22nd Century Group, Inc · NASDAQ:XXII

22nd Century — Q3 2022 Earnings Presentation

25 slides from 22nd Century's earnings presentation, Nov 8, 2022

  1. Slide 1: XXII Third Quarter Earnings Presentation

    XXII THIRD QUARTER EARNINGS PRESENTATIONNOVEMBER 8, 2022

  2. Slide 2: Cautionary Note on Forward-Looking Statements

    CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTSThis 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 tha

  3. Slide 3: Focused on Commercial Transformation in 3Q

    3FOCUSED ON COMMERICAL TRANSFORMATION IN 3Q Leveraging exceptional VLN® pilot results, moving aggressively into multi-sate commercial launch program Focused on launching VLN® in at least 12 to 15 states within the next 12 months –now in 5 states with proven launch templateEvery 1% share of the U.

  4. Slide 4: Tobacco

    TobaccoHemp/Cannabis Financials 4

  5. Slide 5: Implementing VLN Sales Launch Blueprint in New Markets

    IMPLEMENTING VLN® SALES LAUNCH BLUEPRINT IN NEW MARKETSLeveraging exceptional pilot results and moving aggressively into commercial launch program PhaseStatusPhase 1 –Initial Pilot: Initial launch, media support and general awareness Exceeded internal expectationsPhase 2 –Targeted Offers: Test marke

  6. Slide 6: Current States = ~7% of U.S. Cigarette Sales

    5 CURRENT STATES = ~7% OF U.S. CIGARETTE SALES6 1.Pack Volume2.Retail SalesSource:CDC; Current Cigarette Use Among Adults (Behavior Risk Factor Surveillance System) 2019; World Population Review Cigarette Prices by State; Internal DocumentsAt approximately 382M packs sold, just a 1% market share equ

  7. Slide 7: Just States = 53% of Total U.S. Cigarette Sales

    7 JUST 18 STATES = 53% OF TOTAL U.S. CIGARETTE SALESAt approximately5.0B packs sold, just 1% market share equates to ~50M VLN® packs sold Favorable MRTP Excise Tax StatuteProspective Priority Launch State Source:CDC; Current Cigarette Use Among Adults (Behavior Risk Factor Surveillance System) 2019;

  8. Slide 8: Targeted Approach to Highest Volume and Populated Counties

    8TARGETED APPROACH TO HIGHEST VOLUME AND HIGHEST POPULATED COUNTIES TO MAXIMIZE RESOURCES AND REACH Population DensityPopulation % within top 10 counties82.5%# of counties to reach 80% of population10% of counties to reach 80% of population 15.6% A significant proportion of adult smokers can be reac

  9. Slide 9: Regional Rationale: Covering Four Corners

    PopulationTotal = 18.5MMAdults = 13.4 MMAdult Smokers= 3.0 MMREGIONAL RATIONALE: COVERING FOUR CORNERS Accelerating rollout in additional targeted markets 9Total Cigarette Market=~$3.2 BillionMore Than7,400 Targeted Stores3 States with MRTP Tax SavingCO $6.50 / cartonNM $5.00 / carton UT $4.25 / car

  10. Slide 10: Scaling Manufacturing & Growing Programs to Meet Anticipated Demand for VLN

    Completed a 25% capacity expansion, including a new production line Added a second shift to enhance production throughputVLN® 2.0 tobacco seeing ~30% higher yields, enhanced quality leaf, improved disease resistance, reduction in nutrient requirements, and increased stability across various envir

  11. Slide 11: Regulatory Environment Favors VLN

    REGULATORY ENVIRONMENT FAVORS VLN®FDA continues to advance its proposed menthol ban andreduced nicotine content mandate.State and local governments are taking direct action.VLN® Menthol King cigarettes could be the onlycombustible menthol cigarette on the market exempt from the menthol ban.The s

  12. Slide 12: Hemp/Cannabis

    TobaccoHemp/Cannabis Financials 12

  13. Slide 13: GVB Accelerates Hemp/Cannabis Revenue Growth

    Grow to positive cash flow and EBITDA from GVB operations 13GVB ACCELERATES HEMP/CANNABIS REVENUE GROWTH Plant Profile/ RoadmapPlant BiotechnologyPlant Breeding & TrialsIngredient Extraction, Purification, and Finished ProductsCommercial PartnersCannaMetrix’shigh-throughput proprietary, human cell-b

  14. Slide 14: World-Scale Manufacturing Capacity

    Investing modest additional capital expenditure to significantly expand capacity and revenue support growth TheCompanycurrentlyoperates:Prineville, Oregon:World-scalecrude extraction capacity in excess of 15,000 kg/month at full capacity (operational December 2022)Grass Valley, Oregon:30,000 sq ft

  15. Slide 15: Positioning GVB for Global Leadership

    POSITIONING GVB FOR GLOBAL LEADERSHIP 15Capacity expansion plus industry leading certifications positions GVB as the supplier of choice.Prineville extraction facility will greatly reduce crude costs and support increased isolate margins at our Grass Valley facility. Prineville to come online durin

  16. Slide 16: GVB Offers Best-in-Class Cannabinoids and Infused Products

    GVB OFFERS OF BEST-IN-CLASS CANNABINOIDS AND CANNABINOID INFUSED PRODUCTS CannabinoidAbbreviationCannabidiol IsolateCBD IsolateCannabidiol Broad Spectrum DistillateCBD BSDCannabigerol IsolateCBG IsolateCannabidiol Crystal Resistant DistillateCBD CRDCompliant Broad-Spectrum DistillateCompliant BSDCan

  17. Slide 17: Financials

    TobaccoHemp/Cannabis Financials 17

  18. Slide 18: Third Quarter 2022 Financial Highlights

    THIRDQUARTER2022FINANCIALHIGHLIGHTS1.Grossprofitmarginiscalculatedbydividinggrossprofit by netrevenues. NetRevenuesGrossProfitGrossProfit Margin1OperatingLoss3Q2022$19.4M$619K3.2%$(15.3)M3Q2021$7.8M$292K3.7%$(7.6)M +148%QoQNetRevenues: $7.8Mdue to acquisition of GVB –first full quarter of GVB revenu

  19. Slide 19: Tobacco Revenue & Profit Breakdown

    TOBACCO REVENUE & PROFIT BREAKDOWN Tobacco3Q 20223Q 2021Change %Unit sales11.6M1.1M45%Net revenue$11.5M$7.8M48%Gross profit $636K$292K118%Gross profit margin25.5%3.7%180 bps19Net revenue and gross margin expansion QoQ were primarily driven by:Volume increases in the number of cartons soldPrice inc

  20. Slide 20: Hemp/Cannabis Revenue & Profit Breakdown

    HEMP/CANNABIS REVENUE & PROFIT BREAKDOWN Hemp/Cannabis3Q 20223Q 20212Change %Unit sales123,71912,99683%Net revenue$7.8M$6.3M25%Gross profit$(17K)$697KNM320Net revenue growth QoQ primarily driven by:Addition of GVB contributionSignificant GVB organic revenue volume growth QoQQ3 2022 pro forma gros

  21. Slide 21: GVB Acquisition Purchase Price Allocation

    GVB ACQUISTION Q3 ‘22 purchase price allocation –May 13, 2022 acquisition date Adjusted 3Q ‘22(in millions)Current assets, excluding inventory$ 3.4Inventory$ 5.3Other assets$ 0.5Property, plant & equipment and ROU lease asset$ 12.6Goodwill$ 33.7 Tradename$ 4.6Customer lists$ 5.8Accounts payable and

  22. Slide 22: Summary Balance Sheet Items

    SUMMARY BALANCE SHEET ITEMS Balance sheet date as of:(in millions)3Q 20224Q 2021Cash and cash equivalents1$ 43.7$48.7Total assets$ 142.2$76.0Total liabilities$ 21.1$9.9Total shareholders' equity$ 121.1$66.1 22•Strengthened balance sheet during 2022•Strong working capital as of September 30, 2022•In

  23. Slide 23: Focused on Initiatives to Drive Growth

    23FOCUSED ON INITIATIVES TO DRIVE GROWTH Leveraging exceptional VLN® pilot results, moving aggressively into multi-sate commercial launch program Focused on launching VLN® in at least 12 to 15 states within the next 12 months –now in 5 states with proven launch templateEvery 1% share of the U.S.

  24. Slide 24: Questions & Answers

    Questions & Answers QA24

  25. Slide 25: Contact Information

    CONTACT INFORMATIONINVESTOR RELATIONS & MEDIA CONTACTMei Kuo22nd Century Group, Inc. Director, Communications & Investor Relations mkuo@xxiicentury.com Matt Kreps Darrow Associates Investor Relations T: 214-597-8200mkreps@darrowir.com

22nd Century Group — Q3 2022 Earnings Presentation on 6ix