• |
Net sales increased 5.5 percent to $109.9 million
|
• |
Gross profit increased 12.3 percent to $54.3 million
|
• |
Net income increased 49.3 percent to $13.4 million
|
• |
Adjusted EBITDA increased 9.9 percent to $26.3 million (see Schedule A for a reconciliation to net income)
|
• |
Diluted EPS of $0.65 and Adjusted Diluted EPS of $0.72 as compared to $0.44 and $0.69 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
|
3 |
Turning Point Brands, Inc. | www.turningpointbrands.com | ir@tpbi.com | 502.774.9238
|
• |
$1.8 million of stock options, restricted stock and incentive expense as compared to $0.8 million in the year-ago period
|
• |
$1.0 million of FDA PMTA-related expenses compared to $5.3 million in the year-ago period
|
• |
$4.9 million in outbound freight expense compared to $3.8 million in the year-ago period with the increase due to higher shipping costs on vapor products related to PACT Act implementation and higher freight costs across all segments
|
4 |
Turning Point Brands, Inc. | www.turningpointbrands.com | ir@tpbi.com | 502.774.9238
|
• |
Net sales of $433 to $443 million (compared to previous guidance of $447 to $462 million), which assumes:
|
o |
Strong double-digit sales growth for Zig-Zag Products
|
o |
Mid-to-high single-digit sales growth for Stoker's Products (compared to previous guidance of high-single-digit sales growth)
|
o |
A decline in sales for NewGen Products (compared to previous guidance of flat sales growth) which includes a double-digit decline in our vape distribution business (compared to previous guidance of low single-digit decline) offset by expected growth in Nu-X
|
• |
Adjusted EBITDA of $104 to $108 million (compared to previous guidance of $108 to $113 million)
|
• |
Stock compensation and non-cash incentive expense of $8 million
|
• |
Cash interest expense of $19 million and GAAP interest expense of $21 million
|
• |
Effective income tax rate of 23 percent to 24 percent
|
• |
Capital expenditures of $6 million
|
• |
Net sales of $93 to $103 million with growth in the Zig-Zag and Stoker's segments and a double-digit decline in NewGen
|
5 |
Turning Point Brands, Inc. | www.turningpointbrands.com | ir@tpbi.com | 502.774.9238
|
6 |
Turning Point Brands, Inc. | www.turningpointbrands.com | ir@tpbi.com | 502.774.9238
|
7 |
Turning Point Brands, Inc. | www.turningpointbrands.com | ir@tpbi.com | 502.774.9238
|
Three Months Ended September 30,
| ||||||||
2021
|
2020
| |||||||
Net sales
|
$
|
109,904
|
$
|
104,174
| ||||
Cost of sales
|
55,635
|
55,867
| ||||||
Gross profit
|
54,269
|
48,307
| ||||||
Selling, general, and administrative expenses
|
31,894
|
32,286
| ||||||
Operating income
|
22,375
|
16,021
| ||||||
Interest expense, net
|
5,397
|
3,539
| ||||||
Investment income
|
(157
|
)
|
(3
|
)
| ||||
Gain on extinguishment of debt
|
(375
|
)
|
-
| |||||
Net periodic income, excluding service cost
|
-
|
1,188
| ||||||
Income before income taxes
|
17,510
|
11,297
| ||||||
Income tax expense
|
4,073
|
2,277
| ||||||
Consolidated net income
|
13,437
|
9,020
| ||||||
Net loss attributable to non-controlling interest
|
(31
|
)
|
-
| |||||
Net income attributable to Turning Point Brands, Inc.
|
$
|
13,468
|
$
|
9,020
| ||||
Basic income per common share:
| ||||||||
Net income attributable to Turning Point Brands, Inc.
|
$
|
0.71
|
$
|
0.47
| ||||
Diluted income per common share:
| ||||||||
Net income attributable to Turning Point Brands, Inc.
|
$
|
0.65
|
$
|
0.44
| ||||
Weighted average common shares outstanding:
| ||||||||
Basic
|
18,897,974
|
19,240,187
| ||||||
Diluted
|
22,364,807
|
22,839,797
| ||||||
Supplemental disclosures of statement of income information:
| ||||||||
Excise tax expense
|
$
|
6,040
|
$
|
5,810
| ||||
FDA fees
|
$
|
163
|
$
|
135
|
8 |
Turning Point Brands, Inc. | www.turningpointbrands.com | ir@tpbi.com | 502.774.9238
|
(unaudited)
| ||||||||
ASSETS
|
September 30,
2021
|
December 31,
2020
| ||||||
Current assets:
| ||||||||
Cash
|
$
|
130,551
|
$
|
41,765
| ||||
Accounts receivable, net of allowances of $138 in 2021 and $150 in 2020
|
8,507
|
9,331
| ||||||
Inventories
|
98,605
|
85,856
| ||||||
Other current assets
|
27,113
|
26,451
| ||||||
Total current assets
|
264,776
|
163,403
| ||||||
Property, plant, and equipment, net
|
17,596
|
15,524
| ||||||
Deferred income taxes
|
-
|
610
| ||||||
Right of use assets
|
15,984
|
17,918
| ||||||
Deferred financing costs, net
|
415
|
641
| ||||||
Goodwill
|
162,415
|
159,621
| ||||||
Other intangible assets, net
|
87,962
|
79,422
| ||||||
Master Settlement Agreement (MSA) escrow deposits
|
31,763
|
32,074
| ||||||
Other assets
|
42,810
|
26,836
| ||||||
Total assets
|
$
|
623,721
|
$
|
496,049
| ||||
LIABILITIES AND STOCKHOLDERS' EQUITY
| ||||||||
Current liabilities:
| ||||||||
Accounts payable
|
$
|
13,151
|
$
|
9,201
| ||||
Accrued liabilities
|
33,349
|
35,225
| ||||||
Current portion of long-term debt
|
7,485
|
12,000
| ||||||
Other current liabilities
|
71
|
203
| ||||||
Total current liabilities
|
54,056
|
56,629
| ||||||
Notes payable and long-term debt
|
413,553
|
302,112
| ||||||
Deferred income taxes
|
1,654
|
-
| ||||||
Lease liabilities
|
14,201
|
16,117
| ||||||
Other long-term liabilities
|
-
|
3,704
| ||||||
Total liabilities
|
483,464
|
378,562
| ||||||
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; 19,690,884 issued shares and 18,873,183 outstanding shares at September 30, 2021, and 19,532,464 issued shares and 19,133,794 outstanding shares at December 31, 2020
|
197
|
195
| ||||||
Common stock, nonvoting, $0.01 par value; authorized shares, 10,000,000; issued and outstanding shares -0-
|
-
|
-
| ||||||
Additional paid-in capital
|
107,269
|
102,423
| ||||||
Cost of repurchased common stock
| ||||||||
(817,701 shares at September 30, 2021 and 398,670 shares at December 31, 2020)
|
(30,672
|
)
|
(10,191
|
)
| ||||
Accumulated other comprehensive income loss
|
(123
|
)
|
(2,635
|
)
| ||||
Accumulated earnings
|
61,052
|
23,645
| ||||||
Non-controlling interest
|
2,534
|
4,050
| ||||||
Total stockholders' equity
|
140,257
|
117,487
| ||||||
Total liabilities and stockholders' equity
|
$
|
623,721
|
$
|
496,049
|
9 |
Turning Point Brands, Inc. | www.turningpointbrands.com | ir@tpbi.com | 502.774.9238
|
Nine Months Ended September 30,
| ||||||||
2021
|
2020
| |||||||
Cash flows from operating activities:
| ||||||||
Consolidated net income
|
$
|
40,007
|
$
|
23,814
| ||||
Adjustments to reconcile net income to net cash provided by operating activities:
| ||||||||
Loss on extinguishment of debt
|
5,331
|
-
| ||||||
Pension settlement and curtailment loss
|
-
|
1,188
| ||||||
Impairment loss
|
-
|
149
| ||||||
(Gain) loss on sale of property, plant, and equipment
|
(2
|
)
|
36
| |||||
Depreciation expense
|
2,313
|
2,482
| ||||||
Amortization of other intangible assets
|
1,431
|
1,304
| ||||||
Amortization of deferred financing costs
|
1,895
|
1,670
| ||||||
Deferred income taxes
|
1,528
|
2,259
| ||||||
Stock compensation expense
|
6,015
|
1,986
| ||||||
Noncash lease (income) expense
|
(49
|
)
|
179
| |||||
Gain on MSA escrow deposits
|
(144
|
)
|
-
| |||||
Changes in operating assets and liabilities:
| ||||||||
Accounts receivable
|
1,324
|
(1,877
|
)
| |||||
Inventories
|
(10,970
|
)
|
(2,208
|
)
| ||||
Other current assets
|
(491
|
)
|
(829
|
)
| ||||
Other assets
|
685
|
1,941
| ||||||
Accounts payable
|
3,488
|
(3,200
|
)
| |||||
Accrued postretirement liabilities
|
-
|
(54
|
)
| |||||
Accrued liabilities and other
|
(2,796
|
)
|
4,359
| |||||
Net cash provided by operating activities
|
$
|
49,565
|
$
|
33,199
| ||||
Cash flows from investing activities:
| ||||||||
Capital expenditures
|
$
|
(4,391
|
)
|
$
|
(3,420
|
)
| ||
Acquisitions, net of cash acquired
|
(16,416
|
)
|
(37,735
|
)
| ||||
Payments for investments
|
(16,657
|
)
|
-
| |||||
Restricted cash, MSA escrow deposits
|
(14,783
|
)
|
-
| |||||
Proceeds on the sale of property, plant and equipment
|
2
|
3
| ||||||
Net cash used in investing activities
|
$
|
(52,245
|
)
|
$
|
(41,152
|
)
| ||
Cash flows from financing activities:
| ||||||||
Proceeds from Senior Secured Notes
|
$
|
250,000
|
$
|
-
| ||||
Payments of 2018 first lien term loan
|
(130,000
|
)
|
(8,000
|
)
| ||||
Settlement of interest rate swaps
|
(3,573
|
)
|
-
| |||||
Payment of promissory note
|
(9,625
|
)
|
-
| |||||
Payment of IVG note
|
-
|
(4,240
|
)
| |||||
Proceeds from unsecured notes
|
-
|
7,485
| ||||||
Standard Diversified Inc. reorganization, net of cash acquired
|
-
|
(1,737
|
)
| |||||
Payment of dividends
|
(3,056
|
)
|
(2,846
|
)
| ||||
Payments of financing costs
|
(6,921
|
)
|
(194
|
)
| ||||
Exercise of options
|
2,071
|
303
| ||||||
Redemption of options
|
(2,111
|
)
|
-
| |||||
Common stock repurchased
|
(20,481
|
)
|
(7,665
|
)
| ||||
Net cash provided by (used in) financing activities
|
$
|
76,304
|
$
|
(16,894
|
)
| |||
Net increase (decrease) in cash
|
$
|
73,624
|
$
|
(24,847
|
)
| |||
Effect of foreign currency translation on cash
|
$
|
235
|
$
|
-
| ||||
Cash, beginning of period:
| ||||||||
Unrestricted
|
41,765
|
95,250
| ||||||
Restricted
|
35,074
|
32,074
| ||||||
Total cash at beginning of period
|
76,839
|
127,324
| ||||||
Cash, end of period:
| ||||||||
Unrestricted
|
130,551
|
67,403
| ||||||
Restricted
|
20,147
|
35,074
| ||||||
Total cash at end of period
|
$
|
150,698
|
$
|
102,477
|
10 |
Turning Point Brands, Inc. | www.turningpointbrands.com | ir@tpbi.com | 502.774.9238
|
11 |
Turning Point Brands, Inc. | www.turningpointbrands.com | ir@tpbi.com | 502.774.9238
|
Three Months Ended
September 30,
| ||||||||
2021
|
2020
| |||||||
Net income attributable to Turning Point Brands, Inc.
|
$
|
13,468
|
$
|
9,020
| ||||
Add:
| ||||||||
Interest expense, net
|
5,397
|
3,539
| ||||||
Gain on extinguishment of debt
|
(375
|
)
|
-
| |||||
Income tax expense
|
4,073
|
2,277
| ||||||
Depreciation expense
|
767
|
809
| ||||||
Amortization expense
|
477
|
477
| ||||||
EBITDA
|
$
|
23,807
|
$
|
16,122
| ||||
Components of Adjusted EBITDA
| ||||||||
Other (a)
|
-
|
1,188
| ||||||
Stock options, restricted stock, and incentives expense (b)
|
1,752
|
772
| ||||||
Transactional expenses (c)
|
(232
|
)
|
570
| |||||
FDA PMTA (d)
|
960
|
5,271
| ||||||
Adjusted EBITDA
|
$
|
26,287
|
$
|
23,923
|
(a)
|
Represents non-cash pension expense (income) and foreign exchange hedging.
|
(b)
|
Represents non-cash stock options, restricted stock, incentives expense and Solace performance stock units.
|
(c)
|
Represents the fees incurred for transaction expenses.
|
(d)
|
Represents costs associated with applications related to FDA premarket tobacco product application ("PMTA").
|
12 |
Turning Point Brands, Inc. | www.turningpointbrands.com | ir@tpbi.com | 502.774.9238
|
Three Months Ended
September 30,
| ||||||||
2021
|
2020
| |||||||
GAAP EPS
|
$
|
0.65
|
$
|
0.44
| ||||
Other (a)
|
-
|
0.04
| ||||||
Gain on extinguishment of debt (b)
|
(0.01
|
)
|
-
| |||||
Stock options, restricted stock, and incentives expense (c)
|
0.06
|
0.03
| ||||||
Transactional expenses (d)
|
(0.01
|
)
|
0.02
| |||||
FDA PMTA (e)
|
0.03
|
0.18
| ||||||
Tax (expense) benefit (f)
|
0.00
|
(0.02
|
)
| |||||
Adjusted diluted EPS (g)
|
$
|
0.72
|
$
|
0.69
|
(a)
|
Represents non-cash pension expense (income) and foreign exchange hedging reporting tax effected at the quarterly tax rate.
|
(b)
|
Represents gain on extinguishment of debt 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 adjustment from quarterly tax rate to annual projected tax rate of 23% in 2021 and 2020.
|
(g)
|
Diluted shares outstanding includes the full 3.2 million share dilution of debt conversion without a 1.1 million share offsetting impact from capped call transactions
|
Consolidated
|
Zig-Zag Products
|
Stoker's Products
|
NewGen Products
| |||||||||||||||||||||||||||||
3rd Quarter
2021
|
3rd Quarter
2020
|
3rd Quarter
2021
|
3rd Quarter
2020
|
3rd Quarter
2021
|
3rd Quarter
2020
|
3rd Quarter
2021
|
3rd Quarter
2020
| |||||||||||||||||||||||||
Net sales
|
$
|
109,904
|
$
|
104,174
|
$
|
42,234
|
$
|
35,973
|
$
|
30,472
|
$
|
29,764
|
$
|
37,198
|
$
|
38,437
| ||||||||||||||||
Gross profit
|
$
|
54,269
|
$
|
48,307
|
$
|
23,703
|
$
|
21,263
|
$
|
17,104
|
$
|
16,042
|
$
|
13,462
|
$
|
11,002
| ||||||||||||||||
Operating income
|
$
|
22,375
|
$
|
16,021
|
$
|
17,122
|
$
|
16,827
|
$
|
13,305
|
$
|
11,466
|
$
|
2,027
|
$
|
745
| ||||||||||||||||
Adjustments:
| ||||||||||||||||||||||||||||||||
Transactional expenses
|
(232
|
)
|
570
|
-
|
-
|
-
|
-
|
-
|
-
| |||||||||||||||||||||||
FDA PMTA
|
960
|
5,271
|
-
|
-
|
-
|
-
|
-
|
-
| ||||||||||||||||||||||||
Adjusted operating income
|
$
|
23,103
|
$
|
21,862
|
$
|
17,122
|
$
|
16,827
|
$
|
13,305
|
$
|
11,466
|
$
|
2,027
|
$
|
745
|
13 |
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 26 October 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 26 October 2021 14:05:03 UTC.