Good morning and welcome to the Turning Point Brands Fourth Quarter 2017 Earnings Conference Call. All participants will be in listen-only-mode. [Operator Instructions] After today's presentation there will be an opportunity to ask questions. [Operator Instructions]. Please note this event is being recorded. I would now like to turn the conference over to Mark Stegeman, Chief Financial Officer. Please go ahead.

Thank you, Austin. Good morning and thanks everyone for joining our call. I'm Mark Stegeman, CFO of Turning Point Brands. With me today are Turning Point Brands President and CEO, Larry Wexler; and Jim Murray, Senior Vice President of Business Planning. Earlier today we issued a news release covering our fourth quarter and fiscal year 2017 performance. This release is located in the IR section of our website www.turningpointbrands.com where replay of today's conference call will be available. Today, we plan to discuss our consolidated and segment operating results for the quarter and year, highlight progress towards our long-term growth goals and outline our expectations for 2018. Following our formal remarks we will open up the floor to Q&A. 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 Securities and Exchange Commission. The disclosure outlines various factors that could cause actual results to differ materially from projections or forward-looking statements that may be sited in today’s discussion. These forward-looking statements and projections are not guarantees of future performance and you should not place undue reliance upon them except as provided by Federal Security Laws and we undertake no obligation to publicly update or revise any forward-looking statements. We may also discuss today certain non-GAAP financial measures, these measures and reconciliations to the GAAP information along with the reason management believes that they provide investors with useful information regarding the company’s financial conditions and results of operations are set forth in the press release. I will now turn the call over to Larry Wexler, our CEO.

Thank you Mark. Good morning everybody and thank you for joining the call. This morning I would like to update you on how Turning Point Brands has made great progress in 2017 by executing our strategic plan, driving organic growth and pursuing and integrating accretive acquisitions. Our positive results are evident in this year’s operating and financial performance. We enhanced our sales, marketing and distribution platforms and it’s making a difference. Our three acquisitions expanded our portfolio and extended our market reach with new distribution and product capabilities. And we strengthened our financial foundation and flexibility to fortify our platform for future growth. Our key focus brands Stoker’s in Smokeless, Zig-Zag in Smoking, and VaporBeast in NewGen are thriving. Stoker’s continues growing volume, Zig-Zag remains a leader in its category and VaporBeast is producing excellent growth. Our accomplishments in both organic growth in our recent acquisitions is visible in the quarter results. For 2017, net sales grew 38.6% to a record $285.8 million. Gross profit increased 24.4% to a record $124.9 million. Operating income grew 13.6% to a record $49.5 million and while net income was down $6.7 million. Please note the prior year was favorably impacted by a $12.6 million reevaluation of deferred tax assets making comparisons to year ago difficult. Importantly, our adjusted EBITDA reached a record $60 million, 14.4% higher than in 2016. This momentum carried through the fourth quarter where net sales increased 36.7% to a record $73.6 million, gross profit grew 23.1% to $32.3 million, and adjusted EBITDA increased 9.6% to $14.8 million. These results are gratifying; they validate our strategies and demonstrate we are on the path to continued success. Moving forward, we are excited about the growth highway we see ahead of us. Before I dive a little deeper into segment results, I’m…

Thank you Larry and good morning again. Larry reviewed a number of high-level financial metrics. So I’ll provide some other highlights and our view of 2018. It’s been a little over a year ago since our 2017 refinancing and yesterday we amended that facility and extended its maturity. Let me highlight a few things. We simplified our credit structure by eliminating the first lien second out tranche. The first lien term loan was increased to $160 million and is priced at LIBOR Plus 325, but $50 million revolvers also priced at LIBOR Plus 325. And the second lien, it was reduced by $5 million to $40 million and is priced at LIBOR PLUS 700. This amendment produced a number of positive benefits. We’ve reduced annual interest expense by about $2 million on an interest rate risk adjusted basis. We extended the first lien facility by one year and the second lien by one and a half years. We’ve reset the amortization schedule. We eliminated the March 31, 2018 quarterly amortization payment and the 2018 excess cash flow recapture payment given us some additional short-term liquidity. And lastly, we improved our capacity to execute acquisitions. Moving to our 2017 performance, our year-over-year net sales mix continues to shift on robust NewGen growth. For the year, our segment net sales mix was roughly 30% smokeless, 38% smoking and 32% NewGen. Importantly, our margins across segments have meaningful variations principally due to the lower NewGen distribution margins. For the year smokeless and smoking gross margins were roughly 50%, while NewGen delivered approximately a 28% gross margin. As we think about our 2018 growth and beyond consumer shift out of combustible cigarettes and into vapor products will likely drive higher growth rates in NewGen as compared to our tobacco portfolio. Given our segment margin…

Thanks Mark. Our 2017 performance solely positioned us for the opportunities of 2018 and beyond. We continue executing our strategic plan and successfully strengthening our organization with concrete results. In smokeless, Stoker’s MST and Stoker’s chew both share in highly competitive all tobacco market, ramifications of double-digit. Smoking, Zig-Zag cigarette papers and MYO cigar wraps continue to perform at market-leading levels, well-positioned to benefit from the developing Canadian marketplace. NewGen, VaporBeast process improvements resulted in larger and more frequent customer orders delivering robust sales gains, improve share of customer requirements. And our Vapor Shark, our focus efforts have produced strengthening sales trends in both the corporate and franchise stores. Plus most importantly our 2017 operating performance as measured by net sales, gross profit, operating income and adjusted EBITDA each established new company records. Plus setting new company records across the board is a special reward. It simply raises the bar and establishes new hurdles and goals. We’re not a group that's easily satisfied. I work with a great team at TPB and we intend to aggressively pursue growth opportunities including acquisitions to maximize long-term shareholder value. Thank you for participating in the call today. And with that I’d like to open up the call to questions.

Hi, everyone. This is Brian on behalf of Vivien.

Hey, Brian.

Good morning, Brian.

Sort of quick one on MST, so given the commentary across category interplay we heard from Altria in this past quarter. What really do you guys believe Vapor is having on the broader industry decel in MST?

Brian, that’s the question that we get from Vivian, fairly often. I think my personal belief is that cigarette – putting cigarettes aside which is a totally different experience. The consumer response to Vapor and MST is somewhat similar, but it's a very different activity and very different consumption pattern. And well, I think on the margin there probably is some interaction. I'm not sure how great it is. I don't -- I'm in the camp where it’s not as large as what Altria mentioned on the call.

Great. Really helpful.

Our next question is from Susan Anderson with B Riley FBR. Please go ahead.

Hi. Good morning. Thanks for taking my question. I was wondering if you could talk about the Vapor Shark stores. Is there opportunity there to grow though, there are just – these really again just be used for a consumer insight. And then are there more operational efficiencies you think you have left in the stores?

Yes. We actually were surprised a little bit by the improvements we’re able to make in those stores. We think that the Vapor Shark brand can be fairly significant in the retail space both through franchising and to some small -- much smaller degree in terms of the company-owned stores. We do believe that we can continue to impact the operations of the store, and I think that the cost of the acquisition would be actually a very attractive multiple as we go forward.

Great. And then, last one on, the Stoker’s can rollout. I think you guys said you’re in 25% of the outlets out there. Where do you think that 25% number could go? And would you expect similar growth in 2018 and/or additions?

Look. Let me just to be clear about this. I’m personally insulted that we have not been able to get into a 100% of the stores. We’ll continue grind away at it. The available store set in a lot of -- particularly the chain convenient stores is really small. We’re working at it. We’ll continue to expand our distribution. We have gone outside and hired a couple of the salespeople to further accelerate those efforts. We expected to be talking about this in the next couple of quarters, the progress we've made in expanding particularly in chain environment. We think Stoker's got a long platform for growth.

Great. Thanks so much. Good luck next quarter you guys.

Thanks, Susan.

[Operator Instructions] And at this time, I'm showing no additional questions. So I would like to turn the floor back to Mark Stegeman for any closing remarks.

Thanks, Austin. Appreciate everybody's time on the call today. And let us know if you have any follow-up questions. Thank you. Have a great day.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.