22nd Century Group Inc. 2026 Q2 Earnings Call
Review the key takeaways and the transcript of this earnings call.
- 22nd Century Group reported second quarter 2026 net revenue of $2.9 million, a 29% sequential decline from $4.1 million in the first quarter of 2026.
- For the first half of 2026, net revenue was $7 million compared to $10 million in the first half of 2025, reflecting a strategic shift away from contract manufacturing toward reduced nicotine and branded products.
- The company recorded a gross loss of $0.3 million in Q2 2026, an improvement from a $0.6 million gross loss in Q1 2026 and the same quarter in 2025, driven by a shift to higher margin Pinnacle and VLN SKUs.
- Operating loss for Q2 2026 was $3.3 million, compared to $3 million in Q1 2026, with a net loss from continuing operations of $3.3 million and adjusted EBITDA of negative $3.5 million.
- Cash and cash equivalents at quarter-end were $6.1 million with no outstanding debt.
- During the quarter, the company expanded distribution, adding nearly 150 high visibility store locations in metro New York and northern New Jersey through a major cigarette retailer, increasing retail presence to approximately 2,000 stores across 20 states.
- The Pinnacle brand portfolio was expanded with the launch of Pinnacle Pure, targeting the premium tier two cigarette category.
- Two one-time items affected Q2 gross margin: a $196,000 charge for aged inventory write-off and a $692,000 MSA NPM excise tax recovery, both considered non-recurring.
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Transcript
Preview the first fifteen paragraphs, organized by speaker.
Conference call and webcast. At this time, all participants have been placed in a listen-only mode. It is now my pleasure to turn the call over to Dan Otto, Chief Financial Officer of 22nd Century Group. Please go ahead. Good morning, everyone.
I'm Chief Executive Officer. Before we begin, please note that today's remarks include forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those described in these statements. Please refer to the company's earnings release and SEC filings, including our most recent annual report on Form 10-K for a discussion of these risks and other factors. In addition, during today's call, management may refer to certain non-GAAP financial measures. Reconciliations of those measures to the most directly comparable GAAP measures are included in the company's earnings release. With that, I'll now turn the call over to Larry.
Thanks, Dan, and good morning, everyone. Thank you for joining us today and for your continued interest in 22nd Century Group. The second quarter was an important period for our company. We continued executing a strategy that is reshaping 22nd Century into a stronger, more focused, and ultimately more profitable business. That strategy is centered on building a scaled distribution of our higher margin products, improving our product mix, and moving decisively away from the legacy business that did not generate acceptable economics. 22nd Century is the leader in low-nicotine tobacco and low-nicotine combustible cigarettes, designed with authentic tobacco to help smokers reduce their nicotine consumption. We're seeing smokers choose our VLN products as an alternative to full-strength combustible cigarettes, and we believe this category has meaningful room to grow. More broadly, our direction is clear. We are prioritizing profitable growth over uneconomic volume.
We are investing behind brands that can win at retail, and we are aligning our commercial model, pricing strategy, and manufacturing footprint to support a strong. Historically, too much of our business was tied to high volume, lower negative margin contract manufacturing. That volume may have added scale to the true earnings power of the branded platform we are now building. Today, we are taking a different path.
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