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

• Focused on margin improvement, selective retail expansion, and enhancing customer experience to capture critical margins.

• Onboarded three new brands in Q3, including Tyson 2.0 35's and Marigold Sweets, strengthening brand portfolio and manufacturing partnerships.

Financial highlights

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

• CPG revenue decreased 15% sequentially and 26% year-over-year; bulk product revenue was $0 due to exit from cultivation.

• 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, compared to -$1.9 million sequentially and -$1.3 million year-over-year.

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

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

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