Q2 2024 22nd Century Group Inc Earnings Call Transcript
Key Points
- Significant reduction in net loss from $21 million in Q2 2023 to $1.6 million in Q2 2024.
- Revenue growth initiatives, including adding volume to the factory and repricing key customer accounts, are showing positive results.
- Executive team has been slimmed down and rebuilt, with new additions bringing extensive experience.
- Contract Manufacturing Operations (CMO) business is providing a direct path to breakeven and has secured new contracts.
- Substantial decrease in operating expenses from $11.1 million in Q2 2023 to $2.6 million in Q2 2024 due to cost reduction initiatives.
- Despite improvements, the company is still not profitable and anticipates a bumpy ride to achieving positive net income.
- VLN product has not yet reached its full potential, with carton numbers still a fraction of factory capacity.
- Initial go-to-market strategy for VLN was flawed, focusing solely on c-stores without adequate support for sell-through.
- The company faces challenges in expanding volume at scale due to the regulatory environment.
- Cash burn, although reduced, remains a concern with $4.7 million used in operations during Q2 2024.
Hello, and welcome to 22nd Century's second quarter results conference call. Joining me today are Larry Firestone, CEO; and Dan Otto, CFO.
Earlier today, we issued a press release announcing our results for the second quarter of 2024. The release and Form 10-Q are available in the Investors section of our website at xxiicentury.com. Today's call will include prepared remarks from Larry and Dan, updating you on 22nd Century's business, operations, strategy and financial results through June 30, 2024, and subsequent.
Before we begin, a few reminders for today's call. Some of the statements made today are forward-looking. Forward-looking statements are subject to risks, uncertainties and other factors that may cause actual results to differ materially from those contemplated by these statements. Additional information regarding these factors can be found in our annual, quarterly and other reports filed with the SEC.
During today's call, we will also discuss non-GAAP financial measures, including adjusted EBITDA, which we
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