Segment Information

3 Months Ended

Mar. 31, 2021

Segment Information [Abstract]

Segment Information

Note 18. 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 CBD, 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. The Other segment 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 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,
	2021			2020
Net sales
Zig-Zag products	$	41,004		$	28,914
Stoker’s products		29,255			26,495
NewGen products		37,382			35,280
Total	$	107,641		$	90,689
Gross profit
Zig-Zag products	$	24,896		$	16,132
Stoker’s products		15,892			13,874
NewGen products		12,473			11,425
Total	$	53,261		$	41,431
Operating income (loss)
Zig-Zag products	$	19,437		$	12,417
Stoker’s products		12,255			9,746
NewGen products		2,006			477
Corporate unallocated (1)(2)		(9,349	)		(13,603	)
Total	$	24,349		$	9,037
Interest expense, net		4,486			3,309
Investment income		(25	)		(91	)
Loss on extinguishment of debt		5,706			-
Net periodic income, excluding service cost		-			(87	)
Income before income taxes	$	14,182		$	5,906
Capital expenditures
Zig-Zag products	$	-		$	-
Stoker’s products		840			860
NewGen products		2			17
Total	$	842		$	877
Depreciation and amortization
Zig-Zag products	$	114		$	-
Stoker’s products		635			519
NewGen products		516			757
Total	$	1,265		$	1,276

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

(2) Includes costs related to PMTA of $5.9 million in 2020.

	March 31, 2021		December 31, 2020
Assets
Zig-Zag products	$	212,400	$	206,900
Stoker’s products		148,093		133,016
NewGen products		91,616		91,116
Corporate unallocated (1)		175,196		65,017
Total	$	627,305	$	496,049

(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,
	2021		2020
Business to Business	$	27,257	$	25,278
Business to Consumer - Online		10,033		8,134
Business to Consumer - Corporate store		-		1,794
Other		92		74
Total	$	37,382	$	35,280

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,
	2021		2020
Domestic	$	100,127	$	87,568
Foreign		7,514		3,121
Total	$	107,641	$	90,689