Glass House Brands (NEO: GLAS.A.U) reported on Thursday its Q1 2022 financials, toplined by a quarterly revenue of $14.0 million. This is a 24% decline from $18.4 million in Q4 2021 and an 8% decline from $15.2 million in Q1 2021.
But Chairman and CEO Kyle Kazan wants to talk about the future instead.
“We reached a major milestone in the first quarter with the March 11th receipt of all necessary licenses to begin operations at our 5.5 million square foot SoCal facility,” said Kazan in the company’s release. “Early results have been good and we look forward to enjoying our first harvest from the SoCal facility before the end of June, roughly 9 months after the start of the retrofit.”
Kazan also touted the recently completed PLUS acquisition, the intent to acquire the remainder of The Pottery dispensary on Venice Boulevard, and the definitive agreement to acquire three retail assets of Natural Healing Center.
This goes well with what Kazan tweeted a week ago, paralleling his apartment investment experience with what investors should do within the cannnabis market.
“People told me I was a complete fool to jump in there [investing in real estate in 1993]. I was greedy when everybody else was fearful… When there are haters, and they’re scared, that’s when you jump in.”
“The [cannabis] market is bloody… 99% will not invest, cannot invest. They’re scared… That’s the time to buy,” he said.
On top of the revenue decline, gross margin came in at 17%, up from -2% last quarter but down from 36% last year. This is mainly attributed to the decline in wholesale prices, which resulted in a $3.6 million decrease in revenue.
Still recording operating expenses higher than its revenue, the company ended with an operating loss of $13.1 million compared to last quarter’s $19.7 million loss and last year’s $5.0 million loss.
This further led the firm to end the quarter with a net loss of $19.8 million, a deeper red figure from the previous quarter and year-ago periods of $18.8 million and $13.2 million losses, respectively.
Calibrating for financial items, including a $6.5 million loss in change in fair value of contingent earnout liabilities, adjusted EBITDA came in at a loss of $6.4 million vis-a-vis last quarter’s $9.1 million and last year’s gain of $0.6 million.
The company’s cash balance also shrunk during the quarter, ending at $24.8 million from the $54.1 million starting balance. The outflow is mainly due to the cash used in operating and financing activities, $15.5 million and $13.0 million, respectively.
The balance puts the current assets balance at $42.6 million, while current liabilities ended at $60.8 million.
Despite these, Kazan is optimistic that the acquisitions and expansions will pay off, saying that the firm has now the potential “to reach a revenue run rate in excess of $200 million within the next 12 months.”
Glass House Brands last traded at $3.34 on the NEO.
Information for this briefing was found via Sedar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.