Lowell Farms Inc., Formerly Known as Indus Holdings, Inc., Announces Fourth Quarter and Fiscal Year 2020 Results
Vertically-Integrated Cannabis Leader Doubles Down on Path to Scalability and Self-Sustaining Profitability With a Renewed Go-Forward Strategy
SALINAS, Calif., March 02, 2021 (GLOBE NEWSWIRE) — Lowell Farms Inc. (the “Company”) (CSE: INDS converting to LOWL; OTCQX: INDXF to LOWLF effective March 5, 2021), a leading, vertically-integrated, California-focused cannabis company, announced revenue and operating results for the fourth quarter and fiscal year (ended December 31, 2020). All figures stated are in US Dollars.
Fourth Quarter and Fiscal Year Financial Highlights:
- Revenue generated for the three-month period ended December 31, 2020, was $9.2 million; a decline of 15% from the fourth quarter last year. Revenue for the year ended December 31, 2020, was $42.6 million; 15% year-over-year growth.
- Adjusted EBITDA for the three-month period ended December 31, 2020, was ($3.7 million) compared to ($13.2 million) in the fourth quarter last year; Adjusted EBITDA for the year-end December 31, 2020, was ($9.8 million) compared to ($36.0 million) in 2019. See “Use of Non-IFRS Financial Information” below.
- Operating expenses were $5.5 million for the three-month period ended December 31, 2020, compared to $12.0 million in the fourth quarter in the prior year. For the year ended December 31, 2020, operating expenses were $20.6 million; a decline of 45% from 2019.
- Gross margin (before net change in fair value of biological assets) of 8% compared to negative margin of 40% in the fourth quarter last year. For the year ended December 31, 2020, gross margin (before net change in fair value of biological assets) was 11% compared to negative margin of 23% in 2019. See “Use of Non-IFRS Financial Information” below.
- Operating loss before net change in fair value of biological assets of $4.8 million compared to operating loss of $14.0 million in Q4 2019. For the year ended December 31, 2020, operating loss before net change in fair value of biological assets was $16.1 million compared to an operating loss before net change in fair value of biological assets of $45.8 million in 2019. See “Use of Non-IFRS Financial Information” below.
The declined revenue and operating results in the quarter are primarily the direct result of suppressed cultivation yields resulting from the wildfires and extreme temperatures in late summer, and the resultant plant stress that ensued.
Despite the headwinds encountered last year, we have much to look ahead and our shift in strategy to acquire Lowell Herb Co and become Lowell Farms will position us for the future.
Mark Ainsworth, Chief Executive Officer for Lowell Farms Inc
Our team has shown tenacity and drive to get to where we are, and I know what we are capable of achieving when all cylinders are turned on and we are executing to the best of our capacities. The future is bright for Lowell Farms and I can’t wait to share more with you as we solidify our positioning within the California market.
Operational Highlights and Ongoing Initiatives in 2021:
The Company’s focus and strategic planning of key initiatives continue to drive sustainable profitable growth, with top priorities on its cultivation facilities, improving operational efficiency, and refinement of biological assets.
Subsequent events to the fiscal third quarter December 31, 2020:
- Indus Holdings, Inc. Welcomes Bruce Gates to Board of Directors; Announces Results of Annual Shareholder Meeting
- October 22, 2020 – Press release here
- Indus Holdings, Inc. Appoints Board Member Brian Shure as Chief Financial Officer, Steve Neil will remain at the Company in a senior capacity
- November 9, 2020 – Press release here
- Indus Holdings, Inc. announces the acquisition of Lowell Herbs Co
- February 25, 2021 – Press release here
- Cultivation Quality and Efficiency:
- As the Company continues to evaluate its cultivation processes, refine genetics, and enhance facilities and systems, the focus has been on improving the output.
- The Company successfully completed the electrical, mechanical, and environmental upgrades with final approval from the county in the quarter. The environmental upgrades will help mitigate implications experienced from the wildfires and extreme temperatures experienced in the summer.
- Lowell Farms is actively exploring tissue culture clones in order to expand and refine its strain selection.
- Portfolio of strains coming from the newly improved cultivation have consistently tested in the mid to high 20’s for THC potency.
- Continued yield improvements are expected to be seen as the environmental control system has been installed and implemented.
- In Q4, Indus commissioned an automated flower packaging line which meant an immediate 61% reduction in flower packing headcount.
- When fully optimized, the reduction will generate two times the productivity from 50 lbs. per shift to 100 lbs. per shift.
- As the Company continues to evaluate its cultivation processes, refine genetics, and enhance facilities and systems, the focus has been on improving the output.
- Owned Core Brands:
- Owned brands continue to gain market share by strategically expanding in a variety of categories in the fourth the quarter of 2020:
- Flavor was the number four Concentrate brand in Q4 2020 and single handedly made up 6% of all concentrate units sold during Q4 2020.
- Expanding portfolio of products:
- The Company is working on expanding existing brands into new categories while also growing its brand portfolio to engage with new consumers and create additional revenue streams.
- We launched 11 net new sku’s.
- Owned brands continue to gain market share by strategically expanding in a variety of categories in the fourth the quarter of 2020:
- Distribution Capabilities:
- In an effort to simplify and refocus the business on owned brands, the Company has continued to move away from the agency and distribution aspects of its business.
- In order to process the increased flower from its renovated cultivation, Indus has submitted for a cultivation and processing license application for warehouse facilities. Plans for construction of the post-harvest processing space are underway and have been submitted and approved by the City.
Q4 and Fiscal Year Financial Results Earnings Conference Call Details:
The conference call with management at 8:30 a.m. ET on Tuesday, March 2, can be accessed using the following dial-in information
U.S. and Canadian Toll Free: 1-877-407-0789
International: 1-201-689-8562
Conference ID: 13716552
Webcast: http://public.viavid.com/index.php?id=143565
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.indusholdingco.com/.
ABOUT LOWELL FARMS
Lowell Farms (CSE:LOWL; OTCQX:LOWLF) is California-based vertically-integrated cannabis company with advanced production capabilities supporting every step of the supply chain; including cultivation, extraction, manufacturing, brand sales, marketing, and distribution. Founded in 2014 as Indus Holdings, Inc, Lowell Farms grows artisan craft cannabis with a deep love and respect for the plant and prides itself on using sustainable materials – from seed to sale – to produce an extensive portfolio of award-winning original and licensed brands, including Lowell Herb Co, Cypress Cannabis, MOON, Humble Flower, and Kaizen Medicinals, for licensed retailers statewide.
