Lowell Farms (LOWL) Q3 2024 earnings summary

Executive summary

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

• Net revenue for Q3 2024 was $3.2 million, down 8% sequentially and 48% year-over-year.

• Operating loss was $2.8 million, slightly improved from $2.9 million a year ago but worse than $2.2 million in Q2 2024.

• Net loss was $3.6 million, a significant improvement from $20.2 million in Q3 2023, but higher than the $0.8 million loss in Q2 2024.

• Strategic shift included exiting cultivation and expanding into retail dispensary management.

Financial highlights

• Q3 2024 net revenue was $3.2 million, down 8% sequentially and 48% year-over-year.

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

• Adjusted EBITDA was -$2.1 million, down from -$1.4 million in Q3 2023 and -$1.9 million in Q2 2024.

• Cash and cash equivalents at quarter-end were $320,000, down from $2.3 million at year-end 2023.

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

Outlook and guidance

• Anticipates continued growth from new retail locations and brand partnerships, with a strong pipeline of potential new brands.

• Expects operational efficiencies and cost reductions to improve margins and profitability in future quarters.

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

• Management expressed confidence in retail expansion as a driver for sustainable growth.

• Forward-looking statements caution about uncertainties in market demand, regulatory changes, and capital availability.