Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2023 | Apr. 24, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2023 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q1 | |
Document Transition Report | false | |
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, $0.01 par value | |
Trading Symbol | TPB | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 17,585,529 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash | $ 104,801 | $ 106,403 |
Accounts receivable, net of allowances of $101 in 2023 and $114 in 2022 | 8,584 | 8,377 |
Inventories | 113,738 | 119,915 |
Other current assets | 19,961 | 22,959 |
Total current assets | 247,084 | 257,654 |
Property, plant, and equipment, net | 24,364 | 22,788 |
Deferred income taxes | 8,069 | 8,443 |
Right of use assets | 11,722 | 12,465 |
Deferred financing costs, net | 256 | 282 |
Goodwill | 136,253 | 136,253 |
Other intangible assets, net | 82,821 | 83,592 |
Master Settlement Agreement (MSA) escrow deposits | 28,710 | 27,980 |
Other assets | 20,647 | 22,649 |
Total assets | 559,926 | 572,106 |
Current liabilities: | ||
Accounts payable | 10,390 | 8,355 |
Accrued liabilities | 25,932 | 33,001 |
Other current liabilities | 20 | 20 |
Total current liabilities | 36,342 | 41,376 |
Notes payable and long-term debt | 393,578 | 406,757 |
Lease liabilities | 10,072 | 10,593 |
Total liabilities | 439,992 | 458,726 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Preferred stock; $0.01 par value; authorized shares 40,000,000; issued and outstanding shares -0- | 0 | 0 |
Additional paid-in capital | 113,477 | 113,242 |
Cost of repurchased common stock (2,316,460 shares at March 31, 2023 and December 31, 2022) | (78,093) | (78,093) |
Accumulated other comprehensive loss | (2,234) | (2,393) |
Accumulated earnings | 85,133 | 78,691 |
Non-controlling interest | 1,452 | 1,735 |
Total stockholders' equity | 119,934 | 113,380 |
Total liabilities and stockholders' equity | 559,926 | 572,106 |
Common Stock, Voting [Member] | ||
Stockholders' equity: | ||
Common stock | 199 | 198 |
Common Stock, Nonvoting [Member] | ||
Stockholders' equity: | ||
Common stock | $ 0 | $ 0 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Current assets: | ||
Accounts receivable, allowance | $ 101 | $ 114 |
Stockholders' equity: | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 40,000,000 | 40,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Repurchased common stock (in shares) | 2,316,460 | 2,316,460 |
Common Stock, Voting [Member] | ||
Stockholders' equity: | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 190,000,000 | 190,000,000 |
Common stock, shares issued (in shares) | 19,901,989 | 19,801,623 |
Common stock, shares outstanding (in shares) | 17,585,529 | 17,485,163 |
Common Stock, Nonvoting [Member] | ||
Stockholders' equity: | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Common stock, shares issued (in shares) | 0 | 0 |
Common stock, shares outstanding (in shares) | 0 | 0 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Consolidated Statements of Income [Abstract] | ||
Net sales | $ 100,956 | $ 100,894 |
Cost of sales | 52,339 | 49,100 |
Gross profit | 48,617 | 51,794 |
Selling, general, and administrative expenses | 30,775 | 32,565 |
Operating income | 17,842 | 19,229 |
Interest expense, net | 4,010 | 5,196 |
Investment loss (gain) | 4,799 | (78) |
Gain on extinguishment of debt | (777) | 0 |
Income before income taxes | 9,810 | 14,111 |
Income tax expense | 2,468 | 3,340 |
Consolidated net income | 7,342 | 10,771 |
Net loss attributable to non-controlling interest | (255) | (227) |
Net income attributable to Turning Point Brands, Inc. | $ 7,597 | $ 10,998 |
Basic income per common share: | ||
Net income attributable to Turning Point Brands, Inc. (in dollars per share) | $ 0.43 | $ 0.6 |
Diluted income per common share: | ||
Net income attributable to Turning Point Brands, Inc. (in dollars per share) | $ 0.41 | $ 0.55 |
Weighted average common shares outstanding: | ||
Basic (in shares) | 17,531,414 | 18,257,695 |
Diluted (in shares) | 20,669,152 | 21,749,510 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Consolidated Statements of Comprehensive Income [Abstract] | ||
Consolidated net income | $ 7,342 | $ 10,771 |
Other comprehensive income (loss), net of tax | ||
Unrealized gain (loss) on MSA investments, net of tax | 553 | (1,126) |
Foreign currency translation, net of tax | (78) | (7) |
Unrealized loss on derivative instruments, net of tax | (344) | 0 |
Other comprehensive income, net of tax | 131 | (1,133) |
Consolidated comprehensive income | 7,473 | 9,638 |
Comprehensive loss attributable to non-controlling interest | (255) | (229) |
Comprehensive income attributable to Turning Point Brands, Inc. | $ 7,728 | $ 9,867 |
Consolidated Statements of Co_2
Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Other comprehensive income (loss), net of tax | ||
Unrealized loss on MSA investments, tax | $ 176 | $ 357 |
Foreign currency translation, tax | 0 | 0 |
Unrealized loss on derivative instruments, tax | $ 109 | $ 0 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Cash flows from operating activities: | ||
Consolidated net income | $ 7,342 | $ 10,771 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Gain on extinguishment of debt | (777) | 0 |
(Gain) loss on sale of property, plant, and equipment | (6) | 1 |
Depreciation expense | 776 | 871 |
Amortization of other intangible assets | 771 | 463 |
Amortization of deferred financing costs | 626 | 645 |
Deferred income tax expense (benefit) | 299 | (34) |
Stock compensation expense | 743 | 1,159 |
Noncash lease income | (14) | (5) |
Loss (gain) on investments | 4,897 | (14) |
Changes in operating assets and liabilities: | ||
Accounts receivable | (216) | (2,958) |
Inventories | 6,173 | (18,258) |
Other current assets | 2,639 | 1,081 |
Other assets | (2,895) | 382 |
Accounts payable | 2,051 | 22,101 |
Accrued liabilities and other | (7,025) | (3,165) |
Net cash provided by operating activities | 15,384 | 13,040 |
Cash flows from investing activities: | ||
Capital expenditures | (2,435) | (2,787) |
Restricted cash, MSA escrow deposits | 0 | (8,468) |
Proceeds on the sale of property, plant and equipment | 3 | 1 |
Net cash used in investing activities | (2,432) | (11,254) |
Cash flows from financing activities: | ||
Repurchased Convertible Senior Notes | (13,002) | 0 |
Proceeds from call options | 33 | 0 |
Payment of dividends | (1,052) | (1,022) |
Exercise of options | 357 | 245 |
Redemption of performance restricted stock units | (889) | (1,141) |
Common stock repurchased | 0 | (10,622) |
Net cash used in financing activities | (14,553) | (12,540) |
Net decrease in cash | (1,601) | (10,754) |
Effect of foreign currency translation on cash | (1) | (3) |
Cash, beginning of period: | ||
Unrestricted | 106,403 | 128,320 |
Restricted | 4,929 | 15,155 |
Total cash at beginning of period | 111,332 | 143,475 |
Cash, end of period: | ||
Unrestricted | 104,801 | 126,045 |
Restricted | 4,929 | 6,673 |
Total cash at end of period | 109,730 | 132,718 |
Supplemental schedule of noncash investing activities: | ||
Accrued capital expenditures | 7 | 187 |
Supplemental schedule of noncash financing activities: | ||
Dividends declared not paid | $ 1,155 | $ 1,131 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Equity - USD ($) $ in Thousands | Common Stock [Member] Voting [Member] | Additional Paid-In Capital [Member] | Cost of Repurchased Common Stock [Member] | Accumulated Other Comprehensive Income (Loss) [Member] | Accumulated Earnings [Member] | Non-Controlling Interest [Member] | Total |
Beginning balance at Dec. 31, 2021 | $ 197 | $ 108,811 | $ (48,869) | $ (195) | $ 71,460 | $ 2,312 | $ 133,716 |
Beginning balance (in shares) at Dec. 31, 2021 | 18,395,476 | ||||||
Unrealized loss on MSA investments, net of tax | 0 | 0 | 0 | (1,126) | 0 | 0 | $ (1,126) |
Unrealized loss on derivative instruments, net of tax | 0 | ||||||
Foreign currency translation, net of tax | 0 | 0 | 0 | (5) | 0 | (2) | (7) |
Stock compensation expense | 0 | 1,159 | 0 | 0 | 0 | 0 | 1,159 |
Exercise of options | $ 0 | 245 | 0 | 0 | 0 | 0 | 245 |
Exercise of options (in shares) | 25,166 | ||||||
Performance restricted stock units issuance | $ 1 | (1) | 0 | 0 | 0 | 0 | 0 |
Performance restricted stock units issuance (in shares) | 103,843 | ||||||
Performance restricted stock units redeemed | $ 0 | (1,141) | 0 | 0 | 0 | 0 | (1,141) |
Performance restricted stock units redeemed (in shares) | (34,087) | ||||||
Cost of repurchased common stock | $ 0 | 0 | $ (10,622) | 0 | 0 | 0 | (10,622) |
Cost of repurchased common stock (in shares) | (310,224) | ||||||
Dividends | 0 | 0 | $ 0 | 0 | (1,131) | 0 | (1,131) |
Net income | 0 | 0 | 0 | 0 | 10,998 | (227) | 10,771 |
Ending balance at Mar. 31, 2022 | 198 | 109,073 | (59,491) | (1,326) | 81,327 | 2,083 | $ 131,864 |
Ending balance (in shares) at Mar. 31, 2022 | 18,180,174 | ||||||
Beginning balance at Dec. 31, 2021 | 197 | 108,811 | (48,869) | (195) | 71,460 | 2,312 | $ 133,716 |
Beginning balance (in shares) at Dec. 31, 2021 | 18,395,476 | ||||||
Ending balance at Dec. 31, 2022 | 198 | 113,242 | (78,093) | (2,393) | 78,691 | 1,735 | $ 113,380 |
Ending balance (in shares) at Dec. 31, 2022 | 17,485,163 | ||||||
Unrealized loss on MSA investments, net of tax | 0 | 0 | 0 | 553 | 0 | 0 | $ 553 |
Unrealized loss on derivative instruments, net of tax | 0 | 0 | 0 | (344) | 0 | 0 | (344) |
Foreign currency translation, net of tax | 0 | 0 | 0 | (50) | 0 | (28) | (78) |
Stock compensation expense | 0 | 743 | 0 | 0 | 0 | 0 | 743 |
Exercise of options | $ 0 | 357 | 0 | 0 | 0 | 0 | 357 |
Exercise of options (in shares) | 24,955 | ||||||
Performance restricted stock units issuance | $ 1 | (1) | 0 | 0 | 0 | 0 | 0 |
Performance restricted stock units issuance (in shares) | 114,274 | ||||||
Performance restricted stock units redeemed | $ 0 | (889) | 0 | 0 | 0 | 0 | (889) |
Performance restricted stock units redeemed (in shares) | (38,863) | ||||||
Cost of repurchased common stock | $ 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Settlement of call options, net of tax | 0 | 25 | 0 | 0 | 0 | 0 | 25 |
Dividends | 0 | 0 | 0 | 0 | (1,155) | 0 | (1,155) |
Net income | 0 | 0 | 0 | 0 | 7,597 | (255) | 7,342 |
Ending balance at Mar. 31, 2023 | $ 199 | $ 113,477 | $ (78,093) | $ (2,234) | $ 85,133 | $ 1,452 | $ 119,934 |
Ending balance (in shares) at Mar. 31, 2023 | 17,585,529 |
Consolidated Statements of Ch_2
Consolidated Statements of Changes in Stockholders' Equity (Parenthetical) $ in Thousands | 3 Months Ended |
Mar. 31, 2023 USD ($) | |
Consolidated Statements of Changes in Stockholders' Equity [Abstract] | |
Unrealized loss on MSA investments, tax | $ 176 |
Unrealized loss on derivative instruments, tax | 109 |
Foreign currency translation, tax | 0 |
Settlement of call options, tax | $ 8 |
Description of Business and Bas
Description of Business and Basis of Presentation | 3 Months Ended |
Mar. 31, 2023 | |
Description of Business and Basis of Presentation [Abstract] | |
Description of Business and Basis of Presentation | Note 1. Description of Business and Basis of Presentation Description of Business Turning Point Brands, Inc. and its subsidiaries (collectively referred to herein as the “Company,” “we,” “our,” or “us”) is a leading manufacturer, marketer and distributor of branded consumer products. The Company sells a wide range of products to adult consumers consisting of staple products with its iconic brands Zig-Zag ® and Stoker’s ® Zig-Zag ® and CLIPPER ® in the Zig-Zag Products segment; Stoker’s ® along with Beech-Nut ® and Trophy ® in the Stoker’s Products segment. 217 three Basis of Presentation The accompanying unaudited interim, consolidated financial statements have been prepared in accordance with the accounting practices described in the Company’s audited, consolidated financial statements as of and for the year ended December 31, 2022. In the opinion of management, the unaudited, interim, consolidated financial statements included herein contain all adjustments necessary to present fairly the financial position, results of operations, and cash flows of the Company for the periods indicated. Such adjustments, other than nonrecurring adjustments separately disclosed, are of a normal and recurring nature. The operating results for interim periods are not necessarily indicative of results to be expected for a full year or future interim periods. The unaudited, interim, consolidated financial statements should be read in conjunction with the Company’s audited, consolidated financial statements and accompanying notes as of and for the year ended December 31, 2022. The accompanying interim, consolidated financial statements are presented in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) and, accordingly, do not include all the disclosures required by generally accepted accounting principles in the United States (“GAAP”) with respect to annual financial statements. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2023 | |
Summary of Significant Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 2. Summary of Significant Accounting Policies Consolidation The consolidated financial statements include the accounts of the Company, its subsidiaries, all of which are wholly-owned, and variable interest entities (“VIEs”) for which the Company is considered the primary beneficiary. All significant intercompany transactions have been eliminated . Revenue Recognition The Company recognizes revenues in accordance with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers (Topic 606), which includes excise taxes and shipping and handling charges billed to customers, net of cash discounts for prompt payment, sales returns and incentives, upon delivery of goods to the customer – at which time the Company’s performance obligation is satisfied - at an amount that the Company expects to be entitled to in exchange for those goods in accordance with the five-step analysis outlined in Topic 606: (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations, and (v) recognize revenue when (or as) performance obligations are satisfied. The Company excludes from the transaction price, sales taxes and value-added taxes imposed at the time of sale (which do not include excise taxes on smokeless tobacco, cigars or vaping products billed to customers). The Company records an allowance for sales returns, based principally on historical volume and return rates, which is included in accrued liabilities on the consolidated balance sheets. The Company records sales incentives, which consist of consumer incentives and trade promotion activities, as a reduction in revenues (a portion of which is based on amounts estimated to be due to wholesalers, retailers and consumers at the end of the period) based principally on historical volume and utilization rates. Expected payments for sales incentives are included in accrued liabilities on the consolidated balance sheets. A further requirement of ASC 606 is for entities to disaggregate revenue recognized from contracts with customers into categories that depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. The Company’s management views business performance through segments that closely resemble the performance of major product lines. Thus, the primary and most useful disaggregation of the Company’s contract revenue for decision making purposes is the disaggregation by segment which can be found in Note 16, “Segment Information”. An additional disaggregation of contract revenue by sales channel can be found within Note 16 as well. Shipping Costs The Company records shipping costs incurred as a component of selling, general, and administrative expenses. Shipping costs incurred were approximately $6.2 million and $6.1 million for the three months ending March 31 , 2023, and 2022, respectively. Inventories Inventories are stated at the lower of cost or net realizable value using the first -in, -out (“FIFO”) method. Leaf tobacco is presented in current assets in accordance with standard industry practice, notwithstanding the fact that such tobaccos are carried longer than year for the purpose of curing. Fair Value GAAP establishes a framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1) and the lowest priority to unobservable inputs (level 3). The three levels of the fair value hierarchy under GAAP are described below: ● 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. Derivative Instruments Foreign Currency Forward Contracts: The Compan y enters into foreign currency forwar under the provisions of ASC 815, Derivatives and Hedging. Under the Company’s policy, the Company may hedge up to 100% of its anticipated purchases of inventory in the denominated invoice currency over a forwa Risks and Uncertainties Manufacturers and sellers of tobacco products are subject to regulation at the federal, state, and local levels. Such regulations include, among others, labeling requirements, limitations on advertising, and prohibition of sales to minors. The tobacco industry is likely to continue to be heavily regulated. There can be no assurance as to the ultimate content, timing, or effect of any regulation of tobacco products by any federal, state, or local legislative or regulatory body, nor can there be any assurance that any such legislation or regulation would not have a material adverse effect on the Company’s financial position, results of operations, or cash flows. In a number of states, targeted flavor bans have been proposed or enacted legislatively or by the administrative process. Depending on the number and location of such bans, that legislation or regulation could have a material adverse effect on the Company’s financial position, results of operations or cash flows. The U.S. Food and Drug Administration The tobacco industry has experienced, and is experiencing, significant product liability litigation. Most tobacco liability lawsuits have been brought against manufacturers and sellers of cigarettes for injuries allegedly caused by smoking or exposure to smoke. However, several lawsuits have been brought against manufacturers and sellers of smokeless products for injuries to health allegedly caused by use of smokeless products. Typically, such claims assert that use of smokeless products is addictive and causes oral cancer. Additionally, several lawsuits have been brought against manufacturers and distributors of Creative Distribution Solutions products due to malfunctioning devices. Master Settlement Agreement (MSA): Pursuant to the Master Settlement Agreement (the “MSA”) entered into in November 1998 by most states (represented by their attorneys general acting through the National Association of Attorneys General) and subsequent states’ statutes, a “cigarette manufacturer” (which is defined to include a manufacturer of make-your-own (“MYO”) cigarette tobacco) has the option of either becoming a signatory to the MSA or opening, funding, and maintaining an escrow account to have funds available for certain potential tobacco-related liabilities with sub-accounts on behalf of each settling state. Such companies are entitled to direct the investment of the escrowed funds and withdraw any appreciation but cannot withdraw the principal for twenty-five years from the year of each annual deposit, except to withdraw funds deposited pursuant to an individual state’s escrow statute to pay a final judgement to that state’s plaintiffs in the event of such a final judgement against the Company. The Company chose to open and fund an escrow account as its method of compliance. It is the Company’s policy to record amounts on deposit in the escrow account for prior years as a non-current asset. As of March 31, 2023, the Company had on deposit approximately $32.1 million, the fair value of which was approximately $28.7 million. At December 31, 2022, the Company had on deposit approximately $32.1 million, the fair value of which was approximately $28.0 million. The Company discontinued its generic category of MYO in 2019 and its Zig-Zag branded MYO cigarette smoking tobacco in 2017. Thus, pending a change in MSA legislation, the Company has no remaining product lines covered by the MSA and will not be required to make future escrow deposits. The Company has chosen to invest a portion of the MSA escrow, from time to time, in U.S. Government securities including TIPS, Treasury Notes, and Treasury Bonds. These investments are classified as available-for-sale and carried at fair value. Realized losses are prohibited under the MSA; any investment in an unrealized loss position will be held until the value is recovered, or until maturity. Fair values for the U.S. Governmental agency obligations are Level 2 in the fair value hierarchy. The following tables show cost and estimated fair value of the assets held in the MSA account, respectively, as well as the maturities of the U.S. Governmental agency obligations held in such account for the periods indicated. As of March 31, 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) 2,736 (185 ) 2,551 10,226 (1,251 ) 8,975 U.S. Governmental agency obligations (unrealized position > 12 months) 27,408 (3,178 ) 24,230 19,918 (2,842 ) 17,076 $ 32,073 $ (3,363 ) $ 28,710 $ 32,073 $ (4,093 ) $ 27,980 As of March 31, 2023 Less than one year $ 200 One to five years 11,241 Five to ten years 16,748 Greater than ten years 1,955 Total $ 30,144 The following shows the amount of deposits by sales year for the MSA escrow account: Deposits as of Sales Year March 31, 2023 December 31, 2022 1999 $ 211 $ 211 2000 1,017 1,017 2001 1,673 1,673 2002 2,271 2,271 2003 4,249 4,249 2004 3,714 3,714 2005 4,553 4,553 2006 3,847 3,847 2007 4,167 4,167 2008 3,364 3,364 2009 1,619 1,619 2010 406 406 2011 193 193 2012 199 199 2013 173 173 2014 143 143 2015 101 101 2016 91 91 2017 82 82 Total $ 32,073 $ 32,073 FDA: On June 22, 2009, the Family Smoking Prevention and Tobacco Control Act (the “FSPTCA”) authorized the FDA to immediately regulate the manufacturing, sale, and marketing of four categories of tobacco products – cigarettes, cigarette tobacco, roll-your-own tobacco, and smokeless tobacco. On August 8, 2016, the FDA deeming regulation became effective. The deeming regulation gave the FDA the authority to also regulate cigars, pipe tobacco, e-cigarettes, vaporizers, and e-liquids as “deemed” tobacco products under the FSPTCA. The FDA assesses tobacco product user fees on six classes of regulated tobacco products and computes user fees using a methodology similar to the methodology used by the U.S Department of Agriculture to compute the Tobacco Transition Payment Program (“TTPP,” also known as the “Tobacco Buyout”) assessment. First, the total, annual, congressionally established user fee assessment is allocated among the various classes of tobacco products using the federal excise tax weighted market share of tobacco products subject to regulation. Then, the assessment for each class of tobacco products is divided among individual manufacturers and importers. In August 2016, the FDA’s regulatory authority under the Tobacco Control Act (the “TCA”) was extended to all tobacco products not previously covered, including: (i) certain Creative Distribution Solutions products (such as electronic cigarettes, vaporizers and e-liquids) and their components or parts (such as tanks, coils and batteries); (ii) cigars and their components or parts (such as cigar tobacco and wraps); (iii) pipe tobacco; (iv) hookah products; and (v) any other tobacco product “newly deemed” by the FDA. These “deeming regulations” apply to all products made or derived from tobacco intended for human consumption, but excluding accessories of tobacco products (such as lighters). Accordingly, the FDA has since regulated our cigar and cigar wrap products as well as our vapor products containing tobacco-derived nicotine and products intended or reasonably expected to be used to consume such e-liquids. Subsequently, on April 14, 2022, the FDA Center for Tobacco Products also obtained jurisdiction over non-tobacco nicotine products (“NTN Products”), including synthetic nicotine. That law subjects NTN Products to the same requirements as tobacco-derived products, including not selling these products to persons under 21 years of age, not marketing these products as modified risk tobacco products without authorization, and not distributing free samples of these products. Additionally, NTN Products became subject to premarket filing requirements. Under the new law, manufacturers were required to file a Premarket Tobacco Application A successful PMTA must demonstrate that the subject product is “appropriate for the protection of public health,” taking into account the effect of the marketing of the product on all sub-populations while a Substantial Equivalence Report must demonstrate that a new product either has the same characteristics as its predicate product or different characteristics but does not raise different questions of public health. We submitted premarket filings prior to the September 9, 2020 deadline for certain of our tobacco and tobacco-derived products, all of which remain under review. We likewise filed premarket submissions for certain of our NTN Products ahead of the May 14, 2022 deadline. We have continued to supplement these applications with additional information; however, there can be no guarantee that the FDA will accept such amendments or that the applications will meet the standard of “appropriate for the protection of public health.” The FDA has indicated its enforcement priority is those applicants who have received negative action on their application, such as a Marketing Denial Order or Refuse to File notification and who continue to illegally sell those unauthorized products, as well as products for which manufacturers failed to submit a marketing application. Despite these stated enforcement priorities, given the FDA’s limited resources we expect that for a period of time there may be a lack of enforcement, which may adversely impact our ability to compete in the marketplace against those who continue to sell unauthorized products. There can be no guarantee that the FDA will not shift its enforcement priorities or that it will increase in ability to enforce against unauthorized products over time. The FDA has issued a number of rules related to premarket filings; however, those rules were not finalized prior to the September 9, 2020, deadline. On October 5, 2021, the FDA finalized rules related to the Substantial Equivalence process and the Premarket Tobacco Product Application process, respectively, which both became effective November 4, 2021. Both final rules (collectively, the “Rules”) indicate that any new or additional requirements will not retroactively apply to currently pending PMTAs for tobacco and tobacco-derived products; however, the information outlined in the rule remains important to the FDA’s substantive review of an application. The FDA has yet to indicate how it might apply these Rules to NTN Product filings. We believe we have products that meet the Rules and have filed premarket filings supporting a showing of the respective required standards. However, there is no assurance that the FDA’s guidance or regulations will not change, or that the FDA will not prioritize its enforcement in a manner that negatively affects our pending applications, or that unforeseen circumstances will not arise that prevent us from sufficiently supplementing or completing our applications or otherwise increases the amount of time and money we are required to spend to receive all necessary marketing orders. Although we filed many premarket applications in a timely manner, no assurance can be given that the applications will ultimately be successful. This may result in the prioritization of supplementing or completing applications for high priority SKUs in our inventory position, which could adversely impact future revenues generated by lower priority SKUs. In addition, we currently distribute many third-party manufactured vapor products for which we are completely dependent on the manufacturer complying with the premarket filing requirements. There can be no assurance that these third-party products will receive a marketing order or otherwise remain in compliance with relevant legal requirements. While we will take measures to pursue regulatory compliance for our own privately-branded or proprietary vape products that compete with these third-party products, there is no assurance that such proprietary products would be as successful in the marketplace or can fully displace third-party products that are currently being distributed by us, which could adversely affect our results of operations and liquidity. For a period of time after the filing deadline, we expect there to be a lack of enforcement, which may adversely affect our ability to compete in the marketplace against those who continue to sell unauthorized products. On May 4, 2022, the FDA proposed Prevent All Cigarette Trafficking Act (“PACT Act”): On December 27, 2020, President Trump signed the Further Consolidated Appropriations Act, 2021, into law. This law included an amendment to the Jenkins Act expanding the definition of “cigarette” to include “electronic nicotine delivery systems,” or ENDS, and required that the United States Postal Service (USPS) promulgate regulations clarifying the applicability of the prohibition on delivery sales of cigarettes to ENDS. USPS issued its final rule on October 21, 2021. We have received appropriate shipping exemptions from carrier services we use to carry the affected freight. Failure to comply with the PACT Act could result in significant financial or criminal penalties. To the extent we are unable to respond to, or comply with, these new requirements, we could lose our shipping exemptions, be subject to civil or criminal penalties, or there could be a material adverse effect on our business, results of operations and financial condition. |
Derivative Instruments
Derivative Instruments | 3 Months Ended |
Mar. 31, 2023 | |
Derivative Instruments [Abstract] | |
Derivative Instruments | Note 3. Derivative Instruments Foreign Currency The Company’s policy is to manage the risks associated with foreign exchange rate movements. The policy allows hedging of up to 100% of its anticipated purchases of inventory over a forward period that will not exceed 12 rolling and consecutive months. The Company may, from time to time, hedge currency for non-inventory purchases, e.g. , production equipment, up to 100% of the purchase price. During the three months ended March 31, 2023, the Company executed various foreign exchange contracts, which met hedge accounting requirements for the purchase of €4.9 million . The Company did not execute any foreign exchange contracts during three months ended March 31, 2022. At March 31, 2023, the Company had foreign currency contracts for the purchase of €15.3 million and sale of €10.4 million. The foreign currency contracts’ fair value at March 31, 2023, resulted in an asset of $0.7 million included in Other current assets and a liability of $0.0 million included in Accrued liabilities. At December 31, 2022, the Company had foreign currency contracts for the purchase of €18.5 million and sale of €18.5 million. The foreign currency contracts’ fair value at December 31, 2022, resulted in an asset of $1.2 million included in Other current assets and a liability of $0.0 million included in Accrued liabilities. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 3 Months Ended |
Mar. 31, 2023 | |
Fair Value of Financial Instruments [Abstract] | |
Fair Value of Financial Instruments | Note 4. Fair Value of Financial Instruments The estimated fair value amounts have been determined by the Company using the methods and assumptions described below. However, considerable judgment is required to interpret market data to develop estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. Cash and Cash Equivalents Cash and cash equivalents are, by definition, short-term. Thus, the carrying amount is a reasonable estimate of fair value. Accounts Receivable The fair value of accounts receivable approximates their carrying value due to their short-term nature. Long-Term Debt The Company’s Senior Secured Notes (as defined below) bear interest at a rate of per year. As of March 31, 2023, the fair value approximated million, with a carrying value of As of December 31, 2022, the fair value of the Senior Secured Notes approximated $226.4 million, with a carrying value of The Convertible Senior Notes (as defined) bear interest at a rate of 2.50% per year, and the fair value of the Convertible Senior Notes without the conversion feature approximated million, with a carrying value of million as of March 31, 2023. As of December 31, 2022, the fair value of the Convertible Senior Notes approximated $139.2 million, with a carrying value of million. See Note 10, “Notes Payable and Long-Term Debt”, for further information regarding the Company’s long-term debt. |
Inventories
Inventories | 3 Months Ended |
Mar. 31, 2023 | |
Inventories [Abstract] | |
Inventories | Note 5. Inventories The components of inventories are as follows: March 31, December 31, 2023 2022 Raw materials and work in process $ 6,292 $ 7,283 Leaf tobacco 40,131 43,468 Finished goods - Zig-Zag Products 43,640 42,279 Finished goods - Stoker’s Products 11,067 9,667 Finished goods - Creative Distribution Solutions 10,942 15,431 Other 1,666 1,787 Inventories $ 113,738 $ 119,915 The inventory valuation allowance was $4.8 million and $4.5 million as of March 31, 2023 , and December 31, 2022, respectively. |
Other Current Assets
Other Current Assets | 3 Months Ended |
Mar. 31, 2023 | |
Other Current Assets [Abstract] | |
Other Current Assets | Note 6. Other Current Assets Other current assets consist of: March 31, December 31, 2023 2022 Inventory deposits $ 5,280 $ 6,395 Insurance deposit 3,000 3,000 Prepaid taxes 223 448 Other 11,458 13,116 Total $ 19,961 $ 22,959 |
Property, Plant, and Equipment
Property, Plant, and Equipment | 3 Months Ended |
Mar. 31, 2023 | |
Property, Plant, and Equipment [Abstract] | |
Property, Plant, and Equipment | Note 7. Property, Plant, and Equipment Property, plant, and equipment consists of: March 31, December 31, 2023 2022 Land $ 22 $ 22 Buildings and improvements 3,096 3,096 Leasehold improvements 5,404 5,404 Machinery and equipment 28,082 25,832 Furniture and fixtures 9,317 9,264 Gross property, plant and equipment 45,921 43,618 Accumulated depreciation (21,557 ) (20,830 ) Net property, plant and equipment $ 24,364 $ 22,788 |
Other Assets
Other Assets | 3 Months Ended |
Mar. 31, 2023 | |
Other Assets [Abstract] | |
Other Assets | Note 8. Other Assets Other assets consist of: March 31, December 31, 2023 2022 Equity investments $ 8,479 $ 13,376 Debt security investment 7,820 7,820 Other 4,348 1,453 Total $ 20,647 $ 22,649 The Company records its equity investments without a readily determinable fair value, that are not accounted for under the equity method, at cost, with adjustments for impairment and observable price changes. In July 2021, the Company invested $8.0 million in Old Pal Holding Company LLC (“Old Pal”). In July 2022, the Company invested an additional $1.0 million in Old Pal. The Company invested in the form of a convertible note which includes additional follow-on investment rights. The accrued interest of $0.2 $9.2 million. Old Pal is a leading brand in the cannabis lifestyle space that operates a non-plant touching licensing model. The convertible note bears an interest rate of 3.0% per year and matures July 31, 2026. one-year increments. The interest rate is subject to change based Old Pal reaching certain sales thresholds. The weighted average 3.0% for the three months ended March 31, 2023. Old Pal has the option to convert the note into shares once sales reach a certain threshold. The conditions required to allow Old Pal to convert the note were not met as of March 31, 2023. Additionally, the Company has the right to convert the note into shares at any time after January 1, 2022. The Company has classified the debt security with Old Pal as available for sale. The Company records the debt security at fair value and includes unrealized gains and losses recorded in stockholders’ equity as a component of accumulated other comprehensive income on our Consolidated Balance Sheets. The Company reports interest income on available for sale debt securities, in interest income in our Consolidated Statements of Income. Quarterly, we perform a qualitative assessment to determine if the fair value of the In April 2021, the Company invested $8.7 million in Docklight Brands, Inc., a pioneering consumer products company with celebrated brands including Marley Natural Marley Marley resulting in the fair value of the Company’s investment decreasing to $3.8 million resulting in a loss of $4.9 million which was recorded in Investment loss (gain) for the three months ended March 31, 2023. Fair value was determined using a valuation derived from relevant revenue multiples (Level 3). There could be additional impairment if future revenues continue to decline or if market conditions result in decreased revenue multiples which are used to estimate fair value. |
Accrued Liabilities
Accrued Liabilities | 3 Months Ended |
Mar. 31, 2023 | |
Accrued Liabilities [Abstract] | |
Accrued Liabilities | Note 9. Accrued Liabilities Accrued liabilities consist of: March 31, December 31, 2023 2022 Accrued payroll and related items $ 4,437 $ 7,685 Customer returns and allowances 5,883 7,291 Taxes payable 2,215 1,867 Lease liabilities 2,866 3,102 Accrued interest 2,683 7,277 Other 7,848 5,779 Total $ 25,932 $ 33,001 |
Notes Payable and Long-Term Deb
Notes Payable and Long-Term Debt | 3 Months Ended |
Mar. 31, 2023 | |
Notes Payable and Long-Term Debt [Abstract] | |
Notes Payable and Long-Term Debt | Note 10. Notes Payable and Long-Term Debt Notes payable and long-term debt consists of the following in order of preference: March 31, December 31, 2023 2022 Senior Secured Notes $ 250,000 $ 250,000 Convertible Senior Notes 148,600 162,500 Gross notes payable and long-term debt 398,600 412,500 Less deferred finance charges (5,022 ) (5,743 ) Notes payable and long-term debt $ 393,578 $ 406,757 Senior Secured Notes On February 11, 2021, the Company closed a private offering (the “Offering”) of $250 million aggregate principal amount of its 5.625% senior secured notes due 2026 (the “Senior Secured Notes”). The Senior Secured Notes bear interest at a rate of 5.625% and will mature on February 15, 2026. Interest on the Senior Secured Notes is payable semi-annually in arrears on February 15 and August 15 of each year, commencing on August 15, 2021.The Company used the proceeds from the Offering (i) to repay all obligations under and terminate the 2018 First Lien Credit Facility, (ii) to pay related fees, costs, and expenses and (iii) for general corporate purposes. Obligations under the Senior Secured Notes are guaranteed by the Company’s existing and future wholly-owned domestic subsidiaries (the “Guarantors”) that guarantee any Credit Facility (as defined in the Indenture governing the Senior Secured Notes or the “Senior Secured Notes Indenture”) or capital markets debt securities of the Company or Guarantors in excess of $ 15.0 million. The and the related guarantees are secured by first-priority liens on substantially all of the assets of the Company and the Guarantors, subject to certain exceptions. The Company may redeem the Senior Secured Notes, in whole or in part, at any time prior to February 15, 2023, at the redemption prices (expressed as a percentage of the principal amount to be redeemed) set forth below, plus accrued and unpaid interest, if any, on the Senior Secured Notes to be redeemed to (but not including) the applicable redemption date if redeemed during the period indicated below: 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 % If the Company experiences a change of control (as defined in the Senior Secured Notes Indenture), the Company must offer to repurchase the Senior Secured Notes at a repurchase price equal to 101% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest. The Indenture contains covenants that, among other things, restrict the ability of the Company and its restricted subsidiaries to: (i) grant or incur liens; (ii) incur, assume or guarantee additional indebtedness; (iii) sell or otherwise dispose of assets, including capital stock of subsidiaries; (iv) make certain investments; (v) pay dividends, make distributions or redeem or repurchase capital stock; (vi) engage in certain transactions with affiliates; and (vii) consolidate or merge with or into, or sell substantially all of our assets to another entity. These covenants are subject to a number of limitations and exceptions set forth in the Indenture. The Indenture provides for customary events of default . The Company was in compliance with all covenants as of March 31, 2023. The Company incurred debt issuance costs attributable to the issuance of the Senior Secured Notes of $6.4 million which are amortized to interest expense using the effective interest method over the expected life of the Senior Secured Notes. 2021 Revolving Credit Facility In connection with the Offering, the Company also entered into a new $25.0 million senior secured revolving credit facility (the “ 2021 Revolving Credit Facility”) with the lenders party thereto (the “Lenders”) and Barclays Bank PLC, as administrative agent and collateral agent (in such capacity, the “Agent”). Letters of credit are limited to $ million (and are a part of, and not in addition to, the revolving line of credit). The Company has t drawn any borrowings under the 2021 Revolving Credit Facility but does have letters of credit of approximately $ million outstanding under the facility as of March 31, 2023. The 2021 Revolving Credit Facility will mature on , if none of the Company’s Convertible Senior Notes are outstanding, and if any Convertible Senior Notes are outstanding, the date which is days prior to the maturity date of July 15, 2024, for such Convertible Senior Notes. Interest is payable on the 2021 Revolving Credit Facility at a fluctuating rate of interest determined by reference to the Eurodollar rate plus an applicable margin of 3.50% (with step-downs upon de-leveraging). The Company also has the option to borrow at a rate determined by reference to the base rate. The obligations under the 2021 Revolving Credit Agreement are guaranteed on a joint and several basis by the Guarantors. The Company’s and Guarantors’ obligations under the 2021 Revolving Credit Facility are secured on a pari passu basis with the Senior Secured Notes. The 2021 Revolving Credit Agreement contains covenants that are substantially the same as the covenants in the Senior Secured Notes Indenture. The 2021 Revolving Credit Facility also requires the maintenance of a Consolidated Leverage Ratio (as defined in the 2021 Revolving Credit Agreement) of 5.50 to 1.00 (with a step down to 5.25 to 1.00 beginning with the fiscal quarter ending March 31, 2023) at the end of each fiscal quarter when extensions of credit under the 2021 Revolving Credit Facility and certain drawn and undrawn letters of credit (excluding (a) letters of credit that have been cash collateralized and (b) letters of credit having an aggregate face amount less than $5.0 million) in the aggregate outstanding exceeds 35% of the total commitments under the 2021 Revolving Credit Facility. The 2021 Revolving Credit Agreement provides for customary events of default. The Company was in compliance with all covenants as of March 31, 2023 The Company incurred debt issuance costs attributable to the issuance of the 2021 Revolving Credit Facility of $ 0.5 million which are amortized to interest expense using the effective interest method over the expected life of the 2021 Revolving Credit Facility. Convertible Senior Notes In July 2019, the Company closed an offering of $172.5 million in aggregate principal amount of its 2.50% Convertible Senior Notes due July 15, 2024 (the “Convertible Senior Notes”). The Convertible Senior Notes bear interest at a rate of 2.50% per year, payable semiannually in arrears on January 15 and July 15 of each year, beginning on January 15, 2020. The Convertible Senior Notes will mature on July 15, 2024, unless earlier repurchased, redeemed or converted. The Convertible Senior Notes are senior unsecured obligations of the Company. In the first quarter of 2023, a wholly owned subsidiary of the Company purchased $13.9 million in aggregate principal amount of the Convertible Senior Notes on the open market for $13.0 million resulting in a $0.7 million gain on extinguishment of debt. In the fourth quarter of 2022 a wholly owned subsidiary of the Company purchased $10.0 million in aggregate principal amount of the Convertible Senior Notes on the open market for $9.0 million resulting in a $0.9 million gain on extinguishment of debt. The repurchased notes continue to be held by our subsidiary and may be resold subject to compliance with applicable securities law. As of March 31, 2023, $148.6 million aggregate principal remains outstanding and held by third parties. The Convertible Senior Notes held by third parties are convertible into approximately 3,007,462 shares of TPB Common Stock under certain circumstances prior to maturity at a conversion rate of 18.6625 shares per $1,000 principal amount of the Convertible Senior Notes, which represents a conversion price of approximately $53.58 per share, subject to adjustment under certain conditions, but will not be adjusted for any accrued and unpaid interest. The conversion price is adjusted periodically as a result of dividends paid by the Company in excess of pre-determined thresholds of $0.04 per share. Upon conversion, the Company may pay cash, shares of common stock or a combination of cash and stock, as determined by the Company at its discretion. The conditions required to allow the holders to convert their Convertible Senior Notes were not met as of March 31, 2023 The Company incurred debt issuance costs attributable to the Convertible Senior Notes of $5.9 million which are amortized to interest expense using the effective interest method over the expected life of the Convertible Senior Notes. In connection with the Convertible Senior Notes offering, the Company entered into privately negotiated capped call transactions with certain financial institutions. The capped call transactions have a strike price of $53.58 per and a cap price of $82.86 per share, and are exercisable when, and if, the Convertible Senior Notes are converted. The Company paid $20.53 million for these capped calls at the time they were entered into and charged that amount to additional paid-in capital. |
Leases
Leases | 3 Months Ended |
Mar. 31, 2023 | |
Leases [Abstract] | |
Leases | Note 11. Leases The Company’s leases consist primarily of leased property for manufacturing, warehouse, corporate offices and retail space as well as vehicle leases. At lease inception, the Company recognizes a lease right of use asset and lease liability calculated as the present value of future minimum lease payments. In general, the Company does not recognize any renewal periods within the lease terms as there are no significant barriers to ending the lease at the initial term. Lease and non-lease components are accounted for as a single lease component. Leases with an initial term of 12 months or less are not recorded on the balance sheet. Lease expense for these leases is recognized on a straight-line basis over the lease term. The components of lease expense consisted of the following: Three Months Ended March 31, 2023 2022 Operating lease cost Cost of sales $ 128 $ 227 Selling, general and administrative 521 399 Variable lease cost (1) 225 112 Short-term lease cost 6 14 Total $ 880 $ 752 (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 March 31, 2023 2022 Financing lease cost Selling, general and administrative $ 338 $ 291 Total $ 338 $ 291 March 31, December 31, 2023 2022 Assets: Right of use assets - Operating $ 10,477 $ 10,967 Right of use assets - Financing $ 1,245 $ 1,498 Total lease assets $ 11,722 $ 12,465 Liabilities: Current lease liabilities - Operating $ 1,976 $ 2,007 Current lease liabilities - Financing (2) $ 890 $ 1,095 Long-term lease liabilities - Operating $ 9,762 $ 10,243 Long-term lease liabilities - Financing 310 350 Total lease liabilities $ 12,938 $ 13,695 (2) Reported within accrued liabilities on the balance sheet |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2023 | |
Income Taxes [Abstract] | |
Income Taxes | Note 12. Income Taxes The Company’s effective income tax rate for the three months ended March 31, 2023, was 25.2%. The Company’s effective income tax rate for the three months ended March 31, 2022, was 23.7% which includes a discrete tax deduction of $0.4 million for the three months ended March 31, 2022 relating to stock option exercises. The Company follows the provisions of ASC 740-10-25, which prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. The Company has determined that the Company did not have any uncertain tax positions requiring recognition under the provisions of ASC 740-10-25. The Company’s policy is to recognize interest and penalties accrued on uncertain tax positions, if any, as part of interest expense. The Company files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. In general, the Company is no longer subject to U.S. federal and state tax examinations for years prior to 2019. |
Share Incentive Plans
Share Incentive Plans | 3 Months Ended |
Mar. 31, 2023 | |
Share Incentive Plans [Abstract] | |
Share Incentive Plans | Note 13. Share Incentive Plans On March 22, 2021, the Company’s Board of Directors adopted the Turning Point Brands, Inc. 2021 Equity Incentive Plan (the “2021 Plan”), pursuant to which awards may be granted to employees, non-employee directors, and consultants. In addition, the 2021 Plan provides for the granting of nonqualified stock options to employees of the Company or any subsidiary of the Company. Pursuant to the 2021 Plan, 1,290,000 shares, plus 100,052 shares remaining available for issuance under the 2015 Equity Incentive Plan (the “2015 Plan”), of TPB Common Stock are reserved for issuance as awards to employees, non-employee directors, and consultants as compensation for past or future services or the attainment of certain performance goals. The 2021 Plan is scheduled to terminate on March 21, 2031. The 2021 Plan is administered by the compensation committee (the “Committee”) of the Company’s Board of Directors. The Committee determines the vesting criteria for the awards, with such criteria to be specified in the award agreement. As of March 31, 2023, net of forfeitures, there were Restricted Stock Units (“RSUs”), options and Performance-Based Restricted Stock Units (“PRSUs”) On April 28, 2016, the Board of Directors of the Company adopted the 2015 Plan, pursuant to which awards could have been granted to employees, non-employee directors, and consultants. In addition, the 2015 Plan provided for the granting of nonqualified stock options to employees of the Company or any subsidiary of the Company. Pursuant to the 2015 Plan, 1,400,000 shares of TPB Common Stock were reserved for issuance as awards to employees, non-employee directors, and consultants as compensation for past or future services or the attainment of certain performance goals. The 2015 Plan was scheduled to terminate on April 27, 2026. Upon adoption of the 2021 Plan, the 2015 Plan was terminated, and the Company determined additional grants would be made under the 2015 Plan. However, all awards issued under the 2015 Plan that have not been previously terminated or forfeited remain outstanding and continue unaffected. There are shares available for grant under the 2015 Plan. On February 8, 2006, the Board of Directors of the Company adopted the 2006 Equity Incentive Plan (the “2006 Plan”) of North Atlantic Holding Company, Inc., pursuant to which awards may be granted to employees. The 2006 Plan provides for the granting of nonqualified stock options and restricted stock awards to employees. Upon the adoption of the Company’s 2015 Equity Incentive Plan in connection with its IPO, the Company determined no additional grants would be made under the 2006 Plan. However, all awards issued under the 2006 Plan that have not been previously terminated or forfeited remain outstanding and continue unaffected. There are no shares available for grant under the 2006 Plan. Stock option activity for the 2006, 2015 and 2021 Plans is summarized below: Weighted Weighted Stock Average Average Option Exercise Grant Date Shares Price Fair Value Outstanding, December 31, 2021 619,835 $ 28.51 $ 8.70 Granted 114,827 30.58 10.34 Exercised (40,331 ) 12.49 4.08 Forfeited (11,117 ) 32.60 9.35 Outstanding, December 31, 2022 683,214 $ 29.74 $ 9.24 Exercised (24,955 ) 14.30 4.48 Forfeited (40,838 ) 37.83 12.44 Outstanding, March 31 2023 617,421 $ 29.82 $ 9.22 Under the 2006, 2015 and 2021 Plans, the total intrinsic value of options exercised during the three months ended March 31, 2023 and 2022, was $0.2 million, and $0.4 million, respectively. At March 31, 2023, under the 2006 Plan, the exercise price for the 69,163 outstanding options is $3.83 per share, all of which are exercisable. The weighted average of the remaining lives of the outstanding stock options with an exercise price of $3.83 is approximately 1.32 years. The Company estimates the expected life of these stock options is ten years from the date of grant. For the $3.83 per share options, the weighted average fair value of options at the date of grant was determined using the Black-Scholes model with the following assumptions a ten-year life from grant date, a current share price and exercise price of $3.83, a risk-free interest rate of 3.57%, volatility of 40%, and no assumed dividend yield. Based on these assumptions, the fair value of these options is approximately $2.17 per share option granted. At March 31, 2023, under the 2015 and 2021 Plans, the risk-free interest rate is based on the U.S. Treasury rate for the expected life at the time of grant. The expected volatility is based on the average long-term historical volatilities of peer companies. We intend to continue to consistently use the same group of publicly traded peer companies to determine expected volatility until sufficient information regarding volatility of our share price becomes available or until the selected companies are no longer suitable for this purpose. Due to our limited trading history, we are using the simplified method presented by SEC Staff Accounting Bulletin No. 107 to calculate expected holding periods, which represent the periods of time for which options granted are expected to be outstanding. We will continue to use this method until we have sufficient historical exercise experience to give us confidence in the reliability of our calculations. The fair values of these options were determined using the Black-Scholes option pricing model. The following table outlines the assumptions based on the number of options granted under the 2015 Plan. February 10, May 17, March 7, March 20, October 24, March 18, February 18, May 3, 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 Options outstanding at March 31 2023 20,000 40,733 51,567 125,984 25,000 84,259 91,850 12,000 Number exercisable at March 31 2023 20,000 40,733 51,567 125,984 25,000 84,259 64,664 8,040 Exercise price $ 13.00 $ 15.41 $ 21.21 $ 47.58 $ 20.89 $ 14.85 $ 51.75 $ 47.76 Remaining lives 3.87 4.13 4.94 5.98 6.57 6.97 7.89 8.10 Risk free interest rate 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 % Expected life 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 % Fair value at grant date $ 3.98 $ 4.60 $ 6.37 $ 15.63 $ 6.27 $ 4.41 $ 13.77 $ 13.06 The following table outlines the assumptions based on the number of options granted under the 2021 Plan. May 17, March 14, April 29, 2021 2022 2022 Number of options granted 7,500 100,000 14,827 Options outstanding at March 31 2023 7,500 74,538 14,827 Number exercisable at March 31 2023 5,100 25,343 5,042 Exercise price $ 45.05 $ 30.46 $ 31.39 Remaining lives 8.13 8.96 9.09 Risk free interest rate 0.84 % 2.10 % 2.92 % Expected volatility 31.50 % 35.33 % 35.33 % Expected life 6.000 6.000 6.000 Dividend yield 0.63 % 1.01 % 0.98 % Fair value at grant date $ 13.23 $ 10.23 $ 11.07 The Company has recorded compensation expense related to the options based on the provisions of ASC 718 under which the fixed portion of such expense is determined as the fair value of the options on the date of grant and amortized over the vesting period. The Company recorded compensation income related to the options of approximately $0.0 million and expense of approximately $0.2 million for the three months ended March 31, 2023 and 2022, respectively. Total unrecognized compensation expense related to options at March 31, 2023 PRSUs are restricted stock units subject to both performance-based and service-based vesting conditions. The number of shares of TPB Common Stock a recipient will receive upon vesting of a PRSU will be calculated by reference to certain performance metrics related to the Company’s performance over a five-year period. PRSUs will vest on the measurement date, which is no more than days after the performance period provided the applicable service and performance conditions are satisfied. As of March 31, 2023 there are PRSUs outstanding, all of which are unvested. The following table outlines the PRSUs granted and outstanding as of March 31, 2023 . March 20, March 18, December 28, February 18, March 14, 2019 2020 2020 2021 2022 Number of PRSUs granted 92,500 94,000 88,169 100,000 49,996 PRSUs outstanding at March 31 2023 77,380 85,810 58,779 90,190 44,982 Fair value as of grant date $ 47.58 $ 14.85 $ 46.42 $ 51.75 $ 30.46 Remaining lives 0.75 1.75 0.75 2.75 3.75 The Company recorded compensation expense related to the PRSUs of approximately $0.5 million and in the consolidated statements of income for the three months ended March 31, 2023 respectively, based on the probability of achieving the performance condition. Total unrecognized compensation expense related to these awards at March 31, 2023 is which will be expensed over the service periods based on the probability of achieving the performance condition. The Company has granted 89,696 RSUs which vest over one March 31, 2023 March 14, March 14, April 29, April 29, 2022 2022 2022 2022 Number of RSUs granted 50,004 28,726 11,393 4,522 RSUs outstanding at March 31, 2023 44,405 18,961 11,393 4,522 Fair value as of grant date $ 30.46 $ 30.46 $ 31.39 $ 31.39 Remaining lives 3.75 1.75 0.07 3.75 The Company has recorded compensation expense related to the RSUs based on the provisions of ASC 718 under which the fixed portion of such expense is determined as the fair value of the RSUs on the date of grant and amortized over the vesting period. The Company recorded compensation expense related to the RSUs of approximately $0.3 million and $0.2 million for the three months ended March 31, 2023 March 31, 2023 |
Contingencies
Contingencies | 3 Months Ended |
Mar. 31, 2023 | |
Contingencies [Abstract] | |
Contingencies | Note 14. Contingencies On October 9, 2020, a purported stockholder of Turning Point Brands, Inc., Paul-Emile Berteau, filed a complaint in the Delaware Court of Chancery relating to the merger of SDI with a TPB subsidiary pursuant to the Agreement and Plan of Merger and Reorganization, dated as of April 7, 2020, by and among TPB, SDI and Merger Sub. The complaint purports to assert two derivative counts for breach of fiduciary duty on TPB’s behalf and against the TPB Board of Directors and certain SDI affiliates. The third count purports to assert a direct claim against TPB and its Board of Directors based on allegations that TPB’s Amended and Restated Bylaws are inconsistent with TPB’s certificate of incorporation. On October 26, 2020, the TPB Board of Directors adopted Amendment No. 1 to TPB’s Amended and Restated Bylaws, which amended the challenged section of the bylaws. On June 30, 2021, the court granted in part and denied in part the defendants’ motions to dismiss. Among other things, the court dismissed TPB director H.C. Charles Diao as a defendant in the action and dismissed the third count of the plaintiff’s complaint as moot. The remaining defendants attended a mediation in late November 2022 where a tentative settlement was reached which, if consummated as expected, will result in a benefit to the Company. Other major tobacco companies are defendants in product liability claims. In a number of these cases, the amounts of punitive and compensatory damages sought are significant and, if such a claim were brought against the Company, could have a material adverse effect on our business and results of operations. The Company is subject to several lawsuits alleging personal injuries resulting from malfunctioning vaporizer devices or batteries and may be subject to claims in the future relating to other products. The Company is still evaluating these claims and the potential defenses to them. For example, the Company did not design or manufacture the products at issue; rather, the Company was merely the distributor. Nonetheless, there can be no assurance that the Company will prevail in these cases, and they could have a material adverse effect on the financial position, results of operations, or cash flows of the Company. We have several subsidiaries engaged in making, distributing, and selling vapor products. As a result of the overall publicity and controversy surrounding the vapor industry generally, many companies have received informational subpoenas from various regulatory bodies and in some jurisdictions regulatory lawsuits have been filed regarding marketing practices and possible underage sales. We expect that our subsidiaries will be subject to some such cases and investigative requests. In the acquisition of the vapor businesses, we negotiated financial “hold-backs”, which we expect to be able to use to defray expenses associated with the information production We have two franchisor subsidiaries. Like many franchise businesses, in the ordinary course of their business, these subsidiaries are from time-to-time responding parties to arbitration demands brought by franchisees. We have reached an agreement to arbitrate a claim brought by a former franchisee. This matter relates to the termination of the franchise agreement by the franchisor for failure to pay franchising fees and our subsequent demand that the franchisee cease using our marks and de-image locations formerly housing the franchises. The franchisee is claiming tortious interference and conversion. We believe the franchisor’s ultimate termination of the franchise agreement for multiple uncured material defaults by the franchisee was proper. We are party to another franchise arbitration with breach of contract and negligence allegations, among others. We believe we have good and valid substantive defenses against the claims and intend on vigorously defending our interests in these matters. |
Income Per Share
Income Per Share | 3 Months Ended |
Mar. 31, 2023 | |
Income Per Share [Abstract] | |
Income Per Share | Note 15. Income Per Share The following is a reconciliation of the numerators and denominators of the basic and diluted EPS computations of net income: Three Months Ended March 31, 2023 2022 Per Per Income Shares Share Income Shares Share Basic EPS: Numerator Net income attributable to Turning Point Brands, Inc. $ 7,597 $ 10,998 Denominator Weighted average 17,531,414 $ 0.43 18,257,695 $ 0.60 Diluted EPS: Numerator Net income attributable to Turning Point Brands, Inc. $ 7,597 $ 10,998 Interest expense related to Convertible Senior Notes, net of tax 954 1,054 Diluted net income attributable to Turning Point Brands. Inc. $ 8,551 $ 12,052 Denominator Basic weighted average 17,531,414 18,257,695 Convertible Senior Notes 3,029,699 3,209,690 Stock options 108,039 282,125 20,669,152 $ 0.41 21,749,510 $ 0.55 |
Segment Information
Segment Information | 3 Months Ended |
Mar. 31, 2023 | |
Segment Information [Abstract] | |
Segment Information | Note 16. Segment Information In accordance with ASC 280, Segment Reporting, the Company has three reportable segments: (1) Zig-Zag Products; (2) Stoker’s Products; and (3) Creative Distribution Solutions. The Zig-Zag Products segment markets and distributes (a) rolling papers, tubes, and related products; and (b) finished cigars and MYO cigar wraps and (c) CLIPPER reusable lighters. The Stoker’s Products segment (a) manufactures and markets moist snuff and (b) contracts for and markets loose leaf chewing tobacco products. The Creative Distribution Solutions segment (a) markets and distributes liquid vapor products and certain other products without tobacco and/or nicotine; (b) distributes a wide assortment of products to non-traditional retail outlets via VaporBeast; and (c) markets and distributes a wide assortment of products to individual consumers via the VaporFi B2C online platform. Products in the Zig-Zag Products and Stoker’s Products segments are distributed primarily through wholesale distributors in the U.S. and Canada while products in the Creative Distribution Solutions segment are distributed primarily through e-commerce to non-traditional retail outlets and direct to consumers in the U.S. Corporate unallocated includes the costs and assets of the Company not assigned to one of the three reportable segments such as intercompany transfers, deferred taxes, deferred financing fees, and investments in subsidiaries. The accounting policies of these segments are the same as those of the Company. Corporate costs are not directly charged to the three reportable segments in the ordinary course of operations. The Company evaluates the performance of its segments and allocates resources to them based on operating income. The tables below present financial information about reported segments: Three Months Ended March 31, 2023 2022 Net sales Zig-Zag products $ 41,887 $ 45,672 Stoker’s products 33,662 31,703 Total Zig-Zag and Stoker’s products $ 75,549 $ 77,375 Creative Distribution Solutions 25,407 23,519 Total $ 100,956 $ 100,894 Gross profit Zig-Zag products $ 22,390 $ 26,343 Stoker’s products 19,465 17,686 Total Zig-Zag and Stoker’s products $ 41,855 $ 44,029 Creative Distribution Solutions 6,762 7,765 Total $ 48,617 $ 51,794 Operating income (loss) Zig-Zag products $ 13,641 $ 18,737 Stoker’s products 14,563 13,506 Corporate unallocated (1)(2) (10,623 ) (13,692 ) Total Zig-Zag and Stoker’s products $ 17,581 $ 18,551 Creative Distribution Solutions 261 678 Total $ 17,842 $ 19,229 Interest expense, net 4,010 5,196 Investment income 4,799 (78 ) Gain on extinguishment of debt (777 ) - Income before income taxes $ 9,810 $ 14,111 Capital expenditures Zig-Zag products $ 973 $ 2,323 Stoker’s products 1,462 464 Total Zig-Zag and Stoker’s products $ 2,435 $ 2,787 Creative Distribution Solutions - - Total $ 2,435 $ 2,787 Depreciation and amortization Zig-Zag products $ 267 $ 92 Stoker’s products 706 767 Total Zig-Zag and Stoker’s products $ 973 $ 859 Creative Distribution Solutions 574 475 Total $ 1,547 $ 1,334 (1) Includes corporate costs that are not allocated to any of the three reportable segments. (2) Includes costs related to PMTA of $0.1 million in 2023 and $1.1 million in 2022. March 31, December 31, 2023 2022 Assets Zig-Zag products $ 207,653 $ 225,893 Stoker’s products 153,647 151,241 Corporate unallocated (1) 165,643 155,348 Total Zig-Zag and Stoker’s products $ 526,943 $ 532,482 Creative Distribution Solutions 32,983 39,624 Total $ 559,926 $ 572,106 (1) Includes assets not assigned to the three reportable segments. All goodwill has been allocated to the reportable segments. Revenue Disaggregation—Sales Channel Revenues of the Zig-Zag Products and Stoker’s Products segments are primarily comprised of sales made to wholesalers while Creative Distribution Solutions sales are made business to business and business to consumer, both online and through our corporate retail stores. Creative Distribution Solutions net sales are broken out by sales channel below. Creative Distribution Solutions Segment Three Months Ended March 31, 2023 2022 Business to Business $ 22,493 $ 19,124 Business to Consumer - Online 2,810 4,233 Other 104 162 Total $ 25,407 $ 23,519 Net Sales—Domestic vs. Foreign The following table shows a breakdown of consolidated net sales between domestic and foreign customers. Three Months Ended March 31, 2023 2022 Domestic $ 93,860 $ 93,766 Foreign 7,096 7,128 Total $ 100,956 $ 100,894 |
Additional Information with Res
Additional Information with Respect to Unrestricted Subsidiaries | 3 Months Ended |
Mar. 31, 2023 | |
Additional Information with Respect to Unrestricted Subsidiaries [Abstract] | |
Additional Information with Respect to Unrestricted Subsidiaries | Note 17. Additional Information with Respect to Unrestricted Subsidiaries Under the terms of the Indenture and Senior Secured Notes, the Company has designated its subsidiaries, South Beach Brands LLC, TPB Beast LLC and Intrepid Brands, LLC as an “Unrestricted Subsidiaries”. South Beach Brands LLC is a holding company under which our vape business TPB Beast LLC operating as Creative Distribution Solutions sits. The Company is required under the terms of the Indenture and the Senior Secured Notes to present additional information that reflects the financial condition and results of operations of the Company and its Restricted Subsidiaries separate from the financial condition and results of operations of the Company’s Unrestricted Subsidiaries as of and for the periods presented. This additional information is below. Income Statement for the Three Months Ended March 31, 2023 (unaudited): Company and Restricted Subsidiaries Unrestricted Subsidiaries Consolidated Net sales $ 75,549 $ 25,407 $ 100,956 Cost of sales 33,694 18,645 52,339 Gross profit 41,855 6,762 48,617 Selling, general, and administrative expenses 24,274 6,501 30,775 Operating income 17,581 261 17,842 Interest expense, net 4,010 - 4,010 Investment loss 4,799 - 4,799 Gain on extinguishment of debt (777 ) - (777 ) Income before income taxes 9,549 261 9,810 Income tax expense 2,402 66 2,468 Consolidated net income 7,147 195 7,342 Net loss attributable to non-controlling interest (255 ) - (255 ) Net income attributable to Turning Point Brands, Inc. $ 7,402 $ 195 $ 7,597 Balance Sheet as of March 31, 2023 (unaudited): ASSETS Company and Restricted Subsidiaries Unrestricted Subsidiaries Eliminations Consolidated Current assets: Cash $ 103,257 $ 1,544 - $ 104,801 Accounts receivable, net 7,888 696 - 8,584 Inventories 103,166 10,572 - 113,738 Other current assets 16,210 3,751 - 19,961 Total current assets 230,521 16,563 - 247,084 Property, plant, and equipment, net 23,937 427 - 24,364 Deferred income taxes 8,069 - - 8,069 Right of use assets 11,636 86 - 11,722 Deferred financing costs, net 256 - - 256 Goodwill 136,253 - - 136,253 Other intangible assets, net 66,944 15,877 - 82,821 Master Settlement Agreement (MSA) escrow deposits 28,710 - - 28,710 Other assets 20,617 30 - 20,647 Investment in unrestricted subsidiaries 52,238 - (52,238 ) - Total assets $ 579,181 $ 32,983 (52,238 ) $ 559,926 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 9,258 $ 1,132 - $ 10,390 Accrued liabilities 23,407 2,525 - 25,932 Other current liabilities 20 - - 20 Total current liabilities 32,685 3,657 - 36,342 Notes payable and long-term debt 393,578 - - 393,578 Lease liabilities 10,072 - - 10,072 Total liabilities 436,335 3,657 - 439,992 Commitments and contingencies Stockholders’ equity: Total Turning Point Brands Inc. Stockholders’ Equity/Net parent investment in unrestricted subsidiaries 141,394 29,326 (52,238 ) 118,482 Non-controlling interest 1,452 - - 1,452 Total stockholders’ equity 142,846 29,326 (52,238 ) 119,934 Total liabilities and stockholders’ equity $ 579,181 $ 32,983 (52,238 ) $ 559,926 Income Statement for the Three Months Ended March 31, 2022 (unaudited): Company and Restricted Subsidiaries Unrestricted Subsidiaries Consolidated Net sales $ 77,375 $ 23,519 $ 100,894 Cost of sales 33,346 15,754 49,100 Gross profit 44,029 7,765 51,794 Selling, general, and administrative expenses 25,478 7,087 32,565 Operating income 18,551 678 19,229 Interest expense, net 5,196 - 5,196 Investment loss (78 ) - (78 ) Income before income taxes 13,433 678 14,111 Income tax expense 3,180 160 3,340 Consolidated net income 10,253 518 10,771 Net loss attributable to non-controlling interest (227 ) - (227 ) Net income attributable to Turning Point Brands, Inc. $ 10,480 $ 518 $ 10,998 Balance Sheet as of December 31, 2022: 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 |
Dividends and Share Repurchase
Dividends and Share Repurchase | 3 Months Ended |
Mar. 31, 2023 | |
Dividends and Share Repurchase [Abstract] | |
Dividends and Share Repurchase | Note 18. Dividends and Share Repurchase The most recent dividend of $0.065 per common share was paid on April 7, 2023, to shareholders of record at the close of business on March 17, 2023. The Company currently pays a quarterly cash dividend. Dividends are considered restricted payments under the Senior Secured Notes Indenture and 2021 Revolving Credit Facility. The Company is generally permitted to make restricted payments provided that, at the time of payment, or as a result of payment, the Company is not in default on its debt covenants. Additional earnings and market capitalization restrictions limit the aggregate amount of restricted, quarterly dividends during a fiscal year. On February 25, 2020, the Company’s Board of Directors approved a $50.0 million share repurchase program, which is intended for opportunistic execution based upon a variety of factors including market dynamics. The program is subject to the ongoing discretion of the Board. On October 25, 2021, the Board increased the approved share repurchase program by $30.7 million and by an additional $24.6 million on February 24, 2022. $27.2 million remains available for share repurchases under the program at March 31, 2023. |
Description of Business and B_2
Description of Business and Basis of Presentation (Policies) | 3 Months Ended |
Mar. 31, 2023 | |
Description of Business and Basis of Presentation [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited interim, consolidated financial statements have been prepared in accordance with the accounting practices described in the Company’s audited, consolidated financial statements as of and for the year ended December 31, 2022. In the opinion of management, the unaudited, interim, consolidated financial statements included herein contain all adjustments necessary to present fairly the financial position, results of operations, and cash flows of the Company for the periods indicated. Such adjustments, other than nonrecurring adjustments separately disclosed, are of a normal and recurring nature. The operating results for interim periods are not necessarily indicative of results to be expected for a full year or future interim periods. The unaudited, interim, consolidated financial statements should be read in conjunction with the Company’s audited, consolidated financial statements and accompanying notes as of and for the year ended December 31, 2022. The accompanying interim, consolidated financial statements are presented in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) and, accordingly, do not include all the disclosures required by generally accepted accounting principles in the United States (“GAAP”) with respect to annual financial statements. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2023 | |
Summary of Significant Accounting Policies [Abstract] | |
Consolidation | Consolidation The consolidated financial statements include the accounts of the Company, its subsidiaries, all of which are wholly-owned, and variable interest entities (“VIEs”) for which the Company is considered the primary beneficiary. All significant intercompany transactions have been eliminated . |
Revenue Recognition | Revenue Recognition The Company recognizes revenues in accordance with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers (Topic 606), which includes excise taxes and shipping and handling charges billed to customers, net of cash discounts for prompt payment, sales returns and incentives, upon delivery of goods to the customer – at which time the Company’s performance obligation is satisfied - at an amount that the Company expects to be entitled to in exchange for those goods in accordance with the five-step analysis outlined in Topic 606: (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations, and (v) recognize revenue when (or as) performance obligations are satisfied. The Company excludes from the transaction price, sales taxes and value-added taxes imposed at the time of sale (which do not include excise taxes on smokeless tobacco, cigars or vaping products billed to customers). The Company records an allowance for sales returns, based principally on historical volume and return rates, which is included in accrued liabilities on the consolidated balance sheets. The Company records sales incentives, which consist of consumer incentives and trade promotion activities, as a reduction in revenues (a portion of which is based on amounts estimated to be due to wholesalers, retailers and consumers at the end of the period) based principally on historical volume and utilization rates. Expected payments for sales incentives are included in accrued liabilities on the consolidated balance sheets. A further requirement of ASC 606 is for entities to disaggregate revenue recognized from contracts with customers into categories that depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. The Company’s management views business performance through segments that closely resemble the performance of major product lines. Thus, the primary and most useful disaggregation of the Company’s contract revenue for decision making purposes is the disaggregation by segment which can be found in Note 16, “Segment Information”. An additional disaggregation of contract revenue by sales channel can be found within Note 16 as well. |
Shipping Costs | Shipping Costs The Company records shipping costs incurred as a component of selling, general, and administrative expenses. Shipping costs incurred were approximately $6.2 million and $6.1 million for the three months ending March 31 , 2023, and 2022, respectively. |
Inventories | Inventories Inventories are stated at the lower of cost or net realizable value using the first -in, -out (“FIFO”) method. Leaf tobacco is presented in current assets in accordance with standard industry practice, notwithstanding the fact that such tobaccos are carried longer than year for the purpose of curing. |
Fair Value | Fair Value GAAP establishes a framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1) and the lowest priority to unobservable inputs (level 3). The three levels of the fair value hierarchy under GAAP are described below: ● 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. |
Derivative Instruments | Derivative Instruments Foreign Currency Forward Contracts: The Compan y enters into foreign currency forwar under the provisions of ASC 815, Derivatives and Hedging. Under the Company’s policy, the Company may hedge up to 100% of its anticipated purchases of inventory in the denominated invoice currency over a forwa |
Risks and Uncertainties | Risks and Uncertainties Manufacturers and sellers of tobacco products are subject to regulation at the federal, state, and local levels. Such regulations include, among others, labeling requirements, limitations on advertising, and prohibition of sales to minors. The tobacco industry is likely to continue to be heavily regulated. There can be no assurance as to the ultimate content, timing, or effect of any regulation of tobacco products by any federal, state, or local legislative or regulatory body, nor can there be any assurance that any such legislation or regulation would not have a material adverse effect on the Company’s financial position, results of operations, or cash flows. In a number of states, targeted flavor bans have been proposed or enacted legislatively or by the administrative process. Depending on the number and location of such bans, that legislation or regulation could have a material adverse effect on the Company’s financial position, results of operations or cash flows. The U.S. Food and Drug Administration The tobacco industry has experienced, and is experiencing, significant product liability litigation. Most tobacco liability lawsuits have been brought against manufacturers and sellers of cigarettes for injuries allegedly caused by smoking or exposure to smoke. However, several lawsuits have been brought against manufacturers and sellers of smokeless products for injuries to health allegedly caused by use of smokeless products. Typically, such claims assert that use of smokeless products is addictive and causes oral cancer. Additionally, several lawsuits have been brought against manufacturers and distributors of Creative Distribution Solutions products due to malfunctioning devices. Master Settlement Agreement (MSA): Pursuant to the Master Settlement Agreement (the “MSA”) entered into in November 1998 by most states (represented by their attorneys general acting through the National Association of Attorneys General) and subsequent states’ statutes, a “cigarette manufacturer” (which is defined to include a manufacturer of make-your-own (“MYO”) cigarette tobacco) has the option of either becoming a signatory to the MSA or opening, funding, and maintaining an escrow account to have funds available for certain potential tobacco-related liabilities with sub-accounts on behalf of each settling state. Such companies are entitled to direct the investment of the escrowed funds and withdraw any appreciation but cannot withdraw the principal for twenty-five years from the year of each annual deposit, except to withdraw funds deposited pursuant to an individual state’s escrow statute to pay a final judgement to that state’s plaintiffs in the event of such a final judgement against the Company. The Company chose to open and fund an escrow account as its method of compliance. It is the Company’s policy to record amounts on deposit in the escrow account for prior years as a non-current asset. As of March 31, 2023, the Company had on deposit approximately $32.1 million, the fair value of which was approximately $28.7 million. At December 31, 2022, the Company had on deposit approximately $32.1 million, the fair value of which was approximately $28.0 million. The Company discontinued its generic category of MYO in 2019 and its Zig-Zag branded MYO cigarette smoking tobacco in 2017. Thus, pending a change in MSA legislation, the Company has no remaining product lines covered by the MSA and will not be required to make future escrow deposits. The Company has chosen to invest a portion of the MSA escrow, from time to time, in U.S. Government securities including TIPS, Treasury Notes, and Treasury Bonds. These investments are classified as available-for-sale and carried at fair value. Realized losses are prohibited under the MSA; any investment in an unrealized loss position will be held until the value is recovered, or until maturity. Fair values for the U.S. Governmental agency obligations are Level 2 in the fair value hierarchy. The following tables show cost and estimated fair value of the assets held in the MSA account, respectively, as well as the maturities of the U.S. Governmental agency obligations held in such account for the periods indicated. As of March 31, 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) 2,736 (185 ) 2,551 10,226 (1,251 ) 8,975 U.S. Governmental agency obligations (unrealized position > 12 months) 27,408 (3,178 ) 24,230 19,918 (2,842 ) 17,076 $ 32,073 $ (3,363 ) $ 28,710 $ 32,073 $ (4,093 ) $ 27,980 As of March 31, 2023 Less than one year $ 200 One to five years 11,241 Five to ten years 16,748 Greater than ten years 1,955 Total $ 30,144 The following shows the amount of deposits by sales year for the MSA escrow account: Deposits as of Sales Year March 31, 2023 December 31, 2022 1999 $ 211 $ 211 2000 1,017 1,017 2001 1,673 1,673 2002 2,271 2,271 2003 4,249 4,249 2004 3,714 3,714 2005 4,553 4,553 2006 3,847 3,847 2007 4,167 4,167 2008 3,364 3,364 2009 1,619 1,619 2010 406 406 2011 193 193 2012 199 199 2013 173 173 2014 143 143 2015 101 101 2016 91 91 2017 82 82 Total $ 32,073 $ 32,073 FDA: On June 22, 2009, the Family Smoking Prevention and Tobacco Control Act (the “FSPTCA”) authorized the FDA to immediately regulate the manufacturing, sale, and marketing of four categories of tobacco products – cigarettes, cigarette tobacco, roll-your-own tobacco, and smokeless tobacco. On August 8, 2016, the FDA deeming regulation became effective. The deeming regulation gave the FDA the authority to also regulate cigars, pipe tobacco, e-cigarettes, vaporizers, and e-liquids as “deemed” tobacco products under the FSPTCA. The FDA assesses tobacco product user fees on six classes of regulated tobacco products and computes user fees using a methodology similar to the methodology used by the U.S Department of Agriculture to compute the Tobacco Transition Payment Program (“TTPP,” also known as the “Tobacco Buyout”) assessment. First, the total, annual, congressionally established user fee assessment is allocated among the various classes of tobacco products using the federal excise tax weighted market share of tobacco products subject to regulation. Then, the assessment for each class of tobacco products is divided among individual manufacturers and importers. In August 2016, the FDA’s regulatory authority under the Tobacco Control Act (the “TCA”) was extended to all tobacco products not previously covered, including: (i) certain Creative Distribution Solutions products (such as electronic cigarettes, vaporizers and e-liquids) and their components or parts (such as tanks, coils and batteries); (ii) cigars and their components or parts (such as cigar tobacco and wraps); (iii) pipe tobacco; (iv) hookah products; and (v) any other tobacco product “newly deemed” by the FDA. These “deeming regulations” apply to all products made or derived from tobacco intended for human consumption, but excluding accessories of tobacco products (such as lighters). Accordingly, the FDA has since regulated our cigar and cigar wrap products as well as our vapor products containing tobacco-derived nicotine and products intended or reasonably expected to be used to consume such e-liquids. Subsequently, on April 14, 2022, the FDA Center for Tobacco Products also obtained jurisdiction over non-tobacco nicotine products (“NTN Products”), including synthetic nicotine. That law subjects NTN Products to the same requirements as tobacco-derived products, including not selling these products to persons under 21 years of age, not marketing these products as modified risk tobacco products without authorization, and not distributing free samples of these products. Additionally, NTN Products became subject to premarket filing requirements. Under the new law, manufacturers were required to file a Premarket Tobacco Application A successful PMTA must demonstrate that the subject product is “appropriate for the protection of public health,” taking into account the effect of the marketing of the product on all sub-populations while a Substantial Equivalence Report must demonstrate that a new product either has the same characteristics as its predicate product or different characteristics but does not raise different questions of public health. We submitted premarket filings prior to the September 9, 2020 deadline for certain of our tobacco and tobacco-derived products, all of which remain under review. We likewise filed premarket submissions for certain of our NTN Products ahead of the May 14, 2022 deadline. We have continued to supplement these applications with additional information; however, there can be no guarantee that the FDA will accept such amendments or that the applications will meet the standard of “appropriate for the protection of public health.” The FDA has indicated its enforcement priority is those applicants who have received negative action on their application, such as a Marketing Denial Order or Refuse to File notification and who continue to illegally sell those unauthorized products, as well as products for which manufacturers failed to submit a marketing application. Despite these stated enforcement priorities, given the FDA’s limited resources we expect that for a period of time there may be a lack of enforcement, which may adversely impact our ability to compete in the marketplace against those who continue to sell unauthorized products. There can be no guarantee that the FDA will not shift its enforcement priorities or that it will increase in ability to enforce against unauthorized products over time. The FDA has issued a number of rules related to premarket filings; however, those rules were not finalized prior to the September 9, 2020, deadline. On October 5, 2021, the FDA finalized rules related to the Substantial Equivalence process and the Premarket Tobacco Product Application process, respectively, which both became effective November 4, 2021. Both final rules (collectively, the “Rules”) indicate that any new or additional requirements will not retroactively apply to currently pending PMTAs for tobacco and tobacco-derived products; however, the information outlined in the rule remains important to the FDA’s substantive review of an application. The FDA has yet to indicate how it might apply these Rules to NTN Product filings. We believe we have products that meet the Rules and have filed premarket filings supporting a showing of the respective required standards. However, there is no assurance that the FDA’s guidance or regulations will not change, or that the FDA will not prioritize its enforcement in a manner that negatively affects our pending applications, or that unforeseen circumstances will not arise that prevent us from sufficiently supplementing or completing our applications or otherwise increases the amount of time and money we are required to spend to receive all necessary marketing orders. Although we filed many premarket applications in a timely manner, no assurance can be given that the applications will ultimately be successful. This may result in the prioritization of supplementing or completing applications for high priority SKUs in our inventory position, which could adversely impact future revenues generated by lower priority SKUs. In addition, we currently distribute many third-party manufactured vapor products for which we are completely dependent on the manufacturer complying with the premarket filing requirements. There can be no assurance that these third-party products will receive a marketing order or otherwise remain in compliance with relevant legal requirements. While we will take measures to pursue regulatory compliance for our own privately-branded or proprietary vape products that compete with these third-party products, there is no assurance that such proprietary products would be as successful in the marketplace or can fully displace third-party products that are currently being distributed by us, which could adversely affect our results of operations and liquidity. For a period of time after the filing deadline, we expect there to be a lack of enforcement, which may adversely affect our ability to compete in the marketplace against those who continue to sell unauthorized products. On May 4, 2022, the FDA proposed Prevent All Cigarette Trafficking Act (“PACT Act”): On December 27, 2020, President Trump signed the Further Consolidated Appropriations Act, 2021, into law. This law included an amendment to the Jenkins Act expanding the definition of “cigarette” to include “electronic nicotine delivery systems,” or ENDS, and required that the United States Postal Service (USPS) promulgate regulations clarifying the applicability of the prohibition on delivery sales of cigarettes to ENDS. USPS issued its final rule on October 21, 2021. We have received appropriate shipping exemptions from carrier services we use to carry the affected freight. Failure to comply with the PACT Act could result in significant financial or criminal penalties. To the extent we are unable to respond to, or comply with, these new requirements, we could lose our shipping exemptions, be subject to civil or criminal penalties, or there could be a material adverse effect on our business, results of operations and financial condition. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Summary of Significant Accounting Policies [Abstract] | |
Fair Value of MSA Escrow Account | The following tables show cost and estimated fair value of the assets held in the MSA account, respectively, as well as the maturities of the U.S. Governmental agency obligations held in such account for the periods indicated. As of March 31, 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) 2,736 (185 ) 2,551 10,226 (1,251 ) 8,975 U.S. Governmental agency obligations (unrealized position > 12 months) 27,408 (3,178 ) 24,230 19,918 (2,842 ) 17,076 $ 32,073 $ (3,363 ) $ 28,710 $ 32,073 $ (4,093 ) $ 27,980 |
Maturities of U.S. Governmental Agency Obligations | As of March 31, 2023 Less than one year $ 200 One to five years 11,241 Five to ten years 16,748 Greater than ten years 1,955 Total $ 30,144 |
Deposits by Sales Year for MSA Escrow Account | The following shows the amount of deposits by sales year for the MSA escrow account: Deposits as of Sales Year March 31, 2023 December 31, 2022 1999 $ 211 $ 211 2000 1,017 1,017 2001 1,673 1,673 2002 2,271 2,271 2003 4,249 4,249 2004 3,714 3,714 2005 4,553 4,553 2006 3,847 3,847 2007 4,167 4,167 2008 3,364 3,364 2009 1,619 1,619 2010 406 406 2011 193 193 2012 199 199 2013 173 173 2014 143 143 2015 101 101 2016 91 91 2017 82 82 Total $ 32,073 $ 32,073 |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Inventories [Abstract] | |
Inventories | The components of inventories are as follows: March 31, December 31, 2023 2022 Raw materials and work in process $ 6,292 $ 7,283 Leaf tobacco 40,131 43,468 Finished goods - Zig-Zag Products 43,640 42,279 Finished goods - Stoker’s Products 11,067 9,667 Finished goods - Creative Distribution Solutions 10,942 15,431 Other 1,666 1,787 Inventories $ 113,738 $ 119,915 |
Other Current Assets (Tables)
Other Current Assets (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Other Current Assets [Abstract] | |
Other Current Assets | Other current assets consist of: March 31, December 31, 2023 2022 Inventory deposits $ 5,280 $ 6,395 Insurance deposit 3,000 3,000 Prepaid taxes 223 448 Other 11,458 13,116 Total $ 19,961 $ 22,959 |
Property, Plant, and Equipment
Property, Plant, and Equipment (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Property, Plant, and Equipment [Abstract] | |
Property, Plant, and Equipment | Property, plant, and equipment consists of: March 31, December 31, 2023 2022 Land $ 22 $ 22 Buildings and improvements 3,096 3,096 Leasehold improvements 5,404 5,404 Machinery and equipment 28,082 25,832 Furniture and fixtures 9,317 9,264 Gross property, plant and equipment 45,921 43,618 Accumulated depreciation (21,557 ) (20,830 ) Net property, plant and equipment $ 24,364 $ 22,788 |
Other Assets (Tables)
Other Assets (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Other Assets [Abstract] | |
Other Assets | Other assets consist of: March 31, December 31, 2023 2022 Equity investments $ 8,479 $ 13,376 Debt security investment 7,820 7,820 Other 4,348 1,453 Total $ 20,647 $ 22,649 |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Accrued Liabilities [Abstract] | |
Accrued Liabilities | Accrued liabilities consist of: March 31, December 31, 2023 2022 Accrued payroll and related items $ 4,437 $ 7,685 Customer returns and allowances 5,883 7,291 Taxes payable 2,215 1,867 Lease liabilities 2,866 3,102 Accrued interest 2,683 7,277 Other 7,848 5,779 Total $ 25,932 $ 33,001 |
Notes Payable and Long-Term D_2
Notes Payable and Long-Term Debt (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Notes Payable and Long-Term Debt [Abstract] | |
Notes Payable and Long-Term Debt | Notes payable and long-term debt consists of the following in order of preference: March 31, December 31, 2023 2022 Senior Secured Notes $ 250,000 $ 250,000 Convertible Senior Notes 148,600 162,500 Gross notes payable and long-term debt 398,600 412,500 Less deferred finance charges (5,022 ) (5,743 ) Notes payable and long-term debt $ 393,578 $ 406,757 |
Redemption Prices of Senior Secured Notes | The Company may redeem the Senior Secured Notes, in whole or in part, at any time prior to February 15, 2023, at the redemption prices (expressed as a percentage of the principal amount to be redeemed) set forth below, plus accrued and unpaid interest, if any, on the Senior Secured Notes to be redeemed to (but not including) the applicable redemption date if redeemed during the period indicated below: 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 % |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Leases [Abstract] | |
Components of Lease Expense | The components of lease expense consisted of the following: Three Months Ended March 31, 2023 2022 Operating lease cost Cost of sales $ 128 $ 227 Selling, general and administrative 521 399 Variable lease cost (1) 225 112 Short-term lease cost 6 14 Total $ 880 $ 752 (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. |
Amounts Related to Operating and Financing Leases | Three Months Ended March 31, 2023 2022 Financing lease cost Selling, general and administrative $ 338 $ 291 Total $ 338 $ 291 March 31, December 31, 2023 2022 Assets: Right of use assets - Operating $ 10,477 $ 10,967 Right of use assets - Financing $ 1,245 $ 1,498 Total lease assets $ 11,722 $ 12,465 Liabilities: Current lease liabilities - Operating $ 1,976 $ 2,007 Current lease liabilities - Financing (2) $ 890 $ 1,095 Long-term lease liabilities - Operating $ 9,762 $ 10,243 Long-term lease liabilities - Financing 310 350 Total lease liabilities $ 12,938 $ 13,695 (2) Reported within accrued liabilities on the balance sheet |
Share Incentive Plans (Tables)
Share Incentive Plans (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Share Incentive Plans [Abstract] | |
Stock Option Activity | Stock option activity for the 2006, 2015 and 2021 Plans is summarized below: Weighted Weighted Stock Average Average Option Exercise Grant Date Shares Price Fair Value Outstanding, December 31, 2021 619,835 $ 28.51 $ 8.70 Granted 114,827 30.58 10.34 Exercised (40,331 ) 12.49 4.08 Forfeited (11,117 ) 32.60 9.35 Outstanding, December 31, 2022 683,214 $ 29.74 $ 9.24 Exercised (24,955 ) 14.30 4.48 Forfeited (40,838 ) 37.83 12.44 Outstanding, March 31 2023 617,421 $ 29.82 $ 9.22 |
Assumptions for Options Granted Under 2015 and 2021 Plan | The following table outlines the assumptions based on the number of options granted under the 2015 Plan. February 10, May 17, March 7, March 20, October 24, March 18, February 18, May 3, 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 Options outstanding at March 31 2023 20,000 40,733 51,567 125,984 25,000 84,259 91,850 12,000 Number exercisable at March 31 2023 20,000 40,733 51,567 125,984 25,000 84,259 64,664 8,040 Exercise price $ 13.00 $ 15.41 $ 21.21 $ 47.58 $ 20.89 $ 14.85 $ 51.75 $ 47.76 Remaining lives 3.87 4.13 4.94 5.98 6.57 6.97 7.89 8.10 Risk free interest rate 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 % Expected life 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 % Fair value at grant date $ 3.98 $ 4.60 $ 6.37 $ 15.63 $ 6.27 $ 4.41 $ 13.77 $ 13.06 The following table outlines the assumptions based on the number of options granted under the 2021 Plan. May 17, March 14, April 29, 2021 2022 2022 Number of options granted 7,500 100,000 14,827 Options outstanding at March 31 2023 7,500 74,538 14,827 Number exercisable at March 31 2023 5,100 25,343 5,042 Exercise price $ 45.05 $ 30.46 $ 31.39 Remaining lives 8.13 8.96 9.09 Risk free interest rate 0.84 % 2.10 % 2.92 % Expected volatility 31.50 % 35.33 % 35.33 % Expected life 6.000 6.000 6.000 Dividend yield 0.63 % 1.01 % 0.98 % Fair value at grant date $ 13.23 $ 10.23 $ 11.07 |
PRSU Activity | PRSUs are restricted stock units subject to both performance-based and service-based vesting conditions. The number of shares of TPB Common Stock a recipient will receive upon vesting of a PRSU will be calculated by reference to certain performance metrics related to the Company’s performance over a five-year period. PRSUs will vest on the measurement date, which is no more than days after the performance period provided the applicable service and performance conditions are satisfied. As of March 31, 2023 there are PRSUs outstanding, all of which are unvested. The following table outlines the PRSUs granted and outstanding as of March 31, 2023 . March 20, March 18, December 28, February 18, March 14, 2019 2020 2020 2021 2022 Number of PRSUs granted 92,500 94,000 88,169 100,000 49,996 PRSUs outstanding at March 31 2023 77,380 85,810 58,779 90,190 44,982 Fair value as of grant date $ 47.58 $ 14.85 $ 46.42 $ 51.75 $ 30.46 Remaining lives 0.75 1.75 0.75 2.75 3.75 |
RSU Activity | The Company has granted 89,696 RSUs which vest over one March 31, 2023 March 14, March 14, April 29, April 29, 2022 2022 2022 2022 Number of RSUs granted 50,004 28,726 11,393 4,522 RSUs outstanding at March 31, 2023 44,405 18,961 11,393 4,522 Fair value as of grant date $ 30.46 $ 30.46 $ 31.39 $ 31.39 Remaining lives 3.75 1.75 0.07 3.75 |
Income Per Share (Tables)
Income Per Share (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Income Per Share [Abstract] | |
Basic and Diluted Net Income per Share | The following is a reconciliation of the numerators and denominators of the basic and diluted EPS computations of net income: Three Months Ended March 31, 2023 2022 Per Per Income Shares Share Income Shares Share Basic EPS: Numerator Net income attributable to Turning Point Brands, Inc. $ 7,597 $ 10,998 Denominator Weighted average 17,531,414 $ 0.43 18,257,695 $ 0.60 Diluted EPS: Numerator Net income attributable to Turning Point Brands, Inc. $ 7,597 $ 10,998 Interest expense related to Convertible Senior Notes, net of tax 954 1,054 Diluted net income attributable to Turning Point Brands. Inc. $ 8,551 $ 12,052 Denominator Basic weighted average 17,531,414 18,257,695 Convertible Senior Notes 3,029,699 3,209,690 Stock options 108,039 282,125 20,669,152 $ 0.41 21,749,510 $ 0.55 |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Segment Information [Abstract] | |
Financial Information of Reportable Segments | The tables below present financial information about reported segments: Three Months Ended March 31, 2023 2022 Net sales Zig-Zag products $ 41,887 $ 45,672 Stoker’s products 33,662 31,703 Total Zig-Zag and Stoker’s products $ 75,549 $ 77,375 Creative Distribution Solutions 25,407 23,519 Total $ 100,956 $ 100,894 Gross profit Zig-Zag products $ 22,390 $ 26,343 Stoker’s products 19,465 17,686 Total Zig-Zag and Stoker’s products $ 41,855 $ 44,029 Creative Distribution Solutions 6,762 7,765 Total $ 48,617 $ 51,794 Operating income (loss) Zig-Zag products $ 13,641 $ 18,737 Stoker’s products 14,563 13,506 Corporate unallocated (1)(2) (10,623 ) (13,692 ) Total Zig-Zag and Stoker’s products $ 17,581 $ 18,551 Creative Distribution Solutions 261 678 Total $ 17,842 $ 19,229 Interest expense, net 4,010 5,196 Investment income 4,799 (78 ) Gain on extinguishment of debt (777 ) - Income before income taxes $ 9,810 $ 14,111 Capital expenditures Zig-Zag products $ 973 $ 2,323 Stoker’s products 1,462 464 Total Zig-Zag and Stoker’s products $ 2,435 $ 2,787 Creative Distribution Solutions - - Total $ 2,435 $ 2,787 Depreciation and amortization Zig-Zag products $ 267 $ 92 Stoker’s products 706 767 Total Zig-Zag and Stoker’s products $ 973 $ 859 Creative Distribution Solutions 574 475 Total $ 1,547 $ 1,334 (1) Includes corporate costs that are not allocated to any of the three reportable segments. (2) Includes costs related to PMTA of $0.1 million in 2023 and $1.1 million in 2022. March 31, December 31, 2023 2022 Assets Zig-Zag products $ 207,653 $ 225,893 Stoker’s products 153,647 151,241 Corporate unallocated (1) 165,643 155,348 Total Zig-Zag and Stoker’s products $ 526,943 $ 532,482 Creative Distribution Solutions 32,983 39,624 Total $ 559,926 $ 572,106 (1) Includes assets not assigned to the three reportable segments. All goodwill has been allocated to the reportable segments. |
Revenue Disaggregation - Sales Channel | Revenues of the Zig-Zag Products and Stoker’s Products segments are primarily comprised of sales made to wholesalers while Creative Distribution Solutions sales are made business to business and business to consumer, both online and through our corporate retail stores. Creative Distribution Solutions net sales are broken out by sales channel below. Creative Distribution Solutions Segment Three Months Ended March 31, 2023 2022 Business to Business $ 22,493 $ 19,124 Business to Consumer - Online 2,810 4,233 Other 104 162 Total $ 25,407 $ 23,519 |
Net Sales - Domestic and Foreign | The following table shows a breakdown of consolidated net sales between domestic and foreign customers. Three Months Ended March 31, 2023 2022 Domestic $ 93,860 $ 93,766 Foreign 7,096 7,128 Total $ 100,956 $ 100,894 |
Additional Information with R_2
Additional Information with Respect to Unrestricted Subsidiaries (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Additional Information with Respect to Unrestricted Subsidiaries [Abstract] | |
Income Statement | Income Statement for the Three Months Ended March 31, 2023 (unaudited): Company and Restricted Subsidiaries Unrestricted Subsidiaries Consolidated Net sales $ 75,549 $ 25,407 $ 100,956 Cost of sales 33,694 18,645 52,339 Gross profit 41,855 6,762 48,617 Selling, general, and administrative expenses 24,274 6,501 30,775 Operating income 17,581 261 17,842 Interest expense, net 4,010 - 4,010 Investment loss 4,799 - 4,799 Gain on extinguishment of debt (777 ) - (777 ) Income before income taxes 9,549 261 9,810 Income tax expense 2,402 66 2,468 Consolidated net income 7,147 195 7,342 Net loss attributable to non-controlling interest (255 ) - (255 ) Net income attributable to Turning Point Brands, Inc. $ 7,402 $ 195 $ 7,597 Income Statement for the Three Months Ended March 31, 2022 (unaudited): Company and Restricted Subsidiaries Unrestricted Subsidiaries Consolidated Net sales $ 77,375 $ 23,519 $ 100,894 Cost of sales 33,346 15,754 49,100 Gross profit 44,029 7,765 51,794 Selling, general, and administrative expenses 25,478 7,087 32,565 Operating income 18,551 678 19,229 Interest expense, net 5,196 - 5,196 Investment loss (78 ) - (78 ) Income before income taxes 13,433 678 14,111 Income tax expense 3,180 160 3,340 Consolidated net income 10,253 518 10,771 Net loss attributable to non-controlling interest (227 ) - (227 ) Net income attributable to Turning Point Brands, Inc. $ 10,480 $ 518 $ 10,998 |
Balance Sheet | Balance Sheet as of March 31, 2023 (unaudited): ASSETS Company and Restricted Subsidiaries Unrestricted Subsidiaries Eliminations Consolidated Current assets: Cash $ 103,257 $ 1,544 - $ 104,801 Accounts receivable, net 7,888 696 - 8,584 Inventories 103,166 10,572 - 113,738 Other current assets 16,210 3,751 - 19,961 Total current assets 230,521 16,563 - 247,084 Property, plant, and equipment, net 23,937 427 - 24,364 Deferred income taxes 8,069 - - 8,069 Right of use assets 11,636 86 - 11,722 Deferred financing costs, net 256 - - 256 Goodwill 136,253 - - 136,253 Other intangible assets, net 66,944 15,877 - 82,821 Master Settlement Agreement (MSA) escrow deposits 28,710 - - 28,710 Other assets 20,617 30 - 20,647 Investment in unrestricted subsidiaries 52,238 - (52,238 ) - Total assets $ 579,181 $ 32,983 (52,238 ) $ 559,926 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 9,258 $ 1,132 - $ 10,390 Accrued liabilities 23,407 2,525 - 25,932 Other current liabilities 20 - - 20 Total current liabilities 32,685 3,657 - 36,342 Notes payable and long-term debt 393,578 - - 393,578 Lease liabilities 10,072 - - 10,072 Total liabilities 436,335 3,657 - 439,992 Commitments and contingencies Stockholders’ equity: Total Turning Point Brands Inc. Stockholders’ Equity/Net parent investment in unrestricted subsidiaries 141,394 29,326 (52,238 ) 118,482 Non-controlling interest 1,452 - - 1,452 Total stockholders’ equity 142,846 29,326 (52,238 ) 119,934 Total liabilities and stockholders’ equity $ 579,181 $ 32,983 (52,238 ) $ 559,926 Balance Sheet as of December 31, 2022: 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 |
Description of Business and B_3
Description of Business and Basis of Presentation (Details) Outlet in Thousands | 3 Months Ended |
Mar. 31, 2023 Outlet Segment | |
Description of Business and Basis of Presentation [Abstract] | |
Number of reportable segments | Segment | 3 |
Number of retail outlets in North America | Outlet | 217 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies, Shipping Costs (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Shipping Costs [Abstract] | ||
Shipping costs | $ 6.2 | $ 6.1 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies, Derivative Instruments (Details) - Maximum [Member] | 3 Months Ended |
Mar. 31, 2023 | |
Derivative Instruments [Abstract] | |
Percentage of anticipated purchases of inventory that may be hedged | 100% |
Term of hedge | 12 months |
Percentage of non-inventory purchases that may be hedged | 100% |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies, Master Settlement Agreement (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Dec. 31, 2022 | |
Master Settlement Agreement [Abstract] | ||
Term for restricted withdrawal of principal from MSA escrow account | 25 years | |
Fair Value of MSA Escrow Account, More than 12 Months [Abstract] | ||
Estimated fair value, more than 12 months | $ 7,820 | $ 7,820 |
Fair Value of MSA Escrow Account [Abstract] | ||
Cost | 32,073 | 32,073 |
Gross unrealized losses | (3,363) | (4,093) |
Estimated fair value | 28,710 | 27,980 |
Maturities of U.S. Governmental Agency Obligations [Abstract] | ||
Less than one year | 200 | |
One to five years | 11,241 | |
Five to ten years | 16,748 | |
Greater than ten years | 1,955 | |
Total | 30,144 | |
Master Settlement Agreement Escrow Account by Sales Year [Abstract] | ||
1999 | 211 | 211 |
2000 | 1,017 | 1,017 |
2001 | 1,673 | 1,673 |
2002 | 2,271 | 2,271 |
2003 | 4,249 | 4,249 |
2004 | 3,714 | 3,714 |
2005 | 4,553 | 4,553 |
2006 | 3,847 | 3,847 |
2007 | 4,167 | 4,167 |
2008 | 3,364 | 3,364 |
2009 | 1,619 | 1,619 |
2010 | 406 | 406 |
2011 | 193 | 193 |
2012 | 199 | 199 |
2013 | 173 | 173 |
2014 | 143 | 143 |
2015 | 101 | 101 |
2016 | 91 | 91 |
2017 | 82 | 82 |
Total | 32,073 | 32,073 |
Cash and Cash Equivalents [Member] | ||
Fair Value of MSA Escrow Account [Abstract] | ||
Cost | 1,929 | 1,929 |
Gross unrealized losses | 0 | 0 |
Estimated fair value | 1,929 | 1,929 |
U. S. Governmental Agency Obligations [Member] | ||
Fair Value of MSA Escrow Account, Less than 12 Months [Abstract] | ||
Cost, less than 12 months | 2,736 | 10,226 |
Gross unrealized losses, less than 12 months | (185) | (1,251) |
Estimated fair value, less than 12 months | 2,551 | 8,975 |
Fair Value of MSA Escrow Account, More than 12 Months [Abstract] | ||
Cost, more than 12 months | 27,408 | 19,918 |
Gross unrealized losses, more than 12 months | (3,178) | (2,842) |
Estimated fair value, more than 12 months | $ 24,230 | $ 17,076 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies, Food and Drug Administration (Details) | 3 Months Ended | |
Mar. 31, 2023 Category Standard Class | Oct. 05, 2021 Rule | |
Food and Drug Administration [Abstract] | ||
Number of categories of tobacco products regulated by the FDA | Category | 4 | |
Number of classes of regulated tobacco products on which user fees are assessed | Class | 6 | |
Number of rules finalized by the FDA | Rule | 2 | |
Number of proposed tobacco product standards related to combusted tobacco products | Standard | 2 |
Derivative Instruments (Details
Derivative Instruments (Details) € in Millions, $ in Millions | 3 Months Ended | ||||
Mar. 31, 2023 EUR (€) | Mar. 31, 2022 USD ($) | Mar. 31, 2023 USD ($) | Dec. 31, 2022 EUR (€) | Dec. 31, 2022 USD ($) | |
Maximum [Member] | |||||
Derivative Instruments [Abstract] | |||||
Percentage of anticipated purchases of inventory that may be hedged | 100% | ||||
Term of hedge | 12 months | ||||
Percentage of non-inventory purchases that may be hedged | 100% | ||||
Foreign Currency [Member] | |||||
Derivative Instruments [Abstract] | |||||
Notional amount of contracts executed | $ | $ 0 | ||||
Foreign Currency [Member] | Other Current Assets [Member] | |||||
Derivative Instruments [Abstract] | |||||
Fair value, asset | $ | $ 0.7 | $ 1.2 | |||
Foreign Currency [Member] | Accrued Liabilities [Member] | |||||
Derivative Instruments [Abstract] | |||||
Fair value, liability | $ | $ 0 | $ 0 | |||
Foreign Currency [Member] | Purchase [Member] | |||||
Derivative Instruments [Abstract] | |||||
Notional amount of contracts executed | € | € 4.9 | ||||
Notional amount | € | 15.3 | € 18.5 | |||
Foreign Currency [Member] | Sale [Member] | |||||
Derivative Instruments [Abstract] | |||||
Notional amount | € | € 10.4 | € 18.5 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 | Feb. 11, 2021 | Jul. 31, 2019 |
Fair Value of Financial Instruments [Abstract] | ||||
Note payable | $ 398,600 | $ 412,500 | ||
Senior Secured Notes [Member] | ||||
Fair Value of Financial Instruments [Abstract] | ||||
Interest rate | 5.625% | |||
Face amount | $ 250,000 | 250,000 | $ 250,000 | |
Long-term debt | 227,500 | 226,400 | ||
Note payable | $ 250,000 | 250,000 | ||
Convertible Senior Notes [Member] | ||||
Fair Value of Financial Instruments [Abstract] | ||||
Interest rate | 2.50% | |||
Face amount | $ 172,500 | |||
Note payable | $ 148,600 | 162,500 | ||
Fair Value [Member] | Convertible Senior Notes [Member] | ||||
Fair Value of Financial Instruments [Abstract] | ||||
Long-term debt | $ 136,700 | $ 139,200 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Inventories [Abstract] | ||
Raw materials and work in process | $ 6,292 | $ 7,283 |
Leaf tobacco | 40,131 | 43,468 |
Other | 1,666 | 1,787 |
Inventories | 113,738 | 119,915 |
Inventory valuation allowance | 4,800 | 4,500 |
Zig-Zag Products [Member] | ||
Inventories [Abstract] | ||
Finished goods | 43,640 | 42,279 |
Stoker's Products [Member] | ||
Inventories [Abstract] | ||
Finished goods | 11,067 | 9,667 |
Creative Distribution Solutions [Member] | ||
Inventories [Abstract] | ||
Finished goods | $ 10,942 | $ 15,431 |
Other Current Assets (Details)
Other Current Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Other Current Assets [Abstract] | ||
Inventory deposits | $ 5,280 | $ 6,395 |
Insurance deposit | 3,000 | 3,000 |
Prepaid taxes | 223 | 448 |
Other | 11,458 | 13,116 |
Total | $ 19,961 | $ 22,959 |
Property, Plant, and Equipmen_2
Property, Plant, and Equipment (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Property, Plant, and Equipment [Abstract] | ||
Property, plant and equipment | $ 45,921 | $ 43,618 |
Accumulated depreciation | (21,557) | (20,830) |
Net property, plant and equipment | 24,364 | 22,788 |
Land [Member] | ||
Property, Plant, and Equipment [Abstract] | ||
Property, plant and equipment | 22 | 22 |
Buildings and Improvements [Member] | ||
Property, Plant, and Equipment [Abstract] | ||
Property, plant and equipment | 3,096 | 3,096 |
Leasehold Improvements [Member] | ||
Property, Plant, and Equipment [Abstract] | ||
Property, plant and equipment | 5,404 | 5,404 |
Machinery and Equipment [Member] | ||
Property, Plant, and Equipment [Abstract] | ||
Property, plant and equipment | 28,082 | 25,832 |
Furniture and Fixtures [Member] | ||
Property, Plant, and Equipment [Abstract] | ||
Property, plant and equipment | $ 9,317 | $ 9,264 |
Other Assets (Details)
Other Assets (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | |||
Jul. 31, 2022 | Jul. 31, 2021 | Apr. 30, 2021 | Mar. 31, 2023 | Dec. 31, 2022 | |
Other Assets [Abstract] | |||||
Equity investments | $ 8,479 | $ 13,376 | |||
Debt security investment | 7,820 | 7,820 | |||
Other | 4,348 | 1,453 | |||
Total | $ 20,647 | 22,649 | |||
Old Pal Holding Company LLC [Member] | |||||
Other Assets [Abstract] | |||||
Debt security investment | $ 9,200 | ||||
Payment for investment | 1,000 | $ 8,000 | |||
Interest rate | 3% | ||||
Extension period for maturity date | 1 year | ||||
Weighted average interest rate | 3% | ||||
Allowance for credit losses | 1,400 | ||||
Accrued interest receivable | $ 200 | ||||
Old Pal Holding Company LLC [Member] | Other Current Assets [Member] | |||||
Other Assets [Abstract] | |||||
Accrued interest receivable | $ 200 | ||||
Old Pal Holding Company LLC [Member] | Level 3 [Member] | |||||
Other Assets [Abstract] | |||||
Debt security investment | $ 7,900 | ||||
Docklight Brands, Inc. [Member] | |||||
Other Assets [Abstract] | |||||
Equity investments | 3,800 | ||||
Payment for investment | $ 8,700 | ||||
Gain (loss) on investment | $ (4,900) |
Accrued Liabilities (Details)
Accrued Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Accrued Liabilities [Abstract] | ||
Accrued payroll and related items | $ 4,437 | $ 7,685 |
Customer returns and allowances | 5,883 | 7,291 |
Taxes payable | 2,215 | 1,867 |
Lease liabilities | 2,866 | 3,102 |
Accrued interest | 2,683 | 7,277 |
Other | 7,848 | 5,779 |
Total | $ 25,932 | $ 33,001 |
Notes Payable and Long-Term D_3
Notes Payable and Long-Term Debt, Summary of Notes Payable and Long-Term Debt (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Notes Payable and Long-Term Debt [Abstract] | ||
Gross notes payable and long-term debt | $ 398,600 | $ 412,500 |
Less deferred finance charges | (5,022) | (5,743) |
Net notes payable and long-term debt | 393,578 | 406,757 |
Senior Secured Notes [Member] | ||
Notes Payable and Long-Term Debt [Abstract] | ||
Gross notes payable and long-term debt | 250,000 | 250,000 |
Convertible Senior Notes [Member] | ||
Notes Payable and Long-Term Debt [Abstract] | ||
Gross notes payable and long-term debt | $ 148,600 | $ 162,500 |
Notes Payable and Long-Term D_4
Notes Payable and Long-Term Debt, Senior Secured Notes (Details) - Senior Secured Notes [Member] - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2023 | Dec. 31, 2022 | Feb. 11, 2021 | |
Notes Payable and Long-Term Debt [Abstract] | |||
Face amount | $ 250 | $ 250 | $ 250 |
Interest rate | 5.625% | ||
Maturity date | Feb. 15, 2026 | ||
Guarantee threshold amount for obligations | $ 15 | ||
Redemption price (expressed as a percentage of the principal amount to be redeemed) if the Company experiences a change in control | 101% | ||
Debt issuance costs | $ 6.4 | ||
On or after February 15, 2023 [Member] | |||
Notes Payable and Long-Term Debt [Abstract] | |||
Redemption price (expressed as a percentage of the principal amount to be redeemed) | 102.813% | ||
On or after February 15, 2024 [Member] | |||
Notes Payable and Long-Term Debt [Abstract] | |||
Redemption price (expressed as a percentage of the principal amount to be redeemed) | 101.406% | ||
On or after February 15, 2025 and thereafter [Member] | |||
Notes Payable and Long-Term Debt [Abstract] | |||
Redemption price (expressed as a percentage of the principal amount to be redeemed) | 100% |
Notes Payable and Long-Term D_5
Notes Payable and Long-Term Debt, 2021 Revolving Credit Facility (Details) $ in Millions | 3 Months Ended | ||
Mar. 31, 2023 USD ($) | Dec. 31, 2022 | Feb. 11, 2021 USD ($) | |
2021 Revolving Credit Facility [Member] | |||
Notes Payable and Long-Term Debt [Abstract] | |||
Maximum borrowing capacity | $ 25 | ||
Amount drawn under credit facility | $ 0 | ||
Letters of credit outstanding | $ 1.4 | ||
Maturity date | Aug. 11, 2025 | ||
Period prior to maturity date of Convertible Senior Notes | 91 days | ||
Consolidated Leverage Ratio | 5.25 | 5.5 | |
Exclusion threshold for letters of credit | $ 5 | ||
Threshold percentage of total commitments outstanding | 35% | ||
Debt issuance costs | $ 0.5 | ||
2021 Revolving Credit Facility [Member] | Eurodollar [Member] | |||
Notes Payable and Long-Term Debt [Abstract] | |||
Margin on variable rate | 3.50% | ||
Letters of Credit [Member] | |||
Notes Payable and Long-Term Debt [Abstract] | |||
Maximum borrowing capacity | $ 10 |
Notes Payable and Long-Term D_6
Notes Payable and Long-Term Debt, Convertible Senior Notes (Details) | 1 Months Ended | 3 Months Ended | ||
Jul. 31, 2019 USD ($) | Mar. 31, 2023 USD ($) shares $ / shares | Dec. 31, 2022 USD ($) | Mar. 31, 2022 USD ($) | |
Notes Payable and Long-Term Debt [Abstract] | ||||
Repayment of convertible debt | $ 13,002,000 | $ 0 | ||
Gain on extinguishment of debt | 777,000 | $ 0 | ||
Outstanding principal amount | $ 398,600,000 | $ 412,500,000 | ||
Strike price (in dollars per share) | $ / shares | 53.58 | |||
Cap price (in dollars per share) | $ / shares | 82.86 | |||
Payment for cost of capped call transactions | $ 20,530,000 | |||
Convertible Senior Notes [Member] | ||||
Notes Payable and Long-Term Debt [Abstract] | ||||
Face amount | 172,500,000 | |||
Interest rate | 2.50% | |||
Maturity date | Jul. 15, 2024 | |||
Principal amount of convertible debt purchased | $ 13,900,000 | 10,000,000 | ||
Repayment of convertible debt | 13,000,000 | 9,000,000 | ||
Gain on extinguishment of debt | 700,000 | 900,000 | ||
Outstanding principal amount | $ 148,600,000 | $ 162,500,000 | ||
Shares issued upon conversion (in shares) | shares | 3,007,462 | |||
Conversion rate | 18.6625 | |||
Principal amount of notes to be converted | $ 1,000 | |||
Conversion price (in dollars per share) | $ / shares | $ 53.58 | |||
Pre-determined threshold value for adjusting conversion price as a result of dividends paid (in dollars per share) | $ / shares | $ 0.04 | |||
Debt issuance costs | $ 5,900,000 |
Leases (Details)
Leases (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | ||
Operating Lease Cost [Abstract] | ||||
Variable lease cost | [1] | $ 225 | $ 112 | |
Short-term lease cost | 6 | 14 | ||
Total operating lease cost | 880 | 752 | ||
Financing Lease Cost [Abstract] | ||||
Financing lease cost | 338 | $ 291 | ||
Assets [Abstract] | ||||
Right of use assets - Operating | $ 10,477 | $ 10,967 | ||
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] | Total lease assets | Total lease assets | ||
Right of use assets - Financing | $ 1,245 | 1,498 | ||
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] | Total lease assets | Total lease assets | ||
Total lease assets | $ 11,722 | 12,465 | ||
Liabilities [Abstract] | ||||
Current lease liabilities - Operating | [2] | $ 1,976 | $ 2,007 | |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | Accrued Liabilities, Current | Accrued Liabilities, Current | ||
Current lease liabilities - Financing | [2] | $ 890 | $ 1,095 | |
Finance Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration] | Accrued Liabilities, Current | Accrued Liabilities, Current | ||
Long-term lease liabilities - Operating | $ 9,762 | $ 10,243 | ||
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible Enumeration] | Operating and Finance Lease, Liability, Noncurrent | Operating and Finance Lease, Liability, Noncurrent | ||
Long-term lease liabilities - Financing | $ 310 | 350 | ||
Finance Lease, Liability, Noncurrent, Statement of Financial Position [Extensible Enumeration] | Operating and Finance Lease, Liability, Noncurrent | Operating and Finance Lease, Liability, Noncurrent | ||
Total lease liabilities | $ 12,938 | $ 13,695 | ||
Cost of Sales [Member] | ||||
Operating Lease Cost [Abstract] | ||||
Operating lease cost | 128 | $ 227 | ||
Selling, General and Administrative [Member] | ||||
Operating Lease Cost [Abstract] | ||||
Operating lease cost | 521 | 399 | ||
Financing Lease Cost [Abstract] | ||||
Financing lease cost | $ 338 | $ 291 | ||
[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.[2]Reported within accrued liabilities on the balance sheet |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Income Taxes [Abstract] | ||
Effective income tax rate | 25.20% | 23.70% |
Income tax deduction related to exercise of stock options | $ 0.4 |
Share Incentive Plans, Equity I
Share Incentive Plans, Equity Incentive Plans (Details) - shares | Mar. 31, 2023 | Mar. 22, 2021 | Apr. 28, 2016 |
RSUs [Member] | |||
Share Incentive Plans [Abstract] | |||
Number of awards granted, net of forfeitures (in shares) | 89,696 | ||
2021 Plan [Member] | |||
Share Incentive Plans [Abstract] | |||
Number of shares authorized for issuance (in shares) | 1,290,000 | ||
Number of shares available for grant (in shares) | 1,304,202 | ||
2021 Plan [Member] | RSUs [Member] | |||
Share Incentive Plans [Abstract] | |||
Number of awards granted, net of forfeitures (in shares) | 104,375 | ||
2021 Plan [Member] | Stock Options [Member] | |||
Share Incentive Plans [Abstract] | |||
Number of awards granted, net of forfeitures (in shares) | 81,176 | ||
2021 Plan [Member] | Performance-Based Restricted Stock Units [Member] | |||
Share Incentive Plans [Abstract] | |||
Number of awards granted, net of forfeitures (in shares) | (99,701) | ||
2015 Plan [Member] | |||
Share Incentive Plans [Abstract] | |||
Number of shares authorized for issuance (in shares) | 100,052 | 1,400,000 | |
Number of shares available for grant (in shares) | 0 | ||
2006 Plan [Member] | |||
Share Incentive Plans [Abstract] | |||
Number of shares available for grant (in shares) | 0 |
Share Incentive Plans, Stock Op
Share Incentive Plans, Stock Option Activity (Details) - 2006, 2015 and 2021 Plans [Member] - Stock Options [Member] - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Stock Option Shares [Roll Forward] | |||
Outstanding, beginning balance (in shares) | 683,214 | 619,835 | 619,835 |
Granted (in shares) | 114,827 | ||
Exercised (in shares) | (24,955) | (40,331) | |
Forfeited (in shares) | (40,838) | (11,117) | |
Outstanding, ending balance (in shares) | 617,421 | 683,214 | |
Weighted Average Exercise Price [Abstract] | |||
Outstanding, beginning balance (in dollars per share) | $ 29.74 | $ 28.51 | $ 28.51 |
Granted (in dollars per share) | 30.58 | ||
Exercised (in dollars per share) | 14.3 | 12.49 | |
Forfeited (in dollars per share) | 37.83 | 32.6 | |
Outstanding, ending balance (in dollars per share) | 29.82 | 29.74 | |
Weighted Average Grant Date Fair Value [Abstract] | |||
Outstanding, beginning balance (in dollars per share) | 9.24 | $ 8.7 | 8.7 |
Granted (in dollars per share) | 10.34 | ||
Exercised (in dollars per share) | 4.48 | 4.08 | |
Forfeited (in dollars per share) | 12.44 | 9.35 | |
Outstanding, ending balance (in dollars per share) | $ 9.22 | $ 9.24 | |
Intrinsic value of options exercised | $ 0.2 | $ 0.4 |
Share Incentive Plans, Assumpti
Share Incentive Plans, Assumptions for Options Granted Under 2006 Plan (Details) - 2006 Plan [Member] - Stock Options [Member] - Exercise Price $3.83 [Member] | 3 Months Ended |
Mar. 31, 2023 $ / shares shares | |
Share Incentive Plans [Abstract] | |
Number of options (in shares) | shares | 69,163 |
Exercise price (in dollars per share) | $ 3.83 |
Number of options exercisable (in shares) | shares | 69,163 |
Remaining lives | 1 year 3 months 25 days |
Expected life | 10 years |
Exercise price (in dollars per share) | $ 3.83 |
Risk free interest rate | 3.57% |
Expected volatility | 40% |
Dividend yield | 0% |
Fair value at grant date (in dollars per share) | $ 2.17 |
Share Incentive Plans, Assump_2
Share Incentive Plans, Assumptions for Options Granted Under 2015 Plan (Details) - 2015 Plan [Member] - Stock Options [Member] - $ / shares | 3 Months Ended | ||||||||
May 03, 2021 | Feb. 18, 2021 | Mar. 18, 2020 | Oct. 24, 2019 | Mar. 20, 2019 | Mar. 07, 2018 | May 17, 2017 | Feb. 10, 2017 | Mar. 31, 2023 | |
February 10, 2017 [Member] | |||||||||
Share Incentive Plans [Abstract] | |||||||||
Number of options granted (in shares) | 40,000 | ||||||||
Options outstanding (in shares) | 20,000 | ||||||||
Number exercisable (in shares) | 20,000 | ||||||||
Exercise price (in dollars per share) | $ 13 | ||||||||
Remaining lives | 3 years 10 months 13 days | ||||||||
Risk free interest rate | 1.89% | ||||||||
Expected volatility | 27.44% | ||||||||
Expected life | 6 years | ||||||||
Dividend yield | 0% | ||||||||
Fair value at grant date (in dollars per share) | $ 3.98 | ||||||||
May 17, 2017 [Member] | |||||||||
Share Incentive Plans [Abstract] | |||||||||
Number of options granted (in shares) | 93,819 | ||||||||
Options outstanding (in shares) | 40,733 | ||||||||
Number exercisable (in shares) | 40,733 | ||||||||
Exercise price (in dollars per share) | $ 15.41 | ||||||||
Remaining lives | 4 years 1 month 17 days | ||||||||
Risk free interest rate | 1.76% | ||||||||
Expected volatility | 26.92% | ||||||||
Expected life | 6 years | ||||||||
Dividend yield | 0% | ||||||||
Fair value at grant date (in dollars per share) | $ 4.6 | ||||||||
March 7, 2018 [Member] | |||||||||
Share Incentive Plans [Abstract] | |||||||||
Number of options granted (in shares) | 98,100 | ||||||||
Options outstanding (in shares) | 51,567 | ||||||||
Number exercisable (in shares) | 51,567 | ||||||||
Exercise price (in dollars per share) | $ 21.21 | ||||||||
Remaining lives | 4 years 11 months 8 days | ||||||||
Risk free interest rate | 2.65% | ||||||||
Expected volatility | 28.76% | ||||||||
Expected life | 6 years | ||||||||
Dividend yield | 0.83% | ||||||||
Fair value at grant date (in dollars per share) | $ 6.37 | ||||||||
March 20, 2019 [Member] | |||||||||
Share Incentive Plans [Abstract] | |||||||||
Number of options granted (in shares) | 155,780 | ||||||||
Options outstanding (in shares) | 125,984 | ||||||||
Number exercisable (in shares) | 125,984 | ||||||||
Exercise price (in dollars per share) | $ 47.58 | ||||||||
Remaining lives | 5 years 11 months 23 days | ||||||||
Risk free interest rate | 2.34% | ||||||||
Expected volatility | 30.95% | ||||||||
Expected life | 6 years | ||||||||
Dividend yield | 0.42% | ||||||||
Fair value at grant date (in dollars per share) | $ 15.63 | ||||||||
October 24, 2019 [Member] | |||||||||
Share Incentive Plans [Abstract] | |||||||||
Number of options granted (in shares) | 25,000 | ||||||||
Options outstanding (in shares) | 25,000 | ||||||||
Number exercisable (in shares) | 25,000 | ||||||||
Exercise price (in dollars per share) | $ 20.89 | ||||||||
Remaining lives | 6 years 6 months 25 days | ||||||||
Risk free interest rate | 1.58% | ||||||||
Expected volatility | 31.93% | ||||||||
Expected life | 6 years | ||||||||
Dividend yield | 0.95% | ||||||||
Fair value at grant date (in dollars per share) | $ 6.27 | ||||||||
March 18, 2020 [Member] | |||||||||
Share Incentive Plans [Abstract] | |||||||||
Number of options granted (in shares) | 155,000 | ||||||||
Options outstanding (in shares) | 84,259 | ||||||||
Number exercisable (in shares) | 84,259 | ||||||||
Exercise price (in dollars per share) | $ 14.85 | ||||||||
Remaining lives | 6 years 11 months 19 days | ||||||||
Risk free interest rate | 0.79% | ||||||||
Expected volatility | 35.72% | ||||||||
Expected life | 6 years | ||||||||
Dividend yield | 1.49% | ||||||||
Fair value at grant date (in dollars per share) | $ 4.41 | ||||||||
February 18, 2021 [Member] | |||||||||
Share Incentive Plans [Abstract] | |||||||||
Number of options granted (in shares) | 100,000 | ||||||||
Options outstanding (in shares) | 91,850 | ||||||||
Number exercisable (in shares) | 64,664 | ||||||||
Exercise price (in dollars per share) | $ 51.75 | ||||||||
Remaining lives | 7 years 10 months 20 days | ||||||||
Risk free interest rate | 0.56% | ||||||||
Expected volatility | 28.69% | ||||||||
Expected life | 6 years | ||||||||
Dividend yield | 0.55% | ||||||||
Fair value at grant date (in dollars per share) | $ 13.77 | ||||||||
May 3, 2021 [Member] | |||||||||
Share Incentive Plans [Abstract] | |||||||||
Number of options granted (in shares) | 12,000 | ||||||||
Options outstanding (in shares) | 12,000 | ||||||||
Number exercisable (in shares) | 8,040 | ||||||||
Exercise price (in dollars per share) | $ 47.76 | ||||||||
Remaining lives | 8 years 1 month 6 days | ||||||||
Risk free interest rate | 0.84% | ||||||||
Expected volatility | 29.03% | ||||||||
Expected life | 6 years | ||||||||
Dividend yield | 0.59% | ||||||||
Fair value at grant date (in dollars per share) | $ 13.06 |
Share Incentive Plans, Assump_3
Share Incentive Plans, Assumptions for Options Granted Under 2021 Plan (Details) - 2021 Plan [Member] - Stock Options [Member] - $ / shares | 3 Months Ended | |||
Apr. 29, 2022 | Mar. 14, 2022 | May 17, 2021 | Mar. 31, 2023 | |
May 17, 2021 [Member] | ||||
Share Incentive Plans [Abstract] | ||||
Number of options granted (in shares) | 7,500 | |||
Options outstanding (in shares) | 7,500 | |||
Number exercisable (in shares) | 5,100 | |||
Exercise price (in dollars per share) | $ 45.05 | |||
Remaining lives | 8 years 1 month 17 days | |||
Risk free interest rate | 0.84% | |||
Expected volatility | 31.50% | |||
Expected life | 6 years | |||
Dividend yield | 0.63% | |||
Fair value at grant date (in dollars per share) | $ 13.23 | |||
March 14, 2022 [Member] | ||||
Share Incentive Plans [Abstract] | ||||
Number of options granted (in shares) | 100,000 | |||
Options outstanding (in shares) | 74,538 | |||
Number exercisable (in shares) | 25,343 | |||
Exercise price (in dollars per share) | $ 30.46 | |||
Remaining lives | 8 years 11 months 15 days | |||
Risk free interest rate | 2.10% | |||
Expected volatility | 35.33% | |||
Expected life | 6 years | |||
Dividend yield | 1.01% | |||
Fair value at grant date (in dollars per share) | $ 10.23 | |||
April 29, 2022 [Member] | ||||
Share Incentive Plans [Abstract] | ||||
Number of options granted (in shares) | 14,827 | |||
Options outstanding (in shares) | 14,827 | |||
Number exercisable (in shares) | 5,042 | |||
Exercise price (in dollars per share) | $ 31.39 | |||
Remaining lives | 9 years 1 month 2 days | |||
Risk free interest rate | 2.92% | |||
Expected volatility | 35.33% | |||
Expected life | 6 years | |||
Dividend yield | 0.98% | |||
Fair value at grant date (in dollars per share) | $ 11.07 |
Share Incentive Plans, Compensa
Share Incentive Plans, Compensation Expense Related to Options (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Compensation Expense [Abstract] | ||
Compensation expense (income) related to options | $ 0 | $ 0.2 |
Unrecognized compensation expense related to options | $ 0.7 | |
Period over which unrecognized compensation expense will be expensed | 1 year 7 months 6 days |
Share Incentive Plans, Performa
Share Incentive Plans, Performance-Based Restricted Stock Units (Details) - Performance-Based Restricted Stock Units [Member] - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | ||||||
Mar. 14, 2022 | Feb. 18, 2021 | Dec. 28, 2020 | Mar. 18, 2020 | Mar. 20, 2019 | Mar. 31, 2023 | Mar. 31, 2022 | |
Share Incentive Plans [Abstract] | |||||||
Period between performance period and measurement date | 65 days | ||||||
PRSUs outstanding (in shares) | 378,483 | ||||||
Compensation expense | $ 0.5 | $ 0.8 | |||||
Unrecognized compensation expense | $ 2.2 | ||||||
Employees [Member] | |||||||
Share Incentive Plans [Abstract] | |||||||
Performance period | 5 years | ||||||
March 20, 2019 [Member] | Employees [Member] | |||||||
Share Incentive Plans [Abstract] | |||||||
Number of PRSUs granted (in shares) | 92,500 | ||||||
PRSUs outstanding (in shares) | 77,380 | ||||||
Fair value as of grant date (in dollars per share) | $ 47.58 | ||||||
Remaining lives | 9 months | ||||||
March 18, 2020 [Member] | Employees [Member] | |||||||
Share Incentive Plans [Abstract] | |||||||
Number of PRSUs granted (in shares) | 94,000 | ||||||
PRSUs outstanding (in shares) | 85,810 | ||||||
Fair value as of grant date (in dollars per share) | $ 14.85 | ||||||
Remaining lives | 1 year 9 months | ||||||
December 28, 2020 [Member] | Employees [Member] | |||||||
Share Incentive Plans [Abstract] | |||||||
Number of PRSUs granted (in shares) | 88,169 | ||||||
PRSUs outstanding (in shares) | 58,779 | ||||||
Fair value as of grant date (in dollars per share) | $ 46.42 | ||||||
Remaining lives | 9 months | ||||||
February 18, 2021 [Member] | Employees [Member] | |||||||
Share Incentive Plans [Abstract] | |||||||
Number of PRSUs granted (in shares) | 100,000 | ||||||
PRSUs outstanding (in shares) | 90,190 | ||||||
Fair value as of grant date (in dollars per share) | $ 51.75 | ||||||
Remaining lives | 2 years 9 months | ||||||
March 14, 2022 [Member] | Employees [Member] | |||||||
Share Incentive Plans [Abstract] | |||||||
Number of PRSUs granted (in shares) | 49,996 | ||||||
PRSUs outstanding (in shares) | 44,982 | ||||||
Fair value as of grant date (in dollars per share) | $ 30.46 | ||||||
Remaining lives | 3 years 9 months |
Share Incentive Plans, Restrict
Share Incentive Plans, Restricted Stock Units (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | |||
Apr. 29, 2022 | Mar. 14, 2022 | Mar. 31, 2023 | Mar. 31, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Additional Disclosures [Abstract] | ||||
Period over which unrecognized compensation expense will be expensed | 1 year 7 months 6 days | |||
RSUs [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Additional Disclosures [Abstract] | ||||
Number of awards granted (in shares) | 89,696 | |||
Compensation expense | $ 0.3 | $ 0.2 | ||
Unrecognized compensation expense | $ 1.4 | |||
Period over which unrecognized compensation expense will be expensed | 3 years 3 months 25 days | |||
RSUs [Member] | Minimum [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Additional Disclosures [Abstract] | ||||
Vesting period | 1 year | |||
RSUs [Member] | Maximum [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Additional Disclosures [Abstract] | ||||
Vesting period | 5 years | |||
RSUs [Member] | March 14, 2022 [Member] | Vest in Five Years [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Additional Disclosures [Abstract] | ||||
Number of RSUs granted (in shares) | 50,004 | |||
RSUs outstanding (in shares) | 44,405 | |||
Fair value as of grant date (in dollars per share) | $ 30.46 | |||
Remaining lives | 3 years 9 months | |||
RSUs [Member] | March 14, 2022 [Member] | Vest in Three Years [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Additional Disclosures [Abstract] | ||||
Number of RSUs granted (in shares) | 28,726 | |||
RSUs outstanding (in shares) | 18,961 | |||
Fair value as of grant date (in dollars per share) | $ 30.46 | |||
Remaining lives | 1 year 9 months | |||
RSUs [Member] | April 29, 2022 [Member] | Vest in Five Years [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Additional Disclosures [Abstract] | ||||
Number of RSUs granted (in shares) | 11,393 | |||
RSUs outstanding (in shares) | 11,393 | |||
Fair value as of grant date (in dollars per share) | $ 31.39 | |||
Remaining lives | 25 days | |||
RSUs [Member] | April 29, 2022 [Member] | Vest in Three Years [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Additional Disclosures [Abstract] | ||||
Number of RSUs granted (in shares) | 4,522 | |||
RSUs outstanding (in shares) | 4,522 | |||
Fair value as of grant date (in dollars per share) | $ 31.39 | |||
Remaining lives | 3 years 9 months |
Contingencies (Details)
Contingencies (Details) | 3 Months Ended | |
Oct. 09, 2020 Count | Mar. 31, 2023 Subsidiary | |
Contingencies [Abstract] | ||
Number of derivative counts filed in complaint | Count | 2 | |
Number of franchisor subsidiaries | Subsidiary | 2 |
Income Per Share (Details)
Income Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Numerator [Abstract] | ||
Net income attributable to Turning Point Brands, Inc. | $ 7,597 | $ 10,998 |
Denominator [Abstract] | ||
Basic weighted average shares (in shares) | 17,531,414 | 18,257,695 |
Basic EPS (in dollars per share) | $ 0.43 | $ 0.6 |
Numerator [Abstract] | ||
Net income attributable to Turning Point Brands, Inc. | $ 7,597 | $ 10,998 |
Interest expense related to Convertible Senior Notes, net of tax | 954 | 1,054 |
Diluted net income attributable to Turning Point Brands. Inc. | $ 8,551 | $ 12,052 |
Denominator [Abstract] | ||
Basic weighted average shares (in shares) | 17,531,414 | 18,257,695 |
Convertible Senior Notes (in shares) | 3,029,699 | 3,209,690 |
Stock options (in shares) | 108,039 | 282,125 |
Diluted weighted average shares (in shares) | 20,669,152 | 21,749,510 |
Diluted EPS (in dollars per share) | $ 0.41 | $ 0.55 |
Segment Information, Financial
Segment Information, Financial Information of Reportable Segments (Details) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2023 USD ($) Segment | Mar. 31, 2022 USD ($) | Dec. 31, 2022 USD ($) | ||
Segment Information [Abstract] | ||||
Number of reportable segments | Segment | 3 | |||
Segment Information [Abstract] | ||||
Cost of sales | $ 52,339 | $ 49,100 | ||
Net sales | 100,956 | 100,894 | ||
Gross profit | 48,617 | 51,794 | ||
Operating income (loss) | 17,842 | 19,229 | ||
Interest expense, net | 4,010 | 5,196 | ||
Investment income | 4,799 | (78) | ||
Gain on extinguishment of debt | (777) | 0 | ||
Income before income taxes | 9,810 | 14,111 | ||
Capital expenditures | 2,435 | 2,787 | ||
Depreciation and amortization | 1,547 | 1,334 | ||
Assets | 559,926 | $ 572,106 | ||
Zig- Zag and Stoker's Products [Member] | ||||
Segment Information [Abstract] | ||||
Net sales | 75,549 | 77,375 | ||
Gross profit | 41,855 | 44,029 | ||
Operating income (loss) | 17,581 | 18,551 | ||
Capital expenditures | 2,435 | 2,787 | ||
Depreciation and amortization | 973 | 859 | ||
Assets | [1] | 526,943 | 532,482 | |
Creative Distribution Solutions [Member] | ||||
Segment Information [Abstract] | ||||
Net sales | 25,407 | 23,519 | ||
Reportable Segments [Member] | Zig-Zag Products [Member] | ||||
Segment Information [Abstract] | ||||
Net sales | 41,887 | 45,672 | ||
Gross profit | 22,390 | 26,343 | ||
Operating income (loss) | 13,641 | 18,737 | ||
Capital expenditures | 973 | 2,323 | ||
Depreciation and amortization | 267 | 92 | ||
Assets | 207,653 | 225,893 | ||
Reportable Segments [Member] | Stoker's Products [Member] | ||||
Segment Information [Abstract] | ||||
Net sales | 33,662 | 31,703 | ||
Gross profit | 19,465 | 17,686 | ||
Operating income (loss) | 14,563 | 13,506 | ||
Capital expenditures | 1,462 | 464 | ||
Depreciation and amortization | 706 | 767 | ||
Assets | 153,647 | 151,241 | ||
Reportable Segments [Member] | Creative Distribution Solutions [Member] | ||||
Segment Information [Abstract] | ||||
Net sales | 25,407 | 23,519 | ||
Gross profit | 6,762 | 7,765 | ||
Operating income (loss) | 261 | 678 | ||
Capital expenditures | 0 | 0 | ||
Depreciation and amortization | 574 | 475 | ||
Assets | 32,983 | 39,624 | ||
Corporate Unallocated [Member] | ||||
Segment Information [Abstract] | ||||
Operating income (loss) | [2],[3] | (10,623) | (13,692) | |
Operating costs related to PMTA | 100 | $ 1,100 | ||
Assets | [1] | $ 165,643 | $ 155,348 | |
[1] Includes assets not assigned to the three reportable segments. All goodwill has been allocated to the reportable segments. Includes corporate costs that are not allocated to any of the three reportable segments. Includes costs related to PMTA of $0.1 million in 2023 and $1.1 million in 2022. |
Segment Information, Revenue Di
Segment Information, Revenue Disaggregation - Sales Channel (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Net Sales by Sales Channel [Abstract] | ||
Net sales | $ 100,956 | $ 100,894 |
Creative Distribution Solutions [Member] | ||
Net Sales by Sales Channel [Abstract] | ||
Net sales | 25,407 | 23,519 |
Creative Distribution Solutions [Member] | Business to Business [Member] | ||
Net Sales by Sales Channel [Abstract] | ||
Net sales | 22,493 | 19,124 |
Creative Distribution Solutions [Member] | Business to Consumer - Online [Member] | ||
Net Sales by Sales Channel [Abstract] | ||
Net sales | 2,810 | 4,233 |
Creative Distribution Solutions [Member] | Other [Member] | ||
Net Sales by Sales Channel [Abstract] | ||
Net sales | $ 104 | $ 162 |
Segment Information, Net Sales
Segment Information, Net Sales - Domestic and Foreign (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Segment Information [Abstract] | ||
Net sales | $ 100,956 | $ 100,894 |
Reportable Geographical Component [Member] | Domestic [Member] | ||
Segment Information [Abstract] | ||
Net sales | 93,860 | 93,766 |
Reportable Geographical Component [Member] | Foreign [Member] | ||
Segment Information [Abstract] | ||
Net sales | $ 7,096 | $ 7,128 |
Additional Information with R_3
Additional Information with Respect to Unrestricted Subsidiaries, Income Statement (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Income Statement [Abstract] | ||
Net sales | $ 100,956 | $ 100,894 |
Cost of sales | 52,339 | 49,100 |
Gross profit | 48,617 | 51,794 |
Selling, general, and administrative expenses | 30,775 | 32,565 |
Operating income | 17,842 | 19,229 |
Interest expense, net | 4,010 | 5,196 |
Investment loss (gain) | 4,799 | (78) |
Gain on extinguishment of debt | (777) | 0 |
Income before income taxes | 9,810 | 14,111 |
Income tax expense | 2,468 | 3,340 |
Consolidated net income | 7,342 | 10,771 |
Net loss attributable to non-controlling interest | (255) | (227) |
Net income attributable to Turning Point Brands, Inc. | 7,597 | 10,998 |
Company and Restricted Subsidiaries [Member] | ||
Income Statement [Abstract] | ||
Net sales | 75,549 | 77,375 |
Cost of sales | 33,694 | 33,346 |
Gross profit | 41,855 | 44,029 |
Selling, general, and administrative expenses | 24,274 | 25,478 |
Operating income | 17,581 | 18,551 |
Interest expense, net | 4,010 | 5,196 |
Investment loss (gain) | 4,799 | (78) |
Gain on extinguishment of debt | (777) | |
Income before income taxes | 9,549 | 13,433 |
Income tax expense | 2,402 | 3,180 |
Consolidated net income | 7,147 | 10,253 |
Net loss attributable to non-controlling interest | (255) | (227) |
Net income attributable to Turning Point Brands, Inc. | 7,402 | 10,480 |
Unrestricted Subsidiary [Member] | ||
Income Statement [Abstract] | ||
Net sales | 25,407 | 23,519 |
Cost of sales | 18,645 | 15,754 |
Gross profit | 6,762 | 7,765 |
Selling, general, and administrative expenses | 6,501 | 7,087 |
Operating income | 261 | 678 |
Interest expense, net | 0 | 0 |
Investment loss (gain) | 0 | 0 |
Gain on extinguishment of debt | 0 | |
Income before income taxes | 261 | 678 |
Income tax expense | 66 | 160 |
Consolidated net income | 195 | 518 |
Net loss attributable to non-controlling interest | 0 | 0 |
Net income attributable to Turning Point Brands, Inc. | $ 195 | $ 518 |
Additional Information with R_4
Additional Information with Respect to Unrestricted Subsidiaries, Balance Sheet (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 | Mar. 31, 2022 | Dec. 31, 2021 |
Current assets: | ||||
Cash | $ 104,801 | $ 106,403 | $ 126,045 | $ 128,320 |
Accounts receivable, net | 8,584 | 8,377 | ||
Inventories | 113,738 | 119,915 | ||
Other current assets | 19,961 | 22,959 | ||
Total current assets | 247,084 | 257,654 | ||
Property, plant, and equipment, net | 24,364 | 22,788 | ||
Deferred income taxes | 8,069 | 8,443 | ||
Right of use assets | 11,722 | 12,465 | ||
Deferred financing costs, net | 256 | 282 | ||
Goodwill | 136,253 | 136,253 | ||
Other intangible assets, net | 82,821 | 83,592 | ||
Master Settlement Agreement (MSA) escrow deposits | 28,710 | 27,980 | ||
Other assets | 20,647 | 22,649 | ||
Investment in unrestricted subsidiaries | 0 | 0 | ||
Total assets | 559,926 | 572,106 | ||
Current liabilities: | ||||
Accounts payable | 10,390 | 8,355 | ||
Accrued liabilities | 25,932 | 33,001 | ||
Other current liabilities | 20 | 20 | ||
Total current liabilities | 36,342 | 41,376 | ||
Notes payable and long-term debt | 393,578 | 406,757 | ||
Lease liabilities | 10,072 | 10,593 | ||
Total liabilities | 439,992 | 458,726 | ||
Commitments and contingencies | ||||
Stockholders' equity: | ||||
Total Turning Point Brands Inc. Stockholders' Equity/Net parent investment in unrestricted subsidiaries | 118,482 | 111,645 | ||
Non-controlling interest | 1,452 | 1,735 | ||
Total stockholders' equity | 119,934 | 113,380 | $ 131,864 | $ 133,716 |
Total liabilities and stockholders' equity | 559,926 | 572,106 | ||
Eliminations [Member] | ||||
Current assets: | ||||
Cash | 0 | 0 | ||
Accounts receivable, net | 0 | 0 | ||
Inventories | 0 | 0 | ||
Other current assets | 0 | 0 | ||
Total current assets | 0 | 0 | ||
Property, plant, and equipment, net | 0 | 0 | ||
Deferred income taxes | 0 | 0 | ||
Right of use assets | 0 | 0 | ||
Deferred financing costs, net | 0 | 0 | ||
Goodwill | 0 | 0 | ||
Other intangible assets, net | 0 | 0 | ||
Master Settlement Agreement (MSA) escrow deposits | 0 | 0 | ||
Other assets | 0 | 0 | ||
Investment in unrestricted subsidiaries | (52,238) | (60,120) | ||
Total assets | (52,238) | (60,120) | ||
Current liabilities: | ||||
Accounts payable | 0 | 0 | ||
Accrued liabilities | 0 | 0 | ||
Other current liabilities | 0 | 0 | ||
Total current liabilities | 0 | 0 | ||
Notes payable and long-term debt | 0 | 0 | ||
Lease liabilities | 0 | 0 | ||
Total liabilities | 0 | 0 | ||
Commitments and contingencies | ||||
Stockholders' equity: | ||||
Total Turning Point Brands Inc. Stockholders' Equity/Net parent investment in unrestricted subsidiaries | (52,238) | (60,120) | ||
Non-controlling interest | 0 | 0 | ||
Total stockholders' equity | (52,238) | (60,120) | ||
Total liabilities and stockholders' equity | (52,238) | (60,120) | ||
Company and Restricted Subsidiaries [Member] | ||||
Current assets: | ||||
Cash | 103,257 | 103,990 | ||
Accounts receivable, net | 7,888 | 7,374 | ||
Inventories | 103,166 | 104,883 | ||
Other current assets | 16,210 | 18,828 | ||
Total current assets | 230,521 | 235,075 | ||
Property, plant, and equipment, net | 23,937 | 22,261 | ||
Deferred income taxes | 8,069 | 8,443 | ||
Right of use assets | 11,636 | 12,328 | ||
Deferred financing costs, net | 256 | 282 | ||
Goodwill | 136,253 | 136,253 | ||
Other intangible assets, net | 66,944 | 67,241 | ||
Master Settlement Agreement (MSA) escrow deposits | 28,710 | 27,980 | ||
Other assets | 20,617 | 22,619 | ||
Investment in unrestricted subsidiaries | 52,238 | 60,120 | ||
Total assets | 579,181 | 592,602 | ||
Current liabilities: | ||||
Accounts payable | 9,258 | 7,628 | ||
Accrued liabilities | 23,407 | 31,118 | ||
Other current liabilities | 20 | 20 | ||
Total current liabilities | 32,685 | 38,766 | ||
Notes payable and long-term debt | 393,578 | 406,757 | ||
Lease liabilities | 10,072 | 10,593 | ||
Total liabilities | 436,335 | 456,116 | ||
Commitments and contingencies | ||||
Stockholders' equity: | ||||
Total Turning Point Brands Inc. Stockholders' Equity/Net parent investment in unrestricted subsidiaries | 141,394 | 134,751 | ||
Non-controlling interest | 1,452 | 1,735 | ||
Total stockholders' equity | 142,846 | 136,486 | ||
Total liabilities and stockholders' equity | 579,181 | 592,602 | ||
Unrestricted Subsidiary [Member] | ||||
Current assets: | ||||
Cash | 1,544 | 2,413 | ||
Accounts receivable, net | 696 | 1,003 | ||
Inventories | 10,572 | 15,032 | ||
Other current assets | 3,751 | 4,131 | ||
Total current assets | 16,563 | 22,579 | ||
Property, plant, and equipment, net | 427 | 527 | ||
Deferred income taxes | 0 | 0 | ||
Right of use assets | 86 | 137 | ||
Deferred financing costs, net | 0 | 0 | ||
Goodwill | 0 | 0 | ||
Other intangible assets, net | 15,877 | 16,351 | ||
Master Settlement Agreement (MSA) escrow deposits | 0 | 0 | ||
Other assets | 30 | 30 | ||
Investment in unrestricted subsidiaries | 0 | 0 | ||
Total assets | 32,983 | 39,624 | ||
Current liabilities: | ||||
Accounts payable | 1,132 | 727 | ||
Accrued liabilities | 2,525 | 1,883 | ||
Other current liabilities | 0 | 0 | ||
Total current liabilities | 3,657 | 2,610 | ||
Notes payable and long-term debt | 0 | 0 | ||
Lease liabilities | 0 | 0 | ||
Total liabilities | 3,657 | 2,610 | ||
Commitments and contingencies | ||||
Stockholders' equity: | ||||
Total Turning Point Brands Inc. Stockholders' Equity/Net parent investment in unrestricted subsidiaries | 29,326 | 37,014 | ||
Non-controlling interest | 0 | 0 | ||
Total stockholders' equity | 29,326 | 37,014 | ||
Total liabilities and stockholders' equity | $ 32,983 | $ 39,624 |
Dividends and Share Repurchase
Dividends and Share Repurchase (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | ||||
Apr. 07, 2023 | Feb. 24, 2022 | Oct. 25, 2021 | Mar. 31, 2023 | Feb. 25, 2020 | |
Share Repurchase [Abstract] | |||||
Share repurchase program authorized amount | $ 50 | ||||
Increase in share repurchase program authorized amount | $ 24.6 | $ 30.7 | |||
Remaining share repurchase program authorized amount | $ 27.2 | ||||
Dividend Declared Q1-2023 [Member] | |||||
Dividends [Abstract] | |||||
Dividend payable, date to be paid | Apr. 07, 2023 | ||||
Dividend payable, date of record | Mar. 17, 2023 | ||||
Dividend Declared Q1-2023 [Member] | Subsequent Event [Member] | |||||
Dividends [Abstract] | |||||
Cash dividend paid (in dollars per share) | $ 0.065 |