Business Wire | Nov 4, 2020 04:25PM EST

Vector Group Reports Third Quarter 2020 Financial Results

Nov. 04, 2020

MIAMI--(BUSINESS WIRE)--Nov. 04, 2020--Vector Group Ltd. (NYSE:VGR) today announced financial results for the three and nine months ended September 30, 2020.

"Vector Group's strong third quarter results reflect our long-term focus on creating stockholder value," said Howard M. Lorber, President and Chief Executive Officer of Vector Group Ltd. "We are pleased that both our tobacco and real estate segments reported significant increases in operating income in the quarter."

"Our Liggett tobacco subsidiary reported record operating income and is well into the income growth phase of its strategy around Eagle 20's," Mr. Lorber continued. "Our Douglas Elliman real estate subsidiary realized significant benefits from increased sales in markets complementary to New York City, including the Hamptons, as well as in Palm Beach, Miami, Aspen and Los Angeles, and from the steps we took to reduce expenses during the second quarter."

GAAP Financial Results

Third quarter 2020 revenues were $547.8 million, compared to revenues of $504.8 million in the third quarter of 2019. The Company recorded operating income of $95.9 million in the third quarter of 2020, compared to operating income of $66.7 million in the third quarter of 2019. Net income attributed to Vector Group Ltd. for the third quarter of 2020 was $38.1 million, or $0.25 per diluted common share, compared to net income of $36.0 million, or $0.23 per diluted common share, in the third quarter of 2019. Operating income and net income for the third quarter of 2020 included pre-tax restructuring charges of $0.3 million in the Company's Real Estate segment.

For the nine months ended September 30, 2020, revenues were $1.448 billion, compared to revenues of $1.464 billion for the nine months ended September 30, 2019. The Company recorded operating income of $157.8 million for the nine months ended September 30, 2020, compared to operating income of $185.6 million for the nine months ended September 30, 2019. Net income attributed to Vector Group Ltd. for the nine months ended September 30, 2020 was $60.7 million, or $0.39 per diluted common share, compared to net income of $90.3 million, or $0.56 per diluted common share, for the nine months ended September 30, 2019. Operating income and net income for the nine months ended September 30, 2020 included pre-tax and non-cash impairment charges of $58.3 million and pre-tax restructuring charges of $3.3 million in the Company's Real Estate segment.

Non-GAAP Financial Measures

Non-GAAP financial measures include adjustments for litigation settlements and judgments, restructuring charges, settlements of long-standing disputes related to the Master Settlement Agreement in the Tobacco segment, stock-based compensation expense (for purposes of Adjusted EBITDA only), impairment charges of goodwill and intangible assets, net interest expense capitalized to real estate ventures, the derivative associated with the 2018 acquisition of 29.41% of Douglas Elliman Realty, LLC and non-cash interest expense associated with the Company's convertible debt. Reconciliations of non-GAAP financial measures to the comparable GAAP financial results for the three and nine months ended September 30, 2020 and 2019 are included in Tables 2 through 7.

Three months ended September 30, 2020 compared to the Three months ended September 30, 2019

Third quarter of 2020 Adjusted EBITDA attributed to Vector Group (as described in Table 2 attached hereto) were $103.3 million, compared to $73.7 million for the third quarter of 2019.

Adjusted Net Income (as described in Table 3 attached hereto) was $38.3 million, or $0.25 per diluted share, for the third quarter of 2020, and $36.2 million or $0.23 per diluted share, for the third quarter of 2019.

Adjusted Operating Income (as described in Table 4 attached hereto) was $96.5 million for the third quarter of 2020, compared to $67.0 million for the third quarter of 2019.

Nine months ended September 30, 2020 compared to the nine months ended September 30, 2019

Adjusted EBITDA attributed to Vector Group Ltd. (as described in Table 2 attached hereto) were $240.0 million for the nine months ended September 30, 2020, compared to $206.9 million for the nine months ended September 30, 2019.

Adjusted Net Income (as described in Table 3 attached hereto) was $106.9 million, or $0.70 per diluted share, for the nine months ended September 30, 2020, compared to $92.3 million, or $0.59 per diluted share, for the nine months ended September 30, 2019.

Adjusted Operating Income (as described in Table 4 attached hereto) was $219.7 million for the nine months ended September 30, 2020, compared to $186.4 million for the nine months ended September 30, 2019.

Tobacco Segment Financial Results

For the third quarter of 2020, the Tobacco segment had revenues of $318.9 million, compared to $303.3 million for the third quarter of 2019. For the nine months ended September 30, 2020, the Tobacco segment had revenues of $918.4 million, compared to $854.5 million for the nine months ended September 30, 2019.

Operating Income from the Tobacco segment was $91.3 million and $239.8 million for the three and nine months ended September 30, 2020, respectively, compared to $72.8 million and $201.6 million for the three and nine months ended September 30, 2019, respectively.

Non-GAAP Financial Measures

Tobacco Adjusted Operating Income (as described in Table 5 attached hereto) for the third quarter of 2020 and 2019 was $91.6 million and $73.0 million, respectively. Tobacco Adjusted Operating Income for the nine months ended September 30, 2020 was $240.2 million, compared to $202.5 million for the nine months ended September 30, 2019.

For the third quarter of 2020, the Tobacco segment had conventional cigarette (wholesale) shipments of approximately 2.39 billion units, compared to 2.44 billion units for the third quarter of 2019. For the nine months ended September 30, 2020, the Tobacco segment had conventional cigarette (wholesale) shipments of approximately 7.04 billion units, compared to 6.90 billion units for the nine months ended September 30, 2019.

According to data from Management Science Associates, for the third quarter of 2020, Liggett's retail market share declined to 4.2% compared to 4.3% for the third quarter of 2019. For the nine months ended September 30, 2020, Liggett's retail market share increased to 4.3% from 4.2% for the nine months ended September 30, 2019. Compared to the third quarter of 2019, Liggett's retail shipments in the third quarter of 2020 declined by 1.1% while the overall industry's retail shipments increased by 1.7%. Compared to the nine months ended September 30, 2019, Liggett's retail shipments for nine months ended September 30, 2020 increased by 0.5% while the overall industry's retail shipments declined by 0.2%.

Real Estate Segment Financial Results

For the third quarter of 2020, the Real Estate segment had revenues of $229.0 million compared to $201.5 million for the third quarter of 2019. For the nine months ended September 30, 2020, the Real Estate segment had revenues of $529.7 million, compared to $609.6 million for the nine months ended September 30, 2019. For the third quarter of 2020, the Real Estate segment reported a net loss of $4.1 million, compared to net income of $7.2 million for the third quarter of 2019. For the nine months ended September 30, 2020, the Real Estate segment reported a net loss of $70.9 million, compared to net income of $13.5 million for the nine months ended September 30, 2019.

Douglas Elliman's results are included in the Company's Real Estate segment. For the third quarter of 2020, Douglas Elliman had revenues of $208.0 million, compared to $201.2 million for the third quarter of 2019. For the nine months ended September 30, 2020, Douglas Elliman had revenues of $506.5 million, compared to $606.0 million for the nine months ended September 30, 2019. For the third quarter of 2020, Douglas Elliman reported net income of $11.8 million, compared to $1.9 million for the third quarter of 2019. For the nine months ended September 30, 2020, Douglas Elliman reported a net loss of $62.2 million, compared to net income of $6.6 million for the nine months ended September 30, 2019.

Net loss from the Real Estate segment and Douglas Elliman for the third quarter of 2020 included pre-tax restructuring charges of $0.3 million, and the Real Estate segment's and Douglas Elliman's net loss for the nine months ended September 30, 2020 included pre-tax and non-cash impairment charges of $58.3 million and pre-tax restructuring charges of $3.3 million.

Non-GAAP Financial Measures

For the third quarter of 2020, Real Estate Adjusted EBITDA attributed to the Company (as described in Table 6 attached hereto) were income of $13.3 million compared to $2.9 million for the third quarter of 2019.

For the nine months ended September 30, 2020, Real Estate Adjusted EBITDA attributed to the Company were income of $4.7 million, compared to $11.4 million for the nine months ended September 30, 2019.

Douglas Elliman's results are included in the Company's Real Estate segment. For the third quarter of 2020, Douglas Elliman's Adjusted EBITDA (as described in Table 7 attached hereto) were income of $14.1 million, compared to $3.4 million for the third quarter of 2019.

For the nine months ended September 30, 2020, Douglas Elliman's Adjusted EBITDA were income of $5.3 million, compared to $11.0 million for the nine months ended September 30, 2019.

For the three and nine months ended September 30, 2020, Douglas Elliman achieved closed sales of approximately of $7.8 billion and $18.6 billion, respectively, compared to $7.4 billion and $22.1 billion for the three and nine months ended September 30, 2019, respectively.

Non-GAAP Financial Measures

Adjusted EBITDA, Adjusted Net Income, Adjusted Operating Income, Tobacco Adjusted Operating Income, Tobacco Adjusted EBITDA, New Valley LLC Adjusted EBITDA and Douglas Elliman Realty, LLC Adjusted EBITDA ("the Non-GAAP Financial Measures") are financial measures not prepared in accordance with generally accepted accounting principles ("GAAP"). The Company believes that the Non-GAAP Financial Measures are important measures that supplement discussions and analysis of its results of operations and enhances an understanding of its operating performance. The Company believes the Non-GAAP Financial Measures provide investors and analysts with a useful measure of operating results unaffected by differences in capital structures and ages of related assets among otherwise comparable companies.

Management uses the Non-GAAP Financial Measures as measures 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 (the Non-GAAP Financial Measures) of the Company's business. While management considers the Non-GAAP Financial Measures to be important, they should be considered in addition to, but not as substitutes 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, the Non-GAAP Financial Measures are susceptible to varying calculations and the Company's measurement of the Non-GAAP Financial Measures may not be comparable to those of other companies. Attached hereto as Tables 2 through 7 is information relating to the Company's Non-GAAP Financial Measures for the three and nine months ended September 30, 2020 and 2019.

Conference Call to Discuss Third Quarter 2020 Results

As previously announced, the Company will host a conference call and webcast on Thursday, November 5, 2020 at 9:00AM (ET) to discuss its third quarter 2020 results. Investors can access the call by dialing 877-271-1828 and entering 60044226 as the conference ID number. The call will also be available via live webcast at https://www.webcaster4.com/Webcast/Page/2271/37910. Webcast participants should allot extra time to register before the webcast begins.

A replay of the call will be available shortly after the call ends on November 5, 2020 through November 19, 2020. To access the replay, dial 877-656-8905 and enter 60044226 as the conference ID number. The archived webcast will also be available at https://www.webcaster4.com/Webcast/Page/2271/37910 for one year.

About Vector Group Ltd.

Vector Group is a holding company for Liggett Group LLC, Vector Tobacco Inc., New Valley LLC, and Douglas Elliman Realty, LLC. Additional information concerning the company is available on the Company's website, www.VectorGroupLtd.com.

Forward-Looking and Cautionary Statements

This press release includes forward-looking statements within the meaning of the federal securities law. All statements other than statements of historical or current facts, including statements regarding the current or anticipated impact of the COVID-19 pandemic on our business, made in this document are forward-looking. We identify forward-looking statements in this document by using words or phrases such as "anticipate," "believe," "estimate," "expect," "intend," "may be," "objective," "plan," "seek," "predict," "project" and "will be" and similar words or phrases or their negatives. Forward-looking statements reflect our current expectations and are inherently uncertain. Actual results could differ materially for a variety of reasons. In particular, the extent, duration and severity of the spread of the COVID-19 pandemic and economic consequences stemming from the COVID-19 crisis (including a potential significant economic contraction) as well as related risks and the impact of any of the foregoing on our business, results of operations and liquidity could affect our future results and cause actual results to differ materially from those expressed in forward-looking statements.

Risks and uncertainties that could cause our actual results to differ significantly from our current expectations are described in our 2019 Annual Report on Form 10-K and in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2020. We undertake no responsibility to publicly update or revise any forward-looking statement except as required by applicable law.

[Financial Tables Follow]

TABLE 1

VECTOR GROUP LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in Thousands, Except Per Share Amounts)

Three Months Ended Nine Months Ended

September 30, September 30,

2020 2019 2020 2019

(Unaudited) (Unaudited)

Revenues:

Tobacco* $ 318,850 $ 303,260 $ 918,429 $ 854,517

Real estate 228,981 201,530 529,650 609,629

Total revenues 547,831 504,790 1,448,079 1,464,146



Expenses:

Cost of sales:

Tobacco* 204,101 209,192 615,458 590,956

Real estate 170,474 136,264 374,625 408,694

Total cost of 374,575 345,456 990,083 999,650 sales



Operating,selling,administrative 77,019 92,374 238,600 278,047 and generalexpenses

Litigationsettlement and - 240 53 895 judgment expense

Impairments ofgoodwill and - - 58,252 - intangible assets

Restructuring 320 - 3,281 - charges

Operating income 95,917 66,720 157,810 185,554



Other income (expenses):

Interest expense (28,163 ) (32,963 ) (93,148 ) (103,236 )

Change in fairvalue ofderivatives - 6,182 4,999 20,319 embedded withinconvertible debt

Equity inearnings (losses) 1,840 (468 ) 54,199 (791 ) from investments

Equity in(losses) earnings (8,536 ) 8,050 (27,301 ) 12,002 from real estateventures

Other, net (5,096 ) 2,223 (8,116 ) 14,444

Income beforeprovision for 55,962 49,744 88,443 128,292 income taxes

Income tax 17,823 13,736 27,761 37,944 expense



Net income 38,139 36,008 60,682 90,348



Net incomeattributed to - - - (80 ) non-controllinginterest



Net incomeattributed to $ 38,139 $ 36,008 $ 60,682 $ 90,268 Vector Group Ltd.



Per basic common share:



Net incomeapplicable tocommon share $ 0.25 $ 0.23 $ 0.39 $ 0.57 attributed toVector Group Ltd.



Per diluted common share:



Net incomeapplicable tocommon share $ 0.25 $ 0.23 $ 0.39 $ 0.56 attributed toVector Group Ltd.

* Revenues and cost of sales include federal excise taxes of $120,320, $122,951, $354,629 and $347,527, respectively.

TABLE 2

VECTOR GROUP LTD. AND SUBSIDIARIES

RECONCILIATION OF ADJUSTED EBITDA

(Unaudited)

(Dollars in Thousands)

LTM Three Months Ended Nine Months Ended

September 30, September 30, September 30,

2020 2020 2019 2020 2019



Net incomeattributed to $ 71,388 $ 38,139 $ 36,008 $ 60,682 $ 90,268 Vector GroupLtd.

Interest 128,360 28,163 32,963 93,148 103,236 expense

Income tax 22,630 17,823 13,736 27,761 37,944 expense

Net (loss)incomeattributed to (39 ) - - - 80 non-controllinginterest

Depreciationand 17,822 4,346 4,430 13,333 13,362 amortization

EBITDA $ 240,161 $ 88,471 $ 87,137 $ 194,924 $ 244,890

Change in fairvalue ofderivatives (11,105 ) - (6,182 ) (4,999 ) (20,319 ) embedded withinconvertibledebt (a)

Equity in(earnings) (71,990 ) (1,840 ) 468 (54,199 ) 791 losses frominvestments (b)

Equity inlosses(earnings) from 58,591 8,536 (8,050 ) 27,301 (12,002 ) real estateventures (c)

Loss onextinguishment 4,301 - - - - of debt

Stock-basedcompensation 9,359 2,471 2,348 7,012 7,122 expense (d)

Litigationsettlement and 148 - 240 53 895 judgmentexpense (e)

Impact of MSA 286 286 - 286 - settlement (f)

Restructuring 3,281 320 - 3,281 - charges (g)

Impairments ofgoodwill and 58,252 - - 58,252 - intangibleassets (h)

Other, net 1,255 5,096 (2,223 ) 8,116 (14,444 )

Adjusted EBITDAattributed to $ 292,539 $ 103,340 $ 73,738 $ 240,027 $ 206,933 Vector GroupLtd.



Adjusted EBITDAAttributed to Vector GroupLtd. by Segment

Tobacco $ 308,267 $ 93,570 $ 74,980 $ 246,160 $ 208,358

Real Estate (i) (623 ) 13,337 2,868 4,711 11,437

Corporate and (15,105 ) (3,567 ) (4,110 ) (10,844 ) (12,862 ) Other

Total $ 292,539 $ 103,340 $ 73,738 $ 240,027 $ 206,933

* Represents income recognized from changes in the fair value of the derivatives embedded in the Company's convertible debt. * Represents equity in (earnings) losses recognized from investments that the Company accounts for under the equity method. Included in the amount are equity in earnings of $16,377 from Castle Brands for the twelve months ended September 30, 2020 and equity in earnings of $53,860, $372 and $53,424 from Ladenburg Thalmann Financial Services for the twelve months ended September 30, 2020 and for the three and nine months ended September 30, 2020, respectively. * Represents equity in losses (earnings) recognized from the Company's investment in certain real estate businesses that are accounted for under the equity method and are not consolidated in the Company's financial results. * Represents amortization of stock-based compensation. * Represents accruals for product liability litigation in the Company's tobacco segment. * Represents the Company's tobacco segment's settlement of a long-standing dispute related to the Master Settlement Agreement. * Represents restructuring charges related to Douglas Elliman Realty, LLC's realignment of administrative support functions, office locations and business model. * Represents non-cash intangible asset impairment charges in the Company's Real Estate segment related to the goodwill and trademark of the Douglas Elliman Realty, LLC reporting unit. * Includes Adjusted EBITDA for Douglas Elliman Realty, LLC of loss of $362 for the last twelve months ended September 30, 2020, and income of $14,089, $3,368, $5,331 and $11,026 for the three and nine months ended September 30, 2020 and 2019, respectively.TABLE 3

VECTOR GROUP LTD. AND SUBSIDIARIES

RECONCILIATION OF ADJUSTED NET INCOME

(Unaudited)

(Dollars in Thousands, Except Per Share Amounts)

Three Months Ended Nine Months Ended

September 30, September 30,

2020 2019 2020 2019



Net incomeattributed to $ 38,139 $ 36,008 $ 60,682 $ 90,268 Vector GroupLtd.



Change in fairvalue ofderivativesembedded - (6,182 ) (4,999 ) (20,319 )withinconvertibledebt

Non-cashamortizationof debt - 5,746 5,276 19,718 discount onconvertibledebt

Litigationsettlement and - 240 53 895 judgmentexpense (a)

Impact of MSA 286 - 286 - settlement (b)

Impact of netinterestexpense (35 ) 412 3,015 2,488 capitalized toreal estateventures

Adjustment forderivativeassociatedwithacquisition of (252 ) - (2,083 ) - 29.41% ofDouglasEllimanRealty, LLC

Restructuring 320 - 3,281 - charges (c)

Impairments ofgoodwill and - - 58,252 - intangibleassets (d)

Total 319 216 63,081 2,782 adjustments



Tax expenserelated to (154 ) (59 ) (16,848 ) (764 ) adjustments



Adjusted NetIncomeattributed to $ 38,304 $ 36,165 $ 106,915 $ 92,286 Vector GroupLtd.



Per diluted common share:



Adjusted NetIncomeapplicable tocommon shares $ 0.25 $ 0.23 $ 0.70 $ 0.59 attributed toVector GroupLtd.

* Represents accruals for product liability litigation in the Company's tobacco segment. * Represents the Company's tobacco segment's settlement of a long-standing dispute related to the Master Settlement Agreement. * Represents restructuring charges related to Douglas Elliman Realty, LLC's realignment of administrative support functions, office locations and business model. * Represents non-cash intangible asset impairment charges in the Company's Real Estate segment related to the goodwill and trademark of the Douglas Elliman Realty, LLC reporting unit.TABLE 4

VECTOR GROUP LTD. AND SUBSIDIARIES

RECONCILIATION OF ADJUSTED OPERATING INCOME

(Unaudited)

(Dollars in Thousands)

LTM Three Months Ended Nine Months Ended

September September 30, September 30, 30,

2020 2020 2019 2020 2019



Operating $ 203,391 $ 95,917 $ 66,720 $ 157,810 $ 185,554 income



Litigationsettlement 148 - 240 53 895 and judgmentexpense (a)

Restructuring 3,281 320 - 3,281 - charges (b)

Impact of MSAsettlement 286 286 - 286 - (c)

Impairmentsof goodwilland 58,252 - - 58,252 - intangibleassets (d)

Total 61,967 606 240 61,872 895 adjustments



AdjustedOperating $ 265,358 $ 96,523 $ 66,960 $ 219,682 $ 186,449 Income

* Represents accruals for product liability litigation in the Company's tobacco segment. * Represents restructuring charges related to Douglas Elliman Realty, LLC's realignment of administrative support functions, office locations and business model. * Represents the Company's tobacco segment's settlement of a long-standing dispute related to the Master Settlement Agreement. * Represents non-cash intangible asset impairment charges in the Real Estate segment related to the goodwill and trademark of the Douglas Elliman Realty, LLC reporting unit.TABLE 5

VECTOR GROUP LTD. AND SUBSIDIARIES

RECONCILIATION OF TOBACCO ADJUSTED OPERATING INCOME

AND TOBACCO ADJUSTED EBITDA

(Unaudited)

(Dollars in Thousands)

LTM Three Months Ended Nine Months Ended

September September 30, September 30, 30,

2020 2020 2019 2020 2019



TobaccoAdjusted OperatingIncome:

Operatingincome from $ 299,850 $ 91,319 $ 72,799 $ 239,814 $ 201,594 tobaccosegment



Litigationsettlement 148 - 240 53 895 and judgmentexpense (a)

Impact of MSAsettlement 286 286 - 286 - (b)

Total 434 286 240 339 895 adjustments



TobaccoAdjusted $ 300,284 $ 91,605 $ 73,039 $ 240,153 $ 202,489 OperatingIncome

LTM

Three Months Ended

Nine Months Ended

September 30,

September 30,

September 30,

2020

2020

2019

2020

2019

Tobacco Adjusted EBITDA:

Operating income from tobacco segment

$

299,850

$

91,319

$

72,799

$

239,814

$

201,594

Litigation settlement and judgment expense (a)

148

-

240

53

895

Impact of MSA settlement (b)

286

286

-

286

-

Total adjustments

434

286

240

339

895

Tobacco Adjusted Operating Income

300,284

91,605

73,039

240,153

202,489

Depreciation and amortization

7,983

1,965

1,941

6,007

5,848

Stock-based compensation expense

-

-

-

-

21

Total adjustments

7,983

1,965

1,941

6,007

5,869

Tobacco Adjusted EBITDA

$

308,267

$

93,570

$

74,980

$

246,160

$

208,358

a. Represents accruals for product liability litigation in the Company's tobacco segment. b. Represents the Company's tobacco segment's settlement of a long-standing dispute related to the Master Settlement Agreement.

LTM Three Months Ended Nine Months Ended

September September 30, September 30, 30,

2020 2020 2019 2020 2019



TobaccoAdjusted EBITDA:

Operatingincome from $ 299,850 $ 91,319 $ 72,799 $ 239,814 $ 201,594 tobaccosegment



Litigationsettlement 148 - 240 53 895 and judgmentexpense (a)

Impact of MSAsettlement 286 286 - 286 - (b)

Total 434 286 240 339 895 adjustments



TobaccoAdjusted 300,284 91,605 73,039 240,153 202,489 OperatingIncome



Depreciationand 7,983 1,965 1,941 6,007 5,848 amortization

Stock-basedcompensation - - - - 21 expense

Total 7,983 1,965 1,941 6,007 5,869 adjustments



TobaccoAdjusted $ 308,267 $ 93,570 $ 74,980 $ 246,160 $ 208,358 EBITDA

a. Represents accruals for product liability litigation in the Company's tobacco segment. b. Represents the Company's tobacco segment's settlement of a long-standing dispute related to the Master Settlement Agreement.

TABLE 6

VECTOR GROUP LTD. AND SUBSIDIARIES

RECONCILIATION OF REAL ESTATE SEGMENT (NEW VALLEY LLC) ADJUSTED EBITDA

(Unaudited)

(Dollars in Thousands)

LTM Three Months Ended Nine Months Ended

September 30, September 30, September 30,

2020 2020 2019 2020 2019



Net (loss)incomeattributed toVector Group $ (95,810 ) $ (4,053 ) $ 7,246 $ (70,902 ) $ 13,468 Ltd. fromsubsidiarynon-guarantors(a)

Interest 467 17 228 239 685 expense (a)

Income tax(benefit) (37,369 ) (1,634 ) 3,023 (25,972 ) 5,513 expense (a)

Net (loss)incomeattributed to (39 ) - - - 80 non-controllinginterest (a)

Depreciationand 8,946 2,167 2,240 6,678 6,765 amortization

EBITDA $ (123,805 ) $ (3,503 ) $ 12,737 $ (89,957 ) $ 26,511

Loss fromnon-guarantors 55 17 15 61 57 other than NewValley LLC

Equity inlosses(earnings) from 58,591 8,536 (8,050 ) 27,301 (12,002 ) real estateventures (b)

Restructuring 3,281 320 - 3,281 - charges (c)

Impairments ofgoodwill and 58,252 - - 58,252 - intangibleassets (d)

Other, net 2,900 7,967 (1,808 ) 5,685 (3,144 )

Adjusted EBITDAattributed to $ (726 ) $ 13,337 $ 2,894 $ 4,623 $ 11,422 New Valley LLC



Adjusted EBITDAAttributed to New Valley LLCby Segment

Real Estate (e) $ (623 ) $ 13,337 $ 2,868 $ 4,711 $ 11,437

Corporate and (103 ) - 26 (88 ) (15 ) Other

Total (f) $ (726 ) $ 13,337 $ 2,894 $ 4,623 $ 11,422

* Amounts are derived from Vector Group Ltd.'s Condensed Consolidated Financial Statements. See Exhibit 99.2 "Condensed Consolidating Financial Information" contained in Vector Group Ltd.'s Form 10-Q for the period ended September 30, 2020 and the Note 14 contained in Vector Group Ltd.'s Form 10-Q for the period ended September 30, 2019. * Represents equity in losses (earnings) recognized from the Company's investment in certain real estate businesses that are accounted for under the equity method and are not consolidated in the Company's financial results. * Represents restructuring charges related to Douglas Elliman Realty, LLC's realignment of administrative support functions, office locations and business model. * Represents non-cash intangible asset impairment charges in the Real Estate segment related to the goodwill and trademark of the Douglas Elliman Realty, LLC reporting unit. * Includes Adjusted EBITDA for Douglas Elliman Realty, LLC of loss of $362 for the last twelve months ended September 30, 2020, and income of $14,089, $3,368, $5,331 and $11,026 for the three and nine months ended September 30, 2020 and 2019, respectively. * New Valley's Adjusted EBITDA does not include an allocation of Vector Group Ltd.'s "Corporate and Other" segment expenses (for purposes of computing Adjusted EBITDA contained in Table 2 of this press release) of $15,105 for the last twelve months ended September 30, 2020 and $3,567, $4,110, $10,844 and $12,862 for the three and nine months ended September 30, 2020 and 2019, respectively.TABLE 7

VECTOR GROUP LTD. AND SUBSIDIARIES

RECONCILIATION OF DOUGLAS ELLIMAN REALTY, LLC ADJUSTED EBITDA

ATTRIBUTED TO REAL ESTATE SEGMENT

(Unaudited)

(Dollars in Thousands)

LTM Three Months Ended Nine Months Ended

September 30, September 30, September 30,

2020 2020 2019 2020 2019



Net (loss)incomeattributed to $ (62,676 ) $ 11,838 $ 1,893 $ (62,244 ) $ 6,617 DouglasEllimanRealty, LLC

Interest 3 - 1 1 6 expense

Income tax(benefit) (175 ) (179 ) 265 (177 ) 366 expense

Depreciationand 8,586 2,093 2,135 6,405 6,457 amortization

DouglasElliman $ (54,262 ) $ 13,752 $ 4,294 $ (56,015 ) $ 13,446 Realty, LLCEBITDA

Equity inearnings from (7,106 ) (3 ) (458 ) (26 ) (1,392 ) real estateventures (a)

Restructuring 3,281 320 - 3,281 - charges (b)

Impairmentsof goodwilland 58,252 - - 58,252 - intangibleassets (c)

Other, net (527 ) 20 (468 ) (161 ) (1,028 )

DouglasEllimanRealty, LLCAdjusted $ (362 ) $ 14,089 $ 3,368 $ 5,331 $ 11,026 EBITDAattributed toReal EstateSegment

* Represents equity in earnings recognized from the Company's investment in certain real estate businesses that are accounted for under the equity method and are not consolidated in the Company's financial results. * Represents restructuring charges related to Douglas Elliman Realty, LLC's realignment of administrative support functions, office locations and business model. * Represents non-cash intangible asset impairment charges related to the goodwill and trademark of Douglas Elliman Realty, LLC. View source version on businesswire.com: https://www.businesswire.com/news/home/20201104005731/en/

CONTACT: Emily Claffey/Benjamin Spicehandler /Columbia Clancy Sard Verbinnen & Co 212-687-8080

CONTACT: Eve Young Sard Verbinnen & Co - Europe +44 (0)20 3178 8914

CONTACT: J. Bryant Kirkland III, Vector Group Ltd. 305-579-8000