CALGARY, AB, April 22, 2025 /CNW/ - 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 audited financial results for the three and twelve month periods ending December 31, 2024.
Decibel Cannabis logo (CNW Group/Decibel Cannabis Company Inc.)
"We ended 2024 with strong momentum and renewed confidence in our global growth strategy. The removal of our going concern note is a direct reflection of the operational discipline and financial resilience we've built — including improved free cash flow, strategic reductions to payables, and our integration of AgMedica. While we anticipate a softer Q1 due to timing of international shipments, we expect a meaningful ramp-up in Q2 as export volumes accelerate. With these building blocks in place, we remain focused on profitable growth, both in Canada and abroad." — 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 Flow of $20 million to continue strengthening balance sheet.
Debt to EBITDA ratio of <1.4x continuing progress in deleveraging.
Increase export to 9 markets from presence in 7 currently.
_________________________________ 1 Adjusted EBITDA is a Non-GAAP financial measure. Refer to "Cautionary Statement Regarding Certain Non-GAAP Measures" for further details.
AgMedica Transaction Highlights
Financial contributions from AgMedica Bioscience Inc. ("AgMedica") were for the period October 28, 2024 to December 31, 2024, and were immediately accretive to Decibel's results generating $3.4 million of net revenue, positive EBITDA2 and free cash flow.
With an EU-GMP certified facility and strong international demand, AgMedica is expected to contribute $30 million of net revenue and $4 million of EBITDA in 2025.
The Company expects a modest first quarter in 2025 due to the timing of international shipments. It anticipates a significant ramp up in global sales beginning in Q2 2025 as contracted orders begin to ship and scale and therefore is reiterating its previously reported guidance (October 28, 2024) relating to 2025 full year net revenue and Adjusted EBITDA expectations.
_________________________ 2 EBITDA is a Non-GAAP financial measure. Refer to "Cautionary Statement Regarding Certain Non-GAAP Measures" for further details
Fourth Quarter Highlights
Net Revenue was $25.3 million, a year over year increase of 0.4%. Net revenue growth in the quarter was primarily a result of a partial quarter of contributions from AgMedica, acquired on October 28, 2024. Contributions from the acquisition were offset by a decrease in net Canadian recreational sales.
Net Canadian Recreational Sales were $21.9 million, a year over year decrease of 8%. The decrease in net Canadian recreational sales is primarily attributable to increased competition in vapes and infused pre-roll products. Subsequent to the quarter, 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.
International Sales were $3.4 million, a year over year increase of 141%. The increase in international sales was primarily driven by a partial quarter of contributions from AgMedica. Total international sales contributed by AgMedica were $2.1 million. The Company has pursued additional contracts related to cannabis exports to international markets and anticipates contributions from these activities in the second quarter of 2025.
Gross Margin Before Fair Value Adjustments was 49% in the fourth quarter of 2024, compared to 46% in the fourth quarter of 2023.
Adjusted EBITDA of $5.2 million, with a year over year increase of 4%. The increase in Adjusted EBITDA for the quarter was primarily a result of improved gross margin and partial contributions from AgMedica.
Free Cash Flow3 of $2.2 million, with a year over year increase of 18%. The increase in Free Cash Flow was attributable to improvements in gross margin and reductions in working capital investments, partially offset by decreases to accounts payable. During the quarter, the Company reduced its accounts payable by $1.8 million as a part of an ongoing effort to strengthen its financial position.
Adjusted Net Income4 of $1.0 million, a year over year increase of $1.2 million.
________________________________ 3 Free Cash Flow is a Non-GAAP financial measure. Refer to "Cautionary Statement Regarding Certain Non-GAAP Measures" for further details.
4 Adjusted Net income is a Non-GAAP financial measure. Refer to "Cautionary Statement Regarding Certain Non-GAAP Measures" for further details.
Summary Highlights
Three months ended
Year ended
December 31
December 31
2024
2023
2024
2023
(thousands of Canadian dollars, except where noted)
Gross Canadian recreational sales 1
$33,820
$42,177
$136,353
$173,990
Net Canadian recreational sales 1
$21,869
$23,783
$88,392
$102,532
International sales 1
$3,443
$1,427
$4,145
$3,692
Total
Gross revenue
$37,263
$43,604
$140,498
$177,682
Net revenue
$25,312
$25,210
$92,537
$106,224
Gross profit before fair value adjustments
$12,323
$11,598
$44,355
$48,538
Gross margin before fair value adjustments
49 %
46 %
48 %
46 %
Adjusted EBITDA 2
$5,201
$5,002
$17,936
$25,125
Net income (loss) and comprehensive income (loss)
$13,260
($1,249)
$9,463
($1,770)
Adjusted net income (loss) 2
$1,014
($190)
$200
$8,002
Cash flow from continuing operations
$2,390
$2,294
$2,319
$8,188
Free cash flow 2
$2,221
$1,888
$1,396
$6,052
Per Share Metrics
Income (loss) per share
$0.03
($0.00)
$0.03
($0.01)
Adjusted EPS 3
-
-
-
$0.02
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 audited condensed consolidated financial statements for the three and twelve month periods ending December 31, 2024 (the "Financial Statements") and related management's discussion & analysis for the three and twelve month periods ending December 31, 2024 ("MD&A") are available on SEDAR+ under the Company's profile at www.sedarplus.ca.
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 and ratios, namely EBITDA, Adjusted EBITDA, Adjusted Net Income, Free Cash Flow, Adjusted EPS and Debt to EBITDA 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.
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
Year ended
December 31
December 31
2024
2023
2024
2023
(thousands of Canadian dollars)
Net income (loss) and comprehensive income (loss)
13,260
(1,249)
9,463
(1,770)
Unrealized gain on changes in fair value of biological assets
(1,685)
(3,442)
(10,792)
(12,549)
Change in fair value of biological assets realized through inventory sold
5,480
4,501
17,570
22,321
Depreciation and amortization
1,396
428
5,036
2,477
Share-based compensation
(246)
301
(877)
1,365
Other (income)
1,171
(118)
1,305
(360)
Finance costs
648
714
2,902
2,781
Foreign exchange loss
50
194
239
477
Non-cash cost of goods sold1
1,184
1,478
4,216
5,289
Other adjustments2
(16,057)
2,195
(11,126)
5,094
Adjusted EBITDA3
5,201
5,002
17,936
25,125
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
Year ended
December 31
December 31
2024
2023
2024
2023
(thousands of Canadian dollars)
Net income (loss) and comprehensive income (loss)
13,260
(1,249)
9,463
(1,770)
Unrealized gain on changes in fair value of biological assets
(1,685)
(3,442)
(10,792)
(12,549)
Change in fair value of biological assets realized through inventory sold
5,480
4,501
17,570
22,321
Gain on acquisition of AgMedica Bioscience Inc.
(16,041)
-
(16,041)
-
Adjusted net income (loss)1
1,014
(190)
200
8,002
Weighted average number of shares outstanding
475,391,666
409,039,064
425,961,115
408,132,762
Adjusted EPS
-
-
-
$0.02
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
Year ended
December 31
December 31
2024
2023
2024
2023
(thousands of Canadian dollars)
Cash provided by continuing operating activities
2,390
2,294
2,319
8,188
Cash used in investing activities
1,941
(406)
1,187
(2,136)
Proceeds from the sale of Prairie Records Retail assets
(2,110)
-
(2,110)
-
Free cash flow1
2,221
1,888
1,396
6,052
Management considers Debt to EBITDA an important measure as it is a key metric to identify the Company's ability to fund financing expenses, net debt reductions and other obligations. Debt to EBITDA is calculated as Debt divided by EBITDA.
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; 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; the Company's expectation of increasing sales internationally; 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; AgMedica's overall performance compared to management's current expectations; 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 and twelve months ended December 31, 2024, which is 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 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; expectations with respect to AgMedica's performance; 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.
PRELIMINARY FINANCIAL INFORMATION
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, adjusted EBITDA, adjusted Free Cash Flow and debt to 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 Company's expectations for its Q1, 2025 and full year 2025 financial results, including, but not limited to, net revenue, adjusted EBITDA, adjusted Free Cash Flow and debt to EBITDA projections, assumes, among other things: (i) relative stability in interest rates; (ii) limited impacts to our operations and business in Israel due to the ongoing Israel-Hamas conflict; (iii) limited relative deterioration in foreign exchange rates due to ongoing and evolving trade and tariff policies; (iv) limited overall impact to the Company's costs resulting from trade and tariff policies; and (iv) limited overall impact to domestic and international demand for our products resulting from the broader economic impacts from trade and tariff policies, and related uncertainty. The actual results will likely vary from the amounts set forth herein and such variations may be material.
The Company's anticipated financial results are unaudited and preliminary estimates that: (i) represent the most current information available to management as of the date of this news release; (ii) are subject to completion review and audit procedures that could result in significant changes to the estimated amounts; and (iii) do not present all information necessary for an understanding of the Company's financial condition as of, and the Company's results of operations for, such periods. The anticipated financial results are subject to the same limitations and risks as discussed under "Forward-Looking Statements" above. Accordingly, the Company's anticipated financial results for such periods may change upon the completion and approval and audit of the financial statements for such periods and the changes could 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.
