Vector Group Ltd. (NYSE:VGR) Q3 2019 Earnings Conference Call Transcript

Nov 05, 2019 • 04:30 pm ET

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Vector Group Ltd. (NYSE:VGR) Q3 2019 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good day, and welcome to Vector Group Limited's Third 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 performed 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. The statements made during this conference call that are non-historical facts are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by forward-looking statements. These risks are described in more detail in the Company's Securities and Exchange Commission filings.

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

Executive
Howard M. Lorber

Good afternoon and thank you for joining us on Vector Group's third quarter 2019 earnings conference call. With me today are Ron Bernstein, the President and CEO of Liggett Vector Brands; and Bryant Kirkland, Vector Group's Chief Financial Officer. I will first provide an update on our business and review Vector Group's performance for the three and nine months ended September 30, 2019. Ron will then summarize the performance of our tobacco business. We will then be available to answer your questions.

As of September 30, 2019 Vector Group maintained significant liquidity with cash and cash equivalents of $319 million, including cash of $79 million at Douglas Elliman and $108 million at Liggett, and investment securities investment partnerships interests with a fair market value of $265 million. As previously announced, our non-GAAP financial measures from 2018 have been adjusted to reflect our acquisition of the outstanding 29% minority interest in Douglas Elliman taking our ownership to 100%. These adjustments are described in greater detail in our earnings release.

Now turning to Vector Group's key financials. For the three months ended September 30, 2019 Vector Group revenues were $504.8 million, compared to $513.9 million in the 2018 period. The company recorded adjusted EBITDA of $73.7 million, compared to $73.4 million in the 2018 period. Adjusted net income was $36.2 million, or $0.23 per diluted share, compared to $23.1 million, or $0.15 per diluted share in the 2018 period. The Company recorded adjusted operating income of $67 million, compared to $66.4 million in the 2018 period.

For the third quarter of 2018 -- '19, Douglas Elliman reported $201.2 million in revenues and adjusted EBITDA of $3.4 million, compared to $211.5 million in revenues and adjusted EBITDA of $12 million in the 2018 period. For the nine months ended September 30, 2019, Vector Group's revenues were $1.464 billion, compared to $1.424 billion in the 2018