IVG and TPB Join Together as Industry Pioneers
LOUISVILLE, Ky.--(BUSINESS WIRE)--
Turning Points Brands, Inc. (NYSE:TPB) announced that it has acquired
International Vapor Group, LLC (“IVG”). TPB is a leader in the Other
Tobacco Products space and through its B2B platform, VaporBeast, serves
the evolving channels of retail electronic vapor distribution. The
acquisition of IVG will add one of the top vapor B2C platforms to the
Turning Point Brands family.
IVG markets and sells a broad array of proprietary and third-party vapor
products direct to adult consumers via a best-in-class online platform
under brand names such as VaporFi, South Beach Smoke, and DirectVapor.
VaporFi likewise provides an effective in-store experience at its
corporate and franchise retail storefronts where consumers can receive
knowledgeable advice on purchases from experienced employees. The
company was founded in 2010 and is headquartered in Miami Lakes, Florida.
The acquisition values IVG at $24 million plus $4.5 million of
contingent earnouts. Acquisition consideration comprises $15 million of
cash, $5 million equivalent of TPB common shares and a $4 million
18-month promissory note. The contingent earnouts are based on
performance metrics paid out at the end of two years. For the
twelve-month period ending June 30, 2018, IVG had revenue of
approximately $47.7 million and EBITDA of $4.9 million. TPB expects the
transaction to be immediately accretive. As part of the acquisition, TPB
will consolidate underperforming overlapping channels that will lower
remaining TPB 2018 net sales by $5.0 million.
TPB President and Chief Executive Officer, Larry Wexler, commented, “IVG
has played an important role in shaping the vaping industry since its
inception through its commitment to the consumer experience with a world
class B2C infrastructure. This greatly expands our capabilities across
all of our selling channels. The scale created via the combination of
IVG and TPB family of vapor businesses will provide significant
synergies in logistics, marketing and sourcing, which ultimately will
benefit our consumers.”
“Turning Point Brands has been a pioneer in the burgeoning vapor
industry,” said Nick Molina, Co-Founder of IVG. “I am excited TPB
leadership recognized the growth potential for IVG. This acquisition
will continue to enhance the quality of products and buying experience
available to consumers and our franchisees.” Nick Molina will join the
TPB management team as President of IVG.
“TPB’s increased commitment to the vapor space underlines our company’s
dedication to ensuring that this industry succeeds and continues to
assist the adult consumers and small businesses who depend on using and
selling vapor products,” said Graham Purdy, President, New Ventures. “By
bringing IVG into the TPB family, we are leveraging our industry-leading
brand and regulatory infrastructure to build the preeminent
vertically-integrated smoking alternative platform.”
Frost Brown Todd acted as legal counsel to TPB and Moss Adams acted as
financial and tax advisor.
About Turning Point Brands, Inc.
Louisville, Kentucky-based Turning Point Brands, Inc. (NYSE:TPB) is a
leading U.S. provider of Other Tobacco Products. TPB, through its three
focus brands, Stoker’s® in Smokeless products, Zig-Zag® in Smoking
products and the VaporBeast® distribution engine in NewGen products,
generates solid cash flow which it uses to finance acquisitions,
increase brand support and strengthen its capital structure. TPB does
not sell cigarettes. More information about the company is available at
its corporate website, www.turningpointbrands.com.
Forward-Looking Statements
This press release contains forward-looking statements within the
meaning of the federal securities laws. Forward-looking statements may
generally be identified by the use of words such as "anticipate,"
"believe," "expect," "intend," "plan" and "will" or, in each case, their
negative, or other variations or comparable terminology. These
forward-looking statements include all matters that are not historical
facts. By their nature, forward-looking statements involve risks and
uncertainties because they relate to events and depend on circumstances
that may or may not occur in the future. As a result, actual events may
differ materially from those expressed in or suggested by the
forward-looking statements. Factors that could cause these differences
include, but are not limited to, the factors set forth in “Risk Factors”
included in TPB’s annual report on Form 10-K and other reports filed
with the Securities and Exchange Commission from time to time. Any
forward-looking statement made by TPB in this presentation speaks only
as of the date hereof. New risks and uncertainties come up from time to
time, and it is impossible for TPB to predict these events or how they
may affect it. TPB has no obligation, and does not intend, to update any
forward-looking statements after the date hereof, except as required by
federal securities laws.
Non-GAAP Financial Measures
This press release includes certain non-U.S. generally accepted
accounting principles (“GAAP") financial measures, including EBITDA.
Such non-GAAP financial measures are not in accordance with, or an
alternative to, financial measures prepared in accordance with GAAP. 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. We
believe EBITDA provides useful information to management and investors
regarding certain financial and business trends relating to financial
condition and results of operations. We believe that EBITDA is an
appropriate measure of operating performance because it eliminates the
impact of expenses that do not relate to business performance.
Non-U.S. GAAP measures should not be considered a substitute for, or
superior to, financial measures calculated in accordance with U.S. GAAP.
EBITDA exclude significant expenses that are required by U.S. GAAP to be
recorded in our financial statements and is subject to inherent
limitations. In addition, other companies in our industry may calculate
these non-U.S. GAAP measure differently than we do or may not calculate
it at all, limiting its usefulness as a comparative measure.
IVG’s calculation of EBITDA for the 52 weeks ended June 30, 2018, is as
follows:
|
|
$ thousand
|
|
Net Income
| |
4,485
|
|
Depreciation and Amortization
| |
458
|
|
Interest Expense
| |
6
|
|
Taxes
| |
0
|
|
EBITDA
| |
4,949
|
EBITDA is not an earnings measure recognized by GAAP and does not have a
standardized meaning prescribed by GAAP; accordingly, EBITDA may not be
comparable to similar measures presented by other companies. EBITDA
should be considered in addition to, and not as a substitute for, or
superior to, operating income, cash flows, revenue, or other measures of
financial performance prepared in accordance with GAAP. EBITDA is not a
completely representative measure of either the historical performance
or, necessarily, the future potential of IVG.
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Turning Point Brands, Inc.
Robert Lavan, 502-774-9238
ir@tpbi.com
Source: Turning Point Brands, Inc.