Lowell Farms (LOWL) investor relations material

Executive summary

• Entered California retail market with acquisition and management of two high-traffic dispensaries, leveraging integrated manufacturing and distribution capabilities.

• Onboarded three new brands in Q3, including Tyson 2.0 35 and Marigold Suites, expanding product offerings and partnerships.

• Focused on margin improvement, cost reduction, and operational efficiency, including a 45% staff reduction in Q3.

• Net revenue for Q3 2024 fell 48% year-over-year to $3.2 million and declined 8% sequentially from Q2 2024.

• Operating loss for Q3 was $2.8M, compared to $2.2M sequentially and $2.9M year-over-year.

Financial highlights

• Q3 net revenue was $3.2M, down 8% sequentially and 48% year-over-year; CPG revenue declined 15% sequentially to $3.5M.

• Gross margin was negative 29% in Q3, down from negative 15% sequentially and negative 7.1% year-over-year, impacted by higher cost inventory sell-through.

• Adjusted EBITDA was negative $2.1M in Q3, compared to negative $1.9M sequentially and negative $1.3M year-over-year.

• Cash and cash equivalents at quarter-end were $320k, down from $2.3M at year-end 2023.

• Net cash used in operating activities for the nine months ended September 30, 2024 was $2.5M.

Outlook and guidance

• Anticipates recovery from timing issues and supply chain disruptions in coming quarters, with new partnerships expected to drive revenue growth.

• Q4 results will reflect impact of management services agreement for two Los Angeles dispensaries.

• Focus remains on selective retail expansion, operational efficiency, and margin improvement.

• Management expects retail expansion to solidify market position and drive sustainable growth.

• Forward-looking statements highlight uncertainty due to market, regulatory, and operational risks.