Turning Point Brands, Inc. Q1 FY2025 earnings call

Consolidated revenue increased 28% to $106.4 million for the quarter, with adjusted EBITDA up 12% to $27.7 million. Reaffirmed 2025 adjusted EBITDA guidance of $108 million to $113 million. Increased full year consolidated nicotine pouch sales guidance to $80 million to $95 million from $60 million to $80 million. White nicotine pouch brands grew nearly 10x year-over-year post JV launch. Key initiatives include reallocating sales and marketing resources, increasing sales force, improving online presence, ramping up investment in chain accounts, and exploring U.S. manufacturing. Summer Frein discussed modern oral category progress with favorable consumer feedback, expanding sales force, and strategic marketing campaigns. Zig-Zag had initiatives like participating in Rolling Loud and Times Square takeover.

Zig-Zag: Sales increased 1% year-over-year to $47.3 million. Gross profit decreased 7.2% year-over-year but increased 2.9% sequentially. Margin decreased 490 basis points to 54.1% for the quarter. Stoker: Net sales increased 63% year-over-year to $59.2 million, with loose leaf up 4%, MST up 10%, and modern oral revenue $22.3 million. Modern Oral: Nicotine pouch sales (FRE and ALP) up almost 10x year-over-year. Modern oral revenue for the quarter was $22.3 million.

Reaffirmed full year 2025 adjusted EBITDA guidance of $108 million to $113 million. Increased modern oral sales range to $80 million to $95 million from $60 million to $80 million. Included $5 million to $7 million tariff impact on imported products and FX headwinds in Zig-Zag. Effective income tax range 23% to 26% go-forward. Budgeted CapEx for 2025 is $4 million to $5 million, with $3 million to $5 million for modern oral PMTAs.

Zig-Zag segment faces difficult year-over-year comps in Q2 due to reentry into cigar category and strong growth in Q2 2024. Supply chain risk related to exploring U.S. manufacturing for white pouches. FX headwinds in Zig-Zag from a stronger euro.

Q: Comment on distribution gains in modern oral and ALP brick-and-mortar rollout.

A: Summer Frein and Graham Purdy discussed ongoing retailer conversations, rollouts planned later, ALP's online-focused route.

Q: Ability to produce nicotine pouches at domestic facility and onshoring.

A: Andrew Flynn said supply is adequate, exploring onshoring.

Q: Stoker segment gross margin despite higher pouch sales.

A: Andrew Flynn said white pouch margin within expected range.

Q: Growth rates of FRE vs ALP, guidance raise.

A: Graham Purdy discussed different go-to-market strategies for ALP and FRE, guidance raise due to increased investment.

Q: Advertising regulations for nicotine pouches, PMTA timing.

A: Summer Frein mentioned some flexibility but restrictions, Andrew Flynn said FDA timing unclear.