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): August 1, 2024
 
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 August 01, 2024, Turning Point Brands, Inc. (the “Company”) issued a press release announcing its financial results for the second quarter ended June 30, 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 August 01, 2024, the Company posted an investor presentation with supplemental information for the quarter ended June 30, 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
Press Release dated August 01, 2024
 
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: August 01, 2024
By:
  /s/ Brittani N. Cushman


Brittani N. Cushman


Senior Vice President, General Counsel and Secretary


Exhibit 99.1


Turning Point Brands Announces Second Quarter 2024 Results

•
Q2 2024 Adjusted EBITDA of $27.0 million, up 7% over prior year
•
Zig-Zag and Stoker’s Products Net Sales for Q2 2024 Increased 13% Year-Over-Year
•
Company increases full-year 2024 adjusted EBITDA guidance to $98 to $102 million

LOUISVILLE, KY – August 1, 2024 – 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 second quarter ended June 30, 2024.

Q2 2024 vs. Q2 2023

 
•
Total consolidated net sales increased 2.8% to $108.5 million  
 
o
Zig-Zag Products net sales increased 8.0% 
 
o
Stoker’s Products net sales increased 18.5% 
 
o
Creative Distribution Solutions net sales decreased 33.0% 
 
•
Gross profit increased 2.6% to $53.8 million 
 
•
Net income increased 31.0% to $13.0 million 
 
•
Adjusted net income increased 12.2% to $17.2 million (see Schedule B for a reconciliation to net income) 
 
•
Adjusted EBITDA increased 6.9% to $27.0 million (see Schedule A for a reconciliation to net income) 
 
•
Diluted EPS of $0.68 and Adjusted Diluted EPS of $0.89 compared to $0.53 and $0.79, 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 by our second quarter results. We achieved our highest quarterly EBITDA since the second quarter of 2021. We believe Zig-Zag is on a sustainable growth trajectory, and Stoker’s MST continues to grow market share. In addition, sales of FRE, our modern oral nicotine pouch, grew 76% sequentially as we continue to expand our national footprint.”

Zig-Zag Products Segment (47% of total net sales in the quarter)

For the second quarter, Zig-Zag Products net sales increased 8.0% to $50.5 million driven by solid performance in our North American Papers & Wraps businesses as well as solid growth in cigars.

For the quarter, the Zig-Zag Products segment gross profit increased 1.7% to $26.9 million. Gross margin declined 330 basis points to 53.2% driven primarily by product mix.

“We are encouraged by our Zig-Zag results for the quarter,” said Purdy. “Our ongoing initiatives continue to demonstrate progress toward sustainably growing the Zig-Zag brand.”

Stoker’s Products Segment (39% of total net sales in the quarter)

For the second quarter, Stoker’s Products net sales increased 18.5% to $42.7 million. The segment was driven by high teens growth from MST and triple-digit growth off of a low base for FRE, partially offset by low-single-digit decline in loose-leaf tobacco. For the second quarter, total Stoker’s Products segment volume increased 5.3%, while price / mix increased 13.2%.

For the quarter, the Stoker’s Products segment gross profit increased 17.8% to $23.5 million. Gross margin contracted 30 basis points to 55.0%.

Performance Measures in the Second Quarter

Second quarter consolidated selling, general and administrative (“SG&A”) expenses were $32.8 million compared to $31.9 million in the second quarter of 2023.

The second quarter SG&A included the following notable items:

•     $1.9 million of stock compensation expense compared to $2.1 million in the year-ago period; and
•     $1.0 million of FDA PMTA-related expenses for modern oral products compared to $0.7 million in the year-ago period.

Total gross debt as of June 30, 2024 was $368.5 million. Net debt (total gross debt less unrestricted cash) as of June 30, 2024 was $226.4 million. The Company ended the quarter with total liquidity of $201.0 million, comprised of $142.2 million in cash and $58.8 million of asset backed revolving credit facility capacity.

On July 15, 2024, the Company retired the remaining $118.5 million of its convertible notes outstanding with cash on hand. Pro forma for retirement of the convertible notes as of June 30, 2024, the Company had gross debt outstanding of $250.0 million and net debt of $226.4 million.

During the quarter, the Company re-purchased 34,350 shares of common stock at a cost of $1.0 million.

2024 Outlook

The Company is increasing its previous full-year 2024 adjusted EBITDA guidance from $95 to $100 million to $98 to $102 million, which excludes CDS.

Creative Distribution Solutions (“CDS”) (14% of total net sales in the quarter)

For the second quarter, CDS net sales were $15.3 million, gross profit was $3.4 million, and gross margin was 22.5%.

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, August 1, 2024. Investment community participants should dial in 10 minutes ahead of time using the toll-free number (888) 330-2502 (international participants should call (240) 789-2713 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. 

Turning Point Brands, Inc. | www.turningpointbrands.com | ir@tpbi.com | 502.774.9238

2
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 217,000 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 in 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.

Investor Contacts

Turning Point Brands, Inc.
ir@tpbi.com 

Financial Statements Follow on Subsequent Pages

Turning Point Brands, Inc. | www.turningpointbrands.com | ir@tpbi.com | 502.774.9238

3
Turning Point Brands, Inc.
Consolidated Statements of Income
(dollars in thousands except share data)
(unaudited)

   
Three Months Ended June 30,
  
   
2024
    
2023
  
 
            
Net sales (1)
  
$
108,512
    
$
105,595
  
Cost of sales
    
54,671
      
53,117
  
Gross profit
    
53,841
      
52,478
  
Selling, general, and administrative expenses
    
32,753
      
31,933
  
Other operating income
    
(1,674
)
    
-
  
Operating income
    
22,762
      
20,545
  
Interest expense, net
    
2,991
      
4,019
  
Investment loss
    
2,439
      
4,080
  
Gain on extinguishment of debt
    
-
      
(600
)
Income before income taxes
    
17,332
      
13,046
  
Income tax expense
    
4,415
      
3,338
  
Consolidated net income
    
12,917
      
9,708
  
Net loss attributable to non-controlling interest
    
(87
)
    
(217
)
Net income attributable to Turning Point Brands, Inc.
  
$
13,004
    
$
9,925
  
 
                
Basic income per common share:
                
Net income attributable to Turning Point Brands, Inc.
  
$
0.74
    
$
0.56
  
Diluted income per common share:
                
Net income attributable to Turning Point Brands, Inc.
  
$
0.68
    
$
0.53
  
Weighted average common shares outstanding:
                
Basic
    
17,656,732
      
17,584,241
  
Diluted
    
20,156,854
      
20,409,943
  

(1) Net sales include excise taxes billed to customers of $0.8 million and $1.2 million for the three months ended June 30, 2024 and 2023, respectively.

Turning Point Brands, Inc. | www.turningpointbrands.com | ir@tpbi.com | 502.774.9238

4
Turning Point Brands, Inc.
Consolidated Balance Sheets
(dollars in thousands except share data)

 
  
(unaudited)
      
 
 
  
June 30,
    
December 31,
  
ASSETS
  
2024
    
2023
  
Current assets:
            
Cash
  
$
142,159
    
$
117,886
  
Accounts receivable, net of allowances of $54 in 2024 and $78 in 2023
    
12,557
      
9,989
  
Inventories, net
    
102,333
      
98,960
  
Other current assets
    
32,688
      
40,781
  
Total current assets
    
289,737
      
267,616
  
Property, plant, and equipment, net
    
26,441
      
25,300
  
Deferred income taxes
    
1,177
      
1,468
  
Right of use assets
    
10,305
      
11,480
  
Deferred financing costs, net
    
2,145
      
2,450
  
Goodwill
    
136,307
      
136,250
  
Other intangible assets, net
    
79,393
      
80,942
  
Master Settlement Agreement (MSA) escrow deposits
    
28,407
      
28,684
  
Other assets
    
17,644
      
15,166
  
Total assets
  
$
591,556
    
$
569,356
  
 
                
LIABILITIES AND STOCKHOLDERS’ EQUITY
                
Current liabilities:
                
Accounts payable
  
$
11,919
    
$
8,407
  
Accrued liabilities
    
30,428
      
33,635
  
Current portion of long-term debt
    
118,470
      
58,294
  
Total current liabilities
    
160,817
      
100,336
  
Notes payable and long-term debt
    
247,960
      
307,064
  
Lease liabilities
    
8,834
      
9,950
  
Total liabilities
    
417,611
      
417,350
  
 
                
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; 20,126,521 issued shares and 17,703,166 outstanding shares at June 30, 2024, and 19,922,137 issued shares and 17,605,677 outstanding shares at December 31, 2023
    
201
      
199
  
Common stock, nonvoting, $0.01 par value; authorized shares, 10,000,000; issued and outstanding shares -0-
    
-
      
-
  
Additional paid-in capital
    
121,948
      
119,075
  
Cost of repurchased common stock
                
(2,423,355 shares at June 30, 2024, and 2,316,460 shares at December 31, 2023)
    
(81,144
)
    
(78,093
)
Accumulated other comprehensive loss
    
(3,072
)
    
(2,648
)
Accumulated earnings
    
134,917
      
112,443
  
Non-controlling interest
    
1,095
      
1,030
  
Total stockholders’ equity
    
173,945
      
152,006
  
Total liabilities and stockholders’ equity
  
$
591,556
    
$
569,356
  

Turning Point Brands, Inc. | www.turningpointbrands.com | ir@tpbi.com | 502.774.9238

5
Turning Point Brands, Inc.
Consolidated Statements of Cash Flows
(dollars in thousands)
(unaudited)

   
Six Months Ended June 30,
  
   
2024
      
2023
  
Cash flows from operating activities:
              
Consolidated net income
  
$
25,096
  
 
  
$
17,050
  
Adjustments to reconcile net income to net cash provided by operating activities:
        
 
        
Gain on extinguishment of debt
    
-
  
 
    
(1,377
)
Loss on sale of property, plant, and equipment
    
7
  
 
    
44
  
Loss on MSA investments
    
6
  
 
    
-
  
Depreciation and other amortization expense
    
1,916
  
 
    
1,535
  
Amortization of other intangible assets
    
1,559
  
 
    
1,542
  
Amortization of deferred financing costs
    
1,393
  
 
    
1,225
  
Deferred income tax expense
    
363
  
 
    
659
  
Stock compensation expense
    
3,951
  
 
    
2,836
  
Noncash lease income
    
(85
)
 
    
(29
)
Loss on investments
    
2,722
  
 
    
8,989
  
Changes in operating assets and liabilities:
        
 
        
Accounts receivable
    
(2,489
)
 
    
456
  
Inventories
    
(3,218
)
 
    
(5,146
)
Other current assets
    
4,863
  
 
    
3,769
  
Other assets
    
(279
)
 
    
(4,548
)
Accounts payable
    
3,565
  
 
    
2,500
  
Accrued liabilities and other
    
(3,293
)
 
    
(1,972
)
Net cash provided by operating activities
  
$
36,077
  
 
  
$
27,533
  
 
        
 
        
Cash flows from investing activities:
        
 
        
Capital expenditures
  
$
(2,858
)
 
  
$
(2,993
)
Purchases of investments
    
(7,934
)
 
    
-
  
Proceeds from sale of investments
    
3,314
  
 
    
-
  
Purchases of non-marketable equity investments
    
(500
)
 
    
-
  
Restricted cash, MSA escrow deposits
    
4
  
 
    
-
  
Proceeds on the sale of property, plant and equipment
    
2
  
 
    
3
  
Net cash used in investing activities
  
$
(7,972
)
 
  
$
(2,990
)
 
        
 
        
Cash flows from financing activities:
        
 
        
Convertible Senior Notes repurchased
  
$
-
  
 
  
$
(27,357
)
Proceeds from call options
    
-
  
 
    
70
  
Payment of financing costs
    
(133
)
 
    
-
  
Payment of dividends
    
(2,407
)
 
    
(2,209
)
Exercise of options
    
900
  
 
    
406
  
Redemption of options
    
(4
)
 
    
(346
)
Redemption of restricted stock units
    
(840
)
 
    
-
  
Redemption of performance based restricted stock units
    
(1,212
)
 
    
(995
)
Common stock repurchased
    
(3,051
)
 
    
-
  
Net cash used in financing activities
  
$
(6,747
)
 
  
$
(30,431
)
 
        
 
        
Net increase (decrease) in cash
  
$
21,358
  
 
  
$
(5,888
)
Effect of foreign currency translation on cash
  
$
(76
)
 
  
$
(8
)
 
        
 
        
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
  
$
142,159
  
 
  
$
100,507
  
Restricted
    
1,938
  
 
    
4,929
  
Total cash at end of period
  
$
144,097
  
 
  
$
105,436
  

Turning Point Brands, Inc. | www.turningpointbrands.com | ir@tpbi.com | 502.774.9238

6
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 and 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 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.

Turning Point Brands, Inc. | www.turningpointbrands.com | ir@tpbi.com | 502.774.9238

7
Schedule A

Turning Point Brands, Inc.
Reconciliation of GAAP Net Income to Adjusted EBITDA
(dollars in thousands)
(unaudited)

   
Three Months Ended
  
   
  June 30,
  
   
2024
      
2023
  
Net income attributable to Turning Point Brands, Inc.
  
$
13,004
  
 
  
$
9,925
  
Add:
        
 
        
Interest expense, net
    
2,991
  
 
    
4,019
  
Gain on extinguishment of debt
    
-
  
 
    
(600
)
Income tax expense
    
4,415
  
 
    
3,338
  
Depreciation expense
    
891
  
 
    
759
  
Amortization expense
    
931
  
 
    
771
  
EBITDA
  
$
22,232
  
 
  
$
18,212
  
Components of Adjusted EBITDA
        
 
        
Corporate and CDS restructuring (a)
    
283
  
 
    
-
  
ERP/CRM (b)
    
489
  
 
    
138
  
Stock options, restricted stock, and incentives expense (c)
    
1,889
  
 
    
2,093
  
Transactional expenses and strategic initiatives (d)
    
97
  
 
    
82
  
FDA PMTA (e)
    
997
  
 
    
662
  
Non-cash asset impairment (f)
    
2,722
  
 
    
4,092
  
FET Refund (g)
    
(1,674
)
 
    
-
  
Adjusted EBITDA
  
$
27,035
  
 
  
$
25,279
  

(a)
Represents costs associated with corporate and CDS restructuring, including severance.
(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, incentives expense and Solace performance stock units.
(d)
Represents the fees incurred for transaction expenses.
(e)
Represents costs associated with applications related to FDA premarket tobacco product application (“PMTA”).  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 a federal excise tax refund included in other operating income.

Turning Point Brands, Inc. | www.turningpointbrands.com | ir@tpbi.com | 502.774.9238

8
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
  
   
June 30, 2024
    
June 30, 2023
  
 
  
Income
before
income
taxes
    
Income
tax
expense
(h)
    
Net loss
attributable
to non-
controlling
interest
    
Adjusted
Net
Income
    
Adjusted
Diluted
EPS
    
Income
before
income
taxes
    
Income
tax
expense
(h)
    
Net loss
attributable
to non-
controlling
interest
    
Net
Income
    
Diluted
EPS
  
GAAP Net Income and Diluted EPS
  
$
17,332
    
$
4,415
    
$
(87
)
  
$
13,004
    
$
0.68
    
$
13,046
    
$
3,338
    
$
(217
)
  
$
9,925
    
$
0.53
  
Gain on extinguishment of debt (a)
    
-
      
-
      
-
      
-
      
-
      
(600
)
    
(154
)
    
-
      
(446
)
    
(0.02
)
Corporate restructuring (b)
    
283
      
72
      
-
      
211
      
0.01
      
-
      
-
      
-
      
-
      
-
  
ERP/CRM (c)
    
489
      
125
      
-
      
364
      
0.02
      
138
      
35
      
-
      
103
      
0.01
  
Stock options, restricted stock, and incentives expense (d)
    
1,889
      
481
      
-
      
1,408
      
0.07
      
2,093
      
536
      
-
      
1,557
      
0.08
  
Transactional expenses and strategic initiatives (e)
    
97
      
25
      
-
      
72
      
0.00
      
82
      
21
      
-
      
61
      
0.00
  
FDA PMTA (f)
    
997
      
254
      
-
      
743
      
0.04
      
662
      
169
      
-
      
493
      
0.02
  
Non-cash asset impairment (g)
    
2,722
      
693
      
-
      
2,029
      
0.10
      
4,092
      
1,047
      
-
      
3,045
      
0.15
  
FET refund (i)
    
(1,674
)
    
(426
)
    
-
      
(1,248
)
    
(0.06
)
    
-
      
-
      
-
      
-
      
-
  
Tax benefit (j)
    
-
      
(577
)
    
-
      
577
      
0.03
      
-
      
(560
)
    
-
      
560
      
0.03
  
Adjusted Net Income and Adjusted Diluted EPS
  
$
22,135
    
$
5,062
    
$
(87
)
  
$
17,160
    
$
0.89
    
$
19,513
    
$
4,433
    
$
(217
)
  
$
15,297
    
$
0.79
  

Totals may not foot due to rounding

(a)
Represents gain on extinguishment of debt.
(b)
Represents costs associated with corporate and CDS restructuring, including severance.
(c)
Represents cost associated with scoping and mobilization of new ERP and CRM systems and cost of duplicative ERP licenses.
(d)
Represents non-cash stock options, restricted stock, incentives expense and Solace PRSUs.
(e)
Represents the fees incurred for transaction expenses.
(f)
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.
(g)
Represents impairment of investment assets.
(h)
Income tax expense calculated using the effective tax rate for the quarter of 25.5% in 2024 and 25.6% in 2023.
(i)
Represents a federal excise tax refund included in other operating income.
(j)
Represents adjustment from quarterly tax rate to annual projected tax rate of 23% in 2024 and 2023.
 
Schedule C

Turning Point Brands, Inc.
Reconciliation of GAAP Operating Income (Loss) to Adjusted Operating Income (Loss)
(dollars in thousands)
(unaudited)

 
  
Consolidated
    
Zig-Zag Products
    
Stoker’s Products
    
Creative Distribution Solutions
  
 
  
2nd Quarter
    
2nd Quarter
    
2nd Quarter
    
2nd Quarter
    
2nd Quarter
    
2nd Quarter
    
2nd Quarter
    
2nd Quarter
  
 
  
2024
    
2023
    
2024
    
2023
    
2024
    
2023
    
2024
    
2023
  
 
                                                
Net sales
  
$
108,512
    
$
105,595
    
$
50,482
    
$
46,722
    
$
42,743
    
$
36,056
    
$
15,287
    
$
22,817
  
 
                                                                
Gross profit
  
$
53,841
    
$
52,478
    
$
26,872
    
$
26,422
    
$
23,524
    
$
19,968
    
$
3,445
    
$
6,088
  
 
                                                                
Operating income (loss)
  
$
22,762
    
$
20,545
    
$
18,260
    
$
17,000
    
$
17,862
    
$
15,110
    
$
(108
)
  
$
460
  
Adjustments:
                                                                
 Corporate restructuring
    
283
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
 ERP/CRM
    
489
      
138
      
-
      
-
      
-
      
-
      
-
      
-
  
 Transactional expenses and strategic initiatives
    
97
      
82
      
-
      
-
      
-
      
-
      
-
      
-
  
 FDA PMTA
    
997
      
662
      
-
      
-
      
-
      
-
      
-
      
-
  
 FET refund
    
(1,674
)
    
-
      
(1,674
)
    
-
      
-
      
-
      
-
      
-
  
Adjusted operating income (loss)
  
$
22,954
    
$
21,427
    
$
16,586
    
$
17,000
    
$
17,862
    
$
15,110
    
$
(108
)
  
$
460
  

Turning Point Brands, Inc. | www.turningpointbrands.com | ir@tpbi.com | 502.774.9238


9
v3.24.2.u1
Document and Entity Information
Aug. 01, 2024
Cover [Abstract]  
Document Type 8-K
Amendment Flag false
Document Period End Date Aug. 01, 2024
Entity File Number 001-37763
Entity Registrant Name TURNING POINT BRANDS, INC.
Entity Central Index Key 0001290677
Entity Incorporation, State or Country Code DE
Entity Tax Identification Number 20-0709285
Entity Address, Address Line One 5201 Interchange Way
Entity Address, City or Town Louisville
Entity Address, State or Province KY
Entity Address, Postal Zip Code 40229
City Area Code 502
Local Phone Number 778-4421
Title of 12(b) Security Common Stock, $0.01 par value
Trading Symbol TPB
Security Exchange Name NYSE
Entity Emerging Growth Company false
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
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