Debra Borchardt
Turning Point Brands, Inc. (NYSE: TPB) announced financial results for the first quarter ended March 31, 2023 as overall by revenues increased slightly by 0.1% to $101.0 million. Turning Point told investors it is keeping its previous expectation of full-year 2023 adjusted EBITDA to be in a range of $88 to $94 million.
Net income fell by 30.9% to $7.6 million. The diluted earnings were $0.41 versus last year’s $0.55 and the adjusted diluted earnings were $0.62 versus last year’s $0.71.
“We are encouraged by our first quarter operating results which fell within our expectations,” said CEO Graham Purdy. “The Zig-Zag segment had an anticipated inventory reduction with certain wholesale customers but saw strong performance from the alternative channel and the roll-out of CLIPPER lighters. With the adjustment in trade inventory, Zig-Zag is now well-positioned to demonstrate growth for the balance of the year. Stoker’s had a solid quarter of performance as the value proposition of Stoker’s MST and looseleaf led to another quarter of market share gains. We opportunistically purchased another $13.9 million in aggregate principal amount of our convertible notes during the first quarter while maintaining a strong cash balance. We are currently maintaining our annual guidance as we focus on executing against our plan for the balance of the year.”
Zig-Zag
Zig-Zag rolling papers accounts for 42% of the company’s sales and during the quarter those net sales decreased 8.3% to $41.9 million. Turning Point said it expected the drop in the U.S. rolling papers and wraps businesses due to a reduction of trade inventory during the quarter. On a positive note, TPB’s Canadian and other smoking accessories businesses saw strong growth during the quarter.
“Zig-Zag papers and wraps demonstrated solid results in-light of planned inventory reduction with certain customers. Our e-commerce business had another quarter of double-digit growth as we continue to build our presence in the alternative channel,” said Purdy. “The acceptance of CLIPPER lighters within the trade remains encouraging and sets up well for increased penetration going forward.”
Tobacco
Stoker’s Products net sales increased 6.2% to $33.7 million on high single-digit growth of MST and low-single digit growth of loose-leaf chewing tobacco. “Stoker’s saw another quarter of solid performance with strong market share gains in both the MST and loose-leaf chewing tobacco categories as its value proposition continues to resonate with consumers,” continued Purdy.
Balance Sheet
Turning Point is in a comfortable position ending the quarter with a total liquidity of $128.4 million. During the quarter, the company repurchased $13.9 million in aggregate principal amount of its 2.50% Convertible Senior Notes due July 2024.
