NYSE:VGR Vector Group Q1 2024 Earnings Report Vector Group EPS ResultsActual EPS$0.24Consensus EPS $0.25Beat/MissMissed by -$0.01One Year Ago EPS$0.22Vector Group Revenue ResultsActual Revenue$324.57 millionExpected Revenue$333.30 millionBeat/MissMissed by -$8.73 millionYoY Revenue GrowthN/AVector Group Announcement DetailsQuarterQ1 2024Date5/1/2024TimeBefore Market OpensConference Call DateThursday, May 2, 2024Conference Call Time8:00AM ETConference Call ResourcesConference Call AudioConference Call TranscriptPress Release (8-K)Quarterly Report (10-Q)Company ProfilePowered by Vector Group Q1 2024 Earnings Call TranscriptProvided by QuartrMay 2, 2024 ShareLink copied to clipboard.There are 7 speakers on the call. Operator00:00:00Welcome to Vector Group Ltd. 1st 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 An archived version of the webcast will be available on the Investor Relations section of the company's website located at www.vekorgroupltd.com. During this call, the terms adjusted operating income, adjusted net income, adjusted EBITDA and tobacco adjusted operating income will be used. Operator00:00:29These 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. 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. Before the call begins, I would like to read a Safe Harbor statement. The statements made during this conference call that are not 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. Operator00:01:18Now I would like to turn the call over to the President and Chief Executive Officer of Vector Group, Howard Lorber. Speaker 100:01:26Good morning, and thank you for joining us for Vector Group's Q1 2024 earnings conference call. With me today are Richard Lampen, our Chief Operating Officer Brian Kirkland, our Chief Financial Officer and Nick Anson, President and Chief Operating Officer of Liggett Vector Brands. I will provide an update on our balance sheet and review Vector's consolidated financial results for the Q1 of 2024. Then I will ask Nick to summarize the performance of our tobacco business. I will close with final comments and open the call for questions. Speaker 100:01:59Turning to our balance sheet. As of March 31, 2024, we maintained significant liquidity with cash and cash equivalents of approximately 333,000,000 dollars including cash of $84,000,000 at Liggett. We also held investment securities and long term investments with a fair value of approximately 179,000,000 dollars Turning to Vector Group's consolidated results for the 3 months ended March 31, 2024. Vecta's revenues for the Q1 of 2024 were $324,600,000 compared to $334,100,000 in the corresponding 2023 period. Net income increased to $34,800,000 or $0.22 per diluted common share from $34,700,000 or $0.22 per diluted common share in the same period a year ago. Speaker 100:02:50Adjusted EBITDA increased to $82,800,000 from $78,100,000 in the 2023 period. Adjusted net income increased to $37,200,000 or $0.24 per diluted share from $34,000,000 or $0.22 per diluted share in the 2023 period. I will now turn it over to Nick to discuss our tobacco operations. Nick? Speaker 200:03:15Thank you, Howard, and good morning. Continuing our trend of strong market performance, Liggett once again delivered excellent results in the Q1. Operating income from the tobacco segment increased by $4,400,000 or 5.6% compared to the prior year period, while retail market share remained stable at 5.8%. The stability of our market share as we continue to build margin reflects the market strength of Montego, which remains the largest discount cigarette brand in the United States and the country's 4th largest brand. Our ability to continue to grow Montego in the Q1 while improving gross profit margin is a result of our ongoing market analysis, broad based distribution and excellent retail execution. Speaker 200:04:05Montego's national retail market share grew to 4% in the Q1 of 2024, up from 3.4% in the prior year period, which is particularly noteworthy considering our strategic price increases. In addition, the price gap between Montego and the industry's leading premium brands has remained stable in the range of 45% to 50% discount at retail. In the Q1 of 2024, Montego's distribution expanded to approximately 97,500 stores, up from 82,500 stores in the prior year period. Our strategy with Montego remains consistent with our long term objective of optimizing profit by effectively managing volume, pricing and market share, while providing consumers with excellent value in this category. Looking to the year ahead, we expect our market share to remain relatively stable, while gradually increasing our margins. Speaker 200:05:03From a broader industry perspective, the deep discount segment remains strong and continues to outperform the overall U. S. Cigarette market. Additionally, as consumers select more affordable options, including brands like Montego, they recognize that the product quality is on par with more expensive brands. During the Q1 of 2024, based on Management Science Associates retail data, the deep discount category increased 6%, while industry volumes declined 8.9% compared to the same period last year. Speaker 200:05:38As a result, the deep discount segment comprised 15.9% of the overall market in the Q1, up from 13.7% in the same period a year ago and 15.3% last quarter. This segment continues to present an attractive price option for consumers and we are confident that our value focused brand portfolio and nationwide footprint provide Liggett with a meaningful competitive advantage as the migration to deep discount continues. Liggett's 1st quarter retail shipments declined by 8.7% compared to the same period in 2023, while industry retail shipments declined by 8.9% according to data from Management Science Associates. While our retail shipments modestly outperformed the market, our wholesale shipments declined by 10.8%, while industry wholesale shipments declined by 9.8%. The discrepancy between our retail and wholesale shipment performance reflects the inconsistent nature of short term wholesaler purchasing patterns, which in the Q1 were primarily driven by the timing of various manufacturers' price increases. Speaker 200:06:53As we have noted in the past, we believe that retail shipments are a significantly more reliable indicator of industry volume performance. I will now turn to the consolidated tobacco financials for Liggett Group and Vector Tobacco. For the 3 months ended March 31, 2024, revenues declined 2.8 percent to $324,600,000 from $334,100,000 in the first quarter of 2023. This decline was attributable to the previously referenced 10.8% decrease in wholesaler shipments during the period, which was partially offset by an 8.6% increase in pricing. Liggett's operating income for the 3 months ended March 31, 2024 increased 5.6 percent to $83,000,000 compared to $78,600,000 in the corresponding 2023 period. Speaker 200:07:51Tobacco adjusted EBITDA in the Q1 increased 5.5 percent to $84,400,000 compared to $80,000,000 for the corresponding prior year period. Our first quarter gross margin equated to 32.9% of revenues representing an increase of approximately 2 40 basis points compared to the Q1 of 2023. On the regulatory front, we are pleased to hear the recent news that the government has decided to delay its decision to publish a final mental ruling and instead consult further with outside groups on this matter. As we have previously discussed, while we have always supported reasonable regulation based on sound scientific evidence, we remain firm in our position that prohibition is not the right answer as it inevitably drives unintended consequences such as the growth of illicit unregulated markets. We expect any final ruling that includes a ban on Mentor will be vigorously challenged by the industry. Speaker 200:08:54In summary, the operational and financial performance of our tobacco business remains strong and our stable retail market share and profit growth validate our long term strategy and competitive advantages in the discount segment. As leaders of the only growth segment in the market with the nation's number one discount brand, we have a great platform to build on. Our market plans for 2024 have been carefully developed and our mission statement to provide the best value propositions in the U. S. Market has never been more relevant. Speaker 200:09:25While we are operating in an increasingly competitive environment, our proven expertise and leadership in the discount segment positions us well to maintain our momentum and build on our foundation for long term earnings growth. As always, thanks for your attention and back to you, Howard. Speaker 100:09:42Thank you, Nick. In summary, we are pleased with our Q1 operating results as well as our long standing practice of paying a quarterly dividend. We expect that this dividend policy will continue. Now operator, please open the call for questions. Operator00:10:19And we will take our first question from Ian Zaffino with Oppenheimer. Speaker 300:10:25Hi, great. Thank you very much. So I wanted to ask about Montego. Very strong market share gains. Where do you think the ultimate market share can get in this brand, I guess before you start harvesting profits? Speaker 300:10:41Or maybe to point to a similar brand that you had in the past that performed and what Montego might remind you of as maybe a guideline of what we should be able to expect from the Montego brand? Thank you. Speaker 200:10:57Sure. Thanks, Ian. Yes, obviously very pleased with the Montego brand's performance in the Q1. Again, even though we've strategically been taking price increases and increasing the margin on that brand, it's continued to gain market share. So it's continuing to grow. Speaker 200:11:16That is similar to other brands that we've launched and invested and grown both Grand Prix and the Pyramid brand. And I would take the opportunity to remind you that obviously brands continue to grow even though they may not be the cheapest in the store. So and that's again down to our excellent retail execution. So again, feeling very good about the brand, where it's positioned. Again, reinforce our ceiling, our one second, I apologize. Speaker 200:12:14Our mission statements have provided the best value proposition has never been more relevant. So feeling very good about where we stand in the marketplace at the moment. Speaker 300:12:24Understood. Thank you. And then just Speaker 100:12:26as a Speaker 300:12:26follow-up, good commentary on the menthol delay. I guess two questions. Was there any like noticeable difference in shipments that you had seen maybe leading up to this potential ban that should then normalize coming out of this? And then also, how are you thinking about maybe state level bans? And would those be equally as challenged as a federal ban? Speaker 300:12:51Thank you. Speaker 200:12:52Yes. No, feeling obviously very pleased with the the decision to delay. Again, we think that's the right decision. We're not sure when exactly that final rule will be made. But I think it's inevitable as we've seen in states that we may see some increased activity with respect to mental bands at the state level, but that will be handled on a state by state basis, Ian. Speaker 300:13:23All right. Thank you very much. Operator00:13:27Thank you. And our next question comes from Hale Holden with Speaker 400:13:38Two quick questions. The 97,000 points of distribution for Montego, is that should we consider that close to full distribution? I think you've been higher previously for Pyramid and some of the other brands or is there room to growth? Speaker 200:13:56Still some room to grow. Overall distribution for Liggett Bracta Brands in total for our portfolio is about 125,000. Not to say that we'll go get into all those stores, but there's certainly continued room to grow. And we increased distribution quarter over quarter by about 3,000 stores. So certainly, we're continuing to see growth in distribution. Speaker 400:14:20Okay. Great. And then my second question is sort of if you zoom way out, the rate of decline for the industry has been pretty high over the last year and seems to be settling in this kind of this high single digit rate. So I was wondering if you think that changes any of the competitive forces that kind of you face on a day to day basis or changes the way that, you're kind of thinking about the long term in the tobacco in the cigarette industry? Speaker 200:14:57Yes. Look, I think if you look at the that decline rate, it's certainly been elevated the last couple of years. I would argue that probably the underlying decline rate is more in the 4% to 5%. And then you're looking at both the macroeconomic factors in addition to kind of the growth of the illicit disposables that's accentuating the decline. Look, I'm not in a position to say when the macroeconomic position is going to improve for our smokers. Speaker 200:15:35I think it's going to take some time for the illicit disposable market to be cleaned up. So certainly for the foreseeable future, we're going to be dealing with those more elevated declines. But again, that said, we're operating in a discount segment, which is actually growing and performing well relative to the rest of the market. So taking comfort in that and continue to capitalize on that growth in the segment where we're the leaders in. Speaker 400:16:07Great. Thank you so much, Nick. I appreciate it. Yes. Thank Operator00:16:15you. We will take our next question from Karru Martinson with Jefferies. Speaker 500:16:24Good morning. When you look at the deep discount category up 6 percent, our sales being down, what was it, 2.9%. Is that just the timing aspect as you reference the wholesale or is that a result of the conscious efforts to continue to raise price and take margins? Speaker 200:16:46Yes. I mean that's a reflection obviously of the increasing pricing actions that we've taken on Montego and obviously the growth slowing on that. But also we do have a portfolio of brands in the what's referred to as the traditional discount category, which that category is also coming under pressure. So it's a combination of those volume declines and obviously a slowing growth in the Montego brand offset with price increases. Okay. Speaker 500:17:16And while you're maintaining that 45%, 50% discount to the premium brands, are you seeing more competitive pressures in that discount and deep discount category? Speaker 200:17:30Certainly, we're seeing from the bigger players more discounting of their premium brands in the overall market. But they may be discounting 10% to 15%. So they're really not impacting the deep discount, so to speak. As always, we the deep discount segment is extremely competitive and any kind of pressures that we're getting are more on a regional basis. And we certainly feel confident with Montego's broad based distribution that we can handle that and deal with that on a market by market, region by region basis. Speaker 500:18:11Okay. And just lastly, since I ask this every time and I want to keep the streak going, you've got those 10.5 notes, mature 26. How are you thinking about the capital streak? Speaker 600:18:24Hey, Karru, it's Brian Kirkland. Good morning. Good morning. How we're thinking about them. So obviously, as you said, there's $519,000,000 of the $10,500,000 that are due in 2.5 years November of 2026. Speaker 600:18:36So we're continuing to evaluate them. But I think what's very important to convey is we really are in a position of strength. We have $428,000,000 of cash at a holding company. Nick and his team are growing market share, they're growing profit and we're paying we're now paying less dividends in our earnings. And in addition to that, there's $90,000,000 of capacity under Liggett's revolver. Speaker 600:19:01So we feel good about all of our options, and we'll continue to evaluate it with our investment bankers. Speaker 500:19:07Thank you very much, guys. Operator00:19:13Ladies and gentlemen, those are all the questions that we have for today. Thank you for joining us on Vector Group's quarterly earnings conference call. On behalf of all of us at Vector Group and Leggate, we thank you for your participation and this concludes today's call.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallVector Group Q1 202400:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsPress Release(8-K)Quarterly report(10-Q) Vector Group Earnings HeadlinesUnity Software: Turnaround Looks Promising - Bright Advertising Prospects AheadApril 23 at 10:11 AM | seekingalpha.comUnity Software: Anticipation Growing Ahead Of Vector LaunchFebruary 25, 2025 | seekingalpha.comTrump’s tariffs just split the AI market in twoTrump’s tariff just split the AI market – among others – in two. One group of AI companies—the ones relying on cheap foreign hardware—just saw their costs shoot through the roof. For the other group of AI companies, they were just handed a massive competitive advantage. Make no mistake, AI as a whole is still a game-changer for the global economy. But within the AI sector, Trump’s tariffs have created a huge divergence.April 26, 2025 | Traders Agency (Ad)Douglas Elliman takes over Vector Group's former headquartersJanuary 12, 2025 | bizjournals.comJapan Tobacco: The Vector Group Acquisition ImpactOctober 29, 2024 | seekingalpha.comVector Group Ltd (VGR) Q2 2024 Earnings Call Highlights: Strong Net Income Growth and Montego's ...October 9, 2024 | finance.yahoo.comSee More Vector Group Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Vector Group? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Vector Group and other key companies, straight to your email. Email Address About Vector GroupVector Group (NYSE:VGR), through its subsidiaries, engages in the manufacture and sale of cigarettes in the United States. It operates in two segments, Tobacco and Real Estate. The company produces cigarettes under the Montego, EAGLE 20's, Pyramid, Grand Prix, Liggett Select, Eve, and USA brand names, as well as various partner and private label brands. It also invests in planned communities, condominium and mixeduse developments, apartment buildings, hotels, and commercial properties. The company markets and sells its cigarettes to wholesalers and distributors of tobacco and convenience products, as well as grocery, drug, and convenience store chains. The company was formerly known as Brooke Group Ltd. and changed its name to Vector Group Ltd. in May 2000. Vector Group Ltd. was founded in 1873 and is headquartered in Miami, Florida.View Vector Group ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Market Anticipation Builds: Joby Stock Climbs Ahead of EarningsIs Intuitive Surgical a Buy After Volatile Reaction to Earnings?Seismic Shift at Intel: Massive Layoffs Precede Crucial EarningsRocket Lab Lands New Contract, Builds Momentum Ahead of EarningsAmazon's Earnings Could Fuel a Rapid Breakout Tesla Earnings Miss, But Musk Refocuses and Bulls ReactQualcomm’s Range Narrows Ahead of Earnings as Bulls Step In Upcoming Earnings Cadence Design Systems (4/28/2025)Welltower (4/28/2025)Waste Management (4/28/2025)AstraZeneca (4/29/2025)Mondelez International (4/29/2025)PayPal (4/29/2025)Starbucks (4/29/2025)DoorDash (4/29/2025)Honeywell International (4/29/2025)Regeneron Pharmaceuticals (4/29/2025) Get 30 Days of MarketBeat All Access for Free Sign up for MarketBeat All Access to gain access to MarketBeat's full suite of research tools. 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There are 7 speakers on the call. Operator00:00:00Welcome to Vector Group Ltd. 1st 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.vekorgroupltd.com. During this call, the terms adjusted operating income, adjusted net income, adjusted EBITDA and tobacco adjusted operating income will be used. Operator00:00:29These 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. 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. Before the call begins, I would like to read a Safe Harbor statement. The statements made during this conference call that are not 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. Operator00:01:18Now I would like to turn the call over to the President and Chief Executive Officer of Vector Group, Howard Lorber. Speaker 100:01:26Good morning, and thank you for joining us for Vector Group's Q1 2024 earnings conference call. With me today are Richard Lampen, our Chief Operating Officer Brian Kirkland, our Chief Financial Officer and Nick Anson, President and Chief Operating Officer of Liggett Vector Brands. I will provide an update on our balance sheet and review Vector's consolidated financial results for the Q1 of 2024. Then I will ask Nick to summarize the performance of our tobacco business. I will close with final comments and open the call for questions. Speaker 100:01:59Turning to our balance sheet. As of March 31, 2024, we maintained significant liquidity with cash and cash equivalents of approximately 333,000,000 dollars including cash of $84,000,000 at Liggett. We also held investment securities and long term investments with a fair value of approximately 179,000,000 dollars Turning to Vector Group's consolidated results for the 3 months ended March 31, 2024. Vecta's revenues for the Q1 of 2024 were $324,600,000 compared to $334,100,000 in the corresponding 2023 period. Net income increased to $34,800,000 or $0.22 per diluted common share from $34,700,000 or $0.22 per diluted common share in the same period a year ago. Speaker 100:02:50Adjusted EBITDA increased to $82,800,000 from $78,100,000 in the 2023 period. Adjusted net income increased to $37,200,000 or $0.24 per diluted share from $34,000,000 or $0.22 per diluted share in the 2023 period. I will now turn it over to Nick to discuss our tobacco operations. Nick? Speaker 200:03:15Thank you, Howard, and good morning. Continuing our trend of strong market performance, Liggett once again delivered excellent results in the Q1. Operating income from the tobacco segment increased by $4,400,000 or 5.6% compared to the prior year period, while retail market share remained stable at 5.8%. The stability of our market share as we continue to build margin reflects the market strength of Montego, which remains the largest discount cigarette brand in the United States and the country's 4th largest brand. Our ability to continue to grow Montego in the Q1 while improving gross profit margin is a result of our ongoing market analysis, broad based distribution and excellent retail execution. Speaker 200:04:05Montego's national retail market share grew to 4% in the Q1 of 2024, up from 3.4% in the prior year period, which is particularly noteworthy considering our strategic price increases. In addition, the price gap between Montego and the industry's leading premium brands has remained stable in the range of 45% to 50% discount at retail. In the Q1 of 2024, Montego's distribution expanded to approximately 97,500 stores, up from 82,500 stores in the prior year period. Our strategy with Montego remains consistent with our long term objective of optimizing profit by effectively managing volume, pricing and market share, while providing consumers with excellent value in this category. Looking to the year ahead, we expect our market share to remain relatively stable, while gradually increasing our margins. Speaker 200:05:03From a broader industry perspective, the deep discount segment remains strong and continues to outperform the overall U. S. Cigarette market. Additionally, as consumers select more affordable options, including brands like Montego, they recognize that the product quality is on par with more expensive brands. During the Q1 of 2024, based on Management Science Associates retail data, the deep discount category increased 6%, while industry volumes declined 8.9% compared to the same period last year. Speaker 200:05:38As a result, the deep discount segment comprised 15.9% of the overall market in the Q1, up from 13.7% in the same period a year ago and 15.3% last quarter. This segment continues to present an attractive price option for consumers and we are confident that our value focused brand portfolio and nationwide footprint provide Liggett with a meaningful competitive advantage as the migration to deep discount continues. Liggett's 1st quarter retail shipments declined by 8.7% compared to the same period in 2023, while industry retail shipments declined by 8.9% according to data from Management Science Associates. While our retail shipments modestly outperformed the market, our wholesale shipments declined by 10.8%, while industry wholesale shipments declined by 9.8%. The discrepancy between our retail and wholesale shipment performance reflects the inconsistent nature of short term wholesaler purchasing patterns, which in the Q1 were primarily driven by the timing of various manufacturers' price increases. Speaker 200:06:53As we have noted in the past, we believe that retail shipments are a significantly more reliable indicator of industry volume performance. I will now turn to the consolidated tobacco financials for Liggett Group and Vector Tobacco. For the 3 months ended March 31, 2024, revenues declined 2.8 percent to $324,600,000 from $334,100,000 in the first quarter of 2023. This decline was attributable to the previously referenced 10.8% decrease in wholesaler shipments during the period, which was partially offset by an 8.6% increase in pricing. Liggett's operating income for the 3 months ended March 31, 2024 increased 5.6 percent to $83,000,000 compared to $78,600,000 in the corresponding 2023 period. Speaker 200:07:51Tobacco adjusted EBITDA in the Q1 increased 5.5 percent to $84,400,000 compared to $80,000,000 for the corresponding prior year period. Our first quarter gross margin equated to 32.9% of revenues representing an increase of approximately 2 40 basis points compared to the Q1 of 2023. On the regulatory front, we are pleased to hear the recent news that the government has decided to delay its decision to publish a final mental ruling and instead consult further with outside groups on this matter. As we have previously discussed, while we have always supported reasonable regulation based on sound scientific evidence, we remain firm in our position that prohibition is not the right answer as it inevitably drives unintended consequences such as the growth of illicit unregulated markets. We expect any final ruling that includes a ban on Mentor will be vigorously challenged by the industry. Speaker 200:08:54In summary, the operational and financial performance of our tobacco business remains strong and our stable retail market share and profit growth validate our long term strategy and competitive advantages in the discount segment. As leaders of the only growth segment in the market with the nation's number one discount brand, we have a great platform to build on. Our market plans for 2024 have been carefully developed and our mission statement to provide the best value propositions in the U. S. Market has never been more relevant. Speaker 200:09:25While we are operating in an increasingly competitive environment, our proven expertise and leadership in the discount segment positions us well to maintain our momentum and build on our foundation for long term earnings growth. As always, thanks for your attention and back to you, Howard. Speaker 100:09:42Thank you, Nick. In summary, we are pleased with our Q1 operating results as well as our long standing practice of paying a quarterly dividend. We expect that this dividend policy will continue. Now operator, please open the call for questions. Operator00:10:19And we will take our first question from Ian Zaffino with Oppenheimer. Speaker 300:10:25Hi, great. Thank you very much. So I wanted to ask about Montego. Very strong market share gains. Where do you think the ultimate market share can get in this brand, I guess before you start harvesting profits? Speaker 300:10:41Or maybe to point to a similar brand that you had in the past that performed and what Montego might remind you of as maybe a guideline of what we should be able to expect from the Montego brand? Thank you. Speaker 200:10:57Sure. Thanks, Ian. Yes, obviously very pleased with the Montego brand's performance in the Q1. Again, even though we've strategically been taking price increases and increasing the margin on that brand, it's continued to gain market share. So it's continuing to grow. Speaker 200:11:16That is similar to other brands that we've launched and invested and grown both Grand Prix and the Pyramid brand. And I would take the opportunity to remind you that obviously brands continue to grow even though they may not be the cheapest in the store. So and that's again down to our excellent retail execution. So again, feeling very good about the brand, where it's positioned. Again, reinforce our ceiling, our one second, I apologize. Speaker 200:12:14Our mission statements have provided the best value proposition has never been more relevant. So feeling very good about where we stand in the marketplace at the moment. Speaker 300:12:24Understood. Thank you. And then just Speaker 100:12:26as a Speaker 300:12:26follow-up, good commentary on the menthol delay. I guess two questions. Was there any like noticeable difference in shipments that you had seen maybe leading up to this potential ban that should then normalize coming out of this? And then also, how are you thinking about maybe state level bans? And would those be equally as challenged as a federal ban? Speaker 300:12:51Thank you. Speaker 200:12:52Yes. No, feeling obviously very pleased with the the decision to delay. Again, we think that's the right decision. We're not sure when exactly that final rule will be made. But I think it's inevitable as we've seen in states that we may see some increased activity with respect to mental bands at the state level, but that will be handled on a state by state basis, Ian. Speaker 300:13:23All right. Thank you very much. Operator00:13:27Thank you. And our next question comes from Hale Holden with Speaker 400:13:38Two quick questions. The 97,000 points of distribution for Montego, is that should we consider that close to full distribution? I think you've been higher previously for Pyramid and some of the other brands or is there room to growth? Speaker 200:13:56Still some room to grow. Overall distribution for Liggett Bracta Brands in total for our portfolio is about 125,000. Not to say that we'll go get into all those stores, but there's certainly continued room to grow. And we increased distribution quarter over quarter by about 3,000 stores. So certainly, we're continuing to see growth in distribution. Speaker 400:14:20Okay. Great. And then my second question is sort of if you zoom way out, the rate of decline for the industry has been pretty high over the last year and seems to be settling in this kind of this high single digit rate. So I was wondering if you think that changes any of the competitive forces that kind of you face on a day to day basis or changes the way that, you're kind of thinking about the long term in the tobacco in the cigarette industry? Speaker 200:14:57Yes. Look, I think if you look at the that decline rate, it's certainly been elevated the last couple of years. I would argue that probably the underlying decline rate is more in the 4% to 5%. And then you're looking at both the macroeconomic factors in addition to kind of the growth of the illicit disposables that's accentuating the decline. Look, I'm not in a position to say when the macroeconomic position is going to improve for our smokers. Speaker 200:15:35I think it's going to take some time for the illicit disposable market to be cleaned up. So certainly for the foreseeable future, we're going to be dealing with those more elevated declines. But again, that said, we're operating in a discount segment, which is actually growing and performing well relative to the rest of the market. So taking comfort in that and continue to capitalize on that growth in the segment where we're the leaders in. Speaker 400:16:07Great. Thank you so much, Nick. I appreciate it. Yes. Thank Operator00:16:15you. We will take our next question from Karru Martinson with Jefferies. Speaker 500:16:24Good morning. When you look at the deep discount category up 6 percent, our sales being down, what was it, 2.9%. Is that just the timing aspect as you reference the wholesale or is that a result of the conscious efforts to continue to raise price and take margins? Speaker 200:16:46Yes. I mean that's a reflection obviously of the increasing pricing actions that we've taken on Montego and obviously the growth slowing on that. But also we do have a portfolio of brands in the what's referred to as the traditional discount category, which that category is also coming under pressure. So it's a combination of those volume declines and obviously a slowing growth in the Montego brand offset with price increases. Okay. Speaker 500:17:16And while you're maintaining that 45%, 50% discount to the premium brands, are you seeing more competitive pressures in that discount and deep discount category? Speaker 200:17:30Certainly, we're seeing from the bigger players more discounting of their premium brands in the overall market. But they may be discounting 10% to 15%. So they're really not impacting the deep discount, so to speak. As always, we the deep discount segment is extremely competitive and any kind of pressures that we're getting are more on a regional basis. And we certainly feel confident with Montego's broad based distribution that we can handle that and deal with that on a market by market, region by region basis. Speaker 500:18:11Okay. And just lastly, since I ask this every time and I want to keep the streak going, you've got those 10.5 notes, mature 26. How are you thinking about the capital streak? Speaker 600:18:24Hey, Karru, it's Brian Kirkland. Good morning. Good morning. How we're thinking about them. So obviously, as you said, there's $519,000,000 of the $10,500,000 that are due in 2.5 years November of 2026. Speaker 600:18:36So we're continuing to evaluate them. But I think what's very important to convey is we really are in a position of strength. We have $428,000,000 of cash at a holding company. Nick and his team are growing market share, they're growing profit and we're paying we're now paying less dividends in our earnings. And in addition to that, there's $90,000,000 of capacity under Liggett's revolver. Speaker 600:19:01So we feel good about all of our options, and we'll continue to evaluate it with our investment bankers. Speaker 500:19:07Thank you very much, guys. Operator00:19:13Ladies and gentlemen, those are all the questions that we have for today. Thank you for joining us on Vector Group's quarterly earnings conference call. On behalf of all of us at Vector Group and Leggate, we thank you for your participation and this concludes today's call.Read morePowered by