Turning Point Brands (NYSE:TPB) reported second-quarter 2026 sales growth led by its Modern Oral nicotine pouch business, while increased spending on sales, marketing and retail execution weighed on adjusted EBITDA.
Consolidated net sales rose 23% from a year earlier to $143 million. Chief Financial Officer Andrew Flynn said reported gross profit was $94 million, including a tariff refund that affected the quarter. Excluding the out-of-period cost-of-goods impact related to that refund, adjusted gross profit increased 22% year over year to $81 million, representing 57% of sales.
Modern Oral Becomes Larger Share of Revenue
President and Chief Executive Officer Graham Purdy said Modern Oral gross sales increased 149% year over year and 26% sequentially, while net sales rose 128% from a year ago and 32% sequentially. The company attributed the gains to expanded retail distribution for its FRE and ALP brands, as well as direct-to-consumer sales.
Modern Oral generated $68 million in net revenue during the quarter and $89 million in gross revenue. The business accounted for 48% of consolidated net sales, compared with 26% in the second quarter of 2025.
The Stoker’s segment, which includes Modern Oral and heritage tobacco products, posted net sales of $108 million, up 55% year over year and representing 75% of company sales. Heritage Stoker’s brand revenue declined 1% to $39 million, as share growth in moist smokeless tobacco was partly offset by expected declines in loose-leaf tobacco.
Adjusted gross profit in the Stoker’s segment rose 41% to $61 million, though adjusted gross margin fell 600 basis points to 57%. Flynn said the lower margin reflected higher penetration in chain accounts.
Purdy said the company was encouraged by the early customer response to its Stoker’s Proud MST product, launched earlier this year. He described Stoker’s as the “only truly premium product for value-oriented consumers” in the segment.
Distribution, Sales Force and Manufacturing Plans
The company said it expects its chain-store count to rise 70% year over year by the end of 2026. Purdy said shelf resets have begun at several large retail accounts and are expected to be fulfilled largely through the remainder of the year, though national-chain resets can require lengthy implementation periods.
Chief Revenue Officer Summer Frein said sales representatives are selling both ALP and FRE, with ALP currently focused primarily on independent retailers and, in some cases, regional chains. The company expects to bring ALP into discussions with larger chain retailers during the fall reset season and into the spring.
Frein also said Turning Point has begun a phased expansion of ALP into select European markets. Purdy said the company expects to work with international partners that assume regulatory and sales responsibilities, rather than building sales forces outside the U.S.
Turning Point is increasing its sales force by about 50% in 2026 to support product availability, merchandising, shelf placement and customer service at new accounts. Purdy said that after the initial build-out, the business should be able to scale without comparable increases in selling, general and administrative expenses.
The company remains on track, subject to regulatory approval, to begin U.S. manufacturing by year-end. Management said domestic production is tied to regulatory considerations and the company’s ongoing premarket tobacco product application, or PMTA, process with the Food and Drug Administration. Once fully scaled, Turning Point expects U.S. manufacturing to support gross margins of about 70%.
Guidance Raised for Modern Oral Sales
Turning Point raised its 2026 Modern Oral gross sales outlook to $330 million to $350 million, from prior guidance of $280 million to $300 million. It also increased its net sales forecast for the business to $260 million to $270 million, from $210 million to $225 million previously.
The company maintained full-year adjusted EBITDA guidance of $70 million to $90 million, including increased nicotine pouch investments. Flynn said the company’s investments in commercial teams, marketing sponsorships and in-store merchandising are intended to build durable brands, though they are expected to temporarily pressure earnings.
Budgeted 2026 capital expenditures remain $4 million to $5 million, excluding Modern Oral projects. Turning Point expects to spend an additional $3 million to $5 million in 2026 to support its PMTA applications.
Second-quarter free cash flow was $26 million, and the company ended the period with $268 million in cash. Flynn said free cash flow benefited from an $18 million tariff refund. During the quarter, Turning Point also raised $60 million of equity to support its Modern Oral strategy.
Zig-Zag Performance and Brand Investment
Zig-Zag segment net sales declined 4% sequentially to $35 million. The segment generated reported gross profit of $23 million and adjusted gross profit of $20 million, equal to 57% of net sales and flat sequentially.
Purdy said Zig-Zag’s results were in line with expectations, while Frein said the company is refining its product pipeline and using its expanding sales force to broaden distribution. The company cited its “Life’s Fast, Burn Slow” campaign and said its brand-building efforts contributed to Zig-Zag’s strongest 4/20 weekend in its history.
Management said it views the nicotine pouch market as being in the early stages of a longer-term shift away from cigarettes. Purdy added that positive regulatory developments for white nicotine pouches, including recent product authorizations and modified-risk news cited during the call, were favorable for the category, while the company remains focused on its own PMTA process and brand development.
About Turning Point Brands (NYSE:TPB)
Turning Point Brands, Inc (NYSE: TPB) is a U.S.-based consumer products company focused on the manufacture, marketing and distribution of smokeless tobacco, vaping and cigar products. Headquartered in Old Hickory, Tennessee, the company serves retail outlets across all 50 states through a direct-store-delivery network and select third-party distributors. Turning Point Brands operates two reporting segments—Smokeless Products and Cigar—and leverages its logistics capabilities to offer a broad portfolio of brands and SKUs.
In its Smokeless Products segment, Turning Point Brands produces moist smokeless tobacco under leading brand names such as Grizzly, Kodiak and Stoker’s.
