Glass House Brands Inc. Record in Q3 2023

LOS ANGELES- Glass House Brands Inc., a player in the cannabis industry, announced its financial achievements for the third quarter ending September 30, 2023, marking a period of substantial growth and operational efficiency.

“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 Kyle Kazan, co-founder, chairman, and CEO of Glass House. The company reached a milestone with record revenue of $48 million, primarily driven by a 36% increase in production compared to Q3 2022, reaching over 101,000 pounds. Remarkably, this was accomplished using the same cultivation capacity as the previous year.

Financial Highlights of Q3 2023:

• Net Sales: Reported at $48.2 million, a significant year-over-year (YoY) increase of 71% and an 8% sequential rise from Q2 2023.
• Gross Profit: Stood at $26.0 million, a considerable rise from $8.7 million in Q3 2022 and $24.4 million in Q2 2023.
• Gross Margin: Increased to 54%, up from 31% in Q3 2022.
• Adjusted EBITDA: Achieved $10.7 million, a positive swing from $(2.7) million in Q3 2022.
• Operating Cash Flow: Improved to $9.1 million from a negative cash flow in the previous year.
• Production Costs: Marked a record low of $118 per equivalent dry pound of production, a 12% decrease YoY.

Kazan highlighted the reduction in production costs to $118 per pound, a testament to the company’s efficient operations, and expressed confidence in achieving a cost of less than $100 per pound in the near future.

Operational Highlights:

• Participation in notable industry conferences.
• Appointment of new board members including John A. Pérez and Yelena Katchko.
• Settlement and General Mutual Release Agreement with Element 7, APB, and GH Group.

The company also noted a substantial 71% growth in overall sales YoY, bolstering its position in the competitive California market. Despite a loss of $210,000 for the quarter, it marks a significant improvement over the previous quarter’s $25 million loss.

Sector-wise Performance:

• Wholesale Bump: The wholesale sector saw a 142% sales increase YoY to $33.8 million, aided by a slight increase in wholesale prices.
• Retail Revenue: Gained $10.1 million, up 56% YoY, attributed to new dispensary acquisitions and openings.
• Consumer Packaged Goods: Revenue was at $4.3 million, experiencing a varied performance.

Glass House’s focus on quality and cost-efficient production has been key to its financial success. The company anticipates further growth, with plans to retrofit another cannabis cultivation greenhouse, expecting production to commence in Q2 of the following year.

For the upcoming quarter, Glass House projects revenue between $38 million and $40 million, a potential decline from Q3, attributed to challenging cultivation conditions. The company’s financial stability is evident in its total assets of $341.5 million, including $37.8 million in cash, and its managed total liabilities of $170.5 million.

Glass House Brands Inc.’s third-quarter performance in 2023 underscores its strategic success in navigating the dynamic cannabis market, setting the stage for continued growth and profitability in the future.