DATA Communications Management Corp. Announces Third Quarter 2024 Financial Results
DATA Communications Management Corp. (TSX: DCM; OTCQX: DCMDF) (“DCM” or the “Company”), a leading Canadian provider of print and digital solutions that help simplify complex marketing communic...
THIRD QUARTER 2024 SUMMARY FINANCIAL RESULTS
- Total revenues were $108.7 million in the third quarter of 2024
- Gross profit as a percentage of revenues improved to 25.8% vs. 24.7% in Q3 2023
- SG&A expenses decreased to $22.4 million vs. $25.1 million in the prior year
- Adjusted EBITDA1 increased +6.6% vs. the prior year to $12.6 million
- Adjusted EBITDA represented 11.6% of revenues, compared to 9.6% in Q3 2023
BRAMPTON, Ontario: DATA Communications Management Corp. (TSX: DCM; OTCQX: DCMDF) (“DCM” or the “Company”), a leading Canadian provider of print and digital solutions that help simplify complex marketing communications and workflow, today reported its third quarter 2024 financial results.
MANAGEMENT COMMENTARY
“We maintained our focus in the quarter on building a strong platform for profitable growth following last year’s acquisition of Moore Canada Corporation (“MCC”), while advancing our integration priorities including the planned consolidation of our plant network, migrating legacy MCC systems and completing our restructuring actions,” said Richard Kellam, President & CEO of DCM.
Kellam added, “I am pleased to report that we have now substantially completed the integration of MCC operations into DCM. We are on track to finalize the consolidation of our plant network from 14 to 10 main production facilities later this month and we are in the process of bringing online new state-of-the-art capital equipment that will enhance our production capabilities and position us to drive additional operating efficiencies.”
“The progress of our post-acquisition integration and restructuring initiatives is reflected in the consistent improvement we are seeing in gross profit margin and SG&A expenses. We expect continued improvement in these areas in the fourth quarter and in 2025 marking further progress towards our goal of returning our gross margin to the +30% range and Adjusted EBITDA margins to more than 14%.”
“Revenue in the third quarter was lower than expected due mainly to reduced spending by some of our large enterprise clients which we expect to recover in future quarters along with decisions we made to exit certain lower margin accounts. This contributed to a year-over-year revenue decline of 11.4% although, on a year-to-date basis, revenue is up 14.5% through the first nine months of 2024.”
“We remain confident about the platform we are building for profitable growth and winning in the marketplace as our Commercial team continues to make excellent progress strengthening our presence in key industry verticals, attracting new business and leveraging DCM’s growing suite of product and service offerings,” said Kellam
DCM has recently expanded its portfolio of tech-enabled products and solutions, with the launch of ASMBL in the third quarter of 2024 and the acquisition of Zavy Limited (“Zavy”) earlier this month. ASMBL is a fully AI-enabled digital asset management platform enabling customers to organize, store, manage, retrieve, and distribute their digital assets seamlessly. Zavy is a Software-as-a-Service marketing technology company that helps businesses optimize their social media effectiveness.
THIRD QUARTER 2024 EARNINGS CALL
The Company will host a conference call and webcast on Wednesday, November 13, 2024, at 9:00 a.m. Eastern time. Mr. Kellam and James Lorimer, CFO, will present the third quarter of 2024 results followed by a live Q&A.
DCM will be using Microsoft Teams to broadcast our earnings call, which will be accessible via the instructions below:
Register for the webcast prior to the start of the event: Microsoft Virtual Events Powered by Teams
All attendees must register for the webinar prior to the call. Please complete the phone field in the form at the above link (prior to the start of the event) if you wish to dial in.
The Company’s full results will be posted on its Investor Relations page and on www.sedarplus.ca. A video message from Mr. Kellam will also be posted on the Company’s website.
TABLE 1 The following table sets out selected historical consolidated financial information for the periods noted.
For the periods ended September 30, 2024 and 2023 | July 1 to September 30, 2024 | July 1 to September 30, 2023 | January 1 to September 30, 2024 | January 1 to September 30, 2023 | ||||||||
(in thousands of Canadian dollars, except share and per share amounts, unaudited) | ||||||||||||
|
|
|
|
| ||||||||
Revenues | $ | 108,726 |
| $ | 122,721 |
| $ | 363,731 |
| $ | 317,761 |
|
|
|
|
|
| ||||||||
Gross profit |
| 28,009 |
|
| 30,341 |
|
| 99,654 |
|
| 86,151 |
|
|
|
|
|
| ||||||||
Gross profit, as a percentage of revenues |
| 25.8 | % |
| 24.7 | % |
| 27.4 | % |
| 27.1 | % |
|
|
|
|
| ||||||||
Selling, general and administrative expenses |
| 22,430 |
|
| 25,065 |
|
| 71,676 |
|
| 61,944 |
|
As a percentage of revenues |
| 20.6 | % |
| 20.4 | % |
| 19.7 | % |
| 19.5 | % |
|
|
|
|
| ||||||||
Adjusted EBITDA |
| 12,567 |
|
| 11,790 |
|
| 48,120 |
|
| 38,378 |
|
As a percentage of revenues |
| 11.6 | % |
| 9.6 | % |
| 13.2 | % |
| 12.1 | % |
|
|
|
|
| ||||||||
Net (loss) income for the period |
| (2,668 | ) |
| (4,185 | ) |
| 2,871 |
|
| (9,496 | ) |
|
|
|
|
| ||||||||
Adjusted net (loss) income |
| (165 | ) |
| 1,778 |
|
| 8,755 |
|
| 11,465 |
|
As a percentage of revenues |
| (0.2 | )% |
| 1.4 | % |
| 2.4 | % |
| 3.6 | % |
|
|
|
|
| ||||||||
Basic (loss) earnings per share | $ | (0.05 | ) | $ | (0.08 | ) | $ | 0.05 |
| $ | (0.19 | ) |
Diluted (loss) earnings per share | $ | (0.05 | ) | $ | (0.08 | ) | $ | 0.05 |
| $ | (0.19 | ) |
Weighted average number of common shares outstanding, basic |
| 55,308,952 |
|
| 55,022,883 |
|
| 55,192,969 |
|
| 49,420,414 |
|
Weighted average number of common shares outstanding, diluted |
| 55,308,952 |
|
| 55,022,883 |
|
| 57,784,458 |
|
| 49,420,414 |
|
TABLE 2 The following table provides reconciliations of net (loss) income to EBITDA and of net (loss) income to Adjusted EBITDA for the periods noted.
EBITDA and Adjusted EBITDA reconciliation
For the periods ended September 30, 2024 and 2023 | July 1 to September 30, 2024 | July 1 to September 30, 2023 | January 1 to September 30, 2024 | January 1 to September 30, 2023 | ||||||||
(in thousands of Canadian dollars, unaudited) | ||||||||||||
|
|
|
|
| ||||||||
Net (loss) income for the period | $ | (2,668 | ) | $ | (4,185 | ) | $ | 2,871 |
| $ | (9,496 | ) |
|
|
|
|
| ||||||||
Interest expense, net |
| 5,273 |
|
| 5,072 |
|
| 16,192 |
|
| 9,654 |
|
Amortization of transaction costs, net of debt extinguishment gain |
| 140 |
|
| 141 |
|
| 420 |
|
| 320 |
|
Current income tax expense |
| 647 |
|
| (1,495 | ) |
| 2,005 |
|
| 842 |
|
Deferred income tax expense |
| (1,158 | ) |
| (2,227 | ) |
| (1,374 | ) |
| (5,128 | ) |
Depreciation of property, plant, and equipment |
| 1,832 |
|
| 2,051 |
|
| 5,138 |
|
| 4,107 |
|
Amortization of intangible assets |
| 482 |
|
| 888 |
|
| 1,516 |
|
| 2,052 |
|
Depreciation of the ROU Asset |
| 4,674 |
|
| 3,575 |
|
| 13,488 |
|
| 8,012 |
|
EBITDA | $ | 9,222 |
| $ | 3,820 |
| $ | 40,256 |
| $ | 10,363 |
|
|
|
|
|
| ||||||||
Acquisition and integration costs |
| 2,077 |
|
| 244 |
|
| 2,603 |
|
| 10,199 |
|
Restructuring expenses |
| 1,160 |
|
| 7,009 |
|
| 3,346 |
|
| 9,738 |
|
Net fair value losses on financial liabilities at fair value through profit or loss |
| 108 |
|
| 717 |
|
| 1,915 |
|
| 8,078 |
|
Adjusted EBITDA |
| 12,567 |
|
| 11,790 |
|
| 48,120 |
|
| 38,378 |
|
TABLE 3 The following table provides reconciliations of net (loss) income to Adjusted net income and a presentation of Adjusted net income per share for the periods noted.
Adjusted net (loss) income reconciliation
For the periods ended September 30, 2024 and 2023 | July 1 to September 30, 2024 | July 1 to September 30, 2023 | January 1 to September 30, 2024 | January 1 to September 30, 2023 | ||||||||
(in thousands of Canadian dollars, except share and per share amounts, unaudited) | ||||||||||||
|
|
|
|
| ||||||||
Net (loss) income for the period | $ | (2,668 | ) | $ | (4,185 | ) | $ | 2,871 |
| $ | (9,496 | ) |
|
|
|
|
| ||||||||
Restructuring expenses |
| 1,160 |
|
| 7,009 |
|
|
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