By Timothy S. Donahue

Top Takeaways:

• Growth accelerates: Turning Point Brands raised its 2026 Modern Oral sales guidance after nicotine pouch gross sales surged 149% and net sales climbed 128% year over year in the second quarter.
• Investments continue: Despite stronger sales, the company is maintaining its EBITDA outlook as it pours more money into retail expansion, marketing, sponsorships, sales personnel and PMTA submissions.
• U.S. manufacturing ahead: Executives said domestic nicotine pouch production remains on track for launch by year-end, pending regulatory progress, with long-term gross margins expected to approach 70%.

Turning Point Brands isn’t slowing its spending. The company is betting even more heavily on nicotine pouches after reporting another quarter of triple-digit growth in its Modern Oral business.

Kentucky-based Turning Point told investors it plans to continue investing aggressively in distribution, branding, sales infrastructure, and U.S. manufacturing as it pursues market share amid what executives described as a generational shift in nicotine consumption.

The company raised its full-year Modern Oral sales outlook after second-quarter results showed gross sales up 149% year over year and net sales up 128%, driven by expanding retail distribution of its FRĒ and ALP nicotine pouch brands. Modern Oral accounted for 48% of Turning Point’s total revenue, up from 26% a year earlier.

“We delivered another quarter of strong execution in Modern Oral,” President and CEO Graham Purdy said. “Our performance versus the market proves that both brands are resonating with adult nicotine consumers.”

Rather than capitalizing on improved performance by slowing spending, Turning Point said it intends to accelerate investments to build long-term brand value.

“Our priorities for 2026 remain centered on the initiatives we believe will have the greatest impact on building a scaled, profitable nicotine pouch business,” Purdy said. “These strategic actions…are critical to capturing meaningful share in this evolving high-barrier category.”

Among those initiatives is a significant retail expansion. Purdy said the company expects its chain-store count to increase by 70% year over year by the end of 2026, as additional national retailers complete shelf resets and begin carrying FRĒ and ALP. “We expect our chain store count to increase 70% year over year by the end of 2026,” he said, adding that new placements will roll out incrementally over the coming quarters.

Turning Point is also rapidly expanding its commercial organization. “We are on pace to increase our sales force by approximately 50% this year,” Purdy said. “After this initial build out, we’ll be able to further scale without comparable increases in SG&A.”

Chief Financial Officer Andrew Flynn acknowledged that the strategy is weighing on near-term profitability, but management views the spending as an investment rather than a cost. “Our SG&A investments are designed to create long-term brand value,” Flynn said. “Investments in our commercial team, marketing, sponsorships and in-store merchandising are critical yet highly flexible.”

Adjusted EBITDA fell 50% year over year to $15 million, primarily due to increased spending on the Modern Oral business. Even so, the company maintained its full-year EBITDA guidance of $70 million to $90 million, despite raising its sales outlook.

The updated forecast calls for Modern Oral gross sales of $330 million to $350 million, up from the previous range of $280 million to $300 million. Projected net sales are expected to increase to $260 million to $270 million, up from $210 million to $225 million.

Executives also reiterated plans to begin manufacturing nicotine pouches in the United States by year-end, pending regulatory approval.

“We are on track to launch U.S. manufacturing by the end of the year, which we expect to significantly reduce COGS over time,” Purdy said. Once fully scaled, the company believes domestic production can generate gross margins of approximately 70%.

During the analyst question-and-answer session, Flynn said that preparations for domestic manufacturing are advancing alongside the company’s PMTA strategy.

“We’re just being mindful of the process and dedicating ourselves to the PMTA…first and foremost,” Flynn said. “As we get some positive outlook there, we’re able to move quickly on domestic production.”

Management also cited regulatory developments as another positive for the category. Asked about recent FDA actions, including the agency’s modified risk tobacco product (MRTP) authorization for nicotine pouches, Purdy said those decisions reinforce confidence in the long-term outlook.

“The news coming out of the agency relative to white pouches…is great news for the category,” Purdy said. “Anything that allows the consumer more information relative to how these products perform…we think is fantastic news.”

Looking ahead, Turning Point said it is beginning a measured international expansion, primarily through distribution partners rather than by building overseas sales organizations. The company has already taken initial steps in select European markets while continuing to prioritize growth in the United States.

“We continue to believe we are in the early innings of a generational shift in nicotine consumption,” Purdy said. “Each quarter reinforces our confidence in our ability to compete and win in this evolving category.”