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INDS - Indus Holdings Inc News Story

C$1.83 -0.3  -13.3%

Last Trade - 04/03/21

Sector
Healthcare
Size
Small Cap
Market Cap £72.4m
Enterprise Value £92.4m
Revenue £30.2m
Position in Universe 806th / 2711

Lowell Farms Inc., Formerly Known as Indus Holdings, Inc., Announces Fourth Quarter and Fiscal Year 2020 Results

Tue 2nd March, 2021 1:07pm
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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,” says 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
(https://ir.indusholdingco.com/news-events/press-releases/detail/43/indus-holdings-inc-welcomes-bruce-gates-to-board-of)
 
* 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
(https://ir.indusholdingco.com/news-events/press-releases/detail/46/indus-holdings-inc-announces-new-chief-financial-officer)  
 
* Indus Holdings, Inc. announces the acquisition of Lowell Herbs Co * February
25, 2021 - Press release here
(https://ir.indusholdingco.com/news-events/press-releases/detail/55/indus-holdings-inc-announces-the-acquisition-of-lowell)
 
* 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.
 
 
* 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.
 
 
* 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.

Investor Relations Contact
Bill Mitoulas
416.479.9547
bill@indusholdingco.com

Media Contact
Renata Follmann
pr@indusholdingco.com

Company Contact
Mark Ainsworth 
ir@indusholdingco.com

Forward-Looking Information and Statements and non-IFRS Financial Measures

This press release contains certain "forward-looking information" within the
meaning of applicable Canadian securities legislation and may also contain
statements that may constitute "forward-looking statements" within the meaning
of the safe harbor provisions of the United States Private Securities
Litigation Reform Act of 1995. Such forward-looking information and
forward-looking statements are not representative of historical facts or
information or current condition, but instead represent only Indus’ beliefs
regarding future events, plans or objectives, many of which, by their nature,
are inherently uncertain and outside of Indus’ control. Generally, such
forward-looking information or forward-looking statements can be identified by
the use of forward-looking terminology such as "plans", "expects" or "does not
expect", "is expected", "budget", "scheduled", "estimates", "forecasts",
"intends", "anticipates" or "does not anticipate", or "believes", or
variations of such words and phrases or may contain statements that certain
actions, events or results "may", "could", "would", "might" or "will be
taken", "will continue", "will occur" or "will be achieved.” The
forward-looking information and forward-looking statements contained herein
may include, but are not limited to, the ability of the Company to
successfully achieve business objectives (including completion of renovations
and increasing production capacity), and expectations for other economic,
business, and/or competitive factors. There can be no assurance that such
forward-looking information will prove to be accurate, and actual results and
future events could differ materially from those anticipated in such
forward-looking information. This forward-looking information reflects
Indus’ current beliefs and is based on information currently available to
Indus and on assumptions Indus believes are reasonable.

Forward-looking information is subject to known and unknown risks,
uncertainties and other factors that may cause the actual results, level of
activity, performance or achievements of Indus to be materially different from
those expressed or implied by such forward-looking information. Such risks and
other factors may include, but are not limited to: general business, economic,
competitive, political and social uncertainties; general capital market
conditions and market prices for securities; delay or failure to receive board
or regulatory approvals; the actual results of future operations; operating
and development costs; competition; changes in legislation or regulations
affecting Indus; the timing and availability of external financing on
acceptable terms; the available funds of Indus and the anticipated use of such
funds; delay or inability to complete an acquisition; favorable production
levels and outputs; the stability of pricing of cannabis products; the level
of demand for cannabis product; the availability of third-party service
providers and other inputs for Indus’ operations; lack of qualified, skilled
labor or loss of key individuals; and risks and delays resulting from the
COVID-19 pandemic. A description of additional assumptions used to develop
such forward-looking information and a description of additional risk factors
that may cause actual results to differ materially from forward-looking
information can be found in Indus’ disclosure documents, such as Indus’
listing statement filed on the SEDAR website at www.sedar.com. Although Indus
has attempted to identify important factors that could cause actual results to
differ materially from those contained in forward-looking information, there
may be other factors that cause results not to be as anticipated, estimated or
intended. Readers are cautioned that the foregoing list of factors is not
exhaustive. Readers are further cautioned not to place undue reliance on
forward-looking information as there can be no assurance that the plans,
intentions or expectations upon which they are placed will occur.
Forward-looking information contained in this news release is expressly
qualified by this cautionary statement.

This press release includes non-IFRS financial measures, specifically adjusted
EBITDA, which is not a measure of financial performance under IFRS and should
not be considered superior to, as a substitute for or as an alternative to,
and should only be considered in conjunction with IFRS financial measures.

The forward-looking information contained in this news release represents the
expectations of Indus as of the date of this news release and, accordingly, is
subject to change after such date. However, Indus expressly disclaims any
intention or obligation to update or revise any forward-looking information,
whether as a result of new information, future events or otherwise, except as
expressly required by applicable securities law. Neither the Canadian
Securities Exchange nor its Regulation Service Provider has reviewed, or
accepts responsibility for the adequacy or accuracy of, the content of this
news release.



 I NDUS H OLDINGS, I NC. AND A FFILIATES                                                                                                                                                            
 C ONSOLIDATED S TATEMENTS OF F INANCIAL P OSITION                                                                                                                                                  
 (Unaudited)                                                                                                                                                                                        
                                                                                                                                                                                                    
                                                                                                                                        December 31,                                                
 (in thousands)                                                                                                                                 2020                             2019               
 ASSETS                                                                                                                                                                                             
 Current assets:                                                                                                                                                                                    
 Cash and cash equivalents                                                                                                              $       25,751                   $       1,344              
 Accounts Receivable—net of allowance for doubtful accounts of $1,389 and $2,595 at December 31, 2020 and 2019, respectively                    4,529                            6,890              
 Inventory                                                                                                                                      13,613                           9,376              
 Biological assets                                                                                                                              11,288                           1,716              
 Prepaid expenses and other current assets                                                                                                      5,023                            2,729              
 Total current assets                                                                                                                           60,205                           22,055             
 Long-term investments                                                                                                                          202                              397                
 Property and equipment, net                                                                                                                    49,243                           42,972             
 Goodwill                                                                                                                                       357                              357                
 Other intangibles, net                                                                                                                         736                              1,153              
 Other assets                                                                                                                                   274                              2,274              
                                                                                                                                                                                                    
 Total assets                                                                                                                           $       111,016                  $       69,208             
                                                                                                                                                                                                    
 LIABILITIES AND STOCKHOLDERS’ EQUITY                                                                                                                                                               
 Current liabilities:                                                                                                                                                                               
 Accounts payable                                                                                                                       $       2,137                    $       4,704              
 Accrued payroll and benefits                                                                                                                   1,212                            531                
 Notes payable, current portion                                                                                                                 1,213                            135                
 Lease obligation, current portion                                                                                                              2,301                            2,325              
 Other current liabilities                                                                                                                      8,860                            4,356              
 Total current liabilities                                                                                                                      15,723                           12,051             
 Notes payable                                                                                                                                  303                              371                
 Lease obligation                                                                                                                               36,533                           31,480             
 Convertible debentures                                                                                                                         13,701                           -                  
 Other long-term liabilities                                                                                                                    -                                946                
 Total liabilities                                                                                                                              66,260                           44,848             
                                                                                                                                                                                                    
 STOCKHOLDERS' EQUITY                                                                                                                                                                               
 Share capital                                                                                                                                  125,540                          96,160             
 Accumulated deficit                                                                                                                            (80,784  )                       (71,800  )         
 Total stockholders' equity                                                                                                                     44,756                           24,360             
                                                                                                                                                                                                    
 Total liabilities and stockholders' equity                                                                                             $       111,016                  $       69,208             
                                                                                                                                                                                                    



 I NDUS H OLDINGS, INC. AND A FFILIATES                                                                          
 C ONSOLIDATED S TATEMENTS OF O PERATIONS                                                                        
 (Unaudited)                                                                                                     
                                                                                                                 
                                                                 Years Ended December 31,                        
 (in thousands, except per share amounts)                              2020                       2019           
                                                                                                                 
 Net revenue                                                     $     42,618               $     37,045         
 Cost of goods sold                                                    38,085                     45,641         
 Gross profit/(loss) before biological asset adjustments               4,533                      (8,596   )     
                                                                                                                 
 Net effect of change in fair value of biological assets               (14,555  )                 638            
                                                                                                                 
 Gross profit/(loss)                                                   19,088                     (9,234   )     
                                                                                                                 
 Operating expenses                                                                                              
 General and administrative                                            11,762                     25,814         
 Sales and marketing                                                   5,169                      8,029          
 Depreciation and amortization                                         3,671                      3,322          
 Total operating expenses                                              20,602                     37,165         
                                                                                                                 
 Loss from operations                                                  (1,514   )                 (46,399  )     
                                                                                                                 
 Other income/(expense)                                                                                          
 Other income/(expense)                                                118                        95             
 Loss on termination of investments, net                               (4,201   )                 -              
 Unrealized gain/(loss) on change in fair value of investment          168                        (2,250   )     
 Gain/(Loss) on foreign currency                                       -                          159            
 Interest expense                                                      (3,331   )                 (2,152   )     
 Total other income/(expense)                                          (7,246   )                 (4,148   )     
                                                                                                                 
 Loss before provision for income taxes                                (8,760   )                 (50,547  )     
 Provision for income taxes                                            224                        205            
                                                                                                                 
 Net loss                                                        $     (8,984   )           $     (50,752  )     
                                                                                                                 
                                                                                                                 
 Net loss per share - basic and diluted                          $     (0.26    )           $     (1.62    )     
                                                                                                                 
 Weighted average shares outstanding - basic and diluted               33,940                     31,379         
                                                                                                                 



 INDUS HOLDINGS, INC. AND AFFILIATES                                                                                           
 S TATEMENTS OF C ASH F LOWS                                                                                                   
 (Unaudited)                                                                                                                   
                                                                                Year Ended December 31,                        
 (in thousands)                                                                       2020                      2019           
 CASH FLOW FROM OPERATING ACTIVITIES                                                                                           
 Net loss                                                                       $     (8,984  )           $     (50,752  )     
 Adjustments to reconcile net loss to net cash used in operating activities:                                                   
 Depreciation and amortization                                                        3,912                     3,914          
 Amortization of debt issuance costs                                                  481                       -              
 Share-based compensation expense                                                     2,200                     3,385          
 Provision for doubtful accounts                                                      1,195                     2,346          
 Allowance for inventory obsolescence                                                 -                         700            
 Loss on termination of investment                                                    4,359                     -              
 Loss on sale of assets                                                               -                         446            
 Unrealized (gain) loss on change in fair value of investments                        (548    )                 1,713          
 Changes in operating assets and liabilities:                                                                                  
 Accounts receivable                                                                  966                       (6,230   )     
 Inventory                                                                            (4,237  )                 3,538          
 Biological assets                                                                    (9,572  )                 (1,140   )     
 Prepaid expenses and other current assets                                            325                       (463     )     
 Other assets                                                                         18                        (2,000   )     
 Accounts payable and accrued expenses                                                2,222                     5,207          
 Other long-term liabilities                                                          (90     )                 13             
 Net cash used in operating activities                                                (7,752  )                 (39,323  )     
 CASH FLOW FROM INVESTING ACTIVITIES                                                                                           
 Proceeds from asset sales                                                            743                       1,455          
 Net cash received from disposition of business interest                              500                       -              
 Purchases of property and equipment                                                  (6,850  )                 (9,991   )     
 Investment in corporate interests                                                    -                         (1,525   )     
 Net cash used in investing activities                                                (5,607  )                 (10,061  )     
 CASH FLOW FROM FINANCING ACTIVITIES                                                                                           
 Principal payments on lease obligations                                              (2,951  )                 (1,155   )     
 Payments on notes payable                                                            (4,267  )                 (106     )     
 Proceeds from notes payable                                                          3,800                     76             
 Proceeds from lease financing                                                        671                       -              
 Proceeds from convertible debentures, net of financing costs                         15,281                    -              
 Proceeds from subordinate voting share offering                                      26,930                    -              
 Fees on subordinate voting share offering                                            (1,909  )                 -              
 Proceeds from brokered private placement                                             -                         40,195         
 Fees on public brokered private placement                                            -                         (1,919   )     
 Proceeds from exercise of options                                                    -                         127            
 Proceeds from exercise of warrants                                                   210                       -              
 Issuance of subordinate voting shares                                                -                         3,200          
 Net cash provided by financing activities                                            37,765                    40,418         
                                                                                                                               
 Change in cash, cash equivalents and restricted cash                                 24,407                    (8,966   )     
 Cash and cash equivalents—beginning of year                                          1,344                     10,310         
 Cash, cash equivalents and restricted cash—end of period                       $     25,751              $     1,344          
                                                                                                                               
 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION                                                                              
 Cash paid during the period for interest                                       $     3,332               $     2,147          
 Cash paid during the period for income taxes                                   $     262                 $     105            
                                                                                                                               
 OTHER NONCASH INVESTING AND FINANCING ACTIVITIES                                                                              
 Purchase of property and equipment not yet paid for                            $     362                 $     -              
 Property and equipment acquired via capital lease                              $     7,416               $     -              
 Shares Issued in exchange for asset investment                                 $     179                 $     -              
 Issuance of warrants                                                           $     1,620               $     2,291          
 Shares issued to acquiree in connection with reverse takeover                  $     -                   $     1,513          
 Issuance of supervoting shares                                                 $     (39     )           $     40             
 Acquisition of private entities                                                $     -                   $     1,028          
 Shares issued in connection with convertible debenture conversion              $     75                  $     -              
 Stock options issued associated with an acquisition                            $     116                 $     -              
                                                                                                                               

The table below reconciles Net Loss to Adjusted EBITDA for the periods
indicated.

 I NDUS H OLDINGS, INC. AND A FFILIATES                                                                            
 ADJUSTED EBITDA                                                                                                   
 (Unaudited)                                                                                                       
 Year Ended December 31,                                                                                           
 (in thousands)                                                                    2020              2019          
 Net loss attributable to Indus Holdings, Inc. (IFRS)                           $  (8,984   )     $  (50,752  )    
 Interest expense                                                                  3,331             2,152         
 Provision (benefit) for income taxes                                              224               205           
 Depreciation in cost of goods sold                                                241               592           
 Depreciation and amortization in operating expenses                               3,671             3,322         
 Investment and currency losses                                                    (168     )        2,091         
 Share-based compensation                                                          2,200             3,385         
 Transaction and other special charges                                             4,201             2,341         
 Net effect of change in fair value of biological assets                           (14,555  )        638           
 Adjusted EBITDA (non-IFRS) ((1))                                               $  (9,840   )     $  (36,026  )    
 ((1))Non-IFRS measure                                                                                             

 



 

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