☑ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 20-0709285 | |
(State or other jurisdiction of Incorporation or organization) | (I.R.S. Employer Identification No.) |
5201 Interchange Way, Louisville, KY | 40229 | |
(Address of principal executive offices) | (Zip Code) |
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 |
Large accelerated filer | ☐ | Accelerated filer | ☑ | |
Non-accelerated filer | ☐ | Smaller reporting company | ☐ | |
Emerging growth company | ☐ |
Page No. | |||
PART I—FINANCIAL INFORMATION | |||
ITEM 1 | Financial Statements (Unaudited) | ||
6 | |||
7 | |||
8 | |||
9 | |||
Consolidated Statements of Comprehensive Income for the six months ended June 30, 2023 and 2022 | 9 | ||
11 | |||
11 | |||
12 | |||
ITEM 2 | |||
ITEM 3 | |||
ITEM 4 | |||
PART II—OTHER INFORMATION | |||
ITEM 1 | |||
ITEM 1A | |||
ITEM 2 | |||
ITEM 3 | |||
ITEM 4 | |||
ITEM 5 | |||
ITEM 6 | |||
● | declining sales of tobacco products, and expected continuing decline of sales, in the tobacco industry overall; |
● | our dependence on a small number of third-party suppliers and producers; |
● | the possibility that we will be unable to identify or contract with new suppliers or producers in the event of a supply or product disruption, as well as other supply chain concerns, including delays in product shipments and increases in freight cost; |
● | the possibility that our licenses to use certain brands or trademarks will be terminated, challenged or restricted; |
● | failure to maintain consumer brand recognition and loyalty of our customers; |
● | our reliance on relationships with several large retailers and national chains for distribution of our products; |
● | intense competition and our ability to compete effectively; |
● | competition from illicit sources and the damage caused by illicit products to brand equity; |
● | contamination of our tobacco supply or products; |
● | uncertainty and continued evolution of the markets for our |
● | complications with the design or implementation of our new enterprise resource planning system could adversely impact our business and operations; |
● | substantial and increasing U.S. regulation; |
● | regulation or marketing denials of our products by the |
● | many of our products contain nicotine, which is considered to be a highly addictive substance; |
● | requirement to maintain compliance with master settlement agreement escrow |
● | possible significant increases in federal, state and local municipal tobacco- and vapor-related taxes; |
● | our products are subject to developing and unpredictable regulation, such as court actions that impact obligations; |
● | increase in state and local regulation of our |
● | increase in tax of our |
● | sensitivity of end-customers to increased sales taxes and economic conditions including significant increases in the rate of inflation and other declines in purchasing power; |
● | uncertainty surrounding FDA compliance policy; |
● | possible increasing international control and regulation; |
● | failure to comply with environmental, health and safety regulations; |
● | imposition of significant tariffs on imports into the U.S.; |
● | the scientific community’s lack of information regarding the long-term health effects of certain substances contained in some of our products; |
● | significant product liability litigation; |
● | our amount of indebtedness; |
● | the terms of our indebtedness, which may restrict our current and future operations; |
● | our ability to comply with required disclosure requirements; |
● | identification of |
● | our certificate of incorporation and bylaws, as well as Delaware law and certain regulations, could discourage or prohibit acquisition bids or merger proposals, which may adversely affect the market price of our common stock; |
● | our certificate of incorporation limits the ownership of our common stock by individuals and entities that are Restricted Investors. These restrictions may affect the liquidity of our common stock and may result in Restricted Investors (as defined in our Certificate of Incorporation) being required to sell or redeem their shares at a loss or relinquish their voting, dividend and distribution rights; |
● | future sales of our common stock in the public market could reduce our stock price, and any additional capital raised by us through the sale of equity or convertible securities may dilute your ownership in us; |
● | we may issue preferred stock whose terms could adversely affect the voting power or value of our common stock; |
● | our business may be damaged by events outside of our suppliers’ control, such as the impact of epidemics (e.g., coronavirus), political upheavals, or natural disasters; |
● | adverse impact of climate change; |
● | our reliance on information technology; |
● | cybersecurity and privacy breaches; |
● | failure to manage our growth; |
● | failure to successfully integrate our acquisitions or otherwise be unable to benefit from pursuing acquisitions; |
● | fluctuations in our results; |
● | exchange rate fluctuations; |
● | adverse U.S. and global economic conditions; |
● | departure of key management personnel or our inability to attract and retain talent; |
● | infringement on or misappropriation of our intellectual property; |
● | third-party claims that we infringe on their intellectual property; and |
● | failure to meet expectations |
(unaudited) | (unaudited) | |||||||||||||||
September 30, | December 31, | June 30, | December 31, | |||||||||||||
ASSETS | 2022 | 2021 | 2023 | 2022 | ||||||||||||
Current assets: | ||||||||||||||||
Cash | $ | 105,672 | $ | 128,320 | $ | 100,507 | $ | 106,403 | ||||||||
Accounts receivable, net of allowances of $107 in 2022 and $262 in 2021 | 11,453 | 6,496 | ||||||||||||||
Accounts receivable, net of allowances of $103 in 2023 and $114 in 2022 | 7,920 | 8,377 | ||||||||||||||
Inventories | 113,928 | 87,607 | 125,056 | 119,915 | ||||||||||||
Other current assets | 24,729 | 26,746 | 18,216 | 22,959 | ||||||||||||
Total current assets | 255,782 | 249,169 | 251,699 | 257,654 | ||||||||||||
Property, plant, and equipment, net | 22,512 | 18,650 | 24,128 | 22,788 | ||||||||||||
Deferred income taxes | 2,795 | 1,363 | 7,966 | 8,443 | ||||||||||||
Right of use assets | 13,185 | 15,053 | 10,923 | 12,465 | ||||||||||||
Deferred financing costs, net | 309 | 388 | 229 | 282 | ||||||||||||
Goodwill | 162,120 | 162,333 | 136,244 | 136,253 | ||||||||||||
Other intangible assets, net | 86,112 | 87,485 | 82,048 | 83,592 | ||||||||||||
Master Settlement Agreement (MSA) escrow deposits | 27,845 | 31,720 | 28,229 | 27,980 | ||||||||||||
Other assets | 29,129 | 35,399 | 18,208 | 22,649 | ||||||||||||
Total assets | $ | 599,789 | $ | 601,560 | $ | 559,674 | $ | 572,106 | ||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||
Current liabilities: | ||||||||||||||||
Accounts payable | $ | 9,247 | $ | 7,361 | $ | 10,802 | $ | 8,355 | ||||||||
Accrued liabilities | 32,613 | 32,937 | 30,898 | 33,001 | ||||||||||||
Other current liabilities | 21 | 38 | 5 | 20 | ||||||||||||
Total current liabilities | 41,881 | 40,336 | 41,705 | 41,376 | ||||||||||||
Notes payable and long-term debt | 416,029 | 414,172 | 379,195 | 406,757 | ||||||||||||
Lease liabilities | 11,299 | 13,336 | 9,528 | 10,593 | ||||||||||||
Total liabilities | 469,209 | 467,844 | 430,428 | 458,726 | ||||||||||||
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; 19,801,623 issued shares and 17,587,122 outstanding shares at September 30, 2022, and 19,690,884 issued shares and 18,395,476 outstanding shares at December 31, 2021 | 198 | 197 | ||||||||||||||
Common stock, voting, $0.01 par value; authorized shares, 190,000,000; 19,912,039 issued shares and 17,595,579 outstanding shares at June 30, 2023, and 19,801,623 issued shares and 17,485,163 outstanding shares at December 31, 2022 | 199 | 198 | ||||||||||||||
Common stock, nonvoting, $0.01 par value; authorized shares, 10,000,000; issued and outstanding shares -0- | - | - | - | - | ||||||||||||
Additional paid-in capital | 112,034 | 108,811 | 115,272 | 113,242 | ||||||||||||
Cost of repurchased common stock (2,214,501 shares at September 30, 2022, and 1,295,408 shares at December 31, 2021) | (75,901 | ) | (48,869 | ) | ||||||||||||
Cost of repurchased common stock (2,316,460 shares at June 30, 2023 and December 31, 2022) | (78,093 | ) | (78,093 | ) | ||||||||||||
Accumulated other comprehensive loss | (3,424 | ) | (195 | ) | (3,181 | ) | (2,393 | ) | ||||||||
Accumulated earnings | 96,088 | 71,460 | 93,873 | 78,691 | ||||||||||||
Non-controlling interest | 1,585 | 2,312 | 1,176 | 1,735 | ||||||||||||
Total stockholders’ equity | 130,580 | 133,716 | 129,246 | 113,380 | ||||||||||||
Total liabilities and stockholders’ equity | $ | 599,789 | $ | 601,560 | $ | 559,674 | $ | 572,106 |
Three Months Ended September 30, | Three Months Ended June 30, | |||||||||||||||
2022 | 2021 | 2023 | 2022 | |||||||||||||
Net sales | $ | 107,802 | $ | 109,904 | $ | 105,595 | $ | 102,925 | ||||||||
Cost of sales | 55,090 | 55,635 | 53,117 | 51,456 | ||||||||||||
Gross profit | 52,712 | 54,269 | 52,478 | 51,469 | ||||||||||||
Selling, general, and administrative expenses | 32,891 | 31,894 | 31,933 | 33,323 | ||||||||||||
Operating income | 19,821 | 22,375 | 20,545 | 18,146 | ||||||||||||
Interest expense, net | 4,802 | 5,397 | 4,019 | 5,144 | ||||||||||||
Investment income | (75 | ) | (157 | ) | ||||||||||||
Investment loss | 4,080 | 6,227 | ||||||||||||||
Gain on extinguishment of debt | - | (375 | ) | (600 | ) | - | ||||||||||
Income before income taxes | 15,094 | 17,510 | 13,046 | 6,775 | ||||||||||||
Income tax expense | 3,797 | 4,073 | 3,338 | 1,569 | ||||||||||||
Consolidated net income | 11,297 | 13,437 | 9,708 | 5,206 | ||||||||||||
Net loss attributable to non-controlling interest | (239 | ) | (31 | ) | (217 | ) | (218 | ) | ||||||||
Net income attributable to Turning Point Brands, Inc. | $ | 11,536 | $ | 13,468 | $ | 9,925 | $ | 5,424 | ||||||||
Basic income per common share: | ||||||||||||||||
Net income attributable to Turning Point Brands, Inc. | $ | 0.65 | $ | 0.71 | $ | 0.56 | $ | 0.30 | ||||||||
Diluted income per common share: | ||||||||||||||||
Net income attributable to Turning Point Brands, Inc. | $ | 0.60 | $ | 0.65 | $ | 0.53 | $ | 0.30 | ||||||||
Weighted average common shares outstanding: | ||||||||||||||||
Basic | 17,749,294 | 18,897,974 | 17,584,241 | 18,063,259 | ||||||||||||
Diluted | 21,102,006 | 22,364,807 | 20,409,943 | 21,443,279 |
Nine Months Ended September 30, | Six Months Ended June 30, | |||||||||||||||
2022 | 2021 | 2023 | 2022 | |||||||||||||
Net sales | $ | 311,621 | $ | 340,188 | $ | 206,551 | $ | 203,819 | ||||||||
Cost of sales | 155,646 | 172,685 | 105,456 | 100,556 | ||||||||||||
Gross profit | 155,975 | 167,503 | 101,095 | 103,263 | ||||||||||||
Selling, general, and administrative expenses | 98,779 | 95,900 | 62,708 | 65,888 | ||||||||||||
Operating income | 57,196 | 71,603 | 38,387 | 37,375 | ||||||||||||
Interest expense, net | 15,142 | 15,406 | 8,029 | 10,340 | ||||||||||||
Investment loss (income) | 6,074 | (292 | ) | |||||||||||||
Loss on extinguishment of debt | - | 5,331 | ||||||||||||||
Investment loss | 8,879 | 6,149 | ||||||||||||||
Gain on extinguishment of debt | (1,377 | ) | - | |||||||||||||
Income before income taxes | 35,980 | 51,158 | 22,856 | 20,886 | ||||||||||||
Income tax expense | 8,706 | 11,151 | 5,806 | 4,909 | ||||||||||||
Consolidated net income | 27,274 | 40,007 | 17,050 | 15,977 | ||||||||||||
Net loss attributable to non-controlling interest | (684 | ) | (598 | ) | (472 | ) | (445 | ) | ||||||||
Net income attributable to Turning Point Brands, Inc. | $ | 27,958 | $ | 40,605 | $ | 17,522 | $ | 16,422 | ||||||||
Basic income per common share: | ||||||||||||||||
Net income attributable to Turning Point Brands, Inc. | $ | 1.55 | $ | 2.14 | $ | 1.00 | $ | 0.90 | ||||||||
Diluted income per common share: | ||||||||||||||||
Net income attributable to Turning Point Brands, Inc. | $ | 1.45 | $ | 1.95 | $ | 0.94 | $ | 0.86 | ||||||||
Weighted average common shares outstanding: | ||||||||||||||||
Basic | 18,021,554 | 18,988,435 | 17,556,030 | 18,159,940 | ||||||||||||
Diluted | 21,401,485 | 22,464,542 | 20,538,947 | 21,603,113 |
Three Months Ended September 30, | Three Months Ended June 30, | |||||||||||||||
2022 | 2021 | 2023 | 2022 | |||||||||||||
Consolidated net income | $ | 11,297 | $ | 13,437 | $ | 9,708 | $ | 5,206 | ||||||||
Other comprehensive income (loss), net of tax | ||||||||||||||||
Unrealized loss on MSA investments, net of tax of $333 in 2022 and $14 in 2021 | (1,046 | ) | (43 | ) | ||||||||||||
Foreign currency translation, net of tax of $0 in 2022 and 2021 | (160 | ) | (637 | ) | ||||||||||||
Unrealized (loss) gain on derivative instruments, net of tax of $67 in 2022 and $1 in 2021 | (210 | ) | 3 | |||||||||||||
Unrealized loss on MSA investments, net of tax of $116 in 2023 and $244 in 2022 | (365 | ) | (768 | ) | ||||||||||||
Foreign currency translation, net of tax of $0 in 2023 and 2022 | (169 | ) | 45 | |||||||||||||
Unrealized loss on derivative instruments, net of tax of $150 in 2023 and $0 in 2022 | (472 | ) | - | |||||||||||||
(1,416 | ) | (677 | ) | (1,006 | ) | (723 | ) | |||||||||
Consolidated comprehensive income | 9,881 | 12,760 | 8,702 | 4,483 | ||||||||||||
Comprehensive loss attributable to non-controlling interest | (295 | ) | (306 | ) | (217 | ) | (203 | ) | ||||||||
Comprehensive income attributable to Turning Point Brands, Inc. | $ | 10,176 | $ | 13,066 | $ | 8,919 | $ | 4,686 |
Nine Months Ended September 30, | Six Months Ended June 30, | |||||||||||||||
2022 | 2021 | 2023 | 2022 | |||||||||||||
Consolidated net income | $ | 27,274 | $ | 40,007 | $ | 17,050 | $ | 15,977 | ||||||||
Other comprehensive income (loss), net of tax | ||||||||||||||||
Unrealized loss on MSA investments, net of tax of $934 in 2022 and $75 in 2021 | (2,940 | ) | (235 | ) | ||||||||||||
Foreign currency translation, net of tax of $0 in 2022 and 2021 | (122 | ) | 324 | |||||||||||||
Unrealized (loss) gain on derivative instruments, net of tax of $67 in 2022 and $811 in 2021 | (210 | ) | 2,628 | |||||||||||||
Unrealized gain (loss) on MSA investments, net of tax of $60 in 2023 and $602 in 2022 | 188 | (1,894 | ) | |||||||||||||
Foreign currency translation, net of tax of $0 in 2023 and 2022 | (248 | ) | 38 | |||||||||||||
Unrealized loss on derivative instruments, net of tax of $259 in 2023 and $0 in 2022 | (815 | ) | - | |||||||||||||
(3,272 | ) | 2,717 | (875 | ) | (1,856 | ) | ||||||||||
Consolidated comprehensive income | 24,002 | 42,724 | 16,175 | 14,121 | ||||||||||||
Comprehensive loss attributable to non-controlling interest | (727 | ) | (393 | ) | (472 | ) | (432 | ) | ||||||||
Comprehensive income attributable to Turning Point Brands, Inc. | $ | 24,729 | $ | 43,117 | $ | 16,647 | $ | 14,553 |
Nine Months Ended September 30, | Six Months Ended June 30, | |||||||||||||||
2022 | 2021 | 2023 | 2022 | |||||||||||||
Cash flows from operating activities: | ||||||||||||||||
Consolidated net income | $ | 27,274 | $ | 40,007 | $ | 17,050 | $ | 15,977 | ||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||
Loss on extinguishment of debt | - | 5,331 | ||||||||||||||
Gain on sale of property, plant, and equipment | (8 | ) | (2 | ) | ||||||||||||
Gain on extinguishment of debt | (1,377 | ) | - | |||||||||||||
Loss (gain) on sale of property, plant, and equipment | 44 | (8 | ) | |||||||||||||
Depreciation expense | 2,611 | 2,313 | 1,535 | 1,750 | ||||||||||||
Amortization of other intangible assets | 1,373 | 1,431 | 1,542 | 919 | ||||||||||||
Amortization of deferred financing costs | 1,936 | 1,895 | 1,225 | 1,291 | ||||||||||||
Deferred income tax (benefit) expense | (431 | ) | 1,528 | |||||||||||||
Deferred income tax expense (benefit) | 659 | (146 | ) | |||||||||||||
Stock compensation expense | 4,103 | 6,015 | 2,836 | 2,661 | ||||||||||||
Noncash lease income | - | (49 | ) | (29 | ) | (6 | ) | |||||||||
Loss (gain) on investments | 6,244 | (144 | ) | |||||||||||||
Loss on investments | 8,989 | 6,258 | ||||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||||
Accounts receivable | (5,030 | ) | 1,324 | 456 | (2,673 | ) | ||||||||||
Inventories | (26,467 | ) | (10,970 | ) | (5,146 | ) | (27,499 | ) | ||||||||
Other current assets | 1,891 | (491 | ) | 3,769 | (598 | ) | ||||||||||
Other assets | 1,211 | 685 | (4,548 | ) | 624 | |||||||||||
Accounts payable | 2,074 | 3,488 | 2,500 | 7,240 | ||||||||||||
Accrued liabilities and other | (392 | ) | (2,796 | ) | (1,972 | ) | 1,359 | |||||||||
Net cash provided by operating activities | $ | 16,389 | $ | 49,565 | $ | 27,533 | $ | 7,149 | ||||||||
Cash flows from investing activities: | ||||||||||||||||
Capital expenditures | $ | (6,662 | ) | $ | (4,391 | ) | $ | (2,993 | ) | $ | (5,694 | ) | ||||
Acquisitions, net of cash acquired | - | (16,416 | ) | |||||||||||||
Payments for investments | (1,000 | ) | (16,657 | ) | ||||||||||||
Restricted cash, MSA escrow deposits | (10,169 | ) | (14,783 | ) | $ | - | $ | (10,078 | ) | |||||||
Proceeds on the sale of property, plant and equipment | 63 | 2 | 3 | 63 | ||||||||||||
Net cash used in investing activities | $ | (17,768 | ) | $ | (52,245 | ) | $ | (2,990 | ) | $ | (15,709 | ) | ||||
Cash flows from financing activities: | ||||||||||||||||
Proceeds from Senior Secured Notes | $ | - | $ | 250,000 | ||||||||||||
Payments of 2018 first lien term loan | - | (130,000 | ) | |||||||||||||
Settlement of interest rate swaps | - | (3,573 | ) | |||||||||||||
Payment of promissory note | - | (9,625 | ) | |||||||||||||
Convertible Senior Notes repurchased | $ | (27,357 | ) | $ | - | |||||||||||
Proceeds from call options | 70 | - | ||||||||||||||
Payment of dividends | (3,259 | ) | (3,056 | ) | (2,209 | ) | (2,181 | ) | ||||||||
Payments of financing costs | - | (6,921 | ) | |||||||||||||
Exercise of options | 504 | 2,071 | 406 | 475 | ||||||||||||
Redemption of options | (155 | ) | (2,111 | ) | (346 | ) | (155 | ) | ||||||||
Redemption of stock units | (1,228 | ) | - | |||||||||||||
Redemption of performance restricted stock units | (995 | ) | (1,228 | ) | ||||||||||||
Common stock repurchased | (27,032 | ) | (20,481 | ) | - | (19,418 | ) | |||||||||
Net cash (used in) provided by financing activities | $ | (31,170 | ) | $ | 76,304 | |||||||||||
Net cash used in financing activities | $ | (30,431 | ) | $ | (22,507 | ) | ||||||||||
Net (decrease) increase in cash | $ | (32,549 | ) | $ | 73,624 | |||||||||||
Net decrease in cash | $ | (5,888 | ) | $ | (31,067 | ) | ||||||||||
Effect of foreign currency translation on cash | $ | (324 | ) | $ | 235 | $ | (8 | ) | $ | 56 | ||||||
Cash, beginning of period: | ||||||||||||||||
Unrestricted | 128,320 | 41,765 | 106,403 | 128,320 | ||||||||||||
Restricted | 15,155 | 35,074 | 4,929 | 15,155 | ||||||||||||
Total cash at beginning of period | 143,475 | 76,839 | 111,332 | 143,475 | ||||||||||||
Cash, end of period: | ||||||||||||||||
Unrestricted | 105,672 | 130,551 | 100,507 | 107,429 | ||||||||||||
Restricted | 4,930 | 20,147 | 4,929 | 5,035 | ||||||||||||
Total cash at end of period | $ | 110,602 | $ | 150,698 | $ | 105,436 | $ | 112,464 | ||||||||
Supplemental schedule of noncash investing activities: | ||||||||||||||||
Accrued capital expenditures | $ | 57 | $ | - | $ | 42 | $ | 19 | ||||||||
Supplemental schedule of noncash financing activities: | ||||||||||||||||
Dividends declared not paid | $ | 1,089 | $ | 1,255 | $ | 1,188 | $ | 1,110 | ||||||||
Accrued consideration for acquisition | $ | - | $ | 316 |
Accumulated | Accumulated | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common | Additional | Cost of | Other | Non- | Common | Additional | Cost of | Other | Non- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Voting | Stock, | Paid-In | Repurchased | Comprehensive | Accumulated | Controlling | Voting | Stock, | Paid-In | Repurchased | Comprehensive | Accumulated | Controlling | |||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Voting | Capital | Common Stock | Income (Loss) | Earnings | Interest | Total | Shares | Voting | Capital | Common Stock | Income (Loss) | Earnings | Interest | Total | |||||||||||||||||||||||||||||||||||||||||||||||||
Beginning balance July 1, 2022 | 17,890,441 | $ | 198 | $ | 110,563 | $ | (68,287 | ) | $ | (2,064 | ) | $ | 85,641 | $ | 1,880 | $ | 127,931 | |||||||||||||||||||||||||||||||||||||||||||||||
Beginning balance April 1, 2023 | 17,585,529 | $ | 199 | $ | 113,477 | $ | (78,093 | ) | $ | (2,234 | ) | $ | 85,133 | $ | 1,452 | $ | 119,934 | |||||||||||||||||||||||||||||||||||||||||||||||
Unrealized loss on MSA investments, net of tax of $333 | - | - | - | - | (1,046 | ) | - | - | (1,046 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Unrealized loss on derivative instruments, net of tax of $67 | - | - | - | - | (210 | ) | - | - | (210 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Unrealized loss on MSA investments, net of tax of $116 | - | - | - | - | (365 | ) | - | - | (365 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Unrealized loss on derivative instruments, net of tax of $150 | - | - | - | - | (472 | ) | - | - | (472 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign currency translation, net of tax of $0 | - | - | - | - | (104 | ) | - | (56 | ) | (160 | ) | - | - | - | - | (110 | ) | - | (59 | ) | (169 | ) | ||||||||||||||||||||||||||||||||||||||||||
Stock compensation expense | - | - | 1,442 | - | - | - | - | 1,442 | - | - | 2,093 | - | - | - | - | 2,093 | ||||||||||||||||||||||||||||||||||||||||||||||||
Exercise of options | 3,053 | - | 29 | - | - | - | - | 29 | 4,416 | - | 49 | - | - | - | - | 49 | ||||||||||||||||||||||||||||||||||||||||||||||||
Redemption of options | - | - | - | - | - | - | - | - | (15,985 | ) | - | (346 | ) | - | - | - | - | (346 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Performance restricted stock units issuance | 835 | - | - | - | - | - | - | - | 26,050 | - | 78 | - | - | - | - | 78 | ||||||||||||||||||||||||||||||||||||||||||||||||
Performance restricted stock units redeemed | (4,431 | ) | - | (105 | ) | - | - | - | - | (105 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Settlement of call options, net of tax of $9 | - | - | 26 | - | - | - | - | 26 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends | - | - | - | - | - | (1,185 | ) | - | (1,185 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income | - | - | - | - | - | 9,925 | (217 | ) | 9,708 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ending balance June 30, 2023 | 17,595,579 | $ | 199 | $ | 115,272 | $ | (78,093 | ) | $ | (3,181 | ) | $ | 93,873 | $ | 1,176 | $ | 129,246 | |||||||||||||||||||||||||||||||||||||||||||||||
Beginning balance April 1, 2022 | 18,180,174 | $ | 198 | $ | 109,073 | $ | (59,491 | ) | $ | (1,326 | ) | $ | 81,327 | $ | 2,083 | $ | 131,864 | |||||||||||||||||||||||||||||||||||||||||||||||
Unrealized loss on MSA investments, net of tax of $244 | - | - | - | - | (768 | ) | - | - | (768 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign currency translation, net of tax of $0 | - | - | - | - | 30 | - | 15 | 45 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock compensation expense | - | - | 1,502 | - | - | - | - | 1,502 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Exercise of options | 7,175 | - | 230 | - | - | - | - | 230 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Redemption of options | - | - | (155 | ) | - | - | - | - | (155 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Performance restricted stock units issuance | 4,754 | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Performance restricted stock units redeemed | - | - | (87 | ) | - | - | - | - | (87 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cost of repurchased common stock | (307,207 | ) | - | - | (7,614 | ) | - | - | - | (7,614 | ) | (301,662 | ) | - | - | (8,796 | ) | - | - | - | (8,796 | ) | ||||||||||||||||||||||||||||||||||||||||||
Dividends | - | - | - | - | - | (1,089 | ) | - | (1,089 | ) | - | - | - | - | - | (1,110 | ) | - | (1,110 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Net income | - | - | - | - | - | 11,536 | (239 | ) | 11,297 | - | - | - | - | - | 5,424 | (218 | ) | 5,206 | ||||||||||||||||||||||||||||||||||||||||||||||
Ending balance September 30, 2022 | 17,587,122 | $ | 198 | $ | 112,034 | $ | (75,901 | ) | $ | (3,424 | ) | $ | 96,088 | $ | 1,585 | $ | 130,580 | |||||||||||||||||||||||||||||||||||||||||||||||
Beginning balance July 1, 2021 | 18,923,523 | $ | 196 | $ | 105,460 | $ | (24,277 | ) | $ | 279 | $ | 48,647 | $ | 3,963 | $ | 134,268 | ||||||||||||||||||||||||||||||||||||||||||||||||
Unrealized gain on MSA investments, net of tax of $14 | - | - | - | - | (43 | ) | - | - | (43 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Unrealized gain on derivative instruments, net of tax of $1 | - | - | - | - | 3 | - | - | 3 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign currency translation, net of tax of $0 | - | - | - | - | (362 | ) | - | (275 | ) | (637 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock compensation expense | - | - | 1,752 | - | - | - | - | 1,752 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Exercise of options | 74,660 | 1 | 1,184 | - | - | - | - | 1,185 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cost of repurchased common stock | (125,000 | ) | - | - | (6,395 | ) | - | - | - | (6,395 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition of Recreation Marketing interest | - | - | (1,127 | ) | - | - | - | (1,123 | ) | (2,250 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends | - | - | - | - | - | (1,063 | ) | - | (1,063 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income | - | - | - | - | - | 13,468 | (31 | ) | 13,437 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ending balance September 30, 2021 | 18,873,183 | $ | 197 | $ | 107,269 | $ | (30,672 | ) | $ | (123 | ) | $ | 61,052 | $ | 2,534 | $ | 140,257 | |||||||||||||||||||||||||||||||||||||||||||||||
Ending balance June 30, 2022 | 17,890,441 | $ | 198 | $ | 110,563 | $ | (68,287 | ) | $ | (2,064 | ) | $ | 85,641 | $ | 1,880 | $ | 127,931 |
Accumulated | Accumulated | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common | Additional | Cost of | Other | Non- | Common | Additional | Cost of | Other | Non- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Voting | Stock, | Paid-In | Repurchased | Comprehensive | Accumulated | Controlling | Voting | Stock, | Paid-In | Repurchased | Comprehensive | Accumulated | Controlling | |||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Voting | Capital | Common Stock | Income (Loss) | Earnings | Interest | Total | Shares | Voting | Capital | Common Stock | Income (Loss) | Earnings | Interest | Total | |||||||||||||||||||||||||||||||||||||||||||||||||
Beginning balance January 1, 2023 | 17,485,163 | $ | 198 | $ | 113,242 | $ | (78,093 | ) | $ | (2,393 | ) | $ | 78,691 | $ | 1,735 | $ | 113,380 | |||||||||||||||||||||||||||||||||||||||||||||||
Beginning balance January 1, 2022 | 18,395,476 | $ | 197 | $ | 108,811 | $ | (48,869 | ) | $ | (195 | ) | $ | 71,460 | $ | 2,312 | $ | 133,716 | |||||||||||||||||||||||||||||||||||||||||||||||
Unrealized loss on MSA investments, net of tax of $934 | - | - | - | - | (2,940 | ) | - | - | (2,940 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Unrealized loss on derivative instruments, net of tax of $67 | - | - | - | - | (210 | ) | - | - | (210 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Unrealized gain on MSA investments, net of tax of $60 | - | - | - | - | 188 | - | - | 188 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Unrealized loss on derivative instruments, net of tax of $259 | - | - | - | - | (815 | ) | - | - | (815 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign currency translation, net of tax of $0 | - | - | - | - | (79 | ) | - | (43 | ) | (122 | ) | - | - | - | - | (161 | ) | - | (87 | ) | (248 | ) | ||||||||||||||||||||||||||||||||||||||||||
Stock compensation expense | - | - | 4,103 | - | - | - | - | 4,103 | - | - | 2,836 | - | - | - | - | 2,836 | ||||||||||||||||||||||||||||||||||||||||||||||||
Exercise of options | 35,394 | - | 504 | - | - | - | - | 504 | 29,371 | - | 406 | - | - | - | - | 406 | ||||||||||||||||||||||||||||||||||||||||||||||||
Redemption of options | - | - | (155 | ) | - | - | - | - | (155 | ) | (15,985 | ) | - | (346 | ) | - | - | - | - | (346 | ) | |||||||||||||||||||||||||||||||||||||||||||
Issuance of performance restricted stock units | 75,345 | 1 | (1 | ) | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Redemption of performance restricted stock units | - | - | (1,141 | ) | - | - | - | - | (1,141 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Performance restricted stock units issuance | 140,324 | 1 | 77 | - | - | - | - | 78 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Performance restricted stock units redeemed | (43,294 | ) | - | (995 | ) | - | - | - | - | (995 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Settlement of call options, net of tax of $17 | - | - | 52 | - | - | - | - | 52 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends | - | - | - | - | - | (2,340 | ) | - | (2,340 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income | - | - | - | - | - | 17,522 | (472 | ) | 17,050 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ending balance June 30, 2023 | 17,595,579 | $ | 199 | $ | 115,272 | $ | (78,093 | ) | $ | (3,181 | ) | $ | 93,873 | $ | 1,176 | $ | 129,246 | |||||||||||||||||||||||||||||||||||||||||||||||
Beginning balance January 1, 2022 | 18,395,476 | $ | 197 | $ | 108,811 | $ | (48,869 | ) | $ | (195 | ) | $ | 71,460 | $ | 2,312 | $ | 133,716 | |||||||||||||||||||||||||||||||||||||||||||||||
Unrealized loss on MSA investments, net of tax of $602 | - | - | - | - | (1,894 | ) | - | - | (1,894 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign currency translation, net of tax of $0 | - | - | - | - | 25 | - | 13 | 38 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock compensation expense | - | - | 2,661 | - | - | - | - | 2,661 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Exercise of options | 32,341 | - | 475 | - | - | - | - | 475 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Redemption of options | - | - | (155 | ) | - | - | - | - | (155 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Performance restricted stock units issuance | 74,510 | 1 | (1 | ) | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Performance restricted stock units redeemed | - | - | (1,141 | ) | - | - | - | - | (1,141 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Redemption of restricted stock units | - | - | (87 | ) | - | - | - | - | (87 | ) | - | - | (87 | ) | - | - | - | - | (87 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Cost of repurchased common stock | (919,093 | ) | - | - | (27,032 | ) | - | - | - | (27,032 | ) | (611,886 | ) | - | - | (19,418 | ) | - | - | - | (19,418 | ) | ||||||||||||||||||||||||||||||||||||||||||
Dividends | - | - | - | - | - | (3,330 | ) | - | (3,330 | ) | - | - | - | - | - | (2,241 | ) | - | (2,241 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Net income | - | - | - | - | - | 27,958 | (684 | ) | 27,274 | - | - | - | - | - | 16,422 | (445 | ) | 15,977 | ||||||||||||||||||||||||||||||||||||||||||||||
Ending balance September 30, 2022 | 17,587,122 | $ | 198 | $ | 112,034 | $ | (75,901 | ) | $ | (3,424 | ) | $ | 96,088 | $ | 1,585 | $ | 130,580 | |||||||||||||||||||||||||||||||||||||||||||||||
Beginning balance January 1, 2021 | 19,133,794 | $ | 195 | $ | 102,423 | $ | (10,191 | ) | $ | (2,635 | ) | $ | 23,645 | $ | 4,050 | $ | 117,487 | |||||||||||||||||||||||||||||||||||||||||||||||
Unrealized loss on MSA investments, net of tax of $75 | - | - | - | - | (235 | ) | - | - | (235 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Unrealized gain on derivative instruments, net of tax of $811 | - | - | - | - | 2,628 | - | - | 2,628 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign currency translation, net of tax of $0 | - | - | - | - | 119 | - | 205 | 324 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock compensation expense | - | - | 6,015 | - | - | - | - | 6,015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Exercise of options | 158,420 | 2 | 2,069 | - | - | - | - | 2,071 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Redemption of options | - | - | (2,111 | ) | - | - | - | - | (2,111 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cost of repurchased common stock | (419,031 | ) | - | - | (20,481 | ) | - | - | - | (20,481 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition of Recreation Marketing interest | - | - | (1,127 | ) | - | - | - | (1,123 | ) | (2,250 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends | - | - | - | - | - | (3,198 | ) | - | (3,198 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income | - | - | - | - | - | 40,605 | (598 | ) | 40,007 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ending balance September 30, 2021 | 18,873,183 | $ | 197 | $ | 107,269 | $ | (30,672 | ) | $ | (123 | ) | $ | 61,052 | $ | 2,534 | $ | 140,257 | |||||||||||||||||||||||||||||||||||||||||||||||
Ending balance June 30, 2022 | 17,890,441 | $ | 198 | $ | 110,563 | $ | (68,287 | ) | $ | (2,064 | ) | $ | 85,641 | $ | 1,880 | $ | 127,931 |
● | Level 1 – Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets at the measurement date. |
● | Level 2 – Inputs to the valuation methodology include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in inactive markets, inputs other than quoted prices that are observable for the asset or liability, and inputs that are derived principally from or corroborated by observable market data by correlation or other means. |
● | Level 3 – Unobservable inputs that reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. |
As of June 30, 2023 | As of December 31, 2022 | |||||||||||||||||||||||
Gross | Estimated | Gross | Estimated | |||||||||||||||||||||
Unrealized | Fair | Unrealized | Fair | |||||||||||||||||||||
Cost | Losses | Value | Cost | Losses | Value | |||||||||||||||||||
Cash and cash equivalents | $ | 1,929 | $ | - | $ | 1,929 | $ | 1,929 | $ | - | $ | 1,929 | ||||||||||||
U.S. Governmental agency obligations (unrealized position < 12 months) | 746 | (59 | ) | 687 | 10,226 | (1,251 | ) | 8,975 | ||||||||||||||||
U.S. Governmental agency obligations (unrealized position > 12 months) | 29,398 | (3,785 | ) | 25,613 | 19,918 | (2,842 | ) | 17,076 | ||||||||||||||||
$ | 32,073 | $ | (3,844 | ) | $ | 28,229 | $ | 32,073 | $ | (4,093 | ) | $ | 27,980 |
As of September 30, 2022 | As of December 31, 2021 | |||||||||||||||||||||||||||||||
Gross | Gross | Estimated | Gross | Gross | Estimated | |||||||||||||||||||||||||||
Unrealized | Unrealized | Fair | Unrealized | Unrealized | Fair | |||||||||||||||||||||||||||
Cost | Gains | Losses | Value | Cost | Gains | Losses | Value | |||||||||||||||||||||||||
Cash and cash equivalents | $ | 1,928 | $ | - | $ | - | $ | 1,928 | $ | 12,155 | $ | - | $ | - | $ | 12,155 | ||||||||||||||||
U.S. Governmental agency obligations (unrealized position < 12 months) | 15,712 | - | (1,898 | ) | 13,814 | 19,918 | 4 | (357 | ) | 19,565 | ||||||||||||||||||||||
U.S. Governmental agency obligations (unrealized position > 12 months) | 14,433 | - | (2,330 | ) | 12,103 | - | - | - | - | |||||||||||||||||||||||
$ | 32,073 | $ | - | $ | (4,228 | ) | $ | 27,845 | $ | 32,073 | $ | 4 | $ | (357 | ) | $ | 31,720 |
As of | As of | |||||||
September 30, 2022 | June 30, 2023 | |||||||
Less than one year | $ | - | $ | 2,199 | ||||
One to five years | 7,443 | 9,242 | ||||||
Five to ten years | 20,747 | 16,748 | ||||||
Greater than ten years | 1,955 | 1,955 | ||||||
Total | $ | 30,145 | $ | 30,144 |
Deposits as of | Deposits as of | |||||||||||||||
Sales Year | September 30, 2022 | December 31, 2021 | June 30, 2023 | December 31, 2022 | ||||||||||||
1999 | $ | 211 | $ | 211 | $ | 211 | $ | 211 | ||||||||
2000 | 1,017 | 1,017 | 1,017 | 1,017 | ||||||||||||
2001 | 1,673 | 1,673 | 1,673 | 1,673 | ||||||||||||
2002 | 2,271 | 2,271 | 2,271 | 2,271 | ||||||||||||
2003 | 4,249 | 4,249 | 4,249 | 4,249 | ||||||||||||
2004 | 3,714 | 3,714 | 3,714 | 3,714 | ||||||||||||
2005 | 4,553 | 4,553 | 4,553 | 4,553 | ||||||||||||
2006 | 3,847 | 3,847 | 3,847 | 3,847 | ||||||||||||
2007 | 4,167 | 4,167 | 4,167 | 4,167 | ||||||||||||
2008 | 3,364 | 3,364 | 3,364 | 3,364 | ||||||||||||
2009 | 1,619 | 1,619 | 1,619 | 1,619 | ||||||||||||
2010 | 406 | 406 | 406 | 406 | ||||||||||||
2011 | 193 | 193 | 193 | 193 | ||||||||||||
2012 | 199 | 199 | 199 | 199 | ||||||||||||
2013 | 173 | 173 | 173 | 173 | ||||||||||||
2014 | 143 | 143 | 143 | 143 | ||||||||||||
2015 | 101 | 101 | 101 | 101 | ||||||||||||
2016 | 91 | 91 | 91 | 91 | ||||||||||||
2017 | 82 | 82 | 82 | 82 | ||||||||||||
Total | $ | 32,073 | $ | 32,073 | $ | 32,073 | $ | 32,073 |
Total consideration transferred | $ | 3,462 | ||
Adjustments to consideration transferred: | ||||
Cash acquired | (43 | ) | ||
Accrued consideration | 472 | |||
Adjusted consideration transferred | 3,891 | |||
Assets acquired: | ||||
Working capital (primarily AR and inventory) | 1,334 | |||
Fixed assets and Other long term assets | 27 | |||
Net assets acquired | $ | 1,361 | ||
Goodwill | $ | 2,530 |
September 30, | December 31, | June 30, | December 31, | |||||||||||||
2022 | 2021 | 2023 | 2022 | |||||||||||||
Raw materials and work in process | $ | 7,041 | $ | 6,936 | $ | 5,552 | $ | 7,283 | ||||||||
Leaf tobacco | 46,231 | 35,900 | 55,794 | 43,468 | ||||||||||||
Finished goods - Zig-Zag Products | 39,926 | 25,663 | 42,855 | 42,279 | ||||||||||||
Finished goods - Stoker’s Products | 10,818 | 8,959 | 9,671 | 9,667 | ||||||||||||
Finished goods - NewGen products | 8,447 | 8,591 | ||||||||||||||
Finished goods - Creative Distribution Solutions | 9,410 | 15,431 | ||||||||||||||
Other | 1,465 | 1,558 | 1,774 | 1,787 | ||||||||||||
Inventories | $ | 113,928 | $ | 87,607 | $ | 125,056 | $ | 119,915 |
September 30, | December 31, | June 30, | December 31, | |||||||||||||
2022 | 2021 | 2023 | 2022 | |||||||||||||
Inventory deposits | $ | 2,823 | $ | 12,091 | $ | 4,969 | $ | 6,395 | ||||||||
Insurance deposit | 3,000 | 3,000 | 3,000 | 3,000 | ||||||||||||
Prepaid taxes | 783 | - | 976 | 448 | ||||||||||||
Other | 18,123 | 11,655 | 9,271 | 13,116 | ||||||||||||
Total | $ | 24,729 | $ | 26,746 | $ | 18,216 | $ | 22,959 |
September 30, | December 31, | June 30, | December 31, | |||||||||||||
2022 | 2021 | 2023 | 2022 | |||||||||||||
Land | $ | 22 | $ | 22 | $ | 22 | $ | 22 | ||||||||
Buildings and improvements | 3,096 | 3,096 | 3,096 | 3,096 | ||||||||||||
Leasehold improvements | 5,394 | 5,374 | 5,409 | 5,404 | ||||||||||||
Machinery and equipment | 24,821 | 19,591 | 28,451 | 25,832 | ||||||||||||
Furniture and fixtures | 9,254 | 9,402 | 9,403 | 9,264 | ||||||||||||
Gross property, plant and equipment | 42,587 | 37,485 | 46,381 | 43,618 | ||||||||||||
Accumulated depreciation | (20,075 | ) | (18,835 | ) | (22,253 | ) | (20,830 | ) | ||||||||
Net property, plant and equipment | $ | 22,512 | $ | 18,650 | $ | 24,128 | $ | 22,788 |
September 30, | December 31, | June 30, | December 31, | |||||||||||||
2022 | 2021 | 2023 | 2022 | |||||||||||||
Equity investments | $ | 19,282 | $ | 25,649 | $ | 4,627 | $ | 13,376 | ||||||||
Debt security investment | 9,240 | 8,000 | 7,488 | 7,820 | ||||||||||||
Other | 607 | 1,750 | 6,093 | 1,453 | ||||||||||||
Total | $ | 29,129 | $ | 35,399 | $ | 18,208 | $ | 22,649 |
September 30, | December 31, | June 30, | December 31, | |||||||||||||
2022 | 2021 | 2023 | 2022 | |||||||||||||
Accrued payroll and related items | $ | 7,771 | $ | 6,974 | $ | 4,729 | $ | 7,685 | ||||||||
Customer returns and allowances | 7,108 | 6,497 | 7,444 | 7,291 | ||||||||||||
Taxes payable | 2,984 | 2,053 | 2,008 | 1,867 | ||||||||||||
Lease liabilities | 3,130 | 2,976 | 2,596 | 3,102 | ||||||||||||
Accrued interest | 2,682 | 7,318 | 6,830 | 7,277 | ||||||||||||
Other | 8,938 | 7,119 | 7,291 | 5,779 | ||||||||||||
Total | $ | 32,613 | $ | 32,937 | $ | 30,898 | $ | 33,001 |
September 30, | December 31, | June 30, | December 31, | |||||||||||||
2022 | 2021 | 2023 | 2022 | |||||||||||||
Senior Secured Notes | $ | 250,000 | $ | 250,000 | $ | 250,000 | $ | 250,000 | ||||||||
Convertible Senior Notes | 172,500 | 172,500 | 133,541 | 162,500 | ||||||||||||
Gross notes payable and long-term debt | 422,500 | 422,500 | 383,541 | 412,500 | ||||||||||||
Less deferred finance charges | (6,471 | ) | (8,328 | ) | (4,346 | ) | (5,743 | ) | ||||||||
Notes payable and long-term debt | $ | 416,029 | $ | 414,172 | $ | 379,195 | $ | 406,757 |
On or after February 15, 2023 | 102.813 | % | ||
On or after February 15, 2024 | 101.406 | % | ||
On or after February 15, 2025 and thereafter | 100.000 | % |
Three Months Ended September 30, | Three Months Ended June 30, | |||||||||||||||
2022 | 2021 | 2023 | 2022 | |||||||||||||
Operating lease cost | ||||||||||||||||
Cost of sales | $ | 240 | $ | 225 | $ | 129 | $ | 233 | ||||||||
Selling, general and administrative | 680 | 771 | 503 | 386 | ||||||||||||
Variable lease cost (1) | 235 | 214 | 407 | 211 | ||||||||||||
Short-term lease cost | 6 | 13 | 7 | 11 | ||||||||||||
Total | $ | 1,161 | $ | 1,223 | $ | 1,046 | $ | 841 |
(1) | Variable lease cost includes elements of a contract that do not represent a good or service but for which the lessee is responsible for paying. |
Three Months Ended June 30, | ||||||||
2023 | 2022 | |||||||
Financing lease cost | ||||||||
Selling, general and administrative | $ | 348 | $ | 297 | ||||
Total | $ | 348 | $ | 297 |
Nine Months Ended September 30, | Six Months Ended June 30, | |||||||||||||||
2022 | 2021 | 2023 | 2022 | |||||||||||||
Operating lease cost | ||||||||||||||||
Cost of sales | $ | 700 | $ | 682 | $ | 257 | $ | 460 | ||||||||
Selling, general and administrative | 2,053 | 2,285 | 1,024 | 785 | ||||||||||||
Variable lease cost (1) | 558 | 954 | 632 | 323 | ||||||||||||
Short-term lease cost | 31 | 35 | 13 | 25 | ||||||||||||
Sublease income | - | (60 | ) | |||||||||||||
Total | $ | 3,342 | $ | 3,896 | $ | 1,926 | $ | 1,593 |
Six Months Ended June 30, | ||||||||
2023 | 2022 | |||||||
Financing lease cost | ||||||||
Selling, general and administrative | $ | 686 | $ | 588 | ||||
Total | $ | 686 | $ | 588 |
September 30, | December 31, | June 30, | December 31, | |||||||||||||
2022 | 2021 | 2023 | 2022 | |||||||||||||
Assets: | ||||||||||||||||
Right of use assets | $ | 13,185 | $ | 15,053 | ||||||||||||
Right of use assets - Operating | $ | 9,983 | $ | 10,967 | ||||||||||||
Right of use assets - Financing | 940 | 1,498 | ||||||||||||||
Total lease assets | $ | 13,185 | $ | 15,053 | $ | 10,923 | $ | 12,465 | ||||||||
Liabilities: | ||||||||||||||||
Current lease liabilities (2) | $ | 3,130 | $ | 2,976 | ||||||||||||
Long-term lease liabilities | 11,299 | 13,336 | ||||||||||||||
Current lease liabilities - Operating (2) | $ | 1,947 | $ | 2,007 | ||||||||||||
Current lease liabilities - Financing (2) | 649 | 1,095 | ||||||||||||||
Long-term lease liabilities - Operating | 9,272 | 10,243 | ||||||||||||||
Long-term lease liabilities - Financing | 256 | 350 | ||||||||||||||
Total lease liabilities | $ | 14,429 | $ | 16,312 | $ | 12,124 | $ | 13,695 |
(2) | Reported within accrued liabilities on the balance sheet. |
As of September 30, | ||||||||
2022 | 2021 | |||||||
Weighted-average remaining lease term - operating leases | 6.2 years | 6.8 years | ||||||
Weighted-average discount rate - operating leases | 4.86 | % | 4.93 | % |
September 30, | ||||
2022 | ||||
2022 | $ | 941 | ||
2023 | 3,685 | |||
2024 | 2,551 | |||
2025 | 2,234 | |||
2026 | 2,133 | |||
Years thereafter | 5,344 | |||
Total lease payments | $ | 16,888 | ||
Less: Imputed interest | 2,459 | |||
Present value of lease liabilities | $ | 14,429 |
Weighted | Weighted | Weighted | Weighted | |||||||||||||||||||||
Stock | Average | Average | Stock | Average | Average | |||||||||||||||||||
Option | Exercise | Grant Date | Option | Exercise | Grant Date | |||||||||||||||||||
Shares | Price | Fair Value | Shares | Price | Fair Value | |||||||||||||||||||
Outstanding, December 31, 2020 | 711,060 | $ | 19.58 | $ | 6.42 | |||||||||||||||||||
Granted | 119,500 | 50.93 | 13.58 | |||||||||||||||||||||
Exercised | (202,768 | ) | 10.22 | 6.35 | ||||||||||||||||||||
Forfeited | (7,957 | ) | 33.22 | 9.63 | ||||||||||||||||||||
Outstanding, December 31, 2021 | 619,835 | 28.51 | 8.70 | 619,835 | $ | 28.51 | $ | 8.70 | ||||||||||||||||
Granted | 114,827 | 30.58 | 10.34 | 114,827 | 30.58 | 10.34 | ||||||||||||||||||
Exercised | (40,331 | ) | 12.49 | 4.08 | (40,331 | ) | 12.49 | 4.08 | ||||||||||||||||
Forfeited | (10,779 | ) | 32.20 | 9.25 | (11,117 | ) | 32.60 | 9.35 | ||||||||||||||||
Outstanding, September 30, 2022 | 683,552 | $ | 29.74 | $ | 9.24 | |||||||||||||||||||
Outstanding, December 31, 2022 | 683,214 | $ | 29.74 | $ | 9.24 | |||||||||||||||||||
Granted | 77,519 | 20.71 | 6.45 | |||||||||||||||||||||
Exercised | (29,371 | ) | 13.84 | 4.37 | ||||||||||||||||||||
Forfeited | (62,987 | ) | 26.61 | 9.00 | ||||||||||||||||||||
Outstanding, June 30, 2023 | 668,375 | $ | 29.68 | $ | 9.15 |
February 10, | May 17, | March 7, | March 20, | October 24, | March 18, | February 18, | May 3, | February 10, | May 17, | March 7, | March 20, | October 24, | March 18, | February 18, | May 3, | |||||||||||||||||||||||||||||||||||||||||||||||||
2017 | 2017 | 2018 | 2019 | 2019 | 2020 | 2021 | 2021 | 2017 | 2017 | 2018 | 2019 | 2019 | 2020 | 2021 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||
Number of options granted | 40,000 | 93,819 | 98,100 | 155,780 | 25,000 | 155,000 | 100,000 | 12,000 | 40,000 | 93,819 | 98,100 | 155,780 | 25,000 | 155,000 | 100,000 | 12,000 | ||||||||||||||||||||||||||||||||||||||||||||||||
Options outstanding at September 30, 2022 | 20,000 | 44,983 | 58,067 | 141,784 | 25,000 | 93,248 | 93,516 | 12,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Number exercisable at September 30, 2022 | 20,000 | 44,983 | 58,067 | 141,784 | 25,000 | 61,081 | 39,165 | 4,080 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Options outstanding at June 30, 2023 | 20,000 | 39,983 | 51,567 | 125,984 | 25,000 | 82,068 | 91,287 | 12,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Number exercisable at June 30, 2023 | 20,000 | 39,983 | 51,567 | 125,984 | 25,000 | 82,068 | 64,564 | 8,040 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Exercise price | $ | 13.00 | $ | 15.41 | $ | 21.21 | $ | 47.58 | $ | 20.89 | $ | 14.85 | $ | 51.75 | $ | 47.76 | $ | 13.00 | $ | 15.41 | $ | 21.21 | $ | 47.58 | $ | 20.89 | $ | 14.85 | $ | 51.75 | $ | 47.76 | ||||||||||||||||||||||||||||||||
Remaining lives | 4.37 | 4.63 | 5.44 | 6.47 | 7.07 | 7.47 | 8.39 | 8.59 | 3.62 | 3.88 | 4.69 | 5.73 | 6.32 | 6.72 | 7.64 | 7.85 | ||||||||||||||||||||||||||||||||||||||||||||||||
Risk free interest rate | 1.89 | % | 1.76 | % | 2.65 | % | 2.34 | % | 1.58 | % | 0.79 | % | 0.56 | % | 0.84 | % | 1.89 | % | 1.76 | % | 2.65 | % | 2.34 | % | 1.58 | % | 0.79 | % | 0.56 | % | 0.84 | % | ||||||||||||||||||||||||||||||||
Expected volatility | 27.44 | % | 26.92 | % | 28.76 | % | 30.95 | % | 31.93 | % | 35.72 | % | 28.69 | % | 29.03 | % | 27.44 | % | 26.92 | % | 28.76 | % | 30.95 | % | 31.93 | % | 35.72 | % | 28.69 | % | 29.03 | % | ||||||||||||||||||||||||||||||||
Expected life | 6.000 | 6.000 | 6.000 | 6.000 | 6.000 | 6.000 | 6.000 | 6.000 | 6.000 | 6.000 | 6.000 | 6.000 | 6.000 | 6.000 | 6.000 | 6.000 | ||||||||||||||||||||||||||||||||||||||||||||||||
Dividend yield | - | - | 0.83 | % | 0.42 | % | 0.95 | % | 1.49 | % | 0.55 | % | 0.59 | % | - | - | 0.83 | % | 0.42 | % | 0.95 | % | 1.49 | % | 0.55 | % | 0.59 | % | ||||||||||||||||||||||||||||||||||||
Fair value at grant date | $ | 3.98 | $ | 4.60 | $ | 6.37 | $ | 15.63 | $ | 6.27 | $ | 4.41 | $ | 13.77 | $ | 13.06 | $ | 3.98 | $ | 4.60 | $ | 6.37 | $ | 15.63 | $ | 6.27 | $ | 4.41 | $ | 13.77 | $ | 13.06 |
May 17, | March 14, | April 29, | May 17, | March 14, | April 29, | May 12, | ||||||||||||||||||||||
2021 | 2022 | 2022 | 2021 | 2022 | 2022 | 2023 | ||||||||||||||||||||||
Number of options granted | 7,500 | 100,000 | 14,827 | 7,500 | 100,000 | 14,827 | 77,519 | |||||||||||||||||||||
Options outstanding at September 30, 2022 | 7,500 | 98,248 | 14,827 | |||||||||||||||||||||||||
Number exercisable at September 30, 2022 | 2,550 | - | - | |||||||||||||||||||||||||
Options outstanding at June 30, 2023 | 7,500 | 73,816 | 14,827 | 77,519 | ||||||||||||||||||||||||
Number exercisable at June 30, 2023 | 5,100 | 25,295 | 5,042 | 38,760 | ||||||||||||||||||||||||
Exercise price | $ | 45.05 | $ | 30.46 | $ | 31.39 | $ | 45.05 | $ | 30.46 | $ | 31.39 | $ | 20.71 | ||||||||||||||
Remaining lives | 8.63 | 9.46 | 9.59 | 7.88 | 8.71 | 8.84 | 9.87 | |||||||||||||||||||||
Risk free interest rate | 0.84 | % | 2.10 | % | 2.92 | % | 0.84 | % | 2.10 | % | 2.92 | % | 3.41 | % | ||||||||||||||
Expected volatility | 31.50 | % | 35.33 | % | 35.33 | % | 31.50 | % | 35.33 | % | 35.33 | % | 34.51 | % | ||||||||||||||
Expected life | 6.000 | 6.000 | 6.000 | 6.000 | 6.000 | 6.000 | 5.186 | |||||||||||||||||||||
Dividend yield | 0.63 | % | 1.01 | % | 0.98 | % | 0.63 | % | 1.01 | % | 0.98 | % | 1.61 | % | ||||||||||||||
Fair value at grant date | $ | 13.23 | $ | 10.23 | $ | 11.07 | $ | 13.23 | $ | 10.23 | $ | 11.07 | $ | 6.45 |
March 7, | March 20, | July 19, | March 18, | December 28, | February 18, | March 14, | March 20, | March 18, | December 28, | February 18, | March 14, | May 4, | ||||||||||||||||||||||||||||||||||||||||
2018 | 2019 | 2019 | 2020 | 2020 | 2021 | 2022 | 2019 | 2020 | 2020 | 2021 | 2022 | 2023 | ||||||||||||||||||||||||||||||||||||||||
Number of PRSUs granted | 96,000 | 92,500 | 88,582 | 94,000 | 88,169 | 100,000 | 49,996 | 92,500 | 94,000 | 88,169 | 100,000 | 49,996 | 133,577 | |||||||||||||||||||||||||||||||||||||||
PRSUs outstanding at September 30, 2022 | 89,600 | 77,380 | 21,342 | 85,810 | 58,779 | 91,190 | 48,600 | |||||||||||||||||||||||||||||||||||||||||||||
PRSUs outstanding at June 30, 2023 | 77,380 | 85,410 | 31,040 | 88,490 | 44,437 | 133,577 | ||||||||||||||||||||||||||||||||||||||||||||||
Fair value as of grant date | $ | 21.21 | $ | 47.58 | $ | 52.15 | $ | 14.85 | $ | 46.42 | $ | 51.75 | $ | 30.46 | $ | 47.58 | $ | 14.85 | $ | 46.42 | $ | 51.75 | $ | 30.46 | $ | 22.25 | ||||||||||||||||||||||||||
Remaining lives | 0.25 | 1.25 | 0.25 | 2.24 | 1.25 | 3.25 | 4.25 | 0.50 | 1.50 | 0.50 | 2.50 | 3.50 | 2.75 |
March 14, | March 14, | April 29, | April 29, | March 14, | March 14, | April 29, | May 5, | May 5, | May 8, | |||||||||||||||||||||||||||||||
2022 | 2022 | 2022 | 2022 | 2022 | 2022 | 2022 | 2023 | 2023 | 2023 | |||||||||||||||||||||||||||||||
Number of RSUs granted | 50,004 | 28,726 | 11,393 | 4,522 | 50,004 | 28,726 | 4,522 | 130,873 | 22,472 | 20,101 | ||||||||||||||||||||||||||||||
RSUs outstanding at September 30, 2022 | 48,608 | 28,726 | 11,393 | 4,522 | ||||||||||||||||||||||||||||||||||||
RSUs outstanding at June 30, 2023 | 43,860 | 18,961 | 4,522 | 130,873 | 11,236 | 20,101 | ||||||||||||||||||||||||||||||||||
Fair value as of grant date | $ | 30.46 | $ | 30.46 | $ | 31.39 | $ | 31.39 | $ | 30.46 | $ | 30.46 | $ | 31.39 | $ | 22.25 | $ | 22.25 | $ | 21.77 | ||||||||||||||||||||
Remaining lives | 4.25 | 2.25 | 0.57 | 4.25 | 3.50 | 1.50 | 3.50 | 2.75 | 0.50 | 0.86 |
Three Months Ended September 30, | Three Months Ended June 30, | |||||||||||||||||||||||||||||||||||||||||||||||
2022 | 2021 | 2023 | 2022 | |||||||||||||||||||||||||||||||||||||||||||||
Per | Per | Per | Per | |||||||||||||||||||||||||||||||||||||||||||||
Income | Shares | Share | Income | Shares | Share | Income | Shares | Share | Income | Shares | Share | |||||||||||||||||||||||||||||||||||||
Basic EPS: | ||||||||||||||||||||||||||||||||||||||||||||||||
Numerator | ||||||||||||||||||||||||||||||||||||||||||||||||
Net income attributable to Turning Point Brands, Inc. | $ | 11,536 | $ | 13,468 | $ | 9,925 | $ | 5,424 | ||||||||||||||||||||||||||||||||||||||||
Denominator | ||||||||||||||||||||||||||||||||||||||||||||||||
Weighted average | 17,749,294 | $ | 0.65 | 18,897,974 | $ | 0.71 | 17,584,241 | $ | 0.56 | 18,063,259 | $ | 0.30 | ||||||||||||||||||||||||||||||||||||
Diluted EPS: | ||||||||||||||||||||||||||||||||||||||||||||||||
Numerator | ||||||||||||||||||||||||||||||||||||||||||||||||
Net income attributable to Turning Point Brands, Inc. | $ | 11,536 | $ | 13,468 | $ | 9,925 | $ | 5,424 | ||||||||||||||||||||||||||||||||||||||||
Interest expense related to Convertible Senior Notes, net of tax | 1,054 | 1,054 | 846 | 1,054 | ||||||||||||||||||||||||||||||||||||||||||||
Diluted net income attributable to Turning Point Brands. Inc. | $ | 12,590 | $ | 14,522 | $ | 10,771 | $ | 6,478 | ||||||||||||||||||||||||||||||||||||||||
Denominator | ||||||||||||||||||||||||||||||||||||||||||||||||
Basic weighted average | 17,749,294 | 18,897,974 | 17,584,241 | 18,063,259 | ||||||||||||||||||||||||||||||||||||||||||||
Convertible Senior Notes | 3,213,589 | 3,207,293 | 2,625,714 | 3,211,484 | ||||||||||||||||||||||||||||||||||||||||||||
Stock options | 139,123 | 259,540 | ||||||||||||||||||||||||||||||||||||||||||||||
Stock options and restricted stock units | 199,988 | 168,536 | ||||||||||||||||||||||||||||||||||||||||||||||
21,102,006 | $ | 0.60 | 22,364,807 | $ | 0.65 | 20,409,943 | $ | 0.53 | 21,443,279 | $ | 0.30 |
Nine Months Ended September 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||||||||||||||||||
2022 | 2021 | 2023 | 2022 | |||||||||||||||||||||||||||||||||||||||||||||
Per | Per | Per | Per | |||||||||||||||||||||||||||||||||||||||||||||
Income | Shares | Share | Income | Shares | Share | Income | Shares | Share | Income | Shares | Share | |||||||||||||||||||||||||||||||||||||
Basic EPS: | ||||||||||||||||||||||||||||||||||||||||||||||||
Numerator | ||||||||||||||||||||||||||||||||||||||||||||||||
Net income attributable to Turning Point Brands, Inc. | $ | 27,958 | $ | 40,605 | $ | 17,522 | $ | 16,422 | ||||||||||||||||||||||||||||||||||||||||
Denominator | ||||||||||||||||||||||||||||||||||||||||||||||||
Weighted average | 18,021,554 | $ | 1.55 | 18,988,435 | $ | 2.14 | 17,556,030 | $ | 1.00 | 18,159,940 | $ | 0.90 | ||||||||||||||||||||||||||||||||||||
Diluted EPS: | ||||||||||||||||||||||||||||||||||||||||||||||||
Numerator | ||||||||||||||||||||||||||||||||||||||||||||||||
Net income attributable to Turning Point Brands, Inc. | $ | 27,958 | $ | 40,605 | $ | 17,522 | $ | 16,422 | ||||||||||||||||||||||||||||||||||||||||
Interest expense related to Convertible Senior Notes | 3,162 | 3,162 | 1,800 | 2,108 | ||||||||||||||||||||||||||||||||||||||||||||
Diluted net income attributable to Turning Point Brands. Inc. | $ | 31,120 | $ | 43,767 | $ | 19,322 | $ | 18,530 | ||||||||||||||||||||||||||||||||||||||||
Denominator | ||||||||||||||||||||||||||||||||||||||||||||||||
Basic weighted average | 18,021,554 | 18,988,435 | 17,556,030 | 18,159,940 | ||||||||||||||||||||||||||||||||||||||||||||
Convertible Senior Notes | 3,213,589 | 3,207,293 | 2,799,434 | 3,211,484 | ||||||||||||||||||||||||||||||||||||||||||||
Stock options | 166,342 | 268,814 | ||||||||||||||||||||||||||||||||||||||||||||||
Stock options and restricted stock units | 183,483 | 231,689 | ||||||||||||||||||||||||||||||||||||||||||||||
21,401,485 | $ | 1.45 | 22,464,542 | $ | 1.95 | 20,538,947 | $ | 0.94 | 21,603,113 | $ | 0.86 |
Three Months Ended June 30, | ||||||||||||||||
Three Months Ended September 30, | 2023 | 2022 | ||||||||||||||
2022 | 2021 | |||||||||||||||
Net sales | ||||||||||||||||
Zig-Zag products | $ | 52,061 | $ | 42,234 | $ | 46,722 | $ | 46,226 | ||||||||
Stoker’s products | 33,525 | 30,472 | 36,056 | 33,588 | ||||||||||||
NewGen products | 22,216 | 37,198 | ||||||||||||||
Total Zig-Zag and Stoker’s products | $ | 82,778 | $ | 79,814 | ||||||||||||
Creative Distribution Solutions | 22,817 | 23,111 | ||||||||||||||
Total | $ | 107,802 | $ | 109,904 | $ | 105,595 | $ | 102,925 | ||||||||
Gross profit | ||||||||||||||||
Zig-Zag products | $ | 28,035 | $ | 23,703 | $ | 26,422 | $ | 26,430 | ||||||||
Stoker’s products | 18,279 | 17,104 | 19,968 | 18,079 | ||||||||||||
NewGen products | 6,398 | 13,462 | ||||||||||||||
Total Zig-Zag and Stoker’s products | $ | 46,390 | $ | 44,509 | ||||||||||||
Creative Distribution Solutions | 6,088 | 6,960 | ||||||||||||||
Total | $ | 52,712 | $ | 54,269 | $ | 52,478 | $ | 51,469 | ||||||||
Operating income (loss) | ||||||||||||||||
Zig-Zag products | $ | 18,740 | $ | 17,122 | $ | 17,000 | $ | 18,503 | ||||||||
Stoker’s products | 13,653 | 13,305 | 15,110 | 13,378 | ||||||||||||
NewGen products | 142 | 2,027 | ||||||||||||||
Corporate unallocated (1)(2) | (12,714 | ) | (10,079 | ) | (12,025 | ) | (14,287 | ) | ||||||||
Total Zig-Zag and Stoker’s products | $ | 20,085 | $ | 17,594 | ||||||||||||
Creative Distribution Solutions | 460 | 552 | ||||||||||||||
Total | $ | 19,821 | $ | 22,375 | $ | 20,545 | $ | 18,146 | ||||||||
Interest expense, net | 4,802 | 5,397 | 4,019 | 5,144 | ||||||||||||
Investment income | (75 | ) | (157 | ) | ||||||||||||
Investment loss | 4,080 | 6,227 | ||||||||||||||
Gain on extinguishment of debt | - | (375 | ) | (600 | ) | - | ||||||||||
Income before income taxes | $ | 15,094 | $ | 17,510 | $ | 13,046 | $ | 6,775 | ||||||||
Capital expenditures | ||||||||||||||||
Zig-Zag products | $ | 29 | $ | 12 | $ | 112 | $ | 2,237 | ||||||||
Stoker’s products | 940 | 2,209 | 446 | 670 | ||||||||||||
NewGen products | - | 2 | ||||||||||||||
Total Zig-Zag and Stoker’s products | $ | 558 | $ | 2,907 | ||||||||||||
Creative Distribution Solutions | - | - | ||||||||||||||
Total | $ | 969 | $ | 2,223 | $ | 558 | $ | 2,907 | ||||||||
Depreciation and amortization | ||||||||||||||||
Zig-Zag products | $ | 124 | $ | 90 | $ | 267 | $ | 93 | ||||||||
Stoker’s products | 738 | 638 | 709 | 770 | ||||||||||||
NewGen products | 453 | 516 | ||||||||||||||
Total Zig-Zag and Stoker’s products | $ | 976 | $ | 863 | ||||||||||||
Creative Distribution Solutions | 554 | 472 | ||||||||||||||
Total | $ | 1,315 | $ | 1,244 | $ | 1,530 | $ | 1,335 |
(1) | Includes corporate costs that are not allocated to any of the three reportable segments. |
(2) | Includes costs related to PMTA of |
Six Months Ended June 30, | ||||||||||||||||
Nine Months Ended September 30, | 2023 | 2022 | ||||||||||||||
2022 | 2021 | |||||||||||||||
Net sales | ||||||||||||||||
Zig-Zag products | $ | 143,959 | $ | 130,440 | $ | 88,609 | $ | 91,898 | ||||||||
Stoker’s products | 98,816 | 93,096 | 69,718 | 65,291 | ||||||||||||
NewGen products | 68,846 | 116,652 | ||||||||||||||
Total Zig-Zag and Stoker’s products | $ | 158,327 | $ | 157,189 | ||||||||||||
Creative Distribution Solutions | 48,224 | 46,630 | ||||||||||||||
Total | $ | 311,621 | $ | 340,188 | $ | 206,551 | $ | 203,819 | ||||||||
Gross profit | ||||||||||||||||
Zig-Zag products | $ | 80,808 | $ | 76,342 | $ | 48,812 | $ | 52,773 | ||||||||
Stoker’s products | 54,044 | 51,142 | 39,433 | 35,765 | ||||||||||||
NewGen products | 21,123 | 40,019 | ||||||||||||||
Total Zig-Zag and Stoker’s products | $ | 88,245 | $ | 88,538 | ||||||||||||
Creative Distribution Solutions | 12,850 | 14,725 | ||||||||||||||
Total | $ | 155,975 | $ | 167,503 | $ | 101,095 | $ | 103,263 | ||||||||
Operating income (loss) | ||||||||||||||||
Zig-Zag products | $ | 55,980 | $ | 57,897 | $ | 30,641 | $ | 37,240 | ||||||||
Stoker’s products | 40,536 | 39,386 | 29,672 | 26,883 | ||||||||||||
NewGen products | 1,372 | 5,690 | ||||||||||||||
Corporate unallocated (1)(2) | (40,692 | ) | (31,370 | ) | (22,647 | ) | (27,978 | ) | ||||||||
Total Zig-Zag and Stoker’s products | $ | 37,666 | $ | 36,145 | ||||||||||||
Creative Distribution Solutions | 721 | 1,230 | ||||||||||||||
Total | $ | 57,196 | $ | 71,603 | $ | 38,387 | $ | 37,375 | ||||||||
Interest expense, net | 15,142 | 15,406 | 8,029 | 10,340 | ||||||||||||
Investment loss (income) | 6,074 | (292 | ) | |||||||||||||
Loss on extinguishment of debt | - | 5,331 | ||||||||||||||
Investment loss | 8,879 | 6,149 | ||||||||||||||
Gain on extinguishment of debt | (1,377 | ) | - | |||||||||||||
Income before income taxes | $ | 35,980 | $ | 51,158 | $ | 22,856 | $ | 20,886 | ||||||||
Capital expenditures | ||||||||||||||||
Zig-Zag products | $ | 4,588 | $ | 110 | $ | 1,085 | $ | 4,560 | ||||||||
Stoker’s products | 2,074 | 4,226 | 1,908 | 1,134 | ||||||||||||
NewGen products | - | 55 | ||||||||||||||
Total Zig-Zag and Stoker’s products | $ | 2,993 | $ | 5,694 | ||||||||||||
Creative Distribution Solutions | - | - | ||||||||||||||
Total | $ | 6,662 | $ | 4,391 | $ | 2,993 | $ | 5,694 | ||||||||
Depreciation and amortization | ||||||||||||||||
Zig-Zag products | $ | 309 | $ | 297 | $ | 534 | $ | 185 | ||||||||
Stoker’s products | 2,275 | 1,901 | 1,415 | 1,537 | ||||||||||||
NewGen products | 1,400 | 1,546 | ||||||||||||||
Total Zig-Zag and Stoker’s products | $ | 1,949 | $ | 1,722 | ||||||||||||
Creative Distribution Solutions | 1,128 | 947 | ||||||||||||||
Total | $ | 3,984 | $ | 3,744 | $ | 3,077 | $ | 2,669 |
(1) | Includes corporate costs that are not allocated to any of the three reportable |
(2) | Includes costs related to PMTA of $ |
September 30, | December 31, | June 30, | December 31, | |||||||||||||
2022 | 2021 | 2023 | 2022 | |||||||||||||
Assets | ||||||||||||||||
Zig-Zag products | $ | 232,677 | $ | 227,554 | $ | 191,672 | $ | 225,893 | ||||||||
Stoker’s products | 181,333 | 142,334 | 168,326 | 151,241 | ||||||||||||
NewGen products | 54,818 | 72,746 | ||||||||||||||
Corporate unallocated (1) | 130,961 | 158,926 | 167,190 | 155,348 | ||||||||||||
Total Zig-Zag and Stoker’s products | $ | 527,188 | $ | 532,482 | ||||||||||||
Creative Distribution Solutions | 32,486 | 39,624 | ||||||||||||||
Total | $ | 599,789 | $ | 601,560 | $ | 559,674 | $ | 572,106 |
(1) | Includes assets not assigned to the three reportable segments. All goodwill has been allocated to the reportable segments. |
NewGen Segment | Creative Distribution Solutions Segment | |||||||||||||||
Three Months Ended | Three Months Ended | |||||||||||||||
September 30, | June 30, | |||||||||||||||
2022 | 2021 | 2023 | 2022 | |||||||||||||
Business to Business | $ | 18,226 | $ | 27,169 | $ | 20,038 | $ | 17,674 | ||||||||
Business to Consumer - Online | 3,884 | 9,959 | 2,525 | 5,336 | ||||||||||||
Other | 106 | 70 | 254 | 101 | ||||||||||||
Total | $ | 22,216 | $ | 37,198 | $ | 22,817 | $ | 23,111 |
NewGen Segment | Creative Distribution Solutions Segment | |||||||||||||||
Nine Months Ended | Six Months Ended | |||||||||||||||
September 30, | June 30, | |||||||||||||||
2022 | 2021 | 2023 | 2022 | |||||||||||||
Business to Business | $ | 55,024 | $ | 85,141 | $ | 42,531 | $ | 36,798 | ||||||||
Business to Consumer - Online | 13,453 | 31,255 | 5,335 | 9,569 | ||||||||||||
Other | 369 | 256 | 358 | 263 | ||||||||||||
Total | $ | 68,846 | $ | 116,652 | $ | 48,224 | $ | 46,630 |
Three Months Ended | Three Months Ended | |||||||||||||||
September 30, | June 30, | |||||||||||||||
2022 | 2021 | 2023 | 2022 | |||||||||||||
Domestic | $ | 98,173 | $ | 102,255 | $ | 98,121 | $ | 95,442 | ||||||||
Foreign | 9,629 | 7,649 | 7,474 | 7,483 | ||||||||||||
Total | $ | 107,802 | $ | 109,904 | $ | 105,595 | $ | 102,925 |
Nine Months Ended | Six Months Ended | |||||||||||||||
September 30, | June 30, | |||||||||||||||
2022 | 2021 | 2023 | 2022 | |||||||||||||
Domestic | $ | 287,381 | $ | 318,166 | $ | 191,981 | $ | 189,208 | ||||||||
Foreign | 24,240 | 22,022 | 14,570 | 14,611 | ||||||||||||
Total | $ | 311,621 | $ | 340,188 | $ | 206,551 | $ | 203,819 |
Three Months Ended June 30 | ||||||||||||||||||||||||
2023 | 2022 | |||||||||||||||||||||||
Company and Restricted Subsidiaries | Unrestricted Subsidiaries | Consolidated | Company and Restricted Subsidiaries | Unrestricted Subsidiaries | Consolidated | |||||||||||||||||||
Net sales | $ | 82,778 | $ | 22,817 | $ | 105,595 | $ | 79,814 | $ | 23,111 | $ | 102,925 | ||||||||||||
Cost of sales | 36,388 | 16,729 | 53,117 | 35,305 | 16,151 | 51,456 | ||||||||||||||||||
Gross profit | 46,390 | 6,088 | 52,478 | 44,509 | 6,960 | 51,469 | ||||||||||||||||||
Selling, general, and administrative expenses | 26,305 | 5,628 | 31,933 | 26,915 | 6,408 | 33,323 | ||||||||||||||||||
Operating income | 20,085 | 460 | 20,545 | 17,594 | 552 | 18,146 | ||||||||||||||||||
Interest expense, net | 4,019 | - | 4,019 | 5,144 | - | 5,144 | ||||||||||||||||||
Investment loss | 4,080 | - | 4,080 | 6,227 | - | 6,227 | ||||||||||||||||||
Gain on extinguishment of debt | (600 | ) | - | (600 | ) | - | - | - | ||||||||||||||||
Income before income taxes | 12,586 | 460 | 13,046 | 6,223 | 552 | 6,775 | ||||||||||||||||||
Income tax expense | 3,220 | 118 | 3,338 | 1,441 | 128 | 1,569 | ||||||||||||||||||
Consolidated net income | 9,366 | 342 | 9,708 | 4,782 | 424 | 5,206 | ||||||||||||||||||
Net loss attributable to non-controlling interest | (217 | ) | - | (217 | ) | (218 | ) | - | (218 | ) | ||||||||||||||
Net income attributable to Turning Point Brands, Inc. | $ | 9,583 | $ | 342 | $ | 9,925 | $ | 5,000 | $ | 424 | $ | 5,424 |
Six Months Ended June 30 | ||||||||||||||||||||||||
2023 | 2022 | |||||||||||||||||||||||
Company and Restricted Subsidiaries | Unrestricted Subsidiaries | Consolidated | Company and Restricted Subsidiaries | Unrestricted Subsidiaries | Consolidated | |||||||||||||||||||
Net sales | $ | 158,327 | $ | 48,224 | $ | 206,551 | $ | 157,189 | $ | 46,630 | $ | 203,819 | ||||||||||||
Cost of sales | 70,082 | 35,374 | 105,456 | 68,651 | 31,905 | 100,556 | ||||||||||||||||||
Gross profit | 88,245 | 12,850 | 101,095 | 88,538 | 14,725 | 103,263 | ||||||||||||||||||
Selling, general, and administrative expenses | 50,579 | 12,129 | 62,708 | 52,393 | 13,495 | 65,888 | ||||||||||||||||||
Operating income | 37,666 | 721 | 38,387 | 36,145 | 1,230 | 37,375 | ||||||||||||||||||
Interest expense, net | 8,029 | - | 8,029 | 10,340 | - | 10,340 | ||||||||||||||||||
Investment loss | 8,879 | - | 8,879 | 6,149 | - | 6,149 | ||||||||||||||||||
Gain on extinguishment of debt | (1,377 | ) | - | (1,377 | ) | - | - | - | ||||||||||||||||
Income before income taxes | 22,135 | 721 | 22,856 | 19,656 | 1,230 | 20,886 | ||||||||||||||||||
Income tax expense | 5,623 | 183 | 5,806 | 4,620 | 289 | 4,909 | ||||||||||||||||||
Consolidated net income | 16,512 | 538 | 17,050 | 15,036 | 941 | 15,977 | ||||||||||||||||||
Net loss attributable to non-controlling interest | (472 | ) | - | (472 | ) | (445 | ) | - | (445 | ) | ||||||||||||||
Net income attributable to Turning Point Brands, Inc. | $ | 16,984 | $ | 538 | $ | 17,522 | $ | 15,481 | $ | 941 | $ | 16,422 |
ASSETS | Company and Restricted Subsidiaries | Unrestricted Subsidiaries | Eliminations | Consolidated | ||||||||||||
Current assets: | ||||||||||||||||
Cash | $ | 96,701 | $ | 3,806 | $ | - | $ | 100,507 | ||||||||
Accounts receivable, net | 7,550 | 370 | - | 7,920 | ||||||||||||
Inventories | 115,646 | 9,410 | - | 125,056 | ||||||||||||
Other current assets | 15,103 | 3,113 | - | 18,216 | ||||||||||||
Total current assets | 235,000 | 16,699 | - | 251,699 | ||||||||||||
Property, plant, and equipment, net | 23,808 | 320 | - | 24,128 | ||||||||||||
Deferred income taxes | 7,966 | - | - | 7,966 | ||||||||||||
Right of use assets | 10,888 | 35 | - | 10,923 | ||||||||||||
Deferred financing costs, net | 229 | - | - | 229 | ||||||||||||
Goodwill | 136,244 | - | - | 136,244 | ||||||||||||
Other intangible assets, net | 66,646 | 15,402 | - | 82,048 | ||||||||||||
Master Settlement Agreement (MSA) escrow deposits | 28,229 | - | - | 28,229 | ||||||||||||
Other assets | 18,178 | 30 | - | 18,208 | ||||||||||||
Investment in unrestricted subsidiaries | 51,836 | - | (51,836 | ) | - | |||||||||||
Total assets | $ | 579,024 | $ | 32,486 | $ | (51,836 | ) | $ | 559,674 | |||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||
Current liabilities: | ||||||||||||||||
Accounts payable | $ | 9,449 | $ | 1,353 | $ | - | $ | 10,802 | ||||||||
Accrued liabilities | 29,018 | 1,880 | - | 30,898 | ||||||||||||
Other current liabilities | 5 | - | - | 5 | ||||||||||||
Total current liabilities | 38,472 | 3,233 | - | 41,705 | ||||||||||||
Notes payable and long-term debt | 379,195 | - | - | 379,195 | ||||||||||||
Lease liabilities | 9,528 | - | - | 9,528 | ||||||||||||
Total liabilities | 427,195 | 3,233 | - | 430,428 | ||||||||||||
Commitments and contingencies | ||||||||||||||||
Stockholders’ equity: | ||||||||||||||||
Total Turning Point Brands Inc. Stockholders’ Equity/Net parent investment in unrestricted subsidiaries | 150,653 | 29,253 | (51,836 | ) | 128,070 | |||||||||||
Non-controlling interest | 1,176 | - | - | 1,176 | ||||||||||||
Total stockholders’ equity | 151,829 | 29,253 | (51,836 | ) | 129,246 | |||||||||||
Total liabilities and stockholders’ equity | $ | 579,024 | $ | 32,486 | $ | (51,836 | ) | $ | 559,674 |
ASSETS | Company and Restricted Subsidiaries | Unrestricted Subsidiaries | Eliminations | Consolidated | ||||||||||||
Current assets: | ||||||||||||||||
Cash | $ | 103,990 | $ | 2,413 | $ | - | $ | 106,403 | ||||||||
Accounts receivable, net | 7,374 | 1,003 | - | 8,377 | ||||||||||||
Inventories | 104,883 | 15,032 | - | 119,915 | ||||||||||||
Other current assets | 18,828 | 4,131 | - | 22,959 | ||||||||||||
Total current assets | 235,075 | 22,579 | - | 257,654 | ||||||||||||
Property, plant, and equipment, net | 22,261 | 527 | - | 22,788 | ||||||||||||
Deferred income taxes | 8,443 | - | - | 8,443 | ||||||||||||
Right of use assets | 12,328 | 137 | - | 12,465 | ||||||||||||
Deferred financing costs, net | 282 | - | - | 282 | ||||||||||||
Goodwill | 136,253 | - | - | 136,253 | ||||||||||||
Other intangible assets, net | 67,241 | 16,351 | - | 83,592 | ||||||||||||
Master Settlement Agreement (MSA) escrow deposits | 27,980 | - | - | 27,980 | ||||||||||||
Other assets | 22,619 | 30 | - | 22,649 | ||||||||||||
Investment in unrestricted subsidiaries | 60,120 | - | (60,120 | ) | - | |||||||||||
Total assets | $ | 592,602 | $ | 39,624 | $ | (60,120 | ) | $ | 572,106 | |||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||
Current liabilities: | ||||||||||||||||
Accounts payable | $ | 7,628 | $ | 727 | $ | - | $ | 8,355 | ||||||||
Accrued liabilities | 31,118 | 1,883 | - | 33,001 | ||||||||||||
Other current liabilities | 20 | - | - | 20 | ||||||||||||
Total current liabilities | 38,766 | 2,610 | - | 41,376 | ||||||||||||
Notes payable and long-term debt | 406,757 | - | - | 406,757 | ||||||||||||
Lease liabilities | 10,593 | - | - | 10,593 | ||||||||||||
Total liabilities | 456,116 | 2,610 | - | 458,726 | ||||||||||||
Commitments and contingencies | ||||||||||||||||
Stockholders’ equity: | ||||||||||||||||
Total Turning Point Brands Inc. Stockholders’ Equity/Net parent investment in unrestricted subsidiaries | 134,751 | 37,014 | (60,120 | ) | 111,645 | |||||||||||
Non-controlling interest | 1,735 | - | - | 1,735 | ||||||||||||
Total stockholders’ equity | 136,486 | 37,014 | (60,120 | ) | 113,380 | |||||||||||
Total liabilities and stockholders’ equity | $ | 592,602 | $ | 39,624 | $ | (60,120 | ) | $ | 572,106 |
Three Months Ended September 30, | Three Months Ended June 30, | |||||||||||||||||||||||
2022 | 2021 | % Change | 2023 | 2022 | % Change | |||||||||||||||||||
Consolidated Results of Operations Data: | ||||||||||||||||||||||||
Net sales | ||||||||||||||||||||||||
Zig-Zag products | $ | 52,061 | $ | 42,234 | 23.3 | % | $ | 46,722 | $ | 46,226 | 1.1 | % | ||||||||||||
Stoker's products | 33,525 | 30,472 | 10.0 | % | ||||||||||||||||||||
NewGen products | 22,216 | 37,198 | -40.3 | % | ||||||||||||||||||||
Stoker’s products | 36,056 | 33,588 | 7.3 | % | ||||||||||||||||||||
Total Zig-Zag and Stoker’s products | 82,778 | 79,814 | 3.7 | % | ||||||||||||||||||||
Creative Distribution Solutions | 22,817 | 23,111 | -1.3 | % | ||||||||||||||||||||
Total net sales | 107,802 | 109,904 | -1.9 | % | 105,595 | 102,925 | 2.6 | % | ||||||||||||||||
Cost of sales | 55,090 | 55,635 | -1.0 | % | 53,117 | 51,456 | 3.2 | % | ||||||||||||||||
Gross profit | ||||||||||||||||||||||||
Zig-Zag products | 28,035 | 23,703 | 18.3 | % | 26,422 | 26,430 | 0.0 | % | ||||||||||||||||
Stoker's products | 18,279 | 17,104 | 6.9 | % | ||||||||||||||||||||
NewGen products | 6,398 | 13,462 | -52.5 | % | ||||||||||||||||||||
Stoker’s products | 19,968 | 18,079 | 10.4 | % | ||||||||||||||||||||
Total Zig-Zag and Stoker’s products | 46,390 | 44,509 | 4.2 | % | ||||||||||||||||||||
Creative Distribution Solutions | 6,088 | 6,960 | -12.5 | % | ||||||||||||||||||||
Total gross profit | 52,712 | 54,269 | -2.9 | % | 52,478 | 51,469 | 2.0 | % | ||||||||||||||||
Selling, general, and administrative expenses | 32,891 | 31,894 | 3.1 | % | 31,933 | 33,323 | -4.2 | % | ||||||||||||||||
Operating income | 19,821 | 22,375 | -11.4 | % | 20,545 | 18,146 | 13.2 | % | ||||||||||||||||
Interest expense, net | 4,802 | 5,397 | -11.0 | % | 4,019 | 5,144 | -21.9 | % | ||||||||||||||||
Investment income | (75 | ) | (157 | ) | -52.2 | % | ||||||||||||||||||
Investment loss | 4,080 | 6,227 | -34.5 | % | ||||||||||||||||||||
Gain on extinguishment of debt | - | (375 | ) | -100.0 | % | (600 | ) | - | NM | |||||||||||||||
Income before income taxes | 15,094 | 17,510 | -13.8 | % | 13,046 | 6,775 | 92.6 | % | ||||||||||||||||
Income tax expense | 3,797 | 4,073 | -6.8 | % | 3,338 | 1,569 | 112.7 | % | ||||||||||||||||
Consolidated net income | 11,297 | 13,437 | -15.9 | % | 9,708 | 5,206 | 86.5 | % | ||||||||||||||||
Net loss attributable to non-controlling interest | (239 | ) | (31 | ) | 671.0 | % | (217 | ) | (218 | ) | -0.5 | % | ||||||||||||
Net income attributable to Turning Point Brands, Inc. | $ | 11,536 | $ | 13,468 | -14.3 | % | $ | 9,925 | $ | 5,424 | 83.0 | % |
Nine Months Ended September 30, | Six Months Ended June 30, | |||||||||||||||||||||||
2022 | 2021 | % Change | 2023 | 2022 | % Change | |||||||||||||||||||
Consolidated Results of Operations Data: | ||||||||||||||||||||||||
Net sales | ||||||||||||||||||||||||
Zig-Zag products | $ | 143,959 | $ | 130,440 | 10.4 | % | $ | 88,609 | $ | 91,898 | -3.6 | % | ||||||||||||
Stoker's products | 98,816 | 93,096 | 6.1 | % | ||||||||||||||||||||
NewGen products | 68,846 | 116,652 | -41.0 | % | ||||||||||||||||||||
Stoker’s products | 69,718 | 65,291 | 6.8 | % | ||||||||||||||||||||
Total Zig-Zag and Stoker’s products | 158,327 | 157,189 | 0.7 | % | ||||||||||||||||||||
Creative Distribution Solutions | 48,224 | 46,630 | 3.4 | % | ||||||||||||||||||||
Total net sales | 311,621 | 340,188 | -8.4 | % | 206,551 | 203,819 | 1.3 | % | ||||||||||||||||
Cost of sales | 155,646 | 172,685 | -9.9 | % | 105,456 | 100,556 | 4.9 | % | ||||||||||||||||
Gross profit | ||||||||||||||||||||||||
Zig-Zag products | 80,808 | 76,342 | 5.8 | % | 48,812 | 52,773 | -7.5 | % | ||||||||||||||||
Stoker's products | 54,044 | 51,142 | 5.7 | % | ||||||||||||||||||||
NewGen products | 21,123 | 40,019 | -47.2 | % | ||||||||||||||||||||
Stoker’s products | 39,433 | 35,765 | 10.3 | % | ||||||||||||||||||||
Total Zig-Zag and Stoker’s products | 88,245 | 88,538 | -0.3 | % | ||||||||||||||||||||
Creative Distribution Solutions | 12,850 | 14,725 | -12.7 | % | ||||||||||||||||||||
Total gross profit | 155,975 | 167,503 | -6.9 | % | 101,095 | 103,263 | -2.1 | % | ||||||||||||||||
Selling, general, and administrative expenses | 98,779 | 95,900 | 3.0 | % | 62,708 | 65,888 | -4.8 | % | ||||||||||||||||
Operating income | 57,196 | 71,603 | -20.1 | % | 38,387 | 37,375 | 2.7 | % | ||||||||||||||||
Interest expense, net | 15,142 | 15,406 | -1.7 | % | 8,029 | 10,340 | -22.4 | % | ||||||||||||||||
Investment loss (income) | 6,074 | (292 | ) | -2180.1 | % | |||||||||||||||||||
Loss on extinguishment of debt | - | 5,331 | -100.0 | % | ||||||||||||||||||||
Investment loss | 8,879 | 6,149 | 44.4 | % | ||||||||||||||||||||
Gain on extinguishment of debt | (1,377 | ) | - | NM | ||||||||||||||||||||
Income before income taxes | 35,980 | 51,158 | -29.7 | % | 22,856 | 20,886 | 9.4 | % | ||||||||||||||||
Income tax expense | 8,706 | 11,151 | -21.9 | % | 5,806 | 4,909 | 18.3 | % | ||||||||||||||||
Consolidated net income | 27,274 | 40,007 | -31.8 | % | 17,050 | 15,977 | 6.7 | % | ||||||||||||||||
Net loss attributable to non-controlling interest | (684 | ) | (598 | ) | 14.4 | % | (472 | ) | (445 | ) | 6.1 | % | ||||||||||||
Net income attributable to Turning Point Brands, Inc. | $ | 27,958 | $ | 40,605 | -31.1 | % | $ | 17,522 | $ | 16,422 | 6.7 | % |
Three Months Ended | ||||||||||||||||
(in thousands) | September 30, | Three Months Ended June 30, | ||||||||||||||
2022 | 2021 | 2023 | 2022 | |||||||||||||
Net income attributable to Turning Point Brands, Inc. | $ | 11,536 | $ | 13,468 | $ | 9,925 | $ | 5,424 | ||||||||
Add: | ||||||||||||||||
Interest expense, net | 4,802 | 5,397 | 4,019 | 5,144 | ||||||||||||
Gain on extinguishment of debt | - | (375 | ) | (600 | ) | - | ||||||||||
Income tax expense | 3,797 | 4,073 | 3,338 | 1,569 | ||||||||||||
Depreciation expense | 861 | 767 | 759 | 879 | ||||||||||||
Amortization expense | 454 | 477 | 771 | 456 | ||||||||||||
EBITDA | $ | 21,450 | $ | 23,807 | $ | 18,212 | $ | 13,472 | ||||||||
Components of Adjusted EBITDA | ||||||||||||||||
Corporate restructuring (a) | 17 | - | - | 270 | ||||||||||||
ERP/CRM (b) | 435 | - | 138 | 861 | ||||||||||||
Stock options, restricted stock, and incentives expense (c) | 1,442 | 1,752 | 2,093 | 1,502 | ||||||||||||
Transactional expenses (d) | - | (232 | ) | 82 | 364 | |||||||||||
FDA PMTA (e) | 1,169 | 960 | 662 | 1,957 | ||||||||||||
Non-cash asset impairment (f) | 4,092 | 6,300 | ||||||||||||||
Adjusted EBITDA | $ | 24,513 | $ | 26,287 | $ | 25,279 | $ | 24,726 |
(a) | Represents costs associated with corporate 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 |
(f) | Represents impairment of investment assets. |
Nine Months Ended | ||||||||||||||||
(in thousands) | September 30, | Six Months Ended June 30, | ||||||||||||||
2022 | 2021 | 2023 | 2022 | |||||||||||||
Net income attributable to Turning Point Brands, Inc. | $ | 27,958 | $ | 40,605 | $ | 17,522 | $ | 16,422 | ||||||||
Add: | ||||||||||||||||
Interest expense, net | 15,142 | 15,406 | 8,029 | 10,340 | ||||||||||||
Loss on extinguishment of debt | - | 5,331 | ||||||||||||||
Gain on extinguishment of debt | (1,377 | ) | - | |||||||||||||
Income tax expense | 8,706 | 11,151 | 5,806 | 4,909 | ||||||||||||
Depreciation expense | 2,611 | 2,313 | 1,535 | 1,750 | ||||||||||||
Amortization expense | 1,373 | 1,431 | 1,542 | 919 | ||||||||||||
EBITDA | $ | 55,790 | $ | 76,237 | $ | 33,057 | $ | 34,340 | ||||||||
Components of Adjusted EBITDA | ||||||||||||||||
Corporate restructuring (a) | 1,619 | - | - | 1,602 | ||||||||||||
ERP/CRM (b) | 1,626 | - | 276 | 1,191 | ||||||||||||
Stock options, restricted stock, and incentives expense (c) | 4,103 | 6,015 | 2,836 | 2,661 | ||||||||||||
Transactional expenses (d) | 789 | 1,077 | 86 | 789 | ||||||||||||
FDA PMTA (e) | 4,265 | 960 | 820 | 3,096 | ||||||||||||
Non-cash asset impairment (f) | 6,300 | - | 8,989 | 6,300 | ||||||||||||
Adjusted EBITDA | $ | 74,492 | $ | 84,289 | $ | 46,064 | $ | 49,979 |
(a) | Represents costs associated with corporate restructuring, including severance. |
(b) | Represents cost |
(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 |
(f) | Represents impairment of investment |
As of | As of | |||||||||||||||
(in thousands) | September 30, | December 31, | June 30, 2023 | December 31, 2022 | ||||||||||||
2022 | 2021 | |||||||||||||||
Current assets | $ | 150,110 | $ | 120,849 | $ | 151,192 | $ | 151,251 | ||||||||
Current liabilities | 41,881 | 40,336 | 41,705 | 41,376 | ||||||||||||
Working capital | $ | 108,229 | $ | 80,513 | $ | 109,487 | $ | 109,875 |
September 30, | December 31, | |||||||||||||||
2022 | 2021 | June 30, 2023 | December 31, 2022 | |||||||||||||
Senior Secured Notes | $ | 250,000 | $ | 250,000 | $ | 250,000 | $ | 250,000 | ||||||||
Convertible Senior Notes | 172,500 | 172,500 | 133,541 | 162,500 | ||||||||||||
Gross notes payable and long-term debt | 422,500 | 422,500 | 383,541 | 412,500 | ||||||||||||
Less deferred finance charges | (6,471 | ) | (8,328 | ) | (4,346 | ) | (5,743 | ) | ||||||||
Notes payable and long-term debt | $ | 416,029 | $ | 414,172 | $ | 379,195 | $ | 406,757 |
On or after February 15, 2023 | 102.813% |
On or after February 15, 2024 | 101.406% |
On or after February 15, 2025 and thereafter | 100.000% |
Maximum Number | ||||||||||||||||
(or Approximate | ||||||||||||||||
Total Number of | Dollar Value) | |||||||||||||||
Shares Purchased | of Shares that | |||||||||||||||
Total Number | Average | as Part of Publicly | May Yet Be | |||||||||||||
of Shares | Price Paid | Announced Plans | Purchased Under the | |||||||||||||
Period | Purchased (1) | per Share | or Programs | Plans or Programs | ||||||||||||
July 1 to July 31 | 86,841 | $ | 27.93 | 86,841 | $ | 34,578,518 | ||||||||||
August 1 to August 31 | 113,576 | $ | 24.53 | 113,241 | $ | 31,800,716 | ||||||||||
September 1 to September 30 | 107,125 | $ | 22.51 | 107,125 | $ | 29,389,333 | ||||||||||
Total | 307,542 | 307,207 |
Period | Total Number of Shares Purchased (1) | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs | ||||||||||||
April 1 to April 30 | 4,431 | $ | 23.65 | - | $ | 27,197,886 | ||||||||||
May 1 to May 31 | - | $ | - | - | $ | 27,197,886 | ||||||||||
June 1 to June 30 | - | $ | - | - | $ | 27,197,886 | ||||||||||
Total | 4,431 | - |
Exhibit No. | Description |
Amendment No 1. Dated as of May 10, 2023, to the Credit Agreement, dated as of February 11, 2021, by and among Turning Point Brands, Inc., the obligors party thereto, Barclays Bank PLC, as administrative agent, and the lenders party thereto (incorporated herein by reference to Exhibit 10.1 of Turning Point Brand, Inc’s Current Report on Form 8-K filed with the Commission on May 16, 2023 (File No. 001-37763) * | |
Rule 13a-14(a)/15d-14(a) Certification of Graham Purdy.* | |
Rule 13a-14(a)/15d-14(a) Certification of Luis Reformina.* | |
Rule 13a-14(a)/15d-14(a) Certification of Brian Wigginton.* | |
Section 1350 Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.* | |
99.1 | Notice of Pendency of Settlement of Action * |
101 | XBRL (eXtensible Business Reporting Language). The following materials from Turning Point Brands, Inc.’s Quarterly Report on Form 10-Q for the quarter ended |
104 | Cover Page Interactive Data File (formatted in iXBRL and included in Exhibit 101).* |
* | Filed or furnished herewith |
TURNING POINT BRANDS, INC. | |
By: /s/ Graham Purdy | ||
Name: Graham Purdy |
Title: President and Chief Executive Officer |
By: | |||
Name: Luis Reformina |
Name: Brian Wigginton |
Title: |
Chief Accounting Officer | |||
Date: |