22nd Century Group, Inc · NASDAQ:XXII
22nd Century — Q2 2022 Earnings Presentation
26 slides from 22nd Century's earnings presentation, Aug 9, 2022
Slide 1: Second Quarter 2022 Earnings Presentation
SECOND QUARTER 2022 EARNINGS PRESENTATION XXII August 9, 2022
Slide 2: Cautionary Note on Forward-Looking Statements
CAUTIONARY NOTE ON FORWARD - LOOKING STATEMENTS This presentation contains forward - looking statements concerning our business operations, and financial performance and conditions, as well as our plans, objectives, and expectations for our business operations and financial performance and condition
Slide 3: 2Q Represented a Major Transformation
3 2Q REPRESENTED A MAJOR TRANSFORMATION ▪ VLN® pilot program exceeded internal expectations in 150+ Chicago Circle K stores ▪ Confirmed 22nd Century’s approach based on education, trial and awareness ▪ Acquired GVB Biopharma , a global leader in hemp - derived active ingredients and finished product
Slide 4: Key Growth Drivers Ahead in Each Market
4 KEY GROWTH DRIVERS AHEAD IN EACH MARKET ▪ Now expanding VLN® availability in the $80 billion U.S. market and almost $800 billion global market ▪ Announced entry into ~$600 million Colorado market, with favorable MRTP tax status ▪ Advancing additional US and international markets markets to acceler
Slide 5: Tobacco
Tobacco Hemp/Cannabis Hops Financials 5
Slide 6: Successful VLN Pilot in Chicago
SUCCESSFUL VLN® PILOT IN CHICAGO Accelerating rollout in additional targeted markets beginning with Colorado Commenced sales in 150+ Circle K pilot stores on April 11th Phase Status Phase 1: Initial launch, media support and general awareness Exceeded internal expectations Phase 2: Test marketing ta
Slide 7: Colorado Market
7 Population Total = 5.8MM (+1.0%) Adults = 3.1MM Adult Smokers= 568,000 COLORADO MARKET Accelerating rollout in additional targeted markets 7 Total Cigarette Market =~$600 M More than 3,000 targeted stores MRTP Tax Saving = $6.50 / carton Working with two consumer packaged goods distribution partne
Slide 8: Colorado Market: Retail Channels
Retail Channels for Tobacco / Cigarettes: ▪ Convenience ▪ Tobacco Stores ▪ Drug ▪ Military 8 COLORADO MARKET Accelerating rollout in additional targeted markets Example Prospective Retail Partners:
Slide 9: Expanded Manufacturing, VLN Growing Programs
▪ Completing a 25% capacity expansion , including a new production line ▪ Adding a second shift to enhance production throughput ▪ Contracted largest VLN® tobacco crop ever ; plants tailored to be more disease resistant and generate higher yield ▪ Opportunities to grow through further manufacturing
Slide 10: Regulatory Environment Favors VLN
REGULATORY ENVIRONMENT FAVORS VLN® ▪ FDA continues to advance its proposed menthol ban and reduced nicotine mandate ▪ State and local governments taking direct action ▪ Submitted public comments in support of the FDA’s proposed tobacco product standard for menthol in cigarettes ▪ VLN® Menthol King c
Slide 11: Hemp/Cannabis
Tobacco Hemp/Cannabis Hops Financials 11
Slide 12: Monetizing Our Position in Hemp/Cannabis
22nd Century Group optimizes hemp/cannabis plant genetics and creates disruptive, proprietary stable commercial plant lines that deliver higher crop yield. ▪ Plant lines with optimized genetics for commercial farming methodologies ▪ Option to grow at scale indoors and outdoors ▪ Improved disease and
Slide 13: 22nd Century Acquires GVB Biopharma
GVB Biopharma (“GVB”) is a global leader in the manufacturing of hemp - derived active ingredients and finished products servicing the nutraceutical, consumer products and pharmaceutical industries. The acquisition of GVB provides 22nd Century a foundational platform through which it can express and
Slide 14: GVB Completes 22nd Century's B2B Capabilities
14 GVB COMPLETES 22ND CENTURY’S B2B CAPABILITIES 22nd Century will now offer the most robust platform to service the rapid growth of cannabinoid products. Plant Profile / Roadmap Plant Biotechnology Plant Breeding & Trials Plant Cultivation Ingredient Extraction, Purification, and Finished Products
Slide 15: World-Scale Manufacturing Capacity
The Company currently operates : ▪ Grass Valley, Oregon : 30,000 sq ft; refinement facility ▪ Las Vegas, Nevada : 40,000 sq ft; used for Private Label/Contract Manufacturing ▪ Prineville, Oregon : World - scale crude extraction capacity in excess of 20,000 kg/month GVB sources hemp from trusted agri
Slide 16: GVB Offers Best-in-Class Cannabinoids and Infused Products
GVB OFFERS A DIVERSE RANGE OF BEST - IN - CLASS QUALITY CANNABINOIDS AND CANNABINOID INFUSED PRODUCTS Cannabinoid Abbreviation Cannabidiol Isolate CBD Isolate Cannabidiol Broad Spectrum Distillate CBD BSD Cannabigerol Isolate CBG Isolate Cannabidiol Crystal Resistant Distillate CBD CRD Compliant Bro
Slide 17: Hops
Tobacco Hemp/Cannabis /Cannabis Hops Financials 17
Slide 18: 22nd Century's Hops Value Proposition
Introduce new agronomic traits to improve disease/pest resistance and plant architecture to increase crop yields in leading hop strains that are already well - accepted by the brewing industry Increase hops content of hops active molecules that drive the beer industry, such as alpha and beta acids,
Slide 19: Financials
Tobacco Hemp/Cannabis Hops Financials 19
Slide 20: Second Quarter Financial Highlights
SECOND QUARTER 202 2 FINANCIAL HIGHLIGHTS 1. Gross profit margin is calculated by dividing net revenue s by gross profit. Net Revenues Gross Profit Gross Profit Margin 1 Operating Loss 2Q 202 2 $ 14 .. 5 M $ 892 K 6 .. 1 % $( 10 .. 5 )M 2Q 202 1 $ 8 ..4M $ 448 K 5 .. 3 % $( 6 .. 6 )M + 73 % QoQ Net
Slide 21: Second Quarter 2022 Financial Highlights by Segment
SECOND QUARTER 2022 FINANCIAL HIGHLIGHTS Tobacco Hemp/Cannabis 2 6/30/2022 6/30/2021 Change 6/30/2022 Net revenues $ 10.0M 1 $ 8.3M 19% $ 4.5M Gross Profit $ 1.0M 2 $ 0.5M 99% $( 0.1M) 3 Gross Profit Margin 10.0% 5.3% 470 bps ( 1.2%) 3, 4 21 1. Revenue from tobacco related products was $10.0 million
Slide 22: GVB Acquisition Preliminary Purchase Price Allocation
GVB ACQUISTION PRELIMINARY PURCHASE PRICE ALLOCATION * Acquisition Date May 13, 2022 Dollar amounts in millions Current assets, excluding inventory $ 3.4 Inventory $ 5.3 Other assets $ 1.1 Property, plant & equipment and ROU lease asset $ 8.9 Goodwill and intangibles* $44.2 Accounts payable and accr
Slide 23: Summary Balance Sheet Items
SUMMARY BALANCE SHEET ITEMS Balance sheet date as - of: Dollar amounts in millions June 30, 2022 December 31, 2021 Cash and cash equivalents 1 $ 26.3* $ 48.7 Total assets 2 $ 119.4 $ 76.0 Total liabilities $ 20.0 $ 9.9 Total shareholders' equity $ 99.4 $ 66.1 23 1. Cash and cash equivalents includes
Slide 24: Growing Revenue in Large Global Markets with Alkaloid Plant-Science Platform
GROWING REVENUE IN LARGE GLOBAL MARKETS WITH A DISRUPTIVE ALKALOID PLANT - SCIENCE PLATFORM 24 Disruptive Plant Science and Intellectual Property TOBACCO VLN® is the Only Combustible Modified Risk Tobacco Product CANNABIS Pharmaceutical CDMO and Best - In - Class Ingredients Platform Accelerating th
Slide 25: Questions & Answers
Questions & Answers Q A 25
Slide 26: Contact Information
CONTACT INFORMATION INVESTOR RELATIONS & MEDIA CONTACT Joseph T. Schepers 22nd Century Group, Inc. VP, Communications & Investor Relations jschepers@xxiicentury.com Matt Kreps Darrow Associates Investor Relations T: 214 - 597 - 8200 mkreps@darrowir.com