Turning Point Brands raises outlook on Zig-Zag, nicotine growth

Turning Point Brands (NYSE: TPB) beat analyst estimates and raised its full-year outlook after reporting stronger-than-expected third-quarter results, driven by growth in its Zig-Zag papers and oral nicotine businesses.

The company reported revenue of $105.6 million, ahead of the average analyst estimate of $100.7 million, according to Yahoo Finance. Sales topped even the highest estimate of $102.2 million for the quarter.

Adjusted EBITDA is expected to reach $101 million-$103 million for 2024, up from the company’s previous forecast of $98 million-$102 million, excluding its distribution unit. Net income rose 14.3% to $12.4 million in the quarter ending Sept. 30, as revenue increased 3.8% from $101.72 million in the same period last year.

“We believe Zig-Zag is on a sustainable growth trajectory,” President and CEO Graham Purdy said in a statement Thursday.

The Kentucky-based company’s Zig-Zag segment, which makes up 47% of total sales, saw revenue climb 5.5% to $49.3 million.

Stoker’s Products revenue jumped 12.1% to $41.4 million, with its FRE nicotine pouch line quadrupling year-over-year and growing 26% sequentially as the company continues its national rollout. Creative Distribution Solutions revenue declined 17.4% to $14.9 million.

Turning Point finished the quarter with $33.6 million in cash and total liquidity of $92.4 million. Net debt stood at $216.4 million. The board approved an expanded share repurchase program, increasing the authorization by $77.9 million to $100 million.

Analysts expect revenue to reach $101.7 million in the fourth quarter, representing 4.7% growth from the year-ago period.