California Weed Co. Glass House Brands Reports 32% YoY Q3 Revenue Growth (UPDATED)

Editor’s Note: This article has been updated to exclude references to CEO Kyle Kazan's past experience, as they were not directly relevant to the focus of the story.

Vertically integrated Glass House Brands Inc. (CBOE CA: GLAS.A.U) (CBOE CA: GLAS.WT.U) GLASF GHBWF reported its financial results Wednesday for the third quarter ended Sept. 30, 2024.

The cannabis company is focused on strategic growth initiatives, including expanding production capacity, improving cost efficiency and positioning itself to weather challenges in the California weed market. However, retail pricing pressures may continue to affect margins in the near term.

"While we expect lower prices to continue in the short-term, longer-term we expect Glass House will benefit, as our Company is built to weather market cycles and emerge even stronger," said Kyle Kazan, co-founder, chair, CEO and a former Los Angeles police officer.

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Q3 2024 Financial Highlights

• Net revenue totaled $63.8 million, up 32% year-over-year from $48.2 million and 18% sequentially from the previous quarter.
• Retail revenue amounted to $11.2 million, a slight increase from the prior period ($10.9 million) and the third quarter of 2023 ($10.1 million).
• CPG revenue amounted to $4.8 million, up 11% YoY and 20% sequentially.
• Gross profit amounted to $33.4 million, compared to $26 million in the prior year's period and $28.7 million in the second quarter of this fiscal year.
• Gross margin was 52%, down slightly from 54% year-over-year and 53% from the previous quarter.
• Adjusted EBITDA came in positive at a record $20.4 million, up from $10.7 million in the third quarter of 2023 and $12.4 million in the prior period.
• Operating cash flow was $13.2 million, representing a 45% increase year-over-year.
• The company had $35.1 million in cash and restricted cash as of Sept. 30, 2024, up from $25.9 million in the second quarter of 2024.

Operational Developments

• The company’s retail strategic pricing plan has driven increased foot traffic and higher consumer loyalty.
• Glass House is working on the Greenhouse 2 retrofit to increase production capacity by 275,000 pounds annually by the fourth quarter of 2025, aiming for a cost target of $100 per pound.
• The company has obtained a hemp license and is testing strains, with plans to decide on large-scale production by the second quarter of 2025.
• Glass House successfully had the Catalyst lawsuit dismissed, while Hector De La Torre returned to serve on the board of directors.

2024 Outlook

• The company expects $47 million to $49 million in fourth-quarter revenue, representing a 19% year-over-year increase.
• In terms of biomass production, the company provided a guidance of 160,000 to 165,000 pounds, representing 57% year-over-year growth.
• The company forecasted adjusted EBITDA of $3 million to $5 million for the fourth quarter of fiscal 2024.
• Capex is projected at roughly $6 million, with $5 million allocated to Phase III expansion.
• Under the At-The-Market (ATM) program, the company can raise up to $25 million for Phase III expansion.

GLASF Price Action

Glass House Brands' shares traded 0.61% lower at $8.1 per share after the market close on Wednesday afternoon.

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