22nd Century Group, Inc

Ladies and gentlemen, and welcome to the 22nd Century Group fourth quarter and year end results conference call. At this time, all lines are in a listen only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, March 9th, 2023. I would now like to turn the conference over to Matt Cripps, investor relations for 22nd Century. Please go ahead.

Good morning and welcome to 22nd Century's fourth quarter results conference call. Joining me today are Jim Mish, CEO, Hugh Kinsman, CFO, and John Miller, president of our tobacco business. Earlier today, we issued a press release announcing our results for the fourth quarter and full year 2022. The release, earnings presentation, and 10-K are available in the investor section of our website at xxiicentury.com under the events subheading. We'll start today's call with prepared remarks from Jim, John, and Hugh before moving into a Q&A session with our research analysts. Given the limited time for today's call, we will focus on commercial advancements driving revenue in our VLN tobacco and GBB hemp cannabis business units. If you have questions about our business that are not addressed on today's call, you're welcome to email Investor Relations using my contact information provided in today's release. A few reminders about 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. Also during today's call, we may also discuss non-GAAP financial measures, including adjusted EBITDA, which we define as earnings before interest, tax, depreciation, and amortization, as adjusted for certain non-GAAP and non-operating expenses. For more details on these measures, please refer to our press release issued earlier today. And with that, I'll turn the call over to Jim, beginning on slide three.

Thanks, Matt, and good morning, everyone. The fourth quarter and really all of 2022 were transformative for 22nd century as we advanced to an aggressive commercial rollout of VLN reduced nicotine content cigarettes and accelerated revenue and margin growth opportunities with our hemp cannabis business unit. The benefits of those activities are only just beginning to show in the first quarter. And it would become more and more evident as 2023 progresses and as we transform from an R&D company into a truly commercial entity. Our exceptional Chicago pilot results laid the groundwork for an aggressive 2023 multi-state VLN launch program. The pilot clearly showed that adult smokers are willing to switch brands to VLN to help them smoke less. And John's going to tell you why we are so confident in this. Those results are bringing major retail chains to our door, wanting to carry VLN. We've established distributor relationships with the top tobacco and C-store distributors serving national and regional level chains that will achieve our goal of up to 18 states by the end of 2023. GBV volumes have continued to scale as we confirmed our dominant share position in the hemp-derived ingredients market. We recently launched an industry-first CDMO plus distribution category management distribution model and submitted an application to FDA to provide plant-derived APIs to the growing pharmaceutical trial industry centered around CBD-based molecules. The November fire at our Grass Valley facility has actually strengthened our industry position by fully meeting our revenue target even after the fire. continue to build volumes and putting in place plans to come back even stronger with our new facilities. And I'll talk more about that later on in the discussion. Perhaps most importantly to those of you on this call, we are confirming a clear path to cash positive operations, inclusive of corporate overhead, and both our VLN and hemp cannabis business units. This is the first for this company. You've been asking for it, and slide four summarizes how we get to cash positive. This update includes both corporate overhead allocation and adjustments for the fire in Grass Valley, among other updates. VLN now has relationships in place with Cormark, EB Brown, and a growing funnel of top regional and national distributors that will enable us to launch hundreds or thousands of stores across multiple states with the top retail chains. Our initial example of 18 states represents up to 600 million cartons sold per year, and provides a clear path to cash positive in early 2024. Again, John is going to detail this math for you. In hemp cannabis, we still intend to hit cash positive 2024, driven by the continued acceleration of consumer demand for CBD-derived products, improved operating results, such as our Primeville Crude Extraction Facility, and an industry-first, first fully verticalized solution with top customers and consumer CBD brands, speaking decentralized with GVB's ingredients, manufacturing, and now distribution. Again, I'll talk more about that as we get back into the hemp cannabis business unit after John. But that's a good point to let John dive into the incredible work his teams are doing in our tobacco business unit. John?