Release Date: November 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Lowell Farms Inc (LOWLF, Financial) has successfully entered the California retail market, leveraging its strong brand portfolio and integrated model.
- The company has strategically located its retail locations in high-traffic areas, attracting a loyal customer base.
- Lowell Farms Inc (LOWLF) has onboarded new partnerships, including the Tyson 2.0 collaboration, enhancing brand equity and driving revenue growth.
- The company achieved a 24% quarter-over-quarter increase in sales for its 35 preroll category, reflecting improved efficiency.
- Cost reduction initiatives, including a 45% reduction in staffing, are expected to save approximately $546,000 in Q4 2024, improving operational efficiency.
Negative Points
- Lowell Farms Inc (LOWLF) reported a 48% year-over-year decline in net revenue for Q3 2024.
- The company's gross margin was negative 29% in the third quarter, impacted by selling higher-cost inventory.
- Revenue from owned and agency brands decreased by 7.6% quarter-over-quarter, influenced by timing issues and delays in promotional activities.
- The company faced supply chain challenges, leading to a 22% decline in revenue from distributed brands.
- Lowell Farms Inc (LOWLF) reported a net loss of $3.6 million for the second quarter, with a negative adjusted EBITA of $2 million.
Q & A Highlights
Q: Can you provide more details on the strategic initiatives around Lowell Farms' entry into the California retail market?
A: Mark Ainsworth, CEO, explained that Lowell Farms has entered the California retail market after extensive due diligence. The company has acquired and is managing retail footprints in California, leveraging its strong brand portfolio and integrated model, which includes manufacturing, distribution, and sales. The two retail locations are strategically located in high-traffic areas, drawing a loyal customer base and offering a wide array of cannabis products. This expansion is expected to improve margins and support financial goals.
Q: How is Lowell Farms managing its accounts receivable to ensure financial health?
A: Mark Ainsworth, CEO, stated that Lowell Farms is focusing on managing accounts receivable by placing accounts on hold where necessary and adopting assertive collection strategies for certain accounts. The sales team is incentivized to prioritize collections, ensuring collaboration between sales and finance departments to optimize cash flow and maintain financial stability.
Q: What are the recent developments in Lowell Farms' manufacturing division?
A: Mark Ainsworth, CEO, highlighted that Lowell Farms has onboarded new partnerships to drive margin and volume, enhancing brand equity. Three new brands were added in Q3, including Tyson 2.0 and Marigold Sweets. These partnerships are expected to contribute to revenue growth and reinforce Lowell Farms' position as a preferred partner in the cannabis industry.
Q: Can you discuss the performance of Lowell Farms' consumer packaged goods (CPG) segment in Q3 2024?
A: Mark Ainsworth, CEO, reported that the CPG segment saw a 24% increase in sales for the 35 preroll category, while overall brand portfolio revenue decreased by 7.6% quarter over quarter. The decline was due to timing issues with new product rollouts and supply chain challenges. However, the concentrates category showed strong growth, and efforts are underway to address supply chain bottlenecks.
Q: What are the financial highlights for Lowell Farms in Q3 2024?
A: Mark Ainsworth, CEO, noted that Q3 net revenue was $3.2 million, down 8% sequentially and 48% year over year. The gross margin was negative 29%, impacted by higher cost inventory. Operating expenses were $1.8 million, and the net loss was $3.6 million. The company is focused on cost reduction initiatives and improving operational efficiency to drive growth and profitability.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
