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Category: Turning Point Brands (TPB)
Date: 28 April 2021 Stock Price of Turning Point Brands (TPB): $50.99 Market Capital of Turning Point Brands: $972.8 million We take a look at the 1st quarter earnings report of their 2021 fiscal year of Turning Point Brands (NYSE: TPB), a manufacturer, marketer and distributor of branded consumer products including alternative smoking accessories and consumables
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- Our first quarter results demonstrated solid execution with year-over-year growth significantly outpacing our end markets - Larry Wexler, President and CEO, Turning Point Brands"
About Turning Point Brands (TPB)
Turning Point Brands (NYSE: TPB) is a manufacturer, marketer and distributor of branded consumer products including alternative smoking accessories and consumables with active ingredients through its iconic core brands Zig-Zag® and Stoker’s®, and its emerging brands within the NewGen segment. TPB’s products are available in more than 210,000 retail outlets in North America
Overview of Turning Point Brands (TPB) 1st quarter 2021 earnings report
First Quarter 2021 highlights
(Comparisons vs. same period a year-ago)
(Comparisons vs. same period a year-ago)
- Net sales increased 18.7% to $107.6 million
- Gross profit increased 28.6% to $53.3 million
- Net income increased $7.3 million to $11.8 million
- Adjusted EBITDA increased 57.4% to $28.0 million (see Schedule A for a reconciliation to net income)
- Diluted EPS of $0.57 and Adjusted Diluted EPS of $0.80 as compared to $0.22 and $0.51 in the year-ago period, respectively (see Schedule B for a reconciliation to Diluted EPS)
Turning Point Brands management commentary on their 1st quarter 2021 earnings report
LOUISVILLE, Ky.--(BUSINESS WIRE)-- Turning Point Brands, Inc. (“TPB” or “the Company”) (NYSE: TPB), a manufacturer, marketer and distributor of branded consumer products including alternative smoking accessories and consumables with active ingredients, today announced financial results for the first quarter ended March 31, 2021
“Our first quarter results demonstrated solid execution with year-over-year growth significantly outpacing our end markets,” said Larry Wexler, President and CEO, Turning Point Brands. “Zig-Zag led the way with a second consecutive quarter with over 40 percent growth, and Stoker’s delivered another double-digit growth quarter led by our MST business. As such, our core segments are continuing to perform well despite the tough comparables from the previous year period. NewGen had a solid growth quarter as it maintains optionality for long-term upside through its PMTA submissions. We are also excited about our recent investment in Docklight Brands, which increases our exposure in the cannabis space and boosts our portfolio through the addition of the Marley™ CBD products line.”
“Our first quarter results demonstrated solid execution with year-over-year growth significantly outpacing our end markets,” said Larry Wexler, President and CEO, Turning Point Brands. “Zig-Zag led the way with a second consecutive quarter with over 40 percent growth, and Stoker’s delivered another double-digit growth quarter led by our MST business. As such, our core segments are continuing to perform well despite the tough comparables from the previous year period. NewGen had a solid growth quarter as it maintains optionality for long-term upside through its PMTA submissions. We are also excited about our recent investment in Docklight Brands, which increases our exposure in the cannabis space and boosts our portfolio through the addition of the Marley™ CBD products line.”
“Each of Zig-Zag’s product categories experienced robust growth,” added Graham Purdy, Chief Operating Officer, Turning Point Brands. “Our U.S. papers business experienced meaningful year-over-year share gains, with our paper cones and e-commerce businesses becoming bigger contributors to our growth. Our wraps business continues to bounce back from last year’s inventory disruption and had a very strong quarter boosted by adding the Blunt Wrap brand to our portfolio. Canada also saw growth above our expectations with ReCreation Marketing results now consolidated as part of the segment.”
Continued Purdy, “With more states advancing legalization efforts during the quarter, the segment’s outlook continues to improve as a result of the secular industry growth trends that we are seeing across the board.”
2021 Outlook
With the strength of the first quarter results, the Company is revising its guidance provided on February 10, 2021 as follows:
Absent any further acquisitions, TPB projects the following for 2021:
Continued Purdy, “With more states advancing legalization efforts during the quarter, the segment’s outlook continues to improve as a result of the secular industry growth trends that we are seeing across the board.”
2021 Outlook
With the strength of the first quarter results, the Company is revising its guidance provided on February 10, 2021 as follows:
Absent any further acquisitions, TPB projects the following for 2021:
- Net Sales of $422 to $440 million (up from previous guidance of $412 to $432 million) which assumes:
- Strong double-digit sales growth for Zig-Zag Products (up from previous guidance of double-digit sales growth)
- High-single-digit sales growth for Stoker’s Products (unchanged)
- Mid-to-low-single digit declines for NewGen Products (up from previous guidance of mid-single-digit sales declines), which includes single-digit declines for vape distribution (up from previous guidance of double-digit declines) offset by growth in Nu-X
- Adjusted EBITDA of $103 to $108 million (up from previous guidance of $99 to $105 million)
- Stock compensation and non-cash incentive expense of $7 million
- Cash interest expense of $19 million and GAAP interest expense of $22 million which no longer includes debt discount amortization related to the 2024 convertible notes and reflects the recently priced senior secured notes
- Effective income tax rate of 23% to 24%
- Capital expenditures of $5 to $6 million
Turning Point Brands (TPB) stock price chart over the last 5 years
The image below shows the stock price history of Turning Point Brands (TPB) over the last 5 years. And it's been a very good time for Turning Point Brands stockholders. Over the last 5 years the stock of Turning Point Brands (TPB) has increased by a whopping 381.5%. No investor would say no to those type of returns.
The stock of Turning Point Brands is trading at closer to its 52 week high than it is toits 52 week low which is a clear indication that the short term sentiment and momentum of Turning Point Brands stock is positive at this point in time.
The stock of Turning Point Brands is trading at closer to its 52 week high than it is toits 52 week low which is a clear indication that the short term sentiment and momentum of Turning Point Brands stock is positive at this point in time.
Turning Point Brands (TPB) latest stock valuation
So what is Turning Point Brands stock worth based on the release of their latest earnings report? Based on Turning Point Brands' latest earnings report our valuation models provide a target price (full value) price of Turning Point Brands stock at $47.30a stock. Therefore we believe the stock of Turning Point Brands is fully valued at its current price of $50,99
We usually recommend that long term fundamental or value investors look to enter the stock at 10% below our target price (full value price) which in this case is $47.30, so a good entry point into Turning Point Brands stock would be at $42.60 or below.
We expect the stock of Turning Point Brands to trade in a narrow range around its current price in coming weeks and months as it is close to our target price (full value price). Since the stock of Turning Point Brands is trading at close to our suggested entry price we rate the stock of Turning Point Brands a hold
We usually recommend that long term fundamental or value investors look to enter the stock at 10% below our target price (full value price) which in this case is $47.30, so a good entry point into Turning Point Brands stock would be at $42.60 or below.
We expect the stock of Turning Point Brands to trade in a narrow range around its current price in coming weeks and months as it is close to our target price (full value price). Since the stock of Turning Point Brands is trading at close to our suggested entry price we rate the stock of Turning Point Brands a hold
Next earnings release date for Turning Point Brands (TPB)
It is expected that Turning Point Brands (TPB) will release their 2nd quarter 2021 earnings report will be released in late July 2021