Vector Group Reports Fourth Quarter and Full Year 2012 Financial Results
2013-02-26 16:30 ET - News Release
MIAMI -- (Business Wire)
Vector Group Ltd. (NYSE: VGR) today announced financial results for the
fourth quarter and year ended December 31, 2012.
For the year ended December 31, 2012, revenues were $1.085 billion,
compared to $1.133 billion for 2011. The decline in revenues in 2012 was
primarily due to decreased unit sales of approximately 8.1% in 2012
compared to 2011, which was partially offset by higher pricing. The
Company recorded operating income of $154.9 million for 2012, compared
to operating income of $143.3 million for 2011. Net income for 2012 was
$30.6 million, or $0.35 per diluted common share, compared to net income
of $75.0 million, or $0.89 per diluted common share, for 2011. The
results for 2012 included pre-tax losses from changes in the fair value
of derivatives embedded within convertible debt of $7.5 million and the
acceleration of interest expense of $15.0 million related to the
conversion of the Company's convertible debt. Adjusting for these items,
net income for the year ended December 31, 2012 was $43.4 million or
$0.50 per diluted common share. The results for 2011 included pre-tax
gains from liquidation of long-term investments of $25.8 million,
changes in the fair value of derivatives embedded within convertible
debt of $8.0 million and the sales of townhomes of $3.8 million offset
by an acceleration of interest expense of $1.2 million. Adjusting for
these items, net income for the year ended December 31, 2011 was $53.3
million or $0.63 per diluted common share. Adjusted EBITDA (as described
below and in Table 2 attached hereto) was $171.1 million for the year
ended December 31, 2012 as compared to $157.1 million for the year ended
December 31, 2011. The increase in Adjusted EBITDA for the year ended
December 31, 2012 as compared to the year ended December 31, 2011 was
primarily attributable to higher margins in the tobacco segment.
Fourth quarter 2012 revenues were $277.6 million, compared to fourth
quarter 2011 revenues of $292.8 million. The decline in revenues in 2012
was primarily due to decreased unit sales of approximately 8.6% in 2012
compared to 2011, which was partially offset by higher pricing. The
Company recorded operating income of $37.4 million in the 2012 fourth
quarter, compared to operating income of $36.0 million in the fourth
quarter of 2011. Net income for the 2012 fourth quarter was $16.5
million, or $0.14 per diluted common share, compared to net income of
$7.8 million, or $0.09 per diluted common share, in the 2011 fourth
quarter. The results for the three months ended December 31, 2012
included a pre-tax gain related to changes in the fair value of
derivatives embedded within convertible debt of $13.5 million. Adjusting
for this item, net income for the three months ended December 31, 2012
was $7.8 million or $0.09 per diluted common share. The results for the
three months ended December 31, 2011 included pre-tax charges from
changes in the fair value of derivatives embedded within convertible
debt of $5.3 million. Adjusting for this item, the Company's net income
for the 2011 fourth quarter would have been $11.1 million, or $0.13 per
diluted common share. Adjusted EBITDA was $43.2 million for fourth
quarter 2012 as compared to $39.5 million for fourth quarter 2011. The
increase in Adjusted EBITDA for the three months December 31, 2012 as
compared to the three months ended December 31, 2011 was primarily
attributable to higher margins in the tobacco segment.
For the three months and year ended December 31, 2012, the Company's
tobacco business had revenues of $277.6 million and $1.085 billion,
respectively, compared to $292.8 million and $1.133 billion for the
three months and full year ended December 31, 2011, respectively.
Operating income for the Company's tobacco business was $45.8 million
and $176.0 million for the three and twelve months ended December 31,
2012, compared to $43.1 million and $164.6 million for the three and
twelve months ended December 31, 2011, respectively.
Adjusted EBITDA is a financial measure not prepared in accordance with
generally accepted accounting principles (“GAAP”). The Company believes
that Adjusted EBITDA is an important measure that supplements
discussions and analysis of its results of operations and enhances an
understanding of its operating performance. The Company believes
Adjusted EBITDA provides investors and analysts with a useful measure of
operating results unaffected by differences in capital structures,
capital investment cycles and ages of related assets among otherwise
comparable companies. Management uses Adjusted EBITDA as a measure to
review and assess operating performance of the Company's business and
management and investors should review both the overall performance
(GAAP net income) and the operating performance (Adjusted EBITDA) of the
Company's business. While management considers Adjusted EBITDA to be
important, it should be considered in addition to, but not as a
substitute for or superior to, other measures of financial performance
prepared in accordance with GAAP, such as operating income, net income
and cash flows from operations. In addition, Adjusted EBITDA is
susceptible to varying calculations and the Company's measurement of
Adjusted EBITDA may not be comparable to those of other companies.
Attached hereto as Table 2 is information relating to the Company's
Adjusted EBITDA for the years ended December 31, 2012, and 2011 and the
three months ended December 31, 2012 and 2011, including a
reconciliation of net income to Adjusted EBITDA for such periods.
Conference Call to Discuss Fourth Quarter and Full Year2012
Results
As previously announced, the Company will host a conference call and
webcast on Wednesday, February 27, 2013 at 10:00 A.M. (ET) to discuss
fourth quarter and full year 2012 results. Investors can access the call
by dialing 800-859-8150 and entering 68635999 as the
conference ID number. The call will also be available via live webcast
at www.investorcalendar.com.
Webcast participants should allot extra time before the webcast begins
to register.
A replay of the call will be available shortly after the call ends on
February 27, 2013 through March 13, 2013. To access the replay, dial
877-656-8905 and enter 68635999 as the conference ID number. The
archived webcast will also be available at www.investorcalendar.com
for 30 days.
Vector Group is a holding company that indirectly owns Liggett Group LLC
and Vector Tobacco Inc. and directly owns New Valley LLC. Additional
information concerning the company is available on the company's
website, www.VectorGroupLtd.com.
TABLE 1 | VECTOR GROUP LTD. AND SUBSIDIARIES | CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | (Dollars in Thousands, Except Per Share
Amounts) | |
| |
|
Three Months Ended
|
|
Twelve Months Ended
| | |
December 31,
| |
December 31,
| | |
2012
|
|
2011
| |
2012
|
|
2011
| | |
(Unaudited)
| | |
| | |
Revenues*
| |
$
|
277,563
| |
|
$
|
292,827
| | |
$
|
1,084,546
| | |
$
|
1,133,380
| | | | | | | | | |
| |
Expenses:
| | | | | | | | | |
Cost of goods sold*
| |
207,770
| | |
228,770
| | |
823,452
| | |
892,883
| | |
Operating, selling, administrative and general expenses
| |
32,427
|
| |
28,034
|
| |
106,161
|
| |
97,176
|
| |
Operating income
| |
37,366
| | |
36,023
| | |
154,933
| | |
143,321
| | | | | | | | | |
| |
Other income (expenses):
| | | | | | | | | |
Interest expense
| |
(31,435
|
)
| |
(25,275
|
)
| |
(110,102
|
)
| |
(100,706
|
)
| |
Change in fair value of derivatives embedded within convertible debt
| |
13,544
| | |
(5,264
|
)
| |
(7,476
|
)
| |
7,984
| | |
Acceleration of interest expense related to debt conversion
| |
—
| | |
—
| | |
(14,960
|
)
| |
(1,217
|
)
| |
Equity income from non-consolidated real estate businesses
| |
8,795
| | |
2,369
| | |
29,764
| | |
19,966
| | |
Equity (loss) income on long-term investments
| |
(56
|
)
| |
231
| | |
(1,261
|
)
| |
(859
|
)
| |
Gain on sale of investment securities available for sale
| |
—
| | |
2,699
| | |
1,640
| | |
23,257
| | |
Gain on liquidation of long-term investments
| |
—
| | |
—
| | |
—
| | |
25,832
| | |
Gain on sales of townhomes
| |
—
| | |
121
| | |
—
| | |
3,843
| | |
Other, net
| |
323
|
| |
1,385
|
| |
1,179
|
| |
1,736
|
| | | | | | | | |
| |
Income before provision for income taxes
| |
28,537
| | |
12,289
| | |
53,717
| | |
123,157
| | |
Income tax expense
| |
12,052
|
| |
4,492
|
| |
23,095
|
| |
48,137
|
| | | | | | | | |
| |
Net income
| |
$
|
16,485
|
| |
$
|
7,797
|
| |
$
|
30,622
|
| |
$
|
75,020
|
| | | | | | | | |
| |
Per basic common share:
| | | | | | | | | | | | | | | | |
| |
Net income applicable to common shares
| |
$
|
0.19
|
| |
$
|
0.09
|
| |
$
|
0.35
|
| |
$
|
0.89
|
| | | | | | | | |
| |
Per diluted common share:
| | | | | | | | | | | | | | | | |
| |
Net income applicable to common shares
| |
$
|
0.14
|
| |
$
|
0.09
|
| |
$
|
0.35
|
| |
$
|
0.89
|
| | | | |
| | | | | |
Cash distributions and dividends declared per share
| |
$
|
0.40
|
| |
$
|
0.38
|
| |
$
|
1.54
|
| |
$
|
1.47
|
|
________________________
|
* Revenues and Cost of goods sold include excise taxes of
$128,746, $140,924, $508,027 and $552,965, respectively.
| |
|
TABLE 2 | VECTOR GROUP LTD. AND SUBSIDIARIES | RECONCILIATION OF ADJUSTED EBITDA | (Dollars in Thousands) | |
| |
|
Three Months Ended
|
|
Twelve Months Ended
| | |
December 31,
| |
December 31,
| | |
2012
|
|
2011
| |
2012
|
|
2011
| | |
(Unaudited)
| | |
| | |
Net income
| |
$
|
16,485
| |
|
$
|
7,797
| | |
$
|
30,622
| | |
$
|
75,020
| | |
Interest expense
| |
31,435
| | |
25,275
| | |
110,102
| | |
100,706
| | |
Income tax provision
| |
12,052
| | |
4,492
| | |
23,095
| | |
48,137
| | |
Depreciation and amortization
| |
2,660
|
| |
2,676
|
| |
10,608
|
| |
10,607
|
| |
EBITDA
| |
$
|
62,632
| | |
$
|
40,240
| | |
$
|
174,427
| | |
$
|
234,470
| | |
Change in fair value of derivatives embedded within convertible debt
(a)
| |
(13,544
|
)
| |
5,264
| | |
7,476
| | |
(7,984
|
)
| |
Gain on liquidation of long-term investments (b)
| |
—
| | |
—
| | |
—
| | |
(25,832
|
)
| |
Equity income (loss) on long-term investments (c)
| |
56
| | |
(231
|
)
| |
1,261
| | |
859
| | |
Gain on sale of investment securities available for sale
| |
—
| | |
(2,699
|
)
| |
(1,640
|
)
| |
(23,257
|
)
| |
Equity income from non-consolidated real estate businesses (d)
| |
(8,795
|
)
| |
(2,369
|
)
| |
(29,764
|
)
| |
(19,966
|
)
| |
Gain on sales of townhomes
| |
—
| | |
(121
|
)
| |
—
| | |
(3,843
|
)
| |
Acceleration of interest expense related to debt conversion
| |
—
| | |
—
| | |
14,960
| | |
1,217
| | |
Stock-based compensation expense (e)
| |
3,129
| | |
806
| | |
5,563
| | |
3,183
| | |
Other, net
| |
(323
|
)
| |
(1,428
|
)
| |
(1,179
|
)
| |
(1,779
|
)
| |
Adjusted EBITDA
| |
$
|
43,155
|
| |
$
|
39,462
|
| |
$
|
171,104
|
| |
$
|
157,068
|
|
______________________
| |
|
|
a.
|
|
Represents income or losses realized as a result of changes in the
fair value of the derivatives embedded in our convertible debt.
| | |
b.
| |
Represents gains recognized in connection with the liquidation of
two of our long-term investments.
| | |
c.
| |
Represents income or losses recognized on long-term investments that
we account for under the equity method.
| | |
d.
| |
Represents equity income realized from our investment in certain
real estate businesses that are not consolidated in our financial
results.
| | |
e.
| |
Represents amortization of certain stock-based compensation.
|
Contacts:
Sard Verbinnen & Co
Paul Caminiti/Jonathan Doorley/Emily
Deissler
212-687-8080
Source: Vector Group Ltd.
|