GRAND RAPIDS, Mich.–(BUSINESS WIRE)–Electronic Cigarettes International Group, Ltd. (OTCBB: ECIG), a global marketer and distributor of electronic cigarette and vapor products whose brands include VAPESTICK®, FIN®, Victory®, VIP® and others, today announced financial and operating results for the three and nine months ended September 30, 2014. Revenue growth of 41% in the third quarter versus the previous quarter was driven by solid performance across all business units worldwide, and the expansion of new products, expansion to new markets, and penetration of new channels.
Third Quarter Results Overview
Revenue. For the third quarter ended September 30, 2014, total revenue was $15.9 million, a 41% increase as compared with $11.3 million in the second quarter 2014. Both the Americas and International Business Units significantly contributed to the growth. Within the business units, all brands experienced growth, with the largest contributor of organic growth being achieved by the FIN® brand in the United States and VIP® in the United Kingdom. New major customers in both the US and UK, especially in Convenience and Drug and Mass Channels contributed to the growth. Alternative channel expansion was also a major growth driver as the company expanded its vaping shop, retail mobile units/kiosks and e-commerce platforms worldwide.
Cost of Goods Sold. Cost of Goods Sold was $13.6 million in the third quarter 2014 as compared with $4.4 million the previous quarter. The increase in cost of goods sold was driven by increased sales activity as well as a one time $5.6 million charge for aging FIN® inventory of early generation products purchased as part the FIN® company acquisition.
Gross profit. Gross profit was $2.3 million in the third quarter 2014, as compared with $6.9 million in the previous quarter. Gross profit margin was 14.4% in the third quarter 2014. Taking into account the $5.6 million charge for aging inventory, the underlying gross margin was 49.6% for the three-month period and 48.6% for the previous nine months.
Brent Willis, ECIG’s CEO, commented “ECIG performed well during the third quarter and executed against its key initiatives and operational drivers across the Group. Performance across business units worldwide was commendable and the Company’s key brands strengthened their positions across existing and new customers, channels and markets. The roll-out of new products like the Advanced Vaping System in multiple markets represents ECIG’s commitment to delivering innovative products to our consumers and trade partners worldwide.”
Nine Months Results Overview
Revenue. For the nine months ended September 30, 2014, total revenue was $31.3 million.
Cost of Goods Sold. For the nine months ended September 30, 2014, cost of goods sold was $20.8 million.
Gross profit. For the nine months ended September 30, 23014, gross profit was $10.5 million.
Distribution, marketing and advertising expenses. Distribution, marketing and advertising expenses were $8.9 million for the nine-month period ended September 30, 2014.
SG&A. Selling, General and Administrative expenses were $43.2 million for the nine-months ended September 30, 2014.
Net income/(loss). Net loss was $(43.1) million for the nine month period ended September 30, 2014.
As of September 30, 2014, the Company had $4.3 million of cash and equivalents.
About Electronic Cigarettes International Group, Ltd. (ECIG)
Electronic Cigarettes International Group (ECIG) is dedicated to providing a compelling alternative to traditional cigarettes for the more than 1 billion current smokers around the world. ECIG is a fast growing independent electronic cigarette company, and owns the trademarks VAPESTICK®, FIN®, Victory®, VIP®, and others. The Company owns multiple subsidiary companies and has operations in North America and Western Europe. ECIG offers consumers a full product portfolio that incorporates product quality and the latest technology. The Company’s website is www.ecig.co.
Safe Harbor Disclosure
This press release contains forward-looking statements that are made pursuant to the safe harbor provisions within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are any statement reflecting management’s current expectations regarding future results of operations, economic performance, financial condition and achievements of ECIG, including statements regarding ECIG’s expectation to see continued growth. The forward-looking statements are based on the assumption that operating performance and results will continue to materialize consistent with recent trends. Management believes these assumptions to be reasonable but there is no assurance that they will prove to be accurate. Forward-looking statements, specifically those concerning future performance are subject to certain risks and uncertainties, and actual results may differ materially. These risks and uncertainties include: ECIG’s reliance on additional financing, ECIG’s profitability and financial health, risks associated with ECIG’s products, including that they may pose a health risk; governmental regulations may impact ECIG’s business; the market or consumers may not accept ECIG’s products; ECIG relies on a single class of products; existing or pending patents may affect ECIG’s business; and other factors disclosed in the Company’s filings with the Securities and Exchange Commission. Unless required by applicable law, ECIG undertakes no obligation to update or revise any forward-looking statements.