22nd Century Group, Inc · NASDAQ:XXII
22nd Century — Q4 2022 Earnings Presentation
26 slides from 22nd Century's earnings presentation, Mar 9, 2023
Slide 1: Fourth Quarter and Full Year Earnings Presentation
XXII FOURTH QUARTER AND FULL YEAR EARNINGS PRESENTATION MARCH 9, 2023
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 conditions th
Slide 3: 2022: Groundwork for Commercial Transformation
$8.0 $9.0 $10.0 $11.5 $10.0 $4.5 $7.9 $9.5 4Q21 1Q22 2Q22 3Q22 4Q22 Exceptional VLN® pilot results positioned for aggressive 2023 multi-state commercial launch program $7.8 M $19.5M +149% YoY Tobacco Hemp/Cannabis Revenue, net (in millions) • 4Q 2022 Tobacco volumes reflected channel inventory adjus
Slide 4: 2023: Accelerate to Cash Positive
2023: ACCELERATE TO CASH POSITIVE 4 Drive Revenue and Improve Margins by Scaling Both VLN® and Hemp/Cannabis Business Lines 1. Grandview Research; https://www.grandviewresearch.com/industry-analysis/us-tobacco-market#:~:text=The%20U.S.%20tobacco%20market%20size%20was%20estimated%20at%20USD%2075.9,US
Slide 5: FDA Authorized VLN
FDA Authorized VLN® Cannabinoid Ingredients, APIs and CDMO Corporate/Financial
Slide 6: 2022: VLN Pilot and First Expansion Wave
PHASE Q1-Q3 2022 – Initial Pilot and Market Tests: Chicago pilot exceeded expectations, documented high consumer demand, demonstrated ability to achieve initial 1 share target Moved into test marketing and increased share through education, awareness, trial and repeat purchase focus Q3-Q4 2022 –
Slide 7: 100-Day Acceleration to National-Scale Access
100-DAY ACCELERATION TO NATIONAL-SCALE ACCESS 7 *Trade dress subject to change. Opens Largest Distributors, Largest Retail Chains, Largest Markets December 1, 2022 March 9, 2023 Distribution State by state with adjacent category experts Signed #1 C-store distributor in U.S. Signing #2 distribu
Slide 8: 2023 VLN Commercialization
State % of Adult Smokers Pack Volume Retail Sales AZ 15% 160M $1.4B Announced Priority States CA 10% 514M $4.9B CO* 14% 130M $1.0B FL 15% 513M $3.9B IL 15% 253M $2.6B NM* 16% 48M $0.4B TX 15% 736M $5.6B UT* 8% 45M $0.4B Total - 2,397M $20.2B WI 15% 184M $1.6B CT* 12% 65M $0.8B GA 16% 398M $2.5B IN 1
Slide 9: VLN Market Share Gains, Rollout and Cash Positive Operations
2022 Confirmed VLN® Market Share Gains 2023 Accelerated Multi-State Rollout 2024 Cash Positive VLN® Operations Pilot results demonstrated VLN® can rapidly achieve a 1 share in new markets, then grow its position through repeat purchase and new adopters Further refined the brand strategy and mark
Slide 10: VLN International Programs Expand Opportunity
New Zealand reduced nicotine mandate takes effect in ~2 years – requires all cigarettes to be 0.8mg/g or less, including test variance Seed development program scaled to supply tobacco to the entire New Zealand market – more than 2 billion cigarettes in total Advancing pilot programs for additional
Slide 11: VLN Can Be the Foundation for Harm Reduction Policies
VLN® CAN BE THE FOUNDATION FOR NATIONAL AND STATE HARM REDUCTION POLICIES IN THE U.S. The science shows a menthol ban absent an off-ramp primarily transitions menthol smokers to traditional cigarettes 11 The science shows a reduced nicotine mandate would help all smokers more easily quit smoking or
Slide 12: Cannabinoid Ingredients, APIs and CDMO
FDA Authorized VLN® Cannabinoid Ingredients, APIs and CDMO Corporate/Financial
Slide 13: Embarking on High Growth 2023
EMBARKING ON HIGH GROWTH 2023 Ramping Ingredient Volumes, New Market Entry and Expanded White Label Opportunities GVB Biopharma (“GVB”) is a global leader in the manufacturing of hemp-derived active ingredients and finished products servicing the consumer products, nutraceutical and pharmaceutical i
Slide 14: GVB Positioned for Global Leadership
Prineville, Oregon: World-scale crude extraction over 15,000 kg/month at full capacity (operational Q1 2023); New ingredient and production and refinement facility with increased capacity and greater efficiency GVB POSITIONED FOR GLOBAL LEADERSHIP Crude Extraction | Prineville Industry Leading Certi
Slide 15: Grass Valley Update
Grass Valley fire November 2022 Immediate transition to supply customers via alternate sources Met $9.5M revenue target in Q4 – Fulfilled 47k kg in Q4 2022, up from 27k kg in Q3 2022 GRASS VALLEY UPDATE No Customer Shipments Missed, Returning to Full In-house Service 15 Growing volumes year-over
Slide 16: Transformative New CDMO+D Model
TRANSFORMATIVE NEW CDMO+D MODEL Fully Verticalized Services from Ingredient to Manufacturing to Retail Category Management Working with the largest and best-known consumer CBD brands 16 New, single-source model provides complete solution Enhances GVB revenue and margin opportunities; generates incre
Slide 17: Positioned for International Scale
Key Cannabinoids Cannabinoid Abbreviation Cannabidiol Isolate CBD Isolate Cannabidiol Broad-Spectrum Distillate CBD BSD Cannabigerol Isolate CBG Isolate Cannabidiol Crystal Resistant Distillate CBD CRD Compliant Broad-Spectrum Distillate Compliant BSD Cannabidiol THC-Free Crude CBD THC-Free Crude UK
Slide 18: 2023 Hemp/Cannabis Growth Drivers
Continued revenue growth plus improving margin and operating performance will drive hemp/cannabis to cash positive operations in 2024 Operating Performance Enhancement Scale CDMO+D Business Volumes FDA Drug Master File Food & Nutraceuticals Market Expansion 2023 HEMP/CANNABIS GROWTH DRIVERS Clear Gl
Slide 19: Corporate/Financial
FDA Authorized VLN® Cannabinoid Ingredients, APIs and CDMO Corporate/Financial
Slide 20: Fourth Quarter 2022 Financial Highlights
FOURTH QUARTER 2022 FINANCIAL HIGHLIGHTS 1. Gross profit margin is calculated by dividing gross profit by netrevenues. 2. See the tables included in this release for a reconciliation of Adjusted EBITDA (a non-GAAP measure) to net loss. 20 +141% QoQ and 101% YoY increase in Net Revenues due to GVB ac
Slide 21: Tobacco Revenue & Profit Breakdown
TOBACCO REVENUE & PROFIT BREAKDOWN Tobacco 4Q 2022 4Q 2021 Unit sales1 1.3M 1.1M Net revenue $10.0M $7.9M Gross profit $(44)K $356K Gross profit margin2 (0.4)% 4.5% 21 Net revenues increased QoQ based on the number of cartons sold Gross profit declines QoQ reflecting lower margin sales mix in co
Slide 22: Hemp/Cannabis Revenue & Profit Breakdown
HEMP/CANNABIS REVENUE & PROFIT BREAKDOWN 22 Net revenue growth QoQ primarily driven by: Addition of acquired GVB revenue contribution Significant GVB organic revenue volume growth QoQ 4Q net revenue increased despite Grass Valley fire Strong consumer demand for GVB bulk ingredients and new C
Slide 23: New $21M Debt Financing
NEW $21M DEBT FINANCING 23 Proceeds from new credit facility will fund increased working capital needs reflecting significant growth in both VLN and hemp/cannabis business lines Working capital needs rapidly increasing due to: Summary of Terms: Multiple national-scale distribution partnerships req
Slide 24: Summary Balance Sheet Items
SUMMARY BALANCE SHEET ITEMS Balance sheet date as of: (in millions) Year End 2022 Year End 2021 Cash and cash equivalents1 $21.2 $48.7 Total assets $114.7 $76.0 Total liabilities $18.7 $9.9 Total shareholders' equity $96.0 $66.1 24 Q4 included the following non-recurring or seasonal uses of cash:
Slide 25: 2023: Path to Cash Positive Operations
Leveraging exceptional VLN® demand into aggressive multi-sate commercial launch program 2023: PATH TO CASH POSITIVE OPERATIONS Growth Across Both VLN® and Hemp/Cannabis Franchises 25 Launching national scale distribution to support demand from largest C-Store, consumer, and pharmacy chains Selli
Slide 26: Questions & Answers
Questions & Answers Q A INVESTOR RELATIONS & MEDIA CONTACT Matt Kreps Investor Relations 22nd Century Group, Inc. +1 -214 -597 -8200 mkreps@xxiicentury.com