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].

Investment Ideas - Zooplus was identified as a top investment idea on October 24th, 2014 [1] - Coca-Cola Bottling Co was highlighted as a top investment idea on May 20th, 2015 [1] - C&C Group was featured as a top investment idea on April 27th, 2018 [1] Company Analysis - Turning Point Brands faced challenges due to a ban on the shipment of vaping products nearly two years ago [3]

Core Insights - The launch of ALP nicotine pouches, co-founded by Tucker Carlson, is expected to significantly impact the nicotine market, appealing to both current pouch users and consumers of other tobacco products [1][5] - ALP nicotine pouches are designed to provide a superior experience compared to existing products like Zyn, emphasizing a cleaner and more enjoyable use [1][7] Company Overview - ALP Supply Co. LLC is responsible for the sales, marketing, and distribution of nicotine pouches in the United States, co-owned by Turning Point Brands and Tucker Carlson Network [3] - The product is now available for order online, with various purchasing options including tins, sleeves, and pallets [2][4] Market Reception - Pre-launch sales of ALP pouches exceeded initial expectations, with a survey indicating that 86% of current U.S. nicotine pouch users are likely to switch to ALP [5]

Core Insights - Turning Point Brands (NYSE: TPB) is expanding its presence in the growing nicotine pouch category while also performing well in its other primary focus segments [1] - The partnership with Tucker Carlson for the Alp pouch brand is a significant development for the company [1] Company Focus - The company is actively involved in the nicotine pouch market, which is experiencing growth [1] - Turning Point Brands has a diversified focus, indicating a strategy to leverage multiple segments for growth [1] Investment Philosophy - The investment approach emphasizes identifying mispriced securities by understanding the financial drivers of a company, often revealed through DCF model valuation [1]

TURNING POINT™ R A N D B Investor Presentation Q3 2024 | 5201 INTERCHANGE WAY, LOUISVILLE KY | TURNINGPOINTBRANDS.COM Turning Point Brands (NYSE: TPB) 2 DISCLAIMER FORWARD LOOKING STATEMENTS This presentation 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 te ...

Financial Data and Key Metrics Changes - Adjusted EBITDA increased 11% to $27.2 million for Q3 2024, with EBITDA excluding CDS up 12% to $26.9 million [5][13] - Q3 sales rose 3.8% to $105.6 million, with overall revenue excluding CDS up 8.4% year-over-year [13] - Gross margin improved by 10 basis points year-over-year to 50.8% [13] - Free cash flow for the quarter was $12.6 million, with year-to-date free cash flow at $45.8 million [15][16] Business Line Data and Key Metrics Changes - Zig-Zag sales increased 5.5% year-over-year to $49.3 million, with growth across all categories except lighters [14] - Stoker's revenue rose 12.1% year-over-year to $41.4 million, with a 2.9% volume increase and a 9.2% price/mix increase [14] - FRE sales more than quadrupled year-over-year, reflecting strong consumer acceptance and market rollout [14][15] Market Data and Key Metrics Changes - Nearly 75% of Americans now live in a legal medical or adult-use state, benefiting businesses like TPB [6] - The alternative channel experienced low double-digit growth both sequentially and year-to-date [6] - Stoker's gained 230 basis points of market share in chewing tobacco, reaching 32.9% [15] Company Strategy and Development Direction - The company is increasing its guidance for full-year 2024 adjusted EBITDA to $101 million to $103 million, up from prior guidance [5][16] - There is a focus on expanding distribution channels, particularly in the alternative market, leveraging a diverse SKU portfolio [6][9] - The cigar category is identified as a significant growth opportunity, with potential for substantial revenue [30] Management Comments on Operating Environment and Future Outlook - Management expressed optimism about the continued growth of Zig-Zag and Stoker's brands, with plans to enhance the commercial system and go-to-market strategy [10][12] - The company is assessing the strategy for the lighter category due to weaker-than-expected performance [5][6] - Management is exploring U.S. manufacturing options in light of recent election results and potential tariff changes [25] Other Important Information - The company retired a $118.5 million convertible note with cash on hand, maintaining a comfortable liquidity position [16] - A share repurchase program with a capacity of $100 million has been authorized by the Board [16] Q&A Session Summary Question: Growth outlook for FRE - Management indicated that growth will come from both expanded velocity in existing stores and new door penetration, with a focus on national distribution [19][20] Question: Comments on the Alp brand partnership - Management refrained from discussing the Alp brand but indicated updates would be provided in the near future [21][22] Question: Sales expectations for new 3 and 6 milligram products - Management noted that nearly 70% of the category is comprised of 3 and 6 milligram products, and early consumer feedback has been positive [24] Question: Supply chain limitations for FRE - Management stated that manufacturing capacity is sufficient, but entering chains can be a lengthy process due to varying planograms [25] Question: Revenue opportunities in alternative channels - Management believes the total addressable market for the alternative space is significant, potentially larger than traditional convenience stores [26] Question: Pricing strategy for FRE - Management confirmed that FRE is positioned as a premium brand and will follow a competitive pricing strategy [28][29] Question: Cigar growth expectations - Management highlighted the cigar category as a massive opportunity, with significant potential for revenue growth [30]

Financial Performance - Net sales for the three months ended September 30, 2024, were $105.617 million, a 3.5% increase from $101.722 million in the same period of 2023[9]. - Gross profit for the three months ended September 30, 2024, was $53.699 million, compared to $51.622 million in 2023, reflecting a gross margin improvement[9]. - Consolidated net income for the three months ended September 30, 2024, was $12.359 million, up from $10.866 million in the prior year, representing a 14% increase[9]. - Basic income per common share for the three months ended September 30, 2024, was $0.70, compared to $0.62 for the same period in 2023[9]. - Comprehensive income attributable to Turning Point Brands, Inc. for the three months ended September 30, 2024, was $13,341,000, compared to $10,254,000 in 2023, indicating an increase of approximately 30.3%[11]. - Consolidated net income for the nine months ended September 30, 2024, was $37,455,000, up from $27,916,000 in 2023, reflecting a growth of about 34.3%[12]. - Net income for the three months ended September 30, 2024, is reported at $12,359,000, compared to $10,866,000 for the same period in 2023, reflecting an increase of about 14%[14]. - Net income attributable to Turning Point Brands, Inc. for the three months ended September 30, 2024, was $37.389 million, compared to $28.353 million for the same period in 2023, representing a 32.5% increase[109]. - Diluted earnings per share (EPS) increased to $1.99 for the three months ended September 30, 2024, from $1.51 in the same period of 2023, reflecting a 31.8% growth[109]. Assets and Liabilities - Total current assets decreased to $184.752 million as of September 30, 2024, from $267.616 million at the end of 2023, indicating a significant reduction[6]. - Total assets as of September 30, 2024, were $488.009 million, down from $569.356 million at the end of 2023[8]. - Total current liabilities as of September 30, 2024, were $41,278 million, compared to $43,911 million as of December 31, 2023, showing a decrease of 6.0%[123]. - The total notes payable and long-term debt as of September 30, 2024, is $248,282 million, down from $307,064 million as of December 31, 2023[60]. - The company’s long-term debt as of September 30, 2024, was $248.3 million, down from $307.1 million at the end of 2023[200]. Cash Flow and Investments - Net cash provided by operating activities for the nine months ended September 30, 2024, was $49,321,000, compared to $40,005,000 in 2023, an increase of approximately 23.1%[13]. - Total cash at the end of the period was $35,516,000, down from $101,000,000 at the end of the previous period, indicating a decrease of approximately 64.9%[13]. - The company reported a loss on investments of $2,722,000 for the nine months ended September 30, 2024, compared to a loss of $11,162,000 in 2023, reflecting an improvement[13]. - The company recorded a $4.0 million receivable in other current assets related to a settlement approved by the court on December 12, 2023[104]. Segment Performance - The Company operates three segments: Zig-Zag products, Stoker's products, and Creative Distribution Solutions (CDS), with products available in over 217,000 retail outlets in North America[17]. - Zig-Zag products segment net sales were $49.324 million for the three months ended September 30, 2024, compared to $46.754 million in 2023, a growth of 5.5%[113]. - Stoker's products segment net sales increased to $41.380 million in the three months ended September 30, 2024, from $36.916 million in 2023, representing a 12.5% increase[113]. - Creative Distribution Solutions segment net sales decreased to $14.913 million for the three months ended September 30, 2024, down from $18.052 million in 2023, a decline of 17.5%[113]. Expenses - Selling, general, and administrative expenses for the three months ended September 30, 2024, were $33.169 million, an increase from $31.385 million in 2023[9]. - Shipping costs incurred were approximately $5.5 million for the three months ending September 30, 2024, compared to $5.1 million for the same period in 2023, indicating a year-over-year increase of approximately 7.8%[25]. - Selling, general, and administrative expenses increased by $1.8 million, or 5.7%, including $1.8 million of stock options and $1.2 million related to PMTA[152]. Regulatory and Market Challenges - The company anticipates continued challenges in the tobacco industry, including declining sales and increased regulatory scrutiny[4]. - The tobacco industry faces significant regulatory risks, including potential flavor bans that could materially affect the Company's financial position and operations[30]. - Key factors affecting operations include market penetration, new product introductions, and regulatory compliance costs[141]. Shareholder Returns - The company declared dividends totaling $1,278,000 for the three months ended September 30, 2024, compared to $1,187,000 for the same period in 2023[14]. - A quarterly cash dividend of $0.07 per common share was paid on October 4, 2024, to shareholders of record[129]. - The company has a share repurchase program totaling $100.0 million, with 133,873 shares repurchased for $4.2 million at an average price of $31.15 for the nine months ended September 30, 2024[131]. Future Outlook - The company continues to focus on market expansion and new product development to drive future growth[120]. - The company expects to have ample liquidity to satisfy its operating cash requirements for the foreseeable future due to strong cash balance and free cash flow generation[192].

Financial Performance - Q3 2024 Adjusted EBITDA increased 11.3% to $27.2 million compared to the same period last year[2] - Total consolidated net sales increased 3.8% to $105.6 million in Q3 2024, with Zig-Zag Products net sales up 5.5% and Stoker's Products net sales up 12.1%[2] - Gross profit increased 4.0% to $53.7 million in Q3 2024[2] - Net income increased 14.3% to $12.4 million in Q3 2024[2] - Adjusted net income increased 9.8% to $15.9 million in Q3 2024[2] - The Company increased its full-year 2024 adjusted EBITDA guidance to $101 to $103 million, up from the previous range of $98 to $102 million[6] - Consolidated net income for the nine months ended September 30, 2024, was $37.455 million, compared to $27.916 million in the same period in 2023[16] - Net cash provided by operating activities increased to $49.321 million in 2024 from $40.005 million in 2023[16] - Adjusted EBITDA for the three months ended September 30, 2024, was $27.158 million, up from $24.403 million in 2023[22] - GAAP Net Income for Q3 2024 was $16,960 thousand, with an adjusted net income of $12,375 thousand and adjusted diluted EPS of $0.68[23] - Net sales for Q3 2024 were $105,617 thousand, a 3.8% increase from $101,722 thousand in Q3 2023[24] - Gross profit for Q3 2024 was $53,699 thousand, up 4% from $51,622 thousand in Q3 2023[24] - Operating income for Q3 2024 was $20,530 thousand, slightly higher than $20,237 thousand in Q3 2023[24] - Adjusted operating income for Q3 2024 was $22,985 thousand, compared to $20,916 thousand in Q3 2023[24] Segment Performance - Stoker's Products segment gross profit increased 12.1% to $23.1 million in Q3 2024, with gross margin up 10 basis points to 55.8%[4] - Zig-Zag Products segment gross profit increased 2.2% to $27.3 million in Q3 2024, though gross margin declined 180 basis points to 55.4%[3] - Creative Distribution Solutions (CDS) net sales were $14.9 million in Q3 2024, with gross profit of $3.3 million and gross margin of 22.1%[4] - Zig-Zag Products net sales for Q3 2024 were $49,324 thousand, up 5.5% from $46,754 thousand in Q3 2023[24] - Stoker's Products net sales for Q3 2024 were $41,380 thousand, up 12.1% from $36,916 thousand in Q3 2023[24] - Creative Distribution Solutions net sales for Q3 2024 were $14,913 thousand, down 17.4% from $18,052 thousand in Q3 2023[24] Debt and Liquidity - Total gross debt as of September 30, 2024 was $250.0 million, with net debt of $216.4 million and total liquidity of $92.4 million[5] - Net cash used in financing activities was $127.527 million in 2024, compared to $45.956 million in 2023[16] - Total cash at the end of the period was $35.516 million in 2024, down from $101.000 million in 2023[16] Expenses and Costs - Capital expenditures decreased to $3.516 million in 2024 from $4.206 million in 2023[16] - Stock compensation expense increased to $5.720 million in 2024 from $4.660 million in 2023[16] - Depreciation and other amortization expense rose to $3.393 million in 2024 from $2.388 million in 2023[16] - FDA PMTA costs increased to $1.242 million in 2024 from $275 million in 2023[22] - Non-cash asset impairment was $2.173 million in 2023, with no impairment recorded in 2024[22] - FDA PMTA costs for Q3 2024 were $1,242 thousand, significantly higher than $275 thousand in Q3 2023[23][24] - Corporate restructuring costs for Q3 2024 were $186 thousand, slightly lower than $190 thousand in Q3 2023[23][24]

Company Overview - Turning Point Brands, Inc. (NYSE: TPB) specializes in selling tobacco rolling paper, nicotine pouches, and other nicotine products [1] - The company is expected to report its Q3 results near the end of October [1] Investment Philosophy - The investment approach focuses on identifying mispriced securities by understanding the drivers behind a company's financials, often revealed through a DCF model valuation [1] - This methodology allows for a flexible investment strategy that encompasses various prospects of a stock, assessing the risk-to-reward ratio [1]