Turning Point Brands Archives - Green Market Report

StaffNovember 8, 2023
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BusinessDaily Hit

The Daily Hit: November 8, 2023

5min00

The Daily Hit is a recap of the top financial news stories for Nov. 8, 2023.

On the Site

Ohio Voters Say Yes to Adult-Use Marijuana

On Tuesday night, Ohio voters approved Issue 2, a measure to legalize and regulate recreational marijuana for adults statewide. As of 9:35 p.m. ET, the “Yes” vote leads with roughly 55.5% of the vote while “No” has 44.5% of the vote. Read more here.

• Related: What’s Next for Adult-Use Cannabis in Ohio after Issue 2 Approval?

4 Michigan Communities Reject Cannabis Sales

Tuesday’s election may indicate that Detroit’s five-county region is all but full up on where marijuana retailers can set up shop. Voters overwhelmingly rejected ordinances to allow for marijuana sales in Rochester, Birmingham, Grosse Pointe and Keego Harbor. Read more here.

Oklahoma to Revoke 165 Marijuana Cultivation Permits Over Signage Violations

Oklahoma cannabis authorities are set to revoke 165 medical marijuana grow permits for failure to comply with a new rule that mandates each business have a sign out front. Read more here.

Green Thumb Industries Income Dips in Q3 but Still Profitable

Green Thumb Industries Inc. (CSE: GTII) (OTC: GTBIF) had yet another profitable quarter for the three months ended Sept. 30 with $10.8 million in net income, a slight dip from the $13.4 million it made in the second quarter. Read more here.

More Earnings:

• AFC Gamma Q3 Income Down by Half, Company Names New CEO

• Chicago Atlantic Keeps Interest Income Stable at $13.7M for Q3

• Cronos Sees Record Revenue, Signals Optimism Despite Unrest Overseas

• Flora Growth Swings to Profitability on Restructuring, Sales Surge

• MariMed Posts $4.2M Loss in Q3 Despite Maryland Rec Launch

• Turning Point Brands Reports Downturn Amid Restructuring Efforts

• Verano Raises Cash Flow Guidance After Record Q3 Revenue

• Village Farms’ Bet on Cannabis, Tech-Fortified Produce Pays Off

• Weedmaps Loses $2.5M in Third Quarter With Dip in Revenue, Clients

In Other News

Lifeloc Technologies

Lifeloc Technologies, Inc. (OTC PINK:LCTC), a developer and manufacturer of breath alcohol and drug testing devices, posted quarterly net revenue of $2.7 million in the third quarter of 2023, resulting in a quarterly net profit of $110,000, or $0.04 per diluted share. Read more here.

Trulieve Cannabis Corp.

Trulieve Cannabis Corp. (CSE: TRUL) (OTCQX: TCNNF) issued a notice of redemption for all of its outstanding 9.75% senior secured notes due 2024. The aggregate principal amount of the notes currently outstanding is $130 million. Read more here.

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StaffAugust 2, 2023
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BusinessDaily Hit

The Daily Hit: August 2, 2023

5min00

The Daily Hit is a recap of the top financial news stories for Aug. 2, 2023.

On The Site

Unlicensed Cannabis Sales Overrun State’s Legal Program, Strangling Tax Revenue

Legal cannabis sales and tax revenues in New York are at a fraction thus far of what was originally projected, due in large part to the thriving unlicensed market, which one attorney estimated was upwards of 36,000 businesses statewide. Read more here.

MariMed Ends Q2 in the Red Despite Increasing Revenues

Massachusetts-based MariMed Inc. (CSE: MRMD) (OTCQX: MRMD) posted a $900,000 loss for its second quarter of the year, despite increasing revenues year-over-year by $3.5 million, the company reported Wednesday. Read more here.

Oklahoma Supreme Court to Decide Medical Marijuana Permit Fee Case

The Oklahoma Supreme Court this week heard arguments on a lawsuit filed last month by a coalition of cannabis companies who argue that a large business fee increase, which went into effect in June, is illegal because it’s tantamount to a tax hike. Read more here.

New Mexico Asks Court to Halt Sales at Rulebreaking Dispensary

New Mexico cannabis officials have asked a district court to halt sales at a licensed marijuana shop they say has been illegally selling out-of-state marijuana and manufacturing its own products without proper permits. Read more here.

Bill Reintroduced to Prep Federal Government for Marijuana Legalization

In another sign that some in Washington, D.C. are thinking ahead to when the cannabis industry becomes federally legal, Democratic U.S. Sen. John Hickenlooper of Colorado just last week reintroduced a bill designed to get the federal bureaucracy ready to adjust properly for when legalization occurs. Read more here.

Hawthorne’s Sales Slump Drags Scotts Miracle-Gro’s Q3 Profits Down

Lawn and garden products maker Scotts Miracle-Gro Co. (NYSE: SMG) reported lower-than-expected third quarter earnings ending July 1, 2023, mainly due to a sharp decline in its hydroponic business segment, Hawthorne. Read more here.

Turning Point Nets $9.9 Million in Q2 Revenue Beat

Smoking accessories dealer Turning Point Brands Inc. (NYSE: TPB) saw better-than-expected second-quarter financial results ending June 30, 2023, buoyed by rising legal consumption as more state markets open. Read more here.

California Cannabis Farmers Hoping Supreme Court Will Hear Corruption Cases

A small cadre of cannabis farmers from the heart of California’s Emerald Triangle, who have been trying for years to expose local corruption through court cases, are now placing their last hopes in the U.S. Supreme Court via a petition that was filed on July 12 and another that their attorney said should be filed by Friday this week. Read more here.

In Other News

Minnesota

While many other localities around Minnesota are busy banning cannabis commerce or installing moratoriums on licensing, Minneapolis has taken the opposite approach and announced a “permissive” policy for marijuana retailers. Read more here.

Arizona

There are now 26 social equity licenses available in Arizona, licenses aimed at people from those communities, which are available by lottery. But a new investigation from the Arizona Center for Investigative Reporting shows many of those licenses are now owned by corporate dispensaries instead. Read more here.

New York

New York City is now ranked as the top city in the world when it comes to marijuana consumption, according to a recent study. Read more here.

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Debra BorchardtMay 3, 2023
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Business

Turning Point Revenues Rise Slightly As Zig-Zag Sales Dip

4min00

Turning Point Brands, Inc.  (NYSE: TPB) announced financial results for the first quarter ended March 31, 2023 as overall by revenues increased slightly by 0.1% to $101.0 million. Turning Point told investors it is keeping its previous expectation of full-year 2023 adjusted EBITDA to be in a range of $88 to $94 million.

Net income fell by 30.9% to $7.6 million. The diluted earnings were $0.41 versus last year’s $0.55 and the adjusted diluted earnings were $0.62 versus last year’s $0.71.

“We are encouraged by our first quarter operating results which fell within our expectations,” said CEO Graham Purdy. “The Zig-Zag segment had an anticipated inventory reduction with certain wholesale customers but saw strong performance from the alternative channel and the roll-out of CLIPPER lighters. With the adjustment in trade inventory, Zig-Zag is now well-positioned to demonstrate growth for the balance of the year. Stoker’s had a solid quarter of performance as the value proposition of Stoker’s MST and looseleaf led to another quarter of market share gains. We opportunistically purchased another $13.9 million in aggregate principal amount of our convertible notes during the first quarter while maintaining a strong cash balance. We are currently maintaining our annual guidance as we focus on executing against our plan for the balance of the year.”

Zig-Zag

Zig-Zag rolling papers accounts for 42% of the company’s sales and during the quarter those net sales decreased 8.3% to $41.9 million. Turning Point said it expected the drop in the U.S. rolling papers and wraps businesses due to a reduction of trade inventory during the quarter. On a positive note, TPB’s Canadian and other smoking accessories businesses saw strong growth during the quarter.

“Zig-Zag papers and wraps demonstrated solid results in-light of planned inventory reduction with certain customers. Our e-commerce business had another quarter of double-digit growth as we continue to build our presence in the alternative channel,” said Purdy. “The acceptance of CLIPPER lighters within the trade remains encouraging and sets up well for increased penetration going forward.”

Tobacco

Stoker’s Products net sales increased 6.2% to $33.7 million on high single-digit growth of MST and low-single digit growth of loose-leaf chewing tobacco. “Stoker’s saw another quarter of solid performance with strong market share gains in both the MST and loose-leaf chewing tobacco categories as its value proposition continues to resonate with consumers,” continued Purdy.

Balance Sheet

Turning Point is in a comfortable position ending the quarter with a total liquidity of $128.4 million. During the quarter, the company repurchased $13.9 million in aggregate principal amount of its 2.50% Convertible Senior Notes due July 2024.

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StaffOctober 26, 2022
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BusinessDaily Hit

The Daily Hit: October 26, 2022

5min00

The Daily Hit is a recap of cannabis business news for Oct. 26, 2022.

ON THE SITE

South Dakota Moves to Restrict Medical Marijuana Program Further

A South Dakota state legislative panel this week gave initial approval to a bill that would restrict the MMJ program by making it harder to add qualifying conditions and by writing a handful of medical ailments directly into state law. If the bill succeeds, it may be the first time in the history of the U.S. marijuana industry that a state moved to restrict its MMJ program instead of broadening it. Read more here.

Verano Sued on Busted Acquisition

Verano Holdings’ (OTC: VRNOF) breakup with Goodness Growth looks like it’s going to be messy and expensive. Chicago-based marijuana company Verano called off its planned $413 million purchase of Goodness Growth on Oct. 13, citing unspecified breaches of “covenants and representations.” Goodness says Verano tried to back out of their deal without justification. Read more here.

Stifel Downgrades Canopy to a Sell

Stifel analyst Andrew Carter has downgraded Canopy Growth (NASDAQ: CGC) to a Sell rating following the company’s announcement to create Canopy USA. Stifel has a price target of C$2.90, roughly US$2.14. The stock was lately selling at $3.00. Carter noted: “Overall, we take a negative view noting the deal does not alleviate Canopy’s risks which are enhanced given Acreage’s financial position.” Read more here.

Turning Point Vape Sales Plunge as Zig-Zag Lights Up

Turning Point Brands Inc.  (NYSE: TPB) announced financial results for the third quarter ending Sept. 30, 2022, as sales fell by 1.9% to $107.8 million. However, it beat the Yahoo Finance average analyst estimate of $106 million in sales.  Turning Point also reported that its net income decreased by 14.3% to $11.5 million. Read more here.

IN OTHER NEWS

Harmony Foundation

Workers at Harmony Foundation, and its Harmony Dispensary in Secaucus, New Jersey, voted to unionize as members of the United Food and Commercial Workers (UFCW) Local 360. Recently, Harmony announced its intention to expand into the adult-use marijuana market and to open locations in Hoboken and Jersey City, as well as a new cultivation site in Lafayette. Read more here.

DreamField Brands

Two disgruntled customers are suing a California marijuana company, alleging that their prerolled joints were not as strong as claimed. The lawsuit was filed on Oct. 20 against DreamFields Brands Inc. for allegedly falsely claiming that their products have a high THC component, according to the suit. Read more here.

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Debra BorchardtOctober 26, 2022
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BusinessPublic

Turning Point Vape Sales Plunge As Zig-Zag Lights Up

5min00

Turning Point Brands, Inc.  (NYSE: TPB) announced financial results for the third quarter ending September 30, 2022, as sales fell by 1.9% to $107.8 million. However, it beat the Yahoo Finance average analyst estimate of $106 million in sales.  Turning Point also reported that its net income decreased by 14.3% to $11.5 million.

Turning Point earnings for the third quarter fell to $11.54 million, or 60 cents a share, from $13.47 million, or 65 cents a share, in the year-ago quarter. Breaking out one-time items, Turning Point Brands earned 72 cents a share. FactSet data showed that the average of analysts expected Turning Point Brands to earn 49 cents a share, while Yahoo Finance had the number pegged at 60 cents.

Outlook

Turning Point reaffirmed its previous forecast which had been trimmed from earlier in the year. The company’s full-year 2022 results are forecast as follows:

  • Zig-Zag Products sales of $186 to $191 million (compared to the previous outlook of $193 to $200 million)
  • Stoker’s Products sales of $128 to $132 million (compared to the previous outlook of $127 to $133 million)
  • Consolidated adjusted EBITDA of $96 to $99 million (compared to the previous outlook of $97 to $103 million)

“Zig-Zag and Stoker’s segments demonstrated strong double-digit growth during the quarter despite a challenging economic backdrop with inflationary pressures continuing to impact consumers. Zig-Zag benefitted from solid growth in the U.S. papers and Canadian businesses during the quarter and the successful launch of CLIPPER lighters. Meanwhile, Stoker’s MST experienced continued share gains driven by consumer trade-down to the value category. NewGen sales decreased slightly compared to the previous quarter and the segment remained profitable as we monitor ongoing regulatory developments,” said Graham Purdy, President and CEO. “We continued to return capital to our shareholders during the quarter while maintaining a strong cash balance that provides us with the ability to navigate the current financing environment. While our competitive position remains strong and we outperformed our markets during the quarter, it is prudent to adjust our outlook for the year in light of the current economic environment.”

Sales Breakdown

For the third quarter, Zig-Zag Products net sales increased 23.3% to $52.1 million. Both TPB’s U.S. rolling papers and e-commerce, and other smoking accessories businesses grew by double-digits during the quarter. Continued strength in paper cones, strong receptivity to promotional programs, the launch of CLIPPER lighters, and timing shifts in Canadian deliveries contributed to strong performance during the quarter. In total, the company said it believes approximately $5 million of sales was pulled forward from the fourth quarter across the Zig Zag portfolio.

Stoker’s Products net sales increased 10.0% to $33.5 million on strong double-digit growth of MST partially offset by a mid-single digit decline in loose-leaf chewing tobacco. FRE nicotine pouch product was a marginal contributor to segment sales.

NewGen Products’ net sales decreased 40.3% to $22.2 million. The regulatory environment continues to impact sales. Net sales have been relatively steady sequentially within the current year period.

Total gross debt as of September 30, 2022, was $422.5 million. The corresponding net debt (total gross debt less cash) on September 30, 2022, was $316.8 million. The company said it ended the quarter with total liquidity of $127.1 million, comprised of $105.7 million in cash and $21.4 million of revolving credit facility capacity.

New CEO

Just a couple of weeks ago, Turning Point announced that it named long-tenured company executive Graham Purdy as CEO and Board Director, following Yavor Efremov’s resignation as CEO and Director. Additionally, David Glazek will be transitioned from Non-Executive to Executive Board Chairman, effective January 2023. Purdy oversaw two of the company’s highly successful brand extensions, rolling out Zig-Zag Cigar Wraps and Stoker’s MST.

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