Turning Point Brands (NYSE: TPB) announces plans to explore strategic alternatives for third-party Vaping Distribution Business .

“Vaping headlines dramatically disrupted our third-party vaping distribution business starting in mid-August. While third-party vaping saw a step function down in the quarter, we produced strong quarterly performance in the Smokeless and Smoking segments. We have proactively taken steps to address weakness in the third-party vaping distribution business,” said Larry Wexler, President and CEO.

TPB remains heavily committed to capitalizing on our core competencies in branding, distribution, product development, and regulatory affairs to create market-leading adult actives products. This includes investing in the FDA PMTA process for TPB’s proprietary brands, as well as growing the CBD and other actives businesses.

However, management believes the expected future returns from third-party vaping distribution may no longer justify the required investment of human and financial resources going forward. Accordingly, the Board of Directors is reviewing strategic alternatives for the third-party vaping distribution business. There can be no assurance that this process will result in the approval or completion of any particular strategic alternative or transaction in the future.

“We will continue to repurpose infrastructure from the third-party distribution business to support proprietary CBD sales, which continue to grow month-over-month. In addition, once we complete the FDA’s PMTA process, we expect to be one of the only open system liquids players on the market,” said Larry Wexler, President and CEO.

To mitigate the impact of declines in third-party vaping distribution, the Company will accelerate SG&A cost reduction plans which are expected to deliver $8-10 million of annualized savings. These savings will come from warehouse and business consolidation and other related corporate activities.