Turning Point Brands Inc (TPB) 2024 Q1 法說會逐字稿

Good morning and welcome to Turning Brands -- Turning Point Brands' first-quarter 2024 earnings conference call. (Operator Instructions)

早安，歡迎參加 Turning Brands——Turning Point Brands 的 2024 年第一季財報電話會議。（操作員說明）

As a reminder, this conference call is being recorded.

謹此提醒，本次電話會議正在錄音中。

I would now like to turn the call over to Graham Purdy, Chief Executive Officer. Thank you. Please go ahead.

我現在想將電話轉給執行長 Graham Purdy。謝謝。請繼續。

Thank you. Good morning, everyone. This is Graham Purdy, Chief Executive Officer. Joining me are Turning Point Brands' new CFO, Andrew Flynn; and Chief Revenue Officer, Summer Frein. I want to wish a special welcome to Andrew. Please understand that he didn't join the company until immediately after the March quarter concluded, so please take it easy on him.

謝謝。大家，早安。我是執行長格雷厄姆·珀迪。與我一起的還有 Turning Point Brands 的新任財務長 Andrew Flynn；首席營收長薩默‧弗雷恩 (Summer Frein)。我要特別歡迎安德魯。請理解，他是在三月季度結束後才加入公司的，所以請對他放心。

Thank you, Graham. Good morning. It's great to be with you today. First, I want to thank the entire organization for the opportunity. I'm thrilled to join the company and lend my support given my experiences at both Connected Cannabis and Juul Labs. Second, while early in my journey here, I've been impressed by the management team and the strength of our brands.

謝謝你，格雷厄姆。早安.今天很高興和你在一起。首先，我要感謝整個組織給我這個機會。鑑於我在 Connected Cannabis 和 Juul Labs 的經驗，我很高興加入公司並提供支援。其次，在我來這裡的初期，我們的管理團隊和品牌實力給我留下了深刻的印象。

Over the past few weeks, I've been highly engaged in getting up to speed. My early conclusions are that we have a strong foundation to build on, and I am excited to capitalize on our opportunities ahead to help build stakeholder value. I look forward to sharing more in the quarters ahead.

在過去的幾周里，我一直在努力跟上進度。我的早期結論是，我們擁有堅實的基礎，我很高興能夠利用我們未來的機會來幫助建立利害關係人價值。我期待在未來幾季分享更多內容。

With that, let's dive into the quarter. This morning, we issued a news release covering our Q1 results. This release is located in the IR section of our website at www.turningpointbrands.com.

接下來，讓我們深入了解該季度。今天早上，我們發布了有關第一季業績的新聞稿。此新聞稿位於我們網站 www.turningpointbrands.com 的 IR 部分。

During this call, we will discuss our consolidated and segment operating results and provide our perspective on the operating environment and our progress against our strategic plan. As is customary, I direct your attention to the discussion of forward-looking and cautionary statements in today's press release and the risk factors in our filings with the Securities and Exchange Commission.

在這次電話會議中，我們將討論我們的合併和分部經營業績，並提供我們對經營環境的看法以及我們根據戰略計劃取得的進展。按照慣例，我請您注意今天新聞稿中前瞻性和警示性聲明的討論以及我們向美國證券交易委員會提交的文件中的風險因素。

On the call today, we will reference certain non-GAAP financial measures. These measures and reconciliations to GAAP can be found in today's earnings release, along with reasons why management believes that they provide useful information.

在今天的電話會議上，我們將參考某些非公認會計準則財務指標。這些措施和對公認會計原則的調節可以在今天的收益報告中找到，以及管理層認為它們提供有用資訊的原因。

I will now turn the call over to our CEO, Graham Purdy.

我現在將把電話轉給我們的執行長格雷厄姆·珀迪。

Thanks, Andrew. With all that said, good morning, everyone, and thank you for joining our call. Our first-quarter results were in line with, and in some cases, better than our expectations and demonstrated continued progress against our plan. Adjusted EBITDA increased 21.6% to $25.3 million for the quarter. During the March quarter, Zig-Zag performed very well with revenue up 11.5% to $46.7 million, driven by strong double-digit growth in our Zig-Zag papers and alternative channel business.

謝謝，安德魯。話雖如此，大家早安，感謝您加入我們的通話。我們第一季的業績符合甚至在某些情況下優於我們的預期，並表明我們的計劃持續取得進展。本季調整後 EBITDA 成長 21.6%，達到 2,530 萬美元。在 3 月季度，Zig-Zag 表現非常出色，在我們的 Zig-Zag 報紙和替代通路業務強勁的兩位數成長的推動下，營收成長了 11.5%，達到 4,670 萬美元。

As we mentioned last quarter, we think we're past the noise associated with the trade inventory rationalizations we discussed last year, and we anticipate the backdrop is favorable for growth in 2024, and we demonstrated just that in Q1. We are encouraged by our wholesale customers' and retail customers' response to our expanding portfolio and some of our recent new product introductions.

正如我們上季度提到的，我們認為我們已經擺脫了去年討論的貿易庫存合理化帶來的噪音，我們預計背景有利於 2024 年的增長，我們在第一季就證明了這一點。我們的批發客戶和零售客戶對我們不斷擴大的產品組合以及我們最近推出的一些新產品的反應令我們感到鼓舞。

We remain committed to our alternative channel strategy and are efficiently filling out our customers' portfolio to better satisfy the growing and evolving demand from end consumers. Both factors are expanding our addressable market. We are having success not only winning new untapped alternative customers across the brick-and-mortar and alternative distributor network, but we are also seeing existing old customers buy a more complete Zig-Zag portfolio.

我們仍然致力於我們的替代通路策略，並有效地充實客戶的產品組合，以更好地滿足最終消費者不斷增長和變化的需求。這兩個因素都在擴大我們的潛在市場。我們不僅在實體和替代分銷網絡中贏得了新的未開發的替代客戶，而且我們還看到現有的老客戶購買了更完整的 Zig-Zag 投資組合。

As a result, we've seen healthy increases in average order sizes across the alternative space while providing the Zig-Zag brand with more valuable shelf space and merchandising real estate within these stores to build brand awareness as we satisfy evolving in consumer preferences.

因此，我們看到替代空間的平均訂單量健康成長，同時為 Zig-Zag 品牌提供更有價值的貨架空間，並在這些商店內銷售房地產，以建立品牌知名度，以滿足不斷變化的消費者偏好。

Considering that many of our competitors offer far fewer SKUs than Zig-Zag, we're finding that the alt channel is actively looking for partners that provide service above and beyond ordinary fulfillment, and we are one of the few companies that can truly meet the needs of the evolving end customer.

考慮到我們的許多競爭對手提供的SKU 遠少於Zig-Zag，我們發現替代管道正在積極尋找能夠提供超出普通履行範圍的服務的合作夥伴，而我們是少數能夠真正滿足這項要求的公司之一。

In addition to our full suite of product offerings from a well-known brand like Zig-Zag from papers, cones, accessories and apparel, there is a growing appetite to sell our wraps, cigars, and Modern Oral nicotine in stores and distributors that cater to this growing channel.

除了Zig-Zag 等知名品牌提供的全套產品（包括紙張、煙筒、配件和服裝）外，人們對在滿足以下需求的商店和分銷商銷售我們的捲菸、雪茄和現代口服尼古丁的需求也越來越大到這個不斷成長的管道。

As you know, the alternative channel is consistently expanding by virtue of additional states greenlighting medical and recreational cannabis as well as attempts to provide a better shopping experience for consumers. In addition to more legal dispensaries and manufacturing and processing facilities, other retail outlets like head shops are drafting off this trend. Our alternative B2B business saw continued momentum in Q1, accelerating from the growth we saw throughout 2023, growing over 60% in the quarter.

如您所知，隨著更多州批准醫療和娛樂大麻以及試圖為消費者提供更好的購物體驗，替代管道正在不斷擴大。除了更多的合法藥房以及製造和加工設施外，總店等其他零售店也正在效仿這一趨勢。我們的另類 B2B 業務在第一季持續保持成長勢頭，比 2023 年全年的成長有所加速，本季成長超過 60%。

Moving to Stoker's. During the quarter, Stoker's revenue increased 8% to $36.4 million, reflecting a 4.6% decline in loose leaf and a 6.7% increase in MST. Please recall that for the fourth quarter of 2023, we called out a likely unsustainable 18.6% increase in total Stoker's revenue. We continue to be pleased with the market share increases for Stoker's, which continues to be a steady growth engine with a long runway for volume growth and favorable pricing dynamics.

搬到斯托克家。本季度，Stoker 的營收成長了 8%，達到 3,640 萬美元，反映出活頁業務下降了 4.6%，而 MST 業務成長了 6.7%。請回想一下，對於 2023 年第四季度，我們指出 Stoker 總收入可能無法持續成長 18.6%。我們仍然對 Stoker's 市場份額的成長感到滿意，該公司仍然是一個穩定的成長引擎，具有長期的銷售成長和有利的定價動態。

We are pleased with the market's enthusiastic response to the beginning of our national launch of FRĒ, our Modern Oral, so-called white pouch product. As you can appreciate, given that we are in the early innings of growing our presence in this category, we will limit specific operating metrics around FRĒ.

我們很高興看到市場對我們的現代口服產品 FRä 開始在全國推出時的熱烈反響，即所謂的白色袋裝產品。正如您所理解的，鑑於我們正處於擴大這一類別業務的早期階段，我們將限制 FRä 的具體營運指標。

However, we are seeing positive momentum, and we are excited about the opportunity to make FRĒ a material contributor to revenue and profit growth in the Stoker's segment. Buoyed by a category that's already worth over $2 billion in annual wholesale revenue and grew over 50% last year for MSAi, we are currently focusing on prudently ramping up our sales and distribution efforts to achieve steady growth over time. We are leveraging our sales and distribution expertise to profitably expand FRĒ's profile and store count similar to what we've achieved with Stoker's MST over time.

然而，我們看到了積極的勢頭，我們很高興有機會使 FRä 成為 Stoker 細分市場收入和利潤增長的重要貢獻者。受到年批發收入超過 20 億美元且去年 MSAi 增長超過 50% 的類別的推動，我們目前專注於謹慎地加大銷售和分銷力度，以實現長期穩定增長。我們正在利用我們的銷售和分銷專業知識，以盈利方式擴大 FRä 的形象和商店數量，類似於我們隨著時間的推移透過 Stoker 的 MST 所取得的成就。

In addition to our traditional channel, we are also seeing alt channel demand for our FRĒ Modern Oral nicotine product, even if many of these stores don't sell traditional tobacco products. I mentioned this because the dynamic may not be intuitive for some of you, but it speaks volume to the synergies that TPB brings to bear with our world-class sales, service, and distribution platform. We look forward to providing updates on this exciting new product in the quarters and years to come.

除了我們的傳統管道之外，我們還看到其他管道對我們的 FRä 現代口服尼古丁產品的需求，即使其中許多商店不銷售傳統菸草產品。我提到這一點是因為這種動態對你們中的一些人來說可能並不直觀，但它充分說明了 TPB 與我們世界一流的銷售、服務和分銷平台所帶來的協同效應。我們期待在未來幾季和幾年內提供這款令人興奮的新產品的更新。

Given our solid start to the year, we are reaffirming our guidance for projected 2024 adjusted EBITDA in the range of $95 million to $100 million. Of note, our guidance range contemplated no contribution from CDS, which generated approximately $600,000 of adjusted EBITDA during the first quarter and about $2 million full-year EBITDA in 2023.

鑑於今年開局良好，我們重申 2024 年調整後 EBITDA 預計在 9,500 萬至 1 億美元範圍內的指引。值得注意的是，我們的指導範圍並未考慮 CDS 的貢獻，該公司在第一季產生了約 60 萬美元的調整後 EBITDA，並在 2023 年產生了約 200 萬美元的全年 EBITDA。

A reminder that last year, we closed on our ABL facility, which with cash on hand and free cash flow generation, gives us ample liquidity to address our convert maturity this summer, while providing flexibility for capital deployment.

提醒我們，去年我們關閉了 ABL 設施，該設施擁有手頭現金和自由現金流生成，為我們提供了充足的流動性來解決今年夏天的轉換到期問題，同時為資本部署提供了靈活性。

With that, let me hand the call over to Summer to walk through some progress and results of some of our specific go-to-market initiatives.

接下來，讓我將電話轉交給薩默，介紹我們一些具體的市場推廣計畫的一些進展和結果。

Thank you, Graham. Throughout Q4, we continued to further Zig-Zag's position as a lifestyle brand by executing against our multiyear road map. Our focus on growing Zig-Zag's portfolio and the alternative channel, while increasing the brand ubiquity, remains a core tenet of that plan.

謝謝你，格雷厄姆。在整個第四季度，我們透過執行我們的多年路線圖，繼續鞏固 Zig-Zag 作為生活風格品牌的地位。我們專注於發展 Zig-Zag 的產品組合和替代管道，同時提高品牌知名度，仍然是該計劃的核心宗旨。

As Graham noted, Zig-Zag posted a strong quarter, fuel by our papers and a record quarter for our alternative B2B channel. Within alternative B2B, our focus on penetrating cannabis first points of distribution from organized MSOs and dispensaries, manufacturers, and the head shops and smoke shops continues to be a strong barometer for the underlying growth in the industry and as importantly, our commitment to capitalize on this secular trend.

正如 Graham 指出的那樣，Zig-Zag 發布了強勁的季度業績，這得益於我們的論文以及我們的替代 B2B 通路創紀錄的季度業績。在替代B2B 中，我們專注於滲透有組織的MSO 和藥房、製造商以及總店和煙店的大麻第一分銷點，這仍然是該行業潛在增長的強有力的晴雨表，同樣重要的是，我們致力於利用這種長期趨勢。

To further Zig-Zag's growth as a lifestyle brand that resonates with our ever-evolving consumer base, the brand created numerous engaging opportunities throughout the quarter. Beginning with Valentine's Day, Zig-Zag partnered with 30-plus celebrities by hand delivering custom flower bouquets, which integrated Zig-Zag's rose cones into bouquet design. Our rose cones continue to be a popular addition to the portfolio, which we are leaning into and provide the brand with meaningful opportunities such as this.

為了進一步發展 Zig-Zag 作為一個與我們不斷變化的消費者群產生共鳴的生活方式品牌，該品牌在整個季度創造了許多吸引人的機會。從情人節開始，Zig-Zag與30多位名人合作，親手送出客製化花束，將Zig-Zag的玫瑰錐體融入花束設計中。我們的玫瑰錐仍然是產品組合中的熱門產品，我們正在致力於為該品牌提供諸如此類的有意義的機會。

The most notable event for the quarter, however, was coming together with the world's largest hip-hop and rap music festival, Rolling Loud, which celebrated its 10-year anniversary this year. Across four days, thousands and thousands of music lovers came together to embrace the festival's culture. Zig-Zag worked with over 90 celebrity partners by developing custom Zig-Zag in Rolling Loud merchandise and working with nearly 200 influencers to promote the partnership during the four-day event.

然而，本季最引人注目的活動是全球最大的嘻哈和說唱音樂節 Rolling Loud，該音樂節今年慶祝了其十週年紀念日。在四天的時間裡，成千上萬的音樂愛好者齊聚一堂，擁抱音樂節的文化。Zig-Zag 與 90 多名名人合作夥伴合作，在 Rolling Loud 商品中開發客製化 Zig-Zag，並與近 200 位有影響力的人士合作，在為期四天的活動中推廣合作夥伴關係。

Among signage across all digital screens in the venue, Zig-Zag had a custom 40-by-40 pop-up shop that invited attendees to interact with the brand. Sample and purchase products as well and learned more about Zig-Zag's history and future. We look forward to continuing to provide updates that highlight the momentum and efforts that support Zig-Zag's growth.

在會場所有數位螢幕上的標誌中，Zig-Zag 有一個客製化的 40 x 40 快閃店，邀請與會者與品牌互動。還可以試用和購買產品，並了解有關 Zig-Zag 的歷史和未來的更多資訊。我們期待繼續提供最新信息，突出支持 Zig-Zag 增長的勢頭和努力。

Turning to Stoker's. We are pleased with the results, especially coming off of a strong Q4. We are focused on continuing to expand distribution for the brand and continue to see the brand resonate with consumers, particularly given the evolving macroeconomic backdrop.

轉向斯托克。我們對結果感到滿意，尤其是第四季的強勁表現。我們專注於繼續擴大該品牌的分銷，並繼續看到該品牌與消費者產生共鳴，特別是考慮到不斷變化的宏觀經濟背景。

For FRĒ, our sales and marketing organizations are keenly focused on building a brand that will resonate with consumers for the long term. We made progress in the quarter across both brick-and-mortar stores and digital marketplaces, both our own B2C and other parties' website.

對 FRä 來說，我們的銷售和行銷組織專注於打造一個能與消費者長期產生共鳴的品牌。本季我們在實體店和數位市場、我們自己的 B2C 和其他方的網站上都取得了進展。

In addition to the traditional brick-and-mortar channel, which we know well, we have been building our e-commerce business for an extended period of time, enabling us to be closer to the end consumer. We continue to see month-over-month revenue increases and impressive returning consumer metrics on our B2C site.

除了我們熟知的傳統實體管道外，我們還長期致力於電子商務業務的建設，使我們能夠更貼近最終消費者。我們的 B2C 網站上的收入持續逐月成長，回頭客指標也令人印象深刻。

The receptivity and engagement from our trade partners and with consumers continues to reinforce that our product quality, moisture content, pouch size, and differentiated nicotine offerings are a powerful selling proposition.

我們的貿易夥伴和消費者的接受度和參與度不斷強化我們的產品品質、水分含量、袋尺寸和差異化尼古丁產品是一個強大的銷售主張。

In summary, we continue building our brands for the long term, executing against the plan we've established, and growing our business in retail and with our consumers. We will continue to focus on maximizing the value of our world-class brands and strengthening our extensive distribution capabilities.

總而言之，我們將繼續長期打造我們的品牌，執行我們已製定的計劃，並發展我們的零售業務以及與消費者的業務。我們將繼續專注於最大化我們世界級品牌的價值並加強我們廣泛的分銷能力。

Let me now turn the call back over to Andrew to go through our results.

現在讓我將電話轉回給安德魯，以查看我們的結果。

Thank you, Summer. Starting with our consolidated quarterly results. Q1 sales were down 3.9% to $97.1 million, which is flat on a sequential basis. Excluding CDS, overall revenue was up 10%. Gross margin was up 530 basis points to 53.5% due to favorable segment and product mix. Adjusted EBITDA was up 21.6% to $25.3 million.

謝謝你，夏天。從我們的綜合季度業績開始。第一季銷售額下降 3.9% 至 9,710 萬美元，與上一季持平。不包括 CDS，整體營收成長了 10%。由於有利的細分市場和產品組合，毛利率增加了 530 個基點，達到 53.5%。調整後 EBITDA 成長 21.6%，達到 2,530 萬美元。

Going into segment performance. Zig-Zag sales increased 11.5% year over year to $46.7 million due to strength in our papers business and continued penetration of the alt channel, as mentioned. As noted, the alternative B2B channel had a strong quarter. This is critical, given our aim to be everywhere our consumer is, and we couldn't be more pleased with the job the alt team is doing to expand the depth and breadth of our distribution to this important channel.

進入細分市場表現。如前所述，由於我們紙張業務的強勁以及替代管道的持續滲透，Zig-Zag 銷售額年增 11.5% 至 4,670 萬美元。如前所述，替代 B2B 通路的季度表現強勁。鑑於我們的目標是涵蓋消費者所在的任何地方，這一點至關重要，而且我們對 alt 團隊為擴大我們在這一重要管道的分銷深度和廣度所做的工作感到非常滿意。

Our Canadian business provided an approximate $800,000 headwind due to previously mentioned discontinuation of the low-margin, third-party product line. Gross margins increased 550 basis points to 59% during the quarter. This was driven primarily by product mix, including the discontinuation of the low-margin product line.

由於前面提到的低利潤第三方產品線的停產，我們的加拿大業務帶來了約 80 萬美元的阻力。本季毛利率成長 550 個基點，達到 59%。這主要是由產品組合推動的，包括低利潤產品線的停產。

Stoker's net sales increased 8% to $36.4 million in the quarter with a 0.2% volume increase and 7.9% price mix increase. Net sales for the MST portfolio grew 6.7%. Stoker's volume was up 1.2% despite category volume down 8.5%, with share growing 70 basis points year over year to 7.1% during the quarter according to MSAi. Its share in store selling was up 100 basis points year over year to 10.7%, with Stoker's now in stores representing approximately two-thirds of industry volumes, which still provides a long runway for growth.

本季 Stoker 的淨銷售額成長 8%，達到 3,640 萬美元，銷售成長 0.2%，價格組合成長 7.9%。MST 產品組合的淨銷售額成長了 6.7%。根據 MSAi 的數據，儘管類別銷量下降了 8.5%，但 Stoker 的銷量仍增長了 1.2%，本季度份額同比增長 70 個基點至 7.1%。其在商店銷售中的份額同比增長了 100 個基點，達到 10.7%，目前 Stoker's 的商店銷售量約佔行業銷量的三分之二，這仍然為增長提供了漫長的道路。

Chew sales were down mid-single digits from the previous year. Stoker's Chew was the number one chewing brand in the quarter, gaining 140 basis points of share to 31.1% according to MSAi. Overall, TPB loose leaf volume was down 5.2%, still beating category volume declines of 6.9%. Category performance was driven by a larger decline in premium loose leaf with TPB's volume benefiting from consumer trade down as Stoker's volumes grew from the previous year.

咀嚼食品的銷售額比前一年下降了中個位數。根據 MSAi 的數據，Stoker's Chew 是本季排名第一的咀嚼品牌，市佔率成長 140 個基點，達到 31.1%。整體而言，TPB 活葉銷量下降了 5.2%，但仍優於品類銷量 6.9% 的降幅。品類表現受到優質活頁大幅下降的推動，TPB 的銷售量受惠於消費者貿易下降，而 Stoker 的銷售量較前一年成長。

Our FRĒ sales more than tripled off a low base as we continue national distribution of the product. Gross margin declined 60 basis points to 57.2%, primarily due to product mix, somewhat offset by MST pricing gains. Moving to CDS. Sales were $14 million. Gross margin was 25.4%. Adjusted EBITDA was approximately $600,000.

隨著我們繼續在全國範圍內分銷該產品，我們的 FRä 銷售額比低基數增長了兩倍多。毛利率下降 60 個基點至 57.2%，主要是由於產品組合，但在一定程度上被 MST 定價收益所抵銷。轉向 CDS。銷售額為 1400 萬美元。毛利率為25.4%。調整後的 EBITDA 約為 60 萬美元。

Now on to the balance sheet. We ended the quarter with just over $130 million of cash on the balance sheet. And as of today, we have sufficient cash to address the maturity of our remaining $118.5 million convertible notes due July 2024. With our projected free cash flow generation this year, we are well within our previously discussed historical leverage range and are comfortable with our liquidity to enable shareholder value.

現在來看資產負債表。本季結束時，我們的資產負債表上的現金略多於 1.3 億美元。截至今天，我們有足夠的現金來解決 2024 年 7 月到期的剩餘 1.185 億美元可轉換票據的到期問題。根據我們今年預計的自由現金流量產生情況，我們完全處於先前討論的歷史槓桿範圍內，並且對我們的流動性能夠實現股東價值感到滿意。

On to guidance. This morning, we are reaffirming our expectation of consolidated adjusted EBITDA of $95 million to $100 million. Other projections include effective income tax rate of 23% to 26%. We expect CapEx to be approximately $15 million this year. We currently expect to spend approximately $4 million for the full year to supplement our PMTAs related to our Modern Oral products, which remain under review by the FDA.

繼續指導。今天上午，我們重申綜合調整後 EBITDA 為 9,500 萬至 1 億美元的預期。其他預測包括有效所得稅率為 23% 至 26%。我們預計今年的資本支出約為 1500 萬美元。目前，我們預計全年支出約 400 萬美元，以補充與 Modern Oral 產品相關的 PMTA，該產品仍在接受 FDA 審查。

Now let me turn it back over to Graham.

現在讓我把它轉回給格雷厄姆。

To conclude, we feel like we're off to a solid start to the year with Zig-Zag returning to growth, ongoing solid performance at Stoker's, and encouraging early signs from our national launch of FRĒ.

總而言之，我們覺得今年有了一個良好的開端，Zig-Zag 恢復增長，Stoker's 持續穩健的業績，以及我們在全國推出 FRä 帶來的令人鼓舞的早期跡象。

With that, I'll turn it over to questions.

說到這裡，我將把它轉為問題。

(Operator Instructions) Eric Des Lauriers, Craig-Hallum Capital Group.

（操作員說明）Eric Des Lauriers，Craig-Hallum Capital Group。

Great. Thank you for taking my question and congrats on the strong results here.

偉大的。感謝您提出我的問題，並祝賀我們取得了優異的成績。

Thanks, Eric.

謝謝，埃里克。

First one, just a clarifying question for me. So you highlighted B2B growth of 60% within Zig-Zag. And I just wanted to clarify, is that all the alternative channel, or is there some other B2B business in the traditional channel?

第一個，只是向我澄清一個問題。因此，您強調了 Zig-Zag 內 B2B 成長 60%。我只是想澄清一下，這都是替代管道嗎，還是傳統管道中還有其他B2B業務？

Yeah, that's all the alternative channel.

是的，這就是所有替代管道。

All right. That's very impressive. Within the alternative channel, just sticking with Zig-Zag here. So it seems like you've obviously made great progress over the past few years, getting into these new doors, and you've commented a bit on some of the competitive dynamics in terms of gaining shelf space. I'm just wondering if you could expand on those a bit, talk about how your products or your offerings stack up against the evolving competitive set here?

好的。這非常令人印象深刻。在替代通道內，只需堅持之字形調整浪即可。因此，在過去的幾年裡，您顯然已經取得了巨大的進步，進入了這些新的大門，並且您對在獲得貨架空間方面的一些競爭動態進行了一些評論。我只是想知道您是否可以擴展一下這些內容，談談您的產品或產品如何與這裡不斷發展的競爭環境相抗衡？

I think you mentioned you guys feel pretty well positioned in terms of number of SKUs, but just any additional color in terms of SKU counts or service levels or just the overall competitive dynamics or opportunities you see to increasing share within this alternative channel. Thanks.

我認為你們提到你們在 SKU 數量方面感覺非常有利，但在 SKU 數量或服務水平方面的任何額外顏色，或者只是你在這個替代渠道中看到的整體競爭動態或機會來增加份額。謝謝。

Yeah. Sure. Thanks, Eric, for your question. I think it's important to know from a year-over-year perspective, you might remember that we're benefiting from a comp perspective just to level set from some trade dynamics from last year, but still the projections for Zig-Zag are in line with our expectations, if you take that out of it.

是的。當然。謝謝埃里克提出的問題。我認為從逐年的角度了解這一點很重要，您可能還記得，我們​​從比較的角度受益，只是為了從去年的一些貿易動態中設定水平，但之字形調整浪的預測仍然符合符合我們的期望，如果你把它去掉的話。

In terms of the portfolio, as you know, we continue to monitor what consumers are interested in as the category is evolving and staying ahead of those consumer expectations and really balancing that against the profitability of introducing new products into the market, so we can continue to generate new news for Zig-Zag. We introduced some products earlier this year and have a number on the horizon, but it's something we're continuing to really make sure that we're in line with the consumer and where they're going.

就產品組合而言，如您所知，隨著該類別的發展，我們將繼續監控消費者感興趣的內容，並保持領先於消費者的期望，並真正平衡其與向市場推出新產品的盈利能力，這樣我們就可以繼續為 Zig-Zag 產生新訊息。我們在今年稍早推出了一些產品，並且即將推出一些產品，但我們將繼續真正確保我們與消費者及其發展方向保持一致。

Michael Legg, The Benchmark Company.

邁克爾·萊格，基準公司。

Thanks. Good morning. Great quarter, guys. Can you talk a little bit about the margin impact in the Zig-Zag segment from the CLIPPER stocking last year, where we are today? And how much of the margin improvement is from the elimination of the CLIPPER stocking versus margin improvement overall?

謝謝。早安.很棒的季度，夥計們。您能否談談去年 CLIPPER 庫存對 Zig-Zag 細分市場（即我們今天的情況）的利潤率影響？與整體利潤率改善相比，有多少利潤率改善來自於消除 CLIPPER 庫存？

Yeah. Look, Mike, the -- I think it's challenging from a year-over-year perspective given that the majority of what happened in Q1 last year was impact around our high-margin items in our traditional convenience store channel. And so this year, obviously, we didn't have that same headwind from a marginal perspective. So it's really just a catch-up on the year-over-year comp with more paper sales, more wrap sales versus year over year.

是的。聽著，麥克，我認為從同比的角度來看，這是一個挑戰，因為去年第一季發生的大部分事情都是對我們傳統便利商店通路中的高利潤商品的影響。因此，今年，顯然，從邊際角度來看，我們沒有遇到同樣的阻力。因此，這其實只是對同比的追趕，紙張銷售量、包裝銷售量逐年增加。

Okay. Great. And so do you think it's sustainable at these levels?

好的。偉大的。那麼您認為在這些水平上它是可持續的嗎？

I think our expectation is that where the margins sit with Zig-Zag for our core portfolio, we feel pretty good about.

我認為我們的期望是，我們對核心投資組合的鋸齒形調整利潤率感到非常滿意。

Okay. Great. And then I want to talk a little bit about the alt channel penetration. How much of that is in existing dispensaries alt channels versus new ones that are opening up? Where is the growth coming from?

好的。偉大的。然後我想談談替代管道的滲透。與正在開放的新藥房相比，現有藥房的替代管道中有多少？成長從哪裡來？

Yeah. I would highlight that the growth from the quarter is coming from a bit of both. I think the primary benefit that we saw in the quarter was really the alternative customers expanding their portfolio, getting more SKUs on shelf. But certainly, a portion of that was also driven by entering into new customer stores as well.

是的。我想強調的是，本季的成長來自於兩者。我認為我們在本季看到的主要好處實際上是另類客戶擴大了他們的產品組合，讓更多的 SKU 上架。但當然，其中一部分也是由進入新客戶商店推動的。

Okay. Great. And then I just want to -- I know you're not giving that much data on FRĒ. And I think I heard it tripled from a low base this quarter. But can you just talk about what you may have seen in focus groups with the product? I know your product has a higher dose that has more packs for a container. Can you just talk about what you're hearing from the consumer when you do focus groups on that?

好的。偉大的。然後我只是想——我知道你沒有提供那麼多關於 FRä 的數據。我想我聽說這個季度從低基數成長了兩倍。但您能談談您在焦點小組中看到的產品狀況嗎？我知道你們的產品劑量較高，每個容器的包裝數量也較多。您能談談當您進行焦點小組討論時從消費者那裡聽到的情況嗎？

Yeah. I think that as we've pointed out earlier that our point of differentiation in entering the market was more satisfaction, if you will. I think what we're starting to hear from consumers is that they're pleased with the mouthfeel of the product as well. It's designed to touch differently than the analog products that are on the market.

是的。我認為，正如我們之前指出的，如果您願意的話，我們進入市場的差異化點是更滿意。我認為我們開始從消費者那裡聽到的是，他們也對產品的口感感到滿意。它的設計觸控方式與市場上的模擬產品不同。

We continue to get great feedback from our consumers. We've got a really nice window win with our direct-to-consumer website on frepouch.com. Consumers are pretty active in terms of providing us feedback. And as you'll note, with online platforms, generally, consumers are quick to complain, but not as quick to provide positive feedback, and we're seeing a lot of positive feedback relative to the product. I think interestingly, the trade situation that we're in right now is very receptive to new products on shelf, and we're excited about the ramp in our traditional convenience stores.

我們不斷從消費者那裡得到很好的回饋。我們在 frepouch.com 上的直接面向消費者的網站取得了非常好的窗口勝利。消費者非常積極地向我們提供回饋。正如您將注意到的，在線上平台上，消費者通常很快就會抱怨，但不會那麼快提供正面的回饋，而且我們看到了很多與產品相關的正面回饋。我認為有趣的是，我們現在所處的貿易狀況非常容易接受貨架上的新產品，而且我們對傳統便利商店的成長感到興奮。

Okay. Great. And then just one last question on the vape business. I saw Real Brands is buying Vapor Shark. Can you talk a little bit about where we are with the whole CDS segment and what the magnitude of that possible acquisition is or divesture, I should say?

好的。偉大的。最後一個問題是關於電子煙業務的。我看到 Real Brands 正在收購 Vapor Shark。您能否談談我們在整個 CDS 領域的情況以及可能的收購或剝離的規模是多少？

Yeah. I think we're still firmly under the plan that we've previously communicated relative to how we're treating that business. As I'll note, again, we're -- we spend no management time within the core business, talking about the CDS business. So FRĒ stands and runs on its own.

是的。我認為我們仍然堅定地遵守我們之前就如何對待該業務所傳達的計劃。正如我要再次指出的那樣，我們沒有在核心業務中花費任何管理時間來討論 CDS 業務。因此，FRä 可以獨立存在並運作。

I would anticipate us continuing to matriculate along those lines relative to how we think about the future of that particular business. Interestingly to note as well in the quarter, the business actually performed pretty well in the quarter. And to the extent that the business remains sustainable cash flowing on its own, I think we're comfortable with that asset today. But from a future perspective, I think we remain focused on what we previously communicated.

我預計我們將繼續沿著與我們如何看待該特定業務的未來相關的路線進行入學。有趣的是，在本季度，該業務實際上表現相當不錯。如果該業務本身保持可持續的現金流，我認為我們今天對該資產感到滿意。但從未來的角度來看，我認為我們仍然專注於先前溝通的內容。

Okay. Thanks. Great quarter, guys. Congrats.

好的。謝謝。很棒的季度，夥計們。恭喜。

Thanks, Mike.

謝謝，麥克。

Thanks, Mike.

謝謝，麥克。

Scott Fortune, ROTH MKM.

斯科特·福瓊，羅斯·MKM。

Yeah. Thank you for the questions here this morning. Just one quick follow-up on the CDS side of things, it's stabilized at that $14 million business. Just hearing your comments as sustainable here at these levels, although you've indicated that it might come off, but just get a sense for the CDS business as we look out the rest of the year here from a dollar standpoint.

是的。謝謝你今天早上在這裡提出的問題。只需對 CDS 方面的事情進行快速跟進，它就穩定在 1400 萬美元的業務上。剛剛聽到您對這些水平的評論是可持續的，儘管您已經表示它可能會下降，但當我們從美元的角度展望今年剩餘時間時，請對 CDS 業務有所了解。

Yeah. I think on a sequential basis, we feel good about where the business has run through Q1. There's a lot of activity in the world that that business services. And so I think it's hard to underwrite this as this level of sustainability as we move forward. I would note that we do remain committed to that business remaining profitable while it sits underneath the TPB umbrella. So our expectation is that, at a minimum, that business continues to sustain itself, Scott.

是的。我認為，從連續的角度來看，我們對第一季的業務進展感到滿意。世界上有很多活動都是由該業務提供服務的。因此，我認為隨著我們的前進，很難保證這種程度的可持續性。我要指出的是，我們仍然致力於該業務在 TPB 保護下保持盈利。因此，我們的期望是，至少該業務能夠繼續維持下去，斯科特。

Thanks for that and then a follow-up there. And then just digging in a little more color on the continued penetration into the alternative channel and providing maybe a little more metrics there around that penetration levels where you're at. I know Summer has mentioned, you guys are getting positive shelf-based gains here and product strength selling into that channel. But just a little more color on the SKUs or products that are really increasing the market share in that channel if you can provide that.

感謝您的支持，然後進行後續跟進。然後，深入了解替代管道的持續滲透情況，並圍繞您所在的滲透水平提供更多指標。我知道薩默提到過，你們在這裡獲得了積極的貨架收益，並且產品實力銷售到該通路。但是，如果您能提供的話，只需在 SKU 或產品上多加一點顏色即可真正增加該通路的市場份額。

Yeah. So as we previously mentioned, we believe based on our internal metrics that that channel is growing. And I think if you look at year over year as well as sequential growth of 60%, I'm pretty confident to say that we feel like we're growing share.

是的。正如我們之前提到的，根據我們的內部指標，我們相信該管道正在成長。我認為，如果你看看同比以及 60% 的環比增長，我非常有信心地說，我們感覺我們的份額正在增長。

And I don't think that that is a surprise given the fact that we have broadened the portfolio and created more product offerings to create more consumer appeal for the Zig-Zag brand as well as occupying more shelf space to make Zig-Zag more relevant.

我認為這並不令人意外，因為我們已經擴大了產品組合，創造了更多產品，為Zig-Zag 品牌創造更多消費者吸引力，並佔據更多貨架空間，使Zig-Zag 更具相關性。

As it relates to metrics, I would anticipate over time that we will provide more clarity there, but we think we're still way in the early innings of our penetration in that channel. So at this point in time, our focus is to continue to find new retail stores, continue to find more distributors that service that space, continue to keep our head down, focus on the right product mix for the end consumer in those stores. And we think that things will happen if we continue on that plan.

由於它與指標相關，我預計隨著時間的推移，我們將在那裡提供更多的清晰度，但我們認為我們仍處於該管道滲透的早期階段。因此，目前我們的重點是繼續尋找新的零售店，繼續尋找更多為該空間提供服務的經銷商，繼續保持低調，專注於為這些商店的最終消費者提供正確的產品組合。我們認為，如果我們繼續執行該計劃，事情就會發生。

Got it. And then last question for me, just focusing on Stoker's a little bit. You're seeing nice continued market growth there as Modern Oral is weighing on the more of the smokeless tobacco side of things and taking share there, but can you provide a little color on the competitive front?

知道了。然後是我的最後一個問題，稍微關註一下斯托克的問題。您會看到那裡的市場持續良好成長，因為 Modern Oral 正在更多地關注無菸菸草方面並在那裡佔據份額，但是您能否在競爭方面提供一些資訊？

Are you seeing more competition from a pricing landscape with more focus towards the oral side of things? Just a little bit color on continuing that growth going forward and the competitive movement here.

您是否看到更多來自定價領域的競爭，並且更專注於口頭方面？只是對未來繼續成長和這裡的競爭運動進行一點說明。

Yeah. We were -- I think we are pleased with our results in the quarter for FRĒ as we really started down the street to gain penetration into the retail landscape. We've got a really nice online business where we speak directly to the end consumer. The category is on fire.

是的。我認為我們對 FRä 本季的業績感到滿意，因為我們真正開始滲透到零售領域。我們有一個非常好的線上業務，我們可以直接與最終消費者對話。該類別很火。

As you look out, I'm not sure that the category can sustain 73% year-over-year growth. It grew 16.5% on a sequential basis. There is competitive activity within that channel, but you would expect that with the umbrella of growth that category provides.

正如您所看到的，我不確定該類別能否維持 73% 的同比增長。環比增長 16.5%。該通路內存在競爭活動，但您會期望該類別提供成長的保護傘。

We still think we're well positioned with the product offerings that we have, catering to the consumer that's looking for more satisfaction. I mentioned the mouthfeel before. We think we -- our product really stacks up well from a mouthfeel perspective. And so we're going to continue moving forward and gaining new stores and engaging more consumers into the brand.

我們仍然認為，我們現有的產品定位良好，可以滿足尋求更多滿意度的消費者。我之前提到過口感。我們認為，從口感的角度來看，我們的產品確實非常出色。因此，我們將繼續前進，開設新店，吸引更多消費者加入品牌。

Thanks. I appreciate the color and detail. That's all from me.

謝謝。我很欣賞它的顏色和細節。這就是我的全部。

Thanks, Scott.

謝謝，斯科特。

We have no further questions in queue. I would like to turn the call back over to Graham Purdy for any closing remarks.

我們沒有其他問題了。我想將電話轉回給格雷厄姆·珀迪，讓其發表結束語。

Thanks, operator. Thank you, everybody, for joining our call. We felt really good about Q1, and we're looking forward to speaking to you again in a few months on our Q2 results. So thank you very much.

謝謝，接線生。謝謝大家加入我們的電話會議。我們對第一季的感覺非常好，我們期待在幾個月後再次與您討論我們第二季的結果。非常感謝。

This concludes today's conference call. Thank you for your participation. You may now disconnect.

今天的電話會議到此結束。感謝您的參與。您現在可以斷開連線。