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CALGARY, ALBERTA – May 25, 2022 –Decibel Cannabis Company Inc. (the “Company” or “Decibel”) (TSX-V:DB) (OTCQB:DBCCF), a premium cannabis producer, is pleased to announce its first quarter financial results for the three month period ending March 31, 2022.
“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.”
Key Financial Highlights – First Quarter
1 In the table above, wholesale inventory transferred to the retail stores and subsequently sold of $226 has been eliminated from retail sales and attributed to wholesale sales of flower and extracts to provide a more accurate depiction of business performance.
2 Adjusted EBITDA is a non-GAAP performance measure. Refer to “Cautionary Statement Regarding Certain Non-GAAP Performance Measures” for further details.
Link to Decibel’s Investor Presentation
Decibel’s financial statements for the three month period ending March 31, 2022 (“FinancialStatements”) and related Management’s Discussion & Analysis (“MD&A”), are available under the Company’s profile at www.sedar.com. As of March 31, 2022, 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.
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.
For More Information
Contact Stuart Boucher
Cautionary Statement Regarding Certain Non-GAAP Measures
This MD&A 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. These Non-GAAP Measures include, but are not limited, to the following:
Non-GAAP Financial Measures
Adjusted EBITDA: Adjusted EBITDA is a measure of the Company’s financial performance. It 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. Adjusted EBTIDA is not a recognized, defined, or standardized measure under IFRS. 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. Refer to “Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization” for a detailed calculation of this measure. The numbers that are input into this calculation can be found in the statement of financial position in the Company’s Consolidated Financial Statements.
Retail Sales: Retail Sales is a measure intended to provide a more accurate depiction of the revenue earned by the Company’s retail operations. Inventory transferred directly from the Company’s wholesale operations to the Company’s retail operations is removed from Retail Revenue as presented in the Company’s Consolidated Financial Statements.
Gross Sales of Flower: Gross Sales of Flower is a measure intended to provide a more accurate depiction of gross revenue earned by the Company’s wholesale flower operations. Inventory transferred directly from the Company’s wholesale flower operations to the Company’s retail operations is added to Gross Wholesale Revenue of Flower as found in the Company’s Consolidated Financial Statements to arrive at Gross Sales of Flower.
Net Sales of Flower: Net Sales of Flower is a measure intended to provide a more accurate depiction of net revenue earned by the Company’s wholesale flower operations. Excise taxes associated with flower sales are subtracted from Gross Sales of Flower to arrive at Net Sales of Flower.
Gross Sales of Extracts: Gross Sales of Extracts is a measure intended to provide a more accurate depiction of gross revenue earned by the Company’s wholesale extracts operations. Inventory transferred directly from the Company’s wholesale extracts operations to the Company’s retail operations is added to Gross Wholesale Revenue of Extracts as found in the Company’s Consolidated Financial Statements to arrive at Gross Sales of Extracts.
Net Sales of Extracts: Net Sales of Extracts is a measure intended to provide a more accurate depiction of net revenue earned by the Company’s wholesale extracts operations. Excise taxes associated with extracts sales are subtracted from Gross Sales of Extracts to arrive at Net Sales of Extracts.
Working Capital: Working Capital is an indicative measure of the Company’s ability to service its short-term financial obligations with short-term assets. Management believes this measure provides useful information about the Company’s current short-term liquidity. Refer to “Liquidity and Capital Resources” for a detailed calculation of this measure. The numbers that are input into this calculation can be found in the statement of financial position in the Company’s Consolidated Financial Statements.
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.
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