22nd Century Group Q1 2023 Revenue Grows 142% YoY, What About Adjusted EBITDA?

22nd Century Group, Inc. XXII released results for the first quarter ended March 31, 2023, revealing net revenues of $22.0 million, an increase of 142.8% from the same period in 2022.

Q1 2023 Financial Results

• Revenue from hemp/cannabis-related products was $13.0 million, compared to $0 in the prior year first quarter, reflecting the acquisition of GVB and continued sequential quarterly growth in ingredient supply sales.

• Gross loss was $(1.2) million as compared to gross profit of $309,000 in the prior year period.

• Gross loss from hemp/cannabis-related products was $1.2 million compared to $0 in the prior year, reflecting costs associated with buying and selling ingredients while the company rebuilds its distillate and isolate manufacturing capacity following the November 2022 Grass Valley fire; both crude extraction and distillate production will be online in the second quarter of 2023.

• Net loss was $18.2 million, compared to prior year $8.9 million.

• Adjusted EBITDA was a loss of $14.7 million, compared to prior year loss of $6.6 million.

“22nd Century is executing an aggressive commercial rollout of our FDA authorized VLN reduced nicotine content cigarettes and a revolutionary new CDMO plus distribution business model for our hemp/cannabis business unit, the combination of which will accelerate revenue, increase gross margin and drive 22nd Century to cash profitable operating results for both business units in 2024,” stated James A. Mish, CEO of 22nd Century Group.

“We believe 22nd Century is poised for phenomenal growth this year in both our tobacco and hemp/cannabis businesses. As such, we are introducing our first revenue guidance, calling for full-year 2023 revenue of $105 million to $110 million, representing a 69% to 77% increase from $62.1 million in 2022. Our growth will be driven by the rapid stocking and ramp up of new VLN customers, new Pinnacle CMO sales, continued record cannabinoid ingredient volumes, start-up of our CDMO+D hemp/cannabis agreements and a full year of GVB sales. Achieving that goal plus execution on several margin improvement initiatives already in progress provides a clear pathway to achieve cash positive operations from both business units in 2024, as previously indicated,” concluded Mish.

Balance Sheet and Liquidity

• As of March 31, 2023, the company had $23.7 million in cash, cash equivalents, short-term investment securities, and restricted cash.

• The company has received casualty loss insurance recoveries of $5.0 million in first quarter of 2023 from the Grass Valley fire, with additional proceeds from its ongoing business interruption insurance claims expected in the second quarter and thereafter.

• On March 3, 2023, the company strengthened its balance sheet with a $21.1 million senior credit facility to fund increased working capital driven by increased VLN product shipments to multiple national-scale distribution partners as well as strong customer demand for hemp/cannabis bulk ingredients.

• Photo by Giorgio Trovato on Unsplash

Related News

22nd Century Group Signs Exclusive License And Distribution Agreement With Cookies

22nd Century Group Q4 2022 Net Revenue Grows 141.3% YoY, What About Profit?

22nd Century Group Secures $21M Debt Financing For Accelerated Expansion