Glass House Brands Reports Record Setting Second Quarter 2024 Financial Results
- Greenhouse 5 completed its first full quarter of production
and sales in Q2, outperforming expectations
- Record quarterly highs included consolidated revenue
and gross profit, wholesale biomass revenue and gross
profit, biomass production and sales and retail revenue
- Second Quarter 2024 Revenue was $53.9 million, at
the high end of the guidance range and up 21% year-
over-year
- Biomass production was more than 149,000 pounds, 20,000
pounds ahead of the mid-point of guidance and up 45%
year- over-year
- Quarter-end cash and restricted cash balance was $25.9
million
- Q3 2024 revenue projected at a record quarterly high
of $65 million to $67 million
- Q3 2024 quarter-end cash and restricted cash balance
projected to be $38 million to $40 million, a new
high since completion of Phase I expansion
- Notice to vacate given to farmers leasing Greenhouse
2 for next expansion with one-third already empty.
Considering cultivating "Hemp-Derived Cannabis," which
was legalized in the 2018 federal Farm Bill, in Greenhouse
2 but no formal decision has been made
- Conference Call to be held today August 13, 2024 at
5:00 p.m. ET
LONG BEACH, Calif. and TORONTO, Aug. 13, 2024 (GLOBE NEWSWIRE) -- Glass House Brands Inc. ("Glass House" or the "Company") (CBOE CA: GLAS.A.U) (CBOE CA: 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 the second quarter ended June 30, 2024.
Second Quarter 2024 Highlights
(Unaudited results, unless otherwise stated, all results and dollar references are in U.S. dollars)
-- Net Revenue of $53.9 million, an increase of 21% from $44.7 million in Q2
2023 and up 79% sequentially from $30.1 million in Q1 2024.
-- Gross Profit was $28.7 million, compared to $24.4 million in Q2 2023 and
$12.5 million in Q1 2024.
-- Gross Margin was 53%, compared to 55% in Q2 2023 and 42% in Q1 2024.
-- Adjusted EBITDA1 was $12.4 million, compared to $9.5 million in Q2 2023
and $(1.6) million in Q1 2024.
-- Operating Cash Flow was positive $8.9 million, compared to $8.3 million
in Q2 2023 and negative $1.9 million in Q1 2024.
-- Equivalent Dry Pound Production2 was 149,717 pounds, up 45%
year-over-year;
-- Cost per Equivalent Dry Pound of Production3 was $148 an increase of 6%
compared to the same period last year.
-- Cash, Restricted Cash and Cash Equivalents balance was $25.9 million at
quarter-end versus $24.4 million at the end of Q1 2024.
Management Commentary
"Our second quarter results reflect another period of exceptional growth for Glass House Brands where we met or exceeded expectations across almost all key operating metrics," commented Kyle Kazan, Co-Founder, Chairman and CEO of Glass House. "Net revenue increased 21% year over year and 79% sequentially to a record high $54 million, reaching the high end of our guidance range of $52 to $54 million. We produced approximately 150,000 pounds of biomass and sold 138,000 pounds, driving wholesale revenue to a record high $39.1 million and wholesale biomass gross profit to a record high $22.6 million."
"Greenhouse 5 delivered its first full quarter of production and sales in Q2 as production levels, quality and yields have all outperformed our original expectations. As our results show, many of the improvements we have made at Greenhouse 5 have been successful, and at this early stage, Greenhouse 5 is already our most efficient greenhouse. As a result, we have made plans to backport a number of the modifications made in Greenhouse 5 into Greenhouse 6 over the next 6 to 12 months."
"Our retail and CPG teams also delivered strong results in the second quarter. Same-store retail revenue grew by about 6% year-over-year, which is impressive given the backdrop of a highly competitive California retail sales market. Also, the Allswell $7.50 'price on the shelf' and $9.99 'taxes paid out the door' eighth and the Allswell 14 gram package are our best-selling products by unit sales volume and helped propel Allswell into the top 3 of California Flower brands by units sold in the second quarter per Headset data. These products, along with the retail dispensary strategic pricing plan, drove a 20% year-on-year increase in transactions in our stores on a same store basis during the quarter."
"We are planning our next expansion in Greenhouse 2 and to that end, we gave a formal notice to vacate to the tomato and cucumber farmers who have been leasing it. With the federal legalization of 'hemp-derived cannabis' in the 2018 Farm Bill, we are considering growing 'hemp-derived cannabis' compliantly in Greenhouse 2 which would allow us to ship directly to consumers in the many states outside of California where it is legally permitted. As the capital improvements are nearly identical for cultivating 'hemp-derived cannabis' and cannabis, we are taking the time to calculate the best ROI before making a formal decision."
Second Quarter 2024 Operational Highlights
-- Glass House Brands Participates in 8th Annual Canaccord Genuity Global
Cannabis Conference
-- Glass House Brands Announces Appointment of John 'Jay' Nichols Jr. to its
Board of Directors
-- Glass House Brands Announces the Resignation of Board Member Jamie
Mendola
Subsequent Events
-- Glass House Farms Earns Golden Bear Award at the California State Fair
Cannabis Awards
-- Glass House Brands Issues an Open Letter Urging President Biden, Former
President Trump and Vice President Harris to De-Schedule Cannabis
-- Glass House Brands Welcomes Hector De La Torre Back to The Board of
Directors
-- Glass House Brands Announces Court Dismissal of Catalyst Lawsuit
Q2 2024 Financial Results Discussion
Net revenues for Q2 2024 were $53.9 million, up 21% versus Q2 2023 and a 79% sequential increase. This was at the high end of Q2 guidance of $52 to $54 million, driven by record quarterly performance in biomass production, biomass volume sales, wholesale biomass revenue and retail revenue.
The core wholesale biomass business achieved revenue of $39.1 million, increasing 28% versus Q2 2023 and 145% sequentially. Biomass production reached 149,717 pounds in Q2, ahead of guidance of 128,000 to 130,000 pounds as Greenhouse 5's first quarter of production exceeded expectations.
Retail revenue in Q2 2024 was $10.9 million, compared to $9.9 million in the previous quarter and $10.1 million in Q2 2023. On a same store sales basis, retail revenue grew by nearly 6% year-on-year and by 10% sequentially, outperforming the broader California market which saw sales decline 8% year-on-year and which saw sequential growth of one half of one percent per Headset data. The strong performance was driven by the Glass House retail dispensary strategic pricing plan implemented late in the first quarter and by strong sales of Allswell branded flower in Glass House-owned retail stores.
Wholesale CPG revenues were $4.0 million down 6% sequentially and up 1% year-over-year. Strong sales of the 14 gram and 1/8th ounce packs helped propel Allswell into the top 3 of California Flower brands by units sold in the second quarter per Headset data.
Consolidated gross profit was $28.7 million, or 53% of net revenues, compared to $24.4 million, or 55%, in Q2 2023 and $12.5 million, or 42% in Q1 2024. Overall gross margin was ahead of guidance of approximately 50%, due to a 19 percentage point increase in wholesale biomass gross margin, coupled with a 145% quarter-over-quarter increase in wholesale biomass revenue. Wholesale gross margin was 58% despite a lower than anticipated average selling price. It was the third highest wholesale biomass quarterly gross margin on record behind only 61% in Q2 2023 and 60% in Q3 2023.
Average selling price was $283 per pound, compared to $340 in the second quarter of 2023 and guidance of $330 to $335 per pound.
General and administrative expenses were $17.4 million in Q2 2024, up 33% from $13.1 million last year and 28% from $13.5 million last quarter. About 60% of the sequential increase was due to the bonus accrual for projected 2024 performance with most of the remainder due to an increase in wholesale cannabis sales taxes caused by the $23.1 million increase in sequential wholesale biomass revenue.
Sales and marketing expenses were $0.7 million, down from $1.0 million during the same period last year and up from $0.5 million in Q1 2024.
Professional fees of $1.9 million compared to $3.7 million in Q1 2024 and $2.2 million in Q2 2023. The $1.8 million decrease versus Q1 2024 is because incremental expenses were incurred in Q1 2024 from the restatements for 2021, 2022 and the first quarter of 2023 and from legal fees related to litigation. The costs from completing the restatements did not recur in Q2 and legal fees from litigation decreased. Regarding the Catalyst lawsuit that was dismissed on June 24(th) , 2024, please note that on August 7(th) , 562 Discount Med, Inc. filed a Notice of Appeal of the judgment of dismissal following an order granting a motion for judgment on the pleadings without leave to amend. We will disclose further developments in this case as merited.
Depreciation and amortization in Q2 2024 were $3.7 million, consistent with Q1 and up slightly from $3.6 million in the same period last year.
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