Lowell Farms (LOWL) Q2 2024 earnings summary

Executive summary

• Underwent significant restructuring in Q2 2024, allocating $470,000 in cash to cover related expenses, with most now behind the company.

• Net revenue for Q2 2024 was $3.5 million, down 27% sequentially and 50% year-over-year.

• Exited cultivation operations in early Q1 2024, pivoting to higher-margin CPG products and co-manufacturing for other brands.

• Operating loss improved to $2.2 million from $2.9 million sequentially and $2.7 million year-over-year.

• Expanded sales force and onboarded three new distributed brands in late Q2 to drive future revenue growth.

Financial highlights

• Q2 2024 net revenue was $3.5 million, down 27% sequentially and 35–50% year-over-year.

• Gross margin for Q2 2024 was -15.7%, a modest improvement from -17.0% in Q1 2024 and -4.8% year-over-year.

• Adjusted EBITDA was -$1.9 million, compared to -$1.1 million sequentially and -$1.2 million year-over-year.

• Cash at quarter end was $642,000, down from $1.2 million in Q1 and $2.3 million at year-end 2023.

• Bulk product revenue dropped to $0.5 million from $4.8 million year-over-year, reflecting the exit from cultivation.

Outlook and guidance

• Expect increased utilization of Lowell Farm Services in Q3 and Q4 due to seasonal demand from third-party clients.

• Anticipate continued expansion of distribution footprint and growth in co-manufacturing revenue.

• Operational efficiencies and cost reductions expected to improve margins in the second half of the year.

• Management is exploring strategic alternatives to drive business forward and deliver long-term shareholder value.

• Plans to expand services, reduce operational overhead, and strengthen financial position.