CALGARY,
AB, Feb. 6, 2023 /CNW/ - Decibel Cannabis
Company Inc. (the "Company" or "Decibel") (TSXV: DB) (OTCQB:
DBCCF), a premium cannabis producer, is pleased to provide
preliminary unaudited fourth quarter results and 2023 financial
outlook.
Highlights
- Q4 2022 record Net Revenue of $25.25 – $26.25
million (>38% growth from Q3 2022)
- Q4 2022 record Adjusted EBITDA of $6.25 – $7.25
million (>47% growth from Q3 2022)
- Q4 2022 achieved <3.0x Debt to trailing twelve-month
Adjusted EBITDA
- Targeting 2023 Net Revenue year-over-year growth of
>35%
Management Commentary
Decibel has continued its market share gains, becoming the third
largest LP in Canada by market
share and the fastest growing large LP with 77% growth in 2022. We
remained focused on developing consumer loyalty and category
expansion supported through refinement of differentiation within
our products. By creating demand, it led to an abundance of
attractive investment opportunities by way of automation and supply
chain optimization, leading to record level gross margin in the
back half of the year. Through these steps, we've grown Decibel's
top and bottom line substantially, capping off the year with record
level results. We are steadfast in our strategic plan that has
driven our recent success, while remaining nimble to navigate a
highly dynamic Canadian marketplace and ever-growing international
landscape.
We plan to grow our position to become a market leader in
Canada through organic growth
centered around a pipeline of new, unique, and innovative products,
and a strong revenue generation engine to grow distribution.
Growing our footprint and recognition in Canada will in turn create a foundation to
expand our brands internationally, bringing quality and choice to
consumers abroad.
With demand in place, Decibel has invested aggressively to
expand its margins and drive free cash flow, with a pipeline of
high return on capital opportunities still in place. This year, we
are increasing our focus on improving operating cash conversion
with the streamlining of operations, a continued transition towards
automation, and improving our balance sheet. We think this is
critical given the current challenges present in the industry, and
positions Decibel to further reinvest in its business and reinforce
its ability to outcompete.
Link to Decibel's Updated Investor Presentation
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, the Company's plans to become a market leader
in Canada and eventual growth
internationally; the Company's expectation of improving operating
cash conversion; the Company's expectation that growing its
footprint and recognition in Canada will create a foundation to expand
internationally; Decibel's expectation as to the results of its
investments; the Company's 2023 financial outlook, including
targeting and achieving 35% net revenue growth year-over-year
through a new, unique, and innovative product pipeline, expanded
distribution, and international expansion; strengthening the
balance sheet while maintaining certain levels of debt to adjusted
EBITDA; 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. 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.
Forward-looking statements and FOFI (as defined herein) 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, supply chain disruptions, the occurrence of plant
pestilence, 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. Many of these risks and
uncertainties and additional risk factors are described in the
Company's Annual Information Form for the year ended December 31, 2020 and Management's Discussion and
Analysis for the year ended December 31,
2021, which are available at www.sedar.com.
With respect to forward-looking statements and FOFI contained
in this press release, Decibel has made assumptions regarding, but
not limited to: growth of the brand and recognition in Canada will lead to growth internationally;
demand for Decibel's products; streamlining of operations and a
transition towards automation will improve Decibel's balance sheet;
Decibel's ability to enter new markets and industry verticals;
Decibel's ability to attract, develop and retain key personnel;
Decibel's ability to raise additional capital and to execute on its
expansion plans; the timelines for new product launches, Decibel's
ability to continue investing in infrastructure and implement
scalable controls, systems and processes to support its growth; the
impact of competition; the changes and trends in Decibel's industry
or the global economy; the Company's ability to generate sufficient
cash flow from operations and obtain financing, if needed, on
acceptable terms or at all; the general economic, financial market,
regulatory and political conditions in which the Company operates;
the ability of the Company to ship its products and maintain supply
chain stability; consumer interest in the Company's products;
anticipated and unanticipated costs; government regulation of the
Company's activities and products; the timely receipt of any
required regulatory approvals; the Company's ability to conduct
operations in a safe, efficient and effective manner; the Company's
construction plans and timeframe for completion of such plans; and
the changes in laws, rules, regulations, and global
standards.
Any financial outlook or future oriented financial
information (in each case "FOFI") contained in this news release
regarding prospective financial position, including, but not
limited to: targeted net revenue growth of greater than 35% in
2023, is based on reasonable assumptions about future events,
including those described above, based on an assessment by
management of the relevant information that is currently available.
The actual results will likely vary from the amounts set forth
herein and such variations may be material.
Readers are cautioned that the foregoing list of assumptions
and risk factors is not exhaustive. The forward-looking statements
and FOFI contained herein are expressly qualified in their entirety
by this cautionary statement. The forward-looking statements and
FOFI included in this news release are made as of the date hereof
and Decibel does not undertake any obligation to publicly update
such forward-looking statements and FOFI to reflect new
information, subsequent events or otherwise unless so required by
applicable securities laws.
PRELIMINARY FINANCIAL
INFORMATION
The Company's expectations for its H2 and Q4 gross margin,
cash flow from operations, net revenue and adjusted EBITDA (see
"Non-GAAP Measures") are based on, among other things, the
Company's anticipated financial results for the three and twelve
month period ended December 31, 2022.
The Company's anticipated financial results are unaudited and
preliminary estimates that: (i) represent the most current
information available to management as of the date of hereof; (ii)
are subject to completion of interim review procedures that could
result in significant changes to the estimated amounts; and (iii)
do not present all information necessary for an understanding of
the Company's financial condition as of, and the Company's results
of operations for, such periods. The anticipated financial results
are subject to the same limitations and risks as discussed under
"Forward Looking Statements" above. Accordingly, the Company's
anticipated financial results for such periods may change upon the
completion and approval of the financial statements for such
periods and the changes could be material.
Cautionary Statement Regarding
Certain Non-GAAP Measures
This news release contains certain financial performance
measures that are not recognized or defined under IFRS (termed
"Non-GAAP Measures"). As a result, this data may not be comparable
to data presented by other licenced producers and cannabis
companies. For an explanation of these measures to related
comparable financial information presented in the Consolidated
Financial Statements prepared in accordance with IFRS, refer to the
discussion below. The Company believes that these Non-GAAP Measures
are useful indicators of operating performance and are specifically
used by management to assess the financial and operational
performance of the Company. Accordingly, these Non-GAAP Measures
are 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.
Adjusted EBITDA: Adjusted EBITDA is a non-GAAP financial
measure that is intended to provide a proxy for the Company's
operating cash flow and is widely used by industry analysts to
compare Decibel to its competitors and derive expectations of
future financial performance of the Company. Adjusted EBITDA
increases comparability between comparative companies by
eliminating variability resulting from differences in capital
structures, management decisions related to resource allocation,
and the impact of fair value adjustments on biological assets,
inventory, and financial instruments, which may be volatile on a
period to period basis. For a complete breakdown of the historical
composition of adjusted EBITDA please refer to the Corporation's
most recent MD&A on SEDAR.
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SOURCE Decibel Cannabis Company Inc.