Decibel Announces Record First Quarter Results, With Sequential Strong Net Revenue Growth

Decibel Cannabis Company Inc., a premium cannabis producer, is pleased to announce its first quarter financial results for the three month period ending March 31, 2021.

Record Market Share Across BC, AB, SK, ON in Q1 2021^1,2:

• #1 brand in premium flower sales with an 8.4% market share
• #1 brand in concentrate sales with a 21.9% market share
• #3 brand in vape sales with a 10.0% market share

“These exceptional first quarter results are a testament to the strength of our brands, industry-leading product quality and ability to develop and execute an innovative product portfolio that meets the needs of today’s cannabis consumer”, said Cody Church, Interim CEO of Decibel. “Despite significant industry headwinds in the quarter, we delivered on our commitment of sustainable and profitable growth, while substantially strengthening our balance sheet and available liquidity.”

Key Financial Highlights

• Record Net Revenue: Net revenue grew to $12.6 million in the first quarter, an 11% increase over the prior quarter, driven by strong sales growth from vape and concentrate products and continued demand for Qwest flower. Net revenue grew by 151% over the comparative 2020 quarter.
• Record Positive Adj. EBITDA: The Company achieved a record $2.0 million of adjusted EBITDA in the first quarter, its third consecutive quarter of positive adjusted EBITDA, and an increase of 84% from the prior quarter. Adjusted EBITDA improved by $2.5 million over the comparative 2020 quarter.
• Flower Sales: 432 kilograms sold in the first quarter, with an average wholesale net price per gram of $8.94, an increase of 14% and 4%, respectively, over the prior quarter. Decibel continues to see strong demand for premium cannabis and its Qwest products, which command industry leading pricing with demand outstripping current supply.
• Derivative Sales: $5.6 million of net sales of vape and concentrate products in the first quarter, a 23% increase from the prior quarter. Sales growth was driven by increased demand for vape and concentrate products launched in the fourth quarter.
• Retail Sales: $3.2 million of retail sales, a 15% decrease over the prior quarter, primarily driven by seasonality and new entrants into the Saskatchewan retail market. Retail sales grew by 13% over the comparative 2020 quarter. Decibel’s retail portfolio continues to bring strategic value, contributing to the success of recent product launches, product innovation and understanding consumer trends.
• Thunderchild Operational Development:
  • • Achieved a minor contribution of first revenue out of the facility in March 2021
    • Completed seventh harvest since commencement of operations
    • Eight grow rooms planted and at various stages (40% of total facility planted)
• Launch of New Vape & Concentrate Products:
  • • In April, Decibel continued to innovate in the vape category with the launch of its first 100% Live Resin Vape with its General Admission Kootenay Fruit live resin vape and a new flavour of distillate vape with its General Admission Rainbow Sherb distillate vape cartridge
    • In April, Decibel launched into the premium concentrate category with its first live, loose concentrate with its Apricot Kush live sugar, available in BC, Alberta and Saskatchewan now and in Ontario in July
    • Additional upcoming Q2 2021 launches including additional live resin vapes and live sugar along with gems & juice (diamonds & sauce)
• Strengthened Balance Sheet: On May 13, 2021, the Company announced it had closed an amendment to its authorized overdraft facility increasing it from $1.5 million to $7.5 million with a committed interest rate of Prime + 1.00% (currently 3.45%). The additional capital will accelerate Decibel’s sales growth through the Thunderchild facility and new vape and concentrate launches

Quarterly Highlights

Link to Decibel’s Investor Presentation

Decibel’s financial statements for the three-month period ending March 31, 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 March 31, 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.

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, processing and distribution space which produces the widely championed, rare cultivar-focused brands Qwest and Qwest Reserve, which are sold in six provinces across Canada. The Thunderchild Cultivation Facility, is a licensed and operating 80,000 square foot indoor cultivation facility in Battleford, SK. The Plant, Decibel’s extraction, processing and manufacturing 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, and Blendcraft, into new and innovative product formats like concentrates, vapes, edibles and beyond.