Category: Financial

Sales and Profit up at Turning Point Brands

Photo: Tobacco Reporter archive
Turning Point Brands (TPB) announced its second-quarter results and increased its 2020 guidance.
Net sales increased 12.5 percent to $105 million, and gross profit increased 16.8 percent to $48.1 million. Net income decreased $4 million to $9.2 million, reflecting the inclusion of expensing premarket tobacco product application (PMTA) costs incurred during the current quarter compared to the net gain related to a settlement from the V2 winddown in the previous year’s quarter. Adjusted EBITDA increased 24.8 percent to $22.8 million.
Absent any further acquisitions, the company projects 2020 net sales to be $370 million to $382 million (up from previous guidance of $338 million to $353 million). It projects 2020 adjusted EBITDA of $78 million to $83 million (up from previous guidance of $69 million to $75 million). Its projections assume no upside from the PMTA process in 2020.
July 28, 2020
Global Marijuana Market to Reach $73.6 billion by 2027

Credit: Sharon McCutcheon
The global market is seeing rapid growth. That growth is continue for the next several years according to industry market reports. The legal marijuana market size is expected to reach $73.6 billion by 2027, according to a new report published by Grand View Research.
It is anticipated to expand at a CAGR of 18.1 percent during the forecast period, the report states. Increasing legalization of cannabis for medical as well as adult-use is expected to promote the positive growth.
“On the basis of type, the medical segment held the leading revenue share of 71.0 percent in 2019, owing to the growing adoption of cannabis as a pharmaceutical product for treating severe medical conditions, such as cancer, arthritis, and Parkinson’s disease and Alzheimer’s disease among other neurological conditions,” the report states. “Moreover, increasing need for pain management therapies along with growing disease burden of chronic pain among elders is expected to boost the product demand.”
The report states that the legal marijuana flower (buds) segment accounted for the largest market share in terms of revenue and was valued at $9.1 billion in 2019, because of the products growing availability.
“Buds are primary plant products and are readily available without any processing, which makes them relatively affordable for low-income patients. Moreover, the rapid onset of action of smoking buds compared to other types is anticipated to further fuel the segment growth,” the report states. “Based on medical applications, the chronic pain segment dominated the legal marijuana market in 2019 owing to presence of a large patient pool. On the other hand, mental disorder application is expected to witness the fastest growth over the forecast period owing to the growing number of patients suffering from mental disorders, such as anxiety disorder, depressions, and Alzheimer’s disease.”
July 27, 2020
Pyxus Receives Major Support From Creditors for Plan

Pyxus International, a global value-added agricultural company, announced that its Prepackaged Plan of Reorganization of Pyxus International and its Affiliated Debtors was overwhelmingly approved by each class of creditors entitled to vote.
Of those that submitted ballots, holders of 100 percent of first lien notes (holding over $266 million of principal) and over 99 percent of the second lien notes (holding over $524 million of principal) voted in favor of the Prepackaged Plan.
In addition, on July 22, 2020, the Bankruptcy Court presiding over the company’s Chapter 11 cases approved the company’s entry into a commitment letter for a $75 million revolving credit facility to be provided by Sound Point Capital upon the effective date of the Prepackaged Plan, subject to satisfaction or waiver of certain conditions.
“The level of support from our first lien and second lien noteholders in favor of the Prepackaged Plan, and the commitment from Sound Point to finance the company’s go-forward working capital needs, reflects their collective confidence in our proposed restructuring transaction and future business strategy,” said Pieter Sikkel, Pyxus’ president and CEO. “The Company looks forward to working with its creditors and its other constituents to complete its restructuring process and emerge from the Chapter 11 in the near term.”
The hearing to consider approval of the Prepackaged Plan is scheduled for August 18, 2020 at 9:30 a.m. ET.
July 23, 2020
PMI Quarterly Results ‘Above Expectations’

Photo: Taco Tuinstra
Philip Morris International (PMI) has released its second-quarter results and reinstated its 2020 forecast.

Diluted earnings per share were down by 16.1 percent, and net revenues were down by 13.6 percent. Operating income was down by 14.3 percent.

Market share for heated-tobacco units in IQOS markets rose by 1.8 points to 6.3 percent.

“Despite a very challenging quarter due to the pandemic, we delivered results above our previously communicated expectations for both net revenues and reported diluted EPS,” said Andre Calantzopoulos, PMI’s chief executive officer.

“This primarily reflected favorable sequential performance in June, with a strong industry volume recovery—notably in the higher margin EU region—and substantial IQOS user acquisition growth as well as the benefit of certain nonunderlying factors, some of which we expect to reverse in the third quarter.”

PMI reinstated its 2020 full-year forecast after withdrawing it in April due to uncertainty surrounding the Covid-19 pandemic. The “forecast represents a projected increase of approximately 2 percent to 5 percent versus pro forma adjusted diluted earnings per share of $5.13 in 2019,” according to PMI.
July 21, 2020
Smoore Stock Soars Nearly 150 Percent on Opening Day

Smoore International stock (HK: 6969) grew by nearly 150 percent on its opening day of trading on the Hong Kong Exchange. After an initial public offering (IPO) of HK12.40, the stock closed at HK31.00 ($4) on Friday.
“As the global leader in offering vaping technology solutions, Smoore’s mission is to build the world’s leading vaping technology platform to bolster the innovation and development of vaping technology with a wide range of applications,” Cloris Li, a Smoore spokesperson, told Vapor Voice. “In the next three to four years, Smoore plans to invest more in improving production capacity and upgrading equipment, including setting up new manufacturing facilities and research institute of group level as well as installing automated production lines and IT equipment.”
According to Frost & Sullivan, a business consulting firm, Smoore is the world’s largest vaping device manufacturer in terms of revenue, accounting for 16.5 percent of the total market share in 2019. “In the past 14 years, we have been firmly grounded to focus on advanced R&D technology, strong manufacturing capacity, wide-spectrum product portfolio and diverse customer base. We are glad about what we have achieved and will take this as a new start,” said Li.
The Shenzhen-based company offered 574 million shares, according to the company’s prospectus, and had indicated the stock would be priced between HK$9.60 and HK$12.40 per share. According to an article by Reuters, Smoore had locked in 10 cornerstone investors which accounted for $340 million of the total raising, the prospectus showed. The largest of those investors were Huaneng Trust which took $80 million worth of stock, and Prime Capital which took $50 million, according to its prospectus.
“After being listed on the Hong Kong stock market, Smoore is probably going to be able to invest more in the R&D and application of heating technology, for instance, in the medical atomization arena,” said Li. “Meanwhile, we are able to better serve our clients and provide a better life for our employees. As a leader in this field, Smoore is also able to play a more important role in shaping the industry and the whole of society.”
July 10, 2020
Smoore Tallies $918 Million in Hong Kong IPO

Photo: Timonthy Donahue
Smoore International has raised $918 million in its initial public offering (IPO) at the Hong Kong Stock Exchange, reports Reuters. The deal is the largest IPO in Hong Kong since the start of 2020.
The Shenzhen, China-based firm offered 574 million shares, according to the company’s prospectus, and had indicated the stock would be priced between HKD9.60 ($1.24) and HKD12.40 per share.
The largest investors were Huaneng Trust, which took $80 million worth of stock, and Prime Capital which took $50 million, according to Smoore’s prospectus.
In 2019, Smoore reported a profit of CNY2.17 billion ($307.8 million), up from CNY733.9 million one year earlier.
Smoore is due to start trading on the Hong Kong Stock Exchange on Friday.
July 8, 2020
Pyxus to Delist From New York Stock Exchange

Photo: skeeze from Pixabay
The New York Stock Exchange (NYSE) has commenced proceedings to delist Pyxus International. Trading in Pyxus’ common stock has been suspended.
The NYSE determined that Pyxus is no longer suitable for listing under after the company filed for relief under Chapter 11 of the United States bankruptcy code. Pyxus does not intend to appeal the NYSE’s determination.
Pyxus’ common stock began to be quoted on the OTC Pink marketplace on June 17, 2020, under the symbol PYXSQ. Investors can find quotes for the company’s common stock on.
Pyxus does not expect a transition to the OTC Pink marketplace to affect the company’s operations.
“The company can provide no assurance that its common stock will continue to trade on this market, whether broker-dealers will continue to provide public quotes of the company’s common stock on this market, whether the trading volume of the company’s common stock will be sufficient to provide for an efficient trading market or whether quotes for the company’s common stock may be blocked by OTC Markets Group in the future,” Pyxus wrote in a statement.
June 22, 2020
Pyxus Files For Chapter 11

Photo: Darren4155 | Dreamstime.com
Pyxus International announced today that it and its subsidiaries, Alliance One International, Alliance One North America, Alliance One Specialty Products and GSP Properties, have filed voluntary petitions for relief under Chapter 11 of the U.S. bankruptcy code in the U.S. Bankruptcy Court for the District of Delaware as part of a “prepackaged” Chapter 11 Case.
In connection with the filing, the company entered into a restructuring support agreement (RSA) with noteholders holding more than 92 percent in principal amount of the company’s first lien notes and more than 67 percent in principal amount of its second lien notes. In addition, the company’s receivables financing lenders and certain key foreign lenders have granted waivers and amendments under their respective facilities, demonstrating significant global financial support for the company.
Under the terms of the RSA, Pyxus’ second lien noteholders will convert approximately $635 million of the company’s debt into equity or cash, and its first lien noteholders will, among other things, extend the maturity date of their existing notes by four years. To implement the financial restructuring contemplated under the RSA, the company commenced solicitation of a prepackaged Chapter 11 plan of reorganization and thereafter filed for Chapter 11 to restructure its debt and delever its balance sheet.
The prepack plan contemplates that all outstanding shares of Pyxus common stock and rights to acquire Pyxus common stock will be cancelled and each holder of outstanding Pyxus common stock will be entitled to receive its ratable share of $1 million in cash provided that such holder does not opt out of the third-party releases contained in the prepack plan or object to the prepack plan.
The Chapter 11 process does not include the company’s international subsidiaries or affiliates and Pyxus anticipates continuing to operate its worldwide operations in the ordinary course during the proceeding as it restructures its balance sheet. The terms of the restructuring contemplate paying, among others, all vendors and foreign lenders, in full.
In addition, Pyxus has secured commitments for a $206.7 million debtor-in-possession financing facility (DIP facility) from certain existing noteholders. Proceeds from the DIP facility will be used to refinance the company’s existing asset-based revolver, for working capital and general corporate purposes, and to pay expenses incurred in connection with the Chapter 11 cases. Subject to court approval, the DIP facility, combined with the company’s projected cash flows, are expected to provide liquidity to support its operations during the restructuring process, allowing the company to emerge with a strengthened balance sheet to complement its operations and future growth plans.
“This agreement with our noteholders represents a significant milestone in the ongoing process to transform our business as we continue to focus on driving long-term, sustainable growth and greater efficiency,” said Pieter Sikkel, Pyxus’ president and CEO. “We will continue to provide our customers with the quality products and services they are accustomed to without interruption and work with our business partners throughout the Court-supervised process. We also expect there will be no impact to vendors. As we look to quickly re-emerge from this process, we expect to be a stronger company, better able to execute on our long-term strategy and positioned for long-term growth and success.”
Simpson Thacher & Bartlett is serving as legal counsel, and Lazard and RPA Advisors are serving as financial advisors to Pyxus.
June 15, 2020
UAE Defers Ban on Vapor Products Sans Tax Stamp

Photo: Vitaliy Purtov | Dreamstime.com
The UAE’s Federal Tax Authority (FTA) has announced the postponement of the implementation of the ban on supplying, transferring, storing, and possessing electronic cigarettes without digital tax stamps until to January 1, 2021.
The ban was previously scheduled to come into effect from June 1, 2020, in line with phase two of the ‘Marking Tobacco and Tobacco Products Scheme’, the FTA said in a statement on Tuesday, according to the official news agency WAM. The ban also includes water pipe tobacco.
“This extension on the timeline provides them with seven additional months to prepare for the mandatory implementation of the ban,” said FTA director-general Khaled Ali Al Bustani, according to a story in gulfbusiness.com.
“It also comes in response to the concerns expressed by stakeholders in the tobacco sector, and their requests for such an extension that would allow them to sort out any issues resulting from the current difficult circumstances and the necessary precautionary measures that were enforced to prevent the spread of the novel coronavirus. The decision provides them enough time to sell off any remaining tobacco products that do not carry the digital tax stamps.”
As part of the Covid-19 pandemic, restaurants and cafes across the country were temporarily closed and hence there is an existing stockpile of water pipe tobacco and electrically heated cigarettes in the UAE.
“The FTA has consulted all relevant business sectors, as well as the operator of the Scheme’s electronic system, and reassured all stakeholders that it fully understands the difficulties brought on by the current crisis, asserting its commitment to minimising the impact of the ban on businesses, and encouraging them to comply with tax procedures and legislation,” added Al Bustani.
The UAE banned the import of electric cigarettes and water pipe tobacco without ‘digital tax stamps’ from March 1.
May 28, 2020
Pyxus Reportedly in Talks About Bankruptcy

Photo: Pyxus International
Pyxus International has reportedly begun talks with creditors regarding a possible bankruptcy filing, according to an article in the Wall Street Journal.
The filing is potentially related to declining cigarette consumption and the Covid-19 pandemic following the company’s struggle to make headway in the cannabis and vapor sectors.
May 20, 2020