Turning Point Brands, Inc. (NYSE: TPB) reported Q1 EPS of $0.35, $0.05 better than the analyst estimate of $0.30. Revenue for the quarter came in at $73.9 million versus the consensus estimate of $70.7 million.

2018 Outlook Update

As previously announced, and based upon the current understanding of the 2018 FDA schedule, the company has identified products for 2018 rationalization and estimates that SKU discontinuations will unfavorably impact year-over-year net sales by approximately $3.5 million. Total line rationalization expenses in the first quarter were $1 million. We continue to evaluate our portfolio for potential additional SKU eliminations. Recognizing the Vapor Supply transaction and absent any other acquisitions and net of the above-mentioned SKU rationalizations, the company now anticipates 2018 net sales growth of 12% to 16%.

Excluding any acquisition related expenses, SG&A as a percent of net sales for the full year is expected to be in the 25% to 27% range. Interest expense is currently expected to be $14 million, which includes $1 million non-cash deferred financing charges.

New product launch costs, including the $0.7 million recorded in the first quarter, are estimated to be approximately $1.9 million for the year.

The company expects a 2018 effective income tax rate to be 24%, down from the previously announced 26% to 27%. Net operating losses, or NOLs, available to offset federal income taxes amounted to approximately $14.4 million at March 31, 2018. We expect to fully utilize these NOLs during 2018 when we will begin paying cash federal income taxes.

Capital expenditures for 2018 are expected to be on the lower end of the previously announced $2 to $3 million, due to capacity synergies from the Vapor Supply acquisition. These expenditures include one-time investments associated with logistics efficiency and integration activities.

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