Vector Group Reports Second Quarter 2019 Financial Results

MIAMI--()--Vector Group Ltd. (NYSE:VGR) today announced financial results for the three and six months ended June 30, 2019.

GAAP Financial Results

Second quarter 2019 revenues were $538.4 million, compared to revenues of $481.5 million in the second quarter of 2018. The Company recorded operating income of $76.2 million in the second quarter of 2019, compared to operating income of $61.9 million in the second quarter of 2018. Net income attributed to Vector Group Ltd. for the second quarter of 2019 was $39.3 million, or $0.27 per diluted common share, compared to net income of $17.8 million, or $0.12 per diluted common share, in the second quarter of 2018.

For the six months ended June 30, 2019 revenues were $959.4 million, compared to revenues of $910.5 million for the six months ended June 30, 2018. The Company recorded operating income of $118.8 million for the six months ended June 30, 2019, compared to operating income of $109.9 million for the six months ended June 30, 2018. Net income attributed to Vector Group Ltd. for the six months ended June 30, 2019 was $54.3 million, or $0.35 per diluted common share, compared to a net income of $25.0 million, or $0.15 per diluted common share, for the six months ended June 30, 2018.

Non-GAAP Financial Measures

Non-GAAP financial measures also include adjustments for purchase accounting associated with the Company’s 2013 acquisition of an additional 20.59% interest in Douglas Elliman Realty, LLC, 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, litigation settlements and judgments, settlements of long-standing disputes related to the Master Settlement Agreement in the Tobacco segment, net interest expense capitalized to real estate ventures, stock-based compensation expense (for purposes of Adjusted EBITDA only) and non-cash interest expense associated with the Company’s convertible debt. Reconciliations of non-GAAP financial measures to the comparable GAAP financial results for the three and six months ended June 30, 2019 and 2018 are included in Tables 2 through 7.

Three months ended June 30, 2019 compared to the three months ended June 30, 2018

Second quarter of 2019 Adjusted EBITDA attributed to Vector Group (as described in Table 2 attached hereto) were $83.5 million, compared to $67.5 million for the second quarter of 2018.

Adjusted Net Income (as described in Table 3 attached hereto) was $43.2 million, or $0.29 per diluted share, for the second quarter of 2019, and $27.8 million or $0.19 per diluted share for the second quarter of 2018.

Adjusted Operating Income (as described in Table 4 attached hereto) was $76.9 million for the second quarter of 2019, compared to $60.0 million for the second quarter of 2018.

Six months ended June 30, 2019 compared to the six months ended June 30, 2018

Adjusted EBITDA attributed to Vector Group Ltd. (as described in Table 2 attached hereto) were $133.2 million for the six months ended June 30, 2019 compared to $118.0 million for the six months ended June 30, 2018.

Adjusted Net Income (as described in Table 3 attached hereto) was $56.1 million, or $0.37 per diluted share, for the six months ended June 30, 2019, and $33.4 million, or $0.21 per diluted share for the six months ended June 30, 2018.

Adjusted Operating Income (as described in Table 4 attached hereto) was $119.5 million for the six months ended June 30, 2019 compared to $102.5 million for the six months ended June 30, 2018.

Tobacco Segment Financial Results

For the second quarter of 2019, the Tobacco segment had revenues of $294.5 million, compared to $274.8 million for the second quarter of 2018. For the six months ended June 30, 2019, the Tobacco segment had revenues of $551.3 million, compared to $541.9 million for the six months ended June 30, 2018.

Operating Income from the Tobacco segment was $68.7 million and $128.8 million for the three and six months ended June 30, 2019, compared to $62.5 million and $125.9 million for the three and six months ended June 30, 2018.

Non-GAAP Financial Measures

Tobacco Adjusted Operating Income (as described in Table 5 attached hereto) for the second quarter of 2019 and 2018 was $69.3 million and $60.2 million, respectively. Tobacco Adjusted Operating Income for the six months ended June 30, 2019 and 2018 was $129.5 million and $120.2 million, respectively.

For the second quarter of 2019, the Tobacco segment had conventional cigarette (wholesale) shipments of approximately 2.38 billion units, compared to 2.30 billion units for the second quarter of 2018. For the six months ended June 30, 2019, the Tobacco segment had conventional cigarette (wholesale) shipments of approximately 4.46 billion units compared to 4.54 billion units for the six months ended June 30, 2018.

Liggett’s retail market share increased to 4.2% for both the second quarter and the six months ended June 30, 2019, compared to 4.1% for both the second quarter and the six months ended June 30, 2018. Compared to the second quarter of 2018, Liggett’s retail shipments declined by 3.4% while the overall industry’s retail shipments declined by 6.1%. Compared to the six months ended June 30, 2018, Liggett’s retail shipments declined by 2.8% while the overall industry’s retail shipments declined by 5.8%, according to data from Management Science Associates, Inc.

Real Estate Segment Financial Results

For the second quarter of 2019, the Real Estate segment had revenues of $243.9 million, compared to $206.7 million for the second quarter of 2018. For the six months ended June 30, 2019, the Real Estate segment had revenues of $408.1 million, compared to $368.5 million for the six months ended June 30, 2018. For the second quarter of 2019, the Real Estate segment reported net income of $15.3 million, compared to a net income of $2.9 million for the second quarter of 2018. For the six months ended June 30, 2019, the Real Estate segment reported a net income of $6.2 million, compared to net loss of $5.6 million for the six months ended June 30, 2018.

Douglas Elliman’s results are included in Vector Group Ltd.’s Real Estate segment. For the second quarter of 2019, Douglas Elliman had revenues of $243.0 million, compared to $205.6 million for the second quarter of 2018. For the six months ended June 30, 2019, Douglas Elliman had revenues of $404.8 million, compared to $365.0 million for the six months ended June 30, 2018. For the second quarter of 2019, Douglas Elliman reported a net income of $15.1 million, compared to net income of $5.9 million for the second quarter of 2018. For the six months ended June 30, 2019, Douglas Elliman reported net income of $4.7 million, compared to net loss of $2.2 million for the six months ended June 30, 2018.

Non-GAAP Financial Measures

For the second quarter of 2019, Real Estate Adjusted EBITDA attributed to the Company (as described in Table 6 attached hereto) were $16.5 million, compared to $9.0 million for the second quarter of 2018.

For the six months ended June 30, 2019, Real Estate Adjusted EBITDA attributed to the Company were $8.6 million, compared to $1.4 million for the six months ended June 30, 2018.

Douglas Elliman’s results are included in Vector Group Ltd.’s Real Estate segment. For the second quarter of 2019, Douglas Elliman’s Adjusted EBITDA (as described in Table 7 attached hereto) were $16.6 million, compared to $8.4 million for the second quarter of 2018.

For the six months ended June 30, 2019, Douglas Elliman’s Adjusted EBITDA were $7.7 million, compared to a loss of $0.2 million for the six months ended June 30, 2018.

For the three and six months ended June 30, 2019, Douglas Elliman achieved closed sales of approximately $8.9 billion and $14.7 billion, respectively, compared to $7.5 billion and $13.6 billion for the three and six months ended June 30, 2018, respectively.

Non-GAAP Financial Measures

Adjusted EBITDA, Adjusted Net Income, Adjusted Operating Income, Tobacco Adjusted Operating Income, Tobacco Adjusted EBITDA, New Valley LLC Adjusted EBITDA and Douglas Elliman Realty, LLC Adjusted EBITDA (“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.

On December 31, 2018, New Valley LLC, the real estate subsidiary of Vector Group Ltd, acquired the 29.41% interest in Douglas Elliman Realty, LLC it did not previously own. Vector Group Ltd. has adjusted its presentation of Non-GAAP Financial Measures in Tables 2, 3, 6 and 7 to assume the transaction occurred on January 1, 2018 and to improve comparability between the three and six months ended June 30, 2019 and 2018, respectively, as well as the twelve months ended June 30, 2019. Please refer to Vector Group Ltd.’s Form 8-K, which is dated May 3, 2019, for additional information.

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. Attached hereto as Tables 2 through 7 is information relating to the Company’s Non-GAAP Financial Measures for the three and six months ended June 30, 2019 and 2018.

Conference Call to Discuss Second Quarter 2019 Results

As previously announced, the Company will host a conference call and webcast on Wednesday, August 7, 2019 at 8:30 AM (ET) to discuss its second quarter 2019 results. Investors can access the call by dialing 800-859-8150 and entering 92558590 as the conference ID number. The call will also be available via live webcast at https://www.investornetwork.com/event/presentation/51729. Webcast participants should allot extra time to register before the webcast begins.

A replay of the call will be available shortly after the call ends on August 7, 2019 through August 21, 2019. To access the replay, dial 877-656-8905 and enter 92558590 as the conference ID number. The archived webcast will also be available at https://www.investornetwork.com/event/presentation/51729 for one year.

Vector Group is a holding company for Liggett Group LLC, Vector Tobacco Inc., New Valley LLC, and Douglas Elliman Realty, LLC. Additional information concerning the company is available on the Company’s website, www.VectorGroupLtd.com.

[Financial Tables Follow]

 

TABLE 1

VECTOR GROUP LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in Thousands, Except Per Share Amounts)

 

 

Three Months Ended

 

Six Months Ended

 

June 30,

 

June 30,

 

2019

 

2018

 

2019

 

2018

 

(Unaudited)

 

(Unaudited)

Revenues:

 

 

 

 

 

 

 

Tobacco*

$

294,501

 

 

$

274,833

 

 

$

551,257

 

 

$

541,949

 

Real estate

243,931

 

 

206,655

 

 

408,099

 

 

368,505

 

Total revenues

538,432

 

 

481,488

 

 

959,356

 

 

910,454

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

Cost of sales:

 

 

 

 

 

 

 

Tobacco*

204,461

 

 

192,761

 

 

381,764

 

 

377,723

 

Real estate

163,713

 

 

140,005

 

 

272,430

 

 

249,318

 

Total cost of sales

368,174

 

 

332,766

 

 

654,194

 

 

627,041

 

 

 

 

 

 

 

 

 

Operating, selling, administrative and general expenses

93,359

 

 

86,336

 

 

185,673

 

 

175,412

 

Litigation settlement and judgment expense (income)

655

 

 

525

 

 

655

 

 

(1,944

)

Operating income

76,244

 

 

61,861

 

 

118,834

 

 

109,945

 

 

 

 

 

 

 

 

 

Other income (expenses):

 

 

 

 

 

 

 

Interest expense

(32,753

)

 

(48,421

)

 

(70,273

)

 

(94,368

)

Change in fair value of derivatives embedded within convertible debt

3,788

 

 

10,717

 

 

14,137

 

 

21,284

 

Equity in earnings (losses) from real estate ventures

6,391

 

 

(2,112

)

 

3,952

 

 

(8,672

)

Other, net

3,096

 

 

9,711

 

 

11,898

 

 

9,179

 

Income before provision for income taxes

56,766

 

 

31,756

 

 

78,548

 

 

37,368

 

Income tax expense

17,459

 

 

12,760

 

 

24,208

 

 

14,708

 

 

 

 

 

 

 

 

 

Net income

39,307

 

 

18,996

 

 

54,340

 

 

22,660

 

 

 

 

 

 

 

 

 

Net loss (income) attributed to non-controlling interest

 

 

(1,178

)

 

(80

)

 

2,369

 

 

 

 

 

 

 

 

 

Net income attributed to Vector Group Ltd.

$

39,307

 

 

$

17,818

 

 

$

54,260

 

 

$

25,029

 

 

 

 

 

 

 

 

 

Per basic common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income applicable to common share attributed to Vector Group Ltd.

$

0.27

 

 

$

0.12

 

 

$

0.36

 

 

$

0.15

 

 

 

 

 

 

 

 

 

Per diluted common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income applicable to common share attributed to Vector Group Ltd.

$

0.27

 

 

$

0.12

 

 

$

0.35

 

 

$

0.15

 

 

* Revenues and cost of sales include federal excise taxes of $119,943, $115,970, $224,576 and $228,771, respectively.

 

 

TABLE 2

VECTOR GROUP LTD. AND SUBSIDIARIES

RECONCILIATION OF ADJUSTED EBITDA

(Unaudited)

(Dollars in Thousands)

 

 

LTM

 

Three Months Ended

 

Six Months Ended

 

June 30,

 

June 30,

 

June 30,

 

2019

 

2019

 

2018

 

2019

 

2018

 

 

 

 

 

 

Net income attributed to Vector Group Ltd.

$

87,336

 

 

$

39,307

 

 

$

17,818

 

 

$

54,260

 

 

$

25,029

 

Interest expense

179,685

 

 

32,753

 

 

48,421

 

 

70,273

 

 

94,368

 

Income tax expense

31,052

 

 

17,459

 

 

12,760

 

 

24,208

 

 

14,708

 

Net income (loss) attributed to non-controlling interest

2,351

 

 

 

 

1,178

 

 

80

 

 

(2,369

)

Depreciation and amortization

18,403

 

 

4,224

 

 

4,749

 

 

8,932

 

 

9,336

 

EBITDA

$

318,827

 

 

$

93,743

 

 

$

84,926

 

 

$

157,753

 

 

$

141,072

 

Change in fair value of derivatives embedded within convertible debt (a)

(37,842

)

 

(3,788

)

 

(10,717

)

 

(14,137

)

 

(21,284

)

Equity in (earnings) losses from real estate ventures (b)

(27,070

)

 

(6,391

)

 

2,112

 

 

(3,952

)

 

8,672

 

Loss on extinguishment of debt

4,066

 

 

 

 

 

 

 

 

 

Stock-based compensation expense (c)

9,885

 

 

2,338

 

 

2,456

 

 

4,774

 

 

4,840

 

Litigation settlement and judgment expense (income) (d)

815

 

 

655

 

 

525

 

 

655

 

 

(1,944

)

Impact of MSA settlement (e)

 

 

 

 

(2,808

)

 

 

 

(6,298

)

Purchase accounting adjustments (f)

247

 

 

 

 

179

 

 

 

 

361

 

Other, net

(6,640

)

 

(3,096

)

 

(9,711

)

 

(11,898

)

 

(9,179

)

Adjusted EBITDA

$

262,288

 

 

$

83,461

 

 

$

66,962

 

 

$

133,195

 

 

$

116,240

 

Adjusted EBITDA attributed to non-controlling interest

(5,109

)

 

 

 

(1,906

)

 

 

 

1,790

 

Adjustment to reflect additional 29.41% of Adjusted EBITDA from Douglas Elliman Realty, LLC (g)

3,385

 

 

 

 

2,464

 

 

 

 

(66

)

Adjusted EBITDA attributed to Vector Group Ltd.

$

260,564

 

 

$

83,461

 

 

$

67,520

 

 

$

133,195

 

 

$

117,964

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA by Segment

 

 

 

 

 

 

 

 

 

Tobacco

$

258,280

 

 

$

71,256

 

 

$

62,328

 

 

$

133,378

 

 

$

124,307

 

Real Estate (h)

20,017

 

 

16,477

 

 

8,464

 

 

8,569

 

 

(294

)

Corporate and Other

(16,009

)

 

(4,272

)

 

(3,830

)

 

(8,752

)

 

(7,773

)

Total

$

262,288

 

 

$

83,461

 

 

$

66,962

 

 

$

133,195

 

 

$

116,240

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA Attributed to Vector Group Ltd. by Segment

 

 

 

 

 

 

 

 

 

Tobacco

$

258,280

 

 

$

71,256

 

 

$

62,328

 

 

$

133,378

 

 

$

124,307

 

Real Estate (h)

18,293

 

 

16,477

 

 

9,022

 

 

8,569

 

 

1,430

 

Corporate and Other

(16,009

)

 

(4,272

)

 

(3,830

)

 

(8,752

)

 

(7,773

)

Total

$

260,564

 

 

$

83,461

 

 

$

67,520

 

 

$

133,195

 

 

$

117,964

 

  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) losses recognized from the Company’s investment in certain real estate businesses that are not consolidated in its financial results.
  3. Represents amortization of stock-based compensation.
  4. 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.
  5. Represents the Company’s tobacco segment’s settlement of a long-standing dispute related to the Master Settlement Agreement.
  6. 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.
  7. 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%.
  8. Includes Adjusted EBITDA for Douglas Elliman Realty, LLC of $19,166 for the last twelve months ended June 30, 2019 and $16,649, $8,379, $7,658 and negative $224 for the three and six months ended June 30, 2019 and 2018, respectively. Amounts reported in this footnote reflect 100% of Douglas Elliman Realty, LLC’s entire Adjusted EBITDA.

     

 

TABLE 3

VECTOR GROUP LTD. AND SUBSIDIARIES

RECONCILIATION OF ADJUSTED NET INCOME

(Unaudited)

(Dollars in Thousands, Except Per Share Amounts)

 

 

Three Months Ended

 

Six Months Ended

 

June 30,

 

June 30,

 

2019

 

2018

 

2019

 

2018

 

 

 

 

Net income attributed to Vector Group Ltd.

$

39,307

 

 

$

17,818

 

 

$

54,260

 

 

$

25,029

 

 

 

 

 

 

 

 

 

Change in fair value of derivatives embedded within convertible debt

(3,788

)

 

(10,717

)

 

(14,137

)

 

(21,284

)

Non-cash amortization of debt discount on convertible debt

5,447

 

 

20,386

 

 

13,972

 

 

38,579

 

Litigation settlement and judgment income (a)

655

 

 

525

 

 

655

 

 

(1,944

)

Impact of MSA settlement (b)

 

 

(2,808

)

 

 

 

(6,298

)

Impact of net interest expense capitalized to real estate ventures

3,006

 

 

4,324

 

 

2,076

 

 

2,371

 

Douglas Elliman Realty, LLC purchase accounting adjustments (c)

 

 

380

 

 

 

 

755

 

Adjustment to reflect additional 29.41% of net income from Douglas Elliman Realty, LLC (d)

 

 

1,737

 

 

 

 

(644

)

Total adjustments

5,320

 

 

13,827

 

 

2,566

 

 

11,535

 

 

 

 

 

 

 

 

 

Tax expense related to adjustments

(1,467

)

 

(3,868

)

 

(705

)

 

(3,213

)

 

 

 

 

 

 

 

 

Adjusted Net Income attributed to Vector Group Ltd.

$

43,160

 

 

$

27,777

 

 

$

56,121

 

 

$

33,351

 

 

 

 

 

 

 

 

 

Per diluted common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Net Income applicable to common shares attributed to Vector Group Ltd.

$

0.29

 

 

$

0.19

 

 

$

0.37

 

 

$

0.21

 

  1. 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, net of non-controlling interest.
  2. Represents the Company’s tobacco segment’s settlement of a long-standing dispute related to the Master Settlement Agreement.
  3. 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.
  4. 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%.

 

TABLE 4

VECTOR GROUP LTD. AND SUBSIDIARIES

RECONCILIATION OF ADJUSTED OPERATING INCOME

(Unaudited)

(Dollars in Thousands)

 

 

LTM

 

Three Months Ended

 

Six Months Ended

 

June 30,

 

June 30,

 

June 30,

 

2019

 

2019

 

2018

 

2019

 

2018

 

 

 

 

 

 

Operating income

$

232,938

 

 

$

76,244

 

 

$

61,861

 

 

$

118,834

 

 

$

109,945

 

 

 

 

 

 

 

 

 

 

 

Litigation settlement and judgment expense (income) (a)

815

 

 

655

 

 

525

 

 

655

 

 

(1,944

)

Impact of MSA settlement (b)

 

 

 

 

(2,808

)

 

 

 

(6,298

)

Douglas Elliman Realty, LLC purchase accounting adjustments (c)

651

 

 

 

 

380

 

 

 

 

755

 

Total adjustments

1,466

 

 

655

 

 

(1,903

)

 

655

 

 

(7,487

)

 

 

 

 

 

 

 

 

 

 

Adjusted Operating Income (d)

$

234,404

 

 

$

76,899

 

 

$

59,958

 

 

$

119,489

 

 

$

102,458

 

  1. 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.
  2. Represents the Company’s tobacco segment’s settlement of a long-standing dispute related to the Master Settlement Agreement.
  3. 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.
  4. Does not include a reduction for 29.41% non-controlling interest in Douglas Elliman Realty, LLC. for the last twelve months ended June 30, 2019 and three and six months ended June 30, 2018.

 

TABLE 5

VECTOR GROUP LTD. AND SUBSIDIARIES

RECONCILIATION OF TOBACCO ADJUSTED OPERATING INCOME

AND TOBACCO ADJUSTED EBITDA

(Unaudited)

(Dollars in Thousands)

 

 

LTM

 

Three Months Ended

 

Six Months Ended

 

June 30,

 

June 30,

 

June 30,

 

2019

 

2019

 

2018

 

2019

 

2018

 

 

 

 

 

 

Tobacco Adjusted Operating Income:

 

 

 

 

 

 

 

 

 

Operating income from tobacco segment

$

249,396

 

 

$

68,651

 

 

$

62,515

 

 

$

128,795

 

 

$

125,926

 

 

 

 

 

 

 

 

 

 

 

Litigation settlement and judgment expense (a)

815

 

 

655

 

 

525

 

 

655

 

 

525

 

Impact of MSA settlement (b)

 

 

 

 

(2,808

)

 

 

 

(6,298

)

Total adjustments

815

 

 

655

 

 

(2,283

)

 

655

 

 

(5,773

)

 

 

 

 

 

 

 

 

 

 

Tobacco Adjusted Operating Income

$

250,211

 

 

$

69,306

 

 

$

60,232

 

 

$

129,450

 

 

$

120,153

 

 

LTM

 

Three Months Ended

 

Six Months Ended

 

June 30,

 

June 30,

 

June 30,

 

2019

 

2019

 

2018

 

2019

 

2018

 

 

 

 

 

 

 

 

 

 

Tobacco Adjusted EBITDA:

 

 

 

 

 

 

 

 

 

Operating income from tobacco segment

$

249,396

 

 

$

68,651

 

 

$

62,515

 

 

$

128,795

 

 

$

125,926

 

 

 

 

 

 

 

 

 

 

 

Litigation settlement and judgment expense (a)

815

 

 

655

 

 

525

 

 

655

 

 

525

 

Impact of MSA settlement (b)

 

 

 

 

(2,808

)

 

 

 

(6,298

)

Total adjustments

815

 

 

655

 

 

(2,283

)

 

655

 

 

(5,773

)

 

 

 

 

 

 

 

 

 

 

Tobacco Adjusted Operating Income

250,211

 

 

69,306

 

 

60,232

 

 

129,450

 

 

120,153

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

8,005

 

 

1,950

 

 

2,075

 

 

3,907

 

 

4,112

 

Stock-based compensation expense

64

 

 

 

 

21

 

 

21

 

 

42

 

Total adjustments

8,069

 

 

1,950

 

 

2,096

 

 

3,928

 

 

4,154

 

 

 

 

 

 

 

 

 

 

 

Tobacco Adjusted EBITDA

$

258,280

 

 

$

71,256

 

 

$

62,328

 

 

$

133,378

 

 

$

124,307

 

  1. Represents accruals for settlements of judgment expenses in the Engle progeny tobacco litigation.
  2. Represents the Company’s tobacco segment’s settlement of a long-standing dispute related to the Master Settlement Agreement.

 

TABLE 6

VECTOR GROUP LTD. AND SUBSIDIARIES

RECONCILIATION OF REAL ESTATE SEGMENT (NEW VALLEY LLC) ADJUSTED EBITDA

(Unaudited)

(Dollars in Thousands)

 

 

LTM

 

Three Months Ended

 

Six Months Ended

 

June 30,

 

June 30,

 

June 30,

 

2019

 

2019

 

2018

 

2019

 

2018

 

 

 

 

 

 

Net income (loss) attributed to Vector Group Ltd. from subsidiary non-guarantors (a)

$

26,619

 

 

$

15,307

 

 

$

2,926

 

 

$

6,222

 

 

$

(5,618

)

Interest expense (a)

468

 

 

228

 

 

7

 

 

457

 

 

56

 

Income tax expense (benefit) (a)

10,236

 

 

5,909

 

 

(803

)

 

2,490

 

 

(3,797

)

Net income (loss) attributed to non-controlling interest (a)

2,351

 

 

 

 

1,178

 

 

80

 

 

(2,369

)

Depreciation and amortization

9,398

 

 

2,024

 

 

2,418

 

 

4,525

 

 

4,707

 

EBITDA

$

49,072

 

 

$

23,468

 

 

$

5,726

 

 

$

13,774

 

 

$

(7,021

)

Loss from non-guarantors other than New Valley LLC

75

 

 

14

 

 

19

 

 

42

 

 

53

 

Equity in (earnings) losses from real estate ventures (b)

(27,070

)

 

(6,391

)

 

2,112

 

 

(3,952

)

 

8,672

 

Purchase accounting adjustments (c)

247

 

 

 

 

179

 

 

 

 

361

 

Litigation settlement and judgment income (d)

 

 

 

 

 

 

 

 

(2,469

)

Other, net

(2,383

)

 

(632

)

 

(336

)

 

(1,336

)

 

(678

)

Adjusted EBITDA

$

19,941

 

 

$

16,459

 

 

$

7,700

 

 

$

8,528

 

 

$

(1,082

)

Adjusted EBITDA attributed to non-controlling interest

(5,109

)

 

 

 

(1,906

)

 

 

 

1,790

 

Adjustment to reflect additional 29.41% of Adjusted EBITDA from Douglas Elliman Realty, LLC (e)

3,385

 

 

 

 

2,464

 

 

 

 

(66

)

Adjusted EBITDA attributed to New Valley LLC

$

18,217

 

 

$

16,459

 

 

$

8,258

 

 

$

8,528

 

 

$

642

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA by Segment

 

 

 

 

 

 

 

 

 

Real Estate (f)

$

20,017

 

 

$

16,477

 

 

$

8,464

 

 

$

8,569

 

 

$

(294

)

Corporate and Other

(76

)

 

(18

)

 

(764

)

 

(41

)

 

(788

)

Total (g)

$

19,941

 

 

$

16,459

 

 

$

7,700

 

 

$

8,528

 

 

$

(1,082

)

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA Attributed to New Valley LLC by Segment

 

 

 

 

 

 

 

 

 

Real Estate (f)

$

18,293

 

 

$

16,477

 

 

$

9,022

 

 

$

8,569

 

 

$

1,430

 

Corporate and Other

(76

)

 

(18

)

 

(764

)

 

(41

)

 

(788

)

Total (g)

$

18,217

 

 

$

16,459

 

 

$

8,258

 

 

$

8,528

 

 

$

642

 

  1. 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 and six months ended June 30, 2019.
  2. Represents equity in (earnings) losses recognized from the Company’s investment in certain real estate businesses that are not consolidated in its financial results.
  3. 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.
  4. Represents proceeds received from a litigation award at Douglas Elliman Realty, LLC.
  5. 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%.
  6. Includes Adjusted EBITDA for Douglas Elliman Realty, LLC of $19,166 for the last twelve months ended June 30, 2019 and $16,649, $8,379, $7,658 and negative $224 for the three and six months ended June 30, 2019 and 2018, respectively. Amounts reported in this footnote reflect 100% of Douglas Elliman Realty, LLC’s entire Adjusted EBITDA.
  7. 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 $16,009 for the last twelve months ended June 30, 2019 and $4,272, $3,830, $8,752 and $7,773 for the three and six months ended June 30, 2019 and 2018, respectively.

 

TABLE 7

VECTOR GROUP LTD. AND SUBSIDIARIES

RECONCILIATION OF DOUGLAS ELLIMAN REALTY, LLC ADJUSTED EBITDA

AND DOUGLAS ELLIMAN REALTY, LLC ADJUSTED EBITDA ATTRIBUTED TO REAL ESTATE SEGMENT

(Unaudited)

(Dollars in Thousands)

 

LTM

 

Three Months Ended

 

Six Months Ended

 

June 30,

 

June 30,

 

June 30,

 

2019

 

2019

 

2018

 

2019

 

2018

 

 

 

 

 

 

 

 

Net income (loss) attributed to Douglas Elliman Realty, LLC

$

12,113

 

 

$

15,138

 

 

$

5,905

 

 

$

4,724

 

 

$

(2,192

)

Interest expense

10

 

 

2

 

 

3

 

 

5

 

 

48

 

Income tax expense

15

 

 

101

 

 

266

 

 

101

 

 

486

 

Depreciation and amortization

8,991

 

 

1,922

 

 

2,315

 

 

4,322

 

 

4,502

 

Douglas Elliman Realty, LLC EBITDA

$

21,129

 

 

$

17,163

 

 

$

8,489

 

 

$

9,152

 

 

$

2,844

 

Equity in earnings from real estate ventures (a)

(1,300

)

 

(285

)

 

(252

)

 

(934

)

 

(877

)

Purchase accounting adjustments (b)

247

 

 

 

 

179

 

 

 

 

361

 

Litigation settlement and judgment income (c)

 

 

 

 

 

 

 

 

(2,469

)

Other, net

(910

)

 

(229

)

 

(37

)

 

(560

)

 

(83

)

Douglas Elliman Realty, LLC Adjusted EBITDA

$

19,166

 

 

$

16,649

 

 

$

8,379

 

 

$

7,658

 

 

$

(224

)

Douglas Elliman Realty, LLC Adjusted EBITDA attributed to non-controlling interest

(3,385

)

 

 

 

(2,464

)

 

 

 

66

 

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)

3,385

 

 

 

 

2,464

 

 

 

 

(66

)

Douglas Elliman Realty, LLC Adjusted EBITDA attributed to Real Estate Segment

$

19,166

 

 

$

16,649

 

 

$

8,379

 

 

$

7,658

 

 

$

(224

)

  1. Represents equity in earnings recognized from the Company’s investment in certain real estate businesses that are not consolidated in its financial results.
  2. 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.
  3. Represents proceeds received from a litigation award at Douglas Elliman Realty, LLC.
  4. 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%.

 

Contacts

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

Contacts

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