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What changed in Turning Point Brands, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Turning Point Brands, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+239 added−335 removedSource: 10-K (2026-03-02) vs 10-K (2025-03-06)

Top changes in Turning Point Brands, Inc.'s 2025 10-K

239 paragraphs added · 335 removed · 200 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

61 edited+5 added−10 removed115 unchanged
Biggest changeZig-Zag Products Our principal competitors for premium rolling paper sales are Republic Tobacco, L.P. and HBI International. Our major competitors in MYO cigar wraps are Good Times USA, LLC and New Image Global, Inc. We believe MYO cigar wrap products are used interchangeably with both rolling papers and finished cigar products by many consumers.
Biggest changeGiven the decreasing prevalence of cigarette consumption, the “big tobacco” companies continue to demonstrate an increased interest and participation in a number of OTP markets. Zig-Zag Products Our principal competitors for premium rolling paper sales are Republic Tobacco, L.P. and HBI International. Our major competitors in MYO cigar wraps are Good Times USA, LLC and New Image Global, Inc.
We strategically target product categories that we believe demonstrate significant growth potential and for which the value of our brands is likely to have a meaningful impact. We believe that our track record and existing portfolio of brands provide growth advantages as we continue to evaluate opportunities to extend our product lines and expand into new categories.
We strategically target product categories that we believe demonstrate significant growth potential and for which the value of our brands is likely to have a meaningful impact. We believe that our track record and existing portfolio of brands provide competitive advantages as we continue to evaluate opportunities to extend our product lines and expand into new categories.
Zig-Zag ® is the #1 premium and #1 overall rolling paper in the U.S. with approximately 33% total market share according to MSAi. 1 Management estimates that Zig-Zag ® is also the #1 brand in the promising Canadian market. Rolling paper operations are aided by our sourcing relationship with Republic Technology International SAS (“RTI”).
Zig-Zag ® is the #1 premium and #1 overall rolling paper in the U.S. with approximately 33% total market share according to MSAi. 1 Management estimates that Zig-Zag ® is also the #1 brand in the Canadian market. Rolling paper operations are aided by our sourcing relationship with Republic Technology International SAS (“RTI”).
Among other markets, we compete in the alternative smoking accessories and Other Tobacco Products (“OTP”) industries. The alternative smoking accessories market is a dynamic market experiencing robust secular growth driven by cannabinoid legalization in the U.S. and Canada, and positively evolving consumer perception and acceptance in North America.
We primarily compete in the alternative smoking accessories and Other Tobacco Products (“OTP”) industries, among other markets. The alternative smoking accessories market is a dynamic market experiencing robust secular growth driven by cannabinoid legalization in the U.S. and Canada, and positively evolving consumer perception and acceptance in North America.
In 2015, we introduced Stoker ’ s ® MST in 1.2 oz. cans to further expand retail penetration, particularly in convenience stores. • In late 2023, we expanded our oral nicotine offering to include FRE ® , a white pouch nicotine product, with a national rollout started in 2024 during which we expanded SKU assortments to include additional nicotine strengths. • In late 2024, we entered into a joint venture with ALP, which launched an ALP white pouch nicotine product. • We have also had success in acquiring, partnering with and integrating new products and product lines, including Cigarillos, with the acquisition of Unitabac.
In 2015, we introduced Stoker ’ s ® MST in 1.2 oz. cans to further expand retail penetration, particularly in convenience stores. • In late 2023, we expanded our oral nicotine offering to include FRE ® , a white pouch nicotine product, with a national rollout started in 2024 during which we expanded SKU assortments to include additional nicotine strengths. • In late 2024, we entered into a joint venture, which launched the ALP white pouch nicotine products. • We have also had success in acquiring, partnering with and integrating new products and product lines, including Cigarillos, with the acquisition of Unitabac in 2021.
We believe our ability to effectively compete and maintain strong market positions in our principal product lines are due to the high recognition of our brand names, the perceived quality of each of our products, and the efforts of our sales, marketing, and distribution teams.
Competition We believe our ability to effectively compete and maintain strong market positions in our principal product lines are due to the high recognition of our brand names, the perceived quality of each of our products, and the efforts of our sales, marketing, and distribution teams.
In evaluating acquisition opportunities, our focus is on identifying acquisitions that would leverage our distribution platform, regulatory infrastructure and product offerings or enable category expansion in areas with high growth potential to drive profit generation. The vast majority of our 2024 U.S. gross profit was derived from sales of products currently regulated by the FDA Center for Tobacco Products.
In evaluating acquisition opportunities, our focus is on identifying acquisitions that would leverage our distribution platform, regulatory infrastructure and product offerings or enable category expansion in areas with high growth potential to drive profit generation. The vast majority of our 2025 U.S. gross profit was derived from sales of products currently regulated by the FDA Center for Tobacco Products.
Stoker ’ s ® chewing tobacco has grown its market share considerably over the last several years becoming the largest brand family in the industry and is presently the #1 discount and #1 overall brand in the industry, with approximately a 32.3% market share. 1 Our status in the chewing tobacco market is further strengthened by Beech-Nut ® , the #3 premium brand and #7 overall, as well as Trophy ® , Durango ® and the five Wind River Brands.
Stoker ’ s ® chewing tobacco has grown its market share considerably over the last several years becoming the largest brand family in the industry and is presently the #1 discount and #1 overall brand in the industry, with approximately a 34.1% market share. 1 Our status in the chewing tobacco market is further strengthened by Beech-Nut ® , the #3 premium brand and #7 overall, as well as Trophy ® , Durango ® and the five Wind River Brands.
In 2024, we derived more than 90% of our net sales from sales in the U.S., with the remainder primarily from sales in Canada. 11 Table of Contents We subscribe to a sales tracking system from MSAi that records all traditional OTP product shipments (ours as well as those of our competitors) from approximately 600 wholesalers to over 265,000 traditional retail stores in the U.S.
In 2025, we derived more than 90% of our net sales from sales in the U.S., with the remainder primarily from sales in Canada. 11 Table of Contents We subscribe to a sales tracking system from MSAi that records all traditional OTP product shipments (ours as well as those of our competitors) from approximately 600 wholesalers to over 265,000 traditional retail stores in the U.S.
In 2024, the Policies Committee introduced several new policies, particularly aimed at cybersecurity, and held training sessions with our marketing teams related to prevention of youth appeal. Further information related to our efforts can be found on our website. Available Information More information about Turning Point Brands is available on the Company’s website at www.turningpointbrands.com. The U.S.
In 2025, the Policies Committee introduced several new policies, particularly aimed at cybersecurity, and held training sessions with our marketing teams related to prevention of youth appeal. Further information related to our efforts can be found on our website. Available Information More information about Turning Point Brands is available on the Company’s website at www.turningpointbrands.com. The U.S.
In 2024, the Company continued to make substantial investments around reducing energy consumption and environmental waste in our manufacturing operations. Additionally, we have reduced our total fleet mileage through innovative dispatch and scheduling procedures. • The Social Committee provides a platform to help us become the employer of choice.
In 2025, the Company continued to make substantial investments around reducing energy consumption and environmental waste in our manufacturing operations. Additionally, we have reduced our total fleet mileage through innovative dispatch and scheduling procedures. • The Social Committee provides a platform to help us become the employer of choice.
All of our adult-use products are intended to be sold to and used by adults 21 years of age and older, and we are proactive in implementing programs to prevent youth access. For our own online retail (B2C) sales, we display our policies related to age to purchase, battery safety, and shipping restrictions.
All of our adult-use products are intended to be sold to and used by adults 21 years of age and older, and we are proactive in implementing programs to prevent youth access. For our own online retail (B2C) sales, we display our policies related to age to purchase and shipping restrictions.
In 2024, our Zig-Zag and Stoker’s Products sales and marketing efforts enabled our products to reach an estimated 220,000 retail outlets in North America and over 900 direct wholesale customers with an additional 600 secondary, indirect wholesalers in the U.S.
In 2025, our Zig-Zag and Stoker’s Products sales and marketing efforts enabled our products to reach an estimated 220,000 retail outlets in North America and over 900 direct wholesale customers with an additional 600 secondary, indirect wholesalers in the U.S.
Within each of these categories we are concentrating on developing and measuring progress with an aim to define metrics against which we can track our efforts 14 Table of Contents In 2024, we continued to integrate these principles into our business practices.
Within each of these categories we are concentrating on developing and measuring progress with an aim to define metrics against which we can track our efforts 14 Table of Contents In 2025, we continued to integrate these principles into our business practices.
Stoker ’ s Products In our Stoker’s products (“Stoker’s”) segment, we (i) manufacture and market moist snuff tobacco (“MST”), (ii) contract for and market FRE ® , our modern oral product and (iii) contract for and market loose-leaf chewing tobacco products. Stoker ’ s ® is our focus brand in both MST and chewing tobacco.
Stoker ’ s Products In our Stoker’s products (“Stoker’s”) segment, we (i) manufacture and market moist snuff tobacco (“MST”), (ii) contract for and market FRE ® and ALP ® , our modern oral products, and (iii) contract for and market loose-leaf chewing tobacco products. Stoker ’ s ® is our focus brand in both MST and chewing tobacco.
Approximately 42% of our total 2024 Zig-Zag ® branded net sales are under our own Zig-Zag ® marks rather than those we license from RTI under the Distribution and Licensing Agreements described below . • Stoker ’ s ® is among the fastest growing MST brands in the industry and is the #1 loose-leaf chewing tobacco brand. 1 We manufacture Stoker ’ s ® MST using only 100% American leaf, utilizing a proprietary process to produce what we believe is a superior product. 1 Brand rankings and market share percentages obtained from MSAi for the 52-week period ended December 28, 2024. 5 Table of Contents Zig-Zag ® is an iconic brand and has strong, enduring brand recognition among a wide audience of consumers.
Approximately 60% of our total 2025 Zig-Zag ® branded net sales are under our own Zig-Zag ® marks rather than those we license from RTI under the Distribution and Licensing Agreements described below . • Stoker ’ s ® is among the fastest growing MST brands in the industry and is the #1 loose-leaf chewing tobacco brand. 1 We manufacture Stoker ’ s ® MST using only 100% American leaf, utilizing a proprietary process to produce what we believe is a superior product. 1 Brand rankings and market share percentages obtained from MSAi for the 52-week period ended December 27, 2025. 5 Table of Contents Zig-Zag ® is an iconic brand and has strong, enduring brand recognition among a wide audience of consumers.
Item 1. Business Overview Turning Point Brands, Inc. (the “Company,” “we,” “our,” or “us”) is a leading manufacturer, marketer and distributor of branded consumer products. We sell a wide range of products to adult consumers consisting of staple products with our iconic brands Zig-Zag® and Stoker’s® to fulfill evolving consumer preferences.
Item 1. Business Overview Turning Point Brands, Inc. (the “Company,” “we,” “our,” or “us”) is a leading manufacturer, marketer and distributor of branded consumer products. We sell a wide range of products to adult consumers consisting of staple products with our iconic brands Zig-Zag® and Stoker’s®.
The remainder of Turning Point Brands Canada is owned by its management. 1 Brand ranking and market share percentages obtained from MSAi for the 52-week period ended December 28, 2024. 4 Table of Contents In July 2021, we acquired certain assets of Unitabac, LLC (“Unitabac”), a marketer of mass-market cigars.
The remainder of Turning Point Brands Canada is owned by its management. 1 Brand ranking and market share percentages obtained from MSAi for the 52-week period ended December 27, 2025. 4 Table of Contents In July 2021, we acquired certain assets of Unitabac, LLC (“Unitabac”), a marketer of mass-market cigars.
We are now a market share leader for MYO cigar wraps with approximately a 48% share of the cigar wraps category and 71% of the share of the HTL cigar wraps sub-category. 1 We believe our success was driven by the Zig-Zag ® tobacco branding, which we feel is widely understood by consumers to represent a favorable, customizable experience ideally suited to MYO products.
We are now a market share leader for MYO cigar wraps with approximately a 35% share of the cigar wraps category and 68% of the share of the HTL cigar wraps sub-category. 1 We believe our success was driven by the Zig-Zag ® tobacco branding, which we feel is widely understood by consumers to represent a favorable, customizable experience ideally suited to MYO products.
We have added brand dedicated platforms including ZigZag.com to facilitate our e-commerce brand presence and are selling our products on Amazon and other e-commerce sites. 1 Brand ranking and market share percentages obtained from MSAi for the 52-week period ended December 28, 2024. 6 Table of Contents We service our customer base with an experienced sales and marketing organization of approximately 200 professionals who possess in-depth knowledge of the OTP market.
We have added brand dedicated platforms including ZigZag.com to facilitate our e-commerce brand presence and are selling our products on Amazon and other e-commerce sites. 1 Brand ranking and market share percentages obtained from MSAi for the 52-week period ended December 27, 2025. 6 Table of Contents We service our customer base with an experienced sales and marketing organization of approximately 257 professionals who possess in-depth knowledge of the OTP market.
With the classification of the CDS reportable segment to discontinued operations, the Company now has two reportable segments, which are reflected herein. Unless otherwise noted, the description of business in this Annual Report on Form 10-K relates solely to the continuing operations, comprised of the Zig-Zag and Stoker’s segments.
With the classification of the CDS reportable segment to discontinued operations, the Company now has two reportable segments. Unless otherwise noted, the description of business in this Annual Report on Form 10-K relates solely to the continuing operations, comprised of the Zig-Zag and Stoker’s segments.
With flower being the leading form factor for cannabis consumption among consumers, we believe our product offerings provide us with significant opportunity to expand the number of retail channels we reach. A recent Gallup poll showed nearly seven in ten Americans now support legalizing cannabis nationwide, approximately twice the amount as twenty years ago.
With flower being the leading form factor for cannabis consumption among consumers, we believe our product offerings provide us with significant opportunity to expand the number of retail channels we reach. A recent Gallup poll showed 64% Americans now support legalizing cannabis nationwide, approximately twice the amount as twenty years ago.
As of the end of 2024, 24 U.S. states and the District of Columbia had legalized cannabis for adult recreational use and a majority of states now have comprehensive public medical cannabis programs.
As of the end of 2025, 24 U.S. states and the District of Columbia had legalized cannabis for adult recreational use and a vast majority of states now have comprehensive public medical cannabis programs.
Collectively, the Company is the #1 marketer of chewing tobacco with approximately 37.2% market share. 1 Our chewing tobacco operations are facilitated through our long-standing relationship with Swedish Match (a division of Philip Morris International Inc.), the manufacturer of our loose-leaf chewing tobaccos.
Collectively, the Company is the #1 marketer of chewing tobacco with approximately 38.0% market share. 1 Our chewing tobacco operations are facilitated through our long-standing relationship with Swedish Match (a division of Philip Morris International Inc.), the manufacturer of our loose-leaf chewing tobaccos.
Sales and Marketing We have grown the size and capacity of our salesforce and intend to continue strengthening the organization to advance our ability to deepen and broaden the retail availability of our products and brands. As of December 31, 2024, we had a nationwide sales and marketing organization of approximately 200 professionals.
Sales and Marketing We have grown the size and capacity of our salesforce and intend to continue strengthening the organization to advance our ability to deepen and broaden the retail availability of our products and brands. As of December 31, 2025, we had a nationwide sales and marketing organization of approximately 276 professionals.
We spent approximately $1.3 million, $0.6 million, and $0.6 million dollars on research and development and quality control efforts for the years ended December 31, 2024, 2023, and 2022, respectively. Human Capital As of December 31, 2024, we employed 310 full-time and part-time employees. None of our employees are represented by unions.
We spent approximately $0.9 million, $1.3 million, and $0.6 million dollars on research and development and quality control efforts for the years ended December 31, 2025, 2024, and 2023, respectively. Human Capital As of December 31, 2025, we employed 484 full-time and part-time employees. None of our employees are represented by unions.
Our Zig-Zag ® and Stoker ’ s ® brands are each well established and date back 145 and 84 years, respectively. • Zig-Zag ® is the #1 premium and #1 overall rolling paper brand in the U.S., with significant distribution in Canada as well.
Our Zig-Zag ® and Stoker ’ s ® brands are each well established and date back 146 and 85 years, respectively. • Zig-Zag ® is the #1 premium and #1 overall rolling paper brand in the U.S., with significant distribution in Canada as well.
While competitors have since introduced larger format tub packaging, the early entry and differentiation of the Stoker ’ s ® product have firmly established us as the market leader with over 56% of the tub market as of 2024.
While competitors have since introduced larger format tub packaging, the early entry and differentiation of the Stoker ’ s ® product have firmly established us as the market leader with over 55% of the tub market as of 2025.
Our customers use an open purchase order system to buy our products and are not obligated to do so pursuant to ongoing contractual obligations. We perform periodic credit evaluations of our customers and generally do not require collateral on trade receivables. Historically, we have not experienced material credit losses.
Our customers use an open purchase order system to buy our products and are not obligated to do so pursuant to ongoing contractual obligations. We perform periodic credit evaluations of our customers and generally do not require collateral on trade receivables.
For the year ended December 31, 2024, we had one customer that accounted for 10.2% of our net sales. We did not have any customer that accounted for 10% or more of our net sales for the years ended December 31, 2023 or 2022.
We had one customer that accounted for 10.2% of our net sales for the year ended December 31, 2024, and did not have any customers that accounted for 10% or more of our net sales for the year ended December 31, 2023.
Products Zig-Zag Products In our Zig-Zag products (“Zig-Zag”) segment, we principally market and distribute (i) rolling papers, tubes, and related products; (ii) finished cigars and make-your-own (“MYO”) cigar wraps; and (iii) other accessories. In addition, we have a majority stake in Turning Point Brands Canada Inc.
Products Zig-Zag Products In our Zig-Zag products (“Zig-Zag”) segment, we principally market and distribute (i) rolling papers, tubes, and related products; (ii) finished cigars and make-your-own (“MYO”) cigar wraps; and (iii) other accessories. In addition, we have a majority stake in 10233625 Canada Corp.
To date, we have spent approximately $30.0 million in order to file and supplement applications covering a broad portfolio of noncombustible products, including novel oral nicotine products.
To date, we have spent approximately $34.8 million in order to file and supplement applications covering a broad portfolio of noncombustible products, including novel oral nicotine products.
In 2024, approximately 75% of our net sales were derived from outsourced production operations and our capital expenditures have ranged between $4.7 million and $7.7 million per year over the previous five years. The stability of our cash flows is enhanced by the resilience of our Zig-Zag Products and Stoker’s Products business segments which we believe have recession-resistant end-markets.
In 2025, approximately 75% of our net sales were derived from outsourced production operations and our capital expenditures have ranged between $4.6 million and $13.5 million per year over the previous three years. The stability of our cash flows is enhanced by the resilience of our Zig-Zag Products and Stoker’s Products business segments which we believe have recession-resistant end-markets.
In 2025, the Company will be launching a Training and Development program, which will consist of online and in person training and development tools used by management and employees. We believe effective training and development for our employees is essential to maintain the strength and profitability of the Company, generally, and each brand, specifically.
In 2025, the Company launched a Training and Development program, which consists of online and in person training and development tools used by management and employees. We believe effective training and development for our employees is essential to maintain the strength and profitability of the Company, generally, and each brand, specifically.
The OTP industry, which consists of non-cigarette tobacco products, exhibited low-single-digit consumer unit annualized declines during the full year period ended 2024 as reported by Management Science Associates, Inc. (“MSAi”) a third-party analytics and information company.
The OTP industry, which consists of non-cigarette tobacco products, exhibited steady consumer unit annualized volumes during the full year period ended 2025 as reported by Management Science Associates, Inc. (“MSAi”) a third-party analytics and information company.
Research and Development and Quality Assurance We have a research and development and quality assurance function that tests raw materials and finished products in order to maintain a high level of product quality and consistency. Research and development largely bases its new product development efforts on our high-tech data systems.
See "--The Zig-Zag Distribution and License Agreements" above. Research and Development and Quality Assurance We have a research and development and quality assurance function that tests raw materials and finished products in order to maintain a high level of product quality and consistency. Research and development largely bases its new product development efforts on our high-tech data systems.
In June 2020, we purchased certain assets from our long-term commercial partner Durfort Holdings S.R.L (‘‘Durfort’’) which included the co-ownership in the intellectual property rights for all of our MYO Homogenized Tobacco Leaf (“HTL”) cigar wraps products.
In June 2020, we purchased certain assets from our long-term commercial partner Durfort Holdings S.R.L (‘‘Durfort’’) which included the co-ownership in the intellectual property rights for all of our MYO Homogenized Tobacco Leaf (“HTL”) cigar wraps products. In late 2021, we extended our MYO cigar wraps offering with entries into the growing hemp wraps and natural leaf wraps markets.
Stoker ’ s ® is a pioneer in the MST industry. 1 It was first to introduce the large 12 oz. tub packaging format and is manufactured using a proprietary process that we believe results in a superior product.
Stoker ’ s ® is a pioneer in the MST industry. 1 It was first to introduce the large 12 oz. tub packaging format and is manufactured using a proprietary process that we believe results in a superior product. Starting in 2015, we extended the Stoker ’ s ® MST franchise to include traditional 12oz. cans to broaden retail availability.
In the loose-leaf chewing tobacco market, our three principal competitors are Swedish Match, the American Snuff Company, LLC, and Swisher International Group, Inc. We believe moist snuff products are used interchangeably with loose-leaf products by many consumers. For modern oral nicotine products, our four principal competitors are Swedish Match, Modoral Brands Inc.
Smokeless Tobacco Company (a division of Altria Group, Inc.). In the loose-leaf chewing tobacco market, our three principal competitors are Swedish Match, the American Snuff Company, LLC, and Swisher International Group, Inc. We believe moist snuff products are used interchangeably with loose-leaf products by many consumers.
Within our Stoker’s products segment, there is ample runway to gain market share driven by same store sales growth and further distribution gains as Stoker ’ s ® MST continues to be one of the fastest growing brands in the category. In 2024, less than 10% of our revenues were generated outside of the U.S.
Within our Stoker’s products segment, there is ample runway to gain market share driven by same store sales growth and further distribution gains as Stoker ’ s ® MST continues to outperform in the category. In 2025, less than 10% of our revenues were generated outside of the U.S. We believe international sales represent a meaningful growth opportunity.
The legal cannabis market in the U.S. is projected to grow from approximately $32 billion in 2024 to approximately $46 billion by 2028 according to a June 2024 report of BDSA, a market research firm focused on the legal cannabis market.
The legal cannabis market in the U.S. is projected to grow from approximately $30 billion in 2024 to approximately $39 billion by 2029 according to an October 2025 report of BDSA, a market research firm focused on the legal cannabis market.
The components of inventories were as follows (in thousands): December 31, December 31, 2024 2023 Raw materials and work in process $ 7,699 $ 5,201 Leaf tobacco 35,622 34,894 Finished goods - Zig-Zag products 38,042 41,783 Finished goods - Stoker’s products 12,966 8,109 Other 1,924 1,711 Inventories $ 96,253 $ 91,698 Zig-Zag® Products Pursuant to the Zig-Zag ® distribution agreements, we are required to purchase from RTI all cigarette papers, cigarette tubes and cigarette injecting machines that we sell, subject to RTI fulfilling its obligations under the Zig-Zag ® distribution agreements.
The components of inventories were as follows as of the dates indicated (in thousands): December 31, December 31, 2025 2024 Raw materials and work in process $ 9,715 $ 7,699 Leaf tobacco 43,747 35,622 Finished goods - Zig-Zag products 33,276 38,042 Finished goods - Stoker’s products 18,361 12,966 Other 2,890 1,924 Inventories $ 107,989 $ 96,253 Zig-Zag® Products Pursuant to the Zig-Zag ® distribution agreements, we are required to purchase from RTI all cigarette papers, cigarette tubes and cigarette injecting machines that we sell, subject to RTI fulfilling its obligations under the Zig-Zag ® distribution agreements.
We address these retention efforts in a number of ways from formal surveys and quarterly business updates to regular informal discussions with employees that enable us to listen to, understand and address their concerns.
To retain our employees, we believe it is critical to continually focus on ensuring employees are highly engaged and feel valued. We address these retention efforts in a number of ways from formal surveys and quarterly business updates to regular informal discussions with employees that enable us to listen to, understand and address their concerns.
In MST, Stoker ’ s ® remains among the fastest growing brands and holds a 11.2% share in the stores with distribution and a 7.4% share of the total U.S. MST non-pouch market.
In MST, Stoker ’ s ® remains among the fastest growing brands and holds a 12.4% share in the stores that carry our products and a 8.1% share of the total U.S. MST non-pouch market.
Stoker ’ s Products Our four principal competitors in the moist snuff category are Swedish Match, the American Snuff Company, LLC (a unit of British American Tobacco p.l.c.), Swisher International Group, Inc. and U.S. Smokeless Tobacco Company (a division of Altria Group, Inc.).
We believe MYO cigar wrap products are used interchangeably with both rolling papers and finished cigar products by many consumers. Stoker ’ s Products Our four principal competitors in the moist snuff category are Swedish Match, the American Snuff Company, LLC (a unit of British American Tobacco p.l.c.), Swisher International Group, Inc. and U.S.
The Company posts its openings internally to allow current employees to apply. In 2024, we had 38 internal promotions within the organization. Retaining Talent: During the year ended December 31, 2024, our employee voluntary turnover rate was 16.6%. To retain our employees, we believe it is critical to continually focus on ensuring employees are highly engaged and feel valued.
The Company posts its openings internally to allow current employees to apply. In 2025, we had 89 internal promotions within the organization. Retaining Talent: During the year ended December 31, 2025, our employee voluntary turnover rate was 13.3%, compared to 16.6% in 2024.
We have continued to reposition the business with growth initiatives focused on new product introductions and new channel expansions that are better aligned with the growing market trends. As a result of those initiatives, we have been successful in changing the growth profile of our Zig-Zag Products segment.
We have continued to reposition this segment with growth initiatives focused on new product introductions and new channel expansions that are better aligned with the growing market trends.
In 2020, we acquired certain assets from Durfort, including co-ownership of the intellectual property rights for our MYO cigar wraps products. The transaction increased our share of the economics in a MYO cigar wraps business that was benefitting from secular growth tailwinds and gave us access to a complimentary product in Blunt Wrap ® through an exclusive distribution agreement.
In 2020, we acquired certain assets from Durfort, including co-ownership of the intellectual property rights for our MYO cigar wraps products. The transaction increased our share of the economics in a MYO cigar wraps business that was benefitting from secular growth tailwinds. In 2021, we also acquired certain assets from Unitabac, providing a platform to re-enter the large cigarillo category.
Distribution and Supply Agreements The Zig-Zag Distribution and License Agreements In 1992, we entered into two long-term exclusive distribution agreements with respect to sales of Zig-Zag ® cigarette papers, cigarette tubes, and cigarette injector machines in the U.S. and Canada (collectively, the “Distribution Agreements”).
“Risk Factors – Our business may be damaged by events outside of our or our suppliers’ control, such as the impact of epidemics or pandemics, political upheavals, or natural disasters.” Distribution and Supply Agreements The Zig-Zag Distribution and License Agreements In 1992, we entered into two long-term exclusive distribution agreements with respect to sales of Zig-Zag ® cigarette papers, cigarette tubes, and cigarette injector machines in the U.S. and Canada (collectively, the “Distribution Agreements”).
We do not believe we are dependent on any single country or supplier source for tobacco. We generally maintain up to a two-month supply of finished, moist snuff and loose-leaf chewing tobacco on hand. This supply is maintained at our Louisville, Kentucky, facility and in two regional public warehouses to facilitate distribution.
We do not believe we are dependent on any single country or supplier source for tobacco and, if needed, there are dependable alternative supply opportunities as noted below. We generally maintain up to a two-month supply of finished, moist snuff and loose-leaf chewing tobacco on hand.
We compete against “big tobacco,” including Altria Group, Inc.; British American Tobacco p.l.c.; Swedish Match; Swisher International, Inc.; and manufacturers including U.K. based Imperial Brands, PLC, across our segments. “Big tobacco” has substantial resources and a customer base that has historically demonstrated loyalty to their brands.
Many of our competitors are better capitalized than we are and have greater resources, financial and otherwise. We compete against “big tobacco,” including Altria Group, Inc.; British American Tobacco p.l.c.; Swedish Match; Swisher International, Inc.; and manufacturers including U.K. based Imperial Brands, PLC, across our segments.
ALP is a joint venture established with Last Country Ventures, LLC for the purpose of selling and distributing tobacco-free white pouch nicotine products in 3, 6 and 9 mg strengths. Pursuant to the joint venture agreement, the Company's subsidiary is responsible for selling products to ALP and providing warehousing and shipping services on its behalf.
In September 2024, one of the Company's wholly-owned subsidiaries acquired a 50% stake in ALP Supply Co., LLC (“ALP”). ALP is a joint venture established with Last Country Ventures, LLC for the purpose of selling and distributing tobacco-free white pouch nicotine products in 3, 6 and 9 mg strengths.
We believe there are meaningful opportunities to grow through investing in organic growth, acquisitions and joint ventures across all product categories. As of December 31, 2024, our products were available in approximately 200,000 U.S. retail locations which, with the addition of retail stores in Canada, brings our total North American retail presence to an estimated 220,000 points of distribution.
We believe there are meaningful opportunities to grow by investing in organic growth, acquisitions and joint ventures across all product categories. As of December 31, 2025, our products were available in approximately 220,000 retail locations in North America. Our sales team targets widespread distribution to all traditional retail channels, including convenience stores, and we have a growing e-commerce business.
Our segments are led by our core proprietary and iconic brands: Zig-Zag® in the Zig-Zag products segment, and Stoker’s® along with FRE®, Beech-Nut® and Trophy® in the Stoker’s products segment. Our businesses generate solid cash flow which we use to invest in our business, finance acquisitions, increase brand support, expand our distribution infrastructure, and strengthen our capital position.
Our segments are led by our core proprietary and iconic brands: Zig-Zag® in the Zig-Zag products segment, and Stoker’s® along with FRE®, Beech-Nut® and Trophy® in the Stoker’s products segment.
Competition in the OTP market is based upon not only brand quality and positioning but also on price, packaging, promotion, and retail availability and visibility. Given the decreasing prevalence of cigarette consumption, the “big tobacco” companies continue to demonstrate an increased interest and participation in a number of OTP markets.
“Big tobacco” has substantial resources and a customer base that has historically demonstrated loyalty to their brands. Competition in the OTP market is based upon not only brand quality and positioning but also on price, packaging, promotion, and retail availability and visibility.
Our sales team targets widespread distribution to all traditional retail channels, including convenience stores, and we have a growing e-commerce business. 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 Creative Distribution Solutions (“CDS”) reportable segment, to General Wireless Operations, Inc.
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 majority owned by Standard General, LP.
We believe international sales represent a meaningful growth opportunity. Having established a strong infrastructure and negotiated relationships across multiple segments and products, we are pursuing an international growth strategy to broaden sales and strengthen margins. We further invested in growth in Canada in 2021 by increasing our ownership in Turning Point Brands Canada to 65%.
Having established a strong infrastructure and negotiated relationships across multiple segments and products, we are pursuing an international growth strategy to broaden sales and strengthen margins. Our goals include expanding our presence in the worldwide OTP industry on a targeted basis.
We currently ship to approximately 900 distributors with an additional 600 secondary, indirect wholesalers in the U.S. that carry and sell our products.
Our businesses generate meaningful cash flow which we use to further invest in our business, introduce new product lines, finance acquisitions, increase brand support, expand our distribution infrastructure, and strengthen our capital position. We currently ship to approximately 900 distributors with an additional 600 secondary, indirect wholesalers in the U.S. that carry and sell our products.
CDS markets and distributes liquid nicotine and ancillary products without tobacco and/or nicotine primarily through non-traditional retail and B2C online platforms, and includes widely recognized names such as Vapor Beast® and VaporFi® The assets and liabilities associated with the CDS segment have been classified as held for sale as of December 31, 2024 and its financial results are classified as discontinued operations and reported separately for all periods presented herein.
The assets and liabilities associated with the CDS segment were classified as held for sale as of December 31, 2024, and its financial results were classified as discontinued operations and are reported separately for all periods presented herein until its disposition on January 2, 2025.
Starting in 2015, we extended the Stoker ’ s ® MST franchise to include traditional 1.2 oz. cans to broaden retail availability. Our proprietary manufacturing process is conducted at our Dresden, Tennessee plant and packaged in both our Dresden, Tennessee and Louisville, Kentucky facilities.
Our proprietary manufacturing process is conducted at our Dresden, Tennessee plant and packaged in both our Dresden, Tennessee, and Louisville, Kentucky, facilities.
In December 2023, a third-party warehouse that stores our tobacco was damaged by a tornado, leading to a loss of some of our leaf tobacco inventory.
This supply is maintained at our Louisville, Kentucky, facility and in two regional public warehouses to facilitate distribution. In December 2023, a third-party warehouse used by the company was damaged by a tornado, leading to a loss of some of our leaf tobacco inventory. We believe the losses will be fully covered by insurance. See Item 1A.
Removed
(“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.
Added
In 2026, ALP intends to broaden its portfolio, including with the introduction of 12 mg strength. Pursuant to the joint venture agreement, the Company's subsidiary is responsible for selling products to ALP and providing warehousing and shipping services on its behalf.
Removed
In connection with the transaction, we entered into an exclusive Master Distribution Agreement to market and sell the original Blunt Wrap ® cigar wraps within the U.S. which was effective October 9, 2020. In late 2021, we extended our MYO cigar wraps offering with entries into the growing hemp wraps and natural leaf wraps markets.
Added
In addition, a growing number of U.S. states and foreign jurisdictions have authorized the sale of hemp-derived THC products, further broadening consumer access to intoxicating cannabinoid products outside of the traditional state-licensed cannabis channels.
Removed
In 2023, the Company expanded its rollout of modern oral nicotine products with FRE ® white nicotine pouches. Modern oral nicotine products are currently one of the fastest growing categories within the nicotine space. In September 2024, one of the Company's wholly-owned subsidiaries acquired a 50% stake in ALP Supply Co., LLC (“ALP”).
Added
For the year ended December 31, 2025, we did not have any customers that accounted for 10% or more of our net sales for the year.
Removed
Our goals include expanding our presence in the worldwide OTP industry on a targeted basis. For example, we are expanding Zig-Zag ® ’s retail penetration and product assortment in Canada and selling our Stoker ’ s ® MST products in South America, Europe, Asia and Africa.
Added
Historically, we have not experienced material credit losses, and we do not believe it is a material risk given the short duration of payment cycles.
Removed
Our investment in 2021 in Old Pal Holding Company, LLC (“Old Pal”) gives us increased exposure to the large and growing cannabinoid market. In 2021, we also acquired certain assets from Unitabac, providing a platform to re-enter the large and growing cigarillo category.
Added
For modern oral nicotine products, our four principal competitors are Swedish Match, Modoral Brands Inc.
Removed
We believe the losses will be fully covered by insurance and, in light of alternative supply opportunities and our distribution schedule, the loss of the tobacco has not impacted our ability to meet the demand for our products. See Item 1A.
Removed
“Risk Factors – Our business may be damaged by events outside of our or our suppliers’ control, such as the impact of epidemics or pandemics, political upheavals, or natural disasters.” We also utilize a variety of suppliers for the sourcing of additives used in our smokeless products and for the supply of our packaging materials.
Removed
Thus, we believe we are not dependent on a single supplier for these products. There are no current U.S. federal regulations that restrict tobacco flavor additives in smokeless products. The additives that we use are food-grade, generally accepted ingredients. All of our moist snuff products are manufactured at our facility in Dresden, Tennessee.
Removed
Packaging occurs at the Dresden, Tennessee, location in addition to the facility in Louisville, Kentucky. All of our loose-leaf chewing tobacco production is fulfilled through our agreement with Swedish Match. See “Distribution and Supply Agreements” below for our discussion of the Swedish Match Manufacturing Agreement.
Removed
Competition Many of our competitors are better capitalized than we are and have greater resources, financial and otherwise.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

39 edited+11 added−29 removed307 unchanged
Biggest changeMaterial risks that may affect our business, operating results and financial condition include, but are not necessarily limited to, those relating to: 15 Table of Contents Risks Related to Our Business and Industry • 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 recognition and loyalty of our customers and in anticipating and responding to changes in consumer preferences and purchase behavior; • our reliance on relationships with several large retailers and national chains for distribution of our products; • intense competition and our ability to compete effectively; • competition from illicit sources and the damage caused by illicit products to our brand equity; • contamination of our tobacco supply or products; • uncertainty and continued evolution of the markets for our products; • complications with the design or implementation of our new enterprise resource planning system could adversely impact our business and operations; • recalls of our products; Risks Related to Legal, Tax and Regulatory Matters • substantial and increasing regulation and changes in FDA enforcement priorities; • regulation or marketing denials of our products by the FDA, which has broad regulatory powers; • many of our products contain nicotine, which is considered to be a highly addictive substance; • requirement to maintain compliance with master settlement agreement escrow account; • possible significant increases in federal, state and local municipal tobacco- and nicotine-related taxes; • our products are marketed pursuant to a policy of FDA enforcement priorities which could change, and our products could become subject to increased regulatory burdens by the FDA; • our products are subject to developing and unpredictable regulation, such as court actions that impact obligations; • increase in tax of our products could adversely affect our business; • sensitivity of end-customers to increased sales taxes and economic conditions, including as a result of inflation and other declines in purchasing power; • possible increasing international control and regulation; • failure to comply with environmental, health and safety regulations; • imposition of significant tariffs on imports into the U.S.; • the scientific community’s lack of information regarding the long-term health effects of certain substances contained in some of our products; • significant product liability litigation; Risks Related to Financial Results, Finances and Capital Structure • our amount of indebtedness; • our credit rating and ability to access well-functioning capital markets; • the terms of our indebtedness, which may restrict our current and future operations; • our ability to establish and maintain effective internal controls over financial reporting; • identification of material weaknesses in our internal control over financial reporting, which, if not remediated appropriately or timely, could result in loss of investor confidence and adversely impact our stock price; 16 Table of Contents Risks Related to our Common Stock • our certificate of incorporation and bylaws, as well as Delaware law and certain regulations, could discourage or prohibit acquisition bids or merger proposals, which may adversely affect the market price of our common stock; • our certificate of incorporation limits the ownership of our common stock by individuals and entities that are Restricted Investors (as defined in our Certificate of Incorporation).
Biggest changeMaterial risks that may affect our business, operating results and financial condition include, but are not necessarily limited to, those relating to: 15 Table of Contents Risks Related to Our Business and Industry • 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 recognition and loyalty of our customers and in anticipating and responding to changes in consumer preferences and purchase behavior; • our reliance on relationships with several large retailers and national chains for distribution of our products; • intense competition and our ability to compete effectively; • competition from illicit sources and the damage caused by illicit products to our brand equity; • contamination of our tobacco supply or products; • uncertainty and continued evolution of the markets for our products; • recalls of our products; • difficulties or liabilities arising from investments in businesses; Risks Related to Legal, Tax and Regulatory Matters • substantial and increasing regulation and changes in FDA enforcement priorities; • regulation or marketing denials of our products by the FDA, which has broad regulatory powers; • many of our products contain nicotine, which is considered to be a highly addictive substance; • requirement to maintain compliance with master settlement agreement escrow account; • possible significant increases in federal, state and local municipal tobacco- and nicotine-related taxes; • our products are marketed pursuant to a policy of FDA enforcement priorities which could change, and our products could become subject to increased regulatory burdens by the FDA; • sensitivity of end-customers to increased sales taxes and economic conditions, including as a result of inflation and other declines in purchasing power; • possible increasing international control and regulation; • failure to comply with environmental, health and safety regulations; • imposition of significant tariffs on imports into the U.S.; • the scientific community’s lack of information regarding the long-term health effects of certain substances contained in some of our products; • significant product liability litigation; Risks Related to Financial Results, Finances and Capital Structure • our amount of indebtedness; • our credit rating and ability to access well-functioning capital markets; • the terms of our indebtedness, which may restrict our current and future operations; • our ability to establish and maintain effective internal controls over financial reporting; 16 Table of Contents Risks Related to our Common Stock • our certificate of incorporation and bylaws, as well as Delaware law and certain regulations, could discourage or prohibit acquisition bids or merger proposals, which may adversely affect the market price of our common stock; • our certificate of incorporation limits the ownership of our common stock by individuals and entities that are Restricted Investors (as defined in our Certificate of Incorporation).
As a result of recent litigation and subsequent FDA Guidance, marketing applications for newly-deemed products were required to have been submitted no later than September 9, 2020, with the exception of our “preexisting” products (products in commerce as of February 15, 2007) which are already authorized.
As a result of litigation and subsequent FDA Guidance, marketing applications for newly-deemed products were required to have been submitted no later than September 9, 2020, with the exception of our “preexisting” products (products in commerce as of February 15, 2007) which are already authorized.
The indenture governing the 2026 Notes and our 2023 ABL Facility each contain, and any future indebtedness of ours would likely contain, a number of restrictive covenants that impose significant operating and financial restrictions on us, including restrictions on our ability to, among other things • incur additional debt, disqualified stock and preferred stock; • pay dividends and make other restricted payments; • create liens; • make investments and acquisitions; • engage in sales of assets and subsidiary stock; • enter into sale-leaseback transactions; • enter into transactions with affiliates; and • transfer all or substantially all of our assets or enter into merger or consolidation transactions. 28 Table of Contents Our 2023 ABL Facility also requires us to maintain certain financial ratios under certain limited circumstances.
The indenture governing the 2032 Notes and our 2023 ABL Facility each contain, and any future indebtedness of ours would likely contain, a number of restrictive covenants that impose significant operating and financial restrictions on us, including restrictions on our ability to, among other things • incur additional debt, disqualified stock and preferred stock; • pay dividends and make other restricted payments; • create liens; • make investments and acquisitions; • engage in sales of assets and subsidiary stock; • enter into sale-leaseback transactions; • enter into transactions with affiliates; and • transfer all or substantially all of our assets or enter into merger or consolidation transactions. 28 Table of Contents Our 2023 ABL Facility also requires us to maintain certain financial ratios under certain limited circumstances.
In 2024, we accelerated our national roll-out and expanded manufacturing of our white nicotine pouch brand FRE and on behalf of our joint venture, ALP Supply Co, LLC (“ALP”), furthering our entry into the modern oral nicotine space.
In 2024 and 2025, we accelerated our national roll-out and expanded manufacturing of our white nicotine pouch brand FRE and on behalf of our joint venture, ALP Supply Co, LLC (“ALP”), furthering our entry into the modern oral nicotine space.
For instance, in January 2025, we contributed our interest in our former CDS segment to GWO, an entity owned by us and affiliates of Standard General, L.P., and now have a 49% interest in GWO. We are continually evaluating acquisitions, divestitures and strategic investments that are significant to our business both in the United States and in Canada.
For instance, in January 2025, we contributed our interest in our former CDS segment to GWO, an entity owned by us and affiliates of Standard General, L.P., and now have a 49% interest in GWO. We are continually evaluating acquisitions, divestitures and strategic investments that are significant to our business both in the United States and internationally.
Although the high rates of inflation experienced over the past three years in the United States and other countries in which we operate began to ease somewhat in 2023 and 2024, core inflation remains persistent. As a result, inflation has had, and may continue to have, a negative impact on the purchasing power of consumers.
Although the high rates of inflation experienced over the past three years in the United States and other countries in which we operate began to ease somewhat in 2024 and 2025, core inflation remains persistent. As a result, inflation has had, and may continue to have, a negative impact on the purchasing power of consumers.
In 2024, our two most important suppliers and producers were: (i) Swedish Match, which produces all of our loose-leaf chewing tobacco in the U.S.; and (ii) RTI, which provides us with exclusive access to the Zig-Zag ® cigarette paper and related accessories in the U.S. and Canada.
In 2025, our two most important suppliers and producers were: (i) Swedish Match, which produces all of our loose-leaf chewing tobacco in the U.S.; and (ii) RTI, which provides us with exclusive access to the Zig-Zag ® cigarette paper and related accessories in the U.S. and Canada.
These restrictions may affect the liquidity of our common stock and may result in Restricted Investors being required to sell or redeem their shares at a loss or relinquish their voting, dividend and distribution rights; • future sales of our common stock in the public market could reduce our stock price, and any additional capital raised by us through the sale of equity or convertible securities may dilute your ownership in us; • we may issue preferred stock whose terms could adversely affect the voting power or value of our common stock; General Risks • our business may be damaged by events outside of our or our suppliers’ control, such as the impact of epidemics or pandemics, political upheavals, or natural disasters; • adverse impact of climate change and legal and regulatory requirements related to climate change and environmental sustainability; • our reliance on information technology; • cybersecurity and privacy breaches, including due to artificial intelligence; • failure to manage our growth; • failure to successfully identify, negotiate and complete suitable acquisition opportunities, integrate our acquisitions or otherwise be unable to benefit from pursuing acquisitions; • fluctuations in our results; • exchange rate fluctuations; • adverse U.S. and global economic conditions; • departure of key management personnel or our inability to attract and retain talent; • infringement on or misappropriation of our intellectual property; • third-party claims that we infringe on their intellectual property; and • impairment of intangible assets, including trademarks and goodwill Risks Related to Our Business and Industry Sales of tobacco products are generally expected to continue to decline.
These restrictions may affect the liquidity of our common stock and may result in Restricted Investors being required to sell or redeem their shares at a loss or relinquish their voting, dividend and distribution rights; • future sales of our common stock in the public market could reduce our stock price, and any additional capital raised by us through the sale of equity or convertible securities may dilute your ownership in us; • we may issue preferred stock whose terms could adversely affect the voting power or value of our common stock; General Risks • our business may be damaged by events outside of our or our suppliers’ control, such as the impact of epidemics or pandemics, political upheavals, or natural disasters; • adverse impact of climate change and legal and regulatory requirements related to climate change and environmental sustainability; • our reliance on information technology; • cybersecurity and privacy breaches, including due to artificial intelligence; • failure to manage our growth; • failure to successfully identify, negotiate and complete suitable acquisition opportunities, integrate our acquisitions or otherwise be unable to benefit from pursuing acquisitions; • fluctuations in our results; • exchange rate fluctuations; • adverse U.S. and global economic conditions; • departure of key management personnel or our inability to attract and retain talent; • infringement on or misappropriation of our intellectual property; • third-party claims that we infringe on their intellectual property; and • impairment of intangible assets, including trademarks and goodwill.
The vast majority of our 2024 U.S. net sales are derived from the sale of products that are currently regulated by the FDA. The Tobacco Control Act grants the FDA broad regulatory authority over the design, manufacture, sale, marketing and packaging of tobacco products.
The vast majority of our 2025 U.S. net sales are derived from the sale of products that are currently regulated by the FDA. The Tobacco Control Act grants the FDA broad regulatory authority over the design, manufacture, sale, marketing and packaging of tobacco products.
We have the ability to borrow up to $75.0 million under our new asset-backed revolving credit facility entered into in November 2023 (the “2023 ABL Facility”), subject to borrowing base compliance, under which only letters of credit of $2.3 million were outstanding as of December 31, 2024. The 2023 ABL Facility bears interest at a floating rate.
We have the ability to borrow up to $75.0 million under our asset-backed revolving credit facility entered into in November 2023 (the “2023 ABL Facility”), subject to borrowing base compliance, under which only letters of credit of $2.3 million were outstanding as of December 31, 2025. The 2023 ABL Facility bears interest at a floating rate.
While the global inflation rate began to ease somewhat in 2023 and 2024 as a result of central bank policy tightening, core inflation remains persistent and downward pressure on consumer purchasing power remains.
While the global inflation rate began to ease somewhat in 2024 and 2025 as a result of central bank policy tightening, core inflation remains persistent and downward pressure on consumer purchasing power remains.
Risks Related to Financial Results, Finances and Capital Structure We have a substantial amount of indebtedness that could affect our financial condition. In February 2025, we issued $300.0 million of our 7.625% senior secured notes due 2032 (the “2032 Notes”), the proceeds of which were used to repay our existing 5.625% senior secured notes due 2026.
Risks Related to Financial Results, Finances and Capital Structure We have indebtedness that could affect our financial condition. In February 2025, we issued $300.0 million of our 7.625% senior secured notes due 2032 (the “2032 Notes”), the proceeds of which were used to repay our existing 5.625% senior secured notes due 2026.
Under the FDA’s compliance policy, such products could remain on the market until September 9, 2021, unless the FDA makes an adverse determination prior to that date.
Under the FDA’s compliance policy, such products could remain on the market until September 9, 2021, unless the FDA made an adverse determination prior to that date.
Our tobacco products comprised approximately 47% of our total 2024 net sales and, while some of our sales volume declines have been offset by higher prices or by increased sales in other product categories, there can be no assurance that these price increases or increased sales can be sustained, especially in an environment of increased regulation, product characteristic restrictions, and taxation and changes in consumer spending habits.
Our tobacco products comprised approximately 62% of our total 2025 net sales and, while some of our sales volume declines have been offset by higher prices or by increased sales in other product categories, there can be no assurance that these price increases or increased sales can be sustained, especially in an environment of increased regulation, product characteristic restrictions, and taxation and changes in consumer spending habits.
On February 10, 2025, the President issued an executive order directing a pause in enforcement of the FCPA for an initial 180-day period while new enforcement guidelines are created.
On February 10, 2025, the President issued an executive order directing a pause in enforcement of the FCPA for an initial 180-day period while new enforcement guidelines are created. On June 10, 2025, the U.S.
Certain events also can trigger an immediate review of intangible assets. If an impairment is determined to exist, we will incur impairment losses, which could have a material adverse effect on our results of operations or financial position. Item 1B. Unresolved Staff Comments None
Certain events also can trigger an immediate review of intangible assets. If an impairment is determined to exist, we will incur impairment losses, which could have a material adverse effect on our results of operations or financial position.
We may also be required to issue common stock at the exercise or vesting of certain of our incentive equity awards of which 616,270 shares remain outstanding and unvested. Further, on December 13, 2024, the Company entered into an at-the-market offering program (the “ATM Program”) with B. Riley Securities Inc. and Barclays Capital Inc.
We may also be required to issue common stock at the exercise or vesting of certain of our incentive equity awards of which 719,309 shares remain outstanding and unvested. The Company entered into an at-the-market offering program (the "ATM Program") on December 13, 2024, with B. Riley Securities Inc. and Barclays Capital Inc.
The Distribution Agreements were most recently renewed in 2012, with pricing terms subject to renegotiation every five years, the most recent of which occurred in 2022. Pursuant to agreements with certain suppliers, we have agreed to store tobacco inventory purchased on our behalf and generally maintain a 12- to 24-month supply of our various tobacco products at their facilities.
The Distribution Agreements were most recently renewed in 2012, with pricing terms subject to renegotiation every five years, the most recent of which occurred in 2022. Pursuant to agreements with certain suppliers, we generally maintain a 12- to 24-month supply of our various tobacco products at their facilities.
In December 2023, a third-party warehouse in Tennessee used to store some of the Company’s leaf tobacco incurred significant tornado damage including damage to the Company’s leaf tobacco, which resulted in us recording a $15.2 million inventory reserve related to our leaf tobacco inventory.
In December 2023, a third-party warehouse in Tennessee used by the Company incurred significant tornado damage including damage to the Company’s property, which resulted in us recording a $15.2 million inventory reserve related to our leaf tobacco inventory.
Imposition of significant tariffs on imports into the U.S. could have a material adverse effect on our business. We are required to purchase all our cigarette papers, cigarette tubes and cigarette injector machines under the Distribution Agreements from the supplier in France. Additionally, a substantial portion of the Creative Distribution Solutions joint venture’s products are sourced from China.
Imposition of significant tariffs on imports into the U.S. could have a material adverse effect on our business. We are required to purchase all our cigarette papers, cigarette tubes and cigarette injector machines under the Distribution Agreements from the supplier in France.
The failure of our information systems to function as intended, or the penetration by outside parties’ intent on disrupting business processes, could result in significant costs, loss of revenue, assets or personal or other sensitive data and reputational harm.
The failure of our information systems to function as intended, or the penetration by outside parties’ intent on disrupting business processes, could result in significant costs, loss of revenue, assets or personal or other sensitive data and reputational harm. Security and privacy breaches may expose us to liability and cause us to lose customers.
We may encounter difficulties or liabilities arising from investments in joint ventures, acquisitions or divestitures. We have made substantial investments acquisitions, joint ventures and strategic initiatives and we expect that we will continue to do so in the foreseeable future.
We may encounter difficulties or liabilities arising from investments in businesses. We have made substantial investments in businesses, and we expect that we will continue to do so in the foreseeable future.
Should any of the following problems, or others, occur as a result of our acquisition strategy, the impact could be material: • difficulties integrating personnel from acquired entities and other corporate cultures into our business; • difficulties integrating information systems; • the potential loss of key employees of acquired companies; • the assumption of liabilities and exposure to undisclosed or unknown liabilities of acquired companies; or • the diversion of management attention from existing operations We are subject to fluctuations in our results that make it difficult to track trends and develop strategies in the short-term.
Should any of the following problems, or others, occur as a result of our acquisition strategy, the impact could be material: • difficulties integrating personnel from acquired entities and other corporate cultures into our business; • difficulties integrating information systems; • the potential loss of key employees of acquired companies; • the assumption of liabilities and exposure to undisclosed or unknown liabilities of acquired companies; or • the diversion of management attention from existing operations.
As such, although we have a compliance system designed to prevent and detect violations of applicable law, no system can provide assurance that it will always protect against improper actions by employees, joint venture partners, investees or third parties.
Although we have a compliance system designed to prevent and detect violations of applicable law, no system can provide assurance that it will always protect against improper actions by employees, joint venture partners, investees or third parties. Violations of these laws, or allegations of such violations could result in reputational harm, legal challenges and significant penalties and other costs.
For example, in December 2023, a third-party warehouse in Tennessee used to store some of the Company’s leaf tobacco incurred significant tornado damage including damage to the Company’s leaf tobacco.
For example, in December 2023, a third-party warehouse in Tennessee used by the Company incurred significant tornado damage including damage to the Company’s property.
Although we have established security procedures to protect against identity theft and the theft of our customers’ financial information, our security and testing measures may not prevent security breaches.
Federal and state laws require us to safeguard our wholesalers’, retailers’ and consumers’ financial information, including credit card information. Although we have established security procedures to protect against identity theft and the theft of our customers’ financial information, our security and testing measures may not prevent security breaches.
As a result, our business, financial condition and results of operations could be materially adversely affected. The scientific community has not yet studied extensively the long-term health effects of certain substances contained in some of the products we previously sold and some products sold by joint ventures in which we have invested .
The scientific community has not yet studied extensively the long-term health effects of certain substances contained in some of the products we previously sold and some products sold by businesses in which we have invested .
In 2024, we generated approximately $192.4 million in net sales of Zig-Zag ® products, of which approximately $131.6 million was generated from products sold through the License Agreements.
In 2025, we generated approximately $178.5 million in the net sales of Zig-Zag ® product segment, of which approximately $84.7 million was generated from products sold through the License Agreements.
Together with changing public attitudes towards tobacco consumption, the constant expansion of regulations has been a major cause of the overall decline in the consumption of tobacco products since the early 1970s.
A wide variety of federal, state, and local laws limit the advertising, sale and use of tobacco, and these laws have proliferated in recent years. Together with changing public attitudes towards tobacco consumption, the constant expansion of regulations has been a major cause of the overall decline in the consumption of tobacco products since the early 1970s.
In addition, our suppliers generally keep significant amounts of our inventory on hand and it is probable that such inventory could become contaminated or damaged even prior to arrival at our premises.
Although we have alternative sources of tobacco to ensure we meet all demand, if another event were to occur we may not have sufficient supply. In addition, our suppliers generally keep significant amounts of our inventory on hand and it is probable that such inventory could become contaminated or damaged even prior to arrival at our premises.
We could decide, or be required to, recall products, which could have a material adverse effect on our business, reputation, financial position, results of operations, or cash flows.
Further, there can be no assurance that we will be able to continue to effectively compete in the novel nicotine and cannabinoid products marketplace. We could decide, or be required to, recall products, which could have a material adverse effect on our business, reputation, financial position, results of operations, or cash flows.
In 2018, the U.S. imposed significant additional tariffs on certain goods imported from outside the U.S. by executive administrative action, and these tariffs remain in place.
In 2018, the U.S. imposed significant additional tariffs on certain goods imported from outside the U.S. by executive administrative action, and these tariffs remain in place. If the U.S. were to impose additional tariffs on goods we import, it is likely to make it more costly for us to import goods from other countries.
Management previously identified a material weakness in internal control related to ineffective information technology general controls (“ITGCs”) in the areas of user access and program change-management over certain information technology systems that support the Company’s financial reporting processes. See Part II, Item 9A of this Annual Report on Form 10-K for additional information.
Management previously identified a material weakness in internal control related to ineffective information technology general controls in the areas of user access and program change management over certain information technology systems that support the Company’s financial reporting process. Our management developed and implemented a remediation plan to address such material weakness.
Accordingly, unit sales volume and sales promotion costs in any period are not necessarily indicative of sales and costs that may be realized in subsequent periods. Additionally, promotional activity significantly increases net sales in the month in which it is initiated, and net sales are adversely impacted in the month after a promotion.
Additionally, promotional activity significantly increases net sales in the month in which it is initiated, and net sales are adversely impacted in the month after a promotion.
While the President and his administration have taken steps to impose tariffs on a number of countries, most notably Canada, Mexico and China, there is little visibility into how U.S. trade policies will be affected by these actions. For instance, tariffs initially placed on goods from Mexico and Canada were immediately paused for further consideration.
As a result, our business, financial condition and results of operations could be materially adversely affected. While the U.S. has taken steps to impose tariffs on a number of countries, most notably Canada, India, Mexico and China, there is little visibility into how U.S. trade policies will be affected by these actions.
We keep significant amounts of inventory of our products in warehouses and it is possible that this inventory could become contaminated or damaged during the storage period.
We keep significant amounts of inventory of our products in warehouses and it is possible that this inventory could become contaminated or damaged during the storage period. For example, in December 2023, a third-party warehouse in Tennessee used by the Company incurred significant tornado damage including damage to all the Company’s property stored in that warehouse.
The Company may sell up to $100.0 million of common stock under the ATM Program. See Note 14, “Notes Payable and Long-Term Debt,” of our Notes to Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for further discussion.
On November 5, 2025, the Company increased the aggregate dollar amount of shares of common stock that it may sell under the ATM Program by an additional $200,000,000. See Note 22, “Dividends, Share Issuances and Share Repurchases” of our Notes to Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for further discussion.
If we are unable to remediate the material weakness, or are otherwise unable to maintain effective internal control over financial reporting or disclosure controls and procedures, our ability to record, process and report financial information accurately, and to prepare financial statements within required time periods, could be adversely affected, which could subject us to litigation or investigations requiring management resources and payment of legal and other expenses, negatively affect investor confidence in our financial statements and in turn, adversely impact our stock price. 29 Table of Contents Risks Related to our Common Stock Our certificate of incorporation and bylaws, as well as Delaware law and certain regulations, could discourage or prohibit acquisition bids or merger proposals, which may adversely affect the market price of our common stock.
Failure to maintain effective internal control over financial reporting also could potentially subject us to sanctions or investigations by the SEC or other regulatory authorities. 29 Table of Contents Risks Related to our Common Stock Our certificate of incorporation and bylaws, as well as Delaware law and certain regulations, could discourage or prohibit acquisition bids or merger proposals, which may adversely affect the market price of our common stock.
In response to competitor actions and pricing pressures, we have engaged in significant use of promotional and sales incentives. We regularly review the results of our promotional spending activities and adjust our promotional spending programs in an effort to maintain our competitive position.
We are subject to fluctuations in our results that make it difficult to track trends and develop strategies in the short-term. In response to competitor actions and pricing pressures, we have engaged in significant use of promotional and sales incentives.
Removed
For example, in December 2023, a third-party warehouse in Tennessee used to store some of the Company’s leaf tobacco incurred significant tornado damage including damage to all the Company’s leaf tobacco stored in that warehouse. Although we have alternative sources of tobacco to ensure we meet all demand, if another event were to occur we may not have sufficient supply.
Added
Risks Related to Our Business and Industry Sales of tobacco products are generally expected to continue to decline.
Removed
Further, there can be no assurance that we will be able to continue to effectively compete in the novel nicotine and cannabinoid products marketplace. Complications with the design or implementation of our new enterprise resource planning system could adversely impact our business and operations. We rely extensively on information systems and technology to manage our business and summarize operating results.
Added
Department of Justice issued new enforcement guidelines which set forth an approach to FCPA enforcement that is explicitly aimed at promoting U.S. economic interests and national security. It is unclear how these new guidelines may affect our industry as a whole or our business in particular.
Removed
We are currently engaged in the implementation of a new enterprise resource planning (“ERP”) system, which is part of the remediation efforts for our material weakness in internal controls over financial reporting discussed below. This ERP system will replace our existing operating and financial systems.
Added
We have been, and may become, involved in legal proceedings relating to other matters including insurance claims, employee claims, tort or contract claims, federal or state regulatory investigations, securities class actions and other legal proceedings or investigations, which could have a negative impact on our reputation, business and financial condition and divert the attention of our management from the operation of our business.
Removed
The ERP system is designed to accurately maintain the Company’s financial records, enhance operational functionality and provide timely information to the Company’s management team related to the operation of the business. The ERP system implementation process requires the investment of significant personnel and financial resources.
Added
Litigation is inherently unpredictable and can result in excessive or unanticipated verdicts and/or injunctive relief that affect how we operate our business.
Removed
We may not be able to successfully implement the ERP without experiencing delays, increased costs and other difficulties. If we are unable to successfully design and implement the new ERP system as planned, or successfully update or integrate our systems when necessary, our financial positions, results of operations and cash flows could be negatively impacted.
Added
The process of designing and implementing effective internal controls over financial reporting is a continuous effort that requires us to anticipate and react to changes in our business and the economic and regulatory environments in which we operate, and to expend resources to maintain a system of internal controls that is adequate to satisfy our reporting obligations as a public company.
Removed
A wide variety of federal, state, and local laws limit the advertising, sale and use of tobacco, and these laws have proliferated in recent years.
Added
The measures we take may not be sufficient to satisfy our obligations as a public company and if we are unable to establish or maintain appropriate internal financial reporting controls and procedures, it could cause us to fail to meet our reporting obligations on a timely basis, result in material misstatements in our consolidated financial statements and harm our results of operations.
Removed
For instance, on May 4, 2022, the FDA proposed two tobacco products standards related to combusted tobacco products: (1) a ban on menthol as a characterizing flavor of cigarettes; and (2) a ban on all characterizing flavors (including menthol) in cigars, and in May 2023, the FDA proposed additional requirements for tobacco product manufacturing practice regarding the manufacture, design, packing and storage of tobacco products.
Added
We cannot provide assurances that material weaknesses or significant deficiencies will not be discovered in the future or that we will be able to remediate such weaknesses or deficiencies in a timely manner.
Removed
While the scope and substance of the forthcoming new FCPA enforcement guidelines remains unclear, the executive order by itself is not expected to produce a significant or lasting change in the FCPA compliance environment.
Added
Based on the implementation of this remediation plan, we have concluded that the material weakness was remediated as of December 31, 2025.
Removed
Violations of these laws, or allegations of such violations could result in reputational harm, legal challenges and significant penalties and other costs.
Added
While we recently remediated the aforementioned material weaknesses in our internal control over financial reporting, there can be no assurance that our remediation efforts will be effective in all respects or that we will be able to successfully remediate any future material weaknesses.
Removed
These additional tariffs apply to a significant portion of the Creative Distribution Solutions joint venture’s products and may result in increased prices for its customers and in turn, reduced demand where customers are unable to absorb the increased prices or successfully pass them onto the end-user.
Added
If we are unable to implement and maintain effective internal controls over financial reporting, we may be unable to timely and accurately report our financial results, which could increase our operating costs, trigger an event of default under our debt agreements or otherwise harm our business, investor confidence or the value of our ordinary shares.
Removed
While we do not anticipate any impact on our business from these tariffs as we do not import any raw materials or finished goods from Canada, Mexico or China, we cannot predict whether the current administration may impose additional tariffs on goods imported from other countries, such as those in the European Union.
Added
We regularly review the results of our promotional spending activities and adjust our promotional spending programs in an effort to maintain our competitive position. Accordingly, unit sales volume and sales promotion costs in any period are not necessarily indicative of sales and costs that may be realized in subsequent periods.
Removed
If the U.S. were to impose additional tariffs on goods we import, it is likely to make it more costly for us to import goods from other countries. While the future administrations may have a desire to repeal some or all of these tariffs, no assurance can be given that they will do so.
Removed
In addition to current and potential future claims related to our core tobacco products, we are subject to several lawsuits alleging personal injuries resulting from malfunctioning vaporizer devices and may be subject to claims in the future relating to our other Creative Distribution Solutions products. We are still evaluating these claims and the potential defenses to them.
Removed
As a result of their relative novelty, electronic cigarette and vaporizer product manufacturers and sellers have only recently become subject to litigation. We may see increasing litigation over Creative Distribution Solutions products or the regulation of our products, as the regulatory regimes surrounding these products develop.
Removed
As a result, we may face substantial costs due to increased product liability litigation relating to new regulations or other potential defects associated with the products we ship, which could have a material adverse effect on our business, financial position, results of operations and cash flows.
Removed
Even though the Federal Reserve cut interest rates by 100 basis points in 2024, it remains more expensive for us to borrow under the floating rate in our 2023 ABL Facility than it was historically for us to borrow under our previous revolving credit facility.
Removed
Our and our auditor’s testing may reveal deficiencies in our internal control over financial reporting that are deemed to be material weaknesses and render our internal control over financial reporting ineffective. In 2021, management concluded that we had two material weaknesses in our internal control over financial reporting.
Removed
As noted below, management concluded, during this year’s assessment, that we had one material weakness in our internal control over financial reporting, which is a material weakness that remains in existence from 2022 which the Company is continuing to remediate. No assurance can be given that we won’t discover additional material weaknesses in the future.
Removed
We have incurred and we expect to continue to incur substantial accounting and auditing expense and expend significant management time in complying with the requirements of Section 404, including the requirement to have such controls tested by our independent registered public accounting firm.
Removed
While an effective internal control environment is necessary to enable us to produce reliable financial statements and is an important component of our efforts to prevent and detect financial reporting errors and fraud, disclosure controls and internal control over financial reporting are generally not capable of preventing or detecting all financial reporting errors and all fraud.
Removed
A control system, no matter how well-designed and operated, is designed to reduce rather than eliminate the risk of material misstatements in our financial statements. There are inherent limitations on the effectiveness of internal controls, including collusion, management override and failure in human judgment.
Removed
A control system can provide only reasonable, not absolute, assurance of achieving the desired control objectives and the design of a control system must reflect the fact that resource constraints exist.
Removed
If we are not able to comply with the requirements of Section 404, or if we or our independent registered public accounting firm identify deficiencies in our internal control over financial reporting that are deemed to be material weaknesses: • our reputation may be adversely affected and our business and operating results could be harmed; • the market price of our stock could decline; • we could fail to meet our financial reporting obligations; and • we could be subject to litigation and/or investigations or sanctions by the SEC, the New York Stock Exchange or other regulatory authorities.
Removed
We identified a material weakness in our internal control over financial reporting which, if not remediated appropriately or in a timely manner, could result in loss of investor confidence and adversely impact our stock price.
Removed
While we have implemented controls that we believe will remediate the material weakness in 2025, the material weakness remains unremediated as of December 31, 2024, primarily due to the need to finalize testing of the controls and, as a result, management concluded that our internal control over financial reporting was not effective as of December 31, 2024.
Removed
Our remediation measures have and will continue to result in additional technology, new personnel, the creation of training programs and other expenses.
Removed
Additionally, in connection with the preparation of our consolidated financial statements, management identified a material weakness in internal control related to ineffective ITGCs in the areas of user access and program change-management over certain information technology systems that support the Company’s financial reporting processes. See Part II, Item 9A of this Annual Report on Form 10-K for additional information.
Removed
In the event we are unable to remediate the material weakness, or are otherwise unable to maintain effective internal control over financial reporting or disclosure controls and procedures, our ability to record, process and report financial information accurately, and to prepare financial statements within required time periods, could be adversely affected, which could subject us to litigation or investigations requiring management resources and payment of legal and other expenses, negatively affect investor confidence in our financial statements and, in turn, adversely impact our stock price.
Removed
Security and privacy breaches may expose us to liability and cause us to lose customers. Federal and state laws require us to safeguard our wholesalers’, retailers’ and consumers’ financial information, including credit card information.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

0 edited+2 added−27 removed0 unchanged
Removed
Item 1C. Cybersecurity We rely on our technology infrastructure and information systems for our internal communications, controls, reporting and relations with customers and suppliers, to utilize our data, and to bill, collect, and make payments.
Added
ITEM 1C. Cybersecurity 34 ITEM 2. Properties 36 ITEM 3. Legal Proceedings 36 ITEM 4. Mine Safety Disclosures 36 PART II ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 37 ITEM 6. Selected Financial Data 37 ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 38 ITEM 7A.
Removed
Our technology infrastructure and information systems also support and form the foundation for our accounting and finance systems and form an integral part of our disclosure and accounting control environment.
Added
Quantitative and Qualitative Disclosures About Market Risk 51 ITEM 8. Financial Statements and Supplementary Data 52
Removed
Our internally developed system and processes, as well as those systems and processes provided by third -party vendors, may be susceptible to damage or interruption from cybersecurity threats, which include any unauthorized access to our information systems that may result in adverse effects on the confidentiality, integrity, or availability of such systems or the related information.
Removed
Potential cybersecurity threats include terrorist or hacker attacks, the introduction of malicious computer viruses, ransomware, falsification of banking and other information, insider risk, or other security breaches. Such attacks have become more and more sophisticated over time, especially as threat actors have become increasingly well-funded by, or themselves include, governmental actors with significant means.
Removed
We expect that sophistication of cyber-threats will continue to evolve as threat actors increase their use of AI and machine-learning technologies. 34 Table of Contents We have implemented robust processes to assess, identify, and manage cybersecurity risks, including potentially material risks, related to our internal information systems and our products.
Removed
In response to the increasing threats presented by cyber incidents, in 2023 we established a Cybersecurity Steering Committee, which meets bimonthly. This committee is comprised of our Head of IT and Security Leader, along with our Deputy General Counsel who reports to our General Counsel.
Removed
The Cybersecurity Steering Committee oversees activities related to the monitoring, prevention, detection, mitigation and remediation of cybersecurity risks.
Removed
The Cybersecurity Steering Committee develops and implements cybersecurity risk mitigation strategies and activities, including the management of comprehensive incident response plans, oversees the cybersecurity risks posed by third-party vendors, ensures policies and procedures are current and followed, and receives regular updates on cybersecurity-related matters.
Removed
Our Board of Directors oversees our enterprise risk management process and our Audit Committee of the Board has direct oversight of our management of cybersecurity risks.
Removed
Under the direction and supervision of our Chief Financial Officer, we conduct an annual comprehensive enterprise risk assessment, which includes details of our management of enterprise-wide risk topics, such as those related to cybersecurity risks.
Removed
The Board of Directors receives the full results of the annual enterprise risk assessment, including an evaluation of cybersecurity risks presented, a detailed description of the actions we have taken to mitigate these risks.
Removed
Our Cybersecurity Steering Committee reviews the results of any enterprise risk assessment with management on a bimonthly basis and with the Board of Directors quarterly or when risks are identified. Management provides a comprehensive update to the Audit Committee of the Board on cybersecurity threats and risk mitigation at least annually, and more frequently as relevant.
Removed
Our Head of IT, reporting to our Chief Financial Officer, has principal responsibility for assessing and managing cybersecurity risks and threats, implementing the activities and systems necessary to address such risks and threats and preparing updates for the Board of Directors.
Removed
Our Head of IT has over 20 years of IT experience, including over 10 years experience in cybersecurity, data security and regulatory compliance. Our Security Leader reports to our Head of IT and is responsible for the operation of our cybersecurity program and management of our cybersecurity team. Our Security Leader has 20 years of IT experience.
Removed
We have adopted the National Institute of Standards and Technology Cybersecurity Framework and the Center for Internet Security Critical Security Controls to continually evaluate and enhance our cybersecurity.
Removed
Activities include mandatory quarterly online training for all employees, technical security controls, enhanced data protection, the maintenance of backup and protective systems, policy review and implementation, the evaluation and retention of cybersecurity insurance, periodic assessments of third -party service providers to assess cyber preparedness of key vendors, and running simulated cybersecurity drills, including vulnerability scanning, penetration testing and disaster recovery exercises, throughout our organization.
Removed
These cybersecurity drills are performed both in-house and by a third -party service provider. We use automated tools that monitor, detect, and prevent cybersecurity risks and have a security operations center that operates 24 hours a day to alert us to any potential cybersecurity threats.
Removed
Our Cybersecurity Steering Committee also has effected comprehensive incident response plans that outline the appropriate communication flow and response for certain categories of potential cybersecurity incidents. The Cybersecurity Steering Committee escalates events, including to the Chief Financial Officer, Audit Committee and Board of Directors, as relevant, according to pre-defined criteria.
Removed
If we were to experience a cybersecurity incident, our Security Leader would inform the Cybersecurity Steering Committee, which would then evaluate and assess the materiality of the incident to the Company and the impact of the incident on the Company’s information technology infrastructure and data integrity, and determine whether the incident should be reported to the Audit Committee of the Board in advance of the next regular cybersecurity update.
Removed
The Cybersecurity Steering Committee, with the assistance and input of the Audit Committee of the Board, has established a set of predefined criteria that it uses to make such determinations.
Removed
Once a cybersecurity incident has been reported to the Audit Committee of the Board, the Audit Committee of the Board, with the input of the Cybersecurity Steering Committee, will determine how to address it.
Removed
We engage subject matter experts such as consultants and auditors to assist us in establishing processes to assess, identify, and manage potential and actual cybersecurity threats, to actively monitor our systems internally using widely accepted digital applications, processes, and controls, and to provide forensic assistance to facilitate system recovery in the case of an incident.
Removed
The Cybersecurity Steering Committee oversees and establishes the parameters of our engagement with these experts to ensure we obtain supplement assistance needed in this area, if any. If we were to experience a cybersecurity incident, we may suffer interruptions in service, loss of assets or data, or reduced functionality.
Removed
Security breaches of our systems which allow inappropriate access to or inadvertent transfer of information and misappropriation or unauthorized disclosure of confidential information, belonging to us or to our employees, providers, suppliers, customers or insurance companies could result in our suffering significant financial and reputational damage.
Removed
Though we take steps to ensure our products and software are secure, a cyber-attack could result in the loss or compromise of our or our employees’, suppliers’ and customers’ critical data.
Removed
If a supplier or customer alleges that a cyber-attack causes or contributes to a loss or compromise of critical data, whether or not caused by us, we could face harm to our reputation and financial condition and incur regulatory repercussions.
Removed
See Item 1A “Risk Factors – Security and privacy breaches may expose us to liability and cause us to lose customers”. A cybersecurity incident could materially harm our reputation and financial condition and cause us to incur legal liability and increased costs when responding to such events. 35 Table of Contents

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties As of December 31, 2024, we operated manufacturing, distribution, office, and warehouse space in the U.S., all of which is leased with the exception of our Dresden, Tennessee manufacturing facility, which is owned. To provide a cost-efficient supply of products to our customers, we maintain centralized management of internal manufacturing and nationwide distribution facilities.
Biggest changeItem 2. Properties As of December 31, 2025, we operated manufacturing, distribution, office, and warehouse space in the U.S., all of which is leased with the exception of our Dresden, Tennessee manufacturing facility, which is owned. To provide a cost-efficient supply of products to our customers, we maintain centralized management of internal manufacturing and nationwide distribution facilities.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

4 edited+0 added−0 removed8 unchanged
Biggest changePurdy spent 7 years at Philip Morris, USA where he served in senior sales and sales management positions. Mr. Purdy holds a Bachelor of Arts from California State University, Chico. David Glazek, age 47, was appointed Executive Chair of the Board in January 2023. Mr.
Biggest changePurdy spent 7 years at Philip Morris, USA where he served in senior sales and sales management positions. Mr. Purdy holds a Bachelor of Arts from California State University, Chico. David Glazek, age 48, was appointed Executive Chair of the Board in January 2023. Mr.
There are no family relationships between any of the executive officers, and there is no arrangement or understanding between any executive officer and any other person pursuant to which the executive officer was selected. Graham Purdy, age 53, has served as our President and CEO since October 2022. Prior to October 2022, Mr.
There are no family relationships between any of the executive officers, and there is no arrangement or understanding between any executive officer and any other person pursuant to which the executive officer was selected. Graham Purdy, age 54, has served as our President and CEO since October 2022. Prior to October 2022, Mr.
In addition, he is an Adjunct Professor at Columbia Business School. Mr. Glazek holds a Bachelor of Arts from the University of Michigan and a J.D. from Columbia Law School . Andrew Flynn , age 49, joined the Company as our Chief Financial Officer in April 2024. Mr.
In addition, he is an Adjunct Professor at Columbia Business School. Mr. Glazek holds a Bachelor of Arts from the University of Michigan and a J.D. from Columbia Law School . Andrew Flynn , age 50, joined the Company as our Chief Financial Officer in April 2024. Mr.
Cushman , age 40, has been our Senior Vice President, General Counsel, and Secretary since November 2020 and has served in various roles in our legal department since joining the Company in October 2014, most recently serving as Senior Vice President of External Affairs. Prior to joining the Company, Ms.
Cushman , age 41, has been our Senior Vice President, General Counsel, and Secretary since November 2020 and has served in various roles in our legal department since joining the Company in October 2014, most recently serving as Senior Vice President of External Affairs. Prior to joining the Company, Ms.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

7 edited+2 added−2 removed2 unchanged
Biggest changeFor certain information concerning securities authorized for issuance under the Company’s equity compensation plans, see “Item 12.
Biggest changeDuring the years ended December 31, 2025, 2024, and 2023, the Company paid cash dividends of $0.30 per common share for $5.5 million, $0.28 per common share for $4.9 million and $0.26 per common share for $4.5 million, respectively. Equity Compensation Plan Information. For certain information concerning securities authorized for issuance under the Company’s equity compensation plans, see “Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder matters,” which notes that the information required by this Item is incorporated by reference from our Proxy Statement to be filed in connection with our 2025 Annual Meeting of Stockholders within 120 days after the end of the fiscal year ended December 31, 2024. Performance graph.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder matters,” which notes that the information required by this Item is incorporated by reference from our Proxy Statement to be filed in connection with our 2026 Annual Meeting of Stockholders within 120 days after the end of the fiscal year ended December 31, 2025. Performance graph.
Market for Registrant ’ s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information The principal stock exchange on which Turning Point Brands, Inc.’s common stock, par value $0.01 per share, (the “Common Stock”) is listed is the New York Stock Exchange under the symbol “TPB.” At February 28, 2025, there were 133 holders of record of the Company’s Common Stock.
Market for Registrant ’ s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information The principal stock exchange on which Turning Point Brands, Inc.’s common stock, par value $0.01 per share, (the “Common Stock”) is listed is the New York Stock Exchange under the symbol “TPB.” At February 23, 2026, there were 272 holders of record of the Company’s Common Stock.
The last reported sales price of the Company’s Common Stock on February 28, 2025 was $70.30. Dividends. We have a history of paying cash dividends. Future dividend amounts will be considered after reviewing financial results and capital needs and will be declared at the discretion of our Board of Directors. Equity Compensation Plan Information.
The last reported sales price of the Company’s Common Stock on February 23, 2026 was $135.73. Dividends. We have a history of paying cash dividends. Future dividend amounts will be considered after reviewing financial results and capital needs and will be declared at the discretion of our Board of Directors.
The information presented assumes the investment of $100 in common stock and each of the indices as of the market close on December 31, 2019 and the reinvestment of all dividends on a quarterly basis. 37 Table of Contents Issuer purchases of equity securities.
The information presented assumes the investment of $100 in common stock and each of the indices as of the market close on December 31, 2020 and the reinvestment of all dividends on a quarterly basis.
All repurchases to date under our stock repurchase programs have been made through open market transactions, but in the future, we may also purchase shares through privately negotiated transactions or 10b5-1 repurchase plans.
This share repurchase program has no expiration date and is subject to the ongoing discretion of the Board of Directors. All repurchases to date under our stock repurchase programs have been made through open market transactions, but in the future, we may also purchase shares through privately negotiated transactions or 10b5-1 repurchase plans.
On November 6, 2024, the Board of Directors of the Company increased the Company’s share repurchase authorization by $77.9 million to an aggregate amount of $100.0 million. This share repurchase program has no expiration date and is subject to the ongoing discretion of the Board of Directors.
On November 6, 2024, the Board of Directors of the Company increased the Company’s share repurchase authorization by $77.9 million to an aggregate amount of $100.0 million. On November 4, 2025, the Company's Board of Directors increased the share repurchase authorization by $100.0 million to an aggregate amount of $200.0 million.
Removed
The following table includes information regarding purchases of our common stock made by us during the three months ended December 31, 2024 in connection with the repurchase program described above: Maximum Number (or Approximate Total Number of Dollar Value) Shares Purchased of Shares that Total Number Average as Part of Publicly May Yet Be of Shares Price Paid Announced Plans Purchased Under the Period Purchased (1) per Share or Programs Plans or Programs October 1 to October 31 21,072 $ 41.83 21,072 $ 22,147,035 November 1 to November 30 512 $ 62.30 - $ 100,000,000 December 1 to December 31 2,542 $ 60.10 - $ 100,000,000 Total 24,126 21,072 (1) The total number of shares purchased includes shares withheld by the Company in an amount equal to the statutory withholding taxes for holders who vested in stock-based awards, which totaled 512 shares in November and 2,542 shares in December.
Added
This performance graph shall not be deemed “ filed ” for purposes of Section 18 of the Exchange Act or incorporated by reference into any filing of the Company ’ s under the Securities Act, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing. Issuer purchases of equity securities.
Removed
Shares withheld by the Company to cover statutory withholdings taxes are repurchased pursuant to the applicable plan and not the authorization under the share repurchase program.
Added
There were no purchases of our common stock made by us during the three months ended December 31, 2025 in connection with the repurchase program.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

82 edited+19 added−67 removed63 unchanged
Biggest changeKey Factors Affecting Our Results of Operations We consider the following to be the key factors affecting our results of operations: • Our ability to further penetrate markets with our existing products; • Our ability to introduce new products and product lines that complement our core business; • Decreasing interest in some tobacco products among consumers; • Price sensitivity in our end-markets; • Marketing and promotional initiatives, which cause variability in our results; • Cost related to increasing regulation of promotional and advertising activities; • General economic conditions, including consumer access to disposable income and other conditions affecting purchasing power such as inflation and the interest rate environment; • Labor and production costs; • Cost of complying with regulation, including the “deeming regulation”, as well as the unpredictable nature of the regulatory regimes; • Changes to U.S. trade policies; • Counterfeit and other illegal products in our end-markets; • Currency fluctuations; • Our ability to identify attractive acquisition opportunities; and • Our ability to successfully integrate acquisitions. 40 Table of Contents Results of Operations Summary The table and discussion set forth below relates to our consolidated results of continuing operations for the years ended: (in thousands) For the years ended December 31, 2024 2023 % Change 2022 % Change Consolidated Results of Operations Data: Net sales Zig-Zag products $ 192,394 $ 180,455 6.6 % $ 190,403 -5.2 % Stoker’s products 168,266 144,609 16.4 % 130,826 10.5 % Total net sales 360,660 325,064 11.0 % 321,229 1.2 % Cost of sales 159,095 142,122 11.9 % 143,399 -0.9 % Gross profit Zig-Zag products 106,585 101,055 5.5 % 106,576 -5.2 % Stoker’s products 94,980 81,887 16.0 % 71,254 14.9 % Total gross profit 201,565 182,942 10.2 % 177,830 2.9 % Selling, general, and administrative expenses 122,407 104,327 17.3 % 103,822 0.5 % Other operating income (1,674 ) (4,345 ) -61.5 % - NM Operating income Zig-Zag products 66,697 68,280 -2.3 % 73,342 -6.9 % Stoker's products 68,272 62,208 9.7 % 53,331 16.6 % Total segment operating income 134,969 130,488 3.4 % 126,673 3.0 % Corporate unallocated (54,137 ) (47,528 ) 13.9 % (52,665 ) -9.8 % Total operating income 80,832 82,960 -2.6 % 74,008 12.1 % Interest expense, net 13,983 14,645 -4.5 % 19,524 -25.0 % Investment loss 1,893 11,914 -84.1 % 13,303 -10.4 % Other income - (4,000 ) -100.0 % - NM Gain on extinguishment of debt - (1,664 ) -100.0 % (885 ) 88.0 % Income from continuing operations before income taxes 64,956 62,065 4.7 % 42,066 47.5 % Income tax expense 16,929 23,999 -29.5 % 10,980 118.6 % Consolidated net income from continuing operations 48,027 38,066 26.2 % 31,086 22.5 % Net income (loss) attributable to non-controlling interest 701 (681 ) -202.9 % (484 ) 40.7 % Net income from continuing operations attributable to Turning Point Brands, Inc. $ 47,326 $ 38,747 22.1 % $ 31,570 22.7 % Comparison of Year Ended December 31, 2024, to Year Ended December 31, 2023 Net Sales : For the year ended December 31, 2024, consolidated net sales increased $35.6 million, or 11.0%, compared to the prior year period, driven by increases in net sales across both segments.
Biggest changeKey Factors Affecting Our Results of Operations We consider the following to be the key factors affecting our results of operations: • Our ability to further penetrate markets with our existing products; • Our ability to introduce new products and product lines that complement our core business; • Decreasing interest in some tobacco products among consumers; • Competition; • Price sensitivity in our end-markets; • Marketing and promotional initiatives, which cause variability in our results; • Cost related to increasing regulation of promotional and advertising activities; • General economic conditions, including consumer access to disposable income and other conditions affecting purchasing power such as inflation and the interest rate environment; • Labor and production costs; • Cost of complying with regulation as well as the unpredictable nature of the regulatory regimes; • Changes to U.S. trade policies, especially related to import tariffs; • Counterfeit and other illegal products in our end-markets; • Currency fluctuations; • Our ability to identify attractive acquisition opportunities; and • Our ability to successfully integrate acquisitions. 39 Table of Contents Results of Operations Summary The table and discussion set forth below relates to our consolidated results of continuing operations for the years ended: (in thousands) For the years ended December 31, 2025 2024 % Change Consolidated Results of Operations Data: Net sales Zig-Zag products $ 178,478 $ 192,394 -7.2 % Stoker’s products 284,584 168,266 69.1 % Total net sales 463,062 360,660 28.4 % Cost of sales 198,748 159,095 24.9 % Gross profit Zig-Zag products 95,901 106,585 -10.0 % Stoker’s products 168,413 94,980 77.3 % Total gross profit 264,314 201,565 31.1 % Selling, general, and administrative expenses 168,987 122,407 38.1 % Other operating income - (1,674 ) -100.0 % Operating income Zig-Zag products $ 58,941 $ 66,697 -11.6 % Stoker's products 109,105 68,272 59.8 % Total segment operating income $ 168,046 $ 134,969 24.5 % Corporate unallocated (72,719 ) (54,137 ) 34.3 % Total operating income $ 95,327 $ 80,832 17.9 % Other income (6,616 ) - 100.0 % Interest expense, net 17,466 13,983 24.9 % Investment (gain) loss (1,060 ) 1,968 -153.9 % (Income) losses from equity method investment 1,159 (75 ) -1645.3 % Loss on extinguishment of debt 1,235 - 100.0 % Income from continuing operations before income taxes 83,143 64,956 28.0 % Income tax expense 14,991 16,929 -11.4 % Consolidated net income from continuing operations 68,152 48,027 41.9 % Net income attributable to non-controlling interest 9,987 701 1324.7 % Net income from continuing operations attributable to Turning Point Brands, Inc. $ 58,165 $ 47,326 22.9 % Comparison of Year Ended December 31, 2025, to Year Ended December 31, 2024 Net Sales : For the year ended December 31, 2025, consolidated net sales increased $102.4 million, or 28.4%, compared to the prior year period, primarily driven by an increase in net sales in the Stoker's segment mainly relating to modern oral growth.
After giving effect to the issuance of the 2032 Notes and redemption of the 2026 Notes in February 2025, our cash on hand would have been $90.2 million as of December 31, 2024 and borrowing availability under the ABL would have remained the same. We have no borrowings outstanding under our ABL as of December 31, 2024.
After giving effect to the issuance of the 2032 Notes and redemption of the 2026 Notes in February 2025, our cash on hand would have been $90.2 million as of December 31, 2024, and borrowing availability under the ABL would have remained the same. We have no borrowings outstanding under our ABL as of December 31, 2025.
For instance, the Company is generally permitted to make restricted payments, including the payment of dividends to shareholders, provided that, at the time of payment, or as a result of payment, the Company is not in default on its debt covenants; however, there are earnings and market capitalization requirements that if not met could limit the aggregate amount of quarterly dividends payable during a fiscal year.
For instance, the Company is generally permitted to make restricted payments, including the payment of dividends to shareholders, provided that, at the time of payment, or as a result of payment, the Company is not in default on its covenants; however, there are earnings and market capitalization requirements that if not met could limit the aggregate amount of quarterly dividends payable during a fiscal year.
Our core Zig-Zag products and Stoker’s products segments primarily generate revenues from the sale of our products to wholesale distributors who, in turn, resell the products to retail operations. Our net sales, which include federal excise taxes, consist of gross sales net of cash discounts, returns, and selling and marketing allowances.
Our Zig-Zag products and Stoker’s products segments primarily generate revenues from the sale of our products to wholesale distributors who, in turn, resell the products to retail operations. Our net sales, which include federal excise taxes, consist of gross sales net of cash discounts, returns, and selling and marketing allowances.
For information regarding our long-term debt obligations and cash payment obligations thereunder, please see Note 14, “Notes Payable and Long-Term Debt” in Notes to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K.
For information regarding our long-term debt obligations and cash payment obligations thereunder, please see above and Note 14, “Notes Payable and Long-Term Debt” in Notes to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K.
Applicable Margin Applicable Margin Level Historical Excess Availability for SOFR Loans or Base Rate Loans I Greater than or equal to 66.66% 1.75 % 0.75 % II Less than 66.66%, but greater than or equal to 33.33% 2.00 % 1.00 % III Less than 33.33% 2.25 % 1.25 % The 2023 ABL Facility also requires the Company and its restricted subsidiaries to maintain a fixed charge coverage ratio of at least 1.00 to 1.00 as of the end of any four consecutive fiscal quarters if excess availability is less than the greater of (a) 12.5% of the line cap and (b) $9.4 million, at any time and continuing until excess availability is equal to or exceeds the greater of (i) 12.5% of the line and (ii) $9.4 million for thirty (30) consecutive calendar days with the $9.4 million level automatically increased in proportion to the amount of any increase in the aggregate revolving credit commitments thereunder in connection with any incremental facility. 48 Table of Contents The 2023 ABL Facility will mature on the earlier of (x) November 7, 2027 and (y) the date that is 91 days prior to the maturity date of any material debt of the ABL Borrower or the Company or any of its restricted subsidiaries (subject to customary extensions agreed by the lenders thereunder); provided that clause (y) will not apply to the extent that on any applicable date of determination (on any date prior to the date set forth in clause (y)), (A) the sum of (x) cash that is held in escrow for the repayment of such material debt pursuant to arrangements satisfactory to the Administrative Agent, (y) cash that is held in accounts with the Administrative Agent and/or the Additional Collateral Agent, plus (z) excess availability, is sufficient to repay such material debt and (B) the ABL Borrower has excess availability of at least $15.0 million after giving effect to such repayment of material debt, including any borrowings under the commitments in connection therewith.
Applicable Margin Applicable Margin Level Historical Excess Availability for SOFR Loans or Base Rate Loans I Greater than or equal to 66.66% 1.75 % 0.75 % II Less than 66.66%, but greater than or equal to 33.33% 2.00 % 1.00 % III Less than 33.33% 2.25 % 1.25 % The 2023 ABL Facility also requires the Company and its restricted subsidiaries to maintain a fixed charge coverage ratio of at least 1.00 to 1.00 as of the end of any four consecutive fiscal quarters if excess availability is less than the greater of (a) 12.5% of the line cap and (b) $9.4 million, at any time and continuing until excess availability is equal to or exceeds the greater of (i) 12.5% of the line and (ii) $9.4 million for thirty (30) consecutive calendar days with the $9.4 million level automatically increased in proportion to the amount of any increase in the aggregate revolving credit commitments thereunder in connection with any accordion facility. 45 Table of Contents The 2023 ABL Facility will mature on the earlier of (x) November 7, 2027 and (y) the date that is 91 days prior to the maturity date of any material debt of the ABL Borrower or the Company or any of its restricted subsidiaries (subject to customary extensions agreed by the lenders thereunder); provided that clause (y) will not apply to the extent that on any applicable date of determination (on any date prior to the date set forth in clause (y)), (A) the sum of (x) cash that is held in escrow for the repayment of such material debt pursuant to arrangements satisfactory to the Administrative Agent, (y) cash that is held in accounts with the Administrative Agent and/or the Additional Collateral Agent, plus (z) excess availability, is sufficient to repay such material debt and (B) the ABL Borrower has excess availability of at least $15.0 million after giving effect to such repayment of material debt, including any borrowings under the commitments in connection therewith.
Any future increases in federal excise taxes on the Company’s products could have a material adverse effect on the results of operations or financial condition of the Company. The Company is unable to predict the likelihood of passage of future increases in federal excise taxes.
Any future increases in federal excise taxes on the Company’s products could have a material adverse effect on the results of operations or financial condition of the Company. The Company is unable to predict the likelihood of future increases in federal excise taxes.
In our Stoker’s products segment, we (i) manufacture and market moist snuff tobacco (“MST”) and (ii) contract for and market FRE ®, our modern oral product; and (iii) contract for and market loose-leaf chewing tobacco products. 39 Table of Contents Our portfolio of brands includes some of the most widely recognized names in the alternative smoking accessories and OTP industries such as Zig-Zag ® and Stoker ’ s ® .
In our Stoker’s products segment, we (i) manufacture and market moist snuff tobacco (“MST”) and (ii) contract for and market FRE ®, our modern oral product; and (iii) contract for and market loose-leaf chewing tobacco products. 38 Table of Contents Our portfolio of brands includes some of the most widely recognized names in the alternative smoking accessories and OTP industries such as Zig-Zag ® and Stoker ’ s ® .
This system enables us to understand individual product share and volume trends across multiple categories down to the individual retail store level, allowing us to allocate field salesforce coverage to the highest opportunity stores. Our sales and marketing group of approximately 200 professionals utilize the MSAi system to efficiently target markets and sales channels with the highest sales potential.
This system enables us to understand individual product share and volume trends across multiple categories down to the individual retail store level, allowing us to allocate field salesforce coverage to the highest opportunity stores. Our sales and marketing group of approximately 257 professionals utilize the MSAi system to efficiently target markets and sales channels with the highest sales potential.
We rely on long-standing relationships with high-quality, established manufacturers to provide the majority of our produced products. Approximately 70% of our production, as measured by net sales, is outsourced to suppliers. The remaining production consists primarily of our moist snuff tobacco operations located in Dresden, Tennessee and Louisville, Kentucky.
We rely on long-standing relationships with high-quality, established manufacturers to provide the majority of our produced products. Approximately 75% of our production, as measured by net sales, is outsourced to suppliers. The remaining production consists primarily of our moist snuff tobacco operations located in Dresden, Tennessee, and Louisville, Kentucky.
As a result, Company’s management believes it is most appropriate to assess the performance of the Company’s business – the sale of our various products - without regard to these costs and believes that adjusting for these costs provides investors and the public markets with the most meaningful metrics to assess performance of the business. Non-U.S.
As a result, Company’s management believes it is most appropriate to assess the performance of the Company’s business – the sale of its various products - without regard to these costs and believes that adjusting for these costs provides investors and the public markets with the most meaningful metrics to assess performance of the business. Non-U.S.
These regulations are required to go through the formal rulemaking process where we have had the opportunity to provide comments with regard to the impact such standards would have on our products. As of January 2025, these proposed rules were withdrawn or otherwise delayed.
These regulations are required to go through the formal rulemaking process where we have had the opportunity to provide comments with regard to the impact such standards would have on our products. As of February 2025, these proposed rules were withdrawn or otherwise delayed.
Customs and Border Protection. 52 Table of Contents On May 4, 2022, the FDA proposed two tobacco product standards related to combusted tobacco products: (1) a ban on menthol as a characterizing flavor in cigarettes; and (2) a ban on all characterizing flavors (including menthol) in cigars.
Customs and Border Protection. 49 Table of Contents On May 4, 2022, the FDA proposed two tobacco product standards related to combusted tobacco products: (1) a ban on menthol as a characterizing flavor in cigarettes; and (2) a ban on all characterizing flavors (including menthol) in cigars.
“Business - Distribution and Supply Agreements.” Master Settlement Agreement On November 23, 1998, the major U.S. cigarette manufacturers, Philip Morris USA, Inc., Brown & Williamson Tobacco Corporation, Lorillard Tobacco Company and R.J. Reynolds Tobacco Company, entered into the MSA with attorneys general representing states that agreed to settle certain recovery actions (the “Settling States”).
“Business - Distribution and Supply Agreements.” 47 Table of Contents Master Settlement Agreement On November 23, 1998, the major U.S. cigarette manufacturers, Philip Morris USA, Inc., Brown & Williamson Tobacco Corporation, Lorillard Tobacco Company and R.J. Reynolds Tobacco Company, entered into the MSA with attorneys general representing states that agreed to settle certain recovery actions (the “Settling States”).
The Company believes it is appropriate to adjust for this spend as the costs are incurred in connection with what we view as a non-traditional regulatory process that requires applications be submitted for covered products that are already on the market.
The Company believes it is appropriate to adjust for this spend as the costs are incurred in connection with what it views as a non-traditional regulatory process that requires applications be submitted for covered products that are already on the market.
The Company is required under the terms of the indentures governing the Notes to present additional information that reflects the financial condition and results of operations of the Company and its Restricted Subsidiaries separate from the financial condition and results of operations of the Company’s Unrestricted Subsidiaries as of and for the periods presented.
The Company is required under the terms of the indenture governing the 2032 Notes to present additional information that reflects the financial condition and results of operations of the Company and its Restricted Subsidiaries separate from the financial condition and results of operations of the Company’s Unrestricted Subsidiaries as of and for the periods presented.
The following table sets forth the market share and category rank of our core products and demonstrates their industry positions within measured distribution channels: Brand Product TPB Segment Market Share (1) Category Rank (1) Zig-Zag ® Cigarette Papers Zig-Zag Products 32.8 % #1 premium, #1 overall Zig-Zag ® MYO Cigar Wraps Zig-Zag Products 47.8 % #1 overall Stoker’s ® Moist Snuff Stoker’s Products 7.4 % #2 discount, #5 overall Stoker’s ® Chewing Tobacco Stoker’s Products 32.3 % #1 discount, #1 overall (1) Market share and category rank data for all products are derived from MSAi data for the 52 week period ended December 28, 2024.
The following table sets forth the market share and category rank of our core products and demonstrates their industry positions within measured distribution channels: Brand Product TPB Segment Market Share (1) Category Rank (1) Zig-Zag ® Cigarette Papers Zig-Zag Products 32.7 % #1 premium, #1 overall Zig-Zag ® MYO Cigar Wraps Zig-Zag Products 34.3 % #1 overall Stoker’s ® Moist Snuff Stoker’s Products 8.1 % #2 discount, #5 overall Stoker’s ® Chewing Tobacco Stoker’s Products 34.1 % #1 discount, #1 overall (1) Market share and category rank data for all products are derived from MSAi data for the 52 week period ended December 27, 2025.
Net Income (Loss) Attributable to Non-Controlling Interest: Net income attributable to non-controlling interest was $0.7 million for the year ended December 31, 2024, compared to a net loss of $0.7 million for the year ended December 31, 2023.
Net Income Attributable to Non-Controlling Interest: Net income attributable to non-controlling interest was $10.0 million for the year ended December 31, 2025, compared to a net loss of $0.7 million for the year ended December 31, 2024.
Products We operate in two segments: Zig-Zag products and Stoker’s products segments. In our Zig-Zag products segment, we principally market and distribute (i) rolling papers, tubes, and related products; (ii) finished cigars and make-your-own (“MYO”) cigar wraps; and (iii) lighters and other accessories.
In our Zig-Zag products segment, we principally market and distribute (i) rolling papers, tubes, and related products; (ii) finished cigars and make-your-own (“MYO”) cigar wraps; and (iii) lighters and other accessories.
The fair value of the foreign currency contracts was based on quoted market prices and resulted in an asset of $0.3 million included in Other current assets and a liability of $0.1 million included in Accrued liabilities at December 31, 2023.
The fair value of the foreign currency contracts were based on quoted market prices and resulted in an asset of $0.0 million included in Other current assets and a liability of $0.1 million included in Accrued liabilities at December 31, 2024.
Income Tax Expense: The Company’s income tax expense was $16.9 million, or 26.1% of income from continuing operations before income taxes for the year ended December 31, 2024.
Income Tax Expense: The Company’s income tax expense was $15.0 million, or 18.0% of income from continuing operations before income taxes for the year ended December 31, 2025. The Company's income tax expense was $16.9 million, or 26.1% of income from continuing operations before income taxes for the year ended December 31, 2024.
These covenants are subject to a number of several limitations and exceptions set forth in the 2032 Notes Indenture.
These covenants are subject to several limitations and exceptions set forth in the 2032 Notes Indenture.
For information regarding our lease obligations and cash payment obligations thereunder, please see Note 17, “Lease Commitments” in the Notes to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K.
For information regarding our lease obligations and cash payment obligations thereunder, please see Note 17, “Lease Commitments” in the Notes to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K. In 2025, we made no repurchases of our common stock.
Our Convertible Senior Notes matured on July 15, 2024 and were retired with cash. Our adjusted working capital, excluding CDS segment assets and liabilities held for sale, which we define as current assets less cash and current liabilities, increased $57.3 million compared to the prior year end.
Our Convertible Senior Notes matured on July 15, 2024, and were retired with cash. Our adjusted working capital which we define as current assets less cash and current liabilities, increased $21.6 million compared to the prior year end. This amount excludes CDS segment assets and liabilities held for sale in 2024.
If actual results are not consistent with the Company’s estimates and/or other assumptions change, the Company may be exposed to future allowance for credit losses that could materially and adversely impact its financial position and results of operations.
If actual results are not consistent with the Company’s estimates and/or other assumptions change, the Company may be exposed to future impairment charges that could materially and adversely impact its financial position and results of operations. 50 Table of Contents
The PMTA regime requires the Company to submit an application to the FDA to receive marketing authorization to continue to sell certain of its product lines with continued sales permitted during the pendency of the applications.
(g) Represents costs associated with applications related to FDA premarket tobacco production application ("PMTA").The PMTA regime requires the Company to submit an application to the FDA to receive marketing authorization to continue to sell certain of its product lines with continued sales permitted during the pendency of the applications.
The Company has not drawn any borrowings under the 2023 ABL Facility but has letters of credit of approximately $2.3 million outstanding under the facility and has an available balance of $57.4 million based on the borrowing base as of December 31, 2024.
We have not drawn any borrowings under the 2023 ABL Facility but has letters of credit of approximately $2.3 million outstanding under the facility and has an available balance of $65.8 million based on the borrowing base as of December 31, 2025.
Indefinite-lived intangible assets are tested for impairment annually on December 31, or more frequently if certain indicators are present, in accordance with ASC 350-20-35 and ASC 350-30-35, respectively.
Indefinite-lived Intangible Assets We follow the provisions of ASC 350, Intangibles – Goodwill and Other in accounting for indefinite-lived intangible assets. Indefinite-lived intangible assets are tested for impairment annually on December 31, or more frequently if certain indicators are present, in accordance with ASC 350-20-35 and ASC 350-30-35, respectively.
At December 31, 2024, we had foreign currency contracts outstanding for the purchase of €2.1 million and sale of €2.1 million.
During 2024, we executed various foreign exchange contracts for the purchase and sale of €3.6 million. At December 31, 2024, we had foreign currency contracts outstanding for the purchase and sale of €2.1 million.
As of December 31, 2024, federal excise taxes are not assessed on certain novel nicotine products, including nicotine pouches, e-cigarettes and related products. State and Local Regulation As of December 31, 2024, the states require excise tax payments on most of our products.
As of December 31, 2025, federal excise taxes are not assessed on certain novel nicotine products, including nicotine pouches, e-cigarettes and related products. Changes to these requirements could affect our results of operations. State and Local Regulation As of December 31, 2025, the states require excise tax payments on most of our products.
The Company currently has only two product lines currently subject to the PMTA process, having utilized other regulatory pathway options available for our other product lines. The Company does not expect to submit additional PMTA applications for any new product lines after the submission for the remaining two are complete. (f) Represents impairment of goodwill, intangible and investment assets.
The Company currently has only two product lines currently subject to the PMTA process, having utilized other regulatory pathway options available for our other product lines. The Company does not expect to submit additional PMTA applications for any new product lines after the submission for the pending two are complete.
As of December 31, 2024, we had $46.2 million cash on hand, excluding CDS segment cash of $2.8 million, ($116.7 million, excluding CDS segment cash of $1.2 million, as of December 31, 2023) and have up to $57.4 million of availability under the 2023 ABL Facility.
As of December 31, 2025, we had $222.8 million cash on hand and as of December 31, 2024 we had $46.2 million (excluding CDS segment cash of $2.8 million). As of December 31, 2025, we had up to $65.8 million of availability under the 2023 ABL Facility.
For the year ended December 31, 2023, operating income in the Stoker’s products segment increased $8.9 million, or 16.6%, compared to the prior year period.
For the year ended December 31, 2025, operating income in the Stoker’s products segment increased $40.8 million, or 59.8%, compared to the prior year period.
For the year ended December 31, 2024, operating income in the Zig-Zag products segment decreased $1.6 million, or 2.3%, compared to the prior year period.
For the year ended December 31, 2025, operating income in the Zig-Zag products segment decreased $7.8 million, or 11.6%, compared to the prior year period.
We incurred debt issuance costs attributable to the issuance of the 2026 Notes of $6.4 million which are amortized to interest expense using the straight-line method over the expected life of the 2026 Notes. 2032 Notes In February 2025, the Company closed a private offering of $300.0 million aggregate principal amount of 7.625% senior secured notes due to mature on March 15, 2032 (the “2032 Notes”).
We incurred debt issuance costs attributable to the 2032 Notes of $7.3 million which are amortized to interest expense using the straight-line method over the expected life of the 2032 Notes. 2026 Notes On February 11, 2021, we closed a private offering of $250.0 million aggregate principal amount of our 5.625% senior secured notes due 2026 (the “2026 Notes”).
Additional Information with Respect to our Unrestricted Subsidiaries Under the terms of the 2026 Notes that were recently redeemed with proceeds from the February 2025 issuance of the 2032 Notes, the Company designated certain of its subsidiaries as “Unrestricted Subsidiaries” as of December 31, 2024, including Interchange Partners LLC and Intrepid Brands, LLC.
Additional Information with Respect to our Unrestricted Subsidiaries Under the terms of the 2032 Notes, the Company designated certain of its subsidiaries as “Unrestricted Subsidiaries”, including Interchange Partners LLC and Intrepid Brands, LLC.
Operating income as a percentage of net sales decreased to 40.6% of net sales for the year December 31, 2024 from 43.0% of net sales for the year ended December 31, 2023, primarily due to increased sales and marketing costs to support the sales growth in modern oral.
Operating income as a percentage of net sales decreased to 38.3% of net sales for the year December 31, 2025 from 40.6% of net sales for the year ended December 31, 2024, primarily from increased sales and marketing expenses for the segment relating to modern oral growth.
(in thousands) Years ended December 31, 2024 2023 2022 Net income attributable to Turning Point Brands, Inc. $ 39,809 $ 38,462 $ 11,641 Loss from discontinued operations, net of tax 7,517 285 19,929 Add: Interest expense, net 13,983 14,645 19,524 Gain on extinguishment of debt - (1,664 ) (885 ) Income tax expense 16,929 23,999 10,980 Depreciation expense 3,329 2,780 2,859 Amortization expense 2,333 1,338 525 EBITDA $ 83,900 $ 79,845 $ 64,573 Components of Adjusted EBITDA Corporate restructuring (a) 4,634 199 3,329 ERP/CRM (b) 993 552 1,962 Stock based compensation (c) 7,243 6,561 5,273 Transactional expenses and strategic initiatives (d) 2,107 165 801 FDA PMTA (e) 3,592 2,098 4,554 Non-cash asset impairment (f) 2,722 12,177 13,570 FET Refund (g) (1,674 ) (4,345 ) - Legal settlement (h) - (4,000 ) - Mark-to-market loss on Canadian inter-company note (i) 942 - - Adjusted EBITDA $ 104,459 $ 93,252 $ 94,062 (a) Represents costs associated with corporate restructuring, including severance and early retirement.
(in thousands) Years ended December 31, 2025 2024 2023 Net income attributable to Turning Point Brands, Inc. $ 58,165 $ 39,809 $ 38,462 Loss from discontinued operations, net of tax - 7,517 285 Add: Interest expense, net 17,767 13,983 14,645 Loss (Gain) on extinguishment of debt 1,235 - (1,664 ) Income tax expense 15,456 16,929 23,999 Depreciation expense 3,298 3,329 2,780 Amortization expense 4,225 2,333 1,338 EBITDA $ 100,146 $ 83,900 $ 79,845 Components of Adjusted EBITDA Corporate restructuring (a) 1,260 4,634 199 ERP/CRM implementation (b) 211 993 552 Stock based compensation (c) 6,974 7,243 6,561 Transactional expenses and strategic initiatives (d) 2,004 2,107 165 Non-recurring freight (e) 837 - - Non-recurring legal (f) 941 - - FDA PMTA (g) 4,816 3,592 2,098 Mark-to-market gain on Canadian inter-company note (h) (513 ) 942 - Non-cash asset impairment (i) 6,738 2,722 12,177 Gain on investment (j) (1,392 ) - - ERC refund (k) (5,451 ) - - Honorarium (l) 318 - - Manufacturing start-up costs (m) 642 - - Tariff adjustment (n) 1,991 - - FET refund (o) - (1,674 ) (4,345 ) Legal settlement (p) - - (4,000 ) Adjusted EBITDA $ 119,522 $ 104,459 $ 93,252 (a) Represents costs associated with corporate restructuring, including severance and early retirement.
(b) Represents cost associated with scoping and mobilization of new ERP and CRM systems and cost of duplicative ERP licenses. (c) Represents non-cash stock options, restricted stock, PSRUs, etc. (d) Represents the fees incurred for transaction expenses. (e) Represents costs associated with applications related to FDA premarket tobacco product application (“PMTA”).
(b) Represents cost associated with scoping and mobilization of new ERP and CRM systems and temporary cost of duplicative ERP licenses. (c) Represents non-cash stock options, restricted stock, PSRUs, etc. (d) Represents fees incurred for transaction expenses. (e) Represents elevated non-recurring outbound freight costs due to ERP transition.
The 2032 Notes Indenture provides for customary events of default. 47 Table of Contents 2023 ABL Facility On November 7, 2023, TPB Specialty Finance, LLC, a wholly-owned subsidiary of the Company (the “ABL Borrower”), entered into a new $75.0 million asset-backed revolving credit facility (the “2023 ABL Facility”), with the several lenders thereunder, and Barclays Bank PLC, as administrative agent (the “Administrative Agent”) and as collateral agent (the “Collateral Agent”) and First-Citizens Bank & Trust Company as additional collateral agent (the “Additional Collateral Agent”).
We incurred debt issuance costs attributable to the issuance of the 2026 Notes of $6.4 million, with the remaining $1.2 million written off to loss on debt extinguishment upon termination. 44 Table of Contents 2023 ABL Facility On November 7, 2023, TPB Specialty Finance, LLC, a wholly-owned subsidiary of the Company (the “ABL Borrower”), entered into a new $75.0 million asset-backed revolving credit facility (the “2023 ABL Facility”), with the several lenders thereunder, and Barclays Bank PLC, as administrative agent (the “Administrative Agent”) and as collateral agent (the “Collateral Agent”) and First-Citizens Bank & Trust Company as additional collateral agent (the “Additional Collateral Agent”).
For the year ended December 31, 2024, gross profit in the Stoker’s products segment increased $13.1 million, or 16.0%, compared to the prior year period.
For the year ended December 31, 2025, gross profit in the Stoker’s products segment increased $73.4 million, or 77.3%, compared to the prior year period.
The OTP industry, which consists of non-cigarette tobacco products, exhibited low-single-digit consumer unit annualized growth over the four-year period ended 2024 as reported by Management Science Associates, Inc. a third-party analytics and information company.
The OTP industry, which consists of non-cigarette tobacco products, exhibited flat consumer unit annualized growth during the full year period ended 2025 as reported by MSAi a third-party analytics and information company.
Loss from discontinued operations, net of tax for the years ended December 31 are as follows: (in thousands) For the years ended December 31, 2024 2023 2022 Loss from discontinued operations, net of tax $ (7,517 ) $ (285 ) $ (19,929 ) Comparison of Year Ended December 31, 2024, to Year Ended December 31, 2023 For the year ended December 31, 2024, net loss from discontinued operations, net of tax, increased $7.2 million compared to the prior year period.
Loss from discontinued operations, net of tax for the years ended December 31 are as follows: (in thousands) For the years ended December 31, 2025 2024 Loss from discontinued operations, net of tax $ - $ (7,517 ) Comparison of Year Ended December 31, 2025, to Year Ended December 31, 2024 For the year ended December 31, 2025, net loss from discontinued operations was $0, compared to a loss of $7.5 million for the year ended December 31, 2024.
Other Operating Income: For the year ended December 31, 2024, other operating income decreased $2.7 million compared to the prior year period due to a federal excise tax refund of $1.7 million received in 2024 compared to a $4.3 million federal excise tax refund received in 2023.
Other Operating Income: For the year ended December 31, 2025, other operating income decreased $1.7 million compared to the prior year period due to a federal excise tax refund of $1.7 million received in 2024. 40 Table of Contents Operating Income: For the year ended December 31, 2025, consolidated operating income increased $14.5 million, or 17.9%, compared to the prior year period.
Operating income as a percentage of net sales decreased to 34.7% of net sales for the year ended December 31, 2024 from 37.8% of net sales for the year ended December 31, 2023, primarily due to a federal excise tax refund of $1.7 million received in 2024 which increased operating income, compared to a $4.3 million federal excise tax refund received in 2023, along with increased selling and marketing costs in 2024.
Operating income as a percentage of net sales decreased to 33.0% of net sales for the year ended December 31, 2025 from 34.7% of net sales for the year ended December 31, 2024, primarily due to a federal excise tax refund of $1.7 million received in 2024 which increased operating income which did not recur in 2025.
GWO is a joint venture between the Company and Standard General, LP entered into in December 2018. The assets and liabilities associated with the CDS business have been classified as held for sale as of December 31, 2024, and its financial results are classified as discontinued operations and reported separately for all periods presented herein.
The assets and liabilities associated with the CDS business were classified as held for sale as of December 31, 2024, and its financial results are classified as discontinued operations and reported separately for all periods presented herein.
The increase in net sales was driven primarily by $19.0 million of growth in modern oral products while the remaining growth is attributable to MST and loose-leaf chewing tobacco. 41 Table of Contents Gross Profit: For the year ended December 31, 2024, consolidated gross profit increased $18.6 million, or 10.2%, compared to the prior year period.
For the year ended December 31, 2025, net sales in the Stoker’s products segment increased $116.3 million, or 69.1%, compared to the prior year period. The increase in net sales was driven primarily by $107.7 million of growth in modern oral products while the remaining growth is attributable to MST and loose-leaf chewing tobacco.
For the year ended December 31, 2023, operating income in the Zig-Zag products segment decreased $5.1 million, or 6.9%, compared to the prior year period.
For the year ended December 31, 2025, net sales in the Zig-Zag products segment decreased $13.9 million, or 7.2%, compared to the prior year period.
Gross profit as a percentage of net sales decreased to 56.4% of net sales for the year ended December 31, 2024 from 56.6% of net sales for the year ended December 31, 2023, driven primarily by the growth in net sales of modern oral products which generate lower margins than other products in the segment.
Gross profit as a percentage of net sales increased to 59.2% of net sales for the year ended December 31, 2025 from 56.4% of net sales for the year ended December 31, 2024, driven primarily by the growth in net sales of modern oral products generating higher margin contributions than the previous year.
The Company incurred debt issuance costs attributable to the 2023 ABL Facility of $2.6 million which are amortized to interest expense using the straight-line method over the expected life of the 2023 ABL Facility. Convertible Senior Notes The Company's 2.5% convertible senior notes matured and were retired with cash on July 1, 2024.
We incurred debt issuance costs attributable to the 2023 ABL Facility of $2.6 million which are amortized to interest expense using the straight-line method over the expected life of the 2023 ABL Facility.
The change is primarily the result of impairment charges recognized on our investments in Bomani for $1.8 million and Old Pal for $0.8 million for the year ended December 31, 2024, compared to impairment charges recognized on our investments in Docklight for $8.7 million, Wild Hempettes for $2.2 million and Old Pal for $1.3 million for the year ended December 31, 2023.
The change is primarily the result of impairment charges recognized on our investment in Old Pal for $0.9 million for the year ended December 31, 2025 that were offset by gains on marketable available-for-sale securities of $1.4 million, compared to impairment charges recognized on our investments in Bomani for $1.8 million and Old Pal for $0.8 million for the year ended December 31, 2024.
Investment Loss : For the year ended December 31, 2024, investment loss decreased to $1.9 million compared to $11.9 million for the year ended December 31, 2023.
Investment (Income) Loss : For the year ended December 31, 2025, investment (income) loss increased to $1.1 million income compared to $2.0 million loss for the year ended December 31, 2024.
Pending a change in MSA legislation, we have no remaining product lines covered by the MSA and will not be required to make future escrow deposits and, therefore, do not expect to accrue any loss contingencies subject to the MSA in the future. 50 Table of Contents The following table summarizes our escrow deposit balances (in thousands) by sales year as of: Deposits as of December 31, Sales Year 2024 2023 1999 $ 211 $ 211 2000 1,017 1,017 2001 1,673 1,673 2002 2,271 2,271 2003 4,249 4,249 2004 3,714 3,714 2005 4,553 4,553 2006 3,847 3,847 2007 4,167 4,167 2008 3,364 3,364 2009 1,619 1,619 2010 406 406 2011 193 193 2012 199 199 2013 173 173 2014 143 143 2015 101 101 2016 91 91 2017 82 82 Total $ 32,073 $ 32,073 Off-Balance Sheet Arrangements During 2024, we executed various foreign exchange contracts for the purchase of €3.6 million and sale of €3.6 million with maturity dates ranging from October 2024 to June 2025.
The following table summarizes our escrow deposit balances (in thousands) by sales year as of: Deposits as of December 31, Sales Year 2025 2024 1999 $ 130 $ 211 2000 1,017 1,017 2001 1,673 1,673 2002 2,271 2,271 2003 4,249 4,249 2004 3,714 3,714 2005 4,553 4,553 2006 3,847 3,847 2007 4,167 4,167 2008 3,364 3,364 2009 1,619 1,619 2010 406 406 2011 193 193 2012 199 199 2013 173 173 2014 143 143 2015 101 101 2016 91 91 2017 82 82 Total $ 31,992 $ 32,073 Off-Balance Sheet Arrangements At December 31, 2025, we had no foreign currency contracts outstanding.
Selling, general and administrative expenses for the year ended December 31, 2023, included $6.6 million of stock options, restricted stock and incentives expense, $2.1 million of expense related to PMTA, $0.6 million of expense related to the implementation of the new ERP and CRM systems, $0.2 million of expense related to corporate restructuring and $0.2 million related to transaction costs.
Selling, general and administrative expenses for the year ended December 31, 2025, included $6.9 million of stock options, restricted stock and incentives expense, $1.2 million of expense related to corporate restructuring, $4.8 million of expense related to PMTA, a $0.8 million increase in non-recurring outbound freight costs related to our ERP transition, $0.9 million of legal expenses incurred in connection with litigation related to an insurance claim for the tobacco damaged in a tornado, $2.0 million related to transaction costs and $0.2 million of expense related to the implementation of the new ERP and CRM systems.
Operating income as a percentage of net sales decreased to 22.4% of net sales for the year ended December 31, 2024 from 25.5% of net sales for the year ended December 31, 2023, primarily due to an increase in unallocated corporate expenses, as discussed below, driven by increases in restructuring costs related to a voluntary early retirement program, stock compensation and transaction costs.
Operating income as a percentage of net sales decreased to 20.6% of net sales for the year ended December 31, 2025 from 22.4% of net sales for the year ended December 31, 2024, primarily due to an increase in unallocated corporate expenses.
Gross profit as a percentage of net sales decreased to 55.4% of net sales for the year ended December 31, 2024, from 56.0% of net sales for the year ended December 31, 2023, driven primarily by growth in net sales of cigar products which generate lower margins than other products in the segment.
Gross profit as a percentage of net sales decreased to 53.7% of net sales for the year ended December 31, 2025, from 55.4% of net sales for the year ended December 31, 2024, driven primarily by Zig-Zag cigar wraps margins due to imposed tariffs and a shift in product mix with an increase in products with lower margins in the segment.
Gross profit as a percentage of net sales decreased to 55.9% of net sales for the year ended December 31, 2024, from 56.3% of net sales for the year ended December 31, 2023.
Gross Profit: For the year ended December 31, 2025, consolidated gross profit increased $62.7 million, or 31.1%, compared to the prior year period. Gross profit as a percentage of net sales increased to 57.1% of net sales for the year ended December 31, 2025, from 55.9% of net sales for the year ended December 31, 2024.
For the year ended December 31, 2024, unallocated costs were $54.1 million compared to $47.5 million in the prior year period, an increase of $6.6 million or 13.9%, primarily driven by increases of $4.4 million in restructuring expense, $1.9 million in transaction costs, $1.5 million related to PMTA and $0.7 million in stock compensation expense.
For the year ended December 31, 2025, unallocated costs were $72.7 million compared to $54.1 million in the prior year period, an increase of $18.6 million or 34.3%, primarily driven by joint venture related expenses.
Our significant accounting policies are discussed in Note 2 of the Notes to Consolidated Financial Statements in Item 8 of Part II of this Annual Report on Form 10-K. 53 Table of Contents Indefinite-lived Intangible Assets We follow the provisions of ASC 350, Intangibles – Goodwill and Other in accounting for indefinite-lived intangible assets.
In preparing these consolidated financial statements, we have made our best estimates and judgments of the amounts and disclosures included in the consolidated financial statements. Our significant accounting policies are discussed in Note 2 of the Notes to Consolidated Financial Statements in Item 8 of Part II of this Annual Report on Form 10-K.
We believe there are meaningful opportunities to expand through investing in organic growth via acquisitions and joint ventures across all product categories. Our products are currently available in approximately 200,000 U.S. retail locations, which, with the addition of retail stores in Canada, bring our total North American retail presence to an estimated 220,000 points of distribution.
We believe there are meaningful opportunities to expand through investing in organic growth via acquisitions and joint ventures across all product categories. Our products are currently available in approximately 220,000 retail locations in North America. Our sales team targets widespread distribution to all traditional retail channels, including convenience stores, and we have a growing e-commerce business.
Cash Flows from Continuing Operations Our cash flows from continuing operations as reflected in the Consolidated Statements of Cash Flows are summarized as follows: (in thousands) For the years ended December 31, 2024 2023 2022 Cash provided by (used in) Operating activities $ 60,958 $ 56,240 $ 21,298 Investing activities $ (10,509 ) $ (5,906 ) $ (18,969 ) Financing activities $ (128,284 ) $ (49,505 ) $ (43,303 ) Cash Flows from Operating Activities For the year ended December 31, 2024, net cash provided by operating activities was $61.0 million, an increase of $4.7 million compared to the prior year period, primarily due to an increase in net income, net of non-cash items of $12.6 million and a favorable change in other assets of $3.1 million, partially offset by a $11.0 million unfavorable change in working capital.
Cash Flows from Continuing Operations Our cash flows from continuing operations as reflected in the Consolidated Statements of Cash Flows are summarized as follows: (in thousands) For the years ended December 31, 2025 2024 Cash provided by (used in) Operating activities $ 57,374 $ 60,958 Investing activities $ (31,671 ) $ (10,509 ) Financing activities $ 148,274 $ (128,284 ) Cash Flows from Operating Activities For the year ended December 31, 2025, net cash provided by operating activities was $57.4 million, a decrease of $3.6 million compared to the prior year period.
In 2024, we repurchased 154,945 shares of our common stock for a total cost of $5.1 million at an average price per share of $32.60, and have $100 million of authorization remaining under our Board approved repurchase program at December 31, 2024.
In 2024, we repurchased 154,945 shares of our common stock for a total cost of $5.1 million at an average price per share of $32.60, and have $200 million of authorization remaining under our Board approved repurchase program at December 31, 2025. 48 Table of Contents Regulation and Legislation While we are subject to several regulatory regimes and requirements, the following may meaningfully impact operations or resources: Federal Regulation Certain tobacco and nicotine products, cigarette papers, and cigarette tubes are subject to federal excise taxes.
Selling, General and Administrative Expenses : For the year ended December 31, 2024, selling, general and administrative expenses increased $18.1 million, or 17.3%, compared to the prior year period.
Selling, General and Administrative Expenses : For the year ended December 31, 2025, selling, general and administrative expenses increased $46.6 million, or 38.1%, compared to the prior year period primarily due to increased shipping and selling costs related to the increase in modern oral sales in the period compared to prior period.
Net Income from Continuing Operations Attributable to Turning Point Brands, Inc.: Due to the factors described above, net income attributable to Turning Point Brands, Inc. for the years ended December 31, 2023 and 2022, was $38.7 million and $31.6 million, respectively. 43 Table of Contents Loss from Discontinued Operations, net of tax On January 2, 2025, the Company contributed 100% of its interest in SBB, the subsidiary that owns and operates the Company’s CDS segment, to GWO in exchange for 49% of the issued and outstanding GWO common stock on a fully-diluted basis.
Loss from Discontinued Operations, net of tax On January 2, 2025, the Company contributed 100% of its interest in SBB, the subsidiary that owned and operated the Company’s CDS segment, to GWO in exchange for 49% of the issued and outstanding GWO common stock on a fully-diluted basis. GWO is majority owned by Standard General, LP.
Net Income from Continuing Operations Attributable to Turning Point Brands, Inc.: Due to the factors described above, net income from continuing operations attributable to Turning Point Brands, Inc. for the years ended December 31, 2024 and 2023, was $47.3 million and $38.7 million, respectively. 42 Table of Contents Comparison of Year Ended December 31, 2023, to Year Ended December 31, 2022 Net Sales : For the year ended December 31, 2023, consolidated net sales increased $3.8 million, or 1.2%, compared to the prior year period, driven by an increase in the Stoker’s products segment.
Net Income from Continuing Operations Attributable to Turning Point Brands, Inc.: Due to the factors described above, net income from continuing operations attributable to Turning Point Brands, Inc. for the years ended December 31, 2025 and 2024, was $58.2 million and $47.3 million, respectively.
The 2026 Notes and the related guarantees are secured by first-priority liens on substantially all of the assets of the Company and the Guarantors, subject to certain exceptions. We were in compliance with all covenants under the 2026 Notes as of December 31, 2024.
The 2032 Notes and the related guarantees are secured by first-priority liens on substantially all of the existing and future assets of the Company and the Guarantors that do not secure the 2023 ABL Facility (as defined below), subject to certain exceptions.
(g) Represents a federal excise tax refund included in other operating income. (h) Represents other income from litigation settlement. (i) Represents a mark-to-market loss attributable to foreign exchange fluctuation. 45 Table of Contents Liquidity and Capital Resources Our principal uses for cash are working capital, debt service and capital expenditures.
(p) Represents other income from litigation settlement. 42 Table of Contents Liquidity and Capital Resources Our principal uses for cash are working capital, debt service and capital expenditures and other growth initiatives.
The primary drivers of non-cash items were a $9.5 million decrease in loss on investments compared to the prior year period and a $6.5 million decrease in deferred tax expense, partially offset by increases of $1.6 million in depreciation and other amortization expense and a $1.7 million decrease in gains on extinguishment of debt compared to the prior year period.
The primary drivers of non-cash items were $8.4 million increase in deferred tax expenses. $1.7 million increase in depreciation and amortization and $1.2 million increase in losses from equity method investments, partially offset by $1.2 million increase in noncash lease income and $3.2 million decrease in loss on investments.
We had restricted assets of $30.7 million and $33.6 million as of December 31, 2024 and 2023, respectively. Restricted assets consist of escrow deposits under the MSA and insurance deposits. On the 25 th anniversary of each annual deposit, we are entitled to receive reimbursement of the principal amount of escrow remaining for that year.
On the 25 th anniversary of each annual deposit, we are entitled to receive reimbursement of the principal amount of escrow remaining for that year. See “Master Settlement Agreement” below for details.
For the year ended December 31, 2024, gross profit in the Zig-Zag products segment increased $5.5 million, or 5.5%, compared to the prior year period.
The overall increase in gross profit margin was driven primarily by improved margin contribution from modern oral products and MST in the Stoker’s products segment. For the year ended December 31, 2025, gross profit in the Zig-Zag products segment decreased $10.7 million, or 10.0%, compared to the prior year period.
Long-Term Debt Notes payable and long-term debt consisted of the following at December 31, 2024 and 2023, in order of preference: December 31, December 31, 2024 2023 2026 Notes $ 250,000 $ 250,000 Convertible Senior Notes - 118,541 Gross notes payable and long-term debt 250,000 368,541 Less deferred financing costs (1,396 ) (3,183 ) Less current maturities - (58,294 ) Notes payable and long-term debt $ 248,604 $ 307,064 Senior Secured Notes On February 11, 2021, we closed a private offering of $250.0 million aggregate principal amount of our 5.625% senior secured notes due 2026 (the “2026 Notes”).
Long-Term Debt Notes payable and long-term debt consisted of the following at December 31, 2025 and 2024, in order of preference: December 31, December 31, 2025 2024 2032 Notes $ 300,000 $ - 2026 Notes - 250,000 Gross notes payable and long-term debt 300,000 250,000 Less deferred financing costs (6,375 ) (1,396 ) Notes payable and long-term debt $ 293,625 $ 248,604 2032 Notes On February 19, 2025, we entered into an indenture relating to the issuance and sale of $300.0 million aggregate principal amount of its 7.625% Senior Secured Notes due 2032 (the “2032 Notes”), by and among the Company, the guarantors party thereto and GLAS Trust Company LLC, as trustee and notes collateral agent.
As of (in thousands) December 31, December 31, 2024 2023 Current assets $ 140,577 $ 138,637 Current liabilities 42,771 98,140 Adjusted working capital $ 97,806 $ 40,497 For the years ended December 31, 2024 and 2023, we invested $4.6 million and $5.7 million, respectively, in capital expenditures.
For the years ended December 31, 2025 and 2024, we invested $13.5 million and $4.6 million, respectively, in capital expenditures. We had restricted assets of $29.9 million and $28.7 million as of December 31, 2025 and 2024, respectively. Restricted assets consist of escrow deposits under the MSA and insurance deposits.
Gain on Extinguishment of Debt: For the year ended December 31, 2024, gain on extinguishment of debt was zero compared to $1.7 million for the year ended December 31, 2023, as a result of the repurchase of $44.0 million in aggregate principal amount of our Convertible Senior Notes at a discount in 2023.
Loss on Extinguishment of Debt: For the year ended December 31, 2025, loss on extinguishment of debt was $1.2 million as a result of the redemption of the 2026 Notes in February 2025. We had no loss on extinguishment of debt in 2024.
The decreased in loss for the year ended December 31, 2023 is primarily due to a goodwill impairment charge of $27.6 million recognized for the year ended December 31, 2022 to reduce the carrying value of the CDS segment goodwill balance to zero. 44 Table of Contents EBITDA and Adjusted EBITDA To supplement our financial information presented in accordance with generally accepted accounting principles in the United States, or U.S.
Comparison of Year Ended December 31, 2024, to Year Ended December 31, 2023 For a discussion of the comparison of the year ended December 31, 2024 to the year ended December 31, 2023, refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. 41 Table of Contents EBITDA and Adjusted EBITDA To supplement our financial information presented in accordance with generally accepted accounting principles in the United States, or U.S.
For the year ended December 31, 2023, net cash provided by operating activities was $10.6 million, an increase of $1.7 million compared to the prior year period, primarily due to a $9.2 million favorable change in working capital, reduced by a $7.5 million decrease in net loss, net of non-cash items.
The decrease is primarily due to unfavorable changes of $27.9 million in working capital partially offset by an increase of $27.6 million in net income, net of non-cash items of $5.8 million.
Stockholders’ Equity/Net parent investment in unrestricted subsidiaries 177,481 12,087 (1,587 ) 187,981 Non-controlling interest 558 1,841 - 2,399 Total stockholders’ equity 178,039 13,928 (1,587 ) 190,380 Total liabilities and stockholders’ equity $ 476,201 $ 17,902 $ (750 ) $ 493,353 Distribution Agreements For a description of our material distribution agreements, see Item 1.
Stockholders’ Equity/Net parent investment in unrestricted subsidiaries 351,576 13,797 (11,069 ) 354,304 Non-controlling interest 1,361 16,318 - 17,679 Total stockholders’ equity 352,937 30,115 (11,069 ) 371,983 Total liabilities and stockholders’ equity $ 692,205 $ 82,614 $ (11,069 ) $ 763,750 Distribution Agreements For a description of our material distribution agreements, see Item 1.
The 2032 Notes are fully and unconditionally guaranteed on a senior secured basis, jointly and severally, by each current wholly-owned domestic restricted subsidiary of the Company that guaranteed the 2026 Notes. The 2032 Notes and the related guarantees are secured by first-priority liens on substantially all of the assets of the Company and the guarantors, subject to certain exceptions.
Proceeds from the offering were approximately $293.0 million and were used to redeem the 2026 Notes and for general corporate purposes The 2032 Notes are fully and unconditionally guaranteed on a senior secured basis, jointly and severally, by certain existing and future wholly-owned domestic restricted subsidiary of the Company (collectively, the “Guarantors” as defined in the indenture governing the 2032 Notes or the “2032 Notes Indenture”).
Other Income: For the year ended December 31, 2023, other income was $4.0 million compared to zero in the prior year period as a result of a $4.0 million gain related to a legal settlement.
(Income) Losses from Equity Method Investment: For the year ended December 31, 2025, (income) losses from investments in equity method investments decreased $1.2 million compared to the prior year period as a result of a $5.5 million loss from GWO partially offset by $4.2 million of net income from its distribution business.
For the year ended December 31, 2023, net cash used in investing activities was $5.9 million, a decrease of $13.1 million compared to the prior year period, primarily due to a $10.2 million decrease in purchases of investments in our MSA escrow account. 46 Table of Contents Cash Flows from Financing Activities For the year ended December 31, 2024, net cash used in financing activities was $128.3 million, an increase of $78.8 million compared to the prior year period, primarily due to a $118.5 million cash payment for retirement of the Convertible Senior Notes and $5.1 million of cash used for the repurchase of common stock during the period in 2024, partially offset by $41.8 million in repurchases of Convertible Senior Notes that occurred during the same period in 2023.
Cash Flows from Investing Activities For the year ended December 31, 2025, net cash used in investing activities was $31.7 million, an increase of $21.2 million compared to 2024, primarily due to $13.5 million in capital expenditures, including to build U.S. manufacturing for our modern oral brands, the net purchases of an additional $7.4 million in investments by our captive insurance subsidiary, the purchases of non-marketable equity securities of $2.8 million, and $8.0 million paid by TPB Canada for the option to purchase the distribution business. 43 Table of Contents Cash Flows from Financing Activities For the year ended December 31, 2025, net cash provided by financing activities was $148.3 million, an increase of $276.6 million compared to the prior year period, primarily due to a net increase in cash of $42.8 million related to the February 2025 issuance of the 2032 Notes, an increase of $11.0 million from Interchange subscription agreement proceeds, $97.5 million increase related to ATM Program proceeds, and $2.2 million related to stock compensation activity, as well as $5.1 million of common stock repurchases in the prior year period that did not repeat in 2025.
Interest Expense, net: For the year ended December 31, 2024, interest expense, net decreased $0.7 million compared to the prior year period as a result of the maturity of the Convertible Senior Notes in 2024 and increased interest income on cash as a result of higher interest rates on cash deposits.
Interest Expense, net: For the year ended December 31, 2025, interest expense, net increased $3.5 million compared to the prior year period as a result of the issuance of the 2032 Notes in February 2025 which bear interest at a higher rate and have a higher outstanding principal amount than the 2026 Notes which were repaid with proceeds from the issuance of the 2032 Notes partially offset by interest income generated by the employee retention credit received in the current year.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

6 edited+0 added−0 removed3 unchanged
Biggest changeInterest Rate Sensitivity In February 2021, we issued the 2026 Notes in an aggregate principal amount of $250 million. In February 2025, we issued the 2032 Notes in an aggregate principal amount of $300 million and utilized a portion of the proceeds to retire the 2026 Notes. We carry the 2032 Notes at face value.
Biggest changeWe perform periodic credit evaluations of our customers and generally do not require collateral on trade receivables. Historically, we have not experienced significant losses due to customer credit issues. Interest Rate Sensitivity In February 2025, we issued the 2032 Notes in an aggregate principal amount of $300 million. We carry the 2032 Notes at face value.
Since the 2032 Notes bear interest at a fixed rate, we have no financial statement risk associated with increases in interest rates. However, the fair value of the 2023 Notes changes when the market price of our stock fluctuates, or interest rates change. Our remaining debt instrument is the 2023 ABL Facility, which has no borrowing outstanding.
Since the 2032 Notes bear interest at a fixed rate, we have no financial statement risk associated with increases in interest rates. However, the fair value of the 2032 Notes changes when the market price of our stock fluctuates, or interest rates change. Our remaining debt instrument is the 2023 ABL Facility, which has no borrowing outstanding.
The 2023 ABL Facility is subject to a floating rate. Accordingly, if we make borrowings under the 2023 ABL Facility, we will be exposed to fluctuations in interest rates. 55 Table of Contents
The 2023 ABL Facility is subject to a floating rate. Accordingly, if we make borrowings under the 2023 ABL Facility, we will be exposed to fluctuations in interest rates. 51 Table of Contents
A 10% change in the euro to U.S. dollars exchange rate would change our pre-tax income by approximately $1.5 million per year. Credit Risk At December 31, 2024 and 2023, we had bank deposits, including MSA escrows, in excess of federally insured limits of approximately $47.4 million and $119.0 million, respectively.
A 10% change in the euro to U.S. dollars exchange rate would change our pre-tax income by approximately $1.7 million per year. Credit Risk At December 31, 2025 and 2024, we had bank deposits, including MSA escrows, in excess of federally insured limits of approximately $221.8 million and $47.4 million, respectively.
During 2024, we executed various foreign exchange contracts for the purchase of €3.6 million and sale of €3.6 million with maturity dates ranging from October 2024 to June 2025. At December 31, 2024, we had foreign currency contracts outstanding for the purchase of €2.1 million and sale of €2.1 million.
During 2025, we did not execute any foreign exchange contracts. During 2024, we executed various foreign exchange contracts for the purchase of €3.6 million and sale of €3.6 million with maturity dates ranging from October 2024 to June 2025. At December 31, 2025, we had no foreign currency contracts outstanding.
In 2024, we had one customer that accounted for 10.2% of our net sales. In 2023and 2022, we had no customers that accounted for more than 10% of our net sales. We perform periodic credit evaluations of our customers and generally do not require collateral on trade receivables. Historically, we have not experienced significant losses due to customer credit issues.
In 2025, we had no customers that accounted for more than 10% of our net sales. In 2024 we had one customer that accounted for more than 10% of our net sales and in 2023 we had no customers that accounted for more than 10% of our net sales.

Other TPB 10-K year-over-year comparisons