VGR - Earnings call transcript Q3 2020

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Operator

Welcome to Vector Group Limited's Third Quarter 2020 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 the 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

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

You may begin.

Howard Lorber

quarter Officer third earnings Thank Anson, Bryant joining us Vector Financial morning us Bernstein, Advisor the Chief With you. today conference and Brands; Officer. Group's and for me Senior join our Good during question to call. you President thank on and of and XXXX Vector are Nick Liggett will answers. Ron Vector Chief Kirkland, Operating Liggett Brands

will performance the I questions. the performance financial review afterwards XX, XXXX. then first Douglas comments call closing financial Nick months September we'll our I'll for discuss then and open results for ended of call, the will this tobacco the During business. and then Elliman's provide three nine and consolidated summarize

September of of cash interest million, XXXX, As at million $XX liquidity maintained investment and a and Liggett with of market Elliman at $XXX $XXX million Douglas including $XXX fair cash million. and and Vector with cash partnership of sufficient securities XX, equivalents Group investment value

for and months nine operations three ended XXXX. the Vector Group's XX, Now turning to September

Group's XXXX, were the to XX, For million, months period. million Vector revenues XXXX September the ended three in $XXX.X $XXX.X compared

from XXXX compared in The third $XXX.X the diluted Vector income of in XXXX real million a the XXXX. for income compared in to per compared diluted recorded third to Tobacco $XX.X common the $X.XX common quarter million $X.XX both of per revenues EBITDA segment million $XX.X or period. sale $XX.X the million, net $XX.X $X.XX share, $XX.X and Group income the to share quarter of or was $X.XX In the diluted million Elliman, million adjusted addition XXXX share diluted in the million, to attributed company to of or share, or Hamptons. prior-year. in in Adjusted net of Douglas include was estate investment $XX The per Net revenue increases per the

nine September the Group ended revenues in the $X.XX to Vector billion flat For and were when months were XXXX, XX, $X.XX period. XXXX billion, compared

reported $XX a $XX.X in reported of segment Tobacco revenues our revenues decline an Our and increase million. of Real Estate in million segment

$X.XX or Vector nine to or million ended diluted $XXX.X million the XXXX closings York quarters, September the on million because in estate to second segment an XXXX, New on EBITDA results increases months September share $X.XX prior-year. the as $XX.X income July income revenues decline acceleration year-to-date Estate $X.XX diluted company of share, net $XX.X reflects impact the Real X, well of the the period. New XXXX. per York quarter. and per City of our reported dramatic real COVID-XX Tax in to of compared million, the The in residential as ended of XXXX, anticipation acceleration third in comparison second While XXXX. or $X.XX $XXX attributed recorded occurred the year-over-year months XXXX XX, Mansion of State in million, This of pandemic was diluted quarter per net million per common adjusted the to was for the $XXX.X Adjusted the in compared in Group nine first XX, unusual income the Elliman's in increase for diluted common on share in estate Net $XX.X compared or Douglas the share, real

$XXX the reported revenues, in third in three revenues, months ended million, million million the months quarter net the $XXX.X of -- and to $X.X EBITDA an net Elliman's income Douglas of EBITDA $X.X $XX.X For XXXX, results compared adjusted of we September million of in XXXX. for income million three million, XX, of adjusted $XX.X ended and

quarter September New nine reported EBITDA the regions, to charges Group's $XXX.X Elliman ended of initiatives included months $XX.X million, ended million, Douglas million in quarter XXXX, quarter and complementary months million significantly quarter to have and cash million XXXX, $XX.X $XX.X Vector stockholders. XXXX, charges million months of New Hamptons, to of third sales to the the Douglas fourth continues net and pandemic $X.X third estate September September COVID-XX Elliman's net will We first million. EBITDA Beach, in City. million address reducing compared receipts compared revenues, $XXX in the long-term XXXX, the and New to Douglas nine decline upside by expenses, as Los and XX, XXXX. have $XX and quarter other closed expenses. compared in initiatives administrative and months and City XXXX, restructuring adjusted Miami, York in and some provide to second have XX, real excluding to nine net City, XXXX. million strengthen of the of the to and effect continued pre-tax ended impairment third as including third April expense the when including in personnel York To reduced and Palm and quarter a XXXX COVID-XX, offices XX% quarter reduction improved continue significant restructuring nine of These loss believe in for Nonetheless, all Elliman XXXX, Aspen, to charges in both in of For compared Douglas consolidating a Furthermore, York million of non-cash of of Douglas resulted XX, loss the $X.X Elliman's approximately administrative for When revenues well operating market. impact the third on began markets pre-tax these of the the Angeles. Elliman's $X.X $XX.X adjusted income of

over Nick Tobacco the discuss to to business. turn our call I'll Now Nick?

Nick Anson

you, and good Thank morning Howard, everyone.

third a tobacco its XX% to with margin performance Liggett in growth adjusted strong continued contributing the During operating year-to-date income. increase revenue quarter, and tobacco increases

on As we're growth very remain our calls, with and phase XX's results of income pleased strategy business previous to-date. well the the into noted Eagle

successful, we specific have retail XX's about and remain optimistic market increasing programs and proven potential. Eagle Our profit contributions long-term

XX,XXX distribution market results Pyramid Vector the in substantial financials continues nationwide. and which Our Tobacco. reflect resilience is sold also company. profit now Pyramid Tobacco for of turn the currently has and Group to to approximately the I'll and deliver combined stores presence Liggett for strong

shipments to the gross and and respectively, outperformed According X.X%, compared purchasing share $XXX.X overall and XX, the declined COVID-XX three to increased for million was quarter XX, income cigarette the U.S. exemption wholesale September to Tobacco reflects $XXX.X lower underlying resulted the third nine third which increased XXXX, $XX Management million million the higher million $XXX.X Settlement in months under the associated three and MSA. primarily compared September from changes in to million per quarter XXXX, other compared Liggett's wholesale and year-ago. net operating the quarter by with $XXX.X margins categories, benefited Science ended Associates, expense trends, have the and Similar respectively, and volumes Master associated from consumer for increase $XXX.X industry increased recent volumes has months stronger XXXX, For MSA in periods patterns industry pandemic. shipments with of earnings third and million million market X.X% product while ended cigarette value XXXX consumer for pricing historical cigarette Agreement million in the for demand have expense. nine industry related by our $XX.X XXXX. to corresponding periods. unit the The Liggett's revenues profit corresponding a were $XXX.X per unit to increased adjusted lower

consumer the months XX, To-date, the U.S. very long-term increased in currently for further of using approach is pricing, sold strategy I'll volumes and In identifying MONTEGO continued of deep X% slowing during discount on now build volume brand despite business industry shipments Eagle The in by expansion. brands provide increased our remains is declined XXXX. a competitively quarter the XX The X.X% continue third priced in September the discount macroeconomic we of only XX's The was after our be to third being well-positioned the response we're it for wholesale strategies we in upper retail the third margin retail initial MONTEGO further stores adult in U.S. approximately smokers. growth consistent volume updates in MONTEGO net quarter the which anticipated the performance from discount in quarter half modest shipments to to current with with with of in while targeted providing in share was quarter to our XXXX, retail particularly quarter tier XXXX Southeast. MONTEGO XXXX we're Liggett's U.S. coming pricing. deep measured and in to Prior priced our about for This same XX's sold Eagle approximately and the growing segment. our volume nationwide. states. distribution August, Liggett's by pleased increased Liggett's retail XX's and to take for of quarters Eagle primarily Liggett's decline the progress. share will with XX, second Eagle discount and third the third expanded markets third environment. in and XX's XXXX. opportunities volume growth with by states, retail retail of X.X% With began nine MONTEGO largest volume X.X%. for August, segment, summary, in growth of deep Nonetheless, pleased Liggett's growth and the represented the due X.X% also year-over-year slightly of income to in quarter four in effectiveness reinforces the Eagle will XXXX brand is XX,XXX value and increased compared period. the mind, the our of period, ended the discount the X.X% to third declined that light in the segment

to results executional deep the of our programs, capabilities market competitive consumer-focused strategy Our advantages and continue of within including sales the our reflect validate distribution, force. segment, our broad our and base discount

and Eagle distribution the sales Pyramid of incremental As we on base both income ahead, and look remain XX's. from we generating focused strong operating

while risks, to effective for always you, attention. and supporting while keep operating Finally, And we that market profit and business Howard? share subject efficiently we to market our general confident remain Thanks we're to growth. back have programs industry your

Howard Lorber

cash quarterly Thank taken business estate an real the for has It our consistently longstanding paying unit volume our had of strong Group dividend. pleased and tobacco Vector profits capital success. position necessary future you, and history reserves, allocation strategy. with of its its to a increased Nick. component cash remains has important and steps We're

While our continue we'll continue policy it to is well that the evaluate each quarter, into will our dividend future. our expectation policy

Now open please the call for questions. operator,

Operator

Ladies much. very to and floor for you open gentlemen, time at Thank like we this the questions. [Operator Instructions]. would

question Martinson, Our Jefferies. come first Karru will from

Karru Martinson

Good on update in price morning. an Proposition change; noticed the wanted there. that to is with you into minimum had lawsuit get EE a I status? I entered just Colorado What the guys

Nick Anson

Yes.

Howard Lorber

want Nick, to you or Ron answer?

Nick Anson

absolutely. Yes,

Proposition So, And initiative was Colorado. night. passed ballot a on out actually it Tuesday EE in

fixing that products. face it on in our main price which and believe, cigarettes of on we a to bill a state anti-competitive, from state January a that a exercise to perspective, to complaint and going bill also a tobacco on was taxes carried of effectively $X power. the it, form introduced price Bottom also provision a legal essentially and excise of of provision other that contained X. pack on in the beginning minimum cigarettes, increase On we the it this Colorado had price the is contains tax line, increase constitutional of cigarettes is But

complaint filed from Colorado is hold, that at we're on complaint waiting that and moment State and So the hear that. to the a of we on

Ron Bernstein

of is issues doesn't strong The a Yes, process price peers, just case objects in that where to the to have state fact passed. add, pretty which all lawsuit to increase is there's country in only object that price, situation their that. in relative this. tax, was a have bill the involved to like And the state -- we that they be fixing the is legal which to this sorts with it Nick. that the The excise the anticipation creates but minimum the this only

the So -- the passed, legal couldn't lawsuit. now process the we with -- to, the we're bill in go anywhere now, case, go really legal we'll passed. board the until that had full And it's

Karru Martinson

it is pending up And Okay. any issue before play in into this sales other does for I the you? come And how performance has guess or states? Colorado

Nick Anson

we've this that the competition always other I -- way is but the whereby first particular states regulated This certainly to is done allow their it seen have mean, kind, they a cigarettes, around of this prices No. minimum a are remain. time provision. this of price one there is country price they've the in

So a it's part situation. an of is here. unique suddenly the bill this And insidious

we're it. challenging that's why So

Karru Martinson

Okay. you well. us of out what gone what's Could recently And of through as that the sales there's menthol bands as have there? your percentage again, menthol that brands status and is a the menthol remind

Nick Anson

respect has menthol. menthol to-date been California of of challenged and our bans key business. to ban states recently by industry. of a is XX% to-date not date, with Massachusetts in in the approximately by Both those has that the to small California. the But State two challenged ban So is The industry. seen been The for volumes we've very Massachusetts, out the

how materialize. we'll see So --we'll see those

Karru Martinson

And talked strength seeing over Okay. New markets of recovery sustained the fourth York in the markets? in improving the terms receipts potentially you the auxiliary in cash then the quarter about urban the are What core you Douglas quarter Elliman. in and for third

Howard Lorber

of obviously, June. shut the market end down Well, was the till

So of that was time. a pretty long period

So on first in and life the the of most the come deals sales up of a $X did after in the those doing think $XX all up at were Most it's biggest million. was $X lot that been of happening What's price I in we different become that. sales beginning, normal ranges, has range. time we including were to open when gone to million more we're able again, there's has on; million to, one products as the

before high has again, a heading the sort and and the down of really but deductions. But point were some point XXXX, down of a different they're or to XXXX bit you the high idea and starting high highs when was the of once highs. had loss they from So from was even it heading still prices market has Everyone COVID, SALT down the the around in XXXX XXXX are the degree, started recovered the probably anyway, XXXX, little of.

then Mansion and So you year. last had Tax

not in reopen see it. because we're So markets one And other our we're stopped able and that just recovering. as it is is And as performing and good like heading COVID is of of fast completely, way. good were and market it we'd it markets, being in to then until to recovering we about other position strategy just every other of well. our But

Some multiple the shut COVID as parts off South performing there are imagine Island. But other Florida, Hamptons, especially and started but down took will of them well really what were York before, of well can times doing City. before, they in smaller Aspen, the The of Long markets when New very you also,

we're So is okay. performing, California

make up other we pretty in up York So to these to managed New I'd now a markets. what because we lost good lot in in shape, we're say of

Operator

you. Thank

from Our Hale come Barclays. question next Holden, will

Hale Holden

could just give you there is guys. market Thanks the I I for heard Hamptons that was -- estate revenue, sale call. and wondering you in on on us $XX real had was wanted correctly the P&L I if million it? for to color just confirm taking The a two I sale in some that that was the and that

Howard Lorber

just was collapsed of a will That land we had, not after had it. dollars, went but about market you, Hamptons. we and maybe it. make down sort didn't a we Yes, sold money that the made on was we few that, it because a of piece great any what had And and tell bought houseboat I was

was price that of house sold. the we but that the So

Hale Holden

XX's over Okay. then, MONTEGO, to second my Eagle consider of your performance? -- but new the time, sort growth on question And was we're glide an that that should we going expanded distribution, see is early of what following path brand,

Nick Anson

always, I we an always represent at facilitates the moment. the We're on marketplace economics approach capitalize a they XX% time will marketplace, COVID the expanded this to opportunity and the we the potentially to see those the approach of That's for based to market sometimes of we MONTEGO, know, national we profit-taking. unclear categories. as low-end over low-end states and conditions. the kind as current over unique moment. there's But our we opportunities where say, In on specific in of hardest unclear always to be growth brand. There's an to that states opportunistic MONTEGO, some at have expanded economic the like take you the era whether -- XX some It's opportunistic growth take

So and a approach growth, a plans very more to expand develop fair that expanded opportunity an to of LTB of share get make measured there at and a sure brand we nationally. as pricing position this price low-end no saw point or this that -- we on to future so

Ron Bernstein

add to relative the I'm and followed the those Liggett years, history had curves of analysis position all market and XX that growth to how at can all if upon you last we the has affords to the the constant that opportunities. maximize you best our Just brands opportunities the different back look they're go sorry, that, and they've of that based over

mentioned an in the of the the brand demand Nick his there's that Eagle XX's segment now as low-end increased clearly high-end discount As on said, prepared in and deep he is a is segment. remarks,

to not. it that opportunities makes position, a they'll evaluate or sense advance it and are brand have sense said, where Nick it as the So as makes and

Hale Holden

What's and market? same difference XX's the the Eagle between in MONTEGO price

Nick Anson

and and pricing the we Well that the to present. that specifics will the retailers different based because want vary I strategy on programs the don't get they on and into

this be want will again, it discount for that into But just don't market. the there to specifics at deep competitive to get I reiterate, price of down point. So

Operator

Thank you.

Our next Mittal, come will question Barclays. from Pallav

Pallav Mittal

Pallav question you Jain. This Barclays markdown business, have in from reported happening real Mittal morning. any the are goodwill these have Good Douglas losses are Where on estate from please, is behalf another Gaurav so million down and of of estate Elliman? $X.XX you QX. ventures loss on A real condos, writing

Howard Lorber

you answer want to BK, it?

Bryant Kirkland

How you? morning, Pallav. good Yes, are

Pallav Mittal

you. Thank good. I'm

Bryant Kirkland

Excellent.

have you estate, big of the $X.X As real million to $X.X third ventures such the as that non-cash Metropolitan operate been either investments property in during area. million relates losses look hotel that But really, that the estate to in charges. the about that retail we quarter And and in York losses COVID-XX New pandemic. far of or of by million real if ventures to another industries in impairment at real was relates as that right have picture, most estate from had our impacted we $X then

Pallav Mittal

thanks. Sure,

Bryant Kirkland

You're welcome.

Pallav Mittal

And quarter sales estate increase been around is a to was of the business this the prior in so in cost real sales of that increase? causing XX% has the what and massive XX%

Bryant Kirkland

Howard property was Thank two you. at The the is most break-even. Hamptons in by factors. sale earlier, the important caused of increase And The indicated the increases as

million sales. of So $XX corresponding $XX of we cost revenues, recognized of million

have a lower Metropolitan addition Florida migration margin that, our to as higher seen margin of In such from to we California. area Douglas York and sales Southern areas the New South at Elliman

Pallav Mittal

increased so peers now? question a If price have you. Sure, last prices Do in had every on XXXX? have how I think you new you increases one year norm cigarettes three ask the is XXXX. And increases by in thank on your tobacco three price much can just business

Nick Anson

Sure.

increases. -- so three of the price go couple seen the to -- we've years the yes the industry for now So last

price we whilst frequent. increases was first six price for increases three three increases we've price saw So we've with saw And in seen be the and volumes now fact seen, we this the decline, more [ph] it year. and time higher as

of in areas think happened those those the three that industry as we're that evaluate and looking and that based spend that take increases potentially problems. spend not on all I a marketplace we're But seeing increases. need done we where value back. do price And always that's to with price our on this strong And in to after year. money change taken these back we increases, some we we price have we've we of brand

taken it So sense spend But back. think year. this to price strategically back we've those we taken three increases makes where opportunity we've to the spend

Operator

Ladies that Thank and you all very today. questions we those are the have gentlemen, much. for

Operator

and call. joining all us Group's on of and Group, all Thank conclude at you Liggett everyone and you we us Douglas quarter will This your for may behalf you for Elliman, now hope call. disconnect. Thank healthy now well. Vector On conference third our participation that earnings Vector of remains

Howard Lorber

everyone. Thank you

Vector (VGR) 5 Nov 202020 Q3 Earnings call transcript