Decibel Cannabis Company Inc., a market leader in premium cannabis and extract manufactured products, is pleased to announce its interim financial results for the three and six month periods ending June 30, 2023.
“Our strong second quarter sequential net revenue growth, driven by demand for our core products and international exports, continues to exceed our publicly-stated targets.” said Paul Wilson, CEO of Decibel. “We continue to highlight the success in our new, unique and innovative product strategy, demonstrated through clear consumer preference to our infused pre-roll strategy. In 2023, our industry leading brand, General Admission, has grown category share to 49%3 (+6% YTD3) in light of significant category competition through new competitive brands: +50 Brands3 (+56% YTD3) & New SKU’s: +156 SKU’s3 (+62% YTD3). Currently the infused pre-roll segment makes up ~34% of the Canadian pre-roll category3, in established US markets it makes up ~60% (California & Arizona YTD Sales ’233). We continue to see tailwinds for our core business that will further reinforce our Canadian market position and international presence.”
Second Quarter Highlights
- Record National Market Share(4) of 7.5% in Q2 2023 which placed Decibel as the 2nd largest licensed producer in Canada by market share.
- As of July 2023, Decibel’s market share was 7.6% which placed Decibel as the 2nd largest licensed producer in Canada by market share.
- Record Net Revenue of $30.9 million in the second quarter of 2023, with sequential growth of 14% over the prior quarter, and year over year growth of 66%. Net revenue improvement was driven by net Canadian recreational sales through growth in demand for vapes and infused products, increased manufacturing capacity, international sales, and the launch of the Company’s new brand Vox and General Admission Edibles near the end of the quarter.
- Gross Margin Before Fair Value Adjustments was 42% in the second quarter of 2023, compared to 49% in the prior quarter and 41% in the first quarter of 2022. The second quarter was impacted by a $754 thousand write off of aged product and increased temporary labour of $0.9 million to meet market demand as the Company is in the process of expanding manufacturing capacity.
- Record Adjusted EBITDA(2) of $7.3 million in the second quarter of 2023, with sequential growth of 8% over the prior quarter and year over year growth of 126%.
- Positive Free Cash Flow(2) of $0.5 million in the second quarter of 2023, with sequential decline of 75% over the prior quarter and a year over year decline of 51%. During the quarter, the Company reduced accounts payable by $4.2 from the prior quarter, which negatively impacted Free Cash Flow.
- Record Adjusted Net Income(2) of $4.3 million in the second quarter of 2023, with sequential growth of 27% over the prior quarter and a year over year improvement of $4.2 million.
- Adjusted Earnings Per Share (“Adjusted EPS”)(5): of $0.01 Adjusted EPS in the second quarter, consistent with the prior quarter and a year over year improvement of $0.01.
Year to Date Highlights
- Net Revenue of $58.0 million, an increase of 65% over 2022.
- Adjusted EBITDA(2) of $14.1 million, an increase of 147% over 2022.
- Positive Free Cash Flow(2) of $2.3 million, a decrease of 14% over 2022 driven by a $3.7 million reduction in accounts payable.
- Adjusted EPS(4) of $0.02, an increase of $0.02 over 2022.
About Decibel
Decibel is a consumer-focused cannabis company focused on delivering products that delight customers through a commitment to robust innovation and product quality. Leading brands General Admission, Qwest, and Vox are among its portfolio sold both across Canada and beginning to extend towards new countries to create a global footprint. Decibel operates a processing and manufacturing facility in Calgary, Alberta, and two cultivation facilities in Creston, British Columbia, and Battleford, Saskatchewan.
