Glass House Brands Expansion Strategy
OPERATIONS: UNMATCHED COST STRUCTURE
PRO FORMA WHOLESALE BIOMASS ECONOMICS 1
Declining cost of production leads to improving gross margins, even with difficult market conditions
$ /Lb.
Cost of Production²
$400
$350
$300
$250
Cultivation Proforma Economics
$400
$ Weighted Avg. Selling Price4
$350
70%
$188
$237
$204
$204
$300
50%
$250
51%
$200
$ /Lb.
$200
34%
30%
33%
A $150
$150
$100
$50
$-
Q1
Q2
22
10%
$100
$238
$158
$134
$100
$50
-10%
$-
$(50)
3
Q3
Q4
Long-Term Goal
2021 2022
-27%
-30%
Q1
Q2
Q3
5
Cost of Production
Proforma Gross Margin
Long-Term Go al
Proforma Gross Margin %
6
1. This table includes forward-looking information that is disclosed using non-GAAP measures. These non-GAAP measures are described in the notes below. For more information on non-GAAP measures and forward-looking statements, please see Disclaimers on Slide 2.
2. Cost of Production includes all expenses from nursery and cultivation to curing and trimming at which point the product is ready for sale as wholesale cannabis or to be transferred to CPG.
3. Cost of Production for Q4 2022 is based on the guidance of $135/lb provided in our Q3 Earnings Release. For more information, please see https://ir.glasshousebrands.com/release/?Glass-House-Brands-Reports-Third-Quarter-2022-Financial-Results-id-122545
4. Weighted Average Selling Price = the individual selling price for flower, smalls and trim multiplied by the mix of product for each product sold. Q3 2022 weighted average selling price of $204/pound is used for proforma Gross Margin calculation for 'Long Term Goal'.
5. Proforma Gross Profit = Weighted Average Selling Price minus Cost of Production.
6. Proforma Gross Profit Margin = Proforma Gross Profit divided by Weighted Average Selling Price
7. The purpose of this financial analysis is to provide investors with a basis for analysis of the Company's proforma cost structure. Readers are cautioned that the information may not be appropriate for other purposes.
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