VECTOR GROUP LTD [VGR] Filings

10-Q 1 vgr-20220930.htm 10-Q vgr-20220930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For The Quarterly Period Ended September 30, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

VECTOR GROUP LTD.

(Exact name of registrant as specified in its charter)


Delaware	1-5759	65-0949535
(State or other jurisdiction of incorporation	Commission File Number	(I.R.S. Employer Identification No.)
incorporation or organization)

4400 Biscayne Boulevard

Miami, Florida 33137

305-579-8000

(Address, including zip code and telephone number, including area code,

of the principal executive offices)

Securities Registered Pursuant to 12(b) of the Act:


Title of each class:	Trading	Name of each exchange
	Symbol(s)	on which registered:
Common stock, par value $0.10 per share	VGR	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

x Yes o No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

x Yes o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

☒

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging Growth Company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

☐ Yes x No

At November 1, 2022, Vector Group Ltd. had 154,795,902 shares of common stock outstanding.

VECTOR GROUP LTD.

FORM 10-Q

TABLE OF CONTENTS


			Page
PART I. FINANCIAL INFORMATION

Item 1. Vector Group Ltd. Condensed Consolidated Financial Statements (Unaudited):

Condensed Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021			2

Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2022 and 2021			3

Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2022 and 2021			4

Condensed Consolidated Statements of Stockholders' Deficiency for the three and nine months ended September 30, 2022 and 2021			5

Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2022 and 2021			7

Notes to Condensed Consolidated Financial Statements			8

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			36

Item 3. Quantitative and Qualitative Disclosures About Market Risk			55

Item 4. Controls and Procedures			55

PART II. OTHER INFORMATION

Item 1. Legal Proceedings			56

Item 1A. Risk Factors			56

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			57

Item 6. Exhibits			58

SIGNATURE			59

VECTOR GROUP LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in Thousands, Except Per Share Amounts)

Unaudited


	September 30, 2022		December 31, 2021
ASSETS:
Current assets:
Cash and cash equivalents	$	384,963	$	193,411
Investment securities at fair value	115,824		146,687

Accounts receivable - trade, net	27,141		16,067
Inventories	86,101		94,615
Income taxes receivable, net	2,776		10,948

Other current assets	9,079		10,075
Total current assets	625,884		471,803
Property, plant and equipment, net	40,145		36,883
Investments in real estate, net	—		9,098
Long-term investments (includes $28,582 and $32,089 at fair value)	44,394		53,073
Investments in real estate ventures	116,840		105,062

Operating lease right-of-use assets	8,477		10,972
Intangible assets	107,511		107,511
Other assets	106,032		76,685
Total assets	$	1,049,283	$	871,087
LIABILITIES AND STOCKHOLDERS' DEFICIENCY:
Current liabilities:
Current portion of notes payable and long-term debt	$	51	$	79

Current payments due under the Master Settlement Agreement	214,260		11,886

Current operating lease liability	3,689		3,838
Other current liabilities	126,332		149,487
Total current liabilities	344,332		165,290
Notes payable, long-term debt and other obligations, less current portion	1,389,155		1,398,591

Non-current employee benefits	69,550		68,970
Deferred income taxes, net	32,411		34,768
Non-current operating lease liability	6,176		8,853
Payments due under the Master Settlement Agreement	11,116		13,224

Other liabilities	19,853		22,944
Total liabilities	1,872,593		1,712,640
Commitments and contingencies (Note 8)
Stockholders' deficiency:
Preferred stock, par value $1 per share, 10,000,000 shares authorized	—		—
Common stock, par value $0.1 per share, 250,000,000 shares authorized, 154,795,902 and 153,959,427 shares issued and outstanding	15,480		15,396
Additional paid-in capital	3,523		11,172
Accumulated deficit	(827,445)		(852,398)
Accumulated other comprehensive loss	(14,868)		(15,723)

Total Vector Group Ltd. stockholders' deficiency	(823,310)		(841,553)
Non-controlling interest	—		—
Total stockholders' deficiency	(823,310)		(841,553)
Total liabilities and stockholders' deficiency	$	1,049,283	$	871,087

The accompanying notes are an integral part of the condensed consolidated financial statements.

VECTOR GROUP LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in Thousands, Except Per Share Amounts)

Unaudited


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Revenues:
Tobacco*	$	377,995	$	297,942	$	1,061,355	$	895,901
Real estate	—		543		15,884		11,126

Total revenues	377,995		298,485		1,077,239		907,027

Expenses:
Cost of sales:
Tobacco*	267,023		186,398		743,749		556,574
Real estate	—		1,046		7,327		9,668

Total cost of sales	267,023		187,444		751,076		566,242

Operating, selling, administrative and general expenses	27,040		29,924		76,265		89,795
Litigation settlement and judgment expense	31		12		160		17
Net gains on sales of assets	—		(910)		—		(910)


Operating income	83,901		82,015		249,738		251,883

Other income (expenses):
Interest expense	(27,598)		(28,226)		(83,420)		(85,019)
Gain (loss) on extinguishment of debt	412		—		412		(21,362)

Equity in (losses) earnings from investments	(619)		44		(5,172)		1,562
Equity in (losses) earnings from real estate ventures	(1,903)		(5,694)		(4,240)		12,505
Other, net	(804)		(1,451)		(5,043)		9,868
Income before provision for income taxes	53,389		46,688		152,275		169,437
Income tax expense	14,533		16,776		41,724		52,994
Income from continuing operations	38,856		29,912		110,551		116,443
Income from discontinued operations, net of income taxes	—		18,857		—		57,588
Net income	$	38,856	$	48,769	$	110,551	$	174,031

Net loss from continuing operations attributed to non-controlling interest	—		—		—		—
Net loss from discontinued operations attributed to non-controlling interest	—		120		—		120
Net loss attributed to non-controlling interest	—		120		—		120

Net income attributed to Vector Group Ltd. from continuing operations	38,856		29,912		110,551		116,443
Net income attributed to Vector Group Ltd. from discontinued operations	—		18,977		—		57,708
Net income attributed to Vector Group Ltd.	$	38,856	$	48,889	$	110,551	$	174,151

Per basic common share:

Net income from continuing operations applicable to common shares	$	0.25	$	0.19	$	0.70	$	0.74
Net income from discontinued operations applicable to common shares	—		0.12		—		0.37
Net income applicable to common shares	$	0.25	$	0.31	$	0.70	$	1.11

Per diluted common share:

Net income from continuing operations applicable to common shares	$	0.25	$	0.19	$	0.70	$	0.74
Net income from discontinued operations applicable to common shares	—		0.12		—		0.37
Net income applicable to common shares	$	0.25	$	0.31	$	0.70	$	1.11

* Revenues and cost of sales include federal excise taxes of $138,041, $106,408, $392,004, and $322,857 for the three and nine months ended September 30, 2022 and 2021, respectively.

The accompanying notes are an integral part of the condensed consolidated financial statements.

VECTOR GROUP LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in Thousands)

Unaudited


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021

Net income	$	38,856	$	48,769	$	110,551	$	174,031

Net unrealized gains (losses) on investment securities available for sale:
Change in net unrealized losses	(948)		(111)		(2,841)		(415)
Net unrealized losses reclassified into net income	953		36		2,783		29
Net unrealized gains (losses) on investment securities available for sale	5		(75)		(58)		(386)



Net change in pension-related amounts:


Amortization of loss	403		481		1,211		1,444
Net change in pension-related amounts	403		481		1,211		1,444

Other comprehensive income	408		406		1,153		1,058

Income tax effect on:
Change in net unrealized losses on investment securities	245		30		733		112
Net unrealized losses reclassified into net income on investment securities	(246)		(10)		(718)		(8)



Pension-related amounts	(104)		(130)		(313)		(390)
Income tax provision on other comprehensive income	(105)		(110)		(298)		(286)

Other comprehensive income, net of tax	303		296		855		772

Comprehensive income	39,159		49,065		111,406		174,803

Comprehensive loss attributed to non-controlling interest	—		120		—		120
Comprehensive income attributed to Vector Group Ltd.	$	39,159	$	49,185	$	111,406	$	174,923

The accompanying notes are an integral part of the condensed consolidated financial statements.

VECTOR GROUP LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIENCY

(Dollars in Thousands, Except Share Amounts)

Unaudited


	Vector Group Ltd. Stockholders' Deficiency
				Additional Paid-In				Accumulated Other Comprehensive		Non-controlling
	Common Stock					Accumulated
	Shares	Amount		Capital		Deficit		Loss		Interest		Total
Balance as of July 1, 2022	154,896,129	$	15,490	$	3,066	$	(834,297)	$	(15,171)	$	—	$	(830,912)

Net income	—	—		—		38,856		—		—		38,856


Total other comprehensive income	—	—		—		—		303		—		303

Dividends on common stock ($0.20 per share)	—	—		—		(31,739)		—		—		(31,739)


Withholding of shares as payment of payroll tax liabilities in connection with restricted stock vesting	(100,227)	(10)		(1,101)		—		—		—		(1,111)












Stock-based compensation	—	—		1,558		—		—		—		1,558







Other	—	—		—		(265)		—		—		(265)
Balance as of September 30, 2022	154,795,902	$	15,480	$	3,523	$	(827,445)	$	(14,868)	$	—	$	(823,310)


	Vector Group Ltd. Stockholders' Deficiency
				Additional Paid-In				Accumulated Other Comprehensive		Non-controlling
	Common Stock					Accumulated
	Shares	Amount		Capital		Deficit		Loss		Interest		Total
Balance as of July 1, 2021	154,156,100	$	15,416	$	5,048	$	(591,911)	$	(20,598)	$	—	$	(592,045)

Net income	—	—		—		48,889		—		(120)		48,769






Total other comprehensive income	—	—		—		—		296		—		296

Distributions and dividends on common stock ($0.20 per share)	—	—		—		(31,572)		—		—		(31,572)
Restricted stock grant	—	—		—		—		—		—		—

Withholding of shares as payment of payroll tax liabilities in connection with restricted stock vesting	(196,673)	(20)		(2,935)		—		—		—		(2,955)













Stock-based compensation	—	—		2,375		—		—		—		2,375

Acquisition of Douglas Elliman Realty, LLC	—	—		—		—		—		500		500
Contributions from non-controlling interest	—	—		—		—		—		1,500		1,500


Balance as of September 30, 2021	153,959,427	$	15,396	$	4,488	$	(574,594)	$	(20,302)	$	1,880	$	(573,132)

The accompanying notes are an integral part of the condensed consolidated financial statements.


	Vector Group Ltd. Stockholders' Deficiency
				Additional Paid-In				Accumulated Other Comprehensive		Non-controlling
	Common Stock					Accumulated
	Shares	Amount		Capital		Deficit		Loss		Interest		Total
Balance as of January 1, 2022	153,959,427	$	15,396	$	11,172	$	(852,398)	$	(15,723)	$	—	$	(841,553)

Net income	—	—		—		110,551		—		—		110,551






Total other comprehensive income	—	—		—		—		855		—		855

Dividends on common stock ($0.60 per share)	—	—		—		(95,265)		—		—		(95,265)
Restricted stock grants	1,070,000	107		(107)		—		—		—		—

Withholding of shares as payment of payroll tax liabilities in connection with restricted stock vesting	(233,525)	(23)		(2,645)		—		—		—		(2,668)












Stock-based compensation	—	—		6,275		—		—		—		6,275






Reallocation of distribution of Douglas Elliman	—	—		(11,172)		11,172		—		—		—
Other	—	—		—		(1,505)		—		—		(1,505)
Balance as of September 30, 2022	154,795,902	$	15,480	$	3,523	$	(827,445)	$	(14,868)	$	—	$	(823,310)


	Vector Group Ltd. Stockholders' Deficiency
				Additional Paid-In				Accumulated Other Comprehensive		Non-controlling
	Common Stock					Accumulated
	Shares	Amount		Capital		Deficit		Loss		Interest		Total
Balance as of January 1, 2021	153,324,629	$	15,332	$	—	$	(653,945)	$	(21,074)	$	—	$	(659,687)

Net income	—	—		—		174,151		—		(120)		174,031






Total other comprehensive income	—	—		—		—		772		—		772

Dividends on common stock ($0.60 per share)	—	—		—		(94,800)		—		—		(94,800)
Restricted stock grant	873,500	88		(88)		—		—		—		—

Withholding of shares as payment of payroll tax liabilities in connection with restricted stock vesting	(238,702)	(24)		(3,539)		—		—		—		(3,563)













Stock-based compensation	—	—		8,115		—		—		—		8,115

Acquisition of Douglas Elliman Realty, LLC	—	—		—		—		—		500		500
Contributions from non-controlling interest	—	—		—		—		—		1,500		1,500


Balance as of September 30, 2021	153,959,427	$	15,396	$	4,488	$	(574,594)	$	(20,302)	$	1,880	$	(573,132)

The accompanying notes are an integral part of the condensed consolidated financial statements.

VECTOR GROUP LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in Thousands)

Unaudited


	Nine Months Ended
	September 30,
	2022		2021
Net cash provided by operating activities	$	329,017	$	311,337
Cash flows from investing activities:
Sale of investment securities	21,152		33,517
Maturities of investment securities	49,789		50,731
Purchase of investment securities	(48,828)		(99,287)
Proceeds from sale or liquidation of long-term investments	4,413		8,509



Purchase of long-term investments	(4,312)		(13,053)
Investments in real estate ventures	(19,644)		(15,912)
Distributions from investments in real estate ventures	3,791		11,879
Increase in cash surrender value of life insurance policies	(1,268)		(1,253)
Decrease (increase) in restricted assets	5		(5)

Proceeds from sale of fixed assets	—

VECTOR GROUP LTD [VGR] Filings
10-Q	[2022-11-02]
10-Q	[2022-08-05]
10-Q	[2022-05-10]
10-K	[2022-03-02]
10-Q	[2021-11-09]
10-Q	[2021-08-06]
10-Q	[2021-05-07]
10-K	[2021-03-01]
10-Q	[2020-11-06]
10-Q	[2020-08-07]
10-Q	[2020-05-11]
10-K	[2020-03-02]
10-Q	[2019-11-07]
10-Q	[2019-08-09]
10-Q	[2019-05-10]
10-K	[2019-03-01]
10-Q	[2018-11-09]
10-Q	[2018-08-07]
10-Q	[2018-05-10]
10-K	[2018-03-01]
10-Q	[2017-11-08]
10-Q	[2017-08-04]
10-Q	[2017-05-05]
10-K	[2017-03-01]
10-Q	[2016-11-09]
10-Q	[2016-08-08]
10-Q	[2016-04-29]
10-K	[2016-03-08]
10-Q	[2015-11-09]
10-Q	[2015-08-03]
10-Q	[2015-04-29]
10-K	[2015-03-04]
10-Q	[2014-10-31]
10-Q	[2014-07-30]
10-Q	[2014-05-12]
10-K	[2014-03-03]
10-Q	[2013-10-30]
10-Q	[2013-08-01]
10-Q	[2013-05-01]
10-K	[2013-02-28]
10-Q	[2012-10-31]
10-Q	[2012-07-31]
10-Q	[2012-05-03]
10-K	[2012-02-24]