Decibel Cannabis Archives - Green Market Report

StaffMay 26, 2022
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3min5230

Decibel Cannabis Company Inc.  (TSXV: DB) (OTCQB: DBCCF) released its first-quarter financial results for the first quarter ending March 31, 2022. Decibel reported $23 million in total sales for the quarter, with strong growth over the fourth quarter and topping last year’s revenue of $14 million in the same time period in 2021. The company said that 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 the first quarter historically being a seasonally weak period.

“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.”

During the quarter, Decibel said it incurred a net loss of $4.37 million, generated funds amounting to $2.86 million in its operations, and has net current assets of $7.3 million.

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. As of March 31, 2022, the company is in compliance with all covenants.

Cash flow from operations was $3.0 million in the quarter, an improvement of $8 million over the fourth quarter 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 said it anticipates reduced working capital needs in 2022 and is seeing improvements in its supply chain. The company said it 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.


Debra BorchardtApril 22, 2022
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5min7250

Decibel Cannabis Company Inc. (TSXV: DB) (OTCQB: DBCCF) announced its year-end audited financial results for the fourth quarter and year ending December 31, 2021. Decibel reported fourth-quarter net revenue increased 5% sequentially to $14 million. It was a 23% increase over the same time period in 2020. The company attributed the increase to the launch of Decibel’s new infused pre-roll lines and continued growth in demand for flower, vape, and concentrate products. However, this was partially impacted by price compression in the flower segment and slower retail sales from increased competition. Plus, the cash flow from operations in the quarter was a negative $5.1 million.

 

The company also reported that for its six stores, retail revenues fell from $3.6 million in the fourth quarter of 2020 to $2.5 million for the 2021 fourth quarter. Wholesale revenues increased to $5.5 million from last year’s $3.8 million.

 

Full Year Results

Decibel said its net revenue for 2021 increased 75% to $52 million. The company did report a net income for the year of $1.7 million.

“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.”

Going Concern

While Decibel did note that it earned a net income of $1.7 million, the company also said that it utilized funds of $17.1 million in its operations and has net current assets of $9.5 million. In the company’s filing it stated, “In order to continue as a going concern, the Company must generate sufficient income and cash flows to repay its obligations, finance operations and fund capital investments. The future of the Company is dependent on its ability to attain profitable operations and maintain compliance with covenants relating to its lending agreements, generate sufficient funds from operations, continue receiving financial support from its lenders and obtain new financing. There is no certainty that the Company will raise these necessary funds from operations or financings. As a result of these factors, there is material uncertainty that may result in significant doubt as to the ability of the Company to meets its obligations as they come due and continue as a going concern.”

Decibel went on to say that it expects to be able to comply with its covenants over the next year and actually amended its credit facility. “A decrease or sustained period of materially reduced demand for Decibel’s principal products may result in non-compliance with the financial covenants and reduced liquidity related to changes in the credit facility. Non-compliance with the financial covenants in the credit facility could result in the debt becoming due and payable on demand. Should the Company anticipate non-compliance, Decibel will proactively approach its lender to amend the credit facilities to ensure their availability. There is no certainty that the Company will be successful in negotiating such amendments.”

The company said it had $1.9 million in cash at the end of the period.

First Quarter Outlook

Decibel said that for the first quarter of 2022, it expects net revenue to be between $16.5 and $17.5 million versus $12.6 million in the 2021 first quarter. The company said it plans on exiting the quarter with a record 4.0% recreational national market share.


StaffMarch 14, 2022
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4min7450

Decibel Cannabis Company Inc. (TSXV: DB) (OTCQB: DBCCF) reported an operational update with respect to its capital projects and announces its fourth consecutive month of record market share in February. The company did not release any sales figures.

“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%

Looking ahead the company wrote in its investor presentation for Winter 2022 that it is planning on high double digit revenue growth for 2022 with 15 new products launching in the year. The company is going to expand its flower and infused pre-rolls. It is targeting 40 – 45% product margin through investments in scale and automation and anticipating milestones of cash flow generation in first half of 2022.

Decibel said it 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 labor and logistics costs. The Health Canada license is expected to be received within Q2 2022.

In early March, Decibel said it 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 said it 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.


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The Green Market Report focuses on the financial news of the rapidly growing cannabis industry. Our target approach filters out the daily noise and does a deep dive into the financial, business and economic side of the cannabis industry. Our team is cultivating the industry’s critical news into one source and providing open source insights and data analysis


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