Turning Point Brands, Inc. (NYSE:TPB) Q4 2020 Earnings Conference Call February 10, 2021 10:00 AM ET Company Participants Louie Reformina - Chief Business Development Officer Lawrence Wexler - President and CEO Graham Purdy - COO Robert Lavan - CFO Conference Call Participants Gerald Pascarelli - Cowen Susan Anderson - B. Riley Eric Des Lauriers - Craig-Hallum Capital Greg Pendy - Sidoti & Company Operator Good morning and welcome to the Turning Point Brands Fourth Quarter 2020 Earnings Conference Call. All ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2020 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from_______________ to ________________ Commission file number: 001-37763 TURNING POINT BRANDS, INC. (Exact name of registrant as specified in its charter) (St ...

Financial Data and Key Metrics Changes - The company reported $104 million in revenue and $24 million in EBITDA for Q3 2020, exceeding expectations [7][48] - Adjusted EBITDA for the quarter was $23.9 million, compared to $18.8 million in the prior year, achieving 70% incremental margins [48] - The company raised its 2020 guidance for total net sales to $395 million to $401 million, up from previous guidance of $370 million to $382 million [50] Business Line Data and Key Metrics Changes - Smokeless segment net sales increased 13.7% to $29.8 million, with MST portfolio sales growing 16.3% [39] - Smoking segment net sales increased 19% to $36 million, driven by strong growth in U.S. rolling papers and MYO cigar wraps [42] - NewGen segment net sales decreased 4.8% to $38.4 million, with flat performance in vape distribution [46] Market Data and Key Metrics Changes - Stoker's Moist Snuff market share increased by 60 basis points to 5.1% [22] - Zig-Zag papers increased their market share by 4.2 percentage points year-over-year to 35.3% [25] - The smokable hemp market is projected to grow from $70 million to $80 million in 2020 to a range of $300 million to $400 million by 2025 [14] Company Strategy and Development Direction - The company is focusing on strategic acquisitions and investments in growing markets, including a $15 million investment in dosist and a partnership with WildHemp [15][18] - The company aims to leverage its regulatory expertise to navigate the PMTA process and expects significant upside as the market consolidates [12][36] - The company is committed to expanding its product pipeline and enhancing its brand presence in the cannabis and CBD markets [16][19] Management's Comments on Operating Environment and Future Outlook - Management noted that the company successfully navigated a volatile selling environment and saw positive trends across all product lines [7] - The company anticipates near-term volatility due to the PMTA process but remains optimistic about long-term growth opportunities [31][36] - Management expressed confidence in the company's ability to capitalize on increased cannabis consumption as legalization spreads [30] Other Important Information - The company ended the quarter with $67 million in cash and $114 million in available liquidity, indicating strong financial health [51] - The company has implemented cost-cutting measures that have contributed to improved margins and operating leverage [49] Q&A Session Summary Question: What was the impact of distribution gains on volume sales in the Smoking segment? - Management indicated that there was about $3 million to $5 million from wraps, offsetting inventory reductions in the second quarter [60] Question: How is the company preparing for potential consumer behavior changes due to economic pressures? - Management stated that they are positioned to benefit from down trading trends and are preparing new product initiatives to capture market share [65] Question: What is the plan for distribution of dosist products? - The focus will initially be on the THC-free segment, with potential for future cannabis product distribution depending on legalization [74] Question: When is the PMTA-related inventory liquidation expected to normalize? - Management expects inventory liquidation to continue through the end of the year and into the first quarter of 2021, with a catalyst being the FDA's enforcement of product approvals [75] Question: What is the expected impact of recent investments on the company's financials? - Management indicated that dosist will be accounted for as a non-controlling investment, while WildHemp is expected to contribute significantly to sales and gross margins [83]

m Point Brint Brint Brint TURNING POINT™ B R S A N D × INVESTOR PRESENTATION Q3 2020 NYSE: TPB | 5201 INTERCHANGE WAY, LOUISVILLE KY | TURNINGPOINTBRANDS.COM 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 comparab ...

m Point Brint Brint Brint TURNING POINT™ B R A N D × ๊INVESTOR PRESENTATION Q2 2020 NYSE: TPB | 5201 INTERCHANGE WAY, LOUISVILLE KY | TURNINGPOINTBRANDS.COM 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 comparabl ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) Commission file number: 001-37763 TURNING POINT BRANDS, INC. (Exact name of registrant as specified in its charter) Delaware 20-0709285 (State or other jurisdiction of Incorporation or organization) (I.R.S. Employer Identification No.) 5201 Interchange Way, Louisville, KY 40229 (Address of principal executive offices) (Zip Code) (502) 778-4421 (Registrant's telephone number, including area code) Former name, former ...

Financial Performance - Total net sales for Q1 2020 were $90.689 million, a decrease of 1.0% from $91.628 million in Q1 2019[15]. - Gross profit increased to $41.431 million in Q1 2020, compared to $40.464 million in Q1 2019, reflecting a gross margin improvement[15]. - Consolidated net income for Q1 2020 was $3.275 million, down 50.0% from $6.560 million in Q1 2019[15]. - Basic income per common share decreased to $0.17 in Q1 2020 from $0.34 in Q1 2019[15]. - For the three months ended March 31, 2020, consolidated net income was $3.275 million, resulting in a basic EPS of $0.17, compared to $6.560 million and $0.34 in the same period of 2019[113]. - Consolidated net income for the three months ended March 31, 2020, was $3.3 million, down 50.1% from $6.6 million in the same period in 2019[157]. Assets and Liabilities - Total current assets increased to $191.779 million as of March 31, 2020, compared to $189.250 million as of December 31, 2019[14]. - Total liabilities rose to $344.009 million as of March 31, 2020, compared to $339.999 million as of December 31, 2019[14]. - Total stockholders' equity decreased to $105.311 million as of March 31, 2020, from $106.585 million as of December 31, 2019[14]. - The company reported net inventory of $69.195 million as of March 31, 2020, a decrease from $70.979 million as of December 31, 2019[68]. - The total amount of accrued liabilities increased to $28.754 million as of March 31, 2020, compared to $26.520 million as of December 31, 2019[74]. - As of March 31, 2020, the net notes payable and long-term debt amounted to $267.977 million, a slight decrease from $268.951 million as of December 31, 2019[172]. Cash Flow - Cash provided by operating activities was $14.727 million in Q1 2020, slightly up from $14.025 million in Q1 2019[19]. - The company reported a net increase in cash of $4.156 million for Q1 2020, ending the period with total cash of $131.480 million[19]. - Net cash provided by operating activities was $14.7 million, an increase of $0.7 million compared to $14.0 million for the same period in 2019[166]. Shareholder Actions - The company repurchased 134,130 shares of common stock at a cost of $2.627 million during Q1 2020[14]. - A total of 134,130 shares were repurchased for $2.6 million at an average price of $19.59 per share during the three months ended March 31, 2020[125]. - The Board of Directors approved a $50.0 million share repurchase authorization, with 134,130 shares repurchased for a total cost of $2.6 million[170]. - The company paid a dividend of $0.05 per common share on April 10, 2020, to shareholders of record as of March 20, 2020[123]. Segment Performance - The Smokeless products segment reported net sales of $26.495 million, up from $22.544 million in 2019, while the Smoking products segment increased to $28.914 million from $25.519 million[116]. - The NewGen products segment saw a decline in net sales to $35.280 million from $43.565 million in the previous year[116]. - Operating income for the Smokeless products segment was $9.746 million, an increase from $7.487 million, while the Smoking products segment rose to $12.417 million from $9.946 million[116]. - The NewGen products segment reported an operating income of $477, down from $2.838 million in 2019[116]. - Net sales in the Smokeless products segment increased to $26.5 million, up 17.5% from $22.5 million in the prior year, driven by a 16.7% volume increase[147]. - Net sales in the Smoking products segment increased to $28.9 million, a 13.3% increase from $25.5 million in the previous year, with a volume increase of 10.9%[148]. - Net sales in the NewGen products segment decreased to $35.3 million, down 19.0% from $43.6 million in the prior year, primarily due to market disruptions[149]. Regulatory and Legal Issues - The company is subject to heavy regulation in the tobacco industry, which may impact its financial position and operations due to potential flavor bans and other restrictions[33]. - The company has experienced significant product liability litigation, which could adversely affect its financial position and results of operations[34]. - The company is facing significant product liability claims related to malfunctioning vaporizer devices and e-liquids, which could materially affect its financial position and operations[195]. - A subsidiary is involved in a lawsuit from a franchisee seeking compensatory and punitive damages, alleging failure to disclose information in the Franchise Disclosure Document[196]. - The company has several subsidiaries engaged in the vapor products market, which are subject to regulatory scrutiny and potential lawsuits regarding marketing practices and underage sales[197]. - Financial "hold-backs" were negotiated during the acquisition of vapor businesses to cover expenses related to information requests and potential litigation costs[197]. - The company believes its subsidiaries have strong defenses against claims of unfair marketing practices in the vapor products sector[197]. - There have been no material changes to the risk factors outlined in the 2019 Annual Report on Form 10-K[199]. Acquisitions and Investments - The Company acquired Solace Technologies for a total consideration of $9.4 million, which included $7.7 million in cash and an earn-out of $1.1 million[53]. - The acquisition of Solace Technologies is expected to enhance the Company's product development capabilities in alternative ingredients[53]. - The Company is currently evaluating the impact of ASU 2019-12 on its financial statements, which will be effective in the first quarter of fiscal year 2021[52]. - The Company has not completed the accounting for the acquisition of Solace Technologies as of March 31, 2020[53]. Debt and Financing - The company had a $250 million credit facility, with a $160 million First Lien Term Loan and a $50 million Revolving Credit Facility[76]. - The weighted average interest rate of the 2018 First Lien Term Loan was 3.74% as of March 31, 2020[78]. - The company had no borrowings outstanding under the 2018 Revolving Credit Facility as of March 31, 2020, with $46.3 million available[78]. - The company closed an offering of $172.5 million in Convertible Senior Notes in July 2019, bearing interest at 2.50% per year[80]. - The Convertible Senior Notes can be converted into approximately 3,202,808 shares at a conversion price of approximately $53.86 per share[81]. - The debt discount of $35.0 million will be amortized to interest expense using an effective interest rate of 7.5% over the expected life of the Convertible Senior Notes[82]. - The total lease liabilities increased to $14,204 million as of March 31, 2020, compared to $13,285 million as of December 31, 2019[89]. - The Company entered into a $7.5 million unsecured loan under the CARES Act, scheduled to mature on April 17, 2022, with a 1.00% interest rate[183]. Market Conditions - The company expects COVID-19 to impact future results, with temporary closures affecting production and in-person selling[140]. - The OTP industry generated approximately $11.5 billion in manufacturer revenue in 2019, with TPB being the 6th largest competitor in terms of total OTP consumer units sold[130]. - The company has identified growth opportunities in the emerging alternatives market, establishing a subsidiary, Nu-X, for development and production of alternative products[131]. - As of December 31, 2019, TPB's products were available in approximately 210,000 retail locations across North America[132].

TABLE OF CONTENTS UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark One) ☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2019 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from_______________ to ________________ Commission file number: 001-37763 TURNING POINT BRANDS, INC. (Exact name of registrant as specified in its cha ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) Commission file number: 001-37763 TURNING POINT BRANDS, INC. (Exact name of registrant as specified in its charter) Delaware 20-0709285 (State or other jurisdiction of Incorporation or organization) (I.R.S. Employer Identification No.) 5201 Interchange Way, Louisville, KY 40229 (Address of principal executive offices) (Zip Code) (502) 778-4421 (Registrant's telephone number, including area code) Former name, former ...

Financial Performance - Consolidated net sales increased to $93.3 million for the three months ended June 30, 2019, up from $81.1 million in the same period of 2018, representing a 15.1% increase[146] - Operating income rose by 34.7% to $19.9 million for the three months ended June 30, 2019, compared to $14.8 million in the prior year[146] - Consolidated net income increased by 41.7% to $13.2 million for the three months ended June 30, 2019, compared to $9.3 million in 2018[146] - For the three months ended June 30, 2019, consolidated gross profit increased to $41.2 million, a 15.1% increase from $35.8 million in the same period of 2018[150] - For the six months ended June 30, 2019, consolidated net sales increased to $185.0 million, a 19.3% increase from $155.0 million in the same period of 2018[158] - Consolidated net income for the six months ended June 30, 2019, was $19.8 million, a 60.0% increase from $12.4 million in the same period of 2018[171] - Adjusted EBITDA for the six months ended June 30, 2019, was $34,324,000, compared to $30,933,000 in 2018, reflecting an increase of 11%[178] Segment Performance - NewGen products segment saw a significant growth of 52.8%, with net sales reaching $41.8 million compared to $27.4 million in 2018[146] - For the three months ended June 30, 2019, net sales in the Smokeless products segment increased to $26.2 million, a 7.2% increase from $24.4 million in the same period of 2018[147] - For the three months ended June 30, 2019, net sales in the Smoking products segment decreased to $25.4 million, a decline of 13.5% from $29.3 million in the same period of 2018[148] - For the six months ended June 30, 2019, net sales in the NewGen products segment increased to $85.4 million, a 59.4% increase from $53.6 million in the same period of 2018[161] - For the six months ended June 30, 2019, gross profit in the NewGen products segment increased to $28.3 million, a 79.8% increase from $15.7 million in the same period of 2018[165] Investments and Acquisitions - The acquisition of Solace Technologies for $10.56 million aims to enhance product development in alternative ingredients[137] - A 30% stake was obtained in ReCreation Marketing with a $3 million investment, with options to increase ownership to 50%[138] - The investment in Canadian American Standard Hemp Inc. positions the company to participate in the hemp-derived products market[131] Debt and Financing - The company issued $150 million in 2.50% convertible senior notes due July 15, 2024, to refinance existing debt and fund acquisitions[140] - Total notes payable and long-term debt as of June 30, 2019, was $204,511,000, down from $224,000,000 at December 31, 2018[189] - The weighted average interest rate of the 2018 First Lien Term Loan was 5.40% at June 30, 2019[191] - As of June 30, 2019, $70 million of the company's outstanding long-term debt with variable rates is covered by interest rate swap agreements, effectively bearing interest at a fixed rate[199] - A 1% increase in interest rates would result in a pre-tax income change of approximately $1.3 million per year[199] Cash Flow and Working Capital - Net cash provided by operating activities for the six months ended June 30, 2019, was $21.7 million, up from $6.0 million in the same period of 2018, an increase of $15.8 million[184] - Net cash used in investing activities decreased to $0.3 million for the six months ended June 30, 2019, from $14.0 million in 2018, a reduction of $13.7 million[185] - Working capital increased by $5.2 million to $53.3 million at June 30, 2019, compared to $48.1 million at December 31, 2018, primarily due to increased accounts receivable[182] Expenses and Compliance - Selling, general, and administrative expenses for the six months ended June 30, 2019, increased to $49.7 million, a 15.4% increase from $43.1 million in the same period of 2018[166] - Income tax expense for the six months ended June 30, 2019, was $4.8 million, representing 19.4% of income before income taxes[170] - The company was in compliance with the financial and restrictive covenants of the 2018 Credit Facility as of June 30, 2019[188] Shareholder Returns - The company paid a cash dividend of $0.045 per common share on July 12, 2019, to shareholders of record at the close of business on June 21, 2019[187] Risk Exposure - There have been no material changes in the company's exposure to exchange rate fluctuation risk during the reported period[197] - There have been no material changes in the company's exposure to credit risk during the three months ended June 30, 2019[198]