Q1 2026 Turning Point Brands Inc Earnings Call

May 7, 2026

Speaker #3: Should you need operator assistance today, please press star zero. After today's presentation, there will be an opportunity to ask questions. Please note that this event is being recorded.

Speaker #3: I would now like to turn the conference over to Mr. Andrew Flynn, Chief Financial Officer. Please go ahead, sir.

Speaker #4: Good morning, everyone. Earlier today, we issued a press release covering our first quarter results. Available in the investor relations section of our website at www.turningpointbrands.com.

Speaker #4: 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 forward-looking statements and risk factors in our press release and SEC filings.

Speaker #4: We'll also reference certain non-GAAP financial measures. Reconciliations and explanations are included in today's earnings release. With that, I'll turn the call over to our CEO, Graham Purdy.

Speaker #5: Thanks, Andrew. Good morning, everybody. And thank you for joining our call. We started the year with strong momentum, led by accelerating growth in modern world, with gross and net sales up 167% and 133% year over year, and 30% and 26% sequentially.

Speaker #5: These results are driven by ongoing growth in both brands' D2C platforms, freeze early expansion into larger, higher volume chain accounts, and ALP's very early move into bricks and mortar.

Speaker #5: In the quarter, modern world accounted for 42% of our total revenue, up from 21% in Q1 2025. Before we dive into details of the quarter, I want to step back and frame the opportunity in front of Turning Point Brands.

Speaker #5: We believe we are in the midst of a greater than $50 billion generational shift in nicotine consumption, and we are positioning the business to capture meaningful share of nicotine users in this evolving, high barrier category.

Speaker #5: We are strengthening that position through foundational investments in our sales force, marketing, and commercial capabilities. These investments are critical to building a durable, growth platform that can scale into a leading player in the post-cigarette nicotine market over time.

Speaker #5: While this infrastructure will ultimately allow us to compete across the modern nicotine ecosystem, our priority today is clear. Winning in nicotine pouches. We believe the nicotine pouch category is still in its nascent stages of development and can become the dominant revenue and profit driver of the company over time.

Speaker #5: As we've said before, we expect the market to consolidate around a limited number of scaled brands, and we are increasingly confident that free and ALP will be among them.

Speaker #5: Our confidence is grounded in execution. We continue to see encouraging consumer response across both free and ALP. Supported by product quality, brand positioning, and repeat purchasing behavior.

Speaker #5: Our outsized share of direct consumer sales coupled with our continued market share gains in bricks and mortar are evidence that our plan is working in the early innings.

Speaker #5: Based on our Q1 performance, we believe our results captured mid-single digit category share of both gross and net sales, giving confidence that we are on track to achieve our long-term goal of double-digit market share by the end of the decade.

Speaker #5: We are using that momentum to build scale across channels. Free continues to expand into larger regional and national convenience chains, while ALP has moved from a strong direct consumer base into retail faster than we originally expected.

Speaker #5: We've had several notable chain wins, driving confidence in our growth. We expect our chain store count to increase 70% by the end of 2026 versus the prior year.

Speaker #5: As you know, we are building an operational foundation to further support scale in modern world. Commissioning our Louisville manufacturing facility is an important step in localizing production, improving supply control, and reducing freight and tariff exposure over time.

Speaker #5: As we build production, we expect that work to strengthen unit economics and support margin improvement as domestic inventory moves through the P&L. At scale, we believe our margins should approach 70% in this category by the end of the decade.

Speaker #5: We also continue to invest in the commercial infrastructure needed to support growth. Including Salesforce expansion, chain account support, enhanced consumer visibility and manufacturing capabilities, in 2026, we plan to continue investing in our Salesforce and marketing to secure chain placement, build brand awareness, and support our growing distribution footprint.

Speaker #5: Based on achieving our sales and financial objectives, we expect total sales and marketing investment for the year to range from $80 million to $105 million.

Speaker #5: Given the strong gross sales growth we have experienced, we are confident that these investments will provide attractive returns for investors over the long term.

Speaker #5: In short, we are making front-loaded investments in a category where acquiring brand-oriented, adult consumers can drive repeat purchasing and strong margins over extended periods.

Speaker #5: Over time, we believe our investments in physical execution—particularly Salesforce expansion—distribution support, and retail presence will become a more important source of competitive advantage. Overall, we are encouraged by the momentum we are seeing.

Speaker #5: The progress we are making, and the platform we are building to scale profitably. With that, I'll hand the call over to Summer to walk through the progress of our key go-to-market initiatives.

Ian Zaffino: Welcome to the conference center.

Operator 1: Please wait for the next available operator. Thank you for your patience. Please stay on the line for the next available operator. Thank you for your patience. Please stay on the line for the next available operator. Thank you for your patience. Please stay on the line for the next available operator. Thank you for holding. May I have the name of the conference you're joining?

Speaker #6: Thank you, Graham, and good morning, everyone. I'll focus my comments on our go-to-market execution and the nicotine pouch segment. This remains our top commercial priority and, as we scale the business, we continue to benefit from the strength of our legacy distribution relationships and broader commercial capabilities.

Speaker #6: Our strategy is to build demand across both online and retail channels, with retail expansion as the key lever to scale the business. To support that effort, we are investing in sales coverage, merchandising support, and brand-building programs that help us win distribution and improve in-store execution.

Speaker #6: That includes securing the right assortment, shelf placement, and visibility to support trial, repeat purchase, and long-term performance. These investments support both near-term execution and the broader foundation we need to scale the business.

Speaker #6: In the first quarter, we made progress against that plan. We secured new wins across critical, top chain convenience stores that will expand distribution across our portfolio.

Speaker #6: Our brands are designed to resonate with distinct consumers, and we will continue to promote the expansion of both free and ALP into retail stores.

Speaker #6: We believe our brand credibility, market performance, and ongoing marketing support were important drivers of those wins. While nicotine pouch gross sales grew nearly 500% in 2025, we still have meaningful room to build brand awareness relative to category leaders.

Speaker #6: Our early strategy was to establish distribution first, using our existing retailer relationships to build a strong retail foundation. With the progress we made in 2025 and the additional distribution we have secured, we believe we are now at a point where increased brand investment can drive stronger returns.

Speaker #6: Over time, that should improve consumer awareness, support retail productivity, and increase the value of the nicotine pouch opportunity. Accordingly, we are investing aggressively in brand-building to support future scale.

Speaker #6: Last month, we announced a partnership between free and six TKO properties, including UFC, Zufa Boxing, and PBR. This expansion is the result of the demand and brand alignment success we validated through our initial partnership with PBR, which started in May of last year.

Speaker #6: We believe this broader platform will help accelerate brand awareness and consumer engagement with adult consumers. We are off to a solid start, already having executed a few events since the announcement, and we'll share more as the partnership unfolds.

Speaker #6: Building on ALP's success in direct-to-consumer, this was the first quarter that TPB sales organization started to sell ALP on retail shelves. We began with a manageable launch and expect to incrementally add stores this year through our new chain account wins.

David Brown: Hey, how's it going? Looking for Turning Point Brands, please.

Operator 1: Thank you. May I have the spelling of your first and last name?

Speaker #6: While it's early innings, we are encouraged by the initial results. With regards to ZigZag, we continue to execute against our core brand pillars, strengthening the core business while scaling new product innovation, and expanding brand presence in target markets.

David Brown: Surely. David, D-A-V-I-D. Brown, B-R-O-W-N. Company name Aiera, A-I-E-R-A.

Operator 1: I'll join you now, sir.

David Brown: Thank you.

Speaker #6: We accelerated growth in new products, including natural leaf flat wraps, by expanding retail distribution through targeted merchandising programs. At the same time, we are growing brand awareness with a focus on under-indexed markets through integrated marketing campaigns and in-store activations that embody ZigZag's new Life's Fast Burn Slow tagline.

Speaker #6: Overall, we are seeing encouraging early proof points across both brand-building and retail expansion, and we believe that progress positions the nicotine pouch segment to become a major contributor to growth over time.

Speaker #6: Let me now turn the call over to Andrew to go through our financial results.

Speaker #5: Thank you, Summer. Starting with consolidated results, sales were up 17% year over year to $124.3 million for the quarter. Growth was driven primarily by modern oral.

Speaker #5: Gross profit of $68.3 million increased 14.6%, driven by modern oral. Gross margin was 55%, which was down 100 basis points versus last year. Reported SG&A was 55.8 million for the quarter, which was up 8 million sequentially.

Speaker #5: The increase was driven primarily by our nicotine white pouch investments. Including approximately $1 million of incremental spend tied to expansion of our sales force.

Speaker #5: We also spent approximately $7 million on increased marketing investment and broader brand-building initiatives. Adjusted EBITDA was 25.9 million for the quarter, at a 20.8% margin, which exceeded the midpoint of the guidance.

Speaker #5: This was primarily attributed to accelerated growth in modern oral, offset by our strategy to increase sales, and marketing investment, and softness in ZigZag. Stoker segment net sales increased 48% year over year to $88 million for the quarter.

Speaker #5: The Stoker segment now accounts for 70% of consolidated net sales. Regarding modern oral, I want to briefly address our disclosure of gross sales. Because most contra-revenue investments relate to slotting-related distribution fees, we believe both gross and net sales provide the clearest view of underlying business performance.

Speaker #5: Support of our growth investments, modern oral and nicotine pouch net sales free and ALP, were up 133% year over year. Achieving net revenue of $52 million.

Speaker #5: Gross revenue was 69 million, up 167% year over year. For the quarter, modern oral accounted for 42% of consolidated net sales, up from 21% a year ago.

Speaker #5: Legacy Stoker's brand's net revenue decreased 3.5% year over year to $36 million for the quarter. Driven by continued share growth and MST that was partially offset by anticipated declines in loose leaf.

Speaker #5: Stoker's gross profit increased 39% to $47 million. Gross margin decreased 350 basis points to 54%, due largely to the impact of tariffs. ZigZag segment net sales were down 22% year over year to $36.7 million for the quarter.

Speaker #5: For the quarter, ZigZag gross profit decreased 18% to $20.9 million and gross margin was 57.1%. Which was up 300 basis points versus last year.

Speaker #5: First quarter free cash flow was negative 27.4 million dollars, reflective of our investments in trade and brand marketing programs, as well as working capital and US manufacturing CapEx.

Speaker #5: We ended the quarter with $192.4 million of cash. Our expectation is to be approximately cash flow break-even for the remainder of the year. Our capital allocation approach remains disciplined and aligned with the opportunity we see in nicotine pouch.

Speaker #5: As we invest behind growth initiatives, the timing of those investments and the timing of their benefits may not always align evenly within a given quarter.

Speaker #5: That reflects our effort to position the business to capture incremental share in a category with substantial long-term annuity value. Today, we are increasing full-year 2026 modern oral guidance.

Speaker #5: We now expect gross sales of $280 to $300 million, up from our previous range of $220 to $240. And net sales of $210 to $225 million.

Speaker #5: Up from our previous range of $180 to $190. Implied gross revenue growth at the midpoint is 83.7%. We are also introducing full-year EBITDA guidance of $70 million to $90 million.

Speaker #5: Inclusive of increased nicotine pouch investments and sales force expansion, merchandising support, and consumer marketing. For modeling purposes, we expect the effective income tax rate to be 23 to 26 percent on a go-forward basis.

Operator 2: Good morning. Welcome to the Turning Point Brands Q1 2026 Earnings Conference Call. I would now like to turn the conference over to Mr. Andrew Flynn, Chief Financial Officer. Please go ahead, sir.

Operator: Good morning. Welcome to the Turning Point Brands Q1 2026 Earnings Conference Call. I would now like to turn the conference over to Mr. Andrew Flynn, Chief Financial Officer. Please go ahead, sir.

Additionally, as we focus on strengthening our Market presence, we expect to spend between 80 and 105 million to expand our sales force in both our marketing strategy in 2026.

As we continue to scale, we expect the overall cost structure of the business to become more efficient.

Many Investments. We are making today slotting related brand building and go to market. Spend are tied to building distribution and driving initial trial and growth of our products.

Many Investments, we are making today plotting related, brand building and go to market. Spend are tied to building distribution and driving initial trial and growth of our products.

Andrew Flynn: Good morning, everyone. Earlier today, we issued a press release covering our Q1 results available in the 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 forward-looking statements 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 turn the call over to our CEO, Graham Purdy.

As our consumer base grows, these costs should become a smaller percentage of sales.

Now, let me turn it to gram.

Now, let me turn it to Graham.

Thanks Andrew.

Thanks Andrew, we are encouraged by the momentum. We see in the business and by the progress, we're making against our strategy.

We are encouraged by the momentum, we see in the business and by the progress, we're making against our strategy.

as I said at the outset,

we believe we're in the midst of a generational shift in nicotine consumption.

And we believe turning point is uniquely positioned to capture meaningful. Share in that transition.

Our Focus remains on winning in modern oral by investing in the brands commercial capabilities.

Our Focus remains on winning and modern oral by investing in the brands commercial capabilities.

And infrastructure needed to scale.

Graham Purdy: Thanks, Andrew. Good morning, everybody, and thank you for joining our call. We started the year with strong momentum led by accelerating growth in Modern Oral, with gross and net sales up 167% and 133% year over year and 30% and 26% sequentially. These results are driven by ongoing growth in both brands' D2C platforms, FRE's early expansion into larger, higher volume chain accounts, and ALP's very early move into bricks and mortar. In the quarter, Modern Oral accounted for 42% of our total revenue, up from 21% in Q1 2025. Before we dive into details of the quarter, I wanna step back and frame the opportunity in front of Turning Point Brands.

We are seeing continued proof points in both consumer traction and distribution growth. And we believe that positions us well to build a meaningful and profitable business over time.

We are seeing continued proof points in both consumer traction and distribution growth, and we believe that positions us well to build a meaningful and profitable business over time.

And with that, I'll turn it over to questions.

With that, I'll turn it over to questions.

Thank you, sir. And everyone if you would like to ask a question, please press star 1 on your telephone keypad, we do ask that you limit your questions to 1 initial and 1 follow-up. Our first question today will come from Eric dolor from Craig Hallam Capital group.

Great. Thanks for taking my questions. Congrats on the strong results. Uh, very encouraging to see nicotine pouch sales, re accelerating, uh, into q1 here.

Graham Purdy: We believe we are in the midst of a greater than $50 billion generational shift in nicotine consumption, and we are positioning the business to capture meaningful share of nicotine users in this evolving high-barrier category. We are strengthening that position through foundational investments in our sales force, marketing, and commercial capabilities. These investments are critical to building a durable growth platform that can scale into a leading player in the post-cigarette nicotine market over time. While this infrastructure will ultimately allow us to compete across the modern nicotine ecosystem, our priority today is clear: winning in nicotine pouches. We believe the nicotine pouch category is still in its nascent stages of development and can become the dominant revenue and profit driver of the company over time.

Um, so you you raised guidance for modern oral net sales by about 30 million and then gross sales by about 60 million. So, suggesting a big increase in, uh, Contra revenues with these national chain wins. Um, how did these wins announced today compared to your expectations, coming into the year? Have you won more change than initially expected? Um, and any national change that? We should expect both free. And outpour is in mostly free right now.

Net sales by about 30 million and then gross sales by about 60 million. So, suggesting a big increase in, uh, Contra revenues with these national chain wins. Um, how did these wins announced today compared to your expectations, coming into the year? Have you won more change than initially expected? Um, and any national change that we should expect both free and out or is it mostly free right now?

Great question. Thanks Eric. Um, we were really really

Excited about this.

Graham Purdy: As we've said before, we expect the market to consolidate around a limited number of scaled brands. We are increasingly confident that FRE and ALP will be among them. Our confidence is grounded in execution. We continue to see encouraging consumer response across both FRE and ALP, supported by product quality, brand positioning, and repeat purchasing behavior. Our outsized share of direct-to-consumer sales, coupled with our continued market share gains in bricks and mortar, are evidence that our plan is working in the early innings. Based on our Q1 performance, we believe our results captured mid-single-digit category share of both gross and net sales, giving confidence that we are on track to achieve our long-term goal of double-digit market share by the end of the decade. We are using that momentum to build scale across channels.

I think as you know every chain account is different. So we're currently in the process of determining the rollout schedule and the doors will come online over the balance of the Year where we have opportunities to bring both brands in. We will so you'll hear more about that as the as the year rolls out. And we're we're encouraged and excited about the success that we had over the past few months.

Great question. Thanks Eric um we were really really excited about this Springtime negotiation that we worked through over the past few months as Graham noted in his comments. We expect our store count to increase by nearly 70% by the end of the year. I think, as you know, every chain account is different. So we're currently in the process of determining the rollout schedule and the doors will come online over the balance of the Year where we have opportunities to bring both brands in. We will so you'll hear more about that as the as the year rolls out. And we're we're encouraged and excited about the success that we had over the past few months.

Yeah, no certainly sounds, um, very exciting. Um, and I guess some of you touched on this uh, in your answer there and and maybe it's just, um, sort of, you know, we'll, we'll see you over the next couple quarters. But how should we think about the, the timing from these wins? Um, uh, once we expect to see them on shelves and then, you know, how should we think about the sort of impact on, um, gross versus net sales? Um, should we look

Graham Purdy: FRE continues to expand into larger regional and national convenience chains, while ALP has moved from a strong direct consumer base into retail faster than we originally expected. We've had several notable chain wins, driving confidence in our growth. We expect our chain store count to increase 70% by the end of 2026 versus the prior year. As you know, we are building an operational foundation to further support scale in Modern Oral. Commissioning our Louisville manufacturing facility is an important step in localizing production, improving supply control, and reducing freight and tariff exposure over time. As we build production, we expect that work to strengthen unit economics and support margin improvement as domestic inventory moves through the P&L. At scale, we believe our margins should approach 70% in this category by the end of the decade.

Yeah, no certainly sounds, um, very exciting. Um, and I guess some of you touched on this uh, in your answer there and and maybe it's just, um, sort of, you know. We'll, we'll see over the next couple quarters. But how should we think about the, the timing from these wins? Um, uh, when should we expect to see them on shelves and then, you know, how should we think about the sort of impact on um, gross versus net sales? Um, should we look for net sales to sort of pick up from these in the in the back half? Or is that more of a 2027 thing? Thanks. Yeah, I'll answer the first part and then I'll turn it to Andrew. To answer the the second part, but you'll start seeing some of these chain wins roll out over the next few weeks. But as the, the progress of rolling out, these chains requires resets of fixtures and different dynamics, that they're sorting out with getting everything situated in store. It just takes time. So you'll see those stores sort of fill out the balance of the year, but I'll turn it to

Andrew to, to explain how we thought about the dollar impact. Yeah, as as we think about the net sales trajectory over the course of the year, uh, we would expect to see some. We expect to see some pick up in the back half.

For net sales to sort of pick up from these in the in the back half or is that more of a 2027 thing? Thanks. Yeah, I'll answer the first part and then I'll turn it to Andrew. To answer the the second part, but you'll start seeing some of these chain wins roll out over the next few weeks. But as the, the progress of rolling out, these chains requires resets of fixtures and different dynamics, that they're sorting out with getting everything situated in store, it just takes time. So you'll see those stores sort of fill out across the balance of the year, but I'll turn it to Andrew to, to explain how we thought about the dollar impact. Yeah, as as we think about the net sales trajectory over the course of the year, uh, we would expect to see some. We expect to see some pick up in the back half.

Um,

As as it relates to the modern oral category.

Awesome. Uh well it's all very encouraging. Congrats again on the strong results.

Thanks Eric.

Your next question comes from. Ian zafino from Oppenheimer.

Graham Purdy: We also continue to invest in the commercial infrastructure needed to support growth, including sales force expansion, chain account support, enhanced consumer visibility, and manufacturing capabilities. In 2026, we plan to continue investing in our sales force and marketing to secure chain placement, build brand awareness, and support our growing distribution footprint. Based on achieving our sales and financial objectives, we expect total sales and marketing investment for the year to range from $80 million to $105 million. Given the strong gross sales growth we have experienced, we are confident that these investments will provide attractive returns for investors over the long term. In short, we are making front-loaded investments in a category where acquiring brand-oriented adult consumers can drive repeat purchasing and strong margins over extended periods.

I great. Thank you very much and, uh, you know, great great guidance on that, uh, emo side. So, um, you know, question with the on the PTM pmta, um process. Um, how is that going? You know, I know this is articles about that and um, any kind of change in in discussions there or thoughts about getting kind of final

Um, and then, how are you thinking about the Louisville plan? Um, you know, which because I guess they're kind of, um,

Hi, great. Thank you very much and, uh, you know, great great guidance on that, uh, emo side. So, um, you know, question with the, on the PTM pmta, um process, um, how is that going? You know, I know that social news articles about that and, um, and any kind of change in in discussions there or thoughts about getting kind of final approval. Um, and then, how you think about the Louisville plans? Um, you know, which because I guess they're kind of, um,

Connected events. Thanks.

Yeah, great question. Um, look the, uh, the pmta process is, uh, it's a rigorous scientific, uh, process. Uh, we're not surprised by the timing, uh, to be frank uh, in, you know, our approaches, you know, we we respect the process and uh you know, any additional commentary around, sort of where we're at on that per line. Uh probably

We wouldn't be appropriate at this time.

Yeah, great question. Um, look the, uh, the pmta process is, uh, it's a rigorous scientific, uh, process. Uh, we're not surprised by the timing, uh, to be frank, uh, in, you know, our approaches, you know, we we respect the process and uh, you know, any additional commentary around, sort of where we're at on that part line uh, probably wouldn't be appropriate at this time.

Graham Purdy: Over time, we believe our investments in physical execution, particularly sales force expansion, distribution support, and retail presence, will become a more important source of competitive advantage. Overall, we are encouraged by the momentum we are seeing, the progress we are making, and the platform we are building to scale profitably. With that, I'll hand the call over to Summer to walk through the progress of our key go-to-market initiatives.

In terms of Louisville, uh, manufacturing. You know, we're threading, a bit of a needle here with respect to, uh, the pmta process and, uh, and scaling our infrastructure here in louiville, uh, We've made really great progress relative to, uh, you know, laying down the the infrastructure to support manufacturing here, in louiville. We've certainly got equipment, uh, in Louisville, and we feel really good about, uh, you know, where we're at from a, from a, you know, throughput on those machines, in the early innings,

In terms of Louisville uh manufacturing here, we're threading, a bit of a needle here with respect to uh, the pmta process and uh, and scaling our infrastructure here in louiville. Uh, We've made really great progress relative to, uh, you know, laying down the the infrastructure to support manufacturing here, in louiville. We've certainly got equipment, uh, in Louisville, and we feel really good about, uh, you know, where we're at from a, from a, you know, throughput on those machines, in the early innings,

Summer Frein: Thank you, Graham. Good morning, everyone. I'll focus my comments on our go-to-market execution in the nicotine pouch segment. This remains our top commercial priority. As we scale the business, we continue to benefit from the strength of our legacy distribution relationships and broader commercial capabilities. Our strategy is to build demand across both online and retail channels, with retail expansion as the key lever to scale the business. To support that effort, we are investing in sales coverage, merchandising support, and brand-building programs that help us win distribution and improve in-store execution. That includes securing the right assortment, shelf placement, and visibility to support trial, repeat purchase, and long-term performance. These investments support both near-term execution and the broader foundation we need to scale the business. In Q1, we made progress against that plan.

Okay. That's thank you. And then I guess maybe a question for summer is um you know when you're going to like I guess you now the newly expanded portfolio. Um and and so how are you going to Market? Are you going to Market as far as free being your higher nicotine pouches and and out being your your lower?

It's in patch couches. Um, is that the strategy? And also maybe talk about, you know, this portfolio expands a portfolio, which has significantly more skus

Okay, that's thank you. And then I guess maybe a question for summer is um, you know when you're going to like I guess you now the newly expanded portfolio. Um and and so how are you going to Market? Are you going to Market as far as free being your higher nicotine pouches and, and out, being your, your lower nicotine patch pouches, um, is that the strategy and also maybe talk about, you know, this portfolio, expands and portfolio, which has significantly more skus

How that's resonating with retailers bringing them, you know, incremental, skus and any other kind of color you can give us maybe about the maybe sooner just like effects of of having those 2 Brands together. Thanks

How that's resonating with retailers bringing them, you know, incremental, skus and any other kind of color you could give us maybe about the maybe synergistic effects of having those 2 Brands together. Thanks,

Yeah, sure. So I would say the retailers

Say, the retailers.

Summer Frein: We secured new wins across critical top chain convenience stores that will expand distribution across our portfolio. Our brands are designed to resonate with distinct consumers, and we will continue to promote the expansion of both FRE and ALP into retail stores. We believe our brand credibility, market performance, and ongoing marketing support were important drivers of those wins. While nicotine pouch growth sales grew nearly 500% in 2025, we still have meaningful room to build brand awareness relative to category leaders. Our early strategy was to establish distribution first, using our existing retailer relationships to build a strong retail foundation. With the progress we made in 2025 and the additional distribution we have secured, we believe we are now at a point where increased brand investment can drive stronger returns.

Really focused on 2 very distinct consumer bases. There's room in this category for both Brands to win, and we've seen some really encouraging early results as we've been bringing them to Market.

Are consumers and our sales organization are all very excited about us having both brands in the portfolio and in the sales bag to bring to Market. And what's been great about both of these Brands is that they've built, strong base with consumers. Especially Alp you know they've created a really strong d2c presence. And there were some pent-up demand at retail that we were really able to start leveraging. And as these brands are being put into Market, we're really thinking about the end consumer. So while the product itself is important and they certainly have their differences. What's resonating with retail, what's resonating with consumers is that these brands are really focused on 2 very distinct consumer bases. There's room in this category for both Brands to win and we've seen some really encouraging early results as we've been bringing them to Market.

Okay, thank you very much.

No problem.

Next up is Nick Anderson from Ross, Capital partners.

Summer Frein: Over time, that should improve consumer awareness, support retail productivity, and increase the value of the nicotine pouch opportunity. Accordingly, we are investing aggressively in brand building to support future scale. Last month, we announced a partnership between FRE and six TKO properties, including UFC, Zuffa Boxing, and PBR. This expansion is a result of the demand and brand alignment success we validated through our initial partnership with PBR, which started in May of last year. We believe this broader platform will help accelerate brand awareness and consumer engagement with adult consumers. We are off to a solid start already having executed a few events since the announcement and will share more as the partnership unfolds. Building on ALP's success in direct-to-consumer, this was the Q1 that TPB sales organization started to sell ALP on retail shelves.

Great. Thanks for taking the questions and congrats on the quarter. Um, first for me, just on the rising fuel price environment. Have you seen any impact on sea store visits or consumer Behavior? Tobacco is typically more resilient when it comes to higher fuel prices, are you seeing the same Trend emerge within nicotine pouches? Does any discernible change? That would be helpful.

Great. Thanks for taking the questions and congrats on the quarter. Um, first for me, just on the rising fuel price environment. Have you seen any impact on sea store visits or consumer Behavior? Tobacco is typically more resilient when it comes to higher fuel prices, are you seeing the same Trend emerge within nicotine? Pouches? Does any discernible change? Any discussion picked up would be helpful.

Summer Frein: We began with a manageable launch and expect to incrementally add stores this year through our new chain account wins. While it's early innings, we are encouraged by the initial results. With regards to Zig-Zag, we continued executing against our core brand pillars, strengthening the core business while scaling new product innovation and expanding brand presence in target markets. We accelerated growth in new products, including Natural Leaf Flat Wraps, by expanding retail distribution through targeted merchandising programs. At the same time, we are growing brand awareness with a focus on under-indexed markets through integrated marketing campaigns and in-store activations that embody Zig-Zag's new Life's Fast, Burn Slow tagline. Overall, we are seeing encouraging early proof points across both brand building and retail expansion, and we believe that progress positions the nicotine pouch segment to become a major contributor to growth over time.

No, I think uh, you know, given the backdrop of our results, we feel you know, really good about uh, you know, sort of where we're at today. Um you know with the consumer um as summer had mentioned in the last question with Ian we're really focused in on you know, building brand equities building brand identity and really winning on the premium front over the Long Haul. Um, we view the the fuel prices as transient we think where we generally see that more so is in the Heritage businesses and I think what's an interesting aspect of that. You know, historically consumers tend to not move out of the categories. They tend to look for more value and I think we feel very well positioned with, uh, our stoker Stoker's Heritage products, uh, you know, with, with respect to, you know, spiking gas prices.

No, I think uh, you know, given the backdrop of our results, we feel you know, really good about uh, you know, sort of where we're at today. Um, you know, with the consumer um as summer mentioned, in the last question with Ian, we're really focused in on, you know, building brand equities building brand identity and really winning on the premium front over the Long Haul. Um, we view the the fuel prices as transient we think where we generally see that more. So as in the Heritage businesses and I think what's an interesting aspect of that, you know, historically the consumers tend to not move out of the categories. They tend to look for more value and I think we feel very well positioned with, uh, our stoker Stoker's Heritage products, uh, you know, with, with respect to, you know, spiking gas prices.

Great. That's helpful. Um, second for me, just on the Retail Landscape with the momentum from TKO and brand awareness, obviously, ticking higher here. Have you seen a different appetite for Market change to carry free announced as brand recognition grows, I would assume your negotiations should become smoother, but any color there would be helpful. Thank you.

Great, that's helpful. Um, second for me, just on the retail landscape—with the momentum from TKO and brand awareness obviously ticking higher here—have you seen a different appetite from the market to carry Free announcements as brand recognition grows? I would assume your negotiations should become smoother, but any color there would be helpful. Thank you.

Summer Frein: Let me now turn the call over to Andrew to go through our financial results.

Andrew Flynn: Thank you, Summer. Starting with consolidated results. Sales were up 17% year over year to $124.3 million for the quarter. Growth was driven primarily by Modern Oral. Gross profit of $68.3 million increased 14.6%, driven by Modern Oral. Gross margin was 55%, which was down 100 basis points versus last year. Reported SG&A was $55.8 million for the quarter, which was up $8 million sequentially. The increase was driven primarily by our nicotine white pouch investments, including approximately $1 million of incremental spend tied to expansion of our sales force. We also spent approximately $7 million on increased marketing investment and broader brand-building initiatives. Adjusted EBITDA was $25.9 million for the quarter at a 20.8% margin, which exceeded the midpoint of the guidance.

Been part of the conversation with retail. We've seen some early consumer excitement. We have some events under our belts and, and more to come as that partnership unfolds, but encouraged about The credibility. It brings to us and sort of the proof point that, um, comes to the table of us, being a brand and a company that's investing in the long term here.

Great question. We are really excited about the TKO deal. As you know, we invested in PBR Last year, we learned a lot and that gave us some momentum to build upon because I think having this TKO deal. Really has us show up as a credible partner. That's investing for the long term to win with Our Brands. And to certainly, while it's early, it has been part of the conversation with retail. We've seen some early consumer excitement. We have some events under our belts and, and more to come as that partnership unfolds but encouraged about The credibility. It brings to us and sort of the proof point that, um, comes to the table of us, being a brand and a company that's investing in the long term here.

Hey, that's it for me. Congrats again on the quarter.

Thank you.

The next question is from Gerald pascarelli needam and Company.

For Gerald and, uh, thanks.

Hi, this is Jack on for Gerald and uh, thanks for taking my questions. Um,

Uh, decline relative to last year.

That's for Eva guidance obviously implies uh, decline relative to last year, which at this point, I think is, well understood, but the range is pretty wide. So could you just kind of go through some assumptions that get you to the high end versus the low end?

Which, at this point, I think is well understood, but the range is pretty wide. So could you just kind of go through some assumptions that get you to the high end versus the low end?

Andrew Flynn: This was primarily attributed to accelerated growth in Modern Oral, offset by our strategy to increase sales and marketing investment and softness in Zig-Zag. Stoker segment net sales increased 48% year-over-year to $88 million for the quarter. The Stoker segment now accounts for 70% of consolidated net sales. Regarding Modern Oral, I want to briefly address our disclosure of gross sales. Because most contra revenue investments relate to slotting-related and distribution fees, we believe both gross and net sales provide the clearest view of underlying business performance. Support of our growth investments, Modern Oral nicotine pouch net sales FRE and ALP were up 133% year-over-year, achieving net revenue of $52 million. Gross revenue was $69 million, up 167% year-over-year. For the quarter, Modern Oral accounted for 42% of consolidated net sales, up from 21% a year ago.

Sure thing. So um look which which driving the uh the IBA guide is as we as we discussed, we've got big investments in terms of

sales force.

Um, retail distribution, as well as marketing spend. And so those are those are those are the big drivers.

Of the um, the year-over-year change. Um, also as you know, the our free our, in our, our outbound free costs are captured. And as CNA that's also up on a year-over-year basis.

Of the, um, the year-over-year change. Um, also as you know, the our free, our in our outbound freight costs are captured in sgna. That's also up on a year-over-year basis.

And so, what's what's kind of driving the range here is?

um, 1 is the biggest the biggest driver is our ability um, to

To get.

To get that spending and and what we will spend on in the future and so that spending is, is dependent on what we see in in terms of sales, um, because we'll be able to Pivot if needed and we're being judicious about that investment. And so as we monitor it,

Andrew Flynn: Legacy Stoker's brand net revenue decreased 3.5% year-over-year to $36 million for Q1, driven by continued share growth in MST that was partially offset by anticipated declines in loose leaf. Stoker's gross profit increased 39% to $47 million. Gross margin decreased 350 basis points to 54%, due largely to the impact of tariffs. Zig-Zag segment net sales were down 22% year-over-year to $36.7 million for Q1. For Q1, Zig-Zag gross profit decreased 18% to $20.9 million, and gross margin was 57.1%, which was up 300 basis points versus last year. Q1 free cash flow was -$27.4 million, reflective of our investments in trade and brand marketing programs, as well as working capital in US manufacturing CapEx.

Um, we we may make some changes. So that's that's really the the reason for the the guide and also, there could be a real upside opportunity. Um, in terms of the Tau um, agreement that we just launched, this is a very new and also some of these chain ones are also very new and that can provide a very large upside for us as well.

There could be a real upside opportunity um in terms of the TKO. Um, agreement that we just launched. This is very new and also some of these chain ones are also very new and that can provide a very large upside for us as well.

Okay, that's helpful. Um, and then for the US, UFC sponsorship, looks like you can be pretty transformative. Um is incremental to your Opex Outlook relative to last and presented. Um so we kind of look forward as very the potential for training point to enter into some more of these sponsorships and then if so

Okay, that's helpful. Um and then for the US UFC sponsorship, looks like it can be pretty transformative. Um is incremental to your Opex Outlook relative to last time we presented. Um so we kind of look forward as the potential for training point to enter into some more of these sponsorships and then if so

Point.

Can that imply another leg down on ibida? Or do you think the low end is the floor at this point?

I'll I'll take the first part of that question and answer.

Andrew Flynn: We ended the quarter with $192.4 million of cash. Our expectation is to be approximately cash flow breakeven for the remainder of the year. Our capital allocation approach remains disciplined and aligned with the opportunity we see in nicotine pouch. As we invest behind growth initiatives, the timing of those investments and the timing of their benefits may not always align evenly within a given quarter. That reflects our effort to position the business to capture incremental share in a category with substantial long-term annuity value. Today, we are increasing full-year 2026 Modern Oral guidance.

So I'll I'll take the first part of that question. And Andrew may want to chime in on on the dollar aspect. But as, you know, you know, investing in TKO is is a bet for us. So, we're really excited about. We are also, you know, doing other marketing activities, other consumer engagement, building activities, like with Motorsports and and other avenues. And so I think to Andrew's point we will invest prudently as we go and and make changes as we may need to but excited about the awareness opportunity to give for the brand and I'll turn it to Andrew on the dollar aspect.

In investing in TKO is is a bet for us or really excited about. We are also, you know, doing other marketing activities, other consumer engagement, building activities, like with Motorsports and and other avenues. And so, I think to Andrew's point we will invest prudently as we go and and make changes as we may need to. But excited about the awareness opportunity, this gifts for the brands and I'll turn it to Andrew on the dollar aspect.

Andrew Flynn: We now expect gross sales of $280 to 300 million, up from a previous range of $220 to 240 million, and net sales of $210 to 225 million, up from a previous range of $180 to 190 million. Implied gross revenue growth at the midpoint is 83.7%. We are also introducing full-year EBITDA guidance of $70 million to 90 million, inclusive of increased nicotine pouch investments in sales force expansion, merchandising support, and consumer marketing. For modeling purposes, we expect the effective income tax rate to be 23% to 26% on a go-forward basis. Budgeted 2026 CapEx is $4 million to 5 million, excluding projects related to Modern Oral, and we expect to spend an additional $3 million to 5 million this year to support our PMTAs.

Yeah, in terms of of what that may mean for the low under guidance. As I said before, we're going to be judic judic, uh, judicious about our spending and so if something makes sense for us to gain incremental market share, uh, we will do that. And so um, that's really, that's really how we think about these um opportunities.

Yeah, in terms of of what that may mean for the low end of guidance. As I said before, we're going to be Jude judic, uh, judicious about our spending. And so if something makes sense for us to gain incremental market share, uh, we will do that. And so um, that's really, that's really how we think about these um opportunities.

Everyone, at this time, there are no further questions. I'd like to hand the conference back to Mr. Graham pretty for any additional closing remarks.

And everyone at this time, there are no further questions. I'd like to hand the conference back to Mr. Graham for any additional closing remarks

Thanks operator. Um, and really want to thank everybody for joining the call today looking closing, I think ultimately, I want to emphasize a couple of points, uh, you know, to our investors. Um, you know, for 1, I'm, uh, been in this industry for um, closing in, on my 30th year and I can't tell you how excited I am about the, the opportunity in front of us with the generational,

Andrew Flynn: Additionally, as we focus on strengthening our market presence, we expect to spend between $80 to 105 million to expand our sales force and bolster our marketing strategy in 2026. As we continue to scale, we expect the overall cost structure of the business to become more efficient. Many investments we are making today, slotting-related, brand building, and go-to-market spend, are tied to building distribution and driving initial trial and growth of our products. As our consumer base grows, these costs should become a smaller percentage of sales. Now let me turn it to Graham.

You know transformation that we've spoke of uh you know, earlier in the uh, in the script. Um and and what how TPB fits into that, you know, long term I think is is incredibly exciting. The modern oral opportunity. It's real

Thanks operator. Um, really want to thank everybody for joining the call today looking closing. I think ultimately, I want to emphasize a couple of points, uh, you know, to our investors. Um, you know, for 1, I'm uh, been in this industry for I'm closing in on my 30th year and I can't tell you how excited I am about the, the opportunity in front of us with the generational, you know, transformation that we've spoke of uh, you know, earlier in the uh, in the script. Um and and what how TPB fits into that, you know, long term I think is is incredibly exciting. The modern oral opportunity. It's real

It's gaining momentum.

I think you're seeing early progress from our company that, uh, you know, cross our DTC platforms, uh, progress we're making in in bricks and mortar. You know, gives us a lot of enthusiasm around, you know, where we're at, in terms of harvesting that that long-term opportunity as Andrew mentioned. You know, our investments in this category are going to be incredibly disciplined. And ultimately tied to to our sales objectives, uh, in this category

I think you're seeing early progress from our company that, uh, you know, across our DTC platforms, uh, progress we're making in, in bricks and mortar, you know, gives us a lot of enthusiasm around, you know, where we're at, in terms of harvesting that long-term opportunity, as Andrew mentioned. You know, our investments in this category are going to be incredibly disciplined and ultimately tied to our sales objectives in this category.

Graham Purdy: Thanks, Andrew. We are encouraged by the momentum we see in the business and by the progress we are making against our strategy. As I said at the outset, we believe we're in the midst of a generational shift in nicotine consumption, and we believe Turning Point is uniquely positioned to capture meaningful share in that transition. Our focus remains on winning in Modern Oral by investing in the brands, commercial capabilities, and infrastructure needed to scale. We are seeing continued proof points in both consumer traction and distribution growth, and we believe that positions us well to build a meaningful and profitable business over time. With that, I'll turn it over to questions.

I think lastly, uh, the the Heritage business for us is still very important. It provides, you know, strong cash flows for the company, and it gives us gives us cash flow to invest in the future and ultimately harvest the opportunity that uh, that we see in front of us. So it's really exciting times, uh, Turning Point Brands. Um, you know, with that a, a sort of close by saying look forward to talking to you, talking to you all in a few months here and updating against, uh, you know, our progress against the plan. So thank you so much for uh, for joining

I think lastly, uh, the the Heritage business for us is still very important. It provides, you know, strong cash flows for the company, and it gives us gives us cash flow to invest in the future and ultimately harvest the opportunity that uh, that we see in front of us. So it's really exciting times, uh, Turning Point Brands. Um, you know, with that a a sort of close by saying look forward to talk to you, talking to you all in a few months here and updating against, uh, you know, our progress against the plan. So thank you so much for for joining

Once again, everyone that does conclude today's conference, we would like to thank you all for your participation. You may now disconnect

Operator 2: Thank you, sir. Everyone, if you would like to ask a question, please press star one on your telephone keypad. We do ask that you limit your questions to one initial and one follow-up. Our first question today will come from Eric Des Lauriers from Craig-Hallum Capital Group.

Operator: Thank you, sir. Everyone, if you would like to ask a question, please press star one on your telephone keypad. We do ask that you limit your questions to one initial and one follow-up. Our first question today will come from Eric Des Lauriers from Craig-Hallum Capital Group.

Eric Des Lauriers: Great. Thanks for taking my questions. Congrats on the strong results. Very encouraging to see nicotine pouch sales re-accelerating into Q1 here. You raised guidance for Modern Oral net sales by about $30 million and then gross sales by about $60 million. Suggesting a big increase in contra revenues with these national chain wins. How did these wins announce today compared to your expectations coming into the year? Have you won more chains than initially expected? Any national chains that we should expect both FRE and ALP, or is it mostly FRE right now?

Summer Frein: Great question. Thanks, Eric. We were really excited about the springtime negotiations that we worked through over the past few months. As Graham noted in his comments, we expect our store count to increase by nearly 70% by the end of the year. I think as you know, every chain account is different, so we're currently in the process of determining the rollout schedule, and the doors will come online over the balance of the year. Where we have opportunities to bring both brands in, we will. you'll hear more about that as the year rolls out, and we're encouraged and excited about the success that we had over the past few months.

Eric Des Lauriers: Yeah. No, certainly sounds very exciting. I guess, Summer, you touched on this in your answer there, and maybe it's just, you know, we'll see over the next couple quarters. How should we think about the timing from these wins? When should we expect to see them on shelves? Then, you know, how should we think about the sort of impact on gross versus net sales? Should we look for net sales to sort of pick up from these in the H2, or is that more of a 2027 thing? Thanks.

Summer Frein: Yeah. I'll answer the first part, and then I'll turn it to Andrew to answer the second part. You'll start seeing some of these chain wins roll out over the next few weeks. As the progress of rolling out these chains requires resets of fixtures and different dynamics that they're sorting out with getting everything situated in store, it just takes time. You'll see those stores sort of fill out across the balance of the year. I'll turn it to Andrew to explain how we thought about the dollar impact.

Graham Purdy: Yeah. As we think about the net sales trajectory over the course of the year, we'd expect to see some pickup in the H2, as it relates to the Modern Oral category.

Andrew Flynn: Yeah. As we think about the net sales trajectory over the course of the year, we'd expect to see some pickup in the H2, as it relates to the Modern Oral category.

Eric Des Lauriers: Awesome. Well, it's all very encouraging. Congrats again on the strong results.

Summer Frein: Thanks, Eric.

Operator 2: Your next question comes from Ian Zaffino from Oppenheimer.

Operator: Your next question comes from Ian Zaffino from Oppenheimer.

Ian Zaffino: Hi, great. Thank you very much. You know, great guidance on that DMO side. You know, question would be on the PMTA process. How is that going? You know, I know there's been a couple news articles about that. Any kind of change in discussions there or thoughts about getting kind of final approval? How are you thinking about the Louisville plant, you know, which because I guess they're kind of connected events. Thanks.

Graham Purdy: Yeah, great question, Ian. Look, the PMTA process is, it's a rigorous scientific process. We're not surprised by the timing, to be frank. You know, our approach is, you know, we respect the process and, you know, any additional commentary around sort of where we're at on that pert line, probably wouldn't be appropriate at this time. In terms of Louisville manufacturing, you know, we're threading a bit of a needle here with respect to the PMTA process and in scaling our infrastructure here in Louisville. We've made really great progress relative to, you know, laying down the infrastructure to support manufacturing here in Louisville.

Graham Purdy: We've certainly got equipment in Louisville, and we feel really good about, you know, where we're at from a, from a, you know, throughput on those machines in the early innings.

Ian Zaffino: Okay. That's thank you. Then I guess maybe a question for Summer is, you know, when you're going to market this portfolio, like I guess you now have a newly expanded portfolio. So how are you going to market? Are you going to market as far as FRE being your higher nicotine pouches and ALP being your lower nicotine pouches? Is that the strategy? Also maybe talk about, you know, this portfolio, expanded portfolio, which has significantly more SKUs, how that's resonating with retailers, bringing them, you know, incremental SKUs, and any other kind of color you could give us maybe about the maybe synergistic effects of having those two brands together. Thanks.

Summer Frein: Yeah, sure. I would say the retailers, our consumers, and our sales organization are all very excited about us having both brands in the portfolio and in the sales bag to bring to market. What's been great about both of these brands is that they've built strong base with consumers. Especially ALP, you know, they've created a really strong D2C presence, and there was some pent-up demand at retail that we were really able to start leveraging. As these brands are being put into market, we're really thinking about the end consumer. While the product itself is important, and they certainly have their differences, what's resonating with retail, what's resonating with consumers, is that these brands are really focused on two very distinct consumer bases.

Summer Frein: There's room in this category for both brands to win, and we've seen some really encouraging early results as we've been bringing them to market.

Ian Zaffino: Okay. Thank you very much.

Summer Frein: No problem.

Operator 2: Next up is Nick Anderson from ROTH Capital Partners.

Operator: Next up is Nick Anderson from ROTH Capital Partners.

Nick Anderson: Great. Thanks for taking the questions. Congrats on the quarter. First for me, just on the rising fuel price environment, have you seen any impact on C-store visits or consumer behavior? Tobacco is typically more resilient when it comes to higher fuel prices. Are you seeing the same trend emerge within nicotine pouches? Just any discernible changes to gas prices would be helpful.

Graham Purdy: You know, I think, you know, given the backdrop of our results, we feel, you know, really good about, you know, sort of where we're at today, you know, with the consumer. As Summer had mentioned in the last question with Ian, we're really focused in on, you know, building brand equities, building brand identity, and really winning on the premium front over the long haul. We view the fuel prices as transient. We think where we generally see that more so is in the heritage businesses. I think what's an interesting aspect of that, you know, historically, consumers tend to not move out of the categories. They tend to look for more value. I think we feel very well positioned with our Stoker's heritage products, you know, with respect to, you know, spiking gas prices.

David Brown: Great. That's helpful. Second for me, just on the retail landscape. With the momentum from TKO and brand awareness obviously ticking higher here, have you seen a difference in appetite from market chains to carry for you now? As brand recognition grows, I would assume your negotiations should become smoother, but any color there would be helpful. Thank you.

Nick Anderson: Great. That's helpful. Second for me, just on the retail landscape. With the momentum from TKO and brand awareness obviously ticking higher here, have you seen a difference in appetite from market chains to carry for you now? As brand recognition grows, I would assume your negotiations should become smoother, but any color there would be helpful. Thank you.

Summer Frein: Great question. We are really excited about the TKO deal. As you know, we invested in PBR last year. We learned a lot, and that gave us some momentum to build upon because I think having this TKO deal really has us show up as a credible partner that's investing for the long term to win with our brands. Certainly while it's early, it has been part of the conversation with retail. We've seen some early consumer excitement. We have some events under our belts and more to come as that partnership unfolds. Encouraged about the credibility it brings to us and sort of the proof point that comes to the table of us being a brand and a company that's investing in the long term here.

David Brown: Great. That's it for me. Congrats again on the quarter.

Nick Anderson: Great. That's it for me. Congrats again on the quarter.

Summer Frein: Thank you.

Operator 2: The next question is from Gerald Pascarelli, Needham & Company.

Operator: The next question is from Gerald Pascarelli, Needham & Company.

Jack: Hi, this is Jack on for Gerald. Thanks for taking my questions. I guess for EBITDA guidance, obviously implies a decline relative to last year, which at this point I think is well understood, but the range is pretty wide. Could you just kinda go through some assumptions that get you to the high end versus the low end?

[Analyst] (Needham & Company): Hi, this is Jack on for Gerald. Thanks for taking my questions. I guess for EBITDA guidance, obviously implies a decline relative to last year, which at this point I think is well understood, but the range is pretty wide. Could you just kinda go through some assumptions that get you to the high end versus the low end?

Graham Purdy: Sure thing. Look, what's driving the EBITDA guide is as we discussed, we've got big investments in terms of sales force, retail distribution, as well as marketing spend. Those are the big drivers of the year-over-year change. Also, as you know, our freight, our outbound freight costs are captured in SG&A, that's also up on a year-over-year basis. What's kinda driving the range here is one, the biggest driver is our ability to get that spending and what we will spend on in the future. That spending is dependent on what we see in terms of sales, because we'll be able to pivot if needed, and we're being judicious about that investment.

Graham Purdy: As we monitor it, we may make some changes. That's really the reason for the guide. There could be a real upside opportunity in terms of the TKO agreement that we just launched. This is very new. Some of these chain wins are also very new, and that could provide a very large upside for us as well.

Jack: Okay. That's helpful. For the UFC sponsorship, looks like it can be pretty transformative, it's incremental to your OpEx outlook relative to last time you presented. As we kind of look forward, is there the potential for Turning Point to enter into some more of these sponsorships? If so, can that imply another leg down on EBITDA, or do you think the low end is the floor at this point?

[Analyst] (Needham & Company): Okay. That's helpful. For the UFC sponsorship, looks like it can be pretty transformative, it's incremental to your OpEx outlook relative to last time you presented. As we kind of look forward, is there the potential for Turning Point to enter into some more of these sponsorships? If so, can that imply another leg down on EBITDA, or do you think the low end is the floor at this point?

Summer Frein: I'll take the first part of that question, and Andrew may wanna chime in on the dollar aspect. As you know, you know, investing in TKO is a bet for us we're really excited about. We are also, you know, doing other marketing activities, other consumer engagement building activities like with motorsports and other avenues. I think to Andrew's point, we will invest prudently as we go and make changes as we may need to. Excited about the awareness opportunity this gives for the brands, and I'll turn it to Andrew on the dollar aspect.

Andrew Flynn: Yeah, in terms of what that may mean for the low end of guidance, as I said before, we're gonna be judicious about our spending. If something makes sense for us to gain incremental market share, we will do that. That's really, that's really how we think about these opportunities.

Operator 2: Everyone, at this time, there are no further questions. I'd like to hand the conference back to Mr. Graham Purdy for any additional or closing remarks.

Operator: Everyone, at this time, there are no further questions. I'd like to hand the conference back to Mr. Graham Purdy for any additional or closing remarks.

Graham Purdy: Yes, thanks, operator. I really wanna thank everybody for joining the call today. Look, in closing, I think ultimately I wanna emphasize a couple of points, you know, to our investors. You know, for one, I'm been in this industry for I'm closing in on my 30th year, and I can't tell you how excited I am about the opportunity in front of us with the generational, you know, transformation that we've spoke of, you know, earlier in the, in the script. How TPB fits into that, you know, long term, I think is incredibly exciting. The Modern Oral opportunity, it's real, it's gaining momentum.

Graham Purdy: I think you're seeing early progress from our company that, you know, across our D2C platforms, progress we're making in bricks and mortar, you know, gives us a lot of enthusiasm around, you know, where we're at in terms of harvesting that long-term opportunity. As Andrew mentioned, you know, our investments in this category are gonna be incredibly disciplined and ultimately tied to our sales objectives in this category. I think lastly, the heritage business for us is still very important. It provides, you know, strong cash flows for the company, and it gives us cash flow to invest in the future and ultimately harvest the opportunity that we see in front of us. It's really exciting times at Turning Point Brands.

Graham Purdy: You know, with that, I'll sort of close by saying look forward to talking to you all in a few months here and updating against, you know, our progress against the plan. Thank you so much for joining.

Operator 2: Once again, everyone, that does conclude today's conference. We would like to thank you all for your participation. You may now disconnect.

Operator: Once again, everyone, that does conclude today's conference. We would like to thank you all for your participation. You may now disconnect.