Earnings release
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NEWS RELEASE Turning Point Brands Announces Third Quarter 2025 Results 2025-11-05 Consolidated Net Sales for Q3 2025 increased 31.2% year-over-year to $119.0 million Modern Oral Net Sales for Q3 2025 increased 627.6% year-over-year to $36.7 million, accounting for 30.8% of total Company Net Sales Q3 2025 Adjusted EBITDA of $31.3 million, up 17.2% over prior year Company increasing 2025 Adjusted EBITDA guidance to $115.0 – 120.0 million (from $110.0 – 114.0 million) Company increasing full-year Modern Oral sales guidance to $125.0 – 130.0 million (from $100.0 – 110.0 million) LOUISVILLE, Ky.--(BUSINESS WIRE)-- Turning Point Brands, Inc. (“TPB” or the “Company”) (NYSE: TPB), a manufacturer, marketer and distributor of branded consumer products, including alternative smoking accessories and consumables with active ingredients, today announced nancial results for the third quarter ended September 30, 2025. Q3 2025 vs. Q3 2024 Total consolidated Net Sales increased 31.2% to $119.0 million Stoker’s segment Net Sales increased 80.8% Zig-Zag segment Net Sales decreased 10.5% Gross Pro t increased 39.7% to $70.4 million Net Income increased 70.3% to $21.1 million Adjusted EBITDA increased 17.2% to $31.3 million (see Schedule A for a reconciliation to net income) Adjusted Net Income increased 18.3% to $19.6 million (see Schedule B for a reconciliation to net income) Diluted EPS of $1.13 and Adjusted Diluted EPS of $1.27 compared to $0.68 and $0.91, respectively, in the 1
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same period one year ago (see Schedule B for a reconciliation to Diluted EPS) Company raised $97.5 million of net proceeds at an average price of $98.59 per share under previously announced “At the Market” o ering program; capital to be deployed across a variety of high return opportunities to accelerate growth of Modern Oral. Graham Purdy, President and CEO, commented, “Our consolidated third quarter results exceeded expectations. Modern Oral sales were $36.7 million, increasing by 22% versus the prior quarter and 628% over the prior year. In addition, we now expect to qualify our rst U.S. white pouch production lines in the rst half of 2026.” Stoker’s Products Segment (63% of total net sales in the quarter) For the third quarter, Stoker’s segment net sales increased 80.8% from the prior year to $74.8 million, driven by strong growth in Modern Oral sales, mid-single-digit growth in MST and low-single-digit growth in looseleaf. Stoker’s segment gross pro t increased 95.2% from the prior year and 3.5% sequentially to $45.0 million. Gross margin increased 440 basis points from the prior year to 60.2%. Zig-Zag Products Segment (37% of total net sales in the quarter) For the third quarter, Zig-Zag segment net sales decreased 10.5% from the prior year and 6.1% sequentially to $44.2 million. Excluding the previously discussed wind-down of our Clipper business, Zig-Zag was up mid-single- digits sequentially, which slightly beat our expectations. Zig-Zag segment gross pro t decreased 7.1% from the prior year but increased 9.9% sequentially to $25.4 million. Gross margin increased 210 basis points from the prior year to 57.5%. Performance Measures in the Third Quarter Third quarter 2025 consolidated selling, general and administrative (“SG&A”) expenses increased 50.5% from the prior year and 10.5% sequentially to $44.5 million, inclusive of increased Modern Oral-related sales and marketing investments and increased outbound freight costs. Third quarter SG&A included the following notable items: $0.5 million of FDA PMTA-related expenses for Modern Oral products compared to $1.2 million in the prior year period; and $0.8 million of transaction-related costs compared to $0.9 million in the prior year period. Total gross debt as of September 30, 2025 was $300.0 million. Net debt (total gross debt less unrestricted cash) as 2
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of September 30, 2025 was $98.8 million. The Company ended the quarter with total liquidity of $267.8 million, comprised of $201.2 million in cash and $66.6 million of availability under an asset backed revolving credit facility. Consistent with the Company’s policy of maintaining active buyback and sales authorizations to maximize capital markets exibility, the Company plans to amend its ATM prospectus supplement and buyback authorization to provide for $200 million of capacity under each program. There are no current plans to transact under the updated authorizations. 2025 Outlook The Company is increasing full-year 2025 Adjusted EBITDA guidance to $115.0 – 120.0 million (from $110.0 – 114.0 million) and projected full-year 2025 Modern Oral sales to $125.0 – 130.0 million (from $100.0 – 110.0 million). Earnings Conference Call As previously disclosed, a conference call with the investment community to review TPB’s nancial results has been scheduled for 8:30 a.m. Eastern on Wednesday, November 5, 2025. Investment community participants should dial in 10 minutes ahead of time using the toll-free number (800) 715-9871 (international participants should call (646) 307-1963) and follow the audio prompts after typing in the event ID: 6640134. A live listen-only webcast of the call will be available on the Events and Presentations section of the investor relations portion of the Company website (www.turningpointbrands.com). A replay of the webcast will be available on the website two hours following the call. Non-GAAP Financial Measures In addition to nancial measures prepared in accordance with generally accepted accounting principles in the United States (GAAP), this press release includes certain non-GAAP nancial measures including EBITDA, Adjusted EBITDA, Adjusted Net Income, Adjusted Diluted EPS and Adjusted Operating Income (Loss). A reconciliation of these non-GAAP nancial measures accompanies this release. About Turning Point Brands, Inc. Turning Point Brands (NYSE: TPB) is a manufacturer, marketer and distributor of branded consumer products including smoking accessories and consumables with active ingredients through its Zig-Zag®, Stoker’s®, FRE®, and Alp Pouch® brands. TPB’s products are available in more than 220,000 retail outlets in North America, and on sites such as www.zigzag.com. For the latest news and information about TPB and its brands, please visit www.turningpointbrands.com. 3
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Forward-Looking Statements This press release contains forward-looking statements within the meaning of the federal securities laws. Forward- looking statements may generally be identi ed by the use of words such as "anticipate," "believe," "expect," "intend," "plan" and "will" or, in each case, their negative, or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. As a result, these statements are not guarantees of future performance and actual events may di er materially from those expressed in or suggested by the forward-looking statements. Any forward- looking statement made by TPB in this press release, its reports led with the Securities and Exchange Commission (the “SEC”) and other public statements made from time-to-time speak only as of the date made. New risks and uncertainties come up from time to time, and it is impossible for TPB to predict or identify all such events or how they may a ect it. TPB has no obligation, and does not intend, to update any forward-looking statements after the date hereof, except as required by federal securities laws. Factors that could cause these di erences include, but are not limited to, those included in the Company’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and other reports led by the Company with the SEC. These statements constitute the Company’s cautionary statements under the Private Securities Litigation Reform Act of 1995. This press release contains TPB’s preliminary determinations and current expectations, and such information is inherently uncertain. The preliminary estimates provided herein have been prepared by, and are the responsibility of, management and are subject to completion of TPB's customary quarter-end closing and review procedures and third-party review. As a result, TPB's reported information in its Quarterly Report on Form 10-Q for the quarter ended September 30, 2025 may di er from this information, and any such di erences may be material. In addition, the information furnished above does not include all of the information regarding TPB's nancial condition and results of operations for the quarter ending September 30, 2025 that may be important to readers. As a result, readers are cautioned not to place undue reliance on the information furnished in this press release and should view this information in the context of TPB's full third quarter 2025 results when such results are disclosed by TPB in its Quarterly Report on Form 10-Q for the quarter ended September 30, 2025. Financial Statements Follow on Subsequent Pages Turning Point Brands, Inc.Consolidated Statements of Income (dollars in thousands except share data)(unaudited) Three Months Ended September 30, 4
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2025 2024 Net sales $ 118,979$ 90,704 Cost of sales 48,552 40,309 Gross pro t 70,427 50,395 Selling, general, and administrative expenses44,542 29,590 Operating income 25,885 20,805Other (income) expense, net (4,941) -Interest expense, net 3,531 3,831Investment (gain) loss (817) (143) (Income) losses from equity method investment(2,117) (60) Income from continuing operations before income taxes30,229 17,177 Income tax expense 6,472 4,652 Income from continuing operations 23,757 12,525 Loss from discontinued operations, net of tax- (165) Consolidated net income 23,757 12,360 Net income (loss) attributable to non-controlling interest2,677 (16) Net income attributable to Turning Point Brands, Inc.$ 21,080$ 12,376 Basic income per common share:Continuing operations $ 1.16$ 0.70 Discontinued operations - - Net income attributable to Turning Point Brands, Inc.$ 1.16$ 0.70 Diluted income per common share:Continuing operations $ 1.13$ 0.68 Discontinued operations - - Net income attributable to Turning Point Brands, Inc.$ 1.13$ 0.68 Weighted average common shares outstanding:Basic 18,246,72217,722,855Diluted 18,708,66518,448,720 Turning Point Brands, Inc.Consolidated Balance Sheets (dollars in thousands except share data) (unaudited)September 30,December 31, ASSETS 2025 2024 Current assets:Cash $ 201,189$ 46,158Accounts receivable, net of allowances of $174 in 2025 and $66 in 202427,792 9,624Inventories, net 112,790 96,253Current assets held for sale - 11,470 Other current assets 54,665 34,700 Total current assets 396,436 198,205Property, plant, and equipment, net 33,880 26,337Deferred tax assets, net - 995Right of use assets 12,915 11,610Deferred nancing costs, net 1,341 1,823Goodwill 136,068 135,932Other intangible assets, net 64,344 65,254Master Settlement Agreement (MSA) escrow deposits29,762 28,676Noncurrent assets held for sale - 3,859 Other assets 68,102 20,662 Total assets $ 742,848$ 493,353 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities:Accounts payable $ 24,599$ 11,675Accrued liabilities 46,738 31,096 Current liabilities held for sale - 2,049 Total current liabilities 71,337 44,820Deferred tax liabilities, net 3,971 -Notes payable and long-term debt 293,364 248,604Other long-term liabilities 6,182 - Lease liabilities 9,841 9,549 Total liabilities $ 384,695$ 302,973 Commitments and contingenciesStockholders' equity:Preferred stock, $0.01 par value; authorized shares 40,000,000; issued and outstanding h 0 5
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shares -0- - -Common stock, voting, $0.01 par value; authorized shares, 190,000,000; 20,527,900 issuedsharesand 19,070,757 outstanding shares at September 30, 2025, and 20,200,886 issued sharesand17,729,481 outstanding shares at December 31, 2024216 202Common stock, nonvoting, $0.01 par value; authorized shares, 10,000,000;issued and outstanding shares -0- - -Additional paid-in capital 200,376 126,662Cost of repurchased common stock(1,457,143 shares at September 30, 2025 and 2,471,405 shares at December 31, 2024)(47,637) (83,144)Accumulated other comprehensive loss (1,900) (2,903)Accumulated earnings 192,895 147,164 Non-controlling interest 14,203 2,399 Total stockholders' equity 358,153 190,380 Total liabilities and stockholders' equity$ 742,848$ 493,353 Turning Point Brands, Inc.Consolidated Statements of Cash Flows (dollars in thousands)(unaudited) Nine Months Ended September 30, 2025 2024 Cash ows from operating activities:Consolidated net income $ 56,508$ 37,459Loss from discontinued operations, net of tax- 208Adjustments to reconcile net income to net cash provided by operating activities:Loss on extinguishment of debt 1,235 -Loss on sale of property, plant, and equipment47 38Loss (gain) on investments (484) 2,722(Income) losses from equity method investment(2,328) (217)Depreciation and other amortization expense4,489 3,182Amortization of other intangible assets 918 913Amortization of deferred nancing costs 1,293 1,947Deferred income tax expense 4,690 349Stock compensation expense 5,176 5,720Noncash lease income (1,205) (317)Loss on MSA investments - (14)Changes in operating assets and liabilities:Accounts receivable (18,251) (447)Inventories (16,412) (8,149)Other current assets (19,409) 1,422Other assets (10,978) (814)Accounts payable 12,709 4,565 Accrued liabilities and other 14,517 (3,659) Operating cash ows from continuing operations32,515 44,908 Operating cash ows from discontinued operations- 4,413 Net cash provided by operating activities$ 32,515$ 49,321 Cash ows from investing activities:Capital expenditures $ (10,182) $ (3,516)Proceeds on the sale of property, plant and equipment- 3Payment for equity investments (2,783) -Purchases of investments (12,876) (8,865)Proceeds from sale of investments 5,459 4,520Purchases of non-marketable equity investments- (1,250)MSA escrow deposits, net (2) 44 Purchase of option agreement (8,000) - Investing cash ows from continuing operations(28,384) (9,064) Investing cash ows from discontinued operations- - Net cash used in investing activities$ (28,384) $ (9,064) Cash ows from nancing activities:Redemption of 2026 Notes $ (250,000) $ -Proceeds from 2032 Notes 300,000 -At the market o ering proceeds 97,499 -Payment of Convertible Senior Notes - (118,541)Interchange subscription agreement proceeds11,000 -Payment of dividends (4,089) (3,644)Payment of nancing costs (7,285) (133)Exercise of options 6,106 1,341Redemption of options (33) (328)Issuance of restricted stock units 2 -Redemption of restricted stock units (2,324) (840)I f f b d i d k i (1) 6
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Issuance of performance based restricted stock units(1) -Redemption of performance based restricted stock units(2,625) (1,212) Common stock repurchased - (4,170) Financing cash ows from continuing operations148,250 (127,527) Financing cash ows from discontinued operations- - Net cash provided by (used in) nancing activities$ 148,250$ (127,527) Net increase in cash $ 152,381$ (87,270)E ect of foreign currency translation on cash$ (182) $ (29)Cash, beginning of period:Unrestricted $ 48,941$ 117,886 Restricted 1,961 4,929 Total cash at beginning of period $ 50,902$ 122,815 Cash, end of period:Unrestricted $ 201,189$ 33,557 Restricted 1,912 1,959 Total cash at end of period $ 203,101$ 35,516 Non-GAAP Financial Measures To supplement our nancial information presented in accordance with generally accepted accounting principles in the United States, or U.S. GAAP, we use non-U.S. GAAP nancial measures, including EBITDA, Adjusted EBITDA, Adjusted Net Income, Adjusted Diluted EPS, and Adjusted Operating Income. We believe Adjusted EBITDA provides useful information to management and investors regarding certain nancial and business trends relating to our nancial condition and results of operations. Adjusted EBITDA, Adjusted Net Income, Adjusted Diluted EPS, and Adjusted Operating Income are used by management to compare our performance to that of prior periods for trend analyses and planning purposes and are presented to our board of directors. We believe that EBITDA, Adjusted EBITDA, Adjusted Net Income, Adjusted Diluted EPS, and Adjusted Operating Income are appropriate measures of operating performance because they eliminate the impact of expenses that do not relate to business performance. We de ne “EBITDA” as net income before interest expense, gain (loss) on extinguishment of debt, income tax expense, depreciation, amortization. We de ne “Adjusted EBITDA” as net income before interest expense, gain (loss) on extinguishment of debt, income tax expense, depreciation, amortization, other non-cash items and other items that we do not consider ordinary course in our evaluation of ongoing operating performance. We de ne “Adjusted Net Income” as net income excluding items that we do not consider ordinary course in our evaluation of ongoing operating performance. We de ne “Adjusted Diluted EPS” as diluted earnings per share excluding items that we do not consider ordinary course in our evaluation of ongoing operating performance. We de ne “Adjusted Operating Income” as operating income excluding other non-cash items and other items that we do not consider ordinary course in our evaluation of ongoing operating performance. Non-U.S. GAAP measures should not be considered a substitute for, or superior to, nancial measures calculated in accordance with U.S. GAAP. EBITDA, Adjusted Net Income, Adjusted EBITDA, Adjusted Diluted EPS, and Adjusted Operating Income exclude signi cant expenses that are required by U.S. GAAP to be recorded in our nancial statements and is subject to inherent limitations. In addition, other companies in our industry may calculate this 7
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non-U.S. GAAP measure di erently than we do or may not calculate it at all, limiting its usefulness as a comparative measure. In accordance with SEC rules, we have provided, in the supplemental information attached, a reconciliation of the non-GAAP measures to the next directly comparable GAAP measures. Schedule ATurning Point Brands, Inc.Reconciliation of GAAP Net Income to Adjusted EBITDA (dollars in thousands)(unaudited) Three Months EndedSeptember 30, 2025 2024 Net income attributable to Turning Point Brands, Inc.$ 21,080$ 12,376Add:Interest expense, net 3,653 3,831Income tax expense 6,694 4,652Depreciation expense 814 943 Amortization expense 1,132 729 EBITDA $ 33,373$ 22,531 Components of Adjusted EBITDACorporate restructuring (a) 233 186ERP/CRM (b) - 154Stock based compensation (c) 1,884 1,769Transactional expenses and strategic initiatives (d)820 873Non-recurring legal (e) 437 -FDA PMTA (f) 482 1,242Mark-to-market gain on Canadian inter-company note (g)(10) -Gain on investment (h) (678) -ERC refund (i) (5,451) - Honorarium (j) 255 - Adjusted EBITDA $ 31,345$ 26,755 (a)Represents costs associated with corporate restructuring, including severance and early retirement.(b)Represents cost associated with scoping and mobilization of new ERP and CRM systems and cost of duplicative ERP licenses.(c)Represents non-cash stock options, restricted stock, PRSUs, etc.(d)Represents the fees incurred for transaction expenses.(e)Represents legal expenses incurred in connection with litigation related to an insurance claim.(f)Represents costs associated with applications related to FDA premarket tobacco product application (“PMTA”). The PMTA regime requires theCompany to submit an application to the FDA to receive marketing authorization to continue to sell certain of its product lines with continued salespermitted during the pendency of the applications. The application is a onetime resource-intensive process for each covered product line; however,due to the nature of the implementation process for those product lines already in the market, applications can take multiple years to completerather than the typical one-time submission. The Company has only two product lines currently subject to the PMTA process, having utilized otherregulatory pathway options available for our other product lines. The Company does not expect to submit additional PMTA applications for any newproduct lines after the submission for the remaining two are complete.(g)Represents a mark-to-market gain attributable to foreign exchange uctuation.(h)Represents gain on investments.(i)Represents an employee retention credit refund received included in other (income) expense, net.(j)Represents an honorarium gift included in other (income) expense, net. Schedule BTurning Point BrandsR ilii fGAAPNI AdjdNI dDildEPSAdjdDildEPS 8
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Reconciliation of GAAP Net Income to Adjusted Net Income and Diluted EPS to Adjusted Diluted EPS (dollars in thousands except share data) (unaudited) Three Months EndedThree Months EndedSeptember 30, 2025September 30, 2024 Incomefromcontinuingoperationsbeforeincometaxes Incometaxexpense(l) Net incomeattributableto non-controllinginterestNetIncomeDilutedEPS Incomefromcontinuingoperationsbeforeincometaxes Incometaxexpense(l) Loss fromdiscontinuedoperations,net of tax(m) Net incomeattributableto non-controllinginterestNetIncomeDilutedEPSGAAP NetIncome andDiluted EPS$30,229$6,472$ 2,677$21,080$1.13$17,177$4,652$ 165$ (16)$12,376$0.68 Loss ondiscontinuedoperations (a)- - - - - - - (165) - 1650.01Corporaterestructuring(b) 233 50 - 1830.01 18650 - - 1360.01ERP/CRM (c)- - - - - 15442 - - 1120.01Stock basedcompensation(d) 1,884403 - 1,4810.08 1,769479 - - 1,2900.07Transactionalexpenses andstrategicinitiatives (e)820 176 - 6440.03 873236 - - 6370.03Non-recurringlegal (f) 437 94 - 3430.02 - - - - - -FDA PMTA (g)482 103 - 3790.02 1,242336 - - 9060.05Mark-to-market gainon Canadianinter-company note(h) (10) (2) - (8) (0.00) - - - - - -Gain oninvestment (i)(678) (145) - (533) (0.03) - - - - - -ERC refund (j)(5,451) (1,167) - (4,284) (0.23) - - - - - -Honorarium(k) 255 55 - 2000.01 - - - - - - Tax bene t (l)- (113) - 1130.01 - (952) - - 9520.05 Adjusted NetIncome andAdjustedDiluted EPS$28,201$5,925$ 2,677$19,599$1.05$21,401$4,844$ - $ (16)$16,573$0.91 Totals may not foot due to rounding (a)Represents loss on discontinued operations.(b)Represents costs associated with corporate restructuring, including severance and early retirement.(c)Represents cost associated with scoping and mobilization of new ERP and CRM systems and cost of duplicative ERP licenses.(d)Represents non-cash stock options, restricted stock, PRSUs, etc.(e)Represents the fees incurred for transaction expenses.(f)Represents legal expenses incurred in connection with litigation related to an insurance claim.(g)Represents costs associated with applications related to FDA premarket tobacco product application ("PMTA"). The PMTA regime requires theCompany to submit an application to the FDA to receive marketing authorization to continue to sell certain of its product lines with continued salespermitted during the pendency of the applications. The application is a onetime resource-intensive process for each covered product line;however, due to the nature of the implementation process for those product lines already in the market, applications can take multiple years tocomplete rather than the typical one-time submission. The Company has only two product lines currently subject to the PMTA process, havingutilized other regulatory pathway options available for our other product lines. The Company does not expect to submit additional PMTAapplications for any new product lines after the submission for the remaining two are complete.(h)Represents a mark-to-market gain attributable to foreign exchange uctuation.(i)Represents gain on option investment.(j)Represents an employee retention credit refund received included in other (income) expense, net.(k)Represents an honorarium gift included in other (income) expense, net.(l)Income tax expense calculated using the e ective tax rate for the quarter of 21.4% in 2025 and 27.1% in 2024.(m)Tax allocation for discontinued operations excluded from adjusted net income. 9
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Schedule CTurning Point Brands, Inc.Reconciliation of GAAP Operating Income to Adjusted Operating Income (dollars in thousands)(unaudited) ConsolidatedZig-Zag ProductsStoker's Products 3rd Quarter3rdQuarter3rdQuarter3rdQuarter3rdQuarter3rdQuarter202520242025202420252024 Net sales $118,979$90,704$44,154$49,324$74,825$41,380Gross pro t $70,427$50,395$25,386$27,324$45,041$23,071Operating income$25,885$20,805$15,581$17,378$29,270$17,162 Adjustments:Corporate restructuring233 186 - - - -ERP/CRM - 154 - - - -Transactional expenses and strategic initiatives820 873 - - - -Non-recurring legal 437 -FDA PMTA 482 1,242 - - - -Mark-to-market gain on Canadian inter-company note (10) - - - - - Adjusted operating income$27,847$23,260$15,581$17,378$29,270$17,162 Investor Contacts Turning Point Brands, Inc. ir@tpbi.com Source: Turning Point Brands, Inc. 10