Decibel Announces Third Quarter Results
Decibel Cannabis Company reported Q3 2024 financial results with net revenue of $24.1 million, showing a 9% sequential increase but a 12% year-over-year decrease. The company achieved a gross margin of 53% and Adjusted EBITDA of $5.1 million, up 31% from Q2 2024 but down 21% year-over-year. Notable improvements include positive free cash flow of $1.8 million and adjusted net income of $2.1 million. The revenue decline was attributed to increased competition in infused pre-rolls, changes in vape consumer preferences, and temporary halt of exports to Israel during distribution partner transition.
Decibel Cannabis Company ha riportato i risultati finanziari del terzo trimestre 2024 con un fatturato netto di 24,1 milioni di dollari, mostrando un aumento sequenziale del 9% ma una diminuzione del 12% rispetto all'anno precedente. L'azienda ha raggiunto un margine lordo del 53% e un EBITDA rettificato di 5,1 milioni di dollari, in aumento del 31% rispetto al secondo trimestre 2024 ma in calo del 21% su base annua. Tra i miglioramenti significativi si evidenziano un flusso di cassa libero positivo di 1,8 milioni di dollari e un reddito netto rettificato di 2,1 milioni di dollari. La diminuzione del fatturato è stata attribuita all'aumento della concorrenza nei pre-rolls infusi, ai cambiamenti nelle preferenze dei consumatori di vape e alla sospensione temporanea delle esportazioni verso Israele durante la transizione dei partner distributori.
Decibel Cannabis Company informó los resultados financieros del tercer trimestre de 2024 con ingresos netos de 24,1 millones de dólares, mostrando un aumento secuencial del 9% pero una disminución del 12% en comparación interanual. La compañía logró un margen bruto del 53% y un EBITDA ajustado de 5,1 millones de dólares, un 31% más que en el segundo trimestre de 2024, pero un 21% menos que en el año anterior. Las mejoras notables incluyen un flujo de efectivo libre positivo de 1,8 millones de dólares y un ingreso neto ajustado de 2,1 millones de dólares. La disminución de los ingresos se atribuyó a la mayor competencia en los pre-rolls infusionados, cambios en las preferencias de los consumidores de vape y una suspensión temporal de las exportaciones a Israel durante la transición de socios distribuidores.
디시벨 캐나비스 컴퍼니는 2024년 3분기 재무 결과를 보고하며 순수익 2410만 달러를 기록했다고 밝혔습니다. 이는 전분기 대비 9% 증가했지만 전년 동기 대비 12% 감소한 수치입니다. 회사는 53%의 총 이익률과 조정 EBITDA 510만 달러를 달성했으며, 이는 2024년 2분기 대비 31% 증가했지만 전년 대비 21% 감소했습니다. 주목할 만한 개선 사항으로는 180만 달러의 긍정적인 자유 현금 흐름과 210만 달러의 조정된 순이익이 포함됩니다. 수익 감소는 주입된 사전 롤에서의 경쟁 심화, vape 소비자 선호도 변화, 배급 파트너 전환 과정에서 이스라엘로의 수출 일시 중단에 기인했습니다.
Decibel Cannabis Company a annoncé les résultats financiers du troisième trimestre 2024 avec un chiffre d'affaires net de 24,1 millions de dollars, affichant une hausse séquentielle de 9 % mais une baisse de 12 % par rapport à l'année précédente. La société a atteint une marge brute de 53% et un EBITDA ajusté de 5,1 millions de dollars, soit une augmentation de 31 % par rapport au deuxième trimestre 2024, mais une baisse de 21 % par rapport à l'année dernière. Parmi les améliorations notables figurent un flux de trésorerie libre positif de 1,8 million de dollars et un résultat net ajusté de 2,1 millions de dollars. La baisse des revenus a été attribuée à l'augmentation de la concurrence dans les pré-rolls infusés, aux changements de préférences des consommateurs de vape et à l'interruption temporaire des exportations vers Israël lors de la transition des partenaires de distribution.
Decibel Cannabis Company hat die finanziellen Ergebnisse für das dritte Quartal 2024 vorgelegt, mit einem Nettoumsatz von 24,1 Millionen US-Dollar, was einem sequenziellen Anstieg von 9 % entspricht, aber einem Rückgang von 12 % im Jahresvergleich. Das Unternehmen erzielte eine Bruttomarge von 53% und ein bereinigtes EBITDA von 5,1 Millionen US-Dollar, was einen Anstieg von 31 % im Vergleich zum zweiten Quartal 2024, jedoch einen Rückgang von 21 % im Jahresvergleich bedeutet. Zu den bemerkenswerten Verbesserungen gehören ein positiver freier Cashflow von 1,8 Millionen US-Dollar und ein bereinigter Nettogewinn von 2,1 Millionen US-Dollar. Der Umsatzrückgang wurde auf den zunehmenden Wettbewerb im Bereich der infundierten Pre-Rolls, Änderungen der Verbraucherpräferenzen für Vape und den vorübergehenden Halt der Exporte nach Israel während der Übergangsphase des Vertriebspartners zurückgeführt.
- Gross margin improved to 53% from 44% year-over-year
- Sequential net revenue growth of 9% from Q2 2024
- Positive free cash flow of $1.8 million, up 75% year-over-year
- Adjusted net income increased 294% to $2.1 million
- Reduced current liabilities by approximately $5 million
- Net revenue declined 12% year-over-year to $24.1 million
- Adjusted EBITDA decreased 21% year-over-year to $5.1 million
- International sales dropped from $500,000 to $309,000 year-over-year
- Net loss of $585,000 compared to net income of $413,000 in Q3 2023
- Market share decline in infused pre-roll segment
"Decibel has been very deliberate about reducing our current liabilities, by ~5mm this quarter. Maintaining discipline over time will result in a stronger balance sheet. This marks the last quarter where our primary focus is on Canadian domestic recreational sales. While we continue to integrate AgMedica into our portfolio, it is encouraging to see there is significant demand internationally for Decibel flower." Benjamin Sze – Chief Executive Officer
Third Quarter Highlights
- Net Revenue was
$24.1 million 9% sequentially over Q2 2024 and a year over year decrease of12% . Net revenue decrease driven by increased competition in the infused pre-roll segment, vape consumers switching towards large format 510 cartridges and disposables and the halting of exports toIsrael as the Company transitioned to a new distribution partner. Decibel has combatted market share declines with the relaunch of its domestic flower brand Qwest, introduction of large format 510 cartridges and disposables. - Gross Margin Before Fair Value Adjustments was
53% in the third quarter of 2024, compared to44% in the third quarter of 2023. - Adjusted EBITDA(1) of
$5.1 million in the third quarter of 2024, an increase of31% sequentially over Q2 2024 and a year over year decline of21% . The decrease in Adjusted EBITDA year over year was primarily driven by a decline in net Canadian recreational sales and international sales. - Positive Free Cash Flow(1) of
$1.8 million 75% over the third quarter of 2023. - Adjusted Net Income(1) of positive
$2.1 million in the third quarter of 2024, an increase of294% over the third quarter of 2023. - Adjusted Earning Per Share ("Adjusted EPS")(2) of
$0.01 $0.01
Notes: |
1 Non-GAAP financial measure. Refer to "Cautionary Statement Regarding Certain Non-GAAP Measures" for further details. |
2 Non-GAAP ratio. Refer to "Cautionary Statement Regarding Certain Non-GAAP Measures" for further details. |
Summary Highlights
Three months ended | Nine months ended | |||
September 30 | September 30 | |||
2024 | 2023 | 2024 | 2023 | |
(thousands of Canadian dollars, except where noted) | ||||
Gross Canadian recreational sales 1 | ||||
Net Canadian recreational sales 1 | ||||
International sales 1 | ||||
Total | ||||
Gross revenue | ||||
Net revenue | ||||
Gross profit before fair value adjustments | ||||
Gross margin before fair value adjustments | 53 % | 44 % | 48 % | 46 % |
Adjusted EBITDA 2 | ||||
Net income (loss) and comprehensive income (loss) | ( | ( | ( | |
Adjusted net income (loss) 2 | ( | |||
Cash flow from operations | ||||
Free cash flow 2 | ||||
Per Share Metrics | ||||
Income (loss) per share | - | - | - | - |
Adjusted EPS 3 | - | - | ||
1 Supplementary financial measure. Refer to "Cautionary Statement Regarding Certain Non-GAAP Measures" for further details. |
2 Refer to "Cash Flows" in the MD&A (as defined herein) for further details. |
3 Non-GAAP financial measure. Refer to "Cautionary Statement Regarding Certain Non-GAAP Measures" for further details. |
Decibel's unaudited condensed consolidated interim financial statements for the three and nine month periods ending September 30, 2024 (the "Financial Statements") and related management's discussion & analysis for the three and nine month periods ending September 30, 2024 ("MD&A") are available on SEDAR+ under the Company's profile at www.sedarplus.ca.
As of September 30, 2024, 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 also ratified the appointment and position of Corporate Secretary to hold the position as an officer of the Company.
About Decibel
Decibel is a consumer-focused cannabis company known for premium products that delight customers through innovation and quality. With brands like General Admission, Qwest, and Vox, Decibel's offerings are available across
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.
Cautionary Statements
Non-GAAP Measures
This news release contains certain financial performance measures, namely Adjusted EBITDA, Adjusted Net Income and Free Cash Flow, 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 licensed producers and cannabis companies. For an explanation of these measures to related comparable financial information presented in the 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. 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.
Non-GAAP Financial Measures
Adjusted EBITDA is a non-GAAP financial measure that is calculated as net income (loss) and comprehensive income (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. This non-GAAP financial measure should be considered together with other financial information prepared in accordance with IFRS to enable investors to evaluate the Decibel's operating results, underlying performance and prospects in a manner similar to Decibel's management.
Three months ended | Nine months ended | |||
September 30 | September 30 | |||
2024 | 2023 | 2024 | 2023 | |
(thousands of Canadian dollars) | ||||
Net income (loss) and comprehensive income (loss) | (585) | 413 | (3,796) | (579) |
Unrealized gain on changes in fair value of biological assets | (1,201) | (4,683) | (9,108) | (9,107) |
Change in fair value of biological assets realized through inventory sold | 3,844 | 4,792 | 12,090 | 17,820 |
Depreciation and amortization | 1,219 | 690 | 3,640 | 2,049 |
Share-based compensation (recovery) | 162 | 493 | (631) | 1,064 |
Other (income) | (89) | (99) | 134 | (242) |
Finance costs | 728 | 696 | 2,253 | 2,067 |
Foreign exchange loss | 104 | 39 | 189 | 283 |
Gain on disposal of Prairie Records Retail assets | - | - | (62) | - |
Non-cash cost of goods sold | 480 | 1,177 | 3,032 | 3,810 |
Other adjustments | 485 | 2,957 | 4,932 | 2,957 |
Adjusted EBITDA | 5,147 | 6,475 | 12,673 | 20,122 |
Adjusted Net Income is a non-GAAP financial measure that is calculated as net income (loss) and comprehensive income (loss) excluding unrealized gain on changes in fair value of biological assets and change in fair value of biological assets realized through inventory sold. Adjusted EPS is a non-GAAP ratio that is calculated as net income (loss) and comprehensive income (loss) excluding unrealized gain on changes in fair value of biological assets and change in fair value of biological assets realized through inventory sold, divided by the weighted average common shares outstanding. These measures are intended to provide a proxy for the Company's net income (loss) and comprehensive income (loss) and are used to compare Decibel to its competitors and derive expectations of future financial performance of the Company and should be considered together with other financial information prepared in accordance with IFRS to enable investors to evaluate the Decibel's operating results, underlying performance and prospects in a manner similar to Decibel's management.
Three months ended | Nine months ended | |||
September 30 | September 30 | |||
2024 | 2023 | 2024 | 2023 | |
(thousands of Canadian dollars) | ||||
Net income (loss) and comprehensive income (loss) | (585) | 413 | (3,796) | (579) |
Unrealized gain on changes in fair value of biological assets | (1,201) | (4,683) | (9,108) | (9,107) |
Change in fair value of biological assets realized through inventory sold | 3,844 | 4,792 | 12,090 | 17,820 |
Adjusted net income (loss) | 2,058 | 522 | (814) | 8,134 |
Weighted average number of shares outstanding | 409,039,064 | 472,318,208 | 409,039,064 | 409,039,064 |
Adjusted EPS | - | - | ||
Free Cash Flow is a non-GAAP financial measure that is calculated as cash flow from operations less cash provided by (used in) investing activities. This non-GAAP financial measure should be considered together with other financial information prepared in accordance with IFRS to enable investors to evaluate the Decibel's operating results, underlying performance and prospects in a manner similar to Decibel's management.
Three months ended | Nine months ended | |||
September 30 | September 30 | |||
2024 | 2023 | 2024 | 2023 | |
(thousands of Canadian dollars) | ||||
Cash provided by operating activities | 1,906 | 1,793 | 3,766 | 4,758 |
Cash used in investing activities | (133) | (780) | (754) | (1,730) |
Free cash flow | 1,773 | 1,013 | 3,012 | 3,028 |
Non-GAAP Ratios
Adjusted earnings per share (adjusted net income (loss) divided by the number of outstanding shares) is a non-GAAP ratio, does not have a standardized meaning prescribed by GAAP and is therefore unlikely to be comparable to similar measures presented by other issuers. The Company believes that adjusted earnings per share is a useful metric to normalize net income for biological asset accounting impacts.
Supplementary Financial Measures
International Sales is a supplementary financial measure intended to provide a more accurate depiction of international sales earned by the Company's wholesale operations.
Gross Canadian Recreational Sales is a supplementary financial measure intended to provide a more accurate depiction of gross revenue earned by the Company's wholesale operations. Inventory transferred directly from the Company's wholesale operations to the Company's retail operations is added to Gross Canadian Recreational Sales as found in the Financial Statements to arrive at Gross Canadian Recreational Sales.
Net Canadian Recreational Sales is a supplementary financial measure intended to provide a more accurate depiction of net revenue earned by the Company's wholesale operations. Inventory transferred directly from the Company's wholesale operations to the Company's retail operations is added to Net Canadian Recreational Sales as found in the Financial Statements to arrive at Net Canadian Recreational Sales.
Forward-Looking Statements
This news release contains "forward-looking information" and "forward-looking statements" (collectively, "forward-looking statements") within the meaning of the applicable Canadian securities legislation. All statements, other than statements of historical fact, are forward-looking statements and are based on expectations, estimates and projections as at the date of this news release.
Any statement that involves discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or performance (often but not always using phrases such as "expects", or "does not expect", "is expected", "anticipates" or "does not anticipate", "plans", "budget", "scheduled", "forecasts", "estimates", "believes" or "intends" or variations of such words and phrases or stating that certain actions, events or results "may" or "could", "would", "might" or "will" be taken to occur or be achieved) are not statements of historical fact and may be forward-looking statements.
In this news release, forward-looking statements relate to, among other things: expectations that demand for Decibel's products will grow; the ability for Decibel to delight customers through the Company's product offering; the ability of the Company to extend its product offering to new countries and create a global footprint; and the Company's expectation that it will remain in compliance with all of its financial covenants under its credit facilities for the remainder of its twelve-month forecast period, the Company's full year 2025 guidance, and its other business plans and expectations. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on the forward-looking statements contained in this news release. Except as required by law, the Company assumes no obligation to update the forward-looking statements of beliefs, opinions, projections or other factors should they change, except as required by law.
Forward-looking statements and FOFI (as defined herein) are necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include, but are not limited to: risks relating to delays, regulatory changes and impacts; capital requirements; construction impacts; the ability to obtain and maintain licences to retail cannabis products; review of the Company's production facilities by Health Canada and maintenance of licences (including any amendments thereto) from Health Canada in respect thereof; future legislative and regulatory developments involving cannabis; inability to access sufficient capital from internal and external sources, and/or inability to access sufficient capital on favourable terms; the labour market generally and the ability to access, hire and retain employees; general business, economic, competitive, political and social uncertainties; the risk that the Company may not be able to meet consumer demand; the risk that the Company may not improve its operational capacity when anticipated or at all; the risk that Decibel may not remain in compliance with its financial covenants for the remainder of its twelve-month forecast period; and the delay or failure to receive board, regulatory or other approvals, including any approvals of the TSX Venture Exchange, as applicable. Many of these risks and uncertainties and additional risk factors are described in the Company's management's discussion and analysis for the three and nine months ended September 30, 2024 and 2023, which are available under the Company's profile at www.sedarplus.ca.
With respect to forward-looking statements and FOFI contained in this news release, Decibel has made assumptions regarding, but not limited to: growth of the brand and recognition in
Any financial outlook or future oriented financial information (in each case "FOFI") contained in this news release regarding the Company's prospective financial position, including, but not limited to net revenue and adjusted EBITDA projections relating to the full year 2025 guidance in this news release, is based on reasonable assumptions about future events, including those described above, based on an assessment by management of Company of the relevant information that is currently available. The actual results will likely vary from the amounts set forth herein and such variations may be material.
Readers are cautioned that the foregoing list of assumptions and risk factors is not exhaustive. The forward-looking statements contained herein are expressly qualified in their entirety by this cautionary statement. The forward-looking statements included in this news release are made as of the date hereof and Decibel does not undertake any obligation to publicly update such forward-looking statements to reflect new information, subsequent events or otherwise unless so required by applicable securities laws.
Market, Independent Third Party and Industry Data
Certain market, independent third party and industry data contained in this news release is based upon information from government or other independent industry publications and reports or based on estimates derived from such publications and reports. Government and industry publications and reports generally indicate that they have obtained their information from sources believed to be reliable, but Decibel has not conducted its own independent verification of such information. This news release also includes certain data derived from independent third parties. While Decibel believes this data to be reliable, market and industry data is subject to variations and cannot be verified with complete certainty due to limits on the availability and reliability of raw data, the voluntary nature of the data gathering process and other limitations and uncertainties inherent in any statistical survey. Decibel has not independently verified any of the data from independent thirdparty sources referred to in this news release or ascertained the underlying assumptions relied upon by such sources.
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SOURCE Decibel Cannabis Company Inc.
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