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 2021^2,3:

• #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

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.  

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.

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