Turning Point Brands (TPB) investor relations material

Executive summary

• Q1 2026 net sales rose 16.8% year-over-year to $124.3 million, led by Modern Oral's 133% net sales growth to $52.0 million, now 42% of total sales, and strong Stoker's segment performance; Zig-Zag sales declined 22%.

• Modern Oral gross revenue grew 167% year-over-year, reflecting rapid expansion in D2C and retail channels.

• Net income declined 19.0% to $11.7 million; adjusted EBITDA was $25.9 million (20.8% margin), down 6.5% year-over-year.

• Strategic investments in sales force, marketing, and manufacturing, including a new TKO partnership, are positioning the business for long-term leadership in the nicotine pouch category.

• Heritage brands continue to provide cash flow to fund Modern Oral growth initiatives.

Financial highlights

• Consolidated sales rose 16.8% year-over-year to $124.3 million, with gross profit up 14.6% to $68.3 million and gross margin at 55.0%.

• Adjusted EBITDA was $25.9 million (20.8% margin), down from $27.7 million in Q1 2025.

• Free cash flow was negative $27.4 million, reflecting heavy investment in marketing, working capital, and CapEx.

• Ended the quarter with $192.4 million in cash and $72.6 million available under the ABL Facility.

• SG&A expenses rose 53.2% to $55.8 million, mainly due to Modern Oral marketing and higher freight costs.

Outlook and guidance

• Raised FY 2026 Modern Oral gross sales guidance to $280–$300 million (from $220–$240 million) and net sales to $210–$225 million (from $180–$190 million).

• Introduced full-year adjusted EBITDA guidance of $70–$90 million, inclusive of increased Modern Oral investments.

• CapEx for 2026 projected at $4–$5 million (excluding Modern Oral), plus $3–$5 million for PMTAs.

• Anticipate being cash flow breakeven for the remainder of the year.

• Management expects ample liquidity to meet operating requirements, supported by strong cash balances and borrowing capacity.