TPB Posts Flat Q2 Loss Amid Rising Regulatory Costs

TL;DR

**TPB's flat Q2 loss and escalating PMTA costs mean continued headwinds for this tobacco player; stay cautious.**

AI Summary

Turning Point Brands, Inc. (TPB) reported a net loss of $0.01 per share for both the three and six months ended June 30, 2025, consistent with the prior year's performance. The company's diluted weighted-average common shares outstanding were 20,492,267 for the three months ended June 30, 2025, and 18,020,862 for the three months ended June 30, 2024. For the six months ended June 30, 2025, diluted shares were 20,200,886, compared to 17,729,481 in the prior year. The filing indicates increased costs related to PMTA (Premarket Tobacco Product Applications), with $1.6 million incurred for the three months ended June 30, 2025, up from $1.0 million in the same period of 2024. For the six months, PMTA costs rose to $3.2 million in 2025 from $1.8 million in 2024. The company's strategic outlook is heavily influenced by these regulatory expenses, which are not allocated to its two reportable segments but are significant corporate costs. No specific revenue figures were provided in the excerpt, but the consistent net loss per share suggests ongoing challenges or stable, albeit negative, profitability.

Why It Matters

For investors, TPB's consistent net loss per share and increasing PMTA costs signal ongoing profitability pressures, particularly in a highly regulated industry. The rising regulatory burden could impact future product innovation and market access, potentially hindering competitive positioning against larger players with more resources. Employees might face uncertainty if these costs continue to strain financial performance, while customers could see product availability or pricing affected by regulatory compliance. The broader market for tobacco and vaping products is under intense scrutiny, and TPB's performance reflects the challenges smaller companies face in navigating this complex landscape.

Risk Assessment

Risk Level: high — The risk level is high due to the consistent net loss of $0.01 per share for both the three and six months ended June 30, 2025, indicating ongoing profitability challenges. Furthermore, PMTA costs increased significantly to $1.6 million for Q2 2025 from $1.0 million in Q2 2024, and to $3.2 million for the six months ended June 30, 2025, from $1.8 million in the prior year, highlighting escalating regulatory burdens.

Analyst Insight

Investors should closely monitor TPB's future filings for any signs of revenue growth or cost containment strategies, especially regarding PMTA expenses. Given the consistent net loss and rising regulatory costs, a cautious approach is warranted; consider holding off on new investments until a clear path to profitability emerges.

Key Numbers

• $0.01 — Net Loss Per Share (Consistent net loss per share for Q2 2025 and YTD 2025, indicating ongoing profitability challenges.)
• $1.6M — Q2 2025 PMTA Costs (Increased from $1.0M in Q2 2024, showing rising regulatory expenses.)
• $3.2M — YTD 2025 PMTA Costs (Increased from $1.8M in YTD 2024, highlighting a significant increase in regulatory burden.)
• 20,492,267 — Diluted Shares Outstanding (Q2 2025) (Increased from 18,020,862 in Q2 2024, potentially impacting EPS.)

Key Players & Entities

• Turning Point Brands, Inc. (company) — filer of the 10-Q
• TPB (company) — ticker symbol for Turning Point Brands, Inc.
• SEC (regulator) — recipient of the 10-Q filing
• $0.01 (dollar_amount) — net loss per share for Q2 2025 and YTD 2025
• $1.6 million (dollar_amount) — PMTA costs for Q2 2025
• $1.0 million (dollar_amount) — PMTA costs for Q2 2024
• $3.2 million (dollar_amount) — PMTA costs for six months ended June 30, 2025
• $1.8 million (dollar_amount) — PMTA costs for six months ended June 30, 2024
• 20,492,267 (dollar_amount) — diluted weighted-average common shares outstanding for Q2 2025
• 20,200,886 (dollar_amount) — diluted weighted-average common shares outstanding for six months ended June 30, 2025

FAQ

Risk Factors

• Premarket Tobacco Product Application (PMTA) Costs [high — regulatory]: PMTA costs have significantly increased, rising to $1.6 million for Q2 2025 from $1.0 million in Q2 2024, and to $3.2 million year-to-date 2025 from $1.8 million in the prior year. These costs are substantial corporate expenses not allocated to segments, impacting overall profitability.

Industry Context

The tobacco products industry is subject to stringent and evolving regulatory oversight, particularly concerning new product applications like PMTAs. Companies in this sector face ongoing challenges in navigating these regulations while managing operational costs and market dynamics.

Regulatory Implications

The substantial and escalating costs associated with PMTA submissions represent a significant regulatory hurdle for Turning Point Brands. These expenses directly impact the company's bottom line and require careful financial planning and resource allocation to manage compliance.

What Investors Should Do

1. Monitor PMTA cost trends and their impact on profitability.
2. Analyze the impact of increased share count on EPS.

Glossary

PMTA

Premarket Tobacco Product Application. This is a regulatory submission required by the FDA for new tobacco products to be legally marketed in the United States. (TPB is incurring significant and increasing costs for these applications, which are a major factor influencing the company's financial performance and strategic outlook.)

Diluted weighted-average common shares outstanding

The total number of a company's common shares outstanding, adjusted to include the potential dilution from stock options, warrants, and convertible securities. (An increase in these shares, from 18,020,862 in Q2 2024 to 20,492,267 in Q2 2025, can decrease earnings per share (EPS) if net income remains constant or decreases.)

Year-Over-Year Comparison

Turning Point Brands reported a consistent net loss per share of $0.01 for the three and six months ended June 30, 2025, compared to the prior year. A notable change is the significant increase in PMTA costs, which rose by 60% for Q2 and 77.8% year-to-date. Additionally, the diluted weighted-average common shares outstanding increased by approximately 13.7% for Q2 and 14% year-to-date, potentially exacerbating the impact of any profitability challenges.

Key Financial Figures

• $0.01 — ange on which registered Common Stock, $0.01 par value TPB New York Stock Exchan

Filing Documents

• tpb20250630_10q.htm (10-Q) — 2745KB
• ex_816010.htm (EX-31.1) — 9KB
• ex_816011.htm (EX-31.2) — 9KB
• ex_816012.htm (EX-31.3) — 8KB
• ex_816013.htm (EX-32.1) — 8KB
• 0001437749-25-025965.txt ( ) — 12251KB
• tpb-20250630.xsd (EX-101.SCH) — 91KB
• tpb-20250630_cal.xml (EX-101.CAL) — 78KB
• tpb-20250630_def.xml (EX-101.DEF) — 558KB
• tpb-20250630_lab.xml (EX-101.LAB) — 526KB
• tpb-20250630_pre.xml (EX-101.PRE) — 613KB
• tpb20250630_10q_htm.xml (XML) — 2478KB

— FINANCIAL INFORMATION

PART I — FINANCIAL INFORMATION ITEM 1

Financial Statements (Unaudited)

Financial Statements (Unaudited) Consolidated Balance Sheets as of June 30, 2025, and December 31, 2024 5 Consolidated Statements of Income for the three and six months ended June 30, 2025 and 2024 6 Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2025 and 2024 7 Consolidated Statements of Cash Flows for the six months ended June 30, 2025 and 2024 8 Consolidated Statements of Changes in Stockholders ' Equity for the three months ended June 30, 2025 and 2024 9 Consolidated Statements of Changes in Stockholders ' Equity for the six months ended June 30, 2025 and 2024 10

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 11 ITEM 2 Management ' s Discussion and Analysis of Financial Condition and Results of Operations 29 ITEM 3

Quantitative and Qualitative Disclosures about Market Risk

Quantitative and Qualitative Disclosures about Market Risk 44 ITEM 4

Controls and Procedures

Controls and Procedures 44

— OTHER INFORMATION

PART II — OTHER INFORMATION ITEM 1

Legal Proceedings

Legal Proceedings 45 ITEM 1A

Risk Factors

Risk Factors 45 ITEM 2 Unregistered Sales of Equity Securities and Use of Proceeds 45 ITEM 3 Defaults Upon Senior Securities 45 ITEM 4 Mine Safety Disclosures 45 ITEM 5 Other Information 45 ITEM 6 Exhibits 46

Signatures

Signatures 47 Table of Contents Cautionary Note Regarding Forward-Looking Statements This Quarterly Report on Form 10-Q for the quarter ended June 30, 2025 (this "Quarterly Report"), contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements may generally be identified by the use of words such as "anticipate," "believe," "expect," "intend," "plan," and "will" or, in each case, their negative, or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. By their nature, forward-looking statements involve risks and uncertainties because they relate to events, and depend on circumstances, that may or may not occur in the future. As a result, actual events may differ materially from those expressed in, or suggested by, the forward-looking statements. Any forward-looking statement made by Turning Point Brands, Inc. ("TPB"), in this Quarterly Report on Form 10-Q speaks only as of the date hereof. New risks and uncertainties come up from time to time, and it is impossible for TPB to predict these events or how they may affect it. TPB has no obligation, and does not intend, to update any forward-looking statements after the date hereof, except as required by federal securities laws. Factors that could cause these differences include, but are not limited to: declining sales of tobacco products, and expected continuing decline of sales in the tobacco industry overall; our dependence on a small number of third-party suppliers and producers; the possibility that we will be unable to identify or contract with new suppliers or producers in the event of a supply or product disruption, as well as other supply chain concerns, including delays in product shipments and increases in freight cost; the possibility that our licenses to use certain brands or trademarks will be terminated, challenged or restricted; failure to maintain consumer brand recog

— FINANCIAL INFORMATION

PART I — FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements Turning Point Brands, Inc. Consolidated Balance Sheets (dollars in thousands except share data) (unaudited) June 30, December 31, 2025 2024 ASSETS Current assets: Cash $ 109,925 $ 46,158 Accounts receivable, net of allowances of $ 157 in 2025 and $ 66 in 2024 30,056 9,624 Inventories, net 105,009 96,253 Current assets held for sale - 11,470 Other current assets 40,227 34,700 Total current assets 285,217 198,205 Property, plant, and equipment, net 30,982 26,337 Deferred tax assets, net - 995 Right of use assets 10,577 11,610 Deferred financing costs, net 1,501 1,823 Goodwill 136,104 135,932 Other intangible assets, net 64,650 65,254 Master Settlement Agreement (MSA) escrow deposits 29,574 28,676 Noncurrent assets held for sale - 3,859 Other assets 37,183 20,662 Total assets $ 595,788 $ 493,353 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 26,169 $ 11,675 Accrued liabilities 41,340 31,096 Current liabilities held for sale - 2,049 Total current liabilities 67,509 44,820 Deferred tax liabilities, net 1,974 - Notes payable and long-term debt 293,138 248,604 Lease liabilities 8,344 9,549 Total liabilities $ 370,965 $ 302,973 Commitments and contingencies Stockholders' equity: Preferred stock, $ 0.01 par value; authorized shares 40,000,000 ; issued and outstanding shares - 0 - - - Common stock, voting, $ 0.01 par value; authorized shares, 190,000,000 ; 20,492,267 issued shares and 18,020,862 outstanding shares at June 30, 2025, and 20,200,886 issued shares and 17,729,481 outstanding shares at December 31, 2024 205 202 Common stock, nonvoting, $ 0.01 par value; authorized shares, 10,000,000 ; issued and outstanding shares - 0 - - - Additional paid-in capital 130,245 126,662 Cost of repurchased common stock ( 2,471,405 shares at June 30, 2025 and December 31, 2024) ( 83,144 ) ( 83,144 ) Accumulated other

Notes to Consolidated Financial Statements (Unaudited)

Notes to Consolidated Financial Statements (Unaudited) (dollars in thousands, except where designated and per share data) Note 1. Business and Basis of Presentation Description of Business Turning Point Brands, Inc., including its subsidiaries (collectively referred to herein as the "Company," "we," "our" or "us"), is a leading manufacturer, marketer and distributor of branded consumer products. The Company sells a wide range of products to adult consumers consisting of staple products with its iconic brands Zig-Zag and Stoker ' s and its next generation products to fulfill evolving consumer preferences. The Company operates two segments, Zig-Zag products and Stoker's products, led by its core proprietary and iconic brands: Zig-Zag and Stoker ' s along with FRE , Beech-Nut and Trophy . The Company's products are available in more than 220,000 retail outlets in North America. Discontinued Operations On January 2, 2025, the Company contributed 100 % of its interest in South Beach Brands LLC ("SBB"), the subsidiary that owned and operated the Company's former Creative Distribution Solutions ("CDS") reportable segment, to General Wireless Operations, Inc. ("GWO") in exchange for 49 % of the issued and outstanding GWO common stock. GWO is a joint venture between the Company and Standard General, LP entered into in December 2018. As of December 31, 2024, the assets and liabilities associated with the CDS segment have been classified as held for sale. Accordingly, the financial results of the CDS segment were classified as discontinued operations and reported separately for all periods presented herein until its disposition on January 2, 2025. Following the discontinued operations classification, the Company has two reportable segments, which are reflected herein. Unless otherwise noted, disclosures in the notes to these consolidated financial statements relate solely to the Company's continuing operations, comprised of the Zig-Zag and Stoker's segments. See N

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