Turning Point Brands Inc (TPB) Q2 2024 Earnings Call Highlights: Strong Revenue Growth and ...

GuruFocus News
4 min read

In This Article:

  • Adjusted EBITDA: Increased 7% to just over $27 million for the quarter.

  • Projected 2024 Adjusted EBITDA Guidance: Increased to $98 million to $102 million from prior guidance of $95 million to $100 million.

  • Zig-Zag Revenue: Up 8% to $50.5 million, driven by growth in North American papers, wraps, and cigars.

  • Alternative Channel Performance: Declined 3% in the quarter but up about 28% in the first half.

  • Stoker's Revenue: Increased 19% to $42.7 million, with a 1% decline in loose-leaf and a 14% increase in moist snuff.

  • FRE Sales: Approximately $4 million for the quarter, up 76% sequentially and more than 500% versus the prior year.

  • Consolidated Q2 Sales: Up 2.8% to $108.5 million, up 12% sequentially.

  • Gross Margin: Down 8 basis points to 49.6% due to segment and product mix.

  • Zig-Zag Gross Margin: Decreased 330 basis points to 53% due to product mix.

  • Stoker's Gross Margin: Declined 30 basis points to 55%, primarily due to product mix.

  • CDS Sales: $15 million with a gross margin of 22.5%.

  • Cash Position: Ended the quarter with just over $140 million of cash.

  • Convertible Note Retirement: Retired $118.5 million convertible note post Q2 close.

  • Net Debt: $226.4 million on a pro forma basis after retiring the convertible note.

  • CapEx Expectation: Revised from $15 million to $11 million, with reductions being timing driven.

Release Date: August 01, 2024

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

Positive Points

  • Turning Point Brands Inc (NYSE:TPB) reported a 7% increase in adjusted EBITDA, reaching over $27 million for the quarter.

  • Zig-Zag's revenue grew by 8% to $50.5 million, driven by strong performance in North American papers, wraps, and cigars.

  • Stoker's revenue increased by 19% to $42.7 million, with a notable 14% rise in moist snuff sales.

  • The FRE product line saw a significant increase in sales, up 76% sequentially and over 500% year-over-year.

  • TPB increased its guidance for 2024 adjusted EBITDA to $98 million to $102 million, reflecting confidence in continued growth.

Negative Points

  • Gross margin decreased by 8 basis points to 49.6%, impacted by segment and product mix.

  • The alternative channel experienced a 3% decline in the quarter, attributed to timing issues with trade shows and large purchases.

  • Zig-Zag's gross margins decreased by 330 basis points to 53%, primarily due to product mix.

  • Chewing tobacco sales declined by approximately 1% from the previous year.

  • The company faces challenges in measuring alt versus traditional C-store sales due to market convergence.

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