Decibel Cannabis Company Inc. , a premium cannabis producer and retailer, is pleased to announce its year-end financial results for the three and twelve month periods ending December 31, 2020.
“The success achieved in 2020 reflects Decibel’s commitment to sustainable profitability and product quality, all while executing on an aggressive growth plan” said Cody Church, Interim CEO of Decibel. “We continue to execute as a leading producer of premium cannabis, growing our production from 1,800 kg to over 9,000 kg in this year to meet the strong demand for our Qwest Family of Brands. We are gaining momentum with our cannabis 2.0 portfolio as it continues to gain market share, validating Decibel’s approach to product innovation while maintaining our commitment to quality.”
Key Financial Highlights – Fiscal Year 2020
- Net revenue of $30 million in 2020, an increase of 380% from 2019.
- Gross profit of $11.7 million in 2020, an increase of 2,888% from 2019.
- Positive adjusted EBITDA of $1.5 million in 2020, an improvement of $3.5 million from 2019.
- Fourth quarter contributed $1.1 of the $1.5 million in adjusted EBITDA achieved in the year.
Key Financial Highlights – Fourth Quarter
- Record Net Revenue: Net revenue grew to $11.4 million in the fourth quarter, a 51% increase, over the prior quarter, driven by strong sales growth from Qwest dried flower and newly launched vape and concentrate products. Net revenue grew by 645% over the comparative 2019 quarter.
- Record Positive Adj. EBITDA: The Company achieved a record $1.1 million of adjusted EBITDA in the fourth quarter, its second consecutive quarter of positive adjusted EBITDA, and an increase of 28% from the prior quarter. Adjusted EBITDA improved by $4 million over the comparative 2019 quarter.
- Record Qwest Sales: 378 kilograms sold in the fourth quarter, with an average wholesale net price per gram of $8.59, a volume increase of 39% and pricing in line 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. Kilograms sold and average wholesale net price per gram increased by 125% and 23%, respectively, over the comparative 2019 quarter.
- First Full Quarter of Derivative Sales: Achieved $4.5 million of net sales of newly launched vape and concentrate products in the fourth quarter. Decibel had 22 product SKUs in market across four provinces including British Columbia, Alberta, Saskatchewan, and delivered its first shipment to Ontario at the end of December.
- In January, Decibel achieved a 22% market share in concentrates and a 9% market share in vape categories across British Columbia, Alberta, Saskatchewan and Ontario1,2
- Retail Sales: $3.7 million of retail sales, a 7% decrease over the prior quarter. Decibel’s retail portfolio continues to bring strategic value, contributing to the success of product innovation and understanding consumer trends.
- Strengthened Balance Sheet: Decibel completed a $30 million debt refinancing comprised of $28.5 million of term debt and a $1.5 million authorized overdraft. The proceeds were used to fully repay Decibel’s then outstanding $26.8 million of debt with its former lender and provide additional liquidity. The new credit facility resulted in several positive impacts:
- $3.2 million of additional liquidity available for working capital purposes.
- Extended debt maturity by 5 years and debt amortizes over a 10 year term.
- Repayment schedule aligned to operational timeline with $16 million having an interest only period ending in Q3 2021. Principal savings over this period provide Decibel flexibility and additional resources to support its growth strategy.
- Reduced blended interest rate by ~1.70%, to 4.75% for outstanding term debt and Prime + 1.00% for the authorized overdraft. This represents approximately $360 thousand in annual interest savings over the full year 2021.
- Simplified financial covenants to a monthly current ratio of not less than 1.25:1 and two annually tested covenants, a debt service coverage ratio of not less than 1.40:1.00, and a debt to equity ratio of not greater than 0.75:1.00 at the end of 2021 and 0.50:1.00 for all fiscal years ending thereafter.
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.