ICR Conference Orlando, FL January 15, 2019

Transcription

1 ICR Conference Orlando, FL January 15, 2019

2 FORWARD LOOKING STATEMENTS This presentation contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements may generally be identified by the use of words such as "anticipate," "believe," "expect," "intend," "plan" and "will" or, in each case, their negative, or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. As a result, actual events may differ materially from those expressed in or suggested by the forwardlooking statements. Factors that could cause these differences include, but are not limited to, the factors set forth in Risk Factors included in TPB s annual report on Form 10-K and other reports filed with the Securities and Exchange Commission from time to time. Any forwardlooking statement made by TPB in this presentation speaks only as of the date hereof. New risks and uncertainties come up from time to time, and it is impossible for TPB to predict these events or how they may affect it. TPB has no obligation, and does not intend, to update any forward-looking statements after the date hereof, except as required by federal securities laws. DISCLAIMER This presentation includes industry and market data derived from internal analyses based upon publicly available data or proprietary research and analysis, surveys or studies conducted by third parties and industry and general publications, including those by the Management Science Associates, Inc. ( MSAi ) and Nielsen Holdings, N.V. ( Nielsen ). Third-party industry and general publications, research, surveys and studies generally state that the information contained therein has been obtained from sources believed to be reliable. Although there can be no assurance as to the accuracy or completeness of the included information, we believe that this information is reliable. While we believe our internal analyses are reliable, they have not been verified by any independent sources. Any such data and analysis involve risks and uncertainties and are subject to change based on various factors, including those set forth in Risk Factors included in TPB s annual report on Form 10-K and other reports filed with the Securities and Exchange Commission from time to time. NON-GAAP RECONCILIATION This presentation includes certain non-u.s. generally accepted accounting principles ( GAAP") financial measures, including EBITDA, Adjusted EBITDA and Net Debt. Such non-gaap financial measures are not in accordance with, or an alternative to, financial measures prepared in accordance with GAAP. Please refer to the Appendix of this presentation for a reconciliation of EBITDA and Adjusted EBITDA to net income and Net Debt to Debt. To supplement our financial information presented in accordance with generally accepted accounting principles in the United States, or U.S. GAAP, we use non-u.s. GAAP financial measures, including EBITDA, Adjusted EBITDA and Net Debt. We believe EBITDA and Adjusted EBITDA provide useful information to management and investors regarding certain financial and business trends relating to financial condition and results of operations. Adjusted EBITDA and Net Debt are used by management to compare performance to that of prior periods for trend analyses and planning purposes and is presented to our board of directors. We believe that EBITDA and Adjusted EBITDA are appropriate measures of operating performance because they eliminate the impact of expenses that do not relate to business performance. Slide / 01 Non-U.S. GAAP measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with U.S. GAAP. EBITDA and Adjusted EBITDA exclude significant expenses that are required by U.S. GAAP to be recorded in our financial statements and is subject to inherent limitations. In addition, other companies in our industry may calculate these non-u.s. GAAP measure differently than we do or may not calculate it at all, limiting its usefulness as a comparative measure.

3 WE ARE A BRAND COMPANY DEDICATED TO DEVELOPING ICONIC BRANDS THAT SATISFY ADULT CONSUMERS Leading Other Tobacco Products (OTP) provider (not cigarettes) Broad portfolio of compelling brands in higher margin tobacco products Well positioned for growing vapor and evolving alternatives products through NewGen sales engine Leverage as an active consolidator through management, regulatory, purchasing and systems (we will continue to deploy capital towards accretive acquisitions) Slide / 02

4 Net Sales ($MM) $320 $312.0 $285 $285.8 STRONG YOUR TITLE HERE GROWTH TRAJECTORY $250 $215 $206.2 $197.3 $ LTM 9/18 Slide / 03

5 STOKER S: LONG-TERM ORGANIC GROWTH Iconic Brand Chew = Cash Cow Moist = Growing brand in $4bn mfg rev market Slide / 04

6 ZIG-ZAG: ICONIC BRAND WITH TAILWINDS Zig-Zag is leading brand in smoking and alternatives market Significant product launches in 2019 Slide / 05

7 NEWGEN: SALES ENGINE TO THE FUTURE Spent ~$56mm over past two years acquiring infrastructure to expeditiously drive go to market strategy on NewGen products Primary business today is ~$160mm of third party product sales through B2B, B2C and Retail channels Today s formal announcement sets the future with creation of Nu-X Ventures, a subsidiary of the NewGen segment Slide / 06

8 TPB Advantage: Sales Channel Funnel for Proprietary Products Led by Graham Purdy. 16 years at TPB. Prior Philip Morris. Built and managed TPB sales team. Led double digit growth in NewGen since 2016 Nu-X has developed go to market strategies with products, starting in the NewGen Sales Engine and the best products will move to the ZigZag/Stokers sales force Owned/ Franchise Vape Shops (83 shops) VaporBeast B2B (~4,000 shops) IVG B2C Business (1,500,000 unique customers) TPB Sales Force: Independent Stores (80,000 stores) TPB National Chains (75,000 stores) Slide / 07

9 Slide / 08 By sourcing pure, natural ingredients, Nu-X aims to provide a suite of crossfunctional products utilizing innovative delivery methods that promote a holistic approach to wellness

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11 INVESTMENT AND PARTNERSHIP WITH CANADIAN AMERICAN STANDARD HEMP First of multiple investments TPB will make in strong partners in alternatives space CASH investment gives access to proprietary CBD processes and high quality products Slide / 10

12 RIPTIDE NEXT GENERATION NICOTINE TECHNOLOGY Slide / 11

13 MANAGEMENT OF REGULATED ENVIRONMENTS Regulatory Oversight TPB Today TPB does not sell cigarettes, which are the primary target of the FDA FDA continuum of risk guiding principle approach, reaffirmed in 2018 Working with FDA drives expected pathway for future innovation Management team of QA, R&D, legal and scientific professionals Organizer of small/mid-sized company lobbying teams Regulatory changes likely to cause significant disruption among smaller companies Slide / 12 Management has combined 100+ years of experience navigating federal, state and local regulations

14 ACTIVE CONSOLIDATOR 500+ OTP and Alternatives Market Targets and Joint Venture Potentials Have seen more interesting vape opportunities recently Distribution and ecommerce systems now in place to allow for plugand-play Significant incoming calls related to dropping products into TPB supply chain Leverage regulatory and sourcing teams Focused on accretive acquisitions and investments EBITDA Margin (%) Low High Low High High Low Low EBITDA ($) Current Landscape NewGen Smoking Smokeless High

15 BRINGING IT ALL TOGETHER DISTRIBUTION SYSTEM Consolidated distribution into Kentucky with integrated systems. 1-2 days across the US at low rates WORLD CLASS GO TO MARKET STRATEGY HANDS ON MANAGEMENT Management team is hands on with product development and go to market strategies SALES FORCE & ROBUST ECOMMERCE ENGINE Trusted relationships with independent retail world and ecommerce engine gets products into consumers hands REGULATORY STRENGTH Significant experience navigating federal, state and local regulations. Tobacco expertise translates into alternatives markets. Key advantage to startup CBD/alternative companies SOURCING TEAM Our sourcing teams in China and across North American farm networks gives us best in class products FINANCIAL STRENGTH Strong balance sheet with capital flexibility for acquisitions and working capital investments Slide / 01 13

16 THANK YOU