9-6 Glass House Brands Reports Record Second Quarter 2023 Financial Results

Cash increased to $22.7 million from $16.4 million in Q1 2023, as operating cash flow reached a record $8.3 million

– Adjusted EBITDA1 was $9.5 million versus a $0.1 million loss in Q1 2023

-Revenue was $44.7 million, up 54% sequentially and 171% year-over-year

-Gross margin was 55% versus 41% in Q1 2023, and 2% in the prior year period

-Q2 Biomass production2 was up 311% year-on-year and biomass revenue increased 358% year-on-year

-Cost per Equivalent Dry Pound of Production3 was $139 per pound, down 12% versus Q2 2022

-Average selling price was $340 per pound, up 43% versus last year, and 17% versus Q1 2023

-Conference Call to be held today August 14 at 5:00 p.m. ET

LONG BEACH, CA and TORONTO, Aug. 14, 2023 /CNW/ – Glass House Brands Inc. (“Glass House” or the “Company”) (NEO: GLAS.A.U) (NEO: GLAS.WT.U) (OTCQX: GLASF) (OTCQX: GHBWF), one of the fastest-growing, vertically integrated cannabis companies in the U.S., today reported financial results for its second quarter ending June 30, 2023.


Glass House Brands Inc. Logo (CNW Group/Glass House Brands Inc.)

Second Quarter 2023 Highlights
(Unless otherwise stated, all results and dollar references are in U.S. dollars)

  • Net Sales of $44.7 million increased 171% from $16.5 million in Q2 2022 and up 54% sequentially from $29.0 million in Q1 2023;
  • Gross Profit was $24.4 million compared to $0.3 million in Q2 2022 and $12.0 million in Q1 2023;
  • Gross Margin was 55%, compared to 2% in Q2 2022 and 41% in Q1 2023;
  • Adjusted EBITDA1 was $9.5 million, compared to $(9.8) million in Q2 2022 and $(0.1) million in Q1 2023;
  • Cost per Equivalent Dry Pound of Production3 was $139 a decrease of 12% compared to the same period last year and down 29% sequentially versus Q1 2023;
  • Equivalent Dry Pound Production2 was 103,336 pounds, up 311% year-over-year and up 115% sequentially;
  • Cash balance was $22.7 million at quarter-end, up 39% from Q1 2023 quarter end.

Management Commentary

“The second quarter of 2023 was the best in our history. We achieved record levels of operating cash flow, exceeded Q2 guidance across several operating metrics and marked our first quarter of positive adjusted EBITDA1,” stated Kyle Kazan, Co-Founder, Chairman and CEO of Glass House.

“In Q2 2023, we saw our biomass revenues and pounds sold more than quadruple versus the previous year. Revenues from our retail dispensaries doubled to $10 million year-over-year, due to growth from acquisitions. Consolidated gross margin surpassed 50% and cultivation cost per pound3 fell by 12% versus last year. Finally, Adjusted EBITDA1 flipped to a positive $9.5 million compared to negative $9.8 million a year ago.

“I believe that our position as a vertically-integrated California cannabis company with a competitive core competency in the cost-efficient cultivation of premium flower is the reason why we’ve been able to persevere in this difficult market environment. We value our retail and brand businesses for the revenues and market awareness they provide, and we see potential for our brands to create significant shareholder value over the long term.”

Kazan concluded, “We anticipate this momentum will continue through the remainder of 2023, and surpassing our second quarter guidance by significant margins only builds our confidence.”

Second Quarter 2023 Operational Highlights

  • Friday, June 23rd

Q2 2023 Financial Results Discussion

Net revenues for Q2 2023 were $44.7 million, 171% growth versus Q2 2022 and a 54% sequential increase versus Q1 2023. This result was 12% higher than the high end of our Q2 guidance range of $38 million to $40 million.

Wholesale biomass revenue of $30.6 million increased 358% versus Q2 2022 and was up 112% sequentially versus Q1 2023. In the quarter, product sold increased 354% year-on-year to 90,174 pounds of equivalent dry weight. The increase in weight available for sale was driven by a 311% increase in production2 versus last year to 103,336 pounds as a result of incremental production from the Company’s SoCal farm.

Retail revenue in Q2 2023 of $10.1 million increased 108% year-over-year and was up 7% on a sequential basis. The year-over-year increase was primarily a result of incremental revenues from four retail locations we acquired in Q3 2022, and from three new stores – Farmacy Isla Vista which opened in mid-December last year, Farmacy Santa Ynez which opened in January, as well as NHC Turlock which opened in late April.

Wholesale CPG revenues were $4.0 million, a decrease of 20% compared to the prior year and a 24% decline sequentially. We had expected negative sequential growth in our CPG wholesale sales due to the financial difficulties of HERBL, one of the state’s largest distributors, along with the challenges facing all brands in the current California marketplace. We are currently distributing our CPG product via our co-packer who is providing distribution service to our retail accounts. For our own stores, we now sell direct and treat this as an intercompany transaction instead of booking the sale through the distributor; and this reduced Q2 CPG revenue by $1.1 million – accounting for almost the entire sequential decline in CPG sales. Without the change, CPG sales would likely have been about flat.

Consolidated gross profit was $24.4 million, or 55% of net revenues, compared to $0.3 million, or 2% in Q2 2022 and $12.0 million, or 41% in Q1 2023. This is the highest gross margin percent ever achieved by Glass House. The two key drivers were wholesale biomass average selling price reaching $340 per pound, well above