Segment Information

12 Months Ended

Dec. 31, 2023

Segment Information [Abstract]

Segment Information

Note 20. 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) Creative Distribution Solutions. The Zig-Zag Products segment markets and distributes (a) rolling papers, tubes, and related products; (b) finished cigars and MYO cigar wraps and (c) CLIPPER reusable lighters and other accessories. The Stoker’s Products segment (a) manufactures and markets moist snuff and (b) contracts for and markets loose-leaf chewing tobacco products. The Creative Distribution Solutions segment (a) markets and distributes liquid nicotine products and certain other products without tobacco and/or nicotine; (b) distributes a wide assortment of products to non-traditional retail outlets via Vapor Beast; 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 U.S. and Canada while products in the Creative Distribution Solutions segment are distributed primarily through e-commerce to non-traditional retail outlets and direct to consumers in the U.S. 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. The Company had no customer that accounted for more than 10% of net sales in 2023, 2022, or 2021.

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 reportable segments:

	For the year ended December 31,
	2023			2022			2021
Net sales
Zig-Zag products	$	180,455		$	190,403		$	176,491
Stoker’s products		144,609			130,826			124,280
Total Zig-Zag and Stoker’s products		325,064			321,229			300,771
Creative Distribution Solutions		80,329			93,784			144,700
Total	$	405,393		$	415,013		$	445,471
Gross profit
Zig-Zag products	$	101,055		$	106,576		$	102,739
Stoker’s products		81,887			71,254			68,084
Total Zig-Zag and Stoker’s products		182,942			177,830			170,823
Creative Distribution Solutions		20,299			27,708			47,011
Total	$	203,241		$	205,538		$	217,834
Operating income (loss)
Zig-Zag products	$	68,280		$	73,342		$	77,109
Stoker’s products		62,208			53,331			52,073
Corporate unallocated (1)(2)		(47,528	)		(52,665	)		(41,124	)
Total Zig-Zag and Stoker’s products		82,960			74,008			88,058
Creative Distribution Solutions		(383	)		1,506			2,263
Total	$	82,577		$	75,514		$	90,321
Interest expense, net		14,645			19,524			20,500
Investment loss		11,914			13,303			6,673
Other income		(4,000	)		–			–
Goodwill and intangible impairment loss		–			27,566			–
Gain on extinguishment of debt		(1,664	)		(885	)		(2,154	)
Income before income taxes	$	61,682		$	16,006		$	65,302
Capital expenditures
Zig-Zag products	$	1,112		$	4,641		$	141
Stoker’s products		4,595			3,044			5,960
Total Zig-Zag and Stoker’s products		5,707			7,685			6,101
Creative Distribution Solutions		–			–			55
Total	$	5,707		$	7,685		$	6,156
Depreciation and amortization
Zig-Zag products	$	1,077		$	412		$	388
Stoker’s products		3,041			2,972			2,565
Total Zig-Zag and Stoker’s products		4,118			3,384			2,953
Creative Distribution Solutions		2,240			1,915			2,059
Total	$	6,358		$	5,299		$	5,012

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

(2) Includes costs related to PMTA of $2.1 million, $4.6 million and $2.6 million in 2023, 2022, and 2021, respectively.

	December 31,		December 31,
	2023		2022
Assets
Zig-Zag products	$	177,135	$	225,893
Stoker’s products		174,994		151,241
Corporate unallocated (1)		190,223		155,348
Total Zig-Zag and Stoker’s products		542,352		532,482
Creative Distribution Solutions		27,004		39,624
Total	$	569,356	$	572,106

(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 Creative Distribution Solutions sales are made business to business and business to consumer, both online and through our corporate retail stores. Creative Distribution Solutions net sales are broken out by sales channel below.

	Creative Distribution Solutions
	For the year ended December 31,
	2023		2022		2021
Business to Business	$	71,104	$	76,462	$	107,235
Business to Consumer - Online		8,761		16,836		37,069
Other		464		486		396
Total	$	80,329	$	93,784	$	144,700

Net Sales:  Domestic and Foreign

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

	For the year ended December 31,
	2023		2022		2021
Domestic	$	374,352	$	381,723	$	415,514
Foreign		31,041		33,290		29,957
Total	$	405,393	$	415,013	$	445,471