Decibel Pursues Strategies to Trim Expenses

Decibel Cannabis Logo

CALGARY, AB – Over the past month, Decibel Cannabis Company Inc. 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.

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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.

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