Turning Point Brands (TPB) announced the proposed private offering of $250 million aggregate principal amount of its senior secured notes due 2026. The notes will bear cash interest semi-annually beginning in 2021. The notes will be TPB’s senior secured obligations and will be guaranteed on a senior secured basis by each of TPB’s wholly owned domestic subsidiaries (except for certain specified subsidiaries).
TPB intends to use the proceeds from the offering to repay all obligations under and terminate its existing term loan and revolving credit facility; to pay related fees, costs and expenses; and for general corporate purposes. The offering is subject to market conditions.
TPB also announced that in connection with the offering, it intends to enter into a new $25 million senior secured revolving credit facility. The offering is not conditioned on the entry into the revolving credit facility.
In connection with its proposed offering, TPB announced certain preliminary operating results for the fourth quarter and full year ended Dec. 31, 2020.
TPB estimates that for the fourth quarter of 2020 net sales will be between $103.5 million and $105.5 million, income before taxes will be between $16 million and $17 million and adjusted EBITDA will be between $25 million and $26 million. Each of net sales and adjusted EBITDA will be near or above the high end of TPB’s previously disclosed guidance for the fourth quarter of 2020. TPB plans to release its full year end 2020 financial results on Feb. 10, 2021.
The company will hold a conference call to review fourth quarter and fiscal year 2020 results on Feb. 10.
The global e-liquid market is growing quickly. New data suggests that the market could reach $3.3 billion by 2027. According to a new study by Grand View Research, the market is expected to expand at a CAGR of 13.4 percent from 2021 to 2027.
Credit: Vaporesso
“The advent of e-cigarette products such as squonk mods and pod systems has increased its popularity and adoption in recent years. The rising demand for these products globally is expected to drive the market over the forecast period,” a press release states. “In addition, the general presumption that these products can reduce the risk of lung disorders is fueling the market. Moreover, the absence of the tobacco burning process that is often found in conventional smoking products is expected to drive the market in the near future.”
In terms of flavor, the menthol segment is anticipated to register the highest growth rate over the forecast period owing to increasing adoption among young people, especially in students, coupled with its availability at affordable prices, according to the report.
“In terms of type, the bottled segment is expected to register growth at a significant pace from 2021 to 2027. This can be attributed to the fact that bottles allow users to make their own e-juice by adding two or more e-liquids,” the report states. “In terms of distribution channel, the online segment is anticipated to register a significant growth rate over the forecast period as it provides customers with a wide variety of e-liquids.”
Regionally, Europe is anticipated to register notable market growth from 2021 to 2027. This can be attributed to rising awareness among individuals about the tobacco-free formulation of e-liquids, according to the report.
“Market players are focusing on mergers and acquisitions, collaborations, and partnerships in order to expand their distribution networks and build an international presence for their brands,” the reportstates. “For instance, in January 2018, Nicopure, a manufacturer of e-cigarette and e-liquid, announced a partnership with Vapоr Ltd., a distributor of e-cigarette and e-liquid in Bulgaria. Nicopure appointed Vapоr Ltd. as one of its distributors in Bulgaria. The partnership allowed the former to expand its brand presence in Bulgaria.”
Key players are increasingly investing in the marketing and distribution of their products owing to rising competition in the market. For instance, in July 2019, Turning Point Brands, Inc., a manufacturer, and distributor of consumer products, invested $3.0 million in the Canadian distribution firm ReCreation Marketing. Through the ReCreation Marketing platform, the company launched RipTide, an e-liquid vape technology, and a variety of Nu-X products in Canada.
Turning Point Brands (TPB) has declared a regular quarterly dividend of $0.05 per common share. The dividend is payable on Jan. 8, 2021, to shareholders of record on the close of business on Dec. 18, 2020, the company announced in a statement.
TPB manufactures, markets and distributes branded consumer products with active ingredients through its Zig-Zag and Stoker’s core brands and its emerging brands within the NewGen segment.
The company’s products are available in more than 210,000 retail outlets in North America and on various websites.
A $15 million strategic investment in leading global cannabinoid company Dosist was announced today by Turning Point Brands (TPB). The manufacturer, marketer and distributor of branded consumer products said the agreement includes an exclusive co-development and distribution agreement of a new national CBD brand, created in partnership with Dosist’s THC-free business unit.
Additionally, TPB has an option to invest another $15 million at predetermined terms within the next 12 months.
“The cannabis market is exploding and now is the opportune time to invest in the space and significantly expand our addressable market. With its leadership in results-oriented plant-based formulas and dose control technology, global recognition, consumer trust and scalability, Dosist was the clear choice to be our new partner in this critical growth market,” said Larry Wexler, president and CEO of TPB. “We couldn’t be more pleased to enter into this agreement with Dosist, to not only help fuel its exciting new business and co-create a completely new CBD brand for our retail partners, but also to leverage their expertise as a marketing powerhouse to help build the future of both our companies.
Gunner Winston, CEO of Dosist, a pre-eminent and globally recognized cannabis brand, said his team is extremely proud to partner with TPB on its next phase of growth and distribution. “Turning Point’s leadership team has demonstrated remarkable foresight and vision about the future and opportunity for federally legal cannabinoid products,” said Winston. “The synergy between our brands around this scope and mission is incredible and we are excited by what we will achieve together with this partnership.”
Turning Point Brands (TPB) increased its net sales 7.6 percent to $104.2 million. The manufacturer, marketer and distributor of branded consumer products today announced financial results for its third quarter ended September 30, 2020.
“While we still expect short-term disruption related to the [premarket tobacco product application] PMTA process to impact our fourth quarter, the extensive portfolio of products submitted through the PMTA process has us increasingly optimistic about our outlook going forward as the market consolidates,” said Larry Wexler, TPB president and CEO.
Highlights from the report include gross profit increase of 12.8 percent to $48.3 million and a net income increase of $1.5 million to $7.8 million, despite costs associated with PMTA submissions.
“Streamlining and repositioning the business at the end of 2019 has paid dividends throughout 2020. The NewGen [next generation tobacco products] segment navigated admirably through significant market disruption caused by the PMTA application deadline,” said Wexler. “Overall, we are seeing ongoing benefits from re-shaping our business towards a more growth-oriented mindset and are able to raise our outlook once again for the remainder of the fiscal year.”
Financial analysts are now falling in love with Turning Point Brands (TPB). The company’s stock, TPB, now has at least three analysts covering the stock and the consensus rating is “Buy.” The company has submitted premarket tobacco product applications (PMTA) for 250 products.
The target price ranges between 50 and 39 calculating the mean target price of 42.67, according to data from seekingalpha.com. TPB’s share price reflects a potential upside of approximately 30 percent based on the underlying business with additional “upside optionality” from each of the opportunities noted above.
Reasons for the growth include recent U.S. Food and Drug Administration (FDA) regulatory intervention that “creates multiple market share ‘land grab’ opportunities for TPB as non-compliant competitors are forced to exit the marketplace. There are also new growth initiatives for the smokable CBD segment through product introductions (e.g., cones, hemp paper) and entry into alternative growth channels (e.g., headshops, dispensaries and e-commerce) in both US and Canadian markets,” according to seekingalpha.
“The NewGen division represents TPB’s growth engine and platform focusing on developing, testing, acquiring and investing in high-growth new proprietary businesses,” writes the author. ” While it is the largest revenue segment, it currently includes mostly lower margin third-party products sold through online distribution channels. As the product mix shifts towards proprietary products, the gross margins will rise to proprietary standard margins of 50%+ without impacting costs.”
Turning Point Brands (TPB) has entered into an agreement with Wild Hempettes, LLC, the Texas based manufacturer of Wild Hemp Hempettes brand smokeable CBD.
The agreement involves long-term distribution and profit-sharing arrangement with TPB to widen national distribution of the Hempettes brand across specialty tobacco and convenience retail in the USA, according to a press release.
“With growing interest in smokable hemp products among adult consumers across the country, the ability to expand the Hempettes brand through this unique distribution partnership, and investment stake in our company with Turning Point Brands, is a huge endorsement of both the quality of our products, and clear recognition of the customer demand and loyalty we have created for the Wild Hemp Hempettes brand,” says Zain Meghani, CEO of Wild Hempettes. “The Hempettes brand has been steadily growing since its initial 2018 brand launch by Crown Distributing, and its popularity is directly reflected in adult consumer interest in high content CBD smokable hemp products that offer alternatives to traditional tobacco, nicotine and other recreational smoking products,” adds Meghani.
The company expects TPB to distribute Wild Hemp products through TPB’s 210,000 retail points of sale. All Hempettes wholesale and retail accounts will be transitioned to TPB immediately, and other Wild Hemp branded products, such as the tinctures, tonics, gummies, vape and hemp wrapper products will continue to be sold to customers through Crown Distributing and the America Juice Company.
Turning Point Brands (TPB) has submitted to the U.S. Food and Drug Administration (FDA) premarket tobacco product applications (PMTAs) for 250 products.
The PMTAs cover a broad assortment of products in the vapor category including multiple proprietary e-liquid offerings in varying nicotine strengths, technologies and sizes. They also include proprietary replacement parts and components of open system tank devices, along with a closed system e-cigarette.
According to TPB, the filings provide detailed scientific data to demonstrate that the products are “appropriate for the protection of public health,” as required by law.
The applications are supported by five pharmacokinetics studies, a likelihood-of-use study, and a patterns-of-use study, in addition to a toxicological review. Data throughout the applications underline that TPB products do not appeal to never users, youth or former users; that an extremely small percentage of users are never users, youth, or former users; that a significant majority of users have completely ceased use of combustible cigarettes; that a low percentage of users engage in dual or poly use; and that the products are substantially less harmful than combustible cigarettes and comparable to other products in the vapor category.
TPB has also provided a detailed marketing plan to illustrate how it will continue to prevent youth exposure to the products.
“We look forward to engaging with the FDA as it reviews our submissions,” said Larry Wexler, president and CEO of TPB.
Turning Point Brands (TPB) has appointed Brittani Cushman as general counsel, effective Oct. 31. James Dobbins, TPB senior vice president, general counsel and secretary, will retire that day following more than 20 years leading the company’s legal and governance functions.
Cushman currently serves as senior vice president of external affairs in the company’s legal department. She joined TPB as director of external affairs in 2014. During her tenure with the company, Cushman has been a key driver of initiatives related to the company’s policy strategy and regulatory filings along with advising on significant acquisitions, TPB wrote in a statement. Prior to joining TPB, Cushman served as general counsel at a privately held tobacco product manufacturer.
“James has been an invaluable resource for our growing organization during his tenure with the company, including the successful initial public offering in 2016,” said Larry Wexler, president and CEO of TPB. “The board of directors and executive team thank James for his leadership and service to the company. I am particularly pleased that he has agreed to remain with the company in a consulting role.”
Cushman will assume the role of deputy general counsel immediately, working with Dobbins to ensure a seamless transition ahead of his departure.
“Brittani has been a critical piece of our leadership team,” Wexler commented. “Since joining the company, her unique skillset and forward-thinking contributions have strengthened the business. Brittani’s ability to diagnose and respond to evolving legal landscapes will be a significant factor to our continued success.”
Several vapor companies have stepped up during the Covid-19 crisis to help the communities they serve.
By Timothy S. Donahue
The vapor industry has produced millions of bottles of hand sanitizer during the Covid-19 pandemic. Several e-liquid manufacturing companies redesigned their production lines to help replenish one of the most-needed products since safety protocols to help slow the virus began in March. Manufacturers and retailers then donated much of the product to frontline organizations in need such as hospitals, police departments and nursing homes across the U.S.
Turning Point Brands (TPB) was one of the first companies to start producing hand sanitizer. The company said it expected to produce 6,600 liters of hand sanitizer for hospitals and retirement communities. TPB repurposed select manufacturing infrastructure to produce the free hand sanitizer for communities in California, Kentucky and Tennessee, according to the company.
“Our company takes very seriously our role in providing support to the communities where we operate. We hope that through this action we can both help those impacted by the Covid-19 situation and inspire others to act,” said Larry Wexler, president and CEO of TPB.
E-Liquitech was another company that repurposed infrastructure to produce hand sanitizer. George Cassels-Smith, president of E-Liquitech, said that his company teamed up with bottling partner C&C Bottling, which also manufactures several over-the-counter drugs. “We are producing about 11,000 gallons of hand sanitizer a day, six days a week,” said Cassels-Smith. “We had some extra equipment as well that we are using strictly for sanitizer production.”
Maryland-based E-Liquitech donates several hundred gallons of hand sanitizer to local hospitals in Maryland every week. The company plans on continuing to produce hand sanitizer and has now teamed up with several major distribution companies in order to resupply depleted store shelves. Cassells-Smith says it was just the right thing to do.
“There was a need and we had the ability to help out, so we put a plan in place and acted on it,” he says. “You are going to see people cleaning their hands with hand sanitizer for a long time. It’s going to be the new normal.”
In Virginia, Avail Vapor donated more than 5,000 masks to the Virginia Department of Emergency Management to help medical professionals on the frontlines of the coronavirus battle protect themselves.
James Xu, CEO and chairman of Avail, said that the idea came to light early in the pandemic when Avail employees heard about the shortage of masks in China when Covid-19 initially struck. Avail works closely with many Chinese suppliers, and Avail employees wanted to support these suppliers in their time of need. When the virus began impacting the United States, those same Chinese colleagues returned the generosity and shipped thousands of masks to Avail head-quarters for employees and healthcare workers.
“To be successful, our business has always been highly collaborative with global partners,” said Xu. “To see our employees proactively answer a need for their Chinese counterparts was special. Now we are so grateful to our Chinese friends for helping us defend our citizens in this pandemic.”
LCF Labs, a Southern California-based e-liquid manufacturer, also began producing sanitizer. The company donated 100,000 bottles and is co-packing up to 20 million bottles with a distributor for Costco, Walgreens and other large retailers. River Supply Company has produced 10,000 bottles of hand sanitizer to date for local hospitals and nursing homes in California. Mr. Salt-E donated 10,000 bottles to e-liquid manufacturers that are producing hand sanitizer.
In Ohio, James Jarvis, who owns three vape shops, donated several hundred bottles of hand sanitizer to local police departments. Jarvis said that recipients of the sanitizer were genuinely pleased and excited. Tony Abboud, executive director for the Vapor Technology Association (VTA), a vapor industry advocacy group, says that his organization was informed of numerous examples of the vapor industry joining together to combat the coronavirus.
“[The] VTA has been working to support our member companies, which have stepped up to manufacture, bottle and distribute much needed hand sanitizer throughout our communities. [The] VTA is working with its members to source additional materials to further expand the great work already being done,” said Abboud in an email. “We are all in this together, and we are so proud of the way our community has rallied together to help get our nation through this public health crisis.”
Several China-based manufacturers also donated supplies to those in need. Relx Technology announced the extension of the Relx “For You With Care” project to support its inter-national partners during the Covid-19 crisis. Relx initially sent 78,200 masks and over 515 gallons of hand sanitizer to its global distributors, partners and store owners.
Credit: Praveen Kumar
“Relx is wholly committed to supporting the well-being of our employees, partners and store owners during the Covid-19 pandemic. As a global startup, we are doing what we can to help our global community. We hope our modest donation will help them during these trying times,” said Relx founder and CEO Kate Wang.
Abboud says he isn’t surprised by the generosity of the vapor industry. After all, the industry is founded on the principle of harm reduction and ending the 400,000 deaths caused every year by combustible cigarettes.
“We are incredibly proud of the vapor industry for stepping up, even as their own businesses continue to confront the economic fallout of this crisis,” said Abboud. “Vapor companies haven’t hesitated to take a leading role in their communities, making a difference in innovative and impactful ways. Their commitment to service is no surprise given that these business owners have made it their mission to support smokers and former smokers as they transition away from deadly cigarettes.” V
The companies mentioned in the article aren’t the only ones practicing good corporate social responsibility. The list of vapor companies helping their communities is long. While we can’t possibly name them all, here are just a few more examples, courtesy of the Vapor Technology Association:
• Lakes Vape and Rec Supply donated 363 bottles of hand sanitizer to fire departments, nursing homes and businesses in their Minnesota community, including UPS and FedEx. • Madwell Collective has produced 6,340 gallons of hand sanitizer to date.• Ripe Vapes has produced 500,000 bottles of hand sanitizer to date, donating one of every two bottles sold VapeRite has produced 12,000 bottles of hand sanitizer to date for first responders and food delivery workers in Atlanta, Georgia.
• Mech Sauce produced 1,500 bottles of hand sanitizer for the local U.S. Postal Service and seniors in Virginia.
• Chubby Gorilla donates empty bottles to be filled with hand sanitizer for distribution. • Midnight Manufacturing produces 300,000 bottles weekly to support hand sanitizer distribution efforts. • Mob Liquid is committed to producing 10,000 bottles of hand sanitizer weekly. • EjuiceBLVD is producing 6,000 to 7,000 bottles of hand sanitizer weekly. • Euless Vapor donated 150 bottles to their local fire and police departments in Texas. • USA Vape Labs has produced 5,000 gallons of hand sanitizer for local nursing homes, local medical facilities and government employees. • Boosted Juice donated 600 bottles to local police departments in Colorado.
