CALGARY, AB, May 22, 2025 /PRNewswire/ - Decibel Cannabis Company Inc. (the "Company" or "Decibel") (TSXV: DB) (OTCQB: DBCCF), a market leader in premium cannabis and extract manufactured products, is pleased to announce its unaudited interim financial results for the three month period ending March 31, 2025.
"Our first quarter demonstrates progress on multiple fronts. AgMedica has been accretive since day one, and we expect it to accelerate as our strong pipeline activates in Q2 and beyond. Domestically, our renewed focus on innovation-particularly in vapes, milled flower, and ultra high potency formats-is gaining traction and helping to reverse prior market share softness. Importantly, we also reduced our payables this quarter, strengthening our balance sheet and reinforcing our focus on free cash flow and sustainable growth." Benjamin Sze - Chief Executive Officer
2025 Full Year Expectations
- Net Revenue of $130 million driven by continued international growth.
- Adjusted EBITDA1 of $25 million with continued cost focus and automation.
- Adjusted Free Cash Flow1 of $20 million to continue strengthening balance sheet.
- Debt to Adjusted EBITDA ratio2 of <1.4x continuing progress in deleveraging.
- Increase export to 9 markets from presence in 7 currently.
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. |
First Quarter Highlights
- Net Revenue was $21.2 million, a year over year increase of 1.4%. Net revenue growth in the quarter was primarily a result of contributions from AgMedica Bioscience Inc. ("AgMedica"), acquired on October 28, 2024. Total sales contributed from the acquisition were $3.4 million.
- Balance Sheet continued to improve as the Company reduced accounts payables by $2.5 million and debt by $0.8 million. This resulted in Q1 cash dropping quarter over quarter by roughly $2.5 million. Decibel maintains a commitment towards strengthening its balance sheet with an expectation to significantly improve our cash position as our international contributions ramp up.
- Net Canadian Recreational Sales were $19.0 million, a year over year decrease of 8%. The decrease in net Canadian recreational sales is primarily attributable to increased competition in infused pre-roll products. During the first half of 2025, the Company launched additional products and undertook a marketing campaign to combat declines in these segments and grow in other categories, including: a proudly Canadian campaign, reinvesting in growing the Qwest brand presence, launching ultra high potency vapes and infused pre-rolls, new large format all-in-one disposable vapes, and milled flowers. Early sell-through data and retailer feedback indicate strong momentum, with signs of market share growth.
- International Sales were $2.2 million, a year over year increase of 527%. The increase in international sales was primarily driven by the contributions from AgMedica. Total international sales contributed from AgMedica were $2.0 million. While the Company has secured a growing pipeline of export contracts, revenue realization from these agreements has trailed expectations due to operational delays and regulatory complexities in certain markets. Decibel expects international volumes to grow meaningfully beginning in Q2 of 2025 as key contracts come online.
- Gross Margin Before Fair Value Adjustments was 50% in the first quarter of 2025, compared to 48% in the first quarter of 2024.
- Adjusted EBITDA(1) of $3.5 million, with a year over year decrease of 4%. The decrease in Adjusted EBITDA for the quarter was primarily from higher SG&A from the AgMedica acquisition, partially offset by improved gross margin.
- Free Cash Flow(1) of $1.2 million, with a year over year decrease of $0.7 million. The decrease in Free Cash Flow was attributable to working capital investments of $2.4 million.
- Adjusted Net Loss(1) of $0.1 million, a year over year increase of $3.3 million.
Notes: |
1 Non-GAAP financial measure. Refer to "Cautionary Statement Regarding Certain Non-GAAP Measures" for further details. |
Summary Highlights
Three months ended March 31, | 2025 | 2024 | ||
(thousands of Canadian dollars, except where noted) | ||||
Gross Canadian recreational sales 1 | $29,390 | $32,303 | ||
Net Canadian recreational sales 1 | $19,011 | $20,598 | ||
International sales 1 | $2,227 | $355 | ||
Total | ||||
Gross revenue | $31,617 | $32,658 | ||
Net revenue | $21,238 | $20,953 | ||
Gross profit before fair value adjustments | $10,589 | $10,028 | ||
Gross margin before fair value adjustments | 50 % | 48 % | ||
Adjusted EBITDA 3 | $3,456 | $3,589 | ||
Net loss and comprehensive loss | ($1,901) | ($3,333) | ||
Adjusted net loss 3 | ($149) | ($3,477) | ||
Cash flow from continuing operations | ($711) | $905 | ||
Free cash flow 2 | ($1,229) | ($551) | ||
Per Share Metrics | ||||
Loss per share | ($0.00) | - | ||
Adjusted EPS 3 | - | ($0.01) |
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 month period ending March 31, 2025 (the "Financial Statements") and related management's discussion & analysis for the three month period ending March 31, 2024 ("MD&A") are available on SEDAR+ under the Company's profile at www.sedarplus.ca.
As of March 31, 2025, 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 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 Canada, with expanding reach into global markets. Following the acquisition of AgMedica in Q4 2024, Decibel has added an EU-GMP-certified facility, supporting its commitment to international standards and global distribution growth. Decibel now operates three cultivation facilities and a processing and manufacturing center, positioning the company as a leader in high-quality, globally accessible cannabis products and brands.
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 Loss 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 March 31 | ||||
2025 | 2024 | |||
(thousands of Canadian dollars) | ||||
Net loss and comprehensive loss | (1,901) | (3,333) | ||
Unrealized gain on changes in fair value of biological assets | (3,987) | (4,595) | ||
Change in fair value of biological assets realized through inventory sold | 5,739 | 4,451 | ||
Depreciation and amortization | 1,642 | 1,243 | ||
Share-based compensation | 187 | 63 | ||
Other loss | 293 | 12 | ||
Finance costs | 689 | 772 | ||
Foreign exchange loss | 196 | 90 | ||
Non-cash cost of goods sold | 598 | 732 | ||
Other adjustments | - | 4,154 | ||
Adjusted EBITDA | 3,456 | 3,589 | ||
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 | ||||
2025 | 2024 | |||
(thousands of Canadian dollars) | ||||
Net loss and comprehensive loss | (1,901) | (3,333) | ||
Unrealized gain on changes in fair value of biological assets | (3,987) | (4,595) | ||
Change in fair value of biological assets realized through inventory sold | 5,739 | 4,451 | ||
Adjusted net loss | (149) | (3,477) | ||
Weighted average number of shares outstanding | 576,848,521 | 423,958,977 | ||
Adjusted EPS | - | ($0.01) | ||
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 | ||||
2025 | 2024 | |||
(thousands of Canadian dollars) | ||||
Cash used in continuing operating activities | (711) | (21) | ||
Cash used in investing activities | (518) | (530) | ||
Free cash flow | (1,229) | (551) | ||
Adjusted Free Cash Flow is a non-GAAP financial measure that is calculated as cash flow from operations plus cash provided by (used in) investing activities, changes in non-cash working capital, less repayment of long-term debt. 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 | ||||
2025 | 2024 | |||
(thousands of Canadian dollars) | ||||
Free cash flow | (1,229) | (551) | ||
Cash used in investing activities | 518 | 530 | ||
Changes in non-cash working capital | 2,403 | 2,023 | ||
Repayment of long-term debt | (757) | (696) | ||
Adjusted free cash flow | 935 | 1,306 | ||
Non-GAAP Ratios
Debt to Adjusted EBITDA (debt divided by Adjusted EBITDA) 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 debt to Adjusted EBITDA is a useful metric.
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 AgMedica continues to be accretive to the Company's business; the Company's ability to gain traction for new products; the ability to obtain sustainable growth; 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; the Company's marketing efforts and brand expansion, and the expected benefits therefrom; the Company's pursuit of additional contracts related to cannabis exports to international markets, the anticipated contributions from these activities, and the timing thereof; 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 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; including the imposition of levies and tariffs, and the general impact of such policies on the broader economy; 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 months ended March 31, 2025, which is available under the Company's profile at www.sedarplus.ca.
With respect to forward-looking statements contained in this news release, Decibel has made assumptions regarding, but not limited to: growth of the brand and recognition in Canada will lead to growth internationally; demand for Decibel's products; Decibel's ability to enter new markets and industry verticals; Decibel's ability to attract, develop and retain key personnel; Decibel's ability to raise additional capital and to execute on its expansion plans; the timelines for new product launches; Decibel's ability to continue investing in infrastructure and implement scalable controls, systems and processes to support its growth; the impact of competition; the changes and trends in Decibel's industry or the global economy; the Company's ability to generate sufficient cash flow from operations and obtain financing, if needed, on acceptable terms or at all; the general economic, financial market, regulatory and political conditions in which the Company operates; the ability of the Company to ship its products and maintain supply chain stability; consumer interest in the Company's products; anticipated and unanticipated costs; government regulation of the Company's activities and products; the timely receipt of any required regulatory approvals; the Company's ability to conduct operations in a safe, efficient and effective manner; the Company's construction plans and timeframe for completion of such plans; and the changes in laws, rules, regulations, and global standards.
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.
SOURCE Decibel Cannabis Company Inc.
