07/27/2021 | Press release | Distributed by Public on 07/27/2021 08:40
• |
Net sales increased 16.8 percent to $122.6 million
|
• |
Gross profit increased 25.1 percent to $60.0 million
|
• |
Net income increased 49.2 percent to $15.4 million
|
• |
Adjusted EBITDA increased 31.7 percent to $30 million (see Schedule A for a reconciliation to net income)
|
• |
Diluted EPS of $0.73 and Adjusted Diluted EPS of $0.84 as compared to $0.49 and $0.66 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
|
|
• |
$2.8 million of stock options, restricted stock and incentive expense as compared to $0.8 million in the year-ago period
|
|
• |
$0.7 million of transaction expenses principally related to M&A activity as compared to $0.3 million in the year-ago period
|
|
• |
$0.6 million of FDA PMTA-related expenses as compared to $3.3 million in the year-ago period (note that $0.9 million of PMTA-related expenses incurred in the first six months of FY2021 have not been added back to Adjusted EBITDA)
|
|
• |
$5.8 million in outbound freight expense as compared to $4.4 million in the year-ago period with the increase partly driven by the implementation of the PACT Act
|
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• |
$1.0 million from the accounting consolidation of ReCreation Marketing in the current year quarterly period
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4 |
Turning Point Brands, Inc. | www.turningpointbrands.com | [email protected] | 502.774.9238
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|
• |
Net sales of $447 to $462 million (up from previous guidance of $422 to $440 million), which assumes:
|
|
o |
Strong double-digit sales growth for Zig-Zag Products
|
|
o |
High single-digit sales growth for Stoker's Products
|
|
o |
Flat sales growth for NewGen Products (up from previous mid-to-low single-digit declines), which includes low single-digit declines for vape distribution (up from single-digit declines) offset by expected growth in Nu-X
|
|
• |
Adjusted EBITDA of $108 to $113 million (up from previous guidance of $103 to $108 million)
|
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• |
Stock compensation and non-cash incentive expense of $8 million
|
|
• |
Cash interest expense of $19 million and GAAP interest expense of $22 million
|
|
• |
Effective income tax rate of 23 percent to 24 percent
|
|
• |
Capital expenditures of $5 to $6 million
|
|
• |
Net sales of $109 to $114 million
|
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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Three Months Ended June 30,
|
||||||||
2021
|
2020
|
|||||||
Net sales
|
$
|
122,643
|
$
|
104,963
|
||||
Cost of sales
|
62,670
|
57,027
|
||||||
Gross profit
|
59,973
|
47,936
|
||||||
Selling, general, and administrative expenses
|
35,094
|
30,756
|
||||||
Operating income
|
24,879
|
17,180
|
||||||
Interest expense, net
|
5,522
|
3,295
|
||||||
Investment income
|
(110
|
)
|
(34
|
)
|
||||
Net periodic income, excluding service cost
|
-
|
(104
|
)
|
|||||
Income before income taxes
|
19,467
|
14,023
|
||||||
Income tax expense
|
4,424
|
3,728
|
||||||
Consolidated net income
|
15,043
|
10,295
|
||||||
Net loss attributable to non-controlling interest
|
(312
|
)
|
-
|
|||||
Net income attributable to Turning Point Brands, Inc.
|
$
|
15,355
|
$
|
10,295
|
||||
Basic income per common share:
|
||||||||
Net income attributable to Turning Point Brands, Inc.
|
$
|
0.81
|
$
|
0.53
|
||||
Diluted income per common share:
|
||||||||
Net income attributable to Turning Point Brands, Inc.
|
$
|
0.73
|
$
|
0.49
|
||||
Weighted average common shares outstanding:
|
||||||||
Basic
|
18,975,522
|
19,507,874
|
||||||
Diluted
|
22,489,662
|
23,037,153
|
||||||
Supplemental disclosures of statement of income information:
|
||||||||
Excise tax expense
|
$
|
7,687
|
$
|
4,678
|
||||
FDA fees
|
$
|
180
|
$
|
134
|
7 |
Turning Point Brands, Inc. | www.turningpointbrands.com | [email protected] | 502.774.9238
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ASSETS
|
(unaudited)
June 30,
2021
|
December 31,
2020
|
||||||
Current assets:
|
||||||||
Cash
|
$
|
157,474
|
$
|
41,765
|
||||
Accounts receivable, net of allowances of $143 in 2021 and $150 in 2020
|
5,814
|
9,331
|
||||||
Inventories
|
99,010
|
85,856
|
||||||
Other current assets
|
25,809
|
26,451
|
||||||
Total current assets
|
288,107
|
163,403
|
||||||
Property, plant, and equipment, net
|
16,291
|
15,524
|
||||||
Deferred income taxes
|
-
|
610
|
||||||
Right of use assets
|
16,607
|
17,918
|
||||||
Deferred financing costs, net
|
441
|
641
|
||||||
Goodwill
|
162,768
|
159,621
|
||||||
Other intangible assets, net
|
78,468
|
79,422
|
||||||
Master Settlement Agreement (MSA) escrow deposits
|
31,819
|
32,074
|
||||||
Other assets
|
34,898
|
26,836
|
||||||
Total assets
|
$
|
629,399
|
$
|
496,049
|
||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$
|
11,159
|
$
|
9,201
|
||||
Accrued liabilities
|
37,495
|
35,225
|
||||||
Current portion of long-term debt
|
12,485
|
12,000
|
||||||
Other current liabilities
|
104
|
203
|
||||||
Total current liabilities
|
61,243
|
56,629
|
||||||
Notes payable and long-term debt
|
417,935
|
302,112
|
||||||
Deferred income taxes
|
1,165
|
-
|
||||||
Lease liabilities
|
14,788
|
16,117
|
||||||
Other long-term liabilities
|
-
|
3,704
|
||||||
Total liabilities
|
495,131
|
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; 19,616,224 issued shares and 18,923,523 outstanding shares at June 30, 2021, and 19,532,464 issued shares and 19,133,794 outstanding shares at December 31, 2020
|
196
|
195
|
||||||
Common stock, nonvoting, $0.01 par value; authorized shares, 10,000,000; issued and outstanding shares -0-
|
-
|
-
|
||||||
Additional paid-in capital
|
105,460
|
102,423
|
||||||
Cost of repurchased common stock
|
||||||||
(692,701 shares at June 30, 2021 and 398,670 shares at December 31, 2020)
|
(24,277
|
)
|
(10,191
|
)
|
||||
Accumulated other comprehensive income (loss)
|
279
|
(2,635
|
)
|
|||||
Accumulated earnings
|
48,647
|
23,645
|
||||||
Non-controlling interest
|
3,963
|
4,050
|
||||||
Total stockholders' equity
|
134,268
|
117,487
|
||||||
Total liabilities and stockholders' equity
|
$
|
629,399
|
$
|
496,049
|
8 |
Turning Point Brands, Inc. | www.turningpointbrands.com | [email protected] | 502.774.9238
|
Six Months Ended June 30,
|
||||||||
2021
|
2020
|
|||||||
Cash flows from operating activities:
|
||||||||
Consolidated net income
|
$
|
26,570
|
$
|
14,794
|
||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Loss on extinguishment of debt
|
5,706
|
-
|
||||||
Impairment loss
|
-
|
149
|
||||||
(Gain) loss on sale of property, plant, and equipment
|
(2
|
)
|
12
|
|||||
Depreciation expense
|
1,546
|
1,673
|
||||||
Amortization of other intangible assets
|
954
|
827
|
||||||
Amortization of deferred financing costs
|
1,251
|
1,113
|
||||||
Deferred income taxes
|
1,027
|
2,367
|
||||||
Stock compensation expense
|
4,263
|
1,213
|
||||||
Noncash lease expense
|
(19
|
)
|
18
|
|||||
Gain on investments
|
(34
|
)
|
-
|
|||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable
|
3,955
|
1,794
|
||||||
Inventories
|
(12,007
|
)
|
(4,421
|
)
|
||||
Other current assets
|
813
|
(253
|
)
|
|||||
Other assets
|
599
|
(766
|
)
|
|||||
Accounts payable
|
1,423
|
235
|
||||||
Accrued postretirement liabilities
|
-
|
(54
|
)
|
|||||
Accrued liabilities and other
|
1,370
|
(1,167
|
)
|
|||||
Net cash provided by operating activities
|
$
|
37,415
|
$
|
17,534
|
||||
Cash flows from investing activities:
|
||||||||
Capital expenditures
|
$
|
(2,170
|
)
|
$
|
(1,956
|
)
|
||
Acquisitions, net of cash acquired
|
(3,419
|
)
|
(37,772
|
)
|
||||
Payments for investments
|
(8,657
|
)
|
-
|
|||||
Restricted cash, MSA escrow deposits
|
(20,147
|
)
|
-
|
|||||
Proceeds on the sale of property, plant and equipment
|
2
|
-
|
||||||
Net cash used in investing activities
|
$
|
(34,391
|
)
|
$
|
(39,728
|
)
|
||
Cash flows from financing activities:
|
||||||||
Proceeds from Senior Secured Notes
|
$
|
250,000
|
$
|
-
|
||||
Payments of 2018 first lien term loan
|
(130,000
|
)
|
(5,000
|
)
|
||||
Settlement of interest rate swaps
|
(3,573
|
)
|
-
|
|||||
Payment of IVG note
|
-
|
(4,240
|
)
|
|||||
Proceeds from unsecured notes
|
-
|
7,485
|
||||||
Payment of dividends
|
(2,006
|
)
|
(1,872
|
)
|
||||
Payments of financing costs
|
(6,921
|
)
|
(194
|
)
|
||||
Exercise of options
|
886
|
246
|
||||||
Redemption of options
|
(2,111
|
)
|
-
|
|||||
Common stock repurchased
|
(14,086
|
)
|
(5,289
|
)
|
||||
Net cash provided by (used in) financing activities
|
$
|
92,189
|
$
|
(8,864
|
)
|
|||
Net increase (decrease) in cash
|
$
|
95,213
|
$
|
(31,058
|
)
|
|||
Effect of foreign currency translation on cash
|
$
|
315
|
$
|
-
|
||||
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
|
157,474
|
64,192
|
||||||
Restricted
|
14,893
|
32,074
|
||||||
Total cash at end of period
|
$
|
172,367
|
$
|
96,266
|
9 |
Turning Point Brands, Inc. | www.turningpointbrands.com | [email protected] | 502.774.9238
|
10 |
Turning Point Brands, Inc. | www.turningpointbrands.com | [email protected] | 502.774.9238
|
Three Months Ended
June 30,
|
||||||||
2021
|
2020
|
|||||||
Net income attributable to Turning Point Brands, Inc.
|
$
|
15,355
|
$
|
10,295
|
||||
Add:
|
||||||||
Interest expense, net
|
5,522
|
3,295
|
||||||
Income tax expense
|
4,424
|
3,728
|
||||||
Depreciation expense
|
758
|
822
|
||||||
Amortization expense
|
479
|
402
|
||||||
EBITDA
|
$
|
26,538
|
$
|
18,542
|
||||
Components of Adjusted EBITDA
|
||||||||
Other (a)
|
-
|
(104
|
)
|
|||||
Stock options, restricted stock, and incentives expense (b)
|
2,764
|
760
|
||||||
Transactional expenses (c)
|
702
|
290
|
||||||
FDA PMTA (d)
|
-
|
3,290
|
||||||
Adjusted EBITDA
|
$
|
30,004
|
$
|
22,778
|
(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').
|
11 |
Turning Point Brands, Inc. | www.turningpointbrands.com | [email protected] | 502.774.9238
|
(unaudited)
|
Three Months Ended
|
|||||||
June 30,
|
||||||||
2021
|
2020
|
|||||||
GAAP EPS
|
$
|
0.73
|
$
|
0.49
|
||||
Other (a)
|
-
|
(0.00
|
)
|
|||||
Stock options, restricted stock, and incentives expense (b)
|
0.09
|
0.02
|
||||||
Transactional expenses (c)
|
0.02
|
0.01
|
||||||
FDA PMTA (d)
|
-
|
0.10
|
||||||
Tax (expense) benefit (e)
|
(0.01
|
)
|
0.03
|
|||||
Adjusted diluted EPS (f)
|
$
|
0.84
|
$
|
0.66
|
Totals may not foot due to rounding
|
Consolidated
|
Zig-Zag Products
|
Stoker's Products
|
NewGen Products
|
|||||||||||||||||||||||||||||
2nd Quarter
2021
|
2nd Quarter
2020
|
2nd Quarter
2021
|
2nd Quarter
2020
|
2nd Quarter
2021
|
2nd Quarter
2020
|
2nd Quarter
2021
|
2nd Quarter
2020
|
|||||||||||||||||||||||||
Net sales
|
$
|
122,643
|
$
|
104,963
|
$
|
47,202
|
$
|
27,403
|
$
|
33,369
|
$
|
30,822
|
$
|
42,072
|
$
|
46,738
|
||||||||||||||||
Gross profit
|
$
|
59,973
|
$
|
47,936
|
$
|
27,743
|
$
|
15,671
|
$
|
18,146
|
$
|
16,508
|
$
|
14,084
|
$
|
15,757
|
||||||||||||||||
Operating income
|
$
|
24,879
|
$
|
17,180
|
$
|
21,338
|
$
|
12,227
|
$
|
13,826
|
$
|
12,084
|
$
|
1,657
|
$
|
3,271
|
||||||||||||||||
Adjustments:
|
||||||||||||||||||||||||||||||||
Transactional expenses
|
702
|
290
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||
FDA PMTA
|
-
|
3,290
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||
Adjusted operating income
|
$
|
25,581
|
$
|
20,760
|
$
|
21,338
|
$
|
12,227
|
$
|
13,826
|
$
|
12,084
|
$
|
1,657
|
$
|
3,271
|
12 |
Turning Point Brands, Inc. | www.turningpointbrands.com | [email protected] | 502.774.9238
|