- Cash increased to
$37.9 million from$22.7 million in Q2 2023, including about$5 million in capex spend and a$12.8 million inflow from Series D Preferred Equity Fund Raise - Operating cash flow reached a record
$9.1 million versus$8.3 million in Q2 2023 - Adjusted EBITDA1 was
$10.7 million versus$9.5 million in Q2 2023 - Revenue was a record
$48.2 million , up 8% sequentially and 71% year-over-year - Gross margin was 54% versus 55% in Q2 2023 versus 31% in the prior year period
- Q3 Biomass revenue increased 142% year-on-year and production was up 36% year-over-year
- Cost per Equivalent Dry Pound of Production2,3 dropped to a record low
$118 per pound, down 12% versus Q3 2022 - Average selling price was
$336 per pound, up 65% versus last year - Guidance for Q4 2023 revenues is
$38 million to$40 million , up 21% vs Q3 2022 and down 19% sequentially (from the mid-point of guidance) due to high heat, high humidity and low sunlight conditions affecting flower output - Conference Call to be held today
November 13, 2023 at5:00 p.m. ET
Third Quarter 2023 Highlights
(Unless otherwise stated, all results and dollar references are in
Net Sales of$48.2 million increased 71% from$28.3 million in Q3 2022 and up 8% sequentially from$44.7 million in Q2 2023;- Gross Profit was
$26.0 million compared to$8.7 million in Q3 2022 and$24.4 million in Q2 2023; - Gross Margin was 54%, compared to 31% in Q3 2022 and 55% in Q2 2023;
- Adjusted EBITDA was
$10.7 million , compared to$(2.7) million in Q3 2022 and$9.5 million in Q2 2023; 1-3Q 2023 cumulative Adjusted EBITDA reached$20.1 million , compared to$(18.8) million in the same period last year. - Operating Cash Flow was
$9.1 million , compared to$(8.2) million in Q3 2022 and$8.3 million in Q2 2023. 1-3Q 2023 cumulative operating cash flow reached$21.8 million , compared to$(31.5) million in the same period last year. - Cost per Equivalent Dry Pound of Production was
$118 a decrease of 12% compared to the same period last year and down 15% sequentially versus Q2 2023; - Equivalent Dry Pound Production2 was 101,825 pounds, up 36% year-over-year;
- Cash balance was
$37.9 million at quarter-end, up 67% from Q2 2023 quarter end.
Management Commentary
"The third quarter of 2023 was another highly successful quarter for the Company as we achieved record levels of revenue and positive Adjusted EBITDA for the second consecutive quarter," stated
"We achieved record revenue of
"On the production side, we achieved a record low of
"Our outlook continues to be bright as we build upon the successes we have already achieved through the first three quarters of 2023, and I'm happy to re-affirm that we'll complete the retrofit of Greenhouse 5 at the
Third Quarter 2023 Operational Highlights
Glass House Brands to Attend theATB Capital Markets 2023Life Sciences Investor Conference onSeptember 20 thGlass House Brands to Participate in theAGP Virtual Consumer Cannabis Conference onOctober 4
Subsequent Event
- Glass House Brands Announces Appointment of John A. Pérez to its Board of Directors
- Element 7,
APB and GH Group enter into a Settlement and General Mutual Release Agreement - Glass House Brands Announces Appointment of
Yelena Katchko to its Board of Directors
Q3 2023 Financial Results Discussion
Net revenues for Q3 2023 were
Wholesale biomass revenue of
Retail revenue in Q3 2023 of
Wholesale CPG revenues were
Consolidated gross profit was
General and administrative expenses were
Sales and marketing expenses were approximately
Depreciation and amortization in Q3 2023 were
Adjusted EBITDA was
We generated a record
Capital spending was
2023 Outlook
The Company is providing the following guidance for the fourth quarter of 2023 based on the strength of our third quarter results and current trends in the fourth quarter of 2023.
Q4 2023 Outlook
We expect total revenue to be between
Retail and CPG Q4 2023 revenues are expected to be roughly consistent with Q3 2023 sales of
We expect to produce between 100,000 to 102,000 pounds of biomass in Q4 which is slightly lower than Q3 2023 at the midpoint of guidance. We continue to guide for a second half cultivation cost of
Given the reduced Q4 2023 revenue expectations and the need to make approximately
The Phase 2 expansion into Greenhouse 5 at the
Financial results and analyses will be available on the Company's website on the 'Investors' and 'News & Events' drop down menus (www.glasshousebrands.com) and SEDAR+ (www.sedarplus.ca).
Unless otherwise stated, all results are in
Net Income / (Loss) | ||||
(000's) | Q3 2022 | Q2 2023 | Q3 2023 | |
Revenues, net | $ 28,257 | $ 44,665 | $ 48,187 | |
Cost of goods sold | $ 19,531 | $ 20,293 | $ 22,176 | |
Gross profit | $ 8,726 | $ 24,372 | $ 26,011 | |
% of Net Sales | 31 % | 55 % | 54 % | |
Expenses: | ||||
General and administrative | $ 11,546 | $ 13,054 | $ 15,187 | |
Sales and marketing | $ 804 | $ 997 | $ 555 | |
Professional fees | $ 2,834 | $ 2,200 | $ 1,706 | |
Depreciation and amortization | $ 3,441 | $ 3,569 | $ 3,676 | |
Impairment | $ 1,328 | $ - | ||
Total expenses | $ 18,626 | $ 21,149 | $ 21,124 | |
Gain (Loss) from Operations | $ (9,900) | $ 3,223 | $ 4,887 | |
Interest Expense | $ 2,672 | $ 2,547 | $ 2,159 | |
Other expense | $ (30,370) | $ 20,336 | $ (3,556) | |
Total other expense | $ (27,698) | $ 22,883 | $ (1,397) | |
Provision for income taxes | $ 2,630 | $ 5,246 | $ 6,495 | |
Net income (Loss) | $ 15,169 | $ (24,905) | $ (210) |
Adjusted EBITDA | ||||
(000's) | Q3 2022 | Q2 2023 | Q3 2023 | |
Net income (loss) | $ 15,169 | $ (24,905) | $ (210) | |
Interest | $ 2,672 | $ 2,547 | $ 2,159 | |
Depreciation and amortization | $ 3,441 | $ 3,569 | $ 3,676 | |
Taxes | $ 2,630 | $ 5,246 | $ 6,495 | |
EBITDA (non-GAAP) | $ 23,911 | $ (13,544) | $ 12,119 | |
Share-based Compensation Expense | $ 2,812 | $ 1,532 | $ 2,565 | |
Stock Appreciation Rights Expense | $ - | $ 14 | $ 86 | |
Loss on Equity Method Investments | $ 871 | $ (36) | $ (91) | |
(Gain) Loss on Change in Fair Value of Derivative Liabilities | $ 25 | $ 143 | $ 93 | |
Impairment Expense | $ - | $ 1,328 | $ - | |
Loss on Extinguishment of Debt | $ - | $ - | $ - | |
Loss on Disposition of Subsidiary | $ - | $ - | $ - | |
Non-Operational Startup Costs | $ (131) | $ - | $ - | |
Change in Fair Value of Contingent Liabilities | $ (31,122) | $ 19,100 | $ (4,024) | |
Non-Operational Notes Receivable Bad Debt Reserve | $ - | $ - | $ - | |
Loan Amendment Fee | $ - | $ 1,000 | $ - | |
Acquisition Related Professional Fees | $ 935 | $ - | $ - | |
Adjusted EBITDA (non-GAAP) | $ (2,699) | $ 9,538 | $ 10,748 |
Select Balance Sheet Information | ||||
(000's) | Q3 2022 | Q2 2023 | Q3 2023 | |
Cash, Cash Equivalents and Restricted Cash | $ 17,536 | $ 22,690 | $ 37,893 | |
Accounts receivable, net | 6,787 | 3,589 | 4,199 | |
Prepaid expenses and other current assets | 7,590 | 4,317 | 4,735 | |
Inventory | 12,749 | 16,699 | 12,838 | |
Current portion of notes receivable | 600 | - | - | |
Total Current assets | $ 45,263 | $ 47,295 | $ 59,665 | |
Operating and finance lease right-of-use assets, net | 10,293 | 12,212 | 11,179 | |
Investments | 4,492 | 2,018 | 2,110 | |
Property, plant and equipment, net | 215,848 | 211,134 | 212,813 | |
Intangible Assets, Net and Goodwill | 68,548 | 46,797 | 52,297 | |
Deferred Tax Asset | 736 | 1,569 | - | |
Other assets | 3,671 | 3,574 | 3,530 | |
Total Assets | $ 348,851 | $ 324,599 | $ 341,593 | |
Accounts payable and accrued liabilities | $ 23,012 | $ 28,032 | $ 27,744 | |
Income taxes payable | 11,057 | 14,736 | 20,640 | |
Contingent earnout liability | 12,933 | 32,714 | 28,684 | |
Shares payable | 8,226 | 8,595 | 8,561 | |
Current portion of operating and finance lease liabilities | 1,194 | 1,506 | 1,875 | |
Current portion of notes payable | 70 | 49 | 50 | |
Total current liabilities | $ 56,493 | $ 85,632 | $ 87,554 | |
Operating and finance lease liabilities, net of current portion | 9,160 | 10,855 | 9,502 | |
Other non-current liabilities | 1,796 | 5,013 | 5,805 | |
Deferred tax liabilities | - | - | 3,830 | |
Notes payable, net of current portion | 62,407 | 63,632 | 63,872 | |
Total Liabilities | $ 129,856 | $ 165,132 | $ 170,563 | |
Preferred Equity Series B and C | 42,692 | 59,839 | 72,436 | |
APIC, Accumulated Deficit and Non-Controlling Int. | 176,303 | 99,629 | 98,594 | |
Total Shareholders' Equity | 218,995 | 159,468 | 171,031 | |
Total Liabilities and Shareholders' Equity | $ 348,851 | $ 324,599 | $ 341,593 |
Equity Table | ||||
(000's) | Q3 23 | Q2 23 | Change | Comments |
Total Equity and Exchangeable Shares | 70,184 | 70,030 | 154 | Plus Performance RSU's (1.3M), Exercise of RSU's and |
Total Warrants | ||||
Series D | 2,180 | - | 2,180 | |
Series C | 1,000 | 1,000 | - | Exercise price of |
Series B | 10,000 | 10,000 | - | Exercise price of |
Series A | 2,654 | 2,654 | - | Exercise price of |
SPAC | 30,665 | 30,665 | - | Exercise price of |
Total Warrants | 46,499 | 44,319 | 2,180 | |
Stock Options | 1,436 | 1,436 | - | Exercise Price between |
RSU's | 3,209 | 1,663 | 1,546 | Up to 3-year vesting through 2026 |
Total | 4,645 | 3,099 | 1,546 | |
Share Price at Quarter End | $ 4.55 | $ 3.30 | $ 1.25 | |
Convertible Debentures | ||||
Series A | $ 11,895 | $ 11,895 | $ - | 8% semi annual interest, cash or shares, higher of 10 |
Series B | $ 4,111 | $ 4,111 | $ - | 8% semi annual interest, cash or shares, lower of 10 day |
Total | $ 16,006 | $ 16,006 | $ - | |
# of Shares if converted assuming share price at | 3,518 | 4,161 | (643) |
Select Cash Flow Information | ||||
(000's) | Q3 2022 | Q2 2023 | Q3 2023 | |
Net Income (Loss) | $ 15,169 | $ (24,905) | $ (210) | |
Share-based compensation | $ 2,812 | $ 1,532 | $ 2,565 | |
Depreciation and amortization | $ 3,441 | $ 3,569 | $ 3,676 | |
Other | $ (28,886) | $ 22,261 | $ (3,217) | |
Cash From | $ (7,465) | $ 2,456 | $ 2,814 | |
Accounts receivable | $ (3,295) | $ (924) | $ (1,124) | |
Prepaid expenses and other current assets | $ (1,781) | $ 310 | $ (417) | |
Inventory | $ 1,155 | $ (1,768) | $ 3,861 | |
Other assets | $ (66) | $ (6) | $ (48) | |
Accounts payable and accrued liabilities | $ 629 | $ 2,800 | $ (2,447) | |
Income taxes payable | $ 2,429 | $ 5,324 | $ 5,904 | |
Other | $ 165 | $ 73 | $ 518 | |
Working Capital Impact | $ (764) | $ 5,808 | $ 6,246 | |
Operating Cash Flow | $ (8,229) | $ 8,265 | $ 9,060 | |
Purchases of property and equipment | $ (3,206) | $ (206) | $ (4,938) | |
Other | $ 3,173 | $ (233) | $ 55 | |
Net Investing Activities | $ (33) | $ (438) | $ (4,882) | |
Distributions to Preferred Shareholders | $ (1,136) | $ (1,376) | $ (1,647) | |
Other | $ 9,482 | $ (129) | $ 12,672 | |
Net Financing Activities | $ 8,347 | $ (1,505) | $ 11,025 | |
Cash Change | $ 85 | $ 6,322 | $ 15,203 | |
Cash and cash equivalents, beginning of period | $ 17,451 | $ 16,368 | $ 22,690 | |
Cash and Cash, Equivalents, End of Period | $ 17,536 | $ 22,690 | $ 37,893 |
Revenue | ||||||||||||||||||||
(000's $) | Q122 | Q222 | Q322 | Q422 | Q123 | Q223 | Q323 | FY21 | FY22 | |||||||||||
Retail (B2C) | $ 4,858 | $ 4,839 | $ 6,440 | $ 9,373 | ||||||||||||||||
Wholesale CPG (B2B) | $ 3,992 | $ 4,945 | $ 7,862 | $ 5,989 | $ 5,182 | $ 3,954 | $ 4,290 | |||||||||||||
Wholesale (Biomass (B2B) | $ 5,122 | $ 6,689 | ||||||||||||||||||
Total | ||||||||||||||||||||
Sequential % Change | ||||||||||||||||||||
Retail (B2C) | -5 % | 0 % | 33 % | 64 % | -12 % | 7 % | 0 % | |||||||||||||
Wholesale CPG (B2B) | -41 % | 24 % | 59 % | -24 % | -13 % | -24 % | 9 % | |||||||||||||
Wholesale (Biomass (B2B) | -21 % | 31 % | 109 % | 12 % | -7 % | 112 % | 10 % | |||||||||||||
Total | -24 % | 18 % | 72 % | 14 % | -10 % | 54 % | 8 % | |||||||||||||
% change to LY | ||||||||||||||||||||
Retail (B2C) | -3 % | -24 % | 23 % | 106 % | 93 % | 108 % | 56 % | 50 % | 23 % | |||||||||||
Wholesale CPG (B2B) | -31 % | -19 % | 13 % | -11 % | 30 % | -20 % | -45 % | 93 % | -11 % | |||||||||||
Wholesale (Biomass (B2B) | 14 % | 8 % | 180 % | 140 % | 182 % | 358 % | 142 % | 8 % | 87 % | |||||||||||
Total | -8 % | -12 % | 65 % | 75 % | 108 % | 171 % | 71 % | 44 % | 31 % | |||||||||||
Gross Profit | ||||||||||||||||||||
(000's $) | Q122 | Q222 | Q322 | Q422 | Q123 | Q223 | Q323 | FY21 | FY22 | |||||||||||
Retail (B2C) | $ 2,084 | $ 2,037 | $ 2,651 | $ 4,482 | $ 4,871 | $ 5,487 | $ 5,594 | $ 9,419 | ||||||||||||
Wholesale CPG (B2B) | $ 655 | $ 89 | $ 1,078 | $ (917) | $ 921 | $ 239 | $ 241 | $ 5,174 | $ 905 | |||||||||||
Wholesale (Biomass (B2B) | $ (400) | $ 5,011 | $ 6,661 | $ 6,165 | $ 1,427 | $ 9,400 | ||||||||||||||
Total | $ 2,339 | $ 254 | $ 8,726 | |||||||||||||||||
% of Revenue | ||||||||||||||||||||
Retail (B2C) | 43 % | 42 % | 41 % | 42 % | 52 % | 54 % | 56 % | 43 % | 42 % | |||||||||||
Wholesale CPG (B2B) | 16 % | 2 % | 14 % | -15 % | 18 % | 6 % | 6 % | 20 % | 4 % | |||||||||||
Wholesale (Biomass (B2B) | -8 % | -28 % | 36 % | 43 % | 43 % | 61 % | 60 % | 6 % | 23 % | |||||||||||
Total | 17 % | 2 % | 31 % | 32 % | 41 % | 55 % | 54 % | 23 % | 24 % | |||||||||||
Wholesale Biomass Production and Cost per Pound | ||||||||||||||||||||
Q122 | Q222 | Q322 | Q422 | Q123 | Q223 | Q323 | FY21 | FY22 | ||||||||||||
Equivalent Dry Pounds of Production | 16,729 | 25,173 | 74,624 | 75,344 | 48,099 | 103,336 | 101,825 | 96,785 | 191,870 | |||||||||||
% change to LY | 7 % | 9 % | 164 % | 153 % | 188 % | 311 % | 36 % | 79 % | 98 % | |||||||||||
Cost per Equivalent Dry Pounds | $ 238 | $ 159 | $ 134 | $ 127 | $ 196 | $ 139 | $ 118 | $ 189 | $ 143 | |||||||||||
of Production | ||||||||||||||||||||
% change to LY | -2 % | -18 % | -25 % | -24 % | -18 % | -12 % | -12 % | -14 % | -24 % | |||||||||||
Ending Operational Canopy (000 sq. ft) | 332 | 332 | 959 | 959 | 959 | 959 | 959 | 332 | 959 | |||||||||||
Wholesale Biomass Sold and Average Selling Price per Pound | ||||||||||||||||||||
Q122 | Q222 | Q322 | Q422 | Q123 | Q223 | Q323 | FY21 | FY22 | ||||||||||||
Equivalent Dry Pounds Sold | 17,894 | 19,859 | 68,512 | 66,127 | 49,923 | 90,174 | 100,661 | 69,153 | 172,392 | |||||||||||
% change to LY | 41 % | 38 % | 265 % | 184 % | 179 % | 354 % | 47 % | -11 % | 149 % | |||||||||||
Equivalent Dry Pounds Sold | $ 188 | $ 237 | $ 204 | $ 236 | $ 290 | $ 340 | $ 336 | $ 233 | $ 218 | |||||||||||
Average Selling price | ||||||||||||||||||||
% change to LY | -29 % | -30 % | 7 % | 29 % | 54 % | 43 % | 65 % | -56 % | -6 % | |||||||||||
Equivalent Dry Pounds Average Selling Price excludes the impact of cultivation tax. |
Conference Call
The Company will host a conference call to discuss the results today, November 13, 2023 at 5:00 p.m. Eastern Time.
Webcast: Register Here
Dial-In Number: 1-888-664-6392
Conference ID: 14375281
Replay: 1-888-390-0541
Replay Code: 519275#
(replay available until 12:00 midnight Eastern Time
Non-GAAP Financial Measures
Glass House defines EBITDA as Net Loss (GAAP) adjusted for interest and financing costs, income taxes, depreciation, and amortization. Adjusted EBITDA is defined as EBITDA excluding share-based compensation, stock appreciation rights expense, loss (income) on equity method investments, change in fair value of derivative liabilities, change in fair value of contingent liabilities, acquisition related professional fees, and non-operational start-up costs.
EBITDA and Adjusted EBITDA are presented because management has evaluated the financial results both including and excluding the adjusted items and believe that the supplemental non-GAAP financial measures presented provide additional perspective and insights when analyzing the core operating performance of the business. Such supplemental non-GAAP financial measures are not standardized financial measures under
The Company has provided a table above that provides a reconciliation of the Company's net loss to Adjusted EBITDA for the three months ended September 30, 2023 compared to three months ended September 30, 2022 and three months ended June 30, 2023.
Footnotes and Sources:
- EBITDA and Adjusted EBITDA are non-GAAP financial measures that are not defined by
U.S. GAAP and may not be comparable to similar measures presented by other companies. Please see "Non-GAAP Financial Measures" herein for further information and for a reconciliation of such non-GAAP measures to the closest GAAP measure. - Equivalent Dry Pound Production includes all dry production (flower, smalls and trim) plus equivalent dry weight for wet weight and fresh frozen not converted into dry weight by the Company.
- Cost per Equivalent Dry Pound of Production, is the application of a subset of Costs of Goods Sold for cannabis biomass production (including all expenses from nursery and cultivation to curing and trimming - the point at which product is ready for sales as wholesale cannabis or to be transferred to CPG) applied to the Company's metric of dry production which includes all dry production (flower, smalls and trim) plus equivalent dry weight for wet weight and fresh frozen that is not converted into dry goods by the Company.
Glass House is one of the fastest-growing, vertically integrated cannabis companies in the
Forward Looking Statements
This news release contains certain forward-looking information and forward-looking statements, as defined in applicable securities laws (collectively referred to herein as "forward-looking statements"). Forward-looking statements reflect current expectations or beliefs regarding future events or the Company's future performance or financial results. All statements other than statements of historical fact are forward-looking statements. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", "continues", "forecasts", "projects", "predicts", "intends", "anticipates", "targets" or "believes", or variations of, or the negatives of, such words and phrases or state that certain actions, events or results "may", "could", "would", "should", "might" or "will" be taken, occur or be achieved. Forward-looking statements in this news release include, without limitation, the company's: ability to further deliver strong operational and financial results; positioning as a very large, vertically-integrated
Although the Company believes that the expectations expressed in such statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the statements. There are certain factors that could cause actual results to differ materially from those in the forward-looking information, including financial and operational results not proving to be as expected or on the timelines expected; the Company not completing certain proposed acquisition or financing transactions at all, or on the timelines expected; the Company not achieving the synergies expected; and other risks disclosed in the Company's Annual Information Form and other public filings on SEDAR+ at www.sedarplus.ca. Accordingly, readers should not place undue reliance on forward-looking statements.
For more information on the Company, investors are encouraged to review the Company's public filings on SEDAR+ at www.sedarplus.ca. The forward-looking statements and financial outlooks contained in this news release speak only as of the date of this news release or as of the date or dates specified in such statements. The Company disclaims any intention or obligation to update or revise any forward- looking information, whether as a result of new information, future events or otherwise, other than as required by law.
SOURCE
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