Earnings call transcript Q4 2022

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Operator

Welcome to Vector Group Ltd.s' Fourth Quarter 2022 Earnings Conference Call. This call is being recorded and simultaneously webcast. An archived version of the webcast will be available at the Investor Relations section on the company's webcast, located at www.vectorgroupltd.com for one year.

During this call, the terms, adjusted operating income, adjusted net income from continuing operations, adjusted EBITDA from continuing operations and tobacco adjusted operations 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. in income adjusted operations, and on EBITDA operating are operating from net tobacco the adjusted release, income operations, earnings of continuing from contained website. Investor on Relations from been the adjusted continuing income adjusted which section Reconciliations has company's company's posted the continuing operations

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

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

Howard Lorber

fourth conference Brands. Bryant morning, thank and Vector you for joining Anson, Vector Nick Officer Chief today Chief are for us me President Operating earnings of quarter Group's Kirkland, Officer; and With Liggett Good XXXX Financial our and call.

I of will tobacco will close Then for questions. final reviewing begin Nick financial of ask XXXX. performance summarize comments to the I open business. the fourth I Group's the call results our consolidated for by will and quarter with Vector

as excluded Douglas presented in period and fourth are quarter XXXX the Before adjusted reviewing Douglas from financial operations Vector the financial statements Group's our results. consolidated Group's financial consolidated results results, Element the of spin-off of please note in are that of for because Element's Vector XXXX, discontinued

Group's Vector sheet. with beginning First, balance consolidated

remains sheet balance strong. Our

approximately maintained cash at million including we $XXX million XXXX, significant liquidity cash XX, $XX of and December of with equivalents of cash As Liggett.

value and investments securities investment of long fair term held $XXX million. also approximately a with We

the ended $XX.X per Group income $XX.X XXXX. in were $X.XX the diluted common million Turning to months per to in diluted XX, from to million or Group's Vector to Vector for was share $XXX.X attributed share consolidated million $X.XX XXXX. three December Net quarter XXXX, revenues compared operations for compared Group's results Vector $XXX.X or million

from XXXX. million diluted Net Group in $X.XX $XX.X common Vector diluted share to common income per million attributable operations $X.XX to or or was share per continuing compared $XX.X

The company million $XX.X compared million share Adjusted in compared operations income EBITDA $XX.X diluted $XX.X operations million diluted from XXXX. per continuing from adjusted $X.XX recorded of or or share in XXXX. to continuing per was $XX.X net $X.XX to million

billion results to December million or billion common consolidated was Next common Group's to from $X.XX Vector year for share diluted XXXX. Group's $X.XX or compared Vector to the in XX, $X.XX revenues were Net per for $XXX.X XXXX. share in XXXX. $XXX.X income compared ended the $X.XX year million attributed Group diluted operations Vector

per million $X.XX diluted attributed was from share to $X.XX million continuing to common operations Group income $XXX.X or $XXX.X Net common in or XXXX. diluted compared per Vector share

share adjusted continuing share compared million, diluted in $X.XX operations from income million XXXX. $XXX.X from operations or net recorded company compared million in per The EBITDA $X.XX or Adjusted to XXXX. $XXX.X diluted $XXX.X continuing to was of per $XXX.X

tobacco I over will Nick? discuss it to now turn our Nick to operations.

Nick Anson

and Howard, good you, Thank morning.

XX% growth. shipments investment Liggett's on the brand favorable we approximately to increased and capitalize the Montego by in as performance wholesale continued from volume quarter XX% of benefits during and by income growth opportunities of remained Liggett's increased began more to XXXX we as operating brand. continue income of transition marketplace strong quarter fourth fourth the to recognize Montego our the than

growth driven fourth declined retail Montego the X.X%. shipments quarter Management of by Science retail data industry shipments from significant to of ended months three for from increased Associates, by XX.X% Liggett's the December brand. XXXX by XXXX our According XX, Meanwhile, the

period. X.X% largest the market. This up retail when to by quarter share market cigarettes since fourth we discount originally prior share to industry the year increased represents introducing disrupted X.X% Liggett's tobacco the Liggett's market from XXXX in

our XXXX, opportunity portion we captured be U.S. X% capitalized competency to the in of quickly on category exit December Our significant expertise and a discount continues that a share. core following the in competitor's competitor's market market a from

In XXXX, than conversion believe highest we to business sales of more leveraging as as approximately by next that competitor's in converted much is vacated twice retail base and execution. our and the market We Montego broad distribution the the XX% competitor. our volume strong percentage

only approximately the by this XX-year ended increased have is volumes Liggett industry during to addition, period. volumes given company December that unit period in cigarette remarkable XX% XXXX, achievement major percent the In XX, declined U.S. a

term the long cigarette result propositions to performance is more in as discount industry. And value of segment to effective a best particularly strategy environment. the offer demonstrates this shift U.S. mission Our success as proving Liggett's economic consumers the of current the

compared year. last months to same According three the the XX.X% the in represented to the Associates Management category period Science December data ended XX.X% of for retail XX, market discount total XXXX

category, and segment. Within to see growth discount in deep brands the the discount for momentum we continue

For in the total a XX% estimate same the discount fourth the the segment deep comprised discount period category ago. year we quarter of compared that of XXXX, to XX%

migration We presents price consumers. option continue discount the for expect more this to segment as a deep attractive

distribution to our competitive in shifting that Liggett provides advantage brand As experience profitable focused meet value we brands extensive demand. market portfolio, developing national such, and are discount a with confident broad

largest largest second in in our the the XXXX, discount fifth became and U.S. largest which has also grown Montego, cigarette become brand brand brand to

share XXXX national fourth Montego and X.X% third XXXX, X% for in distribution XX,XXX stores of quarter retail fourth of quarter the expanded in of the quarter final quarter increased the in of stores XXXX in XX,XXX of from Our to X.X% up The of the fourth to in XXXX. compared the market to quarter XXXX. brand's

approximately of its share the estimate the a share segment of discount Montego significant expansion year was period. in We discount from XX% that the in fourth deep XX% quarter prior deep

effectively profit with managing Montego volume, brand optimizing pricing our strategy with our long portfolio. in by share of Our and term is market value based consistent objective

and our substantial term we continue providing long to in Pyramid. Pyramid Eagle continue reap while our investment significant also also growth, income income earnings for benefits brands, XX's our to presence. deliver Eagle-XXs growth significant market foundation from Montego and While expands

now combined Tobacco. and I to will Vector the Liggett for Group tobacco turn financials

For XX.X% $XXX.X months December year and increased XXXX of million XX.X% the respectively, three to $XXX.X a and $X.X and in record to respective revenues the million to XXXX, ended XX, periods. billion compared $X.XX billion

compared million and respective million in periods. Tobacco December the and the in to and operating million million $XX $XX.X XXXX months XXXX XX, $XX.X ended income three million respective $XX.X XXXX $XXX and Tobacco XX, compared and $XXX.X year December million the adjusted for and $XXX.X the million was periods. respectively EBITDA XXXX three were ended months million for respectively $XXX.X to year

of which prior the our between from investment period In million to continue in discount the in this industry's fourth and a gross leading increased in as premium in brand our quarter the at higher approximately see $XXX.X the year current to quarter, stable These the price remained tobacco was $XXX.X and fourth of operating income, gap XXXX. occurred Montego million increased the XX.X% as strategic profits reflected retail. profit benefits XX% Montego as we well

we a expansions the last expect significant Consistent move as over XX Montego forward. realize with investment brand return to we on our previous years,

potential. thorough circumstances our investment and foundation investment earnings approach decisions adjusted opportunities. As market and on remains analysis on are always, This long-term for in based based flexible our market real-time

performance operational and discount share of profit the In and gains strategy summary, competitive tobacco in business historic the validate have our long-term our segment. and retail strong the we financial remains our market growth advantage

force. distribution Most broad on effective and by a base, long-term and potential. underpinned Our foundation it strategy importantly, is builds scope the focused our programs, of our sales for consumer earnings capabilities

are the infrastructure in business we strategy to operating place While are regulatory and confident have we to industry, keep and subject market efficiently. risk, always general we our

for to attention back Thanks you, your and Howard.

Howard Lorber

Nick. you, Thank

Group Vector year XXXX. in an outstanding had

quarterly of cash component with an is our to allocation It our our our are continue. that dividend. be practice policy of We important will longstanding and continues pleased strategy a capital expectation paying

open the questions. call operator, for please Now

Operator

Oppenheimer. first Zaffino take [Operator Instructions] from We will question Ian Absolutely. our with

Ian Zaffino

Thank you very much.

margins forward? It come seems we like to Just on expect spend to Montego, what back. be kicking do have going

should spend we outlook kind to of growing kind it of and what So margin that relates you. Thank expect from as business?

Bryant Kirkland

here. know, constantly start the to analyzing in brand, don't our take always are guidance we as our you based pricing analytics. as marketplace as as look, the we're we we certainly transitioning Ian, provide investment, specific So But on

the analyzing market granular at are a level. We very

And spend if to accordingly. back, we need we do will so

the I and market objective we're So maximize analyzing between again, that long-term margin is growth obviously to remarks growth. looking the mentioned and in volume Constantly profit. the balancing my prepared always

Ian Zaffino

very Thank Okay. you much.

Operator

comes Barclays. Holden our Hale And from question next with

Hale Holden

I had two just questions.

majors big if one moving is, from Liggett, great a have seeing I segment? any response the competitive guys first I such price mean, job into in down share taking wondering you done were you was The your potentially

Nick Anson

to answer Hale, to significant any degree. not So simple the is that

gen rentals And I indicated next think, and have say a to Altria premium products both on Altria remains being and remains specifically their company. technologies. I committed that would focus

more So environment, XXXX. significant priced EDLP the volume. of not at of the any end to certainly, of outside degree forays incremental Strike the is Lucky gain into made re-launch segment have Reynolds discount their with competitively their recent But brand to

the there's signs into shift So no strategic are tobacco discount that short, any the big significant certainly companies segment. in planning

we the discount remain the we where in good about and are very feeling marketplace. So leader

Hale Holden

a sort cash a up of little you're second was my move as to on And generate of thoughts cash. if allocation Great. bit, here sort significant amount change capital to flow? of - we any going question I And wondering was see from margins free

Howard Lorber

want money to this Howard I particular don't I it's at think so, think we'll return We don't shareholders. to so but time, see. Lorber.

really our to making of money the brands. So see away. to now that's going to brands. increase price the want this we're discount new We to right and we way and continue could that always do see But not in the in volume one allocate long maintain still we're how some

Hale Holden

thank appreciate Great, you, I it. Howard.

Operator

And Karru Martinson from question comes our with Jefferies. next

Karru Martinson

morning. Good

were cash used? cash in that we right around bonds it's third quarter, kind we we that million on did Where think When mid-XXXs. buyback now question. and $XXX at quarter? of any get Did look the Just I

Bryant Kirkland

are morning, No, we Karru, - you? good hi, how

Karru Martinson

you. thank well, I'm

Bryant Kirkland

the in pays the master agreement cash and Liggett primarily December reduction that. payment to in related settlement

Karru Martinson

Okay, thank you.

Bryant Kirkland

capital. working it's So

Karru Martinson

of there seasonality look Okay. call Should when we we And of that at quarter kind isn't new Eagle, Pyramid terms as business? here baseline then that of Montego. given and brands in in kind of three much it all the now this the think income

Bryant Kirkland

I we specific again, guidance would here. since say don't provide Karru, Well,

earlier, investment analyzing in objective Montego the as our marketplace As we the we profit. long-term with of maximizing I analyze constantly mentioned are

balancing share. constantly are We volume, pricing and

so, and very for profit maximize at obviously the will granular regions the make level a maximizing we we country, ultimately that we long-term. to that in to of do are ensure various adjustments and And accordingly volumes

Karru Martinson

menthol, and then FDA of on other or California just or Okay. regulatory And any may litigation, past lastly, the whether kind update that challenges any radar? there things have is and menthol, fallen the our it's Colorado

Howard Lorber

so. don't I think

certainly ban, about those smokers me With out the to volumes it's draw California conclusions Certainly respect draw Let conclusions. too take preference. I'll menthol too started from an any certainly to any overall early industry individually. have but to changing early depressed, perspective, argue

perspective, State I you that in X% would half California than less total remind of our Liggett's of the menthol of our are volumes from volumes.

total menthol base. going immaterial early to they're ban. rulemaking share So our FDA still still California respect The But the through level, too the overall, process. proposed they general tell to effectively ban to at multi-step earnings are with and the market

XXX,XXX to brands. indicated have, menthol they FDA about the through go what The comments and cigarette continue on

changes the be will to of least year. obviously ruling that the and on the be final side issued before side. later at regulatory litigation a potential that At industry it's retail in implemented that with year will so on at account point, doesn't that indicated for a they've respect real it the on no So

of are there. and we're the we managed side not updates And Colorado, about feeling Colorado in any confident with any of our that through moment no particular further where that good so, moving on things. feel stand We in event forward we've significant litigation the at regulatory marketplace the

Karru Martinson

Appreciate much it. very guys. you Thank

Operator

you conclude conference all earnings at questions, Ladies hope of today. for participation. of those we Thank This everyone have and will your call. all healthy and on us you Group Thank On behalf remains that our us and Vector Group's for joining call. the Vector quarterly well. Liggett, for are we gentlemen,

may disconnect. now You

Vector (VGR) 16 Feb 232022 Q4 Earnings call transcript