What Turning Point Brands (TPB) Said on Its Q3 Earnings Call

Key Points

• Modern Oral drove growth: Third-quarter net sales rose 27% to $151 million, with FRE and ALP nicotine pouches more than doubling sales and Modern Oral revenue increasing 103% to $74 million.
• Profitability faced investment pressure: Adjusted EBITDA fell 41% year over year to $18 million as sales and marketing spending weighed on results, though it improved 21% sequentially amid higher gross profit and lower expenses.
• Outlook held steady: Turning Point reaffirmed its full-year Modern Oral sales and adjusted EBITDA forecasts, expects U.S. manufacturing to begin in 2027 subject to FDA review, and ended the quarter with $251 million in cash.

Turning Point Brands NYSE: TPB reported 27% revenue growth in the third quarter as sales of its FRE and ALP nicotine pouches more than doubled, but increased spending on sales and marketing weighed on profitability.

Net sales rose to $151 million, while adjusted EBITDA fell 41% from a year earlier to $18 million. The company maintained its full-year outlook for Modern Oral sales and adjusted EBITDA, saying it continues to invest in retail distribution and consumer trial.

Chief Executive Officer David Glazek, speaking on his first earnings call in the role, said the company’s strategy remains focused on using cash flow from its heritage businesses to build brands in Modern Oral. Glazek previously served as executive chairman.

Nicotine Pouches Drive Growth

Modern Oral net sales rose 103% year over year to $74 million, while gross sales increased 114% to $94 million. The business represented 49% of consolidated net sales, up from 31% a year earlier.

Glazek said growth reflected the expansion of ALP in brick-and-mortar stores and FRE’s momentum in large chains. Turning Point expects to increase its chain store count by more than 70% during 2026 as it pursues placements for the two brands.

Chief Revenue Officer Summer Frein said FRE is expanding across national chains and securing broader product assortments in existing accounts. ALP is adding independent retailers and regional chains, with discussions beginning to take shape among larger national chains, she said.

Both brands remain in the “early innings” of brick-and-mortar expansion, Frein said, although FRE is further along. Glazek said FRE is being deployed into chain accounts it won earlier in the year, while ALP is beginning chain conversations ahead of spring shelf resets. The timing and number of stores involved in chain rollouts can remain uncertain even after a deal is won, he added.

Glazek said early data from ALP’s brick-and-mortar rollout, predominantly in independent stores, was meeting or exceeding expectations. He also said the company was pleased with results from ALP testing at 7-Eleven.

Profitability and Heritage Brands

Gross profit increased 21% to $85 million. Gross margin was 56%, slightly lower than in the second quarter after normalizing for a tariff refund, Chief Financial Officer Andrew Flynn said.

Reported selling, general and administrative expenses were $75 million, down nearly $2 million sequentially. Flynn said the company scaled back spending in areas where it considered returns inadequate. Adjusted EBITDA increased $3 million, or 21%, from the second quarter, helped by higher gross profit and reduced expenses.

The Stoker’s segment, which includes Modern Oral, posted a 52% increase in net sales to $114 million. Revenue from heritage Stoker’s brands rose 3% to $39 million, as share gains in moist snuff tobacco were partly offset by anticipated declines in loose leaf.

Zig-Zag segment sales fell 15% to $37 million, while gross profit declined 16% to $21 million. Glazek described the business as stable, though he said quarterly sales can vary by a few million dollars because of individual orders. He also noted that a portion of Zig-Zag volume moves through stores that do not report data in the same way as large chains.

Outlook and Manufacturing Plans

Turning Point reaffirmed the outlook it issued on Sept. 21, 2026, calling for full-year Modern Oral gross sales of $330 million to $350 million, net sales of $260 million to $270 million and adjusted EBITDA of $70 million to $80 million.

Asked why the company had not raised its forecast despite continued growth, Glazek said management had not seen a change in the business’s trajectory but had limited additional visibility since the September update. He noted that the timing of year-end orders around the holidays could shift volume between December and January.

The company still expects U.S. manufacturing to begin in 2027, although Glazek said timing depends partly on the Food and Drug Administration’s review of premarket tobacco product applications, or PMTAs. He said applications that would allow production in Louisville have been submitted and completed, and the company is preparing a second submission that will list U.S. manufacturing.

That approach would allow the existing application to remain in the review queue without changing its manufacturing site, Glazek said. The company expects to spend roughly $3.5 million in the fourth quarter in support of its PMTA work.

Turning Point ended the quarter with $251 million in cash and repurchased $10 million of stock during the period. Glazek said the company has no current expectation for acquisitions and will continue to evaluate buybacks opportunistically.

About Turning Point Brands (NYSE:TPB)

Turning Point Brands, Inc is a consumer products company focused on the manufacture, marketing and distribution of branded products for adult consumers. Its portfolio includes rolling papers, wraps, cigarette papers, smoking accessories, smokeless tobacco and modern oral nicotine products.

The company's principal brands include Zig-Zag, a long-standing brand of rolling papers and related accessories, and Stoker's, which offers moist smokeless tobacco and other tobacco products. Turning Point Brands also develops and markets newer nicotine products, including nicotine pouches, through its NewGen Products business.

Turning Point Brands serves retailers and consumers primarily in the United States through convenience stores, tobacco and specialty retailers, mass merchants, e-commerce channels and other distribution networks.

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