VGR - Earnings call transcript Q1 2019

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Operator

Ladies and gentlemen, welcome to Vector Group Limited First Quarter 2019 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 has been posted to the Investor Relations section of the Company's website located at www.vectorgroupltd.com.

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

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

Howard Lorber

first CEO three Group's XXXX for Ron Bryant joining review Vector Financial us call. provide Group's will Chief morning me earnings Brands; for Officer. Group's Good XXXX. thank ended With first and Vector conference Vector performance an and you Bernstein, months for XX, the of and quarter today March on are update business I the Vector President Kirkland, and Liggett our

available includes and questions. Group cash will answer interests Liggett, which million maintained We of Securities $XX $XX a and Elliman, million value Investment including liquidity at Partnership and March Vector $XXX equivalents with fair significant to be redemptions cash and with million at transit cash XX, market $XXX XXXX, million. in Douglas Investment then your of of At

Douglas acquired XX% the previously As we announced, our minority Elliman interest ownership outstanding in taking XXX%. to

in adjustments described release. in are our financial measures detail to These transaction. our from our earnings reported earnings As non-GAAP adjusted a release, this XXXX have reflect been in greater

key financials. Group's Vector to turning Now

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

$XXX.X reported Elliman now of and million call of loss over EBITDA the discuss the Ron to million adjusted XXXX, EBITDA $X For business. $XXX.X and will Douglas of in period. an of Ron? revenues tobacco loss million quarter our Bernstein I turn first million revenues adjusted in XXXX to the to $X.X compared

Ron Bernstein

Good Howard. everyone. morning you, Thank

operating The the large XXXX to a we changes to number large presented grow year-over-year market. Liggett due modestly industry of continuing first our industry part was the adjusted comparisons, segment at to report in quarter price challenges while tobacco period. and I'm that of This increase income, related to with share pleased Despite of prior-year tough increases. to compared year-over-year

As noted XX's on from volume our growth Eagle in second the of growth phase growth. XXXX, fourth year-end began the gradually shifting of our by our income call, strategy focus to quarter we

year-over-year from the During volumes. now due margins income higher increases, as this quarter, to and to turn first while we combined strategy price the of the Tobacco. Group financials Eagle Vector for we XX’s I'll tobacco Liggett to continued benefits saw increased grow

adjusted XXXX, For the million $XXX.X $XX.X operating XXXX, for year ago. March XXXX period XX, to income revenues million corresponding $XXX.X three corresponding March Tobacco a to the for compared ended million ended the XX, period. compared months the $XX.X months for three Liggett million were was

on advance of March the retail afforded will increase rest quarter build mentioned, occur actions. to trade similar increase. announces XXXX. Altria inventory was in The price differences. the performance with follows Last price these pricing their and the and after increases the in As based the advance recent other and to Altria a of gradually and announced year, extent a price try increases inventory build lesser tobacco in manufacturers to the Liggett opportunity in timing previously precedent timing increase. anticipate of Generally including wholesale shortly of the first Wholesalers late industry the speaking impacted increase when industry retailers by increase,

prices February. Altria timing in to in that of late trade increased inventory The XXXX, opportunity increase unexpected increase levels. However for foreclosed the the

trade of wholesale result, revenue second X%. lower the period. basis were levels XXXX reverse shipments inventory compared Liggett's in volume decreased should a by the and overall the and by approximately end at while decreased XX.X% first Associates, industry quarter down year-over-year to Management to These mostly a comparisons As According quarter. on prior-year the were quarter Science wholesale shipments

decline For actual indicative not of the shipment reasons referenced, is this retail wholesale flow.

mentioned during industry more and that a retail of because company like believe shipments period. I'm by indicator by timing we declined we Overall pleased and quarter. on to the X.X% retail call gained the basis shipments I prior-year market the quarter each points performance. outperform that first report of share the X.X% As from declined of while XX and reliable differences, are to shipments issues price industry industry increase during Liggett's continue retail

well-established now share discount in quarter of XX,XXX the nationwide and first is declines, the XX% fifth an continue other and Despite the effective three Liggett and over is retail Eagle market. to unit supporting country. brand profit is grew Eagle XX's a prior-year volume to to retail in nationwide XXX,XXX volume U.S. is is stores providing the The Pyramid's and distribution, focus brands remains with in performance stores has presence. and currently the compared Liggett's U.S., X.X% largest sold the its number sold were across As on pleased the brand growth strong over the approximately the volume period of compliment Pyramid XX's we result, it brands. and now discount Pyramid anticipated in

Special minimal Newport price the see Camel premium discounted priced from extensions. Blend, brands and are impact various sell. and line that from deeper Marlboro we premium typically brands These products economy are as such Red, products discount to continue above We

targeted market continue discount little combustible growth markets. of impact have While first from their see they limited to geographic in strong operating continue on focus look create results to-date, from growth non-combustible as and and focused with sale other share from profit discount generating the of and from remain the and paper pleased over as the strategy Pyramid, opportunities base time distribution brands ahead, XX's. our we Eagle segment our deep smaller on products. volume impact we'll business pressure companies, We XXXX and quarter And discount performance pricing delivering while seek to we income

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

Howard Lorber

Thank you, Ron.

is value estate be business for well-positioned volumes for unit to increased to our long-term We Vector that cash our have profits, and continue continues success. real reserves, tobacco to believe consistently well-positioned Group strong We had generate stockholders. and

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

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

Operator

from Instructions]. question will come Zaffino our Thank And Oppenheimer. you. first [Operator Ian with

Ian Zaffino

very great. Thank Hi, you much.

Ron in give So, tobacco Thanks. bit just us drove Could little color share the what gains on that? strong. a were more very you

Ron Bernstein

cut sorry; for our I'm second. share out you a growth. More on color

Ian Zaffino

growth Yes, was strong. very the tobacco share

Ron Bernstein

we we've projected kind other into. them year over to despite growth on started I continuing of the had maintaining our increase mentioned XX% so, brands last And we or fact pricing to XX's. So see growth Eagle we're are Eagle of had the as XX's range the that that

that margin we're growth we that prices So see despite more generating up Eagle XX's. fact are the to going and on continue

Operator

Thank you. [Operator Instructions].

comes Our Crawford next with from question Jacqueline Jefferies.

Jacqueline Crawford

anticipate that Could through or accepted XXXX? qualitatively any whether the there. issued and increases and about how passing speak Hi been thus you not, just you price of you've far in more those been they've

Ron Bernstein

increases that both. I think we price have with Any that we of percentage industry occur consistently and the the in taken some line? problem value

Operator

are your connected. Speakers, still lines

Ron Bernstein

Okay.

Operator

Okay.

Ron Bernstein

on still We've market we taking increases we've has as on before, in a price basis pricing -- we'll the and growth, well. continuing the our The kept to one our consistent increases. as mentioned taken price market market we power and the pretty anticipate as have them -- that go-forward. see been We're second. Hold

Jacqueline Crawford

you to there? understand or just segment there performance kind what's then And talk type, more region just of real shifting estate about could performance driving housing by maybe geographic Okay. over

Howard Lorber

Sure.

starting income So it it largest we about look if market has decline pretty stopped last has into And a which look to and we of is little I in we're market coming call But and City we year a the thought York instance, over gross year, the -- us. it's for the from little think after saw and decline to much commission down bit last this what up bit sort New year. for a stronger Florida there. being XX%

spend it from. seems on some this in thing It price in slide I up will doesn't City the Douglas companies York the unit again. that seem to that for the think is point definitely, year. to and it basis, inventory some at look mediating where different But last the because driver to because it's start and hopefully So market then big Elliman gone be when is other are the biggest comes is New that the markets is and volume most it picking really of be should real highest a a continue was it as at

Jacqueline Crawford

if can recent Great, have you issue that coming that filed be the next any is to process to not plans thought might security how it's year on my update converts are address shelf securities then you to any thanks. here any or address the that or due understanding would you the used And correct XXXX that for those? confirm

Howard Lorber

So, B.K.

Bryant Kirkland

last filing its to and registration the it it since shelf Jackie, solely as after XXXX company filed flexibility provides had previously in statement expired. to outstanding if shelf has filing, in and years recently an filed desires expires, future, an the the Hi The issue registration XXXX automatic three was statement automatic one was you? Yes. are that new December in of it securities. know if the dissolves, that XXXX. And filed December how replace statement you the So company's and registration serves shelf

Jacqueline Crawford

that convert? Okay. you you do plans might have about XXXX can the address And how to any share with look you us

Howard Lorber

tap We this markets plans basis. And ongoing the there on capital an Yes. markets. capital time, no are at evaluate to the

Operator

you. Thank

comes with question Reinhart. Matt next Our from Martinek

Matt Martinek

actions, trying this the you I pull other between in of then levers and hoping some you any of tobacco Pyramid an anything, And can pricing of Hi, differences us could up? outside profitability maybe there's if terms Eagle also, profitability get give to business was in idea of the XX's.

Ron Bernstein

Yes.

dollars of we kicked half we marketplace, about process built the marketplace. the a to in off As to a grew XXXX, XX-year a that over took margin up, when talked go and course billion a in over brand period that previous you of it back we to if substantially go a calls, building the I up Pyramid we the and introduced of We through brand brand has company.

grow to so continues are I we to We Eagle a to as with phase building in disrupt gradual -- of on as brand. basis, grow pricing indicated. continue the to not opportunity And Eagle. take the the

at do grow profitability, we've gradually and the opportunities over while to focus years. up this way to point last has that's in take dramatic to continue so on couple The to in market next the expect to continue we is margin is So brand now several and though doing look to to be start that build marketplace our the share less our and to brand where for as the a over continuing we build we're focus going right the of margin and to continue years, than base allows. some the key want is what us it built that's our to for we

Operator

you. Thank

Ian next comes question with Zaffino Oppenheimer. from Our

Mark Zhang

is Hey on guys, Mark Ian. for this

to issue there with line before. an Sorry, be seems our

Elliman, provide real just you and a into I'll more guess terms can for bit terms just of dig EBITDA puts I Thanks. Douglas in of and estate lock takes the in quarter? there guys So in little the

Howard Lorber

real the the ownership You're talking versus on estate side on brokerage? the

Mark Zhang

sorry. side, brokerage The

Howard Lorber

Okay.

you the repeat want? do So, What question again.

Mark Zhang

of The there, for potential, like and I sort guess, segment EBITDA given any cost where of the mitigation just like the walk performance was?

Howard Lorber

time. Sure. Well, gone has obviously segment through a rough the

think I the they at I $XXX think some XX% of they million the is saw lost If our range quarter Realogy, stock and down like they year lost you this two I there -- -- have segments. in first about of competitors in look and

their cost going sure into was And hit So much We cutting it like they as you company-owned the And through planning been bit getting it harder. got have are cost and franchise I'm looks started saw more read company-owned and -- we cutting. they're if year. through what this of little doing also. course year and this we've and it going release, last plan we happening into

cost cutting of obviously, it cost cutting course we're substantial right of of that payroll. the with cutting because So is amount cost in we doing. have obviously away And you a can't see most

things in of is it offices a like consolidation chance of of and that. if there's Some

looking we're it, So at it. at look to continue

on bring we We have rebound similar what the weekly was meeting our came we management and to and well. so XXXX down very then meeting, in did the costs and we has did it a which expect and to XXXX

So and profitable structure put turns, we're trying lower that a been to and putting therefore than we've ourselves have we're in the going position the past. ourselves cost -- market the more as same in to

Mark Zhang

more Okay, timing of is then a the XXXX? terrific. of second is you see And expect half of in XXXX in census terms would this this or to more

Howard Lorber

business real second more, we're third most going historically, we're an the us quarters and basis. the estate think I best companies. residential And the quarters see and are on No, to doing for ongoing in

slowing combination where up a it's us and a good should cutting and second put that, down decline in So showing third cost market position the in quarters. the of

Mark Zhang

then terrific. the outstanding your Can guys Okay, of and expectations the housekeeping shares Thanks. rest just interest two year? And you questions. tax for maybe finally and provide rate then

Bryant Kirkland

Mark, Bryant. it's Hey

for shares equity computing year I'd diluted million I value; would far outstanding use As use around for EPS, computing as million. far the $XXX.X $XXX.X as as

due price. well are that are you with that associated the these debt included XX.X As in shares is aware, is in not exercise convertible XX.XX and XXXX April shares million

tax tax XXXX question quarter XX.X%. rate XX%. for next the expect do We was for Your about on about was Tax rate. up the rate

Mark Zhang

interest? on anything And Perfect.

Bryant Kirkland

interest? On

Mark Zhang

Yes.

Howard Lorber

Interest expense.

Bryant Kirkland

question. don't sorry; I’m understand your I

Howard Lorber

is if interest there don't about change. change any think expense asking in there a major is I he which B.K. is

Bryant Kirkland

around There no. $XXX is of cash. replaced million no because XX% issued material $XXX No, change paying and XX.X% that at we they bond were million

interest, as cash So very little as change. far there's

Operator

on Thank call. for all those us call. our that have today. Group's earnings conference you. This joining participation. conclude all Thank Thank Ladies and questions you gentlemen, for we for are your does the you Vector

You may now disconnect.

Vector (VGR) 7 May 192019 Q1 Earnings call transcript