VGR - Earnings call transcript Q2 2024

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Operator

Welcome to Vector Group Ltd.'s Second Quarter 2024 Earnings Conference Call. This call is being recorded and simultaneously webcast. An archived version of the webcast will be available on the Investor Relations section of the company's website located at www.vectorgroupltd.com.

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. to income, income income, company's are which been operating tobacco EBITDA earnings adjusted section has operating Relations adjusted contained posted to adjusted company's adjusted net and release, of Reconciliations the Investor website. the in the

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

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

Howard Lorber

us our are our Richard and Financial Conference start Group's for and Quarter Second morning I Brands. Kirkland, Earnings Lampen, Nick today of President you Chief thank will Bryant Call. Chief Good me Officer; Operating for Vector Officer With and Liggett Officer; Vector Anson, Operating joining Chief XXXX call the business. with our comments will and Nick financial and summarize the our consolidated questions. Then our of second balance for close XXXX. ask an on the the review results I quarter for call to sheet I of update will tobacco performance with open final

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

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

million, per share, per quarter $XX.X period. results diluted income $X.XX XXXX in in revenues XXXX XXXX. million of consolidated period. million $XX.X or to Net were X up XX, $XXX.X or the Vector's from $XXX.X to million ended the for months common share $X.XX the up common corresponding Vector's the diluted from second June increased XXXX for Turning

per diluted period. million, $X.XX share increased up million $XX.X $XX.X share, million $X.XX or to from the net income up in per increased to XXXX period. million XXXX Adjusted Adjusted from or $XX.X EBITDA diluted $XXX.X the in

results Revenues the income for the X per Turning Net million ended share, period. up $X.XX to XXXX corresponding $X.XX were per period. $XX in Vector's June or the XXXX share the $XXX.X June million consolidated compared months $XX.X in to was for $XXX.X X ended from XXXX, million million diluted diluted XX, months common common XX, XXXX. or

to $X.XX to $X.XX million Adjusted from million period. $XX.X XXXX increased EBITDA per -- million over was per net to discuss $XXX now Adjusted $XXX.X -- share million, or operations. up in in our will Nick diluted or to the Nick? $XX.X income million the share compared the $X.XX tobacco $XXX diluted call XXXX turn period. I

Nicholas Anson

total $X.X Liggett strong to retail as the of you, retail increase strategic quarter our XXXX. quarter the share stable to X.X%, year the of share second compared results same Tobacco continued the prior delivered period. Liggett's from operating and our first substantial from from market or XX.X% market the $XXX grew X.X% up second the national in to Montego's during an period. of the remained year X.X% time, was in at million, At million Thank of benefits other prior Howard, we good Eagle second income the brands, XXXX while and Adjusted in segment half Pyramid. income in and investment XX's Montego core quarter morning. delivering the reap also

the United brand incremental now largest offer income while in discount and Montego, for country's strong the Eagle base. and market States Our earnings for potential fourth Pyramid demonstrating The significant is enhances Montego is brand. delivering XX's brands portfolio consumer largest which remains long-term a substantial of margin, demand. provides growth. presence our cigarette the brand

broad-based our diligent distribution gross share and is brand Our retail positioning, a excellent our maintaining our analysis, while margin ability of profit execution. market improve result to strategic consistently market

from we Montego's stores XXXX, than to distribution under stores, a expanded and to disposable consumers income As up period. Despite in in result, more the of XXX,XXX many note that quarter second XX,XXX inflation, remain elevated approximately remains among pleased the cooling pressure. year prices are prior

result, As discount segment deep continued outperform and market. U.S. strong to cigarette overall the a market remained the

year declined Associates, quarter, in During prior the based from segment comprised to of increased on are XX.X% up Management the for XXXX while in XX.X% of second quarter the present option an industry the in that quarter the data to footprint meaningful advantage category deep X.X% lower-priced and competitive The This continues discount value-focused a portfolio as and period. deep and the overall period ago the year market a our products provide Science migration second volumes same nationwide we in confident consumers, retail segment discount compared price the Liggett XX.X% attractive to first continues. volumes of brand XX% XXXX. with

shipments Management retail from data Liggett's XX% quarter while declined second retail compared the to shipments same X.X% Science XXXX, according declined industry to period by in by Associates.

performance offsetting second wholesale compared the shipment declined our between wholesale XX.X% were same In the modestly in of the price and we by manufacturers' XXXX. surrounding While inventory quarter. of the driven shipments shipments X.X% short-term and by shipments industry to first the reductions reflects increases faced difference purchasing inconsistent The the patterns our quarter, wholesaler primarily retail second stronger, retail wholesalers' timing wholesale were quarter in by nature while industry, the patterns. outperformed Liggett's speculation declining period purchasing

more believe retail industry significantly performance. of As past, we the a in noted that are we shipments volume reliable indicator have

in to For months the X.X% Liggett's wholesale industry XX.X% ended X XXXX, decline XX, June compared shipments. declined shipments

wholesale longer-term the Liggett's Group to financials tobacco result, and Vector Tobacco. our turn a consolidated now as will for market retail stability share. I Liggett same the share reflects As

period. June the increase during XX, revenues $XXX.X partially result second XXXX, of increase X.X% from a The X was to X.X% by in months a pricing XXXX. wholesaler X.X% the ended million of quarter For $XXX.X increased in in the offset million decrease shipments the

million June in income XXXX. results months period wholesale corresponding volumes. Liggett's flat XXXX, a for corresponding increase of revenues $XX.X last settlement This margins. roughly with in months State shipment pricing, the $XXX.X a a million primarily of related $XXX.X ended to increase was along X a similar XXXX the XX, for Mississippi X.X% the period. ended in X.X% in higher result The second operating X by the million million, $XX decrease with million in operating million XX, decrease reflect $XXX.X $XX.X June quarter was an the compared were offset lack our the from gross XXXX, income For to accrual year of X.X%

in to June X adjusted income corresponding Liggett's the XX, $XXX $XX.X XX.X% period. increased the XXXX for million ended months to XXXX, million operating compared

Tobacco same the equated of EBITDA representing second period. XX.X% points second approximately margin gross corresponding During corresponding our XX.X% of period, quarter the basis increased the quarter revenues, to the million XXXX million XXXX period. XXX to to in for compared $XXX.X $XX.X an adjusted compared to increase

XXXX, the financial months X.X% share competitive stable the For discount tobacco XX, tobacco EBITDA our June validate of performance the business $XXX.X $XXX.X the and long-term XXXX adjusted to period. In growth remains to operational ended segment. million summary, compared ongoing and market in retail strategy X strong, for our advantages our profit and increased corresponding million and

providing consumers we the are our discount growth leadership track strengthen sustain segment earnings long-term We to propositions in in the and positioned record, best value committed industry. momentum With foundation the growth. the segment proven and with in the ideally leader only in are American U.S. for to remain and market the our our

Thanks Howard. for you, and attention, your to back

Howard Lorber

paying quarterly Thank as you, Nick. In a our second practice long-standing with summary, results cash as our of pleased well are we quarter operating dividend.

We expect policy continue. dividend that this will

Now operator, call the open please for questions.

Operator

first our Oppenheimer. questions with Instructions] will from [Operator we Ian take And Zaffino

Ian Zaffino

strong pricing the share? I brands? pricing I understand at a what's Montego little us versus been Very relative bit ask at strong don't really non-Montego relative wanted And maybe trying better. the know, quarter. the give you, Just to to driving this market

Howard Lorber

want you maybe to that? take Nick,

Nicholas Anson

the alluded X of I reap Look, Yes, continuing And our while in quarter, retail done excellent Sure. to managing core results to remarks, continue. the XX's Montego and other brands benefits the those my at focused Eagle job earlier ability we're the and the at we're same market and second absolutely. of same laser the positioning. in our result and the is we've on the segment our of to expecting to time, an the share investment maintaining right we're time, improve in as strategic of the while execution Pyramid. brand market Look, margins

value a age. gap to proposition at looking From XX% compelling price looking those for remains that's day in Montego, perspective, pricing the stable. respect this you're smokers to value With and for between a Marlboro. obviously And XX% to discount a

Ian Zaffino

do or do eventually to that conditions. fall economic I to trade question you guess how I roll it then I How Basically, down enjoying right, crisis think we And this Okay. in see of, if about the reference you're recession? would continued deteriorate? to off? heard ] Does maybe [ economic we financial be, continue would conditions that like guess, category economic then said the right does now the business Or a then this if because second do how recession? if

Nicholas Anson

on would say, -- gets pressure see trading on as the pressure we continued I to the the weakness, continues going we're if mean I the see down economic continued consumer.

for the take I again, Even situation. option are Prices smokers. good moment any our that the smokers. in high, would with it's that the good improves, alternative economic we're So not again, good advantage economic argue place a proposition of XX% at to XX% scenario environment value segment a under discount, very of for if and kind is and a to premium

do, So cigarette. when the of I mean kind cigarettes, provides people quality the a satisfaction mean well conditions discount cigarette. as a quality fact, based seen as it's we've the same premium of improve I segment. in good stay our It on with

long can the in that we this confident momentum. are we So term sustain

Operator

from next Barclays. question comes Hale our with Holden And

Hale Holden

you retail what I different by wondering Nick, channel. little if a you're bit could talk was seeing about

it are than some I was strength that if if was places seeing across different you So and or heard where universal we've were wondering sort regions? or are channels there others. of softer outlets just And

Nicholas Anson

kind stores certainly, I our stores strong very, and independents the moment both the partnerships performing we Dollar well. that presence are very dividends. very in really we those at and and have our remain the Yes. General are And discount strong when visibility in very, got of well. Sure, have mean, Dollar, paying that very placement certainly, Hale. doing and Family is and Montego those But we've

pleased operating very we're those key way at with So Hale. are the chains moment, the

Hale Holden

first you guys And to sort of just follow-up Great. question a the got.

the of we a think discount years It would but you a have I that heroic, be here share little couple said to going was ago, XX%. seemed XX%, are.

question premium the that Is next as over way to continue to decline to I sector. So about of continue the the kind see numbers is years? guess think core that it expanding the you X from

Nicholas Anson

that products. seeing investments increases that take premium you're their So mean, increases to increases, as more volumes those players the continue price the also frequent to need in from They reduced the Hale, risk decrease. sustain price my perspective, again, I higher price in channel

So smoker do see I being premium again, over good not the option term. the long for the a segment

as the certainly, segment, we're our that. the feeling trends again, the feeling within the So And leaders in position of about marketplace. good about good discount we're

Operator

And our next comes Martinson Jefferies. question with Karru from

Karru Martinson

Is in We've the to pouch tobacco, Zyn. growth for this of area discount challenge this a deep seen the of growth segment you? Or be would an such market? potential as

Nicholas Anson

moment. small we're Yes. impacting it's certainly Karru, base it off mean and very is segment. seeing the segment pouch a very, the I not the growing, segment combustible discount at but that not certainly mean is I necessarily the

focused So we're the if risk it segment laser opportunity segment all at we products, we not remain But came that to the mean, only at moment, on new in about of it, We discount Karru. the the market as segment. advantage the focused reduced and right evaluate core at it. we're growing the on do combustible along, certainly, continue competencies concerned of we our the in investment remain with would take growth I moment. and looking

Karru Martinson

on All gone there. the new? quiet front, is to seems right. And regulatory It have then there anything

Howard Lorber

quiet. -- Yes, it have that. the seems fact I'll it because to quiet it has is gone had gone Yes, answer

that a wouldn't And to you plays guess the legalized, It's may to business legalized. no. on they few Democrats days every federally into came was politics that, obviously, and role -- just positive like when it because office, say these months, in be going so in the the And they be and it's why. to what, marijuana be be going were then want

game. point. that we're to So has as to say, a think, really it's hard it's Nick in play hard perfect at position But this I said, particular

Karru Martinson

structure And how about with are guys days? that perfect you thinking the position, capital these

Howard Lorber

get maybe bonds have that going ready on And started I structure we're to is and the are come good. we Well, due, think working Yes. to that. on capital

good. the that we're And makes can is good. something which with sense. always building It's do see we'll I we cash, if think cash

Operator

today. Vector the Ladies participation, call. we all earnings you behalf that of your and Thank those call. at Group's concludes joining gentlemen, for are for conference and quarterly Liggett, of for thank Group have questions us this we On today's and all us on Vector you

Howard Lorber

Thank you.

Vector (VGR) 1 Aug 242024 Q2 Earnings call transcript