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.
Link to Decibel's Updated Investor Presentation
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.
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SOURCE Decibel Cannabis Company Inc.