22nd Century Group Inc (XXII) 2025 Q1 法說會逐字稿

Welcome to 22nd Century Group's first-quarter 2025 conference call and webcast. (Operator Instructions)

歡迎參加 22 世紀集團 2025 年第一季電話會議和網路廣播。（操作員指示）

It is now my pleasure to turn the floor over to Matt Kreps, Investor Relations for 22nd Century Group. Please begin.

現在我很高興將發言權交給 22 世紀集團投資者關係部門的 Matt Kreps。請開始。

Hello, and welcome to 22nd Century's first-quarter 2025 results conference call. Joining me today are Larry Firestone, CEO; and Dan Otto, CFO. Earlier today, we issued a press release announcing the results for the quarter ended March 31, 2025. The release and 10-Q are available in the Investors section of our website at xxiicentury.com.

您好，歡迎參加 22 世紀 2025 年第一季業績電話會議。今天與我一起出席的還有執行長 Larry Firestone 和財務長 Dan Otto。今天早些時候，我們發布了一份新聞稿，宣布了截至 2025 年 3 月 31 日的季度業績。新聞稿和 10-Q 可在我們網站 xxiicentury.com 的投資者部分找到。

Today's call will include prepared remarks from Larry and Dan, updating you on 22nd Century's business, operations, strategy, and financial results through March 31, 2025, and subsequent. Before we begin, a few reminders for today's call.

今天的電話會議將包括拉里和丹的準備好的發言，向您通報截至 2025 年 3 月 31 日及之後 22 世紀的業務、營運、策略和財務業績。在我們開始之前，先提醒大家一些關於今天通話的內容。

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.

今天的一些聲明具有前瞻性。前瞻性陳述受風險、不確定性和其他因素的影響，這些因素可能導致實際結果與這些陳述所預期的結果有重大差異。有關這些因素的更多資訊可以在我們向美國證券交易委員會提交的年度、季度和其他報告中找到。

Also during today's call, we may discuss non-GAAP financial measures, including adjusted EBITDA, which we define as earnings before interest, taxes, depreciation, and amortization, as adjusted for certain non-cash and non-operating expenses; and net debt calculated as total principal amount of debt less -- outstanding less cash and cash equivalents. For more details on these measures, please refer to our release issued earlier today.

此外，在今天的電話會議中，我們可能會討論非公認會計準則財務指標，包括調整後的 EBITDA（我們將其定義為扣除某些非現金和非營運費用後的息稅折舊攤銷前利潤）；以及淨債務，其計算方式為債務本金總額減去未償還債務減去現金和現金等價物。有關這些措施的更多詳情，請參閱我們今天早些時候發布的新聞稿。

And with that, I'll now turn the call over to Larry.

現在，我將把電話轉給拉里。

Thank you, Matt. Good morning, everyone, and thank you for joining 22nd Century's first-quarter 2025 results conference call.

謝謝你，馬特。大家早安，感謝您參加22世紀2025年第一季業績電話會議。

On our 2024 year-end financial results call in March, I addressed our journey over the first 16 months of my tenure as CEO, which was defined as a turnaround. We're now putting 2024 in the past and are solely focused on our future. We have completely reconfigured our business and laid the tracks to drive into what we believe will be a very profitable future.

在今年 3 月的 2024 年年終財務業績電話會議上，我談到了我擔任執行長後的前 16 個月的歷程，這段時間被定義為轉捩點。我們現在把 2024 年拋在腦後，只專注在我們的未來。我們已經徹底重新配置了我們的業務，並為邁向我們認為非常有利可圖的未來做好了準備。

Dan will talk about the numbers and the wins we had in the first quarter of 2025. I would like to begin my remarks, first, by talking a little bit about the turbulent tobacco market that we serve. And then I will describe our road map to success as we continue the transition of 22nd Century into a growth company.

丹將談論我們在 2025 年第一季取得的數字和勝利。首先，我想談談我們所服務的動盪的菸草市場。然後，我將描述我們繼續將 22 世紀轉型為成長型公司的成功路線圖。

The $85 billion combustible cigarette market is showing increasing friction around price, products, nicotine delivery systems, FDA regulatory environment, and more. Right now, we see an incredible focus on nicotine that we've never seen before, even as big tobacco remains under the pressure to reduce the harms of smoking.

價值 850 億美元的可燃香菸市場在價格、產品、尼古丁輸送系統、FDA 監管環境等方面的摩擦日益加劇。目前，我們看到人們對尼古丁的關注度達到了前所未有的程度，儘管大型菸草公司仍然面臨著減少吸菸危害的壓力。

Big tobacco's answer to smoking arm is to keep their consumers booked on nicotine by transitioning what have been their mainstream products to noncombustible products such as nicotine pouches, which come in all levels of nicotine, with some brands bragging about having the highest nicotine to the wave of heat-not-burn to avoid the carcinogens, vaping, moist snuff, which has been in the market for a long time.

大型菸草公司對付吸菸部門的辦法是，將他們的主流產品轉變為尼古丁袋等非燃燒產品，讓消費者繼續依賴尼古丁，尼古丁袋有各種尼古丁含量，有些品牌吹噓自己擁有最高的尼古丁含量，以避免市場上存在已久的致癌物、電子煙和濕鼻煙。

They, being big tobacco, flat out disregard the harms of nicotine and drive to deliver nicotine in new ways. Nicotine addiction is their secret weapon to keep consumers addicted to their products. In fact, high nicotine and access to high nicotine is in their marketing materials and core to some of their brands and products.

身為菸草巨頭，他們完全無視尼古丁的危害，並致力於以新的方式輸送尼古丁。尼古丁成癮是他們讓消費者對其產品上癮的秘密武器。事實上，高尼古丁和高尼古丁的取得途徑是他們的行銷資料，也是他們的一些品牌和產品的核心。

In addition, we have the same big tobacco companies raising their combustible cigarette prices as often as quarterly, which has the air of arrogance and lack of care for their consumer and their consumers' wallet. It seems to be almost a contest to see how far they can dig into their consumers' pocket book before the consumers' attitude changes and therefore, big tobacco's attitude changes.

此外，我們還有同樣的大型菸草公司，他們每季都會提高可燃香菸的價格，這種做法顯得傲慢，不關心他們的消費者和消費者的錢包。這幾乎是一場比賽，看看在消費者態度改變以及大菸草公司態度改變之前，他們能在多大程度上掏空消費者的錢包。

The cost of a pack of Tier 1 branded cigarettes is competing in the consumer's wallet for consumer staple items such as gasoline and groceries and especially as prices for consumer goods are increasing steadily. It's as if they know that their customer is addicted, thanks to nicotine, and they can charge whatever they want for their cigarettes. And they're testing that theory quarterly with their price increases.

一包一線品牌香菸的價格正在與汽油和食品雜貨等消費必需品爭奪消費者的錢包，尤其是在消費品價格穩步上漲的情況下。就好像他們知道他們的顧客對尼古丁上癮了，所以他們可以隨意收取香菸的費用。他們每季都會透過漲價來驗證這個理論。

We look at the market differently, with changing dynamics in Tier 1 as an opportunity for 22nd Century. 22nd Century serves and will serve two main segments of the market: reduced nicotine premium products and value-focused CMO brands. Our main domestic brands are Smoker Friendly, Pinnacle, and VLN.

我們以不同的眼光看待市場，認為一線市場不斷變化的動態為 22nd Century 帶來了機會。 22nd Century 服務並將服務於兩個主要市場部分：低尼古丁優質產品和注重價值的 CMO 品牌。我們的主要國內品牌是 Smoker Friendly、Pinnacle 和 VLN。

Our Smoker Friendly and Pinnacle CMO brands are value brands that serve the Tier 4 market, which is roughly two-thirds of the price of a Tier 1 brand to the consumer. This is a price point that is much friendlier to the consumer's wallet for those who want to continue to smoke a standard combustible cigarette. So this is predominantly a value price play.

我們的 Smoker Friendly 和 Pinnacle CMO 品牌是服務四級市場的價值品牌，對消費者來說，四級市場的價格大約是一級品牌價格的三分之二。對於那些想繼續吸食標準可燃香菸的人來說，這個價格對消費者來說更友善。因此，這主要是價值價格遊戲。

Then with the relaunch of our VLN-branded products into the market, we will serve consumers who wish to take control of their nicotine consumption. There are plenty of consumers who wish to control their nicotine to either transition from a need to smoke every day or multiple times a day. And they can choose when to smoke or not need to smoke at all.

然後，隨著我們的 VLN 品牌產品重新進入市場，我們將為希望控制尼古丁消費的消費者提供服務。許多消費者希望控制尼古丁攝取量，不再需要每天吸菸或每天多次吸菸。他們可以選擇何時吸煙或根本不吸煙。

This we will prove out as we make our VLN-branded products available across the US and gain distribution and rate of sale. This is predominantly a health and wellness play. We believe there's a large consumer population for both Tier 4 value brands and the consumers who want to control their smoking habit with low-nicotine cigarettes. This will fuel our customers' growth and 22nd Century's growth as well.

隨著我們在美國各地銷售 VLN 品牌產品並獲得分銷和銷售率的提高，我們將證明這一點。這主要是一場健康和保健活動。我們相信，四級價值品牌和希望透過低尼古丁香菸控制吸菸習慣的消費者都擁有龐大的消費群體。這將促進我們客戶的成長以及 22nd Century 的成長。

Our growth will also come from wider distribution as a result of expanded domestic state approvals. But once approved within the state, we will be looking to add points of distribution and launching targeted marketing campaigns that will drive rate of sale.

隨著國內政府審批的擴大，我們的成長也將來自更廣泛的分銷。但一旦獲得州內批准，我們將尋求增加分銷點並開展有針對性的行銷活動，以提高銷售率。

So as the Smoker Friendly, Pinnacle, and VLN footprint grows throughout the US, our revenues will grow as will our profitability. In the past, these brands have had limited approvals in the US, and we are opening up the opportunity to serve all 50 states across all brands. In addition to the widening footprint of our brands nationwide, we're developing with Smoker Friendly and Pinnacle, new products which will widen the SKU count in the stores where we are the manufacturer.

因此，隨著 Smoker Friendly、Pinnacle 和 VLN 在美國的影響力不斷擴大，我們的營收和獲利能力也將隨之成長。過去，這些品牌在美國獲得的批准有限，而我們正在開放為所有 50 個州的所有品牌提供服務的機會。除了在全國擴大我們品牌的影響力之外，我們還在與 Smoker Friendly 和 Pinnacle 合作開發新產品，以擴大我們作為製造商的商店的 SKU 數量。

The latest product introductions include, for Smoker Friendly, which has over 350 stores and another 450 authorized dealers, is introducing Smoker Friendly Black Label for the natural cigarette market, containing only tobacco and water, that is designed to compete directly with major names on quality and profile -- flavor profile at a much more affordable price.

最新推出的產品包括：Smoker Friendly，其擁有超過 350 家商店和另外 450 家授權經銷商，正在為天然香煙市場推出 Smoker Friendly Black Label，該產品僅含有煙草和水，旨在以更實惠的價格在質量和外形（口味）方面與主要品牌直接競爭。

For example, Natural American Spirit is one of the top-selling brands in the market. I think it's number seven and one of the most expensive, quite possibly number one as the most expensive. Smoker Friendly in conjunction with 22nd Century has launched this new natural-style cigarette in the US.

例如，Natural American Spirit 是市場上最暢銷的品牌之一。我認為它排在第七位，也是最昂貴的之一，很可能是第一名。Smoker Friendly 與 22nd Century 聯合在美國推出了這款新型天然風格香菸。

And once we obtain additional state approvals, Smoker Friendly Black Label will be available to be offered in every state at a price point that is much more affordable compared to Natural American Spirit. This is an exciting growth opportunity for both Smoker Friendly and 22nd Century.

一旦我們獲得更多州的批准，“Smokeer Friendly Black Label”將在每個州以比“Natural American Spirit”更實惠的價格出售。對於 Smoker Friendly 和 22nd Century 來說，這是一個令人興奮的成長機會。

Smoker Friendly VLN, which is a private label presentation of our VLN. This is a new set of SKUs for our Smoker Friendly relationship and will be available not only chain-wide but potentially in every state as we receive state approvals and distribution. The importance of the adoption of VLN to these brands is not only the well-established distribution channels that they already possess, but also the brand equity that they carry.

吸菸者友善 VLN，這是我們 VLN 的私人標籤展示。這是我們為與吸煙者友好關係而推出的一套新 SKU，不僅會在整個連鎖店範圍內銷售，而且在我們獲得州政府批准和分銷後，有可能在每個州銷售。對於這些品牌來說，採用 VLN 的重要性不僅在於它們已經擁有的完善的分銷管道，還在於它們所承載的品牌資產。

We believe we can build the VLN product franchise within our CMO customers brands nicely and then move the 22nd Century-branded VLN alongside as awareness expands. Our Pinnacle-branded products are sold in a top five C-store chain in the US with over 1,700 outlets, where the retailer is looking to expand the Pinnacle SKU lineup as well. This will come together in the second half of 2025 and will add additional revenue opportunities for both the retailer and 22nd Century.

我們相信，我們可以在 CMO 客戶品牌內很好地建立 VLN 產品特許經營權，然後隨著知名度的擴大而推動 22 世紀品牌 VLN 的發展。我們的 Pinnacle 品牌產品在美國排名前五的 C 商店連鎖店中銷售，擁有超過 1,700 家門市，該零售商也希望擴大 Pinnacle SKU 陣容。該計劃將於 2025 年下半年實現，並將為零售商和 22 世紀增加額外的收入機會。

The year-over-year growth in the Smoker Friendly- and Pinnacle-branded products that we produce, continue to drive not only retail growth, but 22nd Century growth profitably as well. We believe we're in a great position to build our company on the market opportunities in the Tier 4 and the nicotine control consumer, who would be a candidate for our VLN products.

我們生產的 Smoker Friendly 和 Pinnacle 品牌產品的年成長不僅繼續推動零售成長，也推動了 22nd Century 的獲利成長。我們相信，我們處於一個非常有利的位置，可以利用 Tier 4 和尼古丁控制消費者的市場機會來建立我們的公司，他們將成為我們 VLN 產品的候選人。

The sequence of this rollout is key to understand, as none of this is an instant success. First, there's product development and brand alignment; then state registration, followed by state approval. Then once the states approved the SKU's ability for sale, that's when we begin the sales cycle to the various retailers in the various states.

理解這一推出的順序至關重要，因為這一切都不會立即成功。首先是產品開發和品牌整合；然後是國家註冊，接著是國家批准。一旦各州批准了該 SKU 的銷售能力，我們就開始向各州的各個零售商進行銷售。

And upon successful adoption from retail, we will add distribution. Finally, once approved by the retailers, then shipments to the distributors who will then ship to the stores. Then we will work on rate of sale as the distributors will replenish the supply to the retailer after the first load-in.

在零售成功採用後，我們將增加分銷。最後，一旦獲得零售商的批准，就會將貨物運送給分銷商，然後分銷商再運送到商店。然後，我們將研究銷售率，因為分銷商將在第一次入庫後向零售商補充供應。

This is a very serial process and will roll out and gain momentum over time like starting a locomotive. We start slow and pick up steam as we go. This will be an extended growth process that will add to the normal year-over-year growth in the same-store sales of the existing distribution.

這是一個非常連續的過程，隨著時間的推移，它將像啟動火車頭一樣展開並獲得動力。我們開始得很慢，然後逐漸加快速度。這將是一個延長的成長過程，將增加現有分銷的同店銷售額的正常年成長。

Eventually, we'd like to create a VLN category in retail. That would separate all of our VLN-branded SKUs from the standard cigarette category. This will take time and rate of sale numbers to create, but we believe this is possible.

最終，我們想在零售業中創建一個 VLN 類別。這將使我們所有的 VLN 品牌 SKU 與標準香菸類別區分開來。這需要時間和銷售率來實現，但我們相信這是可能的。

Our growth comes from growth in same-store sales plus new distribution. Then as we add new products, we follow the same cycle. We believe that current market dynamics, which include price pressure on consumers from big tobacco, have and will continue to create an opportunity for our high-quality branded products in the overall Tier 4 and above markets.

我們的成長來自於同店銷售額的成長和新分銷的成長。然後，當我們新增產品時，我們遵循相同的週期。我們相信，當前的市場動態（包括大型菸草公司對消費者施加的價格壓力）已經並將繼續為我們在整個四線及以上市場的優質品牌產品創造機會。

The balance of our CMO business is high-volume, low-margin, low-mix business for domestic supply of filtered cigars and container orders for export cigarettes. This steady volume of business consumes our machine capacity and allows us to manage our above-the-line costs while contributing to our gross profit.

我們的 CMO 業務的平衡是高產量、低利潤、低混合的業務，包括國內供應過濾嘴雪茄和出口香菸的貨櫃訂單。穩定的業務量消耗了我們的機器容量，使我們能夠管理線上成本，同時為我們的毛利做出貢獻。

Now turning my attention to other areas that our management team continues to progress with. We will be launching a new 22nd Century website in the coming weeks and a refreshed [TryVLN] resource, so that once we have established distribution, consumers will be able to find VLN products in retail locations in their market. We are also getting ready to reactivate our social media platform within the guidelines and restrictions of tobacco advertising so that consumers can share their experiences with our branded and VLN products.

現在我將注意力轉向我們的管理團隊繼續取得進展的其他領域。我們將在未來幾週內推出一個新的 22 世紀網站和更新的 [TryVLN] 資源，以便一旦我們建立分銷管道，消費者就能在他們所在市場的零售店找到 VLN 產品。我們也準備在菸草廣告的指導方針和限制範圍內重新啟動我們的社群媒體平台，以便消費者可以分享他們使用我們的品牌和 VLN 產品的體驗。

On the regulatory front, the low-nicotine FDA proposed rule is midway to the completion of the comment period, which ends in September. When the comment period concludes, we can determine the FDA's direction on what could be the most meaningful and impactful tobacco harm reduction policy in a generation.

在監管方面，FDA 提出的低尼古丁規則的評論期已接近一半，評論期將於 9 月結束。當評論期結束時，我們可以確定 FDA 對這一代最有意義和最具影響力的菸草危害減少政策的方向。

But I also want to be very clear, we are not waiting for the FDA to finalize their rule, and we are not dependent on the FDA's rule. We have developed an important technology in our low-nicotine tobacco and VLN products that the FDA has already approved and a certain contingent of customers will want today, that give smokers a choice with their nicotine consumption. It's important to note that we have the only FDA-approved combustible cigarette that meets the new policy standard.

但我也想明確一點，我們不會等待 FDA 最終確定他們的規則，我們也不依賴 FDA 的規則。我們在低尼古丁煙草和極低尼古丁 (VLN) 產品中開發了一項重要技術，該技術已獲得 FDA 批准，並且是目前部分客戶所希望的，它可以讓吸煙者在尼古丁攝入量方面做出選擇。值得注意的是，我們擁有唯一符合新政策標準的經 FDA 批准的可燃香菸。

Pulling all the pieces together, we have rebuilt the foundation of our company to what we believe is a more substantial business model. This model features a suite of our branded products, which include Smoker Friendly, Pinnacle, and 22nd Century VLN, which now represents a wide menu of SKUs.

綜合起來，我們重建了公司的基礎，我們認為這是一個更實質的商業模式。該模型採用了我們的一系列品牌產品，包括 Smoker Friendly、Pinnacle 和 22nd Century VLN，現在代表了廣泛的 SKU 菜單。

Further, we service our standard high-volume, low-mix CMO customers for domestic filtered cigars and export cigarettes. Approaching the market with our current suite of products is a much different proposition than what we had with just the original VLN product set when I joined the company. The railroad tracks are laid; now we have to drive as fast as the states will let us and the markets will allow us to.

此外，我們也為標準的大量、低混合 CMO 客戶提供國內過濾雪茄和出口香菸的服務。利用我們現有的產品套件來進入市場與我加入公司時僅使用原始 VLN 產品套件的主張有很大不同。鐵路軌道已經鋪設完畢；現在我們必須按照國家和市場允許的速度快速行駛。

And now I'll turn the call over to Dan to discuss the numbers.

現在我將把電話轉給丹來討論這些數字。

Thank you, Larry. Good morning, everyone, and thanks again for joining our discussion today. This has really been an exciting quarter for 22nd Century. As the foundational pieces of our strategy continue to be laid and we execute growth initiatives, we are set up for success in improving financial results for the remainder of 2025.

謝謝你，拉里。大家早安，再次感謝大家參加我們今天的討論。對於 22 世紀來說，這確實是一個令人興奮的季度。隨著我們策略基礎的不斷奠定和成長計畫的實施，我們已為成功改善 2025 年剩餘時間的財務表現做好了準備。

Larry and I have spoken consistently about the importance of restoring fiscal responsibility, as a result of our restructuring efforts. And in our 2024 year-end results call, we expanded on those details. We've continued to make substantial progress. And although we aren't claiming victory yet, we've come a long way. As a recap in setting the stage for today's comments, I'll cover three main pillars of our financial targets as we emerge from our restructuring and turnaround.

由於我們的重組努力，拉里和我一直在談論恢復財務責任的重要性。在我們 2024 年年終業績電話會議上，我們進一步闡述了這些細節。我們不斷取得實質進展。儘管我們尚未宣布勝利，但我們已經取得了長足的進步。作為今天的評論的回顧，我將介紹我們在重組和轉型過程中的三大財務目標支柱。

First, achieving profitability in the P&L. For the first time in this company's history in late 2025, we are ready to deliver revenue growth and margin improvement with our CMO customer contracts in 2025. And we'll begin rapidly expanding VLN points of distribution during the year. This sits on top of the much-improved operating cost and overhead structure implemented throughout 2024.

第一，實現損益的獲利。2025 年末，我們準備在公司歷史上首次透過 2025 年的 CMO 客戶合約實現營收成長和利潤率提高。我們將在今年開始迅速擴大 VLN 分銷點。這是在 2024 年實施的大幅改善的營運成本和管理費用結構的基礎上實現的。

Second, the restoration of normal balance sheet ratios and KPIs will occur through continued elimination of debt obligations and improvements in working capital; and third, prioritizing and securing cash run rate to complete these initiatives, as we will then turn our attention to improvement of the overall capitalization table.

第二，透過持續消除債務和改善營運資本，恢復正常的資產負債表比率和關鍵績效指標；第三，優先考慮並確保現金運行率以完成這些舉措，因為我們隨後將把注意力轉向改善整體資本化表。

First-quarter 2025 results begin to showcase how the hard work and planning is coming together to help us deliver on these priorities. Starting from the top, net revenue was $6 million in the first quarter of 2025, increased 50% sequentially from $4 million in the fourth-quarter 2024. Gross margin was a loss of $0.6 million, also an improvement of 50% from the prior quarter. These results reflect slowly rebuilding volume and normal manufacturing capacity with our CMO customers.

2025 年第一季的業績開始展現辛勤工作和規劃如何共同幫助我們實現這些優先事項。從頂部開始，2025 年第一季的淨收入為 600 萬美元，較 2024 年第四季的 400 萬美元環比增長 50%。毛利率虧損 60 萬美元，也較上一季改善了 50%。這些結果反映了我們與 CMO 客戶的產量和正常製造能力正在緩慢重建。

Total cartons sold were 476,000, increased 41% versus 338,000 in the fourth quarter. The volume change is reflective of the initiatives Larry and I have discussed regarding repricing our CMO customer contracts, which initially had created a temporary decline in the later half of 2024, as customers worked off last-time buys, inventory, but is now beginning to reverse back to more normalized volumes.

銷售紙箱總數為 476,000 箱，較第四季的 338,000 箱成長 41%。銷售變化反映了拉里和我討論過的關於重新定價我們的 CMO 客戶合約的舉措，由於客戶消耗了上次購買的庫存，這最初在 2024 年下半年造成了暫時的下降，但現在開始恢復到更正常的數量。

We expect volume will be similar to growing again in the second quarter of 2025, with more meaningful gains in the second half of the year. As a function of the following three points, we also see an inflection point occurring later in 2025, whereby the gross profit deficits currently incurred will quickly be erased.

我們預計 2025 年第二季銷售將再次出現類似的成長，下半年將出現更顯著的成長。結合以下三點，我們也預計2025年後期將出現一個拐點，屆時目前產生的毛利赤字將迅速被消除。

First, we'll continue to see the benefits of the revised pricing structures in the new customer contracts. Second, we'll see volume ramping up and expanded shipments under those same agreements. And third, we'll begin to see meaningful sales of our higher-margin branded cigarettes, including both natural-style cigarettes and our FDA-authorized very-low-nicotine-content cigarettes. [Carrying] positive gross margin in the early stages of the second half of 2025 from these initiatives is integral to us reaching our breakeven profitability goal.

首先，我們將繼續看到新客戶合約中修改後的定價結構帶來的好處。其次，我們將看到在相同協議下銷售和出貨量將會增加。第三，我們將開始看到我們高利潤品牌香菸的銷售量顯著成長，包括天然香菸和FDA核准的極低尼古丁含量香菸。這些措施將在2025年下半年初期帶來正毛利率，對於我們實現損益兩平的獲利目標至關重要。

Total operating expenses for the first quarter were $2 million compared to $2.8 million in the fourth quarter of 2024. This level of operating expense overhead is the lowest quarterly amount we've incurred since our turnaround began in late 2023.

第一季的總營運費用為 200 萬美元，而 2024 年第四季為 280 萬美元。這一水準的營運費用是自 2023 年底開始扭虧為盈以來季度最低的金額。

First-quarter 2025 net loss from continuing operations improved to $3.3 million from $4.2 million in the preceding quarter. EPS improved to a loss of $1.89 a share compared to [$10.59] a share. And adjusted EBITDA significantly improved to a loss of $2.3 million from $3.9 million in the fourth quarter of 2024. As Larry mentioned, we're exiting the turnaround phase now and moving into growth where our story focuses purely on execution against achieving our P&L goals.

2025 年第一季持續經營淨虧損從上一季的 420 萬美元改善至 330 萬美元。每股虧損由每股 [10.59 美元] 改善為每股 1.89 美元。調整後的 EBITDA 大幅改善，從 2024 年第四季的 390 萬美元虧損降至 230 萬美元。正如拉里所提到的，我們現在正走出扭虧為盈階段，進入成長階段，我們的故事完全專注於執行，而不是實現我們的損益目標。

With respect to continued balance sheet improvement, we further reduced our outstanding debt under this convertible senior secured credit facility, bringing the remaining principal balance down to $3.9 million, with debt for equity conversions of $3.1 million that occurred during the quarter and a contractual cash payment subsequent to quarter-end of an additional $1 million.

在持續改善資產負債表方面，我們進一步減少了可轉換優先擔保信貸額度下的未償還債務，使剩餘本金餘額降至 390 萬美元，其中本季度發生的債轉股金額為 310 萬美元，季度末之後又按合約約定支付了 100 萬美元現金。

Cash used in operations in the first quarter of 2025 was [$2.9 million]. And we remain focused on minimizing cash used by the business while also executing a rapid growth strategy. In late April 2025, subsequent to quarter-end, we executed a capital raise through inducement of existing warrants to raise gross proceeds of approximately $5.4 million, with an additional option for a further exercise to raise $3.3 million. This provides us with the cash runway to execute on our strategy for the remainder of 2025.

2025 年第一季營運現金使用量為[290萬美元]。我們將繼續致力於最大限度地減少業務現金消耗，同時執行快速成長策略。2025 年 4 月下旬，即季度末之後，我們透過誘導現有認股權證進行了資本籌集，籌集了約 540 萬美元的總收益，並附加了進一步行使籌集 330 萬美元的額外選擇權。這為我們在 2025 年剩餘時間內實施策略提供了現金支援。

Finally, the company remains active in our lawsuit against Dorchester Insurance Company based on their failure to pay any amount toward our claim of $9 million in actual damages for business interruption insurance. Significant discovery is taking place, and the court has set a trial date for November 2025.

最後，該公司仍在積極起訴多切斯特保險公司，因為該公司未能支付我們索賠的 900 萬美元業務中斷保險實際損失的任何金額。重大發現正在進行中，法院已將審判日期定為 2025 年 11 月。

That concludes our prepared remarks. I'll now open it up for any questions from our analysts.

我們的準備好的演講到此結束。現在我將開始回答我們分析師的任何問題。

(Operator Instructions) Andrew White, Emerging Growth Research.

（操作員指示）安德魯·懷特（Andrew White），新興成長研究。

Hi, good morning. Thank you for taking my questions. First, I want to say, these are great results, guys. You're doing a good job. I do have a couple of questions. First and foremost, do you still foresee a breakeven of EBITDA for the fourth quarter of this year?

嗨，早安。感謝您回答我的問題。首先，我想說，夥計們，這些都是很棒的結果。你做得很好。我確實有幾個問題。首先，您是否仍預期今年第四季的 EBITDA 將達到收支平衡？

Hey, Andy. Good morning. This is Dan. Yes, we're still on track in the later half of the year to get to breakeven.

嘿，安迪。早安.這是丹。是的，我們仍有望在今年下半年達到收支平衡。

Okay. Great. So you're seeing that CMO will continue to grow from this first-quarter level and the VLN will, hopefully, kick in over the course of the year?

好的。偉大的。所以您認為 CMO 將從第一季的水平繼續增長，並且 VLN 有望在今年內開始發揮作用嗎？

Yeah, that's what we're currently looking at. So we have -- as I said in the prepared remarks, Andy, we've got the Smoker Friendly franchise on a pretty nice growth path. We've got the Pinnacle franchise on a nice growth path. And they're going to add -- they're actually going to add some products -- some SKUs to the lineup.

是的，這就是我們目前正在關注的。所以，正如我在準備好的演講中所說的那樣，安迪，我們的“吸煙者友好”特許經營權已經走上了一條相當不錯的增長道路。我們已讓 Pinnacle 特許經營權走上了良好的成長道路。他們將會添加——他們實際上將添加一些產品——一些 SKU 到產品線中。

And then as we get our state approvals for both of them and then state approvals for VLN and our partner VLN, we'll start to see some distribution in there. So that side of the house is beginning to percolate pretty nicely.

然後，當我們獲得這兩個項目的州政府批准，以及 VLN 和我們的合作夥伴 VLN 的州政府批准後，我們將開始看到一些分銷。因此，房子的那一面開始滲透得相當好。

Good to hear. Secondarily, looking at the balance sheet, you have a very large increase in the first quarter of accounts receivable. And that impacts your net working capital, which is notable that you're almost breakeven on net working capital, despite the fact that your debt facility is now listed as a current liability. That's pretty impressive.

很高興聽到這個消息。其次，從資產負債表來看，第一季應收帳款成長非常大。這會影響您的淨營運資本，值得注意的是，儘管您的債務工具現在被列為流動負債，但您的淨營運資本幾乎實現收支平衡。這真是令人印象深刻。

But I did want to ask, does this portend a need for additional financial capital, whether by debt or by share issuance?

但我確實想問，這是否預示著需要額外的財務資本，無論是透過債務還是透過發行股票？

Yeah, Andy. After the most recent financing we just completed here, we're comfortable with the cash runway we have, getting into that latter half of the year where we plan to get to breakeven.

是的，安迪。在我們剛完成最近的融資之後，我們對現有的現金流感到滿意，並計劃在今年下半年實現收支平衡。

As far as the receivable balance increasing, a large portion of that is a sizable contract asset, which is a result of some of the new customer agreements we've signed in the CMO business during the quarter.

就應收帳款餘額的增加而言，其中很大一部分是一筆可觀的合約資產，這是我們本季在 CMO 業務中籤署的一些新客戶協議的結果。

Over what time period do you expect to collect the accounts receivable balance?

您預計在什麼時間內收回應收帳款餘額？

It's the same terms as the typical shipments. So generally, we collect when product is delivered.

其條款與典型的貨物運輸相同。因此一般來說，我們會在產品交付時收取費用。

Okay. Do I have time to ask a couple of more questions?

好的。我還有時間再問幾個問題嗎？

Yeah.

是的。

Okay. Great. On the warrants' overhang, what has been the share issuance dilution from that? And what can we still expect over the course of the year via exercise or inducement?

好的。偉大的。對於認股權證的懸而未決，股票發行稀釋的情況如何？那麼，透過運動或誘導，我們在這一年中還能期待什麼呢？

Yeah, Andy, current shares outstanding as of the filing date of the document, 11.3 million. That includes the almost 7 million shares we issued under the warrant inducement offering we completed a couple of weeks ago. Between the end of the quarter and now, we had another 1.7 million warrants that were exercised.

是的，安迪，截至文件提交之日，目前流通股數為 1,130 萬股。其中包括我們幾週前完成的認股權證誘導發行的近 700 萬股股票。從本季末到現在，我們又有 170 萬張認股權證被行使。

As far as going forward, really, I'd say our priorities still remain focused on P&L profitability, balance sheet strength. And as a function of those two coming into focus, we can continue to address the capitalization table of the warrants. But the first two priorities really are our focus areas.

就未來而言，我想說我們的重點仍然集中在損益表獲利能力和資產負債表實力上。隨著這兩個因素逐漸清晰，我們可以繼續討論認股權證的資本化表。但前兩個優先事項確實是我們的重點領域。

Okay, okay. So is it a fair comment to say that we're about halfway through the exercise inducement process for the warrants?

好的，好的。那麼，我們可以公平地說，我們已經完成了認股權證行使誘導程序的一半嗎？

Yeah. We -- as part of the inducement offering we completed. We have another tranche that still has a period that can be exercised. That would be up to an additional 3.3 million of proceeds to the company and another 4 million or so approximately shares warrants that will be induced, that runs for a couple of months yet.

是的。我們——作為我們完成的誘導產品的一部分。我們還有另一部分債券仍有一段可行使的期限。這將為公司帶來額外 330 萬美元的收益，另外還將產生約 400 萬股認股權證，這些認股權證將持續數月。

Okay. And last but not least, there have been some pretty good earnings results out from some competitors within the tobacco industry, Altria, Philip Morris, starting point. Wondering, are there any implications for 22nd Century growth?

好的。最後但同樣重要的一點是，菸草業的一些競爭對手，如奧馳亞、菲利普莫里斯等，都取得了相當不錯的獲利業績。想知道這對 22 世紀的成長有何影響嗎？

From their earnings reports?

從他們的收益報告？

The trends that are driving them, yes.

是的，這些趨勢正在推動著它們。

Yeah. I would say -- I spoke to some of the trends in my prepared remarks. I think the upside for us or the place that we play would be really the advancement in the value play for us, which is Smoker Friendly and Pinnacle brands. And that's a migration from the result of the price increases that have been going on in the market.

是的。我想說——我在準備好的發言中談到了一些趨勢。我認為，對於我們或我們所經營的場所而言，真正的好處在於價值的提升，也就是 Smoker Friendly 和 Pinnacle 品牌。這是由於市場價格上漲而導致的遷移。

The other results at big tobacco is in the middle of there are -- products like Zyn, things like that or just nicotine pouches and whatnot. But I'd say in the true combustible cigarette area, we have seen attrition from the Tier 1 brands down to Tier 4, and that's where we play. So that's -- and then, of course, we're waiting for -- not waiting. We're anticipating the launch of the partner of VLN in the market.

大型菸草公司的其他成果是——像 Zyn 這樣的產品，或只是尼古丁袋之類的東西。但我想說，在真正的可燃香菸領域，我們已經看到一級品牌的流失下降到四級品牌，這就是我們的業務所在。那麼 — — 當然，我們在等待 — — 而不是等待。我們期待 VLN 合作夥伴的上市。

Okay. And I guess, last but not least, just to reiterate, within the CMO product line, have we seen the worst of it in 2024 past? And are we now on a growth trajectory cartons-wise, price-wise, revenue-wise?

好的。最後但同樣重要的一點是，我想重申一下，在 CMO 產品線中，我們是否在 2024 年看到了最糟糕的情況？那麼，就紙箱數量、價格和收入而言，我們現在是否處於成長軌跡上？

Yeah, that's correct.

是的，沒錯。

That's correct. Good to hear. Well, those are my questions. Thank you very much, guys.

沒錯。很高興聽到這個消息。好吧，這些就是我的問題。非常感謝你們，夥伴們。

All right. Thanks, Andy.

好的。謝謝，安迪。

This concludes our question-and-answer session. I would like to turn the conference back over to Larry Firestone for any closing remarks.

我們的問答環節到此結束。我想將會議交還給 Larry Firestone 並請他做最後演講。

Thank you. 21st Century is in its new business model. As I stated on the last earnings call, this is the start of a new company. We have our branded lineup and our standard CMO business backing it up.

謝謝。 21世紀正處於新的商業模式。正如我在上次財報電話會議上所說，這是一家新公司的開始。我們有自己的品牌陣容和標準的 CMO 業務作為後盾。

Our cost structure is in line, and we believe we have the cash on the balance sheet to carry us into breakeven. That assumes the choreography of state approvals and shipments into distribution happen according to plan. And our team is excited in driving 22nd Century to profitability and beyond.

我們的成本結構符合要求，我們相信資產負債表上的現金足以讓我們達到收支平衡。這假設國家批准和貨物運送到分銷的安排都按照計劃進行。我們的團隊非常高興能夠推動 22nd Century 獲利甚至超越。

I'd personally like to take a minute to thank and appreciate our team for their hard work transitioning our company in a very short period of time with very limited resources. They've done an awesome job. We look forward to updating you with press releases along the way and again at next quarter's earnings release timeframe.

我個人想花一點時間感謝並讚賞我們的團隊在非常短的時間內利用非常有限的資源完成了公司轉型的辛勤工作。他們做得非常出色。我們期待在此過程中以及下個季度的收益發佈時向您發布最新消息。

I hope you all have a great day. Thank you.

我希望你們度過愉快的一天。謝謝。

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

會議現已結束。感謝您參加今天的演講。您現在可以斷開連線。