TPB Q1 2026 Results: Modern Oral Drives Growth as Guidance Raised
Turning Point Brands (TPB) reported strong top-line growth in Q1 2026, primarily driven by continued momentum in its Modern Oral (FRE & ALP nicotine pouches) business. TPB also raised its full-year 2026 Modern Oral sales guidance and introduced full-year Adjusted EBITDA guidance, reflecting confidence in continued category expansion and market share gains.
Consolidated net sales increased 16.8% year-over-year to $124.3 million, while Modern Oral net sales surged 133% to $52.0 million. The category accounted for 42% of total company net sales during the quarter, up sharply from 21% in Q1 2025, underscoring the accelerating transformation of TPB’s business mix toward smoke-free nicotine products.
Gross profit increased 14.6% year-over-year to $68.3 million. However, profitability metrics were pressured by elevated investment spending tied to Modern Oral growth initiatives. Net income declined 19.0% to $11.7 million, while Adjusted EBITDA decreased 6.5% to $25.9 million. Diluted EPS fell to $0.60 from $0.79 in the prior-year period, while Adjusted Diluted EPS declined to $0.76 from $0.91.
The company stated that results were driven by continued Modern Oral momentum alongside disciplined execution across the broader portfolio. Management emphasized that it views the nicotine pouch category as being in the early stages of a long-term structural shift in nicotine consumption. TPB also highlighted ongoing investments in brands, commercial infrastructure, and consumer reach, including the recently announced TKO/UFC partnership intended to strengthen brand visibility and distribution. The company added that its legacy businesses continue to generate substantial cash flow, helping fund strategic expansion in Modern Oral.
Stoker’s Segment
The Stoker’s segment, which represented approximately 70% of total company net sales in the quarter, delivered particularly strong growth. Segment net sales increased 48.1% year-over-year to $87.6 million, primarily driven by triple-digit Modern Oral growth. Excluding nicotine pouches, Stoker’s sales is down 3.3% to $35.6 million. Segment gross profit rose 39.1% to $47.3 million. However, gross margin declined to 54.0% from 57.5% in the prior-year quarter, reflecting the growing contribution of Modern Oral products, which currently carry a different margin profile relative to traditional products.
Zig-Zag Segment
The Zig-Zag segment, accounting for roughly 30% of quarterly net sales, continued to face pressure. Net sales declined 22.4% year-over-year to $36.7 million, primarily due to lower U.S. papers and wraps shipments. Gross profit for the segment decreased 18.1% to $20.9 million. Despite weaker volumes, gross margin improved to 57.1% from 54.1%, supported by favorable product mix.
Operating Expenses and Balance Sheet
TPB significantly increased investment spending during the quarter, particularly in sales and marketing initiatives intended to support Modern Oral distribution expansion and brand development. Consolidated SG&A expenses rose 53.2% year-over-year to $55.8 million, driven by Modern Oral-related marketing investments as well as higher outbound freight costs.
The balance sheet remained strong. As of March 31, 2026, the company held $192.4 million in cash and reported net debt of $101.4 million. Total liquidity stood at $265.0 million, including available capacity under its asset-backed revolving credit facility.
2026 Outlook
TPB materially increased its 2026 Modern Oral guidance:
– Modern Oral Gross Sales: raised to $280-$300 million from $220-$240 million
– Modern Oral Net Sales: raised to $210-$225 million from $180-$190 million
– Gross-to-net sales difference: raised to $72.5 million (25%) from $45 million (c.20%).
The company also introduced full-year Adjusted EBITDA guidance of $70-$90 million, inclusive of ongoing investments in Modern Oral sales, marketing, and trade promotions.
Summary
Turning Point Brands delivered another quarter demonstrating the rapid evolution of its business toward Modern Oral nicotine products. The exceptional growth of the category is increasingly offsetting weakness in the traditional businesses and materially reshaping the company’s revenue mix. While aggressive investment spending compressed earnings and margins in the near term, management appears focused on scaling distribution, consumer awareness, and market share during what it views as an early-stage category expansion phase.
The raised sales outlook suggests accelerating confidence in Modern Oral demand trends and execution capabilities. Going forward, the key focus for investors will likely center on the sustainability of Modern Oral growth, margin progression as the business scales, and the company’s ability to translate rapid revenue expansion into stronger long-term profitability.
