Turning Point Sales Flat In Fourth Quarter

Turning Point Brands, Inc. (NYSE: TPB) reported its financial results for the fourth quarter and full-year ending December 31, 2021 as sales remained flat year-over-year. Turning Point‘s fourth-quarter total sales in 2021 were $105.283 million down slightly from 2020’s fourth-quarter total sales of $105.285 million. Net income in the fourth quarter fell to $11 million from last year’s $14 million.

For the full year 2021, sales increased 10 % to $445.5 million, while net income increased 36.3% to $52.1 million. This was in line with the company’s previously announced lowered guidance. The diluted EPS was $2.52 and Adjusted Diluted EPS was $3.03 versus $1.85 and $2.60 in the same period one year ago, respectively.

Turning Point also forecasts that in 2022 Zig-Zag Products sales are expected to range between $193 to $203 million and Stoker’s Products sales range between $127 to $134 million. The company also said that “Given the dynamic regulatory environment impacting the vape industry, it is difficult to provide reliable guidance for the NewGen Products segment. However, the company’s current expectation is to generate consolidated adjusted EBITDA in-line with fiscal year 2021 despite anticipated volatility in the NewGen Products segment.”

“Our fourth-quarter results capped off another strong year of performance for Turning Point Brands with EBITDA growing 20 percent for the fiscal year. Sales for the fourth quarter finished above our previous guidance and in-line with the previous year despite a 22 percent decline in NewGen sales which fell within our previous guidance,” said Yavor Efremov, President and Chief Executive Officer, Turning Point Brands. “Zig-Zag delivered another quarter of double-digit growth against a tough comparable period, while Stoker’s re-accelerated to high-single digit growth driven by mid-teens growth in the Moist Snuff Tobacco (MST) business. Additionally, NewGen managed through a challenging quarter clouded by the evolving regulatory landscape while maintaining long-term upside potential in a post-PMTA environment.”

Zig-Zag Is The Winner

For the fourth quarter, net sales of Zig-Zag Products increased 13.6% to $46.1 million. The company said that growth was led by double-digit advances in the U.S. rolling papers and Canadian businesses, including consolidation of Turning Point Brands Canada (formerly ReCreation Marketing) which contributed $4.5 million in the Q4 period. “This was partially offset by a double-digit decline in our cigar wraps business as the prior year period benefitted from the re-stocking of channel inventory that was depleted by a COVID-related manufacturing shutdown earlier in 2020. The cigar wraps business was up sequentially from the third quarter of 2021.” “Our Zig-Zag business experienced organic growth during the quarter despite a double-digit percentage growth headwind from the re-stocking of cigar wraps channel inventory in the prior year period,” said Graham Purdy, Chief Operating Officer, Turning Point Brands.

For the fourth quarter, net sales of Stoker’s Products increased 8.3% to $31.2 million on double-digit growth of MST. “This was partially offset by a low single-digit decline of loose-leaf chewing tobacco. MST represented 63 percent of Stoker’s Products revenues in the quarter, up from 59 percent a year earlier. For the fourth quarter, total Stoker’s Products segment volume increased 2.1 percent, while price / mix increased 6.2 percent.”

Vape Struggles

For the fourth quarter, net sales of NewGen Products decreased 22 % to $28.0 million. For the full year, net sales of NewGen Products decreased 7.5% to $144.7 million. Sales were impacted by the regulatory environment in the vape businesses. “NewGen continues to navigate multiple challenges driven by the evolving regulatory environment,” said Purdy. “We began building a last mile network infrastructure that had completed over 38,000 shipments prior to the PACT Act implementation in October. Since then, we have improved our operational positioning having received an exemption with the USPS to ship our vape products to qualified B2B customers while continuing to ramp our B2C logistics capabilities. Meanwhile, our proprietary products remain under review by the FDA as our regulatory capabilities has allowed us to remain one of the few companies continuing to navigate the PMTA process.”

Clipper Agreement

In addition to delivering earnings, Turning Point announced that it had entered into an agreement with Flamagas, a lighter manufacturer, for exclusive distribution of CLIPPER lighters in the United States and Canada. CLIPPER is the number one reusable lighter in the world and the number two overall world lighter brand. CLIPPER is currently available in several leading retail chains with a growing presence in additional retail outlets, dispensaries, smoke shops, and headshops.

“Given Flamagas’ global reach and renowned product portfolio, this partnership represents a tremendous opportunity to expand CLIPPER’s reach in the United States and Canada,” said Frank Vignone, Senior Vice President of Sales and Marketing at Turning Point Brands. “CLIPPER and Zig-Zag create a powerful combination of iconic premium brands in the roll-your-own market perfectly suited to leverage Turning Point Brands’ distribution infrastructure touching over 210,000 retail outlets in North America.”

Mr. Efremov continued, “Turning to capital deployment, we increased our share repurchase activity during the quarter and continue to maintain a strong balance sheet. Going forward, I am eager about the opportunity to work with a great organization, continue our momentum and invest further to deliver future organic and inorganic growth.”



Debra Borchardt

Debra Borchardt is the Co-Founder, and Executive Editor of GMR. She has covered the cannabis industry for several years at Forbes, Seeking Alpha and TheStreet. Prior to becoming a financial journalist, Debra was a Vice President at Bear Stearns where she held a Series 7 and Registered Investment Advisor license. Debra has a Master's degree in Business Journalism from New York University.

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