Turning Point Brands (TPB, Financial) reported first-quarter revenue of $106.4 million, significantly surpassing the consensus estimate of $95.75 million. The company experienced a remarkable surge in Modern Oral sales, reaching $22.3 million, which is nearly ten times higher than the same period last year and nearly double the previous quarter's figures. Additionally, the performance of Stoker’s MST and looseleaf products exceeded expectations, while Zig-Zag sales met anticipated levels.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 4 analysts, the average target price for Turning Point Brands Inc (TPB, Financial) is $77.50 with a high estimate of $85.00 and a low estimate of $65.00. The average target implies an upside of 19.43% from the current price of $64.89. More detailed estimate data can be found on the Turning Point Brands Inc (TPB) Forecast page.
Based on the consensus recommendation from 4 brokerage firms, Turning Point Brands Inc's (TPB, Financial) average brokerage recommendation is currently 1.8, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Turning Point Brands Inc (TPB, Financial) in one year is $36.54, suggesting a downside of 43.69% from the current price of $64.89. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Turning Point Brands Inc (TPB) Summary page.
TPB Key Business Developments
Release Date: March 06, 2025
- Revenue: Increased 13% to $93.7 million for the fourth quarter; up 11% to $360.7 million for the year.
- Adjusted EBITDA: Increased 5% to $26.2 million for the fourth quarter; up 12% to $104.5 million for the full year.
- Gross Margin: 56% for the fourth quarter, down 108 basis points year-over-year; 55.9% for the full year, down 39 basis points year-over-year.
- SG&A Expenses: $34.5 million for the fourth quarter; $122.4 million for the full year, including adjustments.
- Zig-Zag Revenue: Increased 2% to $45.9 million for the fourth quarter; up 7% to $192.4 million for the year.
- Stoker's Revenue: Increased 26% to $47.8 million for the fourth quarter; up 16% to $168.3 million for the year.
- Modern Oral Revenue: FRE sales increased 419% to approximately $6.3 million for the fourth quarter.
- Cash Position: Ended the quarter with over $46 million in cash.
- Free Cash Flow: $56.3 million for the year.
- Share Repurchase: $880,000 worth of shares repurchased in the quarter.
- 2025 Adjusted EBITDA Guidance: $108 million to $113 million.
- 2025 Modern Oral Sales Guidance: $60 million to $80 million.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Turning Point Brands Inc (TPB, Financial) reported a 13% increase in revenue for Q4, reaching $93.7 million.
- Adjusted EBITDA for the full year increased by 12% to $104.5 million, exceeding prior guidance.
- The company is optimistic about its Zig-Zag and Stoker's businesses, with significant growth expected in modern oral brands FRE and ALP.
- Stoker's revenue increased by 26% in the fourth quarter, driven by strong performance in modern oral products.
- The company has initiated 2025 adjusted EBITDA guidance of $108 million to $113 million, reflecting continued growth and strategic investments.
Negative Points
- Gross margin for the full year decreased by 39 basis points to 55.9%, with a 108 basis point decline in Q4.
- Zig-Zag's gross margins decreased by 240 basis points year-over-year in Q4, primarily due to product mix.
- The company faces headwinds from the unwind of the Clipper relationship and FX-related issues in Canada.
- Modern oral gross profit margins are in the mid-30s, with reinvestment needed to support sales and marketing.
- The company anticipates increased sales and marketing investments, which may constrain EBITDA growth in 2025.
