Electronic Cigarettes International Group Reports Fourth Quarter and Full Year 2014 Financial Results

GRAND RAPIDS, Mich.--(BUSINESS WIRE)-- Electronic Cigarettes International Group, Ltd. (The “Company”) (OTCBB: ECIGD), 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 fourth quarter and full year ended December 31, 2014.

Fourth Quarter Summary

• Adjusted revenue of $15.7 million, compared with $0.6 million in the fourth quarter of 2013
• One-off adjustments of $3.5 million, related to sales returns, allowances, customer concessions, credits and price adjustments
• Total revenue of $12.1 million, compared with $0.6 million in the fourth quarter of 2013
• GAAP net loss of $(336.2) million for the fourth quarter ended December 31, 2014, including impairment charges of $144.4 million which is primarily related to our “FIN” and “VAPESTICK” business units.

Dan O’Neill, Executive Chairman of Electronic Cigarettes International Group, Inc., commented, “Recognizing the challenges faced by the Company during fiscal year 2014, the new team has been working tirelessly to position ECIG for future profitable growth. Since my appointment as Executive Chairman, every stone of the Company has been reviewed, discussed and challenged. The work to date has been focused on setting ourselves up to take advantage of the opportunities in the category and the brands in the ECIG portfolio. The restructuring of the balance sheet, the ability to secure both short-term and long-term financing, the changes to the Board and the cleaned up old inventory are mostly behind us. More importantly, we obtained an internal agreement for a new global strategy setting ourselves up for 2015. Cash and profits will be the drivers, with new targets set for inventory turns, SKU priorities, in-country production, receivables and payment terms. The category is one of major opportunity. Our mission is to capture and significantly improve our performance.”

Full Year Summary

• Adjusted revenue of $46.9 million, compared with $3.1 million in 2013
• One-off adjustments of $3.5 million, related to sales returns, allowances, customer concessions, credits and price adjustments
• Total revenue of $43.5 million, compared with $3.1 million in 2013
• GAAP net loss was $(381.6) million for the full year ended December 31, 2014. The net loss includes a goodwill impairment charge of $144.4 million related to the “FIN” and “Vapestick” reporting units.

Phil Anderson, Chief Financial Officer of Electronic Cigarettes International Group, Inc., commented, “Our three main financial objectives since Dan and I joined the company have been to retire our convertible debt by restructuring the balance sheet, secure short and long term working capital, and address all issues relating to our customers and employees. I am very pleased at the progress we have made thus far and we look forward to completing our public recapitalization.”

Full Year 2014 Results Overview

For the year ended December 31, 2014, adjusted revenue was $46.9 million, compared with $3.1 million in 2013. The increase was driven by growth in online sales to new and recurring customers, along with sales to retail and wholesale sources, as a result of an increase in distributors and in marketing efforts throughout 2014.

Cost of Goods Sold was $31.5 million in 2014, compared with $1.3 million in the previous year. The increase in cost of goods sold was driven by an increase in sales, as well as a change in product mix to higher distributor and wholesaler sales, which have lower gross margin than online sales to consumers.

Gross profit was $12.0 million in the year ended December 31, 2014, compared with $1.8 million in the previous year. Gross profit margin was 27.6% in fiscal year 2014.

Distribution, marketing and advertising expenses were $10.4 million in 2014, compared with $1.1 million in 2013. During 2014, the Company continued to increase various advertising campaigns to grow both online and point of sale brand awareness.

Selling, General and Administrative expenses were $56.5 million in 2014, compared with $3.0 million in 2013.

Net loss was $(381.6) million for the full year ended December 31, 2014. The net loss includes a goodwill impairment charge of $144.4 million related to the “FIN” and “Vapestick” reporting units.

Balance Sheet

As of December 31, 2014, the Company had $2.1 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.

For investor inquiries please contact:
The Piacente Group, Inc.
Don Markley/Matthew Abenante, 212-481-2050
[email protected]
www.ecig.co
Follow us on social media:
Facebook: @Electronic Cigarettes International Group, Ltd.
Twitter: @ECIGCorporate

Source: Electronic Cigarettes International Group, Ltd.

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