Segment Information

3 Months Ended

Mar. 31, 2022

Segment Information [Abstract]

Segment Information

Note 17. Segment Information

In accordance with ASC 280, Segment Reporting, the Company has three reportable segments: (1) Zig-Zag Products; (2) Stoker’s Products; and (3) NewGen Products. The Zig-Zag Products segment markets and distributes (a) rolling papers, tubes, and related products; and (b) finished cigars and MYO cigar wraps. The Stoker’s Products segment (a) manufactures and markets moist snuff and (b) contracts for and markets loose leaf chewing tobacco products. The NewGen Products segment (a) markets and distributes liquid vapor products and certain other products without tobacco and/or nicotine; (b) distributes a wide assortment of products to non-traditional retail outlets via VaporBeast; and (c) markets and distributes a wide assortment of products to individual consumers via the VaporFi B2C online platform. Products in the Zig-Zag Products and Stoker’s Products segments are distributed primarily through wholesale distributors in the United States while products in the NewGen Products segment are distributed primarily through e-commerce to non-traditional retail outlets and direct to consumers in the United States. Corporate unallocated includes the costs and assets of the Company not assigned to one of the three reportable segments such as intercompany transfers, deferred taxes, deferred financing fees, and investments in subsidiaries. As a result of a change in the Company’s chief operating decision maker (“CODM”), resulting from the hiring of a new Chief Executive Officer in the first quarter of 2022, certain general and administrative costs previously included to the NewGen Products segment are now included in Corporate unallocated to align with new management and reporting structures in the Company and better reflect how performance is now evaluated and resources are allocated by the CODM. Amounts in the prior year period have not been adjusted. Had such prior period amounts been adjusted, approximately $0.9 million of costs for the three months ended March 31, 2021 previously reported in the NewGen Products segment would have been reported in Corporate unallocated.

The accounting policies of these segments are the same as those of the Company. Corporate costs are not directly charged to the three reportable segments in the ordinary course of operations. The Company evaluates the performance of its segments and allocates resources to them based on operating income.

The tables below present financial information about reported segments:

	Three Months Ended March 31,
	2022			2021
Net sales
Zig-Zag products	$	45,672		$	41,004
Stoker’s products		31,703			29,255
NewGen products		23,519			37,382
Total	$	100,894		$	107,641
Gross profit
Zig-Zag products	$	26,343		$	24,896
Stoker’s products		17,686			15,892
NewGen products		7,765			12,473
Total	$	51,794		$	53,261
Operating income (loss)
Zig-Zag products	$	18,737		$	19,437
Stoker’s products		13,506			12,255
NewGen products		678			2,006
Corporate unallocated (1)(2)		(13,692	)		(9,349	)
Total	$	19,229		$	24,349
Interest expense, net		5,196			4,486
Investment income		(78	)		(25	)
Loss on extinguishment of debt		-			5,706
Income before income taxes	$	14,111		$	14,182
Capital expenditures
Zig-Zag products	$	2,323		$	-
Stoker’s products		464			840
NewGen products		-			2
Total	$	2,787		$	842
Depreciation and amortization
Zig-Zag products	$	92		$	114
Stoker’s products		767			635
NewGen products		475			516
Total	$	1,334		$	1,265

(1) Includes corporate costs that are not allocated to any of the three reportable segments.

(2) Includes costs related to PMTA of $1.1 million in 2022 and $0.3 million in 2021.

	March 31, 2022		December 31, 2021
Assets
Zig-Zag products	$	227,989	$	227,554
Stoker’s products		172,400		142,334
NewGen products		61,529		72,746
Corporate unallocated (1)		156,785		158,926
Total	$	618,703	$	601,560

(1) Includes assets not assigned to the three reportable segments. All goodwill has been allocated to the reportable segments.

Revenue Disaggregation—Sales Channel

Revenues of the Zig-Zag Products and Stoker’s Products segments are primarily comprised of sales made to wholesalers while NewGen sales are made business to business and business to consumer, both online and through our corporate retail stores. NewGen net sales are broken out by sales channel below.

	NewGen Segment
	Three Months Ended March 31,
	2022		2021
Business to Business	$	19,124	$	27,257
Business to Consumer - Online		4,233		10,033
Other		162		92
Total	$	23,519	$	37,382

Net Sales—Domestic vs. Foreign

The following table shows a breakdown of consolidated net sales between domestic and foreign customers.

	Three Months Ended March 31,
	2022		2021
Domestic	$	93,766	$	100,127
Foreign		7,128		7,514
Total	$	100,894	$	107,641