Vector Group Ltd (VGR) Reports 7.9% Increase in Q3 Operating Income Despite Revenue Decline
Vector Group Ltd (NYSE:VGR) reported a 3.7% decline in consolidated revenues for Q3 2023, amounting to $364.1 million.
Operating income for the same period rose by 7.9%, reaching $90.5 million.
Montego, a brand under VGR, increased its wholesale market share to 3.5% from 2.8% in the prior year period.
The company's tobacco segment saw a 7.6% increase in operating income, reaching $94.8 million.
Vector Group Ltd (NYSE:VGR) released its earnings report for the third quarter of 2023 on November 2, 2023. Despite a decrease in consolidated revenues, the company saw a significant increase in operating income. The report also highlighted the growth of Montego, which has become the largest discount brand in the U.S.
Financial Performance
For Q3 2023, VGR reported consolidated revenues of $364.1 million, marking a 3.7% decrease compared to the same period in the previous year. Despite this, the company's operating income increased by 7.9% to $90.5 million. The tobacco segment's operating income also saw a rise of 7.6%, amounting to $94.8 million.
Montego's Market Share Growth
Montego, a brand under VGR, saw a significant increase in its wholesale market share, which rose to 3.5% from 2.8% in the prior year period. This growth has led Montego to become the largest discount brand in the U.S.
Year-to-Date Highlights
Year-to-date 2023 highlights include a slight decrease in consolidated revenues by 1.2% to $1.06 billion. However, the tobacco segment's revenues saw a minor increase of 0.2% to $1.06 billion. The operating income for the year-to-date period was $236.4 million, marking a 5.3% decrease compared to the prior year period.
Balance Sheet and Dividends
As of September 30, 2023, VGR maintained significant liquidity with cash and cash equivalents of $436.5 million, including $208.0 million of cash from the Tobacco segment. The company continued its longstanding history of paying a quarterly cash dividend in the third quarter of 2023, returning a total of $95.3 million to stockholders at a quarterly rate of $0.20 per common share.
CEO's Commentary
We are proud that Montego grew to be the largest discount brand in the United States in the third quarter of 2023, demonstrating the strength of our strategy and the skillful execution by Liggett to offer the best value proposition in the U.S. cigarette industry," said Howard M. Lorber, President and Chief Executive Officer of Vector Group Ltd.
Looking Ahead
Despite the challenges, VGR remains focused on optimizing long-term profit and driving value for stockholders by effectively managing its volume, pricing, and market share.
Explore the complete 8-K earnings release (here) from Vector Group Ltd for further details.
This article first appeared on GuruFocus.
