The Zacks Tobacco industry is facing mounting challenges, including declining cigarette sales – resulting from shifting consumer preferences, inflationary pressures and tightening regulations. Rising health awareness and stricter restrictions on smoking are reducing demand for traditional tobacco products, weighing on the overall industry performance.Despite these headwinds, companies such as Philip Morris International Inc. ((PM), Altria Group, Inc. ((MO) and Turning Point Brands, Inc. ((TPB) are well-posi ...

Core Insights - Turning Point Brands has launched FRE Watermelon, expanding its FRE nicotine pouch portfolio to include a full range of strengths from 3 to 15 milligrams, targeting the underserved fruit-flavored pouch market [1][2][3] Product Launch - FRE Watermelon is the first white pouch brand to offer a complete assortment of nicotine strengths, addressing consumer demand for bold fruit flavors without compromising on strength [2][3] - The product is available in five strengths: 3mg, 6mg, 9mg, 12mg, and 15mg, appealing to a wide range of adult nicotine users [2] Market Positioning - The introduction of FRE Watermelon positions the brand to capitalize on shifting consumer preferences, as Mint and Wintergreen flavors have historically dominated the market, accounting for over 60% of U.S. sales [3] - A national segmentation study indicated that Watermelon outperformed competing flavors in visual appeal, purchase intent, and overall preference, particularly among female users [2] Product Features - FRE distinguishes itself with pre-moistened pouches that maintain flavor across all strengths, along with packaging upgrades that enhance shelf appeal and simplify inventory management for retailers [4] Availability and Marketing - FRE Watermelon was launched on October 1, with retail distribution set to begin in Q4, supported by a comprehensive marketing campaign and point-of-sale materials [5]

We came across a bullish thesis on Turning Point Brands, Inc. on Emil Hartela Investing’s Substack by Emil. In this article, we will summarize the bulls’ thesis on TPB. Turning Point Brands, Inc.'s share was trading at $98.02 as of September 25th. TPB’s trailing and forward P/E were 35.01 and 24.75 respectively according to Yahoo Finance. Tilray Brands (TLRY) – Tilray Boosts Revenue Mix with New Cannabis, Wellness, and Beverage Products Copyright: nilswey / 123RF Stock Photo TPB Holdings (TPB) occupies ...

Industry Overview - The U.S. administration is considering reclassifying marijuana from Schedule I to Schedule III under the Controlled Substances Act, which could significantly impact the marijuana industry by allowing businesses to access standard banking and reducing their effective tax rates [2] - Currently, marijuana's Schedule I classification limits business deductions under Section 280E of the federal tax code, which could change with reclassification, potentially increasing profitability and attracting institutional investors [2] Analyst Insights - TD Cowen analyst Jaret Seiberg suggests that former President Trump may revive efforts to move cannabis to Schedule III, allowing for government regulation [3] Best Marijuana Stocks - **Aurora Cannabis Inc. (NASDAQ: ACB)**: Analysts project an upside potential of 4.55%. The company launched the Physician Experience Platform (PEP) to provide healthcare professionals with access to clinical insights on medicinal cannabis treatments [8] - **Turning Point Brands, Inc. (NYSE: TPB)**: Analysts project an upside potential of 5.47%. The company launched Stoker's Fine Cut Wintergreen in a compact can, responding to consumer demand and enhancing its moist smokeless tobacco line [9][10] - **The Scotts Miracle-Gro Company (NYSE: SMG)**: Analysts project an upside potential of 12.90%. The company made significant strides in sustainability, including reducing water usage for greenhouse irrigation by over 50% and achieving 100% recyclable packaging for its products [11][12]

Core Insights - Stoker's has launched a new 1.2-ounce can of its Fine Cut Wintergreen, expanding its moist smokeless tobacco (MST) portfolio and catering to both existing fans and new consumers [1][2][3] Product Launch Details - The Fine Cut Wintergreen was previously available only in 12-ounce tubs and is now offered in a compact can format, enhancing convenience and freshness for consumers [2][4] - The new can format is expected to drive trial purchases and meet consumer demand, with stores carrying both cans and tubs seeing MST sales increase by three to five times compared to those that do not [3] Retail and Distribution Strategy - The Fine Cut Wintergreen can will be available in select retail stores and will continue to roll out nationwide throughout 2025, targeting both independent and chain retailers [4] - The launch aims to fill a gap in the MST lineup and provide outstanding value and performance at retail [3] Company Background - Stoker's has a heritage dating back to 1940 and holds the No. 2 position in the chewing tobacco category, being one of the fastest-growing brands in the moist snuff segment [5] - The brand is manufactured and distributed by Turning Point Brands (NYSE: TPB), which is known for its branded consumer products [5]

Core Insights - Sin stocks, representing companies in industries like alcohol, tobacco, cannabis, and gambling, are often viewed as unethical but have a history of delivering strong returns due to consistent demand [2][3][4] - These stocks are characterized by their defensive nature, maintaining stable demand even during economic downturns, which allows for strong pricing power and consistent cash flows [3][4] - Despite their potential for robust returns, sin stocks face challenges such as heavy regulation, negative public perception, and ethical concerns that may deter some investors [5][10] Industry Overview - Sin stocks have shown resilience during both economic expansions and contractions, making them appealing for investors willing to overlook ethical concerns [4] - The alcohol sector is experiencing a shift towards premium and craft offerings, while tobacco companies are adapting to declining cigarette use by investing in vaping products [8] - The cannabis industry is rapidly expanding in regions where legalization is increasing, presenting both growth opportunities and volatility [8][9] Company Analysis - **Diageo Plc (DEO)**: Focuses on market share growth through innovation and premiumization in the alcohol sector [6] - **Las Vegas Sands (LVS)**: Concentrates on property upgrades and strategic investments to drive growth in the gambling sector [6][18] - **Turning Point Brands (TPB)**: Building a growth story around established brands and next-generation products, with a focus on smoke-free alternatives [12][13][14] - **Boston Beer Company (SAM)**: Maintains a strong position in the U.S. craft beverage market, emphasizing innovation and operational efficiency to adapt to consumer preferences [15][16][17] - **MGM Resorts International (MGM)**: Holds a leading position in global gaming, enhancing its competitive edge through capital investments and expansion in digital gaming [18][19][20]

Company Information [FORM 10-Q Filing Details](index=1&type=section&id=FORM%2010-Q%20Filing%20Details) This section details the filing information for Turning Point Brands, Inc.'s Quarterly Report on Form 10-Q for the period ended June 30, 2025, including registrant name, jurisdiction, address, telephone number, and stock exchange listing (NYSE: TPB). The company is classified as an accelerated filer with **18,024,761** shares of common stock outstanding as of July 28, **2025** - Filing is a Quarterly Report on Form 10-Q for the period ended June 30, **2025**[2](index=2&type=chunk) - Registrant: TURNING POINT BRANDS, INC., incorporated in Delaware[2](index=2&type=chunk) | Title of each class | Trading Symbol(s) | Name of each exchange on which registered | | --- | --- | --- | | Common Stock, $0.01 par value | TPB | New York Stock Exchange | | Large accelerated filer | ☐ | Accelerated filer | ☑ | | --- | --- | --- | --- | | Non-accelerated filer | ☐ | Smaller reporting company | ☐ | | Emerging growth company ☐ | | | | - As of July 28, **2025**, there were **18,024,761** shares outstanding of the registrant's voting common stock[4](index=4&type=chunk) Cautionary Note Regarding Forward-Looking Statements [Forward-Looking Statements and Risk Factors](index=4&type=section&id=Forward-Looking%20Statements%20and%20Risk%20Factors) This section highlights that the Quarterly Report contains forward-looking statements subject to risks and uncertainties, which could cause actual events to differ materially from expectations. TPB has no obligation to update these statements, except as required by law. Key risk factors include declining tobacco sales, dependence on suppliers, brand recognition, intense competition, regulatory changes (FDA, taxes), product liability litigation, indebtedness, internal control weaknesses, and external factors like epidemics or climate change. - Forward-looking statements are identified by words like "anticipate," "believe," "expect," "intend," "plan," and "will"[7](index=7&type=chunk) - TPB has no obligation to update forward-looking statements, except as required by federal securities laws[7](index=7&type=chunk) - Factors that could cause differences include declining tobacco sales, dependence on third-party suppliers, potential termination of licenses, failure to maintain consumer loyalty, intense competition, and substantial and increasing regulation (e.g., FDA enforcement priorities, taxes)[7](index=7&type=chunk) - Other risks include complications with ERP system implementation, product recalls, nicotine addiction concerns, significant product liability litigation, indebtedness, internal control weaknesses, and external events like epidemics or natural disasters[8](index=8&type=chunk) PART I—FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=6&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited consolidated financial statements of Turning Point Brands, Inc. for the periods ended June 30, **2025**, and December 31, **2024** (Balance Sheets), and for the three and six months ended June 30, **2025** and **2024** (Income, Comprehensive Income, Cash Flows, and Stockholders' Equity). Key financial highlights include a significant increase in cash and total assets, alongside growth in net sales and net income, primarily driven by the Stoker's products segment. The company also details its accounting policies, discontinued operations, and various financial instrument valuations. [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) **Consolidated Balance Sheets (dollars in thousands):** | ASSETS | June 30, 2025 | December 31, 2024 | |---|---|---| | Cash | $109,925 | $46,158 | | Accounts receivable, net | $30,056 | $9,624 | | Inventories, net | $105,009 | $96,253 | | Total current assets | $285,217 | $198,205 | | Total assets | $595,788 | $493,353 | | LIABILITIES AND STOCKHOLDERS' EQUITY | June 30, 2025 | December 31, 2024 | |---|---|---| | Accounts payable | $26,169 | $11,675 | | Accrued liabilities | $41,340 | $31,096 | | Total current liabilities | $67,509 | $44,820 | | Notes payable and long-term debt | $293,138 | $248,604 | | Total liabilities | $370,965 | $302,973 | | Total stockholders' equity | $224,823 | $190,380 | | Total liabilities and stockholders' equity | $595,788 | $493,353 | - Cash increased significantly from **$46.16 million** at December 31, **2024**, to **$109.93 million** at June 30, **2025**[10](index=10&type=chunk) - Total assets grew by approximately **20.8%** from **$493.35 million** to **$595.79 million**[10](index=10&type=chunk) [Consolidated Statements of Income](index=8&type=section&id=Consolidated%20Statements%20of%20Income) **Consolidated Statements of Income (dollars in thousands, except share and per share data):** | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | |---|---|---|---|---| | Net sales | $116,634 | $93,225 | $223,070 | $176,289 | | Gross profit | $66,623 | $50,398 | $126,233 | $98,752 | | Operating income | $26,327 | $22,872 | $49,516 | $42,142 | | Income from continuing operations before income taxes | $21,204 | $17,391 | $39,035 | $33,301 | | Consolidated net income | $16,960 | $12,920 | $32,751 | $25,099 | | Net income attributable to Turning Point Brands, Inc. | $14,480 | $13,007 | $28,875 | $25,017 | | Basic earnings per share | $0.81 | $0.74 | $1.62 | $1.42 | | Diluted earnings per share | $0.79 | $0.68 | $1.58 | $1.31 | - Net sales increased by **25.1%** for the three months ended June 30, **2025**, and **26.5%** for the six months ended June 30, **2025**, compared to the prior year periods[11](index=11&type=chunk) - Diluted EPS from continuing operations increased from **$0.68** to **$0.79** for the three months, and from **$1.31** to **$1.58** for the six months ended June 30, **2025**, year-over-year[11](index=11&type=chunk) [Consolidated Statements of Comprehensive Income](index=9&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) **Consolidated Statements of Comprehensive Income (dollars in thousands):** | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | |---|---|---|---|---| | Consolidated net income | $16,960 | $12,920 | $32,751 | $25,099 | | Other comprehensive income (loss), net of tax | $373 | $(33) | $865 | $(441) | | Consolidated comprehensive income | $17,333 | $12,887 | $33,616 | $24,658 | | Comprehensive income attributable to Turning Point Brands, Inc. | $14,853 | $12,974 | $29,740 | $24,576 | - Other comprehensive income (loss) significantly improved, moving from a loss of **$(33) thousand** to a gain of **$373 thousand** for the three months ended June 30, **2025**, and from a loss of **$(441) thousand** to a gain of **$865 thousand** for the six months ended June 30, **2025**[13](index=13&type=chunk) [Consolidated Statements of Cash Flows](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) **Consolidated Statements of Cash Flows (dollars in thousands):** | Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | |---|---|---| | Net cash provided by operating activities | $29,230 | $36,077 | | Net cash used in investing activities | $(8,626) | $(7,972) | | Net cash provided by (used in) financing activities | $40,312 | $(6,747) | | Net increase in cash | $60,916 | $21,358 | | Total cash at end of period | $111,838 | $144,097 | - Net cash provided by financing activities saw a substantial increase, moving from a use of **$(6.75) million** in **2024** to a provision of **$40.31 million** in **2025**, primarily due to the issuance of **2032

Financial Data and Key Metrics Changes - Revenue increased by 25% to $116.6 million for the quarter, with Modern Oral revenue contributing $30.1 million, accounting for 26% of total revenue [4][20] - Adjusted EBITDA rose by 15% to $30.5 million, with a margin of 26.1% [5][16] - Gross margin improved to 57.1%, up 310 basis points year over year and 110 basis points sequentially [16] Business Line Data and Key Metrics Changes - Zig Zag sales decreased by 6.9% year over year to approximately $47 million, while Stoker's revenue increased by 63% to about $70 million [17][18] - Modern Oral nicotine pouch sales surged nearly 8 times year over year, achieving total revenue of $30.1 million, reflecting a 35% sequential increase [6][19] - The MST portfolio net sales grew by 4% year over year to $29 million, with Stoker's chewing tobacco gaining market share [18] Market Data and Key Metrics Changes - Analysts expect the nicotine pouch category to approach $10 billion in manufacturers' revenue by the end of the decade [6] - The company aims for a long-term target of double-digit market share in the nicotine pouch category [6] Company Strategy and Development Direction - The company is prioritizing investments in the white pouch category while maintaining strong cash flow from heritage brands [7] - Key initiatives include expanding the sales force, enhancing online presence, and increasing investments in chain accounts [12] - The company plans to double the size of its sales force by 2026, with progress ahead of schedule [8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth of the Modern Oral category and the positive consumer feedback received [11] - The company is managing tariff headwinds and is focused on controlling costs while investing in U.S. manufacturing capabilities [36][37] - Management remains optimistic about the premium MST business and its potential for growth despite prioritizing Modern Oral [63] Other Important Information - The company increased its full-year adjusted EBITDA guidance to a range of $110 million to $114 million [5][20] - Capital expenditures for the quarter were $3.9 million, with budgeted CapEx for 2025 expected to be between $4 million and $5 million [21] Q&A Session Summary Question: Plans for ALP brick and mortar rollout - Management indicated excitement about online results and confidence in transitioning to brick and mortar, with expectations for gradual store acquisition [26][27] Question: Slotting fees and distribution expansion - Management acknowledged the competitive nature of the market and the necessity of investing in slotting fees to gain access to chains [38] Question: Gross margins and future expectations - Management noted healthy margins in the Stoker's business and expressed optimism about the margin profile of the Modern Oral segment despite potential lumpiness [42][45] Question: Modern Oral promotional environment - Management highlighted the competitive promotional landscape and expressed excitement about the opportunity to build brand awareness in the category [52][54] Question: Legacy MST business growth - Management emphasized the synergy between Modern Oral and MST distribution, indicating strong potential for continued growth in the MST segment [61][63]

Core Viewpoint - Turning Point Brands (TPB) reported quarterly earnings of $0.98 per share, exceeding the Zacks Consensus Estimate of $0.79 per share, and showing an increase from $0.89 per share a year ago, representing an earnings surprise of +24.05% [1][2] Financial Performance - The company posted revenues of $116.63 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 10.50%, compared to $108.51 million in the same quarter last year [2] - Over the last four quarters, Turning Point Brands has exceeded consensus EPS estimates three times and topped consensus revenue estimates four times [2] Stock Performance - Turning Point Brands shares have increased approximately 35% since the beginning of the year, significantly outperforming the S&P 500's gain of 7.1% [3] - The current consensus EPS estimate for the upcoming quarter is $0.93 on revenues of $110.5 million, and for the current fiscal year, it is $3.36 on revenues of $429 million [7] Industry Outlook - The Tobacco industry, to which Turning Point Brands belongs, is currently ranked in the top 41% of over 250 Zacks industries, indicating a favorable outlook as the top 50% of Zacks-ranked industries tend to outperform the bottom 50% by more than 2 to 1 [8]

Executive Summary & Financial Highlights [Q2 2025 Consolidated Performance](index=1&type=section&id=Q2%202025%20Consolidated%20Performance) Turning Point Brands reported better-than-expected consolidated results for Q2 2025, with significant year-over-year growth in net sales, gross profit, net income, and Adjusted EBITDA, primarily driven by strong performance in the Modern Oral category Consolidated Performance Metrics | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | YoY Change | Chunk Num | | :----------------------- | :------------------- | :------------------- | :--------- | :-------- | | Net Sales | $116.6 | $93.2 | +25.1% | 6 | | Gross Profit | $66.6 | $50.4 | +32.2% | 6 | | Net Income | $14.5 | $13.0 | +11.3% | 6 | | Adjusted EBITDA | $30.5 | $26.6 | +14.8% | 6, 31 | | Diluted EPS | $0.79 | $0.68 | +16.2% | 6, 19 | | Adjusted Diluted EPS | $0.98 | $0.89 | +10.1% | 6, 35 | - Modern Oral sales were a key driver, increasing by **651% year-over-year to $30.1 million** and now accounting for **26% of total Net Sales**[4](index=4&type=chunk)[6](index=6&type=chunk) [Segment Performance](index=1&type=section&id=Segment%20Performance) The Stoker's Products segment experienced robust growth, largely due to Modern Oral sales, while the Zig-Zag Products segment saw a decline in net sales and gross profit [Stoker's Products Segment](index=1&type=section&id=Stoker's%20Products%20Segment) Stoker's segment net sales and gross profit showed substantial year-over-year increases, primarily fueled by the exceptional growth of Modern Oral products Stoker's Products Segment Performance | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | YoY Change | Chunk Num | | :---------------- | :------------------- | :------------------- | :--------- | :-------- | | Net Sales | $69.6 | $42.7 | +62.9% | 4, 6 | | Modern Oral Sales | $30.1 | $4.0 (approx) | +651% | 4, 6 | | Gross Profit | $43.5 | $23.5 | +85.0% | 5, 39 | | Gross Margin | 62.5% | 55.0% | +750 bps | 5 | - Stoker's segment volume increased **48.3%**, and price/product mix increased **14.5% year-over-year**[4](index=4&type=chunk) [Zig-Zag Products Segment](index=2&type=section&id=Zig-Zag%20Products%20Segment) The Zig-Zag segment experienced a decline in net sales and gross profit compared to the prior year, with gross margin also decreasing due to product mix Zig-Zag Products Segment Performance | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | YoY Change | Chunk Num | | :----------- | :------------------- | :------------------- | :--------- | :-------- | | Net Sales | $47.0 | $50.5 | -6.9% | 6, 7 | | Gross Profit | $23.1 | $26.9 | -14.0% | 7, 39 | | Gross Margin | 49.1% | 53.2% | -410 bps | 7 | [Financial Position & Liquidity](index=2&type=section&id=Financial%20Position%20%26%20Liquidity) Consolidated SG&A expenses increased significantly year-over-year, driven by investments in Modern Oral products and other operational costs. The company maintained a healthy liquidity position with manageable debt levels Financial Position and Liquidity Metrics | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | YoY Change | Chunk Num | | :---------------------------------- | :------------------- | :------------------- | :--------- | :-------- | | Consolidated SG&A Expenses | $40.3 | $29.2 | +38.0% | 8 | | Total Gross Debt (as of June 30) | $300.0 | N/A | N/A | 9 | | Net Debt (as of June 30) | $190.1 | N/A | N/A | 9 | | Total Liquidity (as of June 30) | $176.4 | N/A | N/A | 9 | | Cash (as of June 30) | $109.9 | N/A | N/A | 9 | - Increased SG&A was primarily due to white pouch-related SG&A, increased outbound freight, and sales and marketing investments[8](index=8&type=chunk) - Notable SG&A items included **$1.7 million** for FDA PMTA-related expenses (vs **$1.0 million** prior year), **$0.6 million** for transaction-related costs (vs **$0.1 million** prior year), **$0.8 million** for non-recurring freight, and **$0.5 million** for non-recurring legal costs[14](index=14&type=chunk) [2025 Outlook & Guidance](index=2&type=section&id=2025%20Outlook%20%26%20Guidance) The company has increased its full-year 2025 guidance for both Adjusted EBITDA and Modern Oral sales, reflecting confidence in continued growth 2025 Guidance Update | Metric | Previous 2025 Guidance (Millions) | New 2025 Guidance (Millions) | Chunk Num | | :---------------------------------- | :-------------------------------- | :--------------------------- | :-------- | | Adjusted EBITDA | $108.0 – 113.0 | $110.0 – 114.0 | 6, 11 | | Consolidated Modern Oral Sales | $80.0 – 95.0 | $100.0 – 110.0 | 6, 10 | Company Information & Disclosures [About Turning Point Brands, Inc.](index=3&type=section&id=About%20Turning%20Point%20Brands%2C%20Inc.) Turning Point Brands is a manufacturer, marketer, and distributor of branded consumer products, including smoking accessories and consumables with active ingredients, sold through various brands and extensive retail presence - The company manufactures, markets, and distributes branded consumer products such as smoking accessories and consumables with active ingredients[15](index=15&type=chunk) - Key brands include Zig-Zag®, Stoker's®, FRE®, and Alp Pouch®[15](index=15&type=chunk) - Products are available in over 220,000 retail outlets in North America[15](index=15&type=chunk) [Forward-Looking Statements & Preliminary Information](index=3&type=section&id=Forward-Looking%20Statements%20%26%20Preliminary%20Information) The press release contains forward-looking statements subject to risks and uncertainties, and the financial estimates provided are preliminary and subject to change upon completion of the official 10-Q filing - The press release includes forward-looking statements, which are not guarantees of future performance and involve inherent risks and uncertainties[16](index=16&type=chunk) - Preliminary financial estimates are subject to customary quarter-end closing and review procedures and may differ materially from the final reported information in the Quarterly Report on Form 10-Q[17](index=17&type=chunk) [Investor Relations](index=2&type=section&id=Investor%20Relations) Details for the Q2 2025 earnings conference call are provided, along with contact information for investor inquiries - An earnings conference call was scheduled for 9:30 a.m. Eastern on Wednesday, August 6, 2025, with dial-in and webcast details provided[12](index=12&type=chunk) - Investor contact information is ir@tpbi.com[18](index=18&type=chunk) Financial Statements [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income) The consolidated statements of income present the company's financial performance for the three months ended June 30, 2025, compared to the same period in 2024, showing increases across key revenue and profit metrics Consolidated Statements of Income | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Chunk Num | | :------------------------------------------ | :---------------------------------------------- | :---------------------------------------------- | :-------- | | Net sales | $116,634 | $93,225 | 19 | | Gross profit | $66,623 | $50,398 | 19 | | Operating income | $26,327 | $22,872 | 19 | | Income from continuing operations | $16,960 | $12,961 | 19 | | Net income attributable to Turning Point Brands, Inc. | $14,480 | $13,007 | 19 | | Diluted income per common share | $0.79 | $0.68 | 19 | [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) The consolidated balance sheets provide a snapshot of the company's assets, liabilities, and stockholders' equity as of June 30, 2025, compared to December 31, 2024, indicating growth in total assets and stockholders' equity Consolidated Balance Sheets | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Chunk Num | | :-------------------------------- | :----------------------------- | :------------------------------- | :-------- | | Total current assets | $285,217 | $198,205 | 21 | | Total assets | $595,788 | $493,353 | 21 | | Total current liabilities | $67,509 | $44,820 | 22 | | Notes payable and long-term debt | $293,138 | $248,604 | 22 | | Total liabilities | $370,965 | $302,973 | 22 | | Total stockholders' equity | $224,823 | $190,380 | 23 | - Cash increased significantly from **$46,158 thousand** at December 31, 2024, to **$109,925 thousand** at June 30, 2025[21](index=21&type=chunk) [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) The consolidated statements of cash flows detail the cash generated and used across operating, investing, and financing activities for the six months ended June 30, 2025, showing a net increase in cash driven by financing activities Consolidated Statements of Cash Flows | Cash Flow Activity | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | Chunk Num | | :-------------------------------- | :-------------------------------------------- | :-------------------------------------------- | :-------- | | Net cash provided by operating activities | $29,230 | $36,077 | 24 | | Net cash used in investing activities | $(8,626) | $(7,972) | 24 | | Net cash provided by (used in) financing activities | $40,312 | $(6,747) | 24 | | Net increase in cash | $60,916 | $21,358 | 24 | | Total cash at end of period | $111,838 | $144,097 | 25 | - Financing activities in 2025 included the redemption of **$250 million in 2026 Notes** and proceeds from **$300 million in 2032 Notes**[24](index=24&type=chunk) Non-GAAP Financial Measures [Non-GAAP Definitions and Use](index=8&type=section&id=Non-GAAP%20Definitions%20and%20Use) The company utilizes several non-GAAP financial measures, including EBITDA, Adjusted EBITDA, Adjusted Net Income, Adjusted Diluted EPS, and Adjusted Operating Income, to provide additional insights into its operating performance, while also acknowledging their limitations - Non-GAAP measures like EBITDA, Adjusted EBITDA, Adjusted Net Income, Adjusted Diluted EPS, and Adjusted Operating Income are used to supplement GAAP financial information[27](index=27&type=chunk) - These measures are used by management for trend analyses, planning, and performance comparison, as they eliminate the impact of non-ordinary course expenses[27](index=27&type=chunk)[28](index=28&type=chunk) - The company cautions that non-GAAP measures should not be considered a substitute for GAAP measures and may not be comparable to those of other companies[29](index=29&type=chunk) [Reconciliation of GAAP Net Income to Adjusted EBITDA](index=9&type=section&id=Reconciliation%20of%20GAAP%20Net%20Income%20to%20Adjusted%20EBITDA) This section provides a detailed reconciliation of GAAP Net Income to Adjusted EBITDA for the second quarter of 2025 and 2024, highlighting various adjustments made to arrive at the non-GAAP metric Reconciliation of GAAP Net Income to Adjusted EBITDA | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Chunk Num | | :------------------------------------------ | :---------------------------------------------- | :---------------------------------------------- | :-------- | | Net income attributable to Turning Point Brands, Inc. | $14,480 | $13,007 | 31 | | EBITDA | $25,754 | $21,749 | 31 | | Adjusted EBITDA | $30,472 | $26,552 | 31 | - Key adjustments for Adjusted EBITDA in Q2 2025 included stock-based compensation (**$1,628k**), FDA PMTA expenses (**$1,651k**), non-recurring freight (**$837k**), and non-cash asset impairment (**$908k**)[31](index=31&type=chunk) [Reconciliation of GAAP Net Income to Adjusted Net Income and Diluted EPS to Adjusted Diluted EPS](index=10&type=section&id=Reconciliation%20of%20GAAP%20Net%20Income%20to%20Adjusted%20Net%20Income%20and%20Diluted%20EPS%20to%20Adjusted%20Diluted%20EPS) This reconciliation details the adjustments from GAAP Net Income and Diluted EPS to their adjusted non-GAAP counterparts for Q2 2025 and 2024, providing a clearer view of core operational profitability Reconciliation of GAAP Net Income to Adjusted Net Income and Diluted EPS to Adjusted Diluted EPS | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Chunk Num | | :------------------------------------------ | :---------------------------------------------- | :---------------------------------------------- | :-------- | | GAAP Net Income | $14,480 | $13,007 | 35 | | Adjusted Net Income | $17,988 | $17,206 | 35 | | GAAP Diluted EPS | $0.79 | $0.68 | 35 | | Adjusted Diluted EPS | $0.98 | $0.89 | 35 | - Significant adjustments in Q2 2025 included stock options, restricted stock, and incentives expense (**$1,628k**), FDA PMTA (**$1,651k**), non-recurring freight (**$837k**), and non-cash asset impairment (**$908k**)[35](index=35&type=chunk) [Reconciliation of GAAP Operating Income to Adjusted Operating Income](index=12&type=section&id=Reconciliation%20of%20GAAP%20Operating%20Income%20to%20Adjusted%20Operating%20Income) This section reconciles GAAP Operating Income to Adjusted Operating Income for the consolidated entity and by segment (Zig-Zag and Stoker's) for Q2 2025 and 2024, providing a segment-level view of adjusted operational performance Reconciliation of GAAP Operating Income to Adjusted Operating Income | Metric | Consolidated Q2 2025 (in thousands) | Consolidated Q2 2024 (in thousands) | Zig-Zag Q2 2025 (in thousands) | Zig-Zag Q2 2024 (in thousands) | Stoker's Q2 2025 (in thousands) | Stoker's Q2 2024 (in thousands) | Chunk Num | | :------------------------------------------ | :---------------------------------- | :---------------------------------- | :----------------------------- | :----------------------------- | :------------------------------ | :------------------------------ | :-------- | | Operating income | $26,327 | $22,872 | $14,741 | $18,260 | $30,079 | $17,862 | 39 | | Adjusted operating income | $29,223 | $23,064 | $14,833 | $16,586 | $30,824 | $17,862 | 39 | - Adjustments to consolidated operating income in Q2 2025 included transactional expenses (**$569k**), non-recurring freight (**$837k**), non-recurring legal (**$504k**), and FDA PMTA (**$1,651k**)[39](index=39&type=chunk)