Item 1. Business
Item 1. Business
Overview
Turning Point Brands, Inc. (the “Company,” “we,” “our,” or “us”) 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 2023 as
reported by Management Science Associates, Inc. (“MSAi”), a third-party analytics and information company. Our segments are led by our core proprietary and iconic brands: Zig-Zag ® and CLIPPER® in the Zig-Zag Products segment and Stoker’s ® along with 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 820 distributors with an additional 650 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 grow through investing in organic growth, acquisitions and joint ventures across all product categories. As of December 31, 2023, our products
were available in approximately 197,000 U.S. retail locations which, with the addition of retail stores in Canada, brings our total North American retail presence to an estimated 217,000 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.
In the fourth quarter of 2022, we contributed our NewGen Products business to South Beach Holdings LLC doing business as Creative Distribution Solutions (“CDS”), a newly-formed wholly-owned
subsidiary. CDS is separately operated and reports to its own Board of Directors. During the first quarter of 2023, the business was designated an unrestricted subsidiary under the Senior Secured Notes (the “Notes”) and concurrently we renamed
what we previously referred to as our NewGen Products segment as our Creative Distribution Solutions segment as we believe this name better aligns with the goals and strategies of the segment. During the third quarter of 2023, the CDS business
was restructured to eliminate certain unprofitable brands and to focus on a narrower set of products to better position it as a standalone business.
Zig-Zag Products
Our Zig-Zag Products (“Zig-Zag”) segment principally includes rolling papers and make your own (“MYO”) cigar wraps used as smoking accessories. The strength of the Zig-Zag ® brand drives our leadership position in both the rolling papers and MYO cigar wrap markets. Zig-Zag ® is the #1 premium and #1 overall rolling paper in the U.S. with approximately 34% total market share according to
MSAi. 1 Management estimates that Zig-Zag ® is also the #1 brand in the promising Canadian market. Rolling paper operations are aided by our sourcing relationship with Republic Technology International SAS (“RTI”). See “Distribution and Supply Agreements”
below for our discussion of the Zig-Zag ® distribution agreement.
In MYO cigar wraps, the Zig-Zag ® brand commands a
majority of the market and continues to innovate in novel ways through additional product introductions. For instance, we introduced Zig-Zag ® ‘Rillo sized wraps, which are similar in size to cigarillos, the most popular and fastest growing type of machine-made cigars. In June 2020, we purchased certain assets from our long-term commercial
partner Durfort Holdings S.R.L (‘‘Durfort’’) which included the co-ownership in the intellectual property rights for all of our MYO Homogenized Tobacco Leaf (“HTL”) cigar wraps products. In connection with the transaction, we entered into an
exclusive Master Distribution Agreement to market and sell the original Blunt Wrap ® cigar wraps within the U.S. which was effective October 9, 2020. In late 2021, we extended our MYO cigar wraps offering
with entries into the growing hemp wraps and natural leaf wraps markets.
In July 2019, to extend our reach in Canada, we made a minority investment in Turning Point Brands Canada (formerly ReCreation Marketing) that we increased to a 65% ownership stake by July
2021. Turning Point Brands Canada is a specialty marketing and distribution firm focused on building brands in the Canadian cannabis accessories, tobacco and alternative products categories. Our majority ownership stake leverages Turning Point
Brands Canada’s significant expertise in marketing and distributing cannabis accessories and tobacco products throughout Canada. The remainder of Turning Point Brands Canada is owned by its management.
1 Brand ranking and market share percentages obtained from MSAi for the 52-week period ended December 30, 2023.
5
Table of Contents
In July 2021, we acquired certain assets of Unitabac, LLC (“Unitabac”), a marketer of mass-market cigars. In the acquisition, we acquired a robust portfolio of cigarillo products and all
related intellectual property, including Cigarillo Non-Tip (NT) HTL products and Rolled Leaf and Natural Leaf Cigarillo Products that we are using to re-introduce the Zig-Zag ® brand into a large and growing cigarillo market.
In February 2022, we announced an agreement with Flamagas, a renowned lighter manufacturer, for exclusive distribution of CLIPPER® lighters in the U.S. and Canada. CLIPPER® is the #1 reusable
lighter in the world and the #2 overall world lighter brand but is currently underrepresented in the U.S. and Canada with significant potential for growth. We aim to use our existing distribution infrastructure to expand access of CLIPPER®
lighters to more retailers and consumers.
Since mid-2019, we have been repositioning the business with growth initiatives focused on new product introductions and new channel expansions that are better aligned with the growing market
trends. As a result of those initiatives, we have been successful in changing the growth profile of our Zig-Zag Products segment.
Stoker’s Products
Our Stoker’s Products (“Stoker’s”) segment includes both moist snuff tobacco (“MST”) and loose-leaf chewing tobacco in addition to recent introductions in the modern oral product category. Stoker’s ® is our focus brand in both MST and chewing tobacco. In MST, Stoker’s ® remains among the fastest growing brands and holds a 10.7% share in the stores with distribution and a 6.9% share of the total U.S. MST non-pouch
market. Stoker’s ® is a pioneer in the MST industry. 1 It was first to introduce the large 12 oz. tub packaging format and is manufactured using a proprietary process that we believe results in a superior product. Starting in 2015, we extended the Stoker’s ® MST franchise to include traditional 1.2 oz. cans to broaden retail availability. Our proprietary
manufacturing process is conducted at our Dresden, Tennessee, plant and packaged in both our Dresden, Tennessee and Louisville, Kentucky facilities.
Stoker’s ® chewing tobacco has grown its market share
considerably over the last several years becoming the largest brand family in the industry and is presently the #1 discount and #1 overall brand in the industry, with approximately a 31% market share. Our status in the chew market is further
strengthened by Beech-Nut ® , the #3 premium brand and #7 overall, as well as Trophy ® , Durango ® , and the five Wind River Brands. Collectively, the Company is the #2 marketer of chewing tobacco with approximately 36% market share. 1 Our chewing tobacco operations are facilitated through our long-standing relationship with Swedish Match (now owned by Philip Morris International Inc.), the manufacturer of our loose-leaf chewing tobaccos.
In 2023, the Company expanded its rollout of modern oral nicotine products, FRĒ ® white nicotine pouches. Modern oral nicotine products are currently one of the fastest growing categories within the nicotine space.
Creative Distribution Solutions
The Creative Distribution Solutions segment primarily distributes third-party nicotine, non-nicotine and smoking products.
Competitive Strengths
We believe our competitive strengths include the following:
Large, Leading Brands with Significant Scale
We have built a portfolio of leading brands with significant scale that are well recognized by consumers, retailers, and wholesalers. Our Zig-Zag ® and Stoker’s ® brands are each well
established and date back 144 and 83 years, respectively.
•
Zig-Zag ® is the #1 premium and #1 overall rolling paper brand in the U.S., with
significant distribution in Canada as well. Zig-Zag ® is also the #1 MYO cigar wrap brand in the U.S., as measured
by MSAi. 1 We acquired North American rolling papers distribution rights for Zig-Zag ® in 1997. More importantly, we own the Zig-Zag ® tobacco
trademark in the U.S. which we leverage for our MYO cigar wraps product. Approximately 41% of our total 2023 Zig-Zag ® branded net sales are under our own Zig-Zag ® marks rather than those we license from
RTI under the Distribution and Licensing Agreements described below .
•
Stoker’s ® is among the fastest growing MST brands in the industry and is the #1
loose-leaf chewing tobacco brand. 1 We manufacture Stoker’s ® MST using only 100% American Leaf, utilizing a proprietary process to produce what we believe is a superior product.
1 Brand rankings and market share percentages obtained from MSAi for the 52-week period ended December 30, 2023.
6
Table of Contents
Zig-Zag ® is an iconic brand and has strong, enduring brand recognition among
a wide audience of consumers. CLIPPER® is the #1 reusable lighter in the world and the #2 overall world lighter brand with significant opportunities to grow as it is currently underrepresented in the U.S. and Canada. The Stoker’s ® brand is seen as an innovator in both the moist snuff and loose-leaf chewing tobacco markets.
Exposure to Growing Cannabinoid Consumption Trends
We believe that the cannabinoid market will continue to grow over the coming years as it becomes increasingly accepted by the public in the U.S. Our product offerings, particularly those in our
Zig-Zag Products segment, are ideally positioned to benefit from continued growth in consumer consumption.
The legal cannabis market in the U.S. is projected to grow from $29.6 billion in 2023 to $45 billion by 2027, representing an 11.0% compounded annual growth rate, according to a June 2023
report of BDSA, a market research firm focused on the legal cannabis market. With flower being the leading form factor for cannabis consumption among consumers, we believe our product offerings provide us with significant opportunity to expand
the number of retail channels we reach. A recent Gallup poll showed nearly seven in ten Americans now support legalizing cannabis nationwide, approximately twice the amount as twenty years ago. As of the end of 2023, 24 U.S. states and the
District of Columbia had legalized cannabis for adult recreational use and a majority of states now have comprehensive public medical cannabis programs.
Successful Track Record of New Product Launches and Category Expansions
We have successfully launched new products and entered new product categories by leveraging the strength of our brands and methodically targeting markets which we believe have significant
growth potential:
•
In 2009, we extended the Zig-Zag ® tobacco brand into the MYO cigar wraps market and
captured a 50% market share within the first two years. We are now the market share leader for MYO cigar wraps with approximately a 55% share of the cigar wraps category and 76% of the share of the HTL cigar wraps sub-category. 1 We believe our success was driven by the Zig-Zag ® tobacco branding, which we feel is widely understood by consumers to represent a favorable, customizable experience ideally suited to MYO products. In late 2021, we extended our Zig-Zag ® MYO cigar wraps offering with entries into the growing hemp wraps and natural leaf wraps markets.
•
We extended the Zig-Zag ® brand into hemp rolling papers in 2018 and followed that
with the launch of paper cones in 2019 with both products quickly establishing leading positions in their respective categories.
•
We leveraged the proud legacy and value of the Stoker’s ® brand to introduce a 12
oz. MST tub, a size that was not offered by any other market participant at the time of introduction. Stoker’s ® MST
has been among the fastest growing moist snuff brands in the industry in terms of pounds sold. While competitors have since introduced larger format tub packaging, the early entry and differentiation of the Stoker’s ® product have firmly established us as the market leader with over 55% of the tub market as of 2023. In 2015,
we introduced Stoker’s ® MST in 1.2 oz. cans to further expand retail penetration, particularly
in convenience stores. In 2023, we expanded our FRĒ ® white nicotine pouches into the market with a broader rollout planned in 2024.
•
We have also had success in acquiring, partnering with, and integrating new products and product lines, including:
•
Cigarillos, with the acquisition of Unitabac;
•
Lighters, with exclusive distribution of Clipper lighters in the U.S. and Canada; and
•
Liquid nicotine, with the acquisition of Vapor Beast and International Vapor Group, providing us with both B2B and B2C capabilities that we are able to leverage with our other product lines to reach new
retail outlets and consumers.
We strategically target product categories that we believe demonstrate significant growth potential and for which the value of our brands is likely to have a meaningful impact. We believe that
our track record and existing portfolio of brands provide growth advantages as we continue to evaluate opportunities to extend our product lines and expand into new categories.
Extensive Distribution Network and Data Driven Sales Organization
We have taken important steps to enhance our selling and distribution network and consumer marketing capabilities that allow us to grow our business while keeping our capital expenditure
requirements relatively low. We have long-standing relationships in the core convenience store channel and wholesale distribution network with access to more than 217,000 retail outlets in North America. We are also increasing brand presence
through non-traditional channels including headshops, dispensaries, and B2B e-commerce and are expanding our sales team dedicated to these channels. We have added brand dedicated platforms including ZigZag.com to facilitate our e-commerce brand
presence as well as sell on Amazon and other e-commerce sites. Our CDS B2B business reaches thousands of smoke shops and our B2C business has over one million unique customers.
1 Brand ranking and market share percentages obtained from MSAi for the 52-week period ended December 30, 2023.
7
Table of Contents
We service our customer base with an experienced sales and marketing organization of approximately 180 professionals who possess in-depth knowledge of the OTP market. We extensively use data
supported by leading technology, enabling our salesforce to analyze changing trends and effectively identify evolving consumer preferences at the store level and efficiently respond. We subscribe to a sales tracking system provided by MSAi that
measures OTP product shipments by all market participants, on a weekly basis, from approximately 600 wholesalers to over 250,000 traditional retail stores in the U.S. This system enables us to understand share and volume trends across multiple
categories at the store level, allowing us to allocate field salesforce coverage to the highest opportunity stores, thereby enhancing the value of new store placements and sales activity. Within our Stoker’s segment, we have seen a positive
correlation between the frequency of store calls by our salesforce and our retail market share.
Asset-light Business Model that Generates Resilient Free Cash Flow
We have a lean, asset-light manufacturing and sourcing model which leverages outsourced supplier relationships and requires low capital expenditures. We believe our asset-light model provides
marketplace flexibility, allows us to achieve favorable margins and generates high free cash flow conversion.
As part of our asset-light operating model, we built long-standing and extensive relationships with leading, high-quality producers from whom we source products including loose-leaf chewing
tobacco and cigarette paper, among others.
By outsourcing the production of certain products to a select group of suppliers with whom we have strong relationships, we are able to maintain low overhead costs and minimal capital
expenditures. Our supplier relationships allow us to increase the breadth of our product offerings and quickly enter new markets as management is able to focus on brand building and innovation. In 2023, approximately 75% of our net sales were
derived from outsourced production operations and our capital expenditures have ranged between $4.8 million and $7.7 million per year over the previous five years.
The stability of our cash flows is enhanced by the resilience of our Zig-Zag Products and Stoker’s Products business segments which we believe have recession-resistant end-markets. These
products are primarily staples that are small ticket purchases for repeat consumers. In addition, we believe the secular shift to the value category in the Stoker’s Products segment will benefit the long-term resilience of our brands.
We do not outsource our MST production as a result of our proprietary manufacturing processes which are substantively different than those of our competitors.
Expertise to Succeed in Dynamic Regulatory Environments
We operate in a highly regulated environment involving many different government agencies. In 2009, the U.S. Food and Drug Administration (“FDA”) was given jurisdiction over cigarettes and
smokeless tobacco, which expanded in 2016 to include all other tobacco products including vaping and cigars. This was further expanded in 2022 to cover non-tobacco nicotine products. We believe we have a competitive advantage due to our
management team’s experience navigating the relevant regulatory environment. We have increased our investments in teams of professionals including regulatory lawyers, scientists, and quality assurance processes to ensure we maintain a competitive
advantage in this area.
The FDA has implemented a premarket review process, referred to as the PMTA, or the Premarket Tobacco Application process, which requires all tobacco products introduced or changed since 2007
to submit an application to the FDA and receive marketing authorization prior to entering the market. For products already on the market when these requirements became effective, the FDA required applications for those products to be on file by
certain dates depending on whether the products were originally-regulated under the Family Smoking Prevention Tobacco Control Act (“TCA”), whether they were later “deemed” tobacco products, or whether they contain non-tobacco nicotine and were
not otherwise exempt from the TCA. The PMTA process is a very expensive and resource-intensive process and there are currently hundreds of competitors in the market but very few have the capability and or the resources to get their products
successfully through this process. In the years since, the FDA has rejected millions of applications.
To date, we have spent approximately $26 million in order to file and supplement applications covering a broad portfolio of noncombustible products, including vaping products and novel oral
nicotine products. By developing and submitting for FDA marketing authorization a deep suite of noncombustible products and leveraging our distribution platform, we believe that we have the opportunity to grow as consumers look toward potentially
lower-risk product offerings. We believe this is a transformational event for the industry with potential for us to realize substantial benefits over time as the FDA accelerates enforcement thereby, creating significant barriers for new entrants
as well as significant difficulties for existing companies who may not have the infrastructure needed to comply with these regulatory requirements. See “Risks Related to Legal, Tax and Regulatory Matters” under Item 1A “Risk Factors” and Note 1,
“Organizations and Basis of Presentation” in the Notes to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K, for additional information.
8
Table of Contents
In addition, we have been building and expanding an alternative logistics infrastructure across the U.S. to comply with the Prevent All Cigarette Trafficking Act (“PACT Act”) which was recently
extended to prohibit the use of the U.S. Postal Service to mail e-cigarette and related products directly to consumers and requires other common carriers to obtain adult signature on delivery.
Experienced Management Team
With extensive experience in consumer products, alternative smoking accessories and tobacco markets, our senior management team has enabled us to grow and diversify our business while improving
operational efficiency. Members of management have previous experience at other leading tobacco companies. Given the professional experience of the senior management team we are able to analyze risks and opportunities from a variety of
perspectives. Our senior leadership has embraced a collaborative culture in which combined experience, analytical rigor, and creativity are leveraged to assess opportunities and deliver products that satisfy consumers’ demands. Our management
team also brings a proven track record of patient and selective capital deployment into value enhancing transactions.
Growth Strategies
We are focused on building sustainable margins, expanding the availability of our products, developing innovative new products, and enhancing overall operating efficiencies with the goal of
improving margins and cash flow. We adopted the following strategies to drive growth in our business and build stockholder value:
Grow Share of Existing Product Lines, Domestically and Internationally
We intend to remain a consumer centric organization with an innovative view and understanding of the alternative smoking accessories and OTP markets. We believe we have strong tailwinds for
growth within our existing product lines. Within our Zig-Zag Products segment, we are benefitting from secular growth trends in the industry, driving market share gains in our traditional convenience store channel and expanding our presence into
non-traditional channels including headshops, dispensaries and e-commerce to drive growth. Within our Stoker’s Products segment, there is ample runway to gain market share driven by same store sales growth and further distribution gains as Stoker’s ® MST continues to be one of the fastest growing brands in the category.
In 2023, less than 10% of our revenues were generated outside of the U.S. We believe international sales represent a meaningful growth opportunity. Having established a strong infrastructure
and negotiated relationships across multiple segments and products, we are pursuing an international growth strategy to broaden sales and strengthen margins. In 2021, we further invested in growth in Canada by increasing our ownership in Turning
Point Brands Canada to 65%. Our goals include expanding our presence in the worldwide OTP industry on a targeted basis. For example, we are expanding Zig-Zag ® ’s retail penetration and product assortment in Canada including distributing CLIPPER®
lighters, and selling our Stoker’s ® MST products in South America, Europe, Asia and Africa.
Expand into Adjacent Categories through Innovation and New Partnerships
We continually evaluate opportunities to expand into adjacent product categories by leveraging our current portfolio and distribution platform, as well as by forming new partnerships. We
believe there are meaningful opportunities for growth within the alternative smoking accessories and OTP markets. We maintain a robust product pipeline and plan to strategically introduce new products in attractive, growing markets, both
domestically and internationally, with specific focus on our papers and MYO wraps businesses. In particular, the strength of the Zig-Zag ® brand provides a great platform to introduce a suite of complementary products such as our launch and expansion of hemp papers, paper cones, hemp wraps and natural leaf wraps. In 2022 we entered the lighter market through an
exclusive distribution agreement for CLIPPER® lighters in the U.S. and Canada. CLIPPER® is the #1 reusable lighter in the world and the #2 overall world lighter brand but is currently underrepresented in the U.S. and Canada with significant
potential for growth. As we have done successfully in the past, we will leverage our existing sales infrastructure to drive distribution of new products and are investing to expand our e-commerce distribution capabilities.
We have identified a number of new opportunities and we intend to leverage our existing brands and partnerships to continue the process of commercializing winning products that satisfy consumer
needs.
Accelerate Growth Through National Distribution Network
Our business is built around a powerful sales and distribution infrastructure that currently reaches an estimated 217,000 retail outlets in North America. We have strong presence in independent
convenience stores and now service most of the leading chain accounts. Through our e-commerce platforms we have alternative avenues through which to sell third-party products and an increasing amount of our proprietary products. This strategy
allows new products to be tested with lower risk before we incorporate them into our wider brick and mortar distribution system.
9
Table of Contents
Combining our different platforms, we have an expansive multi-channel distribution infrastructure that gives us a big competitive advantage when we introduce new products or acquire companies
that we can integrate into our network. We believe our experienced salesforce, expansive distribution network, and leading market analytics put us in a strong position to swiftly execute new product launches in response to evolving consumer and
market preferences.
Strategically Pursue Acquisitions
We believe there are meaningful acquisition opportunities in our fragmented markets. We regularly evaluate acquisition opportunities across our industries. In evaluating acquisition
opportunities, our focus is on identifying acquisitions that would leverage our distribution platform, regulatory infrastructure and product offerings or enable category expansion in areas with high growth potential to drive profit generation.
The vast majority of our 2023 U.S. gross profit was derived from sales of products currently regulated by the FDA Center for Tobacco Products. We have significant experience in complying with
the FDA regulatory regime with a compliance infrastructure composed of legal and scientific professionals. We believe many smaller OTP manufacturers currently lack this infrastructure, which is necessary to comply with the broad scope of FDA
regulations. We believe our regulatory compliance infrastructure, combined with our skilled management and strong distribution platform, position us to act as a consolidator within the OTP industry.
We have a strong track record of enhancing our OTP business with strategic and accretive acquisitions. The Company itself was built through acquisitions that were subsequently grown through
distribution gains, market share growth and brand extensions into new product categories. This is a playbook that we have drawn on over time with a consistent track record of success. We acquired the U.S. and Canadian rolling papers distribution
rights for Zig-Zag ® in 1997 and extended our product offerings including our entry into the MYO cigar wraps category in
2009. In 2003, we acquired the Stoker’s ® brand. We have since built the brand to the #1 position in the chewing tobacco
industry while successfully leveraging the brand’s value through our MST expansion where it remains among the fastest growing MST brands. Subsequent to our initial public offering (“IPO”) in 2016, we completed a series of acquisitions that built
the foundation of our CDS segment through (i) Vapor Beast, (ii) IVG, and (iii) Solace. Our investment in Turning Point Brands Canada in 2019 is accelerating Zig-Zag ® ’s growth through alternative channel penetration. In 2020, we acquired
certain assets from Durfort including co-ownership of the intellectual property rights for our MYO cigar wraps products. The transaction increased our share of the economics in a MYO cigar wraps business that was benefitting from secular growth
tailwinds and gave us access to a complimentary product in Blunt Wrap ® through an exclusive distribution agreement. Our investment in 2021 in Old Pal gives us increased exposure to the large and growing
cannabinoid market. In 2021, we also acquired certain assets from Unitabac, providing a platform to re-enter the large and growing cigarillo category.
Raw Materials, Product Supply, and Inventory Management
We source our products through a series of longstanding, highly valued relationships which allow us to conduct our business on an asset-light, distribution-focused basis.
The components of inventories were as follows (in thousands):
December 31,
2023
December 31,
2022
Raw materials and work in process
$
5,201
$
7,283
Leaf tobacco
34,894
43,468
Finished goods - Zig-Zag Products
41,783
42,279
Finished goods - Stoker’s Products
8,090
9,667
Finished goods - Creative Distribution Solutions
7,281
15,431
Other
1,711
1,787
Inventories
$
98,960
$
119,915
Zig-Zag Products
Pursuant to the Zig-Zag ® distribution agreements,
we are required to purchase from RTI all cigarette papers, cigarette tubes, and cigarette injecting machines that we sell, subject to RTI fulfilling its obligations under the Zig-Zag ® distribution agreements. See “Distribution and Supply Agreements” below for a discussion of the Zig-Zag ® distribution agreements. If RTI is unable or unwilling to perform its obligations or ceases its cigarette paper manufacturing operations, in each
case, as set forth in the Distribution Agreements, we may seek third-party suppliers and continue the use of the Zig-Zag ® trademark
to market these products. To ensure we have a steady supply of premium cigarette paper products, as well as cigarette tubes and injectors, RTI is required to maintain, at its expense, a two-month supply of inventory in a bonded, public warehouse
in the U.S.
10
Table of Contents
We obtain our MYO cigar wraps from our supplier in the Dominican Republic. We also obtain our Zig-Zag ® branded cigar products from the Dominican Republic.
Stoker’s Products
We produce our moist snuff and loose-leaf chewing tobaccos from air-cured and fire-cured leaf tobacco, respectively. We utilize recognized suppliers that generally maintain 12- to 24-month
supplies of our various types of tobacco at their facilities. We do not believe we are dependent on any single country or supplier source for tobacco. We generally maintain up to a two-month supply of finished, moist snuff and loose-leaf chewing
tobacco on hand. This supply is maintained at our Louisville, Kentucky, facility and in two regional public warehouses to facilitate distribution. In December 2023, a third-party warehouse that stores our tobacco was damaged by a tornado, leading
to a loss of some of our leaf tobacco inventory. We believe the losses will be fully covered by insurance. In light of alternative supply opportunities and our distribution schedule, we don’t expect the loss of the tobacco to impact our ability
to meet the demand for our products. See Item 1A “Risk Factors – Our business may be damaged by events outside of our or our suppliers’ control, such as the impact of epidemics, political upheavals, or natural disasters”.
We also utilize a variety of suppliers for the sourcing of additives used in our smokeless products and for the supply of our packaging materials. Thus, we believe we are not dependent on a
single supplier for these products. There are no current U.S. federal regulations that restrict tobacco flavor additives in smokeless products. The additives that we use are food-grade, generally accepted ingredients.
All of our moist snuff products are manufactured at our facility in Dresden, Tennessee. Packaging occurs at the Dresden, Tennessee, location in addition to the facility in Louisville, Kentucky.
All of our loose-leaf chewing tobacco production is fulfilled through our agreement with Swedish Match. See “Distribution and Supply Agreements” below for our discussion of the Swedish Match Manufacturing Agreement.
Creative Distribution Solutions Products
We have sourcing relationships that provide liquid nicotine products and certain other products without tobacco and/or nicotine for other companies’ brands and for producing our own branded
product lines. Our acquisition of several ecommerce platforms have (i) accelerated our entry into the non-traditional retail channel, where we believe a significant portion of liquid nicotine and adjacent products are sold; (ii) provided enhanced
distribution of our products; and (iii) established best-in-class distribution and B2C platforms. Furthermore, we have established a sourcing group in Asia to ensure timely and cost-effective access to marketplace winners and new product
launches, while also maximizing margins through thoughtful logistics strategies.
Distribution and Supply Agreements
The Zig-Zag Distribution and License Agreements
In 1992, we entered into two long-term exclusive distribution agreements with respect to sales of Zig-Zag® cigarette papers, cigarette tubes, and
cigarette injector machines in the U.S. and Canada (collectively, the “Distribution Agreements”). The Distribution Agreements had an initial twenty-year term, which automatically renews for successive twenty-year terms unless terminated in
accordance with the terms of the Distribution Agreements. The Distribution Agreements renewed for their second twenty-year term in November 2012.
Under the Distribution Agreements, we are required to purchase cigarette papers, cigarette tubes, and cigarette injector machines from the licensor; however, our licensor must provide us with
sufficient quantities consistent with specific order-to-delivery timelines outlined in the Distribution Agreements. Our product supply is further protected by additional safeguards, including the right to seek third-party suppliers in certain
circumstances and a two-month safety stock inventory to be kept in the U.S. at the licensor’s expense. The Distribution Agreements also provide shared responsibility for duties, insurance, shipping, and taxes. The import duties and taxes in the
U.S. and Canada are our responsibility, while the licensor is responsible for insurance, export duties, and shipping costs.
Each of the Distribution Agreements contains customary termination provisions, including failure to meet performance obligations, the assignment of the agreement or the consummation of a change
of control, in each case, without consent of the licensor, upon certain material breaches, including our agreement not to promote, directly or indirectly, cigarette paper or cigarette paper booklets of a competitor, or upon our bankruptcy,
insolvency, liquidation, or other similar event. The licensor also may terminate the Distribution Agreements if a competitor acquires a significant amount of our common stock or if one of our significant stockholders acquires a significant amount
of one of our competitors. In the event of a termination, we have agreed that for a period of five years after the termination we will not engage, directly or indirectly, in the manufacturing, selling, distributing, marketing, or otherwise
promoting, in the U.S. and Canada, of cigarette paper or cigarette paper booklets of a competitor without consent. There are certain de minimis exceptions to these provisions. For further details, see Item 1A “Risk Factors – We depend on a small
number of key third-party suppliers and producers for our products’’.
11
Table of Contents
In subsequent years, we entered into two licensing agreements, giving us the exclusive use of the Zig-Zag® brand name for e-cigarettes and related
accessories in the U.S. and for paper cone products in the U.S. and Canada (collectively, the “License Agreements”). Each of the License Agreements terminates if the Distribution Agreements are terminated.
The Distribution Agreements and the License Agreements were initially entered into with Bolloré S.A. (“Bolloré”). In November 2020, Bolloré assigned the Distribution Agreements and the License
Agreements to RTI. For a number of years, RTI has been the outsourced manufacturer of cigarette papers, cigarette tubes, cigarette injector machines and certain other products bearing the Zig-Zag ® name.
Swedish Match Manufacturing Agreement
In 2008, we entered into a manufacturing and distribution agreement with Swedish Match whereby Swedish Match became the exclusive manufacturer of our loose-leaf chewing tobacco. Under the
agreement, production of our loose-leaf chewing tobacco products was completely transitioned to Swedish Match’s plant located in Owensboro, Kentucky, in 2009. We source all of the tobacco Swedish Match uses to manufacture our products along with
certain proprietary flavorings and retain all marketing, design, formula, and trademark rights over our loose-leaf products. We also have the right to approve all product modifications and are solely responsible for decisions related to package
design and branding of the loose-leaf tobacco produced for us. Responsibilities related to process control, manufacturing activities, and inventory management with respect to our loose-leaf products are allocated between us and Swedish Match as
specified in the agreement. We also have rights to monitor production and quality control processes on an ongoing basis.
The agreement had an initial ten-year term and will automatically be renewed for five successive ten-year terms unless either party provides at least 180 days’ notice prior to a renewal term of
its intent to terminate the agreement, or unless otherwise terminated by mutual agreement of the parties in accordance with the provisions of the agreement. If a notice of non-renewal is delivered, the contract will expire two years after the
date on which the agreement would have otherwise been renewed. The terms allow the agreement to be assumed by a buyer, terminated for uncured material breach, or terminated by us subject to a buyout. We also hold a right of first refusal to
acquire the manufacturing plant as well as Swedish Match’s chewing tobacco unit. The agreement was automatically renewed for the first of five 10-year renewal periods in September 2018.
In November 2022, Philip Morris International Inc., acquired Swedish Match.
Production and Quality Control
We primarily outsource our manufacturing and production processes and focus on packaging, marketing, and distribution. We currently manufacture less than 25% of our products as measured by net
sales. Our in-house manufacturing operations are principally limited to (i) the manufacturing of our moist snuff products, which occurs at our facility in Dresden, Tennessee; and (ii) the packaging of our moist snuff products at our facilities in
Dresden, Tennessee and Louisville, Kentucky. Our MST products are processed in-house, rather than outsourced, as a result of our proprietary manufacturing processes which are substantively different than those of our competitors.
We use proprietary production processes and techniques, including strict quality controls. Our quality control group routinely tests the quality of the tobacco, flavorings, application of
flavorings, premium cigarette papers, tubes and injectors, cigars, MYO cigar wraps, liquid nicotine products, and packaging materials. We utilize sophisticated quality controls to test and closely monitor the quality of our products. The high
quality of our tobacco products is largely the result of using high-grade tobacco leaf and food-grade flavorings and, on an ongoing basis, analyzing the tobacco cut, flavorings, and moisture content together with strict specifications for sourced
products.
Given the importance of contract manufacturing to our business, our quality control group ensures that established, written procedures and standards are adhered to by each of our contract
manufacturers. Responsibilities related to process control, manufacturing activities, quality control, and inventory management with respect to our loose-leaf are allocated between us and Swedish Match under the manufacturing agreement.
Sales and Marketing
We have grown the size and capacity of our salesforce and intend to continue strengthening the organization to advance our ability to deepen and broaden the retail availability of our products
and brands.
As of December 31, 2023, we had a nationwide sales and marketing organization of approximately 180 professionals. Our sales and marketing group focuses on priority markets and sales channels
and seeks to operate with a high level of efficiency. In 2023, our Zig-Zag and Stoker’s Products sales and marketing efforts enabled our products to reach an estimated 217,000 retail outlets in North America and over 820 direct wholesale
customers with an additional 650 secondary, indirect wholesalers in the U.S.
12
Table of Contents
Our Zig-Zag and Stoker’s Products sales efforts are focused on wholesale distributors and retail merchants in the independent and chain convenience store, tobacco outlet, food store, mass
merchandising, drug store, and non-traditional retail channels. For Zig-Zag Products, we have also developed a growing e-commerce business along with a sales team focused on serving alternative channels such as headshops and dispensaries. Our CDS
sales efforts are focused on alternative channels and winning new stores, increasing our products share and store share and growing the B2C engine to capture a greater share of direct-to-consumer online sales. We have expanded, and intend to
continue to expand, the sales of our products into previously underdeveloped geographic markets and retail channels. In 2023, we derived more than 90% of our net sales from sales in the U.S., with the remainder primarily from sales in Canada.
We subscribe to a sales tracking system from MSAi that records all traditional OTP product shipments (ours as well as those of our competitors) from approximately 600 wholesalers to over
250,000 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. Additionally, the ability to select from a range of parameters and to achieve this level of granularity means we can analyze marketplace trends in a timely manner and swiftly evolve our business planning to meet
market opportunities.
We employ marketing activities to grow awareness, trial, and sales including selective trade advertising to expand wholesale availability, point-of-sale advertising and merchandising and
permanent and temporary displays to improve consumer visibility, and social media. We comply with all regulations relating to the marketing of tobacco products, such as directing marketing efforts to adult consumers, and are committed to full
legal compliance in the sales and marketing of our products. To date, we have neither relied upon, nor conducted, any substantial advertising in consumer media for our tobacco products.
For the years ended December 31, 2023, 2022, and 2021, we did not have any customer that accounted for 10% or more of our net sales. Our customers use an open purchase order system to buy our
products and are not obligated to do so pursuant to ongoing contractual obligations. We perform periodic credit evaluations of our customers and generally do not require collateral on trade receivables. Historically, we have not experienced
material credit losses. Sales to customers within our CDS segment are generally prepaid.
Competition
Many of our competitors are better capitalized than we are and have greater resources, financial and otherwise. We believe our ability to effectively compete and maintain strong market
positions in our principal product lines are due to the high recognition of our brand names, the perceived quality of each of our products, and the efforts of our sales, marketing, and distribution teams. We compete against “big tobacco,”
including Altria Group, Inc. (formerly Philip Morris International Inc.); British American Tobacco p.l.c. (formerly R.J. Reynolds Tobacco Company); Swedish Match (now owned by Philip Morris International Inc.); Swisher International, Inc.; and
manufacturers including U.K. based Imperial Brands, PLC, across our segments. “Big tobacco” has substantial resources and a customer base that has historically demonstrated loyalty to their brands.
Competition in the OTP market is based upon not only brand quality and positioning but also on price, packaging, promotion, and retail availability and visibility. Given the decreasing
prevalence of cigarette consumption, the “big tobacco” companies continue to demonstrate an increased interest and participation in a number of OTP markets.
Zig-Zag Products
Our principal competitors for premium rolling paper sales are Republic Tobacco, L.P. and HBI International. Our major competitors in MYO cigar wraps are Good Times USA, LLC and New Image
Global, Inc. We believe MYO cigar wrap products are used interchangeably with both rolling papers and finished cigar products by many consumers.
Stoker’s Products
Our four principal competitors in the moist snuff category are Swedish Match (acquired in 2022 by Philip Morris International Inc.), the American Snuff Company, LLC (a unit of British American
Tobacco p.l.c.), Swisher International Group, Inc. and U.S. Smokeless Tobacco Company (a division of Altria Group, Inc.). In the loose-leaf chewing tobacco market, our three principal competitors are Swedish Match (acquired in 2022 by Philip
Morris International Inc.), the American Snuff Company, LLC (a unit of British American Tobacco p.l.c.), and Swisher International Group, Inc. We believe moist snuff products are used interchangeably with loose-leaf products by many consumers.
For modern oral nicotine products, our four principal competitors are Swedish Match (acquired in 2022 by Philip Morris International Inc.), Modoral Brands Inc. (a unit of British American Tobacco p.l.c.), Swisher International Group, Inc. and
Helix Innovations, LLC (a division of Altria Group, Inc.).
13
Table of Contents
Creative Distribution Solutions Products
In the CDS segment, our competitors are varied as the market is relatively new and highly fragmented. Our direct competitors sell products that are substantially similar to the products that we
sell through the same channels in which we sell such products. We compete with these direct competitors for sales through wholesalers and retailers including, but not limited to, smoke shops, national chain stores, tobacco shops, and convenience
stores and in the online direct to consumer environment. As a result of our acquisitions of Vapor Beast, IVG and Solace we now also compete directly with other non-traditional distributors and retailers.
Patents, Trademarks, and Trade Secrets
We have numerous registered trademarks relating to our products, including: Beech-Nut ® , Trophy ® , Havana Blossom ® , Durango ® , Stoker’s ® , Tequila Sunrise ® , Fred’s Choice ® , Old Hillside ® , Our Pride ® , Red Cap ® , Tennessee Chew ® , Big Mountain ® , Springfield Standard ® , Snake River ® , FRĒ ® , Vapor Beast ® , Vapor Shark ® , DirectVapor ® , VaporFi ® and South Beach Smoke ® . The
registered trademarks, which are significant to our business, expire periodically and are renewable for additional 10-year terms upon expiration. Flavor and blend formula trade secrets relating to our tobacco products, which are key assets of our
businesses, are maintained under strict secrecy.
The Zig-Zag ® trade dress trademark for premium cigarette papers and
related products are owned by RTI and have been exclusively licensed to us in the U.S. and Canada. The Zig-Zag ® trademark
for e-cigarettes is also owned by RTI and has been exclusively licensed to us in the U.S. We own the Zig-Zag ® trademark
with respect to its use in connection with products made with tobacco including, without limitation, cigarettes, cigars, and MYO cigar wraps in the U.S.
Research and Development and Quality Assurance
We have a research and development and quality assurance function that tests raw materials and finished products in order to maintain a high level of product quality and consistency. Research
and development largely bases its new product development efforts on our high-tech data systems. We spent approximately $0.6 million, $0.6 million, and $1.1 million dollars on research and development and quality control efforts for the years
ended December 31, 2023, 2022, and 2021, respectively.
Human Capital
As of December 31, 2023, we employed 373 full-time and part-time employees. None of our employees are represented by unions. We believe we have a positive relationship with our employees.
We believe that our success is driven by our employees. Our human capital strategy, which is developed and overseen by our Chief People Officer (“CPO”), focuses on the health and safety of our
employees, development and retention of current employees, and talent attraction. Our CPO is also responsible for our diversity, equity, and inclusion (“DE&I”) strategies. The Chief Executive Officer (“CEO”) and CPO regularly update the board
of directors and its committees on the human capital management, as well as the implementation of new initiatives.
Health and Safety: Our health and safety programs are designed to address applicable regulations as well as the specific hazards and work environments of
each of our facilities. We regularly conduct safety reviews and trainings at each of our locations to ensure compliance with applicable regulations and all policies and procedures. We maintain safety committees that meet regularly to discuss and
address any potential issues in our warehouse and manufacturing facilities. In addition, we conduct quarterly Motor Vehicle Safety trainings and annual Motor Vehicle Records checks for those assigned to company vehicles or who are daily drivers.
We utilize a number of metrics to assess the performance of our health and safety policies, procedures and initiatives, including lost workdays and any recordable or reportable incidents.
TPB Culture Committee: We implemented a Culture Committee in 2021 as a platform to discuss and implement ideas for Turning Point Brands to be the employer
of choice. The committee is comprised of diverse individuals from different departments and geographic locations. The committee’s focus is to recommend and implement best practices in the areas of health and safety, DE&I, employee engagement,
talent development and retention, and community engagement.
Employee Engagement: To assess and improve employee retention and engagement, we implemented a new software system which frequently surveys our workforce to
focus our efforts on maximizing employee engagement and retention. The system is configured to use text messaging, in addition to email notifications to increase the participation of our workforce.
Diversity, Equity and Inclusion: We place a high value on DE&I. As of December 31, 2023, approximately 33% of our workforce was female and 75% of our
executive leadership roles were held by females. As of the same date, underrepresented minorities made up approximately 28% of our workforce, with 24% of our managerial roles held by underrepresented minorities.
14
Table of Contents
Training and Talent Development: We provide technical and leadership training to employees at both the officer and non-officer levels. In 2020, the Company
developed Turning Point University, an online training and development tool used by management and employees.
We believe that encouraging continual development for our employees is essential for us to maintain the strength and profitability of the Company, generally, and brands, specifically. The
Company posts its openings internally to allow current employees to apply. In 2023, we had 20 internal promotions within the organization.
Retaining Talent: During the year ended December 31, 2023, our employee turnover rate was 18%. To retain our
employees, we believe it is critical to continually focus on ensuring employees are highly engaged and feel valued. We address these retention efforts in a number of ways from formal surveys and quarterly business updates to regular informal
discussions with employees that enable us to listen to, understand and address their concerns.
Employee Benefits : We offer comprehensive benefit programs to our
employees that provides them with, among other things, medical, dental, and vision healthcare; 401(k) matching contributions; paid parental leave; tuition assistance; paid holidays; and paid vacation time.
Environmental, Social and Governance (“ESG”)
We believe that focusing on our consumers and customers, while proactively and productively addressing the environment, our employees, our community, and society at large, is the key to driving
value for all stakeholders. We recognize that incorporating ESG initiatives into our business strategy enhances our operating principles of winning with accountability, integrity, and responsibility, and will position our Company for greater
success in the future. We believe that we will maximize shareholder returns by implementing strategies and establishing goals to address public health concerns, mitigate environmental risks, seek and integrate a diverse range of viewpoints, and
display responsible behaviors to suppliers, customers, members of the organization and most of all to our consumers. Our Nominating and ESG Committee manages oversight of the Company’s ESG efforts. As discussed below, our ESG initiatives are led
by our ESG Executive Committee, as well as subordinate committees that focus on specific initiatives.
Public Health
One key aspect of our ESG program, is our distinct focus on our role in public health. We market and sell products intended for adult use only, many containing nicotine. As a result, public
health plays a central role in all of our product initiatives. We believe in, and work diligently to apply, harm reduction principles to all of our products, from development through distribution and marketing. Our vision is built upon the idea
that adult consumers, when presented with responsibly marketed and high-quality options, will, in large part, prefer products with a lower risk profile than others. This idea of moving adult consumers down the continuum of risk is a key driver of
our future for sustainable growth. We intend to accomplish this by developing low-risk alternatives according to good product stewardship and manufacturing principles in order to increase adult consumer availability of and access to high-quality
products that deliver satisfaction but at a lower risk to the user. We will continue to focus our research and development, scientific, policy, and product resources to increase the number of consumers choosing products that are lower risk.
In September 2020 and again in May 2022, we submitted to the FDA PMTA covering a large number of noncombustible products, including both vaping products and novel oral nicotine products. This
is an important and necessary step to allow us to offer adult consumers an extensive portfolio of products that serve as alternatives to combustible cigarettes and satisfy a wide variety of consumer preferences. The filings provide detailed
scientific data that we believe demonstrates that the products are “appropriate for the protection of public health,” as required by law. Studies to support the applications were performed and included pharmacokinetics studies, a likelihood of
use study, and a patterns of use study, in addition to a toxicological review. We also provided a detailed marketing plan to illustrate how we will continue to prevent youth exposure to the products. See “Risks Related to Legal, Tax and
Regulatory Matters” under Item 1A “Risk Factors” of this Annual Report on Form 10-K.
Prevention of Youth Access
Our vision is a world where only adult consumers purchase and use products that are not intended for youth. As a seller of products intended for adult-use only, society demands a higher burden
of responsibility from us, and we are committed to proactively preventing the underage appeal of and access to those products. We are dedicated to the responsible marketing of our adult use products and are fully committed to complying with all
applicable laws and regulations governing them. We target marketing activities to both male and female current nicotine, cannabinoid, and other active consumers that are 21 years of age and older. The marketing of our adult use products does not
include content directed toward minors, including child-oriented images or other themes where such imagery is reasonably understood to resonate with minors. We plan to continue to engage in appropriately targeted marketing activity, consistent
with all legal requirements, industry standards, and best practices.
15
Table of Contents
Preventing youth access and use of our adult-use products is a key to our continued success. All of our adult-use products are intended to be sold to and used by adults 21 years of age and
older, and we are proactive in implementing programs to prevent youth access. For our own online retail (B2C) sales, we display our policies related to age to purchase, battery safety, and shipping restrictions. Additionally, we verify B2B
customers using business licenses in order to further prevent bulk sales to consumers, which we believe contributes to social sourcing by youth.
Environmental Stewardship
Being good stewards of the planet will support our business success. Our major areas of focus are lowering vehicle emissions produced by our fleet, incorporating energy savings initiatives at
our facilities, reducing water consumption in our operations, and increasing our recycling efforts. Within each of these categories we are concentrating on developing and measuring progress with an aim to define metrics against which we can
track our efforts.
Social Impact
We focus our efforts on fostering a diverse and inclusive workforce while providing a safe work environment for our team. We value different perspectives and feel that an open and inclusive
culture is not only the right thing to do, but fundamentally supports the business through diverse thought and opinions. Our DE&I efforts are evidenced through programs like our veterans and women focused business inclusion groups. Our goal
is to provide an injury-free workplace where every employee has a safe work environment and feels empowered to speak up. We regularly monitor and provide training as part of our safety program and have active safety committees at each of our
sites dedicated to implementing best practices.
Corporate Governance
Good corporate governance is critical to our operating principles of winning with accountability, integrity, and responsibility. Acting with accountability, integrity and responsibility is at
the core of our business conduct policy. We train all employees on our business conduct policies. In addition, our governance program measures the diversity of our Board. We believe that Board diversity is critical to having a winning culture and
strategy. We have established meaningful measures for our governance program and our targets and actions will allow us to achieve our goals in this area.
Our ESG Committees
In 2023, we continued integration of our ESG principles into our business practices. Our ESG committees are comprised of diverse individuals from different departments and geographic locations.
The committees report to the ESG Executive Committee, comprised of the President and CEO, CFO, and General Counsel, who in turn works with the Board’s Nominating and ESG Committee. The following committees report to the ESG Executive Committee:
•
The Environmental Committee provides a platform to enhance and track the progress of our environmental practices within our business units. The committee is charged with recommending, implementing, and
monitoring best practices in the areas of carbon emissions, waste, water, and biodiversity within our business units. In 2023, the Company continued to make substantial investments around reducing energy consumption and environmental
waste in our manufacturing operations. Additionally, we have reduced our total mileage through innovative dispatch and scheduling procedures.
•
The Social Committee provides a platform to achieve the objective of being the employer of choice. The committee is charged with recommending and implementing best practices in the areas of health and
safety, DE&I, Talent Development and Retention, and Community Engagement.
•
The Policies Committee provides a platform to review our governance practices and implement new or updated policies as our needs change. The committee is charged with recommending and implementing
appropriate best practices in the areas of business ethics, political engagement, supply chain processes, and cybersecurity. The committee additionally is charged with recommending and implementing best practices in the areas of public
health, responsible marketing, and youth access prevention. In 2023, the Policies Committee developed several new policies, particularly aimed at cybersecurity, and held training sessions with our marketing teams related to prevention of
youth appeal.
Further information related to our ESG program can be found on our website.
Available Information
More information about Turning Point Brands is available on the Company’s website at www.turningpointbrands.com. The U.S. Securities and Exchange Commission (the “SEC”) maintains a website at
https://www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. On the investor relations portion of our website,
www.turningpointbrands.com/investor-relations, we provide a link to our electronic filings with the SEC, including our Annual Report on Form 10-K, our quarterly reports on Form 10-Q, our current reports on Form 8-K, and any amendments to these
reports. We make all such filings available free of charge as soon as reasonably practicable after filing. The information found on our website is not part of this or any other report we file with or furnish to the SEC.
16
Table of Contents