CALGARY, AB, June 29, 2022 /CNW/ – Decibel Cannabis Company Inc. (the “Company” or “Decibel”) (TSXV: DB) (OTCQB: DBCCF), a premium cannabis producer, is pleased to announce that is has received its certification to export its cannabis products internationally.
“This is a very important milestone for the outlook of the Company as this certification unlocks untapped markets for Decibel. The opportunity allows the Company to provide its high-quality craft cannabis products internationally, while also setting the stage for the Decibel brands to develop international recognition and additional consumer exposure,” said Paul Wilson, Chief Executive Officer.
Key Highlights
IMC-G.A.P certification enabling new international sales channels in Israel
Anticipated initial international export to occur in the second half of 2022
“After a number of ongoing conversations, we are well aware of the international demand for our cannabis products,” said Adam Coates, Chief Revenue Officer. “As global cannabis markets expand, we’ve seen a clear demand for higher quality than what is currently available. Decibel is well positioned to deliver on this growing demand for premium cannabis outside of Canada.”
To enable the international export the Company received its CUMCS Equivalency IMC-G.A.P. certification (the “Certification”). The Company will be required to maintain its Certification by demonstrating its continued compliance with the international regulations on an ongoing basis.About Decibel
Decibel is uncompromising in the process and craftsmanship needed to deliver the highest quality cannabis products and retail experiences. Decibel has three operating production houses along with its wholly owned retail business, Prairie Records. The Qwest Estate in Creston, BC is a licensed and operating 26,000 square foot cultivation space which produces the widely championed, rare cultivar-focused brands Qwest and Qwest Reserve, which are sold in six provinces across Canada. Thunderchild Cultivation, is a licensed and operating 80,000 square foot indoor cultivation facility in Battleford, SK. The Plant, Decibel’s extraction facility, in Calgary, AB has 15,000 square feet of Health Canada licensed extraction and product development space. This production house will fuel the growth of our brands Qwest, Qwest Reserve, and Blendcraft, into new and innovative product formats like concentrates, vapes, edibles and beyond.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Forward Looking Information
This news release contains “forward-looking information” and “forward-looking statements” (collectively, “forward-looking statements”) within the meaning of the applicable Canadian securities legislation. All statements, other than statements of historical fact, are forward-looking statements and are based on expectations, estimates and projections as at the date of this news release. Any statement that involves discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or performance (often but not always using phrases such as “expects”, or “does not expect”, “is expected”, “anticipates” or “does not anticipate”, “plans”, “budget”, “scheduled”, “forecasts”, “estimates”, “believes” or “intends” or variations of such words and phrases or stating that certain actions, events or results “may” or “could”, “would”, “might” or “will” be taken to occur or be achieved) are not statements of historical fact and may be forward-looking statements.
In this news release, forward-looking statements relate to, among other things, the Company’s expectations regarding its ability to meet consumer demand internationally and to develop international recognition and additional consumer exposure, the timing of the Company’s first international export, the Company’s ability to meet the requirements related to international export; the Company’s ability to grow Qwest, Qwest Reserve and Blendcraft brands into new and innovative product formats, variations and its other business plans and expectations. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include, but are not limited to: risks relating to delays, regulatory changes and impacts, capital requirements, construction impacts, displacement requirements and unforeseen requirements resulting from the COVID-19 pandemic, the ability to obtain and maintain licences to retail cannabis products; review of the Company’s production facilities by Health Canada and maintenance of licences (including any amendments thereto) from Health Canada and international bodies; future legislative and regulatory developments involving cannabis; inability to access sufficient capital from internal and external sources, and/or inability to access sufficient capital on favourable terms; the labour market generally and the ability to access, hire and retain employees; general business, economic, competitive, political and social uncertainties; the satisfaction of conditions precedent under the Company’s credit facilities; timing and completion of construction and expansion of the Company’s production facilities and retail locations; and the delay or failure to receive board, regulatory or other approvals, including any approvals of the TSX Venture Exchange, as applicable. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on the forward-looking statements and information contained in this news release. Except as required by law, the Company assumes no obligation to update the forward-looking statements of beliefs, opinions, projections, or other factors, should they change, except as required by law.
These forward-looking statements are made as of the date of this press release and the Company disclaims any intent or obligation to update any forward-looking statements, whether as a result of new information, future events or results or otherwise, other than as required by applicable securities laws.
SOURCE Decibel Cannabis Company Inc.
For further information: Stuart Boucher, stuart.boucher@decibelcc.com, 780-619-0310, www.decibelcc.com
CALGARY, ALBERTA – May 25, 2022 –Decibel Cannabis Company Inc. (the “Company” or “Decibel”) (TSX-V:DB) (OTCQB:DBCCF), a premium cannabis producer, is pleased to announce its first quarter financial results for the three month period ending March 31, 2022.
“Decibel remains on track to achieve its previously communicated targets, which is a testament to the focus on our strategic plan, and particularly our New, Unique and Innovative products and dedication to our customers”, said Paul Wilson, CEO of Decibel. “We see momentum growing in our core business, and at the same time are driving towards creating shareholder value by restructuring our balance sheet. This makes Decibel one of the few in the cannabis space to repay convertible debentures rather than accept shareholder dilution.”
Key Financial Highlights – First Quarter
Record Net Revenue: $16.7 million of total net sales in Q1 2022, with strong growth of 19% over Q4 2021 and 32% over Q1 2021. Net revenue growth was driven by the launch of Decibel’s new infused pre-roll lines and continued growth in demand for flower, vape and concentrate products, despite Q1 historically being a seasonally weak period.
Gross Margin Before Fair Value Adjustments: 35% in Q1 2022, compared to 26% in Q4 2021 and 39% in Q1 2021. The Company has a number of initiatives and capital investments in progress and expects to be successful achieving the targeted 40 – 45% gross margin by the second half of 2022.
Positive Adj. EBITDA: Record $2.5 million of adjusted EBITDA in Q1 2022, with strong growth of 70% over Q4 2021 and 21% over Q1 2021. This marks Decibel’s seventh consecutive quarter of positive adjusted EBITDA.
Derivative Sales: $10.3 million of net sales in Q1 2022, with strong growth of 50% over Q4 2021 and 85% over Q1 2021. Sales growth was driven by increased demand for vape and concentrate products, as well as the launch of a new infused pre-roll line in late Q4 2021 and early Q1 2022.
Flower Sales: $4.2 million of net sales in Q1 2022, with an 8% decline over Q4 2021 and 10% growth over Q1 2021. The Company anticipates that the infrastructure upgrades to its cultivation facilities focusing on enhanced quality, will reinvigorate growth within its flower sales. Sales growth over Q1 2021 was driven by increased volumes from the Thunderchild facility becoming operational.
Record Market Share: 4.3% in April 2022, marking the sixth consecutive month of record market share.
Cash Flow & Working Capital: Cash flow from operations was $3.0 million in Q1 2022, an improvement of $8 million over Q4 2021 and $6 million over Q1 2021. In Q4 2021, the Company made significant investments in working capital to meet the growing demand for Decibel brands and products and mitigate against supply chain risks. The Company anticipates reduced working capital needs in 2022 and is seeing improvements in its supply chain. The Company has identified various initiatives and capital investments to accelerate cash flow generation and manage working capital levels that are expected to support Q2 2022 onwards.
Capital Projects: In Q1 2022, the Company made the following progress on its capital projects:
The Plant: Completed Phase 1 of its processing hub expansion at The Plant and received its Health Canada license May 2, 2022. This area will include newly automated processing and packaging lines for dried flower, pre-roll, and infused products accompanied by reduced labour and logistics costs.
Creston Facility: Completed its infrastructure optimization project which will have an immediate impact on all new harvests, further enhancing product quality and contributing to higher yields.
Thunderchild Cultivation Facility: Accelerated its staged infrastructure optimization to better meet growing demand for Decibel products and enhance product quality and yields. Production volumes are expected to be partially impacted in starting in Q2 2022 and resuming full run-rate production by the start of Q4 2022.
Repayment of Convertible Debentures: On May 11, 2022, the Company repaid its 9.5% convertible debentures with the draw-down of a fixed 4.75% $12 million term loan from its credit facilities. This extends the maturity date of Decibel’s $12 million of debt by 4 years, removes approximately 6% of potential shareholder dilution, and results in $0.6 million of annual interest expense savings.
New Product Launches: The Company continued its launch of new, unique and innovative products in 2022, including cultivar rotations, expanded infused products into new provinces, the entry of General Admission into the core flower segment, and additional vape line extensions:
Introduced Qwest’s new cultivars, with Frosted Cherry Cookies and Icicle launched in May, selling out in the first two weeks.
Expanded distribution of infused pre-rolls:
Kief-coated terpene infused pre-rolls into ON.
Distillate infused pre-rolls into BC, SK, and ON.
Diamond infused pre-rolls into BC, SK, and ON.
Hash infused pre-rolls into AB and ON.
Launched General Admission’s first flower product offering with strong demand early on, representing $950k of net sales in Q1.
1 In the table above, wholesale inventory transferred to the retail stores and subsequently sold of $226 has been eliminated from retail sales and attributed to wholesale sales of flower and extracts to provide a more accurate depiction of business performance.
2 Adjusted EBITDA is a non-GAAP performance measure. Refer to “Cautionary Statement Regarding Certain Non-GAAP Performance Measures” for further details.
Decibel’s financial statements for the three month period ending March 31, 2022 (“FinancialStatements”) and related Management’s Discussion & Analysis (“MD&A”), are available under the Company’s profile at www.sedar.com. As of March 31, 2022, Decibel was in compliance with all of its financial covenants and expects to remain in compliance for the remainder of its twelve-month forecast period.
About Decibel
Decibel is uncompromising in the process and craftsmanship needed to deliver the highest quality cannabis products and retail experiences. Decibel has three operating production houses along with its wholly owned retail business, Prairie Records. The Qwest Estate in Creston, BC is a licensed and operating 26,000 square foot cultivation space which produces the widely championed, rare cultivar-focused brands Qwest and Qwest Reserve, which are sold in six provinces across Canada. Thunderchild Cultivation, is a licensed and operating 80,000 square foot indoor cultivation facility in Battleford, SK. The Plant, Decibel’s extraction facility, in Calgary, AB has 15,000 square feet of Health Canada licensed extraction and product development space. This production house will fuel the growth of our brands Qwest, Qwest Reserve, Blendcraft, and General Admission, into new and innovative product formats like concentrates, vapes, edibles and beyond.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Cautionary Statements
Non-GAAP Measures
Cautionary Statement Regarding Certain Non-GAAP Measures
This MD&A contains certain financial performance measures that are not recognized or defined under IFRS (termed “Non-GAAP Measures”). As a result, this data may not be comparable to data presented by other licenced producers and cannabis companies. For an explanation of these measures to related comparable financial information presented in the Consolidated Financial Statements prepared in accordance with IFRS, refer to the discussion below. The Company believes that these Non-GAAP Measures are useful indicators of operating performance and are specifically used by management to assess the financial and operational performance of the Company. These Non-GAAP Measures include, but are not limited, to the following:
Non-GAAP Financial Measures
Adjusted EBITDA: Adjusted EBITDA is a measure of the Company’s financial performance. It is intended to provide a proxy for the Company’s operating cash flow and is widely used by industry analysts to compare Decibel to its competitors and derive expectations of future financial performance of the Company. Adjusted EBITDA increases comparability between comparative companies by eliminating variability resulting from differences in capital structures, management decisions related to resource allocation, and the impact of fair value adjustments on biological assets, inventory, and financial instruments, which may be volatile on a period to period basis. Adjusted EBTIDA is not a recognized, defined, or standardized measure under IFRS. The Company calculates Adjusted EBITDA as net loss and comprehensive loss excluding unrealized gain on changes in fair value of biological assets, change in fair value of biological assets realized through inventory sold, depreciation and amortization expense, share-based compensation, other income, finance costs, foreign exchange loss, non-cash production costs and severance payments. Non-cash production costs relate to amortization expense allocations included in production costs. Refer to “Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization” for a detailed calculation of this measure. The numbers that are input into this calculation can be found in the statement of financial position in the Company’s Consolidated Financial Statements.
Retail Sales: Retail Sales is a measure intended to provide a more accurate depiction of the revenue earned by the Company’s retail operations. Inventory transferred directly from the Company’s wholesale operations to the Company’s retail operations is removed from Retail Revenue as presented in the Company’s Consolidated Financial Statements.
Gross Sales of Flower: Gross Sales of Flower is a measure intended to provide a more accurate depiction of gross revenue earned by the Company’s wholesale flower operations. Inventory transferred directly from the Company’s wholesale flower operations to the Company’s retail operations is added to Gross Wholesale Revenue of Flower as found in the Company’s Consolidated Financial Statements to arrive at Gross Sales of Flower.
Net Sales of Flower: Net Sales of Flower is a measure intended to provide a more accurate depiction of net revenue earned by the Company’s wholesale flower operations. Excise taxes associated with flower sales are subtracted from Gross Sales of Flower to arrive at Net Sales of Flower.
Gross Sales of Extracts: Gross Sales of Extracts is a measure intended to provide a more accurate depiction of gross revenue earned by the Company’s wholesale extracts operations. Inventory transferred directly from the Company’s wholesale extracts operations to the Company’s retail operations is added to Gross Wholesale Revenue of Extracts as found in the Company’s Consolidated Financial Statements to arrive at Gross Sales of Extracts.
Net Sales of Extracts: Net Sales of Extracts is a measure intended to provide a more accurate depiction of net revenue earned by the Company’s wholesale extracts operations. Excise taxes associated with extracts sales are subtracted from Gross Sales of Extracts to arrive at Net Sales of Extracts.
Working Capital: Working Capital is an indicative measure of the Company’s ability to service its short-term financial obligations with short-term assets. Management believes this measure provides useful information about the Company’s current short-term liquidity. Refer to “Liquidity and Capital Resources” for a detailed calculation of this measure. The numbers that are input into this calculation can be found in the statement of financial position in the Company’s Consolidated Financial Statements.
Accordingly, these Non-GAAP Measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.
Forward Looking Information
This news release contains “forward-looking information” and “forward-looking statements” (collectively, “forward-looking statements”) within the meaning of the applicable Canadian securities legislation. All statements, other than statements of historical fact, are forward-looking statements and are based on expectations, estimates and projections as at the date of this news release. Any statement that involves discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or performance (often but not always using phrases such as “expects”, or “does not expect”, “is expected”, “anticipates” or “does not anticipate”, “plans”, “budget”, “scheduled”, “forecasts”, “estimates”, “believes” or “intends” or variations of such words and phrases or stating that certain actions, events or results “may” or “could”, “would”, “might” or “will” be taken to occur or be achieved) are not statements of historical fact and may be forward-looking statements.
In this news release, forward-looking statements relate to, among other things, anticipated growth in the Company’s core business and the creation of shareholder value through restructuring the Company’s balance sheet; the initiatives and capital investments the Company has in progress and the target gross margin to be derived therefrom; the Company’s expectation that its infrastructure upgrades will lead to enhanced product quality and growth in its flower sales; the Company’s anticipated working capital needs in 2022; the Company’s expectations that its initiatives and capital investments will accelerate cash flow generation and manage working capital levels and the anticipated timing thereof; the anticipated timing of the receipt of licensing for The Plant and the anticipated benefits to be derived therefrom; the anticipated benefits to be derived from the Company’s infrastructure optimization project at the Creston Cultivation Facility; the anticipated benefits to be derived from the Company’s infrastructure optimization project at its Thunderchild Cultivation Facility and the anticipated timing thereof; the Company’s expectations that it will remain in compliance with all of its financial covenants for the remainder of its twelve-month forecast period; the Company’s ability to grow Qwest, Qwest Reserve and Blendcraft brands into new and innovative product formats, variations; and Decibel’s other business plans and expectations. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on the forward-looking statements and information contained in this news release. The Company assumes no obligation to update the forward-looking statements of beliefs, opinions, projections, or other factors, should they change, except as required by law.
Forward-looking statements and FOFI (as defined herein) are necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include, but are not limited to: risks relating to delays, regulatory changes and impacts, capital requirements, construction impacts, displacement requirements and unforeseen requirements resulting from the COVID-19 pandemic, the ability to obtain and maintain licences to retail cannabis products; review of the Company’s production facilities by Health Canada and maintenance of licences (including any amendments thereto) from Health Canada in respect thereof; future legislative and regulatory developments involving cannabis; inability to access sufficient capital from internal and external sources, and/or inability to access sufficient capital on favourable terms; the labour market generally and the ability to access, hire and retain employees; the risk that the Company may not remain in compliance with all of its financial covenants; general business, economic, competitive, political and social uncertainties; timing and completion of construction and expansion of the Company’s production facilities and retail locations; and the delay or failure to receive board, regulatory or other approvals, including any approvals of the TSX Venture Exchange, as applicable. Many of these risks and uncertainties and additional risk factors are described in the Corporation’s Annual Information Form and Management’s Discussion and Analysis for the year ended December 31, 2021, which are available at www.sedar.com.
With respect to forward-looking statements and FOFI contained in this press release, Decibel has made assumptions regarding, but not limited to: Decibel’s ability to enter new markets and industry verticals; Decibel’s ability to attract, develop and retain key personnel; Decibel’s ability to raise additional capital and to execute on its expansion plans; the timelines for new product launches, Decibel’s ability to continue investing in infrastructure and implement scalable controls, systems and processes to support its growth; the impact of competition; the changes and trends in Decibel’s industry or the global economy; the Company’s ability to generate sufficient cash flow from operations and obtain financing, if needed, on acceptable terms or at all; the general economic, financial market, regulatory and political conditions in which the Company operates; the ability of the Company to ship its products and maintain supply chain stability; consumer interest in the Company’s products; anticipated and unanticipated costs; government regulation of the Company’s activities and products; the timely receipt of any required regulatory approvals; the Company’s ability to conduct operations in a safe, efficient and effective manner; the Company’s construction plans and timeframe for completion of such plans; and the changes in laws, rules, regulations, and global standards.
Any financial outlook or future oriented financial information (in each case “FOFI”) contained in this news release regarding prospective financial position, including, but not limited to: anticipated growth in the Company’s core business and the creation of shareholder value through restructuring the Company’s balance sheet; the initiatives and capital investments the Company has in progress and the target gross margin to be derived therefrom; the Company’s anticipated working capital needs in 2022; the Company’s expectations that its initiatives and capital investments will accelerate cash flow generation and manage working capital levels and the anticipated timing thereof; and that The Plant’s newly automated processing and packaging lines will result in significantly reduced labour and logistics costs, is based on reasonable assumptions about future events, including those described above, based on an assessment by management of the relevant information that is currently available. The actual results will likely vary from the amounts set forth herein and such variations may be material.
Readers are cautioned that the foregoing list of assumptions and risk factors is not exhaustive. The forward-looking statements and FOFI contained herein are expressly qualified in their entirety by this cautionary statement. The forward-looking statements and FOFI included in this news release are made as of the date hereof and Decibel does not undertake any obligation to publicly update such forward-looking statements and FOFI to reflect new information, subsequent events or otherwise unless so required by applicable securities laws
CALGARY, ALBERTA – May 11, 2022 –Decibel Cannabis Company Inc. (the “Company” or “Decibel”) (TSX-V:DB) (OTCQB:DBCCF), a premium cannabis producer, is pleased to announce its cash repayment of its 9.5% convertible debentures, which had a maturity date of May 10, 2022 (the “Convertible Debentures”). The $12 million cash repayment represents a full payout of the Convertible Debentures, which were subject to a conversion rate of approximately 2,222 commons shares for each $1,000 of principal amount of Convertible Debentures, equal to a conversion price of $0.45 per common share.
The Company met the pre-disbursement conditions required to draw-down $12 million under its credit facility with ConnectFirst Credit Union and concurrently made the cash repayment of the Convertible Debentures. The $12 million draw-down from its credit facility is subject to a 60-month repayment term at a fixed rate of 4.75%, amortized over 144 months.
About Decibel
Decibel is uncompromising in the process and craftsmanship needed to deliver the highest quality cannabis products and retail experiences. Decibel has three operating production houses along with its wholly owned retail business, Prairie Records. The Qwest Estate in Creston, BC is a licensed and operating 26,000 square foot cultivation space which produces the widely championed, rare cultivar-focused brands Qwest and Qwest Reserve, which are sold in six provinces across Canada. Thunderchild Cultivation, is a licensed and operating 80,000 square foot indoor cultivation facility in Battleford, SK. The Plant, Decibel’s extraction facility, in Calgary, AB has 15,000 square feet of Health Canada licensed extraction and product development space. This production house will fuel the growth of our brands Qwest, Qwest Reserve, and Blendcraft, into new and innovative product formats like concentrates, vapes, edibles and beyond.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
CALGARY, ALBERTA – April 22, 2022 –Decibel Cannabis Company Inc. (the “Company” or “Decibel”) (TSX-V:DB) (OTCQB:DBCCF), a premium cannabis producer, is pleased to announce its year-end audited financial results for the three and twelve month periods ending December 31, 2021.
“Decibel continues to execute on its strategy to accelerate revenue growth and deliver new, unique and innovative choices to cannabis consumers. The success achieved through 2021 with record market share demonstrates the strength we’ve created in our brands, and our dedication towards our customers”, said Paul Wilson, CEO of Decibel. “Our momentum has accelerated into 2022, and we are gaining great traction across our products and brands, particularly with our recent infused product launches over late Q4 and first quarter of 2022.”
Key Financial Highlights – Fiscal Year 2021
Net revenue of $52 million in 2021, an increase of 75% from 2020.
Gross profit of $18 million in 2021, an increase of 53% from 2020.
Positive adjusted EBITDA of $7.4 million in 2021, an increase of 386% from 2020.
Key Financial Highlights – Fourth Quarter
Net Revenue: Net revenue was $14 million in Q4, a 5% increase over the prior quarter, driven by the launch of Decibel’s new infused pre-roll lines and continued growth in demand for flower, vape and concentrate products. This was partially impacted by price compression in the flower segment and slower retail sales from increased competition. Net revenue grew by 23% over the comparative 2020 quarter.
Gross Margin: Gross margin was 26% in Q4, compared to 31% in the prior quarter. The decrease in gross margin is attributable to a combination of permanent and transitory impacts.
Permanent impacts include price compression in Qwest Family of Brands’ products by approximately 25% and a 4% reduction in retail sales margins due to higher competition.
Transitory impacts include a $345 thousand provision for aged inventory, $738 thousand in air freight charges due to supply chain challenges, and $369 thousand of non-cash amortization, and $891 thousand of write downs.
Adjusting for the impact of the transitory factors, normalized gross margin would have been 43%.
Positive Adj. EBITDA: The Company achieved $1.5 million of adjusted EBITDA in Q4, its sixth consecutive quarter of positive adjusted EBITDA and an improvement of 32% from the prior year.
Flower Sales: 808 kilograms sold in Q4, with an average wholesale net price per gram of $5.70, an increase 64% and a decrease of 25%, respectively, over the prior quarter. The decline in price per gram is due to increased competition in the premium segment to which the Company reduced Qwest Family of Brands pricing by approximately 25% to remain in line with other premium cannabis products. Additionally, overall price per gram declined due to a higher contribution from Qwest and General Admission products that have a lower price per unit as the Company continued to broaden its product offerings to its consumers.
Derivative Sales: $6.9 million of net sales of vape, infused, and concentrate products in Q4, a 5% increase from the prior quarter. Sales growth was driven by increased demand for vape and concentrate products, as well as the launch of a new infused pre-roll line in late Q4.
Retail Sales: $2.5 million of retail sales, a 17% decline over the prior quarter, primarily driven by new entrants into the Saskatchewan retail market, partially offset by Alberta retail sales growth.
Harvests & Yields: Decibel harvested 1,059 kilograms of dried flower material in Q4, representing substantial growth over prior periods as Thunderchild achieved run rate harvests. Yields from the Thunderchild Cultivation Facility fell below management estimates, with a facility upgrade necessary to further enhance product quality and contribute to higher yields, to better meet growing demand for Decibel products. To reinforce the Company’s commitment to quality products, it accelerated the implementation of the planned infrastructure optimization at its Thunderchild Cultivation Facility, which are expected to be completed by end of April.
Working Capital: Cash used in operations was $5.1 million in the fourth quarter. The Company has made significant investments in working capital to meet the growing demand for Decibel brands and products, helping the Company achieve its aggressive sales growth and preparing for strong launches of infused products in the first quarter of 2022. Additionally, the Company identified certain supply chain risks related to inventory procurement for packaging and vape carts from overseas manufacturers. As a result, the Company invested in the fourth quarter to air freight inventory and hold more inventory than historical levels to mitigate against these risks.
Debt Financing in Place to Repay Convertible Debentures: On February 1, 2022, the Company closed a debt financing with connectFirst Credit Union in respect of $54 million of debt capital over a 5-year term. The Company has two facilities that remain undrawn:
$12 million additional term debt earmarked for repayment of the Company’s convertible debentures; and
$7.5 million accordion to support future growth initiatives, with availability subject to a trailing twelve month funded debt to EBITDA ratio of less than or equal to 4.00:1.00.
Q1 2022 Preliminary Results
The Company anticipates for the three-month period ending March 31, 2022:
Net revenue between $16.5 and $17.5 million, compared to $12.6 million in Q1 2021
Exiting Q1 2022 with a record 4.0% recreational national market share
Decibel’s audited financial statements for the year ending December 31, 2021 (“FinancialStatements”) and related Management’s Discussion & Analysis (“MD&A”) for the three and twelve months ending December 31, 2021, are available under the Company’s profile at www.sedar.com. As of December 31, 2021, Decibel was in compliance with all of its financial covenants and expects to remain in compliance for the remainder of its twelve-month forecast period.
1 Adjusted EBITDA is a non-GAAP performance measure. Refer to “Cautionary Statement Regarding Certain Non-GAAP Performance Measures” for further details.
About Decibel
Decibel is uncompromising in the process and craftsmanship needed to deliver the highest quality cannabis products and retail experiences. Decibel has three operating production houses along with its wholly owned retail business, Prairie Records. The Qwest Estate in Creston, BC is a licensed and operating 26,000 square foot cultivation space which produces the widely championed, rare cultivar-focused brands Qwest and Qwest Reserve, which are sold in six provinces across Canada. Thunderchild Cultivation, is a licensed and operating 80,000 square foot indoor cultivation facility in Battleford, SK. The Plant, Decibel’s extraction facility, in Calgary, AB has 15,000 square feet of Health Canada licensed extraction and product development space. This production house will fuel the growth of our brands Qwest, Qwest Reserve, Blendcraft, and General Admission, into new and innovative product formats like concentrates, vapes, edibles and beyond.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Cautionary Statements
Non-GAAP Measures
This news release contains the financial performance metric of Adjusted EBITDA, a measure that is not recognized or defined under IFRS (a “Non-GAAP Measure”). As a result, this data may not be comparable to data presented by other cannabis companies. For an explanation and reconciliation of Adjusted EBITDA to related comparable financial information presented in the Financial Statements prepared in accordance with IFRS, refer to the MD&A for the three and twelve months ended December 31, 2021. The Company believes that Adjusted EBITDA is a useful indicator of operational performance and is specifically used by management to assess the financial and operational performance of the Company.
The Company calculates Adjusted EBITDA as net loss and comprehensive loss excluding unrealized gain on changes in fair value of biological assets, change in fair value of biological assets realized through inventory sold, depreciation and amortization expense, share-based compensation, other income, finance costs, foreign exchange loss, non-cash production costs and severance payments. Non-cash production costs relate to amortization expense allocations included in production costs. Non-GAAP Measures should be considered together with other financial information prepared in accordance with IFRS to enable investors to evaluate the Decibel’s operating results, underlying performance and prospects in a manner similar to Decibel’s management.
Accordingly, this Non-GAAP Measure is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.
Forward Looking Information
This news release contains “forward-looking information” and “forward-looking statements” (collectively, “forward-looking statements”) within the meaning of the applicable Canadian securities legislation. All statements, other than statements of historical fact, are forward-looking statements and are based on expectations, estimates and projections as at the date of this news release. Any statement that involves discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or performance (often but not always using phrases such as “expects”, or “does not expect”, “is expected”, “anticipates” or “does not anticipate”, “plans”, “budget”, “scheduled”, “forecasts”, “estimates”, “believes” or “intends” or variations of such words and phrases or stating that certain actions, events or results “may” or “could”, “would”, “might” or “will” be taken to occur or be achieved) are not statements of historical fact and may be forward-looking statements.
In this news release, forward-looking statements relate to, among other things, the Company’s ability to meet consumer demand, that the additional capital will accelerate Decibel’s sales growth through the Thunderchild facility and new vape and concentrate launch; the Company’s ability to grow Qwest, Qwest Reserve and Blendcraft brands into new and innovative product formats, variations and its other business plans and expectations. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include, but are not limited to: risks relating to delays, regulatory changes and impacts, capital requirements, construction impacts, displacement requirements and unforeseen requirements resulting from the COVID-19 pandemic, the ability to obtain and maintain licences to retail cannabis products; review of the Company’s production facilities by Health Canada and maintenance of licences (including any amendments thereto) from Health Canada in respect thereof; future legislative and regulatory developments involving cannabis; inability to access sufficient capital from internal and external sources, and/or inability to access sufficient capital on favourable terms; the labour market generally and the ability to access, hire and retain employees; general business, economic, competitive, political and social uncertainties; the satisfaction of conditions precedent under the Company’s credit facilities; timing and completion of construction and expansion of the Company’s production facilities and retail locations; and the delay or failure to receive board, regulatory or other approvals, including any approvals of the TSX Venture Exchange, as applicable. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on the forward-looking statements and information contained in this news release. Except as required by law, the Company assumes no obligation to update the forward-looking statements of beliefs, opinions, projections, or other factors, should they change, except as required by law.
These forward-looking statements are made as of the date of this press release and the Company disclaims any intent or obligation to update any forward-looking statements, whether as a result of new information, future events or results or otherwise, other than as required by applicable securities laws.
CALGARY, AB – March 21, 2022 – Decibel Cannabis Company Inc. (the “Company” or “Decibel”) (TSXV: DB) (OTCQB: DBCCF), a premium cannabis producer, is pleased to announce that it has appointed Manjit Minhas, an entrepreneur, venture capitalist and beer baroness, as a Senior Advisor to Decibel’s Board of Directors until such time as she is put forth as a director nominee at the Company’s upcoming annual shareholder meeting, which is expected to occur in June.
Manjit has significant CPG expertise, having co-founded the Minhas Brewery, Distillery and Winery with over 90 brands of beers, spirits liqueurs and wines. Her products are sold in 5 provinces as well as 47 states throughout the USA and 16 other countries. She also appears as a television personality on the Canadian reality series, Dragon’s Den, where she has invested in dozens of Canadian businesses. Manjit also has specific cannabis industry experience as a former member of the board of directors of Inner Spirit Holdings Ltd.
“We are thrilled to be able to welcome Manjit to the Company and are expecting that she will be formally elected to the Decibel board later this summer” said Decibel’s Chairman Cody Church. “Manjit’s incredible experience, expertise and consumer product success will have an immediate impact on both the Company and its board of directors “.
About Decibel
Decibel is uncompromising in the process and craftsmanship needed to deliver the highest quality cannabis products and retail experiences. Decibel has three operating production houses along with its wholly owned retail business, Prairie Records. The Qwest Estate in Creston, BC is a licensed and operating 26,000 square foot cultivation space which produces the widely championed, rare cultivar-focused brands Qwest and Qwest Reserve, which are sold in six provinces across Canada. Thunderchild Cultivation, is a licensed and operating 80,000 square foot indoor cultivation facility in Battleford, SK. The Plant, Decibel’s extraction facility, in Calgary, AB has 15,000 square feet of Health Canada licensed extraction and product development space. This production house will fuel the growth of our brands Qwest, Qwest Reserve, Blendcraft, and General Admission, into new and innovative product formats like concentrates, vapes, edibles and beyond.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Cautionary Statements
Forward Looking Information
This news release contains “forward-looking information” and “forward-looking statements” (collectively, “forward-looking statements”) within the meaning of the applicable Canadian securities legislation. All statements, other than statements of historical fact, are forward-looking statements and are based on expectations, estimates and projections as at the date of this news release. Any statement that involves discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or performance (often but not always using phrases such as “expects”, or “does not expect”, “is expected”, “anticipates” or “does not anticipate”, “plans”, “budget”, “scheduled”, “forecasts”, “estimates”, “believes” or “intends” or variations of such words and phrases or stating that certain actions, events or results “may” or “could”, “would”, “might” or “will” be taken to occur or be achieved) are not statements of historical fact and may be forward-looking statements.
In this news release, forward-looking statements relate to, among other things, the Company’s business plans and strategies, including: that Decibel is well positioned to continue its revenue and market share growth, the Company’s ability to grow Qwest, Qwest Reserve and Blendcraft brands into new and innovative product formats, variations and its other business plans and expectations. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include, but are not limited to: risks relating to delays, regulatory changes and impacts, capital requirements, construction impacts, displacement requirements and unforeseen requirements resulting from the COVID-19 pandemic, the ability to obtain and maintain licences to retail cannabis products; review of the Company’s production facilities by Health Canada and maintenance of licences (including any amendments thereto) from Health Canada in respect thereof; future legislative and regulatory developments involving cannabis; counterparty risk; inability to access sufficient capital from internal and external sources, and/or inability to access sufficient capital on favourable terms; the labour market generally and the ability to access, hire and retain employees; general business, economic, competitive, political and social uncertainties; the satisfaction of conditions precedent under the Company’s credit facilities; timing and completion of construction and expansion of the Company’s production facilities and retail locations; and the delay or failure to receive board, regulatory or other approvals, including any approvals of the TSX Venture Exchange, as applicable. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on the forward-looking statements and information contained in this news release.
“With our capital projects having achieved key milestones, it is a testament to our commitment to quality products, which continue to drive strong growth in market share” said Paul Wilson, Chief Executive Officer of Decibel. “As these strategic investments come online, we anticipate operational efficiency gains that will enhance gross margins and drive growth in our bottom line.”
Market Share Summary
Nov. 2021
Dec. 2021
Jan. 2022
Feb. 2022
Canada1
3.3%
3.4%
3.6%
3.8%
Major Markets1
4.0%
4.2%
4.3%
4.6%
Ontario1
3.1%
3.1%
3.2%
3.3%
Market Share in Decibel’s Major Markets1
Record 4.6% recreational market share in Decibel’s major markets in February
#1 brand in premium flower & pre-roll sales with a 9.3% market share2
#5 LP in pre-roll sales with a 6.2% market share
#3 LP in Alberta with a 9.8% market share, where the Company is furthest developed with its infused pre-roll product launches
#4 brand in concentrate sales with a 7.3% market share
#2 brand in vape sales with a 12.5% market share
National Market Share1
Record 3.8% recreational National market share in February
#1 brand in premium flower & pre-roll sales with a 7.6% market share2
#7 LP in pre-roll sales with a 4.9% market share
#4 brand in concentrate sales with a 5.8% market share
#2 brand in vape sales with a 12.4% market share
Ontario Market Share1
Record 3.3% recreational Ontario market share in February
#2 brand in premium flower & pre-roll sales with a 6.6% market share2
#9 brand in concentrate sales with a 3.5% market share
#2 brand in vape sales with a 11.7% market share
Operational Update
The Plant Processing Hub
Decibel has completed construction of Phase 1 of its processing hub expansion at the Plant. Additionally, the Company has submitted a Health Canada amendment for the Phase 1 area and has initiated permitting for Phase 2 construction to complete the remainder of the capital project. Upon licensing, the Phase I area will include newly automated processing and packaging lines for dried flower and pre-roll products accompanied by significantly reduced labour and logistics costs. The Health Canada license is expected to be received within Q2 2022.
Creston Infrastructure Optimization
In early March, the Company completed the final grow room upgrade at the Creston facility, as a part of its staged infrastructure optimization project. This upgrade is anticipated to have an immediate impact on all new harvests, further enhancing product quality and contributing to higher yields per room.
Thunderchild Infrastructure Optimization
The Company is accelerating the implementation of the staged infrastructure optimization at its Thunderchild Cultivation Facility which is expected to be complete by end of April. Once complete, this upgrade is expected to further enhance product quality and contribute to higher yields, to better meeting growing demand for Decibel products. Production volumes are expected to be partially impacted in mid Q2 and resuming full run-rate production by start of Q4.
1 HiFyre Retail Analytics, Licensed Producer Sales over Time Nationally and in BC, AB, SK, ON, November 1, 2021 – February 28, 2022. Decibel’s Major Markets consist of BC, AB, SK, ON.
2 HiFyre Retail Analytics, Premium flower and pre-roll market defined as flower products sold more than 20% above average selling price per gram.
About Decibel
Decibel is uncompromising in the process and craftsmanship needed to deliver the highest quality cannabis products and retail experiences. Decibel has three operating production houses along with its wholly owned retail business, Prairie Records. The Qwest Estate in Creston, BC is a licensed and operating 26,000 square foot cultivation space which produces the widely championed, rare cultivar-focused brands Qwest and Qwest Reserve, which are sold in six provinces across Canada. Thunderchild Cultivation, is a licensed and operating 80,000 square foot indoor cultivation facility in Battleford, SK. The Plant, Decibel’s extraction facility, in Calgary, AB has 15,000 square feet of Health Canada licensed extraction and product development space. This production house will fuel the growth of our brands Qwest, Qwest Reserve, Blendcraft, and General Admission, into new and innovative product formats like concentrates, vapes, edibles and beyond.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Cautionary Statements
Forward Looking Information
This news release contains “forward-looking information” and “forward-looking statements” (collectively, “forward-looking statements”) within the meaning of the applicable Canadian securities legislation. All statements, other than statements of historical fact, are forward-looking statements and are based on expectations, estimates and projections as at the date of this news release. Any statement that involves discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or performance (often but not always using phrases such as “expects”, or “does not expect”, “is expected”, “anticipates” or “does not anticipate”, “plans”, “budget”, “scheduled”, “forecasts”, “estimates”, “believes” or “intends” or variations of such words and phrases or stating that certain actions, events or results “may” or “could”, “would”, “might” or “will” be taken to occur or be achieved) are not statements of historical fact and may be forward-looking statements.
In this news release, forward-looking statements relate to, among other things, the Company’s business plans and strategies, including: that Decibel is well positioned to continue its revenue and market share growth, the Company’s ability to grow Qwest, Qwest Reserve and Blendcraft brands into new and innovative product formats, variations and its other business plans and expectations. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include, but are not limited to: risks relating to delays, regulatory changes and impacts, capital requirements, construction impacts, displacement requirements and unforeseen requirements resulting from the COVID-19 pandemic, the ability to obtain and maintain licences to retail cannabis products; review of the Company’s production facilities by Health Canada and maintenance of licences (including any amendments thereto) from Health Canada in respect thereof; future legislative and regulatory developments involving cannabis; counterparty risk; inability to access sufficient capital from internal and external sources, and/or inability to access sufficient capital on favourable terms; the labour market generally and the ability to access, hire and retain employees; general business, economic, competitive, political and social uncertainties; the satisfaction of conditions precedent under the Company’s credit facilities; timing and completion of construction and expansion of the Company’s production facilities and retail locations; and the delay or failure to receive board, regulatory or other approvals, including any approvals of the TSX Venture Exchange, as applicable. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on the forward-looking statements and information contained in this news release.
This news release also contains future-oriented financial information and financial outlook information (collectively, “FOFI”) about the Company’s prospective results of operations including, without limitation, its expectation that it is well positioned to continue its revenue and market share growth. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on FOFI. The Company’s actual results, performance or achievement could differ materially from those expressed in, or implied by, the FOFI and are subject to the risks set forth above. The Company has included the FOFI in order to provide readers with a more complete perspective on the Company’s future operations and such information may not be appropriate for other purposes.
These forward-looking statements and FOFI are made as of the date of this news release and, except as required by law, the Company assumes no obligation to update the forward-looking statements, FOFI or beliefs, opinions, projections, or other factors, should they change.
“Our market share growth continues to gain momentum, driven by the superior experiences that our brands and products offer to our customers, coupled with a focus on bringing new, unique and innovative products to market” said Paul Wilson, Chief Executive Officer of Decibel. “With a strong footing established early this year, we are confident in maintaining and accelerating this pace of growth, through additional product launches, entry into new markets, and operational efficiency gains acting as catalysts to drive shareholder value this year.”
Market Share Summary
Nov. 2021
Dec. 2021
Jan. 2022
Canada1
3.3%
3.4%
3.6%
Major Markets1
4.0%
4.2%
4.3%
Ontario1
3.1%
3.1%
3.2%
Market Share in Decibel’s Major Markets1
National Market Share1
Ontario Market Share1
Decibel’s market share has grown from 3.1% to 3.2% over the same period
#3 brand in premium flower & pre-roll sales with a 7.4% market share2
#8 brand in concentrate sales with a 4.1% market share
1 HiFyre Retail Analytics, Licensed Producer Sales over Time Nationally and in BC, AB, SK, ON, November 1, 2021 – January 31, 2022. Decibel’s Major Markets consist of BC, AB, SK, ON.
2 HiFyre Retail Analytics, Premium flower and pre-roll market defined as flower products sold more than 20% above average selling price per gram.
About Decibel
Decibel is uncompromising in the process and craftsmanship needed to deliver the highest quality cannabis products and retail experiences. Decibel has three operating production houses along with its wholly owned retail business, Prairie Records. The Qwest Estate in Creston, BC is a licensed and operating 26,000 square foot cultivation space which produces the widely championed, rare cultivar-focused brands Qwest and Qwest Reserve, which are sold in six provinces across Canada. Thunderchild Cultivation, is a licensed and operating 80,000 square foot indoor cultivation facility in Battleford, SK. The Plant, Decibel’s extraction facility, in Calgary, AB has 15,000 square feet of Health Canada licensed extraction and product development space. This production house will fuel the growth of our brands Qwest, Qwest Reserve, Blendcraft, and General Admission, into new and innovative product formats like concentrates, vapes, edibles and beyond.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Cautionary Statements
Forward Looking Information
This news release contains “forward-looking information” and “forward-looking statements” (collectively, “forward-looking statements”) within the meaning of the applicable Canadian securities legislation. All statements, other than statements of historical fact, are forward-looking statements and are based on expectations, estimates and projections as at the date of this news release. Any statement that involves discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or performance (often but not always using phrases such as “expects”, or “does not expect”, “is expected”, “anticipates” or “does not anticipate”, “plans”, “budget”, “scheduled”, “forecasts”, “estimates”, “believes” or “intends” or variations of such words and phrases or stating that certain actions, events or results “may” or “could”, “would”, “might” or “will” be taken to occur or be achieved) are not statements of historical fact and may be forward-looking statements.
In this news release, forward-looking statements relate to, among other things, the Company’s business plans and strategies, including: that Decibel is well positioned to continue its revenue and market share growth, the Company’s ability to grow Qwest, Qwest Reserve and Blendcraft brands into new and innovative product formats, variations and its other business plans and expectations. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include, but are not limited to: risks relating to delays, regulatory changes and impacts, capital requirements, construction impacts, displacement requirements and unforeseen requirements resulting from the COVID-19 pandemic, the ability to obtain and maintain licences to retail cannabis products; review of the Company’s production facilities by Health Canada and maintenance of licences (including any amendments thereto) from Health Canada in respect thereof; future legislative and regulatory developments involving cannabis; counterparty risk; inability to access sufficient capital from internal and external sources, and/or inability to access sufficient capital on favourable terms; the labour market generally and the ability to access, hire and retain employees; general business, economic, competitive, political and social uncertainties; the satisfaction of conditions precedent under the Company’s credit facilities; timing and completion of construction and expansion of the Company’s production facilities and retail locations; and the delay or failure to receive board, regulatory or other approvals, including any approvals of the TSX Venture Exchange, as applicable. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on the forward-looking statements and information contained in this news release.
This news release also contains future-oriented financial information and financial outlook information (collectively, “FOFI”) about the Company’s prospective results of operations including, without limitation, its expectation that it is well positioned to continue its revenue and market share growth. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on FOFI. The Company’s actual results, performance or achievement could differ materially from those expressed in, or implied by, the FOFI and are subject to the risks set forth above. The Company has included the FOFI in order to provide readers with a more complete perspective on the Company’s future operations and such information may not be appropriate for other purposes.
These forward-looking statements and FOFI are made as of the date of this news release and, except as required by law, the Company assumes no obligation to update the forward-looking statements, FOFI or beliefs, opinions, projections, or other factors, should they change.
CALGARY, AB, Jan. 31, 2022 /CNW/ – Decibel Cannabis Company Inc. (the “Company” or “Decibel”) (TSX-V: DB) (OTCQB: DBCCF), a premium cannabis producer, is pleased to provide an update on its strategic priorities and 2022 financial outlook.
Highlights – Strong 2022 drivers now in place to generate substantial revenue and EBITDA growth. – Anticipate achieving milestone of positive cash flow from operations in the first half of 2022. – Driving organic growth, targeting 2022 market share growth of over 40% versus 2021. – Canadian recreational market forecasted to grow more than 30% over prior year. – Targeting 40 – 45% product gross margin by mid-2022. – Organizational realignment to focus on 4 strategic priorities (See Strategic Priorities and Five-Year Outlook).
CEO Comments
Commenting on the Company’s outlook, Paul Wilson, CEO of Decibel noted the following:
“We have established a solid foundation through strong execution of our priorities in 2021 and are well positioned to execute on our 2022 objectives and achieve strong year over year growth in revenue and margins. Demand for our brands and products in the recreational market continues to exhibit strong growth, confirming our thesis that quality across category expansion, consistency, and revenue growth, will lead to creation of competitive advantages for years to come.
Our organic growth will be focused on broadening distribution of existing products, expanding with brands into core segments, launching a pipeline of new, unique, and innovative products, and operational efficiency gains from a series of investments generating substantial EBITDA improvement.
We are investing heavily in growing sales and broadening our distribution, having set Ontario in our sights as a key market for future growth. Over 2021, we’ve tripled our market share and revenues from this province and remain focused on maintaining this trend. As our horizons widen, we are looking to other eastern provinces as additional channels of growth.
We’re confident that our brands and products will continue to provide superior experiences to our customers and that our team will remain flexible to meet evolving consumer trends – and in the future, will be shaping them. We believe that our strategic plan will provide compelling organic growth, which combines further development of our competitive advantages and an attractive cannabis growth outlook.”
Strategic Priorities and Five-Year Outlook
“At Decibel’s core, we will ensure genetics, expertise, and quality remain our core competencies, such that we are flexible to meet consumer trends and produce the highest quality product in each price segment.”
The Company’s 2022 Strategic Plan priorities continue to reinforce elevating Decibel’s customers’ experiences, aggressive sales growth, differentiation of products, and organic growth potential of its cash flows, include the following:
– Continue to champion the Qwest Family of Brands as an industry-leading premium brand, which creates a “halo” extending to Decibel’s other brands and products; – Broaden distribution and enter new markets through a multi-channel and best-in-class sales system; – Execute on capital investments and maximizing product gross margin through a large scale transition from manual to automation driven production lines; and – Establish and refine product differentiation and competitive advantages.
2022 Financial Outlook
The Company highlights the following financial milestones in 2022:
– Anticipate achieving milestone of positive cash flow from operations in the first half of 2022; – Driving high double digit revenue growth through broader distribution and a new, unique, and innovative product pipeline; – Targeting 40 – 45% product gross margin by mid-2022 through automation and other capital investments; – Repaying its outstanding convertible debentures with low cost non-dilutive debt capital, resulting in blended cost of debt capital of less than 5%; – Strengthening balance sheet and financial position with the expectation to reach less than 3.0x debt / trailing twelve month Adj. EBITDA in 2022; and – Established a low cost $7.5 million accordion debt facility for future growth.
The Company’s 2022 performance drivers include:
– Expanded Decibel presence in the core price segment through the launch of General Admission jarred flower and infused pre-roll products in January; – Launched Qwest premium infused pre-roll products in January; – Launched early stage infused products in Ontario in January, with additional General Admission and Qwest infused products launching in early Q2; – Optimizing yields and supply of Qwest flower and pre-rolls over the course of 2022; – Enhancing distribution through investments in Decibel’s revenue generation system and expanding into Eastern provinces; – Completing the majority of capital investments in the first half of 2022 which are designed to bring automation and substantial EBITDA generation to existing product lines and revenue; and – Continued investment in quality of offerings and development of product pipeline (15 new products launching in 2022), focused on new, unique and innovative approach.
Business Updates
Organizational Changes
Decibel has identified an opportunity to be an industry-leader of new, unique and innovative products (“NUI”), shifting product development towards shaping and uncovering consumer preferences. In early 2022, the Company will be formalizing a consumer insights department, to lead this NUI initiative combined with strategic investments currently in progress. The Company’s tissue culture project will be critical, as an origination point in the R&D process, by developing new cultivars. These new cultivars, with controlled flavour and experience profiles, will allow the development of an array of products. Through the Company’s processing hub that is currently under construction, direct consumer trial and feedback will occur to identify successful flower and derivative products, through a Health Canada R&D license.
Resulting from this opportunity, the Company has made the following organizational changes in addition to the formation of a consumer insights group:
– Forming the executive positions of (i) Chief Product Development & Marketing Officer (Warren Matzelle appointed); and (ii) Chief Revenue Officer (Adam Coates title change); and – Dissolving the executive positions of Chief Commercial Officer and Chief Compliance Officer, combining those responsibilities into existing leadership.
NUI Initiative: Infused Pre-Rolls
In November, the Company launched its first line of infused pre-rolls under General Admission in a kief coated, terpene infused format, which saw early success. Following the initial launch, Decibel has launched two additional product lines, General Admission kief coated distillate infused pre-rolls and Qwest diamond infused pre-rolls. To date, 14 infused products have been launched, with significant demand above management’s expectations between late Q4 and the start of Q1. As a result, process improvements have been made to the production line to debottleneck and substantially improve margin moving into the start of 2022.
– With the continued focus on establishing an early mover advantage within the infused category, the Company has the following opportunities to cement this position: – Significant improvements made to production line to expand capacity to meet demand and improve cost structure moving into start of 2022. – Product listing barriers to entry – select provinces (AB, ON) next product listing windows occur in April, providing three months to grow distribution and consumer adoption: – 14 products launched in AB, additional 2 to launch in mid Q1; – 2 products launched in SK, with an additional 14 to launch in mid Q1; – 3 products launched in ON in January, with an additional 6 to launch in early Q2; and – 1 product launched in BC, with an additional 5 launched in January.
1 HiFyre Retail Analytics, Licensed Producer Sales over Time Nationally and in BC, AB, SK, ON, January 1 – December 31, 2021. Major Markets include BC, AB, SK, ON.
2 HiFyre Retail Analytics, Premium flower market defined as flower products sold more than 20% above average selling price per gram in 7g or under size formats.
About Decibel
Decibel is uncompromising in the process and craftsmanship needed to deliver the highest quality cannabis products and retail experiences. Decibel has three operating production houses along with its wholly owned retail business, Prairie Records. The Qwest Estate in Creston, BC is a licensed and operating 26,000 square foot cultivation space which produces the widely championed, rare cultivar-focused brands Qwest and Qwest Reserve, which are sold in six provinces across Canada. Thunderchild Cultivation, is a licensed and operating 80,000 square foot indoor cultivation facility in Battleford, SK. The Plant, Decibel’s extraction facility, in Calgary, AB has 15,000 square feet of Health Canada licensed extraction and product development space. This production house will fuel the growth of our brands Qwest, Qwest Reserve, Blendcraft, and General Admission, into new and innovative product formats like concentrates, vapes, edibles and beyond.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Cautionary Statements
Forward Looking Information
This news release contains “forward-looking information” and “forward-looking statements” (collectively, “forward-looking statements”) within the meaning of the applicable Canadian securities legislation. All statements, other than statements of historical fact, are forward-looking statements and are based on expectations, estimates and projections as at the date of this news release. Any statement that involves discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or performance (often but not always using phrases such as “expects”, or “does not expect”, “is expected”, “anticipates” or “does not anticipate”, “plans”, “budget”, “scheduled”, “forecasts”, “estimates”, “believes” or “intends” or variations of such words and phrases or stating that certain actions, events or results “may” or “could”, “would”, “might” or “will” be taken to occur or be achieved) are not statements of historical fact and may be forward-looking statements.
In this news release, forward-looking statements relate to, among other things: that the Company has strong 2022 growth drivers in place to generate substantial revenue and EBITDA growth; anticipated cash flow in the first half of 2022; anticipated market share at the end of 2022; anticipated growth in the Canadian recreational cannabis market; the Company’s expectations that its quality of products will lead to the creation of brand equity in the future; that the Company will launch a pipeline of new, unique, and innovative products, and operational efficiency gains from a series of investments generating substantial EBITDA; the Company’s geographical expansion plans; the Company’s expectations that its brands and products will provide superior experiences to its customers; that the Company will be able to meet and shape evolving consumer trends; the Company’s expectations that its strategic plan will provide competitive advantages and attractive cannabis growth outlook; that the Company will be able to produce the highest quality of product in each price segment; the Company’s plans to broaden distribution and enter new markets, transition from manual to automation driven production lines and establish and refine product differentiation and competitive advantages; the Company’s expectations that its market share will grow; the Company’s expectations that it will have a strong 2022; the Company’s expectations that in 2022 it will generate a milestone of cash flow, repay its outstanding convertible debentures, establish a low cost $7.5 million accordion debt facility, drive high double digit revenue growth and improve its product gross margin by more than 500 basis points; that the Company will launch additional General Admission and Qwest infused products and the anticipated timing thereof; the Company’s expectations that it will optimize yields and supply of Qwest flower and pre-rolls over the course of 2022; that the Company will enhance distribution through investments in Decibel’s sales team; the anticipated timing and benefits of the Company’s capital investments; the Company’s plans to form a consumer insights department; that the Company will develop an array of new products; the Company’s anticipated product launches; and the Company’s business plans and strategies, including the Company’s ability to grow Qwest, Qwest Reserve and Blendcraft brands into new and innovative product formats, variations and its other business plans and expectations. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include, but are not limited to: risks relating to delays, regulatory changes and impacts, capital requirements, construction impacts, displacement requirements and unforeseen requirements resulting from the COVID-19 pandemic, the ability to obtain and maintain licences to retail cannabis products; review of the Company’s production facilities by Health Canada and maintenance of licences (including any amendments thereto) from Health Canada in respect thereof; future legislative and regulatory developments involving cannabis; inability to access sufficient capital from internal and external sources, and/or inability to access sufficient capital on favourable terms; the labour market generally and the ability to access, hire and retain employees; general business, economic, competitive, political and social uncertainties; the satisfaction of conditions precedent under the Company’s credit facilities; timing and completion of construction and expansion of the Company’s production facilities and retail locations; and the delay or failure to receive board, regulatory or other approvals, including any approvals of the TSX Venture Exchange, as applicable. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on the forward-looking statements and information contained in this news release.
With respect to the forward-looking statements and FOFI (as defined below) contained in this news release, management has made assumptions regarding, among other things: its ability to execute on its business plan in a timely manner and the results thereof; capital requirements, the ability to obtain and maintain licences to retail cannabis products; review of the Company’s production facilities by Health Canada and maintenance of licences (including any amendments thereto) from Health Canada in respect thereof; ability to access sufficient capital from internal and external sources, and/or ability to access sufficient capital on favourable terms; the labour market generally and the ability to access, hire and retain employees; general business, economic, competitive, political and social uncertainties; the satisfaction of conditions precedent under the Company’s credit facilities; timing and completion of construction and expansion of the Company’s production facilities and retail locations.
This news release also contains future-oriented financial information and financial outlook information (collectively, “FOFI”) about the Company’s prospective results of operations including, without limitation, that the Company has strong 2022 growth drivers in place to generate substantial revenue and EBITDA growth; anticipated cash flow in the first half of 2022; anticipated market share at the end of 2022; and the Company’s expectations that in 2022 it will generate a milestone of cash flow, drive high double digit revenue growth and improve its product gross margin by more than 500 basis points. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on FOFI. The Company’s actual results, performance or achievement could differ materially from those expressed in, or implied by, the FOFI and are subject to the risks set forth above. The Company has included the FOFI in order to provide readers with a more complete perspective on the Company’s future operations and such information may not be appropriate for other purposes.
These forward-looking statements and FOFI are made as of the date of this press release and, except as required by law, the Company assumes no obligation to update the forward-looking statements, FOFI or beliefs, opinions, projections, or other factors, should they change.
SOURCE Decibel Cannabis Company Inc.
For further information: Stuart Boucher, stuart.boucher@decibelcc.com, 780-619-0310, www.decibelcc.com
“With our debt refinancing now in place, we remain on the offense, growing revenue and closing 2021 with record market share driven through our core focus to elevate our consumer experience through quality combined with new, unique and innovative products” said Paul Wilson, Chief Executive Officer of Decibel. “With a strong foundation established through efforts in 2021, and impactful 2022 catalysts, we are well positioned to continue our strong revenue and market share growth.”
Jan. 2021
Nov. 2021
Dec. 2021
Canada1
2.6%
3.3%
3.4%
Major Markets1
3.3%
4.0%
4.2%
Ontario1
1.1%
3.1%
3.1%
Market Share in Decibel’s Major Markets1
National Market Share1
1
Ontario Market Share1
Tripled market share from January to December 2021 with a record 3.1% in December
#2 brand in premium flower sales with a 9.0% market share2
#5 brand in concentrate sales with a 5.8% market share
1 HiFyre Retail Analytics, Licensed Producer Sales over Time Nationally and in BC, AB, SK, ON, January 1 – December 31, 2021. Major Markets include BC, AB, SK, ON.
2 HiFyre Retail Analytics, Premium flower market defined as flower products sold more than 20% above average selling price per gram in 7g or under size formats.
About Decibel
Decibel is uncompromising in the process and craftsmanship needed to deliver the highest quality cannabis products and retail experiences. Decibel has three operating production houses along with its wholly owned retail business, Prairie Records. The Qwest Estate in Creston, BC is a licensed and operating 26,000 square foot cultivation space which produces the widely championed, rare cultivar-focused brands Qwest and Qwest Reserve, which are sold in six provinces across Canada. Thunderchild Cultivation, is a licensed and operating 80,000 square foot indoor cultivation facility in Battleford, SK. The Plant, Decibel’s extraction facility, in Calgary, AB has 15,000 square feet of Health Canada licensed extraction and product development space. This production house will fuel the growth of our brands Qwest, Qwest Reserve, Blendcraft, and General Admission, into new and innovative product formats like concentrates, vapes, edibles and beyond.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Cautionary Statements
Forward Looking Information
This news release contains “forward-looking information” and “forward-looking statements” (collectively, “forward-looking statements”) within the meaning of the applicable Canadian securities legislation. All statements, other than statements of historical fact, are forward-looking statements and are based on expectations, estimates and projections as at the date of this news release. Any statement that involves discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or performance (often but not always using phrases such as “expects”, or “does not expect”, “is expected”, “anticipates” or “does not anticipate”, “plans”, “budget”, “scheduled”, “forecasts”, “estimates”, “believes” or “intends” or variations of such words and phrases or stating that certain actions, events or results “may” or “could”, “would”, “might” or “will” be taken to occur or be achieved) are not statements of historical fact and may be forward-looking statements.
In this news release, forward-looking statements relate to, among other things, the Company’s business plans and strategies, including the Company’s ability to grow Qwest, Qwest Reserve and Blendcraft brands into new and innovative product formats, variations and its other business plans and expectations. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include, but are not limited to: risks relating to delays, regulatory changes and impacts, capital requirements, construction impacts, displacement requirements and unforeseen requirements resulting from the COVID-19 pandemic, the ability to obtain and maintain licences to retail cannabis products; review of the Company’s production facilities by Health Canada and maintenance of licences (including any amendments thereto) from Health Canada in respect thereof; future legislative and regulatory developments involving cannabis; counterparty risk; inability to access sufficient capital from internal and external sources, and/or inability to access sufficient capital on favourable terms; the labour market generally and the ability to access, hire and retain employees; general business, economic, competitive, political and social uncertainties; the satisfaction of conditions precedent under the Company’s credit facilities; timing and completion of construction and expansion of the Company’s production facilities and retail locations; and the delay or failure to receive board, regulatory or other approvals, including any approvals of the TSX Venture Exchange, as applicable. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on the forward-looking statements and information contained in this news release.
This news release also contains future-oriented financial information and financial outlook information (collectively, “FOFI”) about the Company’s prospective results of operations including, without limitation, its expectation that it is well positioned to continue its revenue and market share growth. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on FOFI. The Company’s actual results, performance or achievement could differ materially from those expressed in, or implied by, the FOFI and are subject to the risks set forth above. The Company has included the FOFI in order to provide readers with a more complete perspective on the Company’s future operations and such information may not be appropriate for other purposes.
These forward-looking statements and FOFI are made as of the date of this press release and, except as required by law, the Company assumes no obligation to update the forward-looking statements, FOFI or beliefs, opinions, projections, or other factors, should they change.
The Company expects the proceeds combined with contributions from operations to provide sufficient liquidity to repay Decibel’s convertible debentures on maturity.
“With this refinancing, Decibel has added financial flexibility to optimize its capital structure and is well positioned to continue to execute its aggressive growth strategy” said Stuart Boucher, Chief Financial Officer of Decibel. “This transaction reflects the strong position Decibel has established in the Canadian cannabis market and the continued confidence from connectFirst and our team in the execution of the Company’s strategic plan”.
Financing Highlights
The Company’s existing term debt will be increased by $12 million to $40.5 million, amortized over 12-years. The $12 million term debt will be accessible on request by Decibel. The Company expects the proceeds combined with contributions from operations to provide sufficient liquidity to repay Decibel’s convertible debentures on maturity.
The Credit Facilities include a $7.5 million accordion to support future growth initiatives as Decibel continues to scale. The Accordion Line’s initial availability is subject to Decibel achieving a trailing twelve month funded debt to EBITDA ratio of less than or equal to 4.00:1, as well as its maintained compliance with its other financial covenants (as further described below).
Decibel continues to receive industry leading interest rates that reflect the strength of its business:
Term Debt
$40.5 million
4.75% (5yr Fixed)
Authorized Overdraft
$6.0 million
Prime + 1.00%
Accordion
$7.5 million
Prime + 2.00%
The Credit Facilities will have one annually tested financial covenant, a debt to equity ratio of less than 1.00:1. Additionally, the Credit Facilities will have one quarterly tested covenant, a debt service coverage ratio of not less than 1.40:1, and a monthly current ratio covenant of not less than 1.25:1. Decibel’s 12-month forecast projects compliance with all financial covenants.
The Company expects to close on the Committed Amount on or before January 31, 2022, subject to compliance with financial covenants based on its 2021 draft annual financial results and satisfaction of other customary conditions precedent. Decibel expects to remain in compliance for the remainder of its twelve-month forecast period, as well as the 2021 annual covenants.
connectFirst Credit Union, one of the largest and most successful credit unions in Canada, is a full-service financial institution with over $6 billion in assets under administration. connectFirst employs 750 Albertans who provide a range of financial products and advice in more than 40 communities across central and southern Alberta. It serves over 125,000 members through a community-focused approach to banking.
About Decibel
Decibel is uncompromising in the process and craftsmanship needed to deliver the highest quality cannabis products and retail experiences. Decibel has three operating production houses along with its wholly owned retail business, Prairie Records. The Qwest Estate in Creston, BC is a licensed and operating 26,000 square foot cultivation space which produces the widely championed, rare cultivar-focused brands Qwest and Qwest Reserve, which are sold in six provinces across Canada. Thunderchild Cultivation, is a licensed and operating 80,000 square foot indoor cultivation facility in Battleford, SK. The Plant, Decibel’s extraction facility, in Calgary, AB has 15,000 square feet of Health Canada licensed extraction and product development space. This production house will fuel the growth of our brands Qwest, Qwest Reserve, Blendcraft, and General Admission, into new and innovative product formats like concentrates, vapes, edibles and beyond.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Cautionary Statements
Forward Looking Information and Future Oriented Financial Information
This news release contains “forward-looking information” and “forward-looking statements” (collectively, “forward-looking statements”) within the meaning of the applicable Canadian securities legislation. All statements, other than statements of historical fact, are forward-looking statements and are based on expectations, estimates and projections as at the date of this news release. Any statement that involves discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or performance (often but not always using phrases such as “expects”, or “does not expect”, “is expected”, “anticipates” or “does not anticipate”, “plans”, “budget”, “scheduled”, “forecasts”, “estimates”, “believes” or “intends” or variations of such words and phrases or stating that certain actions, events or results “may” or “could”, “would”, “might” or “will” be taken to occur or be achieved) are not statements of historical fact and may be forward-looking statements.
In this news release, forward-looking statements relate to, among other things, the Company’s business plans and strategies, including: the Company’s anticipated use of the funds obtained pursuant to the Credit Facilities; the anticipated closing date; the Company’s expectations that it will be able to comply with all of its financial covenants for the next twelve months; and the Company’s ability to grow Qwest, Qwest Reserve and Blendcraft brands into new and innovative product formats, variations and its other business plans and expectations. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include, but are not limited to: risks relating to the satisfaction of the conditions precedent to obtaining the additional Term Debt; delays, regulatory changes and impacts, capital requirements, construction impacts, displacement requirements and unforeseen requirements resulting from the COVID-19 pandemic, the ability to obtain and maintain licences to retail cannabis products; review of the Company’s production facilities by Health Canada and maintenance of licences (including any amendments thereto) from Health Canada in respect thereof; future legislative and regulatory developments involving cannabis; inability to access sufficient capital from internal and external sources, and/or inability to access sufficient capital on favourable terms; the labour market generally and the ability to access, hire and retain employees; general business, economic, competitive, political and social uncertainties; timing and completion of construction and expansion of the Company’s production facilities and retail locations; and the delay or failure to receive board, regulatory or other approvals, including any approvals of the TSX Venture Exchange, as applicable. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on the forward-looking statements and information contained in this news release.
This press release also contains future-oriented financial information and financial outlook information (collectively, “FOFI“) about the Company’s prospective results of operations including, without limitation, its anticipated liquidity and ability to repay its convertible debentures on maturity. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on FOFI. The Company’s actual results, performance or achievement could differ materially from those expressed in, or implied by, the FOFI. The Company has included the FOFI in order to provide readers with a more complete perspective on the Company’s future operations and such information may not be appropriate for other purposes.
These forward-looking statements and FOFI are made as of the date of this press release and, except as required by law, the Company assumes no obligation to update the forward-looking statements or beliefs, opinions, projections, or other factors, should they change.
