22nd Century Group Q4 2022 Earnings Report
Key Takeaways
22nd Century Group reported a 141% increase in net revenues for Q4 2022, reaching $19.2 million, driven by growth in both tobacco and hemp/cannabis segments. However, the company experienced a net loss of $26.3 million, impacted by the Grass Valley fire and increased operating expenses related to the VLN® launch and GVB Biopharma acquisition. The company is focused on scaling VLN® sales and achieving cash-positive operations in its hemp/cannabis business in the first half of 2024.
Net revenues increased by 141% year-over-year to $19.2 million, driven by both tobacco and hemp/cannabis segments.
The company is scaling hemp/cannabis revenue and gross margin to achieve cash-positive operating results in the first half 2024.
Initiated agreements with national-scale C-store distribution partners.
Net loss was $26.3 million, impacted by the Grass Valley fire and increased operating expenses.
22nd Century Group
22nd Century Group
Forward Guidance
22nd Century Group anticipates decreased operating cash requirements throughout fiscal year 2023 due to increased sales volume of higher margin contract manufacturing operations (CMO) cigarettes and VLN® products, as well as continued organic growth of GVB’s operations.
Positive Outlook
- Increased sales volume of higher margin contract manufacturing operations (CMO) cigarettes
- Increased sales volume of VLN® products
- Continued organic growth of GVB’s operations
- Expanded VLN® sales in Illinois and launch in Colorado
- The company has received casualty loss insurance recoveries of $5.0 million in first quarter of 2023 from the Grass Valley fire, with business interruption insurance claims proceeds expected thereafter.
Challenges Ahead
- The company is still recovering from the Grass Valley fire.
- Losses due to the Grass Valley fire
- Losses due to increased operating expenses
- Gross profit from hemp/cannabis-related products was $(0.6) million compared to $(0.1) million the prior year.
- Actions were taken to ensure we fully serviced our customer base to meet our revenue target and immediate investments were made to restore capacity for future operating needs.