Forum

Welcome to the Cannabis Investing Newsletter Forum. Feel free to find your favorite cannabis stocks and contribute content as you please; content that continues the discussion of, and analysis of, cannabis stocks. – D. H. Taylor

Notifications
Clear all

LOWLF Q3 Earnings


Ricky Perkins
(@gr8day4alemonadegmail-com)
Eminent Member
Joined: 5 months ago
Posts: 25

Quote
cjubes
(@coreyjubesgmail-com)
Active Member
Joined: 1 month ago
Posts: 10
 

Loaded up this morning prior to earnings. hmmm...


ReplyQuote
Tracy Schaff
(@tracy)
Active Member
Joined: 8 months ago
Posts: 18
 

Unfortunately, their earnings report looked ugly.  I am also wondering about the likelihood of them getting bought out by Ascend Wellness after their Michigan announcement bringing their award winning Lowell Smokes to the state.  I believe Ascend Wellness is already selling their products in MA.

 

Lowell Farms Inc.

Mon, November 15, 2021, 2:00 PM
 
 
 

SALINAS, Calif., Nov. 15, 2021 (GLOBE NEWSWIRE) -- Lowell Farms Inc. (the “Company”) (CSE: LOWL; OTCQX: LOWLF), a California-born innovator in cannabis cultivation and maker of the legendary brand Lowell Smokes, announced revenue and operating results for the third quarter (September 30, 2021). All figures stated are in US Dollars and are on a US GAAP basis.

Third Quarter Financial Highlights:

  • Revenue generated for the three-month period ended September 30, 2021 was $12.5 million; a decrease of 12% from Q3 2020 and a decrease of 18% from the preceding quarter.

  • Sales of bulk wholesale flower fell 71% or $3.9 million during the quarter due to depressed wholesale prices in the market.

  • The Company booked its first revenues from two new businesses, brand licensing and Lowell Farm Services of $1.5 million collectively.

  • Gross margin was 1% compared to margin of 35% and 38% in the third quarter of last year and Q2 2021, respectively.

  • Operating loss of $7 million compared to operating loss of $473 thousand in Q2 2021 and operating income of $772 thousand in Q3 2020.

  • Net loss for the third quarter was $8.7 million compared sequentially to net income of $731 thousand, which included income from insurance claim proceeds of $2.6 million, and compared to a net loss of $1.2 million in the third quarter last year.

  • Adjusted EBITDA in the third quarter was negative $5.2 million compared sequentially to adjusted EBITDA of $740 thousand and adjusted EBITDA of $1.9 million year over year. See “Use of Non-GAAP Financial Information” below.


ReplyQuote
TheQueen
(@gtosali1967)
Active Member
Joined: 1 month ago
Posts: 19
 

D.H.   what is your input on this news?   Thanks


ReplyQuote
Tracy Schaff
(@tracy)
Active Member
Joined: 8 months ago
Posts: 18
 

Both Lowell and Halo cited issues with the market in the state of California. 

Lowell specifically stated that the wholesale market fell 71% during the quarter.  They also stated that the supply-demand balance in California is struggling to find equilibrium.  Looking forward, Lowell states the following:

In terms of near-term profitability, we are expecting a lift in revenue and contribution from our Lowell Farm Services division in the fourth quarter which should allow us to recover revenue growth and profitability on a near-term basis without price normalization.  I see this as a positive and they are diversifying.  

Is it fair to say that California is now experiencing what Canada went through?  That is, the state goes legal and there is initially much more demand versus supply.  Then, over the next few years, various companies ramp up production and now there appears to be too much supply.  If I am not mistaken, it took years for Canada to reach equilibrium.  

Another thing worth thinking about is that Halo stated in their earnings report that California retail sales were down 18% during the quarter, resulting in price reductions and quality concessions.  So, it appears to be a double edged sword now, in that both wholesale and retail prices are struggling due to over-supply and under demand.  

 

 

 


ReplyQuote
D. H. Taylor
(@cannabisinvestingnewsletter)
Member Admin
Joined: 1 year ago
Posts: 312
 

@gtosali1967 Great name! hahaha...  @tracy I think this also applied to Oregon.  Tons of companies opened up and there was no balance with price supply/demand (As well as Canada).  We are seeing a lot of pricing issues across the country with just about everything with COVID.  

Canadian companies all left wholesale sales because the margins simply are not there.  Lowell is transitioning out of wholesale sales and into its own premium branding (Just like Canadian companies are doing).  They will transition with its licensing agreements and, as they state, Lowell will be seeing increased revenues from this.  

Look for more near term increases in revenues from the licensing in other states.  And, there will be an eventual balance with prices in California.  The sooner Lowell drops its wholesale sales dependency and focus entirely on its licensing and premium branding, the better off they will be.  This transition has been in the works.  

I expect continued increases in the branding; reiterated by the company.  As for California with sales, this will take some time to work out.  But, Lowell has a premium brand they need to rely upon more and more.  Wholesale is just not really profitable.  And, we are seeing that play out.  

Next quarter. we will see the effects of the licensing to top-line for Lowell.  Over some period of quarters, we will see the mete out in the short term and build from there.  


JP and TheQueen liked
ReplyQuote

Leave a reply

Author Name

Author Email

Title *

Maximum allowed file size is 10MB

 
Preview 0 Revisions Saved
Share: