Turning Point Brands, Inc. (NYSE:TPB) Q4 2022 Earnings Call Transcript

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Eric Des Lauriers: Okay. That’s helpful. On the sort of Q1 inventory weakness guide. Was I hearing that correctly, if that’s primarily within Zig-Zag? And I suppose if so, could you provide some commentary on how that might be impacting the various subsegments within Zig-Zag? It sounds like perhaps weaker on some of the Clipper areas. Not sure if this is impacting wraps as much as it is rolling papers and cones. If you could just provide some commentary that you’re seeing that’s impacting some subsegments more than others, that would be helpful.

Louie Reformina: Yes. Thanks, Eric. Yes. So it’s really more on the papers and wraps. So kind of a some of our legacy products that we’ve kind of stopped with our trade for a while. It is really what we view it as an adjustment in Q1 to kind of return to more normalized levels beyond that.

Eric Des Lauriers: Okay. That’s helpful. And then last one for me here. So just wondering if you can provide maybe just a bit more commentary on the competitive dynamics you’re seeing within MST. Stoker is obviously very well positioned in that value segment, obviously continuing to benefit from consumer down trading really for assumingly a few years here now; wondering if you’re seeing any renewed push from competitors in that value segment. Obviously, you guys have kind of a strong competitive advantage with that in-house manufacturing of those products. But just wondering if you’re seeing any renewed push from competitors into that value segment and just overall commentary on some of the competitive dynamics within MST would be great.

Graham Purdy: Yes. Eric, this is Graham. Look, I think that, that category is generally stable from a competitive perspective and no sort of amplified or different activity from the competitors that’s beyond what you sort of consider normal business at this point in time. Stoker’s had a strong quarter in Q4. We grew volume, we grew share. Last year, we were able to carry the pricing activity through throughout the year. That was amplified by being able to pull a price increase forward for our Tub product, which ended up benefiting us throughout the back half of the year. The brand is strong. It’s performing 10 share across the 10 chair line in store selling. So we feel good about where we’re positioned right now to continue growing, plus we’ve got a lot of runway with 35% of the volume that we don’t compete in. So I think generally, we feel like we’re confident in the Stoker’s MST brand.

Operator: There are no further questions at this time. I would like to turn the call back over to the Turning Point team for any closing remarks.

Graham Purdy: I wanted to thank everybody for joining the call today. I look forward to speaking to you again here in a couple of months.

Operator: This concludes today’s conference call. Thank you for attending. You may now disconnect.

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