CALGARY, AB, April 14, 2021 /CNW/ - Decibel Cannabis Company
Inc. (the "Company" or "Decibel") (TSXV: DB) (OTCQB: DBCCF) , a
premium cannabis producer and retailer, is pleased to announce its
year-end financial results for the three and twelve month periods
ending December 31, 2020.
"The success achieved in 2020 reflects Decibel's commitment to
sustainable profitability and product quality, all while executing
on an aggressive growth plan" said Cody
Church, Interim CEO of Decibel. "We continue to execute as a
leading producer of premium cannabis, growing our production from
1,800 kg to over 9,000 kg in this year to meet the strong demand
for our Qwest Family of Brands. We are gaining momentum with our
cannabis 2.0 portfolio as it continues to gain market share,
validating Decibel's approach to product innovation while
maintaining our commitment to quality."
Key Financial Highlights – Fiscal Year 2020
- Net revenue of $30 million in
2020, an increase of 380% from 2019.
- Gross profit of $11.7 million in
2020, an increase of 2,888% from 2019.
- Positive adjusted EBITDA of $1.5
million in 2020, an improvement of $3.5 million from 2019.
- Fourth quarter contributed $1.1
of the $1.5 million in adjusted
EBITDA achieved in the year.
Key Financial Highlights – Fourth Quarter
- Record Net Revenue: Net revenue grew to $11.4 million in the fourth quarter, a 51%
increase, over the prior quarter, driven by strong sales growth
from Qwest dried flower and newly launched vape and concentrate
products. Net revenue grew by 645% over the comparative 2019
quarter.
- Record Positive Adj. EBITDA: The Company achieved a
record $1.1 million of adjusted
EBITDA in the fourth quarter, its second consecutive quarter of
positive adjusted EBITDA, and an increase of 28% from the prior
quarter. Adjusted EBITDA improved by $4
million over the comparative 2019 quarter.
- Record Qwest Sales: 378
kilograms sold in the fourth quarter, with an average wholesale net
price per gram of $8.59, a volume
increase of 39% and pricing in line over the prior quarter. Decibel
continues to see strong demand for premium cannabis and its Qwest
products, which command industry leading pricing with demand
outstripping current supply. Kilograms sold and average wholesale
net price per gram increased by 125% and 23%, respectively, over
the comparative 2019 quarter.
- First Full Quarter of Derivative Sales: Achieved
$4.5 million of net sales of newly
launched vape and concentrate products in the fourth quarter.
Decibel had 22 product SKUs in market across four provinces
including British Columbia,
Alberta, Saskatchewan, and delivered its first shipment
to Ontario at the end of
December.
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- In January, Decibel achieved a 22% market share in concentrates
and a 9% market share in vape categories across British Columbia, Alberta, Saskatchewan and Ontario1,2
- Retail Sales: $3.7 million
of retail sales, a 7% decrease over the prior quarter. Decibel's
retail portfolio continues to bring strategic value, contributing
to the success of product innovation and understanding consumer
trends.
- Strengthened Balance Sheet: Decibel completed a
$30 million debt refinancing
comprised of $28.5 million of term
debt and a $1.5 million authorized
overdraft. The proceeds were used to fully repay Decibel's then
outstanding $26.8 million of debt
with its former lender and provide additional liquidity. The new
credit facility resulted in several positive impacts:
-
- $3.2 million of additional
liquidity available for working capital purposes.
- Extended debt maturity by 5 years and debt amortizes over a 10
year term.
- Repayment schedule aligned to operational timeline with
$16 million having an interest only
period ending in Q3 2021. Principal savings over this period
provide Decibel flexibility and additional resources to support its
growth strategy.
- Reduced blended interest rate by ~1.70%, to 4.75% for
outstanding term debt and Prime + 1.00% for the authorized
overdraft. This represents approximately $360 thousand in annual interest savings over the
full year 2021.
- Simplified financial covenants to a monthly current ratio of
not less than 1.25:1 and two annually tested covenants, a debt
service coverage ratio of not less than 1.40:1.00, and a debt to
equity ratio of not greater than 0.75:1.00 at the end of 2021 and
0.50:1.00 for all fiscal years ending thereafter.
Year-End and Quarterly Highlights
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Three months
ended
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Year ended
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December 31,
2020
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December 31,
2019
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December 31,
2020
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December 31,
2019
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Net wholesale revenue
of flower
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$3,243
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$1,176
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$9,821
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$5,878
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Kilograms of flower
sold
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378
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168
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1,160
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731
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Average wholesale
flower gross pricing per gram
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$10.21
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$8.91
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$10.17
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$8.48
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Average wholesale
flower net pricing per gram
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$8.59
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$6.99
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$8.47
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$8.04
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Kilograms of cannabis
harvested
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377
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139
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1,313
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1,077
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Net wholesale revenue
of extracts
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$4,528
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$5,312
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-
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Other wholesale
revenue
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-
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-
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$565
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-
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Number of retail
stores
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6
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4
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6
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4
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Retail
revenue
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$3,654
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$357
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$14,232
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$357
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Total
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Net
revenue
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$11,425
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$1,533
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$29,930
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$6,235
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Gross profit before
fair value adjustments
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$4,519
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(1,413)
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$11,683
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$391
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Gross
margin
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40%
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(92%)
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39%
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6%
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Adjusted EBITDA
(a)
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$1,102
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(2,940)
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$1,527
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(2,026)
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Cash flow from
operations
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$1,343
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(378)
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(4,238)
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(1,444)
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(a)
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Adjusted EBITDA is a
non-GAAP performance measure. Refer to "Cautionary Statements –
Non-GAAP Measures" for further details.
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Subsequent Events
- On January 29, 2021, the
Company's wholly-owned subsidiary, dB Thunderchild Cultivation LP,
received a cultivation license from Health Canada for its
cultivation, packaging and processing facility, located in
Battleford, Saskatchewan (the
"Thunderchild Cultivation Facility"). The licensing of the
Thunderchild Cultivation Facility significantly increases Decibel's
cultivation capacity by more than four times, to >9,000
kilograms of premium craft cannabis, allowing Decibel to meet the
tremendous consumer demand it is experiencing for Qwest
products.
Decibel's financial statements for the three and twelve month
periods ending December 31, 2020
("Financial Statements") and related Management's Discussion
& Analysis ("MD&A") for the reporting period are available
under the Company's profile at www.sedar.com. As of December 31, 2020, 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, processing
and distribution space which produces the widely championed, rare
cultivar-focused brands Qwest and Qwest Reserve, which are sold in
six provinces across Canada. The
Thunderchild Cultivation Facility, is a licensed and operating
80,000 square foot indoor cultivation facility in Battleford, SK. The Plant, Decibel's
extraction, processing and manufacturing 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.
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, 2020. 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,
the Company's expectations with respect to its ability to comply
with its financial covenants, 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.
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SOURCE Decibel Cannabis Company Inc.