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Decisive Dividend Corporation Reports Record Quarterly Results for the Third Quarter of 2022

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KELOWNA, BC, Nov. 2, 2022 /CNW/ – Decisive Dividend Corporation (TSXV: DE) (the “Company” or “Decisive”) today reported its financial results for the three and nine months ended September 30, 2022.

Highlights of the Company’s financial performance in Q3 2022 include the following:

  • Consolidated sales increased 57% to a record $25.9 million in Q3 2022 compared to $16.5 million in Q3 2021.
  • The quarterly sales increase brings consolidated sales for the first nine months of 2022 to $67.8 million, an increase of $23.2 million, or 52%, relative to the first nine months of 2021.
  • Generated a record $4.0 million in Adjusted EBITDA* in Q3 2022, an increase of 118% relative to Q3 2021. Excluding subsidies, Q3 2022 Adjusted EBITDA* was $2.7 million, or 202%, higher than Q3 2021.
  • Adjusted EBITDA* in the first nine months of 2022 of $9.7 million represents a 47% increase compared to the first nine months of 2021. Excluding subsidies, year-to-date 2022 Adjusted EBITDA* was $5.8 million, or 151%, higher than the first nine months of 2021.
  • Generated net profit of $2.0 million, or $0.16 per share, in Q3 2022, an increase of $1.5 million, or $0.12 per share compared to Q3 2021.
  • In the first nine months of 2022, generated net profit of $3.4 million, or $0.27 per share, an increase of $2.1 million, or $0.16 per share compared to the first nine months of 2021.

Selected Financial Highlights:

The following are selected financial highlights of Decisive for the three and nine months ended September 30, 2022. All amounts are expressed in Canadian dollars. The Company’s Unaudited – interim condensed consolidated financial statements as well as its management’s discussion and analysis (“MD&A”) are posted on SEDAR and on Decisive’s website (www.decisivedividend.com).

(Stated in thousands of dollars, except per share amounts)


















For the three months ended


For the nine months ended

September 30,


2022



2021


Change



2022



2021


Change

















Sales

$

25,932


$

16,500


57 %


$

67,810


$

44,639


52 %

Gross profit


8,912



5,064


76 %



22,867



15,533


47 %

Gross profit %


34 %



31 %





34 %



35 %



Adjusted EBITDA*


3,999



1,837


118 %



9,651



6,566


47 %

Per share basic


0.32



0.15


106 %



0.77



0.55


40 %

Profit before tax


2,644



593


346 %



4,702



1,955


141 %

Profit


2,029



489


315 %



3,423



1,364


151 %

Per share basic


0.16



0.04


300 %



0.27



0.11


145 %

Per share diluted


0.15



0.04


275 %



0.26



0.11


136 %

Dividends declared


1,193



841


42 %



3,238



1,555


108 %

Per share basic


0.09



0.07


34 %



0.26



0.13


99 %

* Adjusted EBITDA is not a recognized financial measure under International Financial Reporting Standards (IFRS) and therefore may not be comparable to similar measures presented by other issuers, but it is used by management to assess the performance of the Company and its segments. See “Non-IFRS Financial Measures” later in this press release for the full description of Adjusted EBITDA and a reconciliation of applicable IFRS measures to non-IFRS measures.

Q3 2022 Highlights:

  • Consolidated sales increased 57% to $25.9 million compared to $16.5 million in Q3 2021.
  • Consolidated gross profit increased 76% to $8.9 million from $5.1 million in Q3 2021. Excluding subsidies, Q3 2022 gross profit was $4.1 million, or 87%, higher than Q3 2021.
  • Consolidated gross profit percentages increased to 34% from 31% in Q3 2021.
  • Consolidated Adjusted EBITDA* increased to $4.0 million, up 118% relative to Q3 2021. Excluding subsidies, Q3 2022 Adjusted EBITDA* was $2.7 million, or 202%, higher than Q3 2021. 
  • Strong performance across the portfolio of businesses, with each business experiencing robust customer demand.
  • In the finished product segment, the sales generated by Marketing Impact, which was acquired in April 2022, contributed meaningfully to the quarter. In addition, Blaze King sales increased 12% and Slimline sales increased 117% compared to Q3 2021.
  • In the component manufacturing segment, Unicast sales increased 53%, Hawk sales increased 52%, and Northside sales increased 7% compared to Q3 2021.
  • The Company’s subsidiaries did not receive any government subsidies in the quarter (Q3 2021 – $0.5 million).
  • Consolidated net profit in the quarter was $2.0 million, or $0.16 per share, an increase of $1.5 million, or $0.12 per share, compared to Q3 2021.

2022 Year-to-Date Highlights:

  • Consolidated sales increased 52% to $67.8 million, compared to $44.6 million in the first nine months of 2021.
  • Consolidated gross profit increased 47% to $22.9 million from $15.5 million in the first nine months of 2021. Excluding subsidies, gross profit was $8.9 million, or 64% higher than in the first nine months of 2021.
  • Consolidated gross profit percentages declined to 34% from 35% in the first nine months of 2021, which was driven primarily by the decrease in government subsidies. Absent subsidies, year-to-date consolidated gross profit percentages were 2% higher than the first nine months of 2021.
  • Consolidated Adjusted EBITDA* increased to $9.7 million, up 47% relative to the first nine months of 2021, driven by the above noted increases in sales and gross profit. Excluding subsidies, Adjusted EBITDA* was $5.8 million, or 151%, higher than the first nine months of 2021.
  • Sales in the finished product segment increased by $13.9 million, or 60%, relative to the first nine months of 2021, driven by the acquisition of Marketing Impact, continued strong demand for Blaze King’s products and increased sales of Slimline’s agricultural sprayers and wastewater evaporators.
  • Sales for the component manufacturing segment increased by $9.3 million, or 43%, relative to the first nine months of 2021 based on customer demand increases in each of Unicast, Hawk and Northside, driven by improving fundamentals in the sectors that those customers operate in.
  • The Company’s subsidiaries did not receive any government subsidies in the first nine months of the year (2021 – $2.7 million).
  • Consolidated net profit was $3.4 million, or $0.27 per share, an increase of $2.1 million, or $0.16 per share compared to the first nine months of 2021.
  • Effective May 2022, increased the per share monthly dividend to $0.03 from $0.025 previously. The increased monthly dividend represents a $0.36 per share dividend on an annualized basis.

Jeff Schellenberg, Chief Executive Officer of Decisive, noted:

“Q3 was another tremendous quarter for Decisive as we made further progress on all of our key operational, financial and acquisition-related strategic objectives. During the quarter, we achieved record quarterly operating results for the second straight quarter. We also increased the availability on our credit facilities while extending them to 2025, and we completed an equity offering, led by Waratah Capital Advisors Ltd., setting the stage for the acquisition of ACR Heat Products Limited in early October, our second acquisition of 2022.

Each of our portfolio companies continue to experience strong demand for their products as demonstrated by our record revenue levels and robust growth. However, the increase in gross margins experienced in Q3 2022 is an operational highlight of the quarter and demonstrates the reward for the hard work our subsidiaries have done to increase efficiency, negotiate pricing increases with their customers and add new profitable customers. We view our portfolio of businesses as a key driver of our future growth and continue to invest in these businesses to support that growth while enhancing profitability. 

We are also very pleased to have completed a sizable equity offering during a period of significant volatility in capital market conditions and to do so with the backing of a prominent institutional investor that has an excellent reputation and performance track record. Additionally, the renewal, extension and upsize of our credit facilities provides us with further flexibility to continue pursuing our strategic objectives. The demonstrated support from both our lenders and Waratah are a validation of our business model, performance and future potential.

We continue to have an active and growing pipeline of potential targets. Completing our second acquisition of the year in October, financed by an equity raise, demonstrates our commitment to continue growing through acquisition within our long-term funding target of 50% equity and 50% debt. In addition, the integration of Marketing Impact has gone very well, and we are pleased to see that business perform in a way that has met all of the expectations we had for the company when Decisive acquired it in April. In addition, we are excited to have our first add-on acquisition in ACR, which provides immediate geographic diversity and accretive earnings, in the Hearth industry, which is a sector that we have enjoyed great success in.

We have had an eventful first nine months of 2022 and look forward to providing further updates to our shareholders as we progress through the remainder of the year and into 2023.

Outlook:

Decisive remains focused on continuing to drive performance in line with its overall strategic objectives including:

  • Executing on the growth strategy with the acquisition of Marketing Impact Limited in April 2022 and ACR Heat Products Limited in October 2022.
  • Building a strong and growing acquisition prospect pipeline.
  • Continuing to build upon the strong demand across the portfolio of businesses expected through the remainder of 2022 and into 2023.
  • Optimizing operations, with an emphasis on increasing production capacity, improving operational efficiency and enhancing margins in the face of broad and steady customer demand trends.
  • Increasing production capacity and improving operational efficiency, with $1.5 million of manufacturing equipment purchased in 2021, and a further $1.5 million purchased in the first nine months of 2022.
  • Providing sustainable and growing dividends to shareholders, following an increase in the monthly dividend to $0.03 per share in May 2022.
  • Creating balance sheet strength and flexibility through the renewal, extension and upsize of its credit facilities, as well as the equity raised through the private placement completed in September 2022.

Decisive also announced that the Corporation granted stock options to purchase an aggregate of 5,000 common shares of the Corporation at an exercise price of $4.89 per common share for a period of ten years from the date of grant. The stock options will vest over a thirty-six (36) month period, with one-third vesting twelve (12) months from the date of grant, one-third vesting twenty-four (24) months from the date of grant and the remaining one-third vesting thirty-six (36) months from the date of grant.

About Decisive Dividend Corporation

Decisive Dividend Corporation is an acquisition-oriented company, focused on opportunities in manufacturing. The Company’s purpose is to be the sought-out choice for exiting legacy-minded business owners, while supporting the long-term success of the businesses acquired, and through that, creating sustainable and growing shareholder returns. The Company uses a disciplined acquisition strategy to identify already profitable, well-established, high quality manufacturing companies that have a sustainable competitive advantage, a focus on non-discretionary products, steady cash flows, growth potential and established, strong leadership.

For more information on Decisive, or to sign up for email notifications of Company press releases, please visit www.decisivedividend.com.

Cautionary Statements

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Non-IFRS Financial Measures

In this press release, reference is made to “Adjusted EBITDA”, which is not a recognized financial measure under IFRS, but is believed to be meaningful in the assessment of the Company’s performance.

“Adjusted EBITDA” is defined as earnings before finance costs, income taxes, depreciation, amortization, foreign exchange gains or losses, other non-cash items such as gains or losses recognized on the fair value of contingent consideration items, asset impairment, share-based compensation, and restructuring costs, and other non-operating items such as acquisition costs.

Adjusted EBITDA is a financial performance measure that management believes is useful for investors to analyze the results of the Company’s operating activities prior to consideration of how those activities are financed and the impact of non-operating charges related to planned or completed acquisitions, foreign exchange, taxation, depreciation, amortization, and impairment charges.

The most directly comparable financial measure is profit or loss. While Adjusted EBITDA is used by management to assess the historical financial performance of the Company, readers are cautioned that:

  • Non-IFRS financial measures, such as Adjusted EBITDA, are not recognized financial measures under IFRS;
  • The Company’s method of calculating Non-IFRS financial measures, such as Adjusted EBITDA, may differ from that of other corporations or entities and therefore may not be directly comparable to measures utilized by other corporations or entities;
  • Non-IFRS financial measures, such as Adjusted EBITDA, should not be viewed as an alternative to measures that are recognized under IFRS such as profit or loss or cash from operating activities; and
  • A reader should not place undue reliance on any Non-IFRS financial measures.

Set forth below are reconciliations of Non-IFRS financial measures to their most relevant IFRS measures.

(Stated in thousands of dollars)













For the three months ended


For the nine months ended

September 30,


2022



2021



2022



2021













Profit for the period

$

2,029


$

489


$

3,423


$

1,364













Add (deduct):












Financing costs


672



531



1,784



1,581

Income tax expense


615



104



1,279



591

Amortization and depreciation


1,204



914



3,221



2,689

Acquisition and restructuring costs


61





639



Share-based compensation expense


26



23



124



241

Foreign exchange losses (gains)


(598)



(221)



(793)



120

Interest and other expense (income)


(5)





(13)



(3)

Gain on sale of equipment


(5)



(3)



(13)



(17)

Adjusted EBITDA


3,999



1,837



9,651



6,566

Forward-Looking Statements

Certain statements contained in this press release constitute forward-looking information. These statements relate to future events or future performance. The use of any of the words “could”, “intend”, “expect”, “believe”, “will”, “projected”, “estimated” and similar expressions and statements relating to matters that are not historical facts are intended to identify forward-looking information and are based on management’s current beliefs, assumptions and expectations as to the outcome and timing of such future events.  Actual future results may differ materially. In particular, this press release contains forward-looking information relating to the future prospects of the Company and its operating subsidiaries, 2022 and 2023 demand levels, increasing demand from customers, potential future acquisitions, and productivity and efficiency initiatives being explored to enhance margins. Risk factors that could cause actual results or outcomes to differ materially from the results expressed or implied by forward-looking information include, among other things: general economic conditions; pandemics; competition; government regulation; environmental regulation; access to capital; market trends and innovation; climate risk; general uninsured losses; risk related to acquisitions; dependence on customers, distributors and strategic relationships; supply and cost of raw materials and purchased parts; operational performance and growth; implementation of the growth strategy; product liability and warranty claims; litigation; reliance on technology, intellectual property, and information systems; availability of future financing; interest rates and debt financing; income tax matters; foreign exchange; dividends; trading volatility of common shares; dilution risk; reliance on management and key personnel; employee and labour relations; and conflicts of interest, all as more particularly described in the most recent annual MD&A of the Company available on the Company’s profile at www.sedar.com. There can be no assurance as to the future financial performance of the Company or that the board of directors of the Company will declare or pay any dividends in the future or, if dividends are declared and paid, there can be no assurance as to the frequency or amount of such dividends. The Company cautions the reader that the risk factors referenced above are not exhaustive. The forward-looking information contained in this release is made as of the date hereof and the Company is not obligated to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by applicable securities laws. Because of the risks, uncertainties and assumptions contained herein, investors should not place undue reliance on forward-looking information. The foregoing statements expressly qualify any forward-looking information contained herein.

SOURCE Decisive Dividend Corporation

For further information: Jeff Schellenberg, Chief Executive Officer; Rick Torriero, Chief Financial Officer; #260 – 1855 Kirschner Road, Kelowna, BC V1Y 4N7, Telephone: (250) 870-9146

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