Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2017 | Aug. 07, 2017 | |
Entity Information [Line Items] | ||
Entity Registrant Name | Turning Point Brands, Inc. | |
Entity Central Index Key | 1,290,677 | |
Current Fiscal Year End Date | --12-31 | |
Entity Well-known Seasoned Issuer | No | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q2 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2017 | |
Voting Common Stock [Member] | ||
Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 19,029,216 |
Consolidated Balance Sheets (un
Consolidated Balance Sheets (unaudited) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash | $ 1,686 | $ 2,865 |
Accounts receivable, net of allowances of $32 in 2017 and $35 in 2016 | 2,802 | 2,181 |
Inventories | 67,826 | 62,185 |
Other current assets | 11,190 | 11,625 |
Total current assets | 83,504 | 78,856 |
Property, plant and equipment, net | 8,393 | 7,590 |
Deferred income taxes | 5,688 | 6,288 |
Deferred financing costs, net | 707 | 139 |
Goodwill | 134,620 | 134,390 |
Other intangible assets, net | 26,787 | 27,138 |
Master Settlement Agreement - escrow deposits | 30,853 | 30,410 |
Other assets | 372 | 209 |
Total assets | 290,924 | 285,020 |
Current liabilities: | ||
Accounts payable | 8,759 | 9,153 |
Accrued liabilities | 12,812 | 15,336 |
Accrued interest expense | 362 | 394 |
Current portion of long-term debt | 7,850 | 1,650 |
Revolving credit facility | 25,000 | 15,034 |
Total current liabilities | 54,783 | 41,567 |
Notes payable and long-term debt | 188,735 | 201,541 |
Postretirement benefits | 4,404 | 4,407 |
Pension benefits | 283 | 423 |
Other long-term liabilities | 883 | 3,024 |
Total liabilities | 249,088 | 250,962 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Preferred stock; $0.01 par value; authorized shares 40,000,000; issued and outstanding shares -0- | 0 | 0 |
Additional paid-in capital | 102,975 | 104,895 |
Accumulated other comprehensive loss | (3,673) | (4,049) |
Accumulated deficit | (57,656) | (66,972) |
Total stockholders' equity | 41,836 | 34,058 |
Total liabilities and stockholders' equity | 290,924 | 285,020 |
Voting Common Stock [Member] | ||
Stockholders' equity: | ||
Common stock | 190 | 184 |
Nonvoting Common Stock [Member] | ||
Stockholders' equity: | ||
Common stock | $ 0 | $ 0 |
Consolidated Balance Sheets (u3
Consolidated Balance Sheets (unaudited) (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Current assets: | ||
Accounts receivable, allowance | $ 32 | $ 35 |
Stockholders' equity: | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 40,000,000 | 40,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Voting Common Stock [Member] | ||
Stockholders' equity: | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 190,000,000 | 190,000,000 |
Common stock, shares issued (in shares) | 19,029,404 | 18,402,022 |
Common stock, shares outstanding (in shares) | 19,029,404 | 18,402,022 |
Nonvoting Common Stock [Member] | ||
Stockholders' equity: | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Common stock, shares issued (in shares) | 0 | 0 |
Common stock, shares outstanding (in shares) | 0 | 0 |
Consolidated Statements of Inco
Consolidated Statements of Income (unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Consolidated Statements of Income (unaudited) [Abstract] | ||||
Net sales | $ 72,086 | $ 51,581 | $ 138,874 | $ 101,447 |
Cost of sales | 40,091 | 26,707 | 79,213 | 51,926 |
Gross profit | 31,995 | 24,874 | 59,661 | 49,521 |
Selling, general and administrative expenses | 18,360 | 14,098 | 35,269 | 27,836 |
Operating income | 13,635 | 10,776 | 24,392 | 21,685 |
Interest expense | 4,046 | 6,876 | 8,979 | 15,338 |
Investment income | (89) | (332) | (203) | (332) |
Loss on extinguishment of debt | 0 | 2,824 | 6,116 | 2,824 |
Income before income taxes | 9,678 | 1,408 | 9,500 | 3,855 |
Income tax expense | 2,795 | 609 | 740 | 822 |
Consolidated net income | 6,883 | 799 | 8,760 | 3,033 |
Net loss attributable to non-controlling interest | (556) | 0 | (556) | 0 |
Net income attributable to Turning Point Brands, Inc. | $ 7,439 | $ 799 | $ 9,316 | $ 3,033 |
Basic earnings per common share: | ||||
Net income (in dollars per share) | $ 0.39 | $ 0.05 | $ 0.49 | $ 0.24 |
Diluted earnings per common share: | ||||
Net income (in dollars per share) | $ 0.38 | $ 0.05 | $ 0.48 | $ 0.22 |
Weighted average common shares outstanding: | ||||
Basic (in shares) | 18,886,418 | 15,274,446 | 18,829,130 | 12,476,719 |
Diluted (in shares) | 19,585,069 | 16,877,291 | 19,565,522 | 13,924,626 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Consolidated net income | $ 6,883 | $ 799 | $ 8,760 | $ 3,033 |
Other comprehensive income, net of tax | ||||
Tax effect | (89) | 0 | (89) | 0 |
Unrealized gain on investments, net of tax of $141 | 158 | 0 | 229 | 0 |
Other comprehensive income, net of tax | 185 | 123 | 376 | 246 |
Consolidated comprehensive income | 7,068 | 922 | 9,136 | 3,279 |
Comprehensive loss attributable to non-controlling interest | (556) | 0 | (556) | 0 |
Comprehensive income attributable to Turning Point Brands, Inc. | 7,624 | 922 | 9,692 | 3,279 |
Cost of Sales [Member] | ||||
Other comprehensive income, net of tax | ||||
Pension and postretirement amortization of unrealized losses | 6 | 6 | 12 | 12 |
Selling, General and Administrative Expenses [Member] | ||||
Other comprehensive income, net of tax | ||||
Pension and postretirement amortization of unrealized losses | $ 110 | $ 117 | $ 224 | $ 234 |
Consolidated Statements of Com6
Consolidated Statements of Comprehensive Income (unaudited) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended |
Jun. 30, 2017 | Jun. 30, 2017 | |
Other comprehensive income, net of tax | ||
Unrealized gain on investments, tax | $ 98 | $ 141 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Cash flows from operating activities: | ||
Consolidated net income | $ 8,760 | $ 3,033 |
Adjustments to reconcile net income to net cash provided by (used) in operating activities: | ||
Loss on extinguishment of debt | 6,116 | 2,824 |
Loss on sale of property, plant and equipment | 17 | 0 |
Depreciation expense | 771 | 586 |
Amortization of deferred financing costs | 530 | 719 |
Amortization of original issue discount | 66 | 459 |
Amortization of other intangible assets | 351 | 0 |
Deferred income taxes | 371 | 50 |
Stock-based compensation expense | 272 | 46 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (621) | (1,269) |
Inventories | (4,035) | (7,417) |
Other current assets | 612 | 943 |
Other assets | (72) | (62) |
Accounts payable | (629) | 1,234 |
Accrued pension liabilities | 96 | 131 |
Accrued postretirement liabilities | (3) | (59) |
Accrued liabilities and other | (6,236) | (4,188) |
Net cash provided by (used in) operating activities | 6,366 | (9,112) |
Cash flows from investing activities: | ||
Acquisitions, net of cash acquired | 268 | 0 |
Capital expenditures | (567) | (859) |
Net cash used in investing activities | (299) | (859) |
Cash flows from financing activities: | ||
Proceeds from 2017 revolving credit facility | 25,000 | 0 |
Payments of financing costs | (4,765) | (200) |
Proceeds from (payments of) old revolving credit facility | (15,083) | 6,603 |
Payments of Vapor Shark loans | (1,867) | 0 |
Prepaid equity issuance costs | (164) | 0 |
Redemption of Intrepid options | 0 | (661) |
Redemption of Intrepid warrants | 0 | (5,500) |
Exercise of options | 1,097 | 8 |
Redemption of options | (1,636) | 0 |
Surrender of options | (1,000) | 0 |
Proceeds from issuance of stock | 0 | 56,168 |
Distribution to non-controlling interest | (4) | 0 |
Net cash provided by (used in) financing activities | (7,246) | 8,748 |
Net decrease in cash | (1,179) | (1,223) |
Cash, beginning of period | 2,865 | 4,835 |
Cash, end of period | 1,686 | 3,612 |
Supplemental schedule of noncash financing activities: | ||
Issuance of restricted stock | 0 | 279 |
Accrued expenses incurred for prepaid equity costs | 48 | 423 |
PIK Toggle Notes [Member] | ||
Supplemental schedule of noncash financing activities: | ||
Conversion of Notes to equity | 0 | 29,014 |
7% Senior Notes [Member] | ||
Supplemental schedule of noncash financing activities: | ||
Conversion of Notes to equity | 0 | 10,074 |
PIK Toggle Notes [Member] | ||
Adjustments to reconcile net income to net cash provided by (used) in operating activities: | ||
Interest incurred but not paid on notes | 0 | 3,422 |
Interest paid on notes | 0 | (9,893) |
Cash flows from financing activities: | ||
Payment of PIK Toggle Notes | 0 | (24,107) |
7% Senior Notes [Member] | ||
Adjustments to reconcile net income to net cash provided by (used) in operating activities: | ||
Interest incurred but not paid on notes | 0 | 329 |
2017 First Lien Term Loans [Member] | ||
Cash flows from financing activities: | ||
Proceeds from term loans | 145,000 | 0 |
Payments of term loans | (1,462) | 0 |
2017 Second Lien Term Loan [Member] | ||
Cash flows from financing activities: | ||
Proceeds from term loans | 55,000 | 0 |
First Lien Term Loan [Member] | ||
Cash flows from financing activities: | ||
Payments of term loans | (147,362) | (3,563) |
Second Lien Term Loan [Member] | ||
Cash flows from financing activities: | ||
Payments of term loans | $ (60,000) | $ (20,000) |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Jun. 30, 2017 | |
Basis of Presentation [Abstract] | |
Basis of Presentation | Note 1. Basis of Presentation: Turning Point Brands, Inc., (the “Company”) is a holding company which owns NATC Holding Company, Inc. (“NATC Holding”) and its subsidiaries, Turning Point Brands, LLC (“TPLLC”) and its subsidiary, Intrepid Brands, LLC (“Intrepid”), and Vapor Shark, LLC (fka The Hand Media, Inc.) and its subsidiaries (collectively, “Vapor Shark”). Except where the context otherwise requires, references to the Company include the Company, NATC Holding and its subsidiary, North Atlantic Trading Company, Inc. (“NATC”) and its subsidiaries, National Tobacco Company, L.P. ), North Atlantic Operating Company, Inc. (“NAOC”), North Atlantic Cigarette Company, Inc. (“NACC”), National Tobacco Finance Corporation (“NTFC”), Smoke Free Technologies, Inc. d/b/a VaporBeast (“VaporBeast”), Fred Stoker & Sons, Inc., RBJ Sales, Inc. and Stoker, Inc. (collectively, “Stoker”) and TPLLC, Intrepid and Vapor Shark. The accompanying interim condensed consolidated financial statements have been prepared in accordance with our accounting practices described in our audited consolidated financial statements as of and for the year ended December 31, 2016, and are unaudited. In the opinion of management, the unaudited interim condensed consolidated financial statements included herein contain all adjustments necessary to present fairly our financial position, results of operations and cash flows for the periods indicated. Such adjustments, other than nonrecurring adjustments that have been separately disclosed, are of a normal, recurring nature. The operating results for interim periods are not necessarily indicative of results to be expected for a full year or future interim periods. The unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and accompanying notes as of and for the year ended December 31, 2016. The accompanying interim condensed consolidated financial statements are presented in accordance with the rules and regulations of the Securities and Exchange Commission and, accordingly, do not include all the disclosures required by generally accepted accounting principles in the United States (“GAAP”) with respect to annual financial statements. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2017 | |
Summary of Significant Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 2. Summary of Significant Accounting Policies: Consolidation: Vapor Shark is a variable interest entity (“VIE”) for which the Company is considered the primary beneficiary due to a management agreement in which the Company obtained control of the operations in April 2017. The Company did not own Vapor Shark during the second quarter of 2017. On June 30, 2017, the Company exercised a warrant to purchase all of the issued and outstanding equity of Vapor Shark. Beginning June 30, 2017, Vapor Shark is considered a wholly owned subsidiary of the Company. See Note 4 – Acquisitions for details relating to the warrant exercise. Revenue Recognition: We recognize revenues, net of sales incentives and sales returns, including shipping and handling charges billed to customers, upon delivery to the customer at which time there is a transfer of title and risk of loss to the customer in accordance with the ASC 605-10-S99. We classify customer rebates as sales deductions in accordance with the requirements of ASC 605-50-25. Shipping Costs: Fair Value: The three levels of the fair value hierarchy under GAAP are described below: Level 1 – Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets at the measurement date. Level 2 – Inputs to the valuation methodology include: quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in inactive markets; inputs other than quoted prices that are observable for the asset or liability; and inputs that are derived principally from or corroborated by observable market data by correlation or other means. Level 3 – Unobservable inputs that reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Master Settlement Agreement Escrow Account: Pursuant to the Master Settlement Agreement (the “MSA”) entered into in November 1998 by most states (represented by their attorneys general acting through the National Association of Attorneys General) and subsequent states’ statutes, a “cigarette manufacturer” (which is defined to include a manufacturer of make-your-own (“MYO”) cigarette tobacco) has the option of either becoming a signatory to the MSA or opening, funding, and maintaining an escrow account to have funds available for certain potential tobacco-related liabilities, with sub-accounts on behalf of each settling state. The Company has chosen to open and fund an escrow account as its method of compliance. It is the Company’s policy to record amounts on deposit in the escrow account for prior years as a non-current asset. Each year’s annual obligation is required to be deposited in the escrow account by April 15 of the following year. In addition to the annual deposit, many states have elected to require quarterly deposits for the previous quarter’s sales. As of June 30, 2017, the Company had on deposit approximately $32.0 million, the fair value of which was approximately $30.9 million. At December 31, 2016, the Company had on deposit approximately $31.9 million, the fair value of which was approximately $30.4 million . The Company invests a portion of the MSA escrow in U.S. Government securities including TIPS, Treasury Notes and Treasury Bonds. These investments are classified as available-for-sale and carried at fair value. Realized losses are prohibited under the MSA and thus any investment in an unrealized loss position will be held until the value is recovered or until maturity. The following shows the fair value of the MSA escrow account: June 30, 2017 December 31, 2016 Cost Gross Unrealized Losses Estimated Fair Value Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Cash and cash equivalents $ 3,798 $ - $ 3,798 $ 2,786 $ - $ - $ 2,786 U.S. Governmental agency obligations 28,217 (1,162 ) 27,055 29,156 19 (1,551 ) 27,624 $ 32,015 $ (1,162 ) $ 30,853 $ 31,942 $ 19 $ (1,551 ) $ 30,410 Fair value for the U.S. Governmental agency obligations are Level 2. All investments have been in an unrealized loss position for less than 12 months. The following shows the maturities of the U.S. Governmental agency obligations: June 30, 2017 December 31, 2016 Less than five years $ 9,113 $ 9,113 Six to ten years 16,153 16,141 Greater than ten years 2,951 3,902 Total U.S. Governmental agency obligations $ 28,217 $ 29,156 The following table represents the amount of deposits by sales year for the MSA escrow account and reflects the decline in annual deposits beginning in 2009, due to the significant increase in federal excise taxes: Deposits Sales Year June 30, 2017 December 31, 2016 1999 $ 211 $ 211 2000 1,017 1,017 2001 1,673 1,673 2002 2,271 2,271 2003 4,249 4,249 2004 3,715 3,715 2005 4,552 4,552 2006 3,847 3,847 2007 4,167 4,167 2008 3,364 3,364 2009 1,626 1,626 2010 406 406 2011 193 193 2012 199 199 2013 173 173 2014 142 142 2015 101 100 2016 82 37 2017 27 - Total $ 32,015 $ 31,942 Food and Drug Administration (“FDA”): On June 22, 2009, the Family Smoking Prevention and Tobacco Control Act (“FSPTCA”) authorized the Food and Drug Administration (“FDA”) to immediately regulate the manufacture, sale and marketing of four categories of tobacco products – cigarettes, cigarette tobacco, roll-your-own tobacco and smokeless tobacco. On August 8, 2016, the FDA deeming regulation became effective. The deeming regulation gave the FDA the authority to additionally regulate cigars, pipe tobacco, e-cigarettes, vaporizers and e-liquids as “deemed” tobacco products under the FSPTCA. The FDA assesses tobacco product user fees on six classes of regulated tobacco products and computes user fees using a methodology similar to the methodology used by the U.S Department of Agriculture to compute the Tobacco Transition Payment Program (“TTPP,” also known as the “Tobacco Buyout”) assessment. First, the total annual congressionally established user fee assessment is allocated among the six classes of tobacco products using the federal excise tax weighted market share of tobacco products subject to regulation. Then, the assessment for each class of tobacco products is divided among individual manufacturers and importers. Prior to October 1, 2016, these FDA user fees applied only to those products then regulated by the FDA. Effective October 1, 2016, the FDA began additionally applying FDA user fees to newly deemed tobacco products subject to FDA user fees as described above, i.e., cigars and pipe tobacco. On July 28, 2017, FDA announced a new direction in regulating tobacco products, including the newly “deemed” markets, such as cigars and vapor products. FDA stated that it intends to begin several new rulemaking processes, some of which will outline foundational rules governing the premarket application process for the deemed products, including Substantial Equivalence applications and Premarket Tobacco Applications. Accordingly, the original filing deadlines for newly “deemed” products on the market as of August 8, 2016, have been postponed until August 8, 2021, for “combustible” products (e.g., cigar and pipe), and August 8, 2022, for “non-combustible” products (e.g., vapor products). No other filing deadlines were altered. Also noteworthy was that FDA acknowledged a “continuum of risk” among tobacco products, i.e., that certain tobacco products pose a greater risk to individual and public health than others; that it intends to seek public comment on the role that flavors play in attracting youth and the role that flavors may play in helping some smokers switch to potentially less harmful forms of nicotine delivery; and that FDA would be increasing its focus on the regulation of cigarette products. Recent Accounting Pronouncements Adopted: The Company adopted ASU 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment The Company adopted ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory Recent Accounting Pronouncements: In May 2014, the FASB issued Accounting Standards Update (“ASU”), ASU 2014-09, Revenue from Contracts with Customers (Topic 606) , requiring an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The updated standard will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective and permits the use of either a full retrospective or retrospective with cumulative effect transition method. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606) , which delayed the effective date of ASU 2014-09 by one year. ASU 2014-09 is now effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting year. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), Leases In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash In March 2017, the FASB issued ASU 2017-07, Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. ASU 2017-07 is effective for financial statements issued for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. The Company is currently evaluating the effect the adoption of this standard will have on its financial statements Subsequent Events: The Company’s management has evaluated events and transactions that occurred from July 1, 2017 through August 10, 2017, the date these unaudited condensed consolidated financial statements were issued, for subsequent events requiring recognition or disclosure in the financial statements. |
Initial Public Offering
Initial Public Offering | 6 Months Ended |
Jun. 30, 2017 | |
Initial Public Offering [Abstract] | |
Initial Public Offering | Note 3. Initial Public Offering (“IPO”): In April 2016, the Company increased the total authorized shares of preferred and voting and non-voting common stock and effected a 10.43174381 for 1 stock split of the voting and non-voting common stock. As a result of the stock split, all previously reported share amounts (including options and warrants) in the accompanying financial statements and related notes have been retrospectively restated to reflect the stock split. In May 2016, the Company sold 6,210,000 shares of voting common stock in its IPO (including shares sold pursuant to the underwriters’ option to purchase 810,000 shares to cover over-allotments) at a price of $10.00 per share. The gross proceeds totaled $62.1 million. Refer to the 2016 Annual Report on Form 10-K for use of the proceeds. |
Acquisitions
Acquisitions | 6 Months Ended |
Jun. 30, 2017 | |
Acquisitions [Abstract] | |
Acquisitions | Note 4. Acquisitions: In March 2017, the Company entered into a strategic partnership with Vapor Shark in which the Company agreed to make a deposit to Vapor Shark in exchange for a warrant to purchase 100% of the equity interest in Vapor Shark on or before April 15, 2018. In the event the Company exercised the warrant, the Company granted Vapor Shark’s shareholder the option to purchase from Vapor Shark the retail stores it owns effective as of January 1, 2018. In April 2017, the Company entered into a management agreement with Vapor Shark whereby the Company obtained control of the operations. The Company exercised its warrant on June 30, 2017 and obtained ownership of Vapor Shark. As a result of the management agreement, Vapor Shark became a VIE and the Company determined that it is the primary beneficiary and consolidated Vapor Shark as of April 1, 2017. Since Vapor Shark is a business, the Company accounted for the consolidation of the VIE as if it were an acquisition and recorded the assets and liabilities at fair value. The purchase price was nominal and there was no goodwill assigned as a result of the transaction. The Company acquired $3.9 million in assets and assumed $3.9 million in liabilities which includes a liability relating to the option provided to Vapor Shark’s shareholder to purchase the Vapor Shark retail stores it owns. In November 2016, the Company purchased five chewing tobacco brands from Wind River Tobacco Company (“Wind River”) for $2.5 million. The Company paid $0.6 million at closing with the remaining $1.9 million payable quarterly through November 2019 of which $1.6 million was outstanding at June 30, 2017. The transaction was accounted for as an asset purchase with the fair value of the purchase price of $2.4 million assigned to trade names which have an indefinite life. In November 2016, the Company acquired the outstanding stock of VaporBeast for total consideration of $26.5 million net of working capital adjustment of $0.4 million. The purchase price was satisfied through $4.0 million paid in cash at closing, $19.0 million in short-term notes which were paid in December 2016, and $4.0 million in payments deferred for eighteen months. The Company completed the accounting for the acquisition of VaporBeast in 2017 resulting in an increase in goodwill of $0.2 million. The following purchase price and goodwill are based on the excess of the acquisition price over the estimated fair value of the tangible and intangible assets acquired. Purchase price: Total purchase price $ 27,000 Adjustments to purchase price: Working capital (400 ) Fair value of holdback (128 ) Adjusted purchase price $ 26,472 Assets acquired: Working capital $ 4,270 Property and equipment 7 Other intangible assets 16,272 Net assets acquired $ 20,549 Goodwill $ 5,923 The goodwill of $5.9 million consists of the synergies and scale expected from combining the operations. The goodwill is currently deductible for tax purposes. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 6 Months Ended |
Jun. 30, 2017 | |
Fair Value of Financial Instruments [Abstract] | |
Fair Value of Financial Instruments | Note 5. Fair Value of Financial Instruments: The following disclosure of the estimated fair value of financial instruments is made in accordance with the requirements of ASC 825, Financial Instruments. The estimated fair value amounts have been determined by the Company using the methods and assumptions described below. However, considerable judgment is required to interpret market data to develop estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. Cash and Cash Equivalents: Accounts Receivable: Revolving Credit Facility: Long-Term Debt: The fair value of the Company’s long-term debt is estimated based on the quoted market prices for the same or similar issues or on the current rates offered to the Company for debt of the same remaining maturities. As of June 30, 2017, the fair values of the 2017 First Lien Term Loans and the 2017 Second Lien Term Loan were $143.5 million and $55.0 million, respectively as the agreements were entered into during the first quarter of 2017. As of December 31, 2016, the fair values of the First Lien Term Loans and the Second Lien Term Loan approximate their face amounts of $147.3 million and $60.0 million, respectively as they were paid off in February 2017 at face amounts. Foreign Exchange: The Company had forward contracts as of December 31, 2016 for the purchase of €4.9 million. liability as of December 31, 2016 |
Inventories
Inventories | 6 Months Ended |
Jun. 30, 2017 | |
Inventories [Abstract] | |
Inventories | Note 6. Inventories: Inventories are stated at the lower of cost or market. Cost is determined on the last-in, first-out (“LIFO”) method for approximately 49% of the inventories and the first-in, first out (“FIFO”) method for the remaining inventories. Leaf tobacco is presented in current assets in accordance with standard industry practice, notwithstanding the fact that such tobaccos are carried longer than one year for the purpose of curing. The components of inventories are as follows: June 30, 2017 December 31, 2016 Raw materials and work in process $ 2,494 $ 2,596 Leaf tobacco 28,969 27,391 Finished goods - smokeless products 6,384 4,789 Finished goods - smoking products 18,646 18,384 Finished goods - electronic / vaporizer products 15,172 11,993 Other 1,247 1,232 72,912 66,385 LIFO reserve (5,086 ) (4,200 ) $ 67,826 $ 62,185 The inventory valuation allowance as of June 30, 2017 and December 31, 2016 was $0.8 million and $0.6 million, respectively. |
Property, Plant and Equipment
Property, Plant and Equipment | 6 Months Ended |
Jun. 30, 2017 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment | Note 7. Property, Plant and Equipment: Property, plant and equipment consists of: June 30, 2017 December 31, 2016 Land $ 22 $ 22 Building and improvements 1,899 1,899 Leasehold improvements 1,873 1,666 Machinery and equipment 11,642 10,532 Furniture and fixtures 3,666 3,409 19,102 17,528 Accumulated depreciation (10,709 ) (9,938 ) $ 8,393 $ 7,590 |
Accrued Expenses
Accrued Expenses | 6 Months Ended |
Jun. 30, 2017 | |
Accrued Expenses [Abstract] | |
Accrued Expenses | Note 8. Accrued Expenses: Accrued expenses consist of: June 30, 2017 December 31, 2016 Accrued payroll and related items $ 2,962 $ 5,331 Customer returns and allowances 2,051 2,818 Other 7,799 7,187 $ 12,812 $ 15,336 |
Notes Payable and Long-Term Deb
Notes Payable and Long-Term Debt | 6 Months Ended |
Jun. 30, 2017 | |
Notes Payable and Long-Term Debt [Abstract] | |
Notes Payable and Long-Term Debt | Note 9. Notes Payable and Long-Term Debt: Notes payable and long-term debt consists of the following: June 30, 2017 December 31, 2016 2017 First Lien First Out Term Loan $ 108,625 $ - 2017 First Lien Second Out Term Loan 34,913 - 2017 Second Lien Term Loan 55,000 - Note payable - VaporBeast 2,000 2,000 First Lien Term Loan - 146,451 Second Lien Term Loan - 59,128 Total Notes Payable and Long-Term Debt 200,538 207,579 Less deferred finance charges (3,953 ) (4,388 ) Less current maturities (7,850 ) (1,650 ) $ 188,735 $ 201,541 Long-term Debt On February 17, 2017, the Company and NATC, entered into a new $250 million secured credit facility, comprised of (i) a First Lien Credit Facility with Fifth Third Bank, as administrative agent, and other lenders (the “2017 First Lien Credit Facility”), and (ii) a Second Lien Credit Facility with Prospect Capital Corporation, as administrative agent, and other lenders (the “2017 Second Lien Credit Facility,” and together with the 2017 First Lien Credit Facility, the “2017 Credit Facility”). The Company used the proceeds of the 2017 Credit Facility to repay in full the Company’s First Lien Term Loan, Second Lien Term Loan, Revolving Credit Facility and to pay related fees and expenses. The 2017 Credit Facility contains customary events of default, including payment defaults, breaches of representations and warranties, covenant defaults, cross-defaults to certain other material indebtedness in excess of specified amounts, certain events of bankruptcy and insolvency, certain ERISA events, judgments in excess of specified amounts and change in control defaults. The 2017 Credit Facility also contains certain negative covenants customary for facilities of these types including, covenants that, subject to exceptions described in the 2017 Credit Facility, restrict the ability of the Company and its subsidiary guarantors: (i) to pledge assets; (ii) to incur additional indebtedness; (iii) to pay dividends; (iv) to make distributions; (v) to sell assets; and (vi) to make investments. 2017 First Lien Credit Facility The 2017 First Lien Credit Facility consists of: (i) a $50 million revolving credit facility (the “2017 Revolving Credit Facility”); (ii) a $110 million first out term loan facility (the “2017 First Out Term Loan”), and (iii) a $35 million second out term loan facility (the “2017 Second Out Term Loan”), which will be repaid in full only after repayment in full of the 2017 First Out Term Loan. The 2017 First Lien Credit Facility also includes an accordion feature that allows the Company to borrow up to an additional $40 million upon the satisfaction of certain conditions, including obtaining commitments from one or more lenders. Borrowings under the 2017 Revolving Credit Facility may be used for general corporate purposes, including acquisitions. The 2017 First Out Term Loan and the 2017 Revolving Credit Facility have a maturity date of February 17, 2022, and the 2017 Second Out Term Loan has a maturity date of May 17, 2022. The 2017 First Out Term Loan and the 2017 Revolving Credit Facility bear interest at LIBOR plus a spread of 2.5% to 3.5% based on the Company’s senior leverage ratio. The 2017 First Out Term Loan has quarterly required payments of $1.4 million beginning June 30, 2017 increasing to $2.1 million on June 30, 2019 and increasing to $2.8 million on June 30, 2021. The 2017 Second Out Term Loan bears interest at LIBOR plus 6% (subject to a floor of 1.00%). The 2017 Second Out Term Loan has quarterly required payments of $0.1 million beginning June 30, 2017. The 2017 First Lien Credit Facility contains certain financial covenants, including maximum senior leverage ratio of 3.75x with step-downs to 3.00x, a maximum total leverage ratio of 4.75x with step-downs to 4.00x, and a minimum fixed charge coverage ratio of 1.20x. The weighted average interest rate at June 30, 2017 on the 2017 Revolving Credit Facility was 5.2%. The weighted average interest rate at June 30, 2017 on the 2017 First Out Term Loan was 4.5%. The weighted average interest rate at June 30, 2017 on the 2017 Second Out Term Loan was 7.3%. 2017 Second Lien Credit Facility The 2017 Second Lien Credit Facility consists of a $55 million second lien term loan (the “2017 Second Lien Term Loan”) having a maturity date of August 17, 2022. The 2017 Second Lien Term Loan bears interest at a fixed rate of 11%. The 2017 Second Lien Credit Facility contains certain financial covenants, including a maximum senior leverage ratio of 4.25x with step-downs to 3.50x, a maximum total leverage ratio of 5.25x with step-downs to 4.50x, and a minimum fixed charge coverage ratio of 1.10x. Note Payable – VaporBeast On November 30, 2016, the Company issued a note payable to VaporBeast’s shareholders (“VaporBeast Note.”) The VaporBeast Note is $2.0 million principal with 6% interest compounded monthly and matures on May 30, 2018. The VaporBeast Note may be prepaid at any time without penalty and is subject to a late payment penalty of 5% and a default rate of 13% per annum. The VaporBeast Note is subject to customary defaults, including defaults for nonpayment, nonperformance, any material breach under the purchase agreement and bankruptcy or insolvency. First Lien Term Loan All of NATC’s subsidiaries, as well as the Company and NATC Holding, were guarantors under the First Lien Term Loan. TPLLC and its subsidiary were not guarantors of the First Lien Term Loan. The First Lien Term Loan was secured by a first priority lien on substantially all of the assets of the borrowers and the guarantors thereunder, including a pledge of the capital stock of NATC and its subsidiaries held by NATC Holding, NATC or any guarantor, other than certain excluded assets (the “Collateral”). The loans designated as LIBOR rate loans bore interest at LIBOR Rate then in effect (but not less than 1.25%) plus 6.50% and the loans designated as base rate loans bore interest at the (i) highest of (A) the Prime Rate, (B) the Federal Funds Rate plus 0.50%, (C) LIBOR for an interest period of one month plus 1.00% and (D) 2.25% per year plus (ii) 5.50%. The First Lien Term Loan was paid in full with the proceeds from the February 2017 Credit Facility. Second Lien Term Loan The Second Lien Term Loan had the benefit of a second priority security interest in the Collateral and was guaranteed by the same entities as the First Lien Term Loan. Under the Second Lien Term Loan the loans designated as LIBOR rate loans bore interest at the LIBOR Rate then in effect (but not less than 1.25%) plus 10.25% and the loans designated as base rate loans bore interest at (i) the highest of (A) the Prime Rate, (B) the Federal Funds Rate plus 0.50%, (C) LIBOR for an interest period of one month plus 1.00% and (D) 2.25% per year plus (ii) 9.25%. The Second Lien Term Loan was paid in full with the proceeds from the February 2017 Credit Facility. Revolving Credit Facility The Revolving Credit Facility provided for aggregate commitments of up to $40 million, subject to a borrowing base, which was calculated as the sum of (i) 85% of eligible accounts receivable, plus (ii) the lesser of (A) the product of 70% multiplied by the value of eligible inventory and (B) the product of 85% multiplied by the net recovery percentage identified in the most recent inventory appraisal multiplied by the value of eligible inventory, plus (iii) the lesser of (A) the product of 75% multiplied by the value of eligible inventory and (B) the product of 85% multiplied by the net recovery percentage identified in the most recent inventory appraisal multiplied by the value of the eligible finished goods inventory, minus (iv) the aggregate amount of reserves established by the administrative agent. The outstanding balance on the Revolving Credit Facility was paid in full with the proceeds from the February 2017 Credit Facility. PIK Toggle Notes On January 13, 2014, the Company issued PIK Toggle Notes (“PIK Toggle Notes”) to Standard General Master Fund, L.P. (“Standard General”) with a principal amount of $45 million and warrants to purchase 42,424 of the Company’s common stock at $.01 per share, as adjusted for stock splits and other events specified in the agreement. After adjustment for the stock split effected in connection with the IPO of 10.43174381 to 1, the warrants were adjusted to provide for the purchase of 442,558 of the Company’s common stock. Due to the issuance of the warrants, the PIK Toggle Notes had an original issue discount of $1.7 million and were initially valued at $43.3 million. The PIK Toggle Notes were scheduled to mature and the warrants to expire on January 13, 2021. The PIK Toggle Notes accrued interest based on the LIBOR Rate then in effect (but not less than 1.25%) plus 13.75%. Interest was payable on the last day of each quarter and upon maturity. The Company had the flexibility to pay interest in kind through an increase in the principal amount at the same interest rate as the PIK Toggle Notes. The Company chose to increase the PIK Toggle Notes for all interest for the first three months of 2016. In connection with the IPO, in May 2016, the Company redeemed and retired all of the outstanding PIK Toggle Notes in exchange for a combination of cash and shares of the Company’s voting common stock. As a result of this transaction the Company incurred a loss on extinguishment of debt of $2.8 million during the second quarter of 2016. 7% Senior Notes In January 2014, the Company issued 7% Senior Notes to various stockholders with a principal amount of $11 million and warrants to purchase 11,000,000 units of membership interests in Intrepid, which represented 40% of the Intrepid Common Units outstanding on a fully diluted basis, at a purchase price of $1.00 per unit. Due to the issuance of the Intrepid warrants, the 7% Senior Notes had an original issue discount of $2.8 million and were initially valued at $8.2 million. The 7% Senior Notes were scheduled to mature and the warrants to expire on December 31, 2023. The 7% Senior Notes accrued interest at a fixed rate of 7% per annum. The 7% Senior Notes were general unsecured obligations of the Company and ranked equally with the Company’s other unsecured and unsubordinated debt from time to time outstanding. Redemptions of the 7% Senior Notes could be made by the Company at any time without penalty or premium. In connection with the IPO, in May 2016, the Company redeemed and retired all of the outstanding 7% Senior Notes in exchange for shares of the Company’s voting common stock. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2017 | |
Income Taxes [Abstract] | |
Income Taxes | Note 10. Income Taxes: The Company’s income tax expense for the three and six months ended June 30, 2017 does not bear the normal relationship to income before income taxes of approximately 41% because of tax benefits relating to stock options exercised of $1.6 million and $3.6 million for the three and six months ended June 30, 2017, respectively. The Company’s income tax expense for the three and six months ended June 30, 2016 does not bear the normal relationship to income before income taxes because of net operating loss carryforwards that were utilized and were partially offset by certain minimum state income taxes. The Company follows the provisions of ASC 740-10-25, which prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. The Company has determined that it did not have any uncertain tax positions requiring recognition under the provisions of ASC 740-10-25. The Company’s policy is to recognize interest and penalties accrued on uncertain tax positions, if any, as part of interest expense. The Company files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. In general, the Company is no longer subject to U.S. federal and state tax examinations for years prior to 2013. |
Pension and Postretirement Bene
Pension and Postretirement Benefit Plans | 6 Months Ended |
Jun. 30, 2017 | |
Pension and Postretirement Benefit Plans [Abstract] | |
Pension and Postretirement Benefit Plans | Note 11. Pension and Postretirement Benefit Plans: The components of Net Periodic Benefit Cost are as follows: Pension Benefits Postretirement Benefits Three months ended Three months ended June 30, 2017 June 30, 2016 June 30, 2017 June 30, 2016 Service cost $ 26 $ 26 $ - $ - Interest cost 150 175 14 53 Expected return on plan assets (256 ) (258 ) - - Amortization of gains and losses 116 123 - - Net periodic benefit cost $ 36 $ 66 $ 14 $ 53 Pension Benefits Postretirement Benefits Six months ended Six months ended June 30, 2017 June 30, 2016 June 30, 2017 June 30, 2016 Service cost $ 52 $ 52 $ - $ - Interest cost 320 350 72 105 Expected return on plan assets (512 ) (517 ) - - Amortization of gains and losses 236 246 - - Net periodic benefit cost $ 96 $ 131 $ 72 $ 105 The Company has a defined benefit pension plan. Benefits for the hourly employees’ plan were based on a stated benefit per year of service, reduced by amounts earned in a previous plan. Benefits for the salaried employees plan were based on years of service and the employees’ final compensation. The defined benefit pension plan is frozen. The Company sponsored a defined benefit postretirement plan that covered hourly employees. This plan provides medical and dental benefits. This plan is contributory, with retiree contributions adjusted annually. The Company expects to contribute approximately $0.2 million to its postretirement plan in 2017 for the payment of benefits. |
Share Incentive Plans
Share Incentive Plans | 6 Months Ended |
Jun. 30, 2017 | |
Share Incentive Plans [Abstract] | |
Share Incentive Plans | Note 12. Share Incentive Plans: On April 28, 2016, the Board of Directors of the Company adopted the Turning Point Brands, Inc. 2015 Equity Incentive Plan (the “2015 Plan”) pursuant to which awards may be granted to employees, non-employee directors and consultants. In addition, the 2015 Plan provides for the granting of nonqualified stock options to employees of the Company or any subsidiary of the Company. Pursuant to the 2015 Plan, 1,400,000 shares of common stock of the Company are reserved for issuance as awards to employees, consultants and non-employee directors as compensation for past or future services or the attainment of certain performance goals. The 2015 Plan is scheduled to terminate on April 27, 2026. The 2015 Plan is administrated by a committee (the “Committee”) of the Company’s Board of Directors. The Committee determines the criteria for the vesting period, with such criteria to be specified in the award agreement. As of June 30, 2017, 21,949 shares of restricted stock, 94,000 restricted stock units and 187,815 options have been granted to employees of the Company under the 2015 Plan. There are 1,096,236 shares available for grant under the 2015 Plan. On February 7, 2017, the Board of Directors of the Company approved stock option cash-out agreement with three Company officers and a director for the surrender of 83,400 expiring stock options in exchange for payment to the option holders of $11.99 per share which is the difference between the exercise price of $1.06 and closing stock price of $13.05, or an aggregate of $1.0 million. On February 8, 2006, the Board of Directors of the Company adopted the North Atlantic Holding Company, Inc. 2006 Equity Incentive Plan (the “2006 Plan”) pursuant to which awards may be granted to employees. The 2006 Plan provides for the granting of nonqualified stock options and restricted stock awards to employees. Upon the adoption of the Company’s 2015 Equity Incentive Plan in connection with its IPO, the Company determined that no additional grants would be made under the 2006 Plan, however all awards issued under the 2006 Plan that have not been previously terminated or forfeited remain outstanding and continue unaffected. There are no shares available for grant under the 2006 Plan. Stock option activity for the 2006 and 2015 Plans is summarized below: Stock Option Shares Weighted Average Exercise Price Weighted Average Grant Date Fair Value Outstanding, December 31, 2015 1,667,671 $ 2.19 $ 1.20 Granted 53,996 9.26 2.37 Exercised (73,135 ) 2.31 1.27 Forfeited (10,770 ) 3.83 2.17 Outstanding, December 31, 2016 1,637,762 2.41 1.23 Granted 133,819 14.69 4.41 Exercised (737,741 ) 1.49 0.79 Surrendered (83,400 ) 1.06 0.54 Outstanding, June 30, 2017 950,440 $ 4.97 $ 2.09 Under the 2006 Plan, the total intrinsic value of options exercised during the six months ended June 30, 2017 and 2016 was $9.1 million and $0.1 million, respectively. The total intrinsic value of options surrendered during the six months ended June 30, 2017 was $1.0 million. At June 30, 2017, under the 2006 Plan, the outstanding stock options’ exercise price for 239,498 options is $1.06 per share all of which are exercisable. The outstanding stock options’ exercise price for 523,127 options is $3.83 per share all of which are exercisable. The weighted average of the remaining lives of the outstanding stock options is approximately 0.8 years for the options with the $1.06 exercise price, and 5.4 years for the options with the $3.83 exercise price. The Company estimates that the expected life of these stock options is ten years from the date of grant. For the $1.06 per share options, the weighted average fair value of options was determined using the Black-Scholes model assuming a ten-year life from grant date; a current share price and exercise price of $1.06; risk free interest rate of 4.37%; a volatility of 30%; and no assumed dividend yield. Based on these assumptions, the fair value of these options is approximately $0.54 per share option granted. For the $3.83 per share options, At June 30, 2017, under the 2015 Plan, the risk free interest rate is based on the U.S. Treasury rate for the expected life at the time of grant. The expected volatility is based on the average long-term historical volatilities of peer companies. We intend to continue to consistently use the same group of publicly traded peer companies to determine expected volatility in the future until sufficient information regarding volatility of our share price becomes available or the selected companies are no longer suitable for this purpose. Also, due to our limited trading history, we are using the “simplified method” to calculate expected holding periods, which represent the periods of time that options granted are expected to be outstanding. We will continue to use this method until we have sufficient historical exercise experience to give us confidence that our calculations will be reliable. The fair values of these options were determined using the Black-Scholes option pricing model. The following table outlines the assumptions based on the number of options granted under the 2015 Plan. August 2016 Grant February 2017 Grant May 2017 Grant Number of options 53,996 40,000 93,819 Number exercisable 26,998 - - Exercise price $ 9.26 $ 13.00 $ 15.41 Remaining lives 9.1 9.8 9.9 Risk free interest rate 1.16 % 1.89 % 1.76 % Expected volatility 25.40 % 27.44 % 26.92 % Expected life 5.375 6.000 6.000 Dividend yield - - - Fair value $ 2.37 $ 3.98 $ 4.60 The Company has recorded compensation expense related to the options based on the provisions of ASC 718 under which the fixed portion of such expense is determined as the fair value of the options on the date of grant and amortized over the vesting period. The Company recorded compensation expense related to the options of approximately $0.1 million and less than $0.1 million in the consolidated statements of income for the three months ended June 30, 2017 and 2016, respectively, and approximately $0.2 million and $0.1 million for the six months ended June 30, 2017 and 2016, respectively. Total unrecognized compensation expense related to options at June 30, 2017 is $0.5 million which will be expensed over 2.5 years. Performance-based restricted stock units (“PRSUs”) are restricted stock that are subject to both performance-based and service based vesting conditions. The number of shares of common stock that a recipient will receive upon vesting of a PRSU will be calculated by reference to certain performance metrics that relate to the Company’s performance over a five-year period. PRSUs will vest on the measurement date, which is no more than 65 days after the performance period, provided the applicable service and performance conditions are satisfied. On March 31, 2017, the Committee granted 94,000 performance-based restricted stock units to employees of the Company, all of which are unvested at June 30, 2017. The fair value of each PRSU is $15.60, the closing price of the stock on March 31, 2017, the date of grant. The Company recorded compensation expense related to the PRSUs of approximately $0.1 million in the consolidated statements of income for the three and six months ended June 30, 2017 based on the probability of achieving the performance condition. Total unrecognized compensation expense related to these awards is $1.4 million which will be expensed over the service period based on the probability of achieving the performance condition. |
Contingencies
Contingencies | 6 Months Ended |
Jun. 30, 2017 | |
Contingencies [Abstract] | |
Contingencies | Note 13. Contingencies: The Company is involved in various claims and actions that arise in the normal course of business. While the outcome of these legal proceedings cannot be predicted with certainty, it is the opinion of management that the resolution of the proceedings should not have a material adverse effect on the financial position, results of operations or cash flows of the Company. |
Earnings Per Share
Earnings Per Share | 6 Months Ended |
Jun. 30, 2017 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Note 14. Earnings Per Share: The following is a reconciliation of the numerators and denominators of the basic and diluted EPS computations of net income: Three Months Ended June 30, 2017 June 30, 2016 Income Shares Per Share Income Shares Per Share Net income attributable to Turning Point Brands, Inc. $ 7,439 $ 799 Basic EPS: Weighted average 18,886,418 $ 0.39 15,274,446 $ 0.05 Diluted EPS: Effect of Dilutive securities: Stock options and warrants 698,651 1,602,845 19,585,069 $ 0.38 16,877,291 $ 0.05 Six Months Ended June 30, 2017 June 30, 2016 Income Shares Per Share Income Shares Per Share Net income attributable to Turning Point Brands, Inc. $ 9,316 $ 3,033 Basic EPS: Weighted average 18,829,130 $ 0.49 12,476,719 $ 0.24 Diluted EPS: Effect of Dilutive securities: Stock options and warrants 736,392 1,447,907 19,565,522 $ 0.48 13,924,626 $ 0.22 Due to the IPO in May 2016, the Company’s weighted average shares and basic and diluted earnings per share are significantly different as of June 30, 2017 when compared to prior periods. |
Segment Information
Segment Information | 6 Months Ended |
Jun. 30, 2017 | |
Segment Information [Abstract] | |
Segment Information | Note 15. Segment Information: In accordance with ASC 280, Segment Reporting, the Company has three reportable segments, (1) Smokeless products; (2) Smoking products; and (3) NewGen products. The smokeless products segment: (a) manufactures and markets moist snuff and (b) contracts for and markets chewing tobacco products. The smoking products segment: (a) imports and markets cigarette papers, tubes and related products and (b) imports and markets finished cigars and MYO cigar wraps. The NewGen products segment (a) markets e-cigarettes, e-liquids, vaporizers and other related products and (b) distributes a wide assortment of vaping products to non-traditional retail outlets. The Company’s smoking and smokeless products are distributed primarily through wholesale distributors in the United States. The Other segment includes the assets of the Company not assigned to the three reportable segments and Elimination includes the elimination of intercompany accounts between segments. The accounting policies of these segments are the same as those of the Company. Segment data includes a charge allocating corporate costs to the three reportable segments based on their respective net sales. The Company evaluates the performance of its segments and allocates resources to them based on operating income. The tables below present financial information about reported segments: Three Months Ended June 30, 2017 June 30, 2016 Net sales Smokeless products $ 22,021 $ 21,691 Smoking products 27,019 26,789 NewGen products 23,046 3,101 $ 72,086 $ 51,581 Operating income Smokeless products $ 5,433 $ 4,843 Smoking products 7,138 7,206 NewGen products 938 (644 ) Other (1) 126 (629 ) $ 13,635 $ 10,776 Interest expense $ (4,046 ) $ (6,876 ) Investment income 89 $ 332 Loss on extinguishment of debt - (2,824 ) Income before income taxes $ 9,678 $ 1,408 Capital expenditures Smokeless products $ 154 $ 405 NewGen products 45 - $ 199 $ 405 Depreciation and amortization Smokeless products $ 352 $ 293 NewGen products 241 - $ 593 $ 293 Six Months Ended June 30, 2017 June 30, 2016 Net sales Smokeless products $ 42,269 $ 40,030 Smoking products 54,196 54,674 NewGen products 42,409 6,743 $ 138,874 $ 101,447 Operating income Smokeless products $ 8,870 $ 8,402 Smoking products 13,692 14,746 NewGen products 1,850 (528 ) Other (1) (20 ) (935 ) $ 24,392 $ 21,685 Interest expense $ (8,979 ) $ (15,338 ) Investment income 203 $ 332 Loss on extinguishment of debt (6,116 ) (2,824 ) Income before income taxes $ 9,500 $ 3,855 Capital expenditures Smokeless products $ 520 $ 734 NewGen products 47 125 $ 567 $ 859 Depreciation and amortization Smokeless products $ 704 $ 586 NewGen products 418 - $ 1,122 $ 586 June 30, 2017 December 31, 2016 Assets Smokeless products $ 88,207 $ 85,559 Smoking products 150,267 150,498 NewGen products 44,914 39,416 Other (1) 7,536 9,547 $ 290,924 $ 285,020 (1) “Other” includes our assets that are not assigned to our three reportable segments, such as deferred taxes. All goodwill has been allocated to our reportable segments. Net Sales - Domestic and Foreign The tables below present financial information about our domestic and foreign net sales: Three Months Ended June 30, 2017 June 30, 2016 Domestic $ 69,355 $ 49,126 Foreign 2,731 2,455 Net Sales $ 72,086 $ 51,581 Six Months Ended June 30, 2017 June 30, 2016 Domestic $ 133,726 $ 96,100 Foreign 5,148 5,347 Net Sales $ 138,874 $ 101,447 |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Basis of Presentation [Abstract] | |
Basis of Presentation | Turning Point Brands, Inc., (the “Company”) is a holding company which owns NATC Holding Company, Inc. (“NATC Holding”) and its subsidiaries, Turning Point Brands, LLC (“TPLLC”) and its subsidiary, Intrepid Brands, LLC (“Intrepid”), and Vapor Shark, LLC (fka The Hand Media, Inc.) and its subsidiaries (collectively, “Vapor Shark”). Except where the context otherwise requires, references to the Company include the Company, NATC Holding and its subsidiary, North Atlantic Trading Company, Inc. (“NATC”) and its subsidiaries, National Tobacco Company, L.P. ), North Atlantic Operating Company, Inc. (“NAOC”), North Atlantic Cigarette Company, Inc. (“NACC”), National Tobacco Finance Corporation (“NTFC”), Smoke Free Technologies, Inc. d/b/a VaporBeast (“VaporBeast”), Fred Stoker & Sons, Inc., RBJ Sales, Inc. and Stoker, Inc. (collectively, “Stoker”) and TPLLC, Intrepid and Vapor Shark. The accompanying interim condensed consolidated financial statements have been prepared in accordance with our accounting practices described in our audited consolidated financial statements as of and for the year ended December 31, 2016, and are unaudited. In the opinion of management, the unaudited interim condensed consolidated financial statements included herein contain all adjustments necessary to present fairly our financial position, results of operations and cash flows for the periods indicated. Such adjustments, other than nonrecurring adjustments that have been separately disclosed, are of a normal, recurring nature. The operating results for interim periods are not necessarily indicative of results to be expected for a full year or future interim periods. The unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and accompanying notes as of and for the year ended December 31, 2016. The accompanying interim condensed consolidated financial statements are presented in accordance with the rules and regulations of the Securities and Exchange Commission and, accordingly, do not include all the disclosures required by generally accepted accounting principles in the United States (“GAAP”) with respect to annual financial statements. |
Summary of Significant Accoun24
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Summary of Significant Accounting Policies [Abstract] | |
Consolidation | Consolidation: |
Variable Interest Entity | Vapor Shark is a variable interest entity (“VIE”) for which the Company is considered the primary beneficiary due to a management agreement in which the Company obtained control of the operations in April 2017. The Company did not own Vapor Shark during the second quarter of 2017. On June 30, 2017, the Company exercised a warrant to purchase all of the issued and outstanding equity of Vapor Shark. Beginning June 30, 2017, Vapor Shark is considered a wholly owned subsidiary of the Company. See Note 4 – Acquisitions for details relating to the warrant exercise. |
Revenue Recognition | Revenue Recognition: We recognize revenues, net of sales incentives and sales returns, including shipping and handling charges billed to customers, upon delivery to the customer at which time there is a transfer of title and risk of loss to the customer in accordance with the ASC 605-10-S99. We classify customer rebates as sales deductions in accordance with the requirements of ASC 605-50-25. |
Shipping Costs | Shipping Costs: |
Fair Value | Fair Value: The three levels of the fair value hierarchy under GAAP are described below: Level 1 – Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets at the measurement date. Level 2 – Inputs to the valuation methodology include: quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in inactive markets; inputs other than quoted prices that are observable for the asset or liability; and inputs that are derived principally from or corroborated by observable market data by correlation or other means. Level 3 – Unobservable inputs that reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. |
Master Settlement Agreement Escrow Account | Master Settlement Agreement Escrow Account: Pursuant to the Master Settlement Agreement (the “MSA”) entered into in November 1998 by most states (represented by their attorneys general acting through the National Association of Attorneys General) and subsequent states’ statutes, a “cigarette manufacturer” (which is defined to include a manufacturer of make-your-own (“MYO”) cigarette tobacco) has the option of either becoming a signatory to the MSA or opening, funding, and maintaining an escrow account to have funds available for certain potential tobacco-related liabilities, with sub-accounts on behalf of each settling state. The Company has chosen to open and fund an escrow account as its method of compliance. It is the Company’s policy to record amounts on deposit in the escrow account for prior years as a non-current asset. Each year’s annual obligation is required to be deposited in the escrow account by April 15 of the following year. In addition to the annual deposit, many states have elected to require quarterly deposits for the previous quarter’s sales. As of June 30, 2017, the Company had on deposit approximately $32.0 million, the fair value of which was approximately $30.9 million. At December 31, 2016, the Company had on deposit approximately $31.9 million, the fair value of which was approximately $30.4 million . The Company invests a portion of the MSA escrow in U.S. Government securities including TIPS, Treasury Notes and Treasury Bonds. These investments are classified as available-for-sale and carried at fair value. Realized losses are prohibited under the MSA and thus any investment in an unrealized loss position will be held until the value is recovered or until maturity. The following shows the fair value of the MSA escrow account: June 30, 2017 December 31, 2016 Cost Gross Unrealized Losses Estimated Fair Value Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Cash and cash equivalents $ 3,798 $ - $ 3,798 $ 2,786 $ - $ - $ 2,786 U.S. Governmental agency obligations 28,217 (1,162 ) 27,055 29,156 19 (1,551 ) 27,624 $ 32,015 $ (1,162 ) $ 30,853 $ 31,942 $ 19 $ (1,551 ) $ 30,410 Fair value for the U.S. Governmental agency obligations are Level 2. All investments have been in an unrealized loss position for less than 12 months. The following shows the maturities of the U.S. Governmental agency obligations: June 30, 2017 December 31, 2016 Less than five years $ 9,113 $ 9,113 Six to ten years 16,153 16,141 Greater than ten years 2,951 3,902 Total U.S. Governmental agency obligations $ 28,217 $ 29,156 The following table represents the amount of deposits by sales year for the MSA escrow account and reflects the decline in annual deposits beginning in 2009, due to the significant increase in federal excise taxes: Deposits Sales Year June 30, 2017 December 31, 2016 1999 $ 211 $ 211 2000 1,017 1,017 2001 1,673 1,673 2002 2,271 2,271 2003 4,249 4,249 2004 3,715 3,715 2005 4,552 4,552 2006 3,847 3,847 2007 4,167 4,167 2008 3,364 3,364 2009 1,626 1,626 2010 406 406 2011 193 193 2012 199 199 2013 173 173 2014 142 142 2015 101 100 2016 82 37 2017 27 - Total $ 32,015 $ 31,942 |
Food and Drug Administration | Food and Drug Administration (“FDA”): On June 22, 2009, the Family Smoking Prevention and Tobacco Control Act (“FSPTCA”) authorized the Food and Drug Administration (“FDA”) to immediately regulate the manufacture, sale and marketing of four categories of tobacco products – cigarettes, cigarette tobacco, roll-your-own tobacco and smokeless tobacco. On August 8, 2016, the FDA deeming regulation became effective. The deeming regulation gave the FDA the authority to additionally regulate cigars, pipe tobacco, e-cigarettes, vaporizers and e-liquids as “deemed” tobacco products under the FSPTCA. The FDA assesses tobacco product user fees on six classes of regulated tobacco products and computes user fees using a methodology similar to the methodology used by the U.S Department of Agriculture to compute the Tobacco Transition Payment Program (“TTPP,” also known as the “Tobacco Buyout”) assessment. First, the total annual congressionally established user fee assessment is allocated among the six classes of tobacco products using the federal excise tax weighted market share of tobacco products subject to regulation. Then, the assessment for each class of tobacco products is divided among individual manufacturers and importers. Prior to October 1, 2016, these FDA user fees applied only to those products then regulated by the FDA. Effective October 1, 2016, the FDA began additionally applying FDA user fees to newly deemed tobacco products subject to FDA user fees as described above, i.e., cigars and pipe tobacco. On July 28, 2017, FDA announced a new direction in regulating tobacco products, including the newly “deemed” markets, such as cigars and vapor products. FDA stated that it intends to begin several new rulemaking processes, some of which will outline foundational rules governing the premarket application process for the deemed products, including Substantial Equivalence applications and Premarket Tobacco Applications. Accordingly, the original filing deadlines for newly “deemed” products on the market as of August 8, 2016, have been postponed until August 8, 2021, for “combustible” products (e.g., cigar and pipe), and August 8, 2022, for “non-combustible” products (e.g., vapor products). No other filing deadlines were altered. Also noteworthy was that FDA acknowledged a “continuum of risk” among tobacco products, i.e., that certain tobacco products pose a greater risk to individual and public health than others; that it intends to seek public comment on the role that flavors play in attracting youth and the role that flavors may play in helping some smokers switch to potentially less harmful forms of nicotine delivery; and that FDA would be increasing its focus on the regulation of cigarette products. |
Recent Accounting Pronouncements Adopted | Recent Accounting Pronouncements Adopted: The Company adopted ASU 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment The Company adopted ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory |
Recent Accounting Pronouncements | Recent Accounting Pronouncements: In May 2014, the FASB issued Accounting Standards Update (“ASU”), ASU 2014-09, Revenue from Contracts with Customers (Topic 606) , requiring an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The updated standard will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective and permits the use of either a full retrospective or retrospective with cumulative effect transition method. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606) , which delayed the effective date of ASU 2014-09 by one year. ASU 2014-09 is now effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting year. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), Leases In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash In March 2017, the FASB issued ASU 2017-07, Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. ASU 2017-07 is effective for financial statements issued for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. The Company is currently evaluating the effect the adoption of this standard will have on its financial statements |
Subsequent Events | Subsequent Events: The Company’s management has evaluated events and transactions that occurred from July 1, 2017 through August 10, 2017, the date these unaudited condensed consolidated financial statements were issued, for subsequent events requiring recognition or disclosure in the financial statements. |
Summary of Significant Accoun25
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Summary of Significant Accounting Policies [Abstract] | |
Fair Value of MSA Escrow Account | The following shows the fair value of the MSA escrow account: June 30, 2017 December 31, 2016 Cost Gross Unrealized Losses Estimated Fair Value Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Cash and cash equivalents $ 3,798 $ - $ 3,798 $ 2,786 $ - $ - $ 2,786 U.S. Governmental agency obligations 28,217 (1,162 ) 27,055 29,156 19 (1,551 ) 27,624 $ 32,015 $ (1,162 ) $ 30,853 $ 31,942 $ 19 $ (1,551 ) $ 30,410 |
Maturities of U.S. Governmental Agency Obligations | The following shows the maturities of the U.S. Governmental agency obligations: June 30, 2017 December 31, 2016 Less than five years $ 9,113 $ 9,113 Six to ten years 16,153 16,141 Greater than ten years 2,951 3,902 Total U.S. Governmental agency obligations $ 28,217 $ 29,156 |
Deposits by Sales Year for MSA Escrow Account | The following table represents the amount of deposits by sales year for the MSA escrow account and reflects the decline in annual deposits beginning in 2009, due to the significant increase in federal excise taxes: Deposits Sales Year June 30, 2017 December 31, 2016 1999 $ 211 $ 211 2000 1,017 1,017 2001 1,673 1,673 2002 2,271 2,271 2003 4,249 4,249 2004 3,715 3,715 2005 4,552 4,552 2006 3,847 3,847 2007 4,167 4,167 2008 3,364 3,364 2009 1,626 1,626 2010 406 406 2011 193 193 2012 199 199 2013 173 173 2014 142 142 2015 101 100 2016 82 37 2017 27 - Total $ 32,015 $ 31,942 |
Acquisitions (Tables)
Acquisitions (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Acquisitions [Abstract] | |
Acquisition of VaporBeast | The following purchase price and goodwill are based on the excess of the acquisition price over the estimated fair value of the tangible and intangible assets acquired. Purchase price: Total purchase price $ 27,000 Adjustments to purchase price: Working capital (400 ) Fair value of holdback (128 ) Adjusted purchase price $ 26,472 Assets acquired: Working capital $ 4,270 Property and equipment 7 Other intangible assets 16,272 Net assets acquired $ 20,549 Goodwill $ 5,923 |
Inventories (Tables)
Inventories (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Inventories [Abstract] | |
Inventories | The components of inventories are as follows: June 30, 2017 December 31, 2016 Raw materials and work in process $ 2,494 $ 2,596 Leaf tobacco 28,969 27,391 Finished goods - smokeless products 6,384 4,789 Finished goods - smoking products 18,646 18,384 Finished goods - electronic / vaporizer products 15,172 11,993 Other 1,247 1,232 72,912 66,385 LIFO reserve (5,086 ) (4,200 ) $ 67,826 $ 62,185 |
Property, Plant and Equipment (
Property, Plant and Equipment (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment | Property, plant and equipment consists of: June 30, 2017 December 31, 2016 Land $ 22 $ 22 Building and improvements 1,899 1,899 Leasehold improvements 1,873 1,666 Machinery and equipment 11,642 10,532 Furniture and fixtures 3,666 3,409 19,102 17,528 Accumulated depreciation (10,709 ) (9,938 ) $ 8,393 $ 7,590 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Accrued Expenses [Abstract] | |
Accrued Expenses | Accrued expenses consist of: June 30, 2017 December 31, 2016 Accrued payroll and related items $ 2,962 $ 5,331 Customer returns and allowances 2,051 2,818 Other 7,799 7,187 $ 12,812 $ 15,336 |
Notes Payable and Long-Term D30
Notes Payable and Long-Term Debt (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Notes Payable and Long-Term Debt [Abstract] | |
Notes Payable and Long-Term Debt | Notes payable and long-term debt consists of the following: June 30, 2017 December 31, 2016 2017 First Lien First Out Term Loan $ 108,625 $ - 2017 First Lien Second Out Term Loan 34,913 - 2017 Second Lien Term Loan 55,000 - Note payable - VaporBeast 2,000 2,000 First Lien Term Loan - 146,451 Second Lien Term Loan - 59,128 Total Notes Payable and Long-Term Debt 200,538 207,579 Less deferred finance charges (3,953 ) (4,388 ) Less current maturities (7,850 ) (1,650 ) $ 188,735 $ 201,541 |
Pension and Postretirement Be31
Pension and Postretirement Benefit Plans (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Pension and Postretirement Benefit Plans [Abstract] | |
Components of Net Periodic Benefit Cost | The components of Net Periodic Benefit Cost are as follows: Pension Benefits Postretirement Benefits Three months ended Three months ended June 30, 2017 June 30, 2016 June 30, 2017 June 30, 2016 Service cost $ 26 $ 26 $ - $ - Interest cost 150 175 14 53 Expected return on plan assets (256 ) (258 ) - - Amortization of gains and losses 116 123 - - Net periodic benefit cost $ 36 $ 66 $ 14 $ 53 Pension Benefits Postretirement Benefits Six months ended Six months ended June 30, 2017 June 30, 2016 June 30, 2017 June 30, 2016 Service cost $ 52 $ 52 $ - $ - Interest cost 320 350 72 105 Expected return on plan assets (512 ) (517 ) - - Amortization of gains and losses 236 246 - - Net periodic benefit cost $ 96 $ 131 $ 72 $ 105 |
Share Incentive Plans (Tables)
Share Incentive Plans (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Share Incentive Plans [Abstract] | |
Stock Option Activity | Stock option activity for the 2006 and 2015 Plans is summarized below: Stock Option Shares Weighted Average Exercise Price Weighted Average Grant Date Fair Value Outstanding, December 31, 2015 1,667,671 $ 2.19 $ 1.20 Granted 53,996 9.26 2.37 Exercised (73,135 ) 2.31 1.27 Forfeited (10,770 ) 3.83 2.17 Outstanding, December 31, 2016 1,637,762 2.41 1.23 Granted 133,819 14.69 4.41 Exercised (737,741 ) 1.49 0.79 Surrendered (83,400 ) 1.06 0.54 Outstanding, June 30, 2017 950,440 $ 4.97 $ 2.09 |
Assumptions for Options Granted Under 2015 Plan | The following table outlines the assumptions based on the number of options granted under the 2015 Plan. August 2016 Grant February 2017 Grant May 2017 Grant Number of options 53,996 40,000 93,819 Number exercisable 26,998 - - Exercise price $ 9.26 $ 13.00 $ 15.41 Remaining lives 9.1 9.8 9.9 Risk free interest rate 1.16 % 1.89 % 1.76 % Expected volatility 25.40 % 27.44 % 26.92 % Expected life 5.375 6.000 6.000 Dividend yield - - - Fair value $ 2.37 $ 3.98 $ 4.60 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | The following is a reconciliation of the numerators and denominators of the basic and diluted EPS computations of net income: Three Months Ended June 30, 2017 June 30, 2016 Income Shares Per Share Income Shares Per Share Net income attributable to Turning Point Brands, Inc. $ 7,439 $ 799 Basic EPS: Weighted average 18,886,418 $ 0.39 15,274,446 $ 0.05 Diluted EPS: Effect of Dilutive securities: Stock options and warrants 698,651 1,602,845 19,585,069 $ 0.38 16,877,291 $ 0.05 Six Months Ended June 30, 2017 June 30, 2016 Income Shares Per Share Income Shares Per Share Net income attributable to Turning Point Brands, Inc. $ 9,316 $ 3,033 Basic EPS: Weighted average 18,829,130 $ 0.49 12,476,719 $ 0.24 Diluted EPS: Effect of Dilutive securities: Stock options and warrants 736,392 1,447,907 19,565,522 $ 0.48 13,924,626 $ 0.22 |
Segment Information (Tables)
Segment Information (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Segment Information [Abstract] | |
Financial Information of Reportable Segments | The tables below present financial information about reported segments: Three Months Ended June 30, 2017 June 30, 2016 Net sales Smokeless products $ 22,021 $ 21,691 Smoking products 27,019 26,789 NewGen products 23,046 3,101 $ 72,086 $ 51,581 Operating income Smokeless products $ 5,433 $ 4,843 Smoking products 7,138 7,206 NewGen products 938 (644 ) Other (1) 126 (629 ) $ 13,635 $ 10,776 Interest expense $ (4,046 ) $ (6,876 ) Investment income 89 $ 332 Loss on extinguishment of debt - (2,824 ) Income before income taxes $ 9,678 $ 1,408 Capital expenditures Smokeless products $ 154 $ 405 NewGen products 45 - $ 199 $ 405 Depreciation and amortization Smokeless products $ 352 $ 293 NewGen products 241 - $ 593 $ 293 Six Months Ended June 30, 2017 June 30, 2016 Net sales Smokeless products $ 42,269 $ 40,030 Smoking products 54,196 54,674 NewGen products 42,409 6,743 $ 138,874 $ 101,447 Operating income Smokeless products $ 8,870 $ 8,402 Smoking products 13,692 14,746 NewGen products 1,850 (528 ) Other (1) (20 ) (935 ) $ 24,392 $ 21,685 Interest expense $ (8,979 ) $ (15,338 ) Investment income 203 $ 332 Loss on extinguishment of debt (6,116 ) (2,824 ) Income before income taxes $ 9,500 $ 3,855 Capital expenditures Smokeless products $ 520 $ 734 NewGen products 47 125 $ 567 $ 859 Depreciation and amortization Smokeless products $ 704 $ 586 NewGen products 418 - $ 1,122 $ 586 June 30, 2017 December 31, 2016 Assets Smokeless products $ 88,207 $ 85,559 Smoking products 150,267 150,498 NewGen products 44,914 39,416 Other (1) 7,536 9,547 $ 290,924 $ 285,020 (1) “Other” includes our assets that are not assigned to our three reportable segments, such as deferred taxes. All goodwill has been allocated to our reportable segments. |
Net Sales - Domestic and Foreign | The tables below present financial information about our domestic and foreign net sales: Three Months Ended June 30, 2017 June 30, 2016 Domestic $ 69,355 $ 49,126 Foreign 2,731 2,455 Net Sales $ 72,086 $ 51,581 Six Months Ended June 30, 2017 June 30, 2016 Domestic $ 133,726 $ 96,100 Foreign 5,148 5,347 Net Sales $ 138,874 $ 101,447 |
Summary of Significant Accoun35
Summary of Significant Accounting Policies (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2017USD ($) | Jun. 30, 2016USD ($) | Jun. 30, 2017USD ($)CategoryClass | Jun. 30, 2016USD ($) | Dec. 31, 2016USD ($) | |
Shipping Costs [Abstract] | |||||
Shipping costs | $ 2,300 | $ 1,600 | $ 4,500 | $ 3,100 | |
Fair Value of MSA Escrow Account [Abstract] | |||||
Cost | 32,015 | 32,015 | $ 31,942 | ||
Gross unrealized gains | 19 | ||||
Gross unrealized losses | (1,162) | (1,162) | (1,551) | ||
Estimated fair value | 30,853 | 30,853 | 30,410 | ||
Master Settlement Agreement Escrow Account by Sales Year [Abstract] | |||||
1,999 | 211 | 211 | 211 | ||
2,000 | 1,017 | 1,017 | 1,017 | ||
2,001 | 1,673 | 1,673 | 1,673 | ||
2,002 | 2,271 | 2,271 | 2,271 | ||
2,003 | 4,249 | 4,249 | 4,249 | ||
2,004 | 3,715 | 3,715 | 3,715 | ||
2,005 | 4,552 | 4,552 | 4,552 | ||
2,006 | 3,847 | 3,847 | 3,847 | ||
2,007 | 4,167 | 4,167 | 4,167 | ||
2,008 | 3,364 | 3,364 | 3,364 | ||
2,009 | 1,626 | 1,626 | 1,626 | ||
2,010 | 406 | 406 | 406 | ||
2,011 | 193 | 193 | 193 | ||
2,012 | 199 | 199 | 199 | ||
2,013 | 173 | 173 | 173 | ||
2,014 | 142 | 142 | 142 | ||
2,015 | 101 | 101 | 100 | ||
2,016 | 82 | 82 | 37 | ||
2,017 | 27 | 27 | 0 | ||
Total | 32,015 | $ 32,015 | 31,942 | ||
Food and Drug Administration [Abstract] | |||||
Number of categories of tobacco products regulated by the FDA | Category | 4 | ||||
Number of classes of regulated tobacco products on which user fees are assessed by the FDA | Class | 6 | ||||
Cash and Cash Equivalents [Member] | |||||
Fair Value of MSA Escrow Account [Abstract] | |||||
Cost | 3,798 | $ 3,798 | 2,786 | ||
Gross unrealized gains | 0 | ||||
Gross unrealized losses | 0 | 0 | 0 | ||
Estimated fair value | 3,798 | 3,798 | 2,786 | ||
U. S. Governmental Agency Obligations [Member] | |||||
Fair Value of MSA Escrow Account [Abstract] | |||||
Cost | 28,217 | 28,217 | 29,156 | ||
Gross unrealized gains | 19 | ||||
Gross unrealized losses | (1,162) | (1,162) | (1,551) | ||
Estimated fair value | 27,055 | 27,055 | 27,624 | ||
Maturities of U.S. Governmental Agency Obligations [Abstract] | |||||
Less than five years | 9,113 | 9,113 | 9,113 | ||
Six to ten years | 16,153 | 16,153 | 16,141 | ||
Greater than ten years | 2,951 | 2,951 | 3,902 | ||
Total U.S. Governmental agency obligations | $ 28,217 | $ 28,217 | $ 29,156 |
Initial Public Offering (Detail
Initial Public Offering (Details) $ / shares in Units, $ in Thousands | 1 Months Ended | |
May 31, 2016USD ($)$ / sharesshares | Apr. 30, 2016 | |
Voting Common Stock [Member] | ||
Initial Public Offering [Abstract] | ||
Stock split conversion ratio | 10.43174381 | |
Shares issued by the Initial Public Offering (in shares) | 6,210,000 | |
Share price (in dollars per share) | $ / shares | $ 10 | |
Gross proceeds from sale of common stock | $ | $ 62,100 | |
Voting Common Stock [Member] | Over-Allotment Option [Member] | ||
Initial Public Offering [Abstract] | ||
Shares issued by the Initial Public Offering (in shares) | 810,000 | |
Nonvoting Common Stock [Member] | ||
Initial Public Offering [Abstract] | ||
Stock split conversion ratio | 10.43174381 |
Acquisitions, Vapor Shark (Deta
Acquisitions, Vapor Shark (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 |
Acquisitions [Abstract] | |||
Goodwill | $ 134,620 | $ 134,390 | |
Vapor Shark [Member] | |||
Acquisitions [Abstract] | |||
Equity interest to be purchased upon exercise of warrant | 100.00% | ||
Goodwill | 0 | ||
Assets acquired | 3,900 | ||
Liabilities assumed | $ 3,900 |
Acquisitions, Wind River Tobacc
Acquisitions, Wind River Tobacco Company (Details) - Wind River Tobacco Company [Member] $ in Millions | 1 Months Ended | |
Nov. 30, 2016USD ($)Brand | Jun. 30, 2017USD ($) | |
Acquisitions [Abstract] | ||
Number of brands of chewing tobacco purchased | Brand | 5 | |
Purchase price | $ 2.5 | |
Cash paid at closing | 0.6 | |
Payments deferred at closing | 1.9 | |
Deferred payments outstanding | $ 1.6 | |
Trade Names [Member] | ||
Acquisitions [Abstract] | ||
Indefinite-lived intangible asset acquired | $ 2.4 |
Acquisitions, VaporBeast (Detai
Acquisitions, VaporBeast (Details) - USD ($) $ in Thousands | 1 Months Ended | 6 Months Ended | |
Dec. 31, 2016 | Nov. 30, 2016 | Jun. 30, 2017 | |
Assets Acquired [Abstract] | |||
Goodwill | $ 134,390 | $ 134,620 | |
VaporBeast [Member] | |||
Acquisitions [Abstract] | |||
Total consideration, net of working capital adjustment | $ 26,500 | ||
Cash paid at closing | 4,000 | ||
Notes issued at closing | 19,000 | ||
Short-term notes paid after closing | $ 19,000 | ||
Payments deferred at closing | 4,000 | ||
Term of payment deferral at closing | 18 months | ||
Increase in goodwill | $ 200 | ||
Purchase Price [Abstract] | |||
Total purchase price | 27,000 | ||
Adjustments to Purchase Price [Abstract] | |||
Working capital | (400) | ||
Fair value of holdback | (128) | ||
Adjusted purchase price | 26,472 | ||
Assets Acquired [Abstract] | |||
Working capital | 4,270 | ||
Property and equipment | 7 | ||
Other intangible assets | 16,272 | ||
Net assets acquired | 20,549 | ||
Goodwill | 5,923 | ||
Goodwill deductible for tax purposes | $ 5,923 |
Fair Value of Financial Instr40
Fair Value of Financial Instruments (Details) € in Millions, $ in Millions | Jun. 30, 2017USD ($) | Jun. 30, 2017EUR (€) | Feb. 17, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2016EUR (€) |
Foreign Exchange Contracts [Member] | |||||
Foreign Exchange [Abstract] | |||||
Notional amount | € | € 0 | € 4.9 | |||
2017 Second Lien Term Loan [Member] | |||||
Long-Term Debt [Abstract] | |||||
Face amount | $ 55 | ||||
First Lien Term Loan [Member] | |||||
Long-Term Debt [Abstract] | |||||
Face amount | $ 147.3 | ||||
Second Lien Term Loan [Member] | |||||
Long-Term Debt [Abstract] | |||||
Face amount | 60 | ||||
Fair Value [Member] | 2017 First Lien Term Loans [Member] | |||||
Long-Term Debt [Abstract] | |||||
Long-term debt | $ 143.5 | ||||
Fair Value [Member] | 2017 Second Lien Term Loan [Member] | |||||
Long-Term Debt [Abstract] | |||||
Long-term debt | $ 55 | ||||
Fair Value [Member] | First Lien Term Loan [Member] | |||||
Long-Term Debt [Abstract] | |||||
Long-term debt | 147.3 | ||||
Fair Value [Member] | Second Lien Term Loan [Member] | |||||
Long-Term Debt [Abstract] | |||||
Long-term debt | $ 60 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Inventories [Abstract] | ||
Percentage of LIFO inventories | 49.00% | |
Raw materials and work in process | $ 2,494 | $ 2,596 |
Leaf tobacco | 28,969 | 27,391 |
Other | 1,247 | 1,232 |
Inventory | 72,912 | 66,385 |
LIFO reserve | (5,086) | (4,200) |
Inventory, net | 67,826 | 62,185 |
Inventory valuation allowance | 800 | 600 |
Smokeless Products [Member] | ||
Inventories [Abstract] | ||
Finished goods | 6,384 | 4,789 |
Smoking Products [Member] | ||
Inventories [Abstract] | ||
Finished goods | 18,646 | 18,384 |
Electronic / Vaporizer Products [Member] | ||
Inventories [Abstract] | ||
Finished goods | $ 15,172 | $ 11,993 |
Property, Plant and Equipment42
Property, Plant and Equipment (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Property, Plant and Equipment [Abstract] | ||
Property, plant and equipment | $ 19,102 | $ 17,528 |
Accumulated depreciation | (10,709) | (9,938) |
Property, plant and equipment, net | 8,393 | 7,590 |
Land [Member] | ||
Property, Plant and Equipment [Abstract] | ||
Property, plant and equipment | 22 | 22 |
Building and Improvements [Member] | ||
Property, Plant and Equipment [Abstract] | ||
Property, plant and equipment | 1,899 | 1,899 |
Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Abstract] | ||
Property, plant and equipment | 1,873 | 1,666 |
Machinery and Equipment [Member] | ||
Property, Plant and Equipment [Abstract] | ||
Property, plant and equipment | 11,642 | 10,532 |
Furniture and Fixtures [Member] | ||
Property, Plant and Equipment [Abstract] | ||
Property, plant and equipment | $ 3,666 | $ 3,409 |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Accrued Expenses [Abstract] | ||
Accrued payroll and related items | $ 2,962 | $ 5,331 |
Customer returns and allowances | 2,051 | 2,818 |
Other | 7,799 | 7,187 |
Total accrued expenses | $ 12,812 | $ 15,336 |
Notes Payable and Long-Term D44
Notes Payable and Long-Term Debt, Summary of Notes Payable and Long-Term Debt (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Feb. 17, 2017 | Dec. 31, 2016 | Nov. 30, 2016 |
Notes Payable and Long-Term Debt [Abstract] | ||||
Notes payable and long-term debt | $ 200,538 | $ 207,579 | ||
Less deferred finance charges | (3,953) | (4,388) | ||
Less current maturities | (7,850) | (1,650) | ||
Notes payable and long-term debt | 188,735 | 201,541 | ||
2017 Credit Facility [Member] | ||||
Notes Payable and Long-Term Debt [Abstract] | ||||
Face amount | $ 250,000 | |||
2017 First Lien First Out Term Loan [Member] | ||||
Notes Payable and Long-Term Debt [Abstract] | ||||
Notes payable and long-term debt | 108,625 | 0 | ||
Face amount | 110,000 | |||
2017 First Lien Second Out Term Loan [Member] | ||||
Notes Payable and Long-Term Debt [Abstract] | ||||
Notes payable and long-term debt | 34,913 | 0 | ||
Face amount | 35,000 | |||
2017 Second Lien Term Loan [Member] | ||||
Notes Payable and Long-Term Debt [Abstract] | ||||
Notes payable and long-term debt | 55,000 | 0 | ||
Face amount | $ 55,000 | |||
Note Payable - VaporBeast [Member] | ||||
Notes Payable and Long-Term Debt [Abstract] | ||||
Notes payable and long-term debt | 2,000 | 2,000 | ||
Face amount | $ 2,000 | |||
First Lien Term Loan [Member] | ||||
Notes Payable and Long-Term Debt [Abstract] | ||||
Notes payable and long-term debt | 0 | 146,451 | ||
Face amount | 147,300 | |||
Second Lien Term Loan [Member] | ||||
Notes Payable and Long-Term Debt [Abstract] | ||||
Notes payable and long-term debt | $ 0 | 59,128 | ||
Face amount | $ 60,000 |
Notes Payable and Long-Term D45
Notes Payable and Long-Term Debt, 2017 First Lien Credit Facility (Details) $ in Millions | Feb. 17, 2017USD ($)Counterparty | Jun. 30, 2017 | Feb. 17, 2022USD ($) | Mar. 31, 2021USD ($) | Mar. 31, 2019USD ($) | May 17, 2022USD ($) |
2017 First Lien Credit Facility [Member] | ||||||
Notes Payable and Long-Term Debt [Abstract] | ||||||
Additional borrowing capacity | $ 40 | |||||
2017 First Lien Credit Facility [Member] | Minimum [Member] | ||||||
Notes Payable and Long-Term Debt [Abstract] | ||||||
Number of lenders that can provide additional borrowing capacity | Counterparty | 1 | |||||
Senior leverage ratio | 3 | |||||
Total leverage ratio | 4 | |||||
Fixed charge coverage ratio | 1.20 | |||||
2017 First Lien Credit Facility [Member] | Maximum [Member] | ||||||
Notes Payable and Long-Term Debt [Abstract] | ||||||
Senior leverage ratio | 3.75 | |||||
Total leverage ratio | 4.75 | |||||
2017 Revolving Credit Facility [Member] | ||||||
Notes Payable and Long-Term Debt [Abstract] | ||||||
Maximum borrowing capacity | $ 50 | |||||
Maturity date | Feb. 17, 2022 | |||||
Weighted average interest rate | 5.20% | |||||
2017 Revolving Credit Facility [Member] | LIBOR [Member] | Minimum [Member] | ||||||
Notes Payable and Long-Term Debt [Abstract] | ||||||
Margin on variable rate | 2.50% | |||||
2017 Revolving Credit Facility [Member] | LIBOR [Member] | Maximum [Member] | ||||||
Notes Payable and Long-Term Debt [Abstract] | ||||||
Margin on variable rate | 3.50% | |||||
2017 First Out Term Loan [Member] | ||||||
Notes Payable and Long-Term Debt [Abstract] | ||||||
Face amount | $ 110 | |||||
Maturity date | Feb. 17, 2022 | |||||
Frequency of required payment | Quarterly | |||||
Weighted average interest rate | 4.50% | |||||
2017 First Out Term Loan [Member] | Forecast [Member] | ||||||
Notes Payable and Long-Term Debt [Abstract] | ||||||
Required payment | $ 2.8 | $ 2.1 | $ 1.4 | |||
2017 First Out Term Loan [Member] | LIBOR [Member] | Minimum [Member] | ||||||
Notes Payable and Long-Term Debt [Abstract] | ||||||
Margin on variable rate | 2.50% | |||||
2017 First Out Term Loan [Member] | LIBOR [Member] | Maximum [Member] | ||||||
Notes Payable and Long-Term Debt [Abstract] | ||||||
Margin on variable rate | 3.50% | |||||
2017 Second Out Term Loan [Member] | ||||||
Notes Payable and Long-Term Debt [Abstract] | ||||||
Face amount | $ 35 | |||||
Maturity date | May 17, 2022 | |||||
Frequency of required payment | Quarterly | |||||
Weighted average interest rate | 7.30% | |||||
2017 Second Out Term Loan [Member] | Forecast [Member] | ||||||
Notes Payable and Long-Term Debt [Abstract] | ||||||
Required payment | $ 0.1 | |||||
2017 Second Out Term Loan [Member] | LIBOR [Member] | ||||||
Notes Payable and Long-Term Debt [Abstract] | ||||||
Margin on variable rate | 6.00% | |||||
Floor interest rate | 1.00% |
Notes Payable and Long-Term D46
Notes Payable and Long-Term Debt, 2017 Second Lien Credit Facility (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2017 | Feb. 17, 2017 | |
2017 Second Lien Credit Facility [Member] | Minimum [Member] | ||
Notes Payable and Long-Term Debt [Abstract] | ||
Senior leverage ratio | 3.50 | |
Total leverage ratio | 4.50 | |
Fixed charge coverage ratio | 1.10 | |
2017 Second Lien Credit Facility [Member] | Maximum [Member] | ||
Notes Payable and Long-Term Debt [Abstract] | ||
Senior leverage ratio | 4.25 | |
Total leverage ratio | 5.25 | |
2017 Second Lien Term Loan [Member] | ||
Notes Payable and Long-Term Debt [Abstract] | ||
Face amount | $ 55 | |
Maturity date | Aug. 17, 2022 | |
Interest rate | 11.00% |
Notes Payable and Long-Term D47
Notes Payable and Long-Term Debt, Note Payable - VaporBeast (Details) - Note Payable - VaporBeast [Member] - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2017 | Nov. 30, 2016 | |
Notes Payable and Long-Term Debt [Abstract] | ||
Face amount | $ 2 | |
Interest rate | 6.00% | |
Maturity date | May 30, 2018 | |
Late payment fee percentage | 5.00% | |
Default interest rate | 13.00% |
Notes Payable and Long-Term D48
Notes Payable and Long-Term Debt, First Lien Term Loan (Details) - NATC [Member] | 2 Months Ended | 6 Months Ended |
Feb. 17, 2017 | Jun. 30, 2017 | |
First Lien Term Loan LIBOR Rate Loans [Member] | LIBOR [Member] | ||
Notes Payable and Long-Term Debt [Abstract] | ||
Margin on variable rate | 6.50% | |
First Lien Term Loan LIBOR Rate Loans [Member] | LIBOR [Member] | Minimum [Member] | ||
Notes Payable and Long-Term Debt [Abstract] | ||
Interest rate | 1.25% | |
First Lien Term Loan Base Rate Loans [Member] | ||
Notes Payable and Long-Term Debt [Abstract] | ||
Interest rate | 2.25% | |
Margin on variable rate | 5.50% | |
First Lien Term Loan Base Rate Loans [Member] | LIBOR [Member] | ||
Notes Payable and Long-Term Debt [Abstract] | ||
Margin on variable rate | 1.00% | |
Term of variable rate | 1 month | |
First Lien Term Loan Base Rate Loans [Member] | Federal Funds Rate [Member] | ||
Notes Payable and Long-Term Debt [Abstract] | ||
Margin on variable rate | 0.50% |
Notes Payable and Long-Term D49
Notes Payable and Long-Term Debt, Second Lien Term Loan (Details) - NATC [Member] | 2 Months Ended | 6 Months Ended |
Feb. 17, 2017 | Jun. 30, 2017 | |
Second Lien Term Loan LIBOR Rate Loans [Member] | LIBOR [Member] | ||
Notes Payable and Long-Term Debt [Abstract] | ||
Margin on variable rate | 10.25% | |
Second Lien Term Loan LIBOR Rate Loans [Member] | LIBOR [Member] | Minimum [Member] | ||
Notes Payable and Long-Term Debt [Abstract] | ||
Interest rate | 1.25% | |
Second Lien Term Loan Base Rate Loans [Member] | ||
Notes Payable and Long-Term Debt [Abstract] | ||
Interest rate | 2.25% | |
Margin on variable rate | 9.25% | |
Second Lien Term Loan Base Rate Loans [Member] | LIBOR [Member] | ||
Notes Payable and Long-Term Debt [Abstract] | ||
Margin on variable rate | 1.00% | |
Term of variable rate | 1 month | |
Second Lien Term Loan Base Rate Loans [Member] | Federal Funds Rate [Member] | ||
Notes Payable and Long-Term Debt [Abstract] | ||
Margin on variable rate | 0.50% |
Notes Payable and Long-Term D50
Notes Payable and Long-Term Debt, Revolving Credit Facility (Details) - Revolving Credit Facility [Member] - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2017 | Feb. 17, 2017 | |
Notes Payable and Long-Term Debt [Abstract] | ||
Maximum borrowing capacity | $ 40 | |
NATC [Member] | ||
Notes Payable and Long-Term Debt [Abstract] | ||
Borrowing base | Borrowing base, which was calculated as the sum of (i) 85% of eligible accounts receivable, plus (ii) the lesser of (A) the product of 70% multiplied by the value of eligible inventory and (B) the product of 85% multiplied by the net recovery percentage identified in the most recent inventory appraisal multiplied by the value of eligible inventory, plus (iii) the lesser of (A) the product of 75% multiplied by the value of eligible inventory and (B) the product of 85% multiplied by the net recovery percentage identified in the most recent inventory appraisal multiplied by the value of the eligible finished goods inventory, minus (iv) the aggregate amount of reserves established by the administrative agent. |
Notes Payable and Long-Term D51
Notes Payable and Long-Term Debt, PIK Toggle Notes (Details) $ / shares in Units, $ in Thousands | Jan. 13, 2014USD ($)$ / sharesshares | Apr. 30, 2016shares | Jun. 30, 2017USD ($) | Jun. 30, 2016USD ($) | Jun. 30, 2017USD ($) | Jun. 30, 2016USD ($) |
Notes Payable and Long-Term Debt [Abstract] | ||||||
Loss on extinguishment of debt | $ 0 | $ (2,824) | $ (6,116) | $ (2,824) | ||
PIK Toggle Notes [Member] | ||||||
Notes Payable and Long-Term Debt [Abstract] | ||||||
Face amount | $ 45,000 | |||||
Number of shares of TPB common stock that can be purchased with warrants (in shares) | shares | 42,424 | 442,558 | ||||
Purchase price of common stock (in dollars per unit) | $ / shares | $ 0.01 | |||||
Stock split conversion ratio | 10.43174381 | |||||
Original issue discount | $ 1,700 | |||||
Issue price | $ 43,300 | |||||
Loss on extinguishment of debt | $ (2,800) | |||||
PIK Toggle Notes [Member] | LIBOR [Member] | ||||||
Notes Payable and Long-Term Debt [Abstract] | ||||||
Margin on variable rate | 13.75% | |||||
PIK Toggle Notes [Member] | LIBOR [Member] | Minimum [Member] | ||||||
Notes Payable and Long-Term Debt [Abstract] | ||||||
Interest rate | 1.25% |
Notes Payable and Long-Term D52
Notes Payable and Long-Term Debt, 7% Senior Notes (Details) $ / shares in Units, $ in Millions | Jan. 31, 2014USD ($)$ / sharesshares |
7% Senior Notes [Member] | |
Notes Payable and Long-Term Debt [Abstract] | |
Interest rate | 7.00% |
Face amount | $ 11 |
Original issue discount | 2.8 |
Issue price | $ 8.2 |
Intrepid [Member] | |
Notes Payable and Long-Term Debt [Abstract] | |
Number of membership units in Intrepid that can be purchased with warrants (in shares) | shares | 11,000,000 |
Percentage of Common Units called by warrants to total Common Units outstanding | 40.00% |
Purchase price of common unit (in dollars per unit) | $ / shares | $ 1 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended |
Jun. 30, 2017 | Jun. 30, 2017 | Dec. 31, 2017 | |
Income Taxes [Abstract] | |||
Tax benefits relating to stock options exercised | $ 1.6 | $ 3.6 | |
Forecast [Member] | |||
Income Taxes [Abstract] | |||
Effective income tax rate | 41.00% |
Pension and Postretirement Be54
Pension and Postretirement Benefit Plans (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Pension Benefits [Member] | ||||
Net Periodic Benefit Cost [Abstract] | ||||
Service cost | $ 26 | $ 26 | $ 52 | $ 52 |
Interest cost | 150 | 175 | 320 | 350 |
Expected return on plan assets | (256) | (258) | (512) | (517) |
Amortization of gains and losses | 116 | 123 | 236 | 246 |
Net periodic benefit cost | 36 | 66 | 96 | 131 |
Plan Contributions [Abstract] | ||||
Expected contributions in 2017 | 0 | |||
Postretirement Benefits [Member] | ||||
Net Periodic Benefit Cost [Abstract] | ||||
Service cost | 0 | 0 | 0 | 0 |
Interest cost | 14 | 53 | 72 | 105 |
Expected return on plan assets | 0 | 0 | 0 | 0 |
Amortization of gains and losses | 0 | 0 | 0 | 0 |
Net periodic benefit cost | $ 14 | $ 53 | 72 | $ 105 |
Plan Contributions [Abstract] | ||||
Expected contributions in 2017 | $ 200 |
Share Incentive Plans, Equity I
Share Incentive Plans, Equity Incentive Plans (Details) $ / shares in Units, $ in Thousands | Feb. 07, 2017USD ($)Individual$ / sharesshares | Jun. 30, 2017USD ($)shares | Jun. 30, 2016USD ($) | Apr. 28, 2016shares |
Share Incentive Plans [Abstract] | ||||
Surrender of options | $ | $ 1,000 | $ 0 | ||
Officer [Member] | ||||
Share Incentive Plans [Abstract] | ||||
Number of individuals receiving cash-out agreements for surrender of expiring stock options | Individual | 3 | |||
Director [Member] | ||||
Share Incentive Plans [Abstract] | ||||
Number of individuals receiving cash-out agreements for surrender of expiring stock options | Individual | 1 | |||
Stock Options [Member] | ||||
Share Incentive Plans [Abstract] | ||||
Options surrendered (in shares) | 83,400 | |||
Surrender price (in dollars per share) | $ / shares | $ 11.99 | |||
Exercise price (in dollars per share) | $ / shares | 1.06 | |||
Share price (in dollars per share) | $ / shares | $ 13.05 | |||
Surrender of options | $ | $ 1,000 | |||
2015 Plan [Member] | ||||
Share Incentive Plans [Abstract] | ||||
Number of shares authorized for issuance (in shares) | 1,400,000 | |||
Number of shares available for grant (in shares) | 1,096,236 | |||
2015 Plan [Member] | Restricted Stock [Member] | ||||
Share Incentive Plans [Abstract] | ||||
Number of awards granted (in shares) | 21,949 | |||
2015 Plan [Member] | Restricted Stock Units [Member] | ||||
Share Incentive Plans [Abstract] | ||||
Number of awards granted (in shares) | 94,000 | |||
2015 Plan [Member] | Stock Options [Member] | ||||
Share Incentive Plans [Abstract] | ||||
Number of awards granted (in shares) | 187,815 | |||
2006 Plan [Member] | ||||
Share Incentive Plans [Abstract] | ||||
Number of shares available for grant (in shares) | 0 |
Share Incentive Plans, Stock Op
Share Incentive Plans, Stock Option Activity (Details) - Stock Options [Member] - $ / shares | Feb. 07, 2017 | Jun. 30, 2017 | Dec. 31, 2016 |
Incentive Shares [Roll Forward] | |||
Surrendered (in shares) | (83,400) | ||
2006 and 2015 Plans [Member] | |||
Incentive Shares [Roll Forward] | |||
Outstanding, beginning balance (in shares) | 1,637,762 | 1,667,671 | |
Granted (in shares) | 133,819 | 53,996 | |
Exercised (in shares) | (737,741) | (73,135) | |
Forfeited (in shares) | (10,770) | ||
Surrendered (in shares) | (83,400) | ||
Outstanding, ending balance (in shares) | 950,440 | 1,637,762 | |
Weighted Average Exercise Price [Abstract] | |||
Outstanding, beginning balance (in dollars per share) | $ 2.41 | $ 2.19 | |
Granted (in dollars per share) | 14.69 | 9.26 | |
Exercised (in dollars per share) | 1.49 | 2.31 | |
Forfeited (in dollars per share) | 3.83 | ||
Surrendered (in dollars per share) | 1.06 | ||
Outstanding, ending balance (in dollars per share) | 4.97 | 2.41 | |
Weighted Average Grant Date Fair Value [Abstract] | |||
Outstanding, beginning balance (in dollars per share) | 1.23 | 1.20 | |
Granted (in dollars per share) | 4.41 | 2.37 | |
Exercised (in dollars per share) | 0.79 | 1.27 | |
Forfeited (in dollars per share) | 2.17 | ||
Surrendered (in dollars per share) | 0.54 | ||
Outstanding, ending balance (in dollars per share) | $ 2.09 | $ 1.23 |
Share Incentive Plans, Assumpti
Share Incentive Plans, Assumptions for Options Granted Under 2006 Plan (Details) - 2006 Plan [Member] - Stock Options [Member] - USD ($) | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Share Incentive Plans [Abstract] | ||
Intrinsic value of options exercised | $ 9,100 | $ 100 |
Intrinsic value of options surrendered | $ 1,000,000 | |
Expected life | 10 years | |
Exercise Price $1.06 [Member] | ||
Share Incentive Plans [Abstract] | ||
Number of options (in shares) | 239,498 | |
Exercise price (in dollars per share) | $ 1.06 | |
Number exercisable (in shares) | 239,498 | |
Remaining lives | 9 months 18 days | |
Expected life | 10 years | |
Exercise price (in dollars per share) | $ 1.06 | |
Risk free interest rate | 4.37% | |
Expected volatility | 30.00% | |
Dividend yield | 0.00% | |
Fair value (in dollars per share) | $ 0.54 | |
Exercise Price $3.83 [Member] | ||
Share Incentive Plans [Abstract] | ||
Number of options (in shares) | 523,127 | |
Exercise price (in dollars per share) | $ 3.83 | |
Number exercisable (in shares) | 523,127 | |
Remaining lives | 5 years 4 months 24 days | |
Expected life | 10 years | |
Exercise price (in dollars per share) | $ 3.83 | |
Risk free interest rate | 3.57% | |
Expected volatility | 40.00% | |
Dividend yield | 0.00% | |
Fair value (in dollars per share) | $ 2.17 |
Share Incentive Plans, Assump58
Share Incentive Plans, Assumptions for Options Granted Under 2015 Plan (Details) - 2015 Plan [Member] - Stock Options [Member] | 6 Months Ended |
Jun. 30, 2017$ / sharesshares | |
August 2016 Grant [Member] | |
Share Incentive Plans [Abstract] | |
Number of options (in shares) | shares | 53,996 |
Number exercisable (in shares) | shares | 26,998 |
Exercise price (in dollars per share) | $ / shares | $ 9.26 |
Remaining lives | 9 years 1 month 6 days |
Risk free interest rate | 1.16% |
Expected volatility | 25.40% |
Expected life | 5 years 4 months 15 days |
Dividend yield | 0.00% |
Fair value (in dollars per share) | $ / shares | $ 2.37 |
February 2017 Grant [Member] | |
Share Incentive Plans [Abstract] | |
Number of options (in shares) | shares | 40,000 |
Number exercisable (in shares) | shares | 0 |
Exercise price (in dollars per share) | $ / shares | $ 13 |
Remaining lives | 9 years 9 months 18 days |
Risk free interest rate | 1.89% |
Expected volatility | 27.44% |
Expected life | 6 years |
Dividend yield | 0.00% |
Fair value (in dollars per share) | $ / shares | $ 3.98 |
May 2017 Grant [Member] | |
Share Incentive Plans [Abstract] | |
Number of options (in shares) | shares | 93,819 |
Number exercisable (in shares) | shares | 0 |
Exercise price (in dollars per share) | $ / shares | $ 15.41 |
Remaining lives | 9 years 10 months 24 days |
Risk free interest rate | 1.76% |
Expected volatility | 26.92% |
Expected life | 6 years |
Dividend yield | 0.00% |
Fair value (in dollars per share) | $ / shares | $ 4.60 |
Share Incentive Plans, Compensa
Share Incentive Plans, Compensation Expense (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Compensation Expense [Abstract] | ||||
Compensation expense related to options | $ 0.1 | $ 0.2 | $ 0.1 | |
Unrecognized compensation expense related to options | $ 0.5 | $ 0.5 | ||
Period over which unrecognized compensation expense will be expensed | 2 years 6 months | |||
Maximum [Member] | ||||
Compensation Expense [Abstract] | ||||
Compensation expense related to options | $ 0.1 |
Share Incentive Plans, Performa
Share Incentive Plans, Performance-Based Restricted Stock Units (Details) - Performance-Based Restricted Stock Units [Member] - USD ($) $ / shares in Units, $ in Millions | Mar. 31, 2017 | Jun. 30, 2017 | Jun. 30, 2017 |
Share Incentive Plans [Abstract] | |||
Performance period | 5 years | ||
Period between performance period and measurement date for vesting | 65 days | ||
Number of units granted (in shares) | 94,000 | ||
Unvested units outstanding (in shares) | 94,000 | 94,000 | |
Fair value (in dollars per share) | $ 15.6 | ||
Compensation expense | $ 0.1 | $ 0.1 | |
Unrecognized compensation expense | $ 1.4 | $ 1.4 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Earnings Per Share [Abstract] | ||||
Net income attributable to Turning Point Brands, Inc. | $ 7,439 | $ 799 | $ 9,316 | $ 3,033 |
Basic EPS [Abstract] | ||||
Basic weighted average shares (in shares) | 18,886,418 | 15,274,446 | 18,829,130 | 12,476,719 |
Basic EPS (in dollars per share) | $ 0.39 | $ 0.05 | $ 0.49 | $ 0.24 |
Effect of Dilutive securities [Abstract] | ||||
Stock options and warrants (in shares) | 698,651 | 1,602,845 | 736,392 | 1,447,907 |
Diluted weighted average shares (in shares) | 19,585,069 | 16,877,291 | 19,565,522 | 13,924,626 |
Diluted EPS (in dollars per share) | $ 0.38 | $ 0.05 | $ 0.48 | $ 0.22 |
Segment Information, Financial
Segment Information, Financial Information of Reportable Segments (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2017USD ($) | Jun. 30, 2016USD ($) | Jun. 30, 2017USD ($)Segment | Jun. 30, 2016USD ($) | Dec. 31, 2016USD ($) | ||
Segment Information [Abstract] | ||||||
Number of reportable segments | Segment | 3 | |||||
Segment Information [Abstract] | ||||||
Net sales | $ 72,086 | $ 51,581 | $ 138,874 | $ 101,447 | ||
Operating income | 13,635 | 10,776 | 24,392 | 21,685 | ||
Interest expense | (4,046) | (6,876) | (8,979) | (15,338) | ||
Investment income | 89 | 332 | 203 | 332 | ||
Loss on extinguishment of debt | 0 | (2,824) | (6,116) | (2,824) | ||
Income before income taxes | 9,678 | 1,408 | 9,500 | 3,855 | ||
Capital expenditures | 199 | 405 | 567 | 859 | ||
Depreciation and amortization | 593 | 293 | 1,122 | 586 | ||
Assets | 290,924 | 290,924 | $ 285,020 | |||
Reportable Segments [Member] | Smokeless Products [Member] | ||||||
Segment Information [Abstract] | ||||||
Net sales | 22,021 | 21,691 | 42,269 | 40,030 | ||
Operating income | 5,433 | 4,843 | 8,870 | 8,402 | ||
Capital expenditures | 154 | 405 | 520 | 734 | ||
Depreciation and amortization | 352 | 293 | 704 | 586 | ||
Assets | 88,207 | 88,207 | 85,559 | |||
Reportable Segments [Member] | Smoking Products [Member] | ||||||
Segment Information [Abstract] | ||||||
Net sales | 27,019 | 26,789 | 54,196 | 54,674 | ||
Operating income | 7,138 | 7,206 | 13,692 | 14,746 | ||
Assets | 150,267 | 150,267 | 150,498 | |||
Reportable Segments [Member] | NewGen Products [Member] | ||||||
Segment Information [Abstract] | ||||||
Net sales | 23,046 | 3,101 | 42,409 | 6,743 | ||
Operating income | 938 | (644) | 1,850 | (528) | ||
Capital expenditures | 45 | 0 | 47 | 125 | ||
Depreciation and amortization | 241 | 0 | 418 | 0 | ||
Assets | 44,914 | 44,914 | 39,416 | |||
Other [Member] | ||||||
Segment Information [Abstract] | ||||||
Operating income | [1] | 126 | $ (629) | (20) | $ (935) | |
Assets | [1] | $ 7,536 | $ 7,536 | $ 9,547 | ||
[1] | "Other" includes our assets that are not assigned to our three reportable segments, such as deferred taxes. All goodwill has been allocated to our reportable segments. |
Segment Information, Net Sales
Segment Information, Net Sales - Domestic and Foreign (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Segment Information [Abstract] | ||||
Net sales | $ 72,086 | $ 51,581 | $ 138,874 | $ 101,447 |
Reportable Geographical Component [Member] | Domestic [Member] | ||||
Segment Information [Abstract] | ||||
Net sales | 69,355 | 49,126 | 133,726 | 96,100 |
Reportable Geographical Component [Member] | Foreign [Member] | ||||
Segment Information [Abstract] | ||||
Net sales | $ 2,731 | $ 2,455 | $ 5,148 | $ 5,347 |