Sign in
TP

Turning Point Brands, Inc. (TPB)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered a broad-based beat: net sales $116.6M (+25.1% YoY), Adjusted EBITDA $30.5M (+14.8% YoY), Adjusted Diluted EPS $0.98; Modern Oral net sales surged to $30.1M (+651% YoY, +35% QoQ), now 26% of total sales .
  • Company raised FY25 guidance: Adjusted EBITDA to $110.0–$114.0M (from $108.0–$113.0M) and Modern Oral sales to $100.0–$110.0M (from $80.0–$95.0M), reflecting accelerating momentum and investment in go-to-market .
  • Consensus comparison: Revenue $116.6M vs $105.4M estimate*, EPS $0.98 vs $0.73 estimate*, EBITDA $30.1M vs $26.5M estimate*; significant beats driven by Modern Oral growth and mix, offset partially by higher SG&A and freight costs .
  • Strategic narrative: management is prioritizing white nicotine pouches (FREE, ALP), scaling retail distribution, and mitigating tariff risks while building U.S. manufacturing capacity; guidance embeds increased sales/marketing investments .
  • Potential stock reaction catalysts: guidance raise, rapid Modern Oral share gains, margin resilience despite tariff headwinds and higher opex, and a recurring $0.075/share quarterly dividend announced alongside results .

What Went Well and What Went Wrong

What Went Well

  • Modern Oral inflection: net sales reached $30.1M (+651% YoY; +35% QoQ), now 26% of sales; CEO: “results were better than expected… Modern Oral sales… increasing by 35% versus prior quarter and up 651% against the prior year” .
  • Stoker’s strength and margins: Stoker’s segment net sales rose to $69.6M (+62.9% YoY); gross margin expanded 750 bps YoY to 62.5% and +500 bps QoQ; gross profit +85% YoY to $43.5M .
  • Guidance raised: FY25 Adjusted EBITDA lifted to $110–$114M and Modern Oral to $100–$110M; CFO reiterated the plan with tax rate and capex parameters supporting investment pace .

What Went Wrong

  • Zig-Zag softness: net sales fell 6.9% YoY to $47.0M; gross margin contracted 410 bps to 49.1% on product mix and Clipper exit; segment gross profit down 14% YoY .
  • SG&A stepped up: consolidated SG&A rose to $40.3M (vs $29.2M prior year), reflecting white pouch-related SG&A, non-recurring freight, legal costs, and higher sales/marketing investments .
  • Tariff headwinds: management flagged a dynamic tariff environment and is mitigating via inventory build, supplier negotiations, selective pricing, and U.S. manufacturing investments; capex $3.9M in Q2 supports this transition .

Financial Results

Consolidated Results vs Prior Periods and Estimates

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD)$93.667M $106.436M $116.634M
Revenue Consensus Mean ($USD)$95.072M*$95.754M*$105.427M*
GAAP Diluted EPS$0.13 $0.79 $0.79
Adjusted Diluted EPS$0.98 $0.91 $0.98
Primary EPS Consensus Mean$0.708*$0.6975*$0.73*
Gross Profit ($USD)$52.418M $59.610M $66.623M
Gross Margin %55.99% 56.01% 57.12%
Adjusted EBITDA ($USD)$26.241M $27.678M $30.472M
EBITDA Consensus Mean ($USD)$25.967M*$25.638M*$26.522M*

Note: Asterisked estimate values retrieved from S&P Global.

Segment Breakdown

SegmentQ4 2024 Net SalesQ1 2025 Net SalesQ2 2025 Net SalesQ4 2024 Gross Margin %Q1 2025 Gross Margin %Q2 2025 Gross Margin %
Zig-Zag$45.891M $47.265M $47.018M 54.1% 54.1% 49.1%
Stoker’s$47.776M $59.171M $69.616M 57.7% 57.5% 62.5%
Modern Oral (included in Stoker’s)$11.2M (combined) $22.3M $30.1M n/an/an/a

KPIs and Balance Sheet

KPIQ1 2025Q2 2025
Modern Oral share of total sales~21% (22.3/106.4) 26%
Free Cash Flow (quarter)n/a$11.2M
CapEx (quarter)$2.185M $3.9M
Cash (period end)$99.640M $109.925M
Net Debt$200.4M $190.1M
Total Liquidity$161.8M $176.4M

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EBITDAFY 2025$108.0–$113.0M $110.0–$114.0M Raised
Modern Oral SalesFY 2025$80.0–$95.0M $100.0–$110.0M Raised
Effective Tax RateFY 2025n/a23%–26% New detail
CapEx (excl. Modern Oral projects)FY 2025n/a$4–$5M New detail
PMTA SpendFY 2025n/a$3–$5M New detail
DividendQuarterlyIncreased prior to Q2 to $0.075/share Declared $0.075/share, payable Oct 10, 2025 Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
Modern Oral scaling (FREE/ALP)Q4: combined Modern Oral $11.2M; excitement around ALP launch . Q1: Modern Oral $22.3M; guidance raised to $80–$95M .Modern Oral $30.1M; raised guidance to $100–$110M; focus on white pouch premium positioning .Accelerating growth and mix shift positive
Sales force expansion & retail distributionQ1: investment increasing; Zig-Zag in-line; Stoker’s strong .Doubling 2024 sales force by 2026; chain expansion progressing; slotting fees expected; DTC-to-retail transition for ALP .Investment ramp, broader distribution
Tariffs/supply chain & U.S. manufacturingQ4: restructuring and cost actions; bond refinancing .Mitigation via inventory, supplier negotiations, selective pricing; U.S. manufacturing capex; capacity in India sufficient .Active mitigation; build domestic capacity
Zig-Zag performance/mixQ4: +1.8% YoY; margin 54.1% . Q1: +1.2% YoY; margin 54.1% .-6.9% YoY; margin 49.1% on mix; caution on Clipper/cigars headwinds .Headwinds intensifying
Regulatory/PMTAQ4: PMTA costs ongoing; only two product lines subject . Q1: PMTA costs increased; continued process .PMTA costs $1.7M in Q2 SG&A; FY PMTA spend $3–$5M; no MRTP plans .Ongoing compliance investment
Marketing/brand partnershipsQ1: momentum building .PBR partnership to drive awareness; 360 campaigns; product innovation in Zig-Zag (hemp cones, pop tubes) .Increased brand investment

Management Commentary

  • CEO: “Our consolidated second quarter results were better than expected. Modern Oral sales were $30.1 million, increasing by 35% versus prior quarter and up 651% against the prior year. Stoker’s MST and looseleaf showed modest gains with Zig-Zag flat sequentially.”
  • CRO: “We expanded our distribution and product assortment with notable chain partners… announced a long-term partnership with Professional Bull Riders (PBR)… integrating this partnership into 360 marketing campaigns.”
  • CFO: “Gross margin was 57.1%… Adjusted EBITDA was up 15%… increasing our full year 2025 adjusted EBITDA guidance to $110–$114M and Modern Oral sales to $100–$110M; effective income tax range 23%–26% going forward.”
  • CFO on tariffs/manufacturing: “We built an inventory position… negotiating reductions in cost of goods… taking some price increases… continue to invest in U.S. manufacturing; CapEx was around $3.9M for the quarter.”

Q&A Highlights

  • ALP retail rollout: Early innings but ahead of expectations; overlap with FREE will grow as distribution scales; national chain conversations progressing .
  • Tariff mitigation & capacity: Inventory build, supplier cost reductions, selective pricing; sufficient India capacity; U.S. manufacturing investment underway .
  • Slotting fees: Competitive category requires fees; the spend is embedded in Modern Oral guidance .
  • Stoker’s MST & margin profile: Heritage MST/chew margins healthy and expanding; early Modern Oral margins encouraging with potential lumpiness due to brand investment .
  • Promotional environment: Management positioning FREE/ALP as premium; selective promotions; sees large-brand spend as category awareness tailwind .

Estimates Context

  • Revenue: $116.6M vs $105.4M consensus mean*; beat by ~$11.2M (~10.6%)* .
  • Primary EPS (Adjusted/Normalized): $0.98 vs $0.73 consensus mean*; beat by $0.25 (~34%)* .
  • EBITDA: $30.5M vs $26.5M consensus mean*; beat by ~$4.0M (~15%)* .

Note: Asterisked estimate values retrieved from S&P Global.

Key Takeaways for Investors

  • Modern Oral is scaling faster than expected, now 26% of sales, with guidance raised materially; this is the central driver of estimate revisions and multiple expansion narrative .
  • Mix and margin resilience are intact: consolidated gross margin improved to 57.1% despite higher SG&A and freight; Stoker’s gross margin at 62.5% highlights profitability support for investment spend .
  • Zig-Zag faces mix headwinds and tough second-half comps (Clipper exit, cigar de-emphasis); model lower Zig-Zag margins and flat-to-down revenue near-term .
  • Tariffs a manageable headwind: inventory, supplier negotiations, pricing, and U.S. manufacturing capex de-risk supply chain; watch capex cadence and PMTA expense line .
  • FY25 guide uplift implies sustained momentum; track execution on chain wins, sales force build, and ALP’s brick-and-mortar transition for confirmation of share gains .
  • Dividend continuity ($0.075/share) adds income support; balance sheet liquidity improved ($176.4M) with net debt down to $190.1M .
  • Near-term trading: expect positive revisions and sentiment on guidance raise/Modern Oral beats; watch tariff headlines and Zig-Zag mix as potential volatility drivers .