Glass House Brands Inc. (NEO: GLAS.A.U, GLAS.WT.U) (OTCQX: GLASF, GHBWF) set big expectations for the third quarter – and then promptly delivered. The vertically integrated operator reported revenue of $28.3 million for the quarter, up 72% versus the second quarter and up 65% from the same period a year ago.
In its second-quarter report, the company forecasted sales of between $27 million and $30 million.
Wholesale revenue increased 180% year-over-year to $14 million. The category received a solid boost from the first full quarter of production at Glass House’s new SoCal farm.
Retail revenue grew 23% to $6.4 million. Incremental revenue from four acquisitions during the quarter was the primary driver of retail growth in the quarter.
Wholesale CPG revenues continued the growth trend, climbing 13% year-over-year to $7.9 million, primarily driven by the first full quarter of contribution from the PLUS edibles brand. Without that boost, CPG sales would have declined 32%.
Goss profit margin more than doubles, reaching 31% of sales in the quarter compared with 14% a year ago, due in large part to a lower cost of production from the SoCal farm as well as better inventory management on the CPG side.
Net income for the third quarter reached $15.9 million, compared with a year-ago loss of $7.7 million. Adjusted EBITDA, however, came in at ($2.7 million), which was still a year-over-year improvement. Third-quarter 2021 adjusted EBITDA was ($5.5 million).
Despite a positive third quarter, the company said it faced significant headwinds heading into the fourth quarter, and as a result, lowered its fourth-quarter guidance to $30 million-$32 million from the previous guidance of $50 million. The company cited several factors for the revision, including:
- Inflation, which is resulting in more “cost-conscious consumers.”
- Weak wholesale pricing environment.
- A heat wave in September that damaged crops in the greenhouse.
As of Sept. 30, 2022, Glass House Brands had $17.5 million in cash, including $3 million of restricted cash, slightly up compared to the second quarter. Cash used in operations was $7.3 million compared to $7.8 million in Q2.