Turning Point Brands (TPB 14.36%), the consumer products company known for its iconic tobacco and cannabis accessories brands, released its results for Q2 2025 on August 6, 2025. The quarter saw the company surpass Wall Street expectations with GAAP revenue of $116.6 million, well above the GAAP consensus of $105.4 million for Q2 2025, and Adjusted diluted earnings per share (Non-GAAP) of $0.98, beating estimates by $0.25 in Q2 2025. The Modern Oral segment delivered standout growth, with net sales increasing 651% year-over-year to $30.1 million in Q2 2025, but not all brands advanced equally. Overall, the period demonstrated strong performance, though not without rising operating costs and pressure in some legacy segments.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $0.98 | $0.73 | $0.89 | 10.1% |
| Revenue | $116.6 million | $105.4 million | $93.2 million | 25.1% |
| Adjusted EBITDA | $30.5 million | N/A | N/A | |
| Net Income | $14.5 million | $13.0 million | 11.5% | |
| Gross Profit | $66.6 million | $50.4 million | 32.1% |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
Company Overview and Recent Business Focus
Turning Point Brands markets and distributes products in the tobacco, alternative nicotine, and cannabis accessories sectors. Its top brands include Zig-Zag rolling papers and Stoker’s moist snuff tobacco and chewing tobacco. With a vast distribution network reaching around 220,000 retail outlets as of December 31, 2024, it operates at the intersection of legacy tobacco, alternative nicotine, and products supporting the legal cannabis market.
Recently, the company's attention has shifted toward rapid scaling in the high-growth nicotine pouch segment, branded as FRE and ALP, which fall under Modern Oral. Key success factors include the strength of its legacy brands, the ability to navigate regulatory requirements, an expanding distribution footprint, and investments in new product categories expected to drive long-term growth.
Quarter Highlights: Financial and Operational Drivers
Modern Oral products, mainly non-tobacco nicotine pouches, became the main story of the quarter. Segment sales soared 651% to $30.1 million, now representing 26% of total company revenue. Sales from these products rose sharply both compared to Q2 2024 and the previous quarter, with Modern Oral Net Sales (GAAP) increasing to $30.1 million in Q2 2025 from $22.3 million in Q1 2025, as distribution expanded into more retail chains and online channels. Management cited rapid penetration, especially for white pouch products, and Guidance for Modern Oral sales for FY2025 was increased to $100.0–110.0 million, up from the previous $80.0–95.0 million.
The Stoker’s segment, which includes moist snuff tobacco and chewing tobacco, posted strong growth in both sales and margins. Revenue climbed 62.9% to $69.6 million in Q2 2025, maintaining its position as the company's largest segment. Gross profit for Stoker’s increased by 85.0% compared to Q2 2024, with gross margin expanding by 7.5 percentage points to 62.5%. Volume drove most of the growth in the Stoker’s Products segment, with a 48.3% increase in volume, backed by a 14.5% improvement in price and product mix.
Not all brands saw positive trends. Zig-Zag, the brand for rolling papers and smoking accessories, experienced a 6.9% revenue fall to $47.0 million (GAAP) in Q2 2025. Zig-Zag segment gross margin fell 4.1 percentage points to 49.1%, with management citing weaker product mix as a key contributor. Zig-Zag's performance has become more sensitive to trends in both cannabis consumption and cigar-product regulation.
Despite the strong top-line results, expenses outpaced some areas of profit growth. Selling, general, and administrative (SG&A) expenses rose sharply, reaching $40.3 million in Q2 2025 from $29.2 million in Q2 2024. This included $1.7 million in Premarket Tobacco Product Application (PMTA) costs, required for regulatory approval of new modern oral products from the U.S. Food and Drug Administration, as well as a mix of higher freight and transaction costs. Some of these expenses are nonrecurring, but the overall trend reflects heavy investment in growth initiatives and regulatory compliance.
Operational cash flow (GAAP) for the first half of 2025 was $29.2 million, slightly below the prior year, while Capital spending increased to $6.2 million for the six months ended June 30, 2025. the company continues regular payments.
The company raised its full-year 2025 guidance for both Adjusted EBITDA (a non-GAAP measure of operating profit before certain expenses) and Modern Oral sales, with Adjusted EBITDA now expected to be between $110.0–114.0 million. This upward adjustment signals confidence in momentum for new product categories amid changing consumer preferences and channel expansion efforts.
During the quarter, management reiterated strategic goals in expanding Modern Oral portfolio routes to market, highlighted new marketing efforts (including billboards for FRE and a focus on increasing 7-Eleven distribution), and maintained focus on regulatory processes to support continued product introductions. The release also noted that no additional PMTA applications are planned after the current submissions, as stated in management's commentary and non-GAAP reconciliation footnotes, suggesting a pause in regulatory filings once these products clear the process.
Business Model, Risks, and Brand Framework
Turning Point Brands is built around a portfolio of established and emerging brands. Zig-Zag is a well-known name in rolling papers and cigar wraps (smoking accessories tied closely to the legal cannabis market), while Stoker's is prominent in the moist snuff and chewing tobacco markets. Modern Oral products—nicotine pouches with no tobacco leaf—are newer but have quickly become a core growth engine, appealing to adult consumers seeking alternatives to traditional tobacco.
The company leverages its extensive North American distribution network, which includes direct-to-consumer sales online and partnerships with major retail chains. Brand equity and market access are key differentiators. Regulatory compliance, especially with the FDA PMTA process, remains a sizable challenge and cost center, with TPB incurring $1.7 million in FDA PMTA-related expenses for Modern Oral products in Q2 2025 and having spent approximately $30.0 million to date on PMTA applications. Management notes that regulatory costs, while substantial, create barriers to entry for smaller competitors.
Recent focus has been on strategic investments to accelerate the reach of Modern Oral products, while also maintaining competitive share for legacy brands. Category trends—such as growth in legal cannabis in the U.S. for Zig-Zag—or increased nicotine pouch adoption for Modern Oral—factor heavily into revenue trajectories. Ongoing risks tied to regulatory process timing, category volatility (especially for Zig-Zag), and increasing operating expense also remain in focus for both management and industry observers.
From a financial health perspective, Liquidity continued to improve, with a cash position of $109.9 million and total liquidity at $176.4 million as of the end of Q2 2025. Gross debt was $300.0 million as of Q2 2025, with net debt at $190.1 million as of June 30, 2025.
Looking Ahead: Guidance and Points to Watch
Looking forward, management raised full-year 2025 Adjusted EBITDA (non-GAAP) guidance to a range of $110.0–114.0 million. Modern Oral segment sales are now forecast at $100–110 million for the full year, up from earlier predictions. No further regulatory filings beyond current applications are planned, with company leadership emphasizing the completion of ongoing FDA submissions as a near-term focus. There were no other major changes provided for top-line or segment-level forward expectations.
The critical drivers for the next quarters will include continued consumer adoption and expansion of Modern Oral products. Operating cost management—especially after recent spikes in non-recurring SG&A—will also come under close scrutiny. Long-term, the balance between legacy product performance, regulatory navigation, and allocation of resources toward innovative product lines will shape results.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
