $20,717 or the last twelve months ended March 31, 2017 and $1,240 and $6,398 for the three months ended March 31, 2017 and 2016, respectively. Amounts reported in this footnote have adjusted Douglas Elliman Realty, LLC's Adjusted EBITDA for non-controlling interest. |
f. | New Valley's Adjusted EBITDA does not include an allocation of Vector Group Ltd.'s "Corporate and Other" segment's expenses (for purposes of computing Adjusted EBITDA contained in Table 2 of this press release) of $15,210 for the last twelve months ended and $4,010 and $4,077 for the three months ended March 31, 2017 and 2016, respectively. |
LTM | Three Months Ended | ||||||||||
March 31, | March 31, | ||||||||||
2017 | 2017 | 2016 | |||||||||
Net income attributed to Douglas Elliman Realty, LLC | $ | 14,104 | $ | 113 | $ | 7,077 | |||||
Income tax expense | 908 | 30 | 248 | ||||||||
Depreciation and amortization | 10,036 | 2,120 | 2,200 | ||||||||
Douglas Elliman Realty, LLC EBITDA | $ | 25,048 | $ | 2,263 | $ | 9,525 | |||||
Equity in earnings from real estate ventures (a) | (1,039 | ) | (580 | ) | (603 | ) | |||||
Purchase accounting adjustments (b) | 5,143 | 113 | 200 | ||||||||
Other, net | 197 | (40 | ) | (58 | ) | ||||||
Douglas Elliman Realty, LLC Adjusted EBITDA | $ | 29,349 | $ | 1,756 | $ | 9,064 | |||||
Douglas Elliman Realty, LLC Adjusted EBITDA attributed to non-controlling interest | (8,632 | ) | (516 | ) | (2,666 | ) | |||||
Douglas Elliman Realty, LLC Adjusted EBITDA attributed to Real Estate Segment | $ | 20,717 | $ | 1,240 | $ | 6,398 |
a. | Represents equity income recognized from the Company's investment in certain real estate businesses that are not consolidated in its financial results. |
b. | 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. |