Core Insights - ALP has partnered with Gopuff to introduce an instant delivery feature for its nicotine pouches, enhancing customer accessibility and experience [1][3] - The new service allows customers to order ALP products through Alppouch.com and receive them almost instantly, utilizing Gopuff's extensive network of over 200 micro distribution centers across the U.S. [2][3] - This partnership marks a significant innovation in the nicotine pouch market, focusing on a customer-centric approach and leveraging Gopuff's advanced technology [3] Company Overview - ALP Supply Co. LLC specializes in the sale, marketing, and distribution of nicotine pouches in the United States, co-owned by Turning Point Brands and Tucker Carlson Network [6] - Gopuff, founded in 2013, is a leader in instant commerce, providing a wide range of products delivered to customers' doors in as fast as 15 minutes, supported by a robust logistics network [5]

For Immediate ReleaseChicago, IL – April 17, 2025 – Today, Zacks Equity Research Equity Philip Morris International Inc. (PM) , Altria Group, Inc. (MO) and Turning Point Brands, Inc. (TPB) .Industry: TobaccoLink: https://www.zacks.com/commentary/2449632/3-tobacco-stocks-worth-watching-on-robust-industry-trendsThe Zacks Tobacco industry is shifting focus toward smoke-free alternatives, driven by rising consumer health awareness and stricter regulations on traditional cigarettes. Leading companies like Philip ...

The Zacks Tobacco industry is shifting focus toward smoke-free alternatives, driven by rising consumer health awareness and stricter regulations on traditional cigarettes. Leading companies like Philip Morris International Inc. (PM) , Altria Group, Inc. (MO) and Turning Point Brands, Inc. (TPB) are investing heavily in reduced-risk products (RRPs) to capitalize on this growing trend.While cigarette sales continue to decline due to inflation and changing consumer habits, the industry maintains strong pricing ...

Financial Performance - For the year ended December 31, 2024, consolidated net sales increased by $35.6 million, or 11.0%, compared to the prior year, driven by growth in both Zig-Zag and Stoker's product segments [282]. - Zig-Zag products segment net sales increased by $11.9 million, or 6.6%, primarily due to $11.5 million growth in papers, wraps, and accessories, and $5.6 million growth in cigars [283]. - Stoker's products segment net sales increased by $23.7 million, or 16.4%, with a sales volume increase of 6.8% contributing $9.9 million and price/product mix contributing $13.8 million [284]. - For the year ended December 31, 2024, net income from continuing operations attributable to Turning Point Brands, Inc. was $47.3 million for the year ended December 31, 2024, compared to $38.7 million in the prior year [300]. - Consolidated net income for 2024 was $40.51 million, up from $37.78 million in 2023, reflecting a growth of 1.9% [427]. - Basic earnings per share for continuing operations increased to $2.67 in 2024 from $2.20 in 2023, marking a rise of 21.4% [425]. - The company’s accumulated earnings increased to $147.16 million in 2024 from $112.44 million in 2023, an increase of 30.9% [423]. - The company’s total stockholders' equity rose to $190.38 million in 2024, compared to $152.01 million in 2023, reflecting a growth of 25.3% [423]. Profitability and Margins - Consolidated gross profit increased by $18.6 million, or 10.2%, but gross profit margin decreased to 55.9% of net sales from 56.3% in the prior year [286]. - Zig-Zag products segment gross profit increased by $5.5 million, or 5.5%, with gross profit margin decreasing to 55.4% due to growth in lower-margin cigar products [287]. - For the year ended December 31, 2024, gross profit in the Stoker's products segment increased by $13.1 million, or 16.0%, compared to the prior year, while gross profit as a percentage of net sales decreased to 56.4% from 56.6% [288]. - The company’s operating income for the year ended December 31, 2024, was $80.832 million, indicating strong operational performance [362]. Expenses and Costs - Selling, general and administrative expenses increased by $18.1 million, or 17.3%, for the year ended December 31, 2024, including $7.2 million related to stock options and $4.6 million for corporate restructuring [289]. - Operating income in the Zig-Zag products segment decreased by $1.6 million, or 2.3%, for the year ended December 31, 2024, with operating income as a percentage of net sales decreasing to 34.7% from 37.8% [292]. - Operating income in the Stoker's products segment increased by $6.1 million, or 9.7%, for the year ended December 31, 2024, while operating income as a percentage of net sales decreased to 40.6% from 43.0% [293]. - Unallocated costs increased to $54.1 million for the year ended December 31, 2024, compared to $47.5 million in the prior year, marking a 13.9% increase [294]. Cash Flow and Financing - Cash provided by operating activities for the year ended December 31, 2024, was $60,958 thousand, an increase of $4.7 million compared to the prior year [336]. - For the year ended December 31, 2024, net cash used in financing activities was $128.3 million, an increase of $78.8 million primarily due to the retirement of Convertible Senior Notes [341]. - The company had restricted assets of $30.7 million and $33.6 million as of December 31, 2024, and 2023, respectively [334]. - The company’s adjusted working capital increased by $57.3 million compared to the prior year end, primarily due to a $58.3 million decrease in current liabilities [333]. - The company recorded a non-cash charge of $8.8 million to reduce the carrying value of the disposal group to fair value upon meeting the criteria for held for sale classification [323]. Debt and Interest - The company’s long-term debt was $248.604 million, down from $307.064 million in 2023, representing a decrease of approximately 19% [347]. - Interest expense for the year ended December 31, 2024, was $13.983 million, reflecting the company's debt obligations [362]. - Interest expense, net decreased by $0.7 million for the year ended December 31, 2024, due to the maturity of Convertible Senior Notes and increased interest income on cash [295]. Market and Regulatory Environment - The alternative smoking accessories market is experiencing robust growth driven by cannabinoid legalization in the U.S. and Canada [269]. - The FDA has proposed regulations that could significantly impact the company's products and premarket filings [379]. - The company is subject to federal and state excise taxes, which may increase and affect product demand [372][373]. Asset Management - Total assets as of December 31, 2024, amounted to $493.353 million, with current assets totaling $198.205 million [363]. - The company reported total liabilities of $302.973 million, including long-term debt of $248.604 million [363]. - Stockholders' equity reached $190.380 million, with unrestricted subsidiaries contributing $187.981 million [363]. Stock and Shareholder Activity - In 2024, the company repurchased 154,945 shares of common stock for a total cost of $5.1 million, averaging $32.60 per share [370]. - The company has $100 million remaining under its Board-approved stock repurchase program as of December 31, 2024 [370]. Internal Controls and Compliance - The company has not maintained effective internal control over financial reporting as of December 31, 2024, due to identified material weaknesses [414]. - The company reported a material weakness in internal control over financial reporting related to information technology general controls [416]. Research and Development - Research and development and quality assurance costs were approximately $1.3 million in 2024, up from $0.6 million in both 2023 and 2022, indicating a significant increase in investment in these areas [450]. - Advertising and promotion costs amounted to $12.0 million in 2024, compared to $7.6 million in 2023 and $6.2 million in 2022, representing a 57.9% increase from 2023 to 2024 [466].

Financial Data and Key Metrics Changes - Revenue increased 13% to $93.7 million for Q4 2024, and full-year sales were up 11% to $360.7 million [6][25] - Adjusted EBITDA for Q4 increased 5% to $26.2 million, while full-year adjusted EBITDA rose 12% to $104.5 million [7][27] - Gross margin for the full year decreased by 39 basis points to 55.9%, and for Q4, it was 56%, down 108 basis points year over year [25][27] Business Line Data and Key Metrics Changes - Zig Zag sales increased 7% year over year to $192.4 million, with Q4 sales up 2% to $45.9 million [27][28] - Stoker's net sales increased 16% year over year to $168.3 million, with Q4 sales up 26% to $47.8 million [28] - Modern oral revenue included a 419% increase in Free sales to approximately $6.3 million for Q4, reflecting strong growth [14][32] Market Data and Key Metrics Changes - Nearly 75% of Americans now live in states with legal regulated cannabis, expanding the total addressable market (TAM) for related products [12] - Stoker's MST volume was up 10 basis points despite a category volume decline of 6.4%, with market share growing by 50 basis points year over year to 7.6% [29][30] Company Strategy and Development Direction - The company is focusing on growth opportunities in its core business after divesting the CDS segment, which is now classified as discontinued operations [4][6] - The goal is to achieve a 10% market share in the modern oral category, with significant investments planned for sales and marketing [8][34] - The company aims to leverage cross-selling opportunities between its Zig Zag and modern oral products [11][21] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the growth momentum across the organization and initiated 2025 adjusted EBITDA guidance of $108 million to $113 million [8][34] - The company is confident in the performance of its modern oral brands, particularly Free and Out, and plans to expand their market presence [17][20] Other Important Information - The company ended the quarter with over $46 million in cash and reported free cash flow of $56.3 million for the year [32] - Capital expenditures for 2024 were $4.6 million, with a budget of $4 to $5 million for 2025 [36] Q&A Session Summary Question: Outlook for modern oral products in national convenience store chains - Management is in discussions with partners and has rolled out a regional partnership with 7-Eleven, showing early positive results [40][43] Question: Growth and distribution opportunities for Stoker's MST - Management believes there are synergies between MST and modern oral products, presenting opportunities for cross-selling [45][47] Question: Drivers of guidance for modern oral products - Guidance is based on expected growth for Free and early reorder rates, with both Free and Out seen as synergistic [50][52] Question: Contribution margin and manufacturing considerations - Gross profit margins for modern oral are in the mid-thirties, with plans to reinvest profits into sales and marketing [56][58] Question: Regulatory environment regarding nicotine products - Management views recent regulatory actions as positive, particularly with the approval of flavored products [62][63] Question: Direct-to-consumer opportunities in the nicotine patch category - Management sees a strong online opportunity for the Out brand, while Free will focus on brick-and-mortar sales [65][67] Question: Marketing strategies for Free and Out brands - The company plans to leverage both online and brick-and-mortar channels to maximize reach across its product portfolio [71][73] Question: Zig Zag's growth and margin profile - Zig Zag is expected to see single-digit growth, with a mix shift impacting gross margins [75][77]

Financial Data and Key Metrics Changes - Revenue increased 13% to $93.7 million for Q4 2024, and full-year sales were up 11% to $360.7 million [6][25] - Adjusted EBITDA for Q4 increased 5% to $26.2 million, while full-year adjusted EBITDA rose 12% to $104.5 million [7][27] - Gross margin for the full year decreased by 39 basis points to 55.9%, and for Q4, it was 56%, down 108 basis points year over year [25][27] Business Line Data and Key Metrics Changes - Zig Zag sales increased 7% year over year to $192.4 million, with Q4 sales up 2% to $45.9 million [27][28] - Stoker's net sales increased 16% year over year to $168.3 million, with Q4 sales up 26% to $47.8 million [28] - Modern oral revenue included a 419% increase in Free sales to approximately $6.3 million for Q4, reflecting strong growth [14][32] Market Data and Key Metrics Changes - Nearly 75% of Americans now live in states with legal regulated cannabis, expanding the total addressable market (TAM) for related products [12] - Stoker's MST volume was up 10 basis points despite a category volume decline of 6.4%, with market share growing by 50 basis points year over year to 7.6% [29][30] Company Strategy and Development Direction - The company is focusing on growth opportunities in its core business after divesting the CDS segment, which is now classified as discontinued operations [4][6] - The goal is to achieve a 10% market share in the modern oral category, with significant investments planned for sales and marketing [8][34] - The company aims to leverage cross-selling opportunities between its modern oral products and Zig Zag portfolio [11][21] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the growth momentum across the organization and initiated 2025 adjusted EBITDA guidance of $108 million to $113 million [8][34] - The company is confident in the performance of its modern oral brands, particularly Free and Out, and plans to expand distribution and marketing efforts [19][20] Other Important Information - The company ended the quarter with over $46 million in cash and reported free cash flow of $56.3 million for the year [32] - Capital expenditures for 2024 were $4.6 million, with a budgeted range of $4 to $5 million for 2025 [36] Q&A Session Summary Question: Outlook for modern oral products in national convenience store chains - Management is in discussions with partners and has rolled out a regional partnership with 7-Eleven, showing early positive results [40][43] Question: Growth and distribution opportunities for Stoker's MST - Management believes there are synergies between MST and modern oral products, presenting opportunities for cross-selling [45][47] Question: Drivers of guidance for modern oral products - Guidance is based on expected growth for Free and early reorder rates, with both Free and Out seen as synergistic [50][52] Question: Contribution margin and manufacturing considerations - Gross profit margins for modern oral are in the mid-thirties, with plans to reinvest profits into sales and marketing [56][58] Question: Regulatory environment regarding nicotine products - Management views recent regulatory actions as positive and is not currently concerned about nicotine strength regulations [62][64] Question: Direct-to-consumer opportunities in the nicotine patch category - Management sees a strong online opportunity for Out, while Free will focus on brick-and-mortar channels [65][67] Question: Marketing strategies for Free and Out - The company plans to leverage both online and brick-and-mortar strategies to maximize reach across its brand portfolio [71][73] Question: Zig Zag's growth and margin profile - Zig Zag is expected to see single-digit growth, with a mix shift into lower-margin products anticipated to continue [75][78]

Company Performance - Turning Point Brands (TPB) reported quarterly earnings of $0.53 per share, missing the Zacks Consensus Estimate of $0.57 per share, and down from $0.79 per share a year ago, representing an earnings surprise of -7.02% [1] - The company posted revenues of $93.67 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 0.23%, but down from $97.12 million year-over-year [2] - Over the last four quarters, the company has surpassed consensus EPS estimates just once and topped consensus revenue estimates two times [2] Stock Performance - Turning Point Brands shares have increased approximately 11.5% since the beginning of the year, contrasting with the S&P 500's decline of -0.7% [3] - The current consensus EPS estimate for the coming quarter is $0.73 on revenues of $91.9 million, and for the current fiscal year, it is $3.17 on revenues of $384.7 million [7] Industry Outlook - The Tobacco industry, to which Turning Point Brands belongs, is currently ranked in the bottom 36% of over 250 Zacks industries, indicating potential challenges ahead [8] - The performance of Turning Point Brands' stock may be influenced by the overall outlook for the Tobacco industry [8]

Financial Performance - Q4 2024 net sales increased 12.8% year-over-year to $93.7 million, with total consolidated net sales for FY 2024 increasing 11.0% to $360.7 million[5]. - Adjusted EBITDA for Q4 2024 was $26.2 million, up 5.3% from the prior year, while FY 2024 Adjusted EBITDA increased 12.0% to $104.5 million[5]. - Consolidated net income for 2024 was $40,510,000, an increase from $37,781,000 in 2023, representing a growth of 4.8%[25]. - Adjusted EBITDA for 2024 was $104,459,000, up from $93,252,000 in 2023, reflecting a growth of 11.9%[31]. - Adjusted diluted EPS for the year ended December 31, 2024, was $3.49, an increase from $2.93 in 2023[37]. - Adjusted net income for the quarter was $21.68 million, compared to $20.20 million in the prior year, reflecting an increase of 7.3%[39]. - Adjusted diluted EPS for the quarter was $0.98, compared to $0.82 in the same quarter of the previous year, marking an increase of 19.5%[39]. Segment Performance - Zig-Zag Products segment net sales increased 1.8% to $45.9 million in Q4 2024, while Stoker's Products segment net sales rose 25.8% to $47.8 million[6][8]. - Modern Oral combined sales reached $11.2 million for Q4 2024, with FRE sales more than quadrupling year-over-year and growing 26% sequentially[4]. - Stoker's Products segment gross profit increased 26.0% to $27.6 million in Q4 2024, with a gross margin of 57.7%[9]. Income and Expenses - Net income for Q4 2024 decreased 76.1% to $2.4 million, primarily due to a one-time loss from discontinued operations of $7.3 million[5]. - The company incurred $4,634,000 in corporate restructuring costs for the year ended December 31, 2024[37]. - The FDA PMTA-related costs for the year ended December 31, 2024, amounted to $3,592,000, compared to $2,098,000 in 2023[38]. - The company incurred $1.11 million in transactional expenses and strategic initiatives during the quarter, compared to $3,000 in the same quarter last year[40]. - Loss on extinguishment of debt was reported at $194,000 for Q4 2024, while the previous year showed a gain of $146,000[39]. Balance Sheet and Liquidity - Total gross debt as of December 31, 2024, was $248.6 million, with net debt at $202.4 million and total liquidity of $103.6 million[10]. - Total current assets decreased to $198,205,000 in 2024 from $267,629,000 in 2023, a decline of 26%[24]. - Total liabilities reduced to $302,973,000 in 2024 from $417,363,000 in 2023, a decrease of 27.3%[24]. - Total stockholders' equity increased to $190,380,000 in 2024 from $152,006,000 in 2023, a growth of 25.3%[24]. - Cash at the end of the period decreased to $50,902,000 in 2024 from $122,815,000 in 2023, a decline of 58.6%[26]. Guidance and Future Outlook - FY 2025 guidance projects Adjusted EBITDA of $108-113 million and Modern Oral sales of $60-80 million[14]. - The company expects to maintain its focus on FDA PMTA applications, with costs of $512,000 incurred in Q4 2024[40]. Other Notable Items - The company reported a loss from discontinued operations of $7,517,000 in 2024, compared to $285,000 in 2023[25]. - The company recognized a mark-to-market loss of $942,000 on a Canadian inter-company note in Q4 2024[39]. - The effective tax rate for the quarter was 28.4% in 2024, compared to 24.6% in 2023[41]. - The federal excise tax refund for the year ended December 31, 2024, was $(1,674,000), compared to $(5,095,000) in 2023[37].

Company Overview - Turning Point Brands, Inc. (NYSE: TPB) specializes in selling rolling paper, snuff tobacco, and nicotine pouches among other related products [1] Financial Performance - The company reported preliminary Q4 results on February 10, indicating ongoing financial activities and performance metrics [1] Investment Philosophy - The investment philosophy focuses on identifying mispriced securities by understanding the drivers behind a company's financials, often revealed through a DCF model valuation [1]

Core Viewpoint - Wall Street anticipates a year-over-year decline in earnings for Turning Point Brands (TPB) due to lower revenues, with a focus on how actual results will compare to estimates impacting stock price [1][2]. Earnings Expectations - The upcoming earnings report is expected to show earnings of $0.57 per share, reflecting a year-over-year decrease of 27.9%, with revenues projected at $93.4 million, down 3.8% from the previous year [3]. - A positive stock movement is likely if the earnings exceed expectations, while a miss could lead to a decline [2]. Estimate Revisions - The consensus EPS estimate has been revised 2.21% higher in the last 30 days, indicating a reassessment by analysts [4]. - The Most Accurate Estimate aligns with the Zacks Consensus Estimate, resulting in an Earnings ESP of 0%, suggesting no recent differing analyst views [10][11]. Earnings Surprise Prediction - The Zacks Earnings ESP model indicates that a positive or negative reading can predict earnings deviation from consensus, with positive readings being more reliable [6][7]. - Stocks with a positive Earnings ESP and a Zacks Rank of 1, 2, or 3 have shown a nearly 70% success rate in beating earnings expectations [8]. Historical Performance - In the last reported quarter, Turning Point Brands had an earnings surprise of +1.49%, beating the expected earnings of $0.67 per share with actual earnings of $0.68 [12]. - Over the past four quarters, the company has only beaten consensus EPS estimates once [13]. Conclusion - Turning Point Brands does not appear to be a strong candidate for an earnings beat based on current estimates and rankings, but other factors should also be considered for investment decisions [16].