Lowell Farms Inc. (LOWLF)·Q1 2024 Earnings Summary

Executive Summary

• Q1 2024 showed contraction as Lowell exited cultivation: net revenue was $4,874k (-35% YoY vs $7,526k; and -35% QoQ vs $7,495k per revenue table), with gross margin at -17% (gross loss $827k) and net loss of $2,889k; note the press release’s top bullet erroneously states revenue “increased 35% from $7.5 million in the fourth quarter of 2023,” while the detailed revenue table shows a decline—our analysis relies on the detailed table and financial statements .
• Operating loss was $(2,886)k (vs $(2,382)k in Q1’23); adjusted EBITDA improved to $(1,082)k from $(4,080)k in Q4’23 as cost actions and restructuring benefits began to flow through .
• Mix and service volumes were pressured: Bulk Product revenue fell to $681k (Q4’23 $1,984k) and LFS revenue to $68k (Q4’23 $918k), largely tied to the cultivation exit in January 2024; owned-brand revenue softened ($3.1M in Q1’24 vs $3.7M in Q4’23), while delivery drop value improved QoQ ($4,082 vs $3,809) .
• No formal quantitative guidance was issued; management emphasized manufacturing/distribution optimization post-cultivation exit. Subsequent to Q1, the CFO resigned (June 28, 2024) and the CEO assumed interim CFO duties—an execution and governance watch item .

What Went Well and What Went Wrong

• What Went Well

  • Adjusted EBITDA improved sequentially to $(1,082)k from $(4,080)k in Q4’23, reflecting restructuring benefits and cost discipline .
  • Distribution productivity improved: average delivery drop value rose to ~$4,082 in Q1’24 from ~$3,809 in Q4’23, signaling healthier order economics per drop .
  • Infused 35’s growing: sales rose to ~$170k in Q1’24 vs ~$120k in Q4’23, suggesting product innovation traction despite category pressure .
  • “By optimizing efficiencies, we’re poised for steady growth and positive impact,” CEO Mark Ainsworth (strategy focused on manufacturing/distribution post-cultivation exit) .

• What Went Wrong

  • Top-line contraction and unfavorable mix: net revenue fell to $4,874k (-35% YoY, and revenue table indicates -35% QoQ) with Bulk Product and LFS revenues collapsing as cultivation ended; gross margin was -17% .
  • Owned-brand revenue softened QoQ ($3.1M in Q1’24 vs $3.7M in Q4’23), and management cited “significant decrease in California market purchasing trends and instability in flower purchase price” .
  • LFS throughput deteriorated sharply: processed wet weight fell to ~6,173 lbs in Q1’24 from ~116,762 lbs in Q4’23, driving a 93% QoQ drop in LFS revenue; management tied this to exiting cultivation .

Financial Results

Segment revenue breakdown ($ Thousands):

KPIs and operating metrics:

Balance sheet snapshot:

• Cash and cash equivalents: $1,175k at 3/31/24 (vs $2,311k at 12/31/23) .
• Total assets: $34,346k; Total liabilities: $25,731k; Equity: $8,615k at 3/31/24 .

Notes:

• Q1 non-GAAP adjustments include ~$478k of expenses related to exiting the cultivation facility; D&A includes lease-interest components allocated to COGS/Opex per reconciliation .

Guidance Changes

Earnings Call Themes & Trends

Note: The Q1 2024 earnings call occurred May 14, 2024, but a transcript was not available in our source set. We reflect themes from company materials. Call access details were provided (dial-in/webcast) .

Management Commentary

• “Our recent strategic decisions have thoughtfully bolstered our manufacturing and distribution capabilities… By optimizing efficiencies, we’re poised for steady growth and positive impact.” — CEO Mark Ainsworth .
• “As we move through 2024, Lowell stands today as a restructured company… Our strategic decisions have now positioned us favorably and we expect to see a positive impact in the quarters ahead.” — CEO Mark Ainsworth, Q4’23 release (context for Q1 trajectory) .
• Q1 margin commentary: “Gross margin… was negative 17%… adversely impacted by exiting the cultivation facility.” .

Q&A Highlights

• A Q1’24 call was held May 14, 2024 (dial-in/webcast provided), but no transcript was available in our dataset; therefore, Q&A themes and guidance clarifications are not accessible from primary sources here .

Estimates Context

• S&P Global consensus: unavailable for LOWLF in our toolset due to missing CIQ mapping; as a result, we cannot provide EPS/Revenue/EBITDA consensus or quantify beats/misses for Q1’24 (attempted retrieval returned a mapping error). Values retrieved from S&P Global were not available for this ticker in the tool at this time.
• Action for investors: treat narrative as estimate-light; near-term revisions will likely focus on mix reset (post-cultivation), LFS run-rate, owned-brand sell-through, and cost trajectory .

Key Takeaways for Investors

• Structural reset still pressuring P&L: revenue down to $4,874k, gross margin -17%, with the cultivation exit depressing Bulk/LFS; near-term recovery depends on stabilizing mix and scaling asset-light sourcing .
• Early signs of operating improvement: adjusted EBITDA improved sequentially to $(1,082)k (from $(4,080)k in Q4’23); distribution productivity improved (higher drop value) .
• Product innovation pockets: Infused 35’s sales grew to ~$170k; Lowell 35’s held “just over $900k” despite broader category pressures .
• California macro still tough: management cites reduced purchasing and volatile flower prices; monitor pricing power and promo intensity on owned brands .
• Execution watch items: re-acceleration of owned-brand revenue, consistency of third-party brand contributions (~$952k in Q1’24), and rebuilding LFS throughput post footprint change .
• Governance/continuity: CFO resignation announced June 28, 2024; CEO serving as interim CFO—watch reporting cadence, cash management, and cost programs .
• Disclosures discrepancy: top-bullet claim of QoQ revenue “+35%” conflicts with the detailed revenue table (shows decline); rely on tabular/FS detail for modeling .

Appendix: Additional Financial Detail

• Cash flow from operations in Q1’24: $(1,025)k; quarter-end cash: $1,175k .
• Balance sheet at 3/31/24: Assets $34,346k; Liabilities $25,731k; Equity $8,615k .