Decibel Cannabis Company Reports Record Adjusted EBITDA Of $2.1M In The Second Quarter

Cannabis producer Decibel Cannabis Company Inc. DB DBCCF reported its second-quarter financial results for the three-month period ending June 30, 2021, revealing net revenue of $12.4 million with strong gross margins of 41% and a record adj. EBITDA of $2.1 million. This marks the Calgary, Alberta-based company’s fourth consecutive quarter of positive adj. EBITDA. 

"Decibel's tremendous first-half results are a testament to the strength of our brands, ability to innovate and our exceptional team", Paul Wilson, CEO of Decibel said. "We continue to build a solid foundation by creating meaningful brands, high-quality products and executing against our aggressive strategic plan."

Key Financial Highlights 

• Net revenue was $12.4 million in the second quarter, a 1% decrease over the prior quarter 
• and a 111% improvement over the comparative 2020 quarter.
• The Company achieved a record $2.1 million of adjusted EBITDA in the second quarter, its fourth consecutive quarter of positive adjusted EBITDA and an increase of 6% from the prior quarter (improvement of $2.2MM from prior year);
• Flower Sales: 449 kilograms sold in the second quarter, with an average wholesale net price per gram of $7.96, an increase of 4% and a decrease of 11%, respectively, over the prior quarter.
• Retail Sales: $3.2 million of retail sales, a 1% increase over the prior quarter, primarily driven by seasonality and sales growth in the Alberta retail stores as COVID restrictions relaxed, partially offset by new entrants into the Saskatchewan retail market. Retail sales declined by 17% over the comparative 2020 quarter.
• 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 Cultivation facility and new vape and concentrate launches.

Product Innovation Roll-Out

• Decibel continued its aggressive rollout of in-demand products, launching 15 new product SKUs across Ontario, Saskatchewan, Alberta and BC in the quarter with strong interest from customers in different jurisdictions and impressive market share improvements.
• Focused on winning in Ontario, Decibel was successful in both the April and June OCS product calls, the Company achieved 15 new listings that have or will launch in Q2 and early Q3 of this year. It launched two new cultivars, Stuffed French Toast under the Qwest brand and Sunset Mac under the Qwest Reserve brand, in new glass packaging.
• Launched into the live concentrate category with two live resin vapes under the General Admission brand alongside two strains of Gems & Juice and Live Sugar under the Pressed by Qwest brand.
• Launched into large-format pre-rolls with the General Admission brand, its first dried flower product with 6, 7 and 12 x 0.5g pre-rolls.

Price Action 

Decibel’s shares were trading 1.10% lower at 25 cents per share at the time of writing Monday late morning. 

Photo: Courtesy of Tim Foster on Unsplash