Tag: Turning Point Brands

  • Sales, Profits See Massive Growth at Turning Point

    Sales, Profits See Massive Growth at Turning Point

    Stoker’s MST continued to grow share while FRE sales more than quadrupled versus last year’s quarter.

    Turning Point Brands (TPB) announced financial results for the third quarter ended Sept. 30, 2024.

    Total consolidated net sales increased 3.8 percent to $105.6 million compared to the third quarter of 2023. Zig-Zag product net sales increased 5.5 percent during the same period. Stoker’s product net sales increased 12.1 percent. Creative Distribution Solutions net sales decreased 17.4 percent.

    Gross profit increased 4 percent to $53.7 million compared to 2023. Net income increased 14.3 percent to $12.4 million. Adjusted net income increased 9.8 percent to $15.9 million. Adjusted EBITDA increased 11.3 percent to $27.2 million.

    “We were pleased by our third-quarter results,” said TPB president and CEO Graham Purdy in a statement. “We believe Zig-Zag is on a sustainable growth trajectory. Stoker’s MST continued to grow market share while FRE sales more than quadrupled versus year-ago and grew 26 percent sequentially as we continue to expand our national footprint.”

  • Turning Point Announces Second Quarter Results

    Turning Point Announces Second Quarter Results

    Photo: David

    Turning Point Brands (TPB) announced financial results for the second quarter ended June 30, 2024.

    Total consolidated net sales increased 2.8 percent to $108.5 million compared to the previous year period. Zig-Zag product net sales increased 8 percent. Stoker’s product net sales increased 18.5 percent. Creative Distribution Solutions (CDS) net sales decreased 33 percent. Gross profit increased 2.6 percent to $53.8 million. Net income increased 31 percent to $13 million. Adjusted net income increased 12.2 percent to $17.2 million. Adjusted EBITDA increased 6.9 percent to $27 million.

    “We were pleased by our second-quarter results,” said President and CEO Graham Purdy in a statement. “We achieved our highest quarterly EBITDA since the second quarter of 2021. We believe Zig-Zag is on a sustainable growth trajectory, and Stoker’s MST continues to grow market share. In addition, sales of FRE, our modern oral nicotine pouch, grew 76 percent sequentially as we continue to expand our national footprint.”

    The company is increasing its previous full-year 2024 adjusted EBITDA guidance from $95 to $100 million to $98 to $102 million, which excludes CDS.

    For the second quarter, CDS net sales were $15.3 million, gross profit was $3.4 million and gross margin was 22.5 percent.

  • Turning Point Brands Hires Flynn to Fill CFO Role

    Turning Point Brands Hires Flynn to Fill CFO Role

    Credit: Motortion

    Turning Point Brands has announced the appointment Andrew Flynn as the company’s new Chief Financial Officer, effective on or before April 1, 2024.

    Flynn is replacing Louie Reformina, who will step down to pursue other opportunities, according to a Turning Point press release.

    “Andrew has led key initiatives across all areas of finance and broader strategic planning throughout his career,” said Graham Purdy, Turning Point Brands president and CEO. “His diverse operating background and industry expertise ideally positions him to help us maximize the value of our brands, continue to modernize our organization, and grow our free cash flow.”

    Prior to joining Turning Point Brands, Flynn served as the CFO of Connected Cannabis Co. where he was responsible for bringing sustained profitable growth, expanding geographically and recapitalizing the company. Before joining Connected, Flynn served as Sr. vice president of Juul Labs.

    “Turning Point Brands is one of the most innovative and well-capitalized companies in the industry. TPB’s iconic Zig-Zag and Stoker’s brands and market-leading distribution platform set it apart in this rapidly evolving space,” said Flynn. “As CFO, I look forward to working with the Board and management team to maximize long-term shareholder value.”

  • Kaival Brands Group Changes Top-Level Leadership

    Kaival Brands Group Changes Top-Level Leadership

    Credit: Mia B

    Kaival Brands Innovations Group, parent to Bidi Vapor, today announced the promotion of Eric Mosser, its current president and chief operating officer, to the position of CEO. Mosser brings over a decade of senior leadership experience, including since 2020 at Kaival Brands. Mosser will retain the position of president, according to a press release.

    The company also also appointed Thomas J. Metzler as the company’s chief financial officer (CFO), treasurer and secretary, effective as of August 1, 2023, replacing Mark Thoenes, who has served as Interim CFO since 2021.

    Metzler brings over 20 years of finance and operational experience in the vaping and consumer products sector, previously serving as managing director of a division of Turning Point Brands.

    At Turning Point Brands, Metzler led a team to transform the process of financial management efficiencies, which improved cost controls, managed inventory turn, developed strategic product promotions to accelerate product distribution, and built strategic alliances with suppliers.

    “We are very excited to have Tom join our senior management team and believe his hiring represents a key building block for the future of Kaival Brands, said Mosser. “Tom brings to us a wealth of experience and knowledge across all of the key elements of the CFO’s office including treasury, finance, and accounting.

    “He also has tremendous knowledge of business operations in our industry and will therefore greatly contribute to the crafting and implementation of our growth plans. On behalf of our board of directors, we welcome Tom and give thanks to Mark Thoenes for his excellent work as our interim CFO the past few years.”

  • Turning Point Releases Second-Quarter Results

    Turning Point Releases Second-Quarter Results

    Image: Tobacco Reporter archive

    Turning Point Brands (TPB) announced financial results for the second quarter ended June 30, 2023.

    Total consolidated net sales increased 2.6 percent to $105.6 million compared to the second quarter of 2022. Zig-Zag Products net sales increased by 1.1 percent. Stoker’s Products net sales increased by 7.3 percent. Creative Distribution Solutions net sales decreased by 1.3 percent. Gross profit increased 2 percent to $52.5 million, and net income increased 83 percent to $9.9 million. Adjusted net income increased 8.4 percent to $15.3 million.

    “Our second-quarter results demonstrated continued progress against our plan,” said TPB President and CEO Graham Purdy in a statement. “The Zig-Zag segment grew double-digits sequentially from the first quarter as trade inventory normalized. Stoker’s had another solid quarter of performance led by double-digit growth in Stoker’s MST [moist smokeless tobacco]. We opportunistically purchased another $15.1 million in aggregate principal amount of our convertible notes during the second quarter while maintaining a strong cash balance. Given our solid first-half performance, we are raising our guidance for the full year.”

    For the second quarter, Zig-Zag Products net sales increased 1.1 percent to $46.7 million. TPB’s Canadian and other smoking accessories businesses saw strong growth during the quarter, which was partially offset by declines in the U.S. rolling papers and wraps businesses.

    For the quarter, the Zig-Zag Products segment gross profit was steady at $26.4 million. Gross margin declined 60 basis points to 56.6 percent, driven primarily by product mix.

    “Our e-commerce business had another quarter of double-digit growth as we continue to build our omnichannel presence,” said Purdy. “We remain encouraged by our prospects with secular cannabis consumption growth trends driving demand for our products.”

    For the second quarter, Stoker’s Products net sales increased 7.3 percent to $36.1 million. Double-digit growth of MST offset a decline in loose-leaf chewing tobacco. For the second quarter, total Stoker’s Products segment volume increased 0.7 percent while price/mix increased 6.6 percent.

    For the quarter, the Stoker’s Products segment gross profit increased 10.4 percent to $20 million. Gross margin expanded 160 basis points to 55.4 percent due to MST pricing gains.

    “Stoker’s continues to benefit from 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.

  • Net Sales Down 6.8% at Turning Point Brands

    Net Sales Down 6.8% at Turning Point Brands

    Turning Point Brands reported consolidated net sales of $103.4 billion the fourth quarter of 2022, down 1.8 percent from the comparable 2021 quarter. Gross profit decreased 1.5 percent to $49.6 million. Net sales for the Zig-Zag and Stoker products increased 0.9 percent and 2.6 percent, respectively, while sales of new-generation products declined by 11.1 percent.

    For the full year, consolidated net sales decreased by 6.8 percent to $415 million. Gross profit was down 5.6 percent to $205 million. Net sales for Zig-Zag and Stoker’s products increased 7.9 percent and 5.3 percent, respectively, while sales of new generation declined by 35.2 percent

    “The fourth quarter operating results finished in-line with our expectations with solid execution across our segments,” said TPB President and CEO Graham Purdy in a statement.

    “The Zig-Zag segment grew during the quarter despite the impact of a previously disclosed pull-forward in the prior quarter, benefitting from continued market share gains and the contribution from a full quarter of CLIPPER lighters. We are pleased with the ongoing roll-out and strong channel receptivity to the world’s No. 1 reusable lighter. Stoker’s MST experienced strong share gains as consumer trade-downs to value accelerated, consistent with the current inflationary and economic backdrop.

    “The challenging regulatory environment continues to negatively affect the NewGen segment which was down materially vs. 2021, but with declines moderating in the back half of the year. In addition to returning capital to our shareholders through share repurchases, we opportunistically purchased $10 million notional of our convertible notes during the fourth quarter while maintaining a strong cash balance.

    ”Over the last few months since taking on the CEO role, my primary objective has been to re-direct our focus and energy towards driving organic long-term growth. This starts with allocating resources to products, initiatives, and channels best positioned towards this goal. Our organization is now better aligned towards capitalizing on the opportunities in front of us and we look forward to delivering against our long-term plans going forward.”

  • Turning Point Brands Reports Quarterly Results

    Turning Point Brands Reports Quarterly Results

    Photo: crizzystudio

    Turning Point Brands (TPB) reported net sales of $107.8 million for the third quarter ended Sept. 30, 2022, down 1.9 percent.

    Net sales for Zig-Zag and Stoker’s products increased 23.3 percent and 10 percent, respectively, while  net sales for new generation products declined by 40.3 percent. Gross profit decreased 2.9 percent to $52.7 million and net income decreased 14.3 percent to $11.5 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,” said TPB President and CEO Graham Purdy in a statement.

    “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

    “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.”

  • Purdy Appointed as CEO of Turning Point Brands

    Purdy Appointed as CEO of Turning Point Brands

    Turning Point Brands announced the appointment of long-tenured company executive Graham Purdy as CEO and board director, effective October 16, 2022, following Yavor Efremov’s resignation as CEO and director.

    Additionally, David Glazek will transition from non-executive to executive board chairman, effective January 2023, according to a press release.

    Purdy will lead TPB’s strategy, execution, and operations, with a particular focus on growing and maximizing the value of the company’s portfolio of iconic and emerging brands. Prior to his appointment as CEO, Purdy served as chief operating officer since 2019.

    Purdy previously led day-to-day operations during the COVID-19 pandemic, managing through complex challenges to the business while completing three of the most successful years in the company’s history.

    “I am excited to serve as Turning Point’s next CEO and drive the company’s strategic priorities to enhance shareholder value,” said Purdy. “Over the past three decades, Turning Point has built a leading industry position through our portfolio of large and leading brands, innovative marketing, and omni-channel distribution capabilities, along with our strong track record of new product innovation.

    “I look forward to working with our highly talented team to continue to build a world-class consumer products company for the benefit of our employees, customers, and shareholders.”

  • Summer Frein Joins Turning Point Brands as CMO

    Summer Frein Joins Turning Point Brands as CMO

    Turning Point Brands has hired former Cronos executive, Summer Frein, as its Chief Marketing Officer. Effective immediately, Frein is responsible for driving Turning Point Brands’ marketing strategy across the company’s extensive brand portfolio.

    Yavor Efremov, president and CEO of Turning Point Brands

    “As Turning Point Brands continues to transform into a more diversified consumer packaged goods company, Summer’s vast experience leading the planning, strategic development and execution for notable consumer brands will be extremely valuable,” said Yavor Efremov, president and CEO of Turning Point Brands. “I look forward to working closely with Summer as she helps our team to improve our differentiated, world-class brands’ profile and consumer acceptance.”

    Frein previously served as general manager at Cronos Group where she designed and implemented the company’s sales and marketing strategy, according to a press release. Frein also previously led Cronos Group’s U.S. brand sales operations, including building and managing brand and retail partnerships for the Lord Jones and Happy Dance brands.

    Prior to joining Cronos Group, Frein held a variety of senior leadership roles at Altria Group, Inc., across sales, digital and brand marketing, strategy and business development. Notably, in 2018, she led Altria’s cannabis research investment initiative as part of Altria’s strategy and business development group.


    Credit Momius

    “Over the course of my 15-year career, I have worked with leading adult-use consumer brands on many different sides of the business and watched Turning Point Brands evolve into the leading Company that it is today,” said Frein. “This new opportunity will allow me to work with the dynamic team at Turning Point Brands to develop a long-term marketing strategy and help to fully unlock the value of the Company’s iconic Zig-Zag and Stoker’s brands.”

  • Eye of the Tiger

    Eye of the Tiger

    Photo: byrdyak

    Turning Point Brands is embracing next-generation tobacco and alternative products by taking calculated risks.

    By Timothy S. Donahue

    It’s hard to argue the success of Turning Point Brands (TPB). In business since 1988, during the past decade, the company has been turning the typical tobacco business model on its head. It is involved in almost all aspects of the industry, generating nearly $450 million in sales every year. From its iconic brands like Zig-Zag to its more recent investments in the growing legal cannabis industry, TPB is turning heads.

    Headquartered in Louisville, Kentucky, USA, TPB’s business includes three operating segments. Its main line of revenue comes from its “smoking” segment, which includes the rights to the Zig-Zag brand in the U.S. and Canada, according to Scott R. Grossman, TPB’s vice president of corporate development. Zig-Zag is one of the oldest, most recognized “other tobacco products” (OTP) and cannabis accessory brands. “Founded over 150 years ago, Zig-Zag holds the No. 1 share of both rolling papers and wraps in North America, and its products can be found in more than 200,000 retail outlets,” says Grossman. “Given that Zig-Zag generates roughly 40 percent of TPB’s revenue and a majority of our operating income, the brand and its growth initiatives are a major focus for us.”

    TPB’s second segment is “smokeless,” which is predominantly the Stoker’s brand, a leading player in the moist snuff tobacco and chewing tobacco markets. The company also owns the Beech-Nut brand and a diverse collection of other chewing tobacco products. Another compelling segment of the TPB operation is its new generation of products (NewGen), which covers the company’s electronic nicotine-delivery system (ENDS) and cannabis brands.

    NewGen includes an assortment of brands serving multiple industry segments, such as TPB’s business-to-business (Vapor Beast) and business-to-consumer (International Vapor Group) distribution platforms and its new product engine, Nu-X Ventures. The company has online platforms under brand names such as VaporFi, South Beach Smoke and DirectVapor. TPB also owns the e-liquid brand Solace and within its NewGen segment includes recent minority investments in the emerging cannabinoid space, including brands such as Old Pal, Dosist, Docklight and Wild Hemp.

    TPB was one of the first traditional tobacco companies to publicly announce its foray into the legal cannabis market. That decision came under the leadership of TPB’s former president and CEO, Larry Wexler, who retired from the company and was succeeded by Yavor Efremov on Jan. 11. “Larry took the company public in 2016 as an OTP business, and over the next five years, he successfully drove significant initiatives to drive value, including the investment in new talent to drive TPB forward,” says Grossman. “We’ve been strategically focused on introducing new products to serve both B2B and B2C customers across on-premise retail and online channels.”

    Yavor Efremov

    Bump in the Road

    Being a business with major assets in ENDS comes with challenges. TPB was one of the first major companies to receive a marketing denial order (MDO) from the U.S. Food and Drug Administration after the agency’s Sept. 9, 2021, deadline to decide on premarket tobacco product applications (PMTAs). Convinced that the FDA’s decision was unjustified, TPB immediately filed a legal challenge. Before the lawsuit made its way through the courts, the FDA rescinded the MDO it issued to TPB. The term “Fatal Flaw” was used by the FDA for PMTA submissions that lacked certain studies. The term has been at the center of nearly all lawsuits filed against the FDA for its handling of the PMTA process.

    “The Fatal Flaw standard is obviously one that departs from the pre-September 2020 guidance. In fact, it’s in direct conflict with that guidance. It’s helpful that [our MDO] was rescinded and that the agency admitted it had not reviewed certain [TPB] studies,” explains Paul Blair, TPB’s vice president of government affairs, adding that TPB made the decision to file suit because there was information that the regulatory agency overlooked in its review process. TPB wasn’t unique in that respect; however, the agency didn’t look at specific study data for several businesses.

    “[The rescission] is an important recognition that our denial was not related to nitpicking over data. The science we submitted about transitioning combustible cigarette consumers to our products in particular … It was an oversight. And that’s helpful not only as we try to navigate the process moving forward but also because it doesn’t seem it was an attack on the body of our application generally,” explains Blair. “We maintain that we provided data that is sufficient for the agency to authorize the marketing of our PMTAs. It’s fair to say, though, there’s not a publicly announced standard for the approval process, whether it’s for open system products, closed system products, flavors and, honestly, even tobacco and traditional flavored products.”

    That’s what Blair believes the FDA is doing now; the agency is probably reviewing its communications plan on how to reassess the PMTA process and come to some conclusions on deciding on a standard for authorizing products. Traditionally, the FDA would engage in good faith conversations with businesses trying to get products approved and offer some clarity on what information the agency needs. According to critics, the FDA’s Fatal Flaw analysis for ENDS products proved this isn’t the case anymore.

    Paul Blair

    Embracing Change

    Unlike most traditional tobacco companies, TPB isn’t shy about its cannabis investments. The company’s management team and its board have embraced legalization, according to Grossman. Currently, 37 U.S. states have legalized medical cannabis and 18 have approved it for recreational use. During the past few years, the company has invested in several cannabis operations. In 2021, TPB completed an $8 million strategic investment in Old Pal Holding Co., a cannabis lifestyle brand, and an $8.7 million strategic investment in Docklight Brands, a consumer products company led by its anchor brands Marley Natural and Marley CBD. In 2020, TPB entered into a long-term distribution and profit-sharing arrangement with Wild Hempettes, the Texas-based manufacturer of Wild Hemp Hempettes brand smokable CBD, and made a $15 million strategic investment in the global cannabinoid company Dosist.

    Grossman says that while every investment needs to be able to stand on its own, TPB’s strategy is focused on finding highly synergistic companies that strengthen the current TPB platform. Old Pal is a good example of how its strategy is being deployed—Old Pal sells roll-your-own (RYO) cannabis products with rolling papers inside the packaging. “Zig-Zag has historically been mainly focused on the convenience store channel, so this investment enables TPB to further accelerate growth in under-indexed stores such as dispensaries and head shops while supporting the growth of Old Pal,” says Grossman.

    In August, TPB made its first move into the international market by increasing its stake in ReCreation Marketing, a Canadian distribution company with ties to Canada’s recreational cannabis culture. In December, ReCreation Marketing rebranded as Turning Point Brands Canada. “TPB Canada has a number of proprietary branded products in its portfolio, and we are exploring strategies to leverage that proven model and its portfolio to increase distribution within the U.S.,” says Grossman. “We are one of a select group of established companies—especially public companies—that are actively looking to deploy capital in the cannabinoid space. Historically, we’ve been predominately focused on brands given our expertise, but we’re exploring many verticals within the cannabinoid sector. Our pipeline is very healthy, but at the same time, we have to remain highly disciplined with how we spend our time and capital.”

    It’s not just vaping and cannabis products in TPB’s future. In July, the company acquired certain cigar assets of Unitabac. The acquisition was for a portfolio of cigarillo products and all related intellectual property, including cigarillo non-tip, homogenized tobacco leaf, rolled leaf and natural leaf cigarillo products. “The cigar business is a $2.5 billion wholesale business in the United States. We’ve historically participated in that market, but we didn’t have the scale necessary to be really competitive. The Unitabac acquisition allows us to further extend into the cigar market,” says Grossman. “You’ll see a number of initiatives with that asset rolling out natural leaf products and other cigar assets, both under the Unitabac portfolio of brands as well as extending it to Zig-Zag.”

    Scott Grossman

    Facing Uncertainty

    The FDA will soon have a new leader (Biden’s appointee, Robert Califf, had yet to be confirmed at press time). The FDA’s Center for Tobacco Products (CTP) will also have a new leader; its current director, Mitch Zeller, plans to retire in April. Blair says that the individuals in those positions will have a significant role to play in determining how the agency and CTP will work with stakeholders and communicate policies about how those regulations will go into effect. The FDA, he says, doesn’t have any previous experience regulating vaping products, so there is going to be a lot of action, reaction and learning along the way.

    “It’s not as if Congress explicitly wrote how the approval or denial process might look. In fact, they didn’t write the details,” says Blair. “At least [the FDA is] thinking about the process, and they’re thinking about the consequences. But there is this opportunity beyond vapor product PMTAs in 2022 for a future generation of products to have some certainty because at the end of this, whether it’s because of litigation, because it’s further issued guidance, because it’s approvals or denials, there will be a pathway for companies and a better understanding of how the process works.”

    Blair says that overcoming the challenges of getting a PMTA approved will be stepping stones toward determining how the company approaches the future regulation of other products, such as cannabis. He says there is a real opportunity for TPB to play a critical role in the future of cannabis regulation and policy. “I think our action is going to be guided by our business’ experience as a regulated tobacco business. There are other tobacco businesses that have cannabis interests or investments, but there aren’t many that are willing to publicly engage in the way that ours is as an advocate for legalization, as an advocate for appropriate regulations. There needs to be a balance of consumer protection with entrepreneurship and opportunities in the investment space.”

    Grossman says the future of TPB is to align itself with the growth of the cannabinoid industry and possibly make more direct cannabis investments outside its current portfolio. “We are concentrated on trying to learn and execute on a variety of cannabinoid initiatives,” he says. “Although we’ve historically focused on brands, we are deeply embedded in the sector and are actively studying many verticals across value-added products and services, brands and distribution. We believe the U.S. cannabis market will exceed $50 billion over the next five to 10 years, which we clearly think will benefit TPB over the long term.”

    Timothy Donahue is the managing editor of Vapor Voice. Since helping start the magazine in 2014, he has become an expert and well-respected voice in the rapidly evolving vapor industry. Tim spends much of his time on the road, attending conferences and interviewing industry representatives. His networking skills, work ethic and quick mind are valuable assets to the industry’s diverse audience.