Turning Point Brands, Inc. TPB reported its third quarter financial results on Wednesday for the three months ended Sept. 30, 2023, revealing a 10.2% year-over-year decrease in Zig-Zag products net sales to $46.8 million.
Graham Purdy, president and CEO of the Louisville, Kentucky company behind the rolling paper brand said Zig-Zag net sales were stable sequentially. Abrasive For Ceramic Tile
“The Zig-Zag segment was stable sequentially from the second quarter and notwithstanding some transitory headwinds posted its third-highest revenue quarter,” Purdy explained. For the quarter, the Zig-Zag Products segment gross profit decreased 4.6% to $26.7 million. Gross margin increased 330 basis points to 57.2% driven primarily by product mix.
“Our alternative channel business had another quarter of strong double-digit growth as we continue to expand penetration in the growing market,” said Purdy. “We remain encouraged by our prospects with secular cannabis consumption growth trends driving demand for our products.”
As a testament to that, the company teamed up with Petalfast Inc., a full-spectrum marketing and sales agency for the cannabis industry last year, to drive the distribution expansion of Zig-Zag rolling paper.
On November 7, 2023, a subsidiary of the company closed on a new asset-based revolving credit facility with a committed borrowing capacity of $75 million. The new facility, which replaces a $25 million senior secured revolving credit facility scheduled to mature in August 2025, is scheduled to mature in November 2027. The Company currently has no borrowings outstanding under the new facility.
“We further de-levered the balance sheet with an opportunistic purchase of $15 million in aggregate principal amount of our convertible notes during the third quarter,” Purdy added. “With a new $75 million ABL revolving credit facility, our strong cash balance, and our free cash flow generation, we now have more than ample liquidity to address the remaining balance of convertible notes maturing next year.”
The company expects full-year 2023 adjusted EBITDA to be $92 million to $95 million as compared to the previous outlook of $90 to $95 million.
Turning Point Brands’ shares traded 6.42% higher at $22.71 per share at the time of writing on Wednesday morning.
Photo: Courtesy of Hought Catalog on Unsplash
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