Welcome to Vector Group Ltd.'s first quarter 2022 earnings conference call. During this call, the terms adjusted operating income, adjusted net income, adjusted EBITDA, and tobacco adjusted operating income will be used. These terms are non-GAAP financial measures and should be considered in addition to, but not as substitute for, other measures of financial performance. In accordance with GAAP, reconciliations to adjusted operating income, adjusted net income, adjusted EBITDA from continuing operations, 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, located at www.vectorgroupltd.com. Before the call begins, I'd 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 risk 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. Now I'd like to turn the call over to the President and Chief Executive Officer of Vector Group, Howard Lorber. Good morning, and thank you for joining us on our first quarter 2022 earnings conference call. With me today are Richard Lampen, our Chief Operating Officer; Bryant Kirkland, our Chief Financial Officer; and Nick Anson, President and Chief Operating Officer of Liggett Vector Brands. Ron Bernstein, Senior Advisor to Liggett Vector Brands, will also join us during the question and answers. During this call, I will review Vector Group's consolidated financial results for the first quarter of 2022. Nick will then summarize the performance of our tobacco business. I will then provide closing comments and open the call for questions. Before reviewing Vector Group's consolidated financial results, please note that because of the spin-off of Douglas Elliman in the fourth quarter of 2021, Douglas Elliman's financial results have been presented as discontinued operations in Vector Group's consolidated financial statements and have been excluded from our adjusted results. Now turning to Vector Group's consolidated balance sheet. Our balance sheet is strong. As of March 31st, 2022, we maintained significant liquidity with cash and cash equivalents of approximately $238 million, including cash of $46 million at Liggett. We also held investment securities and investment partnership interests with a fair market value of approximately $183 million. Turning to Vector Group's consolidated results from operations for the three months ended March 31st, 2022. Vector Group's revenues for the quarter were $312 million, compared to $271 million in the 2021 period. The increase in revenues was primarily driven by volume growth at Liggett, resulting from the expansion of its Montego brand, as well as increased pricing on its Eagle 20's and Pyramid brands. Net income attributed to Vector Group was $32.5 million or $0.21 per diluted common share, compared to $32 million or $0.20 per diluted common share in the first quarter of 2021. Net income from continuing operations attributed to Vector Group was $32.5 million or $0.21 per diluted common share, compared to $21.6 million or $0.14 per diluted common share in the first quarter of 2021. The company recorded adjusted EBITDA from continuing operations of $77.1 million, compared to $78 million in the first quarter of 2021. Adjusted net income from continuing operations was $26.6 million or $0.17 per diluted share, compared to $34.9 million or $0.22 per diluted share in the 2021 period. I will now turn it over to Nick to discuss our tobacco operations. Nick? Thank you, Howard, and good morning, everyone. Liggett continued its strong performance during the first quarter of 2022 as we took advantage of favorable market opportunities to substantially increase volume and market share. During our full year 2021 earnings call, we noted the significant growth opportunities developing in the US discount cigarette market, including a consumer shift towards value brands and KT&G's departure from the US market in December of 2021. I am pleased to report that we are successfully capitalizing on both opportunities, highlighted by the fact that Liggett's retail market share increased to 5.2% in the first quarter of 2022, up from 4.2% in the first quarter of last year, driven by the growth of our Montego brand. Our strategy with Montego is consistent with our long-term objective of optimizing profit through the effective management of volume, pricing, and market share growth. A key to our long-term success is that we take an opportunistic approach to the marketplace and recognize the need to invest and capitalize on volume growth opportunities. Similar to our successful expansions of Pyramid beginning in 2009 and Eagle 20's in 2013, Montego's significant volume and market share growth has required targeted investment, which led to a small decline in year-over-year income in the first quarter of 2022. We have a proven track record of successful brand expansions. This is demonstrated by our $35 million investment in Pyramid over a decade ago, a brand which now has delivered more than $1 billion in cumulative gross profit margin. Our investment in Eagle 20's in 2017 and 2018 served as the foundation for Liggett's significant increase in tobacco operating income from $247 million in 2018 to $360 million in 2021. We expect to realize a significant return on our investment in Montego, and decisions on when we will transition to an income growth strategy for the brand will be carefully considered based on market factors. Inflation continued to rise during the first quarter, leading to increased financial pressure on many cigarette smokers. As a result, we saw a continuing shift to the discount segment as consumers seek value with their cigarette purchases. Based on Management Science Associates retail data, for the three months ending March 31, 2022, the discount category represented 27.1% of the total market, compared to 26.3% for the same period last year. Within the discount category, we continue to see momentum and growth for brands priced at the low end of the value chain. For the first quarter of 2022, we estimate that the deep discount segment comprised approximately 37% of the total discount category, compared to 33% in the same period a year ago. We expect this migration to continue as the deep discount segment remains a more attractive value proposition for consumers. As such, we are confident that our value-focused brand portfolio and broad national distribution positions us well to meet shifting market demands. With a market share of 2.8%, KT&G's exit from the U.S. presented a significant opportunity. Our timely expansion of Montego in 2021, along with strong execution from our sales organization, ensured that we were well-positioned to capitalize on KT&G's exit. Montego distribution expanded to over 63,000 stores in the first quarter of 2022, compared to approximately 26,000 stores in the first quarter of 2021, while the brand's market share increased to 1.9% compared to 0.4% in the corresponding period in 2021. We estimate Montego's retail share of the deep discount segment in the first quarter was approximately 19%, compared to 4.5% in the same period in 2021. Beyond Montego, our go-to-market strategy with a value-focused portfolio remains successful. Eagle 20's is delivering significantly higher margins, and Pyramid continues to provide both substantial profit and market presence to the company. I'm also pleased to report that for the most recent 13-week period, Eagle 20's and Montego are now the third and fourth largest discount brands, respectively, in the U.S. market. Overall, Liggett's retail shipments for the three months ending March 31, 2022 increased 14.6% from the year ago period, while the industry retail shipments decreased 7.8% during the same period. As a result, and as mentioned earlier, Liggett's first quarter retail share increased to 5.2% from 4.2% in the corresponding period a year ago. I will now turn to the combined tobacco financials for Liggett Group and Vector Tobacco. For the three months ending March 31, 2022, revenues increased 15.1% to $309 million, compared to $268.5 million for the corresponding 2021 period. Tobacco operating income for the three months ending March 31, 2022 was $77.6 million, compared to $81.6 million for the corresponding period in 2021. Tobacco adjusted operating income for the three months ending March 31, 2022 was $75.6 million, compared to $78.9 million for the corresponding period a year ago. Liggett's first quarter earnings decrease was primarily the result of lower gross profit margins associated with a significant increase in Montego volumes. While our business has not been immune from the effects of increased inflation, our operational cost base remains stable. As a reminder, with respect to our MSA cost, the impact of inflation is mitigated since approximately 40% of our current volumes are exempt from payment due to our perpetual MSA grandfathered market share. Regarding the current regulatory environment, as expected, the FDA recently issued its preliminary ruling prohibiting the use of menthol as a characterizing flavor in cigarettes. Importantly, for the 12 months ending March 31, 2022, menthol cigarettes only represented approximately 19% of Liggett's total retail sales volume compared to about 35% for the total industry. As we have previously noted, this issue has been considered by the FDA since 2009, and by statute, the agency is required to apply a scientific approach to their ruling in any question involving public health. The FDA is also required to evaluate potential unintended consequences of any decision. There are many open issues and conflicting scientific data regarding menthol in cigarettes, and we believe it will likely take years before this complex issue is resolved. In addition, several tobacco companies with a presence in the e-cigarette and vapor business have recently received marketing denial orders from the FDA for the next generation products. While we continue to closely monitor this segment of the market, we remain firm in our belief that there is significant risk surrounding consumer acceptance of these products. These recent FDA decisions also highlight the regulatory risk and cost associated with this segment of the market. As such, we remain focused on our core competencies in the growing discount segment of the conventional cigarette market. In summary, the operational and financial performance of our tobacco business remains strong. Our first quarter results validate our strategy and reflect the competitive strength we have in the discount segment, including our broad base of distribution, consumer focus programs, and the scope and capabilities of our sales force. Finally, while we are always subject to industry, regulatory, and general market risks, we are confident that we have the effective programs and infrastructure in place to keep our business operating efficiency while delivering market share and long-term profit growth from our value-based brand portfolio. Thanks for your attention, and back to you, Howard. Thank you, Nick. Vector Group had another outstanding first quarter. We have strong cash reserves and have consistently increased our tobacco market share and profits over the long term. We are pleased with our long-standing practice of paying a quarterly cash dividend. It remains an important component of our capital allocation strategy, and it is our expectation that our policy will continue. Now, operator, please open the call for questions. Thank you. At this time, if you would like to ask a question, please press the star and one on your touch tone phone. You may remove yourself from the queue at any time by pressing star two. Once again, that is star and one to ask a question. We'll pause for a few moments to allow everyone an opportunity to signal for questions. We'll take our first question from Karru Martinson with Jefferies. When you look at the market and the trade down, as the consumer is stressed with inflation, are you seeing the larger players also trying to compete for that customer and moving into the discount channel or is that part of the market fairly static? Nick, you want to answer that? Sure. Sure. I mean, the larger players certainly have a presence in the discount market, Kareem, but the activity that we're really seeing is in the low end of the market in, you know, price discounts anywhere from 50%-40% from the premium players. That's where we're seeing the most activity and the down trading, and those bigger players don't have a presence in the market. But that's where our presence is, and that's where our Montego brand is. That's where we're seeing the vast majority of the down trading and the activity in the marketplace. Okay. If I can add, this is Ron. An important point there is that if you look at the structure of their income statements and balance sheets, they can't really afford to come down deeply into the marketplace, into the low end market. Any impact that they have by bringing down their own brands is going to take more volume away from Marlboro and Newport and the other premium brands. Their strategy seems to have been for many years now just to keep raising prices in order to maintain their profit base. Okay. When we look at the menthol ban that was announced, and certainly understanding this will take many years before it's fully implemented, but what are the next steps and, you know, kind of what are the goalposts that investors should be looking out for in terms of this process moving forward? Sure, Kareem. The immediate next steps are now that there is a 60-day comment period following the proposed standard. After those 60 days, which may well be extended, the FDA is obligated to address all those comments. I think the general consensus of opinion is that any final ruling is at least a year away. Then as a reminder, there's likely another year before anything's implemented at retail, and that's before any potential litigation from the tobacco industry. Okay. Can you update us on if there is any update in terms of the Colorado minimum price laws and what you're seeing in terms of your sales volumes for that market? Sure. I could comment on that. I think we were in court, you know, a couple of weeks ago, to argue against the law. I think, you know, we have a reasonable case. The question is gonna be how long is it gonna take until it happens and what will the end result be? It's clear to our lawyers that it's illegal, what was done. So we think we'll be a winner then. We haven't lost as much as we thought we would. We've lost some volume, but we're still profitable. Nick, you wanna comment on it? Yeah. No, I mean, the bottom line is that, you know, despite the situation, we're certainly holding our own in a difficult marketplace. Very pleased with the performance of both our Pyramid and even our Eagle 20's brand, despite the minimum price legislation. As Hal said, I mean, we're continuing to fight in the courts, but the process is taking some time. Thank you very much, guys. Appreciate it. We'll take our next question from Gaurav Jain with Barclays. Hi, good morning. Thanks a lot for taking my questions. You know, your volume performance this quarter was very strong and your EBIT is down. Clearly one can argue that the EBIT per pack from incremental volumes is right now negative. You know, whenever you decide to take pricing on Montego, will it lead to like a step change in that EBIT number? That might be one year down the line or two years down the line. How should we think about your EBIT progression from here? Well, thanks for the question, Gaurav. I mean, as we've talked about before, we don't give guidance and not gonna go into details here. You know, certainly we are investing in Montego at the moment. The marketplace at the moment has provided a tremendous opportunity with KT&G's exit and just the macroeconomics with the down trading to value. You know, we're constantly evaluating the market, and when opportunities present themselves, we have to take advantage of those opportunities. You know, as I mentioned in my earlier remarks, the decision to migrate to an income growth strategy will depend on many factors. If you go back and look at our, you know, previous investments in Pyramid and Eagle 20's, and even before that in Liggett Select and Grand Prix, you know, the marketplace was different, and the factors were different for that decision to change. Again, we'll analyze the marketplace, and when the decision we feel is right to move to that income growth strategy to ensure, you know, long-term profit growth, we'll make that decision. Okay. Coming to, you know, your capital returns philosophy. Clearly you will be in a much stronger position now with all the market share gains if, you know, if I were to just look out, you know, over the next two, three years, and your leverage will be coming in quite comfortably below 3x, the net leverage. Would you think of stepping up capital returns, especially around share repurchases, given, you know, your stock trades at low multiples of earnings? Well, surely we will always be looking at that. It's an ongoing way to operate the business. We're looking to do the best we can for our shareholders. It's hard to say at this particular point. We do have some good net cash flow. We have the dividends now, substantial number, and we're hoping that that will grow. You know, my guess is at some point in the future, if it continues and if Montego goes the way we think it will go, I think that will give us an opportunity to allocate capital. Actually, there's only one of two ways, really, increase the dividend or buy back stock. Those are the options, and those are the things we'll be looking at in the future. Sure. Following on that, like would you also think of some acquisitions here? You know, one of the companies that operates in the U.S. is now, you know, in talks regarding a potential M&A, and there could be divestitures or not, and then there are other smaller companies as well. If there were any opportunities in the tobacco space that were to present themselves, would you take advantage of them? Ron, you wanna handle that, Ron? Yeah. Look, the issue is if you look at the smaller companies in the U.S., we are in a dominant position relative to them because of our share, because of our nationwide sales force. Frankly, it never has made sense to this point to pay a premium for their volume, which is a price-based volume. It's much more efficient for us to build it ourselves, and that's what we've done in the course of the last, you know, 20-some-odd years, building up from a 1.5 market share to a 5.2% market share. Having said that, you know, we always have our eyes open, and we're always evaluating opportunities. If we see something that makes sense, we certainly consider it. At this point, you know, specifically relative to the low end of the market, it just hasn't made sense to make an acquisition in that sphere. Well, thanks a lot. We'll take our next question from Oren Shaked with BTIG. Yeah. Hi. Good morning, gentlemen. I just wanted to get a framework as we think about the balance of the year. Would you expect that the year-over-year margin profile should be consistent with what we saw in the first quarter? Or Would that evolve somewhat over the remaining few quarters? If you could just give us a framework for how to think about that'd be great. Thank you. Well, again, I'll reiterate the point that we're not gonna go into that detail as we don't give guidance. Again, we're certainly looking to take advantage of this opportunity and investing in Montego to maximize volume and market share. Again, we're constantly analyzing the marketplace. When the time is right to move to an income growth mode, we'll make that decision when the time presents itself. You know, over the course of a long period of time, Liggett has become very good at being able to analyze the market and make adjustments. When the company is oriented towards volume and share growth, the underlying premise of that is to build profit. So the framework that the company operates under is consistently looking for those weak spots in the market where we can start to pick up volume and then build the profit base off of that. You know, as Nick indicated, we've seen substantial benefits from that over the course of an extended period of time. Understood. Thank you very much. Again, if you would like to ask a question, please press star one. We'll take our next question from David Levine with MidOcean. Hey, guys. Thanks for taking my questions. First question, just around gross margin. Clearly, weaker on a year-over-year basis. Sounds like a lot of that is from investment in Montego. Is there any way you can kinda break down the gross margin, just percentage decline? Like, maybe not get into too specifics, but is a lot of that from a higher MSA expense? Is a lot of that from Montego? Is there any way you can kinda break that down just on the gross margin year-over-year? Very, very simply, the vast majority is related to the increase in the Montego volumes. I mean, we are still, you know, continuing to take pricing and monetize our Eagle 20's and Pyramid brands, so those gross margins are up. The overall margin decline is almost solely related to the increasing volumes and our market share increase related to Montego. Okay, that's helpful. Just on the capital allocation, I'll ask it a different way. As I'm sure you follow, you know, your secured bonds trade at around 8.5% yield to maturity. The free cash flow, I think the dividend yield on the free cash flow is around 10%. Would you ever think about, you know, clearly a low kinda loan to value? Would you ever think about potentially buying those back? Obviously, they trade at an attractive yield, particularly with respect to the dividend yield, I think. Just so would love to hear your thoughts on that. Yeah. Hey, good morning. It's Bryant Kirkland. As far as we like where our leverage ratios are currently, obviously we're always opportunistic in the capital markets, and we will evaluate them over time and make any actions we deem possible. Okay. Appreciate it. Thanks a lot. We'll take our next question from Patrick Fitzgerald with Baird. Hi. Thanks for taking the questions. Is there any way you could kind of talk about the share you gained from the competitor leaving the space versus the share you're gaining, you know, because of the inflationary environment and people trading down, just in terms of breaking those two out, if it's possible at all? Well, well, Patrick, appreciate the question. Not gonna go into too much detail there, but with respect to KT&G's exit from the marketplace, again, they were about 2.8% share, about 6 billion units a year. We're very pleased with the way that we've executed at retail, and based on the most recent data here, we're anticipating that we probably obtained over 40% of the volume that they've left on the table in the marketplace. We are very pleased with the way that we're executing. Based on the capabilities our sales force and those advantages, we're really able to capitalize on it. I say we've attained about 40% of the volume that they've left on the table, so very happy with our performance in that respect. Okay. Those volumes, have those been cleaned up at this point and it's kind of more of a, you know- Sure. -clarity? Yeah. Pretty much the inventory that KT&G had at wholesalers and retailers, I mean, those have pretty much been sold through at this point in time. You know, those, their volumes, their brands are pretty much out of the marketplace at this point in time. Okay. Thanks a lot. Ladies and gentlemen, those are all the questions that we have for today. Thank you for joining us on Vector Group's first quarter 2022 earnings conference call. This will co nclude our call. On behalf of all of us at Vector Group and Liggett, we hope that everyone remains healthy and well. Thank you all for your participation. You may now disconnect.