Q2 2026 Turning Point Brands Inc Earnings Call Transcript
Key Points
- Modern oral segment delivered exceptional growth, with gross and net sales up 149% and 128% year-over-year, respectively, and now accounts for 48% of total revenue.
- The company raised its full-year 2026 modern oral gross sales guidance to $330-$350 million, reflecting strong momentum and confidence in continued growth.
- Stokers segment net sales increased 55% year-over-year, driven by modern oral growth, and the segment now represents 75% of consolidated net sales.
- The company is on track to increase its sales force by approximately 50% this year, which will support expanded retail distribution and future scalability.
- Management expects to achieve gross margins of approximately 70% once US manufacturing is fully scaled, which will significantly reduce COGS over time.
- The company has a strong cash position of $268 million and generated $26 million in free cash flow in the quarter, supporting strategic investments.
- Early results from the ALP brand in retail and international expansion into select European markets are positive, indicating additional growth opportunities.
- Adjusted EBITDA declined 50% year-over-year to $15 million, with margins down to 11%, due to increased sales and marketing investments and softness in Zigzag.
- Zigzag segment net sales decreased 4% sequentially, indicating continued weakness in the heritage business.
- Gross margin in the Stokers segment declined 600 basis points year-over-year to 57%, driven by higher chain penetration and associated costs.
- The company expects near-term earnings pressure as it continues to invest heavily in brand building, sales force expansion, and infrastructure.
- The PMTA process remains resource-intensive with uncertain timing, and the company expects to spend an additional $3-$5 million in 2026 on these applications.
- The launch of US manufacturing is subject to regulatory approval and is not expected until the end of the year, delaying potential cost savings.
- The promotional and slotting fee environment remains competitive, and the company anticipates continued investment in shelf placement and visibility, which could pressure margins.
Good morning, and welcome to the TurningPoint Brands second quarter 2026 earnings conference call. (Operator Instructions)
Please note this event is being recorded.
I would now like to turn the conference over to Andrew Flynn, Chief Financial Officer. Please go ahead.
Good morning, everyone. Earlier today, we issued a press release coming our second quarter results, available on our Investor Relations section of our website at www.turningpointbrands.com.
During this call, we'll discuss consolidated and segment operating results, the operating environment and our progress against our strategic plan.
Before we begin, please refer to the forward-looking statements, disclosure and risk factors in our press release and SEC filings.
We'll also reference certain non-GAAP financial measures. Reconciliations and explanations are included in today's earnings release. With that, I'll
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