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    TPB
    Earnings call· Jun 2026(Q2 FY26)

    Turning Point Brands Q2 FY26 earnings call TPB

    Aug 4, 2026 Source

    Executive summary

    Turning Point Brands Q2 FY26 — Strong Modern Oral Growth and Strategic Investments

    Turning Point Brands delivered robust Modern Oral growth, driven by expanded retail distribution and direct-to-consumer platforms, leading to significant market share gains. The company is strategically investing in its sales force and US manufacturing capabilities to support long-term growth in the evolving nicotine pouch category. Despite these substantial investments temporarily impacting EBITDA, management remains confident in its full-year outlook and the potential for future margin expansion.

    Highlights

    5

    • Modern Oral gross sales increased 149% year-over-year and 26% sequentially.

    • Modern Oral net sales increased 128% year-over-year to $68 million, and 32% sequentially.

    • Modern Oral accounted for 48% of total revenue, up from 26% in Q2 2025.

    • Stoker's segment net sales increased 55% year-over-year to $108 million.

    • Full-year 2026 Modern Oral gross sales guidance raised to $330 million-$350 million (from $280 million-$300 million).

    Concerns

    4

    • Adjusted EBITDA was down 50% year-over-year to $15 million, resulting in an 11% margin, due to increased sales and marketing investments and softness in ZigZag.

    • Stoker's gross margin decreased 600 basis points to 57% due to higher chain penetration.

    • Zigzag segment net sales were down 4% sequentially to $35 million.

    • Increased nicotine pouch investments are impacting near-term earnings.

    Guidance & targets

    5
    CategoryTargetConfidence
    Full-year 2026 Modern Oral gross sales
    $330M-$350M
    high materiality
    High
    Full-year 2026 Modern Oral net sales
    $260M-$270M
    high materiality
    High
    Full-year 2026 Adjusted EBITDA
    $70M-$90M
    high materiality
    High
    Budgeted 2026 CapEx (excluding Modern Oral projects)
    $4M-$5M
    medium materiality
    High
    Additional spend for PMP applications
    $3M-$5M
    medium materiality
    High

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Stoker's
    Growth was primarily driven by Modern Oral nicotine pouch net sales. Heritage Stoker's Brands saw share growth in MST partially offset by anticipated declines in loose leaf. Gross margin was impacted by higher chain penetration.
    Modern Oral net sales: $68MModern Oral net sales growth YoY: 128%Modern Oral gross revenue: $87MModern Oral gross revenue growth YoY: 149%Heritage Stoker's Brands net revenue: $39MHeritage Stoker's Brands net revenue growth YoY: -1%Adjusted gross margin: 57%Adjusted gross margin change: -600 bps YoY
    		$108M55%—$61M adjusted gross profit
    Zigzag
    Net sales were down sequentially. Adjusted gross profit as a percentage of net sales was flat on a sequential basis. Performance was in line with expectations.
    Adjusted gross profit as % of net sales: 57%
    		$35M—-4%$20M adjusted gross profit

    Operational metrics

    12
    Consolidated Sales
    $143M23% YoY
    Q2 FY26

    Growth was driven primarily by Modern Oral.

    Adjusted Gross Profit
    $81M22% YoY
    Q2 FY26

    Adjusted for out-of-period COGS related to tariff refund. Increase driven primarily by Modern Oral.

    Adjusted Gross Profit as % of Sales
    57%
    Q2 FY26

    Consolidated adjusted gross profit margin.

    SG&A
    $77Mup $21M sequentially
    Q2 FY26

    Investments designed to create long-term brand value, including commercial team, marketing, and in-store merchandising.

    Adjusted EBITDA
    $15Mdown 50% YoY
    Q2 FY26

    Decline attributed to strategy to increase sales and marketing investment and softness in ZigZag, partially offset by accelerated growth in Modern Oral.

    Adjusted EBITDA Margin
    11%
    Q2 FY26

    Consolidated adjusted EBITDA margin.

    Cash Balance
    $268M
    Q2 FY26

    Cash balance at the end of the quarter.

    Tariff Refund
    $18M
    Q2 FY26

    Had a positive impact on gross profit and free cash flow.

    Equity Raised
    $60M
    Q2 FY26

    Raised to support long-term strategic objectives within Modern Oral.

    Sales Force Increase
    50%
    FY26

    On pace to increase sales force by approximately 50% this year to service new accounts and maximize performance.

    Chain Store Count Increase
    70%YoY
    FY26

    Expected increase in chain store count as a result of strong chain store conversations and new placements.

    Modern Oral % of Total Revenue
    48%up from 26% in Q2 2025
    Q2 FY26

    Reflects the growing contribution of Modern Oral to consolidated sales.

    Industry KPIs

    6
    MetricValueDetails
    Smoke free market footprint70%%
    Productivity cost savings programSignificantly reduce COGS
    Regulatory authorization pipelineprogressing well
    Smoke free revenue and profitability48%%
    New category contribution margin payback70%%
    Smoke free reduced risk shipment volumes149%%

    Product announcements

    3
    ProductTypeDetails
    Stoker's Proud MSTlaunch
    UFC co-brandingexpansion
    Life's Fast, Burns Slow campaignmilestone

    Deals & partnerships

    1
    TKOBrand building and awareness

    Partnership has driven success across early indicators of brand awareness and consumer engagement, including UFC co-branding in stores.

    Capital programs

    1
    US Manufacturing for Modern Oralon track

    Benefit: Significantly reduce COGS; achieve gross margins of approximately 70% once fully scaled

    Subject to regulatory approval, the company is on track to launch U.S. manufacturing by the end of the year, which is expected to significantly reduce COGS over time and achieve 70% gross margins once fully scaled.

    Risks & headwinds

    5
    Near-term zoning pressurenear-term

    unquantified

    Mitigation: Strategic actions focused on building scaled, profitable nicotine pouch businesses to capture meaningful share in the evolving high barrier category.

    Increased sales and marketing investment impact on earningsQ2 FY26

    Adjusted EBITDA down 50% YoY to $15M (11% margin)

    Mitigation: Investments are designed to create long-term brand value and are expected to be leveraged over a larger revenue base as retail footprint expands and sales grow.

    Softness in ZigZag segmentQ2 FY26

    Net sales down 4% sequentially to $35M

    Mitigation: Sharpening new product pipeline to reflect evolving consumer preferences and leveraging growing sales force to expand distribution.

    Regulatory uncertainty and resource-intensive PMTA processFY26

    Additional $3M-$5M spend expected in 2026 for PMP applications

    Mitigation: Company has expertise to succeed in dynamic regulatory environments and is dedicating resources to the PMTA process.

    Higher chain penetration impacting gross marginQ2 FY26

    Stoker's gross margin down 600 bps to 57%

    Mitigation: Not explicitly stated, but implies a trade-off for increased distribution and market share.

    What to watch in Q3 FY26

    5

    Modern Oral C-Store distribution wins

    next quarter
    CurrentShelf resets begun with numerous new large retail accounts
    TargetAdditional wins in fall reset season

    Why it matters

    Continued expansion of retail footprint is crucial for accelerating Modern Oral sales growth and market share gains.

    So I anticipate that we'll continue continue to have strong conversations in the fall and bring out into those conversations at that time as well.

    Q&A highlights

    6

    How are conversations with C-Store chains progressing for additional distribution wins, and should we expect more wins in H2 2026 or later?

    Conversations with chains that didn't onboard in the spring will continue into the fall, which is a typical reset season. They anticipate strong conversations in the fall and into the spring.

    “So I anticipate that we'll continue continue to have strong conversations in the fall and bring out into those conversations at that time as well.”

    asked by Eric Delorier · answered by Summer Frein

    2 min read6 chapters

    Detailed Narrative

    01

    Modern Oral Growth and Market Share Expansion

    Turning Point Brands reported significant growth in its Modern Oral segment, with gross sales up 149% and net sales up 128% year-over-year. This performance was driven by expanding retail distribution for both Free and ALP brands, as well as strong direct-to-consumer platforms. Modern Oral now constitutes 48% of total revenue, demonstrating successful market share gains and consumer resonance in the evolving nicotine category.

    02

    Strategic Investments in Infrastructure and Sales Force

    The company is making substantial investments to support its Modern Oral growth, including increasing its sales force by approximately 50% this year to service new accounts and ensure product availability and merchandising. These investments are critical for executing successfully at retail and are expected to lead to leverage over a larger revenue base as the retail footprint and sales expand.

    03

    US Manufacturing and Margin Improvement

    Subject to regulatory approval, Turning Point Brands is on track to launch US manufacturing by the end of 2026. This initiative is expected to significantly reduce the cost of goods sold (COGS) over time⏳, with a target of achieving gross margins of approximately 70% once fully scaled. This move is a key component of the long-term strategy to build profitable nicotine pouch businesses.

    04

    Heritage Business Performance and Stabilization

    The Stoker's tobacco segment saw net sales increase 55% year-over-year, with heritage Stoker's brands experiencing a slight 1% decrease, driven by MST share growth offsetting loose leaf declines. The Zigzag segment's performance was in line with expectations, with net sales down 4% sequentially. The company is sharpening its new product pipeline and leveraging its sales force to stabilize these heritage businesses, which continue to generate strong cash flow for Modern Oral investments.

    05

    Regulatory Environment and PMTA Progress

    The company's PMP (Premarket Tobacco Product) application is progressing well and remains in process with the FDA. Management acknowledges the resource-intensive and uncertain timing of📎 the regulatory process but expresses confidence in its expertise to navigate dynamic regulatory environments. An additional $3 million to $5 million is expected to be spent in 2026 to support these applications.

    06

    International Expansion Strategy

    Turning Point Brands has begun a phased expansion of its ALP brand into select European markets. The international strategy involves partnering with local entities to manage regulatory and sales burdens, rather than establishing a full sales force, reflecting a disciplined approach to new market entry.

    AI-generated summary of the company’s earnings call. Not investment advice.