Zig-Zag Rolling Papers Segment Drives 47% Of Turning Point Brands' Q3 Sales, CEO Predicts Sustainable Growth

Turning Point Brands, Inc. TPB, a maker of branded consumer products, including alternative smoking accessories and consumables with active ingredients, announced its financial results Thursday for the third quarter ended Sept. 30, 2024.

The company behind Zig-Zag, a brand of rolling papers in the cannabis industry, said total consolidated net sales increased 3.8% year over year to $105.6 million.

Zig-Zag products’ net sales, which accounted for 47% of total net sales in the quarter, increased 5.5% over the same period to $49.3 million, driven by strong performance in our North American Papers & Wraps business and solid growth in cigars.

Graham Purdy, the company’s president and CEO, said Zig-Zag is on "a sustainable growth trajectory."

Zig-Zag Products segment gross profit increased 2.2% to $27.3 million. Gross margin declined 180 basis points to 55.4% driven primarily by product mix.

Read Also: Zig-Zag Segment On Sustainable Growth Trajectory, Turning Point CEO Reports 7% YoY Improvement In Adjusted EBITDA, Raises 2024 Guidance

Other Q3 Financial Highlights

• Gross profit totaled $53.7 million, up from $51.6 million in the prior year's quarter.
• Selling, general and administrative expenses amounted to $33.2 million, compared to $31.4 million in the third quarter of last fiscal year.
• Net loss attributable to non-controlling interest totaled $16 000, compared to net income attributable to non-controlling interest of $35 000 in the prior year's quarter.
• Net income attributable to Turning Point Brands amounted to $12.4 million, up from $10.8 million.
• Total gross debt as of Sept. 30, 2024 was $250 million.
• Net debt as of Sept. 30, 2024 was $216.4 million.
• Ended the quarter with total liquidity of $92.4 million, comprised of $33.6 million in cash and $58.8 million of asset-backed revolving credit facility capacity.

2024 Outlook

Turning Point increased its previous full-year 2024 adjusted EBITDA guidance from $98 million to $102 million to $101 million to $103 million, excluding CDS.

During the quarter, the company repurchased 26,978 shares of common stock for $1.1 million.

On Nov. 6, 2024, the board of directors of the company increased the company's share repurchase authorization by $77.9 million to an aggregate amount of $100 million.

Read Next:

•  Zig-Zag Rolling Paper Sales Made 48% Of Total Turning Point Brands Sales In First Quarter

TPB Price Action

Turning Point Brands' shares traded 1.31% lower at $50.37 per share at the time of writing on Thursday.