CALGARY, AB, May 27, 2021 /CNW/ - Decibel Cannabis Company
Inc. (the "Company" or "Decibel") (TSXV: DB) (OTCQB: DBCCF), a
premium cannabis producer, is pleased to announce its first quarter
financial results for the three month period ending March 31, 2021.
Record Market Share Across BC, AB, SK, ON in Q1
20211,2:
- #1 brand in premium flower sales with an 8.4% market share
- #1 brand in concentrate sales with a 21.9% market share
- #3 brand in vape sales with a 10.0% market share
"These exceptional first quarter results are a testament to the
strength of our brands, industry-leading product quality and
ability to develop and execute an innovative product portfolio that
meets the needs of today's cannabis consumer", said Cody Church, Interim CEO of Decibel. "Despite
significant industry headwinds in the quarter, we delivered on our
commitment of sustainable and profitable growth, while
substantially strengthening our balance sheet and available
liquidity."
Key Financial Highlights
- Record Net Revenue: Net revenue grew to
$12.6 million in the first quarter,
an 11% increase over the prior quarter, driven by strong sales
growth from vape and concentrate products and continued demand for
Qwest flower. Net revenue grew by 151% over the comparative 2020
quarter.
- Record Positive Adj. EBITDA: The Company achieved a
record $2.0 million of adjusted
EBITDA in the first quarter, its third consecutive quarter of
positive adjusted EBITDA, and an increase of 84% from the prior
quarter. Adjusted EBITDA improved by $2.5
million over the comparative 2020 quarter.
- Flower Sales: 432 kilograms sold in the first quarter,
with an average wholesale net price per gram of $8.94, an increase of 14% and 4%, respectively,
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.
- Derivative Sales: $5.6
million of net sales of vape and concentrate products in the
first quarter, a 23% increase from the prior quarter. Sales growth
was driven by increased demand for vape and concentrate products
launched in the fourth quarter.
- Retail Sales: $3.2 million
of retail sales, a 15% decrease over the prior quarter, primarily
driven by seasonality and new entrants into the Saskatchewan retail market. Retail sales grew
by 13% over the comparative 2020 quarter. Decibel's retail
portfolio continues to bring strategic value, contributing to the
success of recent product launches, product innovation and
understanding consumer trends.
- Thunderchild Operational Development:
-
- Achieved a minor contribution of first revenue out of the
facility in March 2021
- Completed seventh harvest since commencement of operations
- Eight grow rooms planted and at various stages (40% of total
facility planted)
- Launch of New Vape & Concentrate Products:
-
- In April, Decibel continued to innovate in the vape category
with the launch of its first 100% Live Resin Vape with its General
Admission Kootenay Fruit live resin vape and a new flavour of
distillate vape with its General Admission Rainbow Sherb distillate
vape cartridge
- In April, Decibel launched into the premium concentrate
category with its first live, loose concentrate with its Apricot
Kush live sugar, available in BC, Alberta and Saskatchewan now and in Ontario in July
- Additional upcoming Q2 2021 launches including additional live
resin vapes and live sugar along with gems & juice (diamonds
& sauce)
- Strengthened Balance Sheet: On May 13, 2021, the Company announced it had closed
an amendment to its authorized overdraft facility increasing it
from $1.5 million to $7.5 million with a committed interest rate of
Prime + 1.00% (currently 3.45%). The additional capital will
accelerate Decibel's sales growth through the Thunderchild facility
and new vape and concentrate launches
Quarterly Highlights
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Three months
ended
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March 31,
2021
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March 31,
2020
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Net wholesale revenue
of flower 3
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$3,862
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$2,227
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Kilograms of flower
sold
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432
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224
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Average wholesale
flower gross pricing per gram
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$10.79
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$11.85
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Average wholesale
flower net pricing per gram
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$8.94
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$9.95
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Kilograms of salable
cannabis harvested
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541
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214
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Net wholesale revenue
of extracts 3
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$5,592
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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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Retail revenue
3
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$3,172
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$2,809
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Total
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Net
revenue
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$12,626
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$5,036
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Gross profit before
fair value adjustments
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$4,978
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$2,142
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Gross
margin
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39%
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43%
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Adjusted
EBITDA4
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$2,033
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(418)
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Cash flow from
operations
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(3,114)
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(5,660)
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Link to Decibel's Investor Presentation
Decibel's financial statements for the three-month period ending
March 31, 2021
("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 March 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 HiFyre
Retail Analytics, Licensed Producer Sales over Time in BC, AB, SK,
ON, January 1, 2021 – March 31, 2021
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2 HiFyre
Retail Analytics, Premium flower market defined as flower products
sold more than 20% above average selling price per gram
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3 Inter-company revenue of $658
pertaining to sales to the retail operations, has been eliminated
on the Company's Interim Consolidated Financial Statements. In the
table above, the inter-company revenue elimination has been
allocated between wholesale revenue and retail revenue to provide a
more accurate depiction of business performance.
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4 Adjusted EBITDA is a non-GAAP
performance measure. Refer to "Cautionary Statement Regarding
Certain Non-GAAP Performance Measures" for further
details.
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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,
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.
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SOURCE Decibel Cannabis Company Inc.