Glass House Brands Spins Its Wheels In Q4 2021, Generating Negative Gross Profit
Glass House Brands (NEO: GLAS.A.U) appears to be spinning its wheels in terms of its financial results. The company this morning posted its fourth quarter financial results, with revenues growing to $18.4 million in the fourth quarter.
While revenues grew 7% on a sequential basis from $17.2 million to $18.4 million, the effort appears to be all for naught. Gross profit for the quarter went backwards, falling from $2.3 million in the third quarter to a gross loss of $0.4 million in the fourth quarter, with the company being vague on the reasoning.
In commenting on the quarter, CEO Kyle Kazan stated that “Wholesale flower prices are unsustainably low in California,” which was followed up with the statement that “Growers of all sizes will be forced to discontinue operations unless they can find a way to decrease their costs.” This destruction of pricing is allegedly a positive for the company, whom aims to produce more product on a larger scale to attempt to fight against the pricing pressure caused by an oversupplied market.
Further compounding the issue is the fact that the company sold 31% more wholesale biomass in the fourth quarter relative to the third quarter, to increase sales by just 7%, while blowing out margins entirely to the point that they went negative on a gross basis. Retail revenue meanwhile was down 2% on a sequential basis, while wholesale CPG revenue was down 4%. The new production facility is expected to take annual capacity from 90,000 pounds to 270,000 pounds of biomass.
Operating expenses for the quarter meanwhile came in at $19.3 million, lead by G&A of $13.5 million. Overall, the firm posted a net loss of $18.7 million, and negative adjusted EBITDA of $9.1 million for the fourth quarter.
For the full fiscal year, the company posted revenue of $69.4 million, compared to $48.3 million in 2020. Gross profits amounted to $16.0 million, down from $18.7 million in the year ago period. Adjusted EBITDA for the year came in at negative $11.8 million as losses widened relative to 2020, when the company saw negative adjusted EBITDA of $0.3 million.
The company closed the year out with cash of $51.1 million as of December 31, 2021.
Glass House Brands last traded at $4.78 on the Neo.
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As the founder of The Deep Dive, Jay is focused on all aspects of the firm. This includes operations, as well as acting as the primary writer for The Deep Dive’s stock analysis. In addition to The Deep Dive, Jay performs freelance writing for a number of firms and has been published on Stockhouse.com and CannaInvestor Magazine among others.
