MOCKSVILLE - 22nd Century (NASDAQ:XXII) Group, Inc. (NASDAQ: XXII), a company specializing in tobacco harm reduction, announced the expansion of its Pinnacle private label brand, which will now include cigarillo products alongside its existing cigarette offerings. The Pinnacle brand is sold in a top-5 U.S. convenience store chain with approximately 1,700 outlets across 26 states. As the private label contract enters its second year, Pinnacle cigarettes have shown sustained sequential growth in re-order volumes, with the retailer experiencing a rise in tobacco sales and market share.
The addition of Pinnacle cigarillo products aims to offer alternative options to the convenience store chain's customers and expand the range of Pinnacle branded offerings. Shipments of the new products are scheduled to begin in the second quarter. Larry Firestone, Chairman and CEO of 22nd Century Group, expressed enthusiasm about the brand expansion following the success of Pinnacle cigarette sales within the retail chain. Firestone also noted the company's goal of reaching breakeven operations by the first quarter of 2025.
In addition to the cigarillo line, 22nd Century Group recently secured a new customer contract for its Contract Manufacturing Operations (CMO), which is expected to increase production volumes by at least 20%, with shipments also commencing from the second quarter.
22nd Century Group is known for its work in agricultural biotechnology, focusing on reduced nicotine tobacco and improving health through plant science. The company holds patents that allow it to control nicotine biosynthesis in tobacco plants and has developed proprietary reduced nicotine content tobacco products. It received the first and only FDA Modified Risk Tobacco Product authorization for a combustible cigarette in December 2021.
InvestingPro Insights
As 22nd Century Group (NASDAQ: XXII) continues to expand its Pinnacle brand and strives towards breakeven operations by 2025, it's important to consider the company's financial health and market performance. According to the latest data from InvestingPro, 22nd Century Group operates with a market capitalization of approximately $5.57 million. Despite the challenges of a significant debt burden and weak gross profit margins, as noted in InvestingPro Tips, analysts anticipate sales growth in the current year, which could be a positive signal for the company's future.
The company's revenue for the last twelve months as of Q4 2023 stood at $21.79 million, but it experienced a decline in revenue growth by -21.85%. This contraction in revenue aligns with the InvestingPro Tips that highlight concerns over the company's ability to make interest payments on its debt and its quick cash burn rate. Additionally, with a gross profit margin of -39.91%, the company's profitability is under pressure.
On the stock performance front, 22nd Century Group has seen a significant return over the last week, with a price total return of 43.92%. However, the longer-term view reveals a substantial decline, with a one-year price total return of -98.63%. This volatility is reflected in another InvestingPro Tip which points out that the stock generally trades with high price volatility. Investors interested in the detailed analysis and additional insights can find more InvestingPro Tips by visiting Investing.com/pro/XXII. In total, there are 17 additional tips listed in InvestingPro that could provide a deeper understanding of the company's prospects.
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