By Timothy S. Donahue
Top Takeaways:
- Revenue Growth: Preliminary third-quarter revenue reached $4.8 million, up 66% sequentially.
- Margin Improvement: The group’s gross profit turned positive at approximately $400,000.
- Smaller Loss: The company’s net loss narrowed to $2.6 million from $3.3 million.
22nd Century Group is selling more cigarettes and losing less money. For now, that’s progress.
The maker of very-low-nicotine (VLN) cigarettes reported preliminary third-quarter revenue of about $4.8 million, a 66% increase from the previous quarter, as the company continued to expand its Pinnacle VLN and other cigarette products.
Gross profit improved to about $400,000, reversing a $300,000 loss in the second quarter. The company also narrowed its operating loss to $2.6 million from $3.3 million, while operating expenses held steady at about $3 million.
“The third quarter marked another period of disciplined execution as we continued to increase consumer awareness and strengthen the commercial foundation for our Pinnacle VLN and 22nd Century VLN low nicotine cigarettes,” said CEO Larry Firestone.
Firestone said that same-store sales growth for the Pinnacle brand, including Pinnacle VLN and conventional Pinnacle Pure cigarettes, reinforced the company’s belief that consumers are seeking alternatives to traditional smoking.
The company expects an adjusted EBITDA loss of about $2.2 million, compared with a $3.5 million loss in the second quarter. Cash and equivalents totaled $3.9 million as of Sept. 30.
22nd Century has positioned its VLN cigarettes, which contain approximately 95% less nicotine than conventional cigarettes, as an alternative for adult smokers seeking to reduce their nicotine intake.
“Today’s consumers are demonstrating through their early adoption of our VLN low nicotine cigarettes that a path to a low nicotine category in the market is being developed,” Firestone said.
The company expects additional cigarette brands to eventually introduce VLN versions alongside their conventional products. “We believe that the future of smoking will include a low nicotine cigarette category of which we are the first and only player at the moment,” Firestone said.
The results are preliminary and unaudited. The company expects to release its full third-quarter financial results by Nov. 13.
