Turning Point Brands, Inc. · NYSE:TPB
Turning Point Brands — Q4 2020 Earnings Presentation
41 slides from Turning Point Brands's earnings presentation, Feb 10, 2021
Slide 1: Turning Point Brands Investor Presentation Q4 2020
Turning Point Brands (NYSE: TPB) INVESTOR PRESENTATION Q4 2020 | NYSE: TPB | 5201 INTERCHANGE WAY, LOUISVILLE KY | TURNINGPOINTBRANDS.COM |
Slide 2: Disclaimer
Disclaimer Turning Point Brands (NYSE: TPB) FORWARD LOOKING STATEMENTS This presentation contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements may generally be identified by the use of words such as "anticipate," "believe," "expect," "inten
Slide 3: Agenda
Turning Point Brands (NYSE: TPB) Agenda 1 Company Overview 2 Key Investment Highlights 3 Financial Update 4 ESG 5 Appendix 3 | NYSE: TPB | 5201 INTERCHANGE WAY, LOUISVILLE KY | TURNINGPOINTBRANDS.COM |
Slide 4: Company Overview
Turning Point Brands (NYSE: TPB) Company Overview | NYSE: TPB | 5201 INTERCHANGE WAY, LOUISVILLE KY | TURNINGPOINTBRANDS.COM |
Slide 5: TPB: A Unique Consumer Products Growth Company
Turning Point Brands (NYSE: TPB) TPB: A Unique Consumer Products Growth Company Segment Comprises Majority of Profit Pool and #1 Premium and Overall Benefits from Secular #2 Loose Leaf Chew Rolling Paper Brand in the U.S. Growth Trends in and Canada and #1 in MYO and Leading MST Value Cannabinoid Co
Slide 6: Broad Portfolio of Iconic and Emerging Brands
Turning Point Brands (NYSE: TPB) TPB is a Consumer Products company that markets Alternative Smoking Accessories and consumables with Active Ingredients BROAD PORTFOLIO OF ICONIC AND EMERGING BRANDS 6 | NYSE: TPB | 5201 INTERCHANGE WAY, LOUISVILLE KY | TURNINGPOINTBRANDS.COM |
Slide 7: TPB Business Segments
Turning Point Brands (NYSE: TPB) TPB Business Segments Zig-Zag Stoker’s NewGen Rolling papers and Make-Your-Own Loose leaf chewing tobacco and moist Innovative alternative and vapor products (“MYO”) cigar wraps snuff tobacco FY20 Sales1 $133mm $116mm $156mm Key Brands Accelerate growth in the near
Slide 8: A U.S.-Focused, Diversified Portfolio of Product Lines
Turning Point Brands (NYSE: TPB) A U.S.-Focused, Diversified Portfolio of Product Lines Diversified Revenue Mix with a Majority of Profits and Growth Driven by Zig-Zag Sales Adjusted Operating Income Sales by Geography NewGen 5% RoW 3% NewGen Zig-Zag 39% Zig-Zag Stoker's 33% 55% 40% U.S. Stoker's 97
Slide 9: Efficient Manufacturing, Supply & Distribution Model
Turning Point Brands (NYSE: TPB) Efficient Manufacturing, Supply & Distribution Model ASSET LIGHT THIRD-PARTY NATIONAL BEST-IN-CLASS B2C AND B2B APPROACH SOURCING DISTRIBUTION SUPPLY CHAIN CAPABILITIES Asset-Light approach allows ~80% of net sales are from National distribution coupled Sourcing team
Slide 10: TPB Strategic Priorities
Turning Point Brands (NYSE: TPB) TPB Strategic Priorities Grow Share of Existing Product Lines, Domestically and Internationally Expand into Adjacent Categories through Innovation and New Partnerships Increase our Mix of Proprietary Products in NewGen Accelerate Growth via National Distribution Netw
Slide 11: Key Investment Highlights
Turning Point Brands (NYSE: TPB) Key Investment Highlights | NYSE: TPB | 5201 INTERCHANGE WAY, LOUISVILLE KY | TURNINGPOINTBRANDS.COM |
Slide 12: TPB Key Investment Highlights
Turning Point Brands (NYSE: TPB) TPB Key Investment Highlights 1 Large, Leading Brands with Significant Scale 2 Exposure to Growing Cannabinoid Consumption Trends 3 Successful Track Record of New Product Launches and Category Expansions 4 E-Commerce Capabilities 5 Extensive Distribution Network and
Slide 13: Smoking: Iconic Brand with Leading Market Share
Large, Leading Brands with Significant Scale Turning Point Brands (NYSE: TPB) Smoking: Iconic Brand with Leading Market Share About Zig-Zag Papers Wraps New Product Launches Embedded into pop culture #1 premium and overall Market leader in MYO cigar Continued roll-out of paper with a storied history
Slide 14: Smoking: Expanding Portfolio and Sales Channels
Large, Leading Brands with Significant Scale Turning Point Brands (NYSE: TPB) Smoking: Expanding Portfolio and Sales Channels Classic Zig-Zag Products Growth Initiatives New products and accessories Re-vamped e-commerce platform Enhanced brand Iconic Products with Strong presence in headshops Brand
Slide 15: Positioned to Capture Growing Cannabinoid Consumption
Exposure to Growing Cannabinoid Consumption Trends Turning Point Brands (NYSE: TPB) Positioned to Capture Growing Cannabinoid Consumption 15 U.S. states and DC have legalized cannabis and 36 states and DC allow for medical cannabis programs WA NH 68% ME MT ND VT OR MN NY WI MA of Americans now ID WY
Slide 16: Poised to Benefit from Cannabinoid Consumption Growth
Exposure to Growing Cannabinoid Consumption Trends Turning Point Brands (NYSE: TPB) Poised to Benefit from Cannabinoid Consumption Growth Large potential Total Addressable Market with significant opportunity for expansion of one of the few truly iconic national brands in the market TPB Poised to Ben
Slide 17: Legalization Impact
Exposure to Growing Cannabinoid Consumption Trends Turning Point Brands (NYSE: TPB) Legalization Impact Industry volume growth in adult rec states has outpaced growth in non-rec states especially in wraps Growth does not reflect shift into non-measured alternative channels (headshops, dispensaries)
Slide 18: Smoking: Continued Profit and Margin Growth
Exposure to Growing Cannabinoid Consumption Trends Turning Point Brands (NYSE: TPB) Smoking: Continued Profit and Margin Growth Rejuvenated segment with recent growth initiatives focused on new product introductions and channel expansions aligned with secular market growth trends Net Sales Adjusted
Slide 19: Smokeless: Iconic Brand with Sustained Growth
Large, Leading Brands with Significant Scale Turning Point Brands (NYSE: TPB) Smokeless: Iconic Brand with Sustained Growth About Stoker's MST TUBS MST Cans Chew Building brand equity for Introduced a larger tub format Accelerating strength from #1 discount and #2 overall over 80 years. Stoker’s is
Slide 20: Smokeless: Continued MST Distribution Gains
Large, Leading Brands with Significant Scale Turning Point Brands (NYSE: TPB) Smokeless: Continued MST Distribution Gains Long Runway for Growth Currently in stores representing 76.8 77.4 70.4 72.8 74.9 ~61%1 of volume weighted 68.3 66.1 67.6 distribution 63.2 63.1 61.4 61.6 61.3 62.3 57.0 57.7 58.0
Slide 21: Smokeless: Continued Profit and Margin Growth
Large, Leading Brands with Significant Scale Turning Point Brands (NYSE: TPB) Smokeless: Continued Profit and Margin Growth Smokeless Net Sales and Gross Profit have shown steady growth with an acceleration in 2020 Net Sales Adjusted Gross Profit $62 $116 $53 1 $100 $47 $90 $44 $85 2017 2018 2019 20
Slide 22: NewGen: Proprietary Products Growth
Successful Track Record of New Product Launches and Category Turning Point Brands (NYSE: TPB) NewGen: Proprietary Products Growth Expansions Executing on a multi-year journey to increase proprietary products sales in the NewGen segment Target for proprietary product gross margins (50%+) to exceed th
Slide 23: Industry Innovators in Adult Consumer Alternatives
Successful Track Record of New Product Launches and Category Turning Point Brands (NYSE: TPB) Industry Innovators in Adult Expansions Consumer Alternatives Robust new product pipeline with ability to leverage distribution platform and scale quickly Nu-X Nutra Nicotine Chew Caffeine B12 - Café Dispos
Slide 24: NewGen Business Update
Successful Track Record of New Product Launches and Category Turning Point Brands (NYSE: TPB) NewGen Business Update Expansions Successfully repositioned the NewGen business which is now ready to capitalize on the post-PMTA opportunity Successfully Repositioned NewGen Poised for Future Growth ▪ Rest
Slide 25: Powerful Distribution Infrastructure
Extensive Distribution Network and Data Driven Sales Organization Turning Point Brands (NYSE: TPB) Powerful Distribution Infrastructure North American retail presence that reaches over ~210,000 outlets + B2C online sites National Regional Product B2C B2B Distribution Sales Teams Sales Teams Distribu
Slide 26: Building a Capital Efficient Business Model
Asset-light Business Model that Generates Resilient Free Cash Flow Turning Point Brands (NYSE: TPB) Building a Capital Efficient Business Model Asset-light business model that generates resilient free cash flow Initiatives: Adjusted EBITDA vs. Capital Expenditures Adjusted EBITDA Capital Expenditure
Slide 27: Conservative and Prudent Financial Policies
Asset-light Business Model that Generates Resilient Free Cash Flow Turning Point Brands (NYSE: TPB) Conservative and Prudent Financial Policies Turning Point has taken a prudent approach to liquidity management and has successfully de-levered 5.7x Historical Leverage Ratio1 Net Debt to Adjusted EBIT
Slide 28: Track Record Navigating an Evolving Regulatory Backdrop
Expertise to Succeed in Dynamic Regulatory Environments Turning Point Brands (NYSE: TPB) Track Record of Success Navigating an Evolving Regulatory Backdrop TPB has extensive experience managing regulatory regime changes and continues to make investments that enhance its regulatory position among com
Slide 29: Experienced Management Team
Experienced Management Team Turning Point Brands (NYSE: TPB) Highly Experienced Senior Leadership Team LAWRENCE S. GRAHAM A. ROBERT BRITTANI N. LOUIE WEXLER PURDY LAVAN CUSHMAN REFORMINA President & Chief Chief Operating Chief Financial General Counsel & Chief Business Executive Officer Officer Offi
Slide 30: Financial Update
Turning Point Brands (NYSE: TPB) Financial Update | NYSE: TPB | 5201 INTERCHANGE WAY, LOUISVILLE KY | TURNINGPOINTBRANDS.COM |
Slide 31: 2020 Summary Business Performance
Turning Point Brands (NYSE: TPB) 2020 Summary Business Performance Streamlining and Repositioning the Business in 2019 led to significant success in 2020 ✓ Sales, EBITDA and Net Income increased YOY Net Sales Adjusted EBITDA1 Capex Free Cash Flow2 ✓ EBITDA Margin improvement EBITDA Margin +367bps ✓
Slide 32: Recent Business Highlights
Turning Point Brands (NYSE: TPB) Recent Business Highlights Strong recent performance is a result of tactical repositioning of the business over the last 12 months and executing on this plan • Strong FY 2020 Financial Results: Net Sales of $405 million +12% yoy and Adjusted EBITDA1 of $90 million +3
Slide 33: Total Sales and Segment Breakdown
Turning Point Brands (NYSE: TPB) Total Sales and Segment Breakdown Internal initiatives leading to accelerated organic growth in core segments 2016 2017 2018 2019 2020 YoY Zig-Zag Products Future Drivers Zig-Zag Products • Industry levered to cannabinoid consumption Wraps $46 $47 $49 $52 $66 27% • W
Slide 34: Taking Decisive Actions During COVID-19
Turning Point Brands (NYSE: TPB) Taking Decisive Actions During COVID-19 TPB implemented several changes to enhance safety and mitigate health risk in its work environment: Incorporated split shifts, temperature scans and personal sanitizing and PPE resources for manufacturing and warehouse fulfil
Slide 35: ESG
Turning Point Brands (NYSE: TPB) ESG | NYSE: TPB | 5201 INTERCHANGE WAY, LOUISVILLE KY | TURNINGPOINTBRANDS.COM |
Slide 36: Commitment to ESG
Turning Point Brands (NYSE: TPB) Commitment to ESG We believe that focusing on our consumers and customers, while proactively and productively addressing the environment, our employees, our community, and society at large, is the key to driving value for all stakeholders Improving Public • Our visio
Slide 37: 2020 ESG Highlights
Turning Point Brands (NYSE: TPB) 2020 ESG Highlights We believe that focusing on our consumers and customers, while proactively and productively addressing the environment, our employees, our community, and society at large, is the key to driving value for all stakeholders Improving Public • Filed P
Slide 38: Appendix
Turning Point Brands (NYSE: TPB) Appendix | NYSE: TPB | 5201 INTERCHANGE WAY, LOUISVILLE KY | TURNINGPOINTBRANDS.COM |
Slide 39: Historical Financials
Turning Point Brands (NYSE: TPB) Historical Financials Net Sales Adjusted EBITDA1 $405 $90 $362 $333 $286 $65 $67 $60 $52 $206 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 % Growth 4.5% 38.6% 16.4% 8.8% 11.9% % Margin 25.4% 21.0% 19.4% 18.6% 22.3% Capital Expenditures Free Cash Flow1 (Adjusted
Slide 40: EBITDA Adjustment Detail
Turning Point Brands (NYSE: TPB) EBITDA Adjustment Detail Reconciliation of GAAP Net Income to Adjusted EBITDA ($ in millions) 2016 2017 2018 2019 2020 Net income attributable to Turning Point Brands, Inc. $26.9 $20.2 $25.3 $13.8 $33.0 Add: Interest expense, net $26.6 $16.9 $14.8 $17.3 $20.2 Loss on
Slide 41: Thank You
Turning Point Brands (NYSE: TPB) THANK YOU | NYSE: TPB | 5201 INTERCHANGE WAY, LOUISVILLE KY | TURNINGPOINTBRANDS.COM |