Decibel Announces Business Update
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
International Markets
We are also excited to announce that we have begun shipping vapes to
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
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
"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
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
Change in Auditor
The Company's former auditor
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
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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 estim
ated 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
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
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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