22nd Century Group, Inc · NASDAQ:XXII
22nd Century — Q1 2023 Earnings Presentation
28 slides from 22nd Century's earnings presentation, May 9, 2023
Slide 1: XXII First Quarter Earnings Presentation
XXII FIRST QUARTER EARNINGS PRESENTATION MAY 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: Revenue and Margin Expected to Scale Through Year, Driving Cash Positive in 2024
$30.9 $40.5 $21.9 2021 2022 2023F VLN® executing aggressive 2023 multi-state commercial launch program Exceptional product demand drives market share accumulation Readying to add thousands of new retail locations in CA, TX & FL More than 100 chains in the funnel, scheduling launches rest of 20
Slide 4: 2023 Revenue Ramp Drives 2024 Cash Positive Goal
2023 REVENUE RAMP DRIVES 2024 CASH POSITIVE GOAL 4 Both VLN® and Hemp/Cannabis Business Lines Benefit from Improved Operating Performance Drivers 1. Grandview Research; https://www.grandviewresearch.com/industry-analysis/us-tobacco-market#:~:text=The%20U.S.%20tobacco%20market%20size%20was%20estimate
Slide 5: FDA Authorized VLN®
FDA Authorized VLN® Cannabinoid Ingredients, APIs and CDMO Corporate/Financial
Slide 6: Months of VLN®: From First Sales to Major Multi-State Launch
12 MONTHS OF VLN®: FROM FIRST SALES TO MAJOR MULTI-STATE LAUNCH One year ago, VLN® was less than 30 days into the pilot, announcing its first sales April 13, 2022 Exceptional early sales and consumer interest exceeded all industry expectations New tobacco team has upgraded VLN’s launch plans since D
Slide 7: New VLN® Launch in Top CA, TX and FL Markets
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 8: VLN® Ready to Launch New Campaign to Evoke Trial and Repeat Purchase
VLN® READY TO LAUNCH NEW CAMPAIGN SPECIFICALLY DESIGNED TO EVOKE TRIAL AND REPEAT PURCHASE 8 4 VLN Has Real Competitive Advantages that Support Commercial Success CREATIVE HERE Our recent research produced two very important findings that VLN, and NOT other reduction/cessation products, can take adv
Slide 9: Campaign Supported Through Targeted Paid Media
CAMPAIGN SUPPORTED THROUGH TARGETED PAID MEDIA Hyper-Targeted Media Blitzes in Rollout Markets Will Reach Prospects through Multiple Digital Touchpoints Generating Top-of-Mind Awareness, VLN Advantage Education and Retail Foot Traffic Program will run on content that has an age composition of at l
Slide 10: Ongoing Activity Delivers Continuous Engagement
ONGOING ACTIVITY DELIVERS CONTINUOUS ENGAGEMENT Integrated Efforts Will Keep VLN in Front of Consumers and Business Partners with a Consistent Message to Grow the Brand Brand Website Enhanced PR Efforts Brand Community Influencer Revamped website will deliver education, user testimonials, smoking re
Slide 11: The Proof Is in the Pinnacle (Launch)
THE PROOF IS IN THE PINNACLE (LAUNCH) Pinnacle is a conventional, premium, store brand cigarette for current adult smokers Sold at a top 5 retail C-store chain, 1,700+ locations across 22 states Leverages national scale distributor also being used for VLN® distribution and stocking Initial sales dem
Slide 12: International Advancement
Advancing pilot programs for additional markets in 2023, including expected: Switzerland (pilot test) – product shipped for distribution commencing by late May Japan (pilot test) – product readying for shipment to distributor ahead of test sales commencing in late June 2023 South Korea (update
Slide 13: Improving Mix to Enhance Capacity and Margin
IMPROVING MIX TO ENHANCE CAPACITY AND MARGIN 13 Shifting product mix at NASCO to improve operating results Rotating out of lower margin filtered cigar volumes to free capacity for higher margin premium cigarettes Specialty CMO products like Spectrum provide superior margin and more predictable deman
Slide 14: VLN® Can Be the Foundation for Harm Reduction Policies
VLN® CAN BE THE FOUNDATION FOR HARM REDUCTION POLICIES IN THE U.S. AND ABROAD The science shows a menthol ban absent an off-ramp primarily transitions menthol smokers to traditional cigarettes, while a reduced nicotine mandate would help all smokers more easily quit smoking or migrate to less toxic
Slide 15: VLN® Path to Cash Positive 2024
Expanded availability and supportive voices drive trial, repeat purchase and market share, leading to cash positive operations in 2024 Expanded Major Distribution Onboarding Top Retail Partners New Consumer Campaign Optimizing Operations VLN® PATH TO CASH POSITIVE 2024 Customers and Retailers WANT t
Slide 16: Cannabinoid Ingredients, APIs and CDMO
FDA Authorized VLN® Cannabinoid Ingredients, APIs and CDMO Corporate/Financial
Slide 17: Delivering 2023's High Growth Promise
Dominant North American position plus broad global footprint in geographic markets targeted for growth Record ingredient sales quarter after quarter New CDMO+D model expands revenue and adds value to customers New extraction unit, production facilities and plant biotechnology by 22nd Century w
Slide 18: Driving Record Ingredient Sales Volumes
16,524 26,546 27,912 41,070 68,195 1Q22 2Q22 3Q22 4Q22 1Q23 DRIVING RECORD INGREDIENT SALES VOLUMES Growing Volumes Sets Stage For Return To Internal Production, Margin Recovery GVB bulk ingredient volumes (kgs) GVB bulk ingredient volumes rising rapidly based on reputation as reliable supplier of
Slide 19: Transformative New CDMO+D Model
TRANSFORMATIVE NEW CDMO+D MODEL First Two Agreements Signed With Estimated $140 Million Cumulative Sales Value Over Three-year Terms Working with the largest and best-known consumer CBD brands 19 New, single-source model provides complete solution Enhances GVB revenue and margin opportunities with d
Slide 20: 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 21: Hemp/Cannabis Path to Cash Positive 2024
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 HEMP/CANNABIS PATH TO CASH POSITIVE 2024 R
Slide 22: Corporate/Financial
FDA Authorized VLN® Cannabinoid Ingredients, APIs and CDMO Corporate/Financial
Slide 23: First Quarter 2023 Financial Highlights
FIRST QUARTER 2023 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. +144% YoY increase in Net Revenues primarily due to GVB acquisiti
Slide 24: Tobacco Revenue & Profit Breakdown
TOBACCO REVENUE & PROFIT BREAKDOWN Tobacco 1Q 2023 1Q 2022 Unit sales1 1.0M 1.4M Net revenue $8.9M $9.0M Gross profit $18K $309K Gross profit margin2 0.2% 3.4% 24 Net revenues decreased slightly QoQ reflecting a planned reallocation in production resources at the Company’s NASCO facilities away fr
Slide 25: Hemp/Cannabis Revenue & Profit Breakdown
HEMP/CANNABIS REVENUE & PROFIT BREAKDOWN 25 Net revenue growth QoQ primarily driven by: Addition of acquired GVB revenue contribution Significant GVB organic revenue volume growth QoQ 1Q net revenue increased despite 4Q Grass Valley fire Strong consumer demand for GVB bulk ingredients and ne
Slide 26: Summary Balance Sheet Items
SUMMARY BALANCE SHEET ITEMS Balance sheet date as of: (in millions) Q1 2023 Year End 2022 Cash and cash equivalents1 $23.7 $21.2 Total assets $124.1 $114.7 Total liabilities $42.7 $18.7 Total shareholders' equity $81.4 $96.0 26 New $21.1M Credit Facility strengthens balance sheet and provides workin
Slide 27: 2023 Revenue Guidance $105 - $110 Million
Leveraging exceptional VLN® demand into aggressive multi-state commercial launch program 2023: REVENUE GUIDANCE $105 - $110 MILLION Growth Across Both VLN® and Hemp/Cannabis Franchises Tracks to 2024 Cash Positive Operations 27 Launching national scale distribution to support demand from largest C
Slide 28: 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