Turning Point Brands Announces Fourth Quarter and Full Year 2023 Results
-
-Adjusted EBITDA for Q4 2023 of
-FY 2023 Free Cash Flow of
Q4 2023 vs. Q4 2022
-
Total consolidated net sales decreased 6.1% to
$97.1 million - Zig-Zag Products net sales decreased by 2.9%
- 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 (see Schedule B for a reconciliation to net income) -
Adjusted EBITDA increased 7.5% to
$24.8 million (see Schedule A for a reconciliation to net income) -
Diluted EPS of
$0.53 and Adjusted Diluted EPS of$0.79 compared to$(0.93) and$0.69 in the same period one year ago, respectively (see Schedule B for a reconciliation to Diluted EPS)
FY 2023 vs. FY 2022
-
Total consolidated net sales decreased 2.3% to
$405.4 million - Zig-Zag Products net sales decreased by 5.2%
- 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) -
Diluted EPS of
$2.01 and Adjusted Diluted EPS of$2.91 compared to$0.64 and$2.83 in the same period one year ago, respectively (see Schedule B for a reconciliation to Diluted EPS)
Zig-Zag Products Segment (46% of total net sales in the quarter)
For the fourth quarter, Zig-Zag Products net sales decreased 2.9% to
For the quarter, the Zig-Zag Products segment gross profit decreased 1.0% to
For the full year, net sales of Zig-Zag Products decreased 5.2% to
For the full year, Zig-Zag Products segment gross profit decreased 5.2% to
“Our US Zig-Zag papers and alternative channel business posted a strong quarter with double-digit growth to close the year,” said Purdy. “With the reduction of trade inventory through the year, Zig-Zag is now positioned to return to growth aided by industry secular growth trends and internal growth initiatives.”
Stoker’s Products Segment (39% of total net sales in the quarter)
For the fourth quarter, Stoker’s Products net sales increased 18.6% to
For the quarter, the Stoker’s Products segment gross profit increased 27.2% to
For the full year, net sales of Stoker’s Products increased 10.5% to
For the full year, the Stoker’s Products segment gross profit increased 14.9% to
“Stoker’s had an exceptional quarter with strong market share gains in both the MST and loose-leaf categories as its value proposition continues to resonate with consumers,” continued Purdy. “We are excited about the planned expansion of our FRĒ white nicotine pouch product throughout the year.”
Performance Measures in the Fourth Quarter
Fourth quarter consolidated selling, general and administrative (“SG&A”) expenses were
Fourth quarter SG&A included the following notable items:
-
$1.9 million of stock options, restricted stock and incentive expense compared to$1.2 million in the year-ago period -
$1.0 million of FDA PMTA-related expenses for modern oral products compared to$0.3 million in the year-ago period -
$0.2 million of restructuring costs compared to$1.8 million in the year-ago period -
$0.1 million of ERP / CRM duplicative system costs compared to$0.3 million of ERP / CRM scoping expenses in the year-ago period
Total gross debt as of
During the quarter, the Company received a net federal excise tax refund of
2024 Outlook
Management expects full-year 2024 adjusted EBITDA to be
Creative Distribution Solutions (“CDS”) (15% of total net sales in the quarter)
For the fourth quarter, CDS net sales were
Earnings Conference Call
As previously disclosed, a conference call with the investment community to review TPB’s financial results has been scheduled for
Non-GAAP Financial Measures
In addition to financial measures prepared in accordance with generally accepted accounting principles in
About
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements may generally be identified by the use of words such as "anticipate," "believe," "expect," "intend," "plan" and "will" or, in each case, their negative, or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. As a result, these statements are not guarantees of future performance and actual events may differ materially from those expressed in or suggested by the forward-looking statements. Any forward-looking statement made by TPB in this press release, its reports filed with the
Financial Statements Follow:
|
|||||||
Consolidated Statements of Income | |||||||
(dollars in thousands except share data) | |||||||
(unaudited) | |||||||
Three Months Ended |
|||||||
|
|||||||
|
2023 |
|
|
|
2022 |
|
|
Net sales |
$ |
97,120 |
|
$ |
103,392 |
|
|
Cost of sales |
|
46,596 |
|
|
53,829 |
|
|
Gross profit |
|
50,524 |
|
|
49,563 |
|
|
Selling, general, and administrative expenses |
|
30,916 |
|
|
31,245 |
|
|
Other operating income, net |
|
(4,345 |
) |
|
- |
|
|
Operating income |
|
23,953 |
|
|
18,318 |
|
|
Interest expense, net |
|
2,632 |
|
|
4,382 |
|
|
Investment loss |
|
934 |
|
|
7,229 |
|
|
Other income |
|
(4,000 |
) |
|
- |
|
|
|
|
- |
|
|
27,566 |
|
|
Loss (gain) on extinguishment of debt |
|
194 |
|
|
(885 |
) |
|
Income (loss) before income taxes |
|
24,193 |
|
|
(19,974 |
) |
|
Income tax expense (benefit) |
|
14,328 |
|
|
(3,857 |
) |
|
Consolidated net income (loss) |
|
9,865 |
|
|
(16,117 |
) |
|
Net (loss) income attributable to non-controlling interest |
|
(244 |
) |
|
200 |
|
|
Net income (loss) attributable to |
$ |
10,109 |
|
$ |
(16,317 |
) |
|
Basic income (loss) per common share: | |||||||
Net income (loss) attributable to |
$ |
0.57 |
|
$ |
(0.93 |
) |
|
Diluted income (loss) per common share: | |||||||
Net income (loss) attributable to |
$ |
0.53 |
|
$ |
(0.93 |
) |
|
Weighted average common shares outstanding: | |||||||
Basic |
|
17,604,313 |
|
|
17,530,278 |
|
|
Diluted |
|
20,153,157 |
|
|
17,530,278 |
|
|
Supplemental disclosures of statement of income information: | |||||||
Excise tax expense |
$ |
5,137 |
|
$ |
5,771 |
|
|
FDA fees |
$ |
138 |
|
$ |
158 |
|
|
|||||||
Consolidated Statements of Income | |||||||
(dollars in thousands except share data) | |||||||
(unaudited) | |||||||
For the year ended |
|||||||
|
|||||||
|
2023 |
|
|
|
2022 |
|
|
Net sales |
$ |
405,393 |
|
$ |
415,013 |
|
|
Cost of sales |
|
202,152 |
|
|
209,475 |
|
|
Gross profit |
|
203,241 |
|
|
205,538 |
|
|
Selling, general, and administrative expenses |
|
125,009 |
|
|
130,024 |
|
|
Other operating income, net |
|
(4,345 |
) |
|
- |
|
|
Operating income |
|
82,577 |
|
|
75,514 |
|
|
Interest expense, net |
|
14,645 |
|
|
19,524 |
|
|
Investment loss |
|
11,914 |
|
|
13,303 |
|
|
Other income |
|
(4,000 |
) |
|
- |
|
|
|
|
- |
|
|
27,566 |
|
|
Gain on extinguishment of debt |
|
(1,664 |
) |
|
(885 |
) |
|
Income before income taxes |
|
61,682 |
|
|
16,006 |
|
|
Income tax expense |
|
23,901 |
|
|
4,849 |
|
|
Consolidated net income |
|
37,781 |
|
|
11,157 |
|
|
Net loss attributable to non-controlling interest |
|
(681 |
) |
|
(484 |
) |
|
Net income attributable to |
$ |
38,462 |
|
$ |
11,641 |
|
|
Basic income per common share: | |||||||
Net income attributable to |
$ |
2.19 |
|
$ |
0.65 |
|
|
Diluted income per common share: | |||||||
Net income attributable to |
$ |
2.01 |
|
$ |
0.64 |
|
|
Weighted average common shares outstanding: | |||||||
Basic |
|
17,578,270 |
|
|
17,899,794 |
|
|
Diluted |
|
20,467,406 |
|
|
18,055,015 |
|
|
Supplemental disclosures of statement of income information: | |||||||
Excise tax expense |
$ |
20,575 |
|
$ |
23,274 |
|
|
FDA fees |
$ |
586 |
|
$ |
623 |
|
|
|||||||
Consolidated Balance Sheets | |||||||
(dollars in thousands except share data) | |||||||
(unaudited) | |||||||
|
|||||||
ASSETS |
|
2023 |
|
|
|
2022 |
|
Current assets: | |||||||
Cash |
$ |
117,886 |
|
$ |
106,403 |
|
|
Accounts receivable, net of allowances of |
|
9,989 |
|
|
8,377 |
|
|
Inventories, net |
|
98,960 |
|
|
119,915 |
|
|
Other current assets |
|
40,781 |
|
|
22,959 |
|
|
Total current assets |
|
267,616 |
|
|
257,654 |
|
|
Property, plant, and equipment, net |
|
25,300 |
|
|
22,788 |
|
|
Deferred income taxes |
|
1,468 |
|
|
8,443 |
|
|
Right of use assets |
|
11,480 |
|
|
12,465 |
|
|
Deferred financing costs, net |
|
2,450 |
|
|
282 |
|
|
|
|
136,250 |
|
|
136,253 |
|
|
Other intangible assets, net |
|
80,942 |
|
|
83,592 |
|
|
Master Settlement Agreement (MSA) escrow deposits |
|
28,684 |
|
|
27,980 |
|
|
Other assets |
|
15,166 |
|
|
22,649 |
|
|
Total assets |
$ |
569,356 |
|
$ |
572,106 |
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable |
$ |
8,407 |
|
$ |
8,355 |
|
|
Accrued liabilities |
|
33,635 |
|
|
33,001 |
|
|
Current portion of long-term debt, net |
|
58,294 |
|
|
- |
|
|
Other current liabilities |
|
- |
|
|
20 |
|
|
Total current liabilities |
|
100,336 |
|
|
41,376 |
|
|
Notes payable and long-term debt |
|
307,064 |
|
|
406,757 |
|
|
Lease liabilities |
|
9,950 |
|
|
10,593 |
|
|
Total liabilities |
|
417,350 |
|
|
458,726 |
|
|
Commitments and contingencies | |||||||
Stockholders' equity: | |||||||
Preferred stock; |
|
- |
|
|
- |
|
|
Common stock, voting, |
|||||||
17,605,677 outstanding shares at |
|||||||
outstanding shares at |
|
199 |
|
|
198 |
|
|
Common stock, nonvoting, |
|||||||
issued and outstanding shares -0- |
|
- |
|
|
- |
|
|
Additional paid-in capital |
|
119,075 |
|
|
113,242 |
|
|
Cost of repurchased common stock | |||||||
(2,316,460 shares at |
|
(78,093 |
) |
|
(78,093 |
) |
|
Accumulated other comprehensive loss |
|
(2,648 |
) |
|
(2,393 |
) |
|
Accumulated earnings |
|
112,443 |
|
|
78,691 |
|
|
Non-controlling interest |
|
1,030 |
|
|
1,735 |
|
|
Total stockholders' equity |
|
152,006 |
|
|
113,380 |
|
|
Total liabilities and stockholders' equity |
$ |
569,356 |
|
$ |
572,106 |
|
|
|||||||
Consolidated Statements of Cash Flows | |||||||
(dollars in thousands) | |||||||
(unaudited) | |||||||
For the Year Ended |
|||||||
|
|||||||
|
2023 |
|
|
|
2022 |
|
|
Cash flows from operating activities: | |||||||
Consolidated net income |
$ |
37,781 |
|
$ |
11,157 |
|
|
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Gain on extinguishment of debt |
|
(1,664 |
) |
|
(885 |
) |
|
Loss (gain) on sale of property, plant, and equipment |
|
90 |
|
|
(9 |
) |
|
Loss on goodwill impairment |
|
- |
|
|
25,585 |
|
|
Loss on intangible asset impairment |
|
- |
|
|
1,982 |
|
|
Gain on insurance recovery of inventory loss |
|
(15,181 |
) |
|
- |
|
|
Loss on investments |
|
12,177 |
|
|
13,570 |
|
|
Depreciation and other amortization expense |
|
3,262 |
|
|
3,388 |
|
|
Amortization of other intangible assets |
|
3,096 |
|
|
1,911 |
|
|
Amortization of deferred financing costs |
|
2,445 |
|
|
2,576 |
|
|
Deferred income tax expense (benefit) |
|
7,024 |
|
|
(6,506 |
) |
|
Stock compensation expense |
|
6,561 |
|
|
5,273 |
|
|
Noncash lease income |
|
(82 |
) |
|
(29 |
) |
|
Gain on MSA escrow deposits |
|
- |
|
|
(54 |
) |
|
Changes in operating assets and liabilities: | |||||||
Accounts receivable |
|
(1,609 |
) |
|
(2,103 |
) |
|
Inventories |
|
20,977 |
|
|
(32,653 |
) |
|
Other current assets |
|
(3,533 |
) |
|
4,581 |
|
|
Other assets |
|
(4,835 |
) |
|
420 |
|
|
Accounts payable |
|
(14 |
) |
|
1,240 |
|
|
Accrued liabilities and other |
|
386 |
|
|
830 |
|
|
Net cash provided by operating activities |
|
66,881 |
|
|
30,273 |
|
|
Cash flows from investing activities: | |||||||
Capital expenditures |
$ |
(5,707 |
) |
$ |
(7,685 |
) |
|
Payments for investments |
|
(202 |
) |
|
(1,000 |
) |
|
Restricted cash, MSA escrow deposits |
|
- |
|
|
(10,170 |
) |
|
Proceeds on the sale of property, plant and equipment |
|
3 |
|
|
62 |
|
|
Net cash used in investing activities |
|
(5,906 |
) |
|
(18,793 |
) |
|
|||||||
Consolidated Statements of Cash Flows (Cont.) | |||||||
(dollars in thousands) | |||||||
(unaudited) | |||||||
For the Year Ended |
|||||||
|
|||||||
|
2023 |
|
|
|
2022 |
|
|
Cash flows from financing activities: | |||||||
Convertible Senior Notes repurchased |
|
(41,794 |
) |
|
(9,000 |
) |
|
Proceeds from call options |
|
114 |
|
|
51 |
|
|
Payment of dividends |
|
(4,497 |
) |
|
(4,250 |
) |
|
Payments of financing costs |
|
(2,437 |
) |
|
- |
|
|
Exercise of options |
|
450 |
|
|
504 |
|
|
Redemption of options |
|
(346 |
) |
|
(155 |
) |
|
Redemption of restricted stock units |
|
(995 |
) |
|
(1,229 |
) |
|
Common stock repurchased |
|
- |
|
|
(29,224 |
) |
|
Net cash used in financing activities |
$ |
(49,505 |
) |
$ |
(43,303 |
) |
|
Net increase (decrease) in cash |
$ |
11,470 |
|
$ |
(31,823 |
) |
|
Effect of foreign currency translation on cash |
$ |
13 |
|
$ |
(320 |
) |
|
Cash, beginning of period: | |||||||
Unrestricted |
$ |
106,403 |
|
$ |
128,320 |
|
|
Restricted |
|
4,929 |
|
|
15,155 |
|
|
Total cash at beginning of period |
$ |
111,332 |
|
$ |
143,475 |
|
|
Unrestricted |
$ |
117,886 |
|
$ |
106,403 |
|
|
Restricted |
|
4,929 |
|
|
4,929 |
|
|
Total cash at end of period |
$ |
122,815 |
|
$ |
111,332 |
|
Non-GAAP Financial Measures
To supplement our financial information presented in accordance with generally accepted accounting principles in
We define “EBITDA” as net income (loss) before interest expense, gain (loss) on extinguishment of debt, provision for (benefit from) income taxes, depreciation and amortization. We define “Adjusted EBITDA” as net income before interest expense, gain (loss) on extinguishment of debt, provision for (benefit from) income taxes, depreciation, amortization, other non-cash items and other items that we do not consider ordinary course in our evaluation of ongoing operating performance. We define “Adjusted Net Income” as net income excluding items that we do not consider ordinary course in our evaluation of ongoing operating performance. We define “Adjusted Diluted EPS” as diluted earnings per share excluding items that we do not consider ordinary course in our evaluation of ongoing operating performance. We define “Adjusted Gross Profit: as gross profit excluding other non-cash items and other items that we do not consider ordinary course in our evaluation of ongoing operating performance. We define “Adjusted Operating Income (Loss)” as operating income excluding other non-cash items and other items that we do not consider ordinary course in our evaluation of ongoing operating performance. We define “Free Cash Flow” as “Net Cash provided by operating activities” less Capital expenditures.
Non-
In accordance with
Schedule A | |||||||
|
|||||||
Reconciliation of GAAP Net Income (Loss) to Adjusted EBITDA | |||||||
(dollars in thousands) | |||||||
(unaudited) | |||||||
Three Months Ended |
|||||||
|
|||||||
|
2023 |
|
|
|
2022 |
|
|
Net income (loss) attributable to |
$ |
10,109 |
|
$ |
(16,317 |
) |
|
Add: | |||||||
Interest expense, net |
|
2,632 |
|
|
4,382 |
|
|
Loss (gain) on extinguishment of debt |
|
194 |
|
|
(885 |
) |
|
Income tax expense (benefit) |
|
14,328 |
|
|
(3,857 |
) |
|
Depreciation expense |
|
804 |
|
|
777 |
|
|
Amortization expense |
|
851 |
|
|
538 |
|
|
EBITDA |
$ |
28,918 |
|
$ |
(15,362 |
) |
|
Components of Adjusted EBITDA | |||||||
Corporate and CDS restructuring (a) |
|
199 |
|
|
1,825 |
|
|
ERP/CRM (b) |
|
138 |
|
|
336 |
|
|
Stock options, restricted stock, and incentives expense (c) |
|
1,901 |
|
|
1,170 |
|
|
Transactional expenses and strategic initiatives(d) |
|
3 |
|
|
12 |
|
|
FDA PMTA (e) |
|
1,003 |
|
|
289 |
|
|
Non-cash asset impairment (f) |
|
1,015 |
|
|
34,836 |
|
|
FET refund (g) |
|
(4,345 |
) |
|
- |
|
|
Legal settlement (h) |
|
(4,000 |
) |
|
- |
|
|
Adjusted EBITDA |
$ |
24,832 |
|
$ |
23,106 |
|
(a) Represents costs associated with corporate and CDS restructuring, including severance. |
(b) Represents cost associated with scoping and mobilization of new ERP and CRM systems and cost of duplicative ERP licenses. |
(c) Represents non-cash stock options, restricted stock, incentives expense and Solace performance stock units. |
(d) Represents the fees incurred for transaction expenses. |
(e) Represents costs associated with applications related to FDA premarket tobacco product application ("PMTA"). |
(f) Represents impairment of goodwill, intangible and investment assets. |
(g) Represents federal excise tax refund included in other operating income, net. |
(h) Represents other income from litigation settlement. |
Schedule A | |||||||
|
|||||||
Reconciliation of GAAP Net Income to Adjusted EBITDA | |||||||
(dollars in thousands) | |||||||
(unaudited) | |||||||
For the Year Ended |
|||||||
|
|||||||
|
2023 |
|
|
|
2022 |
|
|
Net income attributable to |
$ |
38,462 |
|
$ |
11,641 |
|
|
Add: | |||||||
Interest expense, net |
|
14,645 |
|
|
19,524 |
|
|
Gain on extinguishment of debt |
|
(1,664 |
) |
|
(885 |
) |
|
Income tax expense |
|
23,901 |
|
|
4,849 |
|
|
Depreciation expense |
|
3,121 |
|
|
3,388 |
|
|
Amortization expense |
|
3,237 |
|
|
1,911 |
|
|
EBITDA |
$ |
81,702 |
|
$ |
40,428 |
|
|
Components of Adjusted EBITDA | |||||||
Corporate and CDS restructuring (a) |
|
389 |
|
|
3,444 |
|
|
ERP/CRM (b) |
|
552 |
|
|
1,962 |
|
|
Stock options, restricted stock, and incentives expense (c) |
|
6,561 |
|
|
5,273 |
|
|
Transactional expenses and strategic initiatives (d) |
|
165 |
|
|
801 |
|
|
FDA PMTA (e) |
|
2,098 |
|
|
4,554 |
|
|
Non-cash asset impairment (f) |
|
12,177 |
|
|
41,136 |
|
|
FET refund (g) |
|
(4,345 |
) |
|
- |
|
|
Legal settlement (h) |
|
(4,000 |
) |
|
- |
|
|
Adjusted EBITDA |
$ |
95,299 |
|
$ |
97,598 |
|
(a) Represents costs associated with corporate and CDS restructuring, including severance. |
(b) Represents cost associated with scoping and mobilization of new ERP and CRM systems and cost of duplicative ERP licenses. |
(c) Represents non-cash stock options, restricted stock, incentives expense and Solace performance stock units. |
(d) Represents the fees incurred for transaction expenses. |
(e) Represents costs associated with applications related to FDA premarket tobacco product application ("PMTA"). |
(f) Represents impairment of goodwill, intangible and investment assets. |
(g) Represents federal excise tax refund included in other operating income, net. |
(h) Represents other income from litigation settlement. |
Schedule B | |||||||||||||||
|
|||||||||||||||
Reconciliation of GAAP Net Income (Loss) to Adjusted Net Income and Diluted EPS to Adjusted Diluted EPS | |||||||||||||||
(dollars in thousands except share data) | |||||||||||||||
(unaudited) | |||||||||||||||
Three Months Ended |
|
Three Months Ended |
|||||||||||||
|
|
|
|||||||||||||
Net Income |
|
Diluted EPS |
|
Net Income (Loss) |
|
Diluted EPS |
|||||||||
GAAP |
$ |
10,109 |
|
$ |
0.53 |
|
$ |
(16,317 |
) |
$ |
(0.93 |
) |
|||
Anti-dilutive impact (a) |
|
- |
|
|
0.00 |
|
|
- |
|
|
0.20 |
|
|||
Gain on extinguishment of debt (b) |
|
146 |
|
|
0.01 |
|
|
(714 |
) |
|
(0.03 |
) |
|||
Corporate and CDS restructuring (c) |
|
150 |
|
|
0.01 |
|
|
1,473 |
|
|
0.07 |
|
|||
ERP/CRM (d) |
|
104 |
|
|
0.01 |
|
|
271 |
|
|
0.01 |
|
|||
Stock options, restricted stock, and incentives expense (e) |
|
1,434 |
|
|
0.07 |
|
|
944 |
|
|
0.05 |
|
|||
Transactional expenses and strategic initiatives (f) |
|
2 |
|
|
0.00 |
|
|
10 |
|
|
0.00 |
|
|||
FDA PMTA (g) |
|
757 |
|
|
0.04 |
|
|
233 |
|
|
0.01 |
|
|||
Non-cash asset impairment (h) |
|
766 |
|
|
0.04 |
|
|
28,109 |
|
|
1.35 |
|
|||
FET refund (i) |
|
(3,843 |
) |
|
(0.19 |
) |
|
- |
|
|
- |
|
|||
Legal settlement (j) |
|
(3,017 |
) |
|
(0.15 |
) |
|
- |
|
|
- |
|
|||
Deferred tax valuation allowance (k) |
|
8,383 |
|
|
0.42 |
|
|
- |
|
|
- |
|
|||
Impact of quarterly tax items to effective tax rate (l) |
|
311 |
|
|
0.02 |
|
|
(804 |
) |
|
(0.04 |
) |
|||
Adjusted |
$ |
15,302 |
|
$ |
0.79 |
|
$ |
13,205 |
|
$ |
0.69 |
|
Total may not foot due to rounding | |||||||
Note: Quarterly tax rate used excludes impact of deferred tax valuation allowance. | |||||||
(a) Represents dilution of options and debt conversion that is anti-dilutive and not included for GAAP. | |||||||
(b) Represents gain on extinguishment of debt tax effected at the quarterly tax rate. | |||||||
(c) Represents costs associated with corporate and CDS restructuring, including severance tax effected at the quarterly tax rate. | |||||||
(d) Represents cost associated with scoping and mobilization of new ERP and CRM systems and cost of duplicative ERP licenses tax effected at the quarterly tax rate. | |||||||
(e) Represents non-cash stock options, restricted stock, incentives expense and Solace PRSUs tax effected at the quarterly tax rate. | |||||||
(f) Represents the fees incurred for transaction expenses tax effected at the quarterly tax rate. | |||||||
(g) Represents costs associated with applications related to the FDA PMTA tax effected at the quarterly tax rate. | |||||||
(h) Represents impairment of goodwill, intangible and investment assets tax effected at the quarterly tax rate. | |||||||
(i) Represents federal excise tax refund and related interest income effected at the quarterly tax rate. | |||||||
(j) Represents receivable from legal settlement tax effected at the quarterly tax rate. | |||||||
(k) Represents deferred tax valuation allowance. | |||||||
(l) Represents adjustment from quarterly tax rate to annual projected tax rate of 23% in 2023 and 2022. |
Schedule B | |||||||||||||||
|
|||||||||||||||
Reconciliation of GAAP Net Income to Adjusted Net Income and Diluted EPS to Adjusted Diluted EPS | |||||||||||||||
(dollars in thousands except share data) | |||||||||||||||
(unaudited) | |||||||||||||||
For the Year Ended | For the Year Ended | ||||||||||||||
|
|
||||||||||||||
Net Income | Diluted EPS | Net Income | Diluted EPS | ||||||||||||
GAAP |
$ |
38,462 |
|
$ |
2.01 |
|
$ |
11,641 |
|
$ |
0.64 |
|
|||
Anti-dilutive impact (a) |
|
- |
|
|
(0.00 |
) |
|
- |
|
|
0.09 |
|
|||
Gain on extinguishment of debt (b) |
|
(1,245 |
) |
|
(0.06 |
) |
|
(617 |
) |
|
(0.03 |
) |
|||
Corporate and CDS restructuring (c) |
|
291 |
|
|
0.01 |
|
|
2,401 |
|
|
0.11 |
|
|||
ERP/CRM (d) |
|
413 |
|
|
0.02 |
|
|
1,368 |
|
|
0.06 |
|
|||
Stock options, restricted stock, and incentives expense (e) |
|
4,910 |
|
|
0.24 |
|
|
3,676 |
|
|
0.17 |
|
|||
Transactional expenses and strategic initiatives (f) |
|
123 |
|
|
0.01 |
|
|
558 |
|
|
0.03 |
|
|||
FDA PMTA (g) |
|
1,570 |
|
|
0.08 |
|
|
3,174 |
|
|
0.15 |
|
|||
Non-cash asset impairment (h) |
|
9,114 |
|
|
0.45 |
|
|
28,674 |
|
|
1.35 |
|
|||
FET refund (i) |
|
(3,813 |
) |
|
(0.19 |
) |
|
- |
|
|
- |
|
|||
Legal settlement (j) |
|
(2,994 |
) |
|
(0.15 |
) |
|
- |
|
|
- |
|
|||
Deferred tax valuation allowance (k) |
|
8,383 |
|
|
0.41 |
|
|
- |
|
|
- |
|
|||
Impact of annual tax items to effective tax rate (l) |
|
1,587 |
|
|
0.08 |
|
|
5,309 |
|
|
0.25 |
|
|||
Adjusted |
$ |
56,802 |
|
$ |
2.91 |
|
$ |
56,183 |
|
$ |
2.83 |
|
Total may not foot due to rounding | |||
Note: Annual tax rate used excludes impact of deferred tax valuation allowance. | |||
(a) Represents dilution of debt conversion that is anti-dilutive and not included for GAAP. | |||
(b) Represents gain on extinguishment of debt tax effected at the annual tax rate. | |||
(c) Represents costs associated with corporate and CDS restructuring, including severance tax effected at the annual tax rate. | |||
(d) Represents cost associated with scoping and mobilization of new ERP and CRM systems and cost of duplicative ERP licenses tax effected at the annual tax rate. | |||
(e) Represents non-cash stock options, restricted stock, incentives expense and Solace PRSUs tax effected at the annual tax rate. | |||
(f) Represents the fees incurred for transaction expenses tax effected at the annual tax rate. | |||
(g) Represents costs associated with applications related to the FDA PMTA tax effected at the annual tax rate. | |||
(h) Represents impairment of goodwill, intangible and investment assets tax effected at the annual tax rate. | |||
(i) Represents federal excise tax refund and related interest income effected at the annual tax rate. | |||
(j) Represents receivable from legal settlement tax effected at the annual tax rate. | |||
(k) Represents deferred tax valuation allowance. | |||
(l) Represents adjustment from annual tax rate to annual projected tax rate of 23% in 2023 and 2022. |
Schedule C | ||||||||||||||||||||||||||
|
||||||||||||||||||||||||||
Reconciliation of GAAP Operating Income (Loss) to Adjusted Operating Income (Loss) | ||||||||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||
Consolidated |
|
Zig-Zag |
|
Stoker's |
|
Creative Distribution Solutions |
||||||||||||||||||||
4th Quarter |
|
4th Quarter |
|
4th Quarter |
|
4th Quarter |
|
4th Quarter |
|
4th Quarter |
|
4th Quarter |
|
4th Quarter |
||||||||||||
|
2023 |
|
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
|
2022 |
|
|
2023 |
|
|
|
2022 |
|
Net sales |
$ |
97,120 |
|
$ |
103,392 |
$ |
45,092 |
$ |
46,444 |
$ |
37,976 |
|
$ |
32,010 |
$ |
14,052 |
|
$ |
24,938 |
|||||||
Gross profit |
$ |
50,524 |
|
$ |
49,563 |
$ |
25,499 |
$ |
25,768 |
$ |
21,883 |
|
$ |
17,210 |
$ |
3,142 |
|
$ |
6,585 |
|||||||
Operating income (loss) |
$ |
23,953 |
|
$ |
18,318 |
$ |
20,968 |
$ |
17,362 |
$ |
12,533 |
|
$ |
12,794 |
$ |
(646 |
) |
$ |
134 |
|||||||
Adjustments: | ||||||||||||||||||||||||||
Transactional expenses and strategic initiatives |
|
3 |
|
|
12 |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
|
- |
|||||||
FDA PMTA |
|
1,003 |
|
|
289 |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
|
- |
|||||||
Corporate and CDS restructuring |
|
199 |
|
|
1,825 |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
|
- |
|||||||
ERP/CRM |
|
138 |
|
|
336 |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
|
- |
|||||||
FET refund |
|
(4,345 |
) |
|
- |
|
- |
|
- |
|
(4,345 |
) |
|
- |
|
- |
|
|
- |
|||||||
Adjusted operating income (loss) |
$ |
20,951 |
|
$ |
20,780 |
$ |
20,968 |
$ |
17,362 |
$ |
8,188 |
|
$ |
12,794 |
$ |
(646 |
) |
$ |
134 |
Schedule C | ||||||||||||||||||||||||||
|
||||||||||||||||||||||||||
Reconciliation of GAAP Operating Income (Loss) to Adjusted Operating Income (Loss) | ||||||||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||
Consolidated |
|
Zig-Zag |
|
Stoker's |
|
Creative Distribution Solutions |
||||||||||||||||||||
YTD |
|
YTD |
|
YTD |
|
YTD |
|
YTD |
|
YTD |
|
YTD |
|
YTD |
||||||||||||
|
2023 |
|
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
|
2022 |
|
|
2023 |
|
|
|
2022 |
|
Net sales |
$ |
405,393 |
|
$ |
415,013 |
$ |
180,455 |
$ |
190,403 |
$ |
144,609 |
|
$ |
130,826 |
$ |
80,329 |
|
$ |
93,784 |
|||||||
Gross profit |
$ |
203,241 |
|
$ |
205,538 |
$ |
101,055 |
$ |
106,576 |
$ |
81,887 |
|
$ |
71,254 |
$ |
20,299 |
|
$ |
27,708 |
|||||||
Operating income (loss) |
$ |
82,577 |
|
$ |
75,514 |
$ |
68,280 |
$ |
73,342 |
$ |
58,180 |
|
$ |
53,331 |
$ |
(383 |
) |
$ |
1,506 |
|||||||
Adjustments: | ||||||||||||||||||||||||||
Transactional expenses and strategic initiatives |
|
165 |
|
|
801 |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
|
- |
|||||||
FDA PMTA |
|
2,098 |
|
|
4,554 |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
|
- |
|||||||
Corporate and CDS restructuring |
|
389 |
|
|
3,444 |
|
- |
|
- |
|
- |
|
|
- |
|
190 |
|
|
- |
|||||||
ERP/CRM |
|
552 |
|
|
1,962 |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
|
- |
|||||||
FET refund |
|
(4,345 |
) |
|
- |
|
- |
|
- |
|
(4,345 |
) |
|
- |
|
- |
|
|
- |
|||||||
Adjusted operating income (loss) |
$ |
81,436 |
|
$ |
86,275 |
$ |
68,280 |
$ |
73,342 |
$ |
53,835 |
|
$ |
53,331 |
$ |
(193 |
) |
$ |
1,506 |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240228612689/en/
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