Debra BorchardtNovember 16, 2023
New product lines and increased demand drove higher sales.
Decibel Cannabis Archives - Green Market Report
Debra BorchardtNovember 16, 2023Debra BorchardtOctober 13, 2023
"Someone wants to kill us all the time, so we have to adjust," said IM Cannabis CEO Oren Shuster.
StaffAugust 17, 2023
The Daily Hit is a recap of the top financial news stories for Aug. 17, 2023.
On the Site
Shinnecock Tribe Dispensary Still on Track Despite Tilt Comments
This week, Tilt Holdings (OTC: TLLTF) stunned many in the cannabis community when it decided to cut several social equity brands. During the conference call to discuss the latest earnings, interim CEO Tim Conder said Tilt’s partnership with the Shinnecock tribe was also “undergoing a deep analysis,” with construction of the retail store paused. The tribe says: Not so fast. Read more here.
Canopy Growth Sells Hershey Facility for C$53 Million
Canopy Growth Corp. (TSX: WEED) (Nasdaq: CGC) is selling its Hershey Drive facility in Smiths Falls, Ontario, as part of its move to become a simplified, asset-light operating model. Canopy Growth said it will retain its Smiths Falls-based post-harvest manufacturing facility. The facility will be sold to Hershey Canada Inc. for cash consideration of approximately C$53 million. Read more here.
AYR Wellness Revenue Increases, Expands in Florida and Ohio
Multistate cannabis operator AYR Wellness Inc. (OTCQX: AYRWF) reported a revenue increase of 18% year over year, reaching $116.7 million for the second quarter ending June 30. Read more here.
Adastra Sees Three-fold Rise in Q2 Revenue
Canadian extracts processor Adastra Holdings Ltd. (CSE:XTRX)(FRA:D2EP) reported its second-quarter financial results ending June 30, marking a three-fold rise in revenue from the previous year. During the period, Adastra recorded revenue of C$10.9 million, a 205% hike from the second quarter of 2022. Read more here.
Decibel Maintains Canadian Market Share, Cash Flow Tightens
Decibel Cannabis Company Inc. (TSX: DB) (OTCQB: DBCCF) reported notable gains for its second quarter sending June 30, with net revenue of C$30.9 million, a sequential rise of 14% from the previous period and an impressive year-over-year surge of 66%. Read more here.
In Other News
MTL Cannabis Corp.
MTL Cannabis Corp. (CSE: MTLC) received final approval to list its common shares on the Canadian Securities Exchange under the trading symbol MTLC. It will commence trading on the exchange at the opening of Monday, August 21.
Evogene Ltd.
Evogene Ltd. (Nasdaq: EVGN) (TASE: EVGN) reported revenues for the second quarter of 2023 of approximately $654,000, more than double the $312,000 for the same period the previous year. The revenue increase was primarily due to the collaboration agreement of Evogene’s subsidiary AgPlenus with Corteva and from sales of Lavie Bio’s ThrivusTM product. Read more here.
Vertical Peak Holdings
Vertical Peak Holdings Inc. (CSE: MJMJ) (OTC PINK: SPLIF) entered into binding letter of intent dated August 9 to sell all its California operations to Downwind Holdings Inc. Total aggregate net purchase price, including the deposit and assumed obligation, is estimated at CAD $12.3 million. Read more here.
Adam JacksonAugust 17, 2023
The firm recorded a 126% rise in adjusted EBIDTA since the same period last year.
Adam JacksonApril 24, 2023
The company is now the second-largest licensed producer in Canada by market share.
Adam JacksonAugust 18, 2022Decibel Cannabis Company Inc. (TSX-V: DB) (OTCQB: DBCCF) posted promising results as it continues to find gains in the Canadian market and overseas. The Alberta-based company delivered its financial report card using Canadian dollars in the period ending June 30, 2022.
Decibel reported approximately $18.6 million in net revenue during the period, up 11% since the previous quarter; and a gain of 49% since the same period last year. Total gross sales were $26 .2 million for the quarter. Additionally, the company reached 4.5% market share in July, rising 70% year over year.
Second-quarter net losses totaled $2.1 million, up 77% sequentially; versus a net loss of $620,000 in the same period last year. The earnings were a loss of one cent per share; in line with the previous quarter.
“Our second quarter results continue to demonstrate that Decibel is on the path we projected in our 2022 operational outlook,” said CEO Paul Wilson. “Our New Unique and Innovative product development and revenue generating initiatives have once again produced quarter-over-quarter record performance. This progress has been compounded by our productivity initiatives and record gross profit, now resulting in positive cash flow, putting us on track for another projected milestone.”
Decibel said that net revenue growth was driven by expanded distribution “particularly in the Ontario market, the continued launch of new General Admission and Qwest infused products in various provinces and continued growth in demand for derivative products.” The company said that net revenue would have been $18.9 million, however, $320,000 of discounts were provided related to discontinued products.
The company also posted record gross margins, a sequential improvement to 41% in the second quarter versus 35% in the previous quarter; and 41% in the same period last year. Decibel said that the increase was driven by “initiatives realized midway through the second quarter” — such as operational efficiencies, automation equipment commissioned and sourcing of more cost-effective components related to the manufacturing of cannabis products.
Adjusted EBITDA was $3.2 million, rising 31% since the previous quarter and 49% since the same time last year — marking Decibel’s eighth quarter of consecutive quarterly positive adjusted EBITDA.
Decibel reported $1.8 million of cash flow from operations in the quarter, a sequential decrease of $1.2 million since the previous quarter and an improvement of $4.8 million since the same time last year.
The company repaid its 9.5% convertible debentures in May with the draw-down of a $12 million term loan fixed at 4.75% — extending the maturity date of $12 million of debt by four years and avoiding approximately 6% of potential shareholder dilution; resulting in $0.6 million of annual interest expense savings.
“The cost engineering initiatives and capital investments impacted the later part of the second quarter, with additional equipment landed early August expected to drive continued sequential margin expansion,” the release said. The company said it achieved its previously stated target of 40 – 45% gross margin ahead of the second half of this year.
At the end of June, the company announced that is had received its certification to export its cannabis products internationally. The IMC-G.A.P certification will allow for a new international sales channels in Israel, and the company expects initial international export to occur in the second half of the year.
“With more highlights scheduled for the back half of 2022,” Wilson said. “Decibel is delivering exactly what we’ve planned and forecasted to the market, ourselves, and our shareholders.”
StaffJuly 13, 2022
Decibel Cannabis Company Inc. (TSX-V: DB) (OTCQB: DBCCF) released a preliminary outlook for net revenue and Adjusted EBITDA for the second quarter, ending June 31, 2022. Decibel said it expects its revenue to be between $18.5 million and $19.5 million. The company also said it has demonstrated positive cash flow from operations in the first two quarters of 2022.
“In the second quarter Decibel continued to match and exceed revenue projections, and significantly exceed EBITDA projections. Performance was driven by exceptional continued growth in demand for our popular brands and new products. This, coupled with prioritizing certain key capital initiatives, generated gross margin and EBITDA significantly beyond our forecast,” said Paul Wilson, CEO of Decibel. “We expect revenue in the quarter to be in the $18.5 – $19.5 range and corresponding Adjusted EBITDA in the $3.0 – $3.5M range. Margins and profitability expanded with our automation, infrastructure and cost engineering improvements coming online earlier than planned. These improvements have been in the pipeline and impacted the end of Q2, with the full impact unfolding in the third and fourth quarter. The impact of these projects appears to be well beyond our projections for gross margin expansion.”
The company also provided these forecasts:
- Anticipated Adjusted EBITDA of $3.0 to $3.5 million ($2.5 million Q1 2022)
- Anticipating significant ongoing gross margin and profitability increases
- Significant amount of cost engineering and automation infrastructure investments realized in late Q2 and early Q3, with potential for Decibel to exceed previously stated targeted gross margin of 40 – 45%.
Decibel said it will release its second-quarter financial results and related management discussion and analysis for the period ended June 30, 2022, on August 18, 2022, before markets open. The company has said in past statements that it is a going concern.
Israeli Sales
At the end of June, the company announced that is had received its certification to export its cannabis products internationally. The IMC-G.A.P certification will allow for a new international sales channels in Israel. The company expects initial international export to occur in the second half of 2022.
“After a number of ongoing conversations, we are well aware of the international demand for our cannabis products,” said Adam Coates, Chief Revenue Officer. “As global cannabis markets expand, we’ve seen a clear demand for higher quality than what is currently available. Decibel is well positioned to deliver on this growing demand for premium cannabis outside of Canada.”
StaffMay 26, 2022
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
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
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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