Executive Summary

Q4 2023 revenue declined 0.9% year-over-year to $360.4M, but GAAP diluted EPS rose to $0.37 from $0.30, with operating income up 2.6% to $91.6M; Adjusted EBITDA increased 3.6% to $96.0M, underscoring margin resilience despite lower shipments .
Tobacco wholesale market share improved to 5.7% (from 5.5% in Q4 2022), with Montego reaching 3.8% wholesale and retail share, reinforcing its position as the largest U.S. discount brand; shipments fell 7.4% vs industry −9.5% (relative outperformance) .
Pricing actions effective January 26, 2024 (per-pack increases across brands) and deep-discount mix support margins; tobacco segment Adjusted EBITDA rose to $99.6M (+5.4% y/y) .
Dividend maintained at $0.20 per quarter; $127.0M returned to shareholders in 2023; strong liquidity with $268.6M cash, $110.9M investment securities, and $46.8M long-term investments at year-end .
Consensus estimates from S&P Global were unavailable (SPGI mapping error); beat/miss vs Street cannot be assessed. Values retrieved from S&P Global for estimates were unavailable due to mapping limitations.

What Went Well and What Went Wrong

What Went Well
- Montego’s continued share gains drove mix improvement: Montego wholesale share rose to 3.8% (from 3.0%), retail share to 3.8% (from 3.2%); CEO emphasized execution and positioning for 2024 (“well positioned…to continue optimizing long-term profit”) .
- Margins strengthened: operating income up 2.6% y/y to $91.6M; Adjusted EBITDA up 3.6% to $96.0M; tobacco Adjusted EBITDA up 5.4% to $99.6M .
- Relative shipment outperformance: wholesale shipments −7.4% y/y vs industry −9.5%; retail shipments −8.4% y/y vs industry −8.5% .
What Went Wrong
- Top-line pressure: consolidated revenues down 0.9% y/y to $360.4M; tobacco shipments declined to 2.37B units from 2.56B y/y (volume headwind despite share gains) .
- Litigation costs over the year: 2023 reflected $18.8M litigation settlement/judgment expense (full-year), though Q4 accrual was minimal; regulatory uncertainties (menthol ban, nicotine reduction) persist into 2024 .
- Sequential revenue softness vs Q3: revenue slipped from $364.1M in Q3 to $360.4M in Q4, while shipments also declined sequentially (2.45B to 2.37B) .

Financial Results

Metric	Q4 2022	Q3 2023	Q4 2023
Revenue ($USD Millions)	$363.8	$364.1	$360.4
Operating Income ($USD Millions)	$89.3	$90.5	$91.6
Net Income ($USD Millions)	$48.2	$52.7	$58.0
Diluted EPS ($USD)	$0.30	$0.33	$0.37
Adjusted EBITDA ($USD Millions)	$92.7	$94.9	$96.0
EBITDA Margin % (Adj EBITDA/Revenue)	25.5%	26.1%	26.7%
EBIT Margin % (Operating Income/Revenue)	24.5%	24.9%	25.4%

Segment performance:

Segment Metric	Q4 2022	Q3 2023	Q4 2023
Tobacco Revenues ($USD Millions)	$363.8	$364.1	$360.4
Tobacco Operating Income ($USD Millions)	$93.0	$94.8	$98.1
Tobacco Adjusted EBITDA ($USD Millions)	$94.5	$96.3	$99.6

KPIs:

KPI	Q4 2022	Q3 2023	Q4 2023
Wholesale Shipments (B units)	2.56	2.45	2.37
Wholesale Market Share (%)	5.5%	5.3%	5.7%
Retail Market Share (%)	5.8%	5.9%	5.8%
Montego Wholesale Share (%)	3.0%	3.5%	3.8%
Montego Retail Share (%)	3.2%	3.8%	3.8%

Non-GAAP details:

Adjusted Net Income per diluted share: $0.31 (Q4 2022), $0.33 (Q3 2023), $0.36 (Q4 2023), reflecting litigation/MSA and other adjustments .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Dividend per Share	Quarterly 2023	$0.20/qtr	$0.20/qtr	Maintained
Wholesale List Price Increases	Jan 26, 2024	Aug 25, 2023 increases (varied by brand)	Per-pack: Montego +$0.14; Eagle 20’s +$0.17; Pyramid +$0.17; Liggett Select/Eve/Grand Prix +$0.30	Raised (new round)
Tobacco Capex Commitments (factory modernization)	2023-2024	$13.2M commitments; $9.7M funded (Q3)	$14.0M commitments; $10.2M funded (Q4)	Raised/Updated funding
Regulatory Timing (Menthol ban; Nicotine reduction)	2024	Expected 2023 (prior)	Menthol final rule expected 2024; nicotine proposed rule scheduled April 2024	Timeline extended

Earnings Call Themes & Trends

Note: The Q4 2023 earnings call transcript could not be retrieved due to a document database inconsistency; themes below reflect press releases and investor materials.

Topic	Previous Mentions (Q2 & Q3)	Current Period (Q4 2023)	Trend
Pricing actions	Jan & Apr 2023 list price increases; deep discount strategy	New list price increases effective Jan 26, 2024 across brands	Continued pricing discipline
Deep discount mix (Montego)	Liggett deep discount volume 56% (52 weeks ended Jul 1, 2023)	60% (52 weeks ended Sep 30, 2023)	62% (52 weeks ended Dec 31, 2023)
Market share trajectory	Wholesale 5.4% (Q2); retail 5.8% (Q2)	Wholesale 5.3%; retail 5.9% (Q3)	Wholesale 5.7%; retail 5.8% (Q4)
Litigation/MSA	$18M Mississippi settlement accrual disclosed; Engle cases ongoing	~60 non-Engle cases; Engle cases remain	~70 non-Engle cases; Engle cases remain; minimal Q4 accrual
Regulatory outlook	Menthol ban and nicotine reduction rules expected 2023	Timeline still 2023	Menthol final rule expected 2024; nicotine standard proposed April 2024

Management Commentary

“Vector Group delivered a solid performance in 2023 amid a dynamic operating environment…well positioned in 2024…continue optimizing long-term profit and driving value for our stockholders.” – Howard M. Lorber, President & CEO .
“Montego grew to be the largest discount brand in the United States in the third quarter of 2023…focused on optimizing long-term profit…managing volume, pricing, and market share.” – Howard M. Lorber (Q3 press release) .

Q&A Highlights

The Q4 2023 earnings call transcript was unavailable due to a document database inconsistency; therefore, Q&A themes and clarifications cannot be provided from the call. We have anchored commentary on the press release and furnished investor materials .

Estimates Context

S&P Global consensus estimates for Q4 2023 (Primary EPS Consensus Mean; Revenue Consensus Mean; # of Estimates) were unavailable due to a Capital IQ mapping error for VGR. Values retrieved from S&P Global were unavailable due to mapping limitations. As a result, beat/miss vs consensus cannot be assessed.

Key Takeaways for Investors

Margin resilience amid volume pressure: Q4 Adjusted EBITDA rose to $96.0M and EBIT margin expanded to ~25.4%, supported by pricing and mix; tobacco Adjusted EBITDA up 5.4% y/y to $99.6M .
Share gains continue: wholesale market share up to 5.7% and Montego at 3.8% wholesale/retail; competitive positioning in deep discount strengthens .
Pricing actions as a lever: Jan 26, 2024 list price increases across brands provide a near-term margin tailwind into 2024 .
Litigation/regulatory watch: 2023 litigation costs elevated ($18.8M full-year), but Q4 accrual minimal; monitor timing/impact of menthol ban and nicotine reduction proposals in 2024 .
Capital returns sustained: quarterly dividend maintained at $0.20/share; $127.0M returned in 2023 with ample liquidity at year-end (cash and investments) .
Sequential dynamics: revenue down slightly vs Q3; continue to monitor shipments and category elasticity as pricing/mix actions flow through .
Actionable: focus on the trajectory of wholesale share recovery, the incremental margin from price increases, and regulatory milestones as potential stock catalysts in 1H 2024 .

VECTOR GROUP LTD (VGR)·Q4 2023 Earnings Summary