Turning Point Brands, Inc. 17th Annual Midwest IDEAS Conference

Director? Yep. Just call him head of IR.

Thanks, John. We even got a clock up here. My day started out really cool. I flew in last night, got up this morning 6:30 to get ready. I got my suit on. Forming in the back, so bear with me. Standard disclaimers here, so I won't spend much time there. You've all seen them before. So a company overview. We're really going to talk about three distinctive areas here. Leveraging what we view as a proven playbook of building world-class brands, and specifically relative to where the company's going with our modern oral product. The positioning of the modern oral business within our company to capture what we've talked about, and I'll go to the punchline first, is we think this category is going to continue to grow. We think in 2025, it exited the market at about $5 billion.

We think it's going to at least $10 billion over the next several years, and our stated goal as a company is getting to a double-digit market share by the end of the decade. We read into that as $10 billion, 10%, $1 billion. As you think about, we'll talk a little bit later on in the presentation of how we think that we can ultimately get to that particular point. Then ultimately, our focused investments, how we're going to scale distribution, what our omni-channel approach is, and how we attack the market a little bit differently from our competitors. A quick overview of the company. It was founded in 1988. It was a spinoff in the old LBO days of Lehman. We bought the chewing tobacco brands from a company called Lorillard, most famous for Newport cigarettes. Headquartered in Louisville. We're about $1.6 billion in market cap, somewhere in that zone today, maybe 1.7, I don't know, based on today's price.

Just shy of 500 employees in the company. We service about 265 retail bricks-and-mortar outlets in the U.S. Think of that as, we don't have all of our products in all of those stores. We have a SKU or more of products in that many stores across the U.S. Our net sales, $463 million, adjusted EBITDA of $120 million, as of 2025. If you switch to the right side of the screen, really have three distinctive properties across the company that makes us a little bit unique. We've got a heritage tobacco business under the brand Stoker's. We sell moist snuff, so think of that as those old round cans, chewing tobacco, the pouches, baseball players, old school, big dips. We've got that business. We've had that business since the company was founded in 1988.

We expanded in the early 2000s into moist snuff. We're currently the number one value-oriented player in that channel. In the middle section there, these are our two brand properties, which we're most excited about in terms of our future modern oral category, both FRĒ and Nu-X. We'll talk more about those brands towards the end of the presentation. We've also got a cannabis accessories or a cannabis-adjacent business under the brand Zig-Zag, one of the most iconic brands in the cannabis space. We're number one in the premium rolling paper market. We're the number one in the make-your-own cigar market. Think of that as the outer shell of a cigar, and what consumers may or may not choose to use that for.

We've got a number of different brands, both premium and some value-oriented brands, and we've carved out number one positions across various properties within the tobacco and cannabis business. Our competitive advantages. We've got a couple of things that really are the foundation of the company. We've got some great brands, and we ultimately have deep relationships. A lot of these customers, those 265,000 retail stores and the distributors, the thousand odd distributors that service those stores, we've been servicing for decades. We've got long relationships with these customers. If you think about a company that's been in business, we've been a trusted partner. The ability to bring new products to market for us is something that we've done consistently over the last several decades. We've got a multi-brand strategy, as we talked about before.

We do not have all of our eggs in one particular basket. We are fairly diversified within our portfolio. We have great agility to scale our business. We think about it, we have this legacy heritage business on one side of the equation that grinds along, but at the same time, we are able to be really agile and nimble. Similar to a startup company, and we will talk a little bit more about what that looks like in the context of our ALP business, as well as FRĒ. We are a little bit different than historical or legacy tobacco businesses or nicotine businesses, where we do not just focus on bricks-and-mortar stores. We have a robust online business. We sell to independent retail stores, we sell to chain accounts, and we also service distribution channels.

We really have the ability to touch the entire ecosystem to reach consumers with our products. We talked a little bit about the digital and direct-to-consumer capabilities. I think one of the things that really makes us unique and separated within this industry is the legacy companies that we compete against just do not have the same sort of building blocks of reaching consumers on a direct-to-consumer basis. You think about cigarette companies and their ability to market directly to consumers, it does not exist. That muscle memory inside those companies just is not there. Our company, on the other hand, has a heritage of selling direct to consumer. We understand the online channels in ways that our competitors do not. That is a major differentiator for our company.

I think what you have seen, at least since I took over in 2022, is a real discipline to our leverage profile and ultimately, growth in EBITDA. While this year has been somewhat of a challenge there as we have moved into an investment year, we certainly see sort of greenfield in the future in terms of earnings growth. We talked a little bit about the brands. You got Zig-Zag on the left. Think about that as sort of our cannabis adjacency business. What we do is we really service the flower in the industry, so things like rolling papers, things like cones, cigar wraps. We are a leader in a number of those particular segments. That is one vertical inside the company.

Stoker's in the center is really sort of the mainstay in the oral nicotine space for us, up until the launch of the right side of FRĒ and ALP, where we service both the chewing tobacco market as well as the moist snuff market. Interestingly enough, in the moist snuff market, if you think about our ability in modern oral and our aspirations to get to a double-digit market share, one of the things that gives us confidence is that when we launched our moist snuff back in the 2000s, we were a nothing business. It was already a well-established business with all of the same people that we are competing against in modern oral today. Philip Morris International bought Swedish Match. Swedish Match was a long-term competitor of ours. U.S. Smokeless Tobacco purchased British American Tobacco, a long-term competitor of ours with Copenhagen and Skoal.

BAT with Grizzly and some of their chewing tobacco properties with a business called Conwood that they bought, Grizzly, some of their chewing tobacco business. These are people that we have competed against for decades. We understand their playbook. We understand how they go to market. We launched our moist snuff in the early 2000s, and as of today, we are double-digit market share in store selling and approaching 10% of the market in the moist snuff category. We have been competing against these folks for a long time. We understand how they think, we understand how they operate. It gives us a lot of confidence in terms of what we think they are going to do and how ultimately we are going to compete inside that ecosystem. We launched our modern oral products.

Originally, we launched the FRĒ brand, really sort of dipped our toe in the water prior to 2024, just in the D2C space. We started going bricks and mortar in Q1 of 2024. Towards the end of 2024, we then codified a relationship where we have a joint venture with Tucker Carlson and the Tucker Carlson Network, and we have got a 50/50 JV under the brand ALP. Again, I think what is a little bit distinctive about us within the modern oral category is that we have multiple brand properties that we are creating in order to create two distinctive brand identities. It gives us the greatest opportunity to sweep the biggest net for consumers out in modern oral. If somebody does not align around what our FRĒ equities are, we have got the ALP property. If people do not align around the ALP equities, we have the FRĒ property.