Lowell Farms' Q3 2024 Financial Performance Shows Challenges

Overview of Lowell Farms' Q3 2024 Results

Lowell Farms Inc. (CNSX: LOWL; Other OTC: LOWLF) has released its unaudited financial results for the third quarter of 2024, covering the period that ended on September 30. The report reflects significant challenges faced by the company, including a notable decline in revenue compared to the previous year.

Financial Highlights

During the third quarter of 2024, Lowell Farms generated a total net revenue of $3.2 million, which represents a decrease of 48% compared to the same quarter in the previous year. Additionally, it marks an 8% decline from the $3.5 million reported in the preceding quarter. This downward trend in revenue has raised concern among investors, especially given the company's recent expansion efforts in the California retail market.

Revenue Breakdown

A closer look at the revenue streams reveals further insights into the company's performance:

• Consumer Packaged Goods (CPG): CPG revenue dropped by 26% compared to the third quarter of the previous year, and a decrease of 7% from the second quarter of 2024 was also noted.
• Bulk Product Revenue: This revenue fell to $nil from $1.2 million, primarily due to the cessation of operations at the cultivation facility earlier this year.

Gross Margins and Losses

The gross margin for the quarter was reported at negative 29.0%, resulting in a gross loss of $0.9 million. The negative margins were largely attributable to higher-cost inventory that the company sold during this period. This gross loss is a significant increase from the negative gross margin of 15.7% reported in the previous quarter.

Operating loss for the quarter stood at $2.8 million, a slight improvement from $2.9 million in the corresponding quarter last year, but an increase from the $2.2 million loss reported in Q2 2024. Meanwhile, the net loss was recorded at $3.6 million for Q3 2024, down significantly from the $20.2 million net loss reported in the same quarter one year ago.

EBITDA Considerations

Adjusted EBITDA for the quarter was reported at negative $2.1 million, compared to negative $1.4 million in Q3 2023 and negative $1.9 million in the prior quarter. This metric, which is a non-GAAP financial measure, aims to provide a clearer picture of operational efficiency and profitability.

Strategic Expansion and Market Trends

Despite the financial challenges, Chief Executive Officer Mark Ainsworth expressed optimism regarding Lowell Farms' strategic move to expand into the California retail market. The company aims to enhance brand visibility and improve customer experiences in their own retail spaces.

Market Adaptations

Lowell Farms has noted significant changes in market conditions, which have affected purchasing trends in California. The company has recognized the importance of adapting its strategies to address these fluctuations and to take advantage of emerging opportunities.

Management Services and New Ventures

Lowell Farms is actively engaged in pursuing management services agreements and considers options to purchase cannabis retail locations in Southern California. This approach aligns with their vision of building a sustainable and profitable cannabis business.

Looking Ahead

While the third quarter of 2024 presented several obstacles for Lowell Farms, the management remains committed to identifying areas of growth and improvement. The transition to retail management and partnerships with third-party brands may provide potential revenue streams moving forward.

Frequently Asked Questions

What were Lowell Farms' revenue figures for Q3 2024?

In Q3 2024, Lowell Farms reported net revenue of $3.2 million, marking a 48% decrease compared to the same quarter last year.

How does the gross margin compare to previous quarters?

The gross margin for Q3 2024 was negative 29.0%, compared to negative 15.7% in Q2 2024, indicating a decline in profitability.

What strategies is Lowell Farms implementing for growth?

Lowell Farms is focusing on expanding its retail presence in California and exploring management services agreements to enhance its market position.

Why did Lowell Farms stop bulk product sales?

Bulk product revenue fell to $nil due to the company's exit from its cultivation operations at the beginning of 2024.

How did the net loss in Q3 2024 compare to 2023?

The net loss for Q3 2024 was $3.6 million, significantly lower than the $20.2 million reported in Q3 2023.

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