Glass House Brands Reports Second Quarter 2025 Financial Results

Executive Summary

• Glass House Brands reported second quarter 2025 financial results, with revenue of $59.9 million (up 11% year-over-year) and Adjusted EBITDA of $18.1 million, significantly exceeding guidance.
• The company announced a preferred equity refinancing in July, replacing Series B and C Preferred Stock with Series E Convertible Preferred Stock to reduce burdensome Payment-in-Kind terms and lower cumulative interest.
• Due to temporary labor constraints, the company lowered its full-year guidance, projecting full-year revenue between $190 million and $195 million (down from prior $220-$230 million) and full-year Adjusted EBITDA between $23 million and $26 million.

Key Details

• Financial Performance (Q2 2025):
  • Revenue: $59.9 million (up 11% YoY, up 34% QoQ).
  • Gross Profit: $31.9 million; Gross Margin: 53%.
  • Adjusted EBITDA: $18.1 million (vs. $4.4 million in Q1 2025 and $12.4 million in Q2 2024).
  • Operating Cash Flow: Positive $17.7 million.
  • Net Income: $8.7 million.
• Operational Metrics:
  • Wholesale Biomass Production: 230,748 pounds (up 54% YoY), exceeding guidance of 210,000–215,000 pounds.
  • Cost of Production: $91 per pound (down 39% YoY from $148).
  • Average Selling Price: $206 per pound (vs. $283 in Q2 2024).
  • Retail Revenue: $12.3 million (up 13% YoY).
  • Wholesale CPG Revenue: $5.5 million (up 38% YoY).
• Balance Sheet & Cash:
  • Cash and Restricted Cash: $44.2 million at June 30, 2025 (up from $37.6 million at March 31, 2025).
  • Capital Expenditures: $9.5 million spent in Q2, primarily for Phase III expansion at Camarillo.
  • Preferred Stock Dividends Paid: $1.9 million.
• Preferred Equity Refinancing (Subsequent Event):
  • Announced in July, a recapitalization involving approximately $74 million in Series E Convertible Preferred Stock.
  • Replaces existing Series B and Series C Preferred Stock.
  • New terms: 12% annual dividend rate (accrued and paid quarterly), convertible into Class B common stock at $9.00/share.
  • Redemption right for GH Group after 5 years if: (i) 60-day VWAP >= $12.00, (ii) avg daily volume > 1 million shares, and (iii) listed on a major US exchange.
  • Previous Series B/C terms included a 22.5% cumulative annual dividend (10% cash, 12.5% PIK).
• Guidance Updates (Lowered due to labor constraints):
  • Q3 2025 Revenue: $35 million – $38 million.
  • Q3 2025 Biomass Production: 95,000 – 100,000 pounds (<40% of typical expectation).
  • Q4 2025 Revenue: ~$53 million.
  • Full-Year 2025 Revenue: $190 million – $195 million (prior: $220M–$230M).
  • Full-Year 2025 Adjusted EBITDA: $23 million – $26 million (prior: mid-$40M range).
  • Full-Year 2025 Biomass Production: ~670,000 pounds.
  • Full-Year 2025 Cost of Production: ~$110 per pound.
  • Full-Year 2025 Average Selling Price: $183 – $188 per pound.
  • H2 2025 Gross Margin: Mid-30% range.
• Other Operational Updates:
  • Announced MSA for The Leaf El Paseo Dispensary and Off-Take Agreement with LEEF.
  • Partnered with Eaze to launch PLUS Cannabis Gummies in Florida.
  • Announced Hemp R&D agreement with UC Berkeley.

Notable Quotes

• “Second quarter results surpassed expectations across key metrics including biomass production, revenue, gross profit, and Adjusted EBITDA,” said Kyle Kazan, Co-Founder, Chairman and CEO.
• “During the quarter, we produced almost 231,000 pounds of biomass which was well ahead of original guidance... Cost of production was $91 per pound, reflecting a substantial improvement compared to $148 per pound last year and below our long-term $100 per pound target.”
• “This retail strength comes from solid same store sales and reflects increasing consumer demand for our branded products, and the continued benefit of the strategic pricing initiative we began implementing last year.”