Adam JacksonAugust 18, 2022
Decibel 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.
Staff
Debra Borchardt
