Turning Point Brands Upgrades Full-Year Oral Sales Outlook to $110M Amid White Pouch Growth Surge

Key Highlights from Turning Point Brands’ Q2 2025 Earnings Call

Turning Point Brands (TPB) delivered impressive results during its second quarter of 2025, showcasing strong growth and strategic progress. The company’s CEO, Graham Purdy, highlighted that the consolidated second-quarter results exceeded expectations, with revenue increasing by 25% to $116.6 million. This growth was fueled by a significant contribution from Modern Oral, which generated $30.1 million in revenue, accounting for 26% of total sales.

Purdy emphasized that the company is making substantial investments in sales and marketing, including expanding its sales force and improving online presence. These efforts are aimed at driving further growth in the nicotine pouch market, where the brand ALP has shown remarkable performance. White pouch sales surged nearly eightfold year-over-year and increased by 35% sequentially, signaling strong momentum. Purdy noted that ALP is now among the top direct-to-consumer (D2C) pouch brands in the U.S., with potential for expansion into retail channels sooner than anticipated.

The company also announced an increase in adjusted EBITDA guidance for the full year, raising the range to $110 million to $114 million, up from $108 million to $113 million. Additionally, the projected sales for the full-year consolidated nicotine pouch business was raised to $100 million to $110 million, reflecting confidence in the product’s market potential.

Strategic Investments and Expansion Plans

To support this growth, Turning Point Brands is reallocating resources toward sales and marketing, increasing headcount within the sales force, and ramping up investments in chain accounts. Purdy outlined plans to approximately double the size of the 2024 sales force by the end of 2026, with early signs indicating that the company is ahead of schedule.

The CFO, Andrew Flynn, reported that sales for the quarter reached $116.6 million, with gross margins improving by 310 basis points year-over-year and 110 basis points sequentially to 57.1%. This improvement underscores the company’s operational efficiency and cost management strategies.

In terms of financial performance, Stoker’s net sales rose 63% year-over-year to nearly $70 million, while the MST portfolio saw a 4% increase in net sales to $29 million. Stoker’s chewing tobacco remained the top chewing brand in the quarter, gaining 160 basis points in market share to reach 32.7%, according to MSAI data.

Zig-Zag sales declined by 6.9% year-over-year to about $47 million, with gross margins dropping 410 basis points due to product mix and the accelerated exit from the CLIPPER business. However, the company ended the quarter with $109.1 million in cash and generated $11.2 million in free cash flow, with capital expenditures totaling $3.9 million for the period.

New Marketing Partnerships and Distribution Growth

The company also announced a long-term partnership with the Professional Bull Riders (PBR), aiming to connect with consumers through high-impact sports marketing. CRO Summer Frein highlighted the strategic value of this partnership, noting that it will help expand distribution and product assortment with notable chain partners throughout the quarter.

Analysts raised questions about the rollout of ALP into brick-and-mortar stores, with Purdy acknowledging that the process is still in its early stages. He noted that as the company gains more traction, the sales team will gradually expand into more retail locations. Frein added that progress with national chain partners is underway, with plans to expand geographically across the U.S.

Financial Outlook and Risk Management

Flynn provided details on the updated guidance, noting that it reflects increased investment in the go-to-market plan, along with tariff and currency-related impacts. The effective income tax rate is expected to range between 23% and 26% going forward, with budgeted capital expenditures for 2025 set at $4 million to $5 million, excluding projects related to the Modern Oral business.

On the topic of risks, Flynn acknowledged that continued investments in sales and marketing, along with elevated outbound freight charges, have contributed to higher SG&A expenses. However, the company is proactively managing these challenges by building inventory and negotiating supplier costs to mitigate tariff risks.

Market Position and Competitive Dynamics

Analysts expressed interest in the company’s ability to balance legacy products like MST with the growth of Modern Oral. Purdy highlighted the overlap between the two segments, emphasizing that the Modern Oral stores align well with the existing Stoker’s MST portfolio. The company remains optimistic about the future of its MST business, despite ongoing volatility in new distribution and replenishment for pouches.

Overall, the sentiment from analysts was positive, with many congratulating management on the strong results and probing for more details on growth opportunities. Management maintained a confident tone, using phrases such as “we are pleased” and “very excited about the opportunities.” The focus shifted from supply chain concerns in previous quarters to deeper inquiries on margin sustainability, promotional strategies, and competitive positioning.

Final Thoughts

Turning Point Brands’ Q2 results reflect a strong upward trajectory, driven by the success of the Modern Oral segment and strategic investments in sales, marketing, and manufacturing. With a growing presence in both D2C and retail markets, and a solid financial foundation, the company is well-positioned to capitalize on the expanding nicotine pouch market. As the company continues to execute its plans, investors will be watching closely for further signs of sustained growth and profitability.