Vector Group Ltd. (NYSE:VGR) today announced financial results
for the three and nine months ended September 30,
2016.
GAAP Financial Results
Third quarter 2016 revenues were $459.1 million, compared to
revenues of $449.9 million in the third quarter of 2015. The
Company recorded operating income of $69.4 million in the third
quarter of 2016, compared to operating income of $69.4 million in
the third quarter of 2015. Net income attributed to Vector Group
Ltd. for the 2016 third quarter was $23.2 million, or $0.18 per
diluted common share, compared to net income of $12.5 million, or
$0.10 per diluted common share, in the 2015 third quarter.
For the nine months ended September 30, 2016 revenues were
$1.278 billion, compared to revenues of $1.227 billion for the nine
months ended September 30, 2015. The Company recorded operating
income of $202.2 million for the nine months ended September 30,
2016, compared to operating income of $168.9 million for the nine
months ended September 30, 2015. Net income attributed to Vector
Group Ltd. for the nine months ended September 30, 2016 was $66.5
million, or $0.52 per diluted common share, compared to net income
of $51.3 million, or $0.40 per diluted common share for the nine
months ended September 30, 2015.
Non-GAAP Financial Measures
Non-GAAP financial measures also include adjustments for
purchase accounting associated with the Company's acquisition of
its additional 20.59% interest in Douglas Elliman Realty, LLC in
December 2013, litigation settlement and judgment expenses in the
Tobacco segment, settlements of long-standing disputes related to
the Master Settlement Agreement in the Tobacco segment,
restructuring and pension settlement expense in the Tobacco
segment, stock-based compensation expense (for purposes of
Pro-forma Adjusted EBITDA only) and non-cash interest items
associated with the Company's convertible debt. Reconciliations of
non-GAAP financial results to the comparable GAAP financial results
for the three and nine months ended September 30, 2016 and
2015 are included in Tables 2 through 10.
Three months ended September 30, 2016 compared to the three
months ended September 30, 2015
Third quarter 2016 Adjusted Revenues (as described in Table 2
attached hereto) were $459.1 million compared to $450.4 million in
2015.
Adjusted EBITDA attributed to Vector Group (as described
below and in Table 3 attached hereto) were $75.1 million for the
third quarter of 2016 as compared to $72.5 million for the third
quarter of 2015.
Adjusted Net Income (as described below and in Table 4 attached
hereto) was $24.3 million or $0.19 per diluted share for the three
months ended September 30, 2016 and $13.1 million or $0.10 per
diluted share for the three months ended September 30, 2015.
Adjusted Operating Income (as described below and in Table 5
attached hereto) was $71.1 million for the three months ended
September 30, 2016 and $70.9 million for the three months ended
September 30, 2015.
Nine months ended September 30, 2016 compared to the nine
months ended September 30, 2015
For the nine months ended September 30, 2016 Adjusted
Revenues (as described in Table 2 attached hereto) were $1.278
billion compared to $1.228 billion in 2015.
Adjusted EBITDA attributed to Vector Group (as described
below and in Table 3 attached hereto) were $219.8 million for the
nine months ended September 30, 2016 compared to $187.5
million in 2015.
Adjusted Net Income (as described below and in Table 4 attached
hereto) was $67.1 million or $0.52 per diluted share for the nine
months ended September 30, 2016 and $56.1 million or $0.44 per
diluted share for the nine months ended September 30, 2015.
Adjusted Operating Income (as described below and in Table 5
attached hereto) was $207.9 million for the nine months ended
September 30, 2016 and $177.8 million for the nine months ended
September 30, 2015.
Tobacco Segment Financial Results
For the third quarter 2016, the Tobacco segment had revenues of
$274.2 million, compared to $264.2 million for the third quarter
2015. The increase in revenues was primarily due to favorable net
pricing variances and a 2.9% increase in unit sales volume.
For the nine months ended September 30, 2016, the Tobacco
segment had revenues of $750.7 million, compared to $747.1 million
for the nine months ended September 30, 2015. The increase in
revenues was primarily driven by favorable net pricing variances
partially offset by a 1.7% decline in unit sales volume.
Operating Income from the Tobacco segment was $67.0 million and
$194.5 million for the three and nine months ended September 30,
2016 compared to $63.6 million and $169.5 million for the three and
nine months ended September 30, 2015, respectively.
Non-GAAP Financial Measures
Tobacco Adjusted Operating Income (described below and included
in Table 6 attached hereto) for the third quarter 2016 and 2015 was
$66.6 million and $63.2 million, respectively. Tobacco Adjusted
Operating Income for the nine months ended September 30, 2016 and
2015 was $196.5 million and $172.8 million, respectively.
For the three months ended September 30, 2016, the Tobacco
segment had conventional cigarette (wholesale) shipments of
approximately 2.31 billion units compared to 2.24 billion units for
the three months ended September 30, 2015. For the nine months
ended September 30, 2016, the Tobacco segment had conventional
cigarette (wholesale) shipments of approximately 6.23 billion units
compared to 6.34 billion for the nine months ended September 30,
2015.
Liggett's retail market share increased to approximately 3.5%
during the nine months ended September 30, 2016. Compared to the
nine months ended September 30, 2015, Liggett's retail shipments
were flat while the overall industry's retail shipments declined by
2.2%, according to data from Management Science Associates,
Inc.
Real Estate Segment Financial Results
For the third quarter 2016, the Real Estate segment had revenues
of $184.9 million, compared to $185.6 million for the third quarter
2015. For the nine months ended September 30, 2016, the Real Estate
segment had revenues of $527.4 million compared to $478.8 million
for the nine months ended September 30, 2015. For third quarter
2016, the Real Estate segment reported net income of $4.7 million,
compared to $4.7 million for the third quarter 2015. For the nine
months ended September 30, 2016, the Real Estate segment reported
net income of $14.3 million compared to $10.2 million for the nine
months ended September 30, 2015.
Douglas Elliman's results are included in Vector Group Ltd.'s
Real Estate segment. For the third quarter 2016, Douglas Elliman
had revenues of $184.5 million, compared to $185.0 million for the
third quarter 2015. For the nine months ended September 30, 2016,
Douglas Elliman had revenues of $523.8 million compared to $474.4
million for the nine months ended September 30, 2015. For third
quarter 2016, Douglas Elliman reported net income of $8.7 million,
compared to $12.4 million for the third quarter 2015. For the nine
months ended September 30, 2016, the Douglas Elliman net income of
$27.2 million compared to $19.7 million for the nine months ended
September 30, 2015.
Non-GAAP Financial Measures
For the third quarter 2016, the Real Estate segment had Adjusted
Revenues of $184.9 million, compared to $186.0 million for the
third quarter 2015. For the third quarter 2016, Real Estate
Adjusted EBITDA attributed to the Company were $9.3 million,
compared to $11.2 million for the third quarter 2015.
For the nine months ended September 30, 2016, the Real Estate
segment had Adjusted Revenues of $527.4 million compared to $480.3
million for the nine months ended September 30, 2015. The increase
in revenues was primarily due to an increase in commissions and
other brokerage income at Douglas Elliman. For the nine months
ended September 30, 2016, Real Estate Adjusted EBITDA attributed to
the Company were $27.4 million compared to $23.0 million for the
nine months ended September 30, 2015.
Douglas Elliman's results are included in Vector Group Ltd.'s
Real Estate segment. Douglas Elliman's Adjusted Revenues for
the third quarter 2016 were $184.5 million, compared to $185.5
million for the third quarter 2015.
For the third quarter 2016, Douglas Elliman's Adjusted EBITDA
were $13.3 million ($9.4 million attributed to the Company),
compared to $16.3 million ($11.5 million attributed to the Company)
for the third quarter 2015.
For the nine months ended September 30, 2016, Douglas Elliman's
Adjusted Revenues were $523.8 million compared to $475.8 million
for the nine months ended September 30, 2015.
For the nine months ended September 30, 2016, Douglas Elliman's
Adjusted EBITDA were $37.2 million ($26.2 million attributed to the
Company), compared to $29.9 million ($21.1 million attributed to
the Company) for the nine months ended September 30, 2015.
For the three and nine months ended September 30, 2016 , Douglas
Elliman achieved closed sales of approximately $6.8 billion and
$18.9 billion, compared to $6.6 billion and $16.2 billion for the
three and nine months ended September 30, 2015.
E-cigarettes Segment Financial Results
For the third quarter, the E-cigarette segment had a loss of
Adjusted EBITDA of $0.2 million compared to revenues of $0.2
million and a loss of Adjusted EBITDA of $2.1 million for the third
quarter 2015.
For the nine months ended September 30, 2016, the E-cigarette
segment had a loss of Adjusted EBITDA of $0.4 million compared to
revenues of $0.9 million and a loss of Adjusted EBITDA of $7.7
million for the nine months ended September 30, 2015.
Retrospective Adjustment to Previously Reported
Results
Amounts previously reported for the three and nine months ended
September 30, 2015 have been adjusted, as required by Generally
Accepted Accounting Principles, to retroactively apply the equity
method of accounting for two investments (Ladenburg Thalmann
Financial Services Inc. and Castle Brands, Inc.) since the
inception of each investment. Please refer to the Company’s Annual
Report on Form 10-K for the year ended December 31, 2015 as well as
the Company’s Current Report on Form 8-K, dated April 1, 2016, for
additional information.
Non-GAAP Financial Measures
Adjusted Revenues, New Valley LLC Adjusted Revenues and Douglas
Elliman Realty, LLC Adjusted Revenues (hereafter referred to as
"the Non-GAAP Revenue Financial Measures") and Adjusted EBITDA,
Adjusted Net Income, Adjusted Operating Income, Tobacco Adjusted
Operating Income, New Valley LLC Adjusted EBITDA and Douglas
Elliman Realty, LLC Adjusted EBITDA (hereafter, along with the
Non-GAAP Revenue Measures referred to as "the Non-GAAP Financial
Measures") are financial measures not prepared in accordance with
generally accepted accounting principles (“GAAP”). The Company
believes that the Non-GAAP Financial Measures are important
measures that supplement discussions and analysis of its results of
operations and enhances an understanding of its operating
performance. The Company believes the Non-GAAP Financial Measures
provide investors and analysts with a useful measure of operating
results unaffected by differences in capital structures and ages of
related assets among otherwise comparable companies. In the case of
the Non-GAAP Revenue Financial Measures, management believes
revenue growth in its real estate segment is an important measure
of growth because increased revenues generally result in increased
gross margin as a result of absorption of fixed operating costs,
which management believes will lead to increased future
profitability as well as increased capacity to expand into new and
existing markets. A key strategy of the Company is its ability to
move into new markets and therefore gross revenues provide
information with respect to the Company's ability to achieve its
strategic objectives. Management also believes increased revenues
generally indicate increased market share in existing markets as
well as expansion into new markets. Consequently, management
believes the Non-GAAP Revenue Financial Measures are meaningful
indicators of operating performance.
Management uses the Non-GAAP Financial Measures as measures to
review and assess operating performance of the Company's business,
and management and investors should review both the overall
performance (GAAP net income) and the operating performance (the
Non-GAAP Financial Measures) of the Company's business. While
management considers the Non-GAAP Financial Measures to be
important, they should be considered in addition to, but not as
substitutes for or superior to, other measures of financial
performance prepared in accordance with GAAP, such as operating
income, net income and cash flows from operations. In addition, the
Non-GAAP Financial Measures are susceptible to varying calculations
and the Company's measurement of the Non-GAAP Financial Measures
may not be comparable to those of other companies. Attached hereto
as Tables 2 through 10 is information relating to the Company's the
Non-GAAP Financial Measures for the three and nine months ended
September 30, 2016 and 2015.
Conference Call to Discuss Third
quarter 2016 Results
As previously announced, the Company will host a conference call
and webcast on Thursday, November 3, 2016 at 8:30 AM.
(ET) to discuss third quarter 2016 results.
Investors can access the call by dialing 800-859-8150 and
entering 21770048 as the conference ID number. The call will also
be available via live webcast atwww.investorcalendar.com. 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 November 3, 2016 through November 17, 2016. To
access the replay, dial 877-656-8905 and enter 21770048 as the
conference ID number. The archived webcast will also be available
at www.investorcalendar.com for one year.
Vector Group is a holding company that indirectly
owns Liggett Group LLC, Vector Tobacco
Inc. and Zoom E-Cigs LLC and directly owns New
Valley LLC, which owns a controlling interest in 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 CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(Dollars in
Thousands, Except Per Share Amounts)
Three Months Ended Nine Months Ended September 30, September
30, 2016 2015 2016 2015 (Unaudited) (Unaudited)
Revenues Tobacco* $ 274,164 $ 264,170 $ 750,677 $
747,145 Real estate 184,936 185,563 527,448 478,841 E-Cigarettes 4
201 52 881 Total revenues 459,104
449,934 1,278,177 1,226,867 Expenses: Cost of sales:
Tobacco* 186,343 174,418 491,688 506,315 Real estate 117,089
121,078 331,784 309,306 E-Cigarettes 10 421 23
1,518 Total cost of sales 303,442 295,917 823,495 817,139
Operating, selling, administrative and general expenses
86,298 79,352 250,048 233,449 Litigation, settlement and judgment
expense — 3,750 2,350 5,843 Restructuring charges — 1,548
41 1,548 Operating income 69,364 69,367
202,243 168,888 Other income (expenses): Interest expense
(37,365 ) (32,898 ) (104,454 ) (96,405 ) Change in fair value of
derivatives embedded within convertible debt 6,112 7,044 23,222
18,760 Equity in earnings (losses) from real estate ventures 1,022
(916 ) 3,328 1,278 Equity in losses from investments (1,526 )
(1,103 ) (2,108 ) (2,654 ) Gain (loss) on sale of investment
securities available for sale 142 (821 ) 848 12,018 Impairment of
investment securities available for sale (54 ) (12,211 ) (4,916 )
(12,211 ) Other, net 1,328 1,342 2,956 5,100
Income before provision for income taxes 39,023 29,804
121,119 94,774 Income tax expense 13,316 13,694
46,682 37,739 Net income 25,707 16,110 74,437
57,035 Net income attributed to non-controlling interest
(2,532 ) (3,644 ) (7,909 ) (5,741 ) Net income attributed to
Vector Group Ltd. $ 23,175 $ 12,466 $ 66,528 $
51,294 Per basic common share: Net income
applicable to common shares attributed to Vector Group Ltd. $ 0.18
$ 0.10 $ 0.52 $ 0.40 Per diluted
common share: Net income applicable to common shares
attributed to Vector Group Ltd. $ 0.18 $ 0.10 $ 0.52
$ 0.40 Cash distributions declared per share $
0.38 $ 0.36 $ 1.14 $ 1.09
* Revenues and cost of sales include federal
excise taxes of $116,024, $112,773, $313,731 and $319,044,
respectively.
TABLE 2 VECTOR GROUP LTD. AND
SUBSIDIARIES REVENUES AND RECONCILIATION OF ADJUSTED
REVENUES (Unaudited)
(Dollars in
Thousands)
LTM Three Months Ended Nine Months Ended September
30, September 30, September 30, 2016 2016
2015 2016 2015 Revenues $ 1,708,507 $ 459,104 $
449,934 $ 1,278,177 $ 1,226,867 Purchase accounting
adjustments (a) 481 — 481 — 1,444 Total
adjustments 481 — 481 — 1,444 Adjusted Revenues (b) $
1,708,988 $ 459,104 $ 450,415 $ 1,278,177
$ 1,228,311
Revenues by Segment Tobacco (b) $
1,021,293 $ 274,164 $ 264,170 $ 750,677 $ 747,145 E-cigarettes
(2,799 ) 4 201 52 881 Real Estate (c) 690,013 184,936 185,563
527,448 478,841 Corporate and Other — — — —
— Total (b) $ 1,708,507 $ 459,104 $ 449,934
$ 1,278,177 $ 1,226,867
Adjusted Revenues
by Segment Tobacco (b) $ 1,021,293 $ 274,164 $ 264,170 $
750,677 $ 747,145 E-cigarettes (2,799 ) 4 201 52 881 Real Estate
(c) 690,494 184,936 186,044 527,448 480,285 Corporate and Other —
— — — — Total (b) $ 1,708,988 $
459,104 $ 450,415 $ 1,278,177 $ 1,228,311
a. 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. b. Includes excise
taxes of $432,073 for the last twelve months ended September 30,
2016 and $116,024, $112,773, $313,731 and $319,044 for the three
and nine months ended September 30, 2016 and 2015, respectively. c.
Includes Adjusted Revenues from Douglas Elliman Realty, LLC of
$684,960 for the last twelve months ended September 30, 2016 and
$184,453, $185,481, $523,767 and $475,807 for the three and nine
months ended September 30, 2016 and 2015, respectively.
TABLE 3 VECTOR GROUP LTD. AND
SUBSIDIARIES RECONCILIATION OF ADJUSTED EBITDA
(Unaudited)
(Dollars in
Thousands)
LTM Three Months Ended Nine Months Ended September 30,
September 30, September 30, 2016 2016 2015 2016 2015
Net income attributed to Vector Group Ltd. $ 74,432 $ 23,175
$ 12,466 $ 66,528 $ 51,294 Interest expense 128,740
37,365 32,898 104,454 96,405 Income tax expense 50,176 13,316
13,694 46,682 37,739 Net income attributed to non-controlling
interest 9,442 2,532 3,644 7,909 5,741 Depreciation and
amortization 23,125 5,833 6,673 16,867
19,396 EBITDA $ 285,915 $ 82,221 $ 69,375 $ 242,440 $
210,575 Change in fair value of derivatives embedded within
convertible debt (a) (28,917 ) (6,112 ) (7,044 ) (23,222 ) (18,760
) Equity in losses from investments (b) 2,135 1,526 1,103 2,108
2,654 Loss (gain) on sale of investment securities available for
sale 32 (142 ) 821 (848 ) (12,018 ) Impairment of investment
securities available for sale 5,551 54 12,211 4,916 12,211 Equity
in (earnings) losses from real estate ventures (c) (4,051 ) (1,022
) 916 (3,328 ) (1,278 ) Pension settlement charge — — — — 1,607
Stock-based compensation expense (d) 9,249 2,438 1,248 7,277 3,648
Litigation settlement and judgment expense (e) 16,579 — 3,750 2,350
5,843 Impact of MSA settlement (f) 981 (370 ) (5,715 ) (370 )
(5,715 ) Restructuring charges 5,750 — 1,548 41 1,548 Purchase
accounting adjustments (g) 2,580 1,653 366 2,201 1,056 Other, net
(4,265 ) (1,328 ) (1,342 ) (2,956 ) (5,100 ) Adjusted EBITDA $
291,539 $ 78,918 $ 77,237 $ 230,609 $ 196,271 Adjusted EBITDA
attributed to non-controlling interest (13,384 ) (3,852 ) (4,735 )
(10,849 ) (8,732 ) Adjusted EBITDA attributed to Vector Group Ltd.
$ 278,155 $ 75,066 $ 72,502 $ 219,760 $
187,539
Adjusted EBITDA by Segment Tobacco $
268,086 $ 69,421 $ 66,084 $ 204,292 $ 181,580 E-cigarettes (5,776 )
(165 ) (2,146 ) (449 ) (7,710 ) Real Estate (h) 44,710 13,144
15,981 38,297 31,698 Corporate and Other (15,481 ) (3,482 ) (2,682
) (11,531 ) (9,297 ) Total $ 291,539 $ 78,918 $
77,237 $ 230,609 $ 196,271
Adjusted
EBITDA Attributed to Vector Group Ltd. by Segment Tobacco $
268,086 $ 69,421 $ 66,084 $ 204,292 $ 181,580 E-cigarettes (5,776 )
(165 ) (2,146 ) (449 ) (7,710 ) Real Estate (i) 31,326 9,292 11,246
27,448 22,966 Corporate and Other (15,481 ) (3,482 ) (2,682 )
(11,531 ) (9,297 ) Total $ 278,155 $ 75,066 $ 72,502
$ 219,760 $ 187,539 a.
Represents income or losses recognized from changes in the fair
value of the derivatives embedded in the Company's convertible
debt. b. Represents equity in losses recognized from investments
that the Company accounts for under the equity method. c.
Represents equity in (earnings) losses recognized from the
Company's investment in certain real estate businesses that are not
consolidated in its financial results. d. Represents amortization
of stock-based compensation. e. Represents accruals for settlements
of judgment expenses in the Engle progeny tobacco litigation. f.
Represents the Company's tobacco segment's settlement of a
long-standing dispute related to the Master Settlement Agreement.
g. Amounts represent purchase accounting adjustments recorded in
the periods presented in connection with the increase of the
Company's ownership of Douglas Elliman Realty, LLC, which occurred
in 2013. h. Includes Adjusted EBITDA for Douglas Elliman Realty,
LLC of $43,034 for the last twelve months ended September 30, 2016
and $13,297, $16,294, $37,179 and $29,885 for the three and nine
months ended September 30, 2016 and 2015, respectively. Amounts
reported in this footnote reflect 100% of Douglas Elliman Realty,
LLC's entire Adjusted EBITDA. i. Includes Adjusted EBITDA for
Douglas Elliman Realty, LLC less non-controlling interest of
$30,378 for the last twelve months ended September 30, 2016 and
$9,386, $11,502, $26,245 and $21,096 for the three and nine months
ended September 30, 2016 and 2015, respectively. Amounts reported
in this footnote have adjusted Douglas Elliman Realty, LLC's
Adjusted EBITDA for non-controlling interest.
TABLE 4 VECTOR GROUP LTD. AND SUBSIDIARIES
RECONCILIATION OF ADJUSTED NET INCOME (Unaudited)
(Dollars in
Thousands, Except Per Share Amounts)
Three Months Ended Nine Months Ended September 30,
September 30, 2016 2015 2016 2015 Net income
attributed to Vector Group Ltd. $ 23,175 $ 12,466 $ 66,528
$ 51,294 Change in fair value of derivatives embedded
within convertible debt (6,112 ) (7,044 ) (23,222 ) (18,760 )
Non-cash amortization of debt discount on convertible debt 10,167
7,187 27,623 19,646 Litigation settlement and judgment expense (a)
— 3,750 2,350 5,843 Pension settlement charge — — — 1,607 Impact of
interest expense capitalized to real estate ventures, net (3,276 )
— (8,111 ) — Impact of MSA settlement (b) (370 ) (5,715 ) (370 )
(5,715 ) Restructuring charges — 1,548 41 1,548 Douglas Elliman
Realty, LLC purchase accounting adjustments (c) 1,511 1,351
2,568 3,945 Total adjustments 1,920 1,077 879
8,114 Tax expense related to adjustments (780 ) (448 ) (357
) (3,358 ) Adjusted Net Income
attributed to Vector Group Ltd. $ 24,315 $ 13,095 $
67,050 $ 56,050 Per diluted common share:
Adjusted Net Income applicable to common shares attributed
to Vector Group Ltd. $ 0.19 $ 0.10 $ 0.52 $
0.44 a. Represents accruals for
settlements of judgment expenses in the Engle progeny tobacco
litigation. b. Represents the Company's tobacco segment's
settlement of a long-standing dispute related to the Master
Settlement Agreement. c. Represents 70.59% of purchase accounting
adjustments in the periods presented for assets acquired in
connection with the increase of the Company's ownership of Douglas
Elliman Realty, LLC, which occurred in 2013.
TABLE 5 VECTOR GROUP LTD. AND
SUBSIDIARIES RECONCILIATION OF ADJUSTED OPERATING INCOME
(Unaudited)
(Dollars in
Thousands)
LTM Three Months Ended Nine Months Ended September
30, September 30, September 30, 2016 2016 2015 2016
2015 Operating income $ 233,275 $ 69,364 $ 69,367 $
202,243 $ 168,888 Litigation settlement and judgment
expense (a) 16,579 — 3,750 2,350 5,843 Pension settlement charge —
— — — 1,607 Restructuring expense 5,750 — 1,548 41 1,548 Impact of
MSA settlement (b) 981 (370 ) (5,715 ) (370 ) (5,715 ) Douglas
Elliman Realty, LLC purchase accounting adjustments (c) 5,563
2,141 1,913 3,638 5,588 Total
adjustments 28,873 1,771 1,496 5,659 8,871 Adjusted
Operating Income (d) $ 262,148 $ 71,135 $ 70,863
$ 207,902 $ 177,759 a.
Represents accruals for settlements of judgment expenses in
the Engle progeny tobacco litigation. b. Represents the Company's
tobacco segment's settlement of a long-standing dispute related to
the Master Settlement Agreement. c. Amounts represent purchase
accounting adjustments recorded in the periods presented in
connection with the increase of the Company's ownership of Douglas
Elliman Realty, LLC, which occurred in 2013. d. Does not include a
reduction for 29.41% non-controlling interest in Douglas Elliman
Realty, LLC.
TABLE 6
VECTOR GROUP LTD. AND SUBSIDIARIES RECONCILIATION OF
TOBACCO ADJUSTED OPERATING INCOME AND TOBACCO ADJUSTED
EBITDA (Unaudited)
(Dollars in
Thousands)
LTM Three Months Ended Nine Months Ended September 30, September
30, September 30, 2016 2016 2015 2016 2015
Tobacco Adjusted Operating Income: Operating
income from tobacco segment $ 234,351 $ 66,974 $ 63,630 $ 194,473 $
169,515 Litigation settlement and judgment expense (a)
16,579 — 3,750 2,350 5,843 Pension settlement charge — — — — 1,607
Restructuring expense 5,750 — 1,548 41 1,548 Impact of MSA
settlement (b) 981 (370 ) (5,715 ) (370 ) (5,715 ) Total
adjustments 23,310 (370 ) (417 ) 2,021 3,283 Tobacco
Adjusted Operating Income $ 257,661 $ 66,604 $ 63,213
$ 196,494 $ 172,798 LTM
Three Months Ended Nine Months Ended September 30,
September 30, September 30, 2016 2016 2015 2016 2015
Tobacco Adjusted EBITDA: Operating income from
tobacco segment $ 234,351 $ 66,974 $ 63,630 $ 194,473 $ 169,515
Litigation settlement and judgment expense (a) 16,579 —
3,750 2,350 5,843 Pension settlement charge — — — — 1,607
Restructuring expense 5,750 — 1,548 41 1,548 Impact of MSA
settlement (b) 981 (370 ) (5,715 ) (370 ) (5,715 ) Total
adjustments 23,310 (370 ) (417 ) 2,021 3,283 Tobacco
Adjusted Operating Income 257,661 66,604 63,213 196,494 172,798
Depreciation and amortization 10,341 2,796 2,871 7,735 8,717
Stock-based compensation expense 84 21 — 63
65 Total adjustments 10,425 2,817 2,871 7,798 8,782
Tobacco Adjusted EBITDA $ 268,086 $ 69,421 $
66,084 $ 204,292 $ 181,580
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.
TABLE 7 VECTOR GROUP LTD. AND
SUBSIDIARIES RECONCILIATION OF REAL ESTATE SEGMENT (NEW
VALLEY LLC) ADJUSTED REVENUES (Unaudited)
(Dollars in
Thousands)
LTM Three Months Ended Nine Months Ended September
30, September 30, September 30, 2016 2016 2015 2016
2015 Real Estate Segment (New Valley LLC) revenues $ 690,013
$ 184,936 $ 185,563 $ 527,448 $ 478,841
Purchase accounting adjustments (a) 481 — 481
— 1,444 Total adjustments 481 — 481 — 1,444 Real
Estate Segment (New Valley LLC) Adjusted Revenues (b) $ 690,494
$ 184,936 $ 186,044 $ 527,448 $ 480,285
a. Amounts represent purchase
accounting adjustments recorded in connection with the increase of
the Company's ownership of Douglas Elliman Realty, LLC., which
occurred in 2013. b. Includes Adjusted Revenues from Douglas
Elliman Realty, LLC of $684,960 for the last twelve months ended
September 30, 2016 and $184,453, $185,481, $523,767 and $475,807
for the three and nine months ended September 30, 2016 and 2015,
respectively.
TABLE 8
VECTOR GROUP LTD. AND SUBSIDIARIES RECONCILIATION OF REAL
SEGMENT (NEW VALLEY LLC) ADJUSTED EBITDA (Unaudited)
(Dollars in
Thousands)
LTM Three Months Ended Nine Months Ended September 30, September
30, September 30, 2016 2016 2015 2016 2015 Net
income attributed to Vector Group Ltd. from subsidiary
non-guarantors (a) $ 15,744 $ 4,721 $ 4,695 $ 14,291
$ 10,215 Interest expense (a) 17 7 1 14 4 Income tax expense (a)
10,877 2,430 3,395 9,891 7,904 Net income attributed to
non-controlling interest (a) 9,442 2,532 3,644 7,909 5,741
Depreciation and amortization 11,089 2,647 3,388
7,872 9,372 EBITDA $ 47,169 $ 12,337 $ 15,123
$ 39,977 $ 33,236 Loss (income) from non-guarantors other than New
Valley LLC 109 8 (1 ) 84 66 Equity in (earnings) losses from real
estate ventures (b) (4,051 ) (1,022 ) 916 (3,328 ) (1,278 )
Purchase accounting adjustments (c) 2,580 1,653 366 2,201 1,056
Other, net (1,172 ) 136 (305 ) (704 ) (1,286 ) Adjusted
EBITDA $ 44,635 $ 13,112 $ 16,099 $ 38,230 $ 31,794 Adjusted EBITDA
attributed to non-controlling interest (13,384 ) (3,852 ) (4,735 )
(10,849 ) (8,732 ) Adjusted EBITDA attributed to New Valley LLC $
31,251 $ 9,260 $ 11,364 $ 27,381 $
23,062 Adjusted EBITDA by Segment Real Estate (d) $
44,710 $ 13,144 $ 15,981 $ 38,297 $ 31,698 Corporate and Other (75
) (32 ) 118 (67 ) 96 Total (f) $ 44,635 $
13,112 $ 16,099 $ 38,230 $ 31,794
Adjusted EBITDA Attributed to New Valley LLC by Segment Real
Estate (e) $ 31,326 $ 9,292 $ 11,246 $ 27,448 $ 22,966 Corporate
and Other (75 ) (32 ) 118 (67 ) 96 Total (f) $ 31,251
$ 9,260 $ 11,364 $ 27,381 $ 23,062
a. Amounts are derived from
Vector Group Ltd.'s Consolidated Financial Statements. See Note
entitled "Vector Group Ltd.'s Condensed Consolidating Financial
Information" contained in Vector Group Ltd.'s Form 10-K and Form
10-Q for the year ended December 31, 2015 and the quarterly period
ended September 30, 2016, respectively. b. Represents equity in
(earnings) losses recognized from the Company's investment in
certain real estate businesses that are not consolidated in its
financial results. c. Amounts represent purchase accounting
adjustments recorded in the periods presented in connection with
the increase of the Company's ownership of Douglas Elliman Realty,
LLC, which occurred in 2013. d. Includes Adjusted EBITDA for
Douglas Elliman Realty, LLC of $43,034 for the last twelve months
ended September 30, 2016 and $13,297, $16,294, $37,179 and $29,885
for the three and nine months ended September 30, 2016 and 2015,
respectively. Amounts reported in this footnote reflect 100% of
Douglas Elliman Realty, LLC's entire Adjusted EBITDA. e. Includes
Adjusted EBITDA for Douglas Elliman Realty, LLC less
non-controlling interest of $30,378 for the last twelve months
ended September 30, 2016 and $9,386, $11,502, $26,245 and $21,096
for the three and nine months ended September 30, 2016 and 2015,
respectively. Amounts reported in this footnote have adjusted
Douglas Elliman Realty, LLC's Adjusted EBITDA for non-controlling
interest. f. New Valley's Adjusted EBITDA does not include an
allocation of Vector Group Ltd.'s "Corporate and Other" segment's
expenses (for purposes of computing Adjusted EBITDA contained in
Table 3 of this press release) of $15,481 for the last twelve
months ended September 30, 2016 and $3,482, $2,682, $11,531 and
$9,297 for the three and nine months ended September 30, 2016 and
2015, respectively.
TABLE
9 VECTOR GROUP LTD. AND SUBSIDIARIES RECONCILIATION
OF DOUGLAS ELLIMAN REALTY, LLC ADJUSTED REVENUES
(Unaudited)
(Dollars in
Thousands)
LTM Three Months Ended Nine Months Ended September
30, September 30, September 30, 2016 2016 2015 2016
2015 Douglas Elliman Realty, LLC revenues $ 684,479 $
184,453 $ 185,000 $ 523,767 $ 474,363 Purchase
accounting adjustments (a) 481 — 481 —
1,444 Total adjustments 481 — 481 — 1,444 Douglas Elliman
Realty, LLC Adjusted Revenues $ 684,960 $ 184,453 $
185,481 $ 523,767 $ 475,807 a.
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.
TABLE 10
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 Nine Months Ended September 30,
September 30, September 30, 2016 2016 2015 2016 2015
Net income attributed to Douglas Elliman Realty, LLC $
29,631 $ 8,684 $ 12,437 $ 27,181 $ 19,713 Interest expense 1
— — — 3 Income tax expense 904 311 349 949 876 Depreciation and
amortization 10,756 2,549 3,329 7,608
9,195 Douglas Elliman Realty, LLC EBITDA $ 41,292 $ 11,544 $
16,115 $ 35,738 $ 29,787 Equity income from real estate ventures
(a) (1,029 ) (235 ) (211 ) (992 ) (908 ) Purchase accounting
adjustments (b) 2,580 1,653 366 2,201 1,056 Other, net 191
335 24 232 (50 ) Douglas Elliman Realty, LLC
Adjusted EBITDA $ 43,034 $ 13,297 $ 16,294 $ 37,179 $ 29,885
Douglas Elliman Realty, LLC Adjusted EBITDA attributed to
non-controlling interest (12,656 ) (3,911 ) (4,792 ) (10,934 )
(8,789 ) Douglas Elliman Realty, LLC Adjusted EBITDA attributed to
Real Estate Segment 30,378 9,386 11,502 26,245
21,096 a. Represents
equity income recognized from the Company's investment in certain
real estate businesses that are not consolidated in its financial
results. b. Amounts represent purchase accounting adjustments
recorded in the periods presented in connection with the increase
of the Company's ownership of Douglas Elliman Realty, LLC, which
occurred in 2013.
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version on businesswire.com: http://www.businesswire.com/news/home/20161103005550/en/
Sard Verbinnen & CoEmily Deissler/Benjamin
Spicehandler/Spencer Waybright212-687-8080orSard Verbinnen & Co
- EuropeJonathan Doorley/Conrad Harrington+44 (0)20 3178
8914orVector Group Ltd.J. Bryant Kirkland III, 305-579-8000
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