CALGARY, AB, Nov. 18, 2021
/CNW/ - Decibel Cannabis Company Inc. (the "Company" or "Decibel")
(TSXV: DB) (OTCQB: DBCCF), a premium cannabis producer, is pleased
to announce its third quarter financial results for the three month
period ending September 30, 2021.
"Decibel's continued growth is a testament to our consumer
focused approach, the strength of our brands, and our dedication
towards producing high quality products for our customers", said
Paul Wilson, CEO of Decibel. "We are
closing out 2021 with strong momentum as we launch 40 new products,
elevate the experience our products create for consumers, and
innovate to meet cannabis consumers' evolving preferences."
Market Share
- #9 largest LP by Canadian recreational market share, with 3.1%
in September
Strong market share across BC, AB, SK, ON in September 20212,3:
- #2 brand in premium flower sales with a 9.0% market share
- #2 brand in concentrate sales with a 12.9% market share
- #3 brand in vape sales with a 12.9% market share
Key Financial Highlights
- Net Revenue: Net revenue was $13.4 million in Q3, a 7% increase over the prior
quarter, driven by growth in Decibel's existing and newly launched
flower, vape and concentrate products. Net revenue grew by 76% over
the comparative 2020 quarter.
- Flower Sales: 492 kilograms sold in Q3, with an average
wholesale net price per gram of $7.65, an increase of 10% in kilograms sold and a
decrease of 4% in average wholesale net price per gram, over the
prior quarter. The decline in price per gram was a result of a
greater volume allocation towards Qwest products versus Qwest
Reserve products which achieves a higher price point and the launch
of General Admission line of pre-rolls.
- Derivative Sales: $6.6
million of net sales of vape and concentrate products in Q3,
a 16% increase from the prior quarter. Sales growth was driven by
increased demand for vape and concentrate products launched within
Q3 and growth in Ontario demand as
the province re-opened brick & mortar cannabis retail.
- Retail Sales: $3.0 million
of retail sales, a 5% decline over the prior quarter, primarily
driven by new entrants into the Saskatchewan retail market, partially offset
by Alberta retail sales
growth.
- Gross Profit: The Company achieved $4.1 million of gross profit before fair value
adjustments, a decline of 20% from Q2 2021 and improvement of 42%
over the prior year. Gross profit was impacted by a provision of
$922 thousand, pertaining to the
Plant inventory write offs. The inventory provision is primarily
related to the write-off of unusable hardware, packaging materials,
and various items related to discontinued products, as well as
inventory held to satisfy an aged supply agreement that was
mutually terminated.
- Positive Adj. EBITDA: The Company achieved $1.8 million of adjusted EBITDA in Q3, its fifth
consecutive quarter of positive adjusted EBITDA. This represented a
decline of 17% from the prior quarter and improvement of 107% from
the prior year. For the trailing twelve months, the Company has
achieved $7.1 million in adjusted
EBITDA.
- Thunderchild Operational Development: The Company
continues to invest in working capital as it ramps the facility and
achieved run-rate harvests in mid-Q3. The Company anticipates run
rate production by mid-Q4 at which point focus will be directed
towards operational efficiency in post processing.
- Product Innovation Roll-Out: In Q3 2021, Decibel
introduced another six new product SKUs in addition to its
rotational cultivar based products, ending with 57 products in
market.
-
- Generated approximately $182
thousand in net revenue per SKU in Q3, compared to
$181 thousand in net revenue per
product in the prior quarter.
- Announced the launch of 40 new product SKUs between
September 2021 and January 2022, including:
-
- 12 new flower & pre-roll products that will replace
existing cultivars in market.
- 28 incremental new flower & derivative products.
- Strengthened Balance Sheet: On September 16, 2021, the Company closed its bought
deal prospectus offering with gross proceeds of $15 million The additional capital will
accelerate Decibel's strategic plan through previously announced
capital projects and a series of new product launches (See
Decibel's Investor Presentation for further information). Net cash
on the balance sheet as at September 30,
2021 was $11.3 million.
Quarterly Highlights
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Three months
ended
September 30
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Nine months ended
September 30
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2021
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2020
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2021
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2020
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Net wholesale revenue
of flower
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$3,760
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$2,861
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$11,198
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$7,142
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Kilograms of flower
sold
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492
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272
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1,373
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782
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Average wholesale
flower gross pricing per gram
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$8.68
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$10.18
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$9.63
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$10.15
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Average wholesale
flower net pricing per gram
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$7.65
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$8.68
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$8.16
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$8.41
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Kilograms of salable
cannabis harvested
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769
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178
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1,749
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701
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Net wholesale revenue
of extracts
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$6,586
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$785
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$17,854
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$785
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Number of retail
stores
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6
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6
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6
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6
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Retail
revenue
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$3,023
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$3,932
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$9,383
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$10,578
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Total
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Net
revenue
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$13,369
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$7,578
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$38,435
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$18,505
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Gross profit before
fair value adjustments
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$4,101
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$2,898
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$14,174
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$7,164
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Gross
margin
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31%
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38%
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37%
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39%
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Adjusted
EBITDA1
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$1,784
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$860
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$5,966
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$425
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Cash flow from
operations
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($5,905)
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($1,250)
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($12,027)
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($5,862)
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Link to Decibel's Investor Presentation
Decibel's financial statements for the three-month period ending
September 30, 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 September 30, 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.
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2 HiFyre Retail Analytics, Licensed
Producer Sales over Time in BC, AB, SK, ON, September 1 – September
30, 2021
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3 HiFyre Retail Analytics, Premium
flower market defined as flower products sold more than 20% above
average selling price per gram
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Appointment of New Director
On November 17, 2021, Dr.
Ivan Casselman was re-appointed to
the Corporation's board of directors. Dr. Casselman brings a wealth
of product and industry knowledge through his industry experience
as an analytical chemist and plant medicine researcher, and his
current roles as the Chief Psychedelic Officer at Havn. Dr.
Casselman additionally holds a Master of Science in Ethnobotany and
a Doctorate (Ph.d.) in Plant Science (analytical chemistry and
genetics). Dr. Casselman was previously appointed to the board on
November 24, 2020 but had been
serving as a senior advisor since January
29, 2021 while awaiting his most recently granted Health
Canada security clearance.
"Appointing Dr. Casselman to Decibel's board of directors is a
great step in the evolution of the Corporation's governance and
board composition" said Cody Church,
the Chairman of Decibel's board of directors. "Dr. Casselman brings
an extensive amount of experience and knowledge within the sector
and adds a level of product and industry knowledge that will
naturally compliment Decibel's current 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
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 six months ended September
30, 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 anticipated launch of products, the impact
of additional capital on Decibel's strategic plan through
previously announced capital projects and a series of new product
launches; Decibel's expectation that it will remain in compliance
with 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 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.