Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2021 | Oct. 19, 2021 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2021 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q3 | |
Document Transition Report | false | |
Entity File Number | 001-37763 | |
Entity Registrant Name | TURNING POINT BRANDS, INC. | |
Entity Central Index Key | 0001290677 | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 20-0709285 | |
Entity Address, Address Line One | 5201 Interchange Way | |
Entity Address, City or Town | Louisville | |
Entity Address, State or Province | KY | |
Entity Address, Postal Zip Code | 40229 | |
City Area Code | 502 | |
Local Phone Number | 778-4421 | |
Title of 12(b) Security | Common Stock, $0.01 par value | |
Trading Symbol | TPB | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | true | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 18,873,183 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Current assets: | ||
Cash | $ 130,551 | $ 41,765 |
Accounts receivable, net of allowances of $138 in 2021 and $150 in 2020 | 8,507 | 9,331 |
Inventories | 98,605 | 85,856 |
Other current assets | 27,113 | 26,451 |
Total current assets | 264,776 | 163,403 |
Property, plant, and equipment, net | 17,596 | 15,524 |
Deferred income taxes | 0 | 610 |
Right of use assets | 15,984 | 17,918 |
Deferred financing costs, net | 415 | 641 |
Goodwill | 162,415 | 159,621 |
Other intangible assets, net | 87,962 | 79,422 |
Master Settlement Agreement (MSA) escrow deposits | 31,763 | 32,074 |
Other assets | 42,810 | 26,836 |
Total assets | 623,721 | 496,049 |
Current liabilities: | ||
Accounts payable | 13,151 | 9,201 |
Accrued liabilities | 33,349 | 35,225 |
Current portion of long-term debt | 7,485 | 12,000 |
Other current liabilities | 71 | 203 |
Total current liabilities | 54,056 | 56,629 |
Notes payable and long-term debt | 413,553 | 302,112 |
Deferred income taxes | 1,654 | 0 |
Lease liabilities | 14,201 | 16,117 |
Other long-term liabilities | 0 | 3,704 |
Total liabilities | 483,464 | 378,562 |
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 | 107,269 | 102,423 |
Cost of repurchased common stock (817,701 shares at September 30, 2021 and 398,670 shares at December 31, 2020) | (30,672) | (10,191) |
Accumulated other comprehensive loss | (123) | (2,635) |
Accumulated earnings | 61,052 | 23,645 |
Non-controlling interest | 2,534 | 4,050 |
Total stockholders' equity | 140,257 | 117,487 |
Total liabilities and stockholders' equity | 623,721 | 496,049 |
Common Stock, Voting [Member] | ||
Stockholders' equity: | ||
Common stock | 197 | 195 |
Common Stock, Nonvoting [Member] | ||
Stockholders' equity: | ||
Common stock | $ 0 | $ 0 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Current assets: | ||
Accounts receivable, allowance | $ 138 | $ 150 |
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 |
Repurchased common stock (in shares) | 817,701 | 398,670 |
Common Stock, Voting [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) | 19,690,884 | 19,532,464 |
Common stock, shares outstanding (in shares) | 18,873,183 | 19,133,794 |
Common Stock, Nonvoting [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 - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Consolidated Statements of Income [Abstract] | ||||
Net sales | $ 109,904 | $ 104,174 | $ 340,188 | $ 299,826 |
Cost of sales | 55,635 | 55,867 | 172,685 | 162,152 |
Gross profit | 54,269 | 48,307 | 167,503 | 137,674 |
Selling, general, and administrative expenses | 31,894 | 32,286 | 95,900 | 95,436 |
Operating income | 22,375 | 16,021 | 71,603 | 42,238 |
Interest expense, net | 5,397 | 3,539 | 15,406 | 10,143 |
Investment income | (157) | (3) | (292) | (128) |
Gain (loss) on extinguishment of debt | (375) | 0 | 5,331 | 0 |
Net periodic income, excluding service cost | 0 | 1,188 | 0 | 997 |
Income before income taxes | 17,510 | 11,297 | 51,158 | 31,226 |
Income tax expense | 4,073 | 2,277 | 11,151 | 7,412 |
Consolidated net income | 13,437 | 9,020 | 40,007 | 23,814 |
Net loss attributable to non-controlling interest | (31) | 0 | (598) | 0 |
Net income attributable to Turning Point Brands, Inc. | $ 13,468 | $ 9,020 | $ 40,605 | $ 23,814 |
Basic income per common share: | ||||
Net income attributable to Turning Point Brands, Inc. (in dollars per share) | $ 0.71 | $ 0.47 | $ 2.14 | $ 1.22 |
Diluted income per common share: | ||||
Net income attributable to Turning Point Brands, Inc. (in dollars per share) | $ 0.65 | $ 0.44 | $ 1.95 | $ 1.17 |
Weighted average common shares outstanding: | ||||
Basic (in shares) | 18,897,974 | 19,240,187 | 18,988,435 | 19,478,297 |
Diluted (in shares) | 22,364,807 | 22,839,797 | 22,464,542 | 23,061,499 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Consolidated Statements of Comprehensive Income [Abstract] | ||||
Consolidated net income | $ 13,437 | $ 9,020 | $ 40,007 | $ 23,814 |
Other comprehensive income (loss), net of tax | ||||
Amortization of unrealized pension and postretirement gain, net of tax | 0 | 1,816 | 0 | 1,830 |
Unrealized loss on MSA investments, net of tax | (43) | 0 | (235) | 0 |
Foreign currency translation, net of tax | (637) | 0 | 324 | 0 |
Unrealized gain (loss) on derivative instruments, net of tax | 3 | 238 | 2,628 | (1,302) |
Other comprehensive income (loss), net of tax | (677) | 2,054 | 2,717 | 528 |
Consolidated comprehensive income | 12,760 | 11,074 | 42,724 | 24,342 |
Comprehensive loss attributable to non-controlling interest | (306) | 0 | (393) | 0 |
Comprehensive income attributable to Turning Point Brands, Inc. | $ 13,066 | $ 11,074 | $ 43,117 | $ 24,342 |
Consolidated Statements of Co_2
Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Other comprehensive income (loss), net of tax | ||||
Amortization of unrealized pension and postretirement gain, tax | $ 0 | $ 62 | $ 0 | $ 57 |
Unrealized loss on MSA investments, tax | 14 | 0 | 75 | 0 |
Foreign currency translation, tax | 0 | 0 | 0 | 0 |
Unrealized gain (loss) on derivative instruments, tax | $ 1 | $ 84 | $ 811 | $ 516 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Cash flows from operating activities: | ||
Consolidated net income | $ 40,007 | $ 23,814 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Loss on extinguishment of debt | 5,331 | 0 |
Pension settlement and curtailment loss | 0 | 1,188 |
Impairment loss | 0 | 149 |
(Gain) loss on sale of property, plant, and equipment | (2) | 36 |
Depreciation expense | 2,313 | 2,482 |
Amortization of other intangible assets | 1,431 | 1,304 |
Amortization of deferred financing costs | 1,895 | 1,670 |
Deferred income taxes | 1,528 | 2,259 |
Stock compensation expense | 6,015 | 1,986 |
Noncash lease (income) expense | (49) | 179 |
Gain on MSA escrow deposits | (144) | 0 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 1,324 | (1,877) |
Inventories | (10,970) | (2,208) |
Other current assets | (491) | (829) |
Other assets | 685 | 1,941 |
Accounts payable | 3,488 | (3,200) |
Accrued postretirement liabilities | 0 | (54) |
Accrued liabilities and other | (2,796) | 4,359 |
Net cash provided by operating activities | 49,565 | 33,199 |
Cash flows from investing activities: | ||
Capital expenditures | (4,391) | (3,420) |
Acquisitions, net of cash acquired | (16,416) | (37,735) |
Payments for investments | (16,657) | 0 |
Restricted cash, MSA escrow deposits | (14,783) | 0 |
Proceeds on the sale of property, plant and equipment | 2 | 3 |
Net cash used in investing activities | (52,245) | (41,152) |
Cash flows from financing activities: | ||
Proceeds from Senior Secured Notes | 250,000 | 0 |
Settlement of interest rate swaps | (3,573) | 0 |
Payment of promissory note | (9,625) | 0 |
Proceeds from unsecured notes | 0 | 7,485 |
Standard Diversified Inc. reorganization, net of cash acquired | 0 | (1,737) |
Payment of dividends | (3,056) | (2,846) |
Payments of financing costs | (6,921) | (194) |
Exercise of options | 2,071 | 303 |
Redemption of options | (2,111) | 0 |
Common stock repurchased | (20,481) | (7,665) |
Net cash provided by (used in) financing activities | 76,304 | (16,894) |
Net increase (decrease) in cash | 73,624 | (24,847) |
Effect of foreign currency translation on cash | 235 | 0 |
Cash, beginning of period: | ||
Unrestricted | 41,765 | 95,250 |
Restricted | 35,074 | 32,074 |
Total cash at beginning of period | 76,839 | 127,324 |
Cash, end of period: | ||
Unrestricted | 130,551 | 67,403 |
Restricted | 20,147 | 35,074 |
Total cash at end of period | 150,698 | 102,477 |
Supplemental schedule of noncash financing activities: | ||
Dividends declared not paid | 1,255 | 1,081 |
Issuance of note payable for acquisition | 0 | 10,000 |
Accrued consideration for acquisition | 316 | 0 |
2018 First Lien Term Loan [Member] | ||
Cash flows from financing activities: | ||
Payments of term loan | (130,000) | (8,000) |
IVG Note [Member] | ||
Cash flows from financing activities: | ||
Payments of term loan | $ 0 | $ (4,240) |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Equity (Deficit) - USD ($) $ in Thousands | Common Stock [Member]Voting [Member] | Additional Paid-In Capital [Member] | Cost of Repurchased Common Stock [Member] | Accumulated Other Comprehensive Income (Loss) [Member] | Accumulated Earnings (Deficit) [Member] | Non-Controlling Interest [Member] | Total |
Beginning balance at Dec. 31, 2019 | $ 197 | $ 100,530 | $ 0 | $ (3,773) | $ (8,872) | $ 0 | $ 88,082 |
Beginning balance (in shares) at Dec. 31, 2019 | 19,680,673 | ||||||
Unrecognized pension and postretirement cost adjustment, net of tax | 0 | 0 | 0 | 1,830 | 0 | 0 | $ 1,830 |
Unrealized loss on MSA investments, net of tax | 0 | ||||||
Unrealized gain (loss) on derivative instruments, net of tax | 0 | 0 | 0 | (1,302) | 0 | 0 | (1,302) |
Foreign currency translation, net of tax | 0 | ||||||
Stock compensation expense | 0 | 1,986 | 0 | 0 | 0 | 0 | 1,986 |
Exercise of options | $ 0 | 303 | 0 | 0 | 0 | 0 | 303 |
Exercise of options (in shares) | 47,402 | ||||||
Cost of repurchased common stock | $ 0 | 0 | $ (7,665) | 0 | 0 | 0 | (7,665) |
Cost of repurchased common stock (in shares) | (338,960) | ||||||
Standard Diversified Inc. reorganization, net | $ (2) | 0 | $ 0 | 0 | (1,735) | 0 | (1,737) |
Standard Diversified Inc. reorganization, net (in shares) | (244,214) | ||||||
Dividends | $ 0 | 0 | 0 | 0 | (2,964) | 0 | (2,964) |
Net income | 0 | 0 | 0 | 0 | 23,814 | 0 | 23,814 |
Ending balance at Sep. 30, 2020 | 195 | 102,819 | (7,665) | (3,245) | 10,243 | 0 | $ 102,347 |
Ending balance (in shares) at Sep. 30, 2020 | 19,144,901 | ||||||
Beginning balance at Dec. 31, 2019 | 197 | 100,530 | 0 | (3,773) | (8,872) | 0 | $ 88,082 |
Beginning balance (in shares) at Dec. 31, 2019 | 19,680,673 | ||||||
Ending balance at Dec. 31, 2020 | 195 | 102,423 | (10,191) | (2,635) | 23,645 | 4,050 | $ 117,487 |
Ending balance (in shares) at Dec. 31, 2020 | 19,133,794 | ||||||
Beginning balance at Jun. 30, 2020 | 197 | 101,989 | (5,289) | (5,299) | 3,933 | 0 | $ 95,531 |
Beginning balance (in shares) at Jun. 30, 2020 | 19,467,164 | ||||||
Unrecognized pension and postretirement cost adjustment, net of tax | 0 | 0 | 0 | 1,816 | 0 | 0 | $ 1,816 |
Unrealized loss on MSA investments, net of tax | 0 | ||||||
Unrealized gain (loss) on derivative instruments, net of tax | 0 | 0 | 0 | 238 | 0 | 0 | 238 |
Foreign currency translation, net of tax | 0 | ||||||
Stock compensation expense | 0 | 772 | 0 | 0 | 0 | 0 | 772 |
Exercise of options | $ 0 | 58 | 0 | 0 | 0 | 0 | 58 |
Exercise of options (in shares) | 4,048 | ||||||
Cost of repurchased common stock | $ 0 | 0 | $ (2,376) | 0 | 0 | 0 | (2,376) |
Cost of repurchased common stock (in shares) | (82,097) | ||||||
Standard Diversified Inc. reorganization, net | $ (2) | 0 | $ 0 | 0 | (1,735) | 0 | (1,737) |
Standard Diversified Inc. reorganization, net (in shares) | (244,214) | ||||||
Dividends | $ 0 | 0 | 0 | 0 | (975) | 0 | (975) |
Net income | 0 | 0 | 0 | 0 | 9,020 | 0 | 9,020 |
Ending balance at Sep. 30, 2020 | 195 | 102,819 | (7,665) | (3,245) | 10,243 | 0 | $ 102,347 |
Ending balance (in shares) at Sep. 30, 2020 | 19,144,901 | ||||||
Beginning balance at Dec. 31, 2020 | 195 | 102,423 | (10,191) | (2,635) | 23,645 | 4,050 | $ 117,487 |
Beginning balance (in shares) at Dec. 31, 2020 | 19,133,794 | ||||||
Unrecognized pension and postretirement cost adjustment, net of tax | $ 0 | ||||||
Unrealized loss on MSA investments, net of tax | 0 | 0 | 0 | (235) | 0 | 0 | (235) |
Unrealized gain (loss) on derivative instruments, net of tax | 0 | 0 | 0 | 2,628 | 0 | 0 | 2,628 |
Foreign currency translation, net of tax | 0 | 0 | 0 | 119 | 0 | 205 | 324 |
Stock compensation expense | 0 | 6,015 | 0 | 0 | 0 | 0 | 6,015 |
Exercise of options | $ 2 | 2,069 | 0 | 0 | 0 | 0 | 2,071 |
Exercise of options (in shares) | 158,420 | ||||||
Redemption of options | $ 0 | (2,111) | 0 | 0 | 0 | 0 | (2,111) |
Cost of repurchased common stock | 0 | 0 | $ (20,481) | 0 | 0 | 0 | (20,481) |
Cost of repurchased common stock (in shares) | (419,031) | ||||||
Acquisition of Recreation Marketing interest | 0 | (1,127) | $ 0 | 0 | 0 | (1,123) | (2,250) |
Dividends | 0 | 0 | 0 | 0 | (3,198) | 0 | (3,198) |
Net income | 0 | 0 | 0 | 0 | 40,605 | (598) | 40,007 |
Ending balance at Sep. 30, 2021 | 197 | 107,269 | (30,672) | (123) | 61,052 | 2,534 | $ 140,257 |
Ending balance (in shares) at Sep. 30, 2021 | 18,873,183 | ||||||
Beginning balance at Jun. 30, 2021 | 196 | 105,460 | (24,277) | 279 | 48,647 | 3,963 | $ 134,268 |
Beginning balance (in shares) at Jun. 30, 2021 | 18,923,523 | ||||||
Unrecognized pension and postretirement cost adjustment, net of tax | $ 0 | ||||||
Unrealized loss on MSA investments, net of tax | 0 | 0 | 0 | (43) | 0 | 0 | (43) |
Unrealized gain (loss) on derivative instruments, net of tax | 0 | 0 | 0 | 3 | 0 | 0 | 3 |
Foreign currency translation, net of tax | 0 | 0 | 0 | (362) | 0 | (275) | (637) |
Stock compensation expense | 0 | 1,752 | 0 | 0 | 0 | 0 | 1,752 |
Exercise of options | $ 1 | 1,184 | 0 | 0 | 0 | 0 | 1,185 |
Exercise of options (in shares) | 74,660 | ||||||
Cost of repurchased common stock | $ 0 | 0 | $ (6,395) | 0 | 0 | 0 | $ (6,395) |
Cost of repurchased common stock (in shares) | (125,000) | (125,000) | |||||
Acquisition of Recreation Marketing interest | 0 | (1,127) | $ 0 | 0 | 0 | (1,123) | $ (2,250) |
Dividends | 0 | 0 | 0 | 0 | (1,063) | 0 | (1,063) |
Net income | 0 | 0 | 0 | 0 | 13,468 | (31) | 13,437 |
Ending balance at Sep. 30, 2021 | $ 197 | $ 107,269 | $ (30,672) | $ (123) | $ 61,052 | $ 2,534 | $ 140,257 |
Ending balance (in shares) at Sep. 30, 2021 | 18,873,183 |
Consolidated Statements of Ch_2
Consolidated Statements of Changes in Stockholders' Equity (Deficit) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Consolidated Statements of Change in Stockholders' Equity (Deficit) [Abstract] | ||||
Unrecognized pension and postretirement cost adjustment, tax | $ 0 | $ 62 | $ 0 | $ 57 |
Unrealized loss on MSA investments, tax | 14 | 0 | 75 | 0 |
Unrealized gain (loss) on derivative instruments, tax | 1 | 84 | 811 | 516 |
Foreign currency translation, tax | $ 0 | $ 0 | $ 0 | $ 0 |
Description of Business and Bas
Description of Business and Basis of Presentation | 9 Months Ended |
Sep. 30, 2021 | |
Description of Business and Basis of Presentation [Abstract] | |
Description of Business and Basis of Presentation | Note 1. Description of Business and Basis of Presentation Description of Business Turning Point Brands, Inc. and its subsidiaries (collectively referred to herein as the “Company,” “we,” “our,” or “us”) is a leading manufacturer, marketer and distributor of branded consumer products with active ingredients. The Company sells a wide range of products to adult consumers consisting of staple products with its iconic brands Zig-Zag ® and Stoker’s ® to its next generation products to fulfill evolving consumer preferences. The Company operates in segments: (i) Zig-Zag Products, (ii) Stoker’s Products, and (iii) NewGen Products. Its focus segments are led by its core, proprietary brands – Zig-Zag ® in the Zig-Zag Products segment; Stoker’s ® along with Beech-Nut ® and Trophy ® in the Stoker’s Products segment; and Nu-X TM , Solace ® along with its distribution platforms ( Vapor Beast ® , VaporFi ® and Direct Vapor ® ) in the NewGen Products segment. The Company’s products are available in more than retail outlets in North America. Basis of Presentation T he accompanying unaudited interim, consolidated financial statements have been prepared in accordance with the accounting practices described in the Company’s audited, consolidated financial statements as of and for the year ended December 31, 2020. In the opinion of management, the unaudited, interim, consolidated financial statements included herein contain all adjustments necessary to present fairly the financial position, results of operations, and cash flows of the Company for the periods indicated. Such adjustments, other than nonrecurring adjustments separately disclosed, are of a normal and 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, 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, 2020. The accompanying interim, consolidated financial statements are presented in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) and, accordingly, do not include all the disclosures required by generally accepted accounting principles in the United States (“GAAP”) with respect to annual financial statem |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2021 | |
Summary of Significant Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 2. Summary of Significant Accounting Policies Consolidation The consolidated financial statements include the accounts of the Company, its subsidiaries, all of which are wholly-owned, and variable interest entities (“VIEs”) for which the Company is considered the primary beneficiary. All significant intercompany transactions have been eliminated . Revenue Recognition The Company recognizes revenues in accordance with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers (Topic 606), which includes excise taxes and shipping and handling charges billed to customers, net of cash discounts for prompt payment, sales returns and incentives, upon delivery of goods to the customer – at which time the Company’s performance obligation is satisfied - at an amount that the Company expects to be entitled to in exchange for those goods in accordance with the five-step analysis outlined in Topic 606: (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations, and (v) recognize revenue when (or as) performance obligations are satisfied. The Company excludes from the transaction price, sales taxes and value-added taxes imposed at the time of sale (which do not include excise taxes on smokeless tobacco, cigars or vaping products billed to customers). The Company records an allowance for sales returns, based principally on historical volume and return rates, which is included in accrued liabilities on the consolidated balance sheets. The Company records sales incentives, which consist of consumer incentives and trade promotion activities, as a reduction in revenues (a portion of which is based on amounts estimated as being due to wholesalers, retailers and consumers at the end of the period) based principally on historical volume and utilization rates. Expected payments for sales incentives are included in accrued liabilities on the consolidated balance sheets. A further requirement of ASC 606 is for entities to disaggregate revenue recognized from contracts with customers into categories that depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. The Company’s management views business performance through segments that closely resemble the performance of major product lines. Thus, the primary and most useful disaggregation of the Company’s contract revenue for decision making purposes is the disaggregation by segment which can be found in Note 18 of Notes to Consolidated Financial Statements. An additional disaggregation of contract revenue by sales channel can be found within Note 18 as well. Shipping Costs The Company records shipping costs incurred as a component of selling, general, and administrative expenses. Shipping costs incurred were approximately $ 7.1 million and $5.3 million for the three months ending September 30, 2021 and 2020, respectively. Shipping costs incurred were approximately $21.1 million and $17.4 million for the nine months ending September 30, 2021 and 2020, respectively. The implementation of the Prevent All Cigarette Trafficking Act (“PACT Act”) in the second quarter of 2021 made the delivery of vape products to customers and consumers more challenging and more costly. In addition, increased sales and higher freight rates are causing shipping costs to increase. Inventories Inventories are stated at the lower of cost or net realizable value. Effective January 1, 2021, the Company changed its method of accounting for inventory using the last-in, first-out (“LIFO”) method to the first-in, first-out (“FIFO”) method. The Company applied this change retrospectively to all prior periods presented, which is discussed further in Note 6. 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. Fair Value GAAP establishes a framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1) and the lowest priority to unobservable inputs (level 3). 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. Derivative Instruments Foreign Currency Forward Contracts: The Company enters into foreign currency forward contracts to hedge a portion of its exposure to changes in foreign currency exchange rates on inventory purchase commitments. The Company accounts for its forward contracts under the provisions of ASC 815, Derivatives and Hedging. Under the Company’s policy, the Company may hedge up to 100% of its anticipated purchases of inventory in the denominated invoice currency over a forward period not to exceed twelve months. The Company may also, from time to time, hedge up to ninety percent of its non-inventory purchases in the denominated invoice currency. Forward contracts that qualify as hedges are adjusted to their fair value through other comprehensive income as determined by market prices on the measurement date, except any hedge ineffectiveness which is recognized currently in income. Gains and losses on these forward contracts are transferred from other comprehensive income into inventory as the related inventories are received and are transferred to net income as inventory is sold. Changes in fair value of any contracts that do not qualify for hedge accounting or are not designated as hedges are recognized currently in income. Interest Rate Swap Agreements: The Company enters into interest rate swap contracts to manage interest rate risk and reduce the volatility of future cash flows. The Company accounts for its interest rate swap contracts under the provisions of ASC 815, Derivatives and Hedging. Swap contracts that qualify as hedges are adjusted to their fair value through other comprehensive income as determined by market prices on the measurement date, except any hedge ineffectiveness which is recognized currently in income. Gains and losses on these swap contracts are transferred from other comprehensive income into net income upon settlement of the derivative position or at maturity of the interest rate swap contract. Changes in fair value of any contracts that do not qualify for hedge accounting or are not designated as hedges are recognized currently in income. Risks and Uncertainties Manufacturers and sellers of tobacco products are subject to regulation at the federal, state, and local levels. Such regulations include, among others, labeling requirements, limitations on advertising, and prohibition of sales to minors. The tobacco industry is likely to continue to be heavily regulated. There can be no assurance as to the ultimate content, timing, or effect of any regulation of tobacco products by any federal, state, or local legislative or regulatory body, nor can there be any assurance that any such legislation or regulation would not have a material adverse effect on the Company’s financial position, results of operations, or cash flows. In a number of states, targeted flavor bans have been proposed or enacted legislatively or by the administrative process. Depending on the number and location of such bans, that legislation or regulation could have a material adverse effect on the Company’s financial position, results of operations or cash flows. Food and Drug Administration (“FDA”) continues to consider various restrictive regulations around our products, including targeted flavor bans; however, the details, timing, and ultimate implementation of such measures remain unclear. The tobacco industry has experienced, and is experiencing, significant product liability litigation. Most tobacco liability lawsuits have been brought against manufacturers and sellers of cigarettes for injuries allegedly caused by smoking or exposure to smoke. However, several lawsuits have been brought against manufacturers and sellers of smokeless products for injuries to health allegedly caused by use of smokeless products. Typically, such claims assert that use of smokeless products is addictive and causes oral cancer. Additionally, several lawsuits have been brought against manufacturers and distributors of NewGen products due to malfunctioning devices. There can be no assurance the Company will not sustain losses in connection with such lawsuits and that such losses will not have a material adverse effect on the Company’s financial position, results of operations, or cash flows. Master Settlement Agreement (MSA): 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. Such companies are entitled to direct the investment of the escrowed funds and withdraw any appreciation, but cannot withdraw the principal for twenty-five years from the year of each annual deposit, except to withdraw funds deposited pursuant to an individual state’s escrow statute to pay a final judgement to that state’s plaintiffs in the event of such a final judgement against the Company. The Company chose 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. As of September the Company had on deposit approximately , the fair value of which was approximately . At December the Company had on deposit approximately , the fair value of which was approximately . Effective in the quarter of the Company no longer sells any product covered under the MSA. Thus, absent a change in legislation, the Company will no longer be required to make deposits to the MSA escrow account. The Company has chosen to invest a portion of the MSA escrow, from time to time, 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; any investment in an unrealized loss position will be held until the value is recovered, or until maturity. Fair values for the U.S. Governmental agency obligations are Level 2 in the fair value hierarchy. The following tables show cost and estimated fair value of the assets held in the MSA account, respectively, as well as the maturities of the U.S. Governmental agency obligations held in such account for the periods indicated. As of September 30, 2021 As of December 31, 2020 Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Cost and Estimated Fair Value Cash and cash equivalents $ 17,146 $ - $ - $ 17,146 $ 32,074 U.S. Governmental agency obligations (unrealized loss position < 12 months) 14,927 - (310 ) 14,617 - $ 32,073 $ - $ (310 ) $ 31,763 $ 32,074 As of September 30, 2021 Less than one year $ - One to five years 2,000 Five to ten years 11,476 Greater than ten years 1,451 Total $ 14,927 The following shows the amount of deposits by sales year for the MSA escrow account: Deposits as of Sales Year September 30, 2021 December 31, 2020 1999 $ 211 $ 211 2000 1,017 1,017 2001 1,673 1,673 2002 2,271 2,271 2003 4,249 4,249 2004 3,714 3,714 2005 4,553 4,553 2006 3,847 3,847 2007 4,167 4,167 2008 3,364 3,364 2009 1,619 1,619 2010 406 406 2011 193 193 2012 199 199 2013 173 173 2014 143 143 2015 101 101 2016 91 91 2017 82 83 Total $ 32,073 $ 32,074 Food and Drug Administration: On June 22, 2009, the Family Smoking Prevention and Tobacco Control Act (the “ FSPTCA On August 8, 2016, the FDA deeming regulation became effective. The deeming regulation gave the FDA the authority to also 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 c lasses 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 various 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 In August 2016, the FDA’s regulatory authority under the Tobacco Control Act (the “TCA”) Under the deeming regulations, the FDA has responsibility for conducting premarket review of “new tobacco products”—defined as those products not commercially marketed in the United States as of February 15, 2007. There are three pathways for obtaining premarket authorization, including submission of a premarket tobacco product application (“PMTA”). We submitted premarket filings prior to the September 9, 2020 deadline for certain of our products and intend to supplement and complete the applications within the FDA’s discretionary timeline. A successful PMTA must demonstrate that the subject product is “appropriate for the protection of public health,” taking into account the effect of the marketing of the product on all sub-populations while a Substantial Equivalence Report must demonstrate that a new product either has the same characteristics as its predicate product or different characteristics, but does not raise different questions of public health. The FDA has indicated its enforcement priority is those applicants who have received negative action on their application, such as a Marketing Denial Order or Refuse to File notification and who continue to illegally sell those unauthorized products, as well as products for which manufacturers failed to submit a marketing application. The FDA has issued a number of proposed rules related to premarket filings; however, those rules were not finalized prior to the September 9, 2020, deadline. On October 5, 2021, the FDA finalized two rules related to the Substantial Equivalence process and the Premarket Tobacco Product Application process, respectively, which both become effective November 4, 2021. Both Final Rules indicate that any new or additional requirements will not retroactively apply to currently pending PMTAs; however, the information outlined in the rule remains important to the FDA’s substantive review of an application. We believe we have products that meet the Rules and have filed premarket filings supporting a showing of the respective required standards. However, there is no assurance that the FDA’s guidance or regulations will not change, or that the FDA will not prioritize its enforcement in a manner that negatively affects our pending applications, or that unforeseen circumstances will not arise that prevent us from sufficiently supplementing or completing our applications or otherwise increase the amount of time and money we are required to spend to receive all necessary marketing orders. On September 14, 2021, the FDA issued a Marketing Denial Order (“MDO”) for certain of the Company’s proprietary e-liquid products subject of these PMTAs. The Company filed a Petition for Review in the Sixth Circuit Court of Appeals on September 23, 2021, followed by an Emergency Motion for a Stay Pending Review on September 30, 2021. On October 7, 2021, we were informed that the FDA had rescinded its September 14 MDO. We therefore withdrew both the Petition and Emergency Stay on October 8, 2021. The Rescission Letter indicated that FDA had found additional relevant information that was not adequately assessed. Although we filed many premarket applications in a timely manner, no assurance can be given that the applications will ultimately be successful. This may result in the prioritization of supplementing or completing applications for high priority SKUs in our inventory position, which could adversely impact future revenues. At the time of receipt of the MDO, the Company quarantined approximately $0.7 million in the aggregate inventories of the affected products or materials subject to the MDO, which were subsequently released, once the FDA rescinded the MDO. In addition, we currently distribute many third-party manufactured vapor products for which we will be completely dependent on the manufacturer complying with the premarket filing requirements. There can be no assurance that these third-party products will receive a marketing order. While we will take measures to pursue regulatory compliance for our own privately-branded or proprietary vape products that compete with these third-party products, there is no assurance that such proprietary products would be as successful in the marketplace or can fully displace third-party products that are currently being distributed by us, which could adversely affect our results of operations and liquidity. For a period of time after the filing deadline, we expect there to be a lack of enforcement, which may adversely affect our ability to compete in the marketplace against those who continue to sell unauthorized products. On April 29, 2021, the FDA announced plans to propose two tobacco product standards related to combusted tobacco products: (1) a ban on menthol as a characterizing flavor in cigarettes; and (2) a ban on all characterizing flavors (including menthol) in cigars. These product standards are required to go through the formal rulemaking process where we would have the opportunity to comment on the proposed rule with regard to any impact on any of our products. The FDA’s policy on these and other regulated products may change or expand over time in ways not yet known and may significantly impact our products or our premarket filings. Recent Accounting Pronouncements Adopted In December 2019, the FASB issued Accounting Standards Update (“ASU”) 2019-12 to simplify the accounting in ASC 740, Income Taxes . This guidance removes certain exceptions related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities for outside basis differences. This guidance also clarifies and simplifies other areas of ASC 740. This ASU became effective beginning in the first quarter of the Company’s fiscal year 2021. Certain amendments in this update must be applied on a prospective basis, certain amendments must be applied on a retrospective basis, and certain amendments must be applied on a modified retrospective basis through a cumulative-effect adjustment to retained earnings/(deficit) in the period of adoption. The ASU was effective for the Company beginning in the first quarter of 2021. The ASU did not have an impact to the Company’s financial statements and related disclosures. In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40) . This guidance simplifies the accounting for convertible debt instruments by reducing the number of accounting models and the number of embedded conversion features that could be recognized separately from the convertible instrument. This guidance also enhances transparency and improves disclosures for convertible instruments and earnings per share guidance. This ASU is effective for annual reporting periods beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020. This update permits the use of either the modified retrospective or fully retrospective method of transition. The Company early adopted this ASU effective January 1, 2021 using the full retrospective method of transition. The adoption resulted in a $ 7.1 million increase in Accumulated earnings, a $ million increase in Notes payable and long-term debt, a $ million decrease in deferred income taxes and a $ million decrease in Additional paid-in capital as of December 31, 2020, and a $ million decrease in Accumulated deficit and a $ million decrease in Additional paid-in capital as of December 31, 2019. Interest expense will decrease by $ million annually and weighted average diluted common shares outstanding will increase by approximately million shares |
Acquisitions
Acquisitions | 9 Months Ended |
Sep. 30, 2021 | |
Acquisitions [Abstract] | |
Acquisitions | Note 3. Acquisitions Unitabac On July 23, 2021, the Company acquired certain assets of Unitabac, a marketer of mass-market cigars, for $10.7 million in total consideration, comprised of $9.6 million in cash and $1.1 million of capitalized transaction costs. The acquisition is comprised of a portfolio of cigarillo products and all related intellectual property, including Cigarillo Non-Tip (NT) Homogenized Tobacco Leaf (HTL) products and Rolled Leaf and Natural Leaf Cigarillo Products. The transaction was accounted for as an asset purchase with $10.0 million assigned to intellectual property, which has an indefinite life, and $0.7 million assigned to inventory. The intellectual property asset is deductible for tax purposes. Direct Value Wholesale In April 2021, ReCreation Marketing (“ReCreation”), a VIE for which the Company is considered the primary beneficiary, purchased 100% of the equity interests of Westhem Ventures LTD d/b/a Direct Value Wholesale (“DVW”) for $3.9 million, net of cash acquired, with $3.5 million paid in cash at closing and $0.5 million in accrued consideration to be paid during 2021. DVW is a Canadian distribution entity that operates in markets not primarily served by ReCreation. The acquisition expands ReCreation’s markets in Canada. On April 13, 2021, in connection with the acquisition of DVW, the Company provided a $3.7 million unsecured loan to ReCreation bearing interest at 8% per annum and maturing April 13, 2023. The unsecured loan is eliminated in the consolidation of ReCreation. As of September 30, 2021, ReCreation had not completed the accounting for the acquisition. The following table summarizes the consideration transferred and calculation of goodwill based on excess of the acquisition price over the estimated fair value of the identifiable net assets acquired and are based on management’s preliminary estimates: Total consideration transferred $ 3,462 Adjustments to consideration transferred: Cash acquired (43 ) Accrued consideration 480 Adjusted consideration transferred 3,899 Assets acquired: Working capital (primarily AR and inventory) 1,342 Fixed assets and Other long term assets 27 Net assets acquired $ 1,369 Goodwill $ 2,530 The goodwill of $2.5 million consists of the synergies expected from combining the operations and is deductible for tax purposes. ReCreation Marketing In July 2019, the Company obtained a 30% stake in a Canadian distribution entity, ReCreation, for $ million paid at closing. In November 2020, the Company invested an additional $ million related to our stake. In November 2020, the Company also invested an additional $ million increasing its ownership interest to . The Company received board seats aligned with its ownership position. The Company also provided a $ million unsecured loan to ReCreation bearing interest at per annum and maturing November 19, 2022 . The Company has determined that ReCreation is a VIE due to its required subordinated financial support. The Company has determined it is the primary beneficiary due to its equity interest, additional subordinated financing and distribution agreement with ReCreation for the sale of the Company’s products. As a result, the Company began consolidating ReCreation effective November 2020. As of September 30, 2021, the Company had not completed the accounting for the acquisition. The following table summarizes the consideration transferred and calculation of goodwill based on excess of the acquisition price over the estimated fair value of the identifiable net assets acquired and are based on management’s preliminary estimates: Total consideration transferred $ 4,000 Adjustments to consideration transferred: Cash acquired (3,711 ) Working capital 418 Debt eliminated in consolidation 2,000 Adjusted consideration transferred 2,707 Assets acquired: Working capital (primarily AR and inventory) 1,551 Fixed assets and Other long term assets 70 Other liabilities (203 ) Non-controlling interest (4,050 ) Net assets acquired $ (2,632 ) Goodwill $ 5,339 The goodwill of $ 5.3 million consists of the synergies expected from combining the operations and is currently not deductible for tax purposes. In July 2021, the Company invested an additional $2.3 million in ReCreation increasing its ownership interest to 65%. The Company received board seats aligned with its ownership position. The Company has determined that ReCreation continues to be a VIE due to its required subordinated financial support. The Company has determined it remains the primary beneficiary due to its 65% equity interest, additional subordinated financing and distribution agreement with ReCreation for the sale of the Company’s products. As a result of the Company remaining the primary beneficiary, the increase in ownership interest resulted in a decrease in Non-controlling interest of $1.1 million and a decrease in Additional paid-in capital of $1.1 million Standard Diversified Inc. (“SDI”) Reorganization On July 16, 2020, the Company completed its merger with SDI, whereby SDI was merged into a wholly-owned subsidiary of the Company in a tax-free downstream merger. Under the terms of the agreement, the holders of SDI’s Class A Common Stock and SDI’s Class B Common Stock (collectively, “SDI Common Stock”) received in the aggregate, in return for their SDI Common Stock, TPB Voting Common Stock (“TPB Common Stock”) at a ratio of 0.52095 shares of TPB Common Stock for each share of SDI Common Stock at the time of the merger. SDI divested its assets, other than SDI’s TPB Common Stock, prior to close such that the net liabilities at closing were minimal and the only assets that SDI retained were the remaining TPB Common Stock holdings. The transaction was accounted for as an asset purchase for $236.0 million in consideration, comprised of 7,934,704 shares of TPB Common Stock valued at $234.3 million plus transaction costs and assumed net liabilities. The $236.0 million was assigned to the 8,178,918 shares of TPB Common Stock acquired. The 244,214 shares of TPB Common Stock acquired in excess of the shares issued were retired resulting in a charge of $1.7 million recorded in Accumulated earnings (deficit). The Company no longer has a controlling shareholder. Durfort Holdings In June 2020, the Company purchased certain tobacco assets and distribution rights from Durfort Holdings S.R.L. (“Durfort”) and Blunt Wrap USA for $47.7 million in total consideration, comprised of $37.7 million in cash, including $1.7 million of capitalized transaction costs, and a $10.0 million unsecured subordinated promissory note (“Promissory Note”). With this transaction, the Company acquired co-ownership in the intellectual property rights of all of Durfort’s and Blunt Wrap USA’s Homogenized Tobacco Leaf (“HTL”) cigar wraps and cones. The Company also entered into an exclusive Master Distribution Agreement to market and sell the original Blunt Wrap ® |
Derivative Instruments
Derivative Instruments | 9 Months Ended |
Sep. 30, 2021 | |
Derivative Instruments [Abstract] | |
Derivative Instruments | Note 4. Derivative Instruments Foreign Currency The Company’s policy is to manage the risks associated with foreign exchange rate movements. The policy allows hedging up to 100% of its anticipated purchases of inventory over a forward period that will not exceed rolling and consecutive months. The Company may, from time to time, hedge currency for non-inventory purchases, e.g. , production equipment, not to exceed of the purchase price. The foreign currency contracts’ fair value at S eptember 30, 2021 , resulted in an asset of $ million included in Other current assets and a liability of $ million included in Accrued liabilities. At December 31, 2020 , the Company had forward contracts for the purchase of € million and sale of € million outstanding. The foreign currency contracts’ fair value at December 31, 2020 , resulted in an asset of $ million included in Other current assets and a liability of $ million included in Accrued liabilities. Interest Rate Swaps The Company’s policy is to manage interest rate risk relating to the volatility of future cash flows associated with debt instruments bearing interest at variable rates. In March 2018, the Company executed various interest rate swap agreements for a notional amount of $70 million with an expiration of December 2022. The swap agreements fixed LIBOR at 2.755%. The swap agreements met the hedge accounting requirements; thus, any change in fair value was recorded to other comprehensive income. The Company used the Shortcut Method to account for the swap agreements. The Shortcut Method assumes the hedge to be perfectly effective; thus, there is ineffectiveness to be recorded in earnings. The swap agreements’ fair values at , resulted in a liability of $ million included in other long-term liabilities. Losses of $ million were reclassified into interest expense for the months ended S . The Company terminated the interest rate swap agreement in conjunction with the prepayment of all outstanding amounts under the Lien Credit Facility (as defined below) in the quarter of in the amount of $ million which was reclassified out of accumulated other comprehensive loss into loss on extinguishment of debt. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 9 Months Ended |
Sep. 30, 2021 | |
Fair Value of Financial Instruments [Abstract] | |
Fair Value of Financial Instruments | Note 5. Fair Value of 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 Cash and cash equivalents are, by definition, short-term. Thus, the carrying amount is a reasonable estimate of fair value. Accounts Receivable The fair value of accounts receivable approximates their carrying value due to their short-term nature. Long-Term Debt The Company’s Senior Secured Notes (as defined below) bear interest at a rate of 5.625% per year and the fair value of the Senior Secured Notes approximate their carrying value of $250 million due to the recency of the notes’ issuance, related to the quarter ended September 30, 2021. The Company’s 2018 First Lien Credit Facility bore interest at variable rates that fluctuated with market rates, the carrying values of the 2018 First Lien Credit Facility approximated its fair value. As of December 31, 2020, the fair value of the 2018 First Lien Term Loan approximated $130.0 million. The Company prepaid all outstanding amounts under the 2018 First Lien Credit Facility in the first quarter of 2021. The Convertible Senior Notes (as defined) bear interest at a rate of 2.50% per year, and the fair value of the Convertible Senior Notes without the conversion feature approximated , with a carrying value of as of September 30, 2021 As of December 31, 2020 the fair value of the Convertible Senior Notes approximated , with a carrying value of . Note Payable – Promissory Note The Company’s Promissory Note bore interest at a rate of 7.5% per year. The fair value of the Promissory Note approximated its carrying value of $10.0 million at December 31, 2020, due to the recency of the note’s issuance, related to the year ended December 31, 2020. The Company prepaid all outstanding amounts under the Promissory Note in the third quarter of 2021. Note Payable – Unsecured Loan The Company’s Unsecured Note bears interest at a rate of 1.0% per year, and the fair value of the Unsecured Note approximated $7.4 million, with a carrying value of $7.5 million as of September 30, 2021. The fair value of the Unsecured Note approximated its carrying value of $7.5 million at December 31, 2020, due to the recency of the note’s issuance, related to the quarter ended December 31, 2020. The Unsecured Note was forgiven in October 2021. The extinguishment of the Unsecured Note will occur in the fourth quarter of 2021. See Note 11, “Notes Payable and Long-Term Debt”, for further information regarding the Company’s long-term debt. Foreign Exchange At S eptember 30, 2021 , the Company had forward contracts for the purchase of € million and sale of € million. The fair value of the foreign exchange contracts is based upon quoted market prices for similar instruments, thus leading to them being categorized as level instruments within the fair value hierarchy, and resulted in an asset of $ million and a liability of $ million as of September . Interest Rate Swaps The Company had swap contracts for a total notional amount of $70 million at December 31, 2020. The fair values of the swap contracts were based upon quoted market prices for similar instruments, thus leading to them being categorized as level instruments within the fair value hierarchy, and resulted in a liability |
Inventories
Inventories | 9 Months Ended |
Sep. 30, 2021 | |
Inventories [Abstract] | |
Inventories | Note 6. Inventories Effective January 1, 2021, the Company changed its method of accounting for inventory from the LIFO method to the FIFO method. Costs determined using the LIFO method were utilized on approximately 45.1% of inventories at December 31, 2020, prior to this change in method, and consisted primarily of tobacco inventory. The Company believes the FIFO method is preferable because it: (i) conforms the accounting for all inventory with the method utilized for the majority of its inventory; (ii) better represents how management assesses and reports on the performance of the tobacco and other LIFO product lines as LIFO is excluded from management’s economic decision making; (iii) better aligns the accounting with the physical flow of that inventory; and (iv) better reflects inventory at more current costs. The Company applied this change retrospectively to all prior periods presented. This change resulted in a $4.5 million increase in Accumulated earnings as of December 31, 2020, from $12.1 million to $16.6 million and a $4.3 million decrease in Accumulated deficit as of December 31, 2019, from $15.3 million to $11.0 million. In addition, the following financial statement line items in the Company’s Consolidated Balance Sheets as of December 31, 2020 and its Consolidated Statements of Income and Consolidated Statements of Cash Flows for the three and nine months ended September 30, 2020 were adjusted as follows: Consolidated Statement of Income For the three months ended September 30, 2020 As Originally Reported Effect of LIFO Change As Adjusted Cost of sales $ 55,867 $ - $ 55,867 Income before income taxes $ 9,612 $ - $ 9,612 Income tax expense $ 1,816 $ - $ 1,816 Net income attributable to Turning Point Brands, Inc. $ 7,796 $ - $ 7,796 Earnings per common share: Basic $ 0.41 $ - $ 0.41 Diluted $ 0.40 $ - $ 0.40 For the nine months ended September 30, 2020 As Originally Reported Effect of LIFO Change As Adjusted Cost of sales $ 161,996 $ 156 $ 162,152 Income before income taxes $ 26,327 $ (156 ) $ 26,171 Income tax expense $ 6,029 $ - $ 6,029 Net income attributable to Turning Point Brands, Inc. $ 20,298 $ (156 ) $ 20,142 Earnings per common share: Basic $ 1.04 $ (0.01 ) $ 1.03 Diluted $ 1.02 $ (0.01 ) $ 1.01 Consolidated Balance Sheets December 31, 2020 As Originally Reported Effect of LIFO Change As Adjusted Inventories $ 79,750 $ 6,106 $ 85,856 Deferred income taxes $ 4,082 $ 1,584 $ 5,666 Accumulated earnings (deficit) $ 12,058 $ 4,522 $ 16,580 Consolidated Statement of Cash Flows For the nine months ended September 30, 2020 As Originally Reported Effect of LIFO Change As Adjusted Consolidated net income $ 20,298 $ (156 ) $ 20,142 Deferred income taxes $ 876 $ - $ 876 Inventories $ (2,364 ) $ 156 $ (2,208 ) The components of inventories are as follows: September 30, 2021 December 31, 2020 Raw materials and work in process $ 6,892 $ 8,137 Leaf tobacco 38,151 32,948 Finished goods - Zig-Zag Products 26,839 14,903 Finished goods - Stoker’s Products 11,666 9,727 Finished goods - NewGen products 13,554 18,916 Other 1,503 1,225 Inventories $ 98,605 $ 85,856 The inventory valuation allowance was $6.8 million and $9.9 million as of September 30, 2021, and December 31, 2020, respectively. |
Other Current Assets
Other Current Assets | 9 Months Ended |
Sep. 30, 2021 | |
Other Current Assets [Abstract] | |
Other Current Assets | Note 7. Other Current Assets Other current assets consist of: September 30, 2021 December 31, 2020 Inventory deposits $ 9,423 $ 7,113 Insurance deposit 3,000 3,000 Prepaid taxes 1,533 813 Other 13,157 15,525 Total $ 27,113 $ 26,451 |
Property, Plant, and Equipment
Property, Plant, and Equipment | 9 Months Ended |
Sep. 30, 2021 | |
Property, Plant, and Equipment [Abstract] | |
Property, Plant, and Equipment | Note 8. Property, Plant, and Equipment Property, plant, and equipment consists of: September 30, 2021 December 31, 2020 Land $ 22 $ 22 Buildings and improvements 3,069 2,750 Leasehold improvements 4,739 4,702 Machinery and equipment 19,352 15,612 Furniture and fixtures 9,281 9,025 Gross property, plant and equipment 36,463 32,111 Accumulated depreciation (18,867 ) (16,587 ) Net property, plant and equipment $ 17,596 $ 15,524 |
Other Assets
Other Assets | 9 Months Ended |
Sep. 30, 2021 | |
Other Assets [Abstract] | |
Other Assets | Note 9. Other Assets Other assets consist of: September 30, 2021 December 31, 2020 Equity investments $ 32,749 $ 24,018 Debt security investment 8,000 - Other 2,061 2,818 Total $ 42,810 $ 26,836 On July 21, 2021, the Company invested $8 million in Old Pal Holding Company LLC (“Old Pal”). The Company invested in the form of a convertible note which includes additional follow-on investment rights. Old Pal is a leading brand in the cannabis lifestyle space that operates a non-plant touching licensing model. The Company’s investment will enable Old Pal to expand product offerings in existing states, which include California, Nevada, Michigan, Oklahoma, Ohio, Washington and Massachusetts, and will help create the infrastructure necessary to support continued territory and product expansion. The convertible note bears an interest rate of 3.0% per year and matures July 31, 2026. Interest and principal are payable at maturity. Old Pal has the option to extend the maturity date in one-year increments. The interest rate is subject to change based on sales levels of Old Pal meeting certain thresholds. The weighted average interest rate was 3% for the three months ended September 30, 2021. Old Pal has the option to convert the note into shares once sales reach a certain threshold. Additionally, the Company has the right to convert the note into shares at any time after January 1, 2022. The conditions required to allow Old Pal to convert the note were not met as of September 30, 2021. On April 19, 2021, the Company invested $8.7 million in Docklight Brands, Inc., a pioneering consumer products company with celebrated brands including Marley Natural Marley Marley |
Accrued Liabilities
Accrued Liabilities | 9 Months Ended |
Sep. 30, 2021 | |
Accrued Liabilities [Abstract] | |
Accrued Liabilities | Note 10. Accrued Liabilities Accrued liabilities consist of: September 30, 2021 December 31, 2020 Accrued payroll and related items $ 7,029 $ 9,459 Customer returns and allowances 7,635 5,259 Taxes payable 4,409 4,326 Lease liabilities 3,159 3,228 Accrued interest 2,837 2,096 Other 8,280 10,857 Total $ 33,349 $ 35,225 |
Notes Payable and Long-Term Deb
Notes Payable and Long-Term Debt | 9 Months Ended |
Sep. 30, 2021 | |
Notes Payable and Long-Term Debt [Abstract] | |
Notes Payable and Long-Term Debt | Note 11. Notes Payable and Long-Term Debt Notes payable and long-term debt consists of the following in order of preference: September 30, 2021 December 31, 2020 Senior Secured Notes $ 250,000 $ - 2018 First Lien Term Loan - 130,000 Convertible Senior Notes 172,500 172,500 Note payable - Promissory Note - 10,000 Note payable - Unsecured Loan 7,485 7,485 Gross notes payable and long-term debt 429,985 319,985 Less deferred finance charges (8,947 ) (5,873 ) Less current maturities (7,485 ) (12,000 ) Notes payable and long-term debt $ 413,553 $ 302,112 Senior Secured Notes On February 11, 2021, the Company closed a private offering (the “Offering”) of $250 million aggregate principal amount of its 5.625% senior secured notes due 2026 (the “Senior Secured Notes”). The Senior Secured Notes bear interest at a rate of 5.625% and will mature on February 15, 2026. Interest on the Senior Secured Notes is payable semi-annually in arrears on February 15 and August 15 of each year, commencing on August 15, 2021.The Company used the proceeds from the Offering (i) to repay all obligations under and terminate the 2018 First Lien Credit Facility, (ii) to pay related fees, costs, and expenses and (iii) for general corporate purposes. Obligations under the Senior Secured Notes are guaranteed by the Company’s existing and future wholly-owned domestic subsidiaries (the “Guarantors”) that guarantee any Credit Facility (as defined in the Indenture governing the Senior Secured Notes or the “Senior Secured Notes Indenture”) or capital markets debt securities of the Company or Guarantors in excess of $ 15.0 million. The and the related guarantees are secured by first-priority liens on substantially all of the assets of the Company and the Guarantors, subject to certain exceptions. The Company may redeem the Senior Secured Notes, in whole or in part, at any time prior to February 15, 2023, at a price equal to 100% of the principal amount of the Notes redeemed plus accrued and unpaid interest, if any, to, but excluding the applicable redemption date, plus a “make-whole” premium. Thereafter, the Company may redeem the Senior Secured Notes, in whole or in part, at established redemption prices set forth in the Senior Secured Notes Indenture, plus accrued and unpaid interest, if any. In addition, on or prior to February 15, 2023, the Company may redeem up to 40% of the aggregate principal amount of the Senior Secured Notes with the net cash proceeds from certain equity offerings at a redemption price equal to 105.625%, plus accrued and unpaid interest, if any to the redemption date; provided, however , If the Company experiences a change of control (as defined in the Senior Secured Notes Indenture), the Company must offer to repurchase the Senior Secured Notes at a repurchase price equal to 101% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest. The Indenture contains covenants that, among other things, restrict the ability of the Company and its restricted subsidiaries to: (i) grant or incur liens; (ii) incur, assume or guarantee additional indebtedness; (iii) sell or otherwise dispose of assets, including capital stock of subsidiaries; (iv) make certain investments; (v) pay dividends, make distributions or redeem or repurchase capital stock; (vi) engage in certain transactions with affiliates; and (vii) consolidate or merge with or into, or sell substantially all of our assets to another entity. These covenants are subject to a number of limitations and exceptions set forth in the Indenture. The Company incurred debt issuance costs attributable to the issuance of the Senior Secured Notes of $6.4 million which are amortized to interest expense using the effective interest method over the expected life of the Senior Secured Notes. The Indenture provides for customary events of default . 2021 Revolving Credit Facility In connection with the Offering, the Company also entered into a new $25 million senior secured revolving credit facility (the “ 2021 Revolving Credit Facility”) with the lenders party thereto (the “Lenders”) and Barclays Bank PLC, as administrative agent and collateral agent (in such capacity, the “Agent”). The 2021 Revolving Credit Facility provides for a revolving line of credit of up to $ million. Letters of credit are limited to $ million (and are a part of, and not in addition to, the revolving line of credit). The Company has t drawn any borrowings under the 2021 Revolving Credit Facility but does have letters of credit of approximately $ million outstanding under the facility. The 2021 Revolving Credit Facility will mature on if none of the Company’s Convertible Senior Notes are outstanding, and if any Convertible Senior Notes are outstanding, the date which is days prior to the maturity date of July 15, 2024 for such Convertible Senior Notes. Interest is payable on the 2021 Revolving Credit Facility at a fluctuating rate of interest determined by reference to the Eurodollar rate plus an applicable margin of 3.50% (with step-downs upon de-leveraging). The Company also has the option to borrow at a rate determined by reference to the base rate. The obligations under the 2021 Revolving Credit Agreement are guaranteed on a joint and several basis by the Guarantors. The Company’s and Guarantors’ obligations under the 2021 Revolving Credit Facility are secured on a pari passu basis with the Senior Secured Notes. The 2021 Revolving Credit Agreement contains covenants that are substantially the same as the covenants in the Senior Secured Notes Indenture. The 2021 Revolving Credit Facility also requires the maintenance of a Consolidated Leverage Ratio (as defined in the 2021 Revolving Credit Agreement) of 5.50 to 1.00 (with a step down to 5.25 to 1.00 beginning with the fiscal quarter ending March 31, 2023) at the end of each fiscal quarter when extensions of credit under the 2021 Revolving Credit Facility and certain drawn and undrawn letters of credit (excluding (a) letters of credit that have been cash collateralized and (b) letters of credit having an aggregate face amount less than $5,000,000) in the aggregate outstanding exceeds 35% of the total commitments under the 2021 Revolving Credit Facility. The Company incurred debt issuance costs attributable to the issuance of the 2021 Revolving Credit Facility of $ 0.5 million which are amortized to interest expense using the effective interest method over the expected life of the 2021 Revolving Credit Facility. The 2021 Revolving Credit Agreement provides for customary events of default. 2018 Credit Facility On March 7, 2018, the Company entered into $250 million of credit facilities consisting of a $160 million 2018 First Lien Term Loan and a $50 million 2018 Revolving Credit Facility (collectively, the “2018 First Lien Credit Facility”), in each case, with Fifth Third Bank, as administrative agent, and other lenders, in addition to a $40 million 2018 Second Lien Term Loan (the “2018 Second Lien Credit Facility,” and, together with the 2018 First Lien Credit Facility, the “2018 Credit Facility”) with Prospect Capital Corporation, as administrative agent, and other lenders. The 2018 Credit Facility contained a $40 million accordion feature. The 2018 Credit Facility contained 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 2018 Credit Facility also contained certain negative covenants customary for facilities of these types including covenants that, subject to exceptions described in the 2018 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. See Note 19, “Dividends and Share Repurchase”, for further information regarding dividend restrictions. 2018 First Lien Credit Facility: The 2018 First Lien Term Loan and the 2018 Revolving Credit Facility bore interest at LIBOR plus a spread of 2.75% to 3.50% based on the Company’s senior leverage ratio. The 2018 First Lien Term Loan had quarterly required payments of $2.0 million beginning June 30, 2018, increasing to $3.0 million on June 30, 2020, and increasing to $4.0 million on June 30, 2022. The 2018 First Lien Credit Facility had a maturity date of March 7, 2023. The 2018 First Lien Term Loan was secured by a first priority lien on substantially all of the assets of the borrowers and the guarantors thereunder, other than certain excluded assets (the “Collateral”). In connection with the Convertible Senior Notes offering, the Company entered into a First Amendment (“the Amendment”) to the First Lien Credit Agreement, with Fifth Third Bank, as administrative agent, and other lenders and certain other lender parties thereto. The Amendment was entered into primarily to permit the Company to issue up to $200 million of convertible senior notes, enter into certain capped call transactions in connection with the issuance of such notes and to use the proceeds from the issuance of the notes to repay amounts outstanding under the 2018 Second Lien Credit Facility and use the remaining proceeds for acquisitions and investments. In connection with the Amendment, fees of $0.7 million were incurred. The 2018 First Lien Credit Facility contained certain financial covenants, which were amended in connection with the Convertible Senior Notes offering in the third quarter 2019. The covenants included maximum senior leverage ratio of 3.00x with step-downs to 2.50x, a maximum total leverage ratio of 5.50x with step-downs to 5.00x, and a minimum fixed charge coverage ratio of 1.20x. In the first quarter of 2020, the financial covenants were amended to permit certain add-backs related to PMTA in the definition of Consolidated EBITDA for the period of October 1, 2019 until September 30, 2020. In connection with the Amendment, fees of $0.2 million were incurred. The Company used a portion of the proceeds from the issuance of the Senior Secured Notes to prepay all outstanding amounts under and terminate the 2018 First Lien Credit Facility in the first quarter of 2021 in the amount of $130.0 million, and the transaction resulted in a $5.7 million loss on extinguishment of debt. Convertible Senior Notes In July 2019, the Company closed an offering of $172.5 million in aggregate principal amount of its 2.50% Convertible Senior Notes due July 15, 2024 (the “Convertible Senior Notes”). The Convertible Senior Notes bear interest at a rate of 2.50% per year, payable semiannually in arrears on January 15 and July 15 of each year, beginning on January 15, 2020. The Convertible Senior Notes will mature on July 15, 2024, unless earlier repurchased, redeemed or converted. The Convertible Senior Notes are senior unsecured obligations of the Company. The Convertible Senior Notes are convertible into approximately 3,207,293 shares of TPB Common Stock under certain circumstances prior to maturity at a conversion rate of 18.593 shares per $1,000 principal amount of the Convertible Senior Notes, which represents a conversion price of approximately $53.78 per share, subject to adjustment under certain conditions, but will not be adjusted for any accrued and unpaid interest. The conversion price is adjusted periodically as a result of dividends paid by the Company in excess of pre-determined thresholds of $0.04 per share. Upon conversion, the Company may pay cash, shares of common stock or a combination of cash and stock, as determined by the Company at its discretion. The conditions required to allow the holders to convert their Convertible Senior Notes were not met as of September 30, 2021. The Company early adopted ASU 2020-06 effective January 1, 2021 on a retrospective basis to all periods presented. Under ASU 2020-06, the Company will account for the Convertible Senior Notes entirely as a liability and will no longer separately account for the Convertible Senior Notes with liability and equity components. See note 2 for further discussion of the impact of the adoption of ASU 2020-06. The Company incurred debt issuance costs attributable to the Convertible Senior Notes of $5.9 million which are amortized to interest expense using the effective interest method over the expected life of the Convertible Senior Notes. In connection with the Convertible Senior Notes offering, the Company entered into privately negotiated capped call transactions with certain financial institutions. The capped call transactions have a strike price of $53.78 per and a cap price of $82.86 per share, and are exercisable when, and if, the Convertible Senior Notes are converted. The Company paid $20.53 million for these capped calls at the time they were entered into and charged that amount to additional paid-in capital. The indenture covering the Convertible Senior Notes contains customary events of default. Promissory Note On June 10, 2020 , in connection with the acquisition of certain Durfort assets, the Company issued the Promissory Note in the principal amount of $ million (the “Principal Amount”), with an annual interest rate of , payable , with the interest payment due . The Principal Amount was payable in $ million installments, with the installment due months after the closing date of the acquisition ( ), and the installment due months after the closing date of the acquisition. The installment was subject to reduction for certain amounts payable to the Company as a holdback. The Company prepaid all outstanding amounts under and terminated the Promissory Note in the third quarter of 2021 in the amount of $9.6 million. The transaction resulted in a $0.4 million gain on extinguishment of debt. Unsecured Loan On April 6, 2020 , the Lien Credit Facility was amended to allow for an unsecured loan under the Coronavirus Aid, Relief, and Economic Security Act of (“CARES”). On , National Tobacco Company, L.P., a subsidiary of the Company, entered into a loan agreement with Regions Bank guaranteed by the Small Business Administration for a $ million unsecured loan. The proceeds of the loan were received on . The loan is scheduled to mature on and has a interest rate . During 2021, the Company applied for forgiveness for the loan. On October 15, 2021, the Company received notice that its application for forgiveness was fully approved. The Company anticipates that the extinguishment of the unsecured loan will occur in the fourth quarter of 2021 , resulting in a gain on extinguishment of debt of $7.5 million Note Payable – IVG In September 2018, the Company issued a note payable to IVG’s former shareholders (“IVG Note”). The IVG Note had a principal amount of $4.0 million with an interest rate of 6.0% per year and matured on March 5, 2020. All principal and accrued and unpaid interest under the IVG Note were subject to indemnification obligations of the sellers pursuant to the International Vapor Group Stock Purchase Agreement dated as of September 5, 2018. The carrying amount of the IVG Note, $4.2 million, was deposited into an escrow account in the first quarter of 2020 pending agreement with the sellers of any indemnification obligations. The escrow funds were distributed in the first quarter of 2021. |
Leases
Leases | 9 Months Ended |
Sep. 30, 2021 | |
Leases [Abstract] | |
Leases | Note 12. Leases The Company’s leases consist primarily of leased property for manufacturing warehouse, head offices and retail space as well as vehicle leases. At lease inception, the Company recognizes a lease right of use asset and lease liability calculated as the present value of future minimum lease payments. Leases with an initial term of 12 months or less are not recorded on the balance sheet. Lease expense for these leases is recognized on a straight-line basis over the lease term. The components of lease expense consisted of the following: Three Months Ended September 30, 2021 2020 Operating lease cost Cost of sales $ 225 $ 225 Selling, general and administrative 771 643 Variable lease cost (1) 214 96 Short-term lease cost 13 11 Sublease income - (30 ) Total $ 1,223 $ 945 (1) Variable lease cost includes elements of a contract that do not represent a good or service but for which the lessee is responsible for paying. Nine Months Ended September 30, 2021 2020 Operating lease cost Cost of sales $ 682 $ 683 Selling, general and administrative 2,285 1,647 Variable lease cost (1) 954 452 Short-term lease cost 35 120 Sublease income (60 ) (90 ) Total $ 3,896 $ 2,812 (1) Variable lease cost includes elements of a contract that do not represent a good or service but for which the lessee is responsible for paying. September 30, 2021 December 31, 2020 Assets: Right of use assets $ 15,984 $ 17,918 Total lease assets $ 15,984 $ 17,918 Liabilities: Current lease liabilities $ 3,159 $ 3,228 Long-term lease liabilities 14,201 16,117 Total lease liabilities $ 17,360 $ 19,345 (2) Reported within accrued liabilities on the balance sheet As of September 30, 2021 2020 Weighted-average remaining lease term - operating leases 6.8 years 7.4 years Weighted-average discount rate - operating leases 4.93 % 4.93 % Nearly all the lease contracts for the Company do not provide a readily determinable implicit interest rate. For these contracts, the Company uses a discount rate that approximates its incremental borrowing rate at the time of the lease commencement. As of September 30, 2021, maturities of lease liabilities consisted of the following: September 30, 2021 2021 $ 989 2022 3,870 2023 3,679 2024 2,485 2025 2,125 Years thereafter 7,428 Total lease payments $ 20,576 Less: Imputed interest 3,216 Present value of lease liabilities $ 17,360 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2021 | |
Income Taxes [Abstract] | |
Income Taxes | Note 13. Income Taxes The Company’s effective income tax rate for the three and nine months ended September 30, 2021, was 23.3% and 21.8%, respectively, which includes a discrete tax deduction of $1.0 million and $6.2 million for the three and nine months ended September 30, 2021, respectively, relating to stock option exercises. The Company’s effective income tax rate for the three and nine months ended September 30, 2020, was 20.2% and 23.7%, respectively, which includes a discrete tax deduction of $0.0 million and $0.9 million for the three and nine months ended September 30, 2020, respectively, relating to stock option exercises. 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 the Company 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 2018. |
Pension and Postretirement Bene
Pension and Postretirement Benefit Plans | 9 Months Ended |
Sep. 30, 2021 | |
Pension and Postretirement Benefit Plans [Abstract] | |
Pension and Postretirement Benefit Plans | Note 14. Pension and Postretirement Benefit Plans The Company had a defined benefit pension plan. Benefits for hourly employees were based on a stated benefit per year of service, reduced by amounts earned in a previous plan. Benefits for salaried employees were based on years of service and the employees’ final compensation. The Company’s policy was to make the minimum amount of contributions that can be deducted for federal income taxes. The Company made no contributions to the pension plan in 2020. In October 2019, the Company elected to terminate the defined benefit pension plan, effective December 31, 2019 with final distributions made in third quarter of 2020. The Company sponsored a defined benefit postretirement plan that covered hourly employees. This plan provided medical and dental benefits. This plan was contributory with retiree contributions adjusted annually. The Company’s policy was to make contributions equal to benefits paid during the year. In October 2019, the Company amended the plan to cease benefits effective June 30, 2020. The following table provides the components of net periodic pension and postretirement benefit costs and total costs for the plans: Three Months Ended September 30, Pension Benefits Postretirement Benefits 2021 2020 2021 2020 Service cost $ - $ - $ - $ - Interest cost - - - - Expected return on plan assets - - - - Amortization of (gains) losses - - - - Settlement and curtailment loss - 1,188 - - Net periodic benefit income $ - $ 1,188 $ - $ - Nine Months Ended September 30, Pension Benefits Postretirement Benefits 2021 2020 2021 2020 Service cost $ - $ - $ - $ - Interest cost - 190 - - Expected return on plan assets - (322 ) - - Amortization of (gains) losses - 72 - (131 ) Settlement and curtailment loss - 1,188 - - Net periodic benefit income $ - $ 1,128 $ - $ (131 ) |
Share Incentive Plans
Share Incentive Plans | 9 Months Ended |
Sep. 30, 2021 | |
Share Incentive Plans [Abstract] | |
Share Incentive Plans | Note 15. Share Incentive Plans On March 22, 2021, the Company’s Board of Directors adopted the Turning Point Brands, Inc. 2021 Equity Incentive Plan (the “2021 Plan”), pursuant to which awards may be granted to employees, non-employee directors, and consultants. In addition, the 2021 Plan provides for the granting of nonqualified stock options to employees of the Company or any subsidiary of the Company. Pursuant to the 2021 Plan, 1,290,000 shares, plus 100,052 shares remaining available for issuance under the 2015 Equity Incentive Plan (the “2015 Plan”), of TPB Common Stock are reserved for issuance as awards to employees, non-employee directors, and consultants as compensation for past or future services or the attainment of certain performance goals. The 2021 Plan is scheduled to terminate on March 21, 2031. The 2021 Plan is administered by the compensation committee (the “Committee”) of the Company’s Board of Directors. The Committee determines the vesting criteria for the awards, with such criteria to be specified in the award agreement. As of September 30, 2021, net of forfeitures, there were Restricted Stock Units (“RSUs”) and options granted under the 2021 Plan. On April 28, 2016, the Board of Directors of the Company adopted 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 TPB Common Stock were reserved for issuance as awards to employees, non-employee directors, and consultants as compensation for past or future services or the attainment of certain performance goals. The 2015 Plan was scheduled to terminate on April 27, 2026. The 2015 Plan was administered by the Committee. Upon adoption of the 2021 Plan, the 2015 Plan was terminated, and the Company determined additional grants would be made under the 2015 Plan. However, all awards issued under the 2015 Plan that have not been previously terminated or forfeited remain outstanding and continue unaffected. There are shares available for grant under the 2015 Plan. On February 8, 2006, the Board of Directors of the Company adopted the 2006 Equity Incentive Plan (the “2006 Plan”) of North Atlantic Holding Company, Inc., 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 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, 2015 and 2021 Plans is summarized below: Stock Option Shares Weighted Average Exercise Price Weighted Average Grant Date Fair Value Outstanding, December 31, 2019 696,716 $ 18.13 $ 6.17 Granted 155,000 14.85 4.41 Exercised (135,146 ) 6.37 2.74 Forfeited (5,510 ) 27.25 8.64 Outstanding, December 31, 2020 711,060 19.58 6.42 Granted 119,500 50.93 13.58 Exercised (202,768 ) 10.22 6.35 Forfeited (5,749 ) 31.61 9.44 Outstanding, September 30 2021 622,043 $ 28.54 $ 8.70 Under the 2006, 2015 and 2021 Plans, the total intrinsic value of options exercised during the nine months ended September 30, 2021 and 2020, was $7.9 million, and $0.9 million, respectively. At September 30, 2021, under the 2006 Plan, the outstanding stock options’ exercise price for 87,340 options is $3.83 per share, all of which are exercisable. The weighted average of the remaining lives of the outstanding stock options with an exercise price of $3.83 is approximately 2.67 years. The Company estimates the expected life of these stock options is ten years from the date of grant. For the $3.83 per share options, the weighted average fair value of options at the date of grant was determined using the Black-Scholes model with the following assumptions a ten-year life from grant date, a current share price and exercise price of $3.83, a risk-free interest rate of 3.57%, volatility of 40%, and no assumed dividend yield. Based on these assumptions, the fair value of these options is approximately $2.17 per share option granted. At September 30, 2021, under the 2015 and 2021 Plans, 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 until sufficient information regarding volatility of our share price becomes available or until the selected companies are no longer suitable for this purpose. Due to our limited trading history, we are using the simplified method presented by SEC Staff Accounting Bulletin No. 107 to calculate expected holding periods, which represent the periods of time for which 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 in the reliability of our calculations. 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. February 10, 2017 May 17, 2017 March 7, 2018 March 20, 2019 October 24, 2019 March 18, 2020 February 18, 2021 May 3, 2021 Number of options granted 40,000 93,819 98,100 155,780 25,000 155,000 100,000 12,000 Options outstanding at September 30 2021 27,050 47,483 67,417 142,284 25,000 107,219 98,750 12,000 Number exercisable at September 30 2021 27,050 47,483 67,417 110,015 16,750 33,167 9,500 - Exercise price $ 13.00 $ 15.41 $ 21.21 $ 47.58 $ 20.89 $ 14.85 $ 51.75 $ 47.76 Remaining lives 5.37 5.63 6.44 7.47 8.07 8.47 9.39 9.59 Risk free interest rate 1.89 % 1.76 % 2.65 % 2.34 % 1.58 % 0.79 % 0.56 % 0.84 % Expected volatility 27.44 % 26.92 % 28.76 % 30.95 % 31.93 % 35.72 % 28.69 % 29.03 % Expected life 6.000 6.000 6.000 6.000 6.000 6.000 6.000 6.000 Dividend yield - - 0.83 % 0.42 % 0.95 % 1.49 % 0.55 % 0.59 % Fair value at grant date $ 3.98 $ 4.60 $ 6.37 $ 15.63 $ 6.27 $ 4.41 $ 13.77 $ 13.06 The following table outlines the assumptions based on the number of options granted under the 2021 Plan. May 17, 2021 Number of options granted 7,500 Options outstanding at September 30 2021 7,500 Number exercisable at September 30 2021 - Exercise price $ 45.05 Remaining lives 9.63 Risk free interest rate 0.84 % Expected volatility 31.50 % Expected life 6.000 Dividend yield 0.63 % Fair value at grant date $ 13.23 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 $0.3 million and for the three months ended September 30, 2021 and 2020 respectively. The Company recorded compensation expense related to the options of approximately $ million and $ million for the nine months ended September Total unrecognized compensation expense related to options at September is , which will be expensed over years. Performance-Based Restricted Stock Units Performance-Based Restricted Stock Units (“PRSUs”) are restricted stock units subject to both performance-based and service-based vesting conditions. The number of shares of TPB Common Stock a recipient will receive upon vesting of a PRSU will be calculated by reference to certain performance metrics related to the Company’s performance over a five-year period. PRSUs will vest on the measurement date, which is no more than days after the performance period provided the applicable service and performance conditions are satisfied. As of September there are PRSUs outstanding, all of which are unvested. The following table outlines the PRSUs granted and outstanding as of September March 31, 2017 March 7, 2018 March 20, 2019 March 20, 2019 July 19, 2019 March 18, 2020 December 28, 2020 February 18, 2021 Number of PRSUs granted 94,000 96,000 92,500 4,901 88,582 94,000 88,169 100,000 PRSUs outstanding at September 30 2021 83,000 93,000 84,600 - 21,342 92,400 88,169 98,700 Fair value as of grant date $ 15.60 $ 21.21 $ 47.58 $ 47.58 $ 52.15 $ 14.85 $ 46.42 $ 51.75 Remaining lives 0.25 1.25 2.25 - 1.25 3.25 2.25 4.25 The Company recorded compensation expense related to the PRSUs of approximately $1.3 million and in the consolidated statements of income for the three months ended September respectively, based on the probability of achieving the performance condition. The Company recorded compensation expense related to the PRSUs of approximately $ million and $ million in the consolidated statements of income for the nine months ended September based on the probability of achieving the performance condition. Total unrecognized compensation expense related to these awards at September is which will be expensed over the service periods based on the probability of achieving the performance condition. |
Contingencies
Contingencies | 9 Months Ended |
Sep. 30, 2021 | |
Contingencies [Abstract] | |
Contingencies | Note 16. Contingencies On October 9, 2020, a purported stockholder of Turning Point Brands, Inc., Paul-Emile Berteau, filed a complaint in the Delaware Court of Chancery relating to the merger of SDI with a TPB subsidiary pursuant to the Agreement and Plan of Merger and Reorganization, dated as of April 7, 2020, by and among TPB, SDI and Merger Sub. The complaint purports to assert two derivative counts for breach of fiduciary duty on TPB’s behalf and against the TPB Board of Directors and certain SDI affiliates. The third count purports to assert a direct claim against TPB and its Board of Directors based on allegations that TPB’s Amended and Restated Bylaws are inconsistent with TPB’s certificate of incorporation. On October the TPB Board of Directors adopted Amendment No. to TPB’s Amended and Restated Bylaws, which amended the challenged section of the bylaws. On June the court granted in part and denied in part the defendants’ motions to dismiss. Among other things, the court dismissed TPB director H.C. Charles Diao as a defendant in the action and dismissed the count of the plaintiff’s complaint as moot. The remaining defendants answered the complaint on August While the Company believes it has good and valid defenses to the claims, there can be no assurance that the Company will prevail in this case, and it could have a material adverse effect on the Company’s business and results of operations. Other major tobacco companies are defendants in product liability claims. In a number of these cases, the amounts of punitive and compensatory damages sought are significant and, if such a claim were brought against the Company, could have a material adverse effect on our business and results of operations. The Company is subject to several lawsuits alleging personal injuries resulting from malfunctioning vaporizer devices or consumption of e-liquids and may be subject to claims in the future relating to other NewGen products. The Company is still evaluating these claims and the potential defenses to them. For example, the Company did not design or manufacture the products at issue; rather, the Company was merely the distributor. Nonetheless, there can be no assurance that the Company will prevail in these cases, and they could have a material adverse effect on the financial position, results of operations, or cash flows of the Company . We have several subsidiaries engaged in making, distributing, and selling vapor products. As a result of the overall publicity and controversy surrounding the vapor industry generally, many companies have received informational subpoenas from various regulatory bodies and in some jurisdictions regulatory lawsuits have been filed regarding marketing practices and possible underage sales. We expect that our subsidiaries will be subject to some such cases and investigative requests. In the acquisition of the vapor businesses, we negotiated financial “hold-backs”, which we expect to be able to use to defray expenses associated with the information production and the cost of defending any such lawsuits as well as the franchisee lawsuit. To the extent that litigation becomes necessary, we believe that the subsidiaries have strong factual and legal defenses against claims that they unfairly marketed vapor products. We have two franchisor subsidiaries. Like many franchise businesses, in the ordinary course of their business, these subsidiaries are from time to time responding parties to arbitration demands brought by franchisees. One of our subsidiaries, which we acquired in 2018, is the franchisor of the VaporFi system. This subsidiary is a responding party in an arbitration brought by a former franchisee claiming, among other things, violations of Federal Trade Commission Rules and Florida law. These allegations relate to the franchise disclosure document (FDD) utilized by the franchise system, a small vapor store chain, prior to our acquisition of the chain in 2018. We believe that we have good and valid substantive defenses against these claims and will vigorously defend ourselves in the arbitration. We have also been named in a lawsuit brought by a different former franchisee represented by the same firm that represents the plaintiff in the action described above. This case relates to the termination of the franchise agreement by the franchisor for failure to pay franchising fees and our subsequent demand that the franchisee cease using our marks and de-image locations formerly housing the franchises. The franchisee filed suit against us in the U.S. District Court for the Southern District of Florida sixteen months after our demand. The franchisee is claiming tortious interference and conversion. We believe that the suit was improperly brought before the U.S. District Court for the South District of Florida because the related franchising agreements included a mandatory arbitration clause. We believe we have good and valid substantive defenses against the claims and intend on vigorously defending our interests in this matter. |
Income Per Share
Income Per Share | 9 Months Ended |
Sep. 30, 2021 | |
Income Per Share [Abstract] | |
Income Per Share | Note 17. Income 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 September 30, 2021 2020 Income Shares Per Share Income Shares Per Share Basic EPS: Numerator Net income attributable to Turning Point Brands, Inc. $ 13,468 $ 9,020 Denominator Weighted average 18,897,974 $ 0.71 19,240,187 $ 0.47 Diluted EPS: Numerator Net income attributable to Turning Point Brands, Inc. $ 13,468 $ 9,020 Interest expense related to Convertible Senior Notes, net of tax 1,054 1,047 Diluted net income attributable to Turning Point Brands. Inc. $ 14,522 $ 10,067 Denominator Basic weighted average 18,897,974 19,240,187 Convertible Senior Notes 3,207,293 3,202,808 Stock options 259,540 396,802 22,364,807 $ 0.65 22,839,797 $ 0.44 Nine Months Ended September 30, 2021 2020 Income Shares Per Share Income Shares Per Share Basic EPS: Numerator Net income attributable to Turning Point Brands, Inc. $ 40,605 $ 23,814 Denominator Weighted average 18,988,435 $ 2.14 19,478,297 $ 1.22 Diluted EPS: Numerator Net income attributable to Turning Point Brands, Inc. $ 40,605 $ 23,814 Interest expense related to Convertible Senior Notes 3,162 3,141 Diluted net income attributable to Turning Point Brands. Inc. $ 43,767 $ 26,955 Denominator Basic weighted average 18,988,435 19,478,297 Convertible Senior Notes 3,207,293 3,202,808 Stock options 268,814 380,394 22,464,542 $ 1.95 23,061,499 $ 1.17 |
Segment Information
Segment Information | 9 Months Ended |
Sep. 30, 2021 | |
Segment Information [Abstract] | |
Segment Information | Note 18. Segment Information In accordance with ASC 280, Segment Reporting, the Company has three reportable segments: (1) Zig-Zag Products; (2) Stoker’s Products; and (3) NewGen Products. The Zig-Zag Products segment markets and distributes (a) rolling papers, tubes, and related products; and (b) finished cigars and MYO cigar wraps. The Stoker’s Products segment (a) manufactures and markets moist snuff and (b) contracts for and markets loose leaf chewing tobacco products. The NewGen Products segment (a) markets and distributes and certain other products without tobacco and/or nicotine; (b) distributes a wide assortment of products to non-traditional retail outlets via VaporBeast; and (c) markets and distributes a wide assortment of products to individual consumers via the VaporFi online platform. Products in the Zig-Zag Products and Stoker’s Products segments are distributed primarily through wholesale distributors in the United States while products in the NewGen Products segment are distributed primarily through e-commerce to non-traditional retail outlets and direct to consumers in the United States. The Other segment includes the costs and assets of the Company not assigned to one of the reportable segments such as intercompany transfers, deferred taxes, deferred financing fees, and investments in subsidiaries. The accounting policies of these segments are the same as those of the Company. Corporate costs are not directly charged to the three reportable segments in the ordinary course of operations. 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 September 30, 2021 2020 Net sales Zig-Zag products $ 42,234 $ 35,973 Stoker’s products 30,472 29,764 NewGen products 37,198 38,437 Total $ 109,904 $ 104,174 Gross profit Zig-Zag products $ 23,703 $ 21,263 Stoker’s products 17,104 16,042 NewGen products 13,462 11,002 Total $ 54,269 $ 48,307 Operating income (loss) Zig-Zag products $ 17,122 $ 16,827 Stoker’s products 13,305 11,466 NewGen products 2,027 745 Corporate unallocated (1)(2)(3) (10,079 ) (13,017 ) Total $ 22,375 $ 16,021 Interest expense, net 5,397 3,539 Investment income (157 ) (3 ) Gain on extinguishment of debt (375 ) - Net periodic income, excluding service cost - 1,188 Income before income taxes $ 17,510 $ 11,297 Capital expenditures Zig-Zag products $ 12 $ - Stoker’s products 2,209 1,450 NewGen products 2 14 Total $ 2,223 $ 1,464 Depreciation and amortization Zig-Zag products $ 90 $ 91 Stoker’s products 638 562 NewGen products 516 633 Total $ 1,244 $ 1,286 (1) Includes corporate costs that are not allocated to any of the three reportable segments. (2) Includes costs related to PMTA of $ 5.3 million in 2020. (3) Shipping costs are included in the applicable operating segment and not in Corporate unallocated. Nine Months Ended September 30, 2021 2020 Net sales Zig-Zag products $ 130,440 $ 92,290 Stoker’s products 93,096 87,081 NewGen products 116,652 120,455 Total $ 340,188 $ 299,826 Gross profit Zig-Zag products $ 76,342 $ 53,066 Stoker’s products 51,142 46,424 NewGen products 40,019 38,184 Total $ 167,503 $ 137,674 Operating income (loss) Zig-Zag products $ 57,897 $ 41,471 Stoker’s products 39,386 33,296 NewGen products 5,690 4,493 Corporate unallocated (1)(2)(3) (31,370 ) (37,022 ) Total $ 71,603 $ 42,238 Interest expense, net 15,406 10,143 Investment income (292 ) (128 ) Loss on extinguishment of debt 5,331 - Net periodic income, excluding service cost - 997 Income before income taxes $ 51,158 $ 31,226 Capital expenditures Zig-Zag products $ 110 $ - Stoker’s products 4,226 3,148 NewGen products 55 272 Total $ 4,391 $ 3,420 Depreciation and amortization Zig-Zag products $ 297 $ 91 Stoker’s products 1,901 1,605 NewGen products 1,546 2,090 Total $ 3,744 $ 3,786 (1) Includes corporate costs that are not allocated to any of the reportable segments. (2) Includes costs related to PMTA of $ million in 2020. (3) Shipping costs are included in the applicable operating segment and not in Corporate unallocated. September 30, 2021 December 31, 2020 Assets Zig-Zag products $ 230,291 $ 206,900 Stoker’s products 151,494 133,016 NewGen products 80,868 91,116 Corporate unallocated (1) 161,068 65,017 Total $ 623,721 $ 496,049 (1) Includes assets not assigned to the three reportable segments. All goodwill has been allocated to the reportable segments. Revenue Disaggregation—Sales Channel Revenues of the Zig-Zag Products and Stoker’s Products segments are primarily comprised of sales made to wholesalers while NewGen sales are made business to business and business to consumer, both online and through our corporate retail stores. NewGen net sales are broken out by sales channel below. NewGen Segment Three Months Ended September 30, 2021 2020 Business to Business $ 27,169 $ 26,080 Business to Consumer - Online 9,959 10,880 Business to Consumer - Corporate store - 1,389 Other 70 88 Total $ 37,198 $ 38,437 NewGen Segment Nine Months Ended September 30, 2021 2020 Business to Business $ 85,141 $ 81,727 Business to Consumer - Online 31,255 34,066 Business to Consumer - Corporate store - 4,500 Other 256 162 Total $ 116,652 $ 120,455 Net Sales—Domestic vs. Foreign The following table shows a breakdown of consolidated net sales between domestic and foreign customers. Three Months Ended September 30, 2021 2020 Domestic $ 102,255 $ 100,492 Foreign 7,649 3,682 Total $ 109,904 $ 104,174 Nine Months Ended September 30, 2021 2020 Domestic $ 318,166 $ 290,050 Foreign 22,022 9,776 Total $ 340,188 $ 299,826 |
Dividends and Share Repurchase
Dividends and Share Repurchase | 9 Months Ended |
Sep. 30, 2021 | |
Dividends and Share Repurchase [Abstract] | |
Dividends and Share Repurchase | Note 19. Dividends and Share Repurchase The most recent dividend of $0.055 per common share was paid on October 8, 2021, to shareholders of record at the close of business on September 17, 2021. Dividends are considered restricted payments under the Senior Secured Notes Indenture and Revolving Credit Facility. The Company is generally permitted to make restricted payments provided that, at the time of payment, or as a result of payment, the Company is not in default on its debt covenants. Additional earnings and market capitalization restrictions limit the aggregate amount of restricted, quarterly dividends during a fiscal year. On February 25, 2020, the Company’s Board of Directors approved a $50.0 million share repurchase program, which is intended for opportunistic execution based upon a variety of factors including market dynamics. The program is subject to the ongoing discretion of the Board. The total number of shares repurchased for the three months ended September 30, 2021, was 125,000 shares for a total cost of $6.4 million and an average price per share of $51.16. $19.3 million remains available for share repurchases under the program at September 30, 2021. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 20. Subsequent Events During 2021, the Company applied for forgiveness of its unsecured loan under CARES. On October 15, 2021, the Company received notice that its application for forgiveness was fully approved. The Company anticipates that the extinguishment of the unsecured loan will occur in the fourth quarter of 2021, resulting in a gain on extinguishment of debt of $7.5 million. |
Description of Business and B_2
Description of Business and Basis of Presentation (Policies) | 9 Months Ended |
Sep. 30, 2021 | |
Description of Business and Basis of Presentation [Abstract] | |
Basis of Presentation | T he accompanying unaudited interim, consolidated financial statements have been prepared in accordance with the accounting practices described in the Company’s audited, consolidated financial statements as of and for the year ended December 31, 2020. In the opinion of management, the unaudited, interim, consolidated financial statements included herein contain all adjustments necessary to present fairly the financial position, results of operations, and cash flows of the Company for the periods indicated. Such adjustments, other than nonrecurring adjustments separately disclosed, are of a normal and 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, 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, 2020. The accompanying interim, consolidated financial statements are presented in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) and, accordingly, do not include all the disclosures required by generally accepted accounting principles in the United States (“GAAP”) with respect to annual financial statem |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2021 | |
Summary of Significant Accounting Policies [Abstract] | |
Consolidation | Consolidation The consolidated financial statements include the accounts of the Company, its subsidiaries, all of which are wholly-owned, and variable interest entities (“VIEs”) for which the Company is considered the primary beneficiary. All significant intercompany transactions have been eliminated . |
Revenue Recognition | Revenue Recognition The Company recognizes revenues in accordance with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers (Topic 606), which includes excise taxes and shipping and handling charges billed to customers, net of cash discounts for prompt payment, sales returns and incentives, upon delivery of goods to the customer – at which time the Company’s performance obligation is satisfied - at an amount that the Company expects to be entitled to in exchange for those goods in accordance with the five-step analysis outlined in Topic 606: (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations, and (v) recognize revenue when (or as) performance obligations are satisfied. The Company excludes from the transaction price, sales taxes and value-added taxes imposed at the time of sale (which do not include excise taxes on smokeless tobacco, cigars or vaping products billed to customers). The Company records an allowance for sales returns, based principally on historical volume and return rates, which is included in accrued liabilities on the consolidated balance sheets. The Company records sales incentives, which consist of consumer incentives and trade promotion activities, as a reduction in revenues (a portion of which is based on amounts estimated as being due to wholesalers, retailers and consumers at the end of the period) based principally on historical volume and utilization rates. Expected payments for sales incentives are included in accrued liabilities on the consolidated balance sheets. A further requirement of ASC 606 is for entities to disaggregate revenue recognized from contracts with customers into categories that depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. The Company’s management views business performance through segments that closely resemble the performance of major product lines. Thus, the primary and most useful disaggregation of the Company’s contract revenue for decision making purposes is the disaggregation by segment which can be found in Note 18 of Notes to Consolidated Financial Statements. An additional disaggregation of contract revenue by sales channel can be found within Note 18 as well. |
Shipping Costs | Shipping Costs The Company records shipping costs incurred as a component of selling, general, and administrative expenses. Shipping costs incurred were approximately $ 7.1 million and $5.3 million for the three months ending September 30, 2021 and 2020, respectively. Shipping costs incurred were approximately $21.1 million and $17.4 million for the nine months ending September 30, 2021 and 2020, respectively. The implementation of the Prevent All Cigarette Trafficking Act (“PACT Act”) in the second quarter of 2021 made the delivery of vape products to customers and consumers more challenging and more costly. In addition, increased sales and higher freight rates are causing shipping costs to increase. |
Inventories | Inventories Inventories are stated at the lower of cost or net realizable value. Effective January 1, 2021, the Company changed its method of accounting for inventory using the last-in, first-out (“LIFO”) method to the first-in, first-out (“FIFO”) method. The Company applied this change retrospectively to all prior periods presented, which is discussed further in Note 6. 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. |
Fair Value | Fair Value GAAP establishes a framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1) and the lowest priority to unobservable inputs (level 3). 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. |
Derivative Instruments | Derivative Instruments Foreign Currency Forward Contracts: The Company enters into foreign currency forward contracts to hedge a portion of its exposure to changes in foreign currency exchange rates on inventory purchase commitments. The Company accounts for its forward contracts under the provisions of ASC 815, Derivatives and Hedging. Under the Company’s policy, the Company may hedge up to 100% of its anticipated purchases of inventory in the denominated invoice currency over a forward period not to exceed twelve months. The Company may also, from time to time, hedge up to ninety percent of its non-inventory purchases in the denominated invoice currency. Forward contracts that qualify as hedges are adjusted to their fair value through other comprehensive income as determined by market prices on the measurement date, except any hedge ineffectiveness which is recognized currently in income. Gains and losses on these forward contracts are transferred from other comprehensive income into inventory as the related inventories are received and are transferred to net income as inventory is sold. Changes in fair value of any contracts that do not qualify for hedge accounting or are not designated as hedges are recognized currently in income. Interest Rate Swap Agreements: The Company enters into interest rate swap contracts to manage interest rate risk and reduce the volatility of future cash flows. The Company accounts for its interest rate swap contracts under the provisions of ASC 815, Derivatives and Hedging. Swap contracts that qualify as hedges are adjusted to their fair value through other comprehensive income as determined by market prices on the measurement date, except any hedge ineffectiveness which is recognized currently in income. Gains and losses on these swap contracts are transferred from other comprehensive income into net income upon settlement of the derivative position or at maturity of the interest rate swap contract. Changes in fair value of any contracts that do not qualify for hedge accounting or are not designated as hedges are recognized currently in income. |
Risks and Uncertainties | Risks and Uncertainties Manufacturers and sellers of tobacco products are subject to regulation at the federal, state, and local levels. Such regulations include, among others, labeling requirements, limitations on advertising, and prohibition of sales to minors. The tobacco industry is likely to continue to be heavily regulated. There can be no assurance as to the ultimate content, timing, or effect of any regulation of tobacco products by any federal, state, or local legislative or regulatory body, nor can there be any assurance that any such legislation or regulation would not have a material adverse effect on the Company’s financial position, results of operations, or cash flows. In a number of states, targeted flavor bans have been proposed or enacted legislatively or by the administrative process. Depending on the number and location of such bans, that legislation or regulation could have a material adverse effect on the Company’s financial position, results of operations or cash flows. Food and Drug Administration (“FDA”) continues to consider various restrictive regulations around our products, including targeted flavor bans; however, the details, timing, and ultimate implementation of such measures remain unclear. The tobacco industry has experienced, and is experiencing, significant product liability litigation. Most tobacco liability lawsuits have been brought against manufacturers and sellers of cigarettes for injuries allegedly caused by smoking or exposure to smoke. However, several lawsuits have been brought against manufacturers and sellers of smokeless products for injuries to health allegedly caused by use of smokeless products. Typically, such claims assert that use of smokeless products is addictive and causes oral cancer. Additionally, several lawsuits have been brought against manufacturers and distributors of NewGen products due to malfunctioning devices. There can be no assurance the Company will not sustain losses in connection with such lawsuits and that such losses will not have a material adverse effect on the Company’s financial position, results of operations, or cash flows. Master Settlement Agreement (MSA): 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. Such companies are entitled to direct the investment of the escrowed funds and withdraw any appreciation, but cannot withdraw the principal for twenty-five years from the year of each annual deposit, except to withdraw funds deposited pursuant to an individual state’s escrow statute to pay a final judgement to that state’s plaintiffs in the event of such a final judgement against the Company. The Company chose 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. As of September the Company had on deposit approximately , the fair value of which was approximately . At December the Company had on deposit approximately , the fair value of which was approximately . Effective in the quarter of the Company no longer sells any product covered under the MSA. Thus, absent a change in legislation, the Company will no longer be required to make deposits to the MSA escrow account. The Company has chosen to invest a portion of the MSA escrow, from time to time, 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; any investment in an unrealized loss position will be held until the value is recovered, or until maturity. Fair values for the U.S. Governmental agency obligations are Level 2 in the fair value hierarchy. The following tables show cost and estimated fair value of the assets held in the MSA account, respectively, as well as the maturities of the U.S. Governmental agency obligations held in such account for the periods indicated. As of September 30, 2021 As of December 31, 2020 Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Cost and Estimated Fair Value Cash and cash equivalents $ 17,146 $ - $ - $ 17,146 $ 32,074 U.S. Governmental agency obligations (unrealized loss position < 12 months) 14,927 - (310 ) 14,617 - $ 32,073 $ - $ (310 ) $ 31,763 $ 32,074 As of September 30, 2021 Less than one year $ - One to five years 2,000 Five to ten years 11,476 Greater than ten years 1,451 Total $ 14,927 The following shows the amount of deposits by sales year for the MSA escrow account: Deposits as of Sales Year September 30, 2021 December 31, 2020 1999 $ 211 $ 211 2000 1,017 1,017 2001 1,673 1,673 2002 2,271 2,271 2003 4,249 4,249 2004 3,714 3,714 2005 4,553 4,553 2006 3,847 3,847 2007 4,167 4,167 2008 3,364 3,364 2009 1,619 1,619 2010 406 406 2011 193 193 2012 199 199 2013 173 173 2014 143 143 2015 101 101 2016 91 91 2017 82 83 Total $ 32,073 $ 32,074 Food and Drug Administration: On June 22, 2009, the Family Smoking Prevention and Tobacco Control Act (the “ FSPTCA On August 8, 2016, the FDA deeming regulation became effective. The deeming regulation gave the FDA the authority to also 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 c lasses 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 various 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 In August 2016, the FDA’s regulatory authority under the Tobacco Control Act (the “TCA”) Under the deeming regulations, the FDA has responsibility for conducting premarket review of “new tobacco products”—defined as those products not commercially marketed in the United States as of February 15, 2007. There are three pathways for obtaining premarket authorization, including submission of a premarket tobacco product application (“PMTA”). We submitted premarket filings prior to the September 9, 2020 deadline for certain of our products and intend to supplement and complete the applications within the FDA’s discretionary timeline. A successful PMTA must demonstrate that the subject product is “appropriate for the protection of public health,” taking into account the effect of the marketing of the product on all sub-populations while a Substantial Equivalence Report must demonstrate that a new product either has the same characteristics as its predicate product or different characteristics, but does not raise different questions of public health. The FDA has indicated its enforcement priority is those applicants who have received negative action on their application, such as a Marketing Denial Order or Refuse to File notification and who continue to illegally sell those unauthorized products, as well as products for which manufacturers failed to submit a marketing application. The FDA has issued a number of proposed rules related to premarket filings; however, those rules were not finalized prior to the September 9, 2020, deadline. On October 5, 2021, the FDA finalized two rules related to the Substantial Equivalence process and the Premarket Tobacco Product Application process, respectively, which both become effective November 4, 2021. Both Final Rules indicate that any new or additional requirements will not retroactively apply to currently pending PMTAs; however, the information outlined in the rule remains important to the FDA’s substantive review of an application. We believe we have products that meet the Rules and have filed premarket filings supporting a showing of the respective required standards. However, there is no assurance that the FDA’s guidance or regulations will not change, or that the FDA will not prioritize its enforcement in a manner that negatively affects our pending applications, or that unforeseen circumstances will not arise that prevent us from sufficiently supplementing or completing our applications or otherwise increase the amount of time and money we are required to spend to receive all necessary marketing orders. On September 14, 2021, the FDA issued a Marketing Denial Order (“MDO”) for certain of the Company’s proprietary e-liquid products subject of these PMTAs. The Company filed a Petition for Review in the Sixth Circuit Court of Appeals on September 23, 2021, followed by an Emergency Motion for a Stay Pending Review on September 30, 2021. On October 7, 2021, we were informed that the FDA had rescinded its September 14 MDO. We therefore withdrew both the Petition and Emergency Stay on October 8, 2021. The Rescission Letter indicated that FDA had found additional relevant information that was not adequately assessed. Although we filed many premarket applications in a timely manner, no assurance can be given that the applications will ultimately be successful. This may result in the prioritization of supplementing or completing applications for high priority SKUs in our inventory position, which could adversely impact future revenues. At the time of receipt of the MDO, the Company quarantined approximately $0.7 million in the aggregate inventories of the affected products or materials subject to the MDO, which were subsequently released, once the FDA rescinded the MDO. In addition, we currently distribute many third-party manufactured vapor products for which we will be completely dependent on the manufacturer complying with the premarket filing requirements. There can be no assurance that these third-party products will receive a marketing order. While we will take measures to pursue regulatory compliance for our own privately-branded or proprietary vape products that compete with these third-party products, there is no assurance that such proprietary products would be as successful in the marketplace or can fully displace third-party products that are currently being distributed by us, which could adversely affect our results of operations and liquidity. For a period of time after the filing deadline, we expect there to be a lack of enforcement, which may adversely affect our ability to compete in the marketplace against those who continue to sell unauthorized products. On April 29, 2021, the FDA announced plans to propose two tobacco product standards related to combusted tobacco products: (1) a ban on menthol as a characterizing flavor in cigarettes; and (2) a ban on all characterizing flavors (including menthol) in cigars. These product standards are required to go through the formal rulemaking process where we would have the opportunity to comment on the proposed rule with regard to any impact on any of our products. The FDA’s policy on these and other regulated products may change or expand over time in ways not yet known and may significantly impact our products or our premarket filings. |
Recent Accounting Pronouncements Adopted | Recent Accounting Pronouncements Adopted In December 2019, the FASB issued Accounting Standards Update (“ASU”) 2019-12 to simplify the accounting in ASC 740, Income Taxes . This guidance removes certain exceptions related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities for outside basis differences. This guidance also clarifies and simplifies other areas of ASC 740. This ASU became effective beginning in the first quarter of the Company’s fiscal year 2021. Certain amendments in this update must be applied on a prospective basis, certain amendments must be applied on a retrospective basis, and certain amendments must be applied on a modified retrospective basis through a cumulative-effect adjustment to retained earnings/(deficit) in the period of adoption. The ASU was effective for the Company beginning in the first quarter of 2021. The ASU did not have an impact to the Company’s financial statements and related disclosures. In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40) . This guidance simplifies the accounting for convertible debt instruments by reducing the number of accounting models and the number of embedded conversion features that could be recognized separately from the convertible instrument. This guidance also enhances transparency and improves disclosures for convertible instruments and earnings per share guidance. This ASU is effective for annual reporting periods beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020. This update permits the use of either the modified retrospective or fully retrospective method of transition. The Company early adopted this ASU effective January 1, 2021 using the full retrospective method of transition. The adoption resulted in a $ 7.1 million increase in Accumulated earnings, a $ million increase in Notes payable and long-term debt, a $ million decrease in deferred income taxes and a $ million decrease in Additional paid-in capital as of December 31, 2020, and a $ million decrease in Accumulated deficit and a $ million decrease in Additional paid-in capital as of December 31, 2019. Interest expense will decrease by $ million annually and weighted average diluted common shares outstanding will increase by approximately million shares |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Summary of Significant Accounting Policies [Abstract] | |
Fair Value of MSA Escrow Account | Fair values for the U.S. Governmental agency obligations are Level 2 in the fair value hierarchy. The following tables show cost and estimated fair value of the assets held in the MSA account, respectively, as well as the maturities of the U.S. Governmental agency obligations held in such account for the periods indicated. As of September 30, 2021 As of December 31, 2020 Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Cost and Estimated Fair Value Cash and cash equivalents $ 17,146 $ - $ - $ 17,146 $ 32,074 U.S. Governmental agency obligations (unrealized loss position < 12 months) 14,927 - (310 ) 14,617 - $ 32,073 $ - $ (310 ) $ 31,763 $ 32,074 |
Maturities of U.S. Governmental Agency Obligations | As of September 30, 2021 Less than one year $ - One to five years 2,000 Five to ten years 11,476 Greater than ten years 1,451 Total $ 14,927 |
Deposits by Sales Year for MSA Escrow Account | The following shows the amount of deposits by sales year for the MSA escrow account: Deposits as of Sales Year September 30, 2021 December 31, 2020 1999 $ 211 $ 211 2000 1,017 1,017 2001 1,673 1,673 2002 2,271 2,271 2003 4,249 4,249 2004 3,714 3,714 2005 4,553 4,553 2006 3,847 3,847 2007 4,167 4,167 2008 3,364 3,364 2009 1,619 1,619 2010 406 406 2011 193 193 2012 199 199 2013 173 173 2014 143 143 2015 101 101 2016 91 91 2017 82 83 Total $ 32,073 $ 32,074 |
Acquisitions (Tables)
Acquisitions (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Direct Value Wholesale [Member] | |
Acquisitions [Abstract] | |
Consideration Transferred and Calculation of Goodwill | In April 2021, ReCreation Marketing (“ReCreation”), a VIE for which the Company is considered the primary beneficiary, purchased 100% of the equity interests of Westhem Ventures LTD d/b/a Direct Value Wholesale (“DVW”) for $3.9 million, net of cash acquired, with $3.5 million paid in cash at closing and $0.5 million in accrued consideration to be paid during 2021. DVW is a Canadian distribution entity that operates in markets not primarily served by ReCreation. The acquisition expands ReCreation’s markets in Canada. On April 13, 2021, in connection with the acquisition of DVW, the Company provided a $3.7 million unsecured loan to ReCreation bearing interest at 8% per annum and maturing April 13, 2023. The unsecured loan is eliminated in the consolidation of ReCreation. As of September 30, 2021, ReCreation had not completed the accounting for the acquisition. The following table summarizes the consideration transferred and calculation of goodwill based on excess of the acquisition price over the estimated fair value of the identifiable net assets acquired and are based on management’s preliminary estimates: Total consideration transferred $ 3,462 Adjustments to consideration transferred: Cash acquired (43 ) Accrued consideration 480 Adjusted consideration transferred 3,899 Assets acquired: Working capital (primarily AR and inventory) 1,342 Fixed assets and Other long term assets 27 Net assets acquired $ 1,369 Goodwill $ 2,530 |
ReCreation Marketing [Member] | |
Acquisitions [Abstract] | |
Consideration Transferred and Calculation of Goodwill | In July 2019, the Company obtained a 30% stake in a Canadian distribution entity, ReCreation, for $ million paid at closing. In November 2020, the Company invested an additional $ million related to our stake. In November 2020, the Company also invested an additional $ million increasing its ownership interest to . The Company received board seats aligned with its ownership position. The Company also provided a $ million unsecured loan to ReCreation bearing interest at per annum and maturing November 19, 2022 . The Company has determined that ReCreation is a VIE due to its required subordinated financial support. The Company has determined it is the primary beneficiary due to its equity interest, additional subordinated financing and distribution agreement with ReCreation for the sale of the Company’s products. As a result, the Company began consolidating ReCreation effective November 2020. As of September 30, 2021, the Company had not completed the accounting for the acquisition. The following table summarizes the consideration transferred and calculation of goodwill based on excess of the acquisition price over the estimated fair value of the identifiable net assets acquired and are based on management’s preliminary estimates: Total consideration transferred $ 4,000 Adjustments to consideration transferred: Cash acquired (3,711 ) Working capital 418 Debt eliminated in consolidation 2,000 Adjusted consideration transferred 2,707 Assets acquired: Working capital (primarily AR and inventory) 1,551 Fixed assets and Other long term assets 70 Other liabilities (203 ) Non-controlling interest (4,050 ) Net assets acquired $ (2,632 ) Goodwill $ 5,339 |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Inventories [Abstract] | |
Impact of Change in Method of Accounting for Inventory on Financial Statements | The Company applied this change retrospectively to all prior periods presented. This change resulted in a $4.5 million increase in Accumulated earnings as of December 31, 2020, from $12.1 million to $16.6 million and a $4.3 million decrease in Accumulated deficit as of December 31, 2019, from $15.3 million to $11.0 million. In addition, the following financial statement line items in the Company’s Consolidated Balance Sheets as of December 31, 2020 and its Consolidated Statements of Income and Consolidated Statements of Cash Flows for the three and nine months ended September 30, 2020 were adjusted as follows: Consolidated Statement of Income For the three months ended September 30, 2020 As Originally Reported Effect of LIFO Change As Adjusted Cost of sales $ 55,867 $ - $ 55,867 Income before income taxes $ 9,612 $ - $ 9,612 Income tax expense $ 1,816 $ - $ 1,816 Net income attributable to Turning Point Brands, Inc. $ 7,796 $ - $ 7,796 Earnings per common share: Basic $ 0.41 $ - $ 0.41 Diluted $ 0.40 $ - $ 0.40 For the nine months ended September 30, 2020 As Originally Reported Effect of LIFO Change As Adjusted Cost of sales $ 161,996 $ 156 $ 162,152 Income before income taxes $ 26,327 $ (156 ) $ 26,171 Income tax expense $ 6,029 $ - $ 6,029 Net income attributable to Turning Point Brands, Inc. $ 20,298 $ (156 ) $ 20,142 Earnings per common share: Basic $ 1.04 $ (0.01 ) $ 1.03 Diluted $ 1.02 $ (0.01 ) $ 1.01 Consolidated Balance Sheets December 31, 2020 As Originally Reported Effect of LIFO Change As Adjusted Inventories $ 79,750 $ 6,106 $ 85,856 Deferred income taxes $ 4,082 $ 1,584 $ 5,666 Accumulated earnings (deficit) $ 12,058 $ 4,522 $ 16,580 Consolidated Statement of Cash Flows For the nine months ended September 30, 2020 As Originally Reported Effect of LIFO Change As Adjusted Consolidated net income $ 20,298 $ (156 ) $ 20,142 Deferred income taxes $ 876 $ - $ 876 Inventories $ (2,364 ) $ 156 $ (2,208 ) |
Inventories | The components of inventories are as follows: September 30, 2021 December 31, 2020 Raw materials and work in process $ 6,892 $ 8,137 Leaf tobacco 38,151 32,948 Finished goods - Zig-Zag Products 26,839 14,903 Finished goods - Stoker’s Products 11,666 9,727 Finished goods - NewGen products 13,554 18,916 Other 1,503 1,225 Inventories $ 98,605 $ 85,856 |
Other Current Assets (Tables)
Other Current Assets (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Other Current Assets [Abstract] | |
Other Current Assets | Other current assets consist of: September 30, 2021 December 31, 2020 Inventory deposits $ 9,423 $ 7,113 Insurance deposit 3,000 3,000 Prepaid taxes 1,533 813 Other 13,157 15,525 Total $ 27,113 $ 26,451 |
Property, Plant, and Equipment
Property, Plant, and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Property, Plant, and Equipment [Abstract] | |
Property, Plant, and Equipment | Property, plant, and equipment consists of: September 30, 2021 December 31, 2020 Land $ 22 $ 22 Buildings and improvements 3,069 2,750 Leasehold improvements 4,739 4,702 Machinery and equipment 19,352 15,612 Furniture and fixtures 9,281 9,025 Gross property, plant and equipment 36,463 32,111 Accumulated depreciation (18,867 ) (16,587 ) Net property, plant and equipment $ 17,596 $ 15,524 |
Other Assets (Tables)
Other Assets (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Other Assets [Abstract] | |
Other Assets | Other assets consist of: September 30, 2021 December 31, 2020 Equity investments $ 32,749 $ 24,018 Debt security investment 8,000 - Other 2,061 2,818 Total $ 42,810 $ 26,836 |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Accrued Liabilities [Abstract] | |
Accrued Liabilities | Accrued liabilities consist of: September 30, 2021 December 31, 2020 Accrued payroll and related items $ 7,029 $ 9,459 Customer returns and allowances 7,635 5,259 Taxes payable 4,409 4,326 Lease liabilities 3,159 3,228 Accrued interest 2,837 2,096 Other 8,280 10,857 Total $ 33,349 $ 35,225 |
Notes Payable and Long-Term D_2
Notes Payable and Long-Term Debt (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Notes Payable and Long-Term Debt [Abstract] | |
Notes Payable and Long-Term Debt | Notes payable and long-term debt consists of the following in order of preference: September 30, 2021 December 31, 2020 Senior Secured Notes $ 250,000 $ - 2018 First Lien Term Loan - 130,000 Convertible Senior Notes 172,500 172,500 Note payable - Promissory Note - 10,000 Note payable - Unsecured Loan 7,485 7,485 Gross notes payable and long-term debt 429,985 319,985 Less deferred finance charges (8,947 ) (5,873 ) Less current maturities (7,485 ) (12,000 ) Notes payable and long-term debt $ 413,553 $ 302,112 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Leases [Abstract] | |
Components of Lease Expense | The components of lease expense consisted of the following: Three Months Ended September 30, 2021 2020 Operating lease cost Cost of sales $ 225 $ 225 Selling, general and administrative 771 643 Variable lease cost (1) 214 96 Short-term lease cost 13 11 Sublease income - (30 ) Total $ 1,223 $ 945 (1) Variable lease cost includes elements of a contract that do not represent a good or service but for which the lessee is responsible for paying. Nine Months Ended September 30, 2021 2020 Operating lease cost Cost of sales $ 682 $ 683 Selling, general and administrative 2,285 1,647 Variable lease cost (1) 954 452 Short-term lease cost 35 120 Sublease income (60 ) (90 ) Total $ 3,896 $ 2,812 (1) Variable lease cost includes elements of a contract that do not represent a good or service but for which the lessee is responsible for paying. |
Operating Lease Assets and Liabilities | September 30, 2021 December 31, 2020 Assets: Right of use assets $ 15,984 $ 17,918 Total lease assets $ 15,984 $ 17,918 Liabilities: Current lease liabilities $ 3,159 $ 3,228 Long-term lease liabilities 14,201 16,117 Total lease liabilities $ 17,360 $ 19,345 (2) Reported within accrued liabilities on the balance sheet |
Operating Lease Weighted-Average Remaining Lease Term and Discount Rate | As of September 30, 2021 2020 Weighted-average remaining lease term - operating leases 6.8 years 7.4 years Weighted-average discount rate - operating leases 4.93 % 4.93 % |
Maturities of Lease Liabilities | As of September 30, 2021, maturities of lease liabilities consisted of the following: September 30, 2021 2021 $ 989 2022 3,870 2023 3,679 2024 2,485 2025 2,125 Years thereafter 7,428 Total lease payments $ 20,576 Less: Imputed interest 3,216 Present value of lease liabilities $ 17,360 |
Pension and Postretirement Be_2
Pension and Postretirement Benefit Plans (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Pension and Postretirement Benefit Plans [Abstract] | |
Net Periodic Benefit Cost | The following table provides the components of net periodic pension and postretirement benefit costs and total costs for the plans: Three Months Ended September 30, Pension Benefits Postretirement Benefits 2021 2020 2021 2020 Service cost $ - $ - $ - $ - Interest cost - - - - Expected return on plan assets - - - - Amortization of (gains) losses - - - - Settlement and curtailment loss - 1,188 - - Net periodic benefit income $ - $ 1,188 $ - $ - Nine Months Ended September 30, Pension Benefits Postretirement Benefits 2021 2020 2021 2020 Service cost $ - $ - $ - $ - Interest cost - 190 - - Expected return on plan assets - (322 ) - - Amortization of (gains) losses - 72 - (131 ) Settlement and curtailment loss - 1,188 - - Net periodic benefit income $ - $ 1,128 $ - $ (131 ) |
Share Incentive Plans (Tables)
Share Incentive Plans (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Share Incentive Plans [Abstract] | |
Stock Option Activity | Stock option activity for the 2006, 2015 and 2021 Plans is summarized below: Stock Option Shares Weighted Average Exercise Price Weighted Average Grant Date Fair Value Outstanding, December 31, 2019 696,716 $ 18.13 $ 6.17 Granted 155,000 14.85 4.41 Exercised (135,146 ) 6.37 2.74 Forfeited (5,510 ) 27.25 8.64 Outstanding, December 31, 2020 711,060 19.58 6.42 Granted 119,500 50.93 13.58 Exercised (202,768 ) 10.22 6.35 Forfeited (5,749 ) 31.61 9.44 Outstanding, September 30 2021 622,043 $ 28.54 $ 8.70 |
Assumptions for Options Granted | The following table outlines the assumptions based on the number of options granted under the 2015 Plan. February 10, 2017 May 17, 2017 March 7, 2018 March 20, 2019 October 24, 2019 March 18, 2020 February 18, 2021 May 3, 2021 Number of options granted 40,000 93,819 98,100 155,780 25,000 155,000 100,000 12,000 Options outstanding at September 30 2021 27,050 47,483 67,417 142,284 25,000 107,219 98,750 12,000 Number exercisable at September 30 2021 27,050 47,483 67,417 110,015 16,750 33,167 9,500 - Exercise price $ 13.00 $ 15.41 $ 21.21 $ 47.58 $ 20.89 $ 14.85 $ 51.75 $ 47.76 Remaining lives 5.37 5.63 6.44 7.47 8.07 8.47 9.39 9.59 Risk free interest rate 1.89 % 1.76 % 2.65 % 2.34 % 1.58 % 0.79 % 0.56 % 0.84 % Expected volatility 27.44 % 26.92 % 28.76 % 30.95 % 31.93 % 35.72 % 28.69 % 29.03 % Expected life 6.000 6.000 6.000 6.000 6.000 6.000 6.000 6.000 Dividend yield - - 0.83 % 0.42 % 0.95 % 1.49 % 0.55 % 0.59 % Fair value at grant date $ 3.98 $ 4.60 $ 6.37 $ 15.63 $ 6.27 $ 4.41 $ 13.77 $ 13.06 The following table outlines the assumptions based on the number of options granted under the 2021 Plan. May 17, 2021 Number of options granted 7,500 Options outstanding at September 30 2021 7,500 Number exercisable at September 30 2021 - Exercise price $ 45.05 Remaining lives 9.63 Risk free interest rate 0.84 % Expected volatility 31.50 % Expected life 6.000 Dividend yield 0.63 % Fair value at grant date $ 13.23 |
PRSU Activity | Performance-Based Restricted Stock Units (“PRSUs”) are restricted stock units subject to both performance-based and service-based vesting conditions. The number of shares of TPB Common Stock a recipient will receive upon vesting of a PRSU will be calculated by reference to certain performance metrics related to the Company’s performance over a five-year period. PRSUs will vest on the measurement date, which is no more than days after the performance period provided the applicable service and performance conditions are satisfied. As of September there are PRSUs outstanding, all of which are unvested. The following table outlines the PRSUs granted and outstanding as of September March 31, 2017 March 7, 2018 March 20, 2019 March 20, 2019 July 19, 2019 March 18, 2020 December 28, 2020 February 18, 2021 Number of PRSUs granted 94,000 96,000 92,500 4,901 88,582 94,000 88,169 100,000 PRSUs outstanding at September 30 2021 83,000 93,000 84,600 - 21,342 92,400 88,169 98,700 Fair value as of grant date $ 15.60 $ 21.21 $ 47.58 $ 47.58 $ 52.15 $ 14.85 $ 46.42 $ 51.75 Remaining lives 0.25 1.25 2.25 - 1.25 3.25 2.25 4.25 |
Income Per Share (Tables)
Income Per Share (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Income Per Share [Abstract] | |
Basic and Diluted Net Income 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 September 30, 2021 2020 Income Shares Per Share Income Shares Per Share Basic EPS: Numerator Net income attributable to Turning Point Brands, Inc. $ 13,468 $ 9,020 Denominator Weighted average 18,897,974 $ 0.71 19,240,187 $ 0.47 Diluted EPS: Numerator Net income attributable to Turning Point Brands, Inc. $ 13,468 $ 9,020 Interest expense related to Convertible Senior Notes, net of tax 1,054 1,047 Diluted net income attributable to Turning Point Brands. Inc. $ 14,522 $ 10,067 Denominator Basic weighted average 18,897,974 19,240,187 Convertible Senior Notes 3,207,293 3,202,808 Stock options 259,540 396,802 22,364,807 $ 0.65 22,839,797 $ 0.44 Nine Months Ended September 30, 2021 2020 Income Shares Per Share Income Shares Per Share Basic EPS: Numerator Net income attributable to Turning Point Brands, Inc. $ 40,605 $ 23,814 Denominator Weighted average 18,988,435 $ 2.14 19,478,297 $ 1.22 Diluted EPS: Numerator Net income attributable to Turning Point Brands, Inc. $ 40,605 $ 23,814 Interest expense related to Convertible Senior Notes 3,162 3,141 Diluted net income attributable to Turning Point Brands. Inc. $ 43,767 $ 26,955 Denominator Basic weighted average 18,988,435 19,478,297 Convertible Senior Notes 3,207,293 3,202,808 Stock options 268,814 380,394 22,464,542 $ 1.95 23,061,499 $ 1.17 |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Segment Information [Abstract] | |
Financial Information of Reported Segments | The tables below present financial information about reported segments: Three Months Ended September 30, 2021 2020 Net sales Zig-Zag products $ 42,234 $ 35,973 Stoker’s products 30,472 29,764 NewGen products 37,198 38,437 Total $ 109,904 $ 104,174 Gross profit Zig-Zag products $ 23,703 $ 21,263 Stoker’s products 17,104 16,042 NewGen products 13,462 11,002 Total $ 54,269 $ 48,307 Operating income (loss) Zig-Zag products $ 17,122 $ 16,827 Stoker’s products 13,305 11,466 NewGen products 2,027 745 Corporate unallocated (1)(2)(3) (10,079 ) (13,017 ) Total $ 22,375 $ 16,021 Interest expense, net 5,397 3,539 Investment income (157 ) (3 ) Gain on extinguishment of debt (375 ) - Net periodic income, excluding service cost - 1,188 Income before income taxes $ 17,510 $ 11,297 Capital expenditures Zig-Zag products $ 12 $ - Stoker’s products 2,209 1,450 NewGen products 2 14 Total $ 2,223 $ 1,464 Depreciation and amortization Zig-Zag products $ 90 $ 91 Stoker’s products 638 562 NewGen products 516 633 Total $ 1,244 $ 1,286 (1) Includes corporate costs that are not allocated to any of the three reportable segments. (2) Includes costs related to PMTA of $ 5.3 million in 2020. (3) Shipping costs are included in the applicable operating segment and not in Corporate unallocated. Nine Months Ended September 30, 2021 2020 Net sales Zig-Zag products $ 130,440 $ 92,290 Stoker’s products 93,096 87,081 NewGen products 116,652 120,455 Total $ 340,188 $ 299,826 Gross profit Zig-Zag products $ 76,342 $ 53,066 Stoker’s products 51,142 46,424 NewGen products 40,019 38,184 Total $ 167,503 $ 137,674 Operating income (loss) Zig-Zag products $ 57,897 $ 41,471 Stoker’s products 39,386 33,296 NewGen products 5,690 4,493 Corporate unallocated (1)(2)(3) (31,370 ) (37,022 ) Total $ 71,603 $ 42,238 Interest expense, net 15,406 10,143 Investment income (292 ) (128 ) Loss on extinguishment of debt 5,331 - Net periodic income, excluding service cost - 997 Income before income taxes $ 51,158 $ 31,226 Capital expenditures Zig-Zag products $ 110 $ - Stoker’s products 4,226 3,148 NewGen products 55 272 Total $ 4,391 $ 3,420 Depreciation and amortization Zig-Zag products $ 297 $ 91 Stoker’s products 1,901 1,605 NewGen products 1,546 2,090 Total $ 3,744 $ 3,786 (1) Includes corporate costs that are not allocated to any of the reportable segments. (2) Includes costs related to PMTA of $ million in 2020. (3) Shipping costs are included in the applicable operating segment and not in Corporate unallocated. September 30, 2021 December 31, 2020 Assets Zig-Zag products $ 230,291 $ 206,900 Stoker’s products 151,494 133,016 NewGen products 80,868 91,116 Corporate unallocated (1) 161,068 65,017 Total $ 623,721 $ 496,049 (1) Includes assets not assigned to the three reportable segments. All goodwill has been allocated to the reportable segments. |
Revenue Disaggregation - Sales Channel | Revenues of the Zig-Zag Products and Stoker’s Products segments are primarily comprised of sales made to wholesalers while NewGen sales are made business to business and business to consumer, both online and through our corporate retail stores. NewGen net sales are broken out by sales channel below. NewGen Segment Three Months Ended September 30, 2021 2020 Business to Business $ 27,169 $ 26,080 Business to Consumer - Online 9,959 10,880 Business to Consumer - Corporate store - 1,389 Other 70 88 Total $ 37,198 $ 38,437 NewGen Segment Nine Months Ended September 30, 2021 2020 Business to Business $ 85,141 $ 81,727 Business to Consumer - Online 31,255 34,066 Business to Consumer - Corporate store - 4,500 Other 256 162 Total $ 116,652 $ 120,455 |
Net Sales - Domestic and Foreign | The following table shows a breakdown of consolidated net sales between domestic and foreign customers. Three Months Ended September 30, 2021 2020 Domestic $ 102,255 $ 100,492 Foreign 7,649 3,682 Total $ 109,904 $ 104,174 Nine Months Ended September 30, 2021 2020 Domestic $ 318,166 $ 290,050 Foreign 22,022 9,776 Total $ 340,188 $ 299,826 |
Description of Business and B_3
Description of Business and Basis of Presentation (Details) | 9 Months Ended |
Sep. 30, 2021OutletSegment | |
Description of Business and Basis of Presentation [Abstract] | |
Number of reportable segments | Segment | 3 |
Number of retail outlets in North America | Outlet | 210,000 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies, Shipping Costs (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Shipping Costs [Abstract] | ||||
Shipping costs | $ 7.1 | $ 5.3 | $ 21.1 | $ 17.4 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies, Derivative Instruments (Details) - Maximum [Member] | 9 Months Ended |
Sep. 30, 2021 | |
Derivative Instruments [Abstract] | |
Percentage of anticipated purchases of inventory that may be hedged | 100.00% |
Term of hedge | 12 months |
Percentage of non-inventory purchases that may be hedged | 90.00% |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies, Master Settlement Agreement (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2021 | Dec. 31, 2020 | |
Master Settlement Agreement [Abstract] | ||
Term for restricted withdrawal of principal from MSA escrow account | 25 years | |
Fair Value of MSA Escrow Account [Abstract] | ||
Cost | $ 32,073 | $ 32,074 |
Gross unrealized gains | 0 | |
Gross unrealized losses | (310) | |
Estimated fair value | 31,763 | 32,074 |
Maturities of U.S. Governmental Agency Obligations [Abstract] | ||
Less than one year | 0 | |
One to five years | 2,000 | |
Five to ten years | 11,476 | |
Greater than ten years | 1,451 | |
Total | 14,927 | |
Master Settlement Agreement Escrow Account by Sales Year [Abstract] | ||
1999 | 211 | 211 |
2000 | 1,017 | 1,017 |
2001 | 1,673 | 1,673 |
2002 | 2,271 | 2,271 |
2003 | 4,249 | 4,249 |
2004 | 3,714 | 3,714 |
2005 | 4,553 | 4,553 |
2006 | 3,847 | 3,847 |
2007 | 4,167 | 4,167 |
2008 | 3,364 | 3,364 |
2009 | 1,619 | 1,619 |
2010 | 406 | 406 |
2011 | 193 | 193 |
2012 | 199 | 199 |
2013 | 173 | 173 |
2014 | 143 | 143 |
2015 | 101 | 101 |
2016 | 91 | 91 |
2017 | 82 | 83 |
Total | 32,073 | 32,074 |
Cash and Cash Equivalents [Member] | ||
Fair Value of MSA Escrow Account [Abstract] | ||
Cost | 17,146 | 32,074 |
Gross unrealized gains | 0 | |
Gross unrealized losses | 0 | |
Estimated fair value | 17,146 | 32,074 |
U. S. Governmental Agency Obligations (Unrealized Loss Position less than 12 Months) [Member] | ||
Fair Value of MSA Escrow Account [Abstract] | ||
Cost | 14,927 | 0 |
Gross unrealized gains | 0 | |
Gross unrealized losses | (310) | |
Estimated fair value | $ 14,617 | $ 0 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies, Food and Drug Administration (Details) $ in Millions | 9 Months Ended | ||
Sep. 30, 2021StandardClassPathwayCategory | Oct. 05, 2021Rule | Sep. 14, 2021USD ($) | |
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 | Class | 6 | ||
Number of pathways for obtaining premarket authorization | Pathway | 3 | ||
Inventories of affected products or materials subject to MDO that were quarantined | $ | $ 0.7 | ||
Number of proposed tobacco product standards related to combusted tobacco products | Standard | 2 | ||
Subsequent Event [Member] | |||
Food and Drug Administration [Abstract] | |||
Number of rules finalized by the FDA | Rule | 2 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies, Recent Accounting Pronouncements (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Recent Accounting Pronouncements [Abstract] | |||||||
Accumulated earnings | $ 61,052 | $ 61,052 | $ 23,645 | ||||
Notes payable and long-term debt | 413,553 | 413,553 | 302,112 | ||||
Deferred income taxes | 0 | 0 | 610 | ||||
Additional paid-in capital | 107,269 | 107,269 | 102,423 | ||||
Interest expense | $ (5,397) | $ (3,539) | $ (15,406) | $ (10,143) | |||
Weighted average diluted common shares (in shares) | 22,364,807 | 22,839,797 | 22,464,542 | 23,061,499 | |||
ASU 2020-06 [Member] | Accounting Standards Update, Adjustment [Member] | |||||||
Recent Accounting Pronouncements [Abstract] | |||||||
Accumulated earnings | 7,100 | $ (2,200) | |||||
Notes payable and long-term debt | 24,200 | ||||||
Deferred income taxes | (6,300) | ||||||
Additional paid-in capital | $ (24,900) | ||||||
Weighted average diluted common shares (in shares) | 3,200,000 | ||||||
ASU 2020-06 [Member] | Accounting Standards Update, Adjustment [Member] | Forecast [Member] | |||||||
Recent Accounting Pronouncements [Abstract] | |||||||
Interest expense | $ (6,700) |
Acquisitions, Unitabac (Details
Acquisitions, Unitabac (Details) - Unitabac [Member] $ in Millions | Jul. 23, 2021USD ($) |
Acquisitions [Abstract] | |
Total consideration transferred | $ 10.7 |
Cash paid for assets acquired | 9.6 |
Capitalized transaction costs | 1.1 |
Inventory acquired | 0.7 |
Intellectual Property [Member] | |
Acquisitions [Abstract] | |
Indefinite-lived intangible asset acquired | $ 10 |
Acquisitions, Direct Value Whol
Acquisitions, Direct Value Wholesale (Details) - USD ($) $ in Thousands | 1 Months Ended | ||||
Apr. 30, 2021 | Nov. 30, 2020 | Sep. 30, 2021 | Apr. 13, 2021 | Dec. 31, 2020 | |
Assets Acquired [Abstract] | |||||
Goodwill | $ 162,415 | $ 159,621 | |||
Direct Value Wholesale [Member] | |||||
Acquisitions [Abstract] | |||||
Equity interest | 100.00% | ||||
Cash paid for acquisition | $ 3,500 | ||||
Purchase Price [Abstract] | |||||
Total consideration transferred | 3,462 | ||||
Adjustments to Consideration Transferred [Abstract] | |||||
Cash acquired | (43) | ||||
Accrued consideration | 480 | ||||
Adjusted consideration transferred | 3,899 | ||||
Assets Acquired [Abstract] | |||||
Working capital (primarily AR and inventory) | 1,342 | ||||
Fixed assets and other long term assets | 27 | ||||
Net assets acquired | 1,369 | ||||
Goodwill | $ 2,530 | ||||
ReCreation Marketing [Member] | |||||
Acquisitions [Abstract] | |||||
Unsecured loan | $ 2,000 | $ 3,700 | |||
Interest rate | 8.00% | 8.00% | |||
Purchase Price [Abstract] | |||||
Total consideration transferred | $ 4,000 | ||||
Adjustments to Consideration Transferred [Abstract] | |||||
Cash acquired | (3,711) | ||||
Adjusted consideration transferred | 2,707 | ||||
Assets Acquired [Abstract] | |||||
Working capital (primarily AR and inventory) | 1,551 | ||||
Fixed assets and other long term assets | 70 | ||||
Net assets acquired | (2,632) | ||||
Goodwill | $ 5,339 |
Acquisitions, ReCreation Market
Acquisitions, ReCreation Marketing (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||
Jul. 31, 2021 | Nov. 30, 2020 | Jul. 31, 2019 | Sep. 30, 2021 | Sep. 30, 2021 | Apr. 13, 2021 | Dec. 31, 2020 | |
Assets Acquired [Abstract] | |||||||
Goodwill | $ 162,415 | $ 162,415 | $ 159,621 | ||||
Acquisition of additional ownership interest | (2,250) | (2,250) | |||||
Non-Controlling Interest [Member] | |||||||
Assets Acquired [Abstract] | |||||||
Acquisition of additional ownership interest | $ (1,100) | (1,123) | (1,123) | ||||
Additional Paid-In Capital [Member] | |||||||
Assets Acquired [Abstract] | |||||||
Acquisition of additional ownership interest | $ (1,100) | $ (1,127) | $ (1,127) | ||||
30% Investment in ReCreation Marketing [Member] | |||||||
Acquisitions [Abstract] | |||||||
Payment for investment | $ 1,000 | $ 1,000 | |||||
50% Investment in ReCreation Marketing [Member] | |||||||
Acquisitions [Abstract] | |||||||
Payment for investment | $ 2,000 | ||||||
ReCreation Marketing [Member] | |||||||
Acquisitions [Abstract] | |||||||
Ownership interest | 65.00% | 50.00% | 30.00% | ||||
Payment for investment | $ 2,300 | ||||||
Unsecured loan | $ 2,000 | $ 3,700 | |||||
Interest rate | 8.00% | 8.00% | |||||
Purchase Price [Abstract] | |||||||
Total consideration transferred | $ 4,000 | ||||||
Adjustments to Consideration Transferred [Abstract] | |||||||
Cash acquired | (3,711) | ||||||
Working capital | 418 | ||||||
Debt eliminated in consolidation | 2,000 | ||||||
Adjusted consideration transferred | 2,707 | ||||||
Assets Acquired [Abstract] | |||||||
Working capital (primarily AR and inventory) | 1,551 | ||||||
Fixed assets and other long term assets | 70 | ||||||
Other liabilities | (203) | ||||||
Non-controlling interest | (4,050) | ||||||
Net assets acquired | (2,632) | ||||||
Goodwill | $ 5,339 |
Acquisitions, SDI Reorganizatio
Acquisitions, SDI Reorganization (Details) $ in Thousands | Jul. 16, 2020USD ($)shares | Sep. 30, 2020USD ($) | Sep. 30, 2020USD ($) |
Acquisitions [Abstract] | |||
Common Stock conversation ratio | 0.52095 | ||
Total consideration for asset purchase | $ 236,000 | ||
Common Stock issued (in shares) | shares | 7,934,704 | ||
Common Stock issued | $ 234,300 | ||
Common Stock acquired | $ 236,000 | ||
Common Stock acquired (in shares) | shares | 8,178,918 | ||
Common Stock retired (in shares) | shares | 244,214 | ||
Common Stock retired | $ 1,737 | $ 1,737 | |
Accumulated Earnings (Deficit) [Member] | |||
Acquisitions [Abstract] | |||
Common Stock retired | $ 1,700 | $ 1,735 | $ 1,735 |
Acquisitions, Durfort Holdings
Acquisitions, Durfort Holdings (Details) - Durfort [Member] - USD ($) $ in Millions | 1 Months Ended | 9 Months Ended |
Jun. 30, 2020 | Sep. 30, 2021 | |
Acquisitions [Abstract] | ||
Total consideration transferred | $ 47.7 | |
Cash paid for assets acquired | 37.7 | |
Capitalized transaction costs | 1.7 | |
Issuance of promissory note | 10 | |
Master Distribution Agreement [Member] | ||
Acquisitions [Abstract] | ||
Finite-lived intangible asset acquired | 5.5 | |
Life of finite-lived intangible asset acquired | 15 years | |
Intellectual Property [Member] | ||
Acquisitions [Abstract] | ||
Indefinite-lived intangible asset acquired | $ 42.2 |
Derivative Instruments (Details
Derivative Instruments (Details) $ in Thousands, € in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||
Mar. 31, 2021USD ($) | Sep. 30, 2021USD ($) | Sep. 30, 2020USD ($) | Dec. 31, 2020EUR (€) | Sep. 30, 2021EUR (€) | Dec. 31, 2020USD ($) | Dec. 31, 2020EUR (€) | Mar. 31, 2018USD ($) | |
Derivative Instruments [Abstract] | ||||||||
Settlement of interest rate swaps | $ 3,573 | $ 0 | ||||||
Maximum [Member] | ||||||||
Derivative Instruments [Abstract] | ||||||||
Percentage of anticipated purchases of inventory that may be hedged | 100.00% | |||||||
Term of hedge | 12 months | |||||||
Percentage of non-inventory purchases that may be hedged | 90.00% | |||||||
Foreign Currency [Member] | ||||||||
Derivative Instruments [Abstract] | ||||||||
Fair value, asset | $ 400 | |||||||
Fair value, liability | 0 | |||||||
Foreign Currency [Member] | Other Current Assets [Member] | ||||||||
Derivative Instruments [Abstract] | ||||||||
Fair value, asset | $ 0 | 400 | ||||||
Foreign Currency [Member] | Accrued Liabilities [Member] | ||||||||
Derivative Instruments [Abstract] | ||||||||
Fair value, liability | $ 0 | 0 | ||||||
Foreign Currency [Member] | Purchase [Member] | ||||||||
Derivative Instruments [Abstract] | ||||||||
Notional amount of contracts executed | € | € 19.7 | |||||||
Notional amount | € | € 3.3 | € 18 | ||||||
Foreign Currency [Member] | Sale [Member] | ||||||||
Derivative Instruments [Abstract] | ||||||||
Notional amount of contracts executed | € | € 21.4 | |||||||
Notional amount | € | € 3.6 | € 19.6 | ||||||
Interest Rate Swaps [Member] | ||||||||
Derivative Instruments [Abstract] | ||||||||
Notional amount | 70,000 | $ 70,000 | ||||||
Settlement of interest rate swaps | $ 3,600 | |||||||
Interest Rate Swaps [Member] | Interest Expense [Member] | ||||||||
Derivative Instruments [Abstract] | ||||||||
Loss reclassified into interest expense | $ 1,000 | |||||||
Interest Rate Swaps [Member] | LIBOR [Member] | ||||||||
Derivative Instruments [Abstract] | ||||||||
Interest rate percentage | 2.755% | 2.755% | ||||||
Interest Rate Swaps [Member] | Other Long-Term Liabilities [Member] | ||||||||
Derivative Instruments [Abstract] | ||||||||
Fair value, liability | $ 3,700 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Details) $ in Thousands, € in Millions | Sep. 30, 2021EUR (€) | Sep. 30, 2021USD ($) | Feb. 11, 2021USD ($) | Dec. 31, 2020EUR (€) | Dec. 31, 2020USD ($) | Jun. 10, 2020USD ($) | Apr. 17, 2020USD ($) | Jul. 31, 2019USD ($) | Mar. 31, 2018USD ($) | Mar. 07, 2018USD ($) |
Fair Value of Financial Instruments [Abstract] | ||||||||||
Note payable | $ 429,985 | $ 319,985 | ||||||||
Foreign Exchange [Member] | ||||||||||
Fair Value of Financial Instruments [Abstract] | ||||||||||
Fair value, asset | 400 | |||||||||
Fair value, liability | 0 | |||||||||
Foreign Exchange [Member] | Purchase [Member] | ||||||||||
Fair Value of Financial Instruments [Abstract] | ||||||||||
Notional amount | € | € 3.3 | € 18 | ||||||||
Foreign Exchange [Member] | Sale [Member] | ||||||||||
Fair Value of Financial Instruments [Abstract] | ||||||||||
Notional amount | € | € 3.6 | € 19.6 | ||||||||
Interest Rate Swaps [Member] | ||||||||||
Fair Value of Financial Instruments [Abstract] | ||||||||||
Notional amount | 70,000 | $ 70,000 | ||||||||
Senior Secured Notes [Member] | ||||||||||
Fair Value of Financial Instruments [Abstract] | ||||||||||
Interest rate | 5.625% | 5.625% | ||||||||
Face amount | $ 250,000 | $ 250,000 | ||||||||
Note payable | 250,000 | 0 | ||||||||
2018 First Lien Term Loan [Member] | ||||||||||
Fair Value of Financial Instruments [Abstract] | ||||||||||
Face amount | $ 160,000 | |||||||||
Note payable | $ 0 | 130,000 | ||||||||
Convertible Senior Notes [Member] | ||||||||||
Fair Value of Financial Instruments [Abstract] | ||||||||||
Interest rate | 2.50% | 2.50% | ||||||||
Face amount | $ 172,500 | |||||||||
Note payable | $ 172,500 | 172,500 | ||||||||
Promissory Note [Member] | ||||||||||
Fair Value of Financial Instruments [Abstract] | ||||||||||
Interest rate | 7.50% | 7.50% | ||||||||
Face amount | $ 10,000 | |||||||||
Note payable | $ 0 | 10,000 | ||||||||
Unsecured Loan [Member] | ||||||||||
Fair Value of Financial Instruments [Abstract] | ||||||||||
Interest rate | 1.00% | 1.00% | ||||||||
Face amount | $ 7,500 | |||||||||
Note payable | $ 7,485 | 7,485 | ||||||||
Level 2 [Member] | Foreign Exchange [Member] | ||||||||||
Fair Value of Financial Instruments [Abstract] | ||||||||||
Fair value, asset | 0 | |||||||||
Fair value, liability | 0 | |||||||||
Level 2 [Member] | Interest Rate Swaps [Member] | ||||||||||
Fair Value of Financial Instruments [Abstract] | ||||||||||
Fair value, liability | 3,700 | |||||||||
Fair Value [Member] | 2018 First Lien Term Loan [Member] | ||||||||||
Fair Value of Financial Instruments [Abstract] | ||||||||||
Long-term debt | 130,000 | |||||||||
Fair Value [Member] | Convertible Senior Notes [Member] | ||||||||||
Fair Value of Financial Instruments [Abstract] | ||||||||||
Long-term debt | 158,600 | $ 155,300 | ||||||||
Fair Value [Member] | Unsecured Loan [Member] | ||||||||||
Fair Value of Financial Instruments [Abstract] | ||||||||||
Long-term debt | $ 7,400 |
Inventories, Change in Method o
Inventories, Change in Method of Accounting for Inventory (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
Inventories [Abstract] | ||||||
Percentage of LIFO inventory | 45.10% | |||||
Consolidated Statement of Income [Abstract] | ||||||
Cost of sales | $ 55,635 | $ 55,867 | $ 172,685 | $ 162,152 | ||
Income before income taxes | 17,510 | 11,297 | 51,158 | 31,226 | ||
Income tax expense | 4,073 | 2,277 | 11,151 | 7,412 | ||
Net income attributable to Turning Point Brands, Inc. | $ 13,468 | $ 9,020 | $ 40,605 | $ 23,814 | ||
Earnings per common share [Abstract] | ||||||
Basic (in dollars per share) | $ 0.71 | $ 0.47 | $ 2.14 | $ 1.22 | ||
Diluted (in dollars per share) | $ 0.65 | $ 0.44 | $ 1.95 | $ 1.17 | ||
Consolidated Balance Sheets [Abstract] | ||||||
Inventories | $ 98,605 | $ 98,605 | $ 85,856 | |||
Deferred income taxes | 1,654 | 1,654 | 0 | |||
Accumulated earnings (deficit) | 61,052 | 61,052 | 23,645 | |||
Consolidated Statement of Cash Flows [Abstract] | ||||||
Consolidated net income | $ 13,437 | $ 9,020 | 40,007 | $ 23,814 | ||
Deferred income taxes | 1,528 | 2,259 | ||||
Inventories | $ (10,970) | (2,208) | ||||
Change in Method of Accounting for Inventory from LIFO to FIFO [Member] | ||||||
Consolidated Statement of Income [Abstract] | ||||||
Cost of sales | 55,867 | 162,152 | ||||
Income before income taxes | 9,612 | 26,171 | ||||
Income tax expense | 1,816 | 6,029 | ||||
Net income attributable to Turning Point Brands, Inc. | $ 7,796 | $ 20,142 | ||||
Earnings per common share [Abstract] | ||||||
Basic (in dollars per share) | $ 0.41 | $ 1.03 | ||||
Diluted (in dollars per share) | $ 0.40 | $ 1.01 | ||||
Consolidated Balance Sheets [Abstract] | ||||||
Inventories | 85,856 | |||||
Deferred income taxes | 5,666 | |||||
Accumulated earnings (deficit) | 16,580 | $ 11,000 | ||||
Consolidated Statement of Cash Flows [Abstract] | ||||||
Consolidated net income | $ 20,142 | |||||
Deferred income taxes | 876 | |||||
Inventories | (2,208) | |||||
As Originally Reported [Member] | ||||||
Consolidated Statement of Income [Abstract] | ||||||
Cost of sales | $ 55,867 | 161,996 | ||||
Income before income taxes | 9,612 | 26,327 | ||||
Income tax expense | 1,816 | 6,029 | ||||
Net income attributable to Turning Point Brands, Inc. | $ 7,796 | $ 20,298 | ||||
Earnings per common share [Abstract] | ||||||
Basic (in dollars per share) | $ 0.41 | $ 1.04 | ||||
Diluted (in dollars per share) | $ 0.40 | $ 1.02 | ||||
Consolidated Balance Sheets [Abstract] | ||||||
Inventories | 79,750 | |||||
Deferred income taxes | 4,082 | |||||
Accumulated earnings (deficit) | 12,058 | 15,300 | ||||
Consolidated Statement of Cash Flows [Abstract] | ||||||
Consolidated net income | $ 20,298 | |||||
Deferred income taxes | 876 | |||||
Inventories | (2,364) | |||||
Effect of Change [Member] | Change in Method of Accounting for Inventory from LIFO to FIFO [Member] | ||||||
Consolidated Statement of Income [Abstract] | ||||||
Cost of sales | $ 0 | 156 | ||||
Income before income taxes | 0 | (156) | ||||
Income tax expense | 0 | 0 | ||||
Net income attributable to Turning Point Brands, Inc. | $ 0 | $ (156) | ||||
Earnings per common share [Abstract] | ||||||
Basic (in dollars per share) | $ 0 | $ (0.01) | ||||
Diluted (in dollars per share) | $ 0 | $ (0.01) | ||||
Consolidated Balance Sheets [Abstract] | ||||||
Inventories | 6,106 | |||||
Deferred income taxes | 1,584 | |||||
Accumulated earnings (deficit) | $ 4,522 | $ (4,300) | ||||
Consolidated Statement of Cash Flows [Abstract] | ||||||
Consolidated net income | $ (156) | |||||
Deferred income taxes | 0 | |||||
Inventories | $ 156 |
Inventories, Components of Inve
Inventories, Components of Inventories (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Inventories [Abstract] | ||
Raw materials and work in process | $ 6,892 | $ 8,137 |
Leaf tobacco | 38,151 | 32,948 |
Other | 1,503 | 1,225 |
Inventories | 98,605 | 85,856 |
Inventory valuation allowance | 6,800 | 9,900 |
Zig-Zag Products [Member] | ||
Inventories [Abstract] | ||
Finished goods | 26,839 | 14,903 |
Stoker's Products [Member] | ||
Inventories [Abstract] | ||
Finished goods | 11,666 | 9,727 |
NewGen Products [Member] | ||
Inventories [Abstract] | ||
Finished goods | $ 13,554 | $ 18,916 |
Other Current Assets (Details)
Other Current Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Other Current Assets [Abstract] | ||
Inventory deposits | $ 9,423 | $ 7,113 |
Insurance deposit | 3,000 | 3,000 |
Prepaid taxes | 1,533 | 813 |
Other | 13,157 | 15,525 |
Total | $ 27,113 | $ 26,451 |
Property, Plant, and Equipmen_2
Property, Plant, and Equipment (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Property, Plant, and Equipment [Abstract] | ||
Property, plant and equipment | $ 36,463 | $ 32,111 |
Accumulated depreciation | (18,867) | (16,587) |
Net property, plant and equipment | 17,596 | 15,524 |
Land [Member] | ||
Property, Plant, and Equipment [Abstract] | ||
Property, plant and equipment | 22 | 22 |
Buildings and Improvements [Member] | ||
Property, Plant, and Equipment [Abstract] | ||
Property, plant and equipment | 3,069 | 2,750 |
Leasehold Improvements [Member] | ||
Property, Plant, and Equipment [Abstract] | ||
Property, plant and equipment | 4,739 | 4,702 |
Machinery and Equipment [Member] | ||
Property, Plant, and Equipment [Abstract] | ||
Property, plant and equipment | 19,352 | 15,612 |
Furniture and Fixtures [Member] | ||
Property, Plant, and Equipment [Abstract] | ||
Property, plant and equipment | $ 9,281 | $ 9,025 |
Other Assets (Details)
Other Assets (Details) - USD ($) $ in Thousands | Jul. 21, 2021 | Apr. 19, 2021 | Sep. 30, 2021 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 |
Other Assets [Abstract] | ||||||
Equity investments | $ 32,749 | $ 32,749 | $ 24,018 | |||
Debt security investment | 8,000 | 8,000 | 0 | |||
Other | 2,061 | 2,061 | 2,818 | |||
Total | $ 42,810 | 42,810 | $ 26,836 | |||
Other Assets [Abstract] | ||||||
Payment for investment | $ 16,657 | $ 0 | ||||
Docklight Brands, Inc. [Member] | ||||||
Other Assets [Abstract] | ||||||
Payment for investment | $ 8,700 | |||||
Old Pal Holding Company LLC [Member] | ||||||
Other Assets [Abstract] | ||||||
Payment for investment | $ 8,000 | |||||
Interest rate | 3.00% | 3.00% | ||||
Extension period for maturity date | 1 year | |||||
Weighted average interest rate | 3.00% |
Accrued Liabilities (Details)
Accrued Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Accrued Liabilities [Abstract] | ||
Accrued payroll and related items | $ 7,029 | $ 9,459 |
Customer returns and allowances | 7,635 | 5,259 |
Taxes payable | 4,409 | 4,326 |
Lease liabilities | 3,159 | 3,228 |
Accrued interest | 2,837 | 2,096 |
Other | 8,280 | 10,857 |
Total | $ 33,349 | $ 35,225 |
Notes Payable and Long-Term D_3
Notes Payable and Long-Term Debt, Summary of Notes Payable and Long-Term Debt (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Notes Payable and Long-Term Debt [Abstract] | ||
Gross notes payable and long-term debt | $ 429,985 | $ 319,985 |
Less deferred finance charges | (8,947) | (5,873) |
Less current maturities | (7,485) | (12,000) |
Net notes payable and long-term debt | 413,553 | 302,112 |
Senior Secured Notes [Member] | ||
Notes Payable and Long-Term Debt [Abstract] | ||
Gross notes payable and long-term debt | 250,000 | 0 |
2018 First Lien Term Loan [Member] | ||
Notes Payable and Long-Term Debt [Abstract] | ||
Gross notes payable and long-term debt | 0 | 130,000 |
Convertible Senior Notes [Member] | ||
Notes Payable and Long-Term Debt [Abstract] | ||
Gross notes payable and long-term debt | 172,500 | 172,500 |
Promissory Note [Member] | ||
Notes Payable and Long-Term Debt [Abstract] | ||
Gross notes payable and long-term debt | 0 | 10,000 |
Unsecured Loan [Member] | ||
Notes Payable and Long-Term Debt [Abstract] | ||
Gross notes payable and long-term debt | $ 7,485 | $ 7,485 |
Notes Payable and Long-Term D_4
Notes Payable and Long-Term Debt, Senior Secured Notes (Details) - Senior Secured Notes [Member] - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2021 | Feb. 11, 2021 | |
Notes Payable and Long-Term Debt [Abstract] | ||
Face amount | $ 250 | $ 250 |
Interest rate | 5.625% | |
Maturity date | Feb. 15, 2026 | |
Guarantee threshold amount for obligations | $ 15 | |
Redemption price as a percentage of principal amount for principal redeemed | 100.00% | |
Percentage of principal amount that can be redeemed with net cash proceeds from certain equity offerings | 40.00% | |
Redemption price as a percentage of principal amount for principal amount that can be redeemed with net cash proceeds from certain equity offerings | 105.625% | |
Percentage of principal amount that must remain outstanding in order to redeem 40% of principal amount with net cash proceeds from certain equity offerings | 50.00% | |
Period in which 10% of principal amount can be redeemed once | 12 months | |
Percentage of principal amount that can be redeemed once in any twelve-month period | 10.00% | |
Redemption price as a percentage of principal amount for principal amount that can be redeemed once in any twelve-month period | 103.00% | |
Redemption price as a percentage of principal amount for principal amount that can be redeemed if the Company experiences a change in control | 101.00% | |
Debt issuance costs | $ 6.4 |
Notes Payable and Long-Term D_5
Notes Payable and Long-Term Debt, 2021 Revolving Credit Facility (Details) $ in Millions | 9 Months Ended | ||
Sep. 30, 2021USD ($) | Mar. 31, 2023 | Feb. 11, 2021USD ($) | |
2021 Revolving Credit Facility [Member] | |||
Notes Payable and Long-Term Debt [Abstract] | |||
Maximum borrowing capacity | $ 25 | ||
Amount drawn under credit facility | $ 0 | ||
Letters of credit outstanding | $ 3.6 | ||
Maturity date | Aug. 11, 2025 | ||
Period prior to maturity date of Convertible Senior Notes | 91 days | ||
Consolidated Leverage Ratio | 5.50 | ||
Exclusion threshold for letters of credit | $ 5 | ||
Threshold percentage of total commitments outstanding | 35.00% | ||
Debt issuance costs | $ 0.5 | ||
2021 Revolving Credit Facility [Member] | Plan [Member] | |||
Notes Payable and Long-Term Debt [Abstract] | |||
Consolidated Leverage Ratio | 5.25 | ||
2021 Revolving Credit Facility [Member] | Eurodollar [Member] | |||
Notes Payable and Long-Term Debt [Abstract] | |||
Margin on variable rate | 3.50% | ||
Letters of Credit [Member] | |||
Notes Payable and Long-Term Debt [Abstract] | |||
Maximum borrowing capacity | $ 10 |
Notes Payable and Long-Term D_6
Notes Payable and Long-Term Debt, 2018 Credit Facility (Details) $ in Millions | Mar. 07, 2018USD ($) |
2018 Credit Facility [Member] | |
Notes Payable and Long-Term Debt [Abstract] | |
Secured credit facility | $ 250 |
Additional borrowing capacity under accordion feature | 40 |
2018 First Lien Term Loan [Member] | |
Notes Payable and Long-Term Debt [Abstract] | |
Face amount | 160 |
2018 Revolving Credit Facility [Member] | |
Notes Payable and Long-Term Debt [Abstract] | |
Maximum borrowing capacity | 50 |
2018 Second Lien Term Loan [Member] | |
Notes Payable and Long-Term Debt [Abstract] | |
Face amount | $ 40 |
Notes Payable and Long-Term D_7
Notes Payable and Long-Term Debt, 2018 First Lien Credit Facility (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||
Jul. 31, 2019USD ($) | Sep. 30, 2021USD ($) | Mar. 31, 2021USD ($) | Sep. 30, 2020USD ($) | Mar. 31, 2020USD ($) | Sep. 30, 2021USD ($) | Sep. 30, 2020USD ($) | |
Notes Payable and Long-Term Debt [Abstract] | |||||||
Financing costs of amending facility | $ 6,921 | $ 194 | |||||
Loss on extinguishment of debt | $ 375 | $ 0 | $ (5,331) | 0 | |||
2018 First Lien Credit Facility [Member] | |||||||
Notes Payable and Long-Term Debt [Abstract] | |||||||
Maturity date | Mar. 7, 2023 | ||||||
Financing costs of amending facility | $ 700 | ||||||
Payment of term loan | $ 130,000 | ||||||
Loss on extinguishment of debt | $ (5,700) | ||||||
2018 First Lien Credit Facility [Member] | Minimum [Member] | |||||||
Notes Payable and Long-Term Debt [Abstract] | |||||||
Senior leverage ratio | 2.50 | 2.50 | |||||
Total leverage ratio | 5 | 5 | |||||
Fixed charge coverage ratio | 1.20 | 1.20 | |||||
2018 First Lien Credit Facility [Member] | Maximum [Member] | |||||||
Notes Payable and Long-Term Debt [Abstract] | |||||||
Senior leverage ratio | 3 | 3 | |||||
Total leverage ratio | 5.50 | 5.50 | |||||
2018 Revolving Credit Facility [Member] | LIBOR [Member] | Minimum [Member] | |||||||
Notes Payable and Long-Term Debt [Abstract] | |||||||
Margin on variable rate | 2.75% | ||||||
2018 Revolving Credit Facility [Member] | LIBOR [Member] | Maximum [Member] | |||||||
Notes Payable and Long-Term Debt [Abstract] | |||||||
Margin on variable rate | 3.50% | ||||||
2018 First Lien Term Loan [Member] | |||||||
Notes Payable and Long-Term Debt [Abstract] | |||||||
Frequency of required payment | quarterly | ||||||
Financing costs of amending facility | $ 200 | ||||||
Payment of term loan | $ 130,000 | $ 8,000 | |||||
2018 First Lien Term Loan [Member] | June 30, 2018 through March 31, 2020 [Member] | |||||||
Notes Payable and Long-Term Debt [Abstract] | |||||||
Required payment | 2,000 | ||||||
2018 First Lien Term Loan [Member] | June 30, 2020 through March 31, 2022 [Member] | |||||||
Notes Payable and Long-Term Debt [Abstract] | |||||||
Required payment | 3,000 | ||||||
2018 First Lien Term Loan [Member] | June 30, 2022 and after [Member] | |||||||
Notes Payable and Long-Term Debt [Abstract] | |||||||
Required payment | $ 4,000 | ||||||
2018 First Lien Term Loan [Member] | LIBOR [Member] | Minimum [Member] | |||||||
Notes Payable and Long-Term Debt [Abstract] | |||||||
Margin on variable rate | 2.75% | ||||||
2018 First Lien Term Loan [Member] | LIBOR [Member] | Maximum [Member] | |||||||
Notes Payable and Long-Term Debt [Abstract] | |||||||
Margin on variable rate | 3.50% | ||||||
Convertible Senior Notes [Member] | |||||||
Notes Payable and Long-Term Debt [Abstract] | |||||||
Maturity date | Jul. 15, 2024 | ||||||
Maximum notes to be issued | $ 200,000 | $ 200,000 |
Notes Payable and Long-Term D_8
Notes Payable and Long-Term Debt, Convertible Senior Notes (Details) | 1 Months Ended | 9 Months Ended |
Jul. 31, 2019USD ($) | Sep. 30, 2021USD ($)shares$ / shares | |
Notes Payable and Long-Term Debt [Abstract] | ||
Strike price (in dollars per share) | $ / shares | 53.78 | |
Cap price (in dollars per share) | $ / shares | 82.86 | |
Payment for cost of capped call transactions | $ | $ 20,530,000 | |
Convertible Senior Notes [Member] | ||
Notes Payable and Long-Term Debt [Abstract] | ||
Face amount | $ | 172,500,000 | |
Interest rate | 2.50% | |
Maturity date | Jul. 15, 2024 | |
Shares issued upon conversion (in shares) | shares | 3,207,293 | |
Conversion rate | 18.593 | |
Principal amount of notes to be converted | $ | $ 1,000 | |
Conversion price (in dollars per share) | $ / shares | $ 53.78 | |
Pre-determined threshold value for adjusting conversion price as a result of dividends paid (in dollars per share) | $ / shares | $ 0.04 | |
Debt issuance costs | $ | $ 5,900,000 |
Notes Payable and Long-Term D_9
Notes Payable and Long-Term Debt, Promissory Note (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2021USD ($)Intallment | Sep. 30, 2020USD ($) | Sep. 30, 2021USD ($)Intallment | Sep. 30, 2020USD ($) | Jun. 10, 2020USD ($) | |
Notes Payable and Long-Term Debt [Abstract] | |||||
Repayment of note | $ 9,625 | $ 0 | |||
Gain on extinguishment of debt | $ 375 | $ 0 | $ (5,331) | $ 0 | |
Promissory Note [Member] | |||||
Notes Payable and Long-Term Debt [Abstract] | |||||
Face amount | $ 10,000 | ||||
Interest rate | 7.50% | 7.50% | |||
Number of installment payments | Intallment | 2 | 2 | |||
Required payment | $ 5,000 | ||||
Repayment of note | $ 9,600 | ||||
Gain on extinguishment of debt | $ 400 | ||||
Promissory Note [Member] | Minimum [Member] | |||||
Notes Payable and Long-Term Debt [Abstract] | |||||
Term of note | 18 months | ||||
Promissory Note [Member] | Maximum [Member] | |||||
Notes Payable and Long-Term Debt [Abstract] | |||||
Term of note | 36 months |
Notes Payable and Long-Term _10
Notes Payable and Long-Term Debt, Unsecured Loan (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Dec. 31, 2021 | Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2021 | Apr. 17, 2020 | |
Notes Payable and Long-Term Debt [Abstract] | |||||||
Gain on extinguishment of debt | $ 375 | $ 0 | $ (5,331) | $ 0 | |||
Unsecured Loan [Member] | |||||||
Notes Payable and Long-Term Debt [Abstract] | |||||||
Face amount | $ 7,500 | ||||||
Maturity date | Apr. 17, 2022 | ||||||
Interest rate | 1.00% | 1.00% | |||||
Unsecured Loan [Member] | Forecast [Member] | |||||||
Notes Payable and Long-Term Debt [Abstract] | |||||||
Gain on extinguishment of debt | $ 7,500 | $ 7,500 |
Notes Payable and Long-Term _11
Notes Payable and Long-Term Debt, Note Payable - IVG (Details) - Note Payable - IVG [Member] - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2018 | |
Notes Payable and Long-Term Debt [Abstract] | |||
Face amount | $ 4,000 | ||
Interest rate | 6.00% | ||
Maturity date | Mar. 5, 2020 | ||
Payment of note | $ 0 | $ 4,240 |
Leases (Details)
Leases (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | ||
Components of Lease Expense [Abstract] | ||||||
Variable lease cost | [1] | $ 214 | $ 96 | $ 954 | $ 452 | |
Short-term lease cost | 13 | 11 | 35 | 120 | ||
Sublease income | 0 | (30) | (60) | (90) | ||
Total operating lease cost | 1,223 | $ 945 | 3,896 | $ 2,812 | ||
Assets [Abstract] | ||||||
Right of use assets | 15,984 | 15,984 | $ 17,918 | |||
Liabilities [Abstract] | ||||||
Current lease liabilities | $ 3,159 | $ 3,159 | $ 3,228 | |||
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | Accrued Liabilities, Current | Accrued Liabilities, Current | Accrued Liabilities, Current | |||
Long-term lease liabilities | $ 14,201 | $ 14,201 | $ 16,117 | |||
Total lease liabilities | $ 17,360 | $ 17,360 | 19,345 | |||
Weighted-Average Remaining Lease Term and Discount Rate [Abstract] | ||||||
Weighted-average remaining lease term - operating leases | 6 years 9 months 18 days | 7 years 4 months 24 days | 6 years 9 months 18 days | 7 years 4 months 24 days | ||
Weighted-average discount rate - operating leases | 4.93% | 4.93% | 4.93% | 4.93% | ||
Maturities of Lease Liabilities [Abstract] | ||||||
2021 | $ 989 | $ 989 | ||||
2022 | 3,870 | 3,870 | ||||
2023 | 3,679 | 3,679 | ||||
2024 | 2,485 | 2,485 | ||||
2025 | 2,125 | 2,125 | ||||
Years thereafter | 7,428 | 7,428 | ||||
Total lease payments | 20,576 | 20,576 | ||||
Less: Imputed interest | 3,216 | 3,216 | ||||
Total lease liabilities | 17,360 | 17,360 | $ 19,345 | |||
Cost of Sales [Member] | ||||||
Components of Lease Expense [Abstract] | ||||||
Operating lease cost | 225 | $ 225 | 682 | $ 683 | ||
Selling, General and Administrative [Member] | ||||||
Components of Lease Expense [Abstract] | ||||||
Operating lease cost | $ 771 | $ 643 | $ 2,285 | $ 1,647 | ||
[1] | Variable lease cost includes elements of a contract that do not represent a good or service but for which the lessee is responsible for paying. |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Income Taxes [Abstract] | ||||
Effective income tax rate | 23.30% | 20.20% | 21.80% | 23.70% |
Income tax deduction related to exercise of stock options | $ 1 | $ 0 | $ 6.2 | $ 0.9 |
Pension and Postretirement Be_3
Pension and Postretirement Benefit Plans (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | |
Pension Benefits [Member] | |||||
Plan Contributions [Abstract] | |||||
Contributions made by employer | $ 0 | ||||
Net Periodic Benefit Cost [Abstract] | |||||
Service cost | $ 0 | $ 0 | $ 0 | $ 0 | |
Interest cost | 0 | 0 | 0 | 190 | |
Expected return on plan assets | 0 | 0 | 0 | (322) | |
Amortization of (gains) losses | 0 | 0 | 0 | 72 | |
Settlement and curtailment loss | 0 | 1,188 | 0 | 1,188 | |
Net periodic benefit income | 0 | 1,188 | 0 | 1,128 | |
Postretirement Benefits [Member] | |||||
Net Periodic Benefit Cost [Abstract] | |||||
Service cost | 0 | 0 | 0 | 0 | |
Interest cost | 0 | 0 | 0 | 0 | |
Expected return on plan assets | 0 | 0 | 0 | 0 | |
Amortization of (gains) losses | 0 | 0 | 0 | (131) | |
Settlement and curtailment loss | 0 | 0 | 0 | 0 | |
Net periodic benefit income | $ 0 | $ 0 | $ 0 | $ (131) |
Share Incentive Plans, Equity I
Share Incentive Plans, Equity Incentive Plans (Details) - shares | Sep. 30, 2021 | Mar. 22, 2021 | Apr. 28, 2016 |
2021 Plan [Member] | |||
Share Incentive Plans [Abstract] | |||
Number of shares authorized for issuance (in shares) | 1,290,000 | ||
Number of shares available for grant (in shares) | 1,378,711 | ||
2021 Plan [Member] | RSUs [Member] | |||
Share Incentive Plans [Abstract] | |||
Number of awards granted, net of forfeitures (in shares) | 8,637 | ||
2021 Plan [Member] | Stock Options [Member] | |||
Share Incentive Plans [Abstract] | |||
Number of awards granted, net of forfeitures (in shares) | 7,500 | ||
2015 Plan [Member] | |||
Share Incentive Plans [Abstract] | |||
Number of shares authorized for issuance (in shares) | 100,052 | 1,400,000 | |
Number of shares available for grant (in shares) | 0 | ||
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) - 2006, 2015 and 2021 Plans [Member] - Stock Options [Member] - USD ($) $ / shares in Units, $ in Millions | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | |
Stock Option Shares [Roll Forward] | |||
Outstanding, beginning balance (in shares) | 711,060 | 696,716 | 696,716 |
Granted (in shares) | 119,500 | 155,000 | |
Exercised (in shares) | (202,768) | (135,146) | |
Forfeited (in shares) | (5,749) | (5,510) | |
Outstanding, ending balance (in shares) | 622,043 | 711,060 | |
Weighted Average Exercise Price [Abstract] | |||
Outstanding, beginning balance (in dollars per share) | $ 19.58 | $ 18.13 | $ 18.13 |
Granted (in dollars per share) | 50.93 | 14.85 | |
Exercised (in dollars per share) | 10.22 | 6.37 | |
Forfeited (in dollars per share) | 31.61 | 27.25 | |
Outstanding, ending balance (in dollars per share) | 28.54 | 19.58 | |
Weighted Average Grant Date Fair Value [Abstract] | |||
Outstanding, beginning balance (in dollars per share) | 6.42 | $ 6.17 | 6.17 |
Granted (in dollars per share) | 13.58 | 4.41 | |
Exercised (in dollars per share) | 6.35 | 2.74 | |
Forfeited (in dollars per share) | 9.44 | 8.64 | |
Outstanding, ending balance (in dollars per share) | $ 8.70 | $ 6.42 | |
Intrinsic value of options exercised | $ 7.9 | $ 0.9 |
Share Incentive Plans, Assumpti
Share Incentive Plans, Assumptions for Options Granted Under 2006 Plan (Details) - 2006 Plan [Member] - Stock Options [Member] - Exercise Price $3.83 [Member] | 9 Months Ended |
Sep. 30, 2021$ / sharesshares | |
Share Incentive Plans [Abstract] | |
Number of options (in shares) | shares | 87,340 |
Exercise price (in dollars per share) | $ 3.83 |
Number of options exercisable (in shares) | shares | 87,340 |
Remaining lives | 2 years 8 months 1 day |
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 at grant date (in dollars per share) | $ 2.17 |
Share Incentive Plans, Assump_2
Share Incentive Plans, Assumptions for Options Granted Under 2015 Plan (Details) - 2015 Plan [Member] - Stock Options [Member] - $ / shares | May 03, 2021 | Feb. 18, 2021 | Mar. 18, 2020 | Oct. 24, 2019 | Mar. 20, 2019 | Mar. 07, 2018 | May 17, 2017 | Feb. 10, 2017 | Sep. 30, 2021 |
February 10, 2017 [Member] | |||||||||
Share Incentive Plans [Abstract] | |||||||||
Number of options granted (in shares) | 40,000 | ||||||||
Options outstanding (in shares) | 27,050 | ||||||||
Number exercisable (in shares) | 27,050 | ||||||||
Exercise price (in dollars per share) | $ 13 | ||||||||
Remaining lives | 5 years 4 months 13 days | ||||||||
Risk free interest rate | 1.89% | ||||||||
Expected volatility | 27.44% | ||||||||
Expected life | 6 years | ||||||||
Dividend yield | 0.00% | ||||||||
Fair value at grant date (in dollars per share) | $ 3.98 | ||||||||
May 17, 2017 [Member] | |||||||||
Share Incentive Plans [Abstract] | |||||||||
Number of options granted (in shares) | 93,819 | ||||||||
Options outstanding (in shares) | 47,483 | ||||||||
Number exercisable (in shares) | 47,483 | ||||||||
Exercise price (in dollars per share) | $ 15.41 | ||||||||
Remaining lives | 5 years 7 months 17 days | ||||||||
Risk free interest rate | 1.76% | ||||||||
Expected volatility | 26.92% | ||||||||
Expected life | 6 years | ||||||||
Dividend yield | 0.00% | ||||||||
Fair value at grant date (in dollars per share) | $ 4.60 | ||||||||
March 7, 2018 [Member] | |||||||||
Share Incentive Plans [Abstract] | |||||||||
Number of options granted (in shares) | 98,100 | ||||||||
Options outstanding (in shares) | 67,417 | ||||||||
Number exercisable (in shares) | 67,417 | ||||||||
Exercise price (in dollars per share) | $ 21.21 | ||||||||
Remaining lives | 6 years 5 months 8 days | ||||||||
Risk free interest rate | 2.65% | ||||||||
Expected volatility | 28.76% | ||||||||
Expected life | 6 years | ||||||||
Dividend yield | 0.83% | ||||||||
Fair value at grant date (in dollars per share) | $ 6.37 | ||||||||
March 20, 2019 [Member] | |||||||||
Share Incentive Plans [Abstract] | |||||||||
Number of options granted (in shares) | 155,780 | ||||||||
Options outstanding (in shares) | 142,284 | ||||||||
Number exercisable (in shares) | 110,015 | ||||||||
Exercise price (in dollars per share) | $ 47.58 | ||||||||
Remaining lives | 7 years 5 months 19 days | ||||||||
Risk free interest rate | 2.34% | ||||||||
Expected volatility | 30.95% | ||||||||
Expected life | 6 years | ||||||||
Dividend yield | 0.42% | ||||||||
Fair value at grant date (in dollars per share) | $ 15.63 | ||||||||
October 24, 2019 [Member] | |||||||||
Share Incentive Plans [Abstract] | |||||||||
Number of options granted (in shares) | 25,000 | ||||||||
Options outstanding (in shares) | 25,000 | ||||||||
Number exercisable (in shares) | 16,750 | ||||||||
Exercise price (in dollars per share) | $ 20.89 | ||||||||
Remaining lives | 8 years 25 days | ||||||||
Risk free interest rate | 1.58% | ||||||||
Expected volatility | 31.93% | ||||||||
Expected life | 6 years | ||||||||
Dividend yield | 0.95% | ||||||||
Fair value at grant date (in dollars per share) | $ 6.27 | ||||||||
March 18, 2020 [Member] | |||||||||
Share Incentive Plans [Abstract] | |||||||||
Number of options granted (in shares) | 155,000 | ||||||||
Options outstanding (in shares) | 107,219 | ||||||||
Number exercisable (in shares) | 33,167 | ||||||||
Exercise price (in dollars per share) | $ 14.85 | ||||||||
Remaining lives | 8 years 5 months 19 days | ||||||||
Risk free interest rate | 0.79% | ||||||||
Expected volatility | 35.72% | ||||||||
Expected life | 6 years | ||||||||
Dividend yield | 1.49% | ||||||||
Fair value at grant date (in dollars per share) | $ 4.41 | ||||||||
February 18, 2021 [Member] | |||||||||
Share Incentive Plans [Abstract] | |||||||||
Number of options granted (in shares) | 100,000 | ||||||||
Options outstanding (in shares) | 98,750 | ||||||||
Number exercisable (in shares) | 9,500 | ||||||||
Exercise price (in dollars per share) | $ 51.75 | ||||||||
Remaining lives | 9 years 4 months 20 days | ||||||||
Risk free interest rate | 0.56% | ||||||||
Expected volatility | 28.69% | ||||||||
Expected life | 6 years | ||||||||
Dividend yield | 0.55% | ||||||||
Fair value at grant date (in dollars per share) | $ 13.77 | ||||||||
May 3, 2021 [Member] | |||||||||
Share Incentive Plans [Abstract] | |||||||||
Number of options granted (in shares) | 12,000 | ||||||||
Options outstanding (in shares) | 12,000 | ||||||||
Number exercisable (in shares) | 0 | ||||||||
Exercise price (in dollars per share) | $ 47.76 | ||||||||
Remaining lives | 9 years 7 months 2 days | ||||||||
Risk free interest rate | 0.84% | ||||||||
Expected volatility | 29.03% | ||||||||
Expected life | 6 years | ||||||||
Dividend yield | 0.59% | ||||||||
Fair value at grant date (in dollars per share) | $ 13.06 |
Share Incentive Plans, Assump_3
Share Incentive Plans, Assumptions for Options Granted Under 2021 Plan (Details) - 2021 Plan [Member] - Stock Options [Member] - May 17, 2021 [Member] - $ / shares | May 17, 2021 | Sep. 30, 2021 |
Share Incentive Plans [Abstract] | ||
Number of options granted (in shares) | 7,500 | |
Options outstanding (in shares) | 7,500 | |
Number exercisable (in shares) | 0 | |
Exercise price (in dollars per share) | $ 45.05 | |
Remaining lives | 9 years 7 months 17 days | |
Risk free interest rate | 0.84% | |
Expected volatility | 31.50% | |
Expected life | 6 years | |
Dividend yield | 0.63% | |
Fair value at grant date (in dollars per share) | $ 13.23 |
Share Incentive Plans, Compensa
Share Incentive Plans, Compensation Expense Related to Options (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Compensation Expense [Abstract] | ||||
Compensation expense related to options | $ 0.3 | $ 0.3 | $ 2 | $ 0.9 |
Unrecognized compensation expense related to options | $ 1 | $ 1 | ||
Period over which unrecognized compensation expense will be expensed | 2 years 21 days |
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 | Feb. 18, 2021 | Dec. 28, 2020 | Mar. 18, 2020 | Jul. 19, 2019 | Mar. 20, 2019 | Mar. 07, 2018 | Mar. 31, 2017 | Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 |
Share Incentive Plans [Abstract] | |||||||||||
Period between performance period and measurement date | 65 days | ||||||||||
PRSUs outstanding at September 30, 2021 (in shares) | 561,211 | 561,211 | |||||||||
Compensation expense | $ 1.3 | $ 0.4 | $ 3.9 | $ 1.1 | |||||||
Unrecognized compensation expense | $ 9.9 | $ 9.9 | |||||||||
Employees [Member] | |||||||||||
Share Incentive Plans [Abstract] | |||||||||||
Performance period | 5 years | ||||||||||
March 31, 2017 [Member] | Employees [Member] | |||||||||||
Share Incentive Plans [Abstract] | |||||||||||
Number of PRSUs granted (in shares) | 94,000 | ||||||||||
PRSUs outstanding at September 30, 2021 (in shares) | 83,000 | 83,000 | |||||||||
Fair value as of grant date (in dollars per share) | $ 15.60 | ||||||||||
Remaining lives | 3 months | ||||||||||
March 7, 2018 [Member] | Employees [Member] | |||||||||||
Share Incentive Plans [Abstract] | |||||||||||
Number of PRSUs granted (in shares) | 96,000 | ||||||||||
PRSUs outstanding at September 30, 2021 (in shares) | 93,000 | 93,000 | |||||||||
Fair value as of grant date (in dollars per share) | $ 21.21 | ||||||||||
Remaining lives | 1 year 3 months | ||||||||||
March 20, 2019 [Member] | |||||||||||
Share Incentive Plans [Abstract] | |||||||||||
Number of PRSUs granted (in shares) | 4,901 | ||||||||||
PRSUs outstanding at September 30, 2021 (in shares) | 0 | 0 | |||||||||
Fair value as of grant date (in dollars per share) | $ 47.58 | ||||||||||
March 20, 2019 [Member] | Employees [Member] | |||||||||||
Share Incentive Plans [Abstract] | |||||||||||
Number of PRSUs granted (in shares) | 92,500 | ||||||||||
PRSUs outstanding at September 30, 2021 (in shares) | 84,600 | 84,600 | |||||||||
Fair value as of grant date (in dollars per share) | $ 47.58 | ||||||||||
Remaining lives | 2 years 3 months | ||||||||||
July 19, 2019 [Member] | Employees [Member] | |||||||||||
Share Incentive Plans [Abstract] | |||||||||||
Number of PRSUs granted (in shares) | 88,582 | ||||||||||
PRSUs outstanding at September 30, 2021 (in shares) | 21,342 | 21,342 | |||||||||
Fair value as of grant date (in dollars per share) | $ 52.15 | ||||||||||
Remaining lives | 1 year 3 months | ||||||||||
March 18, 2020 [Member] | Employees [Member] | |||||||||||
Share Incentive Plans [Abstract] | |||||||||||
Number of PRSUs granted (in shares) | 94,000 | ||||||||||
PRSUs outstanding at September 30, 2021 (in shares) | 92,400 | 92,400 | |||||||||
Fair value as of grant date (in dollars per share) | $ 14.85 | ||||||||||
Remaining lives | 3 years 3 months | ||||||||||
December 28, 2020 [Member] | Employees [Member] | |||||||||||
Share Incentive Plans [Abstract] | |||||||||||
Number of PRSUs granted (in shares) | 88,169 | ||||||||||
PRSUs outstanding at September 30, 2021 (in shares) | 88,169 | 88,169 | |||||||||
Fair value as of grant date (in dollars per share) | $ 46.42 | ||||||||||
Remaining lives | 2 years 3 months | ||||||||||
February 18, 2021 [Member] | Employees [Member] | |||||||||||
Share Incentive Plans [Abstract] | |||||||||||
Number of PRSUs granted (in shares) | 100,000 | ||||||||||
PRSUs outstanding at September 30, 2021 (in shares) | 98,700 | 98,700 | |||||||||
Fair value as of grant date (in dollars per share) | $ 51.75 | ||||||||||
Remaining lives | 4 years 3 months |
Contingencies (Details)
Contingencies (Details) | Oct. 09, 2020Count | Sep. 30, 2021Subsidiary | Dec. 31, 2018Subsidiary |
Contingencies [Abstract] | |||
Number of derivative counts filed in complaint | Count | 2 | ||
Number of franchisor subsidiaries | 2 | ||
Number of acquired franchisor subsidiaries | 1 | ||
Period after Company's demand when lawsuit was filed by franchisee | 16 months |
Income Per Share (Details)
Income Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Numerator [Abstract] | ||||
Net income attributable to Turning Point Brands, Inc. | $ 13,468 | $ 9,020 | $ 40,605 | $ 23,814 |
Denominator [Abstract] | ||||
Basic weighted average shares (in shares) | 18,897,974 | 19,240,187 | 18,988,435 | 19,478,297 |
Basic EPS (in dollars per share) | $ 0.71 | $ 0.47 | $ 2.14 | $ 1.22 |
Numerator [Abstract] | ||||
Net income attributable to Turning Point Brands, Inc. | $ 13,468 | $ 9,020 | $ 40,605 | $ 23,814 |
Interest expense related to Convertible Senior Notes, net of tax | 1,054 | 1,047 | 3,162 | 3,141 |
Diluted net income attributable to Turning Point Brands. Inc. | $ 14,522 | $ 10,067 | $ 43,767 | $ 26,955 |
Denominator [Abstract] | ||||
Basic weighted average shares (in shares) | 18,897,974 | 19,240,187 | 18,988,435 | 19,478,297 |
Convertible Senior Notes (in shares) | 3,207,293 | 3,202,808 | 3,207,293 | 3,202,808 |
Stock options (in shares) | 259,540 | 396,802 | 268,814 | 380,394 |
Diluted weighted average shares (in shares) | 22,364,807 | 22,839,797 | 22,464,542 | 23,061,499 |
Diluted EPS (in dollars per share) | $ 0.65 | $ 0.44 | $ 1.95 | $ 1.17 |
Segment Information, Financial
Segment Information, Financial Information of Reportable Segments (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||||
Sep. 30, 2021USD ($) | Sep. 30, 2020USD ($) | Sep. 30, 2021USD ($)Segment | Sep. 30, 2020USD ($) | Dec. 31, 2020USD ($) | ||||||
Segment Information [Abstract] | ||||||||||
Number of reportable segments | Segment | 3 | |||||||||
Segment Information [Abstract] | ||||||||||
Net sales | $ 109,904 | $ 104,174 | $ 340,188 | $ 299,826 | ||||||
Gross profit | 54,269 | 48,307 | 167,503 | 137,674 | ||||||
Operating income (loss) | 22,375 | 16,021 | 71,603 | 42,238 | ||||||
Interest expense, net | 5,397 | 3,539 | 15,406 | 10,143 | ||||||
Investment income | (157) | (3) | (292) | (128) | ||||||
Gain (loss) on extinguishment of debt | (375) | 0 | 5,331 | 0 | ||||||
Net periodic income, excluding service cost | 0 | 1,188 | 0 | 997 | ||||||
Income before income taxes | 17,510 | 11,297 | 51,158 | 31,226 | ||||||
Capital expenditures | 2,223 | 1,464 | 4,391 | 3,420 | ||||||
Depreciation and amortization | 1,244 | 1,286 | 3,744 | 3,786 | ||||||
Assets | 623,721 | 623,721 | $ 496,049 | |||||||
NewGen Products [Member] | ||||||||||
Segment Information [Abstract] | ||||||||||
Net sales | 37,198 | 38,437 | 116,652 | 120,455 | ||||||
Corporate Unallocated [Member] | ||||||||||
Segment Information [Abstract] | ||||||||||
Operating income (loss) | [2],[3] | (10,079) | [1] | (13,017) | [1] | (31,370) | [4] | (37,022) | [4] | |
Assets | [5] | 161,068 | 161,068 | 65,017 | ||||||
Operating costs related to PMTA | 5,300 | 14,400 | ||||||||
Reportable Segments [Member] | Zig-Zag Products [Member] | ||||||||||
Segment Information [Abstract] | ||||||||||
Net sales | 42,234 | 35,973 | 130,440 | 92,290 | ||||||
Gross profit | 23,703 | 21,263 | 76,342 | 53,066 | ||||||
Operating income (loss) | 17,122 | 16,827 | 57,897 | 41,471 | ||||||
Capital expenditures | 12 | 0 | 110 | 0 | ||||||
Depreciation and amortization | 90 | 91 | 297 | 91 | ||||||
Assets | 230,291 | 230,291 | 206,900 | |||||||
Reportable Segments [Member] | Stoker's Products [Member] | ||||||||||
Segment Information [Abstract] | ||||||||||
Net sales | 30,472 | 29,764 | 93,096 | 87,081 | ||||||
Gross profit | 17,104 | 16,042 | 51,142 | 46,424 | ||||||
Operating income (loss) | 13,305 | 11,466 | 39,386 | 33,296 | ||||||
Capital expenditures | 2,209 | 1,450 | 4,226 | 3,148 | ||||||
Depreciation and amortization | 638 | 562 | 1,901 | 1,605 | ||||||
Assets | 151,494 | 151,494 | 133,016 | |||||||
Reportable Segments [Member] | NewGen Products [Member] | ||||||||||
Segment Information [Abstract] | ||||||||||
Net sales | 37,198 | 38,437 | 116,652 | 120,455 | ||||||
Gross profit | 13,462 | 11,002 | 40,019 | 38,184 | ||||||
Operating income (loss) | 2,027 | 745 | 5,690 | 4,493 | ||||||
Capital expenditures | 2 | 14 | 55 | 272 | ||||||
Depreciation and amortization | 516 | $ 633 | 1,546 | $ 2,090 | ||||||
Assets | $ 80,868 | $ 80,868 | $ 91,116 | |||||||
[1] | Includes costs related to PMTA of $5.3 million in 2020. | |||||||||
[2] | Includes corporate costs that are not allocated to any of the three reportable segments. | |||||||||
[3] | Shipping costs are included in the applicable operating segment and not in Corporate unallocated. | |||||||||
[4] | Includes costs related to PMTA of $14.4 million in 2020. | |||||||||
[5] | Includes assets not assigned to the three reportable segments. All goodwill has been allocated to the reportable segments. |
Segment Information, Revenue Di
Segment Information, Revenue Disaggregation - Sales Channel (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Net Sales by Sales Channel [Abstract] | ||||
Net sales | $ 109,904 | $ 104,174 | $ 340,188 | $ 299,826 |
NewGen Products [Member] | ||||
Net Sales by Sales Channel [Abstract] | ||||
Net sales | 37,198 | 38,437 | 116,652 | 120,455 |
NewGen Products [Member] | Business to Business [Member] | ||||
Net Sales by Sales Channel [Abstract] | ||||
Net sales | 27,169 | 26,080 | 85,141 | 81,727 |
NewGen Products [Member] | Business to Consumer - Online [Member] | ||||
Net Sales by Sales Channel [Abstract] | ||||
Net sales | 9,959 | 10,880 | 31,255 | 34,066 |
NewGen Products [Member] | Business to Consumer - Corporate Store [Member] | ||||
Net Sales by Sales Channel [Abstract] | ||||
Net sales | 0 | 1,389 | 0 | 4,500 |
NewGen Products [Member] | Other [Member] | ||||
Net Sales by Sales Channel [Abstract] | ||||
Net sales | $ 70 | $ 88 | $ 256 | $ 162 |
Segment Information, Net Sales
Segment Information, Net Sales - Domestic and Foreign (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Segment Information [Abstract] | ||||
Net sales | $ 109,904 | $ 104,174 | $ 340,188 | $ 299,826 |
Reportable Geographical Component [Member] | Domestic [Member] | ||||
Segment Information [Abstract] | ||||
Net sales | 102,255 | 100,492 | 318,166 | 290,050 |
Reportable Geographical Component [Member] | Foreign [Member] | ||||
Segment Information [Abstract] | ||||
Net sales | $ 7,649 | $ 3,682 | $ 22,022 | $ 9,776 |
Dividends and Share Repurchase
Dividends and Share Repurchase (Details) - USD ($) $ / shares in Units, $ in Thousands | Oct. 08, 2021 | Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Feb. 25, 2020 |
Share Repurchase [Abstract] | ||||||
Share repurchase program authorized amount | $ 50,000 | |||||
Total number of shares repurchased (in shares) | 125,000 | |||||
Cost of shares repurchased | $ 6,395 | $ 2,376 | $ 20,481 | $ 7,665 | ||
Average price per share (in dollars per share) | $ 51.16 | |||||
Remaining share repurchase program authorized amount | $ 19,300 | $ 19,300 | ||||
Dividend Declared Q3-2021 [Member] | ||||||
Dividends [Abstract] | ||||||
Dividend payable, date to be paid | Oct. 8, 2021 | |||||
Dividend payable, date of record | Sep. 17, 2021 | |||||
Dividend Declared Q3-2021 [Member] | Subsequent Event [Member] | ||||||
Dividends [Abstract] | ||||||
Cash dividend paid (in dollars per share) | $ 0.055 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Dec. 31, 2021 | Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2021 | |
Subsequent Events [Abstract] | ||||||
Gain on extinguishment of debt | $ 375 | $ 0 | $ (5,331) | $ 0 | ||
Forecast [Member] | Unsecured Loan [Member] | ||||||
Subsequent Events [Abstract] | ||||||
Gain on extinguishment of debt | $ 7,500 | $ 7,500 |