Turning Point Announces Potential Pricing for IPO

Turning Point Brands has filed an amended S-1 form with the U.S. Securities and Exchange Commission (SEC) regarding its initial public offering (IPO). The company expects to price its 5.4 million shares in the range of $13 to $15 per share, with an overallotment option for an additional 810,000 shares. At the maximum price the entire offering is valued up to $93.15 million. The company intends to file on the New York Stock Exchange under the symbol TPB.

The joint book-running managers and underwriters for this offering are Cowen and FBR.

Turning Point is a leading independent provider of other tobacco products (OTP) in the United States. It sells a wide range of products across the OTP spectrum, including moist snuff, loose leaf chewing tobacco, premium cigarette papers, make-your-own cigar wraps and cigar smoking tobacco, cigars, liquid vapor products and tobacco vaporizer products.

The company does not sell cigarettes. It estimates that the OTP industry generated approximately $10.0 billion in manufacturer revenue in 2014. In contrast to manufactured cigarettes, which have experienced declining sales for decades, based on data published by the Alcohol and Tobacco Tax and Trade Bureau, the OTP industry is demonstrating increased consumer appeal.
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Turning Point currently ships to in excess of 900 direct wholesale customers with an additional 100 secondary, indirect wholesalers in the United States that carry and sell these products. At the end of December 2015, these products were available in over 172,000 U.S. retail locations which, with the addition of retail stores in Canada, brings total North American retail presence to an estimated 200,000 points of distribution.

In the filing, the company described its sales as follows:

We achieved net sales for the year ended December 31, 2015 of $197.3 million. For the year ended December 31, 2015, our Adjusted EBITDA was $50.6 million and we had net income of $9.1 million.

The company intends to use the net proceeds from this offering to repay its senior notes and other debt obligations. The remainder will be put toward working capital and general corporate purposes.