10/26/2021 | Press release | Distributed by Public on 10/26/2021 07:58
• |
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 | [email protected] | 502.774.9238
|
3 |
Turning Point Brands, Inc. | www.turningpointbrands.com | [email protected] | 502.774.9238
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• |
$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
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|
• |
$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 | [email protected] | 502.774.9238
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• |
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)
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|
• |
Stock compensation and non-cash incentive expense of $8 million
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• |
Cash interest expense of $19 million and GAAP interest expense of $21 million
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• |
Effective income tax rate of 23 percent to 24 percent
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• |
Capital expenditures of $6 million
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• |
Net sales of $93 to $103 million with growth in the Zig-Zag and Stoker's segments and a double-digit decline in NewGen
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5 |
Turning Point Brands, Inc. | www.turningpointbrands.com | [email protected] | 502.774.9238
|
6 |
Turning Point Brands, Inc. | www.turningpointbrands.com | [email protected] | 502.774.9238
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7 |
Turning Point Brands, Inc. | www.turningpointbrands.com | [email protected] | 502.774.9238
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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 | [email protected] | 502.774.9238
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(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 | [email protected] | 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 | [email protected] | 502.774.9238
|
11 |
Turning Point Brands, Inc. | www.turningpointbrands.com | [email protected] | 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 | [email protected] | 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 | [email protected] | 502.774.9238
|