Good morning, ladies and gentlemen, and welcome to the Turning Point Brands second quarter 2022 earnings conference call. All participants will be in a listen-only mode, and all lines have been placed on mute to prevent any background noise. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions, and please note that this event is being recorded. I would now like to turn the conference over to Louie Reformina, Chief Financial Officer. Please go ahead. Thank you, operator. Good morning, everyone. This is Louie Reformina, Chief Financial Officer. Joining me are Turning Point Brands President and CEO, Yavor Efremov, Graham Purdy, Chief Operating Officer, and Summer Frein, Chief Marketing Officer. This morning, we issued a news release covering our second quarter results. This release is located in the IR section of our website, www.turningpointbrands.com. There's also a presentation which we will be referencing on the call available on the site. Turning over to slide two of the presentation. During this call, we will discuss our consolidated and segment operating results and provide a perspective on 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 SEC. On the call today, we will be referencing 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. I will now turn the call over to our CEO, Yavor Efremov. Thank you, Louie. Good morning, everyone, and thank you for joining our call. I have now been with the company for two quarters and wanted to start by sharing some thoughts on what I have seen so far and areas where I see opportunities. In terms of immediate steps, in light of the turbulence we saw in the quarter and continued uncertainty, we have taken a number of cost control measures on the OpEx side and have restructured our CapEx plans to protect our cash flow for the year. We continue to review the company for areas where we can improve on costs or delay spending without putting future performance at material risk. While those steps are necessary given the current environment, I'm happy to report that there are significant growth opportunities ahead of us. We have done more work on the areas we highlighted in prior calls, and I wanted to give you an update on what we're seeing so far. First, we have done quite a bit of analysis to understand the alternative channel, which we define as head shops and dispensaries. We believe that the target addressable market for the alt channel relative to the current product types we engage with is roughly the same as the measured channel. While there are fewer dispensaries and head shops than there are C-stores, the velocity of product sales in the alt channel is multiples of that in the C-store channel, and the availability of shelf space also allows for more of our products and accessories to be sold. Importantly, we see the channel and its TAM growing strongly as a result of deregulation. MSAi does not measure sales in the alt channel, but we have utilized our own sales data along with other available market information to triangulate the estimated size, which again, we believe is similar to the size of the measured channel today, and we expect that it will grow faster in the future. For MSAi, our share of the measured market, broadly speaking, is 1/3 between papers and cones. Based on our estimates, we have a single-digit share in the total opportunity set within the alt channel, which extends beyond our traditional paper products. That leaves a large opportunity of incremental revenue that is available for us over time. Penetrating the alt channel and continuing to push on the measured channel requires us to approach marketing in a different way. We recently brought Summer on board to drive that effort and to lead our talented Miami and L.A.-based teams, which have been critical to Zig-Zag's growth in recent years. I'm very excited by the initiatives she has outlined so far. While we are in the early stages, we believe that we can highlight the superior quality of our products and drive greater market share while at the same time realizing attractive returns. As we increase our focus on penetration, we will continue to keep an eye on marketing costs to ensure that we realize a decent ROI. Second, we have historically underinvested in technology. As many other companies have shown, leveraging the right technology can drive the top line and allow us to control costs. Specifically, we're looking to expand our CRM functionality to allow us to better track both performance and opportunities in the market and allow us to pivot quickly to respond to market dynamics. Moving from a cell-based solution to the full power of a modern CRM should help us drive the top line in ways that are not available to us today. As discussed on our prior calls, we are replacing our four existing ERP systems with a single fully integrated ERP. Over time, we expect significant efficiencies on the cost side from the implementation of the new system, both in terms of eliminating the excess costs associated with maintaining outdated systems and manual processes, as well as significantly better visibility into our business functions and better controls over our processes that should lead to better performance. Summing it up, I'm even more optimistic now than when I joined. I will continue to review the opportunity set both for ways to drive revenue and to find initiatives to reduce costs so we can grow the company. Turning to the quarter. While we experienced uneven results during the second quarter, we're pleased with the resilience of our business. Rising prices at the pump and heightened inflationary environment had an impact on consumer traffic in convenience stores. Zig-Zag overall had a stable quarter against the tough comparable period in the previous year. Continued proliferation of the cannabinoid market, combined with our new initiatives on new products, e-commerce, D2C, and targeting the out space, is offsetting the impact of recent inflationary pressures on consumer demand and tail-off of COVID-related consumption. Our U.S. papers and e-commerce business delivered another strong quarter of double-digit growth that was offset by a decline in our wraps business, which faced a tough comparable with a pull forward of sales in the previous year. Stoker's MST and loose-leaf business saw strong share gains during the quarter. With its value proposition, Stoker's was well-positioned for the consumers looking to trade down during the quarter. The FDA has accepted our pre-PMTA filing, and we look forward to continuing to supply our White Pouch product to our consumers. Meanwhile, NewGen navigated another challenging quarter, but remained profitable despite a 45% decline in sales. On capital allocation, we continued to buy back shares during the quarter and maintain a strong balance sheet for further capital deployment along with our priorities, which continue to be investing in the company, buybacks, and accretive M&A. Going forward, we maintain a favorable outlook as Stoker's and Zig-Zag continue to be well-positioned. We are, however, mindful of the uncertainty in the economic environment and consumer confidence driven by the continued inflationary environment. With the current economic backdrop, along with the volatility we experienced during the second quarter, we have adjusted our outlook for the remainder of the year, as stated in today's press release. With that, let me turn the call back over to Louie to go through our results. Thank you, Yavor. Starting with our consolidated results on slide four. Q1 sales were down 16.1% to $102.9 million, with stable results from Zig-Zag and Stoker's, offset by a double-digit decline in NewGen. Gross margin increased 110 basis points, driven by mix from a decline in lower-margin NewGen sales. Adjusted EBITDA was down $5.3 million year-over-year, with most of that decrease coming from the decline in our vape distribution business. Going over into segment performance, slide five on Zig-Zag. Zig-Zag sales declined 2.1% year-over-year to $46.2 million, with a 2.3% volume decline offset by 0.2% from price mix. Wraps revenue was down 22% year-over-year due to an industry decline in the HTL wraps category, partially offset by growth in natural leaf wraps. As a reminder, we did have a pull forward of sales of $2 million in the previous year's second quarter, which affected the comps. In addition, the trade was building up inventory in the first half of last year, but worked down inventory during the first half of this year. As a result, the category saw a double-digit decline this year per MSAi. Our U.S. papers and e-commerce business was up 10% year-over-year, driven by growth in e-commerce and paper cone sales. E-commerce was up 84% and now represents 23% of the sub-segment, with strong growth expected for the rest of the year. Sales of cones products was up 59% and now 25% of the sub-segment. Zig-Zag remains the number one premium and overall paper brand in the MSAI measured market with 32.4% share. Zig-Zag was the number two brand in the paper cones category in the MSAI measured market with 32% share. Cones continues to remain a large opportunity, with only 1/3 of stores receiving paper products also receiving cones during the quarter in the MSAI measured market. The paper category saw a decline in the market, in the MSAI measured market, down 8.6%. Canada was up 38% for us during the quarter due to a load in of new products and a full quarter from the DBW acquisition. The cigars and other subcategory grew 48%, with growth in our cigars business and the addition of $0.2 million of sales from Wild Hemp that was previously recognized in NewGen. Gross margins declined 160 basis points during the quarter, driven by higher growth in lower-margin products like paper cones. Operating margin declined for the quarter, and that was due to a decline in the high contribution margin, wrap sales, a gross margin decline, variable costs from increased B2C e-commerce sales, and the impact from the DBW acquisition as part of Turning Point Brands Canada. Our marketing team continues its push to strengthen the Zig-Zag brand. Its partnership with luxury fashion line Amiri for its spring 2022 collection led to tens of millions of impressions from organic social media posts, including from musicians like French Montana and Mick Jagger, and athletes like NFL star CeeDee Lamb and FIFA athlete Trent Alexander-Arnold and the Liverpool Football Club. The fundamental long-term drivers for the segment remain intact as legal recreational cannabis continues to drive growth in sales and store count in the all-channel. Turning to slide six. Stoker's products net sales increased 0.7% to $33.6 million in the quarter, with a 6.1% volume decline offset by 6.8% from price mix. Net sales for the MST portfolio grew 6% and represented 65% of Stoker's revenue in the quarter. That was up from 62% a year earlier. Category volume was down 5.7%, while Stoker's was up 2.3% as its share grew 50 basis points year-over-year to 6.3% during the quarter. Its share in store sellings was up 55 basis points to 9.8%, with Stoker's now in stores representing 64% of industry volumes, which still provides a long runway for growth. Chewing tobacco sales declined 10% from the previous year. The category was down 7.1% during the quarter. Stoker's Chew was the number one chewing brand in the quarter, gaining 150 basis points of share to 27.5% share according to MSAi. Despite softening industry demand in general during the quarter, Stoker's performed well as its value proposition products resonated well with consumers, especially in the current inflationary environment. FRE contributed $0.2 million in sales during the quarter, with sales negatively impacted ahead of the PMTA submission during the quarter, but is expected to ramp again in the second half. Gross margin decreased 60 basis points due to FRE inventory write-down, but increased 80 basis points excluding FRE, with MST price growth and incremental volume offsetting loose leaf decline. Operating margin decreased 160 basis points, with higher gross margin partially offset by higher sales costs, marketing costs from FRE, and increased shipping costs. Moving to slide seven. NewGen continued to manage through a disruptive environment with sales down 45.1% from the previous year to $23.1 million. Our vape distribution business continues to be disrupted by the regulatory environment, including the implementation of the PACT Act late last year. Gross margins were down 340 basis points impacted by products and channel mix, as well as the competitive environment. Operating income was down $1.1 million due to lower sales and higher freight costs, offset by lower variable SG&A and reallocation of shared costs into the corporate segment. As a reminder, NewGen results this year are now a cleaner representation of our vape business, which remained profitable despite this challenging environment. We are still awaiting progress from the FDA and our PMTAs and continue to adapt our business based on the changing dynamics in the industry. We are happy to report that our FRE application was accepted last week. Again, this is part of the Stoker's segment, but it was a positive development in our PMTA applications. Ultimately, we still believe that all the shorts and challenges present an opportunity for us in the long term, given our size and ability to navigate this regulatory environment. Turning now to slide eight, our balance sheet and liquidity. We ended the quarter with over $107 million of cash on the balance sheet and $129 million of available liquidity, providing flexibility in capital deployment. Q2 is generally our weakest free cash flow quarter, as this is when we do our annual tobacco purchase for our MST business. We also front-loaded purchases for Zig-Zag products this year, given transportation bottlenecks, and expect that to bleed down through the second half of the year. We repurchased 8.8 million of shares during the quarter. Turning over to slide nine. Due to the uncertain macro environment and slower-than-expected improvement in our NewGen product segments, we now expect the following results for the year. Zig-Zag product sales of $193 million-$200 million, compared to previous expectations of $193 million-$203 million, primarily due to the Q2 weakness in our wrap sales. Stoker's product sales of $127 million-$133 million. Consolidated Adjusted EBITDA, $97 million-$103 million. We now expect CapEx to be roughly $10 million this year. This excludes ERP and CRM projects, which we're in the process of selecting an implementation partner. We are still in the process of choosing an implementation partner for ERP and CRM, and should be able to provide more color on that in the next call. In addition, we are also projecting approximately $6 million of PMTA spend, which includes supplemental filings for new products, including our FRE nicotine pouch. Thank you for participating in the call today. With that, I would like to open the call for questions. Thank you. Pardon me. At this time, I would like to remind everyone in order to ask a question, press star then the number one on your telephone keypad, and we'll pause for just a moment to compile the Q&A roster. We will take our first question from Vivien Azer with TD Cowen. Your line is open. Hi. Good morning. Morning, Vivien. Morning, Vivien. Maybe we can just start with the Stoker's segment, generally in line with our expectations, you know, just given the transparency in the category. I was wondering if you could provide perhaps a post-quarter update. Gas prices have been on the decline for nearly a month now. Obviously, your core consumer is very sensitive to inflationary swings, particularly at the pump. Has there been any directional change since you closed the quarter? Thanks. Hi. So this is, yeah, we're looking at kind of just from a foot traffic perspective, I would say that obviously we've seen a lot less foot traffic. We think the consumer got impacted quite severely. We're seeing that, you know, the reduced foot traffic obviously translated. That being said, I think Stoker's performed extremely well. If you look at it on a share basis, we've gained share in a very strong way, and we continue to expect that to continue as the consumer trades down. We're very happy with how Stoker's has performed. Again, we are positioned as the value brand, and we deliver, you know. For the amount of money that we charge, we deliver great quality. I think the consumer has recognized that, and we're seeing the shift benefiting us. Has there been any change in terms of retailer receptivity to increase shelf placement for Stoker's given the inflationary backdrop? Hey, Vivien, this is Graham Purdy. How are you? Look, we've continued to make store gains, you know, consistent with our historical patterns. At this point in time, receptivity by our estimation has not changed for our product. Both our tubs and our cans are growing store counts. Okay. Understood. Thank you. Perhaps just pivoting to Stoker's, where you've tempered the high end of the guidance range, you know, recognizing there are a lot of moving pieces, you know, to that business. Maybe if we could just put a macro lens on the nature of that guidance revision and just remind us how does Zig-Zag compare to competitors in terms of price point? Do you think that this is just a consumer response to inflationary pressures, or is there anything beyond that to read into? Thanks. Yeah. The Vivien, the guidance reduction, a lot of that related to the weakness that we saw in wraps during the quarter. As we mentioned in the remarks, a lot of that related to trade inventory reduction in response to slowing demand. You know, I do think we are seeing a little bit of caution from the consumer given the rising gas prices, and we're seeing that across different categories. Just to add to that, Vivien, one thing that I would continue to stress is, even in the overall macro environment, the brand continues to perform very, very well. We're not so much concerned around our performance or the brand, it's more concern for the consumer overall. What we're seeing is being a very harsh environment for our consumer. We do expect to continue to gain share. We do expect the brand to continue to perform very well. Understood. Thank you very much. We will take our next question from Susan Anderson with B. Riley. Your line is live. Hi, Louie. Hi, Yavor and Graham. It's Alec Legg on for Susan. On Stoker's- Yeah. Hi. The gross margins when you exclude the write-down of Spree, they continue to trend up. I think previously you said that it's mainly been driven by taking price in that category. In this inflationary environment, I guess how much pricing is left to take before you might start to see more pushback in that category? Okay. Yeah. We still feel pretty good about pricing in Stoker's. Now as we've said in the past, we are price followers in that segment. What we are seeing in the market is pretty encouraging in terms of activity on the pricing segment. Obviously, we're not the only ones to feel inflationary pressure in this environment, and it seems to be holding up to be a rational category for us. Just to expand a little bit on that one, what I would say is, look, we have to measure price increases again. We see the consumer under tremendous pressure. At the same time, we're gaining share. One thing that we have noticed in the past is that given the quality of our product, once we get a customer, we tend to keep that customer. Gaining shares is something that we take very seriously. It is not a one time and then goes back. We get our customers and then we keep them. We're balancing the ability to increase price with, again, we are a price follower, but there is room against the long-term benefit of keeping and increasing share. Got it. Switching over to NewGen. You said the PMTA application was accepted but still awaiting a decision. I guess, do you guys have a timeline of when you might hear any news? Can you remind us again how many products you filed for? Let me start by highlighting that we filed on Modern Oral products. That's the kind of heavy bulk of the application. We had very little vape inside it. Modern Oral specifically, we have two products. One is Spree, which is the one that got accepted. We have another product which we have not discussed publicly, and I'm not going to do today, but we're very optimistic about it. They're both Modern Oral. In terms of timing, we don't have any more visibility than anybody else. As we get news, we obviously let you guys know. We know that Spree was accepted. Exactly when they're gonna get to it, very difficult to tell. You know, Spree is doing very well. We have backlog that we're now filling up. We're excited about it. I'm even more excited about the other product that we should be bringing to market hopefully next year. Got it. Very helpful. Thanks for the details and best of luck the rest of the year. Thank you. We will take our next question from Eric Des Lauriers with Craig-Hallum Capital Group. Your line is live. Great. Thank you for taking my questions. Hey, Eric. Hey. With Zig-Zag, as you look towards the second half, are there any other inventory trade dynamics to call out with regards to wraps or your other categories? Would you expect to see a rebound in wraps in Q3 or should we take your commentary as sort of some of your customers getting a little more cautious for the consumer here as a sign that this Q2 trade reduction was more of a normalization and that won't necessarily see a rebound in Q3. Thanks. Yeah, we think it's more of the latter. Certainly going into the year, there were concerns about supply chain and, you know, they likely had more inventory than they normally carry. We think this is more of a normalization for Zig-Zag. What we do expect the ramp in Zig-Zag for the second half is for launching Clipper, so that should benefit us as that product ramps up for us. That's happening both in the U.S. and Canada. Great. I appreciate that commentary. Just switching gears to NewGen here. Can you comment just on the current, you know, volatility in that vape distribution business? Just kind of, you know, any sort of, you know, transparency on what you're seeing there with regards to, you know, whether it's turnover in third-party brands or some inventory flushing. You know, obviously we saw, you know, relatively stable results quarter-over-quarter. Is that a sign of a broader trend, or can you just kind of give us a bit more, of a sense of what you're seeing, in that business with regards to volatility? Thanks. Sure. Let me kind of start at the macro level for vape, and then I'll double-click on our own business. On a macro level, obviously the federal government has taken some steps in that area. They have been primarily about looking to increase regulation. We have not seen increased enforcement as of yet. That being said, there were quite a bit of news in vape land throughout the quarter, which made customers nervous to the extent. July fourteenth was a big date, and the FDA put out an announcement which is obviously publicly available. The continued uncertainty about what the FDA is going to do and how hard they're going to enforce obviously impacts the customers, specifically on the B2B side, where they're continuing to be hesitant about how to order and what they can order because you just don't know if it's going to become illegal, and you have to dispose of it the next day, which necessarily impacts how much inventory you're going to keep, how you're going to order. That's just industry-wide. It is just kind of giving you the color. Against that, we executed, I think, quite well. I'm very proud of the fact that the management has done two things. One, number one, they have kept profitability. They continue to generate dollars for us. Number two, we have managed inventory on that side aggressively ourselves. We're managing inventory for the same reasons. We're just kind of, obviously we're going to be compliant with anything and everything the FDA requires us to do. But to be in a position where we don't have massive write-downs, we have to keep inventory low, which necessarily impacts how hard we can push the top line on that business. As the uncertainty diminishes, hopefully with more clarity from the FDA, and as we've said on previous calls, we are very, very supportive of strong enforcement. That should hopefully settle down, and the business should be doing much better. That being said, we don't have either the clarity or the enforcement today for us to tell you that, you know, this is it's going to get better in the next quarter. The uncertainty continues. We continue to have the same approach, which is, to our mind, the vape business is a cash flow paying option. They generate cash for us. It's not a lot of cash, but so long as they're profitable, we can wait for the vape uncertainty to get resolved and hopefully the FDA enforcing whatever the regulations end up being. Got it. Very helpful color and, certainly impressive, to be able to maintain profitability in this environment. Just last one from me here, with regards to the ERP system. Can you just remind us, your rough expected timeline of, when that should be completed and maybe when you'll start to see some of the benefits of that? Thanks. Kinda our current timeline continues to be the same as we discussed earlier in the year, which is we expect to be complete by the end of next year. Hopefully we start seeing the benefits before that. At this point we have not yet selected an implementation partner. We expect to do that shortly. We expect to kick off the implementation part of the project this fall. We've stayed with the same timeline we discussed before. There's no changes to it. Excellent. Thank you. Thank you. We will take our next question from Gaurav Jain with Barclays. Your line is live. Hi. Good morning, Yavor. Good morning, Louie. A few questions from me and all on FRE. You know, what you have told us is that you booked some revenue, and you also had a write-down this quarter because of the PMTA sort of deadline around synthetic nicotine. I'm not very clear why that would happen. I mean, normally we don't see companies pull back because of PMTA deadline. What exactly happened at your end? We had to make a decision on which products we wanted to file. There were certain flavors that we chose not to file, and so that was the reason for the write-down on FRE. We're encouraged. We actually have a strong backlog of back orders on FRE right now. There was a pause during the quarter because of the uncertainty around the synthetic nicotine regulation from some of our customers. You know, what we're seeing now, especially with the acceptance that we've received with FRE and strong receptivity for the product going forward. Right. You know, what you have told us is that you booked, you know, some revenues this quarter, but clearly volumes could be very different because we have seen massive amount of promotions from other players in the market. Would you be able to share any volume data? Yeah. You know, obviously, for competitive reasons, we're not gonna disclose the volumes. We did disclose the sales, so that gives you an indication of what we did during the quarter. We reported our sales last quarter. What I would say was, you know, outside of the synthetic nicotine regulation, we would have expected that to ramp, and we do expect that to ramp for us in the second half of the year. Sure. Just to be clear, on the promotional side to your comment that it's a heavily promotional category, our approach has never been to outspend our competitors on marketing, and that is not going to change. We're not looking to go toe-to-toe with BAT and Swedish Match to find out, you know, if we can outspend them on marketing. Our approach is differentiated product and a fantastic sales force. Right. You know, you clearly have reduced your EBITDA guidance a bit here. Is it because of additional investments related to FRE? Because, you know, in the initial years of expanding that product, you know, you will lose money, most likely. Or is it that e-cigarettes are trending below expectations? Or is it that the core business is trending below expectations? Could you just disaggregate? As Yavor mentioned, we're gonna be careful about, you know, how we spend on FRE. We're not looking to lose money. You know, the good thing about that end market is it's a large and growing end market, and we don't need significant share to have an impact on our bottom line for that. We're gonna be very cautious about, you know, how we promote on FRE. The real reason for the guidance reduction, Gaurav, one, to your point, our NewGen business we highlighted in the press release is not ramping to the extent that we thought, so we're being a little bit more cautious there. The wraps hit for us in Q2. That comes at a high contribution margin because of kind of the flow through on that product. Those are two of the main reasons for the reduction in guidance, but also a response to kind of what we're seeing in the consumer environment in terms of the headline news that everyone else is seeing out there as well. Sure. Thank you. A last question from me, Yavor, around your M&A philosophy, like, you know, you spoke on around that, you know, a few months ago now, almost six months ago. We haven't seen anything from the company yet. How have your thoughts evolved around M&A? Look, I wouldn't say that they have changed. Kind of what I said is M&A for us is going to be a game of patience. Successful M&A, we're not going to do things that we don't like. What do we like? Things that are accretive, things that fit well within our business, things that we can acquire at a price that makes sense. One thing that I've emphasized pretty much on every call, we're going to be patient. The best M&A we could pursue this quarter was buying back our own shares, and that's exactly what we've done. We'll continue to be following the same priorities, invest in the company, buy back shares, and be very opportunistic when it comes to M&A. It needs to make sense. If it doesn't make sense, we'll buy back our own shares and wait for it to make sense. Okay. Well, thanks a lot. Pardon me. There are no further questions at this time. I will now turn the call back to Yavor for any additional or closing remarks. I wanted to thank everyone who joined us on the call today and to highlight again, we have very resilient brands. We're happy with where we are, and we look forward to continue to execute on the plan and deliver for you and for the company to achieve its results and goals all the time. Thank you. Ladies and gentlemen, this concludes today's conference call. You may now disconnect.