What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2026-03-02 compared with 2025-03-06 · 138 added, 225 removed, 375 unchanged (49% of the section changed)

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Future dividend amounts will be considered after reviewing financial results and capital needs and will be declared at the discretion of our Board of Directors.

During the years ended December 31, 2025, 2024, and 2023, the Company paid cash dividends of $0.30 per common share for $5.5 million, $0.28 per common share for $4.9 million and $0.26 per common share for $4.5 million, respectively.

Equity Compensation Plan Information.

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The information presented assumes the investment of $100 in common stock and each of the indices as of the market close on December 31, 2020 and the reinvestment of all dividends on a quarterly basis.

This performance graph shall not be deemed “ filed ” for purposes of Section 18 of the Exchange Act or incorporated by reference into any filing of the Company ’ s under the Securities Act, or the Exchange Act, except as shall be expressly set forth by specific

reference in such filing.

Issuer purchases of equity securities.

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On November 6, 2024, the Board of Directors of the Company increased the Company’s share repurchase authorization by $77.9 million to an aggregate amount of $100.0 million.

On November 4, 2025, the Company's Board of Directors increased the share repurchase authorization by $100.0 million to an aggregate amount of $200.0 million.

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.

The following table includes information regarding purchases of our common stock made by us during the three months ended December 31, 2024 in connection with the repurchase program described above:

Maximum Number

(or Approximate

Total Number of

Dollar Value)

Shares Purchased

of Shares that

as Part of Publicly

Announced Plans

Purchased Under the

Purchased (1)

Plans or Programs

October 1 to October 31

November 1 to November 30

December 1 to December 31

(1) The total number of shares purchased includes shares withheld by the Company in an amount equal to the statutory withholding taxes for holders who vested in stock-based awards, which totaled 512 shares in November and 2,542 shares in December.

Shares withheld by the Company to cover statutory withholdings taxes are repurchased pursuant to the applicable plan and not the authorization under the share repurchase program.

There were no purchases of our common stock made by us during the three months ended December 31, 2025 in connection with the repurchase program.

Selected Financial Data

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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 growth over the four-year period ended 2024 as reported by Management Science Associates, Inc.

a third-party analytics and information company.

The OTP industry, which consists of non-cigarette tobacco products, exhibited flat consumer unit annualized growth during the full year period ended 2025 as reported by MSAi a third-party analytics and information company.

Our segments are led by our core proprietary and iconic brands:

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We believe there are meaningful opportunities to expand through investing in organic growth via acquisitions and joint ventures across all product categories.

Our products are currently available in approximately 200,000 U.S.

retail locations, which, with the addition of retail stores in Canada, bring our total North American retail presence to an estimated 220,000 points of distribution.

Our products are currently available in approximately 220,000 retail locations in North America.

Our sales team targets widespread distribution to all traditional retail channels, including convenience stores, and we have a growing e-commerce business.

Recent Developments

Contribution of Creative Distribution Solutions

On January 2, 2025, the Company contributed 100% of its interest in South Beach Brands LLC (“SBB”), the subsidiary that owns and operates the Company’s former Creative Distribution Solutions (“CDS”) reportable segment, to General Wireless Operations, Inc.

GWO is a joint venture between the Company and Standard General, LP entered into in December 2018, the primary operations of which will be related to the CDS business.

The divestiture of the CDS business represents a strategic shift of operations and allows the Company to focus resources on its Zig-Zag and Stoker's product segments.

The assets and liabilities associated with the CDS business have been classified as held for sale as of December 31, 2024, and the CDS operations have been classified as discontinued operations and reported separately for all periods presented in this annual report of Form 10-K.

The Company holds a 49% minority interest in GWO and will account for its investment in GWO under the equity method.

Refer to Note 3, "Assets and Liabilities Held for Sale and Discontinued Operations" and Note 24, "Subsequent Events" in Notes to Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for further discussion regarding the divestiture.

Senior Secured Notes Offering

In February 2025, we issued $300.0 million in aggregate principal amount of our 7.625% senior secured notes due 2032 (the “2032 Notes”) at a price of 100%, the proceeds of which were used to repay in full the $250 million in aggregate principal amount outstanding of 5.625% senior secured notes due 2026 (the “2026 Notes”).

The 2026 Notes were originally issued in 2021.

The 2032 Notes are guaranteed by certain of the Company’s wholly-owned domestic subsidiaries but not the borrower under the Company’s ABL facility.

The 2023 Notes are senior secured obligations of the Company and guarantors secured on a first lien basis by all assets of the Company and guarantors, subject to customary exclusions.

As a result of the U.S.

trade policies beginning in 2025, we incurred tariff charges on certain products we import from overseas manufacturers.

Certain of these tariffs were imposed by the administration utilizing the International Emergency Economic Powers Act(IEEPA).

In February 2026, the United States Supreme Court held that the International Emergency Economic Powers Act does not authorize the president to impose tariffs and the government immediately ceased collecting such tariffs.

While this ruling prohibits the imposition of tariffs under IEEPA it does not provide for a refund mechanism, and we cannot assure as to when or how much of the tariffs the Company previously paid under IEEPA will be refunded.

In addition, the ruling does not prohibit the imposition of tariffs pursuant to other statutes.

For instance, in response to the ruling the administration imposed a blanket 10% on all products importers pursuant to section 122 of the Trade Act of 1974.

We operate in two segments:

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Our sales and marketing group of approximately 257 professionals utilize the MSAi system to efficiently target markets and sales channels with the highest sales potential.

Our core Zig-Zag products and Stoker’s products segments primarily generate revenues from the sale of our products to wholesale distributors who, in turn, resell the products to retail operations.

Our 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.

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Labor and production costs;

Cost of complying with regulation, including the “deeming regulation”, as well as the unpredictable nature of the regulatory regimes;

Cost of complying with regulation as well as the unpredictable nature of the regulatory regimes;

Changes to U.S.

trade policies;

trade policies, especially related to import tariffs;

Counterfeit and other illegal products in our end-markets;

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Interest expense, net

Investment loss

Gain on extinguishment of debt

Investment (gain) loss

(Income) losses from equity method investment

Loss on extinguishment of debt

Income from continuing operations before income taxes

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Consolidated net income from continuing operations

Net income (loss) attributable to non-controlling interest

Net income attributable to non-controlling interest

Net income from continuing operations attributable to Turning Point Brands, Inc.

Comparison of Year Ended December 31, 2025, to Year Ended December 31, 2024

For the year ended December 31, 2024, consolidated net sales increased $35.6 million, or 11.0%, compared to the prior year period, driven by increases in net sales across both segments.

For the year ended December 31, 2024, net sales in the Zig-Zag products segment increased $11.9 million, or 6.6%, compared to the prior year period.

The increase in net sales was driven primarily by $11.5 million of growth in papers, wraps and accessories, as well as $5.6 million of growth in cigars.

This growth was partially offset by declines of $5.0 million in our Clipper lighter business.

For the year ended December 31, 2025, consolidated net sales increased $102.4 million, or 28.4%, compared to the prior year period, primarily driven by an increase in net sales in the Stoker's segment mainly relating to modern oral growth.

For the year ended December 31, 2025, net sales in the Zig-Zag products segment decreased $13.9 million, or 7.2%, compared to the prior year period.

The decrease in net sales was driven primarily by $15.2 million decline in U.S.

papers, wraps, as well as $1.7 million decline in cigars, which was anticipated with expected opportunity costs associated with our focus on oral expansion.

This decline was partially offset by $2.9 million of growth in our Canadian business.

For the year ended December 31, 2025, net sales in the Stoker’s products segment increased $116.3 million, or 69.1%, compared to the prior year period.

For the year ended December 31, 2024, sales volume of Stoker’s products increased 6.8% as compared with the prior year period contributing $9.9 million to the increase, and price/product mix increased 9.6% which contributed $13.8 million to the increase.

The increase in net sales was driven primarily by $107.7 million of growth in modern oral products while the remaining growth is attributable to MST and loose-leaf chewing tobacco.

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For the year ended December 31, 2025, consolidated gross profit increased $62.7 million, or 31.1%, compared to the prior year period.

Gross profit as a percentage of net sales decreased to 55.9% of net sales for the year ended December 31, 2024, from 56.3% of net sales for the year ended December 31, 2023.

The overall decrease in gross profit margin was driven primarily by increased sales in modern oral in the Stoker’s products segment and cigars in the Zig-Zag products segment which generates lower margins than other product categories.

For the year ended December 31, 2024, gross profit in the Zig-Zag products segment increased $5.5 million, or 5.5%, compared to the prior year period.

Gross profit as a percentage of net sales decreased to 55.4% of net sales for the year ended December 31, 2024, from 56.0% of net sales for the year ended December 31, 2023, driven primarily by growth in net sales of cigar products which generate lower margins than other products in the segment.

Gross profit as a percentage of net sales increased to 57.1% of net sales for the year ended December 31, 2025, from 55.9% of net sales for the year ended December 31, 2024.

The overall increase in gross profit margin was driven primarily by improved margin contribution from modern oral products and MST in the Stoker’s products segment.

For the year ended December 31, 2025, gross profit in the Zig-Zag products segment decreased $10.7 million, or 10.0%, compared to the prior year period.

Gross profit as a percentage of net sales decreased to 53.7% of net sales for the year ended December 31, 2025, from 55.4% of net sales for the year ended December 31, 2024, driven primarily by Zig-Zag cigar wraps margins due to imposed tariffs and a shift in product mix with an increase in products with lower margins in the segment.

For the year ended December 31, 2025, gross profit in the Stoker’s products segment increased $73.4 million, or 77.3%, compared to the prior year period.

Gross profit as a percentage of net sales decreased to 56.4% of net sales for the year ended December 31, 2024 from 56.6% of net sales for the year ended December 31, 2023, driven primarily by the growth in net sales of modern oral products which generate lower margins than other products in the segment.

Gross profit as a percentage of net sales increased to 59.2% of net sales for the year ended December 31, 2025 from 56.4% of net sales for the year ended December 31, 2024, driven primarily by the growth in net sales of modern oral products generating higher margin contributions than the previous year.

Selling, General and Administrative Expenses :

For the year ended December 31, 2024, selling, general and administrative expenses increased $18.1 million, or 17.3%, compared to the prior year period.

For the year ended December 31, 2025, selling, general and administrative expenses increased $46.6 million, or 38.1%, compared to the prior year period primarily due to increased shipping and selling costs related to the increase in modern oral sales in the period compared to prior period.

Selling, general and administrative expenses for the year ended December 31, 2025, included $6.9 million of stock options, restricted stock and incentives expense, $1.2 million of expense related to corporate restructuring, $4.8 million of expense related to PMTA, a $0.8 million increase in non-recurring outbound freight costs related to our ERP transition, $0.9 million of legal expenses incurred in connection with litigation related to an insurance claim for the tobacco damaged in a tornado, $2.0 million related to transaction costs and $0.2 million of expense related to the implementation of the new ERP and CRM systems.

Selling, general and administrative expenses for the year ended December 31, 2024, included $7.2 million of stock options, restricted stock and incentives expense, $4.6 million of expense related to corporate restructuring, $3.6 million of expense related to PMTA, $2.1 million related to transaction costs and $0.9 million of expense related to the implementation of the new ERP and CRM systems.

Corporate restructuring expense increased in 2024 compared to the prior year period primarily due to a voluntary early retirement program offered to employees in October 2024.

This program offered early retirement benefits to employees meeting certain criteria.

Agreements with employees were finalized in the fourth quarter of 2024 and the Company booked a $2.7 million reserve for estimated future payments.

Selling, general and administrative expenses for the year ended December 31, 2023, included $6.6 million of stock options, restricted stock and incentives expense, $2.1 million of expense related to PMTA, $0.6 million of expense related to the implementation of the new ERP and CRM systems, $0.2 million of expense related to corporate restructuring and $0.2 million related to transaction costs.

Other Operating Income:

For the year ended December 31, 2024, other operating income decreased $2.7 million compared to the prior year period due to a federal excise tax refund of $1.7 million received in 2024 compared to a $4.3 million federal excise tax refund received in 2023.

For the year ended December 31, 2025, other operating income decreased $1.7 million compared to the prior year period due to a federal excise tax refund of $1.7 million received in 2024.

Operating Income:

For the year ended December 31, 2024, consolidated operating income decreased $2.1 million, or 2.6%, compared to the prior year period.

Operating income as a percentage of net sales decreased to 22.4% of net sales for the year ended December 31, 2024 from 25.5% of net sales for the year ended December 31, 2023, primarily due to an increase in unallocated corporate expenses, as discussed below, driven by increases in restructuring costs related to a voluntary early retirement program, stock compensation and transaction costs.

For the year ended December 31, 2025, consolidated operating income increased $14.5 million, or 17.9%, compared to the prior year period.

Operating income as a percentage of net sales decreased to 20.6% of net sales for the year ended December 31, 2025 from 22.4% of net sales for the year ended December 31, 2024, primarily due to an increase in unallocated corporate expenses.

For the year ended December 31, 2025, operating income in the Zig-Zag products segment decreased $7.8 million, or 11.6%, compared to the prior year period.

Operating income as a percentage of net sales decreased to 34.7% of net sales for the year ended December 31, 2024 from 37.8% of net sales for the year ended December 31, 2023, primarily due to a federal excise tax refund of $1.7 million received in 2024 which increased operating income, compared to a $4.3 million federal excise tax refund received in 2023, along with increased selling and marketing costs in 2024.

Operating income as a percentage of net sales decreased to 33.0% of net sales for the year ended December 31, 2025 from 34.7% of net sales for the year ended December 31, 2024, primarily due to a federal excise tax refund of $1.7 million received in 2024 which increased operating income which did not recur in 2025.

For the year ended December 31, 2025, operating income in the Stoker’s products segment increased $40.8 million, or 59.8%, compared to the prior year period.

Operating income as a percentage of net sales decreased to 40.6% of net sales for the year December 31, 2024 from 43.0% of net sales for the year ended December 31, 2023, primarily due to increased sales and marketing costs to support the sales growth in modern oral.

Operating income as a percentage of net sales decreased to 38.3% of net sales for the year December 31, 2025 from 40.6% of net sales for the year ended December 31, 2024, primarily from increased sales and marketing expenses for the segment relating to modern oral growth.

Included in consolidated operating income are costs of the Company which are not assigned to one of the two reportable segments and includes:

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as well as (ii) costs related to the FDA premarket tobacco product application.

For the year ended December 31, 2024, unallocated costs were $54.1 million compared to $47.5 million in the prior year period, an increase of $6.6 million or 13.9%, primarily driven by increases of $4.4 million in restructuring expense, $1.9 million in transaction costs, $1.5 million related to PMTA and $0.7 million in stock compensation expense.

Interest Expense, net:

For the year ended December 31, 2024, interest expense, net decreased $0.7 million compared to the prior year period as a result of the maturity of the Convertible Senior Notes in 2024 and increased interest income on cash as a result of higher interest rates on cash deposits.

Investment Loss :

For the year ended December 31, 2024, investment loss decreased to $1.9 million compared to $11.9 million for the year ended December 31, 2023.

The change is primarily the result of impairment charges recognized on our investments in Bomani for $1.8 million and Old Pal for $0.8 million for the year ended December 31, 2024, compared to impairment charges recognized on our investments in Docklight for $8.7 million, Wild Hempettes for $2.2 million and Old Pal for $1.3 million for the year ended December 31, 2023.

For the year ended December 31, 2025, unallocated costs were $72.7 million compared to $54.1 million in the prior year period, an increase of $18.6 million or 34.3%, primarily driven by joint venture related expenses.

Other Income:

For the year ended December 31, 2024, other income was zero compared to $4.0 million in the prior year as a result of a $4.0 million gain related to a legal settlement.

Gain on Extinguishment of Debt:

For the year ended December 31, 2024, gain on extinguishment of debt was zero compared to $1.7 million for the year ended December 31, 2023, as a result of the repurchase of $44.0 million in aggregate principal amount of our Convertible Senior Notes at a discount in 2023.

For the year ended December 31, 2025, other income was $6.6 million stemming from a $5.5 million employee retention credit refund received and $1.8 million received for management fees in the current year.

We recognized no other income in 2024.

Interest Expense, net:

For the year ended December 31, 2025, interest expense, net increased $3.5 million compared to the prior year period as a result of the issuance of the 2032 Notes in February 2025 which bear interest at a higher rate and have a higher outstanding principal amount than the 2026 Notes which were repaid with proceeds from the issuance of the 2032 Notes partially offset by interest income generated by the employee retention credit received in the current year.

(Income) Losses from Equity Method Investment:

For the year ended December 31, 2025, (income) losses from investments in equity method investments decreased $1.2 million compared to the prior year period as a result of a $5.5 million loss from GWO partially offset by $4.2 million of net income from its distribution business.

Investment (Income) Loss :

For the year ended December 31, 2025, investment (income) loss increased to $1.1 million income compared to $2.0 million loss for the year ended December 31, 2024.

The change is primarily the result of impairment charges recognized on our investment in Old Pal for $0.9 million for the year ended December 31, 2025 that were offset by gains on marketable available-for-sale securities of $1.4 million, compared to impairment charges recognized on our investments in Bomani for $1.8 million and Old Pal for $0.8 million for the year ended December 31, 2024.

Loss on Extinguishment of Debt:

For the year ended December 31, 2025, loss on extinguishment of debt was $1.2 million as a result of the redemption of the 2026 Notes in February 2025.

We had no loss on extinguishment of debt in 2024.

Income Tax Expense:

The Company’s income tax expense was $15.0 million, or 18.0% of income from continuing operations before income taxes for the year ended December 31, 2025.

The Company's income tax expense was $24.0 million, or 38.7% of income from continuing operations before income taxes for the year ended December 31, 2023 and included $6.4 million of valuation allowance for the deferred tax asset related to unrealized loss on investments and $1.7 million valuation allowance for foreign net operating losses.

Net Income (Loss) Attributable to Non-Controlling Interest:

The Company's income tax expense was $16.9 million, or 26.1% of income from continuing operations before income taxes for the year ended December 31, 2024.

The decrease in tax rate compared to the prior year 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 year ended December 31, 2025.

Net Income Attributable to Non-Controlling Interest:

Net income attributable to non-controlling interest was $10.0 million for the year ended December 31, 2025, compared to a net loss of $0.7 million for the year ended December 31, 2024.

The increase in income from non-controlling interest compared to the prior year period is due to the consolidation of a joint venture starting in December 2024.

Net Income from Continuing Operations Attributable to Turning Point Brands, Inc.:

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Comparison of Year Ended December 31, 2024, to Year Ended December 31, 2023

For the year ended December 31, 2023, consolidated net sales increased $3.8 million, or 1.2%, compared to the prior year period, driven by an increase in the Stoker’s products segment.

For the year ended December 31, 2023, net sales in the Zig-Zag products segment decreased $9.9 million, or 5.2%, compared to the prior year period.

The decrease in net sales was driven by declines in the U.S.

rolling papers and wraps businesses which were impacted by a reduction of trade inventory, partially offset by growth in our Clipper products.

Additionally, the discontinuation of an unprofitable product line negatively impacted Canadian sales by $4.9 million against the previous year.

For the year ended December 31, 2023, net sales in the Stoker’s products segment increased $13.8 million, or 10.5%, compared to the prior year period.

For the year ended December 31, 2023, Stoker’s products volume increased 4.2% and price/mix increased 6.3%.

The increase in net sales was driven primarily by double-digit growth of Stoker’s® MST.

MST represented 68% of Stoker’s products revenue in 2023, up from 66% for the same period in 2022.

Gross Profit:

For the year ended December 31, 2023, consolidated gross profit increased $5.1 million, or 2.9%, compared to the prior year period.

Gross profit as a percentage of net sales increased to 56.3% of net sales for the year ended December 31, 2023, from 55.4% of net sales for the year ended December 31, 2022.

T he overall increase in gross profit margin was driven primarily by increased margins in the Stoker’s products segment.

For the year ended December 31, 2023, gross profit in the Zig-Zag products segment decreased $5.5 million, or 5.2%, compared to the prior year period.

Gross profit as a percentage of net sales remained unchanged at 56.0% of net sales for the years ended December 31, 2024 and 2023, respectively.

For the year ended December 31, 2023, gross profit in the Stoker’s products segment increased $10.6 million, or 14.9%, compared to the prior year period.

Gross profit as a percentage of net sales increased to 56.6% of net sales for the year ended December 31, 2023, from 54.5% of net sales for the year ended December 31, 2022, as a result of strong incremental margin contribution of MST.

Selling, General and Administrative Expenses :

For the year ended December 31, 2023, selling, general, and administrative expenses increased $0.5 million, or 0.5% compared to the prior year period.

Selling, general and administrative expenses for the year ended December 31, 2022, included $5.3 million of stock options, restricted stock and incentives expense, $4.6 million of expense related to PMTA, $3.3 million of expense related to corporate restructuring, $2.0 million of expense related to the implementation of the new ERP and CRM systems and $0.8 million related to transaction costs.

Other Operating Income:

For the year ended December 31, 2023, other operating income was $4.3 million, resulting from a federal excise tax refund and a $15.2 million gain related to insurance, partially offset by a $15.2 million reduction in inventory due to storm damage.

For the year ended December 31, 2022, there was no other operating (income) expense.

Operating Income:

For the year ended December 31, 2023, consolidated operating income increased $9.0 million, or 12.1%, compared to the prior year period.

Operating income as a percentage of net sales increased to 25.5% of net sales for the year ended December 31, 2023, from 23.0% of net sales for the year ended December 31, 2022, primarily due to increased margins in the Stokers products segment partially offset by decreases in unallocated corporate expenses.

For the year ended December 31, 2023, operating income in the Zig-Zag products segment decreased $5.1 million, or 6.9%, compared to the prior year period.

Operating income as a percentage of net sales decreased to 37.8% of net sales for the year ended December 31, 2023, from 38.5% of net sales for the year ended December 31, 2022, primarily driven by decreased gross profits in U.S.

papers and wraps.

For the year ended December 31, 2023, operating income in the Stoker’s products segment increased $8.9 million, or 16.6%, compared to the prior year period.

Operating income as a percentage of net sales increased to 43.0% of net sales for the year December 31, 2023, from 40.8% of net sales for the year ended December 31, 2022, primarily driven by higher net sales of MST.

Included in consolidated operating income are costs of the Company which are not assigned to one of the two reportable segments and includes:

(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 year ended December 31, 2023, unallocated costs were $47.5 million compared to $52.7 million in the prior year period, a decrease of $5.1 million or 9.8%, primarily driven by decreases of $3.1 million of restructuring expense and $2.5 million of expense related to PMTA.

Interest Expense, net:

For the year ended December 31, 2023, interest expense, net decreased $4.9 million compared to the prior year period primarily as a result of the repurchases of $44.0 million and $10.0 million in aggregate principal amount of Convertible Senior Notes in 2023 and 2022, respectively, and increased interest income on cash as a result of rising interest rates.

Investment Loss :

For the year ended December 31, 2023, investment loss decreased to $11.9 million compared to $13.3 million for the year ended December 31, 2022.

The change is primarily a result of the 2023 impairment charges recognized on our investments in Docklight, Wild Hempettes and Old Pal of $8.7 million, $2.3 million and $1.3 million, respectively, in 2023, compared to impairment charges of $7.9 million, $4.3 million and $1.4 million in 2022 related to our investments in Dosist, Real Brands and Old Pal, respectively.

Other Income:

For the year ended December 31, 2023, other income was $4.0 million compared to zero in the prior year period as a result of a $4.0 million gain related to a legal settlement.

Gain on Extinguishment of Debt:

For the year ended December 31, 2023, gain on extinguishment of debt was $1.7 million compared to $0.9 million for the year ended December 31, 2022, as a result of the repurchase of $44.0 million in aggregate principal amount of our Convertible Senior Notes at a discount.

For the year ended December 31, 2022, gain on extinguishment of debt resulted from the repurchase of $10.0 million in aggregate principal of our Convertible Senior Notes at a discount.

Income Tax Expense:

The Company’s income tax expense was $24.0 million, or 38.7% of income before income taxes for the year ended December 31, 2023, and included $6.4 million of valuation allowance for the deferred tax asset related to unrealized loss on investments and $1.7 million valuation allowance for foreign net operating losses.

The Company's income tax expense was $11.0 million, or 26.1% of income before income taxes for the year ended December 31, 2022.

Net Income (Loss) Attributable to Non-Controlling Interest:

Net loss attributable to non-controlling interest was $0.7 million for the year ended December 31, 2023, compared to a $0.5 million loss for the year ended December 31, 2022.

Net Income from Continuing Operations Attributable to Turning Point Brands, Inc.:

Due to the factors described above, net income attributable to Turning Point Brands, Inc.

for the years ended December 31, 2023 and 2022, was $38.7 million and $31.6 million, respectively.

For a discussion of the comparison of the year ended December 31, 2024 to the year ended December 31, 2023, refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

Loss from Discontinued Operations, net of tax

On January 2, 2025, the Company contributed 100% of its interest in SBB, the subsidiary that owns and operates the Company’s CDS segment, to GWO in exchange for 49% of the issued and outstanding GWO common stock on a fully-diluted basis.

GWO is a joint venture between the Company and Standard General, LP entered into in December 2018.

The assets and liabilities associated with the CDS business have been classified as held for sale as of December 31, 2024, and its financial results are classified as discontinued operations and reported separately for all periods presented herein.

On January 2, 2025, the Company contributed 100% of its interest in SBB, the subsidiary that owned and operated the Company’s CDS segment, to GWO in exchange for 49% of the issued and outstanding GWO common stock on a fully-diluted basis.

GWO is majority owned by Standard General, LP.

The assets and liabilities associated with the CDS business were classified as held for sale as of December 31, 2024, and its financial results are classified as discontinued operations and reported separately for all periods presented herein.

Upon meeting the criteria for held for sale classification, 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.

As of December 2024, total assets and liabilities associated with the CDS segment classified as held for sale were $15.3 million and $2.0 million, respectively.

As of December 2023, total assets and liabilities associated with the CDS segment classified as held for sale were $27.0 million and $2.2 million, respectively.

Loss from discontinued operations, net of tax for the years ended December 31 are as follows:

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Comparison of Year Ended December 31, 2025, to Year Ended December 31, 2024

For the year ended December 31, 2024, net loss from discontinued operations, net of tax, increased $7.2 million compared to the prior year period.

The loss is primarily due to lower net sales of $21.3 million for the year ended December 31, 2024 compared to prior year and a $8.8 million non-cash charge recognized in discontinued operations in 2024 to reduce the carrying value of the disposal group to its fair value.

For the year ended December 31, 2025, net loss from discontinued operations was $0, compared to a loss of $7.5 million for the year ended December 31, 2024.

This prior year loss related to operations that were classified as discontinued in 2024 and no such activity occurred in 2025.

Comparison of Year Ended December 31, 2024, to Year Ended December 31, 2023

For the year ended December 31, 2023, net loss from discontinued operations, net of tax, decreased $19.6 million compared to the prior year period.

The decreased in loss for the year ended December 31, 2023 is primarily due to a goodwill impairment charge of $27.6 million recognized for the year ended December 31, 2022 to reduce the carrying value of the CDS segment goodwill balance to zero.

EBITDA and Adjusted EBITDA

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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 believes it is appropriate to adjust for this spend as the costs are incurred in connection with what it views as a non-traditional regulatory process that requires applications be submitted for covered products that are already on the market.

As a result, Company’s management believes it is most appropriate to assess the performance of the Company’s business – the sale of its various products - without regard to these costs and believes that adjusting for these costs provides investors and the public markets with the most meaningful metrics to assess performance of the business.

GAAP measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with U.S.

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Interest expense, net

Gain on extinguishment of debt

Loss (Gain) on extinguishment of debt

Income tax expense

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Corporate restructuring (a)

ERP/CRM implementation (b)

Stock based compensation (c)

Transactional expenses and strategic initiatives (d)

Non-cash asset impairment (f)

FET Refund (g)

Legal settlement (h)

Mark-to-market loss on Canadian inter-company note (i)

Non-recurring freight (e)

Non-recurring legal (f)

Mark-to-market gain on Canadian inter-company note (h)

Non-cash asset impairment (i)

Gain on investment (j)

ERC refund (k)

Honorarium (l)

Manufacturing start-up costs (m)

Tariff adjustment (n)

FET refund (o)

Legal settlement (p)

Adjusted EBITDA

Represents costs associated with corporate restructuring, including severance and early retirement.

Represents cost associated with scoping and mobilization of new ERP and CRM systems and cost of duplicative ERP licenses.

Represents cost associated with scoping and mobilization of new ERP and CRM systems and temporary cost of duplicative ERP licenses.

Represents non-cash stock options, restricted stock, PSRUs, etc.

Represents the fees incurred for transaction expenses.

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.

Represents fees incurred for transaction expenses.

Represents elevated non-recurring outbound freight costs due to ERP transition.

Represents legal expenses incurred in connection with litigation related to an insurance claim.

Represents costs associated with applications related to FDA premarket tobacco production application ("PMTA").The PMTA regime requires the Company to submit an application to the FDA to receive marketing authorization to continue to sell certain of its product lines with continued sales permitted during the pendency of the applications.

The application is a onetime resource-intensive process for each covered product line;

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The Company currently has only two product lines currently subject to the PMTA process, having utilized other regulatory pathway options available for our other product lines.

The Company does not expect to submit additional PMTA applications for any new product lines after the submission for the remaining two are complete.

The Company does not expect to submit additional PMTA applications for any new product lines after the submission for the pending two are complete.

Represents a mark to market loss attributable to foreign exchange fluctuation.

Represents impairment of goodwill, intangible and investment assets.

Represents gain on investments.

Represents an employee retention credit refund received which is included in other income, net.

Represents an honorarium gift included in other income, net.

Represents non-recurring expenses incurred during the start-up of manufacturing lines.

Represents adjustment to costs of goods sold to reflect prevailing tariff rates.

Represents a federal excise tax refund included in other operating income.

Represents other income from litigation settlement.

Represents a mark-to-market loss attributable to foreign exchange fluctuation.

Liquidity and Capital Resources

Our principal uses for cash are working capital, debt service and capital expenditures.

As of December 31, 2024, we had $46.2 million cash on hand, excluding CDS segment cash of $2.8 million, ($116.7 million, excluding CDS segment cash of $1.2 million, as of December 31, 2023) and have up to $57.4 million of availability under the 2023 ABL Facility.

Our principal uses for cash are working capital, debt service and capital expenditures and other growth initiatives.

As of December 31, 2025, we had $222.8 million cash on hand and as of December 31, 2024 we had $46.2 million (excluding CDS segment cash of $2.8 million).

As of December 31, 2025, we had up to $65.8 million of availability under the 2023 ABL Facility.

After giving effect to the issuance of the 2032 Notes and redemption of the 2026 Notes in February 2025, our cash on hand would have been $90.2 million as of December 31, 2024, and borrowing availability under the ABL would have remained the same.

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Our Convertible Senior Notes matured on July 15, 2024, and were retired with cash.

Our adjusted working capital, excluding CDS segment assets and liabilities held for sale, which we define as current assets less cash and current liabilities, increased $57.3 million compared to the prior year end.

The increase in working capital was primarily a result of a $58.3 million decrease in current liabilities due to the July 15, 2024 maturity of our Convertible Senior Notes which were retired with cash on that date.

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.

Our adjusted working capital which we define as current assets less cash and current liabilities, increased $21.6 million compared to the prior year end.

This amount excludes CDS segment assets and liabilities held for sale in 2024.

(in thousands)

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Adjusted working capital

The increase in adjusted working capital is primarily a result of increased other current assets from inventory deposits relating to growth.

For the years ended December 31, 2025 and 2024, we invested $13.5 million and $4.6 million, respectively, in capital expenditures.

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Cash Flows from Operating Activities

For the year ended December 31, 2024, net cash provided by operating activities was $61.0 million, an increase of $4.7 million compared to the prior year period, primarily due to an increase in net income, net of non-cash items of $12.6 million and a favorable change in other assets of $3.1 million, partially offset by a $11.0 million unfavorable change in working capital.

The primary drivers of non-cash items were a $9.5 million decrease in loss on investments compared to the prior year period and a $6.5 million decrease in deferred tax expense, partially offset by increases of $1.6 million in depreciation and other amortization expense and a $1.7 million decrease in gains on extinguishment of debt compared to the prior year period.

For the year ended December 31, 2023, net cash provided by operating activities was $56.2 million, an increase of $34.9 million compared to the prior year period, primarily due to an increase in the change in working capital of $35.2 million (net of inventory reserve), partially offset by a decrease in the change in other assets of $5.3 million.

The increase in working capital was primarily driven by an increase in the change in inventories of $40.0 million related to the timing of changes in inventory.

For the year ended December 31, 2025, net cash provided by operating activities was $57.4 million, a decrease of $3.6 million compared to the prior year period.

The decrease is primarily due to unfavorable changes of $27.9 million in working capital partially offset by an increase of $27.6 million in net income, net of non-cash items of $5.8 million.

The primary drivers of non-cash items were $8.4 million increase in deferred tax expenses.

$1.7 million increase in depreciation and amortization and $1.2 million increase in losses from equity method investments, partially offset by $1.2 million increase in noncash lease income and $3.2 million decrease in loss on investments.

Cash Flows from Investing Activities

For the year ended December 31, 2024, net cash used in investing activities was $10.5 million, an increase of $4.6 million compared to the prior year period, primarily due to the net purchase of an additional $5.4 million in investments by our captive insurance subsidiary.

For the year ended December 31, 2023, net cash used in investing activities was $5.9 million, a decrease of $13.1 million compared to the prior year period, primarily due to a $10.2 million decrease in purchases of investments in our MSA escrow account.

For the year ended December 31, 2025, net cash used in investing activities was $31.7 million, an increase of $21.2 million compared to 2024, primarily due to $13.5 million in capital expenditures, including to build U.S.

manufacturing for our modern oral brands, the net purchases of an additional $7.4 million in investments by our captive insurance subsidiary, the purchases of non-marketable equity securities of $2.8 million, and $8.0 million paid by TPB Canada for the option to purchase the distribution business.

Cash Flows from Financing Activities

For the year ended December 31, 2024, net cash used in financing activities was $128.3 million, an increase of $78.8 million compared to the prior year period, primarily due to a $118.5 million cash payment for retirement of the Convertible Senior Notes and $5.1 million of cash used for the repurchase of common stock during the period in 2024, partially offset by $41.8 million in repurchases of Convertible Senior Notes that occurred during the same period in 2023.

For the year ended December 31, 2023, net cash used in financing activities was $49.5 million, an increase of $6.2 million compared to the prior year period, primarily due to $41.8 million in repurchases of Convertible Senior Notes during the period, partially offset by a decrease in repurchases of common stock of $29.2 million during 2023.

Cash Flows from Discontinued Operations

The cash flows of the discontinued operations are reflected in the Consolidated Statements of Cash Flows and are summarized below.

(in thousands)

For the years ended December 31,

Cash provided by

Operating activities

Investing activities

Cash Flows from Operating Activities

For the year ended December 31, 2024, net cash provided by operating activities was $6.1 million, a decrease of $4.5 million compared to the prior year period, primarily due to an unfavorable $5.8 million change in working capital.

For the year ended December 31, 2023, net cash provided by operating activities was $10.6 million, an increase of $1.7 million compared to the prior year period, primarily due to a $9.2 million favorable change in working capital, reduced by a $7.5 million decrease in net loss, net of non-cash items.

For the year ended December 31, 2025, net cash provided by financing activities was $148.3 million, an increase of $276.6 million compared to the prior year period, primarily due to a net increase in cash of $42.8 million related to the February 2025 issuance of the 2032 Notes, an increase of $11.0 million from Interchange subscription agreement proceeds, $97.5 million increase related to ATM Program proceeds, and $2.2 million related to stock compensation activity, as well as $5.1 million of common stock repurchases in the prior year period that did not repeat in 2025.

Long-Term Debt

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

Convertible Senior Notes

Gross notes payable and long-term debt

Less deferred financing costs

Less current maturities

Notes payable and long-term debt

Senior Secured Notes

On February 11, 2021, we closed a private offering of $250.0 million aggregate principal amount of our 5.625% senior secured notes due 2026 (the “2026 Notes”).

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.

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 the “2026 Notes Indenture”) or capital markets debt securities of the Company or Guarantors in excess of $15.0 million.

The 2026 Notes and the related guarantees are secured by first-priority liens on substantially all of the assets of the Company and the Guarantors, subject to certain exceptions.

We were in compliance with all covenants under the 2026 Notes as of December 31, 2024.

In February 2025, we redeemed the 2026 Notes with the proceeds from the offering of the 2032 Notes.

We incurred debt issuance costs attributable to the issuance of the 2026 Notes of $6.4 million which are amortized to interest expense using the straight-line method over the expected life of the 2026 Notes.

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.

The Company used the proceeds from the offering (i) to repay all obligations under and terminate the 2026 Notes, (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 wholly-owned domestic restricted subsidiary of the Company that guaranteed the 2026 Notes.

The 2032 Notes and the related guarantees are secured by first-priority liens on substantially all of the assets of the Company and the guarantors, subject to certain exceptions.

Proceeds from the offering were approximately $294.0 million.

On February 19, 2025, we entered into an indenture relating to the issuance and sale of $300.0 million aggregate principal amount of its 7.625% Senior Secured Notes due 2032 (the “2032 Notes”), by and among the Company, the guarantors party thereto and GLAS Trust Company LLC, as trustee and notes collateral agent.

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 and for general corporate purposes

The 2032 Notes are fully and unconditionally guaranteed on a senior secured basis, jointly and severally, by certain existing and future wholly-owned domestic restricted subsidiary of the Company (collectively, the “Guarantors” as defined in the indenture governing the 2032 Notes or the “2032 Notes Indenture”).

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:

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and (vii) consolidate or merge with or into, or sell substantially all of our assets to another entity.

These covenants are subject to a number of 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;

These covenants are subject to several limitations and exceptions set forth in the 2032 Notes Indenture.

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 $7.3 million which are amortized to interest expense using the straight-line method over the expected life of the 2032 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%.

On February 20, 2025 (the “Redemption Date”), we 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.

We incurred debt issuance costs attributable to the issuance of the 2026 Notes of $6.4 million, with the remaining $1.2 million written off to loss on debt extinguishment upon termination.

2023 ABL Facility

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Less than 33.33%

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 $57.4 million based on the borrowing base as of December 31, 2024.

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 remain outstanding as of December 31, 2024.

We have not drawn any borrowings under the 2023 ABL Facility but has letters of credit of approximately $2.3 million outstanding under the facility and has an available balance of $65.8 million based on the borrowing base as of December 31, 2025.

We incurred debt issuance costs attributable to the 2023 ABL Facility of $2.6 million which are amortized to interest expense using the straight-line method over the expected life of the 2023 ABL Facility.

Additional Information with Respect to our Unrestricted Subsidiaries

Under the terms of the 2026 Notes that were recently redeemed with proceeds from the February 2025 issuance of the 2032 Notes, the Company designated certain of its subsidiaries as “Unrestricted Subsidiaries” as of December 31, 2024, including Interchange Partners LLC and Intrepid Brands, LLC.

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.

Under the terms of the 2032 Notes, the Company designated certain of its subsidiaries as “Unrestricted Subsidiaries”, including Interchange Partners LLC and Intrepid Brands, LLC.

The Company is required under the terms of the indenture governing the 2032 Notes to present additional information that reflects the financial condition and results of operations of the Company and its Restricted Subsidiaries separate from the financial condition and results of operations of the Company’s Unrestricted Subsidiaries as of and for the periods presented.

This additional information for 2025 is presented below.

With the classification of the Company's CDS products business to discontinued operations in December 2024, there are no meaningful results for Unrestricted Subsidiaries to present for 2023 or 2022.

Income Statement for the year ended December 31, 2025:

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Selling, general, and administrative expenses

Other operating income

Operating income

Interest expense (income), net

Investment loss

Other income, net

Interest expense, net

Investment (gain) loss

(Income) losses from equity method investment

Loss on extinguishment of debt

Income before income taxes

1 unchanged sentence

Consolidated net income

Net (loss) income attributable to non-controlling interest

Net income attributable to non-controlling interest

Net income attributable to Turning Point Brands, Inc.

3 unchanged sentences

Inventories, net

Current assets held for sale

Other current assets

1 unchanged sentence

Property, plant, and equipment, net

Deferred income taxes

Right of use assets

2 unchanged sentences

Master Settlement Agreement (MSA) escrow deposits

Noncurrent assets held for sale

Investment in unrestricted subsidiaries

3 unchanged sentences

Accrued liabilities

Current liabilities held for sale

Total current liabilities

Deferred income tax liabilities, net

Notes payable and long-term debt

Other long-term liabilties

Lease liabilities

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Off-Balance Sheet Arrangements

During 2024, we executed various foreign exchange contracts for the purchase of €3.6 million and sale of €3.6 million with maturity dates ranging from October 2024 to June 2025.

At December 31, 2024, we had foreign currency contracts outstanding for the purchase of €2.1 million and sale of €2.1 million.

The fair value of the foreign currency contracts was 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.

We had no interest rate swap contracts at December 31, 2024 and 2023.

During 2023, we executed various foreign exchange contracts for the purchase of €20.1 million and sale of €15.2 million with maturity dates ranging from July 2023 to September 2024.

At December 31, 2023, we had foreign currency contracts outstanding for the purchase of €15.2 million and sale of €15.2 million.

The fair value of the foreign currency contracts was based on quoted market prices and resulted in an asset of $0.3 million included in Other current assets and a liability of $0.1 million included in Accrued liabilities at December 31, 2023.

At December 31, 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.

Future Cash Requirements

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The Company’s contractual obligations primarily include long-term debt and lease obligations.

For information regarding our long-term debt obligations and cash payment obligations thereunder, please see Note 14, “Notes Payable and Long-Term Debt” in Notes to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K.

For information regarding our long-term debt obligations and cash payment obligations thereunder, please see above and Note 14, “Notes Payable and Long-Term Debt” in Notes to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K.

For information regarding our lease obligations and cash payment obligations thereunder, please see Note 17, “Lease Commitments” in the Notes to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K.

In 2024, we repurchased 154,945 shares of our common stock for a total cost of $5.1 million at an average price per share of $32.60, and have $100 million of authorization remaining under our Board approved repurchase program at December 31, 2024.

In 2025, we made no repurchases of our common stock.

In 2024, we repurchased 154,945 shares of our common stock for a total cost of $5.1 million at an average price per share of $32.60, and have $200 million of authorization remaining under our Board approved repurchase program at December 31, 2025.

Regulation and Legislation

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Any future increases in federal excise taxes on the Company’s products could have a material adverse effect on the results of operations or financial condition of the Company.

The Company is unable to predict the likelihood of passage of future increases in federal excise taxes.

The Company is unable to predict the likelihood of future increases in federal excise taxes.

As of December 31, 2025, federal excise taxes are not assessed on certain novel nicotine products, including nicotine pouches, e-cigarettes and related products.

Changes to these requirements could affect our results of operations.

State and Local Regulation

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These regulations are required to go through the formal rulemaking process where we have had the opportunity to provide comments with regard to the impact such standards would have on our products.

As of January 2025, these proposed rules were withdrawn or otherwise delayed.

As of February 2025, these proposed rules were withdrawn or otherwise delayed.

The FDA’s policy on these and other regulated products may change or expand over time in ways not yet known and may significantly impact our products or our premarket filings.

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If actual results are not consistent with the Company’s estimates and/or other assumptions change, the Company may be exposed to future impairment charges that could materially and adversely impact its financial position and results of operations.

Investments in Debt Security

We have classified our debt security investment as available-for-sale and, as a result, this security is recorded at fair value.

We estimate the fair value of the debt security investment using a Monte Carlo simulation, which utilizes unobservable inputs that are classified as Level 3 inputs under the fair value hierarchy.

We identified the estimate of the fair value of the Company’s debt security investment as a critical estimate because of the complexity of the Monte Carlo simulation valuation methodology and the significant assumptions used in estimating the fair value, including the enterprise valuation of the investee, enterprise value to revenue market multiples applied to the financial results of the investee to estimate an enterprise valuation of the investee, and investment hold period scenarios used in the weighting of Monte Carlo simulation valuation results.

If actual results are not consistent with the Company’s estimates and/or other assumptions change, the Company may be exposed to future allowance for credit losses that could materially and adversely impact its financial position and results of operations.

Fair Value of the Creative Distribution Solution Segment

Our CDS segment met the criteria to be classified as held-for-sale as of December 31, 2024.

As a result, we are required to carry the net assets of the CDS segment at fair value less costs to sell.

We determined the fair value of the CDS segment using a weighted average of three valuation methodologies that consisted of the discounted cash flow method, the guideline public company method and the similar transaction method.

We identified the estimate of the fair value of the CDS segment as a critical accounting estimate because of the significant estimates and assumptions used by management in the discounted cash flow method, including forecasts of expected revenue growth rates, estimated terminal value and the selection of the discount rate.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 5. Market for Registrant’s Common Equity