Glass House Brands (Glass House Brands Stock Quote, Chart, News, Analysts, Financials NEO:GLAS) is gaining ground across the board, according to Ventum Capital Markets analyst Andrew Semple, who says each business segment outperformed expectations in Q1 2025, and Q2 is shaping up to be even stronger.
“Glass House continued to show momentum across the organization, with each segment exceeding our forecasts,” Semple said in a May 15 update, maintaining his “Buy” rating and $12.00 price target.
“Wholesale biomass sales met our expectations, but the cost of production dropped meaningfully, leading to gross profit beating our estimate by $3.7M (40%),” Semple said in his May 14 report on the company’s earnings. “This was driven by improved biomass yield, especially in trim, though saleable yields also improved in flower and smalls. Pricing remained a headwind, but this was in line with expectations. Retail and branded wholesale CPG sales also outperformed our estimates, despite challenges with a distributor this quarter. Glass House earned record EBITDA of $4.4M for the seasonally softer Q1 period.”
Glass House Brands is a California-based cannabis company with wholesale, branded products and retail operations. It sells bulk flower and trim to other producers and offers consumer products through its own and third-party stores. With up to six million square feet of cultivation space, 20,000 square feet of manufacturing, and 10 retail locations, it has the largest footprint in the state.
Ventum sees Q1 2025 as a strong quarter across nearly all key metrics. Biomass production hit 153,000 pounds, beating their 144,000-pound forecast by 6% and up almost 149% from last year. At the same time, production costs fell 45% year-over-year to $108 per pound, well below the expected $129.
“The production progress was largely explained by the positive contribution of Greenhouse 5, but operating results also benefited from deriving additional saleable biomass (mostly trim, but also flower and smalls), which helped yields and reduced unit costs,” Semple said. “Realized pricing was $193/lb, in line with our estimate of $194/lb. Given the higher proportion of trim in the revenue mix, we viewed this positively.”
The branded product and retail segments grew faster than expected after the company made strategic changes that boosted market share. Retail sales rose 18.4% year-over-year, while California’s overall market declined 13%, showing a strong outperformance. Wholesale CPG sales grew 11.6% year-over-year, even with challenges from a distribution partner that may have reduced sales by up to $500,000, meaning growth could have nearly doubled.
“Gross margins of 44.8% were 860 bps above our forecast and adj. EBITDA of $4.4M was nearly triple our $1.6M estimate,” Semple said. “Key metrics such as revenue, EBITDA, and pounds of production all exceeded management’s earlier Q1/25 guidance.”
He said management also provided guidance for Q2/25 results that were better than expected.
“The company expects Q2/25 production of 210–215K lbs, well above our prior forecast of 180K lbs. With trim expected to represent a larger portion of the mix, this reduced expectations for both selling price and cost per pound. Management guided to an average selling price of $200–203/lb (prior VCM: $225/lb) and production costs of $105/lb (VCM: $121/lb). We note that the mid-point of production guidance multiplied by the guidance on cannabis pricing spread (price/lb less production cost/lb) implied $20.5M of gross profit on wholesale biomass, compared to our prior forecast, which implied $18.7M on the same basis.”
Glass House raised its Q2 guidance above expectations, projecting $57–59-million in revenue (vs. VCM’s $55.8M) and $11–13-million in EBITDA (vs. VCM’s $9.8M).
Semple expects Glass House to generate $38.3-million in Adjusted EBITDA on $219.4-million in revenue for fiscal 2025. He forecasts those figures will rise to $67.4-million in EBITDA on $283.6-million in revenue in fiscal 2026.
The company is also advancing its hemp strategy, committing $3-million this year to prepare Greenhouse 4 for hemp production, with a goal of generating $33-million in hemp revenue next year. Greenhouses 3 and 4 give Glass House flexibility to pivot between cannabis and hemp, depending on market and regulatory conditions.
Additionally, Glass House announced its first retail managed services deal. It will take over operations at The Leaf El Paseo dispensary for an initial one-year term, with an option to extend. The company sees this as a way to grow its branded product sales by expanding retail distribution.
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About The Author /
Cantech Letter founder and editor Nick Waddell has lived in five Canadian provinces and is proud of his country's often overlooked contributions to the world of science and technology. Waddell takes a regular shift on the Canadian media circuit, making appearances on CTV, CBC and BNN, and contributing to publications such as Canadian Business and Business Insider.
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