Turning Point Brands Inc ((TPB)) has held its Q4 earnings call. Read on for the main highlights of the call.
Turning Point Brands Inc. recently held its earnings call, showcasing a positive outlook with notable growth in revenue and adjusted EBITDA. The company highlighted strong performance in the modern oral category and Stoker’s revenue, despite facing challenges in gross margin and specific segments like Zig Zag and MST. The overall sentiment was optimistic, particularly regarding future growth in the modern oral category.
Revenue Growth
Turning Point Brands reported a 13% increase in fourth-quarter revenue, reaching $93.7 million. For the full year, revenue rose by 11% to $360.7 million, demonstrating the company’s robust financial performance.
Adjusted EBITDA Growth
The company’s adjusted EBITDA saw a 5% rise to $26.2 million for the quarter and a 12% increase to $104.5 million for the full year. This growth underscores the company’s effective cost management and operational efficiency.
Stoker’s Revenue Surge
Stoker’s revenue surged by 26% to $47.8 million for the quarter, reflecting a strong performance in the modern oral category. This significant growth highlights the brand’s increasing market presence and consumer demand.
Modern Oral Category Expansion
The modern oral brands Free and Out combined to generate substantial revenue, with Free sales skyrocketing by 419% year-over-year. This expansion indicates a successful strategy in capturing the growing demand for modern oral products.
Guidance for 2025
Looking ahead, Turning Point Brands has set its 2025 adjusted EBITDA guidance between $108 million and $113 million. The company expects modern oral sales to reach between $60 million and $80 million, driven by growth in their Zig Zag and Stoker businesses.
Gross Margin Decline
The company experienced a decline in gross margin, down 39 basis points to 55.9% for the full year, with a quarterly drop of 108 basis points to 56%. This decrease was primarily driven by product mix changes.
Zig Zag Segment Pressure
The Zig Zag segment faced pressure due to the unwind of the Clipper relationship and timing and FX-related issues in the Canadian business. Despite these challenges, the segment remains a focus for future growth.
MST Segment Flat
Stoker’s MST net sales declined by 1% year-over-year for the fourth quarter, facing tough comparables from the previous year. The company is working to address these challenges and improve performance in this segment.
In summary, Turning Point Brands Inc. has demonstrated strong financial performance and growth, particularly in the modern oral category and Stoker’s revenue. While challenges exist in gross margin and specific segments, the company’s forward-looking guidance remains optimistic, with expectations of continued growth and expansion in key areas. Investors and market enthusiasts will find the company’s strategic focus on modern oral products and operational efficiency promising for future success.