Turning Point Brands(US:TPB)2025-05-07 14:30Financial Data and Key Metrics Changes - Revenue increased by 28% to $106.4 million for Q1 2025, with adjusted EBITDA rising by 12% to $27.7 million [4][13] - Gross margin was 56%, down 220 basis points year over year but flat sequentially [13] - Free cash flow for the quarter was $12.4 million, with capital expenditures of $2.2 million [16] Business Line Data and Key Metrics Changes - Modern Oral revenue reached $22.3 million, with sales increasing nearly 10 times year over year [5][16] - Stoker's revenue increased by 63% to $59.2 million, with MST portfolio net sales growing by 10% to $26.3 million [7][15] - Zig Zag sales increased by 1% year over year to $47.3 million, with gross profit decreasing by 7.2% compared to the prior year [14] Market Data and Key Metrics Changes - The company anticipates the modern oral category will exceed $5 billion in manufacturers' revenue by the end of the decade [5] - The company aims for a long-term target of double-digit market share in the modern oral space [6] Company Strategy and Development Direction - The company is increasing full-year consolidated nicotine pouch sales guidance to a range of $80 million to $95 million from $60 million to $80 million [5][17] - Key initiatives include reallocating sales and marketing resources, increasing sales force headcount, and improving online presence [6][10] - The company is exploring U.S. manufacturing to improve profitability and mitigate supply chain risks [6][7] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth of white nicotine pouch brands and the overall modern oral category [5][6] - The company is focused on building brands for the long term and executing against an omnichannel plan [11][12] - Management acknowledged potential headwinds from tariffs and foreign exchange impacts on the Zig Zag segment [17] Other Important Information - The company reaffirmed its previously announced 2025 adjusted EBITDA guidance of $108 million to $113 million [5][17] - Budgeted capital expenditures for 2025 are projected to be between $4 million to $5 million, excluding modern oral business projects [17] Q&A Session Summary Question: Comments on distribution gains in Modern Oral and rollout expectations for ALP - Management noted strong traction with retailers and plans for rollouts and enhancements later in the year [22][23] Question: Capacity to produce nicotine pouches at current facilities - Management confirmed adequate supply and ongoing exploration of onshoring production options [26] Question: Timing impact on pouch shipments and brand awareness for ALP - Management indicated that ALP's rollout is focused on online direct-to-consumer channels and is seeing good brand awareness [30][32] Question: Stoker segment gross margin performance - Management stated that pouch margins are within previously discussed ranges and are performing well [35] Question: Advertising regulations for nicotine pouches - Management acknowledged more flexibility in advertising compared to traditional tobacco products but emphasized responsible marketing [44] Question: Timing of PMTA applications amid FDA changes - Management indicated uncertainty regarding timing due to changes in government but continues to monitor the situation [46]