Category: Financial

  • Taat Reports Third-Quarter Results

    Taat Reports Third-Quarter Results

    Photo: Taat Global Alternatives

    Taat Global Alternatives reported revenue of CAD17.47 million ($12.93 million) and a gross profit of $567,404 for the three-month period ended July 31, 2022. Assets grew 48.77 percent to $23.38 million over the comparable 2021 quarter.

    “I am very pleased with our results for FQ3 2022, as they reflect the many steps we have taken to fortify the financial landscape of the company as an integrated innovator, manufacturer and distributor of tobacco alternatives, legacy convenience offerings and other emerging product categories,” said Taat CEO Michael Saxon in a statement.

    “We continue to strategically commercialize Taat as a category creator, which is now sold in thousands of stores between our U.S. and U.K. footprints, including placements in major convenience and gas chains.”

  • Revenue Down as RLX Adjusts to New Rules

    Revenue Down as RLX Adjusts to New Rules

    Photo: RLX Technology

    RLX Technology reported net revenues of RMB2.23 billion ($333.5 million) for the second quarter of its fiscal year 2022 compared with RMB2.54 billion in the same period of 2021. Gross profit was RMB977.9 million compared with RMB1.15 billion in the comparable 2021 period.

    The company attributed the decrease in net revenues primarily to the suspension of store expansions and new product launches to comply with regulatory requirements.

    Chinese authorities have recently moved the vapor business under the regulatory framework for tobacco products. E-cigarette manufacturers now require operating licenses from the State Tobacco Monopoly Administration (STMA) while vapor products must satisfy various standards and technical requirements before entering the market.

    On June 10, 2022, one RLX Technology subsidiary obtained an STMA license to manufacture e-liquids. On July 22, 2022, another subsidiary was licensed to own the RELX brand and manufacture RELX branded e-vapor rechargeable devices, cartridge products and products sold in combination with e-vapor rechargeable devices and cartridge products.

    “Over the past several months, we have made meaningful strides in adapting our business and product development to the new regulatory framework,” said Ying (Kate) Wang, co-founder, chairperson of the board of directors and CEO of RLX Technology, in a statement. “Specifically, we have obtained the License for Manufacturing Enterprise and received regulatory approvals for some of our new products, demonstrating our operational excellence and industry-leading R&D capabilities.”

    “In light of the regulatory changes, we are off to a slow start of the sales of our new products that are compliant with the National Standards in the new transaction system mandated by the regulators,” said Chao Lu, chief financial officer of RLX Technology. “Despite the macro headwinds, we will continue to steadily focus on cost optimization while reinforc[ing] our product competitiveness under the new regulatory regime to create sustainable, long-term growth for our shareholders.”

  • MDO Stay Boosts Kaival’s Results

    MDO Stay Boosts Kaival’s Results

    Photo: crizzystudio

    Kaival Brands Innovations Group reported revenues of $3.8 million for the third quarter of fiscal year 2022, up from $3.2 million for the same period of 2021. Gross profit was $442,100 compared to a loss of $84,300 for comparable 2021 period.

    Kaival attributed its improved revenues in part to an August court ruling that set aside a marketing denial order issued by the U.S. Food and Drug Administration to the company’s nontobacco flavored Bidi Stick e-cigarettes. Arguing that the agency had insufficiently considered Kaival Brands’ marketing and sales access restriction plans, the U.S. Court of Appeals for the Eleventh Circuit ordered the FDA to further review Kaival’s premarket tobacco product applications, allowing the company to continue to market its products.

    Eric Mosser

    “The recent 11th Circuit ruling in favor of Bidi Vapor alleviated a significant barrier to our adult-focused B2B sales efforts, which we believe will once again allow us to materially scale our business, grow revenue, move toward net profitability in the future and increase shareholder value,” said Kaival Brands President and Chief Operating Officer Eric Mosser in a statement.

    Mosser added that the company is working with Philip Morris to expand international distribution into new global markets. In June, Kaival Brands Innovations Group’s subsidiary, Kaival Brands International (KBI), entered into a licensing agreement with Philip Morris Products (PMP) for the development and distribution of electronic nicotine-delivery system products outside the U.S.

    “We expect to begin recognizing revenues from this international licensing agreement in our fiscal fourth quarter,” said Mosser.

    In July, Kaival announced the launch of PMP’s Veeba vapor product in Canada, with royalties due to KBI pursuant to the international licensing agreement.

  • Hedge Fund Might Force PMI to Raise its Swedish Match Bid  

    Hedge Fund Might Force PMI to Raise its Swedish Match Bid  

    Photo: Swedish Match

    A hedge fund might force Philip Morris International to raise its bid for Swedish Match, according to an article in The Wall Street Journal.

    On May 11, PMI offered SEK161.2 billion ($16.14 billion) to purchase Swedish Match. The acceptance period for the offer was initially set to expire on Sept. 30, 2022, but was later extended to Oct. 21, 2022, as the bid awaits approval from the European Commission.

    The offer is conditional on PMI gaining more than 90 percent of Swedish Match’s Stockholm-listed shares.

    Since the companies announced their deal, Elliott Management Corp. has acquired an undisclosed stake in Swedish Match. According to Massimo Stabilini, a hedge-fund manager at London-based Sinclair Capital, Elliott is trying to get a better price from PMI.

    Elliott would need to buy close to $1.6 billion worth of Swedish Match stock to stop Philip Morris reaching 90 percent, suggesting it might need others to join its campaign. Under Swedish rules, it will also have to disclose its holding if its stake reaches 5 percent.

    Elliott is not the only Swedish Match shareholder seeking better terms. Earlier this year, shareholder Bronte Capital also opposed the takeover, saying the offer price was “unacceptable,” according to Reuters.

    Investors holding out for a better price are betting that PMI will cough up rather than walk away from the deal. The acquisition is key to the cigarette giant’s stated goal of generating more than 50 percent of its net revenue from smoke-free products by 2025, up from 29 percent last year.

    Elliott has proven willing to play a longer game before, according to The Wall Street Journal. In 2016, it took a more than 10 percent stake in Arcam after General Electric Co. agreed to buy the Swedish 3-D printing company. GE later raised its bid and lowered its minimum approval threshold to 75 percent.

  • Pyxus Reports First Quarter Results

    Pyxus Reports First Quarter Results

    Photo: Pyxus International

    Pyxus International reported sales and other operating revenues of $343.9 million for the fiscal quarter that ended June 30, 2022, up 3.2 percent over the comparable 2021 quarter. Net loss increased 27.8 percent to $14.7 million, primarily due to a $7.6 million decrease in income tax benefit. Adjusted EBITDA increased 17.1 percent to $17.3 million.

    “As expected, our first quarter was consistent with the prior fiscal year, with increased demand and more normalized timing of shipments from Asia, partially offset by the timing of shipments from Africa and South America,” said Pyxus President and CEO Pieter Sikkel in a statement.

    “As of June 30, 2022, our inventory increased $126 million compared to the prior year primarily due to higher new crop green tobacco prices and processing costs in South America, and accelerated new crop buying activities in certain key markets. In addition, our processed tobacco inventory continues to be more than 90 percent committed to specific customers.

    “The overall increase in inventory and our committed inventory levels for processed tobacco position us to meet near-term demand and we expect to see stronger shipments in subsequent quarters in fiscal 2023, consistent with historical trends. Despite higher green tobacco prices and processing costs in South America, we were able to effectively manage our working capital to meet our purchasing goals for the current crop cycle.

    “Crop sizes in certain markets in Africa, Asia and South America are below expectations due to the adverse impacts of prevailing La Nina weather patterns during the growing season, which has exacerbated supply shortages. We continue to engage with customers in transparent dialogue regarding the impacts of La Nina and inflation on our business. In response to these and other market dynamics, we accelerated buying activities in certain key markets, and continue to invest in research trials, local programs, and additional training for our global agronomy team to further support our efforts to maximize grower efficiencies and yield despite unpredictable weather patterns.

    “We continue to expect fiscal 2023 sales to be between $1.75 billion and $1.95 billion and adjusted EBITDA to be between $130 million and $160 million. Moving forward, we are committed to recovering crop sizes, and aligning volumes in future years with customer expectations, as we work to deliver stakeholder value, and together, grow a better world.”

  • Mativ Reports Second-Quarter Results

    Mativ Reports Second-Quarter Results

    Photo: SWM

    Mativ Holdings, the company that was recently created out of the merger between Schweitzer-Mauduit International (SWM) and Neenah, reported earnings results for the three months ending June 30, 2022.

    Including SWM legacy results, sales increased 13 percent to $426.4 million. Organically, sales grew 11 percent with strong demand and pricing actions across the business, driving top-line gains and offsetting cost increases.

    “With the completion of our merger in early July to form Mativ and the close of a strong second quarter for the legacy SWM and Neenah businesses, we are poised to carry our momentum into the rest of 2022 as a unified and more scaled global leader in specialty materials,” said Mativ Holdings CEO Julie Schertell in a statement.

    The company’s Engineered Papers segment sales were up 10 percent, to $138.3 million, driven by volume growth and price increases. Volumes benefited from broad-based gains across the portfolio, highlighted by continued rapid growth in heat-not-burn reduced-risk products.

    GAAP operating profit was $22.4 million, down 7 percent. Adjusted operating profit was $21.5 million, down 19 percent. While contractual and market price increases and negotiated volume gains more than offset higher pulp and other material costs, operating profit and margin percentage reductions resulted mainly from rapidly escalating energy costs, particularly in Europe.

    Mativ Holdings expects semi-annual contractual price increases, additional market price increase and surcharges to mitigate the impacts of escalating pulp and energy costs during the second half of the year.

  • 22nd Century Reports Second-Quarter Results

    22nd Century Reports Second-Quarter Results

    Photo: 22nd Century Group

    22nd Century Group reported net revenue of $14.48 million for the three months ended June 30, 2022, up 73 percent over the comparable 2021 quarter. Gross profit was $892,000 for the quarter compared with $449,000 for the second quarter of 2021.

    The increase in net revenue was due to increased contract manufacturing volumes as well as the addition of GVB Biopharma revenue for approximately half of the second quarter. 22nd Century Group acquired GVB Biopharma on May 13.

    Revenue from tobacco-related products was $10 million, an increase of 19 percent from 2021. Revenue from hemp/cannabis-related products was $4.5 million compared to zero in the prior year, reflecting a partial quarter of GVB revenues.

    22nd Century Group said it will step up the rollout of its VLN King and VLN Menthol King reduced-nicotine content cigarettes. After receiving permission from the Food and Drug Administration in December to market its VLN brands as modified-risk tobacco products (MRTPs), 22nd Century started a pilot program to sell the product at select Chicagoland Circle K stores.

    “Our VLN pilot in Chicago is exceeding expectations, driving us to accelerate and expand our launch plans,” said 22nd Century Group CEO James A. Mish in a statement. “The pilot and consumer studies have made clear that our approach focusing on awareness, education and trial is working with adult smokers. We are now testing specific offers designed to increase trial and repeat purchase among existing smokers looking to smoke less/reduce their nicotine consumption while also expanding our presence in Chicago and the state of Illinois.

    “We are also expanding our VLN launch to the state of Colorado ahead of plan. Colorado offers a reduced taxation rate for MRTP-authorized products, providing a favorable cost structure for our VLN products in that state as compared to traditional premium cigarettes.

    “Additionally, and more importantly, we are working closely with a major consumer packaged goods distributor and a longstanding specialty distributor covering convenience, grocery and drug stores across the state, giving us full access to a broad range of more than 3,000 targeted statewide potential points of sale.”

  • Vector Reports Strong Tobacco Revenue

    Vector Reports Strong Tobacco Revenue

    Photo: tadamichi

    Vector Group reported revenues of $387.2 million for the second quarter of 2022, up 14.7 percent over that for the comparable 2021 quarter. Operating income was $90.71 million and net income was $39.15 million compared with operating income of $93.89 million and net income of $93.3 million in the second quarter of 2021. Tobacco contributed $374.31 million of the 2022 second-quarter revenues, with the balance coming from Vector Group’s real estate business.

    “Vector Group delivered strong tobacco revenue performance in the second quarter as we capitalized on favorable market opportunities to substantially increase value and market share,” said Howard M. Lorber, president and CEO of Vector Group, in a statement. “Our price-fighting Montego brand is now our largest brand and the third-largest discount brand in the United States. This strong performance demonstrates our commitment to optimizing long-term profit through the effective management of volume, pricing and market share growth.”

    According to data from Management Science Associates, the retail market share of Vector Group’s Liggett Group subsidiary increased to 5.5 percent for the second quarter of 2022 from 4.1 percent for the second quarter of 2021. For the six months ended June 30, 2022, Liggett’s retail market share increased to 5.3 percent compared to 4.1 percent for the six months ended June 30, 2021.

  • KT&G Profit up Slightly

    KT&G Profit up Slightly

    Photo: KT&G

    KT&G reported a consolidated operating profit of KRW327.6 billion ($249.7 million) for the second quarter of 2022, up by 1 percent from a year earlier, the company said in an earnings release.

    Revenue for the April-June period amounted to KRW1.42 trillion, up 10.9 percent from a year ago, with net profit gaining 34 percent to KRW330.1 billion.

    Sales increased thanks to brisk overseas sales and real estate margins, the company said.

    International sales from the company’s traditional cigarette business surged 47.1 percent, driven by the growth of Latin America and other emerging markets and improved sales in Indonesia.

    KT&G’s share of the domestic market for heat-not-burn (HnB) products increased to 47 percent in 2022, up from 40.4 percent in 2021. HnB products now account for 16.7 percent of all tobacco sales in South Korea, according to KT&G.

    Despite rising interest rates and soaring commodity prices, KT&G’s traditional and HnB business will continue strong growth in the months ahead, a company official said.

  • Universal Reports First-Quarter Results

    Universal Reports First-Quarter Results

    Photo: Taco Tuinstra

    Universal Corp. reported sales and other operating revenue of $429.8 million for the three months ended June 30, up 23 percent over the comparable 2021 quarter. Tobacco operations sales and other operating revenues increased 18 percent to $348.1 million, but tobacco operations income declined 9 percent to $8.1 million.

    George C. Freeman, III, chairman, president and CEO of Universal Corp. expressed satisfaction with the start of the company’s 2023 fiscal year.

    “In the quarter ended June 30, 2022, we continued to effectively navigate increased costs, particularly rising prices for green leaf tobacco and shipping constraints,” Freeman said in a statement. “We succeeded in getting a significant amount of carryover tobacco shipped out of Brazil, and our plant-based ingredients platform continued to exceed our expectations.

    “Results for our Tobacco Operations segment were down modestly in the quarter ended June 30, 2022, compared to the quarter ended June 30, 2021, largely on unfavorable foreign currency comparisons due to the strong U.S. dollar.

    “Demand for leaf tobacco remains strong, and flue-cured, burley, oriental and wrapper tobacco remain in an undersupply position. We are also anticipating a reduction in African burley tobacco crop sizes due to weather conditions there.

    “While we were able to ship a greater amount of carryover tobacco out of Brazil in the quarter ended June 30, 2022, compared to the quarter ended June 30, 2021, we continue to face a challenging logistical environment. We are also continuing to see increased costs for leaf tobacco across virtually all markets.”