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)) |
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 |
(c) | Exhibit. |
Exhibit No. | Exhibit | |
Press Release issued on February 28, 2020. |
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 | ||
Conrad Harrington | ||
Sard Verbinnen & Co - Europe | ||
+44 (0)20 3178 8914 | ||
J. Bryant Kirkland III, Vector Group Ltd. | ||
305-579-8000 |
Three Months Ended | Year Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
(Unaudited) | (Unaudited) | ||||||||||||||
Revenues: | |||||||||||||||
Tobacco* | $ | 260,323 | $ | 267,136 | $ | 1,114,840 | $ | 1,111,094 | |||||||
Real estate | 179,242 | 178,803 | 788,871 | 759,168 | |||||||||||
Total revenues | 439,565 | 445,939 | 1,903,711 | 1,870,262 | |||||||||||
Expenses: | |||||||||||||||
Cost of sales: | |||||||||||||||
Tobacco* | 180,174 | 189,759 | 771,130 | 787,251 | |||||||||||
Real estate | 121,755 | 115,382 | 530,449 | 505,233 | |||||||||||
Total cost of sales | 301,929 | 305,141 | 1,301,579 | 1,292,484 | |||||||||||
Operating, selling, administrative and general expenses | 91,960 | 92,552 | 370,007 | 355,513 | |||||||||||
Litigation settlement and judgment expense (income) | 95 | 160 | 990 | (1,784 | ) | ||||||||||
Operating income | 45,581 | 48,086 | 231,135 | 224,049 | |||||||||||
Other income (expenses): | |||||||||||||||
Interest expense | (35,212 | ) | (58,328 | ) | (138,448 | ) | (203,780 | ) | |||||||
Loss on extinguishment of debt | (4,301 | ) | (4,066 | ) | (4,301 | ) | (4,066 | ) | |||||||
Change in fair value of derivatives embedded within convertible debt | 6,106 | 13,700 | 26,425 | 44,989 | |||||||||||
Equity in (losses) earnings from real estate ventures | (31,290 | ) | 22,824 | (19,288 | ) | 14,446 | |||||||||
Other, net | 24,652 | (9,739 | ) | 38,305 | 3,921 | ||||||||||
Income before provision for income taxes | 5,536 | 12,477 | 133,828 | 79,559 | |||||||||||
Income tax (benefit) expense | (5,131 | ) | (7,842 | ) | 32,813 | 21,552 | |||||||||
Net income | 10,667 | 20,319 | 101,015 | 58,007 | |||||||||||
Net loss (income) attributed to non-controlling interest | 39 | 755 | (41 | ) | 98 | ||||||||||
Net income attributed to Vector Group Ltd. | $ | 10,706 | $ | 21,074 | $ | 100,974 | $ | 58,105 | |||||||
Per basic common share: | |||||||||||||||
Net income applicable to common share attributed to Vector Group Ltd. | $ | 0.06 | $ | 0.13 | $ | 0.64 | $ | 0.35 | |||||||
Per diluted common share: | |||||||||||||||
Net income applicable to common share attributed to Vector Group Ltd. | $ | 0.06 | $ | 0.13 | $ | 0.63 | $ | 0.35 |
Three Months Ended | Year Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Net income attributed to Vector Group Ltd. | $ | 10,706 | $ | 21,074 | $ | 100,974 | $ | 58,105 | |||||||
Interest expense | 35,212 | 58,328 | 138,448 | 203,780 | |||||||||||
Income tax (benefit) expense | (5,131 | ) | (7,842 | ) | 32,813 | 21,552 | |||||||||
Net (loss) income attributed to non-controlling interest | (39 | ) | (755 | ) | 41 | (98 | ) | ||||||||
Depreciation and amortization | 4,489 | 4,764 | 17,851 | 18,807 | |||||||||||
EBITDA | $ | 45,237 | $ | 75,569 | $ | 290,127 | $ | 302,146 | |||||||
Change in fair value of derivatives embedded within convertible debt (a) | (6,106 | ) | (13,700 | ) | (26,425 | ) | (44,989 | ) | |||||||
Equity in losses (earnings) from real estate ventures (b) | 31,290 | (22,824 | ) | 19,288 | (14,446 | ) | |||||||||
Loss on extinguishment of debt | 4,301 | 4,066 | 4,301 | 4,066 | |||||||||||
Stock-based compensation expense (c) | 2,347 | 2,527 | 9,469 | 9,951 | |||||||||||
Litigation settlement and judgment expense (income) (d) | 95 | 160 | 990 | (1,784 | ) | ||||||||||
Impact of MSA settlement (e) | — | — | — | (6,298 | ) | ||||||||||
Purchase accounting adjustments (f) | — | 63 | — | 608 | |||||||||||
Other, net | (24,652 | ) | 9,739 | (38,305 | ) | (3,921 | ) | ||||||||
Adjusted EBITDA | $ | 52,512 | $ | 55,600 | $ | 259,445 | $ | 245,333 | |||||||
Adjusted EBITDA attributed to non-controlling interest | — | (1,471 | ) | — | (3,319 | ) | |||||||||
Adjustment to reflect additional 29.41% of Adjusted EBITDA from Douglas Elliman Realty, LLC (g) | — | (158 | ) | — | 3,319 | ||||||||||
Adjusted EBITDA attributed to Vector Group Ltd. | $ | 52,512 | $ | 53,971 | $ | 259,445 | $ | 245,333 | |||||||
Adjusted EBITDA by Segment | |||||||||||||||
Tobacco | $ | 62,107 | $ | 59,563 | $ | 270,465 | $ | 249,209 | |||||||
Real Estate (h) | (5,334 | ) | (249 | ) | 6,103 | 11,154 | |||||||||
Corporate and Other | (4,261 | ) | (3,714 | ) | (17,123 | ) | (15,030 | ) | |||||||
Total | $ | 52,512 | $ | 55,600 | $ | 259,445 | $ | 245,333 | |||||||
Adjusted EBITDA Attributed to Vector Group Ltd. by Segment | |||||||||||||||
Tobacco | $ | 62,107 | $ | 59,563 | $ | 270,465 | $ | 249,209 | |||||||
Real Estate (h) | (5,334 | ) | (1,878 | ) | 6,103 | 11,154 | |||||||||
Corporate and Other | (4,261 | ) | (3,714 | ) | (17,123 | ) | (15,030 | ) | |||||||
Total | $ | 52,512 | $ | 53,971 | $ | 259,445 | $ | 245,333 |
a. | Represents income recognized from changes in the fair value of the derivatives embedded in the Company’s convertible debt. |
b. | Represents equity in losses (earnings) 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 negative $5,693, negative $540, $5,333 and $11,284 for the fourth quarter and full year ended December 31, 2019 and 2018, respectively. Amounts reported in this footnote reflect 100% of Douglas Elliman Realty, LLC’s entire Adjusted EBITDA. |
Three Months Ended | Year Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Net income attributed to Vector Group Ltd. | $ | 10,706 | $ | 21,074 | $ | 100,974 | $ | 58,105 | |||||||
Change in fair value of derivatives embedded within convertible debt | (6,106 | ) | (13,700 | ) | (26,425 | ) | (44,989 | ) | |||||||
Non-cash amortization of debt discount on convertible debt | 5,095 | 25,173 | 24,813 | 86,623 | |||||||||||
Loss on extinguishment of debt | 4,301 | 4,066 | 4,301 | 4,066 | |||||||||||
Litigation settlement and judgment expense (income) (a) | 95 | 160 | 990 | (1,784 | ) | ||||||||||
Impact of MSA settlement (b) | — | — | — | (6,298 | ) | ||||||||||
Impact of net interest expense capitalized to real estate ventures | 10,701 | (472 | ) | 13,189 | 1,303 | ||||||||||
Adjustment for derivative associated with acquisition of 29.41% of Douglas Elliman Realty, LLC | (3,157 | ) | — | (3,157 | ) | — | |||||||||
Douglas Elliman Realty, LLC purchase accounting adjustments (c) | — | 265 | — | 1,406 | |||||||||||
Adjustment to reflect additional 29.41% of net income from Douglas Elliman Realty, LLC (d) | — | (758 | ) | — | 1,529 | ||||||||||
Total adjustments | 10,929 | 14,734 | 13,711 | 41,856 | |||||||||||
Tax expense related to adjustments | (3,789 | ) | (4,046 | ) | (4,553 | ) | (11,718 | ) | |||||||
Adjusted Net Income attributed to Vector Group Ltd. | $ | 17,846 | $ | 31,762 | $ | 110,132 | $ | 88,243 | |||||||
Per diluted common share: | |||||||||||||||
Adjusted Net Income applicable to common shares attributed to Vector Group Ltd. | $ | 0.11 | $ | 0.20 | $ | 0.70 | $ | 0.55 |
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. | 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%. |
Three Months Ended | Year Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Operating income | $ | 45,581 | $ | 48,086 | $ | 231,135 | $ | 224,049 | |||||||
Litigation settlement and judgment expense (income) (a) | 95 | 160 | 990 | (1,784 | ) | ||||||||||
Impact of MSA settlement (b) | — | — | — | (6,298 | ) | ||||||||||
Douglas Elliman Realty, LLC purchase accounting adjustments (c) | — | 265 | — | 1,406 | |||||||||||
Total adjustments | 95 | 425 | 990 | (6,676 | ) | ||||||||||
Adjusted Operating Income (d) | $ | 45,676 | $ | 48,511 | $ | 232,125 | $ | 217,373 |
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 three months and year ended December 31, 2018. |
Three Months Ended | Year Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Tobacco Adjusted Operating Income: | |||||||||||||||
Operating income from tobacco segment | $ | 60,036 | $ | 57,342 | $ | 261,630 | $ | 246,527 | |||||||
Litigation settlement and judgment expense (a) | 95 | 160 | 990 | 685 | |||||||||||
Impact of MSA settlement (b) | — | — | — | (6,298 | ) | ||||||||||
Total adjustments | 95 | 160 | 990 | (5,613 | ) | ||||||||||
Tobacco Adjusted Operating Income | $ | 60,131 | $ | 57,502 | $ | 262,620 | $ | 240,914 |
Three Months Ended | Year Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Tobacco Adjusted EBITDA: | |||||||||||||||
Operating income from tobacco segment | $ | 60,036 | $ | 57,342 | $ | 261,630 | $ | 246,527 | |||||||
Litigation settlement and judgment expense (a) | 95 | 160 | 990 | 685 | |||||||||||
Impact of MSA settlement (b) | — | — | — | (6,298 | ) | ||||||||||
Total adjustments | 95 | 160 | 990 | (5,613 | ) | ||||||||||
Tobacco Adjusted Operating Income | 60,131 | 57,502 | 262,620 | 240,914 | |||||||||||
Depreciation and amortization | 1,976 | 2,039 | 7,824 | 8,210 | |||||||||||
Stock-based compensation expense | — | 22 | 21 | 85 | |||||||||||
Total adjustments | 1,976 | 2,061 | 7,845 | 8,295 | |||||||||||
Tobacco Adjusted EBITDA | $ | 62,107 | $ | 59,563 | $ | 270,465 | $ | 249,209 |
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. |
Three Months Ended | Year Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Net (loss) income attributed to Vector Group Ltd. from subsidiary non-guarantors (a) | $ | (24,908 | ) | $ | 15,694 | $ | (11,440 | ) | $ | 14,779 | |||||
Interest expense (a) | 228 | 4 | 913 | 67 | |||||||||||
Income tax (benefit) expense (a) | (11,397 | ) | 5,775 | (5,884 | ) | 3,949 | |||||||||
Net (loss) income attributed to non-controlling interest (a) | (39 | ) | (755 | ) | 41 | (98 | ) | ||||||||
Depreciation and amortization | 2,268 | 2,475 | 9,033 | 9,580 | |||||||||||
EBITDA | $ | (33,848 | ) | $ | 23,193 | $ | (7,337 | ) | $ | 28,277 | |||||
(Income) loss from non-guarantors other than New Valley LLC | (6 | ) | 15 | 51 | 86 | ||||||||||
Equity in losses (earnings) from real estate ventures (b) | 31,290 | (22,824 | ) | 19,288 | (14,446 | ) | |||||||||
Purchase accounting adjustments (c) | — | 63 | — | 608 | |||||||||||
Litigation settlement and judgment income (d) | — | — | — | (2,469 | ) | ||||||||||
Other, net | (2,785 | ) | (705 | ) | (5,929 | ) | (1,725 | ) | |||||||
Adjusted EBITDA | $ | (5,349 | ) | $ | (258 | ) | $ | 6,073 | $ | 10,331 | |||||
Adjusted EBITDA attributed to non-controlling interest | — | (1,471 | ) | — | (3,319 | ) | |||||||||
Adjustment to reflect additional 29.41% of Adjusted EBITDA from Douglas Elliman Realty, LLC (e) | — | (158 | ) | — | 3,319 | ||||||||||
Adjusted EBITDA attributed to New Valley LLC | $ | (5,349 | ) | $ | (1,887 | ) | $ | 6,073 | $ | 10,331 | |||||
Adjusted EBITDA by Segment | |||||||||||||||
Real Estate (f) | $ | (5,334 | ) | $ | (249 | ) | $ | 6,103 | $ | 11,154 | |||||
Corporate and Other | (15 | ) | (9 | ) | (30 | ) | (823 | ) | |||||||
Total (g) | $ | (5,349 | ) | $ | (258 | ) | $ | 6,073 | $ | 10,331 | |||||
Adjusted EBITDA Attributed to New Valley LLC by Segment | |||||||||||||||
Real Estate (f) | $ | (5,334 | ) | $ | (1,878 | ) | $ | 6,103 | $ | 11,154 | |||||
Corporate and Other | (15 | ) | (9 | ) | (30 | ) | (823 | ) | |||||||
Total (g) | $ | (5,349 | ) | $ | (1,887 | ) | $ | 6,073 | $ | 10,331 |
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-K for the three months and year ended December 31, 2019. |
b. | Represents equity in losses (earnings) 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 negative $5,693, negative $540, $5,333 and $11,284 for the three months and year ended December 31, 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 $4,261, $3,714, $17,123 and $15,030 for the three months and year ended December 31, 2019 and 2018, respectively. |
Three Months Ended | Year Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Net (loss) income attributed to Douglas Elliman Realty, LLC | $ | (432 | ) | $ | (2,576 | ) | $ | 6,185 | $ | 5,197 | |||||
Interest expense | 2 | 2 | 8 | 53 | |||||||||||
Income tax expense (benefit) | 2 | (1 | ) | 368 | 400 | ||||||||||
Depreciation and amortization | 2,181 | 2,374 | 8,638 | 9,171 | |||||||||||
Douglas Elliman Realty, LLC EBITDA | $ | 1,753 | $ | (201 | ) | $ | 15,199 | $ | 14,821 | ||||||
Equity in earnings from real estate ventures (a) | (7,080 | ) | (92 | ) | (8,472 | ) | (1,243 | ) | |||||||
Purchase accounting adjustments (b) | — | 63 | — | 608 | |||||||||||
Litigation settlement and judgment income (c) | — | — | — | (2,469 | ) | ||||||||||
Other, net | (366 | ) | (310 | ) | (1,394 | ) | (433 | ) | |||||||
Douglas Elliman Realty, LLC Adjusted EBITDA | $ | (5,693 | ) | $ | (540 | ) | $ | 5,333 | $ | 11,284 | |||||
Douglas Elliman Realty, LLC Adjusted EBITDA attributed to non-controlling interest | — | 158 | — | (3,319 | ) | ||||||||||
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) | — | (158 | ) | — | 3,319 | ||||||||||
Douglas Elliman Realty, LLC Adjusted EBITDA attributed to Real Estate Segment | $ | (5,693 | ) | $ | (540 | ) | $ | 5,333 | $ | 11,284 |
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%. |