GRAND RAPIDS, MICHIGAN, May 19, 2015 – Electronic Cigarettes International Group, Ltd. (The “Company”) (OTCBB: ECIG), a global marketer and distributor of electronic cigarette and vapor products whose brands include FIN, Vapestick, Victory, VIP, and others, today announced financial results for the first quarter ended March 31, 2015.
First Quarter Financial Review
- Total revenue was $11.1 million, compared with $4.1 million in the first quarter of 2014.
- Net loss for the first quarter of 2015 was $67.5 million, compared with a net loss of $86.4 million in the first quarter of 2014. The majority of the loss in 2015 is attributable to non-cash charges in the value of certain notes and warrants.
- Adjusted EBITDA was negative $2.2 million after adding back non-cash charges of $15.5 million compared with adjusted EBITDA (which adds back the equivalent non-cash charges) in the first quarter of 2014 of negative $5.1 million.
- At the end of the first quarter, the Company had $1.0 million of cash and cash equivalents. Subsequent to the end of the first quarter, the Company announced a term loan agreement providing $41 million from long-term investors and strategic business partners.
“First quarter revenue results were negatively affected by the lack of working capital to appropriately fund operating units and provide product inventory to meet demand,” said Phil Anderson, Chief Financial Officer of Electronic Cigarettes International Group, Inc. “However, the recently announced $41 million capital injection strengthened the balance sheet and improved the capital structure by eliminating toxic convertible debt. We now have positive working capital, and since the closing of that financing have already made significant progress in reorganizing vendor and supplier relationships to reduce accounts receivable and various operating costs. I believe we are positioned to invest for growth, and build business relationships to support ECIG’s global brands.”
Dan O’Neill, Chief Executive Officer of Electronic Cigarettes International Group, Inc. commented, “Apart from the significant changes to the balance sheet achieved during the quarter, management undertook several initiatives designed to position the Company for future success. In March the first global management meeting was held in Manchester, with the primary focus being potential acquisition synergies. The meetings resulted in an agreement on an annual cost saving target of approximately $12 million. This project includes an overall reduction of 75 SKUs, an aggressive implementation of acquisition synergies between Must-Have and Vapestick, consolidation from 10 product suppliers to 7, as well as transferring liquid refill production from China to the United States and United Kingdom. This transfer not only reduces costs, but responds to both government and consumer demands for domestic production with pharmaceutical level of quality control.
“It was also clear during the global managers meeting that a new inventory control system was required, and a simplified system has been implemented in the US. This will eliminate holding excess stock of slower moving items. As a final step significant changes were made with respect to the US sales and account management teams, which will improve overall performance of priority customers.
“Importantly, a new global strategy was reviewed by the senior team. The strategy has at its core a new vision to become the most sought-after independent electronic cigarette and vapor company in the world by both consumers and investors. The plan clearly defines ECIG’s direction and focus for the future.”
“I am also pleased to have strengthened our relationship with the Mansour Group, which helps solidify our financial position and potentially creates opportunities for expansion in the Middle East and Northern Africa. The recent operating progress at ECIG is only the beginning of a Company turnaround,” concluded Mr. O’Neill.
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 key worldwide markets. 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.
For investor inquiries please contact:
The Piacente Group, Inc.
Don Markley/Matthew Abenante, 212-481-2050
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