• |
Net sales decreased 16.1 percent to $102.9 million
|
o |
Combined net sales for Zig-Zag and Stoker's Products demonstrated resilience decreasing 0.9 percent for the quarter
|
o |
NewGen net sales declined by 45.1 percent (declined 2.1 percent sequentially)
|
• |
Gross profit decreased 14.2 percent to $51.5 million
|
• |
Net income decreased 64.7 percent to $5.4 million
|
• |
Adjusted EBITDA decreased 17.6 percent to $24.7 million (see Schedule A for a reconciliation to net income)
|
• |
Diluted EPS of $0.30 and Adjusted Diluted EPS of $0.70 as compared to $0.73 and $0.84 in the same period one year ago, respectively (see Schedule B for a reconciliation to Diluted EPS)
|
2 |
Turning Point Brands, Inc. | www.turningpointbrands.com | ir@tpbi.com | 502.774.9238
|
• |
$0.3 million of restructuring expenses compared to none in the previous year
|
• |
$0.9 million of ERP / CRM scoping expenses and duplicative system costs compared to none in the previous year
|
• |
$1.5 million of stock options, restricted stock and incentive expense compared to $2.8 million in the year-ago period
|
• |
$0.4 million of transaction expenses compared to $0.7 million in the year-ago period
|
• |
$2.0 million of FDA PMTA-related expenses compared to $0.6 million in the year-ago period
|
• |
$1.6 million from the accounting consolidation of Turning Point Brands Canada compared to $1.1 in the year-ago period with the increase driven by the inclusion of a full quarter of the DVW acquisition in the current period
|
• |
Zig-Zag Products sales of $193 to $200 million (compared to previous outlook of $193 to $203 million)
|
• |
Stoker's Products sales of $127 to $133 million
|
• |
Consolidated adjusted EBITDA of $97 to $103 million
|
3 |
Turning Point Brands, Inc. | www.turningpointbrands.com | ir@tpbi.com | 502.774.9238
|
4 |
Turning Point Brands, Inc. | www.turningpointbrands.com | ir@tpbi.com | 502.774.9238
|
Three Months Ended June 30,
| ||||||||
2022
|
2021
| |||||||
Net sales
|
$
|
102,925
|
$
|
122,643
| ||||
Cost of sales
|
51,456
|
62,670
| ||||||
Gross profit
|
51,469
|
59,973
| ||||||
Selling, general, and administrative expenses
|
33,323
|
35,094
| ||||||
Operating income
|
18,146
|
24,879
| ||||||
Interest expense, net
|
5,144
|
5,522
| ||||||
Investment loss (income)
|
6,227
|
(110
|
)
| |||||
Income before income taxes
|
6,775
|
19,467
| ||||||
Income tax expense
|
1,569
|
4,424
| ||||||
Consolidated net income
|
5,206
|
15,043
| ||||||
Net loss attributable to non-controlling interest
|
(218
|
)
|
(312
|
)
| ||||
Net income attributable to Turning Point Brands, Inc.
|
$
|
5,424
|
$
|
15,355
| ||||
Basic income per common share:
| ||||||||
Net income attributable to Turning Point Brands, Inc.
|
$
|
0.30
|
$
|
0.81
| ||||
Diluted income per common share:
| ||||||||
Net income attributable to Turning Point Brands, Inc.
|
$
|
0.30
|
$
|
0.73
| ||||
Weighted average common shares outstanding:
| ||||||||
Basic
|
18,063,259
|
18,975,522
| ||||||
Diluted
|
21,443,279
|
22,489,662
| ||||||
Supplemental disclosures of statements of income information:
| ||||||||
Excise tax expense
|
$
|
6,141
|
$
|
7,687
| ||||
FDA fees
|
$
|
171
|
$
|
180
|
5 |
Turning Point Brands, Inc. | www.turningpointbrands.com | ir@tpbi.com | 502.774.9238
|
ASSETS
|
(unaudited)
June 30,
2022
|
December 31,
2021
| ||||||
Current assets:
| ||||||||
Cash
|
$
|
107,429
|
$
|
128,320
| ||||
Accounts receivable, net of allowances of $161 in 2022 and $262 in 2021
|
9,177
|
6,496
| ||||||
Inventories
|
115,129
|
87,607
| ||||||
Other current assets
|
27,353
|
26,746
| ||||||
Total current assets
|
259,088
|
249,169
| ||||||
Property, plant, and equipment, net
|
22,376
|
18,650
| ||||||
Deferred income taxes
|
2,111
|
1,363
| ||||||
Right of use assets
|
13,749
|
15,053
| ||||||
Deferred financing costs, net
|
335
|
388
| ||||||
Goodwill
|
162,385
|
162,333
| ||||||
Other intangible assets, net
|
86,566
|
87,485
| ||||||
Master Settlement Agreement (MSA) escrow deposits
|
29,224
|
31,720
| ||||||
Other assets
|
28,475
|
35,399
| ||||||
Total assets
|
$
|
604,309
|
$
|
601,560
| ||||
LIABILITIES AND STOCKHOLDERS' EQUITY
| ||||||||
Current liabilities:
| ||||||||
Accounts payable
|
$
|
14,436
|
$
|
7,361
| ||||
Accrued liabilities
|
34,560
|
32,937
| ||||||
Other current liabilities
|
38
|
38
| ||||||
Total current liabilities
|
49,034
|
40,336
| ||||||
Notes payable and long-term debt
|
415,410
|
414,172
| ||||||
Lease liabilities
|
11,934
|
13,336
| ||||||
Total liabilities
|
476,378
|
467,844
| ||||||
Commitments and contingencies
| ||||||||
Stockholders' equity:
| ||||||||
Preferred stock; $0.01 par value; authorized shares 40,000,000; issued and outstanding shares -0-
|
-
|
-
| ||||||
Common stock, voting, $0.01 par value; authorized shares, 190,000,000; 19,797,735 issued shares and 17,890,441 outstanding shares at June 30, 2022, and 19,690,884 issued shares and 18,395,476 outstanding shares at December 31, 2021
|
198
|
197
| ||||||
Common stock, nonvoting, $0.01 par value; authorized shares, 10,000,000; issued and outstanding shares -0-
|
-
|
-
| ||||||
Additional paid-in capital
|
110,563
|
108,811
| ||||||
Cost of repurchased common stock
| ||||||||
(1,907,294 shares at June 30, 2022 and 1,295,408 shares at December 31, 2021)
|
(68,287
|
)
|
(48,869
|
)
| ||||
Accumulated other comprehensive loss
|
(2,064
|
)
|
(195
|
)
| ||||
Accumulated earnings
|
85,641
|
71,460
| ||||||
Non-controlling interest
|
1,880
|
2,312
| ||||||
Total stockholders' equity
|
127,931
|
133,716
| ||||||
Total liabilities and stockholders' equity
|
$
|
604,309
|
$
|
601,560
|
6 |
Turning Point Brands, Inc. | www.turningpointbrands.com | ir@tpbi.com | 502.774.9238
|
Six Months Ended June 30,
| |||||||||
2022
|
2021
| ||||||||
Cash flows from operating activities:
| |||||||||
Consolidated net income
|
$
|
15,977
|
$
|
26,570
| |||||
Adjustments to reconcile net income to net cash provided by operating activities:
| |||||||||
Loss on extinguishment of debt
|
-
|
5,706
| |||||||
Gain on sale of property, plant, and equipment
|
(8
|
)
|
(2
|
)
| |||||
Depreciation expense
|
1,750
|
1,546
| |||||||
Amortization of other intangible assets
|
919
|
954
| |||||||
Amortization of deferred financing costs
|
1,291
|
1,251
| |||||||
Deferred income tax (benefit) expense
|
(146
|
)
|
1,027
| ||||||
Stock compensation expense
|
2,661
|
4,263
| |||||||
Noncash lease income
|
(6
|
)
|
(19
|
)
| |||||
Loss (gain) on investments
|
6,258
|
(34
|
)
| ||||||
Changes in operating assets and liabilities:
| |||||||||
Accounts receivable
|
(2,673
|
)
|
3,955
| ||||||
Inventories
|
(27,499
|
)
|
(12,007
|
)
| |||||
Other current assets
|
(598
|
)
|
813
| ||||||
Other assets
|
624
|
599
| |||||||
Accounts payable
|
7,240
|
1,423
| |||||||
Accrued liabilities and other
|
1,359
|
1,370
| |||||||
Net cash provided by operating activities
|
$
|
7,149
|
$
|
37,415
| |||||
Cash flows from investing activities:
| |||||||||
Capital expenditures
|
$
|
(5,694
|
)
|
$
|
(2,170
|
)
| |||
Acquisitions, net of cash acquired
|
-
|
(3,419
|
)
| ||||||
Payments for investments
|
-
|
(8,657
|
)
| ||||||
Restricted cash, MSA escrow deposits
|
(10,078
|
)
|
(20,147
|
)
| |||||
Proceeds on the sale of property, plant and equipment
|
63
|
2
| |||||||
Net cash used in investing activities
|
$
|
(15,709
|
)
|
$
|
(34,391
|
)
| |||
Cash flows from financing activities:
| |||||||||
Proceeds from Senior Secured Notes
|
$
|
-
|
$
|
250,000
| |||||
Payments of 2018 first lien term loan
|
-
|
(130,000
|
)
| ||||||
Settlement of interest rate swaps
|
-
|
(3,573
|
)
| ||||||
Payment of dividends
|
(2,181
|
)
|
(2,006
|
)
| |||||
Payments of financing costs
|
-
|
(6,921
|
)
| ||||||
Exercise of options
|
475
|
886
| |||||||
Redemption of options
|
(155
|
)
|
(2,111
|
)
| |||||
Redemption of performance restricted stock units
|
(1,228
|
)
|
-
| ||||||
Common stock repurchased
|
(19,418
|
)
|
(14,086
|
)
| |||||
Net cash provided by (used in) financing activities
|
$
|
(22,507
|
)
|
$
|
92,189
| ||||
Net (decrease) increase in cash
|
$
|
(31,067
|
)
|
$
|
95,213
| ||||
Effect of foreign currency translation on cash
|
$
|
56
|
$
|
315
| |||||
Cash, beginning of period:
| |||||||||
Unrestricted
|
128,320
|
41,765
| |||||||
Restricted
|
15,155
|
35,074
| |||||||
Total cash at beginning of period
|
143,475
|
76,839
| |||||||
Cash, end of period:
| |||||||||
Unrestricted
|
107,429
|
157,474
| |||||||
Restricted
|
5,035
|
14,893
| |||||||
Total cash at end of period
|
$
|
112,464
|
$
|
172,367
|
7 |
Turning Point Brands, Inc. | www.turningpointbrands.com | ir@tpbi.com | 502.774.9238
|
8 |
Turning Point Brands, Inc. | www.turningpointbrands.com | ir@tpbi.com | 502.774.9238
|
Three Months Ended
June 30,
| ||||||||
2022
|
2021
| |||||||
Net income attributable to Turning Point Brands, Inc.
|
$
|
5,424
|
$
|
15,355
| ||||
Add:
| ||||||||
Interest expense, net
|
5,144
|
5,522
| ||||||
Income tax expense
|
1,569
|
4,424
| ||||||
Depreciation expense
|
879
|
758
| ||||||
Amortization expense
|
456
|
479
| ||||||
EBITDA
|
$
|
13,472
|
$
|
26,538
| ||||
Components of Adjusted EBITDA
| ||||||||
Corporate restructuring (a)
|
270
|
-
| ||||||
ERP/CRM (b)
|
861
|
-
| ||||||
Stock options, restricted stock, and incentives expense (c)
|
1,502
|
2,764
| ||||||
Transactional expenses (d)
|
364
|
702
| ||||||
FDA PMTA (e)
|
1,957
|
-
| ||||||
Non-cash asset impairment (f)
|
6,300
|
-
| ||||||
Adjusted EBITDA
|
$
|
24,726
|
$
|
30,004
|
(a)
|
Represents costs associated with corporate restructuring, including severance.
|
(b)
|
Represents cost associated with scoping new ERP and CRM systems.
|
(c)
|
Represents non-cash stock options, restricted stock, incentives expense and Solace performance stock units.
|
(d)
|
Represents the fees incurred for transaction expenses.
|
(e)
|
Represents costs associated with applications related to FDA premarket tobacco product application ("PMTA").
|
(f)
|
Represents impairment of investment in dosist.
|
9 |
Turning Point Brands, Inc. | www.turningpointbrands.com | ir@tpbi.com | 502.774.9238
|
Three Months Ended
June 30,
| ||||||||
2022
|
2021
| |||||||
GAAP EPS
|
$
|
0.30
|
$
|
0.73
| ||||
Corporate restructuring (a)
|
0.01
|
-
| ||||||
ERP/CRM (b)
|
0.03
|
-
| ||||||
Stock options, restricted stock, and incentives expense (c)
|
0.05
|
0.09
| ||||||
Transactional expenses (d)
|
0.01
|
0.02
| ||||||
FDA PMTA (e)
|
0.07
|
-
| ||||||
Non-cash asset impairment (f)
|
0.23
|
-
| ||||||
Tax (expense) benefit (g)
|
0.00
|
(0.01
|
)
| |||||
Adjusted diluted EPS
|
$
|
0.70
|
$
|
0.84
|
Totals may not foot due to rounding
|
(a)
|
Represents costs associated with corporate restructuring, including severance, tax effected at the quarterly tax rate.
|
(b)
|
Represents cost associated with scoping new ERP and CRM systems tax effected at the quarterly tax rate.
|
(c)
|
Represents non-cash stock options, restricted stock, incentives expense and Solace PRSUs tax effected at the quarterly tax rate.
|
(d)
|
Represents the fees incurred for transaction expenses tax effected at the quarterly tax rate.
|
(e)
|
Represents costs associated with applications related to the FDA PMTA tax effected at the quarterly tax rate.
|
(f)
|
Represents impairment of investment in dosist tax effected at the quarterly tax rate.
|
(g)
|
Represents adjustment from quarterly tax rate to annual projected tax rate of 23% in 2022 and 2021.
|
Consolidated
|
Zig-Zag Products
|
Stoker's Products
|
NewGen Products
| |||||||||||||||||||||||||||||
2nd Quarter
2022
|
2nd Quarter
2021
|
2nd Quarter
2022
|
2nd Quarter
2021
|
2nd Quarter
2022
|
2nd Quarter
2021
|
2nd Quarter
2022
|
2nd Quarter
2021
| |||||||||||||||||||||||||
Net sales
|
$
|
102,925
|
$
|
122,643
|
$
|
46,226
|
$
|
47,202
|
$
|
33,588
|
$
|
33,369
|
$
|
23,111
|
$
|
42,072
| ||||||||||||||||
Gross profit
|
$
|
51,469
|
$
|
59,973
|
$
|
26,430
|
$
|
27,743
|
$
|
18,079
|
$
|
18,146
|
$
|
6,960
|
$
|
14,084
| ||||||||||||||||
Operating income
|
$
|
18,146
|
$
|
24,879
|
$
|
18,503
|
$
|
21,338
|
$
|
13,378
|
$
|
13,826
|
$
|
552
|
$
|
1,657
| ||||||||||||||||
Adjustments:
| ||||||||||||||||||||||||||||||||
Corporate restructuring
|
270
|
-
|
-
|
-
|
-
|
-
|
-
|
-
| ||||||||||||||||||||||||
ERP/CRM
|
861
|
-
|
-
|
-
|
-
|
-
|
-
| |||||||||||||||||||||||||
Transactional expenses
|
364
|
702
|
-
|
-
|
-
|
-
|
-
|
-
| ||||||||||||||||||||||||
FDA PMTA
|
1,957
|
-
|
-
|
-
|
-
|
-
|
-
|
-
| ||||||||||||||||||||||||
Adjusted operating income
|
$
|
21,598
|
$
|
25,581
|
$
|
18,503
|
$
|
21,338
|
$
|
13,378
|
$
|
13,826
|
$
|
552
|
$
|
1,657
|
10 |
Turning Point Brands, Inc. | www.turningpointbrands.com | ir@tpbi.com | 502.774.9238
|
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Disclaimer
Turning Point Brands Inc. published this content on 27 July 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 27 July 2022 13:53:04 UTC.