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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion is intended to help the reader understand the results of operations and financial condition of the Company. The discussion is provided as a supplement to, and should be read in conjunction with our historical consolidated financial statements and accompanying notes, which are included elsewhere in this Annual Report on Form 10-K and incorporated herein by reference. In addition, this discussion includes forward-looking statements subject to risks and uncertainties that may result in actual results differing from statements we make. See “Cautionary Note Regarding Forward-Looking Statements.” Factors that could cause actual results to differ include those risks and uncertainties discussed in Item 1A “Risk Factors.”

The following discussion relates to the audited financial statements of Turning Point Brands, Inc., included elsewhere in this Annual Report on Form 10-K. In this discussion, unless the context requires otherwise, references to “the Company”“we,”“our,” or “us” refer to Turning Point Brands, Inc., and its consolidated subsidiaries. References to “TPB” refer to Turning Point Brands, Inc., without any of its subsidiaries. We were incorporated in 2004 under the name North Atlantic Holding Company, Inc. On November 4, 2015, we changed our name to Turning Point Brands, Inc. Many of the amounts and percentages in this discussion have been rounded for convenience of presentation.

Overview

Turning Point Brands, Inc. is a leading manufacturer, marketer and distributor of branded consumer products. We sell a wide range of products to adult consumers consisting of staple products with our iconic brands Zig-Zag® and Stoker’s® and our next-generation products to fulfill evolving consumer preferences. Among other markets, we compete in the alternative smoking accessories and Other Tobacco Products (“OTP”) industries. The alternative smoking accessories market is a dynamic market experiencing robust secular growth driven by cannabinoid legalization in the U.S. and Canada and positively evolving consumer perception and acceptance in North America. The OTP industry, which consists of non-cigarette tobacco products, exhibited low-single-digit consumer unit annualized growth over the four-year period ended 2024 as reported by Management Science Associates, Inc. a third-party analytics and information company. Our segments are led by our core proprietary and iconic brands: Zig-Zag® in the Zig-Zag products segment and Stoker’s® along with FRE®, Beech-Nut® and Trophy® in the Stoker’s products segment. Our businesses generate solid cash flow which we use to invest in our business, finance acquisitions, increase brand support, expand our distribution infrastructure, and strengthen our capital position. We currently ship to approximately 900 distributors with an additional 600 secondary, indirect wholesalers in the U.S. that carry and sell our products. Under the leadership of a senior management team with extensive experience in the consumer products, alternative smoking accessories and tobacco industries, we have grown and diversified our business through new product launches, category expansions and acquisitions while concurrently improving operational efficiency.

We believe there are meaningful opportunities to expand through investing in organic growth via acquisitions and joint ventures across all product categories. Our products are currently available in approximately 200,000 U.S. retail locations, which, with the addition of retail stores in Canada, bring our total North American retail presence to an estimated 220,000 points of distribution. Our sales team targets widespread distribution to all traditional retail channels, including convenience stores, and we have a growing e-commerce business.

Recent Developments

Contribution of Creative Distribution Solutions

On January 2, 2025, the Company contributed 100% of its interest in South Beach Brands LLC (“SBB”), the subsidiary that owns and operates the Company’s former Creative Distribution Solutions (“CDS”) reportable segment, to General Wireless Operations, Inc. (“GWO”). GWO is a joint venture between the Company and Standard General, LP entered into in December 2018, the primary operations of which will be related to the CDS business. The divestiture of the CDS business represents a strategic shift of operations and allows the Company to focus resources on its Zig-Zag and Stoker's product segments. The assets and liabilities associated with the CDS business have been classified as held for sale as of December 31, 2024, and the CDS operations have been classified as discontinued operations and reported separately for all periods presented in this annual report of Form 10-K.

The Company holds a 49% minority interest in GWO and will account for its investment in GWO under the equity method. Refer to Note 3, "Assets and Liabilities Held for Sale and Discontinued Operations" and Note 24, "Subsequent Events" in Notes to Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for further discussion regarding the divestiture.

Senior Secured Notes Offering

In February 2025, we issued $300.0 million in aggregate principal amount of our 7.625% senior secured notes due 2032 (the “2032 Notes”) at a price of 100%, the proceeds of which were used to repay in full the $250 million in aggregate principal amount outstanding of 5.625% senior secured notes due 2026 (the “2026 Notes”). The 2026 Notes were originally issued in 2021. The 2032 Notes are guaranteed by certain of the Company’s wholly-owned domestic subsidiaries but not the borrower under the Company’s ABL facility. The 2023 Notes are senior secured obligations of the Company and guarantors secured on a first lien basis by all assets of the Company and guarantors, subject to customary exclusions.

Products

We operate in two segments: Zig-Zag products and Stoker’s products segments. In our Zig-Zag products segment, we principally market and distribute (i) rolling papers, tubes, and related products; (ii) finished cigars and make-your-own (“MYO”) cigar wraps; and (iii) lighters and other accessories. In addition, we have a majority stake in Turning Point Brands Canada which is a specialty marketing and distribution firm focused on building brands in the Canadian cannabis accessories, tobacco and alternative products categories. In our Stoker’s products segment, we (i) manufacture and market moist snuff tobacco (“MST”) and (ii) contract for and market FRE®, our modern oral product; and (iii) contract for and market loose-leaf chewing tobacco products.

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Our portfolio of brands includes some of the most widely recognized names in the alternative smoking accessories and OTP industries such as Zig-Zag® and Stoker’s®. The following table sets forth the market share and category rank of our core products and demonstrates their industry positions within measured distribution channels:

Brand Product TPB Segment Market Share(1) Category Rank(1)

Zig-Zag® Cigarette Papers Zig-Zag Products 32.8 % #1 premium, #1 overall

Zig-Zag® MYO Cigar Wraps Zig-Zag Products 47.8 % #1 overall

Stoker’s® Moist Snuff Stoker’s Products 7.4 % #2 discount, #5 overall

Stoker’s® Chewing Tobacco Stoker’s Products 32.3 % #1 discount, #1 overall

We subscribe to a sales tracking system from MSAi that records all OTP product shipments (ours as well as those of our competitors) from approximately 600 wholesalers to over 265,000 traditional retail stores in the U.S. This system enables us to understand individual product share and volume trends across multiple categories down to the individual retail store level, allowing us to allocate field salesforce coverage to the highest opportunity stores. Our sales and marketing group of approximately 200 professionals utilize the MSAi system to efficiently target markets and sales channels with the highest sales potential.

Our core Zig-Zag products and Stoker’s products segments primarily generate revenues from the sale of our products to wholesale distributors who, in turn, resell the products to retail operations. Our net sales, which include federal excise taxes, consist of gross sales net of cash discounts, returns, and selling and marketing allowances.

We rely on long-standing relationships with high-quality, established manufacturers to provide the majority of our produced products. Approximately 70% of our production, as measured by net sales, is outsourced to suppliers. The remaining production consists primarily of our moist snuff tobacco operations located in Dresden, Tennessee and Louisville, Kentucky. Our principal operating expenses include the cost of raw materials used to manufacture the limited number of our products which we produce in-house; the cost of finished products, which are generally purchased goods; federal excise taxes; legal expenses; and compensation expenses, including benefits and costs of salaried personnel.

Key Factors Affecting Our Results of Operations

We consider the following to be the key factors affecting our results of operations:

• Our ability to further penetrate markets with our existing products;

• Decreasing interest in some tobacco products among consumers;

• Price sensitivity in our end-markets;

• Marketing and promotional initiatives, which cause variability in our results;

• Labor and production costs;

• Changes to U.S. trade policies;

• Counterfeit and other illegal products in our end-markets;

• Currency fluctuations;

• Our ability to identify attractive acquisition opportunities; and

• Our ability to successfully integrate acquisitions.

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Results of Operations

Summary

The table and discussion set forth below relates to our consolidated results of continuing operations for the years ended:

(in thousands) For the years ended December 31,

Consolidated Results of Operations Data:

Net sales

Gross profit

Operating income

Comparison of Year Ended December 31, 2024, to Year Ended December 31, 2023

Net Sales: For the year ended December 31, 2024, consolidated net sales increased $35.6 million, or 11.0%, compared to the prior year period, driven by increases in net sales across both segments.

For the year ended December 31, 2024, net sales in the Zig-Zag products segment increased $11.9 million, or 6.6%, compared to the prior year period. The increase in net sales was driven primarily by $11.5 million of growth in papers, wraps and accessories, as well as $5.6 million of growth in cigars. This growth was partially offset by declines of $5.0 million in our Clipper lighter business.

For the year ended December 31, 2024, net sales in the Stoker’s products segment increased $23.7 million, or 16.4%, compared to the prior year period. For the year ended December 31, 2024, sales volume of Stoker’s products increased 6.8% as compared with the prior year period contributing $9.9 million to the increase, and price/product mix increased 9.6% which contributed $13.8 million to the increase. The increase in net sales was driven primarily by $19.0 million of growth in modern oral products while the remaining growth is attributable to MST and loose-leaf chewing tobacco.

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Gross Profit: For the year ended December 31, 2024, consolidated gross profit increased $18.6 million, or 10.2%, compared to the prior year period. Gross profit as a percentage of net sales decreased to 55.9% of net sales for the year ended December 31, 2024, from 56.3% of net sales for the year ended December 31, 2023. The overall decrease in gross profit margin was driven primarily by increased sales in modern oral in the Stoker’s products segment and cigars in the Zig-Zag products segment which generates lower margins than other product categories.

For the year ended December 31, 2024, gross profit in the Zig-Zag products segment increased $5.5 million, or 5.5%, compared to the prior year period. Gross profit as a percentage of net sales decreased to 55.4% of net sales for the year ended December 31, 2024, from 56.0% of net sales for the year ended December 31, 2023, driven primarily by growth in net sales of cigar products which generate lower margins than other products in the segment.

For the year ended December 31, 2024, gross profit in the Stoker’s products segment increased $13.1 million, or 16.0%, compared to the prior year period. Gross profit as a percentage of net sales decreased to 56.4% of net sales for the year ended December 31, 2024 from 56.6% of net sales for the year ended December 31, 2023, driven primarily by the growth in net sales of modern oral products which generate lower margins than other products in the segment.

Selling, General and Administrative Expenses: For the year ended December 31, 2024, selling, general and administrative expenses increased $18.1 million, or 17.3%, compared to the prior year period. Selling, general and administrative expenses for the year ended December 31, 2024, included $7.2 million of stock options, restricted stock and incentives expense, $4.6 million of expense related to corporate restructuring, $3.6 million of expense related to PMTA, $2.1 million related to transaction costs and $0.9 million of expense related to the implementation of the new ERP and CRM systems. Corporate restructuring expense increased in 2024 compared to the prior year period primarily due to a voluntary early retirement program offered to employees in October 2024. This program offered early retirement benefits to employees meeting certain criteria. Agreements with employees were finalized in the fourth quarter of 2024 and the Company booked a $2.7 million reserve for estimated future payments. Selling, general and administrative expenses for the year ended December 31, 2023, included $6.6 million of stock options, restricted stock and incentives expense, $2.1 million of expense related to PMTA, $0.6 million of expense related to the implementation of the new ERP and CRM systems, $0.2 million of expense related to corporate restructuring and $0.2 million related to transaction costs.

Other Operating Income: For the year ended December 31, 2024, other operating income decreased $2.7 million compared to the prior year period due to a federal excise tax refund of $1.7 million received in 2024 compared to a $4.3 million federal excise tax refund received in 2023.

Operating Income: For the year ended December 31, 2024, consolidated operating income decreased $2.1 million, or 2.6%, compared to the prior year period. Operating income as a percentage of net sales decreased to 22.4% of net sales for the year ended December 31, 2024 from 25.5% of net sales for the year ended December 31, 2023, primarily due to an increase in unallocated corporate expenses, as discussed below, driven by increases in restructuring costs related to a voluntary early retirement program, stock compensation and transaction costs.

For the year ended December 31, 2024, operating income in the Zig-Zag products segment decreased $1.6 million, or 2.3%, compared to the prior year period. Operating income as a percentage of net sales decreased to 34.7% of net sales for the year ended December 31, 2024 from 37.8% of net sales for the year ended December 31, 2023, primarily due to a federal excise tax refund of $1.7 million received in 2024 which increased operating income, compared to a $4.3 million federal excise tax refund received in 2023, along with increased selling and marketing costs in 2024.

For the year ended December 31, 2024, operating income in the Stoker’s products segment increased $6.1 million, or 9.7%, compared to the prior year period. Operating income as a percentage of net sales decreased to 40.6% of net sales for the year December 31, 2024 from 43.0% of net sales for the year ended December 31, 2023, primarily due to increased sales and marketing costs to support the sales growth in modern oral.

Included in consolidated operating income are costs of the Company which are not assigned to one of the two reportable segments and includes: (i) corporate overhead expense, including executive management, finance, legal and information technology salaries and professional services, such as audit, external legal costs and information technology services; as well as (ii) costs related to the FDA premarket tobacco product application. For the year ended December 31, 2024, unallocated costs were $54.1 million compared to $47.5 million in the prior year period, an increase of $6.6 million or 13.9%, primarily driven by increases of $4.4 million in restructuring expense, $1.9 million in transaction costs, $1.5 million related to PMTA and $0.7 million in stock compensation expense.

Interest Expense, net: For the year ended December 31, 2024, interest expense, net decreased $0.7 million compared to the prior year period as a result of the maturity of the Convertible Senior Notes in 2024 and increased interest income on cash as a result of higher interest rates on cash deposits.

Investment Loss: For the year ended December 31, 2024, investment loss decreased to $1.9 million compared to $11.9 million for the year ended December 31, 2023. The change is primarily the result of impairment charges recognized on our investments in Bomani for $1.8 million and Old Pal for $0.8 million for the year ended December 31, 2024, compared to impairment charges recognized on our investments in Docklight for $8.7 million, Wild Hempettes for $2.2 million and Old Pal for $1.3 million for the year ended December 31, 2023.

Other Income: For the year ended December 31, 2024, other income was zero compared to $4.0 million in the prior year as a result of a $4.0 million gain related to a legal settlement.

Gain on Extinguishment of Debt: For the year ended December 31, 2024, gain on extinguishment of debt was zero compared to $1.7 million for the year ended December 31, 2023, as a result of the repurchase of $44.0 million in aggregate principal amount of our Convertible Senior Notes at a discount in 2023.

Income Tax Expense: The Company’s income tax expense was $16.9 million, or 26.1% of income from continuing operations before income taxes for the year ended December 31, 2024. The Company's income tax expense was $24.0 million, or 38.7% of income from continuing operations before income taxes for the year ended December 31, 2023 and included $6.4 million of valuation allowance for the deferred tax asset related to unrealized loss on investments and $1.7 million valuation allowance for foreign net operating losses.

Net Income (Loss) Attributable to Non-Controlling Interest: Net income attributable to non-controlling interest was $0.7 million for the year ended December 31, 2024, compared to a net loss of $0.7 million for the year ended December 31, 2023.

Net Income from Continuing Operations Attributable to Turning Point Brands, Inc.:Due to the factors described above, net income from continuing operations attributable to Turning Point Brands, Inc. for the years ended December 31, 2024 and 2023, was $47.3 million and $38.7 million, respectively.

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Comparison of Year Ended December 31, 2023, to Year Ended December 31, 2022

Net Sales: For the year ended December 31, 2023, consolidated net sales increased $3.8 million, or 1.2%, compared to the prior year period, driven by an increase in the Stoker’s products segment.

For the year ended December 31, 2023, net sales in the Zig-Zag products segment decreased $9.9 million, or 5.2%, compared to the prior year period. The decrease in net sales was driven by declines in the U.S. rolling papers and wraps businesses which were impacted by a reduction of trade inventory, partially offset by growth in our Clipper products. Additionally, the discontinuation of an unprofitable product line negatively impacted Canadian sales by $4.9 million against the previous year.

For the year ended December 31, 2023, net sales in the Stoker’s products segment increased $13.8 million, or 10.5%, compared to the prior year period. For the year ended December 31, 2023, Stoker’s products volume increased 4.2% and price/mix increased 6.3%. The increase in net sales was driven primarily by double-digit growth of Stoker’s® MST. MST represented 68% of Stoker’s products revenue in 2023, up from 66% for the same period in 2022.

Gross Profit: For the year ended December 31, 2023, consolidated gross profit increased $5.1 million, or 2.9%, compared to the prior year period. Gross profit as a percentage of net sales increased to 56.3% of net sales for the year ended December 31, 2023, from 55.4% of net sales for the year ended December 31, 2022. The overall increase in gross profit margin was driven primarily by increased margins in the Stoker’s products segment.

For the year ended December 31, 2023, gross profit in the Zig-Zag products segment decreased $5.5 million, or 5.2%, compared to the prior year period. Gross profit as a percentage of net sales remained unchanged at 56.0% of net sales for the years ended December 31, 2024 and 2023, respectively.

For the year ended December 31, 2023, gross profit in the Stoker’s products segment increased $10.6 million, or 14.9%, compared to the prior year period. Gross profit as a percentage of net sales increased to 56.6% of net sales for the year ended December 31, 2023, from 54.5% of net sales for the year ended December 31, 2022, as a result of strong incremental margin contribution of MST.

Selling, General and Administrative Expenses: For the year ended December 31, 2023, selling, general, and administrative expenses increased $0.5 million, or 0.5% compared to the prior year period. Selling, general and administrative expenses for the year ended December 31, 2023, included $6.6 million of stock options, restricted stock and incentives expense, $2.1 million of expense related to PMTA, $0.6 million of expense related to the implementation of the new ERP and CRM systems, $0.2 million of expense related to corporate restructuring and $0.2 million related to transaction costs. Selling, general and administrative expenses for the year ended December 31, 2022, included $5.3 million of stock options, restricted stock and incentives expense, $4.6 million of expense related to PMTA, $3.3 million of expense related to corporate restructuring, $2.0 million of expense related to the implementation of the new ERP and CRM systems and $0.8 million related to transaction costs.

Other Operating Income: For the year ended December 31, 2023, other operating income was $4.3 million, resulting from a federal excise tax refund and a $15.2 million gain related to insurance, partially offset by a $15.2 million reduction in inventory due to storm damage. For the year ended December 31, 2022, there was no other operating (income) expense.

Operating Income: For the year ended December 31, 2023, consolidated operating income increased $9.0 million, or 12.1%, compared to the prior year period. Operating income as a percentage of net sales increased to 25.5% of net sales for the year ended December 31, 2023, from 23.0% of net sales for the year ended December 31, 2022, primarily due to increased margins in the Stokers products segment partially offset by decreases in unallocated corporate expenses.

For the year ended December 31, 2023, operating income in the Zig-Zag products segment decreased $5.1 million, or 6.9%, compared to the prior year period. Operating income as a percentage of net sales decreased to 37.8% of net sales for the year ended December 31, 2023, from 38.5% of net sales for the year ended December 31, 2022, primarily driven by decreased gross profits in U.S. papers and wraps.

For the year ended December 31, 2023, operating income in the Stoker’s products segment increased $8.9 million, or 16.6%, compared to the prior year period. Operating income as a percentage of net sales increased to 43.0% of net sales for the year December 31, 2023, from 40.8% of net sales for the year ended December 31, 2022, primarily driven by higher net sales of MST.

Included in consolidated operating income are costs of the Company which are not assigned to one of the two reportable segments and includes: (i) corporate overhead expense, including executive management, finance, legal and information technology salaries, and professional services, such as audit, external legal costs and information technology services, as well as (ii) costs related to the FDA premarket tobacco product application. For the year ended December 31, 2023, unallocated costs were $47.5 million compared to $52.7 million in the prior year period, a decrease of $5.1 million or 9.8%, primarily driven by decreases of $3.1 million of restructuring expense and $2.5 million of expense related to PMTA.

Interest Expense, net: For the year ended December 31, 2023, interest expense, net decreased $4.9 million compared to the prior year period primarily as a result of the repurchases of $44.0 million and $10.0 million in aggregate principal amount of Convertible Senior Notes in 2023 and 2022, respectively, and increased interest income on cash as a result of rising interest rates.

Investment Loss: For the year ended December 31, 2023, investment loss decreased to $11.9 million compared to $13.3 million for the year ended December 31, 2022. The change is primarily a result of the 2023 impairment charges recognized on our investments in Docklight, Wild Hempettes and Old Pal of $8.7 million, $2.3 million and $1.3 million, respectively, in 2023, compared to impairment charges of $7.9 million, $4.3 million and $1.4 million in 2022 related to our investments in Dosist, Real Brands and Old Pal, respectively.

Other Income: For the year ended December 31, 2023, other income was $4.0 million compared to zero in the prior year period as a result of a $4.0 million gain related to a legal settlement.

Gain on Extinguishment of Debt: For the year ended December 31, 2023, gain on extinguishment of debt was $1.7 million compared to $0.9 million for the year ended December 31, 2022, as a result of the repurchase of $44.0 million in aggregate principal amount of our Convertible Senior Notes at a discount. For the year ended December 31, 2022, gain on extinguishment of debt resulted from the repurchase of $10.0 million in aggregate principal of our Convertible Senior Notes at a discount.

Income Tax Expense: The Company’s income tax expense was $24.0 million, or 38.7% of income before income taxes for the year ended December 31, 2023, and included $6.4 million of valuation allowance for the deferred tax asset related to unrealized loss on investments and $1.7 million valuation allowance for foreign net operating losses. The Company's income tax expense was $11.0 million, or 26.1% of income before income taxes for the year ended December 31, 2022.

Net Income (Loss) Attributable to Non-Controlling Interest: Net loss attributable to non-controlling interest was $0.7 million for the year ended December 31, 2023, compared to a $0.5 million loss for the year ended December 31, 2022.

Net Income from Continuing Operations Attributable to Turning Point Brands, Inc.:Due to the factors described above, net income attributable to Turning Point Brands, Inc. for the years ended December 31, 2023 and 2022, was $38.7 million and $31.6 million, respectively.

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Loss from Discontinued Operations, net of tax

On January 2, 2025, the Company contributed 100% of its interest in SBB, the subsidiary that owns and operates the Company’s CDS segment, to GWO in exchange for 49% of the issued and outstanding GWO common stock on a fully-diluted basis. GWO is a joint venture between the Company and Standard General, LP entered into in December 2018. The assets and liabilities associated with the CDS business have been classified as held for sale as of December 31, 2024, and its financial results are classified as discontinued operations and reported separately for all periods presented herein. Upon meeting the criteria for held for sale classification, the Company recorded a non-cash charge of $8.8 million with an equivalent valuation allowance against net assets held for sale to reduce the carrying value of the disposal group to fair value.

As of December 2024, total assets and liabilities associated with the CDS segment classified as held for sale were $15.3 million and $2.0 million, respectively. As of December 2023, total assets and liabilities associated with the CDS segment classified as held for sale were $27.0 million and $2.2 million, respectively.

Loss from discontinued operations, net of tax for the years ended December 31 are as follows:

(in thousands) For the years ended December 31,

Loss from discontinued operations, net of tax $ (7,517 ) $ (285 ) $ (19,929 )

Comparison of Year Ended December 31, 2024, to Year Ended December 31, 2023

For the year ended December 31, 2024, net loss from discontinued operations, net of tax, increased $7.2 million compared to the prior year period. The loss is primarily due to lower net sales of $21.3 million for the year ended December 31, 2024 compared to prior year and a $8.8 million non-cash charge recognized in discontinued operations in 2024 to reduce the carrying value of the disposal group to its fair value.

Comparison of Year Ended December 31, 2023, to Year Ended December 31, 2022

For the year ended December 31, 2023, net loss from discontinued operations, net of tax, decreased $19.6 million compared to the prior year period. The decreased in loss for the year ended December 31, 2023 is primarily due to a goodwill impairment charge of $27.6 million recognized for the year ended December 31, 2022 to reduce the carrying value of the CDS segment goodwill balance to zero.

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EBITDA and Adjusted EBITDA

To supplement our financial information presented in accordance with generally accepted accounting principles in the United States, or U.S. GAAP, we use non-U.S. GAAP financial measures including EBITDA and Adjusted EBITDA. We believe Adjusted EBITDA provides useful information to management and investors regarding certain financial and business trends relating to our financial condition and results of operations. Adjusted EBITDA is used by management to compare our performance to that of prior periods for trend analyses and planning purposes and is presented to our Board of Directors. We believe that EBITDA and Adjusted EBITDA are appropriate measures of operating performance because they eliminate the impact of expenses that do not relate to operating performance. In addition, our debt instruments contain covenants which use Adjusted EBITDA calculations.

We define “EBITDA” as net income before interest expense, gain (loss) on extinguishment of debt, income tax expense, depreciation, and amortization. We define “Adjusted EBITDA” as net income before interest expense, gain (loss) on extinguishment of debt, income tax expense, depreciation, amortization, other non-cash items, and other items we do not consider the ordinary course in our evaluation of ongoing operating performance noted in the reconciliation below. Among other items that we adjust Adjusted EBITDA for is FDA PMTA expense. The Company believes it is appropriate to adjust for this spend as the costs are incurred in connection with what we view as a non-traditional regulatory process that requires applications be submitted for covered products that are already on the market. As a result, Company’s management believes it is most appropriate to assess the performance of the Company’s business – the sale of our various products - without regard to these costs and believes that adjusting for these costs provides investors and the public markets with the most meaningful metrics to assess performance of the business.

Non-U.S. GAAP measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with U.S. GAAP. Adjusted EBITDA excludes significant expenses required to be recorded in our financial statements by U.S. GAAP and is subject to inherent limitations. Other companies in our industry may calculate this non-U.S. GAAP measure differently than we do or may not calculate it at all, limiting its usefulness as a comparative measure. The tables below provide reconciliations between net income and Adjusted EBITDA.

(in thousands) Years ended December 31,

Net income attributable to Turning Point Brands, Inc. $ 39,809 $ 38,462 $ 11,641

Loss from discontinued operations, net of tax 7,517 285 19,929

Add:

Gain on extinguishment of debt - (1,664 ) (885 )

Components of Adjusted EBITDA

Transactional expenses and strategic initiatives (d) 2,107 165 801

Legal settlement (h) - (4,000 ) -

Mark-to-market loss on Canadian inter-company note (i) 942 - -

(d) Represents the fees incurred for transaction expenses.

(f) Represents impairment of goodwill, intangible and investment assets.

(g) Represents a federal excise tax refund included in other operating income.

(h) Represents other income from litigation settlement.

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Liquidity and Capital Resources

Our principal uses for cash are working capital, debt service and capital expenditures. As of December 31, 2024, we had $46.2 million cash on hand, excluding CDS segment cash of $2.8 million, ($116.7 million, excluding CDS segment cash of $1.2 million, as of December 31, 2023) and have up to $57.4 million of availability under the 2023 ABL Facility. After giving effect to the issuance of the 2032 Notes and redemption of the 2026 Notes in February 2025, our cash on hand would have been $90.2 million as of December 31, 2024 and borrowing availability under the ABL would have remained the same. We have no borrowings outstanding under our ABL as of December 31, 2024. Our Convertible Senior Notes matured on July 15, 2024 and were retired with cash.

Our adjusted working capital, excluding CDS segment assets and liabilities held for sale, which we define as current assets less cash and current liabilities, increased $57.3 million compared to the prior year end. The increase in working capital was primarily a result of a $58.3 million decrease in current liabilities due to the July 15, 2024 maturity of our Convertible Senior Notes which were retired with cash on that date. With our strong cash balance, free cash flow generation and borrowing availability under the 2023 ABL Facility, we expect to have ample liquidity to satisfy our operating cash requirements for the foreseeable future.

As of

(in thousands) December 31, December 31,

For the years ended December 31, 2024 and 2023, we invested $4.6 million and $5.7 million, respectively, in capital expenditures. We had restricted assets of $30.7 million and $33.6 million as of December 31, 2024 and 2023, respectively. Restricted assets consist of escrow deposits under the MSA and insurance deposits. On the 25th anniversary of each annual deposit, we are entitled to receive reimbursement of the principal amount of escrow remaining for that year. See “Master Settlement Agreement” below for details.

Cash Flows from Continuing Operations

Our cash flows from continuing operations as reflected in the Consolidated Statements of Cash Flows are summarized as follows:

(in thousands) For the years ended December 31,

Cash provided by (used in)

Cash Flows from Operating Activities

For the year ended December 31, 2024, net cash provided by operating activities was $61.0 million, an increase of $4.7 million compared to the prior year period, primarily due to an increase in net income, net of non-cash items of $12.6 million and a favorable change in other assets of $3.1 million, partially offset by a $11.0 million unfavorable change in working capital. The primary drivers of non-cash items were a $9.5 million decrease in loss on investments compared to the prior year period and a $6.5 million decrease in deferred tax expense, partially offset by increases of $1.6 million in depreciation and other amortization expense and a $1.7 million decrease in gains on extinguishment of debt compared to the prior year period.

For the year ended December 31, 2023, net cash provided by operating activities was $56.2 million, an increase of $34.9 million compared to the prior year period, primarily due to an increase in the change in working capital of $35.2 million (net of inventory reserve), partially offset by a decrease in the change in other assets of $5.3 million. The increase in working capital was primarily driven by an increase in the change in inventories of $40.0 million related to the timing of changes in inventory.

Cash Flows from Investing Activities

For the year ended December 31, 2024, net cash used in investing activities was $10.5 million, an increase of $4.6 million compared to the prior year period, primarily due to the net purchase of an additional $5.4 million in investments by our captive insurance subsidiary.

For the year ended December 31, 2023, net cash used in investing activities was $5.9 million, a decrease of $13.1 million compared to the prior year period, primarily due to a $10.2 million decrease in purchases of investments in our MSA escrow account.

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Cash Flows from Financing Activities

For the year ended December 31, 2024, net cash used in financing activities was $128.3 million, an increase of $78.8 million compared to the prior year period, primarily due to a $118.5 million cash payment for retirement of the Convertible Senior Notes and $5.1 million of cash used for the repurchase of common stock during the period in 2024, partially offset by $41.8 million in repurchases of Convertible Senior Notes that occurred during the same period in 2023.

For the year ended December 31, 2023, net cash used in financing activities was $49.5 million, an increase of $6.2 million compared to the prior year period, primarily due to $41.8 million in repurchases of Convertible Senior Notes during the period, partially offset by a decrease in repurchases of common stock of $29.2 million during 2023.

Cash Flows from Discontinued Operations

The cash flows of the discontinued operations are reflected in the Consolidated Statements of Cash Flows and are summarized below.

(in thousands) For the years ended December 31,

Cash provided by

Investing activities $ - $ - $ 176

Cash Flows from Operating Activities

For the year ended December 31, 2024, net cash provided by operating activities was $6.1 million, a decrease of $4.5 million compared to the prior year period, primarily due to an unfavorable $5.8 million change in working capital.

For the year ended December 31, 2023, net cash provided by operating activities was $10.6 million, an increase of $1.7 million compared to the prior year period, primarily due to a $9.2 million favorable change in working capital, reduced by a $7.5 million decrease in net loss, net of non-cash items.

Long-Term Debt

Notes payable and long-term debt consisted of the following at December 31, 2024 and 2023, in order of preference:

December 31, December 31,

Convertible Senior Notes - 118,541

Less deferred financing costs (1,396 ) (3,183 )

Less current maturities - (58,294 )

Senior Secured Notes

On February 11, 2021, we closed a private offering of $250.0 million aggregate principal amount of our 5.625% senior secured notes due 2026 (the “2026 Notes”). The 2026 Notes incurred interest at a rate of 5.625%. Interest on the 2026 Notes is payable semi-annually in arrears on February 15 and August 15 of each year, commencing on August 15, 2021.We 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 2026 Notes were 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 2026 Notes or the “2026 Notes Indenture”) or capital markets debt securities of the Company or Guarantors in excess of $15.0 million. The 2026 Notes 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. We were in compliance with all covenants under the 2026 Notes as of December 31, 2024.

In February 2025, we redeemed the 2026 Notes with the proceeds from the offering of the 2032 Notes.

We incurred debt issuance costs attributable to the issuance of the 2026 Notes of $6.4 million which are amortized to interest expense using the straight-line method over the expected life of the 2026 Notes.

2032 Notes

In February 2025, the Company closed a private offering of $300.0 million aggregate principal amount of 7.625% senior secured notes due to mature on March 15, 2032 (the “2032 Notes”). Interest on the 2032 Notes is payable semi-annually on March 15 and September 15 of each year, commencing on September 15, 2025. The Company used the proceeds from the offering (i) to repay all obligations under and terminate the 2026 Notes, (ii) to pay related fees, costs, and expenses and (iii) for general corporate purposes. The 2032 Notes are fully and unconditionally guaranteed on a senior secured basis, jointly and severally, by each current wholly-owned domestic restricted subsidiary of the Company that guaranteed the 2026 Notes. The 2032 Notes 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. Proceeds from the offering were approximately $294.0 million.

The 2032 Notes 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 several limitations and exceptions set forth in the 2032 Notes Indenture. For instance, the Company is generally permitted to make restricted payments, including the payment of dividends to shareholders, provided that, at the time of payment, or as a result of payment, the Company is not in default on its debt covenants; however, there are earnings and market capitalization requirements that if not met could limit the aggregate amount of quarterly dividends payable during a fiscal year. The 2032 Notes Indenture provides for customary events of default.

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2023 ABL Facility

On November 7, 2023, TPB Specialty Finance, LLC, a wholly-owned subsidiary of the Company (the “ABL Borrower”), entered into a new $75.0 million asset-backed revolving credit facility (the “2023 ABL Facility”), with the several lenders thereunder, and Barclays Bank PLC, as administrative agent (the “Administrative Agent”) and as collateral agent (the “Collateral Agent”) and First-Citizens Bank & Trust Company as additional collateral agent (the “Additional Collateral Agent”). Under the 2023 ABL Facility, the ABL Borrower may draw up to $75.0 million under Revolving Credit Loans and Last In Last Out (“LILO”) Loans. The 2023 ABL Facility includes a $40.0 million accordion feature. In connection with the 2023 ABL Facility, certain existing inventory was contributed to the ABL Borrower. The 2023 ABL Facility is secured on a first priority basis (subject to customary exceptions) by all assets of the ABL Borrower.

The 2023 ABL Facility contains customary borrowing conditions including a borrowing base equal to the sum of (a) the lesser of (1) 85% of the lower of (A) the market value (on a first in first out basis) of the sum of eligible inventory, plus eligible in-transit inventory of the ABL Borrower and (B) 85% of the cost of the sum of eligible inventory, plus eligible in-transit inventory of the ABL Borrower and (2) 85% of the net orderly liquidation value (“NOLV”) percentage of the lower of (1)(A) or (1)(B); plus (b) 85% of the face value of all eligible accounts of the ABL Borrower minus (c) the amount of all eligible reserves. The 2023 ABL Facility also includes a LILO borrowing base equal to the sum of (a) the lesser of: (1) 10% of the lower of (A) the market value (on a first in first out basis) of the sum of eligible inventory, plus eligible in-transit inventory of the ABL Borrower and (B) the cost of the sum of eligible inventory, plus eligible in-transit inventory and (2) 10% of the NOLV percentage of the lower of (1)(A) or (1)(B); plus (b) 10% of the face amount of eligible account; minus (c) the amount of all eligible reserves.

Amounts borrowed under the 2023 ABL Facility are subject to an interest rate margin per annum equal to (a) from and after the closing date until the last day of the first full fiscal quarter ended after the closing date, (i) 1.25% per annum, in the case base rate loans, and (ii) 2.25% per annum, in the case of revolving credit loans that are SOFR Loans, (b)(i) 2.25% per annum, in the case of LILO loans that are base rate loans, and (ii) 3.25% per annum, in the case of LILO loans that are SOFR loans, (c) on the first day of each fiscal quarter, the applicable interest rate margins will be determined from the pricing grid below based upon the historical excess availability for the most recent fiscal quarter ended immediately prior to the relevant date, as calculated by the Administrative Agent.

Applicable Margin Applicable Margin

Level Historical Excess Availability for SOFR Loans or Base Rate Loans

The 2023 ABL Facility also requires the Company and its restricted subsidiaries to maintain a fixed charge coverage ratio of at least 1.00 to 1.00 as of the end of any four consecutive fiscal quarters if excess availability is less than the greater of (a) 12.5% of the line cap and (b) $9.4 million, at any time and continuing until excess availability is equal to or exceeds the greater of (i) 12.5% of the line and (ii) $9.4 million for thirty (30) consecutive calendar days with the $9.4 million level automatically increased in proportion to the amount of any increase in the aggregate revolving credit commitments thereunder in connection with any incremental facility.

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The 2023 ABL Facility will mature on the earlier of (x) November 7, 2027 and (y) the date that is 91 days prior to the maturity date of any material debt of the ABL Borrower or the Company or any of its restricted subsidiaries (subject to customary extensions agreed by the lenders thereunder); provided that clause (y) will not apply to the extent that on any applicable date of determination (on any date prior to the date set forth in clause (y)), (A) the sum of (x) cash that is held in escrow for the repayment of such material debt pursuant to arrangements satisfactory to the Administrative Agent, (y) cash that is held in accounts with the Administrative Agent and/or the Additional Collateral Agent, plus (z) excess availability, is sufficient to repay such material debt and (B) the ABL Borrower has excess availability of at least $15.0 million after giving effect to such repayment of material debt, including any borrowings under the commitments in connection therewith.

The Company has not drawn any borrowings under the 2023 ABL Facility but has letters of credit of approximately $2.3 million outstanding under the facility and has an available balance of $57.4 million based on the borrowing base as of December 31, 2024.

The Company incurred debt issuance costs attributable to the 2023 ABL Facility of $2.6 million which are amortized to interest expense using the straight-line method over the expected life of the 2023 ABL Facility.

Convertible Senior Notes

The Company's 2.5% convertible senior notes matured and were retired with cash on July 1, 2024. No principal amounts remain outstanding as of December 31, 2024.

Additional Information with Respect to our Unrestricted Subsidiaries

Under the terms of the 2026 Notes that were recently redeemed with proceeds from the February 2025 issuance of the 2032 Notes, the Company designated certain of its subsidiaries as “Unrestricted Subsidiaries” as of December 31, 2024, including Interchange Partners LLC and Intrepid Brands, LLC. The Company is required under the terms of the indentures governing the Notes to present additional information that reflects the financial condition and results of operations of the Company and its Restricted Subsidiaries separate from the financial condition and results of operations of the Company’s Unrestricted Subsidiaries as of and for the periods presented. This additional information for 2024 is presented below. With the classification of the Company's CDS products business to discontinued operations in December 2024, there are no meaningful results for Unrestricted Subsidiaries to present for 2023 or 2022.

Income Statement for the year ended December 31, 2024:

Year Ended December 31,

Company and

Restricted Unrestricted

Subsidiaries Subsidiaries Consolidated

Other operating income (1,674 ) - (1,674 )

Net (loss) income attributable to non-controlling interest (390 ) 1,091 701

Net income attributable to Turning Point Brands, Inc. $ 46,041 $ 1,285 $ 47,326

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Balance Sheet as of December 31, 2024:

Company and

Restricted Unrestricted

Subsidiaries Subsidiaries Eliminations Consolidated

ASSETS

Current assets:

Property, plant, and equipment, net 26,337 - - 26,337

Deferred income taxes 995 - - 995

Deferred financing costs, net 1,823 - - 1,823

Master Settlement Agreement (MSA) escrow deposits 28,676 - - 28,676

Noncurrent assets held for sale 3,859 - - 3,859

Investment in unrestricted subsidiaries - 750 (750 ) -

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Current liabilities held for sale 2,049 - - 2,049

Commitments and contingencies

Stockholders’ equity:

Distribution Agreements

For a description of our material distribution agreements, see Item 1. “Business - Distribution and Supply Agreements.”

Master Settlement Agreement

On November 23, 1998, the major U.S. cigarette manufacturers, Philip Morris USA, Inc., Brown & Williamson Tobacco Corporation, Lorillard Tobacco Company and R.J. Reynolds Tobacco Company, entered into the MSA with attorneys general representing states that agreed to settle certain recovery actions (the “Settling States”). In order to be in compliance with the MSA and subsequent states’ statutes, we were required to fund an escrow account with each of the Settling States based on the number of cigarettes or cigarette equivalents (which is measured by pounds of MYO cigarette smoking tobacco) sold in such state. We discontinued our generic category of MYO in 2019 and ourZig-Zagbranded MYO cigarette smoking tobacco in 2017. Pending a change in MSA legislation, we have no remaining product lines covered by the MSA and will not be required to make future escrow deposits and, therefore, do not expect to accrue any loss contingencies subject to the MSA in the future.

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The following table summarizes our escrow deposit balances (in thousands) by sales year as of:

Deposits as of December 31,

Off-Balance Sheet Arrangements

During 2024, we executed various foreign exchange contracts for the purchase of €3.6 million and sale of €3.6 million with maturity dates ranging from October 2024 to June 2025. At December 31, 2024, we had foreign currency contracts outstanding for the purchase of €2.1 million and sale of €2.1 million. The fair value of the foreign currency contracts was based on quoted market prices and resulted in an asset of $0.0 million included in Other current assets and a liability of $0.1 million included in Accrued liabilities at December 31, 2024. We had no interest rate swap contracts at December 31, 2024 and 2023.

During 2023, we executed various foreign exchange contracts for the purchase of €20.1 million and sale of €15.2 million with maturity dates ranging from July 2023 to September 2024. At December 31, 2023, we had foreign currency contracts outstanding for the purchase of €15.2 million and sale of €15.2 million. The fair value of the foreign currency contracts was based on quoted market prices and resulted in an asset of $0.3 million included in Other current assets and a liability of $0.1 million included in Accrued liabilities at December 31, 2023.

Future Cash Requirements

The Company’s primary future cash requirements will be to fund operations, lease payments, debt service and capital expenditures. The Company’s contractual obligations primarily include long-term debt and lease obligations. For information regarding our long-term debt obligations and cash payment obligations thereunder, please see Note 14, “Notes Payable and Long-Term Debt” in Notes to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K. For information regarding our lease obligations and cash payment obligations thereunder, please see Note 17, “Lease Commitments” in the Notes to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K.

In 2024, we repurchased 154,945 shares of our common stock for a total cost of $5.1 million at an average price per share of $32.60, and have $100 million of authorization remaining under our Board approved repurchase program at December 31, 2024. In 2023, we made no repurchases of our common stock.

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Regulation and Legislation

While we are subject to several regulatory regimes and requirements, the following may meaningfully impact operations or resources:

Federal Regulation

Certain tobacco and nicotine products, cigarette papers, and cigarette tubes are subject to federal excise taxes. Any future increases in federal excise taxes on the Company’s products could have a material adverse effect on the results of operations or financial condition of the Company. The Company is unable to predict the likelihood of passage of future increases in federal excise taxes. As of December 31, 2024, federal excise taxes are not assessed on certain novel nicotine products, including nicotine pouches, e-cigarettes and related products.

State and Local Regulation

As of December 31, 2024, the states require excise tax payments on most of our products. These required taxes may increase over time or be expanded to cover additional product categories and may in some cases impact the consumer demand of the products. In addition, there are several local taxing jurisdictions requiring taxes and/or licensing. Several states have also implemented or are considering implementing additional regulations on our products, including sales restrictions. These requirements may impact which products we are allowed to offer for sale or may influence retailers’ likelihood of carrying regulated products more generally.

FDA Regulation

On June 22, 2009, the Family Smoking Prevention and Tobacco Control Act (“FSPTCA”) authorized the FDA to immediately regulate the manufacture, sale, and marketing of four categories of tobacco products – cigarettes, cigarette tobacco, roll-your-own tobacco, and smokeless tobacco. On August 8, 2016, the FDA deeming regulation became effective. The deeming regulation gave the FDA the authority to also regulate all products made or derived from tobacco intended for human consumption, but excluding accessories of tobacco products (such as lighters). Accordingly, the FDA has since regulated our cigar and cigar wrap products. Subsequently, on April 14, 2022, the FDA Center for Tobacco Products also obtained jurisdiction over non-tobacco nicotine products (“NTN Products”), including synthetic nicotine. That law subjects NTN Products to the same requirements as tobacco-derived products.

The FDA currently assesses tobacco product user fees on six classes of regulated tobacco products and computes user fees using a methodology similar to the methodology used by the U.S Department of Agriculture to compute the Tobacco Transition Payment Program (“TTPP,” also known as the “Tobacco Buyout”) assessment. First, the total, annual, congressionally established user fee assessment is allocated among the 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.

Tobacco products regulated by FDA are subject to premarket filing requirements, most significantly Premarket Tobacco Product Applications (“PMTAs”) or Substantial Equivalence Reports (“SEs”).

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. We submitted premarket filings for certain of our regulated products in order to continue selling these products while they remain under review. We have continued to supplement these applications with additional information and have responded to information requests from the FDA; however, there can be no guarantee that the FDA will accept such amendments and responses or that the applications will meet the standard of “appropriate for the protection of public health” or “substantially equivalent,” as appropriate. FDA’s interpretation and implementation of these standards likewise may change over time, which may negatively impact our existing or future premarket filings. Currently, 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 premarket filing. Despite these stated enforcement priorities, given the FDA’s limited resources we expect that for a period of time there may be a lack of enforcement, which may adversely impact our ability to compete in the marketplace against those who continue to sell unauthorized products. This issue could grow worse should the federal government decrease the size of certain agencies or resources, including the U.S. Department of Justice or U.S. Customs and Border Protection.

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On May 4, 2022, the FDA proposed 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. On June 21, 2022, the FDA also issued a proposed product standard related to restricting the level of nicotine in traditional cigarettes. On March 8, 2023, the FDA proposed requirements for tobacco product manufacturing practice (“TPMPs”). Once finalized, TPMPs would establish requirements for tobacco product manufacturers regarding the manufacture, design, packing and storage of finished and bulk tobacco products. These regulations are required to go through the formal rulemaking process where we have had the opportunity to provide comments with regard to the impact such standards would have on our products. As of January 2025, these proposed rules were withdrawn or otherwise delayed. 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.

Inflation

Inflation in general and the continued increases in costs of goods and services, such as food and gas prices, have had a substantial negative effect on the purchasing power of consumers. While historically, we have been able to pass on most cost increases to our consumers, no assurance can be given that we will continue to be able to do so. In addition, we have been able to maintain a relatively stable variable cost structure for our products due, in part, to our successful procurement with regard to our tobacco products and, in part, to our existing contractual agreement for the purchase of our premium cigarette papers.

Recent Accounting Pronouncements

See Item 8 of Part II, “Financial Statements and Supplementary Data - Note 2 - Summary of Significant Accounting Policies - Recent Accounting Pronouncements”.

Critical Accounting Estimates

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the U.S. When more than one accounting principle, or the method of its application, is generally accepted, we select the principle or method that is appropriate in the specific circumstances. Application of these accounting principles requires us to make estimates about the future resolution of existing uncertainties. Actual results could differ from these estimates. We evaluate our estimates, including those related to intangibles, investments in debt security and the fair value of the Creative Distribution Solutions segment on an ongoing basis. We base these estimates on our historical experience and other assumptions we believe are appropriate under the circumstances. In preparing these consolidated financial statements, we have made our best estimates and judgments of the amounts and disclosures included in the consolidated financial statements. Our significant accounting policies are discussed in Note 2 of the Notes to Consolidated Financial Statements in Item 8 of Part II of this Annual Report on Form 10-K.

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Indefinite-lived Intangible Assets

We follow the provisions of ASC 350, Intangibles – Goodwill and Other in accounting for indefinite-lived intangible assets. Indefinite-lived intangible assets are tested for impairment annually on December 31, or more frequently if certain indicators are present, in accordance with ASC 350-20-35 and ASC 350-30-35, respectively. Examples of such indicators could include but are not limited to a significant loss of market share, significant decline in operating results, change in management strategy or operations, economic decline, and other significant disruptions to the business.

We estimate the fair value of our indefinite-lived assets using the relief from royalty valuation methodology. This methodology is based on what the Company would be willing to pay as a royalty in order to exploit the related benefits of the asset. The value of the asset is determined by discounting the inherent after-tax royalty savings associated with ownership or possession of the asset over the expected useful life. In 2024, based on quantitative assessments, the fair values of our Zig-Zag and Stokers’ indefinite-lived intangible assets exceeded their carrying values by a significant amount. We identified the estimate of the fair value of the Company’s indefinite lived assets as a critical estimate because of the significant assumptions used in these analyses including, but are not limited to, projected revenue, the weighted average cost of capital and royalty rate. We used modest growth rates in projecting the revenue related to these indefinite-lived intangible assets. As we do for each impairment assessment, for our future impairment assessments we will evaluate the reasonableness and relevance of our previous performance assumptions, considering both internal and external factors existing at the impairment test date, to determine if changes to those performance assumptions are warranted.

If actual results are not consistent with the Company’s estimates and/or other assumptions change, the Company may be exposed to future impairment charges that could materially and adversely impact its financial position and results of operations.

Investments in Debt Security

We have classified our debt security investment as available-for-sale and, as a result, this security is recorded at fair value. We estimate the fair value of the debt security investment using a Monte Carlo simulation, which utilizes unobservable inputs that are classified as Level 3 inputs under the fair value hierarchy. We identified the estimate of the fair value of the Company’s debt security investment as a critical estimate because of the complexity of the Monte Carlo simulation valuation methodology and the significant assumptions used in estimating the fair value, including the enterprise valuation of the investee, enterprise value to revenue market multiples applied to the financial results of the investee to estimate an enterprise valuation of the investee, and investment hold period scenarios used in the weighting of Monte Carlo simulation valuation results.

If actual results are not consistent with the Company’s estimates and/or other assumptions change, the Company may be exposed to future allowance for credit losses that could materially and adversely impact its financial position and results of operations.

Fair Value of the Creative Distribution Solution Segment

Our CDS segment met the criteria to be classified as held-for-sale as of December 31, 2024. As a result, we are required to carry the net assets of the CDS segment at fair value less costs to sell. We determined the fair value of the CDS segment using a weighted average of three valuation methodologies that consisted of the discounted cash flow method, the guideline public company method and the similar transaction method. We identified the estimate of the fair value of the CDS segment as a critical accounting estimate because of the significant estimates and assumptions used by management in the discounted cash flow method, including forecasts of expected revenue growth rates, estimated terminal value and the selection of the discount rate.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Foreign Currency Sensitivity

Our inventory purchases from RTI are denominated in euros. Accordingly, we have exposure to potentially adverse movements in the euro exchange rate. In addition, RTI provides a contractual hedge against catastrophic currency fluctuation in our agreement. We do not use derivative financial instruments for speculative trading purposes, nor do we hedge our foreign currency exposure in a manner that offsets the effects of changes in foreign exchange rates.

We regularly review our foreign currency risk and hedging programs and may as part of that review determine at any time to change our hedging policy. During 2024, we executed various foreign exchange contracts for the purchase of €3.6 million and sale of €3.6 million with maturity dates ranging from October 2024 to June 2025. At December 31, 2024, we had foreign currency contracts outstanding for the purchase of €2.1 million and sale of €2.1 million. A 10% change in the euro to U.S. dollars exchange rate would change our pre-tax income by approximately $1.5 million per year.

Credit Risk

At December 31, 2024 and 2023, we had bank deposits, including MSA escrows, in excess of federally insured limits of approximately $47.4 million and $119.0 million, respectively. The Company has chosen to invest a portion of the MSA escrows, from time to time, in U.S. Government securities including Treasury notes and Treasury bonds. We sell our products to distributors, retail establishments, and individual consumers throughout the U.S. and also have sales of Zig-Zag® premium cigarette papers in Canada. In 2024, we had one customer that accounted for 10.2% of our net sales. In 2023and 2022, we had no customers that accounted for more than 10% of our net sales. We perform periodic credit evaluations of our customers and generally do not require collateral on trade receivables. Historically, we have not experienced significant losses due to customer credit issues.

Interest Rate Sensitivity

In February 2021, we issued the 2026 Notes in an aggregate principal amount of $250 million. In February 2025, we issued the 2032 Notes in an aggregate principal amount of $300 million and utilized a portion of the proceeds to retire the 2026 Notes. We carry the 2032 Notes at face value. Since the 2032 Notes bear interest at a fixed rate, we have no financial statement risk associated with increases in interest rates. However, the fair value of the 2023 Notes changes when the market price of our stock fluctuates, or interest rates change. Our remaining debt instrument is the 2023 ABL Facility, which has no borrowing outstanding. The 2023 ABL Facility is subject to a floating rate. Accordingly, if we make borrowings under the 2023 ABL Facility, we will be exposed to fluctuations in interest rates.

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Item 8. Financial Statements and Supplementary Data

TURNING POINT BRANDS, INC.

CONTENTS

Page

Reports of RSM US LLP (PCAOB ID: 49) 57

Financial Statements:

Consolidated Balance Sheets as of December 31, 2024 and 2023 59

Notes to Consolidated Financial Statements 65

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Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of Turning Point Brands, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Turning Point Brands, Inc. and its subsidiaries (the Company) as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income, changes in stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2024, and the related notes to the consolidated financial statements (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. Our report dated March 6, 2025 expressed an opinion that the Company had not maintained effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to which they relate.

Controlling Financial Interest Assessment of Equity Investment

As described in Notes 3 and 24 to the financial statements, on January 2, 2025, the Company sold 100% of its equity interest in South Beach Brands LLC (“SBB”), the subsidiary that owns and operates the Company’s Creative Distribution Solutions (“CDS”) segment, to General Wireless Operations, Inc. (“GWO”) in exchange for 1,006.45 shares of GWO common stock and 680 shares of GWO Series B Preferred Stock, which together represent 49% of the issued and outstanding GWO common stock on a fully-diluted basis (“SBB Exchange Transaction”). The Company determined that, upon completion of the SBB Exchange Transaction, it will not have a controlling financial interest in GWO and, as a result, will deconsolidate SBB on January 2, 2025. Having met applicable criteria prior to December 31, 2024, the Company recorded the assets and liabilities of SBB as held for sale as of December 31, 2024 and 2023 and the results of operations and cash flows of SBB as discontinued operations for each of the three years in the period ended December 31, 2024.

As described in Note 2 to the financial statements, when the Company concludes it has a controlling financial interest in a legal entity, the Company consolidates the legal entity as a subsidiary. The evaluation of whether or not the Company has a controlling financial interest in a legal entity requires the application of complex accounting rules and the evaluation of a number of factors, including determining the consolidation model that applies, the Company’s decision-making ability through voting or other rights, and the Company’s exposure to variability to the legal entity, among other items.

We identified the Company’s accounting conclusion that it will not have a controlling financial interest in GWO as a critical audit matter because of the complexity involved in evaluating the exchange transaction structure and related agreements with management’s interpretation and application of the accounting rules. Auditing management’s accounting conclusion involved a high degree of auditor judgment and an increase in audit effort due to the impact management’s conclusion would have on the Company’s financial statement presentation.

Our audit procedures related to the Company’s assessment of whether or not it will have a controlling financial interest in GWO included the following, among others:

Fair Value of Creative Distribution Solutions Segment

As described in Note 3 to the financial statements, the Company has classified the assets and liabilities of the Creative Distribution Solutions (“CDS”) segment as held for sale as of December 31, 2024 and 2023, and recognized a valuation allowance of $8.8 million against the net assets of CDS as of December 31, 2024 to adjust the carrying value of the CDS segment to fair value less cost to sell. The Company estimated the fair value of the CDS segment using a weighted average of three valuation methodologies that consisted of a discounted cash flow method, a guideline public company method and a guideline transaction method.

We identified the estimate of the fair value of the Company’s CDS segment as a critical audit matter because of the significant estimates and assumptions used by management when estimating the fair value of the segment, including management’s forecasts of expected revenue growth rates, management’s selection of the discount rate and management’s estimate of the terminal value, which were all used in the discounted cash flow method. Auditing management’s estimates and assumptions involved a high degree of auditor judgment and increased audit effort, including the use of our valuation specialists, due to the impact these assumptions have on the estimated fair value of the CDS segment.

Our audit procedures related to the estimated fair value of the CDS segment included the following, among others:

/s/ RSM US LLP

We have served as the Company’s auditor since 2006.

Charlotte, North Carolina

March 6, 2025

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Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of Turning Point Brands, Inc.

Opinion on the Internal Control Over Financial Reporting

We have audited Turning Point Brands, Inc.’s (the Company) internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. In our opinion, because of the effect of the material weakness described below on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income, changes in stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2024, and the related notes to the consolidated financial statements of the Company and our report dated March 6, 2025 expressed an unqualified opinion.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. The following material weakness has been identified and included in management’s assessment:

There were deficiencies in the design and operation of information technology general controls (ITGCs) in the areas of user access and program change-management over certain information technology systems that support the Company’s financial reporting processes. The business process controls (automated and manual) that are dependent on the affected ITGCs were also deemed ineffective because they could have been adversely impacted.

This material weakness was considered in determining the nature, timing and extent of audit tests applied in our audit of the 2024 financial statements, and this report does not affect our report dated March 6, 2025 on those financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ RSM US LLP

Charlotte, North Carolina

March 6, 2025

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Turning Point Brands, Inc. and Subsidiaries

Consolidated Balance Sheets

December 31, 2024 and 2023

(dollars in thousands except share data)

December 31, December 31,

ASSETS

Current assets:

Deferred financing costs, net 1,823 2,450

Master Settlement Agreement (MSA) escrow deposits 28,676 28,684

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Current portion of long-term debt - 58,294

Current liabilities held for sale 2,049 2,209

Noncurrent liabilities held for sale - 52

Commitments and contingencies

Stockholders’ equity:

Accumulated other comprehensive loss (2,903 ) (2,648 )

Total liabilities and stockholders’ equity $ 493,353 $ 569,369

The accompanying notes are an integral part of the consolidated financial statements.

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Turning Point Brands, Inc. and Subsidiaries

Consolidated Statements of Income

for the years ended December 31, 2024, 2023, and 2022

(dollars in thousands except share data)

For the years ended December 31,

Other operating income (1,674 ) (4,345 ) -

Other income - (4,000 ) -

Gain on extinguishment of debt - (1,664 ) (885 )

Loss from discontinued operations, net of tax (7,517 ) (285 ) (19,929 )

Net income (loss) attributable to non-controlling interest 701 (681 ) (484 )

Net income attributable to Turning Point Brands, Inc. $ 39,809 $ 38,462 $ 11,641

Basic income (loss) per common share:

Discontinued operations (0.43 ) (0.01 ) (1.11 )

Diluted income (loss) per common share:

Discontinued operations (0.39 ) (0.01 ) (1.11 )

Diluted earnings per share $ 2.14 $ 2.01 $ 0.64

Weighted average common shares outstanding:

The accompanying notes are an integral part of the consolidated financial statements.

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Turning Point Brands, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income

for the years ended December 31, 2024, 2023, and 2022

(dollars in thousands)

For the years ended December 31,

Other comprehensive income (loss), net of tax

Unrealized gain on investments, net of tax of $0 in 2024 50 - -

The accompanying notes are an integral part of the consolidated financial statements.

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Turning Point Brands, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

for the years ended December 31, 2024, 2023, and 2022

(dollars in thousands)

For the years ended December 31,

Cash flows from operating activities:

Loss from discontinued operations, net of tax 7,517 285 19,929

Gain on extinguishment of debt - (1,664 ) (885 )

Loss (gain) on sale of property, plant, and equipment 75 62 (33 )

Gain on insurance recovery of inventory loss - (15,181 ) -

Depreciation and other amortization expense 4,439 2,921 2,859

Deferred income tax (benefit) expense 519 7,024 (6,506 )

Noncash lease (income) expense (622 ) (72 ) 84

Gain on MSA investments (14 ) - (54 )

Changes in operating assets and liabilities:

Operating cash flows from discontinued operations 6,104 10,641 8,975

Cash flows from investing activities:

Proceeds from sale of investments 5,420 - -

Purchases of non-marketable equity investments (500 ) - -

Proceeds on sale of property, plant and equipment 5 3 35

MSA escrow deposits, net 46 - (10,170 )

Investing cash flows from continuing operations (10,509 ) (5,906 ) (18,969 )

Investing cash flows from discontinued operations - - 176

Net cash used in investing activities $ (10,509 ) $ (5,906 ) $ (18,793 )

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Turning Point Brands, Inc. and Subsidiaries

Consolidated Statements of Cash Flows (cont.)

for the years ended December 31, 2024, 2023, and 2022

(dollars in thousands)

For the years ended December 31,

Cash flows from financing activities:

Convertible Senior Notes repurchased $ - $ (41,794 ) $ (9,000 )

Payment of Convertible Senior Notes (118,541 ) - -

Proceeds from call options - 114 51

Payments of financing costs (133 ) (2,437 ) -

Redemption of restricted stock units (914 ) (995 ) (1,229 )

Redemption of performance based restricted stock units (1,212 ) - -

Financing cash flows from discontinued operations - - -

Effect of foreign currency translation on cash $ (182 ) $ 13 $ (320 )

Cash, beginning of period:

Cash, end of period:

Supplemental disclosures of cash flow information:

Cash paid during the period for income taxes, net $ 20,997 $ 12,447 $ 13,369

Supplemental schedule of noncash investing activities:

Accrued capital expenditures $ 18 $ 8 $ 11

Accrued consideration for acquisition of investments $ - $ 248 $ -

Supplemental schedule of noncash financing activities:

The accompanying notes are an integral part of the consolidated financial statements.

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Turning Point Brands, Inc. and Subsidiaries

Consolidated Statements of Changes in Stockholders’ Equity

for the years ended December 31, 2024, 2023, and 2022

(dollars in thousands)

Cost of Accumulated

Common Additional Repurchased Other Accumulated Non-

Voting Stock, Paid-In Common Comprehensive Earnings Controlling

Shares Voting Capital Stock Income (Loss) (Deficit) Interest Total

Foreign currency translation, net of tax of $0 - - - - (176 ) - (93 ) (269 )

Stock compensation expense - - 5,273 - - - - 5,273

Redemption of options - - (155 ) - - - - (155 )

Issuance of performance based restricted stock units 69,756 - - - - - - -

Issuance of restricted stock units 5,589 - - - - - - -

Redemption of restricted stock units - - (88 ) - - - - (88 )

Settlement of call options, net of tax of $12 - - 39 - - - - 39

Foreign currency translation, net of tax of $0 - - - - (50 ) - (24 ) (74 )

Stock compensation expense - - 6,561 - - - - 6,561

Issuance of performance based restricted stock units 105,032 1 75 - - - - 76

Issuance of restricted stock units 40,910 - 2 - - - - 2

Redemption of restricted stock units (8,590 ) - (195 ) - - - - (195 )

Settlement of call options, net of tax of $28 - - 86 - - - - 86

Foreign currency translation, net of tax of $0 - - - - (115 ) - (82 ) (197 )

Unrealized gain on investments, net of tax of $0 - - - - 50 - - 50

Acquisition of non-controlling interest - - - - - - 750 750

Stock compensation expense - - 7,243 - - - - 7,243

Redemption of options (9,735 ) - (335 ) - - - - (335 )

Issuance of performance based restricted stock units 129,316 1 - - - - - 1

Issuance of restricted stock units 106,249 1 78 - - - - 79

Redemption of restricted stock units (31,483 ) - (993 ) - - - - (993 )

Cost of repurchased common stock (154,945 ) - - (5,051 ) - - - (5,051 )

The accompanying notes are an integral part of the consolidated financial statements.

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Turning Point Brands, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(dollars in thousands, except where designated and per share data)

Note 1. Organizations and Basis of Presentation

Description of Business

Turning Point Brands, Inc., including its subsidiaries (collectively referred to herein as the “Company,” “we,” “our,” or “us”), is a leading manufacturer, marketer and distributor of branded consumer products. The Company sells a wide range of products to adult consumers consisting of staple products with its iconic brands Zig-Zag® and Stoker’s® and its next generation products to fulfill evolving consumer preferences. The Company's segments are led by its core proprietary and iconic brands: Zig-Zag® and Stoker’s® along with FRE®, Beech-Nut® and Trophy®. The Company’s products are available in more than 220,000 retail outlets in North America. The Company operates two segments, Zig-Zag products and Stoker’s products.

Contribution of Creative Distribution Solutions

On January 2, 2025, the Company contributed 100% of its interest in South Beach Brands LLC ("SBB"), the subsidiary that owns and operates the Company’s Creative Distribution Solutions (“CDS”) segment, to General Wireless Operations, Inc. (“GWO”) in exchange for 49% of the issued and outstanding GWO common stock. GWO is a joint venture between the Company and Standard General, LP entered into in December 2018. The Company will provide certain transition services to GWO in connection with the operation of SBB on an arm’s length basis.

For all periods presented in these consolidated financial statements, the assets and liabilities associated with the CDS disposal group have been classified as held for sale in the Consolidated Balance Sheets and its operations have been classified as discontinued operations in the Consolidated Statements of Income and Cash Flows. See Note 3, "Assets Held for Sale and Discontinued Operations" for additional information regarding the CDS divestiture, including the assets and liabilities held for sale and the loss from discontinued operations. Unless otherwise noted, disclosures in the notes to these consolidated financial statements relate solely to the Company's continuing operations.

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. (“U.S. GAAP”) and Securities and Exchange Commission (“SEC”) regulations. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts of assets and liabilities, disclosure of contingent assets and liabilities as of the dates of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. The Company’s estimates include those affecting the valuation of goodwill and other intangible assets, the fair value of assets held for sale, deferred income tax valuation allowances, the valuation of investments and the valuation of inventory, including reserves.

Certain prior year amounts have been reclassified to conform to the current year’s presentation. The changes did not have an impact on the Company’s consolidated financial position, results of operations, or cash flows in any of the periods presented.

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 to have a controlling interest based on the voting interest entity model or the variable interest entity model. All significant intercompany transactions have been eliminated.

U.S. GAAP requires the Company to identify entities for which control is achieved through means other than voting rights and to determine whether the Company is the primary beneficiary of VIEs. A VIE is broadly defined as an entity with one or more of the following characteristics: (a) the total equity investment at risk is insufficient to finance the entity’s activities without additional subordinated financial support; (b) as a group, the holders of the equity investment at risk lack (i) the ability to make decisions about the entity’s activities through voting or similar rights, (ii) the obligation to absorb the expected losses of the entity, or (iii) the right to receive the expected residual returns of the entity; and (c) the equity investors have voting rights that are not proportional to their economic interests, and substantially all of the entity’s activities either involve, or are conducted on behalf of, an investor that has disproportionately few voting rights. The Company consolidates its investment in a VIE when it determines that it is the VIE’s primary beneficiary. The Company may change its original assessment of a VIE upon subsequent events such as the modification of contractual arrangements that affects the characteristics or adequacy of the entity’s equity investments at risk and the disposition of all or a portion of an interest held by the primary beneficiary.

The primary beneficiary of a VIE is the entity that has both: (i) the power to direct the activities of the VIE that most significantly impact the entity’s economic performance; and (ii) the obligation to absorb losses or the right to receive benefits of the VIE that could be significant to the entity. The Company performs this analysis on an ongoing basis.

Management of the Company has determined that Turning Point Brands Canada and ALP Supply Co, LLC ("ALP") are VIEs for which the Company is required to consolidate. The Company has a controlling financial interest of 65% equity in Turning Point Brands Canada, provides additional subordinated financing, and has a distribution agreement for the sale of the Company’s products that makes up a significant portion of Turning Point Brands Canada’s business activities. The Company has a 50% equity interest in ALP, provides additional financing, has a supply agreement to be the exclusive provider of product and is the primary beneficiary due to the power the Company has over the activities that most significantly impact the economic performance, and the right to receive benefits and the obligation to absorb losses. See Note 4,"Joint Venture Agreement" for additional information on the current year ALP transaction.

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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 includes in its transaction price excise taxes on smokeless tobacco, cigars or other nicotine products billed to customers, and excludes sales taxes and value-added taxes imposed at the time of sale.

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 to be 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 21, “Segment Information”.

Held for Sale and Discontinued Operations

The Company classifies assets and liabilities to be sold (disposal group) as held for sale in the period when all of the applicable criteria are met, including: (i) management commits to a plan to sell, (ii) the disposal group is available to sell in its present condition, (iii) there is an active program to locate a buyer, (iv) the disposal group is being actively marketed at a reasonable price in relation to its fair value, (v) significant changes to the plan to sell are unlikely, and (vi) the sale of the disposal group is generally probable of being completed within one year.

Assets and liabilities held for sale are presented separately within the Consolidated Balance Sheets with any adjustments necessary to measure the disposal group at the lower of its carrying value or fair value less costs to sell. Depreciation of property, plant and equipment and amortization of intangible and right-of-use assets are not recorded while these assets are classified as held for sale. For each period the disposal group remains classified as held for sale, its recoverability is reassessed, and any necessary adjustments are made to its carrying value.

The Company reports the results of operations of a business as discontinued operations if a disposal represents a strategic shift that will have a major effect on its operations and financial results. The results of discontinued operations are reported as Loss from discontinued operations, net of tax in the Consolidated Statements of Income for the current and prior periods commencing in the period in which the held for sale criteria are met. Loss from discontinued operations includes direct costs attributable to the divested business and excludes any cost allocations associated with any shared or corporate functions. Loss from discontinued operations will include any gain or loss recognized upon disposition or from any adjustment of the carrying amount of the assets and liabilities of the discontinued operations to fair value less costs to sell while classified as held for sale.

Derivative Instruments

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 100% of its non-inventory purchases (e.g., production equipment) 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 reclassified 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.

Shipping Costs

The Company records shipping costs incurred as a component of selling, general and administrative expenses. Shipping costs incurred were approximately $17.9 million, $16.0 million, and $14.0 million in 2024, 2023, and 2022, respectively.

Research and Development and Quality Assurance Costs

Research and development and quality assurance costs are expensed as incurred. These expenses, classified as selling, general and administrative expenses, were approximately $1.3 million, $0.6 million, and $0.6 million in 2024,2023, and 2022, respectively.

Cash and Cash Equivalents

The Company considers any highly liquid investments with a maturity of three months or less from the date of purchase to be cash equivalents.

Inventories

Inventories are stated at the lower of cost or net realizable value using the first-in, first-out (“FIFO”) method. 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.

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Property, Plant and Equipment

Property, plant and equipment is stated at cost less accumulated depreciation and impairment. Depreciation is provided using the straight-line method over the lesser of the estimated useful lives of the assets or the life of the leases for leasehold improvements (4 to 7 years for machinery, equipment and furniture, 10 to 15 years for leasehold improvements, and up to 15 years for buildings and building improvements). Expenditures for repairs and maintenance are charged to expense as incurred. The costs of major renewals and improvements are capitalized and depreciated over their estimated useful lives. Upon disposition of fixed assets, the costs and related accumulated depreciation amounts are relieved. Any resulting gain or loss is reflected in operations during the period of disposition. Long-lived assets are reviewed for impairment when changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Goodwill and Other Intangible Assets

The Company follows the provisions of ASC 350, Intangibles – Goodwill and Other in accounting for goodwill and other intangible assets. Goodwill is tested for impairment annually on December 31, or more frequently if certain indicators are present.

When testing goodwill for impairment, the Company has the option to first perform qualitative testing to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If the Company chooses not to complete a qualitative assessment for a given reporting unit or if the initial assessment indicates that it is more likely than not that the carrying value of a reporting unit exceeds its estimated fair value, additional quantitative testing is required. If the carrying value of a reporting unit exceeds its fair value, an impairment loss is recognized in the amount by which the carrying value of the reporting unit exceeds its fair value, limited to the amount of goodwill at the reporting unit. The Company determines fair values for each of the reporting units using a combination of the income approach and/or market approach. Under the income approach, fair value is determined based on the present value of estimated future cash flows, discounted at an appropriate risk-adjusted rate. Under the market approach, the Company selects peer sets based on close competitors and reviews the revenue and EBITDA multiples to determine the fair value. See Note 11, “Goodwill and Other Intangible Assets” for further information on goodwill.

Indefinite-lived intangible assets are tested for impairment at least annually; however, these tests are performed more frequently when events or changes in circumstances indicate that the asset may be impaired. Impairment exists when carrying value exceeds fair value. The Company’s fair value methodology is primarily based on the relief from royalty approach.

Definite-lived intangible assets are amortized over their estimated useful lives, generally on a straight-line basis for periods ranging primarily from 3.5 to 15 years. The Company continually evaluates the reasonableness of the useful lives of these assets.

Fair Value

U.S. 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 U.S. GAAP are described below:

Equity Investments

The Company's investments include equity securities, which are accounted for at cost and under the equity method of accounting.

For equity investments that do not qualify to be accounted for under the equity method of accounting and that do not have a readily determinable fair value, the Company has elected a practical expedient to record the investment at the original cost, as adjusted for impairment and observable price changes. Under the practical expedient, if a qualitative analysis indicates impairment exists, the fair value of the investment is required to be estimated and any excess of the carrying value over the estimated fair value is recognized as an impairment loss.

Equity investments accounted for under the equity method of accounting are assessed for impairment when events or circumstances suggest that any loss in value of the investment may be other than temporary. A loss in value of an investment is other than temporary when evidence of a loss in value indicates the absence of an ability to recover the carrying amount of the investment or inability of the investee to sustain an earnings capacity that would justify the carrying amount of the investment.

In the absence of observable data, the Company estimates the fair values of these investments using a market approach derived from applying market multiples of comparable public companies to the financial results of each investment. The valuation methodology and the significant assumptions used by management in estimating the fair values of each investment involve a high degree of judgment and may involve the use of third-party valuation specialists.

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Deferred Financing Costs

Deferred financing costs are amortized over the terms of the related debt obligations using the straight-line method. Unamortized amounts are expensed upon extinguishment of the related borrowings. Deferred financing costs are presented as a direct deduction from the carrying amount of that debt liability except for deferred financing costs relating to our revolving credit facility, which are presented as an asset.

Income Taxes

The Company records the effects of income taxes under the liability method in which deferred income tax assets and liabilities are recognized based on the difference between the financial and tax basis of assets and liabilities using the enacted tax rates in effect for the years in which the differences are expected to reverse. The Company assesses its ability to realize future benefits of deferred tax assets by determining if they meet the “more likely than not” criteria in ASC 740, Income Taxes. If the Company determines that future benefits do not meet the “more likely than not” criteria, a valuation allowance is recorded.

Advertising and Promotion

Advertising and promotion costs, including point of sale materials, are expensed as incurred and amounted to $12.0 million, $7.6 million, and $6.2 million for the years ended December 31, 2024, 2023, and 2022, respectively.

Stock-Based Compensation

The Company measures stock-based compensation costs related to its stock options on the fair value-based method under the provisions of ASC 718, Compensation – Stock Compensation. The fair value-based method requires compensation cost for stock options to be recognized over the requisite service period based on the fair value of stock options granted. The Company determined the fair value of these awards using the Black-Scholes option pricing model.

The Company grants performance-based restricted stock units (“PRSU”) subject to both performance-based and service-based vesting conditions. The fair value of each PRSU is the Company’s stock price on the date of grant. For purposes of recognizing compensation expense as services are rendered in accordance with ASC 718, the Company assumes all employees involved in the PRSU grant will provide service through the end of the performance period. Stock compensation expense is recorded based on the probability of achievement of the performance conditions specified in the PRSU grant.

The Company grants restricted stock units (“RSU”) subject to service-based vesting conditions. The fair value of each RSU is the Company’s stock price on the date of grant. The Company recognizes compensation expense as services are rendered in accordance with ASC 718. Stock compensation expense is recorded over the service period in the RSU grant.

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. The U.S. 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. 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.

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Master Settlement Agreement (MSA)

Forty-six states, certain U.S. territories, and the District of Columbia are parties to the Master Settlement Agreement (“MSA”) and the Smokeless Tobacco Master Settlement Agreement (“STMSA”). To the Company’s knowledge, signatories to the MSA include 49 cigarette manufacturers and/or distributors. The only signatory to the STMSA is US Smokeless Tobacco Company. In the Company’s opinion, the fundamental basis for each agreement is the states’ consents to withdraw all claims for monetary, equitable, and injunctive relief against certain tobacco products manufacturers and others and, in return, the signatories have agreed to certain marketing restrictions and regulations as well as certain payment obligations.

Pursuant to the MSA and subsequent states’ statutes, a “cigarette manufacturer” (which is defined to also include 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, with sub-accounts on behalf of each settling state. The STMSA has no similar provisions. The MSA escrow accounts are governed by states’ statutes that expressly give the manufacturers the option of opening, funding, and maintaining an escrow account in lieu of becoming a signatory to the MSA. The statutes require companies who are not signatories to the MSA to deposit, on an annual basis, into qualified banks, escrow funds based on the number of cigarettes or cigarette equivalents, i.e., the pounds of MYO tobacco, sold. The purpose of these statutes is expressly stated to be to eliminate the cost disadvantage the settling manufacturers have as a result of entering into the MSA. 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 judgment to that state’s plaintiffs in the event of such a final judgment against the company. Either option – becoming an MSA signatory or establishing an escrow account – is permissible.

The Company chose to open and fund an MSA escrow account as its means of compliance. It is management’s opinion, due to the possibility of future federal or state regulations, though none have to date been enacted, that entering into one or both of the settlement agreements or establishing and maintaining an escrow account would not necessarily prevent future regulations from having a material adverse effect on the results of operations, financial position, and cash flows of the Company.

Various states have enacted or proposed complementary legislation intended to curb the activity of certain manufacturers and importers of cigarettes that are selling into MSA states without signing the MSA or who have failed to properly establish and fund a qualifying escrow account. To the best of the Company’s knowledge, no such statute has been enacted which could inadvertently and negatively impact the Company, which has been, and is currently, fully compliant with all applicable laws, regulations, and statutes. However, there can be no assurance that the enactment of any such complementary legislation in the future will not have a material adverse effect on the results of operations, financial position, or cash flows of the Company.

Pursuant to the MSA escrow account statutes, in order to be compliant with the MSA escrow requirements, companies selling products covered by the MSA are required to deposit such funds for each calendar year into a qualifying escrow account by April 15 of the following year. At December 31, 2024 and 2023, the Company had on deposit approximately $32.1 million, the fair value of which was approximately $28.7 million. During 2024, no monies were deposited into this qualifying escrow account. The investment vehicles available to the Company are specified in the state escrow agreements and are limited to low-risk government securities.

The Company discontinued its generic category of MYO in 2019 and itsZig-Zagbranded MYO cigarette smoking tobacco in 2017. Thus, pending a change in MSA legislation, the Company has no remaining product lines covered by the MSA and will not be required to make future escrow deposits.

The Company has chosen to invest a portion of the MSA escrow, from time to time, in U.S. Government securities including Treasury inflation-protected securities, 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; thus, any investment with an unrealized loss position will be held until the value is recovered, or until maturity.

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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.

Gross Gross Estimated Gross Gross Estimated

Unrealized Unrealized Fair Unrealized Unrealized Fair

Cost Gains Losses Value Cost Gains Losses Value

As of

Less than one year $ 250

Greater than ten years 1,955

The following shows the amount of deposits by sales year for the MSA escrow account:

Deposits as of December 31,

Concentration of Credit Risk:At December 31, 2024 and 2023, the Company had bank deposits, including MSA escrow accounts, in excess of federally insured limits of approximately $47.4 million and $119.0 million, respectively. During 2024 and 2023, the Company invested a portion of the MSA escrow accounts in U.S. Government securities including TIPS, Treasury notes, and Treasury bonds.

The Company sells its products to distributors, retail establishments, and consumers throughout the U.S. and also sells Zig-Zag® premium cigarette papers in Canada and some smaller quantities in other countries. For 2024, the Company had one customer that accounted for 10.2% of net sales. There were no customers that accounted for more than 10% of net sales for 2023 or 2022. The Company performs periodic credit evaluations of its customers and generally does not require collateral on trade receivables. Historically, the Company has not experienced significant credit losses.

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Accounts Receivable

Accounts receivable are recognized at their net realizable value. All accounts receivable are trade related, recorded at the invoiced amount, and do not bear interest. The Company maintains allowances for credit losses for estimated uncollectible invoices resulting from a customer’s inability to pay (bankruptcy, out of business, etc., i.e. “bad debt” which results in write-offs). The activity of allowance for credit losses for the years ended December 31, 2024, 2023 and 2022 is as follows:

Balance at beginning of period $ 78 $ 40 $ 29

Additions to allowance account during period 23 38 24

Deductions of allowance account during period (35 ) - (13 )

Balance at end of period $ 66 $ 78 $ 40

Recent Accounting Pronouncements

Recently adopted

In November 2023, the Financial Accounting Standards Board (“FASB”) issued guidance that enhances reportable segment disclosures by requiring disclosure of significant reportable segment expenses and other items regularly provided to the Chief Operating Decision Maker (“CODM”) and included within measures of a segment’s profit or loss. Additional requirements include the title and position of the CODM and an explanation of how the CODM uses the reported measure of a segment’s profit or loss to assess performance and allocate resources, and the amount and composition of other segment items necessary to reconcile segment revenue, significant expenses, and the reported measure of profit or loss. The Company adopted this guidance retrospectively beginning with its fiscal 2024 annual financial statements. See Note 21, "Segment Information" for the additional disclosures required by this guidance.

Issued but not yet adopted

In December 2023, the FASB issued guidance which enhances income tax disclosures to require reporting entities to disclose annual income taxes paid, net of refunds, disaggregated by federal, state, and foreign taxes and to provide additional disaggregated information for individual jurisdictions under certain conditions. The guidance also requires disclosure of amounts and percentages in the annual rate reconciliation table, rather than amounts or percentages, and will eliminate certain existing disclosure requirements related to uncertain tax positions and unrecognized deferred tax liabilities. This guidance will be effective for the Company beginning with its fiscal 2025 annual financial statements, with early adoption permitted. The guidance may be applied prospectively, while retrospective application is permitted. The Company is currently assessing the impact of this guidance and expects its incremental disclosures will likely be provided on a prospective basis upon adoption.

In November 2024, the FASB issued guidance requiring reporting entities to disclose in the notes to the financial statements, specified information about certain categories of expenses including purchases of inventory, employee compensation, depreciation and amortization for each caption on the income statement where such expenses are included. This guidance will be effective for the Company beginning with its fiscal 2027 annual financial statements and interim periods thereafter. Early adoption is permitted, in addition to either prospective or retrospective application. The Company is currently assessing the impact and extent to which this guidance will affect its disclosures.

Note 3. Assets and Liabilities Held for Sale and Discontinued Operations

On January 2, 2025, the Company entered into an agreement to contribute 100% of its interest in SBB, the subsidiary that owns and operates the Company’s CDS segment, to GWO in exchange for 49% of the issued and outstanding GWO common stock on a fully-diluted basis. GWO is a joint venture between the Company and Standard General, LP entered into in December 2018. Under certain circumstances the Company has the right to redeem the contribution of SSB from GWO at fair market value. In addition, the Company received an option with a 15-year term to purchase the remaining 51% of GWO at an exercise price initially set at $22.0 million, which decreases over time based on certain tax sharing payments to GWO.

The assets and liabilities associated with the CDS business have been classified as held for sale as of December 31, 2024, and its financial results are classified as discontinued operations and reported separately for all periods presented herein. With the strategic shift of the Company's operations, as a result of this transaction, the CDS segment has been classified as discontinued operations. As a result, the Company now has two reportable segments as disclosed in Note 21, "Segment Information".

Upon meeting the criteria for held for sale classification, the Company recorded a non-cash charge of $8.8 million with an equivalent valuation allowance against net assets held for sale to reduce the carrying value of the disposal group to fair value. Fair value of the disposal group utilized inputs within Level 3 of the fair value hierarchy, and was determined using both a market and an income approach.

The following table summarizes income from discontinued operations, net of tax, included in the Consolidated Statements of Income:

For the years ended December 31,

Loss on assets held for sale fair value adjustment 8,801 - -

Goodwill and intangible impairment loss - - 27,566

Operating loss from discontinued operations (10,116 ) (383 ) (26,060 )

Interest income (146 ) - -

Loss from discontinued operations before income taxes (9,970 ) (383 ) (26,060 )

Loss from discontinued operations $ (7,517 ) $ (285 ) $ (19,929 )

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The following table summarizes the carrying amounts of assets and liabilities classified as held for sale and included in the Consolidated Balance Sheets:

December 31,

Current assets

Noncurrent assets

Property, plant, and equipment, net - 158

Right of use assets 51 121

Allowance to adjust held for sale assets to fair value (8,801 ) -

Current liabilities

Current liabilities held for sale 2,049 2,209

Noncurrent liabilities

Lease liabilities - 52

Noncurrent liabilities held for sale - 52

Total liabilities held for sale $ 2,049 $ 2,261

Note 4. Joint Venture Agreement

In September 2024, a wholly-owned subsidiary of the Company invested $0.8 million to acquire a 50% ownership interest in ALP Supply Co., LLC ("ALP"). Additionally, the Company has provided ALP with a $10.0 million line of credit. ALP is a joint venture established between the subsidiary and Last Country Ventures, LLC for the purpose of selling and distributing tobacco-free moist nicotine pouches in various strengths. Per the joint venture agreement, the Company's subsidiary will be responsible for selling products to ALP and providing warehousing and shipping services on its behalf. The Company has determined that ALP is a VIE and that it has a controlling financial interest requiring consolidation. As a result, the assets, liabilities and result of operations of ALP have been included in the Company's consolidated financial statements.

The assets and liabilities of ALP included in the consolidated balance sheet at December 31, 2024 primarily include $5.3 million in cash, $0.9 million of inventory, $1.1 million of other assets, and accounts payable and accrued liabilities of $3.6 million inclusive of amounts payable to the Company of $3.2 million.

Note 5. Derivative Instruments

Foreign Currency

TPB US Equity

TPB · 10-K · period ended 2024-12-31

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Item 8. Financial Statements and Supplementary Data

TPB US Equity☆

TPB · 10-K · period ended 2024-12-31

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Item 8. Financial Statements and Supplementary Data

TPB US Equity