Lowell Farms Inc. (CSE:LOWL, OTCQX:LOWLF), a California-born innovator in cannabis cultivation, announces unaudited revenue and operating results for the third quarter ended September 30, 2022.
“While these unaudited results are not in line with expectations, we remain confident moving into 2023 and beyond. The successful launch and positive reception that our 35's pre-roll brand has enjoyed gives us great confidence, as the market share for this coveted new product has increased substantially since the launch in September," said chairman of the board George Allen in a press release.
“The positive launch of the 35’s is proof of the solid investments we’ve made in our technology and the innovations that we’ve made as brand creators and marketers. We expect the 35’s, among other Lowell brands, to carry us to greater success in the future.”
Third Quarter Financial Highlights
- Revenue generated for the three-month period that ended September 30, 2022, was $8.7 million; a decrease of 34% sequentially and down 31% from the third quarter of 2021.
- Adjusted EBITDA in the third quarter was negative $3.5 million compared sequentially to adjusted EBITDA of negative $1.1 million and negative adjusted EBITDA of $5.2 million year over year. Without the impact of the out-of-period adjustments itemized above, Adjusted EBITDA for the third quarter would have been negative $1.7 million.
- Lowell brand revenues remain strong increasing to 82% of CPG revenues compared to 66% in the prior quarter.
- CPG revenue declined 18% sequentially and 31% from the prior year inclusive of the adverse impact on Q3 revenues resulting from the accounting treatment referenced above.
- Bulk flower revenue decreased 43% sequentially to $2 million, and increased 2% year over year.
- Lowell Farm Services' revenue decreased to $0.3 million in the third quarter of 2022.
- Out-of-State Licensing increased 13% to $0.3 million during the quarter.
- Gross margin as reported was -21.9% in the third quarter compared to 11.3% sequentially and 0.5% year over year. Excluding the effect of out-of-period expenses incurred, gross margins would have been -2.9% for the quarter.
- Operating expenses were $3.3 million or 38% of sales for the quarter, compared to $4.5 million or 34% of sales in the second quarter and $7.0 million or 56% of sales in the first quarter last year, reflecting cost reductions and operating efficiencies realized in the current year.
- The operating loss in the third quarter was $5.2 million compared to an operating loss of $3.0 million sequentially and an operating loss of $7.0 million year-over-year, reflecting lower margins in the current quarter and reduced volumes.
- Net loss for the third quarter was $4.8 million which includes recognition of a $2 million gain related to an ERC credit received. This compares sequentially to a net loss of $4.6 million and a net loss of $8.7 million in the third quarter of last year.
- Capital Expenditures during the quarter were $1.9 million, the vast majority of which was associated with the launch of the new Lowell 35’s product.
Price Action
Lowell Farms shares were trading down 1.43% at $0.16 per share at the time of writing Thursday morning.
Photo courtesy of Lelen Ruete.
