Turning Point Brands Grows Revenue 27% as Nicotine Pouches Double

Turning Point Brands (NYSE:TPB) grew third-quarter net sales 27% to $151 million, as its FRE and ALP nicotine pouches more than doubled, while adjusted EBITDA fell 41% year over year to $18 million. The gap between those two numbers is the story: the company is spending heavily to build retail distribution, and it says that is the plan.

Chief Executive Officer David Glazek, on his first earnings call in the role, said the strategy remains anchored in using cash flow from heritage businesses to build brands in Modern Oral. Glazek previously served as executive chairman. The company maintained its full-year outlook for Modern Oral sales and adjusted EBITDA.

How fast is Modern Oral growing?

Modern Oral net sales rose 103% year over year to $74 million, with gross sales up 114% to $94 million. The segment (the company's nicotine pouch business) represented 49% of consolidated net sales, up from 31% a year earlier. Turning Point expects to increase its chain store count by more than 70% during 2026.

Chief Revenue Officer Summer Frein said FRE is expanding across national chains and securing broader assortments in existing accounts. ALP, meanwhile, is adding independent retailers and regional chains. Both brands remain in the "early innings" of brick-and-mortar expansion, Frein said, though FRE is further along.

• Glazek said FRE is being deployed into chain accounts won earlier in the year
• ALP is beginning chain conversations ahead of spring shelf resets
• Early data from ALP's rollout, predominantly in independent stores, is meeting or exceeding expectations
• The company was pleased with results from ALP testing at 7-Eleven
• Timing and store counts in chain rollouts can remain uncertain even after a deal is won, Glazek cautioned

What happened to profitability?

Gross profit rose 21% to $85 million, at a gross margin of 56% — slightly below the second quarter once a tariff refund is normalized out, according to Chief Financial Officer Andrew Flynn. Reported selling, general and administrative expenses came in at $75 million, down nearly $2 million sequentially, after the company scaled back spending where it judged returns inadequate. Adjusted EBITDA rose $3 million, or 21%, from the second quarter on higher gross profit and lower expenses.

The Stoker's segment, which includes Modern Oral, posted a 52% increase in net sales to $114 million. Heritage Stoker's brands grew 3% to $39 million, with share gains in moist snuff tobacco partly offset by anticipated declines in loose leaf. Zig-Zag was less cooperative: segment sales fell 15% to $37 million and gross profit declined 16% to $21 million. Glazek called the business stable, noting quarterly sales can swing by a few million dollars on individual orders, and that some Zig-Zag volume moves through stores that do not report data like large chains do.

Why did the company keep its forecast?

Turning Point reaffirmed the outlook issued on Sept. 21, 2026, calling for full-year Modern Oral gross sales of $330 million to $350 million, net sales of $260 million to $270 million, and adjusted EBITDA of $70 million to $80 million. Asked why it did not raise the forecast, Glazek said management had seen no change in trajectory but had limited additional visibility since September. Year-end holiday orders, he noted, could shift volume between December and January.

U.S. manufacturing is still expected to begin in 2027, though timing depends partly on the Food and Drug Administration's review of premarket tobacco product applications (PMTAs, the regulatory filings required before new tobacco products reach the market). Applications allowing production in Louisville have been submitted and completed, and a second submission listing U.S. manufacturing is in preparation — an approach that keeps the existing application in the review queue without changing its manufacturing site. The company expects to spend roughly $3.5 million in the fourth quarter on PMTA work.

Turning Point ended the quarter with $251 million in cash and repurchased $10 million of stock during the period. Glazek said the company has no current expectation for acquisitions and will evaluate buybacks opportunistically. The cash pile, in short, is waiting for a purpose.