Standard Diversified Inc. Reports Financial Results for Its Third Quarter Ended September 30, 2018

Standard Diversified Inc. (the Company) (NYSE American: SDI) today announced its financial results for the third quarter ended September 30, 2018. In addition to its Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission, the Company will also make available an updated Investor Presentation on its corporate website at www.standarddiversified.com.

2018 Third Quarter Highlights

  • Total revenues increased 24.9% to $91.6 million as a result of strong growth at Turning Point Brands, Inc. (NYSE: TPB) and the addition of $7.1 million of earned insurance premiums from Maidstone Insurance Company, which the Company acquired on January 2, 2018
  • Net income attributable to SDI was $1.4 million, or $0.08 per diluted share

About Standard Diversified Inc.

Standard Diversified Inc. is a holding company that owns and operates subsidiaries in a variety of industries, including insurance, other tobacco products and outdoor advertising. For more information about the Company, please visit the Companys website at www.standarddiversified.com.

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Cautionary Statement Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical facts, are forward-looking statements. These forward-looking statements address, among other things activities, events or developments that the Company expects, believes or anticipates will or may occur in the future. These forward-looking statements are subject to a number of risks that could cause actual results to differ materially from those contained in the forward-looking statements, including those risks described in Part I, Item 1A of the Companys Annual Report on Form 10-K for the year ended December 31, 2017, as filed with the Securities and Exchange Commission, as well as the Companys subsequent Quarterly Reports on Form 10-Q. Except as required by law, the Company assumes no obligation to update publicly any such forward-looking statements.

 
Standard Diversified Inc. and Subsidiaries
Consolidated Statements of Income

(dollars in thousands except share data)

       
Three Months Ended Nine Months Ended
September 30, September 30,
2018 2017 2018 2017
Revenues:
Net sales $ 84,035 $ 73,352 $ 240,156 $ 212,226
Insurance premiums earned 7,088 21,539
Net investment income 309 679
Other income   163         557      
Total revenues   91,595     73,352     262,931     212,226  
 
Operating costs and expenses:
Cost of sales 47,742 40,386 136,147 119,522
Selling, general and administrative expenses 24,492 19,606 70,237 55,355
Incurred losses and loss adjustment expenses 5,790 17,007
Other operating expenses   2,682         5,512      
Total operating costs and expenses   80,706     59,992     228,903     174,877  
Operating income   10,889     13,360     34,028     37,349  
 
Interest expense 4,450 4,023 12,556 13,002
Interest and investment income (243 ) (157 ) (620 ) (369 )
Loss on extinguishment of debt 2,384 6,116
Net periodic benefit (income) expense, excluding service cost   (45 )   58     176     174  
Income before income taxes 6,727 9,436 19,532 18,426
Income tax expense   1,436     3,110     4,153     3,850  
Net income 5,291 6,326 15,379 14,576
Net income attributable to noncontrolling interests   3,924     3,576     9,962     5,046  

Net income attributable to Standard Diversified Inc.

$ 1,367   $ 2,750   $ 5,417   $ 9,530  
 
 
Net income attributable to SDI per Class A and Class B Common Share “ Basic $ 0.08   $ 0.17   $ 0.33   $ 0.42  
Net income attributable to SDI per Class A and Class B Common Share “ Diluted $ 0.08   $ 0.16   $ 0.31   $ 0.41  
Weighted Average Class A and Class B Common Shares Outstanding “ Basic 16,677,412 16,399,796 16,618,823

22,853,762

Weighted Average Class A and Class B Common Shares Outstanding “ Diluted 16,741,660 16,410,672 16,661,809 22,880,941
 
 
Standard Diversified Inc. and Subsidiaries
Consolidated Balance Sheets

(dollars in thousands except share data)

 
September December 31,
2018 2017
ASSETS
Cash and cash equivalents $ 18,520 $ 18,219
Fixed maturities available for sale, at fair value; amortized cost $34,492 in 2018 33,908
Equity securities, at fair value; cost: $753 in 2018 804
Trade accounts receivable, net of allowances of $44 in 2018 and $17 in 2017 6,808 3,249
Premiums receivable 6,245
Inventories 89,433 63,296
Other current assets 14,998 10,851
Property, plant and equipment, net 28,068 9,172
Deferred income taxes 450
Deferred financing costs, net 922 630
Intangible assets, net 38,206 26,436
Deferred policy acquisition costs 2,384
Goodwill 147,464 134,620
Master Settlement Agreement (MSA) escrow deposits 29,926 30,826
Pension asset 396
Other assets   2,877     569  
Total assets $ 420,563   $ 298,714  
 
LIABILITIES AND EQUITY
Reserves for losses and loss adjustment expenses $ 24,741 $
Unearned premiums 13,160
Advance premiums collected 519
Accounts payable 9,943 3,686
Accrued liabilities 18,336 20,014
Current portion of long-term debt 9,299 7,850
Revolving credit facility 30,000 8,000
Notes payable and long-term debt 210,427 186,190
Deferred income taxes 2,598
Postretirement benefits 3,916 3,962
Asset retirement obligations 2,028
Other long-term liabilities   1,959     571  
Total liabilities   326,926     230,273  
 
Commitments and contingencies
 
Equity:

Preferred stock, $0.01 par value; authorized shares 50,000,000; -0- issued and outstanding shares

Class A common stock, $0.01 par value; authorized shares, 300,000,000; 9,031,641 and 8,348,373 issued and outstanding shares at September 30, 2018 and December 31, 2017, respectively

90 83

Class B common stock, $0.01 par value; authorized shares, 30,000,000; 7,818,645 and 8,041,525 issued and outstanding shares at September 30, 2018 and December 31, 2017, respectively; convertible into Class A shares on a one-for-one basis

78 81
Additional paid-in capital 79,338 70,813
Accumulated other comprehensive loss (2,503 ) (1,558 )
Accumulated deficit   (21,577 )   (26,982 )
Total stockholders’ equity   55,426     42,437  
Noncontrolling interests   38,211     26,004  
Total equity   93,637     68,441  
Total liabilities and equity $ 420,563   $ 298,714  
 

The Equity Group Inc.
Adam Prior, 212-836-9606
[email protected]

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