Lowell Farms Inc. Announces Unaudited Fourth Quarter and Fiscal Year 2021 Financial and Operational Results

Lowell Farms Inc. (the “Company”) (CSE: LOWL; OTCQX: LOWLF), a California-born innovator in cannabis cultivation and maker of the legendary brand Lowell Smokes, announces unaudited revenue and operating results for the fourth quarter and fiscal year (ended December 31, 2021). All figures stated are in US Dollars.

Fourth Quarter and Fiscal Year Financial Highlights:

  • Revenue generated for the quarter ended December 31, 2021 was $15.1 million; an increase of 65% from the fourth quarter last year and a 21% sequential increase from the third quarter.
  • Revenue for the year ended December 31, 2021 was $53.7 million, reflecting a company record and 26% growth over the prior year.
  • Revenue from Lowell Farm Services (LFS) was $3.2 million for the quarter.
  • Sales of bulk wholesale products increased 30% sequentially to $2.6 million during the quarter on increased volumes from both cultivation and LFS sources.
  • Total revenues from out-of-state licensing reached $1.1 million in Q4, up 80% from the prior quarter.
  • Out-of-state licensing exited the year with a GMV run-rate of $15 million in annual sales, up 37% from the end of the prior quarter.
  • Excluding an inventory impairment charge of $2.8 million, gross profit during the quarter was $1.0 million, up from $0.1 million in the prior quarter.
  • Excluding an inventory impairment charge, operating losses during the quarter were $5.3 million compared to $7.0 million in the third quarter. 
    • The inventory impairment charge reflects an inventory revaluation resulting from the sudden change in wholesale market prices experienced in the second half of 2021.
  • Net loss for the fourth quarter was $10.0 million (inclusive of the inventory impairment charge) compared sequentially to net loss of $8.7 million, and a net loss of $4.1 million for the fourth quarter of 2020. Net loss for the year was $24.7 million compared to a net loss of $21.9 million in 2020.
  • Adjusted EBITDA in the fourth quarter was negative $3.6 million compared sequentially to adjusted EBITDA of negative $5.2 million and negative adjusted EBITDA of $1.6 million in the fourth quarter of 2020. Adjusted EBITDA for the year was negative $14.4 million compared to negative adjusted EBITDA of $8.2 million in 2020. Adjusted EBITDA is a non-GAAP financial measure. See “Use of Non-GAAP Financial Information” below for further information and a detailed reconciliation to Net Loss, the closest comparable GAAP measure.
Revenue Summary ($’s in ‘000)
  Q3Q4 Growth
 CPG Revenues$9,052$8,219 -9%
 Bulk Product$2,008$2,609 30%
 LFS$800$3,153 294%
 Out-of-State Licensing$607$1,092 80%
 Total$12,467$15,073 21%

“We’re proud of our standing as California’s leading seller of packaged flower and full-flower prerolls, despite significant headwinds from market flower pricing,” says Co-Founder and Chief Executive Officer Mark Ainsworth.

“It’s been a long journey for us to reach this point, and we still have many more goals to reach, but this is a milestone that all of us can celebrate together.”

Subsequent events to the fourth quarter ended December 31, 2021:

Operational Highlights and Ongoing Initiatives:
The Company’s focus and strategic planning of key initiatives continue to drive sustainable profitable growth, with top priorities on Lowell Farm Services, its cultivation facilities, improving operational efficiency, and refinement of biological assets.

  • Lowell Farm Services
    • Lowell Farms commissioned a first-of-its-kind cannabis processing facility in Salinas Valley and started receiving third party products in the third quarter 2021. 
      • In the fourth quarter the Company generated revenue of approximately $3.2 million associated with Lowell Farm Services. This revenue is expected to increase.
      • Lowell Farm Services processed over 315,600 pounds of wet weight product in the quarter yielding approximately 14,800 pounds of finished flower.
  • Portfolio Brands and Out-of-State Licensing
    • Lowell Farms achieved a historic milestone in the fourth quarter of 2021 being the largest seller of packaged flower in the state of California as measured by unit volume by third party data aggregator Headset. 
      • The fourth quarter results show Lowell Farms as No. 1 statewide, driven by sales of its two premier flower brands – Lowell Herb Co. and House Weed – and surpassing more than 500 competing brands.
    • Lowell Herb Co. 
      • Sales of Lowell branded products generated revenue over $5.1 million in the fourth quarter, while revenues for the year totaled approximately $17.6 million.
      • Lowell Herb Co. brand launched in Massachusetts and Illinois in the third quarter of 2021 and continues to receive positive reception from the market.
    • House Weed 
      • House Weed, a portfolio brand, generated revenue of over $2.4 million in the fourth quarter of 2021, an increase of over $2.0 million from the fourth quarter of 2020.
  • Cultivation Quality and Efficiency
    • The Company continues to refine its cultivation processes, genetics, and enhance facilities and systems in order to continue to improve the yield, potencies, and increase margins. 
      • Lowell Farms saw its flower production at the greenhouse continue to steadily increase year-over-year, with flower product totaling 8,336 lbs during the fourth quarter of 2021 in comparison to 5,913 lbs in the fourth quarter of 2020. 
        • The Company harvested 39 times in the fourth quarter of 2021; in contrast to 36 harvests in the fourth quarter of 2020.
        • The average turn time for the flowering rooms has seen continued improvement and is now at 56 days in the fourth quarter of 2021 compared to 75 days in the fourth quarter of 2020.
    • The portfolio of strains and increased THC potencies coming from the cultivation are a direct result of the upgrades the Company has made to the electrical, mechanical, and environmental systems. 
      • These improvements resulted in an increased average potency of 26.11% in the fourth quarter of 2021 compared to 20.04% in the fourth quarter of 2020.
    • The Company onboarded a new cultivation harvest data system to allow increased visibility and efficiencies to support elevated potencies and decreased labor spend.
  • Distribution and Sales Capabilities:
    • With the increased desirability of the Lowell brand, dispensary partners are continuing to add Lowell portfolio products to their orders. 
      • The average delivery drop value has increased year-over-year by 44% to approximately $4,352 in the fourth quarter of 2021 from $3,028 in the fourth quarter of 2020.

“Given the challenging market conditions of California cannabis, our organic growth reflects our ability to adapt to evolving market conditions,” said Chairman of the Board George Allen.

“We are committed to building our business around brand leadership and these results reflect progress.”

Q4 Financial Results Earnings Conference Call Details:
The conference call with management at 5:30 p.m. ET on Tuesday, March 1, can be accessed using the following dial-in information:

U.S. and Canadian Toll Free:1-877-407-0789

Please dial-in at least 10 minutes before the call to register.

The conference call will be webcast live and archived on the investor relations section of the Lowell Farms website at https://ir.lowellfarms.com/.

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