- First Quarter 2024 Revenue was
$30.1 million , exceeding guidance and up 9% year-over-year - Biomass production reached 61,334 pounds in Q1, ahead of guidance and up 28% year-over-year with no expansion in cultivation footprint
- Cost per Equivalent Dry Pound of Production(1) was
$182 per pound, a 7% decrease versus Q1 2023 - Finished the First Quarter with a cash balance of
$24 million - Greenhouse 5 is now running at full capacity and will have its first full quarter of production and sales in Q2 of this year.
- Q2 2024 revenue projected to achieve a new record high of between
$52 million to$54 million - Conference Call to be held today
May 14, 2024 at5:00 p.m. ET
First Quarter 2024 Highlights
(Unaudited results, unless otherwise stated, all results and dollar references are in
Net Sales of$30.1 million , an increase of 9% from$27.6 million in Q1 2023 and down 26% sequentially from$40.4 million in Q4 2023;- Gross Profit was
$12.5 million , compared to$12.6 million in Q1 2023 and$18.0 million in Q4 2023; - Gross Margin was 42%, compared to 46% in Q1 2023 and 45% in Q4 2023;
- Adjusted EBITDA(2) was
$(1.6) million , compared to$0.5 million in Q1 2023 and$3.8 million in Q4 2023. - Operating Cash Flow was negative
$1.9 million , compared to$4.5 million in Q1 2023 and$1.4 million in Q4 2023. - Cost per Equivalent Dry Pound of Production was
$182 a decrease of 7% compared to the same period last year. - Equivalent Dry Pound Production(3) was 61,334 pounds, up 28% year-over-year;
- Cash balance was
$24.4 million at quarter-end versus$16.4 million at the end of Q1 2023.
Management Commentary
"The first quarter of 2024 was another very successful quarter for Glass House where we exceeded Q1 guidance across all operating metrics including cash, sales, production and Adjusted EBITDA," stated
"We produced 61,300 pounds of biomass, revenue of
"I am particularly proud of our retail and CPG teams. We saw a 4% increase in CPG revenue versus Q4 2023 with Allswell revenue growing by 20%. The Allswell eighth priced at
First Quarter 2024 Operational Highlights
- Glass House Brands Named to 2024 OTCQX Best 50
- Glass House Brands Commences Cultivation in Greenhouse 5 at the
SoCal Farm - Glass House Brands Announces Resignation of Board Member
John Pérez Glass House Brands to Participate in Inaugural Benzinga Cannabis Market Spotlight Event- Glass House Brands Announces Intent to Restate Certain Historical Financial Statements
Glass House Brands to Participate in the 36th AnnualRoth Conference to be HeldMarch 17th-19th, 2024 - Final Judgment of
$2,865,000 Entered Against Element 7 in Favor ofGH Group
Subsequent Events
Glass House Brands CEOKyle Kazan to Headline the Keynote Session at theBenzinga Cannabis Capital Conference onApril 16-17 Glass House Brands to Hold 3rd Annual Investor Sesh onFriday, June 21st (Register Here)
Q1 2024 Financial Results Discussion
Net revenues for Q1 2024 were
Wholesale biomass revenue of
Retail revenue in Q1 2024 was
Wholesale CPG revenues were
Consolidated gross profit was
Average selling price was
General and administrative expenses were
Sales and marketing expenses were
Professional fees of
Depreciation and amortization in Q1 2024 were
Adjusted EBITDA was
As of the end of the first quarter, the Company had
2024 Outlook
The Company is providing the following guidance for the second quarter of 2024 based on the strength of our first quarter results and current trends in 2024.
Q2 2024 Outlook
We expect to set a new record high for single quarter revenue at
We are raising Q2 biomass production guidance to 128,000 to 130,000 pounds from a previous 125,000 to 127,000 pounds, as initial production levels have somewhat outperformed expectations with the increase coming from trim. This will represent 110% sequential and 25% year-on-year growth at the mid-point of guidance. We expect visibility on Greenhouse 5's production capabilities to improve as we move through Q2 and as we complete several planting and harvest cycles in the greenhouse.
Average selling price for wholesale biomass is projected to be
Cost of production is projected to fall to
Retail and CPG revenue is expected to be roughly flat from Q1 as we continue to expect a highly promotional and price driven retail landscape.
We expect consolidated gross margin to be approximately 50% which is up about 8 percentage points versus the Q1 level of 42%, driven mainly by a higher margin in wholesale biomass as a result of the higher mix of flower production during the second quarter versus the first quarter. In addition, we expect Adjusted EBITDA to be a positive
2024 Fiscal Year Outlook
We are maintaining revenue guidance of
We are raising our guidance for wholesale biomass production by 5,000 pounds to 525,000 to 535,000 pounds, which represents a 49% increase over 2023 at the mid-point of guidance. Cost per pound is projected to be
We expect pricing to drop in the second half of the year as compared to the first half of the year following a similar pattern to last year as industry production increases in the second half. We are planning on flower and smalls pricing to be modestly lower than last year in the second half but we expect our average selling price in the second half of 2024 to be about flat to up slightly as a result of an improved product mix vs. the second half of 2023. We are revising our projected average selling price to between
Combined revenues from Retail and CPG are projected to be up mid-single digits in the second half of the year as we expect our retail dispensary strategic pricing plan will drive higher sales as foot traffic builds. However, we are planning for the difficult market conditions in both retail and the branded business to continue in 2024.
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).
Unaudited results, unless otherwise stated, all results are in
Net Income / (Loss) | ||||
(000's) | Q123 | Q423 | Q124 | |
Revenues, net | $ 27,555 | $ 40,429 | $ 30,101 | |
Cost of goods sold | $ 14,981 | $ 22,417 | $ 17,574 | |
Gross profit | $ 12,574 | $ 18,012 | $ 12,526 | |
% of Net Sales | 46 % | 45 % | 42 % | |
Expenses: | ||||
General and administrative | $ 11,386 | $ 13,287 | $ 13,528 | |
Sales and marketing | $ 652 | $ 634 | $ 477 | |
Professional fees | $ 1,500 | $ 1,898 | $ 3,663 | |
Depreciation and amortization | $ 3,836 | $ 3,545 | $ 3,716 | |
Impairment | $ 19,670 | $ 31,816 | $ - | |
Total expenses | $ 37,045 | $ 51,180 | $ 21,384 | |
Gain (Loss) from Operations | $ (24,471) | $ (33,168) | $ (8,858) | |
Interest Expense | $ 2,080 | $ 3,033 | $ 2,205 | |
Other expense | $ 5,858 | $ 6,132 | $ 6,371 | |
Total other expense | $ 7,938 | $ 9,165 | $ 8,577 | |
Provision for income taxes | $ 2,374 | $ (4,218) | $ 834 | |
Net income (Loss) | $ (34,783) | $ (38,115) | $ (18,269) | |
Adjusted EBITDA | ||||
(000's) | Q123 | Q423 | Q124 | |
Net income (loss) | $ (34,783) | $ (38,115) | $ (18,269) | |
Interest | $ 2,080 | $ 3,033 | $ 2,205 | |
Depreciation and amortization | $ 3,836 | $ 3,545 | $ 3,716 | |
Taxes | $ 2,374 | $ (4,218) | $ 834 | |
EBITDA (non-GAAP) | $ (26,492) | $ (35,755) | $ (11,513) | |
Share-based Compensation Expense | $ 1,631 | $ 1,909 | $ 3,272 | |
Stock Appreciation Rights Expense | $ - | $ 119 | $ 345 | |
Loss on Equity Method Investments | $ 2,264 | $ (35) | $ (18) | |
(Gain) Loss on Change in Fair Value of Derivative Liabilities | $ (13) | $ (195) | $ (113) | |
Impairment Expense | $ 19,670 | $ 31,816 | $ - | |
Loss on Extinguishment of Debt | $ - | $ - | $ - | |
Loss on Disposition of Subsidiary | $ - | $ - | $ - | |
Non-Operational Startup Costs | $ - | $ - | $ - | |
Change in Fair Value of Contingent Liabilities | $ 3,410 | $ 5,913 | $ 6,465 | |
Non-Operational Notes Receivable Bad Debt Reserve | $ - | $ - | $ - | |
Loan Amendment Fee | $ - | $ - | $ - | |
Acquisition Related Professional Fees | $ - | $ - | $ - | |
Adjusted EBITDA (non-GAAP) | $ 469 | $ 3,773 | $ (1,562) | |
Select Cash Flow Information | ||||
(000's) | Q123 | Q423 | Q124 | |
Net Income (Loss) | $ (34,783) | $ (38,115) | $ (18,269) | |
Share-based compensation | 1,631 | 1,909 | 3,272 | |
Depreciation and amortization | 3,836 | 3,545 | 3,716 | |
Other | 25,856 | 40,209 | 6,974 | |
Cash From | $ (3,460) | $ 7,548 | $ (4,308) | |
Accounts receivable | 2,343 | 687 | 981 | |
Prepaid expenses and other current assets | 3,369 | 91 | 418 | |
Inventory | (2,324) | 3,121 | (2,371) | |
Other assets | (48) | 294 | 105 | |
Accounts payable and accrued liabilities | 2,572 | 1,903 | 2,897 | |
Income taxes payable | 2,004 | (12,812) | 309 | |
Other | 1 | 608 | 94 | |
Working Capital Impact | $ 7,918 | $ (6,108) | $ 2,432 | |
Operating Cash Flow | $ 4,458 | $ 1,441 | $ (1,875) | |
Purchases of property and equipment | (1,090) | (6,076) | (2,405) | |
Other | (45) | (183) | - | |
Net Investing Activities | $ (1,135) | $ (6,258) | $ (2,405) | |
Distributions to Preferred Shareholders | (1,367) | (1,940) | (1,937) | |
Other | 269 | 1,389 | (1,898) | |
Net Financing Activities | $ (1,099) | $ (551) | $ (3,836) | |
Cash Change | 2,225 | (5,369) | (8,116) | |
Cash and cash equivalents, beginning of period | 14,144 | 37,893 | 32,524 | |
Cash and Cash, Equivalents, End of Period | $ 16,368 | $ 32,524 | $ 24,408 | |
Select Balance Sheet Information | ||||
(000's) | Q123 | Q423 | Q124 | |
Cash, Cash Equivalents and Restricted Cash | $ 16,368 | $ 32,524 | $ 24,408 | |
Accounts receivable, net | 2,527 | 3,979 | 3,008 | |
Prepaid expenses and other current assets | 4,387 | 3,873 | 3,455 | |
Inventory | 13,274 | 8,840 | 11,210 | |
Current portion of notes receivable | 1,301 | - | - | |
Total Current assets | $ 37,856 | $ 49,216 | $ 42,081 | |
Operating and finance lease right-of-use assets, net | 10,833 | 10,860 | 10,621 | |
Investments | 1,982 | 2,327 | 2,345 | |
Property, plant and equipment, net | 214,202 | 215,686 | 214,712 | |
Intangible Assets, Net and Goodwill | 53,632 | 21,213 | 21,007 | |
Deferred Tax Asset | 1,436 | - | - | |
Other assets | 4,753 | 4,472 | 4,480 | |
Total Assets | $ 324,695 | $ 303,775 | $ 295,247 | |
Accounts payable and accrued liabilities | $ 24,627 | $ 26,932 | $ 29,771 | |
Income taxes payable | 9,606 | 7,879 | 8,188 | |
Contingent earnout liability | 18,059 | 34,589 | 41,042 | |
Shares payable | 8,596 | 8,570 | 8,581 | |
Current portion of operating and finance lease liabilities | 1,193 | 1,839 | 1,822 | |
Current portion of notes payable | 48 | 7,550 | 7,551 | |
Total current liabilities | $ 62,129 | $ 87,359 | $ 96,956 | |
Operating and finance lease liabilities, net of current portion | 9,756 | 9,224 | 9,035 | |
Other non-current liabilities | 3,055 | 5,444 | 5,970 | |
Deferred tax liabilities | - | - | - | |
Notes payable, net of current portion | 62,887 | 56,513 | 54,883 | |
Total Liabilities | $ 137,827 | $ 158,539 | $ 166,843 | |
Preferred Equity Series B, C and D | 58,299 | 78,153 | 79,936 | |
APIC, Accumulated Deficit and Non-Controlling Int. | 128,570 | 67,083 | 48,468 | |
Total Shareholders' Equity | 186,869 | 145,236 | 128,404 | |
Total Liabilities and Shareholders' Equity | $ 324,695 | $ 303,775 | $ 295,247 |
Equity Table | ||||
(000's) | Q1 24 | Q4 23 | Change | Comments |
Total Equity and Exchangeable Shares | 71,230 | 70,941 | 289 | Exercise of RSU's and Convertible Notes |
Total Warrants | ||||
Series D | 3,000 | 3,000 | - | Exercise price of |
Series C | 1,000 | 1,000 | - | Exercise price of |
Series B | 9,900 | 10,000 | (100) | Exercise price of |
Series A | 2,654 | 2,654 | - | Exercise price of |
SPAC | 30,665 | 30,665 | - | Exercise price of |
Total Warrants | 47,219 | 47,319 | (100) | |
Stock Options | 1,370 | 1,436 | (66) | Exercise Price between |
RSU's | 3,731 | 2,534 | 1,198 | Up to 3-year vesting through 2026 |
Total | 5,101 | 3,969 | 1,132 | |
Share Price at Quarter End | $ 8.00 | $ 4.72 | $ 3.28 | |
Convertible Debentures | ||||
Series A | $ 11,895 | $ 11,895 | $ - | 8% semi annual interest, cash or shares, higher of 10 day VWAP 5 |
Series B | $ 4,111 | $ 4,111 | $ - | 8% semi annual interest, cash or shares, lower of 10 day VWAP 5 |
Total | $ 16,006 | $ 16,006 | $ - | |
# of Shares if converted assuming share price at quarter end | 2,001 | 3,391 | (1,390) |
Revenue | ||||||||
(000's $) | Q123 | Q223 | Q323 | Q423 | Q124 | FY22 | FY23 | |
Retail (B2C) | $ 9,373 | $ 10,073 | $ 10,058 | $ 9,574 | $ 9,921 | $ 26,731 | $ 39,078 | |
Wholesale CPG (B2B) | $ 3,715 | $ 3,954 | $ 4,290 | $ 4,103 | $ 4,253 | $ 16,770 | $ 16,062 | |
Wholesale (Biomass (B2B) | $ 14,467 | $ 30,639 | $ 33,839 | $ 26,752 | $ 15,927 | $ 41,373 | $ 105,696 | |
Total | $ 27,555 | $ 44,665 | $ 48,187 | $ 40,429 | $ 30,101 | $ 84,874 | $ 160,836 | |
Sequential % Change | ||||||||
Retail (B2C) | -12 % | 7 % | 0 % | -5 % | 4 % | |||
Wholesale CPG (B2B) | -1 % | 6 % | 9 % | -4 % | 4 % | |||
Wholesale (Biomass (B2B) | -7 % | 112 % | 10 % | -21 % | -40 % | |||
Total | -8 % | 62 % | 8 % | -16 % | -26 % | |||
% change to LY | ||||||||
Retail (B2C) | 93 % | 108 % | 56 % | -10 % | 6 % | 23 % | 46 % | |
Wholesale CPG (B2B) | 70 % | 0 % | -38 % | 10 % | 14 % | -13 % | -4 % | |
Wholesale (Biomass (B2B) | 182 % | 358 % | 142 % | 71 % | 10 % | 87 % | 155 % | |
Total | 126 % | 188 % | 77 % | 35 % | 9 % | 34 % | 89 % | |
Gross Profit | ||||||||
(000's $) | Q123 | Q223 | Q323 | Q423 | Q124 | FY22 | FY23 | |
Retail (B2C) | $ 5,281 | $ 5,487 | $ 5,594 | $ 5,190 | $ 5,253 | $ 11,498 | $ 21,552 | |
Wholesale CPG (B2B) | $ 1,128 | $ 239 | $ 241 | $ (385) | $ 1,065 | $ 76 | $ 1,223 | |
Wholesale (Biomass (B2B) | $ 6,165 | $ 18,646 | $ 20,176 | $ 13,207 | $ 6,209 | $ 9,138 | $ 58,194 | |
Total | $ 12,574 | $ 24,372 | $ 26,011 | $ 18,012 | $ 12,526 | $ 20,712 | $ 80,969 | |
% of Revenue | ||||||||
Retail (B2C) | 56 % | 54 % | 56 % | 54 % | 53 % | 43 % | 55 % | |
Wholesale CPG (B2B) | 30 % | 6 % | 6 % | -9 % | 25 % | 0 % | 8 % | |
Wholesale (Biomass (B2B) | 43 % | 61 % | 60 % | 49 % | 39 % | 22 % | 55 % | |
Total | 46 % | 55 % | 54 % | 45 % | 42 % | 24 % | 50 % | |
Wholesale Biomass Production and Cost per Pound | ||||||||
Q123 | Q223 | Q323 | Q423 | Q124 | FY22 | FY23 | ||
Equivalent Dry Pounds of Production | 48,099 | 103,336 | 101,825 | 103,462 | 61,334 | 193,723 | 356,722 | |
% change to LY | 188 % | 282 % | 36 % | 37 % | 28 % | 100 % | 84 % | |
Cost per Equivalent Dry Pounds | $ 196 | $ 139 | $ 118 | $ 121 | $ 182 | $ 144 | $ 136 | |
of Production | ||||||||
% change to LY | -18 % | -12 % | -12 % | -5 % | -7 % | -24 % | -6 % | |
Ending Operational Canopy (000 sq. ft) | 959 | 959 | 959 | 959 | 959 | 959 | 959 | |
Wholesale Biomass Sold and Average Selling Price per Pound | ||||||||
Q123 | Q223 | Q323 | Q423 | Q124 | FY22 | FY23 | ||
Equivalent Dry Pounds Sold | 49,923 | 90,174 | 100,661 | 98,199 | 56,432 | 172,392 | 338,958 | |
% change to LY | 179 % | 354 % | 47 % | 49 % | 13 % | 149 % | 97 % | |
Equivalent Dry Pounds Sold | $ 290 | $ 340 | $ 336 | $ 272 | $ 282 | $ 240 | $ 312 | |
Average Selling price | ||||||||
% change to LY | 1 % | 1 % | 65 % | 15 % | -3 % | -25 % | 30 % | |
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,
Webcast: Register Here
Dial-In Number: 1-888-664-6392
Replay: 1-888-390-0541
Replay Code: 647010#
(replay available until 12:00
In addition, content related to the earnings call including a transcript and audio recording of the call, as well as the Company's financial statements and MD&A for the period (upon completion), will be posted to the Company's website and can be found here. Content from previous reporting periods is also available.
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 profit/loss to Adjusted EBITDA for the three months ended
Footnotes and Sources:
- 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.
- 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.
About
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; guidance that Greenhouse 5 is now running at full capacity and will have its first full quarter of production and sales in Q2 of this year; guidance that Q2 2024 revenue is projected to achieve a new record high of between
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.
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