Decibel Cannabis Company Inc. (OTCQB:DBCCF) (TSXV:DB) provided a preliminary outlook for net revenue and Adjusted EBITDAfor the second quarter, ending June 31, 2022.
Q2 2022 Outlook
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Demonstrated positive cash flow from operations in first two quarters of 2022
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Anticipated adjusted EBITDA of $3.0 to $3.5 million ($2.5 million Q1 2022)
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Resulting primarily from strong net revenue growth and margin expansion outpacing SG&A.
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Eighth consecutive quarter of positive adjusted EBITDA.
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Anticipated net revenue of $18.5 to $19.5 million
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Implies year over year growth of 49% to 57% compared to Q2 2021
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Driven by strong demand growth in all categories led by newly launched infused products and vape cartridges. Additionally, Decibel saw demand growth for its Qwest flower products.
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Anticipating significant ongoing gross margin and profitability increases
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Significant amount of cost engineering and automation infrastructure investments realized in late Q2 and early Q3, with potential for Decibel to exceed previously stated targeted gross margin of 40 â€" 45%.
"In the second quarter Decibel continued to match and exceed revenue projections, and significantly exceed EBITDA projections. Performance was driven by exceptional continued growth in demand for our popular brands and new products. This, coupled with prioritizing certain key capital initiatives, generated gross margin and EBITDA significantly beyond our forecast," stated Paul Wilson, CEO of Decibel.
"We expect revenue in the quarter to be in the $18.5 - $19.5 range and corresponding adjusted EBITDA in the $3.0 - $3.5M range. Margins and profitability expanded with our automation, infrastructure and cost engineering improvements coming online earlier than planned. These improvements have been in the pipeline and impacted the end of Q2, with the full impact unfolding in the third and fourth quarter. The impact of these projects appears to be well beyond our projections for gross margin expansion."
The company will release its second quarter financial results and related management discussion and analysis for the period ended June 30, 2022, on August 18, 2022, before markets open.
Photo by Jeff W on Unsplash
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