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Turning Point Brands, Inc. (TPB)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered a clean beat and strong momentum: revenue rose 28.1% YoY to $106.4M, Adjusted EBITDA increased 12.0% to $27.7M, and Adjusted Diluted EPS reached $0.91; management raised full‑year modern oral sales guidance to $80–95M while reaffirming Adjusted EBITDA at $108–113M .
  • Versus S&P Global consensus, TPB beat on revenue ($106.4M vs $95.8M*) and EPS ($0.91 vs $0.70*), and topped EBITDA ($27.7M vs $25.6M*); beats were driven by modern oral ($22.3M) and solid Stoker’s MST/looseleaf performance . Values retrieved from S&P Global.
  • Mix pressures persisted: consolidated gross margin was 56% (down 220 bps YoY but flat sequentially), with Zig‑Zag margin down YoY on mix, offset by elevated Stoker’s margins despite higher modern oral mix .
  • Guidance drivers and watch‑items: management flagged a $5–7M tariff headwind (assuming a 10% rate), FX headwinds in Zig‑Zag, PMTA costs of $3–5M for 2025, and is exploring U.S. manufacturing to enhance supply chain and margins .
  • Corporate action: Board declared a $0.075 quarterly dividend payable July 11, 2025; catalysts include expanding chain distribution (e.g., trials at 7‑Eleven), modern oral category growth, and ALP’s D2C acceleration (including Gopuff partnership) .

What Went Well and What Went Wrong

What Went Well

  • Modern oral execution: sales reached $22.3M, up ~10x YoY and ~2x sequential; CEO: “Modern Oral sales were $22.3 million, up nearly 10-times versus the prior year and nearly double the prior quarter” .
  • Stoker’s outperformance: segment net sales +62.7% YoY to $59.2M, with MST +10% to $26.3M and chewing share gains to 32.7%; Stoker’s gross profit +63.6% YoY to $34.0M .
  • Strategic momentum in distribution and marketing: initiatives include increased sales force coverage, billboard campaigns (I‑95), and chain trials (7‑Eleven) that support omnichannel scaling of FRE and ALP .

What Went Wrong

  • Mix‑driven margin pressure: consolidated gross margin 56%, down 220 bps YoY; Zig‑Zag margin fell 490 bps YoY to 54.1% due to mix and CLIPPER unwind, partially offset by sequential stabilization .
  • Tariff/FX headwinds: guidance embeds $5–7M tariff impact (10% assumption) and stronger euro FX pressure in Zig‑Zag; PMTA cost run‑rate remains a drag ($1.6M in Q1) .
  • Cigar margin headwinds ahead: management expects Q2 headwinds from lower‑margin cigar expansion and resource reallocation toward pouches, which could weigh on Zig‑Zag profitability near term .

Financial Results

Core Financials vs Prior Periods

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$105.6 $93.7 $106.4
Diluted EPS ($USD)$0.68 $0.13 $0.79
Adjusted Diluted EPS ($USD)$0.87 $0.98 $0.91
Gross Margin (%)50.8% 56% 56%
Operating Income ($USD Millions)$20.5 $17.9 $23.2
Adjusted EBITDA ($USD Millions)$27.2 $26.2 $27.7
  • YoY: Net sales +28.1%, Adjusted EBITDA +12.0%, net income +19.8% .
  • Sequential: Zig‑Zag gross profit +2.9%; Stoker’s gross profit +23.5%; consolidated margin essentially flat .
  • Non‑GAAP adjustments: Q1 Adjusted EBITDA includes PMTA ($1.591M), stock‑based comp ($1.664M), ERP/CRM ($0.211M), transactional costs ($0.176M), FX MTM ($0.315M) .

Consensus vs Actual (Q1 2025)

MetricConsensusActualSurprise
Revenue ($USD)$95.8M*$106.4M +$10.7M*
EPS ($USD)$0.70*$0.91 +$0.21*
EBITDA ($USD)$25.6M*$27.7M +$2.0M*

Values retrieved from S&P Global.

Segment Performance

Zig‑Zag Products

MetricQ3 2024Q4 2024Q1 2025
Net Sales ($USD Millions)$49.3 $45.9 $47.3
Gross Profit ($USD Millions)$27.3 $24.8 $25.6
Gross Margin (%)55.4% 54.1% 54.1%

Stoker’s Products

MetricQ3 2024Q4 2024Q1 2025
Net Sales ($USD Millions)$41.4 $47.8 $59.2
Gross Profit ($USD Millions)$23.1 $27.6 $34.0
Gross Margin (%)55.8% 57.7% 57.5%

KPIs and Balance Sheet

KPIQ3 2024Q4 2024Q1 2025
Modern Oral Revenue ($USD Millions)~$5.0 (FRE) $11.2 (combined) $22.3 (combined)
Cash and Equivalents ($USD Millions)$33.6 $46.2 $99.6
Net Debt ($USD Millions)$216.4 $202.4 $200.4
Stoker’s MST Net Sales ($USD Millions)N/A$25.9 $26.3
Chewing Tobacco Share (%)32.9% 32.9% 32.7%
In‑store MST Selling Share (%)11.3% 11.2% 11.2%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EBITDA ($USD Millions)FY 2025$108–113M $108–113M Maintained
Modern Oral Sales ($USD Millions)FY 2025$60–80M $80–95M Raised
Effective Tax Rate (%)FY 202523–26% 23–26% Maintained
CapEx ($USD Millions)FY 2025$4–5M (ex modern oral projects) $4–5M (ex modern oral projects) Maintained
PMTA Spend ($USD Millions)FY 2025$3–6M $3–5M Lowered
Tariff Impact ($USD Millions)FY 2025Not specified$5–7M (assumes 10% rate) New headwind
FX HeadwindsFY 2025Not specifiedStronger euro pressure in Zig‑Zag New headwind
Dividend ($/share)Q2 2025 Payable 7/11/25Prior dividends not specified here$0.075 per share Continued distributions

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3/Q4)Current Period (Q1 2025)Trend
Modern Oral growth and route‑to‑marketFRE sales +342% YoY in Q3; expanded to 6mg and planned 3mg in Q1’25; ALP launch noted in Q4 Modern oral revenue $22.3M, ~10x YoY and ~2x sequential; prioritizing FRE brick‑and‑mortar, ALP D2C focus Accelerating
Chain distributionEarly chain trials (7‑Eleven) and broadening chain engagement Trial with 7‑Eleven; expanding sales force; merchandising push Building
Tariffs/MacroConsidering U.S. manufacturing; alt‑channel TAM expanding $5–7M tariff assumption (10% rate); exploring U.S. manufacturing New headwind + strategic mitigation
Regulatory/PMTAPMTA spend ~$4M FY’24; FDA timing uncertain PMTA $3–5M in 2025; FDA timing remains unclear Ongoing uncertainty
Zig‑Zag product/mix & cigar opportunityCigar runway highlighted; lighters weakness; margin mix pressure Zig‑Zag in line; expect Q2 cigar margin headwinds; mix keeps margins lower YoY Mixed; near‑term margin caution
Alternative channelAlt channel TAM large; cross‑sell with Zig‑Zag Continued brand building (Rolling Loud/Times Square, hemp cones) Expanding presence

Management Commentary

  • “We are pleased with our first quarter results. Modern Oral sales were $22.3 million, up nearly 10-times versus the prior year and nearly double the prior quarter. Stoker’s MST and looseleaf exceeded our expectations, and Zig-Zag was in line with our expectations.” — Graham Purdy, CEO .
  • “Adjusted EBITDA increased 12% to $27.7 million… We are increasing full‑year consolidated nicotine pouch sales guidance to a range of $80 million to $95 million from $60 million to $80 million.” — Graham Purdy .
  • “Key initiatives include reallocating sales and marketing resources, increasing the headcount of our sales force… ramping up investment in chain accounts and exploring U.S. manufacturing to improve white pouch profitability and mitigate supply chain risk.” — Graham Purdy .
  • “We have begun billboard placement along Interstate 95, and we recently started a trial with 7‑Eleven… along with initiatives with other large nationally recognized chains.” — Summer Frein .
  • “For modeling purposes, the effective income tax range is 23% to 26%… budgeted CapEx for 2025 is $4 million to $5 million… we expect to spend between $3 million to $5 million for the full year to supplement our modern oral PMTAs.” — Andrew Flynn .

Q&A Highlights

  • Distribution pacing and ALP rollout: ALP initially focused on online D2C leveraging TCN marketing, with visibility to brick‑and‑mortar later in the year; FRE is squarely focused on chain distribution .
  • Supply chain and onshoring: Supply adequate; company is “heading down the path” exploring U.S. manufacturing to enhance resilience and margins .
  • Stoker’s margin profile: Despite higher modern oral mix, Stoker’s margins remain within previously communicated ranges; consolidated mix drove margin compression YoY .
  • Guidance bridge: Increase reflects modern oral momentum; embedded headwinds include $5–7M tariff and FX; incremental investments scale as the segment grows .
  • Advertising flexibility: Modern oral has more flexibility than historic tobacco, but TPB will market responsibly across digital and out‑of‑home channels (e.g., I‑95) .

Estimates Context

  • Revenue beat: $106.4M actual vs $95.8M consensus*; EPS beat: $0.91 actual vs $0.70 consensus*; EBITDA beat: $27.7M actual vs $25.6M consensus*. Values retrieved from S&P Global.
  • Estimate revisions likely: Raise modern oral revenue trajectory and maintain EBITDA range given reinvestment pace; watch for Q2 cigar mix and tariff headwinds potentially tempering margin expectations .

Key Takeaways for Investors

  • Beat and guidance raise: The quarter’s broad‑based beat, especially in modern oral, and raised modern oral guidance to $80–95M underpin near‑term positive estimate revisions .
  • Modern oral is the growth engine: $22.3M Q1 revenue, ~10x YoY, and sequential doubling, with clear plans for chain penetration (FRE) and D2C acceleration (ALP) .
  • Margin trajectory is mixed: Consolidated margin down YoY on product mix and expected cigar headwinds in Q2; Stoker’s margins remain healthy even with modern oral scaling .
  • Risk management: Embedded tariff ($5–7M) and FX headwinds suggest near‑term caution; PMTA timing remains uncertain, but spend is manageable ($3–5M FY’25) .
  • Balance sheet flexibility: Cash grew to $99.6M with net debt down to $200.4M, enhancing capacity to invest in distribution, marketing, and potential onshoring .
  • Corporate return: Ongoing dividend ($0.075/share) supports shareholder returns as growth investments scale .
  • Watch catalysts: Chain distribution wins (e.g., 7‑Eleven trials), ALP D2C campaigns (including Gopuff partnership), and updates on U.S. manufacturing could drive sentiment and multiple expansion .

Sources

  • Q1 2025 press release, financials and reconciliations .
  • Q1 2025 earnings call (prepared remarks and Q&A) .
  • Other Q1 press releases (dividend; ALP–Gopuff partnership; call date) .
  • Prior quarters: Q4 2024 press release and call ; Q3 2024 press release and call .

Values retrieved from S&P Global for consensus metrics.