Turning Point Brands, Inc.

customer's response to our expanding and more complete portfolio fueled by many new products launched over the past few years. In Q4, we launched combo books as well as our first seasonal vintage apparel line. As you may have noticed, we leaned into our direct relationships with our consumers using several social media tactics to engage our growing audience. As mentioned, we continue to see strong demand from consumers in the alternative channel as legalization And further normalization of cannabis is expanding the alternative store footprint, dispensaries, head shops, smoke shops, which cater to a growing accessory market. Our alternative B2B business saw continued momentum with zigzag sales growing by over 30% during the quarter, driven by an acceleration in premium paper sales in the second half of 2023. Our strategy in the alternative channel is to be a valued partner to the growing distributor, retailer, and manufacturing network serving this ecosystem. In addition to growing traffic, alternative stores are attractive because they offer the zigzag portfolio more valuable shelf space and merchandising real estate than traditional C-stores. We try to be a solution provider to various customers throughout the ecosystem, and in doing so, we're able to build brand awareness and consumer trial to ensure we satisfy this growing consumer base. As discussed in the past, our growth in the alternative market has been driven by two drivers. One, gaining new customers across the retail, distributor, and manufacturing landscape, and two, increasing order sizes to both existing and new customers as we expand our portfolio. Cross-selling Clipper Lighters is an example of that. Both drivers continue to be healthy. Lastly, in 2023, we were pleased to close on our ABL facility, which, along with the cash we have on hand, gives us ample liquidity to address our convertible debt maturity later this year. With that, let me hand the call over to Summer to walk through progress and the results of several of our specific go-to-market initiatives.

Thank you, Graham. Throughout Q4, we continued to make progress against our roadmap of furthering ZigZag's position as a lifestyle brand. Our focus on growing ZigZag's portfolio and the alternative channel while increasing the brand's ubiquity remains a core tenant of that plan. In Q4, we continued building a product assortment that aligns with market demand. In early December at MJBizCon, we launched our new ZigZag combo booklet, a convenient package combining both papers and tips available in several varieties of our paper assortment. Since its launch, our team is ahead of plan and gaining valuable shelf space. In 2024 and beyond, you should expect us to continue to launch new products that cater to this rapidly evolving consumer. We also launched ZigZag's first seasonal apparel collection, the Vintage Collection, which garnered the attention of the fashion and streetwear community with two of the largest culture publications, Complex and Hypebeast, covering the launch. The Vintage Collection paid homage to ZigZag's century-long influence in the smoking world by blending style, heritage, and culture. 2024 marks the 145th anniversary of the brand, and launching the vintage collection is just the first of many moments we'll bring to consumers and retail to celebrate this remarkable milestone. Furthermore, we continue to develop our event and partnership strategy to integrate ZigZag into music, entertainment, and other creative communities, including recent collaborations with major record labels. Leading into 2024, we hosted Grammy events within the Afrobeat community in partnership with Roc Nation, with the famous DJ collective, Selection, and five-time Grammy award-winning producer, D-Mile, who added another Grammy at the ceremony for Producer of the Year. Throughout Q4, we continued increasing store penetration for Clipper lighters and capitalizing on the synergies between Clipper and Zig Zags. We look forward to continuing to provide updates that showcase the momentum and efforts that support Zig Zags growth. Moving to Stokers, Graham noted the success we had for the segment. The strength was driven by another strong quarter of share gain for both Stoker's MST and Loose Leaf. With its product quality and value proposition continuing to resonate with consumers, we expect that trend to continue. While a small contributor during the quarter, we are excited about the broader rollout of our free white nicotine pouch product. We are in the midst of our initial push on free in both brick-and-mortar stores and digital marketplaces, both our own and other parties' websites. The receptivity and engagement from our trade partners and with consumers continue to reinforce that our product quality, moisture content, pouch size, and differentiated nicotine offerings are leading to positive consumer sentiment. 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. Our efforts are focusing on maximizing the value of our world-class brands and strengthening our extensive distribution capabilities. Let me now turn the call back over to Louie to go through our results.

Thank you, Summer. Starting with our consolidated quarterly results. Q4 sales were down 6.1% to $97.1 million. Gross margin was up 410 basis points to 52.0% due to segment and product mix. Adjusted EBITDA was up 7.5% to $24.8 million. Going into segment performance. Zigzag sales decreased 2.9% year-over-year to $45.1 million due to discontinuation of an unprofitable product line in Canada that impacted sales by $1.4 million. Our U.S. paper and RAS business was stable with double-digit growth in our B2B alternative sales business. Our Canadian and other smoking accessories categories saw declines during the quarter, leading to a discontinuation of the low-margin third-party product line. This margin increased 100 basis points to 56.5% during the quarter, driven primarily by product mix, including the discontinuation of the low-margin product line. Focus products net sales increased 18.6% to $38.0 million in the quarter, with a 14.2% volume increase and a 4.4% price mix increase. MST, SHU, and FREE all delivered strong growth during the quarter. Net sales from the MST portfolio grew double-digit. Sophos retail shipment pounds were up despite the category being down 5.6%, with share growing 50 basis points year-over-year to 7.1% during the second quarter, according to MSAI. MST share in-store selling was up 40 basis points year-over-year, To 10.7%, with Stokers now in stores representing 67% of industry bodies, which still provides a long runway for growth. We also had strong growth in our international export business. Chew sales were up high single-digits from the previous year. Stokers Chew was the number one chewing brand in the quarter, gaining 220 basis points of share with 31.0% share, according to MSAI. overall tcb loose wheat retail shipping pounds were up despite the category being down 2.2 percent category performance was driven by a larger decline in premium loosely with tpv's volume benefiting from its values positioning and continuing consumer trade-offs our free sales more than doubled off a low base as we start a broader expansion of the product in 2024. Gross margin increased 380 basis points to 57.6%, primarily due to MSP pricing. PDS sales were 14.1 million. Gross margin was 22.4%. Moving to our balance sheet. After generating $61 million of free cash flow during the year, we ended the quarter with $117.9 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 will be able to stay within our net and gross leverage target range of 2.5 to 3.5 times after retiring our converts this year, while having the flexibility for future capital deployment. On to guidance. At this point, we expect consolidated adjusted EBITDA of 95 to 100 million, The guidance excludes contributions from our CDS business, which contributed a little over $2 million of EBITDA in fiscal year 2023. Other projections include effective income tax rate of 24 to 26%. We expect CapEx to be approximately $9 to $11 million this year, compared to $5.7 million the previous year, including $6.5 million of payments related to an automation project that was pushed out from 2023 to 2024. We also expect to spend six to nine million in capitalized software implementation costs related to the ERP and CRM implementation after spending a little over six million last year. The first stage of the CRM is now live, and we expect the ERP to go live in the first half of 2024. We currently expect to spend approximately four million for the four years to supplement our PMTAs related to our modern oral products, which remain under review by the FDA. and we turned it back to Graham.