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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2025

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________ to _______________

Commission file number: 001-37763

TURNING POINT BRANDS, INC.

(Exact name of registrant as specified in its charter)

Delaware	20-0709285
(State or other jurisdiction of Incorporation or organization)	(I.R.S. Employer Identification No.)

5201 Interchange Way, Louisville, KY	40229
(Address of principal executive offices)	(Zip Code)

(502) 778-4421

(Registrant’s telephone number, including area code)

Former name, former address and former fiscal year, if changed since last report: not applicable

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	TPB	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☑
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

At October 31, 2025, there were 19,070,757 shares outstanding of the registrant’s voting common stock, par value $0.01 per share.

Table of Contents

TURNING POINT BRANDS, INC.

TABLE OF CONTENTS

			Page No.
PART I—FINANCIAL INFORMATION

	ITEM 1	Financial Statements (Unaudited)

		Consolidated Balance Sheets as of September 30, 2025, and December 31, 2024	5

		Consolidated Statements of Income for the three and nine months ended September 30, 2025 and 2024	6

		Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2025 and 2024	7

		Consolidated Statements of Cash Flows for the nine months ended September 30, 2025 and 2024	8

		Consolidated Statements of Changes in Stockholders’ Equity for the three months ended September 30, 2025 and 2024	9

		Consolidated Statements of Changes in Stockholders’ Equity for the nine months ended September 30, 2025 and 2024	10

		Notes to Consolidated Financial Statements	11

	ITEM 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29

	ITEM 3	Quantitative and Qualitative Disclosures about Market Risk	44

	ITEM 4	Controls and Procedures	44

PART II—OTHER INFORMATION

	ITEM 1	Legal Proceedings	45

	ITEM 1A	Risk Factors	45

	ITEM 2	Unregistered Sales of Equity Securities and Use of Proceeds	45

	ITEM 3	Defaults Upon Senior Securities	45

	ITEM 4	Mine Safety Disclosures	45

	ITEM 5	Other Information	45

	ITEM 6	Exhibits	46

	Signatures		47

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Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q for the quarter ended September 30, 2025 (this “Quarterly Report”), contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements may generally be identified by the use of words such as “anticipate,” “believe,” “expect,” “intend,” “plan,” and “will” or, in each case, their negative, or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. By their nature, forward-looking statements involve risks and uncertainties because they relate to events, and depend on circumstances, that may or may not occur in the future. As a result, actual events may differ materially from those expressed in, or suggested by, the forward-looking statements. Any forward-looking statement made by Turning Point Brands, Inc. (“TPB”), in this Quarterly Report on Form 10-Q speaks only as of the date hereof. New risks and uncertainties come up from time to time, and it is impossible for TPB to predict these events or how they may affect it. TPB has no obligation, and does not intend, to update any forward-looking statements after the date hereof, except as required by federal securities laws. Factors that could cause these differences include, but are not limited to:

●

declining sales of tobacco products, and expected continuing decline of sales in the tobacco industry overall;

●

our dependence on a small number of third-party suppliers and producers;

●

the possibility that we will be unable to identify or contract with new suppliers or producers in the event of a supply or product disruption, as well as other supply chain concerns, including delays in product shipments and increases in freight cost;

●

the possibility that our licenses to use certain brands or trademarks will be terminated, challenged or restricted;

●

failure to maintain consumer brand 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;

●

substantial and increasing regulation and changes in U.S. Food and Drug Administration (“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 the taxation 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.;

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●

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;

	●	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;

●

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). 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;

●

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.

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PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

Turning Point Brands, Inc.

Consolidated Balance Sheets

(dollars in thousands except share data)

	(unaudited)
	*September 30,*			*December 31,*
	*2025*			*2024*
ASSETS
Current assets:
Cash	$	201,189		$	46,158
Accounts receivable, net of allowances of $174 in 2025 and $66 in 2024		27,792			9,624
Inventories, net		112,790			96,253
Current assets held for sale		-			11,470
Other current assets		54,665			34,700
Total current assets		396,436			198,205
Property, plant, and equipment, net		33,880			26,337
Deferred tax assets, net		-			995
Right of use assets		12,915			11,610
Deferred financing costs, net		1,341			1,823
Goodwill		136,068			135,932
Other intangible assets, net		64,344			65,254
Master Settlement Agreement (MSA) escrow deposits		29,762			28,676
Noncurrent assets held for sale		-			3,859
Other assets		68,102			20,662
Total assets	$	742,848		$	493,353

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	24,599		$	11,675
Accrued liabilities		46,738			31,096
Current liabilities held for sale		-			2,049
Total current liabilities		71,337			44,820
Deferred tax liabilities, net		3,971			-
Notes payable and long-term debt		293,364			248,604
Other long-term liabilities		6,182			-
Lease liabilities		9,841			9,549
Total liabilities	$	384,695		$	302,973

Commitments and contingencies

Stockholders’ equity:
Preferred stock, $0.01 par value; authorized shares 40,000,000; issued and outstanding shares -0-		-			-
Common stock, voting, $0.01 par value; authorized shares, 190,000,000; 20,527,900 issued shares and 19,070,757 outstanding shares at September 30, 2025, and 20,200,886 issued shares and 17,729,481 outstanding shares at December 31, 2024		216			202
Common stock, nonvoting, $0.01 par value; authorized shares, 10,000,000; issued and outstanding shares -0-		-			-
Additional paid-in capital		200,376			126,662
Cost of repurchased common stock (1,457,143 shares at September 30, 2025 and 2,471,405 shares at December 31, 2024)		(47,637	)		(83,144	)
Accumulated other comprehensive loss		(1,900	)		(2,903	)
Accumulated earnings		192,895			147,164
Non-controlling interest		14,203			2,399
Total stockholders’ equity		358,153			190,380
Total liabilities and stockholders’ equity	$	742,848		$	493,353

The accompanying notes are an integral part of the consolidated financial statements.

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Turning Point Brands, Inc.

Consolidated Statements of Income

(dollars in thousands except share and per share data)

(unaudited)

	*Three Months Ended*						*Nine Months Ended*
	*September 30,*						*September 30,*
	*2025*			*2024*			*2025*			*2024*
Net sales	$	118,979		$	90,704		$	342,049		$	266,993
Cost of sales		48,552			40,309			145,389			117,846
Gross profit		70,427			50,395			196,660			149,147
Selling, general, and administrative expenses		44,542			29,590			121,259			87,874
Other operating income		-			-			-			(1,674	)
Operating income		25,885			20,805			75,401			62,947
Other (income) expense, net		(4,941	)		-			(4,941	)		-
Interest expense, net		3,531			3,831			13,085			10,352
Investment (gain) loss		(817	)		(143	)		(914	)		2,334
(Income) losses from equity method investment		(2,117	)		(60	)		(2,328	)		(217	)
Loss on extinguishment of debt		-			-			1,235			-
Income from continuing operations before income taxes		30,229			17,177			69,264			50,478
Income tax expense		6,472			4,652			12,756			12,811
Income from continuing operations		23,757			12,525			56,508			37,667
Loss from discontinued operations, net of tax		-			(165	)		-			(208	)
Consolidated net income		23,757			12,360			56,508			37,459
Net income (loss) attributable to non-controlling interest		2,677			(16	)		6,553			66
Net income attributable to Turning Point Brands, Inc.	$	21,080		$	12,376		$	49,955		$	37,393

Basic income per common share:
Continuing operations	$	1.16		$	0.70		$	2.77		$	2.12
Discontinued operations		-			-			-			(0.01	)
Basic earnings per share	$	1.16		$	0.70		$	2.77		$	2.11
Diluted income per common share:
Continuing operations	$	1.13		$	0.68		$	2.70		$	1.99
Discontinued operations		-			-			-			-
Diluted earnings per share	$	1.13		$	0.68		$	2.70		$	1.99
Weighted average common shares outstanding:
Basic		18,246,722			17,722,855			18,052,798			17,678,257
Diluted		18,708,665			18,448,720			18,474,764			19,600,650

The accompanying notes are an integral part of the consolidated financial statements.

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Turning Point Brands, Inc.

Consolidated Statements of Comprehensive Income

(dollars in thousands)

(unaudited)

	*Three Months Ended*
	*September 30,*
	*2025*			*2024*
Consolidated net income	$	23,757		$	12,360

Other comprehensive income (loss), net of tax
Unrealized gain (loss) on MSA investments, net of tax of $53 in 2025 and $245 in 2024		180			829
Foreign currency translation, net of tax of $0 in 2025 and 2024		88			18
Unrealized gain on derivative instruments, net of tax of $0 in 2025 and $27 in 2024		-			92
Unrealized gain (loss) on investments, net of tax of $30 in 2025 and $0 in 2024		(127	)		27
		141			966

Consolidated comprehensive income		23,898			13,326
Comprehensive income (loss) attributable to non-controlling interest		2,677			(16	)
Comprehensive income attributable to Turning Point Brands, Inc.	$	21,221		$	13,342

	*Nine Months Ended*
	*September 30,*
	*2025*			*2024*
Consolidated net income	$	56,508		$	37,459

Other comprehensive income (loss), net of tax
Unrealized gain (loss) on MSA investments, net of tax of $258 in 2025 and $226 in 2024		873			572
Foreign currency translation, net of tax of $0 in 2025 and 2024		103			5
Unrealized gain (loss) on derivative instruments, net of tax of $18 in 2025 and $26 in 2024		62			(79	)
Unrealized gain (loss) on investments, net of tax of $0 in 2025 and 2024		(32	)		27
		1,006			525

Consolidated comprehensive income		57,514			37,984
Comprehensive income attributable to non-controlling interest		6,553			66
Comprehensive income attributable to Turning Point Brands, Inc.	$	50,961		$	37,918

The accompanying notes are an integral part of the consolidated financial statements.

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Turning Point Brands, Inc.

Consolidated Statements of Cash Flows

(dollars in thousands)

(unaudited)

	*Nine Months Ended*
	*September 30,*
	*2025*			*2024*
Cash flows from operating activities:
Consolidated net income	$	56,508		$	37,459
Loss from discontinued operations, net of tax		-			208
Adjustments to reconcile net income to net cash provided by operating activities:
Loss on extinguishment of debt		1,235			-
Loss on sale of property, plant, and equipment		47			38
Loss (gain) on investments		(484	)		2,722
(Income) losses from equity method investment		(2,328	)		(217	)
Depreciation and other amortization expense		4,489			3,182
Amortization of other intangible assets		918			913
Amortization of deferred financing costs		1,293			1,947
Deferred income tax expense		4,690			349
Stock compensation expense		5,176			5,720
Noncash lease income		(1,205	)		(317	)
Loss on MSA investments		-			(14	)
Changes in operating assets and liabilities:
Accounts receivable		(18,251	)		(447	)
Inventories		(16,412	)		(8,149	)
Other current assets		(19,409	)		1,422
Other assets		(10,978	)		(814	)
Accounts payable		12,709			4,565
Accrued liabilities and other		14,517			(3,659	)
Operating cash flows from continuing operations		32,515			44,908
Operating cash flows from discontinued operations		-			4,413
Net cash provided by operating activities	$	32,515		$	49,321

Cash flows from investing activities:
Capital expenditures	$	(10,182	)	$	(3,516	)
Proceeds on the sale of property, plant and equipment		-			3
Payment for equity investments		(2,783	)		-
Purchases of investments		(12,876	)		(8,865	)
Proceeds from sale of investments		5,459			4,520
Purchases of non-marketable equity investments		-			(1,250	)
MSA escrow deposits, net		(2	)		44
Purchase of option agreement		(8,000	)		-
Investing cash flows from continuing operations		(28,384	)		(9,064	)
Investing cash flows from discontinued operations		-			-
Net cash used in investing activities	$	(28,384	)	$	(9,064	)

Cash flows from financing activities:
Redemption of 2026 Notes	$	(250,000	)	$	-
Proceeds from 2032 Notes		300,000			-
At the market offering proceeds		97,499			-
Payment of Convertible Senior Notes		-			(118,541	)
Interchange subscription agreement proceeds		11,000			-
Payment of dividends		(4,089	)		(3,644	)
Payment of financing costs		(7,285	)		(133	)
Exercise of options		6,106			1,341
Redemption of options		(33	)		(328	)
Issuance of restricted stock units		2			-
Redemption of restricted stock units		(2,324	)		(840	)
Issuance of performance based restricted stock units		(1	)		-
Redemption of performance based restricted stock units		(2,625	)		(1,212	)
Common stock repurchased		-			(4,170	)
Financing cash flows from continuing operations		148,250			(127,527	)
Financing cash flows from discontinued operations		-			-
Net cash provided by (used in) financing activities	$	148,250		$	(127,527	)

Net increase in cash	$	152,381		$	(87,270	)
Effect of foreign currency translation on cash	$	(182	)	$	(29	)

Cash, beginning of period:
Unrestricted	$	48,941		$	117,886
Restricted		1,961			4,929
Total cash at beginning of period	$	50,902		$	122,815

Cash, end of period:
Unrestricted	$	201,189		$	33,557
Restricted		1,912			1,959
Total cash at end of period	$	203,101		$	35,516

Supplemental schedule of noncash investing activities:
Accrued capital expenditures	$	111		$	23
Investment acquired in exchange for net assets held for sale	$	10,496		$	-

Supplemental schedule of noncash financing activities:
Dividends declared not paid	$	1,465		$	1,278

The accompanying notes are an integral part of the consolidated financial statements

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Turning Point Brands, Inc.

Consolidated Statements of Changes in Stockholders’ Equity

For the Three Months Ended September 30, 2025 and 2024

(dollars in thousands except share data)

(unaudited)

									*Cost of*			*Accumulated*
				*Common*		*Additional*			*Repurchased*			*Other*						*Non-*
	*Voting*			*Stock,*		*Paid-In*			*Common*			*Comprehensive*			*Accumulated*			*Controlling*
	*Shares*			*Voting*		*Capital*			*Stock*			*Income (Loss)*			*Earnings*			*Interest*			*Total*
Beginning balance July 1, 2025		18,020,862		$	205	$	130,245		$	(83,144	)	$	(2,010	)	$	173,280		$	6,247		$	224,823

Unrealized gain on MSA investments, net of tax of $53		-			-		-			-			180			-			-			180
Foreign currency translation, net of tax of $0		-			-		-			-			57			-			31			88
Unrealized loss on investments, net of tax of $30		-			-		-			-			(127	)		-			-			(127	)
Stock compensation expense		-			-		1,884			-			-			-			-			1,884
Exercise of options		28,263			1		1,186			-			-			-			-			1,187
Issuance of performance based restricted stock units		-			-		-			-			-			-			-			-
Redemption of performance based restricted stock units		-			-		-			-			-			-			-			-
Issuance of restricted stock units		11,738			-		-			-			-			-			-			-
Redemption of restricted stock units		(4,368	)		-		(355	)		-			-			-			-			(355	)
Interchange subscription agreement contribution		-			-		5,752			-			-			-			5,248			11,000
Issuance of common stock in connection with the At-the-Market Offering Program, net of fees		1,014,262			10		61,664			35,507			-			-			-			97,181
Dividends		-			-		-			-			-			(1,465	)		-			(1,465	)
Net income		-			-		-			-			-			21,080			2,677			23,757
Ending balance September 30, 2025		19,070,757		$	216	$	200,376		$	(47,637	)	$	(1,900	)	$	192,895		$	14,203		$	358,153

Beginning balance July 1, 2024		17,703,166		$	201	$	121,948		$	(81,144	)	$	(3,072	)	$	134,920		$	1,095		$	173,948

Unrealized gain on MSA investments, net of tax of $245		-			-		-			-			829			-			-			829
Foreign currency translation, net of tax of $0		-			-		-			-			12			-			6			18
Unrealized gain on derivative instruments, net of tax of $27		-			-		-			-			92			-			-			92
Unrealized gain on investments, net of tax of $0		-			-		-			-			27			-			-			27
Stock compensation expense		-			-		1,769			-			-			-			-			1,769
Exercise of options		38,104			1		440			-			-			-			-			441
Redemption of options		(9,055	)		-		(324	)		-			-			-			-			(324	)
Issuance of restricted stock units		11,610			-		-			-			-			-			-			-
Cost of repurchased common stock		(26,978	)		-		-			(1,119	)		-			-			-			(1,119	)
Dividends		-			-		-			-			-			(1,278	)		-			(1,278	)
Net income		-			-		-			-			-			12,376			(16	)		12,360
Ending balance September 30, 2024		17,716,847		$	202	$	123,833		$	(82,263	)	$	(2,112	)	$	146,018		$	1,085		$	186,763

The accompanying notes are an integral part of the consolidated financial statements.

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Turning Point Brands, Inc.

Consolidated Statements of Changes in Stockholders’ Equity

For the Nine Months Ended September 30, 2025 and 2024

(dollars in thousands except share data)

(unaudited)

									*Cost of*			*Accumulated*
				*Common*		*Additional*			*Repurchased*			*Other*						*Non-*
	*Voting*			*Stock,*		*Paid-In*			*Common*			*Comprehensive*			*Accumulated*			*Controlling*
	*Shares*			*Voting*		*Capital*			*Stock*			*Income (Loss)*			*Earnings*			*Interest*			*Total*
Beginning balance January 1, 2025		17,729,481		$	202	$	126,662		$	(83,144	)	$	(2,903	)	$	147,164		$	2,399		$	190,380

Unrealized gain on MSA investments, net of tax of $258		-			-		-			-			873			-			-			873
Foreign currency translation, net of tax of $0		-			-		-			-			100			-			3			103
Unrealized gain on derivative instruments, net of tax of $18		-			-		-			-			62			-			-			62
Unrealized loss on investments, net of tax of $0		-			-		-			-			(32	)		-			-			(32	)
Stock compensation expense		-			-		5,176			-			-			-			-			5,176
Exercise of options		184,228			2		6,106			-			-			-			-			6,108
Redemption of options		(572	)		-		(33	)		-			-			-			-			(33	)
Issuance of performance based restricted stock units		104,532			1		(2	)		-			-			-			-			(1	)
Redemption of performance based restricted stock units		(34,196	)		-		(2,625	)		-			-			-			-			(2,625	)
Issuance of restricted stock units		103,612			1		-			-			-			-			-			1
Redemption of restricted stock units		(30,590	)		-		(2,324	)		-			-			-			-			(2,324	)
Interchange subscription agreement contribution		-			-		5,752			-			-			-			5,248			11,000
Issuance of common stock in connection with the At-the-Market Offering Program, net of fees		1,014,262			10		61,664			35,507			-			-			-			97,181
Dividends		-			-		-			-			-			(4,224	)		-			(4,224	)
Net income		-			-		-			-			-			49,955			6,553			56,508
Ending balance September 30, 2025		19,070,757		$	216	$	200,376		$	(47,637	)	$	(1,900	)	$	192,895		$	14,203		$	358,153

Beginning balance January 1, 2024		17,605,677		$	199	$	119,075		$	(78,093	)	$	(2,648	)	$	112,443		$	1,030		$	152,006

Unrealized gain on MSA investments, net of tax of $226		-			-		-			-			572			-			-			572
Foreign currency translation, net of tax of $0		-			-		-			-			16			-			(11	)		5
Unrealized loss on derivative instruments, net of tax of $26		-			-		-			-			(79	)		-			-			(79	)
Unrealized gain on investments, net of tax of $0		-			-		-			-			27			-			-			27
Stock compensation expense		-			-		5,720			-			-			-			-			5,720
Exercise of options		99,551			1		1,340			-			-			-			-			1,341
Redemption of options		(9,223	)		-		(328	)		-			-			-			-			(328	)
Issuance of performance based restricted stock units		129,323			1		-			-			-			-			-			1
Redemption of performance based restricted stock units		(48,177	)		-		(1,212	)		-			-			-			-			(1,212	)
Issuance of restricted stock units		101,650			1		78			-			-			-			-			79
Redemption of restricted stock units		(28,081	)		-		(840	)		-			-			-			-			(840	)
Cost of repurchased common stock		(133,873	)		-		-			(4,170	)		-			-			-			(4,170	)
Dividends		-			-		-			-			-			(3,818	)		-			(3,818	)
Net income		-			-		-			-			-			37,393			66			37,459
Ending balance September 30, 2024		17,716,847		$	202	$	123,833		$	(82,263	)	$	(2,112	)	$	146,018		$	1,085		$	186,763

The accompanying notes are an integral part of the consolidated financial statements.

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Turning Point Brands, Inc.

Notes to Consolidated Financial Statements (Unaudited)

(dollars in thousands, except where designated and per share data)

Note 1. Business and Basis of Presentation

Description of Business

Turning Point Brands, Inc., including its subsidiaries (collectively referred to herein as the “Company,” “we,” “our” or “us”), is a leading manufacturer, marketer and distributor of branded consumer products. The Company sells a wide range of products to adult consumers consisting of staple products with its iconic brands Zig-Zag® and Stoker’s® and its next generation products to fulfill evolving consumer preferences. The Company operates two segments, Zig-Zag products and Stoker’s products, led by its core proprietary and iconic brands: Zig-Zag® and Stoker’s® along with FRE®, Beech-Nut® and Trophy®. The Company’s products are available in more than 220,000 retail outlets in North America.

Discontinued Operations

On January 2, 2025, the Company contributed 100% of its interest in South Beach Brands LLC (“SBB”), the subsidiary that owned and operated the Company’s former Creative Distribution Solutions (“CDS”) reportable segment, to General Wireless Operations, Inc. (“GWO”) in exchange for 49% of the issued and outstanding GWO common stock. GWO is a joint venture between the Company and Standard General, LP entered into in December 2018.

As of December 31, 2024, the assets and liabilities associated with the CDS segment have been classified as held for sale. Accordingly, the financial results of the CDS segment were classified as discontinued operations and reported separately for all periods presented herein until its disposition on January 2, 2025. Following the discontinued operations classification, the Company has two reportable segments, which are reflected herein. Unless otherwise noted, disclosures in the notes to these consolidated financial statements relate solely to the Company's continuing operations, comprised of the Zig-Zag and Stoker’s segments. See Note 3, "Assets and Liabilities Held for Sale and Discontinued Operations" for additional information regarding the CDS divestiture, including the assets and liabilities held for sale and the income or losses from discontinued operations.

Basis of Presentation

The accompanying unaudited, interim, consolidated financial statements have been prepared in accordance with the accounting practices described in the Company’s audited, consolidated financial statements as of and for the year ended December 31, 2024. In the opinion of management, the unaudited, interim, consolidated financial statements included herein contain all adjustments necessary to present fairly the financial position, results of operations, and cash flows of the Company for the periods presented. Such adjustments, other than nonrecurring adjustments separately disclosed, are of a normal and recurring nature. The operating results for interim periods are not necessarily indicative of results to be expected for a full year or future interim periods. The unaudited, interim, consolidated financial statements should be read in conjunction with the Company’s audited, consolidated financial statements and accompanying notes as of and for the year ended December 31, 2024. The accompanying interim, consolidated financial statements are presented in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) and, accordingly, do not include all the disclosures required by generally accepted accounting principles in the United States (“GAAP”) with respect to annual financial statements.

Certain prior year amounts have been reclassified to conform to the current year’s presentation. The changes did not have an impact on the Company’s consolidated financial position, results of operations, or cash flows in any of the periods presented.

Note 2. Summary of Significant Accounting Policies

Consolidation

The consolidated financial statements include the accounts of the Company, its subsidiaries, all of which are wholly-owned, and variable interest entities (“VIEs”) for which the Company is considered to have a controlling interest based on the voting interest entity model or the variable interest entity model. All significant intercompany transactions have been eliminated.

U.S. GAAP requires the Company to identify entities for which control is achieved through means other than voting rights and to determine whether the Company is the primary beneficiary of a VIE. A VIE is broadly defined as an entity with one or more of the following characteristics: (a) the total equity investment at risk is insufficient to finance the entity’s activities without additional subordinated financial support; (b) as a group, the holders of the equity investment at risk lack (i) the ability to make decisions about the entity’s activities through voting or similar rights, (ii) the obligation to absorb the expected losses of the entity, or (iii) the right to receive the expected residual returns of the entity; and (c) the equity investors have voting rights that are not proportional to their economic interests, and substantially all of the entity’s activities either involve, or are conducted on behalf of, an investor that has disproportionately few voting rights. The Company consolidates a VIE when it determines that it is the VIE’s primary beneficiary. The Company may change its original assessment of a VIE upon subsequent events such as the modification of contractual arrangements that affects the characteristics or adequacy of the entity’s equity investments at risk and the disposition of all or a portion of an interest held by the primary beneficiary.

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The primary beneficiary of a VIE is the entity that has both: (i) the power to direct the activities of the VIE that most significantly impact the entity’s economic performance; and (ii) the obligation to absorb losses or the right to receive benefits of the VIE that could be significant to the entity. The Company performs this analysis on an ongoing basis.

Management of the Company has determined that Turning Point Brands Canada and ALP Supply Co, LLC (“ALP”) are VIEs for which the Company is required to consolidate and determined that the Canadian distribution business acquired by General Wireless Operations, Inc. (refer to Note 9, "Other Assets") is a VIE for which the Company is not required to consolidate. The Company has a controlling financial interest of 65% of the equity in Turning Point Brands Canada, provides additional subordinated financing and has a distribution agreement for the sale of the Company’s products that makes up a significant portion of Turning Point Brands Canada’s business activities. The Company has a 50% equity interest in ALP, provides additional financing, has a supply agreement to be the exclusive provider of product and is the primary beneficiary due to the power the Company has over the activities that most significantly impact the economic performance, and the right to receive benefits and the obligation to absorb losses. The Company has 49% indirect interest in the Canadian distribution business through the Company's equity interests in General Wireless Operations, Inc. and, through Turning Point Brands Canada, has a variable interest through a purchase option on the equity interests and a management service agreement with the Canadian distribution business. However, the Company does not have the ability to direct the activities that most significantly impact the performance of the business. The majority owner designee to the Board of Directors can terminate the management services agreement, and it may be terminated at any time without cause. Based on the foregoing, management believes in its judgement that the Canadian distribution business is a VIE for which the Company is not required to consolidate. See Note 9 "Other Assets" for further discussion of the acquisition of the Canadian distribution business by General Wireless Operations, Inc. and the terms of the option on its equity interests.

Revenue Recognition

The Company recognizes revenues in accordance with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers, which includes excise taxes and shipping and handling charges billed to customers, net of cash discounts for prompt payment, sales returns and incentives, upon delivery of goods to the customer – at which time the Company’s performance obligation is satisfied - at an amount that the Company expects to be entitled to in exchange for those goods in accordance with the five-step analysis outlined in ASC 606: (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations, and (v) recognize revenue when (or as) performance obligations are satisfied. The Company includes in its transaction price excise taxes on smokeless tobacco, cigars or other nicotine products billed to customers, and excludes sales taxes and value-added taxes imposed at the time of sale.

The Company records an allowance for sales returns, based principally on historical volume and return rates, which is included in accrued liabilities on the consolidated balance sheets. The Company records sales incentives, which consist of consumer incentives and trade promotion activities, as a reduction in revenues (a portion of which is based on amounts estimated to be due to wholesalers, retailers and consumers at the end of the period) based principally on historical volume and utilization rates. Expected payments for sales incentives are included in accrued liabilities on the consolidated balance sheets.

A further requirement of ASC 606 is for entities to disaggregate revenue recognized from contracts with customers into categories that depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. The Company’s management views business performance through segments that closely resemble the performance of major product lines. Thus, the primary and most useful disaggregation of the Company’s contract revenue for decision making purposes is the disaggregation by segment which can be found in Note 16, “Segment Information”.

Held for Sale and Discontinued Operations

The Company classifies assets and liabilities to be sold (the “disposal group”) as held for sale in the period when all of the applicable criteria are met, including: (i) management commits to a plan to sell, (ii) the disposal group is available to sell in its present condition, (iii) there is an active program to locate a buyer, (iv) the disposal group is being actively marketed at a reasonable price in relation to its fair value, (v) significant changes to the plan to sell are unlikely, and (vi) the sale of the disposal group is generally probable of being completed within one year.

Assets and liabilities held for sale are presented separately within the Consolidated Balance Sheets with any adjustments necessary to measure the disposal group at the lower of its carrying value or fair value less costs to sell. Depreciation of property, plant and equipment and amortization of intangible and right-of-use assets are not recorded while these assets are classified as held for sale. For each period the disposal group remains classified as held for sale, its recoverability is reassessed, and any necessary adjustments are made to its carrying value.

The Company reports the results of operations of a business as discontinued operations if a disposal represents a strategic shift that will have a major effect on its operations and financial results. The results of discontinued operations are reported as Loss from discontinued operations, net of tax in the Consolidated Statements of Income commencing in the period in which the held for sale criteria are met. Loss from discontinued operations includes direct costs attributable to the divested business and excludes any cost allocations associated with any shared or corporate functions. Loss from discontinued operations includes any gain or loss recognized upon disposition or from any adjustment of the carrying amount of the assets and liabilities of the discontinued operations to fair value less costs to sell while classified as held for sale.

Shipping Costs

The Company records shipping costs incurred as a component of selling, general and administrative expenses. Shipping costs incurred were approximately $7.7 million and $4.1 million for the three months ending September 30, 2025 and 2024, respectively, and $22.3 million and $12.3 million for the nine months ended September 30, 2025 and 2024, respectively.

Inventories

Inventories are stated at the lower of cost or net realizable value using the first-in, first-out method. Leaf tobacco is presented in current assets in accordance with standard industry practice, notwithstanding the fact that such tobaccos are carried longer than one year for the purpose of curing.

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Fair Value

GAAP establishes a framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3).

The three levels of the fair value hierarchy under GAAP are described below:

●

Level 1 – Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets at the measurement date.

●

Level 2 – Inputs to the valuation methodology include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in inactive markets, inputs other than quoted prices that are observable for the asset or liability, and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

●

Level 3 – Unobservable inputs that reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date.

Derivative Instruments

The Company enters into foreign currency forward contracts to hedge a portion of its exposure to changes in foreign currency exchange rates on inventory purchase commitments. The Company accounts for its forward contracts under the provisions of ASC 815, Derivatives and Hedging. Under the Company’s policy, the Company may hedge up to 100% of its anticipated purchases of inventory in the denominated invoice currency over a forward period not to exceed twelve months. The Company may also, from time to time, hedge up to 100% of its non-inventory purchases (e.g., production equipment) in the denominated invoice currency. Forward contracts that qualify as hedges are adjusted to their fair value through other comprehensive income as determined by market prices on the measurement date, except any hedge ineffectiveness which is recognized currently in income. Gains and losses on these forward contracts are reclassified from other comprehensive income into inventory as the related inventories are received and are transferred to net income as inventory is sold. Changes in fair value of any contracts that do not qualify for hedge accounting or are not designated as hedges are recognized currently in income.

Risks and Uncertainties

Manufacturers and sellers of tobacco products are subject to regulation at the federal, state, and local levels. Such regulations include, among others, labeling requirements, limitations on advertising, and prohibition of sales to minors. The tobacco industry is likely to continue to be heavily regulated. There can be no assurance as to the ultimate content, timing, or effect of any regulation of tobacco products by any federal, state, or local legislative or regulatory body, nor can there be any assurance that any such legislation or regulation would not have a material adverse effect on the Company’s financial position, results of operations or cash flows. In a number of states targeted flavor bans have been proposed or enacted legislatively or by the administrative process. Depending on the number and location of such bans, such legislation or regulation could have a material adverse effect on the Company’s financial position, results of operations or cash flows. The U.S. Food and Drug Administration (“FDA”) continues to consider various restrictive regulations around our products, including targeted flavor bans; however, the details, timing and ultimate implementation of such measures remain unclear.

The tobacco industry has experienced, and is experiencing, significant product liability litigation. Most tobacco liability lawsuits have been brought against manufacturers and sellers of cigarettes for injuries allegedly caused by smoking or exposure to smoke. However, several lawsuits have been brought against manufacturers and sellers of smokeless products for injuries to health allegedly caused by use of smokeless products. Typically, such claims assert that use of smokeless products is addictive and causes oral cancer. There can be no assurance the Company will not sustain losses in connection with such lawsuits and that such losses will not have a material adverse effect on the Company’s financial position, results of operations or cash flows.

Master Settlement Agreement (MSA)

Pursuant to the Master Settlement Agreement (the “MSA”) entered into in November 1998 by most states (represented by their attorneys general acting through the National Association of Attorneys General) and subsequent states’ statutes, a “cigarette manufacturer” (which is defined to include a manufacturer of make-your-own (“MYO”) cigarette tobacco) has the option of either becoming a signatory to the MSA or opening, funding and maintaining an escrow account to have funds available for certain potential tobacco-related liabilities with sub-accounts on behalf of each settling state. Such companies are entitled to direct the investment of the escrowed funds and withdraw any appreciation but cannot withdraw the principal for twenty-five years from the year of each annual deposit, except to withdraw funds deposited pursuant to an individual state’s escrow statute to pay a final judgement to that state’s plaintiffs in the event of such a final judgement against the Company. The Company chose to open and fund an escrow account as its method of compliance. It is the Company’s policy to record amounts on deposit in the escrow account for prior years as a non-current asset. The Company has begun to receive deposits back from participating states commencing with the deposits from 1999. At September 30, 2025 and December 31, 2024, the Company had on deposit approximately $32.0 million and $32.1 million, respectively, the fair values of which were approximately $29.8 million and $28.7 million, respectively. The Company discontinued its generic category of MYO in 2019 and its Zig-Zag branded MYO cigarette smoking tobacco in 2017. Thus, unless there is a change in MSA legislation, the Company has no remaining product lines covered by the MSA and will not be required to make future escrow deposits.

The Company has chosen to invest a portion of the MSA escrow, from time to time, in U.S. Government securities including TIPS, Treasury Notes and Treasury Bonds. These investments are classified as available-for-sale and recorded at fair value. Realized losses are prohibited under the MSA; any investment in an unrealized loss position will be held until the value is recovered, or until maturity.

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Fair values for the U.S. Governmental agency obligations are Level 2 in the fair value hierarchy. The following tables show cost and estimated fair value of the assets held in the MSA account, respectively, as well as the maturities of the U.S. Governmental agency obligations held in such account for the periods indicated.

	*As of September 30, 2025*									*As of December 31, 2024*
			*Gross*		*Gross*			*Estimated*				*Gross*		*Gross*			*Estimated*
			*Unrealized*		*Unrealized*			*Fair*				*Unrealized*		*Unrealized*			*Fair*
	*Cost*		*Gains*		*Losses*			*Value*		*Cost*		*Gains*		*Losses*			*Value*
Cash and cash equivalents	$	1,912	$	-	$	-		$	1,912	$	1,961	$	-	$	-		$	1,961
U.S. Governmental agency obligations (unrealized position < 12 months)		298		6		-			304		4,168		11		(48	)		4,131
U.S. Governmental agency obligations (unrealized position > 12 months)		29,817		82		(2,353	)		27,546		25,944		95		(3,455	)		22,584
	$	32,027	$	88	$	(2,353	)	$	29,762	$	32,073	$	106	$	(3,503	)	$	28,676

	*As of*
Maturities:	*September 30, 2025*
One to five years	$	14,736
Five to ten years		13,424
Greater than ten years		1,955
Total	$	30,115

The following shows the amount of deposits by sales year for the MSA escrow account:

	*Deposits as of*
Sales	*September 30,*		*December 31,*
Year	*2025*		*2024*
1999		165	$	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	$	32,027	$	32,073

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Recent Accounting Pronouncements

Issued but not yet adopted

In December 2023, the FASB issued guidance which enhances income tax disclosures to require reporting entities to disclose annual income taxes paid, net of refunds, disaggregated by federal, state, and foreign taxes and to provide additional disaggregated information for individual jurisdictions under certain conditions. The guidance also requires disclosure of amounts and percentages in the annual rate reconciliation table, rather than amounts or percentages, and will eliminate certain existing disclosure requirements related to uncertain tax positions and unrecognized deferred tax liabilities. This guidance will be effective for the Company beginning with its fiscal 2025 annual financial statements, with early adoption permitted. The guidance may be applied prospectively, while retrospective application is permitted. The Company is currently assessing the impact of this guidance and expects its incremental disclosures will likely be provided on a prospective basis upon adoption.

In November 2024, the FASB issued guidance requiring reporting entities to disclose in the notes to the financial statements, specified information about certain categories of expenses including purchases of inventory, employee compensation, depreciation and amortization for each caption on the income statement where such expenses are included. This guidance will be effective for the Company beginning with its fiscal 2027 annual financial statements and interim periods thereafter. Early adoption is permitted, in addition to either prospective or retrospective application. The Company is currently assessing the impact and extent to which this guidance will affect its disclosures.

Note 3. Assets and Liabilities Held for Sale and Discontinued Operations

On January 2, 2025, the Company contributed 100% of its interest in SBB, the subsidiary that owned and operated the Company’s former CDS segment, to GWO in exchange for 49% of the issued and outstanding GWO common stock on a fully-diluted basis. Under certain circumstances the Company has the right to redeem the contribution of SBB from GWO at fair market value. In addition, the Company received an option with a 15-year term to purchase the remaining 51% of GWO at an exercise price initially set at $22.0 million, which decreases over time based on certain tax sharing payments to Standard General, LP.

The assets and liabilities of the CDS business were classified as held for sale as of December 31, 2024, and its financial results were classified as discontinued operations and reported separately for all periods presented herein. Upon meeting the criteria for held for sale classification in 2024, the Company recorded a non-cash charge of $8.8 million with an equivalent valuation allowance against net assets held for sale to reduce the carrying value of the disposal group to fair value. There was no additional loss upon completion of the sale in the first quarter of 2025. Fair value of the disposal group utilized inputs within Level 3 of the fair value hierarchy, and was determined using both a market and an income approach.

The Company incurred no income or loss from discontinued operations for the three and nine months ended September 30, 2025. The following table summarizes the loss from discontinued operations included in the Consolidated Statements of Income for the three and nine months ended September 30, 2024.

	*Three Months Ended*			*Nine Months Ended*
	*September 30, 2024*
Net sales	$	14,913		$	44,194
Cost of sales		11,609			33,888
Gross profit		3,304			10,306
Selling, general, and administrative expenses		3,066			9,059
Depreciation		38			211
Amortization of other intangible assets		475			1,424
Operating loss from discontinued operations		(275	)		(388	)
Interest income		(58	)		(109	)
Loss from discontinued operations before income taxes		(217	)		(279	)
Income tax benefit		(52	)		(71	)
Loss from discontinued operations	$	(165	)	$	(208	)

A summary of the held for sale assets and liabilities included in the Consolidated Balance Sheets follows:

	*As of December 31, 2024*
Current assets:
Cash	$	2,783
Inventories, net		5,813
Other current assets		2,874
Current assets held for sale		11,470

Noncurrent assets:
Right of use assets		51
Other intangible assets, net		12,609
Allowance to adjust held for sale assets to fair value		(8,801	)
Noncurrent assets held for sale		3,859
Total assets held for sale	$	15,329

Current liabilities:
Accounts payable	$	532
Accrued liabilities		1,517
Current liabilities held for sale		2,049
Total liabilities held for sale	$	2,049

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Note 4. Derivative Instruments

Foreign Currency

At September 30, 2025, the Company had no foreign currency contracts outstanding. At December 31, 2024, the Company had foreign currency contracts outstanding for the purchase and sale of €2.1 million. The foreign currency contracts’ fair value at December 31, 2024, resulted in an asset of $0.0 million included in Other current assets and a liability of $0.1 million included in Accrued liabilities.

Note 5. Fair Value of Financial Instruments

The estimated fair value amounts have been determined by the Company using the methods and assumptions described below. However, considerable judgment is required to interpret market data to develop estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.

Cash and Cash Equivalents

Cash and cash equivalents are, by definition, short-term. Thus, the carrying amount is a reasonable estimate of fair value.

Accounts Receivable

The fair value of accounts receivable approximates their carrying value due to their short-term nature.

Long-Term Debt

The Company's 2032 Notes bear interest at a rate of 7.625% per year. As of September 30, 2025, the fair value approximated $308.4 million, with a carrying value of $300.0 million.

The Company’s 2026 Notes were retired at par on February 20, 2025. As of December 31, 2024, the fair value of the 2026 Notes approximated $251.2 million, with a carrying value of $250.0 million.

See Note 11, “Notes Payable and Long-Term Debt”, for further information regarding the Company’s long-term debt.

Note 6. Inventories

The components of inventories are as follows:

	*September 30,*		*December 31,*
	*2025*		*2024*
Raw materials and work in process	$	7,977	$	7,699
Leaf tobacco		46,727		35,622
Finished goods - Zig-Zag products		34,252		38,042
Finished goods - Stoker’s products		21,165		12,966
Other		2,669		1,924
Inventories, net	$	112,790	$	96,253

The valuation allowance to write inventory down to its net realizable value at September 30, 2025 and December 31, 2024 was $18.7 million and $17.6 million, respectively.

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In December 2023, a third-party warehouse in Tennessee used to store some of the Company’s leaf tobacco incurred significant tornado damage resulting in damage to the leaf tobacco. The leaf tobacco inventory is covered by the Company’s stock throughput insurance policy and the Company believes the inventory loss is probable of being fully recovered under the policy. As a result, the Company recorded a $15.2 million receivable related to its leaf tobacco inventory which is included in Other current assets on the consolidated balance sheets.

Note 7. Other Current Assets

Other current assets consist of:

	*September 30,*		*December 31,*
	*2025*		*2024*
Inventory deposits	$	26,844	$	5,981
Prepaid taxes		1,293		3,586
Insurance recovery receivable		15,181		15,181
Other		11,347		9,952
Total	$	54,665	$	34,700

Note 8. Property, Plant, and Equipment

Property, plant, and equipment consists of:

	*September 30,*			*December 31,*
	*2025*			*2024*
Land	$	22		$	22
Buildings and improvements		3,839			4,216
Leasehold improvements		8,447			7,983
Machinery and equipment		38,738			31,207
Furniture and fixtures		5,741			4,723
Gross property, plant and equipment		56,787			48,151
Accumulated depreciation		(22,907	)		(21,814	)
Property, plant and equipment, net	$	33,880		$	26,337

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Note 9. Other Assets

Other assets consist of:

	*September 30,*		*December 31,*
	*2025*		*2024*
Non-marketable equity investments	$	16,838	$	1,231
Debt security investments		5,653		6,276
Capitalized software		10,301		7,409
Captive investments - available-for-sale marketable securities		14,699		5,487
Option Agreement		20,516		-
Other		95		259
Total	$	68,102	$	20,662

Debt and Non-Marketable Equity Investments

The Company records its non-marketable equity investments without a readily determinable fair value, that are not accounted for under the equity method, at cost, with adjustments for impairment and observable price changes. Should assumptions underlying the determination of the fair values of the Company’s non-marketable equity and debt security investments change, it could result in material future impairment charges.

In December 2018, the Company acquired a minority interest in General Wireless Operations, Inc. (“GWO”) from SG Gaming LLC for $0.4 million. GWO is a joint venture between the Company and Standard General, LP. On January 2, 2025, the Company contributed 100% of its interest in SBB, the subsidiary that owned and operated the Company’s former CDS reportable segment, to GWO in exchange for a 49% equity interest. In connection with the transaction, the Company has the right to redeem the contribution of SBB from GWO at fair market value under certain circumstances. The Company also received a purchase option with a 15-year term to acquire the remaining 51% equity interest in GWO. The purchase option includes an initial exercise price of $22.0 million, which may decrease over time based on certain tax sharing payments to Standard General, LP. As a result of this transaction, the Company determined that it no longer has a controlling financial interest in SBB and, as a result, deconsolidated SBB on January 2, 2025, and accounts for its interest in GWO under the equity method of accounting. On January 2, 2025, the Company contributed net assets valued at $13.3 million to GWO as part of the transaction. Fair value of the Company's interest in GWO was determined utilizing the market approach and the income approach in the form of the discount cash flow method. The results of GWO are recognized through the caption "(income) losses from equity method investment" in the consolidated statements of income. On August 8, 2025, SBB acquired a Canadian distribution business. In connection with this acquisition, 10233625 Canada Corp. (“Turning Point Brands Canada”) purchased an option from SBB to acquire this distribution business for fair market value less the option price. The option becomes exercisable in March 2027. The option price was approximately $20.0 million with approximately $8.0 million paid at closing and the remining paid quarterly over 18 months beginning in February 2026. There is approximately $20.0 million in other assets, $8.0 million paid at closing, $6.1 million in accrued liabilities, and $6.1 million in other long-term liabilities as of September 30, 2025. The distribution business will also pay management fees to Turning Point Brands Canada for services to be provided for up to approximately $7.0 million per annum for a three-year period, as agreed upon in a management service agreement.

In August 2025, the Company and Standard General, LP amended the GWO purchase option held by the Company, delaying the Company's ability to exercise the purchase option until August 2027.

Debt Security Investment

In July 2021, the Company invested $8.0 million in Old Pal Holding Company, LLC (“Old Pal”), with an additional $1.0 million invested in July 2022. The Company invested in the form of a convertible note which includes additional follow-on investment rights. Interest on the convertible note is payable annually in arrears in July of each year. As of September 2025, total interest of $1.1 million has been rolled into the convertible note resulting in a total investment of $10.1 million. The convertible note bears an interest rate of 3.0% per year and matures July 31, 2027. Interest and principal not paid to date are receivable at maturity, and Old Pal has the option to extend the maturity date of the convertible note in one-year increments. The interest rate is subject to change based on Old Pal reaching certain sales thresholds. The weighted average interest rate on the convertible note was 3.0% for the three and nine months ended September 30, 2025 and 2024. Old Pal has the option to convert the note into shares once sales reach a certain threshold. The conditions required to allow Old Pal to convert the note were not met as of September 30, 2025. Additionally, the Company has the right to convert the note into shares at any time. The Company has classified the debt security with Old Pal as available for sale. The Company reports interest income on available for sale debt securities in interest income in its Consolidated Statements of Income. The Company performs a qualitative assessment on a quarterly basis to determine if the fair value of the Old Pal investment could be less than the amortized cost basis. In addition, the Company utilizes a third-party to perform a quantitative assessment to determine fair value using a Monte Carlo simulation (Level 3) when indicated, and at least bi-annually. Based upon its fair value assessments, the Company determined the fair value of Old Pal to be $6.4 million at December 31, 2024. In the second quarter of 2025, based upon a quantitative fair value assessment, the Company determined the fair value to be $5.6 million and recorded a $0.9 million allowance for credit losses in Investment loss on its Consolidated Statements of Income for the nine months ended September 30, 2025. In the second quarter of 2024, the Company recorded an allowance for credit losses related to its investment in Old Pal of $0.8 million included in investment loss for the nine months ended September 30, 2024. The Company has recorded an accrued interest receivable of $0.1 million and $0.1 million at September 30, 2025 and December 31, 2024, respectively, in Other current assets on its Consolidated Balance Sheets.

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Captive Available-for-Sale Marketable Securities

In December 2023, the Company formed a captive insurance company, Interchange, IC, incorporated in the District of Columbia, to write a portion of its insurance coverage, including with respect to general product, and officer and director liability coverages under deductible reinsurance policies. Interchange, IC is a fully licensed captive insurance company holding a certificate of authority from the District of Columbia Department of Insurance, Securities and Banking. Interchange, IC is consolidated in the Company’s financial statements. Subsequent to June 30, 2025, Interchange IC received approval from the District of Columbia Department of Insurance, Securities and Banking to operate as a group captive. On July 14, 2025, a third-party investor subscribed $11.0 million for an interest in Interchange IC’s parent company, which contributed the investment to Interchange IC. There is currently no insurance reserve as the claims activity is immaterial and expected to be immaterial for the foreseeable future. As of September 30, 2025, no policy has been underwritten for the benefit of the third-party investor. The group captive will write policies for both companies. The Company will continue to control and consolidate the entity.

The investments held within the captive are not available for operating activities and are carried at fair value on the consolidated balance sheet. They consist of money market, stocks, corporate bonds, government securities and real estate investment trusts. The Company believes any investments held with gross unrealized losses to be temporary and not the result of credit risk.

The Company’s captive investments are summarized in the following table:

	*As of September 30, 2025*							*As of December 31, 2024*
			*Gross*			*Estimated*				*Gross*			*Estimated*
	*Amortized*		*Unrealized*			*Fair*		*Amortized*		*Unrealized*			*Fair*
	*Cost*		*Gains (Losses)*			*Value*		*Cost*		*Gains (Losses)*			*Value*
Stocks	$	1,638	$	278		$	1,916	$	1,517	$	9		$	1,526
Exchange traded funds		4,811		(23	)		4,788		1,189		(5	)		1,184
Corporate bonds		2,808		46			2,854		2,383		50			2,433
Real estate investment trusts		368		6			374		343		1			344
Mutual Funds		4,767		-			4,767		-		-			-
Total	$	14,392	$	307		$	14,699	$	5,432	$	55		$	5,487

The following table summarizes the fair value of the Company’s captive investments by contractual maturity.

	*As of*
	*September 30, 2025*
Due within one year	$	1,787
Due in one to five years		1,067
Stocks, real estate investment trusts, exchange traded funds and mutual funds		11,845
Total investments at fair value	$	14,699

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Note 10. Accrued Liabilities

Accrued liabilities consist of:

	*September 30,*		*December 31,*
	*2025*		*2024*
Accrued payroll and related items	$	13,861	$	9,564
Customer returns and allowances		5,880		5,160
Taxes payable		3,285		1,357
Lease liabilities		3,966		3,121
Accrued interest		2,089		5,473
Other		17,657		6,421
Total	$	46,738	$	31,096

Note 11. Notes Payable and Long-Term Debt

Notes payable and long-term debt consists of the following in order of preference:

	*September 30,*			*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 finance charges		(6,636	)		(1,396	)
Notes payable and long-term debt	$	293,364		$	248,604

The components of interest expense, net consists of the following:

	*Three Months Ended*						*Nine Months Ended*
	*September 30,*						*September 30,*
	*2025*			*2024*			*2025*			*2024*
Interest expense	$	6,988		$	4,594		$	19,254		$	15,199
Interest income		(3,457	)		(763	)		(6,169	)		(4,847	)
Interest expense, net	$	3,531		$	3,831		$	13,085		$	10,352

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2032 Notes

On February 19, 2025, the Company 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. The 2032 Notes incur interest at a rate of 7.625%, payable semi-annually in arrears on March 15 and September 15 of each year, commencing on September 15, 2025. Proceeds from the offering were approximately $293.0 million and were used to redeem the 2026 Notes (as defined below) and for general corporate purposes.

The 2032 Notes are fully and unconditionally guaranteed on a senior secured basis, jointly and severally, by each 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”). 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. The 2032 Notes Indenture contains covenants that, among other things, restrict the ability of the Company and its restricted subsidiaries to: (i) grant or incur liens; (ii) incur, assume or guarantee additional indebtedness; (iii) sell or otherwise dispose of assets, including capital stock of subsidiaries; (iv) make certain investments; (v) pay dividends, make distributions or redeem or repurchase capital stock; (vi) engage in certain transactions with affiliates; and (vii) consolidate or merge with or into, or sell substantially all of our assets to another entity. These covenants are subject to several limitations and exceptions set forth in the 2032 Notes Indenture. 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. The 2032 Notes Indenture provides for customary events of default.

The Company incurred debt issuance costs attributable to the 2032 Notes of $7.1 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, the Company closed a private offering of $250.0 million aggregate principal amount of its 5.625% senior secured notes due 2026 (the “2026 Notes”). The 2026 Notes incurred interest at a rate of 5.625%, payable semi-annually in arrears on February 15 and August 15 of each year, commencing on August 15, 2021. The Company used the proceeds from the offering (i) to repay all obligations under and terminate the 2018 First Lien Credit Facility, (ii) to pay related fees, costs and expenses and (iii) for general corporate purposes.

Obligations under the 2026 Notes were guaranteed by the Company’s existing and future wholly-owned domestic subsidiaries that guarantee any credit facility (as defined in the indenture governing the 2026 Notes) or capital markets debt securities of the Company or Guarantors in excess of $15.0 million. The 2026 Notes and the related guarantees were secured by first-priority liens on substantially all of the assets of the Company and the Guarantors, subject to certain exceptions. The Company was in compliance with all covenants under the 2026 Notes as of December 31, 2024.

On February 20, 2025 (the “Redemption Date”), the Company used a portion of the proceeds from the issuance and sale of the 2032 Notes to redeem all $250.0 million of its outstanding 2026 Notes at a redemption price equal to 100% of the aggregate principal amount of the 2026 Notes, plus accrued and unpaid interest thereon to, but excluding the Redemption Date. Upon redemption of the 2026 Notes, the indenture governing the 2026 Notes was satisfied and discharged in accordance with its terms.

The Company 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.

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 and First-Citizens Bank & Trust Company as additional collateral agent (the “Additional Collateral Agent”). Under the 2023 ABL Facility, the ABL Borrower may draw up to $75.0 million under Revolving Credit Loans and Last In Last Out (“LILO”) loans. The 2023 ABL Facility includes a $40.0 million accordion feature. In connection with the 2023 ABL Facility, Turning Point Brands contributed certain existing inventory to the ABL Borrower. The 2023 ABL Facility is secured on a first priority basis (subject to customary exceptions) by all assets of the ABL Borrower.

The 2023 ABL Facility contains customary borrowing conditions including a borrowing base equal to the sum of (a) the lesser of (1) 85% of the lower of (A) the market value (on a first in first out basis) of the sum of eligible inventory, plus eligible in-transit inventory of the ABL Borrower and (B) 85% of the cost of the sum of eligible inventory, plus eligible in-transit inventory of the ABL Borrower and (2) 85% of the net orderly liquidation value (“NOLV”) percentage of the lower of (1)(A) or (1)(B); plus (b) 85% of the face value of all eligible accounts of the ABL Borrower minus (c) the amount of all eligible reserves. The 2023 ABL Facility also includes a LILO borrowing base equal to the sum of (a) the lesser of: (1) 10% of the lower of (A) the market value (on a first in first out basis) of the sum of eligible inventory, plus eligible in-transit inventory of the ABL Borrower and (B) the cost of the sum of eligible inventory, plus eligible in-transit inventory and (2) 10% of the NOLV percentage of the lower of (1)(A) or (1)(B); plus (b) 10% of the face amount of eligible account; minus (c) the amount of all eligible reserves.

Amounts borrowed under the 2023 ABL Facility are subject to an interest rate margin per annum equal to (a) from and after the closing date until the last day of the first full fiscal quarter ended after the closing date, (i) 1.25% per annum, in the case base rate loans, and (ii) 2.25% per annum, in the case of revolving credit loans that are secured overnight financing rate (“SOFR”) loans, (b)(i) 2.25% per annum, in the case of LILO loans that are base rate loans, and (ii) 3.25% per annum, in the case of LILO loans that are SOFR loans, (c) on the first day of each fiscal quarter, the applicable interest rate margins will be determined from the pricing grid below based upon the historical excess availability for the most recent fiscal quarter ended immediately prior to the relevant date, as calculated by the Administrative Agent.

		Applicable Margin	Applicable Margin
Level	Historical Excess Availability	for SOFR Loans	for 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%

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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; provided that such $9.4 million level shall automatically increase in proportion to the amount of any increase in the aggregate revolving credit commitments in connection with any incremental facility.

The 2023 ABL Facility matures 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.

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 $66.6 million based on the borrowing base as of September 30, 2025.

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

In July 2019, the Company closed an offering of $172.5 million in aggregate principal amount of its 2.50% convertible senior notes due July 15, 2024 (the “Convertible Senior Notes”). The Convertible Senior Notes were senior unsecured obligations of the Company and the remaining outstanding balance of $118.5 million was retired with cash on July 15, 2024 with no principal amounts remaining outstanding or held by third parties.

Note 12. Income Taxes

The Company’s effective income tax rate for the three and nine months ended September 30, 2025 was 21.4% and 18.4%, respectively. The Company’s effective income tax rate for the three and nine months ended September 30, 2024 was 27.1% and 25.4%, respectively. The effective tax rate for the nine months ended September 30, 2025 includes permanent tax differences related to the Company's restricted stock units that were issued in the first quarter of 2025 and stock options that were exercised during the nine months ended September 30, 2025.

The Company follows the provisions of ASC 740-10-25, which prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. The Company has determined that the Company did not have any uncertain tax positions requiring recognition under the provisions of ASC 740-10-25. The Company’s policy is to recognize interest and penalties accrued on uncertain tax positions, if any, as part of interest expense. The Company files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. In general, the Company is no longer subject to U.S. federal and state tax examinations for years prior to 2021.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”), which includes a broad range of tax reform provisions, was signed into law in the United States. The Company is currently evaluating the potential impact of this legislation and has determined that the legislation will not have a significant impact on its 2025 consolidated financial statements.

In 2020, the U.S. government enacted the Coronavirus Aid, Relief, and Security Act (the “CARES Act”) to provide certain relief as a result of the COVID-19 Pandemic. The CARES Act provides tax relief, along with other stimulus measures, including a provision for an Employee Retention Credit (“ERC”). ERC is a refundable tax credit for employers who kept employees on their payroll during the COVID-19 Pandemic. The Company applied for the ERC in 2024.

The Company considered the ERC to be a contingent gain. During the quarter ended September 30, 2025, the Company received and recorded an employee retention credit totaling $5.5 million, within the “Other income, net” in our Consolidated Statements of Income.

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Note 13. Share Incentive Plans

On March 22, 2021, the Company’s Board of Directors adopted the Turning Point Brands, Inc. 2021 Equity Incentive Plan (the “2021 Plan”), pursuant to which awards may be granted to employees, non-employee directors, and consultants. In addition, the 2021 Plan provides for the granting of nonqualified stock options to employees of the Company or any subsidiary of the Company. Pursuant to the 2021 Plan, 1,290,000 shares, plus 100,052 shares remaining available for issuance under the 2015 Equity Incentive Plan (the “2015 Plan”), of TPB Common Stock are reserved for issuance as awards to employees, non-employee directors, and consultants as compensation for past or future services or the attainment of certain performance goals. The 2021 Plan is scheduled to terminate on March 21, 2031. The 2021 Plan is administered by the compensation committee (the “Committee”) of the Company’s Board of Directors. The Committee determines the vesting criteria for the awards, with such criteria to be specified in the award agreement. As of September 30, 2025, net of forfeitures, there were 437,087 Restricted Stock Units (“RSUs”), 122,570 options and 94,684 Performance Based Restricted Stock Units (“PRSUs”) granted under the 2021 Plan. There are 735,711 shares available for future grant under the 2021 Plan as of September 30, 2025.

On April 28, 2016, the Board of Directors of the Company adopted the 2015 Plan, pursuant to which awards could have been granted to employees, non-employee directors, and consultants. In addition, the 2015 Plan provided for the granting of nonqualified stock options to employees of the Company or any subsidiary of the Company. Upon adoption of the 2021 Plan, the 2015 Plan was terminated, and the Company determined no additional grants would be made under the 2015 Plan. However, all awards issued under the 2015 Plan that have not been previously terminated or forfeited remain outstanding and continue unaffected. There are no shares available for grant under the 2015 Plan.

Stock option activity for the 2015 and 2021 Plans is summarized below:

				*Weighted*		*Weighted*
	*Stock*			*Average*		*Average*
	*Option*			*Exercise*		*Grant Date*
	*Shares*			*Price*		*Fair Value*
Outstanding, December 31, 2023		656,951		$	29.79	$	9.18

Granted		54,289			27.19		9.21
Exercised		(132,572	)		21.36		6.97
Forfeited		(42,878	)		38.11		11.94
Outstanding, December 31, 2024		535,790		$	30.69	$	9.51

Exercised		(184,228	)		33.16		10.30
Forfeited		(2,643	)		36.11		10.88
Outstanding, September 30, 2025		348,919		$	29.34	$	9.08

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Under the 2015 and 2021 Plans, the total intrinsic value of options exercised during the nine months ended September 30, 2025 and 2024, was $7.8million, and $2.0million, respectively.

At September 30, 2025, under the 2015 and 2021 Plans, the risk-free interest rate is based on the U.S. Treasury rate for the expected life at the time of grant. The expected volatility is based on the average long-term historical volatilities of peer companies. We intend to continue to consistently use the same group of publicly traded peer companies to determine expected volatility until sufficient information regarding volatility of our share price becomes available or until the selected companies are no longer suitable for this purpose. Due to our limited trading history, we are using the simplified method presented by SEC Staff Accounting Bulletin No. 107 to calculate expected holding periods, which represent the periods of time for which options granted are expected to be outstanding. We will continue to use this method until we have sufficient historical exercise experience to give us confidence in the reliability of our calculations. The fair values of these options were determined using the Black-Scholes option pricing model.

The following table outlines the assumptions based on the number of options granted under the 2015 Plan.

	*February 10,*			*May 17,*			*March 7,*			*March 20,*			*March 18,*			*February 18,*
	*2017*			*2017*			*2018*			*2019*			*2020*			*2021*
Number of options granted		40,000			93,819			98,100			155,780			155,000			100,000
Options outstanding at September 30, 2025		5,000			23,669			36,367			51,560			33,013			43,100
Number exercisable at September 30, 2025		5,000			23,669			36,367			51,560			33,013			43,100
Exercise price	$	13.00		$	15.41		$	21.21		$	47.58		$	14.85		$	51.75
Remaining lives		1.36			1.63			2.44			3.47			4.47			5.39
Risk free interest rate		1.89	%		1.76	%		2.65	%		2.34	%		0.79	%		0.56	%
Expected volatility		27.44	%		26.92	%		28.76	%		30.95	%		35.72	%		28.69	%
Expected life		6.000			6.000			6.000			6.000			6.000			6.000
Dividend yield		-			-			0.83	%		0.42	%		1.49	%		0.55	%
Fair value at grant date	$	3.98		$	4.60		$	6.37		$	15.63		$	4.41		$	13.77

The following table outlines the assumptions based on the number of options granted under the 2021 Plan.

	*May 17,*			*March 14,*			*April 29,*			*May 12,*			*March 11,*
	*2021*			*2022*			*2022*			*2023*			*2024*
Number of options granted		7,500			100,000			14,827			77,519			54,289
Options outstanding at September 30, 2025		2,200			15,929			6,273			77,519			54,289
Number exercisable at September 30, 2025		2,200			15,929			6,273			77,519			54,289
Exercise price	$	45.05		$	30.46		$	31.39		$	20.71		$	27.19
Remaining lives		5.63			6.46			6.58			7.62			8.45
Risk free interest rate		0.84	%		2.10	%		2.92	%		3.41	%		4.06	%
Expected volatility		31.50	%		35.33	%		35.33	%		34.51	%		35.09	%
Expected life		6.000			6.000			6.000			5.186			5.186
Dividend yield		0.63	%		1.01	%		0.98	%		1.61	%		1.26	%
Fair value at grant date	$	13.23		$	10.23		$	11.07		$	6.45		$	9.21

The Company records compensation expense related to the options based on the provisions of ASC 718 under which the fixed portion of such expense is determined as the fair value of the options on the date of grant and amortized over the vesting period. In 2025, the Company has recorded no compensation expense related to the options, which are fully expensed. The Company recorded compensation expense related to the options of approximately $0.1 million and $0.5 million for the three and nine months ended September 30, 2024, respectively.

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PRSUs are restricted stock units subject to both performance-based and service-based vesting conditions. The number of shares of TPB Common Stock a recipient will receive upon vesting of a PRSU will be calculated by reference to certain performance metrics related to the Company’s performance over a five-year period. PRSUs will vest on the measurement date, which is no more than 65 days after the performance period provided the applicable service and performance conditions are satisfied. As of September 30, 2025, there are 273,361 PRSUs outstanding. The following table outlines the PRSUs granted and outstanding as of September 30, 2025.

	*February 18,*		*March 14,*		*May 4,*		*March 1,*		*April 1,*		*March 3,*
	*2021*		*2022*		*2023*		*2024*		*2024*		*2025*
Number of PRSUs granted		100,000		49,996		133,578		111,321		8,242		41,137
PRSUs outstanding at September 30, 2025		63,540		19,680		67,511		74,899		6,594		41,137
Fair value as of grant date	$	51.75	$	30.46	$	22.25	$	26.52	$	29.12	$	70.34
Remaining lives		0.25		1.25		0.25		1.25		1.25		2.25

The Company records compensation expense related to the PRSUs based on the probability of achieving the performance condition. The Company recorded compensation expense related to the PRSUs of approximately $0.8 million and $0.8 million for the three months ended September 30, 2025 and 2024, respectively, and $2.2 million and $2.5 million for the nine months ended September 30, 2025 and 2024, respectively. Total unrecognized compensation expense related to these awards at September 30, 2025, is $3.1 million which will be expensed over the service periods based on the probability of achieving the performance condition.

The Company has granted 158,982 RSUs which are outstanding and vest over one to five years. The following table outlines the RSUs granted and outstanding as of September 30, 2025.

	March 14,		April 29,		May 5,		March 1,		April 1,		March 3,		March 5,		May 8,		July 14,
	2022		2022		2023		2024		2024		2025		2025		2025		2025
Number of RSUs granted		50,004		4,522		130,873		105,257		5,495		36,843		14,921		8,464		1,341
RSUs outstanding at September 30, 2025		16,968		1,263		29,007		47,418		3,627		35,973		14,921		8,464		1,341
Fair value as of grant date	$	30.46	$	31.39	$	22.25	$	26.52	$	29.12	$	70.34	$	67.02	$	75.66	$	74.61
Remaining lives		1.25		1.25		0.50		1.50		1.50		2.50		0.50		0.75		2.94

The Company records compensation expense related to the RSUs based on the provisions of ASC 718 under which the fixed portion of such expense is determined as the fair value of the RSUs on the date of grant and amortized over the vesting period. The Company recorded compensation expense related to the RSUs of approximately $1.1 million and $0.9 million for the three months ended September 30, 2025 and 2024, respectively, and $3.0 million and $2.7 million for the nine months ended September 30, 2025 and 2024 respectively. Total unrecognized compensation expense related to RSUs at September 30, 2025, is $3.1 million, which will be expensed over 1.72 years.

Note 14. Contingencies

Other major tobacco companies are defendants in product liability claims. In a number of these cases, the amounts of punitive and compensatory damages sought are significant and, if such a claim were brought against the Company, could have a material adverse effect on our business and results of operations. The potential losses associated with any such lawsuits are not currently reasonably estimable and therefore are not accrued.

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Note 15. Income Per Share

The Company calculates earnings per share using the treasury stock method for its options and non-vested restricted stock units, and the if-converted method for its Convertible Senior Notes.

The following is a reconciliation of the numerators and denominators of the basic and diluted EPS computations of net income:

	*Three Months Ended September 30,*
	*2025*						*2024*
					*Per*							*Per*
	*Income*		*Shares*		*Share*		*Income*			*Shares*		*Share*
Basic EPS:
Numerator
Income from continuing operations less non-controlling interest	$	21,080			$	1.16	$	12,541				$	0.70
Loss from discontinued operations, net of tax		-				-		(165	)				-
Net income attributable to Turning Point Brands, Inc.	$	21,080			$	1.16	$	12,376				$	0.70

Denominator
Weighted average				18,246,722							17,722,855

Diluted EPS:
Numerator
Income from continuing operations less non-controlling interest	$	21,080					$	12,541
Interest expense related to Convertible Senior Notes, net of tax		-						143
Diluted income from continuing operations		21,080			$	1.13		12,684				$	0.68
Loss from discontinued operations, net of tax	$	-				-	$	(165	)				-
Diluted net income	$	21,080			$	1.13	$	12,519				$	0.68

Denominator
Basic weighted average				18,246,722							17,722,855
Convertible Senior Notes				-							345,562
Stock options and restricted stock units (1)				461,943							380,303
				18,708,665							18,448,720

	*Nine Months Ended September 30,*
	*2025*						*2024*
					*Per*							*Per*
	*Income*		*Shares*		*Share*		*Income*			*Shares*		*Share*
Basic EPS:
Numerator
Income from continuing operations less non-controlling interest	$	49,955			$	2.77	$	37,601				$	2.12
Loss from discontinued operations, net of tax		-				-		(208	)				(0.01	)
Net income attributable to Turning Point Brands, Inc.	$	49,955			$	2.77	$	37,393				$	2.11

Denominator
Weighted average				18,052,798							17,678,257

Diluted EPS:
Numerator
Income from continuing operations less non-controlling interest	$	49,955					$	37,601
Interest expense related to Convertible Senior Notes, net of tax		-						1,566
Diluted income from continuing operations		49,955			$	2.70		39,167				$	1.99
Loss from discontinued operations, net of tax	$	-				-	$	(208	)				-
Diluted net income	$	49,955			$	2.70	$	38,959				$	1.99

Denominator
Basic weighted average				18,052,798							17,678,257
Convertible Senior Notes				-							1,594,546
Stock options and restricted stock units ⁽¹⁾				421,966							327,847
				18,474,764							19,600,650

⁽¹⁾

There were outstanding stock options of $0.0 million and $0.2 million for the three months ended September 30, 2025 and 2024, respectively, and $0.0 million and $0.2 million for the nine months ended September 30, 2025 and 2024, respectively, not included in the computation of diluted earnings per share because the effect would have been antidilutive.

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Note 16. Segment Information

In accordance with ASC 280, Segment Reporting, the Company has two reportable segments, Zig-Zag products and Stoker’s products. The Zig-Zag products segment markets and distributes (i) rolling papers, tubes, and related products; (ii) finished cigars and MYO cigar wraps; and (iii) lighters and other accessories. The Stoker’s products segment (i) manufactures and markets moist snuff, (ii) contracts for and markets loose-leaf chewing tobacco products, and (iii) contracts for and markets its modern oral product. The Company's products are distributed primarily through wholesale distributors in the U.S. and Canada. Corporate unallocated includes the costs and assets of the Company not assigned to one of the two reportable segments and includes corporate overhead expense, including executive management, finance, legal and information technology salaries, and professional services such as audit, external legal costs and information technology services, as well as costs related to the FDA premarket tobacco product application.

The Company’s CODM is its President and Chief Executive Officer and uses segment operating income as the measure of earnings to evaluate the performance of each segment and to make decisions about allocating resources, including employees, property, plant and equipment, as well as financial and capital resources. On a quarterly basis, the CODM reviews segment operating income budget-to-actual variances to assess segment performance and make resource allocation decisions. For both reportable segments, cost of sales is the significant segment expense that is regularly provided to the CODM.

The accounting policies of these segments are the same as those of the Company. Corporate costs are not directly charged to the two reportable segments in the ordinary course of operations.

The tables below present financial information about reportable segments:

	*Three Months Ended*						*Nine Months Ended*
	*September 30,*						*September 30,*
	*2025*			*2024*			*2025*			*2024*
Net sales
Zig-Zag products	$	44,154		$	49,324		$	138,441		$	146,502
Stoker’s products		74,825			41,380			203,608			120,491
Total	$	118,979		$	90,704		$	342,049		$	266,993

Cost of Sales
Zig-Zag products	$	18,768		$	22,000		$	64,386		$	64,765
Stoker’s products		29,784			18,309			81,003			53,081
Total	$	48,552		$	40,309		$	145,389		$	117,846

Gross profit
Zig-Zag products	$	25,386		$	27,324		$	74,055		$	81,737
Stoker’s products		45,041			23,071			122,605			67,410
Total	$	70,427		$	50,395		$	196,660		$	149,147

Other segment items ⁽¹⁾
Zig-Zag products	$	9,805		$	9,946		$	26,797		$	28,100
Stoker’s products		15,771			5,909			39,090			16,990
Total	$	25,576		$	15,855		$	65,887		$	45,090

Operating income (loss)
Zig-Zag products	$	15,581		$	17,378		$	47,258		$	53,637
Stoker’s products		29,270			17,162			83,515			50,420
Total segment operating income	$	44,851		$	34,540		$	130,773		$	104,057
Corporate unallocated⁽²⁾⁽³⁾		(18,966	)		(13,735	)		(55,372	)		(41,110	)
Total	$	25,885		$	20,805		$	75,401		$	62,947

Other (income) expense, net		(4,941	)		-			(4,941	)
Interest expense, net		3,531			3,831			13,085			10,352
Investment (gain) loss		(817	)		(143	)		(914	)		2,334
(Income) losses from equity method investment		(2,117	)		(60	)		(2,328	)		(217	)
Loss on extinguishment of debt		-			-			1,235			-

Income from continuing operations before income taxes	$	30,229		$	17,177		$	69,264		$	50,478

Capital expenditures
Zig-Zag products	$	317		$	212		$	337		$	2,659
Stoker’s products		3,646			5			9,845			857
Total	$	3,963		$	217		$	10,182		$	3,516

Depreciation and amortization
Zig-Zag products	$	275		$	481		$	831		$	1,096
Stoker’s products		1,625			1,191			4,576			2,999
Total	$	1,900		$	1,672		$	5,407		$	4,095

⁽¹⁾	Includes primarily selling and marketing costs.
⁽²⁾	Includes corporate costs that are not allocated to any of the two reportable segments.

⁽³⁾	Includes costs related to FDA premarket tobacco product application (“PMTA”) of $0.5 million and $1.2 million for the three months ended September 30, 2025 and 2024, respectively, and $3.7 million and $3.1 million for the nine months ended September 30, 2025 and 2024, respectively.

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	*September 30,*		*December 31,*
	*2025*		*2024*
Assets
Zig-Zag products	$	255,947	$	224,052
Stoker’s products		264,687		197,038
Assets held for sale		-		15,329
Corporate unallocated ⁽¹⁾		222,214		56,934
Total	$	742,848	$	493,353

⁽¹⁾	Includes assets not assigned to the two reportable segments. All goodwill has been allocated to the reportable segments.

Net Sales: Domestic and Foreign

The following table shows a breakdown of consolidated net sales between domestic and foreign customers:

	*Three Months Ended*				*Nine Months Ended*
	*September 30,*				*September 30,*
	*2025*		*2024*		*2025*		*2024*
Domestic	$	107,255	$	82,721	$	315,929	$	243,518
Foreign		11,724		7,983		26,120		23,475
Total	$	118,979	$	90,704	$	342,049	$	266,993

Note 17. Dividends and Shares Repurchases

A dividend of $0.075 per common share was paid on October 10, 2025, to shareholders of record at the close of business on September 19, 2025.

The Company currently pays a quarterly cash dividend. Dividends are considered restricted payments under the 2032 Notes Indenture. The Company is generally permitted to make restricted payments 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 restricted, quarterly dividends during a fiscal year.

On February 25, 2020, the Company’s Board of Directors approved a $50.0 million share repurchase program which is intended for opportunistic execution based upon a variety of factors including market dynamics. The program is subject to the ongoing discretion of the Board of Directors. On October 25, 2021, the Board of Directors increased the approved share repurchase program by $30.7 million, and by an additional $24.6 million on February 24, 2022. On November 6, 2024, the Company's Board of Directors increased the 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. For the nine months ended September 30, 2025, there were no repurchases under the share repurchase program.

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 Company is filing an amendment to the prospectus supplement to increase the aggregate dollar amount of shares of common stock that it may sell under the ATM Program by an additional $200,000,000. Between August 15, 2025, and September 11, 2025, the Company sold 1,014,262 shares of our Common Stock under the ATM Program at an average selling price of $98.59 per share for gross proceeds of $100.0 million, less underwriter's commission and expenses of approximately $2.5 million, for net proceeds of $97.5 million. The shares were issued from repurchased common stock on a first in first out basis. The Company recorded the gain, corresponding to the difference in between the reacquisition cost of treasury stock and the value of treasury stock reissued, into APIC within the Consolidated Statements of Changes in Stockholders' Equity.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion of the historical financial conditions and results of operations in conjunction with our consolidated financial statements and accompanying notes, which are included elsewhere in this Quarterly Report on Form 10-Q. In addition, this discussion includes forward-looking statements which are subject to risks and uncertainties that may result in actual results differing from statements we make. See “Cautionary Note Regarding Forward-Looking Statements.” Factors that could cause actual results to differ include those risks and uncertainties discussed in “Risk Factors” contained in the Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

The following Management’s Discussion and Analysis (“MD&A”) relates to the unaudited financial statements of Turning Point Brands, Inc., included elsewhere in this Quarterly Report on Form 10-Q. The MD&A is intended to enable the reader to understand the Company’s financial condition and results of operations, including any material changes in the Company’s financial condition and results of operations since December 31, 2024, and as compared with the three and nine months ended September 30, 2024. The MD&A is provided as a supplement to and should be read in conjunction with the unaudited consolidated financial statements and notes thereto included in this Quarterly report on Form 10-Q, as well as “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in the Annual Report on Form 10-K for the fiscal year ended December 31, 2024 (the “2024 Annual Report”).

In this MD&A, unless the context requires otherwise, references to “our Company” “we,” “our,” or “us” refer to Turning Point Brands, Inc., and its consolidated subsidiaries. References to “TPB” refer to Turning Point Brands, Inc., without any of its subsidiaries. Many of the amounts and percentages in this discussion have been rounded for convenience of presentation.

Overview

Turning Point Brands, Inc. 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. 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. The OTP industry, which consists of non-cigarette tobacco products, exhibited low-single-digit consumer unit annualized declines during the year ended December 31, 2024, as reported by Management Science Associates, Inc. (“MSAi”) a third-party analytics and information company. 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. We currently ship to approximately 900 distributors with an additional 600 secondary, indirect wholesalers in the U.S. that carry and sell our products. Under the leadership of a senior management team with extensive experience in the consumer products, alternative smoking accessories and tobacco industries, we have grown and diversified our business through new product launches, category expansions, and acquisitions while concurrently improving operational efficiency.

We believe there are meaningful opportunities to grow through investing in organic growth, acquisitions and joint ventures across all product categories. Our products are 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. 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 former Creative Distribution Solutions (“CDS”) reportable segment, to General Wireless Operations, Inc. (“GWO”) in exchange for 49% of the issued and outstanding GWO common stock. GWO is a joint venture between the Company and Standard General, LP entered into in December 2018. CDS marketed and distributed liquid nicotine and ancillary products without tobacco and/or nicotine.

Refer to Note 3 and Note 9 of the Notes to Consolidated Financial Statements included in Item 1 of Part 1 in this Quarterly Report on Form 10-Q for further details regarding the CDS divestiture.

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 addition, we have a majority stake in Turning Point Brands Canada which is a specialty marketing and distribution firm focused on building brands in the Canadian cannabis accessories, tobacco and alternative products categories. In our Stoker’s products segment, we (i) manufacture and market moist snuff tobacco (“MST”); (ii) contract for and market modern oral products; and (iii) contract for and market loose-leaf chewing tobacco products.

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Operations

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.

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. Our principal operating expenses include the cost of raw materials used to manufacture the limited number of our products which we produce in-house; the cost of finished products, which are generally purchased goods; federal excise taxes; legal expenses; and compensation expenses, including benefits and costs of salaried personnel.

Key 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, including 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.

Critical Accounting Policies and Uses of Estimates

There have been no material changes to our critical accounting policies and estimates from the information provided in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our 2024 Annual Report on Form 10-K.

Recent Accounting Pronouncements

See Item 1 of Part I, “Notes to Consolidated Financial Statements - Note 2 - Summary of Significant Accounting Policies - Recent Accounting Pronouncements.”

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Results of Operations

Summary

The table and discussion set forth below relates to our consolidated results of continuing operations:

(in thousands)		Three Months Ended September 30,
	2025			2024			% Change
Consolidated Results of Operations Data:
Net sales
Zig-Zag products	$	44,154		$	49,324			-10.5	%
Stoker’s products		74,825			41,380			80.8	%
Total net sales		118,979			90,704			31.2	%
Cost of sales		48,552			40,309			20.4	%
Gross profit
Zig-Zag products		25,386			27,324			-7.1	%
Stoker’s products		45,041			23,071			95.2	%
Total gross profit		70,427			50,395			39.7	%

Selling, general, and administrative expenses		44,542			29,590			50.5	%

Operating income
Zig-Zag products		15,581			17,378			-10.3	%
Stoker’s products		29,270			17,162			70.6	%
Total segment operating income		44,851			34,540			29.9	%
Corporate unallocated		(18,966	)		(13,735	)		38.1	%
Total operating income		25,885			20,805			24.4	%
Other (income) expense, net		(4,941	)		-			NM
Interest expense, net		3,531			3,831			-7.8	%
Investment (gain) loss		(817	)		(143	)		471.3	%
(Income) losses from equity method investment		(2,117	)		(60	)		NM
Income from continuing operations before income taxes		30,229			17,177			76.0	%
Income tax expense		6,472			4,652			39.1	%
Consolidated net income from continuing operations		23,757			12,525			89.7	%
Net income (loss) attributable to non-controlling interest		2,677			(16	)		NM
Net income from continuing operations attributable to Turning Point Brands, Inc.	$	21,080		$	12,541			68.1	%

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Comparison of the Three Months Ended September 30, 2025, to the Three Months Ended September 30, 2024

Net Sales: For the three months ended September 30, 2025, consolidated net sales increased $28.3 million, or 31.2% compared to the prior year period, driven primarily by an increase in the Stoker’s products segment.

For the three months ended September 30, 2025, net sales in the Zig-Zag products segment decreased $5.2 million, or 10.5% compared to the prior year period. The decrease in net sales was driven primarily by declines of $5.5 million in U.S. papers and wraps, and $1.8 million in the Clipper lighter business, partially offset by a $2.4 million increase in our Canadian products. Clipper has not been a focus area for the Company over the past several quarters and the Company was able to sell the majority of its inventory at a discounted rate with extended payment terms. We do not expect meaningful additional revenue from Clipper in future periods.

For the three months ended September 30, 2025, net sales in the Stoker’s products segment increased $33.4 million, or 80.8% compared to the prior year period. For the three months ended September 30, 2025, sales volume of Stoker’s products increased 69.0% compared to the prior year period, which contributed $28.5 million to the increase, and price/product mix increased 11.8% compared to the prior year period, which contributed $4.9 million to the increase. The increase in net sales was primarily driven by $31.6 million of growth in modern oral products and $1.4 million of growth of Stoker’s® MST.

Gross Profit: For the three months ended September 30, 2025, consolidated gross profit increased $20.0 million, or 39.7% compared to the prior year period. Gross profit as a percentage of net sales increased to 59.2% for the three months ended September 30, 2025, compared to 55.6% for the three months ended September 30, 2024. The overall increase in gross profit was driven by increases in net sales in the Stoker's products segment and improved margin contribution from modern oral products.

For the three months ended September 30, 2025, gross profit in the Zig-Zag products segment decreased $1.9 million, or 7.1% compared to the prior year period. Gross profit as a percentage of net sales increased to 57.5% of net sales for the three months ended September 30, 2025, from 55.4% of net sales for the three months ended September 30, 2024, driven primarily by product mix.

For the three months ended September 30, 2025, gross profit in the Stoker’s products segment increased $22.0 million, or 95.2% compared to the prior year period. Gross profit as a percentage of net sales increased to 60.2% of net sales for the three months ended September 30, 2025, from 55.8% of net sales for the three months ended September 30, 2024, primarily driven by improved margin contribution from modern oral products.

Selling, General, and Administrative Expenses: For the three months ended September 30, 2025, selling, general, and administrative expenses increased $15.0 million, or 50.5% compared to the prior year period, primarily due to increased shipping and selling costs related to the increase in modern oral sales in the quarter compared to the prior year period. Selling, general and administrative expenses in the three months ended September 30, 2025, included $0.5 million of expense related to PMTA, $1.9 million of stock options, restricted stock and incentives expense, $0.4 million of legal expenses incurred in connection with litigation related to an insurance claim, $0.8 million of transaction costs and $0.2 million of expense related to corporate restructuring. Selling, general and administrative expenses in the three months ended September 30, 2024, included $1.8 million of stock options, restricted stock and incentives expense, $1.2 million of expense related to PMTA, $0.9 million of transaction costs, $0.2 million of expense related to the implementation of the new ERP and CRM systems, and $0.2 million of expense related to corporate restructuring.

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Operating Income: For the three months ended September 30, 2025, consolidated operating income increased $5.1 million, or 24.4% compared to the prior year period. Operating income as a percentage of net sales decreased to 21.8% of net sales for the three months ended September 30, 2025 from 22.9% of net sales for the three months ended September 30, 2024, primarily driven by increased selling, general and administrative costs.

For the three months ended September 30, 2025, operating income in the Zig-Zag products segment decreased $1.8 million, or 10.3% compared to the prior year period. Operating income as a percentage of net sales increased to 35.3% of net sales for the three months ended September 30, 2025 from 35.2% of net sales for the three months ended September 30, 2024, primarily driven by improved margins on product mix.

For the three months ended September 30, 2025, operating income in the Stoker’s products segment increased $12.1 million, or 70.6% compared to the prior year period. Operating income as a percentage of net sales decreased to 39.1% of net sales for the three months ended September 30, 2025 from 41.5% of net sales for the three months ended September 30, 2024, primarily driven by higher margin contribution of modern oral products offset by higher marketing costs to drive sales.

Included in consolidated operating income are costs of the Company which are not assigned to one of the two reportable segments and include: (i) corporate overhead expense, including executive management, finance, legal and information technology salaries, and professional services, such as audit, external legal costs and information technology services, as well as (ii) costs related to the FDA premarket tobacco product application. For the three months ended September 30, 2025, unallocated costs were $19.0 million compared to $13.7 million in the prior year period, an increase of $5.2 million or 38.1%, primarily driven by joint venture related expenses.

Other (income) expense, net: For the three months ended September 30, 2025, other income increased $4.9 million compared to the prior year period due to an employee retention credit refund received in the current year period that was not applicable in the prior year period.

Interest Expense, net: For the three months ended September 30, 2025, interest expense, net decreased $0.3 million compared to the prior year period as a result of interest income generated from the employee retention credit received in the current year period.

Investment Gain (Loss): For the three months ended September 30, 2025, investment gain increased $0.7 million compared to the prior year period. The investment gain for the three months ended September 30, 2025, is primarily due to the gain on the sale of an available-for-sale marketable security.

(Income) losses from equity method investment: For the three months ended September 30, 2025, income from investments in equity securities increased $2.1 million compared to the prior year period as a result of the acquisition of the Canadian distribution business by GWO.

Income Tax Expense: Our income tax expense of $6.5 million was 21.4% of income before income taxes for the three months ended September 30, 2025. Our effective income tax rate was 27.1% for the three months ended September 30, 2024. The decrease in tax rate compared to the prior year period is due to the inclusion of permanent tax differences related to stock options that were exercised in the third quarter 2025.

Net Income (Loss) Attributable to Non-Controlling Interest: Net income (loss) attributable to non-controlling interest was $2.7 million and $0.0 million, respectively, for the three months ended September 30, 2025 and 2024. The increase in non-controlling interest compared to the prior year period is due to the consolidation of a joint venture starting in December 2024.

Net Income Attributable to Turning Point Brands, Inc.: Due to the factors described above, net income attributable to Turning Point Brands, Inc. for the three months ended September 30, 2025 and 2024, was $21.1 million and $12.5 million, respectively.

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Summary

The table and discussion set forth below relates to our consolidated results of continuing operations:

	Nine Months Ended September 30,
	2025			2024			% Change
Consolidated Results of Operations Data:
Net sales
Zig-Zag products	$	138,441		$	146,502			-5.5	%
Stoker’s products		203,608			120,491			69.0	%
Total net sales		342,049			266,993			28.1	%
Cost of sales		145,389			117,846			23.4	%
Gross profit
Zig-Zag products		74,055			81,737			-9.4	%
Stoker’s products		122,605			67,410			81.9	%
Total gross profit		196,660			149,147			31.9	%

Selling, general, and administrative expenses		121,259			87,874			38.0	%
Other operating income		-			(1,674	)		NM

Operating income
Zig-Zag products		47,258			53,637			-11.9	%
Stoker’s products		83,515			50,420			65.6	%
Total segment operating income		130,773			104,057			25.7	%
Corporate unallocated		(55,372	)		(41,110	)		34.7	%
Total operating income		75,401			62,947			19.8	%
Other (income) expense, net		(4,941	)		-			NM
Interest expense, net		13,085			10,352			26.4	%
Investment (gain) loss		(914	)		2,334			-139.2	%
(Income) losses from equity method investment		(2,328	)		(217	)		NM
Loss on extinguishment of debt		1,235			-			NM
Income from continuing operations before income taxes		69,264			50,478			37.2	%
Income tax expense		12,756			12,811			-0.4	%
Consolidated net income from continuing operations		56,508			37,667			50.0	%
Net income attributable to non-controlling interest		6,553			66			NM
Net income from continuing operations attributable to Turning Point Brands, Inc.	$	49,955		$	37,601			32.9	%

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Comparison of the Nine Months Ended September 30, 2025, to the Nine Months Ended September 30, 2024

Net Sales: For the nine months ended September 30, 2025, consolidated net sales increased $75.1 million, or 28.1% compared to the prior year period, driven primarily by an increase in the Stoker’s products segment.

For the nine months ended September 30, 2025, net sales in the Zig-Zag products segment decreased $8.1 million, or 5.5% compared to the prior year period. The decrease in net sales was driven primarily by declines of $8.9 million in U.S. papers and wraps, $2.5 million in our cigar products, partially offset by an increase of $2.0 million in the Clipper lighter business and a $1.6 million increase in our Canadian products. Clipper has not been a focus area for the Company over the past several quarters and the Company was able to sell the majority of its inventory at a discounted rate with extended payment terms.

For the nine months ended September 30, 2025, net sales in the Stoker’s products segment increased $83.1 million, or 69.0% compared to the prior year period. For the nine months ended September 30, 2025, sales volume of Stoker’s products increased 62.9% compared to the prior year period, which contributed $75.8 million to the increase, and price/product mix increased 6.1% compared to the prior year period, which contributed $7.3 million to the increase. The increase in net sales was primarily driven by $77.7 million of sales in modern oral products and $5.0 million of growth of Stoker’s® MST.

Gross Profit: For the nine months ended September 30, 2025, consolidated gross profit increased $47.5 million, or 31.9% compared to the prior year period. Gross profit as a percentage of net sales increased to 57.5% for the nine months ended September 30, 2025, compared to 55.9% for the nine months ended September 30, 2024. The overall increase in gross profit was driven by increases in net sales in the Stoker's products segment as a result of improved contribution margin from modern oral products.

For the nine months ended September 30, 2025, gross profit in the Zig-Zag products segment decreased $7.7 million, or 9.4% compared to the prior year period. Gross profit as a percentage of net sales decreased to 53.5% of net sales for the nine months ended September 30, 2025, from 55.8% of net sales for the nine months ended September 30, 2024, driven primarily by sales of Clipper lighters at a discounted rate.

For the nine months ended September 30, 2025, gross profit in the Stoker’s products segment increased $55.2 million, or 81.9% compared to the prior year period. Gross profit as a percentage of net sales increased to 60.2% of net sales for the nine months ended September 30, 2025, from 55.9% of net sales for the nine months ended September 30, 2024, primarily driven by improved contribution margin from modern oral products.

Selling, General, and Administrative Expenses: For the nine months ended September 30, 2025, selling, general, and administrative expenses increased $33.4 million, or 38.0% 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 the prior year period. Selling, general and administrative expenses in the nine months ended September 30, 2025, included $5.2 million of stock options, restricted stock and incentives expense, $3.7 million of expense related to PMTA, $0.8 million of elevated non-recurring outbound freight costs due to the ERP transition, $1.6 million of transaction costs, $0.9 million of legal expenses incurred in connection with litigation related to an insurance claim and $0.2 million of expense related to the implementation of the new ERP and CRM systems. Selling, general and administrative expenses in the nine months ended September 30, 2024, included $5.7 million of stock options, restricted stock and incentives expense, $3.1 million of expense related to PMTA, $1.7 million of expense related to corporate restructuring, $1.0 million related to transaction costs and $0.8 million of expense related to the implementation of the new ERP and CRM systems.

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Other Operating Income: For the nine months ended September 30, 2025, other operating income decreased $1.7 million compared to the prior year period due to a federal excise tax refund received in the prior year period that did not repeat in the current year period.

Operating Income: For the nine months ended September 30, 2025, consolidated operating income increased $12.5 million, or 19.8% compared to the prior year period. Operating income as a percentage of net sales decreased to 22.0% of net sales for the nine months ended September 30, 2025 from 23.6% of net sales for the nine months ended September 30, 2024, primarily driven by increased selling, general and administrative costs.

For the nine months ended September 30, 2025, operating income in the Zig-Zag products segment decreased $6.4 million, or 11.9% compared to the prior year period. Operating income as a percentage of net sales decreased to 34.1% of net sales for the nine months ended September 30, 2025 from 36.6% of net sales for the nine months ended September 30, 2024, primarily driven by sales of Clipper lighters at a discounted rate.

For the nine months ended September 30, 2025, operating income in the Stoker’s products segment increased $33.1 million, or 65.6% compared to the prior year period. Operating income as a percentage of net sales decreased slightly to 41.0% of net sales for the nine months ended September 30, 2025 from 41.8% of net sales for the nine months ended September 30, 2024, primarily driven by higher margin contribution of modern oral products offset by higher marketing costs to drive sales.

Included in consolidated operating income are costs of the Company which are not assigned to one of the two reportable segments and include: (i) corporate overhead expense, including executive management, finance, legal and information technology salaries, and professional services, such as audit, external legal costs and information technology services, as well as (ii) costs related to the FDA premarket tobacco product application. For the nine months ended September 30, 2025, unallocated costs were $55.4 million compared to $41.1 million in the prior year period, an increase of $14.3 million, or 34.7%, primarily driven by joint venture related expenses.

Other (income) expense, net: For the nine months ended September 30, 2025, other income increased $4.9 million compared to the prior year period due to an employee retention credit refund received in the current year period that was not applicable in the prior year period.

Interest Expense, net: For the nine months ended September 30, 2025, interest expense, net increased $2.7 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 period.

Investment Gain (Loss): For the nine months ended September 30, 2025, investment gain was $0.9 million compared to a loss of $2.3 million in the prior year period. The $0.9 million investment gain for the nine months ended September 30, 2025, is primarily due to gains on available-for-sale marketable securities of $1.4 million, offset by a $0.9 million impairment charge related to our investment in Old Pal. In the prior year period, we recognized impairment charges on our investments of $1.8 million for Bomani and $0.8 million for Old Pal.

(Income) Losses from Equity Method Investment: For the nine months ended September 30, 2025, income from investments in equity securities increased $2.1 million compared to the prior year period as a result of the acquisition of the Canadian distribution business by GWO.

Loss on Extinguishment of Debt: Loss on extinguishment of debt for the nine months ended September 30, 2025 increased $1.2 million compared to the prior year period as a result of the redemption of the 2026 Notes in February 2025.

Income Tax Expense: Our income tax expense of $12.8 million was 18.4% of income before income taxes for the nine months ended September 30, 2025. Our effective income tax rate was 25.4% for the nine months ended September 30, 2024. The decrease in tax rate compared to the prior year period is due to the inclusion of permanent tax differences related to the Company's restricted stock units that were issued and stock options that were exercised in the nine months ended September 30, 2025.

Net Income Attributable to Non-Controlling Interest: Net income attributable to non-controlling interest was $6.6 million and $0.1 million, respectively, for the nine months ended September 30, 2025 and 2024. The increase in non-controlling interest compared to the prior year period is due to the consolidation of a joint venture starting in December 2024.

Net Income Attributable to Turning Point Brands, Inc.: Due to the factors described above, net income attributable to Turning Point Brands, Inc. for the nine months ended September 30, 2025 and 2024, was $50.0 million and $37.6 million, respectively.

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EBITDA and Adjusted EBITDA

To supplement our financial information presented in accordance with generally accepted accounting principles in the United States, or U.S. GAAP, we use non-U.S. GAAP financial measures including EBITDA and Adjusted EBITDA. We believe Adjusted EBITDA provides useful information to management and investors regarding certain financial and business trends relating to our financial condition and results of operations. Adjusted EBITDA is used by management to compare our performance to that of prior periods for trend analyses and planning purposes and is presented to our Board of Directors. We believe that EBITDA and Adjusted EBITDA are appropriate measures of operating performance because they eliminate the impact of expenses that do not relate to operating performance. In addition, our debt instruments contain covenants which use Adjusted EBITDA calculations.

We define “EBITDA” as net income attributable to Turning Point Brands, Inc. before interest expense, gain (loss) on extinguishment of debt, income tax expense, depreciation and amortization. We define “Adjusted EBITDA” as net income before interest expense, gain (loss) on extinguishment of debt, income tax expense, depreciation, amortization, other non-cash items and other items we do not consider the ordinary course in our evaluation of ongoing operating performance noted in the reconciliation below. Among other items that we adjust Adjusted EBITDA for is FDA PMTA expense. 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. 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. The Company reconciles its EBITDA metrics to Net income attributable to Turning Point Brands, Inc. because that measure reflects the Company’s portion of the profitability from consolidated joint ventures after removing results attributable to our partners in such joint ventures.

Non-U.S. GAAP measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with U.S. GAAP. Adjusted EBITDA excludes significant expenses required to be recorded in our financial statements by U.S. GAAP and is subject to inherent limitations. Other companies in our industry may calculate this non-U.S. GAAP measure differently than we do or may not calculate it at all, limiting its usefulness as a comparative measure. The tables below provide reconciliations between net income and Adjusted EBITDA.

	Three Months Ended					Nine Months Ended
(in thousands)	September 30,					September 30,
	2025			2024		2025			2024
Net income attributable to Turning Point Brands, Inc.	$	21,080		$	12,376	$	49,955		$	37,393
Add:
Interest expense, net		3,653			3,831		13,194			10,352
Loss on extinguishment of debt		-			-		1,235			-
Income tax expense		6,694			4,652		12,978			12,811
Depreciation expense		814			943		2,484			2,498
Amortization expense		1,132			729		3,003			1,597
EBITDA	$	33,373		$	22,531	$	82,849		$	64,651
Components of Adjusted EBITDA
Corporate restructuring ^(a)		233			186		233			1,730
ERP/CRM ^(b)		-			154		211			781
Stock based compensation^(c)		1,884			1,769		5,176			5,720
Transactional expenses and strategic initiatives^(d)		820			873		1,566			1,000
Non-recurring freight ^(e)		-			-		837			-
Non-recurring legal ^(f)		437			-		941			-
FDA PMTA ^(g)		482			1,242		3,724			3,080
Mark-to-market gain on Canadian inter-company note ^(h)		(10	)		-		(360	)		-
Non-cash asset impairment ⁽ⁱ⁾		-			-		908			2,722
Gain on investment ^(j)		(678	)		-		(1,392	)		-
FET refund ^(k)		-			-		-			(1,674	)
ERC refund ^(l)		(5,451	)		-		(5,451	)		-
Honorarium ^(m)		255			-		255			-
Adjusted EBITDA	$	31,345		$	26,755	$	89,497		$	78,010

(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, PRSUs, etc.

(d)	Represents the fees incurred for transaction expenses.
(e)	Represents elevated non-recurring outbound freight costs due to ERP transition.
(f)	Represents legal expenses incurred in connection with litigation related to an insurance claim.

(g)	Represents costs associated with applications related to FDA premarket tobacco product 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 application is a onetime resource-intensive process for each covered product line; however, due to the nature of the implementation process for those product lines already in the market, applications can take multiple years to complete rather than the typical one-time submission. The Company 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.
(h)	Represents a mark-to-market gain attributable to foreign exchange fluctuation.
(i)	Represents impairment of investment assets.
(j)	Represents gain on investments.
(k)	Represents a federal excise tax refund included in other operating income.
(l)	Represents an employee retention credit refund received included in other (income) expense, net.
(m)	Represents an honorarium gift included in other (income) expense, net.

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Liquidity and Capital Resources

As of September 30, 2025, we have $201.2 million of cash on hand and $66.6 million of availability under the 2023 ABL Facility. We have no borrowings outstanding under our 2023 ABL Facility as of September 30, 2025. Our principal uses for cash are working capital, debt service, and capital expenditures.

Our adjusted working capital, which we define as current assets less cash and current liabilities, increased $16.7 million compared to the prior year end. Excluding assets and liabilities held for sale at December 31, 2024, our adjusted working capital increased $26.1 million for the quarter ended September 30, 2025. The increase in working capital is primarily the result of a $18.2 million increase in accounts receivable, an $16.5 million increase in inventory and a $20.0 million increase in other current assets, partially offset by an increase of $12.9 million in accounts payable and a $15.6 million increase in accrued liabilities. With our strong cash balance, free cash flow generation and borrowing availability under the 2023 ABL Facility, we expect to have ample liquidity to satisfy our operating cash requirements for the foreseeable future.

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 Company is filing an amendment to the prospectus supplement to increase the aggregate dollar amount of shares of common stock that it may sell under the ATM Program by an additional $200,000,000. Between August 15, 2025, and September 11, 2025, the Company sold 1,014,262 shares of our Common Stock under the ATM Program at an average selling price of $98.59 per share for gross proceeds of $100.0 million, less underwriter's commission and expenses of approximately $2.5 million, for net proceeds of $97.5 million.

	September 30,		December 31,
(in thousands)	2025		2024

Current assets	$	195,247	$	152,047
Current liabilities		71,337		44,820
Adjusted working capital	$	123,910	$	107,227

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)	Nine Months Ended
	September 30,
Cash provided by (used in):	2025			2024
Operating activities	$	32,515		$	44,908
Investing activities	$	(28,384	)	$	(9,064	)
Financing activities	$	148,250		$	(127,527	)

Cash Flows from Operating Activities

For the nine months ended September 30, 2025, net cash provided by operating activities was $32.5 million, a decrease of $12.4 million compared to the prior year period. The decrease is primarily due to unfavorable changes of $20.6 million in working capital and $10.2 million in other assets, partially offset by an increase in net income, net of non-cash items of $18.3 million. The primary drivers of non-cash items were a $4.3 million increase in deferred tax expense, a $1.3 million increase in depreciation and amortization, a $3.2 million decrease in loss on investments, a $2.3 million decrease in income from equity method investment and a $1.2 million increase in loss on extinguishment of debt compared to the prior year period. The decrease in cash from working capital compared to the prior year period was primarily driven by the timing of payments.

Cash Flows from Investing Activities

For the nine months ended September 30, 2025, net cash used in investing activities was $28.4 million, an increase of $19.3 million compared to the prior year period, primarily due to the purchase of the option by Turning Point Brands Canada to acquire the Canadian distribution business for $8 million, an increase in capital expenditures of $6.7 million, an increase of $4.0 million for purchases of investments, $1.5 million increase for purchases of non-marketable equity investments, partially offset by an increase of $1.0 million for proceeds from the sales of investments.

Cash Flows from Financing Activities

For the nine months ended September 30, 2025, net cash provided by financing activities was $148.3 million, an increase of $275.8 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 $4.2 million of common stock repurchases in the prior year period that did not repeat in 2025.

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Dividends and Shares Repurchases

A dividend of $0.075 per common share was paid on October 10, 2025, to shareholders of record at the close of business on September 19, 2025.

On February 25, 2020, our Board of Directors approved a $50.0 million share repurchase program, which is intended for opportunistic execution based upon a variety of factors including market dynamics. The program is subject to the ongoing discretion of the Board of Directors. On October 25, 2021, the Board of Directors increased the approved share repurchase program by $30.7 million, and by $24.6 million on February 24, 2022. On November 6, 2024, the Company's Board of Directors 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. For the nine months ended September 30, 2025, there were no repurchases under the share repurchase program. As of September 30, 2025, there was $100.0 million in remaining repurchase authority under the plan.

Long-Term Debt

Notes payable and long-term debt consisted of the following at September 30, 2025 and December 31, 2024, in order of preference:

	September 30,			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 finance charges		(6,636	)		(1,396	)
Notes payable and long-term debt	$	293,364		$	248,604

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”). Interest on the 2032 Notes is payable semi-annually on March 15 and September 15 of each year, commencing on September 15, 2025. We used the proceeds from the offering (i) to repay all obligations under and terminate the 2026 Notes (as defined below), (ii) to pay related fees, costs and expenses and (iii) for general corporate purposes. The 2032 Notes are fully and unconditionally guaranteed on a senior secured basis, jointly and severally, by each current and future wholly-owned domestic restricted subsidiary of the Company that guaranteed the 2026 Notes (collectively, the “Guarantors” as defined in the indenture governing the 2032 Notes or the “2032 Notes Indenture”). 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.

The 2032 Notes Indenture contains covenants that, among other things, restrict the ability of the Company and its restricted subsidiaries to: (i) grant or incur liens; (ii) incur, assume or guarantee additional indebtedness; (iii) sell or otherwise dispose of assets, including capital stock of subsidiaries; (iv) make certain investments; (v) pay dividends, make distributions or redeem or repurchase capital stock; (vi) engage in certain transactions with affiliates; and (vii) consolidate or merge with or into, or sell substantially all of our assets to another entity. These covenants are subject to several limitations and exceptions set forth in the 2032 Notes Indenture. 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. The 2032 Notes Indenture provides for customary events of default.

We incurred debt issuance costs attributable to the 2032 Notes of $7.1 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”). The 2026 Notes incurred interest at a rate of 5.625%. Interest on the 2026 Notes is payable semi-annually in arrears on February 15 and August 15 of each year, commencing on August 15, 2021.We used the proceeds from the offering (i) to repay all obligations under and terminate the 2018 First Lien Credit Facility, (ii) to pay related fees, costs and expenses and (iii) for general corporate purposes. In February 2025, we redeemed the 2026 Notes with the proceeds from the offering of the 2032 Notes.

Obligations under the 2026 Notes were guaranteed by the Company’s existing and future wholly-owned domestic subsidiaries (the “Guarantors”) that guarantee any credit facility (as defined in the indenture governing the 2026 Notes) or capital markets debt securities of the Company or Guarantors in excess of $15.0 million. The 2026 Notes and the related guarantees were 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.

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 redemption.

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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 and First-Citizens Bank & Trust Company as additional collateral agent (the “Additional Collateral Agent”). Under the 2023 ABL Facility, the ABL Borrower may draw up to $75.0 million under Revolving Credit Loans and Last In Last Out (“LILO”) Loans. The 2023 ABL Facility includes a $40.0 million accordion feature. In connection with the 2023 ABL Facility, Turning Point Brands contributed certain existing inventory to the ABL Borrower. The 2023 ABL Facility is secured on a first priority basis (subject to customary exceptions) by all assets of the ABL Borrower.

The 2023 ABL Facility contains customary borrowing conditions including a borrowing base equal to the sum of (a) the lesser of (1) 85% of the lower of (A) the market value (on a first in first out basis) of the sum of eligible inventory, plus eligible in-transit inventory of the ABL Borrower and (B) 85% of the cost of the sum of eligible inventory, plus eligible in-transit inventory of the ABL Borrower and (2) 85% of the net orderly liquidation value (“NOLV”) percentage of the lower of (1)(A) or (1)(B); plus (b) 85% of the face value of all eligible accounts of the ABL Borrower minus (c) the amount of all eligible reserves. The 2023 ABL Facility also includes a LILO borrowing base equal to the sum of (a) the lesser of: (1) 10% of the lower of (A) the market value (on a first in first out basis) of the sum of eligible inventory, plus eligible in-transit inventory of the ABL Borrower and (B) the cost of the sum of eligible inventory, plus eligible in-transit inventory and (2) 10% of the NOLV percentage of the lower of (1)(A) or (1)(B); plus (b) 10% of the face amount of eligible account; minus (c) the amount of all eligible reserves.

Amounts borrowed under the 2023 ABL Facility are subject to an interest rate margin per annum equal to (a) from and after the closing date until the last day of the first full fiscal quarter ended after the closing date, (i) 1.25% per annum, in the case base rate loans, and (ii) 2.25% per annum, in the case of revolving credit loans that are secured overnight financing rate (“SOFR”) loans, (b)(i) 2.25% per annum, in the case of LILO loans that are base rate loans, and (ii) 3.25% per annum, in the case of LILO loans that are SOFR loans, (c) on the first day of each fiscal quarter, the applicable interest rate margins will be determined from the pricing grid below based upon the historical excess availability for the most recent fiscal quarter ended immediately prior to the relevant date, as calculated by the Administrative Agent.

		Applicable Margin	Applicable Margin
Level	Historical Excess Availability	for SOFR Loans	for 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.

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.

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 $66.6 million based on the borrowing base as of September 30, 2025.

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. No principal amounts remained outstanding as of December 31, 2024.

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Additional Information with Respect to Unrestricted Subsidiaries

Under the terms of the 2032 Notes, and 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. 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. This additional information is presented below.

Income Statements for the three and nine months ended September 30, 2025 and 2024 (unaudited):

	Three Months Ended September 30,
	2025									2024
	Company and									Company and
	Restricted			Unrestricted						Restricted			Unrestricted
	Subsidiaries			Subsidiaries			Consolidated			Subsidiaries			Subsidiaries			Consolidated
Net sales	$	97,714		$	21,265		$	118,979		$	90,704		$	-		$	90,704
Cost of sales		40,414			8,138			48,552			40,322			(13	)		40,309
Gross profit (loss)		57,300			13,127			70,427			50,382			13			50,395
Selling, general, and administrative expenses		36,170			8,372			44,542			29,743			(153	)		29,590
Other operating income		-			-			-			-			-			-
Operating income		21,130			4,755			25,885			20,639			166			20,805
Other (income) expense, net		(4,941	)		-			(4,941	)		-			-			-
Interest expense (income), net		3,905			(374	)		3,531			3,978			(147	)		3,831
Investment (gain) loss		(139	)		(678	)		(817	)		(143	)		-			(143	)
(Income) losses from equity method investment		(2,147	)		30			(2,117	)		-			(60	)		(60	)
Income before income taxes		24,452			5,777			30,229			16,804			373			17,177
Income tax expense		5,235			1,237			6,472			4,551			101			4,652
Consolidated net income		19,217			4,540			23,757			12,253			272			12,525
Net income (loss) attributable to non-controlling interest		444			2,233			2,677			(16	)		-			(16	)
Net income attributable to Turning Point Brands, Inc.	$	18,773		$	2,307		$	21,080		$	12,269		$	272		$	12,541

	Nine Months Ended September 30,
	2025									2024
	Company and									Company and
	Restricted			Unrestricted						Restricted			Unrestricted
	Subsidiaries			Subsidiaries			Consolidated			Subsidiaries			Subsidiaries			Consolidated
Net sales	$	289,945		$	52,104		$	342,049		$	267,003		$	(10	)	$	266,993
Cost of sales		124,723			20,666			145,389			117,862			(16	)		117,846
Gross profit (loss)		165,222			31,438			196,660			149,141			6			149,147
Selling, general, and administrative expenses		103,440			17,819			121,259			88,344			(470	)		87,874
Other operating income		-			-			-			(1,674	)		-			(1,674	)
Operating income		61,782			13,619			75,401			62,471			476			62,947
Other (income) expense, net		(4,941	)		-			(4,941	)		-			-			-
Interest expense (income), net		14,001			(916	)		13,085			10,602			(250	)		10,352
Investment (gain) loss		(236	)		(678	)		(914	)		2,334			-			2,334
(Income) losses from equity method investment		(2,184	)		67			(2,117	)		-			(217	)		(217	)
Gain on extinguishment of debt		1,235			-			1,235			-			-			-
Income before income taxes		54,118			15,146			69,264			49,535			943			50,478
Income tax expense		9,967			2,789			12,756			12,572			239			12,811
Consolidated net income		44,151			12,357			56,508			36,963			704			37,667
Net (loss) income attributable to non-controlling interest		187			6,366			6,553			66			-			66
Net income attributable to Turning Point Brands, Inc.	$	43,964		$	5,991		$	49,955		$	36,897		$	704		$	37,601

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Balance Sheet as of September 30, 2025 (unaudited):

	Company and
	Restricted			Unrestricted
	Subsidiaries			Subsidiaries		Eliminations			Consolidated
ASSETS
Current assets:
Cash	$	167,917		$	33,272	$	-		$	201,189
Accounts receivable, net		26,206			1,586		-			27,792
Inventories		105,326			7,464		-			112,790
Other current assets		49,956			4,709		-			54,665
Total current assets		349,405			47,031		-			396,436
Property, plant, and equipment, net		33,842			38		-			33,880
Right of use assets		12,915			-		-			12,915
Deferred financing costs, net		1,341			-		-			1,341
Goodwill		136,068			-		-			136,068
Other intangible assets, net		64,344			-		-			64,344
Master Settlement Agreement (MSA) escrow deposits		29,762			-		-			29,762
Other assets		52,659			15,443		-			68,102
Investment in unrestricted subsidiaries		-			750		(750	)		-
Total assets	$	680,336		$	63,262	$	(750	)	$	742,848

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	16,584		$	8,015	$	-		$	24,599
Accrued liabilities		35,981			7,968		2,789			46,738
Total current liabilities		52,565			15,983		2,789			71,337
Deferred tax liabilities, net		3,971			-		-			3,971
Notes payable and long-term debt		293,364			-		-			293,364
Other long-term liabilities		6,182			-		-			6,182
Lease liabilities		9,841			-		-			9,841
Total liabilities		365,923			15,983		2,789			384,695

Commitments and contingencies

Stockholders’ equity:
Total Turning Point Brands, Inc. Stockholders’ Equity/Net parent investment in unrestricted subsidiaries		319,418			28,071		(3,539	)		343,950
Non-controlling interest		(5,005	)		19,208		-			14,203
Total stockholders’ equity		314,413			47,279		(3,539	)		358,153
Total liabilities and stockholders’ equity	$	680,336		$	63,262	$	(750	)	$	742,848

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Balance Sheet as of December 31, 2024:

	Company and
	Restricted		Unrestricted
	Subsidiaries		Subsidiaries		Eliminations			Consolidated
ASSETS
Current assets:
Cash	$	37,279	$	8,879	$	-		$	46,158
Accounts receivable, net		9,624		-		-			9,624
Inventories, net		95,378		875		-			96,253
Current assets held for sale		11,470		-		-			11,470
Other current assets		33,599		1,101		-			34,700
Total current assets		187,350		10,855		-			198,205
Property, plant, and equipment, net		26,337		-		-			26,337
Deferred tax assets		995		-		-			995
Right of use assets		11,610		-		-			11,610
Deferred financing costs, net		1,823		-		-			1,823
Goodwill		135,932		-		-			135,932
Other intangible assets, net		65,254		-		-			65,254
Master Settlement Agreement (MSA) escrow deposits		28,676		-		-			28,676
Noncurrent assets held for sale		3,859		-					3,859
Other assets		14,365		6,297		-			20,662
Investment in unrestricted subsidiaries		-		750		(750	)		-
Total assets	$	476,201	$	17,902	$	(750	)	$	493,353

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	8,420	$	3,255	$	-		$	11,675
Accrued liabilities		29,540		719		837			31,096
Current liabilities held for sale		2,049		-		-			2,049
Total current liabilities		40,009		3,974		837			44,820
Notes payable and long-term debt		248,604		-		-			248,604
Lease liabilities		9,549		-		-			9,549
Total liabilities		298,162		3,974		837			302,973

Commitments and contingencies

Stockholders’ equity:
Total Turning Point Brands, Inc. 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

Off-balance Sheet Arrangements

At September 30, 2025, we had no foreign currency contracts outstanding. 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. 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.

Inflation

Inflation has a substantial negative effect on the purchasing power of consumers. While historically, we have been able to increase prices at a rate equal to or greater than that of inflation, doing so could be difficult in an inflationary environment. However, we have implemented price increases in areas where doing so has been feasible. In addition, we have been able to maintain a relatively stable variable cost structure for our products due, in part, to our existing contractual agreements for the purchases of tobacco and our premium cigarette rolling papers.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk

Foreign Currency Sensitivity

During the nine months ended September 30, 2025, there have been no material changes in our exposure to exchange rate fluctuation risk, as reported within our 2024 Annual Report on Form 10-K. Please refer to our ‘Quantitative and Qualitative Disclosures about Market Risk’ included in our 2024 Annual Report on Form 10-K filed with the SEC.

Credit Risk

During the nine months ended September 30, 2025, there have been no material changes in our exposure to credit risk, as reported within our 2024 Annual Report on Form 10-K. Please refer to our ‘Quantitative and Qualitative Disclosures about Market Risk’ included in our 2024 Annual Report on Form 10-K filed with the SEC.

Interest Rate Sensitivity

In February 2025, we issued the 2032 Notes in an aggregate principal amount of $300.0 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 changes in interest rates. Our remaining debt instrument is the 2023 ABL Facility, which as of September 30, 2025 and the filing date of this report had no borrowings outstanding.

Item 4. Controls and Procedures

We have carried out an evaluation under the supervision, and with the participation of, our management including our Chief Executive Officer (“CEO”), Chief Financial Officer (“CFO”), and Chief Accounting Officer (“CAO”), of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act of 1934), as of September 30, 2025. Based upon the evaluation, our CEO, CFO, and CAO concluded our disclosure controls and procedures are not effective as of such date solely due to a material weakness in internal controls over financial reporting that was disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

As previously described in Part II, Item 9A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, during our evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2024, we concluded that our internal control over financial reporting was not effective solely due to the existence of the following material weakness:

We did not design and maintain effective internal controls related to our information technology general controls (“ITGCs”) in the areas of user access and program change-management over certain information technology (“IT”) systems that support the Company’s financial reporting processes. Our business process controls

(automated and manual) that are dependent on the affected ITGCs were also deemed ineffective because they could have been adversely impacted. We believe that these control deficiencies were a result of: IT control processes lacking sufficient documentation such that the successful operation of ITGCs was overly dependent

upon knowledge and actions of certain individuals with IT expertise and inherent system limitations.

The material weakness did not result in any identified misstatements to our financial statements for any period, and there were no changes to previously released financial results. The material weakness will not be considered remediated until the applicable controls operate for a sufficient period of time, and management has concluded through testing that these controls are operating effectively.

Remediation Plan

Management has been implementing and continues to implement measures designed to ensure that control deficiencies contributing to the material weakness are remediated, such that these controls are designed, implemented, and operating effectively. The remediation actions include: (i) completing the implementation of a new ERP system, which was completed in April 2025; (ii) engaging third-party consultants to assist in the review, planning and implementation of systems and tools designed to support the remediation processes; (iii) developing and maintaining documentation underlying ITGCs; (iv) implementing an IT management review and testing plan to monitor ITGCs with a specific focus on systems that support our financial reporting processes; (v) providing training for control owners and reviewers with a specific focus on identifying, addressing and documenting risks; and (vi) providing enhanced quarterly reporting on the remediation progress to the Audit Committee of the Board of Directors.

While we have made significant progress in strengthening our internal controls, the previously identified material weakness was not fully remediated as of September 30, 2025. We expect to complete the remediation by the end of fiscal year 2025, as at that time we believe the referenced controls will have been in place for a sufficient period of time to demonstrate operating effectiveness.

Role of the Audit Committee in Material Weakness Remediation

The Audit Committee of the Board of Directors is actively overseeing the remediation of the material weakness. Working closely with management, as well as with the Company’s internal audit, finance teams, and independent auditors, the Audit Committee has and will continue to monitor and evaluate the progress of the remediation throughout the fiscal year ending December 31, 2025. Regular updates on the remediation have been and will continue to be provided to the Board of Directors, with the Audit Committee ensuring management’s testing of the remediated controls is completed as soon as practicable.

Changes in Internal Controls over Financial Reporting

There were no changes in the Company’s internal controls over financial reporting during the quarter ended September 30, 2025 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II—OTHER INFORMATION

Item 1. Legal Proceedings

See “Risk Factors—We are subject to significant product liability litigation” in our 2024 Annual Report on Form 10-K for additional details.

Item 1A. Risk Factors

In addition to the other information set forth in this report, carefully consider the factors discussed in the ‘Risk Factors’ section contained in our 2024 Annual Report on Form 10-K. There have been no material changes to the Risk Factors set forth in the 2024 Annual Report on Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

On February 25, 2020, the Company’s Board of Directors approved a $50.0 million share repurchase program, which is intended for opportunistic execution based upon a variety of factors including market dynamics. On October 25, 2021, the Board of Directors increased the approved share repurchase program by $30.7 million, and by an additional $24.6 million on February 24, 2022. On November 6, 2024, the Company's Board of Directors 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. As of September 30, 2025, there remains $100.0 million in authority to repurchase shares under the plan. 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.

During the three months ended September 30, 2025, the Company made no purchases of common stock in connection with the repurchase program described above.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

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Item 6. Exhibits

Exhibit No.	Description

31.1	Rule 13a-14(a)/15d-14(a) Certification of Graham Purdy.*

31.2	Rule 13a-14(a)/15d-14(a) Certification of Andrew Flynn.*

31.3	Rule 13a-14(a)/15d-14(a) Certification of Brian Wigginton.*

32.1	Section 1350 Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

101	XBRL (eXtensible Business Reporting Language). The following materials from Turning Point Brands, Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2025, filed on November 5, 2025, formatted in Inline XBRL (iXBRL): (i) consolidated balance sheets, (ii) consolidated statements of income, (iii) consolidated statements of comprehensive income, (iv) consolidated statements of cash flows, and (v) the notes to consolidated financial statements.*

104	Cover Page Interactive Data File (formatted in iXBRL and included in Exhibit 101).*

*	Filed or furnished herewith

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Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

TURNING POINT BRANDS, INC.

	By: /s/ Graham Purdy
	Name:	Graham Purdy

			Title: President and Chief Executive Officer

		By: /s/ Andrew Flynn
		Name:	Andrew Flynn

			Title: Chief Financial Officer

		By: /s/ Brian Wigginton
		Name:	Brian Wigginton

Title: Chief Accounting Officer

Date: November 5, 2025