Zig-Zag Segment Stable, Says CEO As Turning Point Reports Profit Increase And 6.1% YoY Drop In Q4 Net Sales

Maker of Zig-Zag rolling paper Turning Point Brands, Inc. TPB announced its financial results on Wednesday for the fourth quarter and full year ended Dec. 31, 2023.

Graham Purdy, president and CEO, praised the quarterly results.

 "Our fourth quarter results were at the high end of our expectations," Purdy said. "The Zig-Zag segment was stable from the previous year excluding the impact of a discontinued product line and is well positioned to return to growth in 2024. We also had strong free cash flow generation during the year allowing us to build a cash balance to address the remaining principal amount of our convertible notes at maturity in July."

Q4 2023 vs. Q4 2022 Financial Highlights

• Total consolidated net sales decreased 6.1% to $97.1 million.
• Zig-Zag products net sales decreased by 2.9% to $45.1 million due to the discontinuation of an unprofitable product line in Canada that impacted sales by $1.4 million.
• For the quarter, the Zig-Zag products segment gross profit decreased 1.0% to $25.5 million. Gross margin increased 100 basis points to 56.5% driven by product mix.
• Stoker's Products’ net sales increased by 18.6%.
• Creative distribution solutions net sales decreased by 43.7%.
• Gross profit increased 1.9% to $50.5 million.
• Net income increased $26.4 million to $10.1 million.
• Adjusted net income increased 15.9% to $15.3 million.
• Adjusted EBITDA increased 7.5% to $24.8 million.

See also: Zig-Zag Rolling Paper Will Benefit From Weed Consumption Trends, CEO Says Post Q3 Earnings

FY 2023 vs. FY 2022 Financial Highlights

• Total consolidated net sales decreased 2.3% to $405.4 million.
• Zig-Zag Products net sales decreased by 5.2% to $180.5 million due to the reduction of trade inventory earlier in the year and the discontinuation of an unprofitable product line in Canada that impacted sales by $4.9 million.
• For the full year, the Zig-Zag Products segment gross profit decreased 5.2% to $101.1 million. Gross margin was steady at 56.0%.
• Stoker's Products net sales increased by 10.5%
• Creative Distribution Solutions net sales decreased by 14.3%
• Gross profit decreased 1.1% to $203.2 million
• Net income increased 230.4% to $38.5 million
• Adjusted net income increased 1.1% to $56.8 million (see Schedule B for a reconciliation to net income)
• Adjusted EBITDA decreased 2.4% to $95.3 million (see Schedule A for a reconciliation to net income)

Now read: Zig-Zag Rolling Paper Brand Launches Vintage Apparel Collection Ahead Of 145th Anniversary

TPB Price Action

Turning Point Brands' shares traded 6.23% higher at $24.38 per share on Wednesday.