22nd Century Group (Nasdaq: XXII) reported a 50% sequential increase in first-quarter revenue as its growth strategy began delivering results across multiple product lines, including reduced-nicotine cigarettes and filtered cigars.
The company posted net revenues of $6.0 million for the quarter ending March 31, up from $4.0 million in the fourth quarter of 2024. CEO Larry Firestone attributed the jump to expanding sales from contract manufacturing and preparations for new product launches under its VLN brand and partner labels.
“Our first quarter results demonstrate the positive trends we expect to build on in 2025,” Firestone said. “Sales increased by approximately 50% from the fourth quarter and the operating leverage is flowing through our low-cost operating model.”
VLN Expansion and Partner Launches
22nd Century is preparing for the initial shipment of two partner-branded VLN cigarette lines, including products for Smoker Friendly, one of the company’s largest customers.
“We are excited about the upcoming launch of now two partner branded VLN products, both for chains with substantial retail store counts,” Firestone said. “These bring additional partner-supported marketing and outreach activity to grow sales volumes in the VLN category.”
In addition to launching VLN Red, joining the previously available Gold and Green variants, the company has submitted regulatory filings for VLN and related products in all 50 U.S. states. The filings are part of a larger strategy to expand its footprint in the reduced nicotine content market, which is gaining traction following recent U.S. Food and Drug Administration policy signals in favor of harm reduction.
Gains in Cigarettes and Cigar Segments
Cigarette revenue rose to $5.0 million from $3.3 million the prior quarter, boosted by new contracts, including a significant agreement with 22nd Century’s largest contract manufacturing customer that took effect on January 1.
Carton volumes climbed to 319,000, up from 228,000 in the fourth quarter.
Filtered cigar revenues also saw growth, increasing to $1.1 million from $0.8 million, driven by new long-term contracts signed in March. The company said it has now secured multiple multi-year filtered cigar deals that are expected to sustain volumes through 2025.
Meanwhile, cigarillo sales remained negligible during the quarter, with reorders anticipated later in the year as distributors sell through initial stocking orders.
22nd Century also began shipments of the “Smoker Friendly Black Label” line, a new natural-style cigarette made from just tobacco and water. The product is part of a broader manufacturing and licensing agreement covering 19 SKUs over five years.
Operating Improvements and Reduced Losses
Gross losses narrowed to $0.6 million from $1.3 million in Q4, while operating expenses fell to $2.0 million — the company’s lowest since initiating its restructuring in 2023.
The company reported a net loss of $3.3 million, down from $4.2 million, and an adjusted EBITDA loss of $2.3 million, an improvement over the $3.9 million loss in the previous quarter.
“We are continuing to operate efficiently while funding our inventory and receivables,” Firestone noted, highlighting that 22nd Century reduced net debt by $3.7 million so far in 2025. The company reported net total debt of $3.4 million at quarter’s end.
Looking Ahead
22nd Century says it will continue focusing on partner brand launches and increased contract manufacturing volumes while maintaining tight cost controls. The company is also exploring new VLN partnerships to further diversify its offerings and accelerate revenue.
“We are moving ahead on these and other opportunities as we continue to execute our growth strategy in 2025,” Firestone said.
The company hosted a webcast earlier today to discuss the quarterly results. More information, including the full financial report, is available on 22nd Century’s investor website at https://ir.xxiicentury.com.
