22nd Century (XXII) 6 Aug 202020 Q2 Earnings call transcript

Welcome to 22nd Century Group’s Second Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode.

As a reminder, today’s conference is being recorded. At this time, I would like to turn the call over to Mei Kuo, Director of Communications and Investor Relations. Please begin.

Brock. you, Thank welcome call. and Century’s quarter second Good to conference earnings morning XXnd

Joining Chief our Mish, Zercher, Jim me are today our Operating and Officer. our Officer, Executive John Financial Franzino, Chief Chief Mike Officer,

we the made of we that forward-looking. statements like remind today to Before everyone begin, some are would

Forward-looking statements. from that are actual may to statements results of those uncertainties, risks, to and not performance, guarantees materially contemplated cause these by and are differ future subject other factors

found be earlier in Form information regarding can Additional and filed factors March filed XX-Q XXXX today. our XX these XX-K Form

GAAP that, During turn earnings adjusted the financial certain replay archive which define the for live this EBITDA, concluded. income, xxiicentury.com. find release, event available of after you over reconciliation press and call, of as we including at we website adjusted today's on shortly will as I'll non-cash net also has including EBITDA a and the depreciation discuss with to which call our taxes, to amortization An measures, non-GAAP Jim. non-operating earnings expenses, webcast be interest, before will describing can adjusted all And

everyone. Thanks, Mei. welcome Good morning and

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continued research evolving will to and deliver adapt We the COVID-XX, with meaningful remain KeyGene to results. continue this Despite partnership hemp/cannabis situation, monitor of our agile. impact

lines, few This than on platform. foundation and genes sequenced months, Over and will the foundation knowledge the of we expanding more cannabinoids modulation bolstering various terpenes have for identification in biosynthetic the our pathways. enable and the responsible bioinformatics hemp/cannabis last our information XXX plant. production They're additional and of the the

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morning, Thank you, everyone. good And Mike.

I'd this the best to honored us. and like help the So serve in expect to will and the near and each XXnd a and identify path of for you to Chief My company's a about the our today's opportunity also initial Century. as excited you thank call. my what Officer year-to-date financial term. second include to for quarter observations morning performance, discussion of forward review sense of And Financial joining I'm welcome to

diving second say otherwise begin was I Net into the higher I presented Manufacturing noted. ease half quarter of first volume referring rounded on XX%. to business. approximately the our are by Let's into up The primarily the of in numbers, and all by for driven XXXX increases basis sales for be unless pricing reference, a numbers comparisons. were otherwise, unless will Contract year-over-year and revenue

expense, quarter the This second a of driven company the profit, for expenses and professional million. first In Operating operating expense the in consulting contract improvement was R&D The improved points. partially higher costs The decreased favorable the driven improvement operating increase half an year, second quarter XXX of by offset of increase loss in MRTP year. were related margin gross improvements net by one-time million. higher expenses for points, The driven was our expenses. gross in Year-to-date increases. For Operating application of $X.X SG&A and overhead improved operating offset the by prior price the the lower a a by $X.X experienced this margin by as was loss lower of lower million, services, labor expenses. $XXX,XXX. driven improvement and $XXX,XXX lower The which expenses. of was by which costs personnel improved the expense was by expense. to result positive [ph] an majority R&D by improved basis of gross and XXX by in gross primarily by basis and partially second personnel was decrease loss representing $X.X SG&A result D&O and and the and profit quarter in premiums, insurance year reduction

macro last in improved million expense to addition loss, was improvement a This operating by of gain second Panacea is the an sales impairment and warrant year In continued cannabis related this quarter, led uncertainty disruption on stock to legal income us million. improvement recognized CBD XXXX, investment, industry, million our unrealized and hemp competition overall and income headwinds taking these the interest favorable in in recognized warrants of this to million to Aurora the and other improvements partially to collectively settlements factors which $X.X COVID-XX in including of an FDA charge $X.X economic $X.X due in provision. $X.X quarter offsetting from

year-to-date. was and million loss related favorable by non-cash the loss was and half net and the $X.X investment recognized other first other this Operating our charge $X expense to to and expense year. EBITDA by million. which improved income by Panacea by income offset XX% legal For million offset of of was expense Panacea and last Adjusted improved XXXX, aforementioned an increase impairment from by $XXX,XXX. The quarter interest by for $X.X was year in by driven in improved XX% income and the a increase settlement

XX, for period. approximately totaled company half non-recurring, with related cash the As the professional cash million. used the services, executive ended search Cash activities investment $XX for equivalents and professional $XX.X year-to-date of operating cash, expenses. fees burn term quarter to including the net personnel year, cost one-time of in XXXX, securities June totaling and first and The short million

Given the second into half continue expect expenses, of same to the do year. those trend the the of not nature we

deliver strategically the front managing over of operating that prudently are areas while We in need our future time. in also key growth expenses, opportunities balancing will to of focus invest returns

remains optionality shelf crucial capital we our investments filed time, the have not at expired plans previously new will the registration shelf summary, shelf will to flexibility this do us provide should While with a and The new be position raise they replace to future. have In and registration we registration our financial SEC. compelling make immediate with strong. in

months, seek allocation investments. business partnering to the be Jim I'll In will comments. cost to and sharpen with and focus resource with over both help closing controls, exercise greatest And our and Jim continue I refine for deploy strict to the to the We back optimize capital achieve our call coming our that, on return to Mike turn will our plans.

forward our to look and in business shareholders for communicating to closing, In the priorities our John. my Thank very stakeholders working opportunities your your forward time third look quarter Thanks, November. our partners, I and I and again with vision during to strategic important interest seize early team, other incredible call in talented you ahead. our earnings continued XXnd Century.

at questions If Kuo call, to please following you have today's xxiicentury.com. any reach out Thank Relations at Investor you. Mei

Thank today's you. This conclude does call.

You may now disconnect.