Turning Point Brands Q1 2022 Net Income Decreased 6.7% To $11M YoY

Turning Point Brands, Inc. TPB released financial results for the first quarter ended March 31, 2022.

Q1 2022 vs. Q1 2021

• Net sales decreased 6.3% to $100.9 million

• Gross profit decreased 2.8% to $51.8 million

• Net income decreased 6.7% to $11.0 million

• Adjusted EBITDA decreased 9.8% to $25.3 million

• Diluted EPS of $0.55 and Adjusted Diluted EPS of $0.71 as compared to $0.57 and $0.80 in the same period one year ago, respectively

“Our first quarter results were in-line with our expectations as we continued to grow our market share for both Zig-Zag and Stoker’s while navigating a difficult consumer and regulatory environment to drive profitability in each of our segments, including NewGen. Sales decreased 6% from the previous year driven by a 37% decline in NewGen sales but showed double-digit growth excluding NewGen,” stated Yavor Efremov, president and CEO of Turning Point Brands.

Performance Measures in the First Quarter

First-quarter consolidated selling, general and administrative (“SG&A”) expenses were $32.6 million compared to $28.9 million in the first quarter of 2021.

The first quarter SG&A included the following notable items:

• $1.3 million of restructuring expenses compared to none in the previous year

• $0.3 million of ERP / CRM scoping expenses compared to none in the previous year

• $1.1 million of stock options, restricted stock and incentive expenses compared to $1.5 million in the year-ago period

• $0.4 million of transaction expenses compared to $0.6 million in the year-ago period

• $1.1 million of FDA PMTA-related expenses compared to $0.3 million in the year-ago period

• $4.2 million in outbound freight expense compared to $3.7 million in the year-ago period with the increase due to higher shipping costs on vapor products related to PACT Act implementation and higher freight costs across all segments

• $1.5 million from the accounting consolidation of Turning Point Brands Canada compared to $0.8 in the year-ago period with the increase driven by the inclusion of the DVW acquisition in the current period

Total gross debt as of March 31, 2022 was $422.5 million. The corresponding net debt (total gross debt less cash) on March 31, 2022 was $296.5 million. The company ended the quarter with total liquidity of $147.4 million, comprised of $126.0 million in cash and $21.4 million of revolving credit facility capacity.

During the quarter, the company spent $10.6 million to repurchase 310,224 shares at an average price of $34.24 per share.

Earnings Conference Call

A conference call with the investment community to review TPB’s financial results has been scheduled for 8:30 a.m. Eastern on April 27, 2022.

Photo: Courtesy of Shelby Ireland on Unsplash

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