CALGARY,
AB, July 8, 2024 /CNW/ - Decibel Cannabis
Company Inc. (the "Company" or "Decibel") (TSXV: DB)
(OTCQB: DBCCF), a market leader in premium cannabis and extract
manufactured products would like to provide an update to its
shareholders and stakeholders.
Over the past month, the Company has executed a series of
initiatives to improve operating efficiencies and focus on reducing
expenses. These came in the form of process optimization,
portfolio rebalancing, right-sizing labour and new market
exploration. The purpose of this release is to provide some insight
into these initiatives that form the basis of our new business
strategy.
"Unfortunately, our stock has taken a hit over the last while.
This is disappointing and shareholder value is something we will
focus on. Our balance sheet needs to improve, and I believe we are
taking the right steps to do so. Decibel has consistently
outperformed its peers by market share, revenue generation and
profitability despite what our valuation may suggest. We are
implementing operational and strategic enhancements that we
anticipate will form the basis of a stronger and more resilient
company allowing us to grow and take back market share," said CEO
Benjamin Sze.
Domestic Flower Strategy
QWEST was the preeminent dried flower brand in 2018 when Decibel
was formed. Over the past few years, our business focused on the
highly scalable ready-to-consume product strategy ("RTC").
This has left an opportunity for the Company to re-align and
refocus on our dried flower consumer, where we significantly
under-index category market share. Over the next month, we are
excited to relaunch QWEST, delivering a value proposition that
does not exist in market today.
"QWEST started off as a premium brand. As our product mix
shifted to RTC, we failed to deliver on consumer expectations
in the dried flower category, while the market evolved around us.
The upcoming relaunch of QWEST is focused on delivery of
exceptional value to the flower consumer. This platform, once
established in Canada, will give
us optionality both domestically and internationally and is
expected to show market share gains," said CMO Warren
Matzelle.
International Markets
We are also excited to announce that we have begun shipping
vapes to Australia and expect to
ship our first flower and vape products to the UK in early Q3 2024.
With these shipments we expect our brands to be just as successful
internationally.
Portfolio Optimization
The Company has completed a review of our product portfolio and
lifecycle patterns. SKU portfolio have been optimized ensuring we
remain true to the General Admission, VOX and Qwest brands. Our
refreshed portfolio gives us meaningful participation in critical
segments in vape, infused pre-roll, standard pre-roll and
flower. Ensuring we have the right mix of products to meet the
needs and wants of our consumers.
"Decibel has been very good at identifying market trends and
ensuring we are competitive in the categories we participate in. I
believe by optimizing on our product mix, we will better serve
consumers and support our retailer partners," said CRO Adam
Coates
Rightsizing Initiatives:
Capex initiatives were put on pause with dollars being allocated
to revenue generating activities alongside process improvements and
right sizing of the business. These initiatives are intended to
realize an estimated annualized reduction in SG&A by
approximately $2 million. In addition
to the rightsizing, work has been done to improve working
capital and significantly reducing AP.
"With all the implementation, we expect to materially strengthen
our balance sheet, positioning the Company better to capitalize on
opportunities in the future," said CFO Stuart Boucher.
Cultivation Reorganization
Dried flower processing has been reorganized across our
facilities. These changes will allow us to increase efficiencies at
each facility while ensuring we have quality checkpoints that are
consistent across the organization. These changes are expected to
allow a path to scale additional production while maintaining the
great quality as required by consumer demand.
"Changing the flow of how cannabis flower moves through our
various facilities will allow each operation to focus on its core
competency. This flexibility enables us to quickly scale up and
down our supply to match the ever-changing demand profile
irrespective of whether that demand comes through international
sales or domestic wholesale," said COO Kris
Newell.
Change in Auditor
The Company's former auditor KPMG LLP has exited the Canadian
cannabis industry and therefore will not be standing for
re-election at the Company's AGM. As a result the Company will be
appointing a new auditor within the month of July 2024 and, following which, the Company
intends to announce the date of our AGM. KPMG LLP will remain
engaged to review the Q2 2024 financial statements to the extent
requested by the Company.
About Decibel
Decibel is a consumer-focused cannabis company focused on
delivering products that delight customers through a commitment to
robust innovation and product quality. Leading brands General
Admission, Qwest and Vox are among its portfolio sold both across
Canada and beginning to extend
towards new countries to create a global footprint. Decibel
operates a processing and manufacturing facility in Calgary, Alberta and two cultivation
facilities in Creston, British
Columbia and Battleford,
Saskatchewan.
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.
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", "is expected", "anticipates"
"plans", "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, the estimated reduction in SG&A; the
anticipated reduction in the Company's AP balance; the
anticipated improvements to the Company's working capital
position; the Company's expectations regarding the
optimization of its portfolio, including the Company's
ability to continue to attract consumers; the results of the
Company's cultivation reorganization, including any anticipated
increases in production efficiency, improvements in quality and
reduced processing/packaging costs and the Company's ability to
scale production; the effects of the Company's process
initiatives, including the timeline for completion of these
initiatives; the Company's intention to re-focus on dried
flower consumers; the Company's expectations regarding the
relaunching of QWEST; the timeline to ship flower and vape
products to the UK; the effects of its product launch in
Australia and the UK; the
anticipated timing for the appointment of a new auditor and
announcing the timing of the AGM.
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: the ability of the Company to implement its
rightsizing initiatives, portfolio optimization, cultivation
reorganization, process changes and domestic flower strategy;
satisfaction of all international regulatory requirements,
including applicable product testing; risks relating to
delays; other regulatory changes and impacts; capital requirements;
construction impacts; displacement requirements; global
macro-economic events, conditions and factors; the ability to
obtain and maintain licenses to retail cannabis products; review of
the Company's production facilities by Health Canada and
maintenance of licenses (including any amendments thereto) from
Health Canada in respect thereof; future legislative and regulatory
developments involving cannabis, international export rules and
regulations; 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; and general business, economic,
competitive, political and social uncertainties.
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.
These forward-looking statements are made as of the date of
this news release and the Company disclaims any intent or
obligation to update any forward-looking statements, whether as a
result of new information, future events or results or otherwise,
other than as required by applicable securities laws.
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SOURCE Decibel Cannabis Company Inc.
