UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO
RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of May, 2024.
Commission File Number 000-56261
Glass House Brands Inc.
(Translation of registrant’s name into English)
3645 Long Beach Blvd.
Long
Beach, California 90807
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F.
Form 20-F
¨ Form 40-F x
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| |
Glass House Brands Inc. |
| |
|
| Date: May 14, 2024 |
/s/ Kyle Kazan |
| |
By: Kyle Kazan |
| |
Title: Chief Executive Officer |
EXHIBIT INDEX
Exhibit
99.1
Glass
House Brands Reports First Quarter 2024 Financial Results
- 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 at 5:00 p.m. ET
LONG
BEACH, CA and TORONTO, May 14, 2024 - 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 first quarter ended March 31, 2024.
First
Quarter 2024 Highlights
(Unaudited
results, unless otherwise stated, all results and dollar references are in U.S. dollars)
| · | 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 Kyle Kazan, Co-Founder, Chairman and CEO of Glass House.
“We
produced 61,300 pounds of biomass, revenue of $30.1 million and gross profit of $12.5 million or 42% of net revenue during the first
quarter, all ahead of our guidance. Greenhouse 5 is now running at full capacity and will have its first full quarter of production and
sales in Q2 of this year. We are very pleased with the initial production volumes, quality and yields that are coming out of this facility,
and are confident that the facility will continue to pick up steam as the year progresses.”
“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 $9.99 out- the-door, including taxes, has been one of our most successful launches ever and shows
the strength of our vertical integration, from farm to consumer. In early March, we introduced this new pricing across all of our stores,
and it resulted in the Allswell Eighth becoming our best-selling product by unit sales volume, up from the No. 2 position in January and
February. This offering dovetailed nicely with our retail dispensary strategic pricing plan, driving increased foot traffic to our dispensaries
across the board in March.”
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 Annual Roth Conference to be Held March 17th-19th,
2024 |
| · | Final
Judgment of $2,865,000 Entered Against Element 7 in Favor of GH Group |
Subsequent
Events
| · | Glass
House Brands CEO Kyle Kazan to Headline the Keynote Session at the Benzinga Cannabis Capital
Conference on April 16-17 |
| · | Glass
House Brands to Hold 3rd Annual Investor Sesh on Friday, June 21st (Register Here) |
Q1
2024 Financial Results Discussion
Net
revenues for Q1 2024 were $30.1 million, 9% growth versus Q1 2023 and a 26% sequential decrease versus Q4 2023. This exceeded our previous
Q1 2024 guidance range of $28 million to $29 million. The sequential decline was driven by the typical seasonal reduction in production
of biomass due to lower sunlight levels for plants harvested in Q1 compared to Q4.
Wholesale
biomass revenue of $15.9 million increased 10% versus Q1 2023 and was down 40% sequentially. Biomass production reached 61,334 pounds
in Q1, ahead of guidance and up 28% year-over-year with no expansion in cultivation footprint.
Retail
revenue in Q1 2024 was $9.9 million, compared to $9.6 million in the previous quarter and $9.4 million in Q1 2023. It should be noted
that during the quarter we made changes to our retail loyalty program that reduced our points liability by approximately $0.3M and improved
sales and margin by the same amount.
Wholesale
CPG revenues were $4.3 million compared to $4.1 million last quarter and $3.7 million in Q1 2023. The CPG market remains very competitive
given the ongoing price discounting and heavy promotional activity. As stated in Q4 2024, we are committed to our policy of selling to
dispensaries that are current on payments and limiting our credit exposure, so we are not heavily concentrated on any one customer. As
a result, we have not experienced material AR payment defaults and, during the first quarter, the percentage of our accounts that were
current on their payments averaged over 70%, a percentage we believe is among the best in California cannabis.
Consolidated
gross profit was $12.5 million, or 42% of net revenues, compared to $12.6 million, or 46%, in Q1 2023 and $18.0 million, or 45% in Q4
2023. The lower gross margin is mainly due to a higher sales mix of trim relative flower and smalls than in Q4 and Q1 of last year.
Average
selling price was $282 per pound, just above guidance of $280 per pound and up from $272 per pound in the fourth quarter of 2023. Cost
per pound was $182, slightly lower than guidance of $185, and wholesale gross margin was 39%.
General
and administrative expenses were $13.5 million in Q1 2024, up 19% from $11.4 million last year and up 2% from $13.3 million last quarter.
The increase versus 2023 is almost entirely driven by an increase in stock compensation from new equity grants effective January 1,
2024. Excluding stock compensation, general and administrative expenses increased 2% versus the same period last year. G&A was up
slightly in Q1 versus Q4 2023 because the Q1 2024 increase in stock compensation was offset by lower salary expense in Q1 versus Q4 2023
as there was no bonus accrual in Q1 2024.
Sales
and marketing expenses were $0.48 million, down from $0.65 million during the same period last year and down from $0.63 million in Q4.
Professional
fees of $3.7 million were up versus $1.5 million in Q1 2023 and $1.9 million in Q4 2023. The $1.8 million increase versus Q4 2024 is
related to incremental expenses from the restatements for 2021, 2022 and the first quarter of 2023 that were completed in Q1 2024 and
higher legal fees related to litigation.
Depreciation
and amortization in Q1 2024 were $3.7 million, versus $3.5 million in Q4 and $3.8 million in the same period last year.
Adjusted
EBITDA was $(1.6) million in Q1, above the high end of guidance of $(2.0) to $(4.0) million. The sequential decrease from positive $3.8
million in Q4 was mainly due to lower gross profit due to the seasonal decline in revenue and a lower gross margin percent.
As
of the end of the first quarter, the Company had $24.4 million in cash, compared to $16.4 million at the end of the first quarter of
2023 and $32.5 million at year-end 2023. This was ahead of our guidance of $21 million for quarter-end cash, as operating cash flow for
the first quarter was better than originally anticipated at negative $1.9 million, versus guidance of negative $3 million to negative
$4 million. Both inventory and accounts receivable were slightly lower than budget and Q1 Capex spending also benefited ending cash relative
to guidance, as it was $2.4 million versus guidance of $4 million, as some of the expected capex payments were pushed into the second
quarter.
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 $52.0 million to $54.0 million, up 76% sequentially and 19% percent year-on-year
at the mid-point of guidance
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 $330 to $335 per pound which is down from our prior guidance of $350 to $355 due
to a higher mix of trim being sold compared to prior guidance. It is also slightly below our second quarter 2023 ASP of $340 per pound.
The new guidance assumes that pricing of flowers and smalls remains at the same levels seen during the second half of Q1 2024.
Cost
of production is projected to fall to $150 per pound, down 18% sequentially but an 8% increase year-over-year, due to start-up costs
from Greenhouse 5.
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 $10 million to $12 million and operating cash flow to be a positive
$8 million to $10 million. We expect to see cash end the quarter at around $25 million as Greenhouse 5 output and sales ramp up in May/June.
Within the quarter, we expect cap ex spending to be about $4 million as we make the final payments associated with Phase 2 and add some
additional investments in automation and infrastructure at the Camarillo farm. Similar to the first quarter, we will make $1.9 million
in dividend payments and $1.9 million in debt amortization payments.
2024
Fiscal Year Outlook
We
are maintaining revenue guidance of $215 to $220 million for 2024, a 35% increase at the mid-point of guidance. We continue to expect
Adjusted EBITDA to exceed $50 million during 2024 and for operating cash flow to be in the mid $30 million range. Cash flow will grow
at a slower rate than Adjusted EBITDA due to working capital associated with starting up Greenhouse 5. This guidance does not include
the $11.5 million ERTC refund we expect to receive later this year.
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 $135 per pound, which is roughly flat to our 2023 cost of $136
per pound. The increase in guidance for 2024 wholesale biomass production reflects the higher-than- expected production in the first
quarter and the increase in our Q2 guidance. Although Greenhouse 5 is delivering ahead of expectations, it is nonetheless still in its
first full quarter of operations. Therefore, we are maintaining our current production guidance for the second half of the year until
we have additional experience from which to develop a more robust baseline of expectations.
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 $310 and $315 per
pound for the year, down slightly from the previous $315 to $320, due to the higher percentage of trim we are seeing in our sales mix.
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 U.S. dollars.
| 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 Net Income (Loss) | |
$ | (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 $6.00 with an expiration date of August 2028 |
| Series C | |
| 1,000 | |
|
| 1,000 | |
|
| - | | |
Exercise price
of $5.00 with an expiration date of August 2027 |
| Series B | |
| 9,900 | |
|
| 10,000 | |
|
| (100 | ) | |
Exercise price
of $5.00 with an expiration date of August 2027 |
| Series A | |
| 2,654 | |
|
| 2,654 | |
|
| - | | |
Exercise price
of $10.00 with an expiration date of June 2024 |
| SPAC | |
| 30,665 | |
|
| 30,665 | |
|
| - | | |
Exercise
price of $11.50 with an expiration date of June 2026 |
| Total
Warrants | |
| 47,219 | |
|
| 47,319 | |
|
| (100 | ) | |
|
| Stock Options | |
| 1,370 | |
|
| 1,436 | |
|
| (66 | ) | |
Exercise
Price between $2.26 and $4.60 with expiration dates from October 2024 to October 2026 |
| 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 trading days prior to pay date or $4.08, Maturity 4/15/27 |
| Series B | |
$ | 4,111 | |
|
$ | 4,111 | |
|
$ | - | | |
8%
semi annual interest, cash or shares, lower of 10 day VWAP 5 trading days prior to pay date or $10.00, Maturity 4/15/27 |
| 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 of Production | |
$ | 196 | | |
$ | 139 | | |
$ | 118 | | |
$ | 121 | | |
$ | 182 | | |
$ | 144 | | |
$ | 136 | |
| % 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 Average Selling price | |
$ | 290 | | |
$ | 340 | | |
$ | 336 | | |
$ | 272 | | |
$ | 282 | | |
$ | 240 | | |
$ | 312 | |
| % 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, May 14, 2024 at 5:00 p.m. Eastern Time.
| Webcast: |
Register Here |
| Dial-In Number: |
1-888-664-6392 |
| Replay: |
1-888-390-0541 |
| Replay Code: |
647010# |
(replay available until
12:00 midnight Eastern Time Tuesday, May 21, 2024)
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
U.S. GAAP used to prepare the Company's financial statements and might not be comparable to similar financial measures disclosed by other
companies and, thus, should only be considered in conjunction with the GAAP financial measures presented herein.
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
March 31, 2024 compared to the three months ended March 31, 2023 and three months ended December 31, 2023.
Footnotes and Sources:
| 1. | 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. |
| 2. | 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. |
| 3. | 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 Brands
Glass
House is one of the fastest-growing, vertically integrated cannabis companies in the U.S., with a dedicated focus on the California
market and building leading, lasting brands to serve consumers across all segments. From its greenhouse cultivation operations to its
manufacturing practices, from brand-building to retailing, the company's efforts are rooted in the respect for people, the environment,
and the community that co-founders Kyle Kazan, Chairman and CEO, and Graham Farrar, Board Member and President, instilled
at the outset. Through its portfolio of brands, which includes Glass House Farms, PLUS Products, Allswell and Mama
Sue Wellness, Glass House is committed to realizing its vision of excellence: outstanding cannabis products, produced sustainably, for
the benefit of all. For more information and company updates, visit www.glasshousebrands.com and https://ir.glasshousebrands.com/contact/email-alerts/.
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 $52 million to $54 million; guidance that the
Company is confident that Greenhouse 5 will continue to pick up steam as the year progresses; guidance that Q2 biomass production
will reach 128,000 to 130,000 pounds; guidance that the Company expects 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; guidance that the
Company’s Q2 2024 average selling price for wholesale biomass is projected to be $330 to $335 per pound; guidance that the
Company assumes that Q2 2024 pricing of flowers and smalls will remain at the same levels seen during the second half of Q1 2024;
guidance that Q2 2024 cost of production is projected to be $150 per pound; guidance that Q2 2024 Retail and CPG revenue is expected
to be roughly flat from Q1 as the Company continues to expect a highly promotional and price driven retail landscape; guidance that
Q2 2024 consolidated gross margin is expected to be approximately 50%; guidance that the Company expects Q2 2024 Adjusted EBITDA to
be a positive $10 million to $12 million and operating cash flow to be a positive $8 million to $10 million; guidance that the
Company expects to see cash end Q2 2024 at around $25 million as Greenhouse 5 output and sales ramp up in May/June; guidance that
within Q2 2024, the Company expects cap ex spending to be about $4 million as it makes the final payments associated with Phase 2
expansion and adds some additional investments in automation and infrastructure at the Camarillo farm; guidance that similar to the
first quarter, the company will make $1.9 million in dividend payments and $1.9 million in debt amortization payments in Q2 2024;
guidance the Company projects revenue of $215 to $220 million for 2024; guidance the Company expects Adjusted EBITDA to exceed $50
million during 2024 and for operating cash flow to be in the mid $30 million range; guidance cash flow will grow at a slower rate
than Adjusted EBITDA due to working capital associated with starting up Greenhouse 5 and that this guidance does not include the
$11.5 million ERTC refund the Company expects to receive later this year; guidance that the Company projects 2024 wholesale biomass
production of 525,000 to 535,000 pounds; guidance that 2024 cost per pound is projected to be $135 per pound; guidance that although
Greenhouse 5 is delivering ahead of expectations, it is nonetheless still in its first quarter of operations and that, therefore,
the Company is maintaining its current production guidance for the second half of the year until it has additional experience from
which to develop a more robust baseline of expectations; guidance that the Company expects 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; guidance that the company is planning on flower and smalls pricing to be modestly lower than last year in the second
half of 2024 but that the Company expects 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; guidance that the Company projects its average selling price to
between $310 and $315 per pound for the year; guidance that combined revenues from Retail and CPG are projected to be up mid-single
digits in the second half of the year as the Company expects its retail dispensary strategic pricing plan to drive higher sales as
foot traffic builds; guidance that the Company is planning for the difficult market conditions in both retail and the branded
business to continue in 2024.
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.
For
further information, please contact:
Glass
House Brands Inc.
John Brebeck, Vice President
of Investor Relations
T: (562) 264-5078
E:
ir@glasshousebrands.com
Mark Vendetti, Chief Financial
Officer
T: (562) 264-5078
E:
ir@glasshousebrands.com
Investor
Relations Contact:
KCSA Strategic Communications
Phil Carlson
T: 212-896-1233
E:
GlassHouse@kcsa.com
Exhibit 99.2
Form 52-109F2
Certification of Interim Filings Full Certificate
I, Mark Vendetti, Chief Financial Officer of Glass House Brands Inc.,
certify the following:
| 1. | Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”)
of Glass House Brands Inc. (the “issuer”) for the interim period ended March 31, 2024. |
| 2. | No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain
any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement
not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings. |
| 3. | Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together
with the other financial information included in the interim filings fairly present in all material respects the financial condition,
financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings. |
| 4. | Responsibility: The issuer’s other certifying officer and I are responsible for establishing and maintaining disclosure
controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument
52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer. |
| 5. | Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying
officer and I have, as at the end of the period covered by the interim filings |
| (a) | designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that |
| (i) | material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings
are being prepared; and |
| (ii) | information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it
under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation;
and |
| (b) | designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP. |
| 5.1 | Control framework: The control framework the issuer’s other certifying officer and I used to design the issuer’s
ICFR is based on principles set out in the Internal Control – Integrated Framework (COSO Framework) published by The Committee of
Sponsoring Organizations of the Treadway Commission (COSO). |
| 5.2 | ICFR – material weakness relating to design: The issuer has disclosed in its interim MD&A for each material
weakness relating to design existing at the end of the interim period |
| (a) | a description of the material weakness; |
| (b) | the impact of the material weakness on the issuer’s financial reporting and its ICFR; and |
| (c) | the issuer’s current plans, if any, or any actions already undertaken, for remediating the material weakness. |
| 5.3 | Limitation on scope of design: N/A |
| 6. | Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that
occurred during the period beginning on January 1, 2024 and ended on March 31, 2024 that has materially affected, or is reasonably
likely to materially affect, the issuer’s ICFR. |
| Dated May 14, 2024. |
|
| |
|
| (signed) “Mark
Vendetti” |
|
| Mark Vendetti |
|
| Chief Financial Officer |
|
Exhibit 99.3
Form 52-109F2
Certification of Interim Filings Full Certificate
I, Kyle Kazan, Chief Executive Officer of Glass House Brands Inc.,
certify the following:
| 1. | Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”)
of Glass House Brands Inc. (the “issuer”) for the interim period ended March 31, 2024. |
| 2. | No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain
any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement
not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings. |
| 3. | Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together
with the other financial information included in the interim filings fairly present in all material respects the financial condition,
financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings. |
| 4. | Responsibility: The issuer’s other certifying officer and I are responsible for establishing and maintaining disclosure
controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument
52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer. |
| 5. | Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying
officer and I have, as at the end of the period covered by the interim filings |
| (a) | designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that |
| (i) | material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings
are being prepared; and |
| (ii) | information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it
under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation;
and |
| (b) | designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP. |
| 5.1 | Control framework: The control framework the issuer’s other certifying officer and I used to design the issuer’s
ICFR is based on principles set out in the Internal Control – Integrated Framework (COSO Framework) published by The Committee of
Sponsoring Organizations of the Treadway Commission (COSO). |
| 5.2 | ICFR – material weakness relating to design: The issuer has disclosed in its interim MD&A for each material
weakness relating to design existing at the end of the interim period |
| (a) | a description of the material weakness; |
| (b) | the impact of the material weakness on the issuer’s financial reporting and its ICFR; and |
| (c) | the issuer’s current plans, if any, or any actions already undertaken, for remediating the material weakness. |
| 5.3 | Limitation on scope of design: N/A |
| 6. | Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that
occurred during the period beginning on January 1, 2024 and ended on March 31, 2024 that has materially affected, or is reasonably
likely to materially affect, the issuer’s ICFR. |
| Dated May 14, 2024. |
|
| |
|
| (signed) “Kyle Kazan” |
|
| Kyle Kazan |
|
| Chief Executive Officer |
|
Glass House Brands (QX) (USOTC:GLASF)
Gráfica de Acción Histórica
De Abr 2024 a May 2024
Glass House Brands (QX) (USOTC:GLASF)
Gráfica de Acción Histórica
De May 2023 a May 2024
