Lowell Farms Inc. (the “Company”) (CSE: LOWL; OTCQX: LOWLF), a California-born vertically integrated cannabis company with advanced production capabilities including cultivation, extraction, manufacturing, and distribution, announces audited revenue and operating results for the fourth quarter and fiscal year (ended December 31, 2022). All figures stated are in US Dollars.
Fourth Quarter and Fiscal Year Financial Highlights:
- Revenue generated for the quarter ended December 31, 2022, was $9.3 million; a decrease of 38% from the fourth quarter last year and a 7% sequential increase from the third quarter of 2022.
- Revenue for the year ended December 31, 2022 was $43.5 million.
- Sales of self-grown bulk wholesale products increased 42% sequentially to $2.8 million during the quarter including a 23% increase in volume and a 7% increase in realized price per pound.
- Total revenues from out of state licensing reached $0.3 million in the fourth quarter of 2022 and were $1.6 million for the year.
- Gross profit for the year was negative 4.2%.
- Operating loss during the quarter was $6.4 million, a favorable increase of 22% year over year. Operating loss during 2022 was $17.1 million, a favorable increase of 20% compared to 2021.
- Net loss for the fourth quarter was $11.1 million (inclusive of $3.2 million of impairment on capitalized equipment and leases) compared sequentially to net loss of $4.8 million, and a net loss of $10.0 million for the fourth quarter of 2021. Net loss for the year was $24.6 million compared to a net loss of $24.7 million in 2021.
- Adjusted EBITDA in the fourth quarter was negative $4.1 million compared sequentially to adjusted EBITDA of negative $3.5 million and negative adjusted EBITDA of $5.4 million in the fourth quarter of 2021. Adjusted EBITDA for the year was negative $9.6 million compared to negative adjusted EBITDA of $14.4 million in 2021. Adjusted EBITDA is a non-GAAP financial measure. See “Use of Non-GAAP Financial Information” below for further information and a detailed reconciliation to Net Loss, the closest comparable GAAP measure.
| Revenue Summary ($’s in ‘000) | ||||||
| Q/Q | ||||||
| Q3 | Q4 | Growth | ||||
| CPG Revenues | $6,137 | $5,682 | -7 | % | ||
| Bulk Product | $1,956 | $2,768 | 42 | % | ||
| LFS | $254 | $549 | 116 | % | ||
| Out-of-State Licensing | $310 | $289 | -7 | % | ||
| Total | $8,657 | $9,288 | 7 | % |
“We’re proud to remain at the forefront of innovation in the cannabis industry, with numerous accomplishments in the past year, including the acquisition of advanced pre-roll production equipment that has accelerated our ability to bring products to market as well as our cultivation output yielding the highest levels of potency we have recorded and our continued improvement of efficiencies in our various capabilities,” says Co-Founder and Chief Executive Officer Mark Ainsworth.
“We remain laser-focused on further dialing in our efficiencies as well as leveraging the incredible infrastructure we have in place with the best-in-class leadership team to maintain our position in California. Our commitment to quality, safety, and innovation is unwavering, and in the coming year we will continue to focus on growth.”
Subsequent events to the fourth quarter ended December 31, 2022:
- Lowell Farms Inc. and The Pharm, LLC to Bring the Award-Winning Lowell Smokes to Arizona Dispensaries, January 4, 2023
- Lowell Farms Inc. Retains Canaccord Genuity in Connection with Strategic Alternatives Review, January 12, 2023
- Lowell Farms Announces Proposed Debt Settlement, Asset Sale, and Financing, March 15, 2023
Operational Highlights and Ongoing Initiatives:
We believe the Company’s focus and strategic planning of key initiatives continue to drive sustainable growth, with top priorities on its cultivation facilities, improving operational efficiency, and refinement of biological assets.
- Cultivation Quality and Efficiency:
- Continuing to refine its cultivation processes, genetics, and enhance facilities and systems is always at the forefront of the Company’s objectives. In doing so, it allows improved yield, potencies and increased margins.
- Lowell Farms saw its flower production at the greenhouse continue to increase year-over-year, with flower product totaling 8,369 lbs during the fourth quarter of 2022 in comparison to 8,336 lbs in the fourth quarter of 2021.
- The Company harvested 41 times in the fourth quarter of 2022; in contrast to 39 harvests in the fourth quarter of 2021.
- The average turn time for the flowering rooms remained consistent with 58 days in the fourth quarter of 2022 compared to 56 days in the fourth quarter of 2021.
- Lowell Farms saw its flower production at the greenhouse continue to increase year-over-year, with flower product totaling 8,369 lbs during the fourth quarter of 2022 in comparison to 8,336 lbs in the fourth quarter of 2021.
- The portfolio of strains and increased THC potencies coming from the cultivation are a result of the upgrades the Company has made to the electrical, mechanical, and environmental systems.
- These improvements resulted in an increased average potency of 28% in the fourth quarter of 2022 compared to 26% in the fourth quarter of 2021.
- Fourth quarter 2022 results held steady despite abnormally cooler and wetter winter weather in the region.
- All science amendments to convert from Provisional to Annual licenses are complete and expected to be issued in Q1 2023.
- Continuing to refine its cultivation processes, genetics, and enhance facilities and systems is always at the forefront of the Company’s objectives. In doing so, it allows improved yield, potencies and increased margins.
