Turning Point Brands (TPB) Q3 2024 earnings summary

Executive summary

• Q3 2024 net sales rose 3.8% year-over-year to $105.6 million, with adjusted EBITDA up 11.3% to $27.2 million and net income up 14.3% to $12.4 million, driven by Zig-Zag and Stoker's growth.

• Full-year 2024 adjusted EBITDA guidance was raised to $101–$103 million, reflecting confidence in ongoing growth and excluding CDS contributions.

• Zig-Zag revenue grew 5.5% to $49.3 million, and Stoker's revenue increased 12.1% to $41.4 million, with both segments showing strong performance.

• Free cash flow for Q3 was $12.6 million, supporting capital allocation and shareholder returns.

• Growth was supported by internal initiatives, product innovation, and expansion in alternative channels.

Financial highlights

• Q3 2024 gross margin improved to 50.8%, with adjusted EBITDA margin at 25.7%.

• Operating income for Q3 was $20.5 million, up 1.4% year-over-year.

• SG&A expenses were $33.2 million, including higher PMTA and transaction costs.

• Cash on hand at quarter-end was $33.6 million, with $58.8 million available under the ABL facility.

• Free cash flow generation continues to support business investment and shareholder returns.

Outlook and guidance

• 2024 adjusted EBITDA guidance raised to $101–$103 million, up from prior $98–$102 million.

• CapEx expectation revised down to under $10 million for the year.

• Effective income tax rate projected at 23%-26%.

• Management expects strong liquidity and free cash flow generation to support operating requirements.

• Continued investment in PMTAs for Modern Oral products, with $4 million expected spend for the year.