Lowell Farms Inc. (CSE: LOWL)(OTCQX: LOWLF) released its unaudited revenue and operating results for the third quarter ending September 30, 2022. Revenues fell by 34% sequentially to $8.7 million and dropped by 31% from last year.
Lowell noted that it changed the accounting for slotting fees paid to retail partners during the quarter. In a statement, the company said, “Previously, these fees had been booked as sales & marketing expenses and are now being treated as a deduction from revenues. The change in the accounting resulted in a $0.7m reduction in Q3 revenues, $0.4m of which was related to prior periods.”
The company delivered a net loss in the third quarter of $4.8 million which was an improvement over last year’s net loss of $8.7 million. It included a $2 million gain related to an ERC credit received.
“While these unaudited results are not in line with expectations, we remain confident moving into 2023 and beyond,” says Chairman of the Board George Allen. “The successful launch and positive reception that our 35’s pre-roll brand has enjoyed gives us great confidence, as the market share for this coveted new product has increased substantially since the launch in September.”
Pre-roll Data is Good
Since launching the Lowell 35’s product on September 29th, Lowell said has secured the No. 1 spot as the top-selling non-infused pre-roll brand in California, according to Headset data. Lowell also said that its products now account for over 10% of the total non-infused pre-roll market, an increase since the launch of Lowell 35’s, according to Headset data since September 2022
Lowell 35’s authorized retailers have climbed from 16 initial launch partners to over 120 retailers across the state of California – with more in the process of onboarding.
Bulk flower revenue decreased 43% sequentially to $2 million, and increased 2% year over year. Lowell Farm Services (LFS) revenue decreased to $0.3 million in the third quarter of 2022.
The company did manage to cut costs as operating expenses were $3.3 million or 38% of sales for the quarter, compared to $4.5 million or 34% of sales in the second quarter and $7.0 million or 56% of sales in the first quarter last year, reflecting cost reductions and operating efficiencies realized in the current year.