Turning Point Brands Inc (TPB) (Q1 2024) Earnings Call Transcript Highlights: Strong Growth ...

In This Article:

  • Adjusted EBITDA: Increased 21.6% to $25.3 million for the quarter.

  • Zig-Zag Revenue: Up 11.5% to $46.7 million, driven by strong growth in papers and alternative channel business.

  • Stoker's Revenue: Increased 8% to $36.4 million, with a 4.6% decline in loose leaf and a 6.7% increase in MST.

  • Gross Margin: Up 530 basis points to 53.5%, influenced by favorable segment and product mix.

  • 2024 Adjusted EBITDA Guidance: Reaffirmed in the range of $95 million to $100 million.

  • Q1 Sales: Down 3.9% to $97.1 million, flat on a sequential basis.

  • Alternative B2B Channel Growth: Over 60% growth in the quarter.

  • Stoker's Market Share: Grew 70 basis points year over year to 7.1%.

  • FRE Sales: More than tripled from a low base as national distribution continues.

  • Cash on Hand: Ended the quarter with over $130 million.

  • CapEx Expectation: Approximately $15 million for the year.

Release Date: May 02, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Adjusted EBITDA increased by 21.6% to $25.3 million in Q1, demonstrating strong financial performance.

  • Zig-Zag segment revenue grew by 11.5% to $46.7 million, driven by robust growth in papers and alternative channel businesses.

  • Stoker's segment revenue increased by 8% to $36.4 million, with market share gains and favorable pricing dynamics.

  • The alternative B2B business saw a significant growth of over 60% in Q1, indicating successful expansion in this channel.

  • Turning Point Brands Inc reaffirmed its guidance for 2024 adjusted EBITDA in the range of $95 million to $100 million, reflecting confidence in continued strong performance.

Negative Points

  • Q1 sales overall were down by 3.9% to $97.1 million, indicating some challenges in revenue generation.

  • There was a 4.6% decline in loose leaf volume in the Stoker's segment, suggesting some softness in this product category.

  • The Canadian business faced an $800,000 headwind due to the discontinuation of a low-margin third-party product line.

  • Gross margin in the Stoker's segment declined by 60 basis points to 57.2%, primarily due to product mix changes.

  • The CDS segment, while stable, poses uncertainty regarding its sustainability and future within the company's portfolio.

Q & A Highlights

Q: Congrats on strong results. First one, just a clarifying question for me. So you highlighted B2B growth of 60% within Zig-Zag. And I just wanted to clarify, is that all the alternative channel. Or is there some other B2B business in the traditional channel? A: (Summer Frein - Chief Revenue Officer) Yes, that's all the alternative channel.