Turning Point Brands Inc
For the period ended Dec 31, 2024. Filed Mar 6, 2025.
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A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Mar 6, 2025
TPB$65.88-2.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2023-12-31; filed 2024-02-28.
0001140361-24-010142
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-03-06.
0001437749-25-006480
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 159 previous paragraphs and 154 current paragraphs.
39 unchanged; 51 reworded; 60 added; 68 removed; 1 previous and 4 current paragraphs rearranged.
Tables are not compared: 34 previous and 34 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (60)
Current report
On January 2, 2025, the Company contributed 100% of its interest in South Beach Brands LLC (“SBB”), the subsidiary that owns and operates the Company’s former Creative Distribution Solutions (“CDS”) reportable segment, to General Wireless Operations, Inc. (“GWO”). GWO is a joint venture between the Company and Standard General, LP entered into in December 2018, the primary operations of which will be related to the CDS business. The divestiture of the CDS business represents a strategic shift of operations and allows the Company to focus resources on its Zig-Zag and Stoker's product segments. The assets and liabilities associated with the CDS business have been classified as held for sale as of December 31, 2024, and the CDS operations have been classified as discontinued operations and reported separately for all periods presented in this annual report of Form 10-K.
Current report
The Company holds a 49% minority interest in GWO and will account for its investment in GWO under the equity method. Refer to Note 3, "Assets and Liabilities Held for Sale and Discontinued Operations" and Note 24, "Subsequent Events" in Notes to Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for further discussion regarding the divestiture.
Current report
Senior Secured Notes Offering
Current report
In February 2025, we issued $300.0 million in aggregate principal amount of our 7.625% senior secured notes due 2032 (the “2032 Notes”) at a price of 100%, the proceeds of which were used to repay in full the $250 million in aggregate principal amount outstanding of 5.625% senior secured notes due 2026 (the “2026 Notes”). The 2026 Notes were originally issued in 2021. The 2032 Notes are guaranteed by certain of the Company’s wholly-owned domestic subsidiaries but not the borrower under the Company’s ABL facility. The 2023 Notes are senior secured obligations of the Company and guarantors secured on a first lien basis by all assets of the Company and guarantors, subject to customary exclusions.
Current report
Net Sales:** For the year ended December 31, 2024, consolidated net sales increased $35.6 million, or 11.0%, compared to the prior year period, driven by increases in net sales across both segments.
Current report
For the year ended December 31, 2024, net sales in the Zig-Zag products segment increased $11.9 million, or 6.6%, compared to the prior year period. The increase in net sales was driven primarily by $11.5 million of growth in papers, wraps and accessories, as well as $5.6 million of growth in cigars. This growth was partially offset by declines of $5.0 million in our Clipper lighter business.
Current report
For the year ended December 31, 2024, net sales in the Stoker’s products segment increased $23.7 million, or 16.4%, compared to the prior year period. For the year ended December 31, 2024, sales volume of Stoker’s products increased 6.8% as compared with the prior year period contributing $9.9 million to the increase, and price/product mix increased 9.6% which contributed $13.8 million to the increase. The increase in net sales was driven primarily by $19.0 million of growth in modern oral products while the remaining growth is attributable to MST and loose-leaf chewing tobacco.
Current report
Gross Profit: For the year ended December 31, 2024, consolidated gross profit increased $18.6 million, or 10.2%, compared to the prior year period. Gross profit as a percentage of net sales decreased to 55.9% of net sales for the year ended December 31, 2024, from 56.3% of net sales for the year ended December 31, 2023. The overall decrease in gross profit margin was driven primarily by increased sales in modern oral in the Stoker’s products segment and cigars in the Zig-Zag products segment which generates lower margins than other product categories.
Current report
For the year ended December 31, 2024, gross profit in the Zig-Zag products segment increased $5.5 million, or 5.5%, compared to the prior year period. Gross profit as a percentage of net sales decreased to 55.4% of net sales for the year ended December 31, 2024, from 56.0% of net sales for the year ended December 31, 2023, driven primarily by growth in net sales of cigar products which generate lower margins than other products in the segment.
Current report
For the year ended December 31, 2024, gross profit in the Stoker’s products segment increased $13.1 million, or 16.0%, compared to the prior year period. Gross profit as a percentage of net sales decreased to 56.4% of net sales for the year ended December 31, 2024 from 56.6% of net sales for the year ended December 31, 2023, driven primarily by the growth in net sales of modern oral products which generate lower margins than other products in the segment.
Current report
Other Operating Income: For the year ended December 31, 2024, other operating income decreased $2.7 million compared to the prior year period due to a federal excise tax refund of $1.7 million received in 2024 compared to a $4.3 million federal excise tax refund received in 2023.
Current report
Operating Income: For the year ended December 31, 2024, consolidated operating income decreased $2.1 million, or 2.6%, compared to the prior year period. Operating income as a percentage of net sales decreased to 22.4% of net sales for the year ended December 31, 2024 from 25.5% of net sales for the year ended December 31, 2023, primarily due to an increase in unallocated corporate expenses, as discussed below, driven by increases in restructuring costs related to a voluntary early retirement program, stock compensation and transaction costs.
Current report
For the year ended December 31, 2024, operating income in the Zig-Zag products segment decreased $1.6 million, or 2.3%, compared to the prior year period. Operating income as a percentage of net sales decreased to 34.7% of net sales for the year ended December 31, 2024 from 37.8% of net sales for the year ended December 31, 2023, primarily due to a federal excise tax refund of $1.7 million received in 2024 which increased operating income, compared to a $4.3 million federal excise tax refund received in 2023, along with increased selling and marketing costs in 2024.
Current report
For the year ended December 31, 2024, operating income in the Stoker’s products segment increased $6.1 million, or 9.7%, compared to the prior year period. Operating income as a percentage of net sales decreased to 40.6% of net sales for the year December 31, 2024 from 43.0% of net sales for the year ended December 31, 2023, primarily due to increased sales and marketing costs to support the sales growth in modern oral.
Current report
Included in consolidated operating income are costs of the Company which are not assigned to one of the two reportable segments and includes: (i) corporate overhead expense, including executive management, finance, legal and information technology salaries and professional services, such as audit, external legal costs and information technology services; as well as (ii) costs related to the FDA premarket tobacco product application. For the year ended December 31, 2024, unallocated costs were $54.1 million compared to $47.5 million in the prior year period, an increase of $6.6 million or 13.9%, primarily driven by increases of $4.4 million in restructuring expense, $1.9 million in transaction costs, $1.5 million related to PMTA and $0.7 million in stock compensation expense.
Current report
Interest Expense, net: For the year ended December 31, 2024, interest expense, net decreased $0.7 million compared to the prior year period as a result of the maturity of the Convertible Senior Notes in 2024 and increased interest income on cash as a result of higher interest rates on cash deposits.
Current report
Net Sales:** For the year ended December 31, 2023, consolidated net sales increased $3.8 million, or 1.2%, compared to the prior year period, driven by an increase in the Stoker’s products segment.
Current report
Gross Profit: For the year ended December 31, 2023, consolidated gross profit increased $5.1 million, or 2.9%, compared to the prior year period. Gross profit as a percentage of net sales increased to 56.3% of net sales for the year ended December 31, 2023, from 55.4% of net sales for the year ended December 31, 2022. The overall increase in gross profit margin was driven primarily by increased margins in the Stoker’s products segment.
Current report
Operating Income: For the year ended December 31, 2023, consolidated operating income increased $9.0 million, or 12.1%, compared to the prior year period. Operating income as a percentage of net sales increased to 25.5% of net sales for the year ended December 31, 2023, from 23.0% of net sales for the year ended December 31, 2022, primarily due to increased margins in the Stokers products segment partially offset by decreases in unallocated corporate expenses.
Current report
For the year ended December 31, 2023, operating income in the Zig-Zag products segment decreased $5.1 million, or 6.9%, compared to the prior year period. Operating income as a percentage of net sales decreased to 37.8% of net sales for the year ended December 31, 2023, from 38.5% of net sales for the year ended December 31, 2022, primarily driven by decreased gross profits in U.S. papers and wraps.
Current report
For the year ended December 31, 2023, operating income in the Stoker’s products segment increased $8.9 million, or 16.6%, compared to the prior year period. Operating income as a percentage of net sales increased to 43.0% of net sales for the year December 31, 2023, from 40.8% of net sales for the year ended December 31, 2022, primarily driven by higher net sales of MST.
Current report
Included in consolidated operating income are costs of the Company which are not assigned to one of the two reportable segments and includes: (i) corporate overhead expense, including executive management, finance, legal and information technology salaries, and professional services, such as audit, external legal costs and information technology services, as well as (ii) costs related to the FDA premarket tobacco product application. For the year ended December 31, 2023, unallocated costs were $47.5 million compared to $52.7 million in the prior year period, a decrease of $5.1 million or 9.8%, primarily driven by decreases of $3.1 million of restructuring expense and $2.5 million of expense related to PMTA.
Current report
Loss from Discontinued Operations, net of tax
Current report
On January 2, 2025, the Company contributed 100% of its interest in SBB, the subsidiary that owns and operates the Company’s CDS segment, to GWO in exchange for 49% of the issued and outstanding GWO common stock on a fully-diluted basis. GWO is a joint venture between the Company and Standard General, LP entered into in December 2018. The assets and liabilities associated with the CDS business have been classified as held for sale as of December 31, 2024, and its financial results are classified as discontinued operations and reported separately for all periods presented herein. Upon meeting the criteria for held for sale classification, the Company recorded a non-cash charge of $8.8 million with an equivalent valuation allowance against net assets held for sale to reduce the carrying value of the disposal group to fair value.
Current report
As of December 2024, total assets and liabilities associated with the CDS segment classified as held for sale were $15.3 million and $2.0 million, respectively. As of December 2023, total assets and liabilities associated with the CDS segment classified as held for sale were $27.0 million and $2.2 million, respectively.
Current report
Loss from discontinued operations, net of tax for the years ended December 31 are as follows:
Current report
For the year ended December 31, 2024, net loss from discontinued operations, net of tax, increased $7.2 million compared to the prior year period. The loss is primarily due to lower net sales of $21.3 million for the year ended December 31, 2024 compared to prior year and a $8.8 million non-cash charge recognized in discontinued operations in 2024 to reduce the carrying value of the disposal group to its fair value.
Current report
For the year ended December 31, 2023, net loss from discontinued operations, net of tax, decreased $19.6 million compared to the prior year period. The decreased in loss for the year ended December 31, 2023 is primarily due to a goodwill impairment charge of $27.6 million recognized for the year ended December 31, 2022 to reduce the carrying value of the CDS segment goodwill balance to zero.
Current report
Our adjusted working capital, excluding CDS segment assets and liabilities held for sale, which we define as current assets less cash and current liabilities, increased $57.3 million compared to the prior year end. The increase in working capital was primarily a result of a $58.3 million decrease in current liabilities due to the July 15, 2024 maturity of our Convertible Senior Notes which were retired with cash on that date. With our strong cash balance, free cash flow generation and borrowing availability under the 2023 ABL Facility, we expect to have ample liquidity to satisfy our operating cash requirements for the foreseeable future.
Current report
Cash Flows from Continuing Operations
Current report
Our cash flows from continuing operations as reflected in the Consolidated Statements of Cash Flows are summarized as follows:
Current report
For the year ended December 31, 2024, net cash provided by operating activities was $61.0 million, an increase of $4.7 million compared to the prior year period, primarily due to an increase in net income, net of non-cash items of $12.6 million and a favorable change in other assets of $3.1 million, partially offset by a $11.0 million unfavorable change in working capital. The primary drivers of non-cash items were a $9.5 million decrease in loss on investments compared to the prior year period and a $6.5 million decrease in deferred tax expense, partially offset by increases of $1.6 million in depreciation and other amortization expense and a $1.7 million decrease in gains on extinguishment of debt compared to the prior year period.
Current report
For the year ended December 31, 2023, net cash provided by operating activities was $56.2 million, an increase of $34.9 million compared to the prior year period, primarily due to an increase in the change in working capital of $35.2 million (net of inventory reserve), partially offset by a decrease in the change in other assets of $5.3 million. The increase in working capital was primarily driven by an increase in the change in inventories of $40.0 million related to the timing of changes in inventory.
Current report
For the year ended December 31, 2024, net cash used in investing activities was $10.5 million, an increase of $4.6 million compared to the prior year period, primarily due to the net purchase of an additional $5.4 million in investments by our captive insurance subsidiary.
Current report
For the year ended December 31, 2024, net cash used in financing activities was $128.3 million, an increase of $78.8 million compared to the prior year period, primarily due to a $118.5 million cash payment for retirement of the Convertible Senior Notes and $5.1 million of cash used for the repurchase of common stock during the period in 2024, partially offset by $41.8 million in repurchases of Convertible Senior Notes that occurred during the same period in 2023.
Current report
Cash Flows from Discontinued Operations
Current report
The cash flows of the discontinued operations are reflected in the Consolidated Statements of Cash Flows and are summarized below.
Current report
Cash Flows from Operating Activities
Current report
For the year ended December 31, 2024, net cash provided by operating activities was $6.1 million, a decrease of $4.5 million compared to the prior year period, primarily due to an unfavorable $5.8 million change in working capital.
Current report
For the year ended December 31, 2023, net cash provided by operating activities was $10.6 million, an increase of $1.7 million compared to the prior year period, primarily due to a $9.2 million favorable change in working capital, reduced by a $7.5 million decrease in net loss, net of non-cash items.
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Removed paragraphs (68)
Previous report
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Previous report
In the fourth quarter of 2022, we contributed our NewGen Products business to South Beach Holdings LLC doing business as Creative Distribution Solutions (“CDS”), a newly-formed wholly-owned subsidiary. CDS is separately operated and reports to its own Board of Directors. During the first quarter of 2023, the business was designated an unrestricted subsidiary under the Senior Secured Notes (the “Notes”) and concurrently we renamed what we previously referred to as our NewGen Products segment as our Creative Distribution Solutions segment as we believe this name better aligns with the goals and strategies of the segment. During the third quarter of 2023, the CDS business was restructured to eliminate certain unprofitable brands and focus on a narrower set of products to better position it as a standalone business.
Previous report
ABL Facility
Previous report
In November 2023, a wholly-owned subsidiary of the Company entered into a new asset-based revolving credit facility with committed borrowing capacity of up to $75.0 million. The facility is secured solely by the assets of the subsidiary, which consists of certain inventory lines and cash. Neither the Company or any of its other subsidiaries guarantees or provides other credit support for the new facility. The new facility is scheduled to mature in November 2027, and replaces a $25.0 million senior secured revolving credit facility which was scheduled to mature in August 2025. The Company currently has no borrowings outstanding under the new asset-based revolving credit facility.
Previous report
Warehouse Damage
Previous report
In December 2023, a third-party warehouse in Tennessee used to store some of the Company’s leaf tobacco incurred significant tornado damage resulting in damage to the leaf tobacco. As a result, the Company recorded a $15.2 million inventory reserve related to its leaf tobacco inventory which is included in other operating income, net. The leaf tobacco inventory is covered by the Company’s stock throughput insurance policy and the Company believes the inventory loss is probable of being fully recovered under the policy. As a result, the Company recorded a $15.2 million insurance recovery receivable which is included in other operating income, net. The Company does not expect to incur any delays in customer deliveries as a result of the damage.
Previous report
Captive Insurer
Previous report
In December 2023, the Company formed a captive insurance company, Interchange IC, incorporated in the District of Columbia, to write a portion of our general product, and officer and director liability coverages under deductible reinsurance policies. Interchange IC is a fully licensed captive insurance company holding a certificate of authority from the District of Columbia Department of Insurance, Securities and Banking. Interchange IC is a wholly-owned subsidiary of Turning Point Brands and will be consolidated in the Company’s financial statements. As of December 31, 2023 Interchange IC had not been funded and had no activity.
Previous report
Critical Accounting Policies and Uses of Estimates
Previous report
Revenue Recognition
Previous report
We recognize revenues in accordance with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers (Topic 606), which include excise taxes and shipping and handling charges billed to customers, net of cash discounts for prompt payment, sales returns and sales incentives, upon delivery of goods to the customer—at which time our performance obligation is satisfied—at an amount that we expect 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. We exclude 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).
Previous report
We record an allowance for sales returns, based principally on historical volume and return rates, which is included in accrued liabilities on the consolidated balance sheets. We record 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 as being 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.
Previous report
Goodwill and Other Intangible Assets
Previous report
When testing goodwill for impairment, we have the option to first perform qualitative testing to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If we choose not to complete a qualitative assessment for a given reporting unit or if the initial assessment indicates that it is more likely than not that the carrying value of a reporting unit exceeds its estimated fair value, additional quantitative testing is required. If the carrying value of a reporting unit exceeds its fair value, an impairment loss is recognized in the amount by which the carrying value of the reporting unit exceeds its fair value, limited to the amount of goodwill at the reporting unit. We determine fair values for each of the reporting units using a combination of the income approach and/or market approach. Under the income approach, fair value is determined based on the present value of estimated future cash flows, discounted at an appropriate risk-adjusted rate. Under the market approach, we select peer sets based on close competitors and review the revenue and EBITDA multiples to determine the fair value. See Note 10, “Goodwill and Other Intangible Assets” in Notes to Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for further information on goodwill.
Previous report
Indefinite-lived intangible assets are tested for impairment at least annually; however, these tests are performed more frequently when events or changes in circumstances indicate that the asset may be impaired. Impairment exists when carrying value exceeds fair value. The Company’s fair value methodology is primarily based on the relief from royalty approach. See Note 10, “Goodwill and Other Intangible Assets” in Notes to Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for further information on intangible assets.
Previous report
Definite-lived intangible assets are amortized over their estimated useful lives, generally on a straight-line basis for periods ranging primarily from 3.5 to 15 years. The Company continually evaluates the reasonableness of the useful lives of these assets and upon a triggering event evaluates its asset group for impairment.
Previous report
Fair Value
Previous report
U.S. 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 U.S. GAAP are described below:
Previous report
Income Taxes
Previous report
We account for income taxes under ASC 740. We record the effects of income taxes under the liability method in which deferred income tax assets and liabilities are recognized based on the difference between the financial and tax basis of assets and liabilities using the enacted tax rates in effect for the years in which the differences are expected to reverse. We assess our ability to realize future benefits of deferred tax assets by determining if they meet the “more likely than not” criteria in ASC 740, Income Taxes. If we determine that future benefits do not meet the “more likely than not” criteria, a valuation allowance is recorded.
Previous report
Stock-Based Compensation
Previous report
We measure stock compensation costs related to our stock options using the fair value-based method under the provisions of ASC 718, Compensation – Stock Compensation, which requires compensation cost for stock options to be recognized based on the fair value of stock options granted. We determine the fair value of these awards using the Black-Scholes option pricing model.
Previous report
We grant performance-based restricted stock units (“PRSU”) subject to both performance-based and service-based vesting conditions. The fair value of each PRSU is our stock price on the date of grant. For purposes of recognizing compensation expense as services are rendered in accordance with ASC 718, we assume all employees involved in the PRSU grant will provide service through the end of the performance period. Stock compensation expense is recorded based on the probability of achievement of the performance conditions specified in the PRSU grant.
Previous report
We grant restricted stock units (“RSU”) subject to service-based vesting conditions. The fair value of each RSU is our stock price on the date of grant. We recognize compensation expense as services are rendered in accordance with ASC 718. Stock compensation expense is recorded over the service period in the RSU grant.
Previous report
Inventories
Previous report
Inventories are stated at the lower of cost or net realizable value using the first-in, first-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 one year for the purpose of curing. We recorded an inventory valuation allowance of $20.6 million and $4.5 million at December 31, 2023 and 2022, respectively.
Previous report
Results of Operations
Previous report
Net Sales. For the year ended December 31, 2023, overall net sales decreased to $405.4 million from $415.0 million for the year ended December 31, 2022, a decrease of $9.6 million or 2.3%. The decrease in net sales was primarily driven by decreased sales volume in the Creative Distribution Solutions segment.
Previous report
For the year ended December 31, 2023, net sales in the Creative Distribution Solutions segment decreased to $80.3 million from $93.8 million for the year ended December 31, 2022, a decrease of $13.5 million or 14.3%. The decrease in net sales was primarily the result of reduced volumes.
Previous report
Gross Profit. For the year ended December 31, 2023, overall gross profit decreased to $203.2 million from $205.5 million for the year ended December 31, 2022, a decrease of $2.3 million or 1.1%. Gross profit as a percentage of net sales increased to 50.1% of net sales for the year ended December 31, 2023, from 49.5% of net sales for the year ended December 31, 2022. The overall decrease in gross profit was driven by decreased margins in the Creative Distribution Solutions segment partially offset by increased margin in the Stoker’s Products segment.
Previous report
For the year ended December 31, 2023, gross profit in the Creative Distribution Solutions segment decreased to $20.3 million from $27.7 million for the year ended December 31, 2022, a decrease of $7.4 million or 26.7%. Gross profit as a percentage of net sales decreased to 25.3% of net sales for the year ended December 31, 2023, from 29.5% of net sales for the year ended December 31, 2022, primarily as a result of channel mix.
Previous report
Other Operating Income, net. For the year ended December 31, 2023, other operating income, net was $4.3 million as a result of a
Previous report
Goodwill and Intangible Impairment Loss. For the year ended December 31, 2023 there was no goodwill and intangible impairment loss. For the year ended December 31, 2022, goodwill and intangible impairment loss was $27.6 million primarily as a result of fully impairing the goodwill balance of the Creative Distribution Solutions reporting unit.
Previous report
Net Sales. For the year ended December 31, 2022, overall net sales decreased to $415.0 million from $445.5 million for the year ended December 31, 2021, a decrease of $30.5 million or 6.8%. The decrease in net sales was primarily driven by decreased sales volume in the Creative Distribution Solutions segment.
Previous report
For the year ended December 31, 2022, net sales in the Zig-Zag Products segment increased to $190.4 million from $176.5 million for the year ended December 31, 2021, an increase of $13.9 million or 7.9%. The increase in net sales was by led by double-digit growth in sales of U.S. rolling papers and e-commerce, other smoking accessories, and Canadian businesses partially offset by a double-digit decline in the wraps business.
Previous report
For the year ended December 31, 2022, net sales in the Stoker’s Products segment increased to $130.8 million from $124.3 million for the year ended December 31, 2021, an increase of $6.5 million or 5.3%. For the year ended December 31, 2022, Stoker’s Products volume decreased 2.6% and price/mix increased 7.9%. The increase in net sales was driven by the continuing double-digit growth of Stoker’s® MST offset by high single-digit decline in loose-leaf chewing tobacco. MST represented 66% of Stoker’s Products revenue in 2022, up from 63% a year earlier.
Previous report
For the year ended December 31, 2022, net sales in the Creative Distribution Solutions segment decreased to $93.8 million from $144.7 million for the year ended December 31, 2021, a decrease of $50.9 million or 35.2%. The decrease in net sales was primarily the result of volume declines as a result of the changing regulatory environment relating to liquid nicotine products.
Previous report
Gross Profit. For the year ended December 31, 2022, overall gross profit decreased to $205.5 million from $217.8 million for the year ended December 31, 2021, a decrease of $12.3 million or 5.6%. Gross profit as a percentage of net sales increased to 49.5% for the year ended December 31, 2022, from 48.9% for the year ended December 31, 2021. The increase in gross profit as a percentage of net sales was driven by product mix.
Previous report
For the year ended December 31, 2022, gross profit in the Zig-Zag Products segment increased to $106.6 million from $102.7 million for the year ended December 31, 2021, an increase of $3.8 million or 3.7%. Gross profit as a percentage of net sales decreased to 56.0% of net sales for the year ended December 31, 2022, from 58.2% of net sales for the year ended December 31, 2021. The decrease in gross profit as a percentage of net sales is a result of product mix including the launch of our CLIPPER lighter products which have lower gross profit margins.
Previous report
For the year ended December 31, 2022, gross profit in the Stoker’s Products segment increased to $71.3 million from $68.1 million for the year ended December 31, 2021, an increase of $3.2 million or 4.7%. Gross profit as a percentage of net sales decreased to 54.5% of net sales for the year ended December 31, 2022, from 54.8% of net sales for the year ended December 31, 2021. The decrease in gross profit as a percentage of net sales is primarily a result of product mix shift including mix of discount loose-leaf products.
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Reworded paragraphs (51)
Previous wording
Turning Point Brands, Inc. is a leading manufacturer, marketer and distributor of branded consumer products. We sell a wide range of products to adult consumers consisting of staple products with our iconic brands Zig-Zag®and Stoker’s®and our next generation products to fulfill evolving consumer preferences. Among other markets, we compete in the alternative smoking accessories and Other Tobacco Products (“OTP”) industries. The alternative smoking accessories market is a dynamic market experiencing robust secular growth driven by cannabinoid legalization in the U.S. and Canada, and positively evolving consumer perception and acceptance in North America. The OTP industry, which consists of non-cigarette tobacco products, exhibited low-single-digit consumer unit annualized growth over the four-year period ended 2023 as reported by Management Science Associates, Inc., a third-party analytics and information company. Our segments are led by our core, proprietary brands: Zig-Zag® and CLIPPER® in the Zig-Zag Products segment and Stoker’s® along with Beech-Nut® and Trophy® in the Stoker’s Products segment. Our businesses generate solid cash flows which we use to invest in our business, finance acquisitions, increase brand support, expand our distribution infrastructure, and strengthen our capital position. We currently ship to approximately 820 distributors with an additional 650 secondary, indirect wholesalers in the U.S. that carry and sell our products. Under the leadership of a senior management team with extensive experience in the consumer products, alternative smoking accessories and tobacco industries, we have grown and diversified our business through new product launches, category expansions, and acquisitions while concurrently improving operational efficiency.
Current wording
Turning Point Brands, Inc. is a leading manufacturer, marketer and distributor of branded consumer products. We sell a wide range of products to adult consumers consisting of staple products with our iconic brands Zig-Zag® and Stoker’s® and our next-generation products to fulfill evolving consumer preferences. Among other markets, we compete in the alternative smoking accessories and Other Tobacco Products (“OTP”) industries. The alternative smoking accessories market is a dynamic market experiencing robust secular growth driven by cannabinoid legalization in the U.S. and Canada and positively evolving consumer perception and acceptance in North America. The OTP industry, which consists of non-cigarette tobacco products, exhibited low-single-digit consumer unit annualized growth over the four-year period ended 2024 as reported by Management Science Associates, Inc. a third-party analytics and information company. Our segments are led by our core proprietary and iconic brands: Zig-Zag® in the Zig-Zag products segment and Stoker’s® along with FRE®, Beech-Nut® and Trophy® in the Stoker’s products segment. Our businesses generate solid cash flow which we use to invest in our business, finance acquisitions, increase brand support, expand our distribution infrastructure, and strengthen our capital position. We currently ship to approximately 900 distributors with an additional 600 secondary, indirect wholesalers in the U.S. that carry and sell our products. Under the leadership of a senior management team with extensive experience in the consumer products, alternative smoking accessories and tobacco industries, we have grown and diversified our business through new product launches, category expansions and acquisitions while concurrently improving operational efficiency.
Previous wording
We believe there are meaningful opportunities to grow through acquisitions and joint ventures across all product categories. Our products are currently available in approximately 197,000 U.S. retail locations which, with the addition of retail stores in Canada, brings our total North American retail presence to an estimated 217,000 points of distribution. Our sales team targets widespread distribution to all traditional retail channels, including convenience stores. We also have a growing e-commerce business.
Current wording
We believe there are meaningful opportunities to expand through investing in organic growth via acquisitions and joint ventures across all product categories. Our products are currently available in approximately 200,000 U.S. retail locations, which, with the addition of retail stores in Canada, bring our total North American retail presence to an estimated 220,000 points of distribution. Our sales team targets widespread distribution to all traditional retail channels, including convenience stores, and we have a growing e-commerce business.
Previous wording
We operate in three segments: Zig-Zag Products, Stoker’s Products and Creative Distribution Solutions. In our Zig-Zag Products segment, we principally market and distribute (i) rolling papers, tubes, and related products; (ii) finished cigars and make-your-own (“MYO”) cigar wraps and (iii) lighters and other accessories. In addition, we have a majority stake in Turning Point Brands Canada which markets and distributes cannabis accessories and tobacco products throughout Canada. In our Stoker’s Products segment, we (i) manufacture and market moist snuff tobacco (“MST”) and (ii) contract for and market loose leaf chewing tobacco products. In our Creative Distribution Solutions segment, we (i) market and distribute liquid nicotine products and certain other products without tobacco and/or nicotine; (ii) distribute a wide assortment of products to non-traditional retail via VaporBeast; and (iii) market and distribute a wide assortment of products to individual consumers via the VaporFi B2C online platform.
Current wording
We operate in two segments: Zig-Zag products and Stoker’s products segments. In our Zig-Zag products segment, we principally market and distribute (i) rolling papers, tubes, and related products; (ii) finished cigars and make-your-own (“MYO”) cigar wraps; and (iii) lighters and other accessories. In addition, we have a majority stake in Turning Point Brands Canada which is a specialty marketing and distribution firm focused on building brands in the Canadian cannabis accessories, tobacco and alternative products categories. In our Stoker’s products segment, we (i) manufacture and market moist snuff tobacco (“MST”) and (ii) contract for and marketFRE®, our modern oral product; and (iii) contract for and market loose-leaf chewing tobacco products.
Previous wording
Our portfolio of brands includes some of the most widely recognized names in the alternative smoking accessories and OTP industries, such as Zig-Zag®, Stoker’s®, Vapor Beast® and VaporFi®. The following table sets forth the market share and category rank of our core products and demonstrates their industry positions within measured distribution channels:
Current wording
Our portfolio of brands includes some of the most widely recognized names in the alternative smoking accessories and OTP industries such asZig-Zag®andStoker’s®. The following table sets forth the market share and category rank of our core products and demonstrates their industry positions within measured distribution channels:
Previous wording
We subscribe to a sales tracking system from MSAi that records all OTP product shipments (ours as well as those of our competitors) from approximately 600 wholesalers to over 250,000 traditional retail stores in the U.S. This system enables us to understand individual product share and volume trends across multiple categories down to the individual retail store level, allowing us to allocate field salesforce coverage to the highest opportunity stores. Our sales and marketing group of approximately 180 professionals utilize the MSAi system to efficiently target markets and sales channels with the highest sales potential.
Current wording
We subscribe to a sales tracking system from MSAi that records all OTP product shipments (ours as well as those of our competitors) from approximately 600 wholesalers to over 265,000 traditional retail stores in the U.S. This system enables us to understand individual product share and volume trends across multiple categories down to the individual retail store level, allowing us to allocate field salesforce coverage to the highest opportunity stores. Our sales and marketing group of approximately 200 professionals utilize the MSAi system to efficiently target markets and sales channels with the highest sales potential.
Previous wording
Our core Zig-Zag Products and Stoker’s Products segments primarily generate revenues from the sale of our products to wholesale distributors who, in turn, resell the products to retail operations. Our acquisition of Vapor Beast in 2016 expanded our revenue streams as we began selling directly to non-traditional retail outlets. Our acquisition of IVG in 2018 enhanced our B2C revenue stream with the addition of the Vapor-Fi online platform. Our net sales, which include federal excise taxes, consist of gross sales net of cash discounts, returns, and selling and marketing allowances.
Current wording
Our core Zig-Zag products and Stoker’s products segments primarily generate revenues from the sale of our products to wholesale distributors who, in turn, resell the products to retail operations. Our net sales, which include federal excise taxes, consist of gross sales net of cash discounts, returns, and selling and marketing allowances.
Previous wording
We rely on long-standing relationships with high-quality, established manufacturers to provide the majority of our produced products. Approximately 75% of our production, as measured by net sales, is outsourced to suppliers. The remaining production consists primarily of our moist snuff tobacco operations located in Dresden, Tennessee and Louisville, Kentucky. Our principal operating expenses include the cost of raw materials used to manufacture the limited number of our products which we produce in-house; the cost of finished products, which are generally purchased goods; federal excise taxes; legal expenses; and compensation expenses, including benefits and costs of salaried personnel. Our other principal expenses include interest expense and other expenses.
Current wording
We rely on long-standing relationships with high-quality, established manufacturers to provide the majority of our produced products. Approximately 70% of our production, as measured by net sales, is outsourced to suppliers. The remaining production consists primarily of our moist snuff tobacco operations located in Dresden, Tennessee and Louisville, Kentucky. Our principal operating expenses include the cost of raw materials used to manufacture the limited number of our products which we produce in-house; the cost of finished products, which are generally purchased goods; federal excise taxes; legal expenses; and compensation expenses, including benefits and costs of salaried personnel.
Previous wording
The table and discussion set forth below relates to our consolidated results of operations for the years ended December 31 (in thousands):
Current wording
The table and discussion set forth below relates to our consolidated results of continuing operations for the years ended:
Previous wording
Selling, General and Administrative Expenses. For the year ended December 31, 2022, selling, general and administrative expenses increased to $130.0 million from $127.5 million for the year ended December 31, 2021, an increase of $2.5 million or 2.0%. Selling, general, and administrative expenses for the year ended December 31, 2022, included $5.3 million of stock options, restricted stock and incentives expense, $0.8 million of transaction expenses, $3.4 million of restructuring expenses, $2.0 million of ERP/CRM expenses and $4.6 million of expense related to PMTA. Selling, general, and administrative expenses for the year ended December 31, 2021, included $7.6 million of stock options, restricted stock and incentives expense, $1.3 million of transaction expenses, $0.9 million of restructuring expenses and $1.7 million of expense related to PMTA. The increase in selling, general and administrative expenses is a result of increased PMTA spend in 2022 and expenses related to of our new ERP/CRM system.
Current wording
Selling, General and Administrative Expenses:** For the year ended December 31, 2024, selling, general and administrative expenses increased $18.1 million, or 17.3%, compared to the prior year period. Selling, general and administrative expenses for the year ended December 31, 2024, included $7.2 million of stock options, restricted stock and incentives expense, $4.6 million of expense related to corporate restructuring, $3.6 million of expense related to PMTA, $2.1 million related to transaction costs and $0.9 million of expense related to the implementation of the new ERP and CRM systems. Corporate restructuring expense increased in 2024 compared to the prior year period primarily due to a voluntary early retirement program offered to employees in October 2024. This program offered early retirement benefits to employees meeting certain criteria. Agreements with employees were finalized in the fourth quarter of 2024 and the Company booked a $2.7 million reserve for estimated future payments. Selling, general and administrative expenses for the year ended December 31, 2023, included $6.6 million of stock options, restricted stock and incentives expense, $2.1 million of expense related to PMTA, $0.6 million of expense related to the implementation of the new ERP and CRM systems, $0.2 million of expense related to corporate restructuring and $0.2 million related to transaction costs.
Previous wording
Other Income. For the year ended December 31, 2023, other income was $4.0 million as a result of a $4.0 million gain related to a legal settlement.
Current wording
**Other Income:**For the year ended December 31, 2024, other income was zero compared to $4.0 million in the prior year as a result of a $4.0 million gain related to a legal settlement.
Previous wording
Gain on Extinguishment of Debt. For the year ended December 31, 2022, gain on extinguishment of debt was $0.9 million as a result of the repurchase of $10.0 million principal of our Convertible Senior Notes at a discount. For the year ended December 31, 2021, gain on extinguishment of debt was $2.2 million as a result of forgiveness of the unsecured loan issued to us under the Coronavirus Aid, Relief, and Economic Security Act of 2020 (the “CARES Act”) partially offset by the repayment of the 2018 First Lien Credit Facility.
Current wording
**Gain on Extinguishment of Debt:**For the year ended December 31, 2024, gain on extinguishment of debt was zero compared to $1.7 million for the year ended December 31, 2023, as a result of the repurchase of $44.0 million in aggregate principal amount of our Convertible Senior Notes at a discount in 2023.
Previous wording
Income Tax Expense. The Company’s income tax expense was $4.8 million, or 30.3% of income before income taxes, for the year ended December 31, 2022. The Company’s income tax expense was $14.0 million, or 21.5% of income before income taxes, for the year ended December 31, 2021, and included discrete tax deductions of $7.5 million related to the forgiveness of the $7.5 million unsecured loan and $7.2 million relating to stock option exercises during the year.
Current wording
Income Tax Expense: The Company’s income tax expense was $16.9 million, or 26.1% of income from continuing operations before income taxes for the year ended December 31, 2024. The Company's income tax expense was $24.0 million, or 38.7% of income from continuing operations before income taxes for the year ended December 31, 2023 and included $6.4 million of valuation allowance for the deferred tax asset related to unrealized loss on investments and $1.7 million valuation allowance for foreign net operating losses.
Previous wording
Net Loss Attributable to Non-Controlling Interest. Net loss attributable to non-controlling interest was $0.5 million for the year ended December 31, 2022, compared to $0.8 million for the year ended December 31, 2021.
Current wording
**Net Income (Loss) Attributable to Non-Controlling Interest:**Net income attributable to non-controlling interest was $0.7 million for the year ended December 31, 2024, compared to a net loss of $0.7 million for the year ended December 31, 2023.
Previous wording
Net Income Attributable to Turning Point Brands, Inc. Due to the factors described above, net income attributable to Turning Point Brands, Inc. for the years ended December 31, 2022 and 2021, was $11.6 million and $52.1 million, respectively.
Current wording
*Net Income from Continuing Operations Attributable to Turning Point Brands, Inc.: ***Due to the factors described above, net income from continuing operations attributable to Turning Point Brands, Inc. for the years ended December 31, 2024 and 2023, was $47.3 million and $38.7 million, respectively.
Previous wording
For the year ended December 31, 2023, net sales in the Zig-Zag Products segment decreased to $180.5 million from $190.4 million for the year ended December 31, 2022, a decrease of $9.9 million or 5.2%. The decrease in net sales was driven by anticipated declines in the U.S. rolling papers and wraps businesses which were impacted by a reduction of trade inventory, partially offset by growth in our Clipper products. Additionally, a discontinuation of an unprofitable product line negatively impacted Canadian sales by $4.9 million against the previous year.
Current wording
For the year ended December 31, 2023, net sales in the Zig-Zag products segment decreased $9.9 million, or 5.2%, compared to the prior year period. The decrease in net sales was driven by declines in the U.S. rolling papers and wraps businesses which were impacted by a reduction of trade inventory, partially offset by growth in our Clipper products. Additionally, the discontinuation of an unprofitable product line negatively impacted Canadian sales by $4.9 million against the previous year.
Previous wording
For the year ended December 31, 2023, net sales in the Stoker’s Products segment increased to $144.6 million from $130.8 million for the year ended December 31, 2022, an increase of $13.8 million or 10.5%. For the year ended December 31, 2023, Stoker’s Products volume increased 4.2% and price/mix increased 6.3%. The increase in net sales was driven primarily by double-digit growth of Stoker’s® MST. MST represented 68% of Stoker’s Products revenue in 2023, up from 66% for the same period in 2022.
Current wording
For the year ended December 31, 2023, net sales in the Stoker’s products segment increased $13.8 million, or 10.5%, compared to the prior year period. For the year ended December 31, 2023, Stoker’s products volume increased 4.2% and price/mix increased 6.3%. The increase in net sales was driven primarily by double-digit growth of Stoker’s® MST. MST represented 68% of Stoker’s products revenue in 2023, up from 66% for the same period in 2022.
Previous wording
For the year ended December 31, 2023, gross profit in the Zig-Zag Products segment decreased to $101.1 million from $106.6 million for the year ended December 31, 2022, a decrease of $5.5 million or 5.2%. Gross profit as a percentage of net sales remained steady at 56.0% of net sales for the years ended December 31, 2023 and 2022.
Current wording
For the year ended December 31, 2023, gross profit in the Zig-Zag products segment decreased $5.5 million, or 5.2%, compared to the prior year period. Gross profit as a percentage of net sales remained unchanged at 56.0% of net sales for the years ended December 31, 2024 and 2023, respectively.
Previous wording
For the year ended December 31, 2023, gross profit in the Stoker’s Products segment increased to $81.9 million from $71.3 million for the year ended December 31, 2022, an increase of $10.6 million or 14.9%. Gross profit as a percentage of net sales increased to 56.6% of net sales for the year ended December 31, 2023, from 54.5% of net sales for the year ended December 31, 2022, primarily as a result of the strong incremental margin contribution of MST.
Current wording
For the year ended December 31, 2023, gross profit in the Stoker’s products segment increased $10.6 million, or 14.9%, compared to the prior year period. Gross profit as a percentage of net sales increased to 56.6% of net sales for the year ended December 31, 2023, from 54.5% of net sales for the year ended December 31, 2022, as a result of strong incremental margin contribution of MST.
Previous wording
Selling, General and Administrative Expenses. For the year ended December 31, 2023, selling, general and administrative expenses decreased to $125.0 million from $130.0 million for the year ended December 31, 2022, a decrease of $5.0 million or 3.9%. Selling, general, and administrative expenses for the year ended December 31, 2023, included $6.6 million of stock options, restricted stock and incentives expense, $0.2 million of transaction expenses, $0.4 million of restructuring expenses, $0.6 million of ERP/CRM expenses and $2.1 million of expense related to PMTA. Selling, general, and administrative expenses for the year ended December 31, 2022, included $5.3 million of stock options, restricted stock and incentives expense, $0.8 million of transaction expenses, $3.4 million of restructuring expenses, $2.0 million of ERP/CRM expenses and $4.6 million of expense related to PMTA.
Current wording
Selling, General and Administrative Expenses:** For the year ended December 31, 2023, selling, general, and administrative expenses increased $0.5 million, or 0.5% compared to the prior year period. Selling, general and administrative expenses for the year ended December 31, 2023, included $6.6 million of stock options, restricted stock and incentives expense, $2.1 million of expense related to PMTA, $0.6 million of expense related to the implementation of the new ERP and CRM systems, $0.2 million of expense related to corporate restructuring and $0.2 million related to transaction costs. Selling, general and administrative expenses for the year ended December 31, 2022, included $5.3 million of stock options, restricted stock and incentives expense, $4.6 million of expense related to PMTA, $3.3 million of expense related to corporate restructuring, $2.0 million of expense related to the implementation of the new ERP and CRM systems and $0.8 million related to transaction costs.
Previous wording
$4.3 million gain from a federal excise tax refund and a $15.2 million gain related to insurance, partially offset by a $15.2 million reduction in inventory due to storm damage. For the year ended December 31, 2022 there was no other operating (income) expense.
Current wording
Other Operating Income: For the year ended December 31, 2023, other operating income was $4.3 million, resulting from a federal excise tax refund and a $15.2 million gain related to insurance, partially offset by a $15.2 million reduction in inventory due to storm damage. For the year ended December 31, 2022, there was no other operating (income) expense.
Previous wording
Interest Expense, net. For the year ended December 31, 2023, interest expense, net decreased to $14.6 million from $19.5 million for the year ended December 31, 2022, primarily as a result of the repurchases of $44.0 million and $10.0 million in aggregate principal amount of Convertible Senior Notes in 2023 and 2022, respectively, and increased interest income on cash as a result of rising interest rates.
Current wording
Interest Expense, net: For the year ended December 31, 2023, interest expense, net decreased $4.9 million compared to the prior year period primarily as a result of the repurchases of $44.0 million and $10.0 million in aggregate principal amount of Convertible Senior Notes in 2023 and 2022, respectively, and increased interest income on cash as a result of rising interest rates.
Previous wording
Investment Loss. For the year ended December 31, 2023, investment loss decreased to $11.9 million compared to $13.3 million of investment loss for the year ended December 31, 2022. The change is primarily a result of the 2023 impairment charges recognized on our investments in Docklight, Wild Hemp and Old Pal of $8.7 million, $2.3 million and $1.3 million, respectively, in 2023 compared to impairment charges of $7.9 million, $4.3 million and $1.4 million in 2022 related to our investments in Dosist, Real Brands and Old Pal, respectively.
Current wording
Investment Loss:** For the year ended December 31, 2023, investment loss decreased to $11.9 million compared to $13.3 million for the year ended December 31, 2022. The change is primarily a result of the 2023 impairment charges recognized on our investments in Docklight, Wild Hempettes and Old Pal of $8.7 million, $2.3 million and $1.3 million, respectively, in 2023, compared to impairment charges of $7.9 million, $4.3 million and $1.4 million in 2022 related to our investments in Dosist, Real Brands and Old Pal, respectively.
Previous wording
Gain on Extinguishment of Debt. For the year ended December 31, 2023, gain on extinguishment of debt was $1.7 million as a result of the repurchase of $44.0 million in aggregate principal amount of our Convertible Senior Notes at a discount. For the year ended December 31, 2022, gain on extinguishment of debt was $0.9 million as a result of the repurchase of $10.0 million in aggregate principal of our Convertible Senior Notes at a discount.
Current wording
**Gain on Extinguishment of Debt:**For the year ended December 31, 2023, gain on extinguishment of debt was $1.7 million compared to $0.9 million for the year ended December 31, 2022, as a result of the repurchase of $44.0 million in aggregate principal amount of our Convertible Senior Notes at a discount. For the year ended December 31, 2022, gain on extinguishment of debt resulted from the repurchase of $10.0 million in aggregate principal of our Convertible Senior Notes at a discount.
Previous wording
Income Tax Expense. The Company’s income tax expense was $23.9 million, or 38.7% of income before income taxes, for the year ended December 31, 2023, and included $6.4 million of valuation allowance for the deferred tax asset related to unrealized loss on investments and $1.7 million valuation allowance for foreign net operating losses. The Company’s income tax expense was $4.8 million, or 30.3% of income before income taxes, for the year ended December 31, 2022.
Current wording
Income Tax Expense: The Company’s income tax expense was $24.0 million, or 38.7% of income before income taxes for the year ended December 31, 2023, and included $6.4 million of valuation allowance for the deferred tax asset related to unrealized loss on investments and $1.7 million valuation allowance for foreign net operating losses. The Company's income tax expense was $11.0 million, or 26.1% of income before income taxes for the year ended December 31, 2022.
Previous wording
Net Loss Attributable to Non-Controlling Interest. Net loss attributable to non-controlling interest was $0.7 million for the year ended December 31, 2023, compared to $0.5 million for the year ended December 31, 2022.
Current wording
**Net Income (Loss) Attributable to Non-Controlling Interest:**Net loss attributable to non-controlling interest was $0.7 million for the year ended December 31, 2023, compared to a $0.5 million loss for the year ended December 31, 2022.
Previous wording
Net Income Attributable to Turning Point Brands, Inc. Due to the factors described above, net income attributable to Turning Point Brands, Inc. for the years ended December 31, 2023 and 2022, was $38.5 million and $11.6 million, respectively.
Current wording
*Net Income from Continuing Operations Attributable to Turning Point Brands, Inc.: ***Due to the factors described above, net income attributable to Turning Point Brands, Inc. for the years ended December 31, 2023 and 2022, was $38.7 million and $31.6 million, respectively.
Previous wording
We define “EBITDA” as net income before interest expense, gain (loss) on extinguishment of debt, provision for income taxes, depreciation, and amortization. We define “Adjusted EBITDA” as net income before interest expense, gain (loss) on extinguishment of debt, provision for income taxes, depreciation, amortization, other non-cash items, and other items we do not consider the ordinary course in our evaluation of ongoing operating performance noted in the reconciliation below.
Current wording
We define “EBITDA” as net income before interest expense, gain (loss) on extinguishment of debt, income tax expense, depreciation, and amortization. We define “Adjusted EBITDA” as net income before interest expense, gain (loss) on extinguishment of debt, income tax expense, depreciation, amortization, other non-cash items, and other items we do not consider the ordinary course in our evaluation of ongoing operating performance noted in the reconciliation below. Among other items that we adjust Adjusted EBITDA for is FDA PMTA expense. The Company believes it is appropriate to adjust for this spend as the costs are incurred in connection with what we view as a non-traditional regulatory process that requires applications be submitted for covered products that are already on the market. As a result, Company’s management believes it is most appropriate to assess the performance of the Company’s business – the sale of our various products - without regard to these costs and believes that adjusting for these costs provides investors and the public markets with the most meaningful metrics to assess performance of the business.
Previous wording
Our principal uses for cash are working capital, debt service, and capital expenditures. As of December 31, 2023, we have $117.9 million cash on hand and have up to $60.0 million of availability under the new 2023 ABL Facility.
Current wording
Our principal uses for cash are working capital, debt service and capital expenditures. As of December 31, 2024, we had $46.2 million cash on hand, excluding CDS segment cash of $2.8 million, ($116.7 million, excluding CDS segment cash of $1.2 million, as of December 31, 2023) and have up to $57.4 million of availability under the 2023 ABL Facility. After giving effect to the issuance of the 2032 Notes and redemption of the 2026 Notes in February 2025, our cash on hand would have been $90.2 million as of December 31, 2024 and borrowing availability under the ABL would have remained the same. We have no borrowings outstanding under our ABL as of December 31, 2024. Our Convertible Senior Notes matured on July 15, 2024 and were retired with cash.
Previous wording
For the years ended December 31, 2023 and 2022, we invested $5.7 million and $7.7 million, respectively, in capital expenditures. We had unrestricted cash on hand of $117.9 million and $106.4 million as of December 31, 2023 and 2022, respectively. We had restricted assets of $31.7 million and $31.0 million as of December 31, 2023 and 2022, respectively. Restricted assets consist of escrow deposits under the MSA and insurance deposits. On the 25 th anniversary of each annual deposit, we are entitled to receive reimbursement of the principal amount of escrow remaining for that year. See “Master Settlement Agreement” below for details.
Current wording
For the years ended December 31, 2024 and 2023, we invested $4.6 million and $5.7 million, respectively, in capital expenditures. We had restricted assets of $30.7 million and $33.6 million as of December 31, 2024 and 2023, respectively. Restricted assets consist of escrow deposits under the MSA and insurance deposits. On the 25 th anniversary of each annual deposit, we are entitled to receive reimbursement of the principal amount of escrow remaining for that year. See “Master Settlement Agreement” below for details.
Previous wording
For the year ended December 31, 2023, net cash used in investing activities decreased to $5.9 million from $18.8 million for the year ended December 31, 2022, a decrease of $12.9 million or 69%, primarily due to a decrease in purchases of investments in our MSA escrow account.
Current wording
For the year ended December 31, 2023, net cash used in investing activities was $5.9 million, a decrease of $13.1 million compared to the prior year period, primarily due to a $10.2 million decrease in purchases of investments in our MSA escrow account.
Previous wording
For the year ended December 31, 2023, net cash used in financing activities increased to $49.5 million from $43.3 million for the year ended December 31, 2022, an increase of $6.2 million or 14%, primarily due to $41.8 million in repurchases of Convertible Senior Notes during the period, offset by a decrease in repurchases of common stock of $29.2 million during 2023.
Current wording
For the year ended December 31, 2023, net cash used in financing activities was $49.5 million, an increase of $6.2 million compared to the prior year period, primarily due to $41.8 million in repurchases of Convertible Senior Notes during the period, partially offset by a decrease in repurchases of common stock of $29.2 million during 2023.
Previous wording
On February 11, 2021, we closed a private offering (the “Offering”) of $250 million aggregate principal amount of our 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.We 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.
Current wording
On February 11, 2021, we closed a private offering of $250.0 million aggregate principal amount of our 5.625% senior secured notes due 2026 (the “2026 Notes”). The 2026 Notes incurred interest at a rate of 5.625%. Interest on the 2026 Notes is payable semi-annually in arrears on February 15 and August 15 of each year, commencing on August 15, 2021.We 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.
Previous wording
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 Senior Secured Notes 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.
Current wording
Obligations under the 2026 Notes were 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 2026 Notes or the “2026 Notes Indenture”) or capital markets debt securities of the Company or Guarantors in excess of $15.0 million. The 2026 Notes 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. We were in compliance with all covenants under the 2026 Notes as of December 31, 2024.
Previous wording
We 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 straight-line method over the expected life of the Senior Secured Notes.
Current wording
We incurred debt issuance costs attributable to the issuance of the 2026 Notes of $6.4 million which are amortized to interest expense using the straight-line method over the expected life of the 2026 Notes.
Previous wording
The Senior Secured Notes 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 Senior Secured Notes Indenture. The Senior Secured Notes Indenture provides for customary events of default. We were in compliance with all covenants as of December 31, 2023.
Current wording
The 2032 Notes 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 several limitations and exceptions set forth in the 2032 Notes Indenture. For instance, the Company is generally permitted to make restricted payments, including the payment of dividends to shareholders, provided that, at the time of payment, or as a result of payment, the Company is not in default on its debt covenants; however, there are earnings and market capitalization requirements that if not met could limit the aggregate amount of quarterly dividends payable during a fiscal year. The 2032 Notes Indenture provides for customary events of default.
Previous wording
On November 7, 2023, TPB Specialty Finance, LLC, a wholly-owned subsidiary of the Company (the “ABL Borrower”), entered into a new $75.0 million asset-backed revolving credit facility (the “2023 ABL Facility”), with the several lenders thereunder, and Barclays Bank Plc, as administrative agent (the “Administrative Agent”) and as collateral agent (the “Collateral Agent”) and First-Citizens Bank & Trust Company as additional collateral agent (the “Additional Collateral Agent”). Under the 2023 ABL Facility, the ABL Borrower may draw up to $75.0 million under Revolving Credit Loans and Last In Last Out (“LILO”) Loans. The 2023 ABL Facility includes a $40.0 million accordion feature. In connection with the 2023 ABL Facility, Turning Point Brands contributed certain existing inventory to the ABL Borrower. The 2023 ABL Facility is secured on a first priority basis (subject to customary exceptions) by all assets of the ABL Borrower.
Current wording
On November 7, 2023, TPB Specialty Finance, LLC, a wholly-owned subsidiary of the Company (the “ABL Borrower”), entered into a new $75.0 million asset-backed revolving credit facility (the “2023 ABL Facility”), with the several lenders thereunder, and Barclays Bank PLC, as administrative agent (the “Administrative Agent”) and as collateral agent (the “Collateral Agent”) and First-Citizens Bank & Trust Company as additional collateral agent (the “Additional Collateral Agent”). Under the 2023 ABL Facility, the ABL Borrower may draw up to $75.0 million under Revolving Credit Loans and Last In Last Out (“LILO”) Loans. The 2023 ABL Facility includes a $40.0 million accordion feature. In connection with the 2023 ABL Facility, certain existing inventory was contributed to the ABL Borrower. The 2023 ABL Facility is secured on a first priority basis (subject to customary exceptions) by all assets of the ABL Borrower.
Previous wording
The 2023 ABL Facility also requires the Company and its restricted subsidiaries to maintain a fixed charge coverage ratio of at least 1.00 to 1.00 as of the end of any four consecutive fiscal quarters if excess availability shall be less than the greater of (a) 12.5% of the line cap and (b) $9.4 million, at any time and continuing until excess availability is equal to or exceeds the greater of (i) 12.5% of the line and (ii) $9.4 million for thirty (30) consecutive calendar days; provided that such $9.4 million level shall automatically increase in proportion to the amount of any increase in the aggregate revolving credit commitments thereunder in connection with any incremental facility.
Current wording
The 2023 ABL Facility also requires the Company and its restricted subsidiaries to maintain a fixed charge coverage ratio of at least 1.00 to 1.00 as of the end of any four consecutive fiscal quarters if excess availability is less than the greater of (a) 12.5% of the line cap and (b) $9.4 million, at any time and continuing until excess availability is equal to or exceeds the greater of (i) 12.5% of the line and (ii) $9.4 million for thirty (30) consecutive calendar days with the $9.4 million level automatically increased in proportion to the amount of any increase in the aggregate revolving credit commitments thereunder in connection with any incremental facility.
Previous wording
The 2023 ABL Facility will mature on the earlier of (x) November 7, 2027 and (y) the date that is 91 days prior to the maturity date of any material debt of the ABL Borrower or the Company or any of its restricted subsidiaries (subject to customary extensions agreed by the lenders thereunder); provided that clause (y) shall not apply to the extent that on any applicable date of determination (on any date prior to the date set forth in clause (y)), (A) the sum of (x) cash that is held in escrow for the repayment of such material debt pursuant to arrangements satisfactory to the Administrative Agent, (y) cash that is held in accounts with the Administrative Agent and/or the Additional Collateral Agent, plus (z) excess availability, is sufficient to repay such material debt and (B) the ABL Borrower has excess availability of at least $15.0 million after giving effect to such repayment of material debt, including any borrowings under the commitments in connection therewith.
Current wording
The 2023 ABL Facility will mature on the earlier of (x) November 7, 2027 and (y) the date that is 91 days prior to the maturity date of any material debt of the ABL Borrower or the Company or any of its restricted subsidiaries (subject to customary extensions agreed by the lenders thereunder); provided that clause (y) will not apply to the extent that on any applicable date of determination (on any date prior to the date set forth in clause (y)), (A) the sum of (x) cash that is held in escrow for the repayment of such material debt pursuant to arrangements satisfactory to the Administrative Agent, (y) cash that is held in accounts with the Administrative Agent and/or the Additional Collateral Agent, plus (z) excess availability, is sufficient to repay such material debt and (B) the ABL Borrower has excess availability of at least $15.0 million after giving effect to such repayment of material debt, including any borrowings under the commitments in connection therewith.
Previous wording
The Company has not drawn any borrowings under the 2023 ABL Facility but has letters of credit of approximately $1.4 million outstanding under the facility and has an available balance of $60.0 million as of December 31, 2023.
Current wording
The Company has not drawn any borrowings under the 2023 ABL Facility but has letters of credit of approximately $2.3 million outstanding under the facility and has an available balance of $57.4 million based on the borrowing base as of December 31, 2024.
Previous wording
On November 23, 1998, the major U.S. cigarette manufacturers, Philip Morris USA, Inc., Brown & Williamson Tobacco Corporation, Lorillard Tobacco Company and R.J. Reynolds Tobacco Company, entered into the MSA with attorneys general representing states that agreed to settle certain recovery actions (the “Settling States”). In order to be in compliance with the MSA and subsequent states’ statutes, we were required to fund an escrow account with each of the Settling States based on the number of cigarettes or cigarette equivalents (which is measured by pounds of MYO cigarette smoking tobacco) sold in such state. We discontinued our generic category of MYO in 2019 and our Zig-Zag branded MYO cigarette smoking tobacco in 2017. Thus, pending a change in MSA legislation, we have no remaining product lines covered by the MSA and will not be required to make future escrow deposits. Each year’s deposit will be released from escrow after 25 years.
Current wording
On November 23, 1998, the major U.S. cigarette manufacturers, Philip Morris USA, Inc., Brown & Williamson Tobacco Corporation, Lorillard Tobacco Company and R.J. Reynolds Tobacco Company, entered into the MSA with attorneys general representing states that agreed to settle certain recovery actions (the “Settling States”). In order to be in compliance with the MSA and subsequent states’ statutes, we were required to fund an escrow account with each of the Settling States based on the number of cigarettes or cigarette equivalents (which is measured by pounds of MYO cigarette smoking tobacco) sold in such state. We discontinued our generic category of MYO in 2019 and our* Zig-Zag *branded MYO cigarette smoking tobacco in 2017. Pending a change in MSA legislation, we have no remaining product lines covered by the MSA and will not be required to make future escrow deposits and, therefore, do not expect to accrue any loss contingencies subject to the MSA in the future.
Showing the first 40 of 51 pairs. Open the source sections for the rest.
Rearranged current paragraphs (4)
Current report — wording carried from elsewhere
Investment Loss:** For the year ended December 31, 2024, investment loss decreased to $1.9 million compared to $11.9 million for the year ended December 31, 2023. The change is primarily the result of impairment charges recognized on our investments in Bomani for $1.8 million and Old Pal for $0.8 million for the year ended December 31, 2024, compared to impairment charges recognized on our investments in Docklight for $8.7 million, Wild Hempettes for $2.2 million and Old Pal for $1.3 million for the year ended December 31, 2023.
Current report — wording carried from elsewhere
**Other Income:**For the year ended December 31, 2023, other income was $4.0 million compared to zero in the prior year period as a result of a $4.0 million gain related to a legal settlement.
Current report — wording carried from elsewhere
Comparison of Year Ended December 31, 2024, to Year Ended December 31, 2023
Current report — wording carried from elsewhere
Comparison of Year Ended December 31, 2023, to Year Ended December 31, 2022
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
On March 8, 2023, the FDA proposed requirements for tobacco product manufacturing practice (“TPMPs”). Once finalized, TPMPs would establish requirements for tobacco product manufacturers regarding the manufacture, design, packing and storage of finished and bulk tobacco products. This product standard is required to go through the formal rulemaking process, where we have had the opportunity to comment on the proposed rule with regard to any impact on any of our products and manufacturing practices. Nonetheless, implementation may result in additional resource requirements for quality management and changes to existing manufacturing operations.