TPB - Earnings call transcript Q4 2024 | Turning Point Brands, Inc.

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Operator

Thank you for standing by. My name is Kathleen, and I will be your conference operator today. At this time, I would like to welcome everyone to the Turning Point Brands Fourth Quarter and Fiscal Year 2024 Conference Call. [Operator Instructions]

And now I would like to turn the call over to Andrew Flynn, CFO, Turning Point Brands. ahead. go Please

Andrew Flynn

A release everyone. located ago, issued at we the Good our short QX press www.turningpointbrands.com. website our covering section is results. a IR morning, of while This in release

followed release preliminary some this aware, metrics. you're an issued that financial February X-K included XX As

and and call, this progress strategic results against discuss perspective on and segment our our During some consolidated the will operating we provide operating environment plan.

change as is deconsolidated our in CDS and discontinued brief ops. the a classified This today. and we reminder, we financials As that will reflected discussing is our segment results now consolidated be

is Commission. As today's of press your the in to in forward-looking the and the with risk factors customary, discussion direct I release our statements Exchange and and cautionary filings attention Securities

reference along with ] why they call financial to useful we non-GAAP information. reconciliations and [ the measures. reasons release, are measures today, in earnings provide GAAP will certain management believes today's These On

Graham call I will the turn now our over Purdy. CEO, to

Graham Purdy

morning, Thanks, for everyone, joining Andrew. and Good call. our you thank

exciting consolidated to January, quarter. than against the CDS million increased X% think the divestiture quarter opportunities $XX.X Revenue and in the transaction that plan. our discontinued in and our demonstrated continued best XX% consolidated progress to Our are were million management Adjusted expected EBITDA results for the quarter. excluded we growth increased our business. We for now positions announced of Recall early $XX.X focus better fourth from going our guidance financials results These classified the on forward. as core and business. to any

third range provided our $XXX results. February increased high at XX% increased to XX and with $XXX $XXX.X Adjusted of quarter end million full to on EBITDA year million the of range to provided preliminary the $XXX.X million, million the of million prior above $XXX.X for

pleased organization. we for are across excited full with and the seeing our both momentum are XXXX, are the results and year QX about we We

$XXX of XXXX. of to ALP, expect as $XX continued in of $XXX combined brands XXXX acceleration guidance and oil growth to Stoker's initiating modern EBITDA adjusted million. We our $XX growth This Zig-Zag our of of revenue we million million generate significant million to are businesses as which FRE and reflects well

sales support growth Our investments includes our marketing and ambitious to plans. meaningful EBITDA guidance

Going discuss combined for purposes. modern business on oral forward, we financial basis will and our a guidance reporting

Our adjusted ALP's economics. pro of XX% guidance EBITDA reflects our share rata

We brands long-term modern achieving expect the play goal key roles of to market share category. both in our of XX% oral

Zig-Zag fourth X%. revenue During up the was quarter,

was Excluding Clipper, X%. it up

have remain SKU another XXXX We segment growth which year the smoking deliver needs. for their opportunity growth. a to leverage portfolio accessories, an one-stop of offer distribution to our convergence channels shop diverse solid a that for promising lineup for customers all should initiatives provides of us help We Zig-Zag bullish for on of

the adoption our opportunities we've significantly It's medical year, the over portfolio. XX% onboard reiterating emerge also Americans across of regulated customers the or And of legal green worth oral the Zig-Zag which with cross-selling the Bill wave modern ecosystem hemp, another as now Nearly valuable in products seen state. has past a TAM. live adult-use compliant cannabis Farm all alongside expanded

build us dynamic must-carry cannabis picks vice As and Texas our and sell should combustible should nicotine mentioned, And tobacco give in hemp-derived state as businesses pouches. distribution outlets MST, of brands continue products a sell modern This these be advantage Zig-Zag many cigarettes they traditional products as don't an estimated in illustration, modern or we Zig-Zag. cross-selling over tailwind versa. valuable now carry do a without oral to benefit stores but in time oral like to X,XXX are like continue there that to regulated a This retail shovels marketplace. with secular

Stoker's. to Moving

loose flat Stoker's decline a million quarter, the X% reflecting in modern leaf, $XX.X million, revenue. in XX% oral During revenue and increased $XX.X MST to

to business XXX% from of sales a in Our modern base represented growth. modern a revenue low of million sales off very acceleration and increase the oral The of for free $X.X both balance the successful the was approximately in sequential launch included year-over-year oral quarter, which ALP.

note quick A on MST.

QX called out we very strong quarters previously, MST had As Stoker's and QX XXXX. in XXXX

following So brand roughly talk will modern high-level a comparable QX shortly, flat offer lapped a of but our in year. we anticipated I quarter about oral Summer tough we as more will XX% last the commentary.

around reason pleased venture the strong of launch ALP with Network. our been Company, Tucker the with the excitement Supply very are for joint and optimism. We brand has significant Carlson There

obligations. limited evidence due This further that and Positive can in are sequentially FRE marketplace. XX% increased somewhat the what FRE disclose feel positioning, for mouth a we the in range feedback winning progress has is pouch brand's reinforced provides confidentiality We sales quarter. to nicotine size, consistently our strengths. consumer flavor, the of

have and reorders to This increased involve FRE to execute loyalty X, our XX our complement store strong retail retail promotional our we confidence programs. and XX-milligram on expand This initial X-milligram distribution placement, feel growth, to expanding with in and invest to stores. we QX, participate to In given website feedback and look footprint. in-store will and likely sales began offerings. desired further In our in launched QX, investment X-milligram acceptance chain competitive us and secure along

hand go-to-market over progress me the to Summer let to through that, initiatives. the walk of With some of call our

Summer Frein

you, Thank Graham.

brand. have modern partnerships As continued QX purchase and FRE, XXXX category the behind reorder broad-reaching and wholesale in in chains we repeat Pertaining strong give the prominent particular. increasing exciting confidence progress to and and trade invest at he to rates which online receptivity throughout from consumer and during us feedback, positive retail mentioned, oral made we long-standing of

and accelerated During our markets. and initiatives introduction regional QX, in like our began we chain marketing with investment sales X-Eleven partners, testing expanded to key

and assortment beyond. retail year distribution discussed, this to previously our ongoing of SKU expanded progress look also X-milligram. forward broaden As throughout we to the sharing We

Stoker's. to Turning

the the price, consumer at dip awareness a to benefit to with offering loyalty. value grow initiatives continues for brand with looking value. to and consumer our our segment the along Stoker's base continue to a across MSG We broaden great fair of see great the drive and a distribution and from opportunities expand

regards we to launch With XXX-year paper and build our with quarter. upon line vintage history continue the past this booklets to of Zig-Zag's celebrated Zig-Zag,

build Graham are customers to We while influencers nontraditional continuing with Z our existing Zig-Zag to also are partner with continue Further, Gen will street leveraging looking the that new the back win and mentioned. further as growth, portfolio we in resonate with consumers. ALP's to opportunity their who to

and these stores. increases we to sizes within as a In our order healthy and channel see average shelf partner. for long and become Zig-Zag, while continue solidify cannabis summary, trusted to a continue products We in more space we in have mainstream, related position high-value this expanding runway valuable merchandising as

to are Lastly, which enhanced and all brands from of the geographical to growth our modern will we coverage scaling evolving category. oral sales enable for benefit organization, support our

closing, omnichannel and we new executing our we've against add winning consumers for established term, the to In continue building the our growing to plan brands base. long customer

our continue extensive We will of maximize to distribution world-class and capabilities. strengthen brands our the value

the to through back turn financial now over go me Andrew results. to Let call our

Andrew Flynn

Sales up XX% for Summer. to were year. you, the million Thank $XXX.X

up gross year-over-year was full was revenue year to basis points XX margin On down XX% basis, XX.X%. quarter, the $XX.X to For million. a

quarter, The year-over-year. mix is the change driven. in XXX margin was For margin points XX% down basis and

million for was fourth $XX.X $XXX.X SG&A As items. including quarter, the the adjusted for year million and reported,

net year-over-year an the the found $X.X In press million these For and million quarter, of EBITDA income Adjusted release our the year, EBITDA there $XXX.X adjustments of to up these for be SG&A-related XX% were The $XX.X year. adjusted reconciliation. incremental in was adjustments was detail adjustments. million. can to

quarter, X% For adjusted $XX.X to EBITDA the was up million.

X% performance. points the decreased year-over-year fourth mix. the $XX.X XXX million Canadian and the our and unwind the to XX.X% quarter product X% fourth increased segment relationship was issues points to by the timing to sales This year business. basis into $XXX.X and despite driven Gross pressure Zig-Zag down for primarily million of in for for margins Going Clipper XX.X% year-over-year FX-related basis and to year-over-year quarter. XX up from

points MST $XXX.X year-over-year year to X% the fourth $XX.X and up basis volume XX X/X growth. for stores up quarter. to Stoker's quarter. $XXX.X the MST in with points Stoker's XX to long despite million million X.X% million volumes, for declined fourth increased MSAi. to category basis the the industry provides of year, a volume year-over-year the year-over-year grew was year-over-year the during net was XX% XX% for Share Net for approximately year million portfolio sales to to now year-over-year by Stoker's sales according XX to down increased which and $XX.X X.X%, in in share with year-over-year representing X% selling growing runway in-store basis still of XX.X%, points

basis XXX was was tobacco MSAi. in Stoker's [ grew a was by the category loose volume down larger with brand from leaf from Category Overall, as declines down to performance Chewing of driven points previous decline trade according share volume chewing gaining premium the the to volumes volumes XX.X% TPD ] beating #X TPD's consumer benefiting year. loose of quarter, X.X%. leaf in X.X%, Stoker's

more for was X the we continue and mix. sales decreased quadrupled national FRE This product the our primarily XX than Our year-over-year year for to rollout. as fourth basis year-over-year XX.X% year-over-year increased to XX.X% points points by basis driven Gross margin quarter.

Last flow called over $XX year penalty. issued we month, we for of ended with $XXX due Free of to senior maturing XXXX no sheet. million. just on balance million cash. with the X-year We Moving secured $XXX the and $XX.X XXXX, quarter cash in of notes notes the prepayment million was million

Xx. program. quarter, of we announced our previously share to worth previously well are as within net We the shares leverage of repurchase repurchased In our range X $XXX,XXX disclosed part of

to and other items. line On guidance

of $XX we year adjusted anticipate sales $XXX to total previously guiding to to million $XXX XXXX we modern million oral full of are EBITDA We million. $XX noted, As million.

despite and exchange mid-single-digit Clipper anticipate business headwinds modern excluding oral projections from rates. growth, Our our Canadian

marketing Our growth reflects increased the EBITDA range EBITDA that adjusted sales constrain in somewhat will and investments of XXXX. rate total

For Budgeted to for modeling CapEx of for our any full $X 'XX purposes, exclusive effective range million modern oral tax business. XXXX the million. year XX% $X.X is projects XX%. CapEx $X million, to to was is related potential year full income

modern spend under on to supplement review the expect the $X remain for full which We $X FDA. to million depending PMTAs, by million oral regulatory the to our year environment

let turn to back Now me it Graham. over

Graham Purdy

over it pleased turn and to are our questions performance, we conclude, To I'll now. XXXX with

Operator

[Operator Craig-Hallum the first question comes of from Capital line of Des Eric Group. Instructions] Your Lauriers

Eric Des Lauriers

Congrats results. on strong the very

year, talk the national outlook terms you this modern or number C-store chains into for of of could getting In about timing? oral, maybe chains expectation of just C-store

Summer Frein

this Eric, Summer. is

that of And set of sort stores of of about you moves And that's is and category where or through as terms in is As majority that bit business so a of the sold particular scheduled the thing. done. XX% the chain know, know, convenience. planogram you their cycles slower

currently So traction results partnership in We're making the those as encouraged many are we a X-Eleven. those by relationships the early progress heard have are great of we and with recently them. And rolled call, there. long-standing you throughout and year partners regional discussions with that continue in to plan out with

Eric Des Lauriers

And me. a just All follow-up helpful. right. then Great. for That's

In in that or just modern stores And distribution you're now such either that by sort with terms X/X of kind to terms with you're oral that might remain of for of oral not is that Stoker's opportunity of modern the about the MST, you can of already you of Zig-Zag? kind stores an have what sort strong stores X/X that in be in volume overlap the expedite of you here? talk a targeting there product in there and of guys, growth

Graham Purdy

Yes.

mentioned, portfolio modern -- as days. well is the category that accounts going think oral. synergistic the And be chain in of we early are So the modern just really MST the between products as nicotine our the highly behind thrust oral Summer as the to oral

as I for discussion MST. chains oral great of us. the really to around standpoint from sort presents And that, a backstop that that with a modern think hit cross-selling a opportunity with we

Eric Des Lauriers

the strong Congrats again results. on

Operator

next comes Ian Zaffino Your question from of the of Oppenheimer. line

Ian Zaffino

versus understand versus of guidance ALP's? discussion let's what's How Xs like a more higher guidance? what's modern kind think do us nicotine do of Maybe about, driving general we say, we and Xs Maybe and oral. driving think that? on FRE about that your just Great level a kind How pouches? the help on visibility of

Graham Purdy

X I -- informed areas. Yes. by Look, is our think the guide specific

FRE. And continued early visibility customer BXB rates through have growth online our BXC and the expect on or we around our that businesses. based We with reorder

of launched the taken in from this ALP of early -- and we've So FRE, we I thinking late market. launched QX. think ALP And we've in route learned through their terms experience point in it's Obviously, that to innings sort we're time. just at

And so it's exactly that really early can to sort we where think be. of project

the us synergistic products market entire are the really highly think a for from to But standpoint. X the and consumer speak we at same time,

wide so consumers. And bullish we're our net to of and gain sort outlook a on cast very

Ian Zaffino

there Okay. about what Great. And is I the on And the there? And to slotting that how then components up, can maybe you that what as the are higher. there's revenues? that know do would margin going pay? mean we general? in starts to get scale maybe think kind gets the that scaling by business But contribution fees be you're I about contribution talk margin of obviously

just your manufacturing reason keep Does is kind to make sense some that footprint, And political the it out a then when of to given maybe think the the there we about of of it country, onshore environment? production?

Andrew Flynn

Ian, Andrew here.

profit in oral, we're relates reinvest the for of some business benefit modern mid-XXs. only to it the the other those the seeing carry. sales oral, profits to gross margins to support is marketing broaden plan is that as and team first back products for but our to So the modern help not also into reach, we off, our And what of

something getting and around that fees some these convenience, we're and looking are is attuned slotting at multiple to, of we into opportunities that of terms different In that. chain

And on so the oral. of modern that's kind story

U.S. And which how we're in also all terms chain manufacturing. we relates our of grow to business, manufacturing, this as supply U.S. considering includes it options and enhancing considering

Operator

Capital line next Anderson the question Partners. Nick from Your of comes of ROTH

Nicholas Anderson

think for in just combustion How you more just seems initiative that It general, the rule nicotine and playing do on the around the First are like for do here. reduction of regulatory nicotine-based regulators products? products. potential focused terms one capping you on FDA landscape me, levels this And the and for out? future harm more means the in view what

Graham Purdy

the is the the bullish as We very with think has have authorization. ZYN that that agency frankly, sign, marketing this a I a in moment category. Look, at time stance see on that Yes. taken certainty we only in product the receiving a

that I was out include it were range to a think approved it's very products. interesting full point products that to flavored of

that excited viewing to think appears way this I the particular the we're about be category. agency that So

any maintain right our have perspective the don't We work on done We we've now with strengths. that filings. our nicotine

We wide be the behind continue to of range invested nicotine strengths.

of ours. -- point that's not particular a So in at we're this time, concern

Nicholas Anderson

Okay. color. I appreciate that

shop the if within on the market millennial just tendency standpoint, you up the for one sense your how Second pouch the online, opportunity view of category within demographic given versus to and I an follow the Just the strength me. direct-to-consumer wanted to could as provide here? out modern mix oral. nicotine grows for you from their playing kind just Wondering category? brick-and-mortar overall do just online

Graham Purdy

To great Yes. a me, that's question.

level market of X route to think I there's a our dependency that properties. relative brand on to

certainly mortar the -- and on we've been the As stores core FRE That's bricks you to convenience [indiscernible] and line into with get throughout is throughout imagine, Point can our XXXX. of country. Turning Brands ability that

mentioned about the you for can ALP the that brand it's from that some on dynamics feel an the outsized be being we with may online underlying perspective there how that speak route imagine, can't As confidentiality too we had given as that to specifically sort But purposes, an very demographic market. to you opportunity their marketed. of it the strongly and size of audience relates and opportunity, based

Nicholas Anderson

on the Congrats quarter. Great.

Operator

Grey Alliance question next line comes Your Aaron the of from of Partners. Global

Aaron Grey

the Congrats guys. quarter, on

I and First the more the on want brands, to of distribution, just marketing to modern so -- on between double question X ALP. back on oral FRE me, for wanted course, just instead

of of now provide referenced for more focus the FRE. maybe X? a looking color You how market ALP, in of brick-and-mortar kind you're to any between online more could just implying between Just maybe for terms you for

you're So how marketing planning for with investments exactly make? the that coincides you're that planning to and the

Graham Purdy

Yes.

and From opportunity -- all launches ultimately, organization the of just see speak made. net to underneath I me where the of standpoint, of there's all innings brand back strengths our to sort I to opportunity products properties was properties. a portfolio as point just to early double you the consumers across modern across really widest a cast referencing multiple in lie. between we X that really may an oral. wide on our the Let bricks quickly of Look, be of think going our the brands possible mortar

think long to And sort over if about we consumers haul today. those be And growth time, multiple having the more the you think consumers. those best of possible over projected exist option the the there properties category category give reach us will new entering than

Aaron Grey

Okay. Great. for commentary. Thanks that

some right? gross you that question that So about Clippers margin away. think Zig-Zag, we talked from little in the you shifted Second bit me, quarter. on down the But about just was profile, it drag as there a of had for the

out drag deeper I you're terms dive sales? margin XXXX, profile thinking then the in for we a alluded bit Clippers? in the And called the despite You about to just to mix. of there? brand about want little into both how also that growth Zig-Zag gross think terms You of for should how

Graham Purdy

Yes, sure thing.

in sales terms kind we mid-single-digit of like our reach investing hasn't to said, changed. the And growth, stores. will we all of across So really our thinking broaden growth. team be in It's

And will we -- mix what of I basis. anticipate seen profile, a fixed that is the would our margin some terms we've leveraging be continue lower shift and would margin product also that, In into we categories. as cost

percent margin year. see basis, impact in income somewhat we'll op or the growth an next from moderated So

Operator

Graham turn conference back will over that for remarks. And I concludes our to closing session. Q&A the Purdy now

Graham Purdy

the to forward of speaking months. the I us, appreciate results we to call exciting you today. the joining everybody It's operator. couple in on look here all Thanks, QX and for next XXXX

Operator

joining. today's gentlemen, call. Ladies that for all and Thank concludes you

disconnect. now may You

Turning Point Brands (TPB) 6 Mar 252024 Q4 Earnings call transcript