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): November 10, 2020
(Exact Name of Registrant as Specified in Its Charter)
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(305 ) 579-8000
(Registrant’s Telephone Number, Including Area Code)
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Securities Registered Pursuant to 12(b) of the Act:
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 7.01. Regulation FD Disclosure
Vector Group Ltd. (NYSE:VGR) (the "Company") 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 November 4, 2020, February 28, 2020, October 4, 2019, and May 3, 2019 for reconciliations of financial measures prepared in accordance with GAAP to Non-GAAP Financial Measures. Non-GAAP Financial Measures include adjustments for litigation settlements and judgments, restructuring charges, settlements of long-standing disputes related to the Master Settlement Agreement (“MSA”) in the Tobacco segment, stock-based compensation expense (for purposes of Adjusted EBITDA only), impairment charges of goodwill and intangible assets, net interest expense capitalized to real estate ventures, the derivative associated with the 2018 acquisition of 29.41% of Douglas Elliman Realty, LLC, non-cash interest expense associated with the Company’s convertible debt, the purchase accounting associated with the Company’s 2013 acquisition of an additional 20.59% interest in Douglas Elliman Realty, LLC, and the impact of non-controlling interest associated with the 29.41% of Douglas Elliman Realty, LLC that was purchased by the Company on December 31, 2018.
Adjusted EBITDA, Adjusted Operating Income, Tobacco Adjusted EBITDA, New Valley LLC Adjusted EBITDA and Douglas Elliman Realty, LLC Adjusted EBITDA (hereafter, 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. 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 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.
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 in earnings (losses) on long-term investments, equity in earnings (losses) from real estate ventures, loss on extinguishment of debt, stock-based compensation expense (for purposes of Adjusted EBITDA only), litigation settlement and judgment expense, settlements of long-standing disputes related to the MSA, purchase accounting adjustments, restructuring charges, impairments of goodwill and intangible assets, and other charges.
New Valley LLC, the real estate subsidiary of Vector Group Ltd. (NYSE: VGR), operates a real estate services, technology and investment business through its ownership of Douglas Elliman, the largest residential brokerage firm in the New York metropolitan area, and a minority stake in numerous real estate ventures. New Valley LLC Adjusted EBITDA is defined as the portion of Adjusted EBITDA that relates 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, 2019 and in the Company’s Form 10-Q for the quarterly period ended September 30, 2020. 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 Exhibits
(c)Exhibit.
| Exhibit No. | Exhibit | |||||||
| Investor presentation of Vector Group Ltd. dated November 2020 (furnished pursuant to Regulation FD). | ||||||||
| Fact Sheet of Vector Group Ltd. dated November 2020 (furnished pursuant to Regulation FD). | ||||||||
| Fact Sheet of New Valley LLC dated November 2020 (furnished pursuant to Regulation FD). | ||||||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). | |||||||
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: November 10, 2020
INVESTOR PRESENTATION November 2020
DISCLAIMER This document and any related oral presentation does not constitute an offer or invitation to subscribe for, purchase or otherwise acquire any equity or debt securities or other instruments of Vector Group Ltd. (“Vector,” “Vector Group Ltd.” or “the Company”) or its subsidiaries 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 impact of the Covid-19 pandemic on the Company’s business and operations. 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, 2019, as filed with the SEC, and quarterly report on Form 10-Q for the period ended September 30, 2020, 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, March 1, 2017, May 3, 2018, June 14, 2018, September 28, 2018, February 28, 2019, May 3, 2019, October 4, 2019, February 28, 2020 and November 4, 2020 (Commission File Number 1-05759) 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 Overview . Diversified Holding Company with two primary businesses with iconic brand names: tobacco (Liggett Group) and real estate (Douglas Elliman) . History of strong earnings with Adjusted EBITDA of $292.3 million for the twelve months ended September 30, 2020(1) — Tobacco Adjusted EBITDA of $308.3 million for the twelve months ended September 30, 2020(2) — Despite challenges from the COVID-19 pandemic, Douglas Elliman produced revenues of $684.7 million and Adjusted EBITDA loss of $(362,000) for the twelve months ended September 30, 2020(3) . Diversified portfolio of consolidated and non-consolidated real estate investments at New Valley . Maintains substantial liquidity with cash, marketable securities and long-term investments of $625 million (including cash of $148 million at Liggett and $76 million at Douglas Elliman) as of September 30, 2020. . As of September 30, 2020, seasoned management team (CEO, EVP, CFO and General Counsel) with average tenure of 26 years with Vector Group . Management team and directors beneficially own approximately 8% of the equity of Vector Group . Perpetual cost advantage over the largest U.S. tobacco companies – annual cost advantage ranged between $160 million and $169 million from 2012 to 2019(4) (1)Vector’sNet income for the twelvemonths ended September 30, 2020 was $71.4 million. AdjustedEBITDAis a Non-GAAP FinancialMeasure. Please refer to Exhibit 99.1 of the Company’sCurrent Reporton Form 8-K, dated November 4, 2020 (Table 2), for a reconciliationof Net income to Adjusted EBITDAas well as the Disclaimerto this documenton Page 2. (2)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 Tables 2 and 5 of Exhibit 99.1 to the Company’sCurrentReport on Form 8-K, dated November 4, 2020. (3)Douglas Elliman’s Net (loss) was $(62.8) million for the twelvemonths ended September 30, 2020. Adjusted EBITDA is a Non-GAAP FinancialMeasure.Please refer to Exhibit 99.1 of the Company’sCurrentReport on Form 8-K, dated November 4, 2020, for a reconciliation of Adjusted EBITDAto net income (Table 7) as well as the Disclaimerto this document. (4)Cost advantageapplies only to cigarettessold below applicablemarket share exemption (approximately1.93%of cigarettes sold in the United States). 3
TOBACCO OPERATIONS
LIGGETT GROUP OVERVIEW . Fourth-largest U.S. tobacco company; founded in 1873 — Core Discount Brands – Eagle 20’s, Pyramid, Montego, Grand Prix, Liggett Select and Eve — Partner Brands – USA, Bronson and Tourney . Consistent and strong cash flow — Tobacco Adjusted EBITDA of $308.3 million for the twelve months ended September 30, 2020 (1) — Low capital requirements with capital expenditures of $4.4 million related to tobacco operations for the twelve months ended September 30, 2020 . Current cost advantage of approximately $0.76 per pack(2) 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 $160 million and $169 million for Liggett and Vector Tobacco from 2012 to 2019 (1) Tobacco Adjusted EBITDA is a Non-GAAP Financial Measure and is defined in the Company’s Current Report on Form 8-K, dated November 4, 2020. Please also refer to the Disclaimer to this document on Page 2. (2) Cost advantage only applies to cigarettes sold below applicable market share exemption (approximately 1.93% of total cigarettes sold in the United States). 5
LIGGETT GROUP HISTORY MSA, which was signed in November 1998, became effective and Liggett, as Repositioned Liggett maintains its long-term a Subsequent Participating Manufacturer, established perpetual cost Eagle 20’s as a focus by balancing market share advantage over three largest U.S. tobacco companies. Liggett also national deep and profit growth, which introduced deep discount brand Liggett Select taking advantage of the discount brand maximizes long-term Tobacco Company’s cost advantage resulting from the MSA Adjusted EBITDA 1999 2005 2009 2013 Today Relaunched deep discount Repositioned Pyramid as a deep-discount brand in brand Grand Prix response to a large Federal Excise Tax increase $350 5.0% 4.1% (1) $300 4.0% 4.0% Share DomesticMarket A 3.8% D 3.7% 4.0% IT 3.5% 3.5% 3.4% B 3.3% 3.3% 3.3% ) E $250 s n d o t e 2.7% illi s 3.0% $200 2.5% 2.5% 2.5% M 2.4% 2.4% dju $ 2.3% ( 2.2% 2.2% A $150 $308 cc o 1.5% $268 $270 2.0% $243 $253 $249 1.2% Tob a $209 $100 $186 $198 $158 $170 $165 $158 $174 $127 $130 $144 $146 1.0% $50 $121 $111 $79 $77 $0 0.0% 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) Vector’s operating income from the tobacco segment for the periods presented was $299.9 million for the twelve months ended September 30, 2020. Tobacco Adjusted EBITDA is a Non-GAAP Financial Measure and is defined in Table 2 and Table 5 of Exhibit 99.1 to the Company’s Current Reports on Form 8-K, filed on November 4, 2020. Please also refer to Table 2 of Exhibit 99.2 to the Company’s Current Reports on Form 8-K, dated October 2, 2015, November 15, 2016 , and Table 5 of Exhibit 99.1 6 to the Company's Current Reports on Form 8-K, dated February 28, 2020.
ADJUSTED U.S. TOBACCO INDUSTRY MARKET SHARE 15.00% Legacy brands 12.15% 12.47% Brands acquired by ITG in 2015 10.00% 9.45% Newport – acquired by RAI in 2015 8.61% 8.81% 9.26% Santa Fe tobacco – acquired by RAI in 2002 6.74% 6.57% 5.00% 4.07% 3.36% 50.0% 48.8% 2.44% 2.36% 46.7% 47.4% 2.89% 3.65% 44.8% 2.71% 2.04% 0.00% 40.0% 2003 2006 2014 LTM 2003 2006 2014 LTM 9/30/20 9/30/20 32.4% 32.0% 30.0% 28.9% 28.4% 12.4% 13.6% 7.7% 8.8% 0.3% 20.0% 0.4% 1.5% 2.8% 12.2% 12.5% 20.9% 9.5% 8.6% 10.0% 19.2% 18.4% 15.6% 9.3% 8.8% 6.7% 6.6% 4.1% 2.4% 2.4% 3.4% 2.9% 3.7% 2.7% 0.0% 2.0% 2003 2006 2014 LTM 2003 2006 2014 LTM 2003 2006 2014 LTM 2003 2006 2014 LTM 9/30/20 9/30/20 9/30/20 9/30/20 PHILIP MORRIS REYNOLDS ITG BRANDS LIGGETT GROUP USA AMERICAN Source: The Maxwell Report’s sales estimates for the cigarette Industry for the years ended 2003 (February 2004), 2006 (February 2007) and 2014 (March 2015) and internal estimates for LTM 9/30/2020. (1) Actual Market Share in 2003, 2006 and 2014 reported in the Maxwell Report for Reynolds American was 29.6%, 27.6% and 23.1%, respectively, and, for ITG Brands, was 2.9%, 3.7%. and 2.7%, 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 Reynolds American in 2003 includes the market share of Brown & Williamson, which was acquired by Reynolds American in 2004. In 2015, Reynolds American 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%, 8.9% and 10.5% in 2003, 2006, 2014 and LTM 9/30/2020, respectively. 7
TOBACCO LITIGATION AND REGULATORY UPDATES Litigation . In 2013, Liggett reached a settlement with approximately 4,900 Engle progeny plaintiffs — Liggett agreed to pay $60 million in cash and annual payments of $3.4 million from 2015 to 2028 — As of September 30, 2020, 42 Engle progeny cases remain pending • Liggett is also a defendant in 70 non-Engle smoking-related individual cases and three smoking-related actions where either a class had been certified or plaintiffs were seeking class certification . The Mississippi Attorney General has filed a motion to enforce Mississippi’s 1996 settlement agreement with Liggett and alleged that Liggett owes Mississippi approximately $36 million in damages (including interest through September 2020) Regulatory . Since 1998, the MSA has restricted the advertising and marketing of tobacco products . Minimum Price Legislation — Legislation was recently passed in Colorado that contained a provision setting a floor on the minimum retail price of cigarettes sold in Colorado. Liggett commenced litigation challenging the legality of the minimum price provision. If the litigation is not successful or other states enact similar legislation, the result could have a material adverse effect on our future financial condition, results of operations and cash flow. . Certain states have passed legislation banning the sale of menthol cigarettes . Family Smoking Prevention and Tobacco Control Act (2009) granted the FDA the authority to regulate (but not ban) tobacco products — On March 16, 2018, FDA initiated regulatory process to consider setting maximum nicotine level for cigarettes — On March 21, 2018, FDA initiated regulatory process to consider implementing a ban on menthol and other flavors 8
REAL ESTATE OPERATIONS
REAL ESTATE OVERVIEW . New Valley, which owns Douglas Elliman Realty, LLC, is a diversified real estate technology and services company that is seeking to acquire or invest in additional real estate properties or projects . New Valley has approximately $154 million(1) invested, as of September 30, 2020, in a broad portfolio of real estate ventures New Valley Revenues – LTM September 30, 2020 New Valley Adjusted EBITDA(2) Real Estate Brokerage Commissions Revenues from Investments in Real Estate Property Management Other $27.9M $21M $34M $8M $10.3M $709M $6.1M LTM 9/30/2020 2017 2018 2019 $(0.7M) $646M (1) Net of cash returned. (2) New Valley’s net income (loss) was $37.6M, $14.8M, $(11.4M) and $(95.8M) for the periods presented. Adjusted EBITDA is a non-GAAP financial measure. For a reconciliation of Net income (loss) to Adjusted EBITDA, please see Vector Group Ltd.’s Current Reports on Form 8-K, filed on May 3, 2019, and February 28, 2020 and dated November 4, 2020 and Form 10-K for the fiscal year ended December 31, 2019 and Form 10-Q for the quarterly period ended September 30, 2020 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 $13.0M. $15.0M, $17.1M and $15.1M for the periods presented, respectively. 10
DOUGLAS ELLIMAN REALTY, LLC . Largest residential real estate brokerage firm in the New Douglas Elliman Closed Sales – LTM September 30, 2020 York metropolitan area and fourth-largest residential brokerage firm in the U.S. Long Island, Westchester, Connecticut . Douglas Elliman has more than 7,000 affiliated agents Massachusetts and approximately 95 offices in the U.S. $7.6B New York . Douglas Elliman’s alliance with Knight Frank provides a City network with approximately 500 offices across 60 Aspen $7.4B countries with approximately 19,000 affiliated agents Los Angeles $4.3B . Douglas Elliman also offers title and settlement services, relocation services, and residential property Florida management services through various subsidiaries $5.1B Douglas Elliman Douglas Elliman Douglas Elliman Adjusted EBITDA(1) Closed Sales Revenues – LTM September 30, 2020 Real Estate Brokerage Commissions Other $26.1M $28.1B $28.8B Property Management $24.5B $26.1B $25.3B $5M $22.4B $34M $18.2B $11.3M $685M $5.3M LTM 9/30/2020 $646M 2017 2018 2019 $(0.4M) (1) Douglas Elliman’s net income (loss) was $21.4M, $5.2M , $6.2M and $(62.7M) for the periods presented. Adjusted EBITDA is a non-GAAP financial measure. For a reconciliation of Adjusted EBITDA to net income (loss), please see Vector Group Ltd.’s Current Reports on Forms 8-K, filed on March 1, 2017, May 3, 2018, June 14, 2018 , February 28, 2019 and February 28, 2020 and dated November 4, 2020, Form 10-K for the fiscal year ended December 31, 2019 and Form 10-Q for the quarterly period ended September 30, 2020 as well as the Disclaimer to this document on Page 2. 11
(1) NEW VALLEY’S REAL ESTATE INVESTMENTS AT SEPTEMBER 30, 2020 Land Development/Real Apartments/ Commercial Retail/ Estate Held for Sale, net Condominiums/Hotels Office Assets West Hollywood Edition The Plaza at Harmon (West Hollywood) Meadow (NewJersey) MarylandPortfolio (BaltimoreCounty) New York City Investments (see Page 13) Takanasee (New Jersey) INTERNATIONAL 500 INVESTMENTS Broadway (Santa Coral Beach Monica) and TennisClub Wynn Las Vegas Bermuda Retail (Nevada) Escena Fontainebleau 87 Park The Park on Fifth Monad Terrace West Hialeah (Palm Springs) (Las Vegas) (Miami Beach) (Miami Beach) (Miami Beach) (Miami) (1) For the percentage of each real estate project owned, please refer to the “Summary of Real Estate Investments” section of Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations of Vector Group Ltd.’s Form 10-Q for the period ended September 30, 2020. 12
(1) NEW VALLEY’S REAL ESTATE VENTURES IN NEW YORK CITY 1. 10 Madison Square West Flatiron District/NoMad (in liquidation) 9 17 2. 11 Beach Street TriBeCa 3. 20 Times Square Times Square (in liquidation) 8 7 4. 111 Murray Street TriBeCa 3 5. 160 Leroy Street Greenwich Village (in liquidation) 6. 215 Chrystie Street Lower East Side 7. The Dutch Long Island City (substantially monetized) 1 8. 1 QPS Tower Long Island City (in liquidation) 11 9. Park Lane Hotel Central Park South (substantially monetized) 16 10. 125 Greenwich Street Financial District 11. The XI (formerly “The Eleventh”) West Chelsea 5 13 12. 15 East 19th Street (formerly “New Brookland”) Brooklyn 6 4 2 13. The Dime (Havemeyer Street) Brooklyn 14. 352 6th Avenue Brooklyn 10 15. 9 DeKalbBrooklyn 16. Meatpacking Plaza Meatpacking District 12 15 14 17. Parker New York Central Park South (1) For the percentage ownership of each real estate project owned, please refer to the “Summary of Real Estate Investments” section of Item 2 – “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of Vector Group Ltd.’s Form 10-Q for the period ended September 30, 2020. Some of the described ventures have been substantially monetized or are carried at $0 on New Valley’s Balance Sheet as of September 30, 2020. 13
(1) NEW VALLEY’S REAL ESTATE SUMMARY AS OF SEPTEMBER 30, 2020 ($ Thousands) Projected Net cash invested / Cummulative construction end Range of Number of (returned) earnings / (loss) (2) Carrying value (2) date ownership investments Land owned New York City SMSA $ - $ - $ - N/A N/A - All other U.S. areas 2,182 7,604 9,786 N/A 100.0% 1 $ 2,182 $ 7,604 $ 9,786 1 Condominium and Mixed Use Development (Minority interest owned) New York City SMSA $ 13,538 $ 22,714 $ 36,252 2020 - 2022 3.1% - 49.5% 14 All other U.S. areas 50,348 (6,639) 43,709 2020 - 2024 15% - 77.8% 6 $ 63,886 $ 16,075 $ 79,961 20 Apartments (Minority Interest owned) New York City SMSA $ - $ - $ - N/A N/A - All other U.S. areas 774 (982) (208) N/A 7.60% 1 $ 774 $ (982) $ (208) 1 Hotels (Minority interest owned) New York City SMSA $ 5,425 $ (3,437) $ 1,988 2022 1.0%-18.4% 3 All other U.S. areas 8,350 (919) 7,431 N/A 15% 1 International 6,048 (4,281) 1,767 N/A 49% 1 $ 19,823 $ (8,637) $ 11,186 5 Commercial and Other (Minority interest owned) New York City SMSA $ (9,681) $ 12,911 $ 3,230 N/A 45.4% - 49% 3 All other U.S. areas 4,737 2,250 6,987 N/A 1.6% 1 $ (4,944) $ 15,161 $ 10,217 4 Total $ 81,721 $ 29,221 $ 110,942 31 Summary New York City SMSA $ 9,282 $ 32,188 $ 41,470 20 All other U.S. areas 66,391 1,314 67,705 10 International 6,048 (4,281) 1,767 1 $ 81,721 $ 29,221 $ 110,942 31 (1)For the percentage of each real estate project owned, please refer to the “Summary of Real Estate Investments” section of Item 2 – “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of Vector Group Ltd.’s Form 10-Q for the period ended September 30, 2020. (2) Includes interest expense capitalized to real estate ventures of $7,582. 14
FINANCIAL DATA
ADJUSTED HISTORICAL FINANCIAL DATA (Dollars in millions) Revenues Adjusted EBITDA(1) Tobacco Real Estate Corporate & Other Tobacco Real Estate Corporate & Other $1,870 $1,904 $1,888 $1,807 $293 $267 $259 $245 $1,115 $1,081 $1,111 $1,179 $253 $308 $249 $270 $759 $727 $759 $789 $709 $6 $28 $11 ($14) ($15) ($17) ($15) 2017 2018 2019 LTM 9/30/2020 ($1) 2017 2018 2019 LTM 9/30/2020 (1) Vector’s Net income for the periods presented was $84.6M, $58.1M, $101M and $71.4M, respectively. Adjusted EBITDA are a Non-GAAP Financial Measure. Please refer to the Company’s Current Reports on Form 8-K, filed on February 28, 2019, May 3, 2019 and February 28, 2020 and dated November 4, 2020, respectively (Exhibit 99.1) for a reconciliation of Non-GAAP financial measures to GAAP as well as the Disclaimer to this document on Page 2. 16
SUMMARY
SUMMARY . Vector Group, a holding . Tobacco segment . Real Estate segment company owning Tobacco — Liggett is thefourth-largest — New Valley owns a and Real Estate U.S. Cigarette company diversified portfolio of businesses and holding with 4.1% wholesale consolidated and non- consolidated cash, market share and 4.3% consolidated real estate investment securities and retail market share over investments totaling$111 LTM September 30, million at September 30, long-term investments of 2020 2020 (1) $625 million at — Douglas Elliman Realty LLC — From April 1, 2010 to September 30, 2020 • Largest residential real March 31, 2020, was the ($401 million net of cash estate brokerage firmin only major U.S. cigarette New York Metropolitan at Liggett and Douglas manufacturer to increase area and fourth-largest Elliman). both market share and residential brokerage unit volumes firm in the U.S. — Vector’s CEO, EVP, CFO and General Counsel have an — $308.3 million(2) of • Closed sales volumeof average tenure of 26 Tobacco Adjusted EBITDA $25.3 billion over LTM years with the Company over LTM September 30, September 30, 2020 and, along with directors, 2020 • Revenues have increased beneficially owns from $541 million in approximately 8% of 2014 to $685 million Vector’s common stock over LTM September 30, 2020 (1) At September 30, 2020 the total amount ($625 million) includes cash at Douglas Elliman of $76 million, and cash at Liggett of $148 million. (2) Vector’s operating income from the tobacco segment for the periods presented was $299.9 million for the twelve months ended September 30, 2020. Adjusted EBITDA is a Non-GAAP Financial Measure. Please refer to Exhibit 99.1 to the Company’s Current Reports on Form 8-K, dated November 4, 2020 (Tables 2 and 5) and February 28, 2021 (Tables 2 and 5), for a reconciliation of Net income to Adjusted EBITDA and a reconciliation of operating income from the tobacco segment to Adjusted EBITDA as well as the Disclaimer to this document on Page 2. 18
ADJUSTED EBITDA RECONCILIATION ($ Millions) FYE December 31, LTM 9/30/2020 2017 2018 2019 Net income attributed to Vector Group Ltd. $ 84.6 $ 58.1 $ 101.0 $ 71.4 Interest Expense 173.7 203.8 138.4 128.4 Tax (Benefit) Expense (1.6) 21.6 32.8 22.6 Net Income (Loss) Attributed to Non-Controlling Interest 6.2 (0.1) - - Depreciation and Amortization 18.6 18.8 17.9 17.8 EBITDA $ 281.5 $ 302.1 $ 290.1 $ 240.2 Change in Fair Value of Derivatives Embedded Within Convertible Debt (1) (35.9) (45.0) (26.4) (11.1) Equity in Losses (Earnings) on Long-Term Investments (2) 0.8 (3.2) (17.0) (72.0) Net Losses Recognized on Investment Securities 0.7 9.6 - - Equity in (Earnings) Losses from Real Estate Ventures (3) (21.4) (14.4) 19.3 58.6 Loss on Extinguishment of Debt 34.1 4.1 4.3 4.3 Stock-Based Compensation Expense (4) 10.9 10.0 9.5 9.4 Litigation Settlement and Judgment Expense (Income)(5) 6.6 (1.8) 1.0 0.1 Impact of MSA Settlement (6) (2.7) (6.3) - 0.3 Purchase Accounting Adjustments (7) (2.1) 0.6 - - Restructuring Changes (8) - - - 3.3 Impairments of Goodwill and Intangible Assets(9) - - - 58.3 Other, Net (5.4) (10.3) (21.4) 1.3 Adjusted EBITDA $ 266.9 $ 245.3 259.4 $ 292.5 Net Adjusted EBITDA Attributed to Non-Controlling Interest (7.6) (3.3) - - Adjustment to reflect additional 29.41% of Douglas Elliman Realty, LLC Adjusted EBITDA (10) 7.7 3.3 - - Adjusted EBITDA Attributed to Vector $ 267.0 $ 245.3 259.4 $ 292.5 Operating Income (Loss) by Segment Tobacco $ 240.4 $ 246.5 $ 261.6 $ 299.9 Real Estate 21.4 3.4 (2.9) (71.1) Corporate & Other (26.2) (25.9) (27.6) (25.4) Operating Income (Loss) $ 235.6 $ 224.0 231.1 $ 203.4 Adjusted EBITDA Attributed to Vector by Segment Tobacco $ 253.2 $ 249.2 $ 270.5 $ 308.3 Real Estate (11) 28.0 11.2 6.1 (0.6) Corporate & Other (14.1) (15.0) (17.1) (15.1) Adjusted EBITDA Attributed to Vector $ 267.0 $ 245.3 259.4 $ 292.5 Source: Companyfilings. (1) Represents income recognized from changes in the fair value of the derivatives embedded in the Company’s convertible debt. (2) Represents equity in earnings recognized from investments that the Company accounts for under the equity method. Included in the amount are equity in earnings from Castle Brands Inc. of $16.5 million for the year ended December 31, 2019 and $16.4 million for the last twelve months ended September 30, 2020 and Ladenburg Thalmann Financial Services of $53.9 million for the last twelve months ended September 30, 2020. (3) Represents equity in (earnings) losses recognized from the Company’s investment in certain real estate businesses that are not consolidated in its financial results. (4) Represents amortization of stock-based compensation. (5) Represents accruals for settlements of judgment expenses in the Engle progeny tobacco litigation and proceeds received from litigation award at Douglas Elliman Realty, LLC. (6) Represents the Company's tobacco segment's settlement of a long-standing dispute related to the Master Settlement Agreement. (7) 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. (8) Represents restructuring charges related to Douglas Elliman Realty, LLC’s realignment of administrative support functions, office locations and business model. (9) Represents non-cash intangible asset impairment charges within the Real Estate segment related to the Douglas Elliman Realty, LLC reporting unit and trademark. (10) 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%. (11) Includes Adjusted EBITDA for Douglas Elliman Realty, LLC of $26.1 million, $11.3 million, $5.3 million for the years ended December 31, 2017, 2018, and 2019, respectively, and $(0.4) million for the last twelve months ended September 30, 2020. 19
November 2020 Vector Group Ltd. owns Liggett Group, Vector Tobacco and New Valley. New Valley owns 100% of Douglas Elliman. TOBACCO EXECUTIVE MANAGEMENT • Fourth-largest cigarette manufacturer in the U.S. with a strong family of brands — Pyramid, Eagle 20’s, Montego, Grand Prix, Liggett Select and Eve — representing 14% share of the discount market. Howard M. Lorber President and Chief Executive O icer • Focused on brand strength and long-term profit growth, while continuing to evaluate opportunities to pursue incremental volume and margin growth. Richard J. Lampen • Annual cost advantage due to favorable treatment under the Master Settlement Agreement that Executive Vice President ranged between $160 million and $169 million from 2012 to 2019. J. Bryant Kirkland III • The only cigarette company to have reached a comprehensive settlement resolving substantially all Senior Vice President, Chief Financial O icer of the individual Engle progeny product liability cases pending in Florida. The Engle progeny cases and Treasurer have represented a substantial portion of Liggett’s pending litigation. Marc N. Bell Senior Vice President, General Counsel and Secretary Nicholas P. Anson President and Chief Operating O icer of Liggett Vector Brands J. David Ballard REAL ESTATE Senior Vice President, Enterprise E iciency and CTO • New Valley, which owns Douglas Elliman Realty, LLC, is a diversified real estate services and technology company that is seeking to acquire or invest in additional real estate properties or ventures. COMPANY HIGHLIGHTS 1 • New Valley has invested approximately $154 million , as of September 30, 2020, in a broad • Headquartered in Miami with an executive portfolio of real estate ventures. o ice in Manhattan and tobacco operations • Douglas Elliman is the largest residential real estate brokerage firm in the New York metropolitan in North Carolina area and the fourth-largest in the U.S. • Executive management and directors • Douglas Elliman’s closings totaled $25.3 billion for the last 12 months ended September 30, 2020, and it has more than 7,000 a iliated agents and approximately 95 o ices throughout the New York beneficially own 8% of the Company metropolitan area, South Florida, Southern California, and Massachusetts. • Reported cash of $4513 million and investments with fair value of $174 million at September 30, 2020. • Recognized as one of America’s Most Trustworthy Companies by Forbes in 2013 Adjusted EBITDA2 Revenues LTM 9/30/20 Tobacco Real Estate Corporate and Other Tobacco Real Estate $267M $293M $245M $259M $709M $308M $253M $270M TOTAL $249M $1.887B $28M $1.179B $11M $6M ($14M) ($15M) ($17M) ($15M) ($1M) 2017 2018 2019 LTM 9/30/20 1 Net of cash returned. 2 Vector’s Net income for the periods presented was $84.6M, $58.1M, $101M and $71.4M, respectively. Adjusted EBITDA are a Non-GAAP Financial Measure. Please refer to the Company’s Current Reports on Form 8-K, fi led on February 28, 2019, May 3, 2019 and February 28, 2020 and dated November 4, 2020, respectively (Exhibit 99.1) for a reconciliation of Non-GAAP fi nancial measures to GAAP 3 At September 30, 2020, this amount includes cash at Douglas Elliman of $76 million and cash at Liggett of $148 million. Excludes real estate investments. This summary contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We have identifi ed these forward-looking statements using words such as “could” and similar expressions. These statements refl ect 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 diff er materially from those expressed in, or implied by, such statements. Contact: Emily Claff ey / Ben Spicehandler / Columbia Clancy of Sard Verbinnen & Co (212) 687-8080 vectorgroupltd.com
November 2020 New Valley LLC, the real estate subsidiary of Vector Group Ltd. (NYSE: VGR), is a diversified real estate services and technology company that owns Douglas Elliman Realty, LLC and is seeking to acquire or invest in additional real estate properties or ventures. 1 NEW VALLEY REAL ESTATE INVESTMENTS1 New Valley’s New York Real Estate Investments 1. 10 Madison Square West Flatiron District/NoMad (in liquidation) 2 New Valley has invested approximately $154 million , as of September 30, 2020, in a broad portfolio of 2. 11 Beach Street TriBeCa real estate ventures. 3. 20 Times Square Times Square (in liquidation) 4. 111 Murray Street TriBeCa 5. 160 Leroy Street Greenwich Village (in liquidation) New Valley’s Real Estate Investment Portfolio1 6. 215 Chrystie Street Lower East Side 7. The Dutch Long Island City 8. 1 QPS Tower Long Island City (in liquidation) Land Development/Real Apartments/ Condo- Commercial Retail/ 9. Park Lane Hotel Central Park South Estate Held for Sale, net miniums/Hotels O ice Assets 10. 125 Greenwich Street Financial District 9 17 11. The XI (formerly “The Eleventh”) West Chelsea West Hollywood Edition The Plaza at Harmon 8 12. 15 East 19th Street (formerly “New Brookland”) Brooklyn (West Hollywood) Meadow (New Jersey) 7 13. The Dime (Havemeyer Street) Brooklyn 3 14. 352 6th Avenue Brooklyn 500 Broadway Maryland Portfolio 15. 9 DeKalb Brooklyn (Santa Monica) (Baltimore County) 16. Meatpacking Plaza Meatpacking District 17. Parker New York Central Park South NY City 1 Investments 11 1 16 International Investments Coral Beach Wynn Las Vegas 5 13 and Tennis Club Retail (Nevada) Takanasee 6 Bermuda (New Jersey) 4 2 Fontainebleau West Hialeah (Las Vegas) (Miami) 10 Escena 87 Park The Park on Fi h Monad Terrace EXECUTIVE MANAGEMENT 12 (Palm Springs) (Miami Beach) (Miami Beach) (Miami Beach) 15 14 Howard M. Lorber President and Chief Executive O icer DOUGLAS ELLIMAN Richard J. Lampen Executive Vice President • Largest residential real estate brokerage firm in New York metropolitan area and fourth-largest in the United States. J. Bryant Kirkland III Senior Vice President, Chief Financial O icer and Treasurer • Closings of $25.3 billion for the last 12 months ended September 30, 2020; Douglas Elliman has more than 7,000 a iliated agents and approximately 95 o ices in the U.S. Marc N. Bell Senior Vice President, Secretary and General Counsel • Maintains an alliance with Knight Frank— the largest independent residential brokerage J. David Ballard in the United Kingdom— to jointly market high-end properties, providing a network with Senior Vice President, Enterprise E iciency and CTO approximately 500 o ices across 60 countries with approximately 19,000 a iliated agents. COMPANY HIGHLIGHTS • Revenues and Adjusted EBITDA (loss) at Douglas Elliman of $685 million and ($0.4 million),3 respectively, for the last 12 months ended September 30, 2020. • Executive o ices in Manhattan and Miami Douglas Elliman Closings New Valley Revenues - LTM 9/30/20 New Valley Adjusted EBITDA3 Real Estate Brokerage Commissions Property Management $28.8B Revenues from Investments in Real Estate Other $28.1B $21M $8M $27.9M $26.1B $25.3B $34M $24.5B $22.4B $10.3M $6.1M $709M $18.2B 2017 2018 2019 ($0.7M) LTM $646M 2014 2015 2016 2017 2018 2019 LTM 9/30/20 9/30/20 1 Please refer to Vector Group Ltd.’s Form 10-Q for the period ended September 30, 2020 in the section “Summary of Real Estate Investments” section of Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations. Some of the described ventures have been substantially monetized as of September 30, 2020. 2 Net of cash returned. 3 New Valley’s net income (loss) was $37.6M, $14.8M, $(11.4M) and $(95.8M) for the periods presented. Adjusted EBITDA is a non-GAAP fi nancial measure. For a reconciliation of Net income to Adjusted EBITDA, please see Vector Group Ltd.’s Current Reports on Form 8-K, fi led on May 3, 2019, and February 28, 2020 and dated November 4, 2020 and Form 10-K for the fi scal year ended December 31, 2019 and Form 10-Q for the quarterly period ended September 30, 2020 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 $13.0M. $15.0M, $17.1M and $15.1M for the periods presented, respectively. Contact: Emily Claff ey / Ben Spicehandler / Columbia Clancy of Sard Verbinnen & Co (212) 687-8080 newvalley.com