VGR - Earnings call transcript Q3 2018

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Operator

Welcome to Vector Group Limited’s Third Quarter 2018 Earnings Conference Call.

During this call, the terms adjusted operating income, adjusted net income, adjusted EBITDA and tobacco-adjusted operating income will be used. These terms are non-GAAP financial measures and should be considered in addition to, but not as a substitute for, other measures of financial performance prepared in accordance with GAAP. Reconciliations to adjusted operating income, adjusted net income, adjusted EBITDA and tobacco-adjusted operating income are contained in the company’s earnings release, which will – which has been posted to the Investor Relations section of the company’s website located at vectorgroupltd.com.

Before the call begins, I’d like to read a Safe Harbor statement. results this statements that risks forth that that cause during facts, not and in made from could forward-looking materially forward-looking are are actual or statements implied conference those statements. are call historical uncertainties these by The – differ set to subject to more These in the Securities detail risks are and company’s in described Exchange Commission filings.

Vector turn the and Officer of President call Chief to to Group, over like Lorber. I’d Now, Howard Executive

Howard Lorber

third and CEO Group’s XXXX for Ron Bryant joining Vector nine Financial ended XXXX, us update company’s call. of will tobacco includes Chief the XX, on morning, adoption me earnings Brands; months the business which our Officer. of an Group’s Good thank With summarize new first Vector business. will conference and you Bernstein, for Vector then our the Ron three accounting Group’s performance standards. of and quarter several today are review September I provide the and Vector performance President Kirkland, and Liggett for

then at million available which liquidity XX, significant your Vector answer cash XXXX, and be Elliman $XX to questions. maintained September cash of million of cash At $XXX Group included and equivalents at million, Liggett. Douglas $XXX with will We

securities also market redemptions with value interest, We a investment and XXXX. including held fair September at of partnership investment in-transit XX, [ph] $XXX million

corporate the $XXX outstanding to and of senior million company’s purposes. general completed of notes interest XX.X% due issuance necessary we proceeds the January use intend convertible week, to XXXX. variable XXXX notes last We addition, retire for In X.X% due the senior as

Group’s Turning key Vector financials. now to

to September the XXXX million $XXX.X compared quarter in XXXX The recorded XXXX ended Adjusted in to of compared million, to the months $XXX.X XXXX period. the quarter period. $XX.X quarter XXXX, operating million, third recorded XX, company $X.XX three XXXX third were in or in income Vector million, share third EBITDA was of million, million $X.XX third XXXX the net period. company $XX.X $XX.X million period. adjusted to XXXX revenues the $XX Group’s or compared diluted $XX.X per $XX.X share, the XXXX compared diluted The million, quarter adjusted for per income For

Elliman For of EBITDA reported of and million. adjusted $XXX.X adjusted million XXXX, revenues and Douglas to in This quarter the $XXX.X $XX XXXX EBITDA the million $X.X revenues period. third compared million in of

the nine months XXXX share, was diluted months operating period. in recorded the $X.XX the for XXXX, adjusted compared income ended per XX, net were revenues Vector period. the For months $X.XXX XXXX, September billion XXXX in period. XXXX million $XXX.X to or XXXX September adjusted nine diluted months per $XXX the million, of ended share million, company the ended the company The million or for XXXX, September $XX.X $XXX.X nine Group’s to September in months The billion period. EBITDA to of nine million XXXX income compared XXXX, ended nine $XXX.X XX, for September the XX, Adjusted the compared for $XX.X $X.XXX XX, to ended recorded million $X.XX for XX, compared

our to XXXX revenues For adjusted and XX, $XXX.X EBITDA of nine to million $XXX.X September over $XX.X business. million the EBITDA of call Douglas Bernstein ended $XX.X This Ron of million to tobacco in turn and months in reported revenues Ron? Elliman I’ll compared XXXX, million. the now the discuss adjusted period.

Ronald Bernstein

of market I’m trend continued everyone. Good that morning, pleased quarter. share report the third to volume Howard. growth Liggett’s in Thanks, and

both This for and We significant invest XXXX, identified in opportunities previously was seen we that growth. quarters unit of in volume by and growth As the commitment have three maintained results. noted, market first to XXXX volume entering demonstrated share. positive

tobacco future. resulted investment initially I’ll for financials well and the positions Liggett it the for gross combined margins, this us Tobacco. Vector to lower in has now While turn

million compared the to million late million the XX’s September million respectively, $XXX.X stores and and complement across and brands, income nation’s period. for distribution time, XX’s and grew XX’s $XXX other nationwide. of $XX.X to stores. ended prior compared to well-established increased $XXX.X brand of raised and approximately currently anticipated For $XX.X months with Eagle nine same declines, we’re much XX performance the the months now million, unit XXX,XXX than sold brands. the continued provided Eagle to XXXX, strong, $XXX.X million The $XXX the million million, presence. Pyramid, year and corresponding to and Pyramid the third Pyramid three XX, nine in and September is At the respectively, were volume operating continue of compared for both and we the period. despite has volume effective more supporting $XX,XXX Tobacco discount growth sold September pleased largest on respectively. and Eagle in for Eagle fifth of and XX, adjusted is revenues $XXX.X Liggett the nationwide was nine industry, pricing September, price ending focus with the Pyramid ended Liggett XXXX corresponding an months by In XXXX, XX’s three XXXX for its periods. XX% the almost

declines, impact of have companies, many economy as recent are slowed their we’ve in X% anticipate of this premium increases to will range have Line as has XXXX Special the Camel industry growth the products had from in To despite Blend, little growth deeper effect from has are the above These minimal brands We Red various seen decline which Similarly, X.X% brands. Newport such our and cumulative of extensions. accelerated price discount-focused of the discounted Our Marlboro products. effect shipments smaller priced total been year. industry typically premium-priced accomplished, brands from and results XXXX. shipment discount date,

has about other course, products. a However, in search various and geographic continue been there emerge competitors of And, growth discount targeted recently noise deep pockets, brands opportunities. over noncombustible smaller time, to as lot for of vapor

seen shipments quarter basis, third discount any, on to the increased if Associates, decreased we while According by impact overall business X.X% to segment the have little, However, wholesale a industry the in year-over-year on of combustible X.X%. Liggett’s shipments by market. Management Science date, wholesale

are retail wholesale we the and While Liggett’s remind According you year-over-year only are outperformed to register we that a increased fluctuations, Liggett’s that were among more increases buying is increase shipments shipments pleased things. individual to once patterns, to believe I’ll an major pleased manufacturer indicator again price performance. Management Science in third are X% overall X.X%. competitors, have that quarter. major retail we due quarter, cigarette wholesaler company during other our national an shipment in we the shipments This by timing of almost of reliable the retail industry to Associates, decline the nationally-focused shipments again compared And of

approaching As our third year Liggett’s now share prior is market retail period the of a quarter market. share retail increased result, to and XX the compared by points, X.X% basis

to We’re income and delivering focus the pleased generating performance. And and from strong with base growth operating vision as distribution of sales this continue XX’s. Eagle we share volume, to from our while ahead, profit on is look Pyramid,

to we Howard. profit. risks, remain support to we market our back you, to industry Thanks programs attention effective increase and to While we’re and have confident that implemented your share for subject

Howard Lorber

Ron. Thank you,

is to continue long-term Vector well-positioned for Group that to generate believe We value stockholders.

estate for increased and our consistently cash tobacco We continues have and unit success. business profits our volumes real be strong have to well-positioned reserves,

remains of policy are record its since uninterrupted X% that We a XXXX dividend The track the reaffirms proud also quarterly and regular again annual the dividend since cash cash paying company’s once XXXX. of an dividend stock company same.

operator, Now, you questions? please would the call for open

Operator

for floor Thank you Thank open you, for conference [Operator sir. will At this our time, the conclude the Group’s questions. call. call. Vector we joining will That earnings Instructions]

Vector (VGR) 7 Nov 182018 Q3 Earnings call transcript