TPB Filings — Turning Point Brands, Inc. - FilingSpy
TPB
Turning Point Brands, Inc.
A maker of branded smoking accessories and other tobacco products, Turning Point Brands sells Zig-Zag® rolling papers and cigar wraps, Stoker's® chewing tobacco and moist snuff, and modern oral nicotine pouches under the FRE® and ALP® brands. Its products reach roughly 220,000 retail locations across North America through a network of distributors. The company runs an asset-light model, outsourcing most production while keeping its brands at the top of their U.S. categories.
A $12.3M tariff refund lifted gross margin to 65.5%, but a 91% SG&A increase cut operating income 36.5%.
Stoker's modern oral products drove another quarter of rapid growth, but the cost of that expansion consumed the profit. rose 22.6% to $143.0 million and widened to 65.5% after a $12.3 million , yet fell 36.5% to $16.7 million as selling, general, and administrative expenses nearly doubled. The company is growing its top line at the expense of its , and the quarter's profitability relied on a one-time refund.
Key takeaways
A $12.3 million recognized as a reduction in cost of sales was the primary driver of the 8.4-point expansion in consolidated to 65.5%, without which the margin would have been closer to 57%.
Selling, general, and administrative expenses rose 91.1% to $77.0 million, driven by higher shipping, selling, and marketing costs to support modern oral growth, and consumed the entire increase.
Stoker's Products rose 54.5% to $107.6 million, driven by modern oral products, and the now represents 75% of total company revenue.
Section summaries
Management's Discussion and Analysis
Consolidated Q2 net sales rose 22.6% to $143M driven by Stoker's modern oral growth, but operating income fell 36.5% on higher SG&A.
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Consolidated increased 22.6% to $143.0 million, driven by a 54.5% surge in the Stoker's products to $107.6 million, primarily from modern oral products.
Zig-Zag products declined 24.8% to $35.4 million due to decreases in U.S. papers and wraps, the Clipper lighter business, and Canadian products.
Zig-Zag Products fell 24.8% to $35.4 million, with declines across U.S. papers and wraps, Clipper lighters, and Canadian products, deepening a trend that began in Q2 2025.
fell 75.2% to $3.6 million, weighed down by a $1.1 million investment loss and higher , while swung to positive $26.3 million from negative $22.3 million in the prior quarter.
What changed
The Zig-Zag decline accelerated: after a 6.9% drop in Q2 2025 and a 10.5% drop in Q3 2025, the fell 24.8% this quarter, suggesting the trend flagged a year ago has deepened rather than stabilized.
The Stoker's , which reached 62.5% in Q2 2025 and 60.2% in Q3 2025, was not separately disclosed this quarter, but the consolidated gross margin excluding the $12.3 million would be roughly flat with the prior-year quarter's 57.1%, indicating modern oral's lower-margin profile continues to pressure profitability.
returned to positive territory at $26.3 million after the $22.3 million use of cash in Q1 2026, resolving the immediate concern about consumption, though the six-month figure remains barely positive.
The material weakness in IT general controls flagged in prior periods was remediated as of the FY 2025 10-K, and KPMG replaced RSM as auditor with an unqualified opinion on internal controls.
What to watch
Whether the $12.3 million is a one-time event or part of an ongoing recovery, and whether reverts toward the mid-50s range in Q3 without a similar benefit.
Whether the 91.1% SG&A growth rate moderates as the modern oral distribution build matures, or whether selling and shipping costs continue to outpace growth and compress further.
Whether Zig-Zag's 24.8% decline represents a new run-rate or prompts management action on pricing, product mix, or cost structure.
Whether the $1.1 million investment loss and higher are recurring items that will continue to widen the gap between and .
Consolidated rose 40.6% to $93.7 million, with margin expanding to 65.5% from 57.1%, aided by a $12.3 million tariff refund recognized as a reduction in cost of sales.
Selling, general, and administrative expenses jumped 91.1% to $77.0 million, largely due to higher shipping, selling, and marketing costs to support modern oral growth.
decreased 36.5% to $16.7 million as the increase was more than offset by the significant rise in SG&A expenses.
attributable to Turning Point Brands fell 75.2% to $3.6 million, impacted by higher and a $1.1 million investment loss.
Quantitative and Qualitative Disclosures About Market Risk
Foreign Currency Sensitivity During the three months ended June 30, 2026, there have been no material changes in our exposure to exchange rate fluctuation risk, as reported within our 2025 Annual Report on Form 10-K. Please refer to our ‘Quantitative and Qualitative Disclosures…
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Foreign Currency Sensitivity
During the three months ended June 30, 2026, there have been no material changes in our exposure to exchange rate fluctuation risk, as reported within our 2025 Annual Report on Form 10-K. Please refer to our ‘Quantitative and Qualitative Disclosures about Market Risk’ included in our 2025 Annual Report on Form 10-K filed with the SEC.
Credit Risk
During the six months ended June 30, 2026, there have been no material changes in our exposure to credit risk, as reported within our 2025 Annual Report on Form 10-K. Please refer to our ‘Quantitative and Qualitative Disclosures about Market Risk’ included in our 2025 Annual Report on Form 10-K filed with the SEC.
Interest Rate Sensitivity
In February 2025, we issued the 2032 Notes in an aggregate principal amount of $300.0 million. We carry the 2032 Notes at face value. Since the 2032 Notes bear interest at a fixed rate, we have no financial statement risk associated with changes in interest rates. Our remaining debt instrument is the 2023 ABL Facility, which as of June 30, 2026 and the filing date of this report had no borrowings outstanding.
In addition to the other information set forth in this report, carefully consider the factors discussed in the ‘Risk Factors’ section contained in our 2025 Annual Report on Form 10-K. There have been no material changes to the Risk Factors set forth in the 2025 Annual Report on…
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In addition to the other information set forth in this report, carefully consider the factors discussed in the ‘Risk Factors’ section contained in our 2025 Annual Report on Form 10-K. There have been no material changes to the Risk Factors set forth in the 2025 Annual Report on Form 10-K.