SALINAS, Calif., May 10, 2022 (GLOBE NEWSWIRE) — NEWS RELEASE — Lowell Farms Inc. (CSE: LOWL; OTCQX: LOWLF), a California-born innovator in cannabis cultivation and maker of the Lowell Smokes brand, announces unaudited revenue and operating results for the first quarter and fiscal year (ended March 31, 2022). All figures shown are in US dollars.
First Quarter Financial Highlights:
- Revenue generated for the three-month period ended March 31, 2022 was $12.4 million; an increase of 13% compared to Q1 2021.
- CPG revenue increased 10% sequentially, primarily due to higher pre-roll and packaged flower revenue.
- As expected, Lowell Farm Services (LFS) revenue fell $2.8 million from seasonally high levels in the fourth quarter.
- Gross margin as reported was 12.7% in the first quarter, compared to 12.3% sequentially and 13.4% year-on-year.
- Operating expenses were $4.0 million or 33% of sales for the quarter, compared to $6.3 million or 42% of sales in the fourth quarter last year and 4.2 million or 38% of sales in the first quarter of the prior year, reflecting the cost reductions achieved in the current quarter.
- Operating loss in the first quarter was $2.5 million, compared to an operating loss of $8.2 million sequentially and an operating loss of $5.7 million. year over year, reflecting the favorable impact of increased sales, cost reductions and efficiencies.
- Net loss for the first quarter was $4.1 million, compared to a net loss of $10.0 million, compared to a net loss of $6.7 million in the first quarter of Previous exercice.
- Adjusted EBITDA in the first quarter was negative $0.9 million, compared to negative Adjusted EBITDA of $3.6 million and negative Adjusted EBITDA of $4.6 million year-over-year . Adjusted EBITDA is a non-GAAP financial measure. See “Use of Non-GAAP Financial Information” below for more information and a detailed reconciliation to net loss, the closest comparable GAAP measure.
|Revenue Summary (thousands of dollars)|
|December 31, 2021||March 31, 2022||% Switch||$ Change|
|Out of state license||$||1,092||$||723||-34||%||(369||)|
“For the second consecutive quarter, Lowell Farms took the lead as the largest combined seller of packaged flowers and all-flower pre-rolls in California by helmet,” said co-founder and CEO Mark Ainsworth. “You do that by selling a consistent quality product that consumers have come to trust and that’s exactly what we sell.
“We also continue to make great strides with our out-of-state licensing partnerships, becoming one of the top players in both of these markets for pre-rolls. This is a strong statement about the power of this brand.
Events after the first quarter ended March 31, 2022:
- Lowell Herb Co. Expands Award-Winning Cannabis Brand With All-New Products, April 18, 2022
- Lowell Farms Inc. Becomes Exclusive Distributor of Zippo Products for California Cannabis Dispensaries, April 20, 2022
Operational highlights and ongoing initiatives:
The company remains focused on key initiatives to drive sustainable profitable growth as well as working closely with governing bodies to ensure effective changes to the cannabis industry tax system that would enable higher profitability.
- Lowell Farm Services:
- Lowell Farm Services, a one-of-a-kind cannabis processing facility in the Salinas Valley, continues to improve operational efficiencies with an increased focus on new customers and scalability.
- Lowell Farm Services processed over 98,604 pounds of wet produce during the quarter.
- LFS processed approximately 11,000 pounds of finished bulk flowers.
- The expected increase at LFS reflects the impact of seasonal spring harvests versus minimal outdoor harvest activity during the first quarter. The outdoor spring harvest is low compared to the primary yields of the outdoor harvest in the fall.
- To mitigate the impact of seasonality on the industry, the company signed several greenhouse partners throughout the year to ensure consistent processing revenue.
- Portfolio Marks and Out-of-State Licenses:
- The company reported a 10.4% increase in CPG revenue due to increased pre-roll and packaged flower revenue, as well as cost reductions and efficiency improvements.
- For the second consecutive quarter, Lowell Farms achieved an historic milestone of being the largest combined seller of packaged flowers and all flower pre-rolls in California, as measured by dollar volume by third-party data aggregator Headset.
- First quarter results show that Lowell Farms’ two leading flower brands – Lowell Herb Co. and House Weed – outpace more than 500 competing brands in the market.
- Lowell Herb Co.
- Sales of Lowell-branded products generated revenue of $5.0 million in the first quarter, approaching the record level of sales in the fourth quarter of 2021.
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- House Weed, a portfolio brand, generated over $2.9 million in revenue in Q1 2022, an increase of over $0.5 million from Q4 2021.
- Bulk Flower Sales
- Prices for bulk flower sales were up 34% from the fourth quarter, rebounding from low prices in December.
- Bulk flower sales were down 11% sequentially despite higher selling prices due to seasonally lower flower yields during the winter months and were down 52% from the first quarter of 2021 in due to lower prices in the current quarter.
- Out of state license
- Revenue for the quarter in Illinois totaled approximately $3.14 million.
- Revenue for the quarter in Massachusetts totaled approximately $1.5 million.
- The Massachusetts market specifically experienced supply disruptions during the quarter, which contributed to lower sales
- Cultivation quality and efficiency:
- The company’s focus on refining its cultivation processes, genetics and facilities continues to improve yield, potencies and increase margins quarter over quarter.
- Lowell Farms has seen its flower production at the greenhouse continue to steadily increase, with floral products totaling 8,356 pounds. in the first quarter of 2022 from 4,724 pounds. in the first quarter of 2021.
- The company harvested 41 times in the first quarter of 2022; against 37 harvests in the first quarter of 2021.
- The average bloom room turnaround time has seen continuous improvement and is now 58 days in Q1 2022 compared to 74 days in Q1 2021.
- The portfolio of cultivated flowers is becoming a standard for strains and genetics, which generates an increase in consumer demand.
- The company continues to scale its licenses to increase its existing footprint and canopy for higher cultivation capacity.
- Distribution and Sales Capabilities:
- With the increased desirability of the Lowell brand, dispensary partners continue to add products from the Lowell portfolio to their orders.
- The average value of shipments increased from approximately $5,362 in the first quarter of 2022 to approximately $3,552 in the first quarter of 2021.
“To compete in the black market, we must do so with price, quality, safety and partnership with the governing bodies that control our industry,” said board chairman George Allen. “We need three things: good quality cannabis, a brand people trust, and automation. We are on track to have all three.
Details of the first quarter financial results conference call:
The conference call with management at 5:30 p.m. EDT on Tuesday, May 10 can be accessed using the following login information:
Toll free in the United States and Canada: 1-877-407-0789
Webcast: Lowell Farms Inc.
Conference ID: 13728978
Please log in at least 10 minutes before the call to register.
The conference call will be webcast live and archived in the Investor Relations section of the Lowell Farms website at https://ir.lowellfarms.com/.