8-K
Turning Point Brands, Inc. (TPB)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): **** March 6, 2025
TURNING POINT BRANDS, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 001-37763 | 20-0709285 |
|---|---|---|
| (State or other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
| 5201 Interchange Way, Louisville, KY | 40229 | |
| --- | --- | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (502) 778-4421
| N/A |
|---|
(Former name, former address and former fiscal year, if changed since last report.)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, $0.01 par value | TPB | New York Stock Exchange |
Check the appropriate box below if the Form 8–K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| --- | --- |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 2.02. | Results of Operations and Financial Condition. |
|---|
On March 6, 2025, Turning Point Brands, Inc. (the “Company”) issued a press release announcing its financial results for the fourth quarter and full year ended December 31, 2024. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K.
The information in this Current Report on Form 8-K and the Exhibit attached hereto shall not be deemed to be "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section. Such information will not be incorporated by reference into any registration statement filed by the Company under the Securities Act of 1933, as amended, unless specifically identified therein as being incorporated by reference.
| Item 7.01. | Regulation FD Disclosure. |
|---|
On March 6, 2025, the Company posted an investor presentation with supplemental information for the quarter and full year ended December 31, 2024 to the investor relations section of its website at the following link https://www.turningpointbrands.com/investor-relations/events-and-presentations.
The information furnished under Item 7.01 of this Current Report on Form 8-K, including the referenced investor presentation, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
| Item 9.01. | Financial Statements and Exhibits. |
|---|---|
| (d) | Exhibits |
| --- | --- |
| 99.1 | Press Release dated March 6, 2025 |
| --- | --- |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
| --- | --- |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| TURNING POINT BRANDS, INC. | ||
|---|---|---|
| Dated: March 6, 2025 | By: | /s/ Brittani N. Cushman |
| Brittani N. Cushman | ||
| Senior Vice President, General Counsel and Secretary |
ex_786422.htm
Exhibit 99.1
Turning Point Brands Announces Fourth Quarter and Full Year 2024 Results
| ● | Q4 2024 Adjusted EBITDA of $26.2 million, up 5.3% over prior year |
|---|---|
| ● | Net Sales for Q4 2024 Increased 12.8% Year-Over-Year to $93.7 million |
| --- | --- |
| ● | FY 2024 Adjusted EBITDA of $104.5 million, up 12.0% over prior year |
| --- | --- |
| ● | FY 2025 guidance: Adjusted EBITDA of $108-113 million and Modern Oral sales of $60-80 million |
| --- | --- |
LOUISVILLE, KY – March 6, 2025 – Turning Point Brands, Inc. (“TPB” or “the Company”) (NYSE: TPB), a manufacturer, marketer and distributor of branded consumer products, including alternative smoking accessories and consumables with active ingredients, today announced financial results for the fourth quarter and full year ended December 31, 2024.
Q4 2024 vs. Q4 2023
| ● | Total consolidated net sales increased 12.8% to $93.7 million |
|---|---|
| o | Zig-Zag Product Segment net sales increased 1.8% |
| --- | --- |
| o | Stoker’s Product Segment net sales increased 25.8% |
| --- | --- |
| ● | Gross profit increased 10.6% to $52.4 million |
| --- | --- |
| ● | Adjusted EBITDA increased 5.3% to $26.2 million (see Schedule A for a reconciliation to net income) |
| --- | --- |
| ● | Net income decreased 76.1% to $2.4 million compared to $10.1 million in the year-ago period, driven primarily by a one-time loss from discontinued operations (CDS) of $7.3 million |
| --- | --- |
| ● | Adjusted net income increased 12.7% to $18.0 million (see Schedule B for a reconciliation to net income) |
| --- | --- |
| ● | Diluted EPS of $0.13 and Adjusted Diluted EPS of $0.98 compared to $0.53 and $0.82, respectively, in the same period one year ago (see Schedule B for a reconciliation to Diluted EPS) |
| --- | --- |
FY 2024 vs. FY 2023
| ● | Total consolidated net sales increased 11.0% to $360.7 million |
|---|---|
| o | Zig-Zag Product Segment net sales increased 6.6% |
| --- | --- |
| o | Stoker’s Product Segment net sales increased 16.4% |
| --- | --- |
| ● | Gross profit increased 10.2% to $201.6 million |
| --- | --- |
| ● | Adjusted EBITDA increased 12.0% to $104.5 million (see Schedule A for a reconciliation to net income) |
| --- | --- |
| ● | Net income increased 3.5% to $39.8 million |
| --- | --- |
| ● | Adjusted net income increased 15.5% to $65.9 million (see Schedule B for a reconciliation to net income) |
| --- | --- |
| ● | Diluted EPS of $2.14 and Adjusted Diluted EPS of $3.49 compared to $2.01 and $2.93, respectively, in the same period one year ago (see Schedule B for a reconciliation to Diluted EPS) |
| --- | --- |
Graham Purdy, President and CEO, commented, “We were pleased with our fourth quarter and full year 2024 results and the momentum we are seeing across the organization. We believe Zig-Zag remains on a sustainable growth trajectory with Stoker’s MST continuing to grow market share. In Modern Oral, combined sales were $11.2 million for the quarter. FRE sales more than quadrupled versus year-ago and grew 26% sequentially, and we are excited by the successful launch of ALP during the quarter.”
Zig-Zag Products Segment (49% of total net sales in the quarter)
For the fourth quarter, Zig-Zag Products net sales increased 1.8% to $45.9 million driven by solid performance in our US Papers & Wraps business, partially offset by Clipper. Excluding Clipper, Zig-Zag revenue was up 4.1%.
For the quarter, the Zig-Zag Products segment gross profit decreased 2.5% to $24.8 million. Gross margin declined 240 basis points to 54.1% driven primarily by product mix.
For the full year, Zig-Zag Products net sales increased 6.6% to $192.3 million driven by strong performance in our North American Papers & Wraps business and solid growth in cigars that was partially offset by declines in lighter sales.
For the full year, the Zig-Zag Products segment gross profit increased 5.5% to $106.6 million. Gross margin declined 60 basis points to 55.4% driven primarily by product mix.
Stoker’s Products Segment (51% of total net sales in the quarter)
For the fourth quarter, Stoker’s Products net sales increased 25.8% to $47.8 million, driven by strong growth in our combined Modern Oral sales, partially offset by low-single-digit declines in MST against a strong comp from Q4 2023. For the fourth quarter, total Stoker’s Products segment volume increased 17.8%, while price / product mix increased 8.0%.
For the quarter, the Stoker’s Products segment gross profit increased 26.0% to $27.6 million. Gross margin increased 10 basis points to 57.7%
For the full year, Stoker’s Products net sales increased 16.4% to $168.3 million. The segment was driven by triple-digit growth off a low base for our combined Modern Oral business and mid-single-digit growth from MST partially offset by low-single-digit decline in loose-leaf chew. For the year, total Stoker’s Products segment volume increased 6.8%, while price / product mix increased 9.6%.
For the full year, the Stoker’s Products segment gross profit increased 16.0% to $95.0 million. Gross margin decreased 20 basis points to 56.4%
Performance Measures in the Fourth Quarter
Fourth quarter consolidated selling, general and administrative (“SG&A”) expenses were $34.5 million compared to $27.1 million in the fourth quarter of 2023.
The fourth quarter SG&A included the following notable items:
| ● | $0.5 million of FDA PMTA-related expenses for modern oral products compared to $1.0 million in the year-ago period |
|---|---|
| ● | $1.1 million of transaction related costs compared to less than $0.1 million in the year-ago period |
| --- | --- |
| ● | $2.9 million of corporate restructuring costs compared to $0.2 million in the year-ago period |
| --- | --- |
Total gross debt as of December 31, 2024 was $248.6 million. Net debt (total gross debt less unrestricted cash) as of December 31, 2024 was $202.4 million. The Company ended the quarter with total liquidity of $103.6 million, comprised of $46.2 million in cash and $57.4 million of asset backed revolving credit facility capacity.
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Turning Point Brands, Inc. | www.turningpointbrands.com | ir@tpbi.com | 502.774.9238
During the quarter, the Company re-purchased 21,072 shares of common stock at a cost of $0.9 million.
On January 2, 2025, the Company contributed 100% of its interest in South Beach Brands LLC, the subsidiary that owned and operated the Company’s former Creative Distribution Solutions reportable segment, to General Wireless Operations, Inc., giving the Company a 49% ownership interest in the joint venture. This business is presented as discontinued operations in the exhibits below.
Last month, the Company issued $300 million of senior secured notes due 2032 (the “2032 Notes”), the proceeds of which were used to repay its $250 million of existing senior secured notes due 2026 with no pre-payment penalty. The Company is well within its previously disclosed net leverage range of 2 to 3 times and is comfortable with its liquidity position.
2025 Outlook
Management expects full-year 2025 adjusted EBITDA to be $108 to $113 million and projects combined Modern Oral sales of $60 to $80 million.
Earnings Conference Call
As previously disclosed, a conference call with the investment community to review TPB’s financial results has been scheduled for 10:00 a.m. Eastern on Thursday, March 6, 2025. Investment community participants should dial in 10 minutes ahead of time using the toll-free number (800) 715-9871 (international participants should call (646) 307-1963) and follow the audio prompts after typing in the event ID: 6640134. A live listen-only webcast of the call will be available on the Events and Presentations section of the investor relations portion of the Company website (www.turningpointbrands.com). A replay of the webcast will be available on the site two hours following the call.
Non-GAAP Financial Measures
In addition to financial measures prepared in accordance with generally accepted accounting principles in the United States (GAAP), this press release includes certain non-GAAP financial measures including EBITDA, Adjusted EBITDA, Adjusted Net Income, Adjusted Diluted EPS and Adjusted Operating Income (Loss). A reconciliation of these non-GAAP financial measures accompanies this release.
About Turning Point Brands, Inc.
Turning Point Brands (NYSE: TPB) is a manufacturer, marketer and distributor of branded consumer products including alternative smoking accessories and consumables with active ingredients through its iconic Zig-Zag® and Stoker’s® brands. TPB’s products are available in more than 220,000 retail outlets in North America, and on sites such as www.zigzag.com. For the latest news and information about TPB and its brands, please visit www.turningpointbrands.com.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements may generally be identified by the use of words such as "anticipate," "believe," "expect," "intend," "plan" and "will" or, in each case, their negative, or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. As a result, these statements are not guarantees of future performance and actual events may differ materially from those expressed in or suggested by the forward-looking statements. Any forward-looking statement made by TPB in this press release, its reports filed with the Securities and Exchange Commission (the “SEC”) and other public statements made from time-to-time speak only as of the date made. New risks and uncertainties come up from time to time, and it is impossible for TPB to predict or identify all such events or how they may affect it. TPB has no obligation, and does not intend, to update any forward-looking statements after the date hereof, except as required by federal securities laws. Factors that could cause these differences include, but are not limited to those included it the Company’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and other reports filed by the Company with the SEC. These statements constitute the Company’s cautionary statements under the Private Securities Litigation Reform Act of 1995.
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Turning Point Brands, Inc. | www.turningpointbrands.com | ir@tpbi.com | 502.774.9238
Investor Contacts
Turning Point Brands, Inc.
ir@tpbi.com
Financial Statements Follow on Subsequent Pages
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Turning Point Brands, Inc. | www.turningpointbrands.com | ir@tpbi.com | 502.774.9238
| Turning Point Brands, Inc. | ||||||
|---|---|---|---|---|---|---|
| Consolidated Statements of Income | ||||||
| (dollars in thousands except share data) | ||||||
| (unaudited) | ||||||
| For the year ended December 31, | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| 2024 | 2023 | |||||
| Net sales | $ | 360,660 | $ | 325,064 | ||
| Cost of sales | 159,095 | 142,122 | ||||
| Gross profit | 201,565 | 182,942 | ||||
| Selling, general, and administrative expenses | 122,407 | 104,327 | ||||
| Other operating income | (1,674 | ) | (4,345 | ) | ||
| Operating income | 80,832 | 82,960 | ||||
| Interest expense, net | 13,983 | 14,645 | ||||
| Investment loss | 1,893 | 11,914 | ||||
| Other income | - | (4,000 | ) | |||
| Gain on extinguishment of debt | - | (1,664 | ) | |||
| Income from continuing operations before income taxes | 64,956 | 62,065 | ||||
| Income tax expense | 16,929 | 23,999 | ||||
| Income from continuing operations | 48,027 | 38,066 | ||||
| Loss from discontinued operations, net of tax | (7,517 | ) | (285 | ) | ||
| Consolidated net income | 40,510 | 37,781 | ||||
| Net income (loss) attributable to non-controlling interest | 701 | (681 | ) | |||
| Net income attributable to Turning Point Brands, Inc. | $ | 39,809 | $ | 38,462 | ||
| Basic income (loss) per common share: | ||||||
| Continuing operations | $ | 2.67 | $ | 2.20 | ||
| Discontinued operations | (0.43 | ) | (0.01 | ) | ||
| Basic earnings per share | $ | 2.24 | $ | 2.19 | ||
| Diluted income (loss) per common share: | ||||||
| Continuing operations | $ | 2.53 | $ | 2.02 | ||
| Discontinued operations | (0.39 | ) | (0.01 | ) | ||
| Diluted earnings per share | $ | 2.14 | $ | 2.01 | ||
| Weighted average common shares outstanding: | ||||||
| Basic | 17,734,239 | 17,578,270 | ||||
| Diluted | 19,362,806 | 20,467,406 |
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Turning Point Brands, Inc. | www.turningpointbrands.com | ir@tpbi.com | 502.774.9238
| Turning Point Brands, Inc. | ||||||
|---|---|---|---|---|---|---|
| Consolidated Statements of Income | ||||||
| (dollars in thousands except share data) | ||||||
| (unaudited) | ||||||
| Three Months Ended December 31, | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| 2024 | 2023 | |||||
| Net sales | $ | 93,667 | $ | 83,067 | ||
| Cost of sales | 41,249 | 35,687 | ||||
| Gross profit | 52,418 | 47,380 | ||||
| Selling, general, and administrative expenses | 34,533 | 27,128 | ||||
| Other operating income | - | (4,345 | ) | |||
| Operating income | 17,885 | 24,597 | ||||
| Interest expense, net | 3,631 | 2,632 | ||||
| Investment loss | (224 | ) | 934 | |||
| Other income | - | (4,000 | ) | |||
| Gain on extinguishment of debt | - | 194 | ||||
| Income from continuing operations before income taxes | 14,478 | 24,837 | ||||
| Income tax expense | 4,118 | 14,492 | ||||
| Income from continuing operations | 10,360 | 10,345 | ||||
| Loss from discontinued operations, net of tax | (7,309 | ) | (480 | ) | ||
| Consolidated net income | 3,051 | 9,865 | ||||
| Net income (loss) attributable to non-controlling interest | 635 | (244 | ) | |||
| Net income attributable to Turning Point Brands, Inc. | $ | 2,416 | $ | 10,109 | ||
| Basic income (loss) per common share: | ||||||
| Continuing operations | $ | 0.55 | $ | 0.60 | ||
| Discontinued operations | (0.41 | ) | (0.03 | ) | ||
| Basic earnings per share | $ | 0.14 | $ | 0.57 | ||
| Diluted income (loss) per common share: | ||||||
| Continuing operations | $ | 0.53 | $ | 0.56 | ||
| Discontinued operations | (0.40 | ) | (0.03 | ) | ||
| Diluted earnings per share | $ | 0.13 | $ | 0.53 | ||
| Weighted average common shares outstanding: | ||||||
| Basic | 17,708,460 | 17,604,313 | ||||
| Diluted | 18,251,876 | 20,153,157 |
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Turning Point Brands, Inc. | www.turningpointbrands.com | ir@tpbi.com | 502.774.9238
| Turning Point Brands, Inc. | |||||
|---|---|---|---|---|---|
| Consolidated Balance Sheets | |||||
| (dollars in thousands except share data) | |||||
| (unaudited) | |||||
| --- | --- | --- | --- | --- | --- |
| 2023 | |||||
| ASSETS | **** | **** | **** | **** | **** |
| Current assets: | |||||
| Cash | 46,158 | $ | 116,725 | ||
| Accounts receivable, net of allowances of 66 in 2024 and 78 in 2023 | 9,624 | 10,002 | |||
| Inventories, net | 96,253 | 91,698 | |||
| Current assets held for sale | 11,470 | 12,267 | |||
| Other current assets | 34,700 | 36,937 | |||
| Total current assets | 198,205 | 267,629 | |||
| Property, plant, and equipment, net | 26,337 | 25,142 | |||
| Deferred tax assets | 995 | 1,468 | |||
| Right of use assets | 11,610 | 11,359 | |||
| Deferred financing costs, net | 1,823 | 2,450 | |||
| Goodwill | 135,932 | 136,250 | |||
| Other intangible assets, net | 65,254 | 66,490 | |||
| Master Settlement Agreement (MSA) escrow deposits | 28,676 | 28,684 | |||
| Noncurrent assets held for sale | 3,859 | 14,731 | |||
| Other assets | 20,662 | 15,166 | |||
| Total assets | 493,353 | $ | 569,369 | ||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | **** | **** | **** | **** | **** |
| Current liabilities: | |||||
| Accounts payable | 11,675 | $ | 7,794 | ||
| Accrued liabilities | 31,096 | 32,052 | |||
| Current portion of long-term debt | - | 58,294 | |||
| Current liabilities held for sale | 2,049 | 2,209 | |||
| Total current liabilities | 44,820 | 100,349 | |||
| Notes payable and long-term debt | 248,604 | 307,064 | |||
| Lease liabilities | 9,549 | 9,898 | |||
| Noncurrent liabilities held for sale | - | 52 | |||
| Total liabilities | 302,973 | 417,363 | |||
| 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; 20,200,886 issued shares, 17,729,481 outstanding shares at December 31, 2024, and 19,922,137 issued shares, 17,605,677 outstanding shares at December 31, 2023 | 202 | 199 | |||
| Common stock, nonvoting, 0.01 par value; authorized shares, 10,000,000; issued and outstanding shares -0- | - | - | |||
| Additional paid-in capital | 126,662 | 119,075 | |||
| Cost of repurchased common stock (2,471,405 and 2,316,460 shares at December 31, 2024 and 2023) | (83,144 | ) | (78,093 | ) | |
| Accumulated other comprehensive loss | (2,903 | ) | (2,648 | ) | |
| Accumulated earnings | 147,164 | 112,443 | |||
| Non-controlling interest | 2,399 | 1,030 | |||
| Total stockholders’ equity | 190,380 | 152,006 | |||
| Total liabilities and stockholders’ equity | 493,353 | $ | 569,369 |
All values are in US Dollars.
| Turning Point Brands, Inc. | ||||||
|---|---|---|---|---|---|---|
| Consolidated Statements of Cash Flows | ||||||
| (dollars in thousands) | ||||||
| (unaudited) | ||||||
| For the year ended December 31, | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| 2024 | 2023 | |||||
| Cash flows from operating activities: | ||||||
| Consolidated net income | $ | 40,510 | $ | 37,781 | ||
| Loss from discontinued operations, net of tax | 7,517 | 285 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
| Gain on extinguishment of debt | - | (1,664 | ) | |||
| Loss (gain) on sale of property, plant, and equipment | 75 | 62 | ||||
| Gain on insurance recovery of inventory loss | - | (15,181 | ) | |||
| Loss on investments | 2,722 | 12,177 | ||||
| Depreciation and other amortization expense | 4,439 | 2,921 | ||||
| Amortization of other intangible assets | 1,223 | 1,197 | ||||
| Amortization of deferred financing costs | 2,430 | 2,445 | ||||
| Deferred income tax (benefit) expense | 519 | 7,024 | ||||
| Stock compensation expense | 7,243 | 6,561 | ||||
| Noncash lease income | (622 | ) | (72 | ) | ||
| Gain on MSA investments | (14 | ) | - | |||
| Changes in operating assets and liabilities: | ||||||
| Accounts receivable | 185 | (2,625 | ) | |||
| Inventories | (4,770 | ) | 13,287 | |||
| Other current assets | (1,421 | ) | (3,794 | ) | ||
| Other assets | (1,767 | ) | (4,865 | ) | ||
| Accounts payable | 3,689 | 100 | ||||
| Accrued liabilities and other | (1,000 | ) | 601 | |||
| Operating cash flows from continuing operations | 60,958 | 56,240 | ||||
| Operating cash flows from discontinued operations | 6,104 | 10,641 | ||||
| Net cash provided by operating activities | $ | 67,062 | $ | 66,881 | ||
| Cash flows from investing activities: | ||||||
| Capital expenditures | $ | (4,623 | ) | $ | (5,707 | ) |
| Purchases of investments | (10,857 | ) | (202 | ) | ||
| Proceeds from sale of investments | 5,420 | - | ||||
| Purchases of non-marketable equity investments | (500 | ) | - | |||
| Proceeds on sale of property, plant and equipment | 5 | 3 | ||||
| MSA escrow deposits, net | 46 | - | ||||
| Investing cash flows from continuing operations | (10,509 | ) | (5,906 | ) | ||
| Investing cash flows from discontinued operations | - | - | ||||
| Net cash used in investing activities | $ | (10,509 | ) | $ | (5,906 | ) |
| Cash flows from financing activities: | ||||||
| Convertible Senior Notes repurchased | $ | - | $ | (41,794 | ) | |
| Payment of Convertible Senior Notes | (118,541 | ) | - | |||
| Proceeds from call options | - | 114 | ||||
| Payment of dividends | (4,905 | ) | (4,497 | ) | ||
| Payments of financing costs | (133 | ) | (2,437 | ) | ||
| Exercise of options | 2,807 | 450 | ||||
| Redemption of options | (335 | ) | (346 | ) | ||
| Redemption of restricted stock units | (914 | ) | (995 | ) | ||
| Redemption of performance based restricted stock units | (1,212 | ) | - | |||
| Common stock repurchased | (5,051 | ) | - | |||
| Financing cash flows from continuing operations | (128,284 | ) | (49,505 | ) | ||
| Financing cash flows from discontinued operations | - | - | ||||
| Net cash used in financing activities | $ | (128,284 | ) | $ | (49,505 | ) |
| Net (decrease) increase in cash | $ | (71,731 | ) | $ | 11,470 | |
| Effect of foreign currency translation on cash | $ | (182 | ) | $ | 13 | |
| Cash, beginning of period: | ||||||
| Unrestricted | $ | 117,886 | $ | 106,403 | ||
| Restricted | 4,929 | 4,929 | ||||
| Total cash at beginning of period | $ | 122,815 | $ | 111,332 | ||
| Cash, end of period: | ||||||
| Unrestricted | $ | 48,941 | $ | 117,886 | ||
| Restricted | 1,961 | 4,929 | ||||
| Total cash at end of period | $ | 50,902 | $ | 122,815 |
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Turning Point Brands, Inc. | www.turningpointbrands.com | ir@tpbi.com | 502.774.9238
Non-GAAP Financial Measures
To supplement our financial information presented in accordance with generally accepted accounting principles in the United States, or U.S. GAAP, we use non-U.S. GAAP financial measures, including EBITDA, Adjusted EBITDA, Adjusted Net Income, Adjusted Diluted EPS, and Adjusted Operating Income (Loss). We believe Adjusted EBITDA provides useful information to management and investors regarding certain financial and business trends relating to our financial condition and results of operations. Adjusted EBITDA, Adjusted Net Income, Adjusted Diluted EPS, and Adjusted Operating Income (Loss) are used by management to compare our performance to that of prior periods for trend analyses and planning purposes and are presented to our board of directors. We believe that EBITDA, Adjusted EBITDA, Adjusted Net Income, Adjusted Diluted EPS, and Adjusted Operating Income (Loss) are appropriate measures of operating performance because they eliminate the impact of expenses that do not relate to business performance.
We define “EBITDA” as net income before interest expense, gain (loss) on extinguishment of debt, income tax expense, depreciation, amortization. We define “Adjusted EBITDA” as net income before interest expense, gain (loss) on extinguishment of debt, income tax expense, depreciation, amortization, other non-cash items and other items that we do not consider ordinary course in our evaluation of ongoing operating performance. We define “Adjusted Net Income” as net income excluding items that we do not consider ordinary course in our evaluation of ongoing operating performance. We define “Adjusted Diluted EPS” as diluted earnings per share excluding items that we do not consider ordinary course in our evaluation of ongoing operating performance. We define “Adjusted Operating Income (Loss)” as operating income (loss) excluding other non-cash items and other items that we do not consider ordinary course in our evaluation of ongoing operating performance.
Non-U.S. GAAP measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with U.S. GAAP. EBITDA, Adjusted Net Income, Adjusted EBITDA, Adjusted Diluted EPS, and Adjusted Operating Income (Loss) exclude significant expenses that are required by U.S. GAAP to be recorded in our financial statements and is subject to inherent limitations. In addition, other companies in our industry may calculate this non-U.S. GAAP measure differently than we do or may not calculate it at all, limiting its usefulness as a comparative measure.
In accordance with SEC rules, we have provided, in the supplemental information attached, a reconciliation of the non-GAAP measures to the next directly comparable GAAP measures.
9
Turning Point Brands, Inc. | www.turningpointbrands.com | ir@tpbi.com | 502.774.9238
| Schedule A | ||||||
|---|---|---|---|---|---|---|
| Turning Point Brands, Inc. | ||||||
| Reconciliation of GAAP Net Income to Adjusted EBITDA | ||||||
| (dollars in thousands) | ||||||
| (unaudited) | ||||||
| For the Year Ended | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| December 31, | ||||||
| 2024 | 2023 | |||||
| Consolidated net income | $ | 39,809 | $ | 38,462 | ||
| Loss from discontinued operations, net of tax | 7,517 | 285 | ||||
| Add: | ||||||
| Interest expense, net | 13,983 | 14,645 | ||||
| Gain on extinguishment of debt | - | (1,664 | ) | |||
| Income tax expense | 16,929 | 23,999 | ||||
| Depreciation expense | 3,329 | 2,780 | ||||
| Amortization expense | 2,333 | 1,338 | ||||
| EBITDA | $ | 83,900 | $ | 79,845 | ||
| Components of Adjusted EBITDA | ||||||
| Corporate restructuring (a) | 4,634 | 199 | ||||
| ERP/CRM (b) | 993 | 552 | ||||
| Stock based compensation (c) | 7,243 | 6,561 | ||||
| Transactional expenses and strategic initiatives (d) | 2,107 | 165 | ||||
| FDA PMTA (e) | 3,592 | 2,098 | ||||
| Non-cash asset impairment (f) | 2,722 | 12,177 | ||||
| FET Refund (g) | (1,674 | ) | (4,345 | ) | ||
| Legal settlement (h) | - | (4,000 | ) | |||
| Mark-to-market loss on Canadian inter-company note (i) | 942 | - | ||||
| Adjusted EBITDA | $ | 104,459 | $ | 93,252 | ||
| (a) | Represents costs associated with corporate restructuring, including severance and early retirement | |||||
| --- | --- | |||||
| (b) | Represents cost associated with scoping and mobilization of new ERP and CRM systems and cost of duplicative ERP licenses. | |||||
| (c) | Represents non-cash stock options, restricted stock, PSRUs, etc. | |||||
| (d) | Represents the fees incurred for transaction expenses. | |||||
| (e) | Represents costs associated with applications related to FDA premarket tobacco product application ("PMTA"). The PMTA regime requires the Company to submit an application to the FDA to receive marketing authorization to continue to sell certain of its product lines with continued sales permitted during the pendency of the applications. The application is a onetime resource-intensive process for each covered product line; however, due to the nature of the implementation process for those product lines already in the market, applications can take multiple years to complete rather than the typical one-time submission. The Company currently has only two product lines currently subject to the PMTA process, having utilized other regulatory pathway options available for our other product lines. The Company does not expect to submit additional PMTA applications for any new product lines after the submission for the remaining two are complete. | |||||
| (f) | Represents impairment of investment assets. | |||||
| (g) | Represents federal excise tax refund included in other operating income, net. | |||||
| (h) | Represents other income from litigation settlement. | |||||
| (i) | Represents a mark-to-market loss attributable to foreign exchange fluctuation. |
10
Turning Point Brands, Inc. | www.turningpointbrands.com | ir@tpbi.com | 502.774.9238
| Schedule A | |||||
|---|---|---|---|---|---|
| Turning Point Brands, Inc. | |||||
| Reconciliation of GAAP Net Income to Adjusted EBITDA | |||||
| (dollars in thousands) | |||||
| (unaudited) | |||||
| Three Months Ended | |||||
| --- | --- | --- | --- | --- | --- |
| December 31, | |||||
| 2024 | 2023 | ||||
| Consolidated net income | $ | 2,416 | $ | 10,109 | |
| Loss from discontinued operations, net of tax | 7,309 | 480 | |||
| Add: | |||||
| Interest expense, net | 3,631 | 2,632 | |||
| Gain on extinguishment of debt | - | 194 | |||
| Income tax expense | 4,118 | 14,492 | |||
| Depreciation expense | 831 | 730 | |||
| Amortization expense | 736 | 375 | |||
| EBITDA | $ | 19,041 | $ | 29,012 | |
| Components of Adjusted EBITDA | |||||
| Corporate restructuring (a) | 2,904 | 199 | |||
| ERP/CRM (b) | 212 | 138 | |||
| Stock based compensation (c) | 1,523 | 1,901 | |||
| Transactional expenses and strategic initiatives(d) | 1,107 | 3 | |||
| FDA PMTA (e) | 512 | 1,003 | |||
| Non-cash asset impairment (f) | - | 1,015 | |||
| FET refund (g) | - | (4,345 | ) | ||
| Legal settlement (h) | - | (4,000 | ) | ||
| Mark-to-market loss on Canadian inter-company note (i) | 942 | - | |||
| Adjusted EBITDA | $ | 26,241 | $ | 24,926 | |
| (a) | Represents costs associated with corporate restructuring, including severance and early retirement | ||||
| --- | --- | ||||
| (b) | Represents cost associated with scoping and mobilization of new ERP and CRM systems and cost of duplicative ERP licenses. | ||||
| (c) | Represents non-cash stock options, restricted stock, PSRUs, etc. | ||||
| (d) | Represents the fees incurred for transaction expenses. | ||||
| (e) | Represents costs associated with applications related to FDA premarket tobacco product application ("PMTA"). The PMTA regime requires the Company to submit an application to the FDA to receive marketing authorization to continue to sell certain of its product lines with continued sales permitted during the pendency of the applications. The application is a onetime resource-intensive process for each covered product line; however, due to the nature of the implementation process for those product lines already in the market, applications can take multiple years to complete rather than the typical one-time submission. The Company currently has only two product lines currently subject to the PMTA process, having utilized other regulatory pathway options available for our other product lines. The Company does not expect to submit additional PMTA applications for any new product lines after the submission for the remaining two are complete. | ||||
| (f) | Represents impairment of investment assets. | ||||
| (g) | Represents federal excise tax refund included in other operating income, net. | ||||
| (h) | Represents other income from litigation settlement. | ||||
| (i) | Represents a mark-to-market loss attributable to foreign exchange fluctuation. |
11
Turning Point Brands, Inc. | www.turningpointbrands.com | ir@tpbi.com | 502.774.9238
| Schedule B | |||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Turning Point Brands | |||||||||||||||||||||||||||||||||||
| Reconciliation of GAAP Net Income to Adjusted Net Income and Diluted EPS to Adjusted Diluted EPS | |||||||||||||||||||||||||||||||||||
| (dollars in thousands except share data) | |||||||||||||||||||||||||||||||||||
| (unaudited) | For the Year Ended | For the Year Ended | |||||||||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| December 31, 2024 | December 31, 2023 | ||||||||||||||||||||||||||||||||||
| Income from<br><br> <br>continuing<br><br> <br>operations<br><br> <br>before<br><br> <br>income taxes | Income<br><br> <br>tax<br><br> <br>expense^^<br><br> <br>^(m)^ | Loss from<br><br> <br>discontinued<br><br> <br>operations,<br><br> <br>net of tax (o) | Net loss<br><br> <br>attributable<br><br> <br>to non-<br><br> <br>controlling<br><br> <br>interest | Adjusted<br><br> <br>Net<br><br> <br>Income | Adjusted<br><br> <br>Diluted<br><br> <br>EPS | Income from<br><br> <br>continuing<br><br> <br>operations<br><br> <br>before income<br><br> <br>taxes | Income<br><br> <br>tax<br><br> <br>expense^^<br><br> <br>^(m)^ | Loss from<br><br> <br>discontinued<br><br> <br>operations,<br><br> <br>net<br><br> <br>of tax (o) | Net loss<br><br> <br>attributable<br><br> <br>to non-<br><br> <br>controlling<br><br> <br>interest | Net Income | Diluted EPS | ||||||||||||||||||||||||
| GAAP Net Income and Diluted EPS | $ | 64,956 | $ | 16,929 | $ | 7,517 | $ | 701 | $ | 39,809 | $ | 2.14 | $ | 62,065 | $ | 23,999 | $ | 285 | $ | (681 | ) | $ | 38,462 | $ | 2.01 | ||||||||||
| Loss on discontinued operations (a) | - | - | (9,970 | ) | - | 9,970 | 0.51 | - | - | (383 | ) | - | 383 | 0.03 | |||||||||||||||||||||
| Gain on extinguishment of debt (b) | - | - | - | - | - | - | (1,664 | ) | (419 | ) | - | - | (1,245 | ) | (0.06 | ) | |||||||||||||||||||
| Corporate restructuring (c) | 4,634 | 1,208 | - | - | 3,426 | 0.18 | 199 | 50 | - | - | 149 | 0.01 | |||||||||||||||||||||||
| ERP/CRM (d) | 993 | 259 | - | - | 734 | 0.04 | 552 | 139 | - | - | 413 | 0.02 | |||||||||||||||||||||||
| Stock based compensation (e) | 7,243 | 1,888 | - | - | 5,355 | 0.28 | 6,561 | 1,651 | - | - | 4,910 | 0.24 | |||||||||||||||||||||||
| Transactional expenses and strategic initiatives (f) | 2,107 | 549 | - | - | 1,558 | 0.08 | 165 | 42 | - | - | 123 | 0.01 | |||||||||||||||||||||||
| FDA PMTA (g) | 3,592 | 936 | - | - | 2,656 | 0.14 | 2,098 | 528 | - | - | 1,570 | 0.08 | |||||||||||||||||||||||
| Non-cash asset impairment (h) | 2,722 | 709 | - | - | 2,013 | 0.10 | 12,177 | 3,063 | - | - | 9,114 | 0.45 | |||||||||||||||||||||||
| FET refund (i) | (1,674 | ) | (436 | ) | - | - | (1,238 | ) | (0.06 | ) | (5,095 | ) | (1,282 | ) | - | - | (3,813 | ) | (0.19 | ) | |||||||||||||||
| Legal settlement (j) | - | - | - | - | - | - | (4,000 | ) | (1,006 | ) | - | - | (2,994 | ) | (0.15 | ) | |||||||||||||||||||
| Mark-to-market loss on Canadian inter-company note (k) | 942 | 246 | - | - | 696 | 0.04 | - | - | - | - | - | - | |||||||||||||||||||||||
| Deferred tax valuation allowance (l) | - | - | - | - | - | - | - | (8,383 | ) | - | - | 8,383 | 0.41 | ||||||||||||||||||||||
| Tax benefit (n) | - | (901 | ) | - | - | 901 | 0.05 | - | (1,593 | ) | - | - | 1,593 | 0.08 | |||||||||||||||||||||
| Adjusted Net Income and Adjusted Diluted EPS | $ | 85,515 | $ | 21,386 | $ | (2,453 | ) | $ | 701 | $ | 65,881 | $ | 3.49 | $ | 73,058 | $ | 16,788 | $ | (98 | ) | $ | (681 | ) | $ | 57,049 | $ | 2.93 | ||||||||
| Totals may not foot due to rounding | |||||||||||||||||||||||||||||||||||
| --- | |||||||||||||||||||||||||||||||||||
| (a) | Represents loss on discontinued operations. | ||||||||||||||||||||||||||||||||||
| --- | --- | ||||||||||||||||||||||||||||||||||
| (b) | Represents gain on extinguishment of debt. | ||||||||||||||||||||||||||||||||||
| (c) | Represents costs associated with corporate restructuring, including severance and early retirement. | ||||||||||||||||||||||||||||||||||
| (d) | Represents cost associated with scoping and mobilization of new ERP and CRM systems and cost of duplicative ERP licenses. | ||||||||||||||||||||||||||||||||||
| (e) | Represents non-cash stock options, restricted stock, PSRUs, etc. | ||||||||||||||||||||||||||||||||||
| (f) | Represents the fees incurred for transaction expenses. | ||||||||||||||||||||||||||||||||||
| (g) | Represents costs associated with applications related to FDA premarket tobacco product application ("PMTA"). The PMTA regime requires the Company to submit an application to the FDA to receive marketing authorization to continue to sell certain of its product lines with continued sales permitted during the pendency of the applications. The application is a onetime resource-intensive process for each covered product line; however, due to the nature of the implementation process for those product lines already in the market, applications can take multiple years to complete rather than the typical one-time submission. The Company currently has only two product lines currently subject to the PMTA process, having utilized other regulatory pathway options available for our other product lines. The Company does not expect to submit additional PMTA applications for any new product lines after the submission for the remaining two are complete. | ||||||||||||||||||||||||||||||||||
| (h) | Represents impairment of investment assets. | ||||||||||||||||||||||||||||||||||
| (i) | Represents federal excise tax refund included in other operating income, net. | ||||||||||||||||||||||||||||||||||
| (j) | Represents other income from litigation settlement. | ||||||||||||||||||||||||||||||||||
| (k) | Represents a mark-to-market loss attributable to foreign exchange fluctuation. | ||||||||||||||||||||||||||||||||||
| (l) | Represents deferred tax valuation allowance. | ||||||||||||||||||||||||||||||||||
| (m) | Income tax expense calculated using the effective tax rate for the year of 26.1% in 2024 and 25.2% in 2023. | ||||||||||||||||||||||||||||||||||
| (n) | Represents adjustment from annual tax rate to annual projected tax rate of 25% in 2024 and 23% in 2023. | ||||||||||||||||||||||||||||||||||
| (o) | Tax allocation for discontinued operations excluded from adjusted net income. | ||||||||||||||||||||||||||||||||||
| Schedule C | |||||||||||||||||||||||||||||||||||
| --- | |||||||||||||||||||||||||||||||||||
| Turning Point Brands, Inc. | |||||||||||||||||||||||||||||||||||
| Reconciliation of GAAP Operating Income to Adjusted Operating Income | |||||||||||||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||||||||
| (unaudited) | |||||||||||||||||||||||||||||||||||
| Consolidated | Zig-Zag | Stoker's | |||||||||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |||||||||||||||||||
| For the Year Ended | For the Year Ended | For the Year Ended | For the Year Ended | For the Year Ended | For the Year Ended | ||||||||||||||||||||||||||||||
| December 31, 2024 | December 31, 2023 | December 31, 2024 | December 31, 2023 | December 31, 2024 | December 31, 2023 | ||||||||||||||||||||||||||||||
| Net sales | $ | 360,660 | $ | 325,064 | $ | 192,394 | $ | 180,455 | $ | 168,266 | $ | 144,609 | |||||||||||||||||||||||
| Gross profit | $ | 201,565 | $ | 182,942 | $ | 106,585 | $ | 101,055 | $ | 94,980 | $ | 81,887 | |||||||||||||||||||||||
| Operating income (loss) | $ | 80,832 | $ | 82,960 | $ | 66,697 | $ | 68,280 | $ | 68,272 | $ | 62,208 | |||||||||||||||||||||||
| Adjustments: | |||||||||||||||||||||||||||||||||||
| Transactional expenses and strategic initiatives | 2,107 | 165 | - | - | - | - | |||||||||||||||||||||||||||||
| FDA PMTA | 3,592 | 2,098 | - | - | - | - | |||||||||||||||||||||||||||||
| Corporate restructuring | 4,634 | 199 | - | - | - | - | |||||||||||||||||||||||||||||
| ERP/CRM | 993 | 552 | - | - | - | - | |||||||||||||||||||||||||||||
| FET refund | (1,674 | ) | (4,345 | ) | (1,674 | ) | (4,345 | ) | |||||||||||||||||||||||||||
| Mark-to-market loss on Canadian inter-company note | 942 | - | 942 | - | - | - | |||||||||||||||||||||||||||||
| Adjusted operating income | $ | 91,426 | $ | 81,629 | $ | 65,965 | $ | 63,935 | $ | 68,272 | $ | 62,208 |
12
Turning Point Brands, Inc. | www.turningpointbrands.com | ir@tpbi.com | 502.774.9238
| Schedule B | ||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Turning Point Brands | ||||||||||||||||||||||||||||||||
| Reconciliation of GAAP Net Income to Adjusted Net Income and Diluted EPS to Adjusted Diluted EPS | ||||||||||||||||||||||||||||||||
| (dollars in thousands except share data) | ||||||||||||||||||||||||||||||||
| (unaudited) | Three Months Ended | Three Months Ended | ||||||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| December 31, 2024 | December 31, 2023 | |||||||||||||||||||||||||||||||
| Income from<br><br> <br>continuing<br><br> <br>operations<br><br> <br>before<br><br> <br>income taxes | Income<br><br> <br>tax<br><br> <br>expense^^<br><br> <br>^(m)^ | Loss from<br><br> <br>discontinued<br><br> <br>operations,<br><br> <br>net of tax (o) | Net loss<br><br> <br>attributable<br><br> <br>to non-<br><br> <br>controlling<br><br> <br>interest | Adjusted<br><br> <br>Net<br><br> <br>Income | Adjusted<br><br> <br>Diluted<br><br> <br>EPS | Income from<br><br> <br>continuing<br><br> <br>operations<br><br> <br>before income<br><br> <br>taxes | Income<br><br> <br>tax<br><br> <br>expense^^<br><br> <br>^(m)^ | Loss from<br><br> <br>discontinued<br><br> <br>operations, net<br><br> <br>of tax (o) | Net loss<br><br> <br>attributable<br><br> <br>to non-<br><br> <br>controlling<br><br> <br>interest | Net Income | Diluted EPS | |||||||||||||||||||||
| GAAP Net Income and Diluted EPS | $ | 14,478 | $ | 4,118 | $ | 7,309 | $ | 635 | $ | 2,416 | $ | 0.13 | $ | 24,837 | $ | 14,492 | $ | 480 | $ | (244 | ) | $ | 10,109 | $ | 0.53 | |||||||
| Loss on discontinued operations (a) | - | - | (9,694 | ) | - | 9,694 | 0.53 | - | - | (644 | ) | - | 644 | 0.03 | ||||||||||||||||||
| Loss on extinguishment of debt (b) | - | - | - | - | - | - | 194 | 48 | - | - | 146 | 0.01 | ||||||||||||||||||||
| Corporate restructuring (c) | 2,904 | 826 | - | - | 2,078 | 0.11 | 199 | 49 | - | - | 150 | 0.01 | ||||||||||||||||||||
| ERP/CRM (d) | 212 | 60 | - | - | 152 | 0.01 | 138 | 34 | - | - | 104 | 0.01 | ||||||||||||||||||||
| Stock based compensation (e) | 1,523 | 433 | - | - | 1,090 | 0.06 | 1,901 | 467 | - | - | 1,434 | 0.07 | ||||||||||||||||||||
| Transactional expenses and strategic initiatives (f) | 1,107 | 315 | - | - | 792 | 0.04 | 3 | 1 | - | - | 2 | 0.00 | ||||||||||||||||||||
| FDA PMTA (g) | 512 | 146 | - | - | 366 | 0.02 | 1,003 | 246 | - | - | 757 | 0.04 | ||||||||||||||||||||
| Non-cash asset impairment (h) | - | - | - | - | - | - | 1,015 | 249 | - | - | 766 | 0.04 | ||||||||||||||||||||
| FET refund (i) | - | - | - | - | - | - | (5,095 | ) | (1,252 | ) | - | - | (3,843 | ) | (0.19 | ) | ||||||||||||||||
| Legal settlement (j) | - | - | - | - | - | - | (4,000 | ) | (983 | ) | - | - | (3,017 | ) | (0.15 | ) | ||||||||||||||||
| Mark-to-market loss on Canadian inter-company note (k) | 942 | 268 | - | - | 674 | 0.04 | - | - | - | - | - | - | ||||||||||||||||||||
| Deferred tax valuation allowance (l) | - | - | - | - | - | - | - | (8,383 | ) | - | - | 8,383 | 0.42 | |||||||||||||||||||
| Tax benefit (n) | - | (725 | ) | - | - | 725 | 0.04 | - | (326 | ) | - | - | 326 | 0.02 | ||||||||||||||||||
| Adjusted Net Income and Adjusted Diluted EPS | $ | 21,678 | $ | 5,441 | $ | (2,385 | ) | $ | 635 | $ | 17,987 | $ | 0.98 | $ | 20,195 | $ | 4,640 | $ | (164 | ) | $ | (244 | ) | $ | 15,963 | $ | 0.82 | |||||
| Totals may not foot due to rounding | ||||||||||||||||||||||||||||||||
| --- | ||||||||||||||||||||||||||||||||
| (a) | Represents loss on discontinued operations. | |||||||||||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||||||||||
| (b) | Represents gain on extinguishment of debt. | |||||||||||||||||||||||||||||||
| (c) | Represents costs associated with corporate restructuring, including severance and early retirement. | |||||||||||||||||||||||||||||||
| (d) | Represents cost associated with scoping and mobilization of new ERP and CRM systems and cost of duplicative ERP licenses. | |||||||||||||||||||||||||||||||
| (e) | Represents non-cash stock options, restricted stock, PSRUs, etc. | |||||||||||||||||||||||||||||||
| (f) | Represents the fees incurred for transaction expenses. | |||||||||||||||||||||||||||||||
| (g) | Represents costs associated with applications related to FDA premarket tobacco product application ("PMTA"). The PMTA regime requires the Company to submit an application to the FDA to receive marketing authorization to continue to sell certain of its product lines with continued sales permitted during the pendency of the applications. The application is a onetime resource-intensive process for each covered product line; however, due to the nature of the implementation process for those product lines already in the market, applications can take multiple years to complete rather than the typical one-time submission. The Company currently has only two product lines currently subject to the PMTA process, having utilized other regulatory pathway options available for our other product lines. The Company does not expect to submit additional PMTA applications for any new product lines after the submission for the remaining two are complete. | |||||||||||||||||||||||||||||||
| (h) | Represents impairment of investment assets. | |||||||||||||||||||||||||||||||
| (i) | Represents federal excise tax refund included in other operating income, net. | |||||||||||||||||||||||||||||||
| (j) | Represents other income from litigation settlement. | |||||||||||||||||||||||||||||||
| (k) | Represents a mark-to-market loss attributable to foreign exchange fluctuation. | |||||||||||||||||||||||||||||||
| (l) | Represents deferred tax valuation allowance. | |||||||||||||||||||||||||||||||
| (m) | Income tax expense calculated using the effective tax rate for the quarter of 28.4% in 2024 and 24.6% in 2023. | |||||||||||||||||||||||||||||||
| (n) | Represents adjustment from quarterly tax rate to annual projected tax rate of 25% in 2024 and 23% in 2023. | |||||||||||||||||||||||||||||||
| (o) | Tax allocation for discontinued operations excluded from adjusted net income. | |||||||||||||||||||||||||||||||
| Schedule C | ||||||||||||||||||||||||||||||||
| --- | ||||||||||||||||||||||||||||||||
| Turning Point Brands, Inc. | ||||||||||||||||||||||||||||||||
| Reconciliation of GAAP Operating Income to Adjusted Operating Income | ||||||||||||||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||||||||
| (unaudited) | ||||||||||||||||||||||||||||||||
| Consolidated | Zig-Zag | Stoker's | ||||||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||||||||||||||||
| Three Months Ended | Three Months Ended | Three Months Ended | Three Months Ended | Three Months Ended | Three Months Ended | |||||||||||||||||||||||||||
| December 31, 2024 | December 31, 2023 | December 31, 2024 | December 31, 2023 | December 31, 2024 | December 31, 2023 | |||||||||||||||||||||||||||
| Net sales | $ | 93,667 | $ | 83,067 | $ | 45,891 | $ | 45,092 | $ | 47,776 | $ | 37,975 | ||||||||||||||||||||
| Gross profit | $ | 52,418 | $ | 47,380 | $ | 24,848 | $ | 25,499 | $ | 27,570 | $ | 21,881 | ||||||||||||||||||||
| Operating income (loss) | $ | 17,885 | $ | 24,597 | $ | 13,059 | $ | 20,968 | $ | 17,852 | $ | 16,833 | ||||||||||||||||||||
| Adjustments: | ||||||||||||||||||||||||||||||||
| Transactional expenses and strategic initiatives | 1,107 | 3 | - | - | - | - | ||||||||||||||||||||||||||
| FDA PMTA | 512 | 1,003 | - | - | - | - | ||||||||||||||||||||||||||
| Corporate restructuring | 2,904 | 199 | - | - | - | - | ||||||||||||||||||||||||||
| ERP/CRM | 212 | 138 | - | - | - | - | ||||||||||||||||||||||||||
| FET refund | - | (4,345 | ) | - | (4,345 | ) | - | - | ||||||||||||||||||||||||
| Mark-to-market loss on Canadian inter-company note | 942 | - | 942 | - | - | - | ||||||||||||||||||||||||||
| Adjusted operating income (loss) | $ | 23,562 | $ | 21,595 | $ | 14,001 | $ | 16,623 | $ | 17,852 | $ | 16,833 |
13
Turning Point Brands, Inc. | www.turningpointbrands.com | ir@tpbi.com | 502.774.9238