52 slides from Data Communications Management's earnings presentation, Mar 25, 2022
Slide 1: Fiscal 2021 Report to Shareholders
Fiscal 2021 Report to Shareholders DATA Communications Management Corp. DCM-TSX DCMDF-OTCBB March 25, 2022
Slide 2: Forward-looking Statements and Information Disclosure
Forward-looking Statements Information Disclosure Forward-looking Statements Non-IFRS Measures – See Appendix A Certain statements in this presentation constitute “forward-looking” statements that involve This presentation includes certain non-IFRS measures as supplementary information. In known and
Slide 3: Introduction
Introduction DCM
Slide 4: Focus Since March 8, 2021
Focus Since March 8, 2021 Building both a better Strategy and bigger business 4
Slide 5: Strategic Direction
Strategic Direction From print first to digital first Complex conventional Tech-enabled Digital asset management print solutions marketing workflow tech-enabled service Marketing Business Print on solutions process demand outsourcing 5
Slide 6: Five-year Financial Objectives
Five-year Financial Objectives From print first to digital first Targets: 5%+ 35-40% 18-20% 18-22% Revenue CAGR Gross margins SG&A Adjusted EBITDA 6
Slide 7: Better and Bigger Business
Better and Bigger Business DCM
Slide 8: Better and Bigger Business
Better and Bigger Business DCM
Slide 9: Better Business
Better Business 1. Headcount Reduction and Productivity Improvements 9
Slide 10: Headcount Reduction & Productivity Improvements
1. Headcount Reduction & Productivity Improvements Headcount at End of Period Revenue per Employee* (thousands) $255.2 $231.7 $240.6 1,411 1,433 $225.2 $205.2 1,221 1,078 922 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 -14.5% vs. prior year +6.1% vs. prior year -34.7% vs. 2017 +24.4% vs. 2017
Slide 11: Better Business
Better Business 1. Headcount Reduction and Productivity Improvements 2. Leadership Team Optimization 11
Slide 12: Leadership Team Optimization
2. Leadership Team Optimization Richard Kellam appointed President & CEO, March 8, 2021 • Eliminated 2 complete levels of leadership • Eliminated 6 senior leadership positions • Broadened span of responsibilities across the enterprise • Accelerated decision-making 12
Slide 13: Better Business
Better Business 1. Headcount Reduction and Productivity Improvements 2. Leadership Team Optimization 3. Factory Consolidation & Operational Efficiencies 13
Slide 14: Factory Consolidation and Operational Efficiencies
3. Factory Consolidation and Operational Efficiencies Brampton Calgary Digital inkjet consolidation consolidation capabilities +$1.8M +$.75M +$1M Overhead savings Overhead savings OPEX savings 14
Slide 15: Better Business
Better Business 1. Headcount Reduction and Productivity Improvements 2. Leadership Team Optimization 3. Factory Consolidation & Operational Efficiencies 4. Office Consolidation & Overhead Reductions 15
Slide 16: Office Consolidation and Overhead Reductions
4. Office Consolidation and Overhead Reductions Hybrid Leadership Other headcount work model optimization savings +$0.8M +$3.9M +$6.7M Overhead savings Overhead savings Overhead savings 16
Slide 17: Better Business
Better Business 1. Headcount Reduction and Productivity Improvements 2. Leadership Team Optimization 3. Factory Consolidation & Operational Efficiencies 4. Office Consolidation & Overhead Reductions 5. Debt Reduction & Refinancing 17
Slide 18: Debt Reduction
5. Debt Reduction Total Debt Outstanding (millions) $79.8 $64.8 $65.1 $48.2 $37.1 2017 2018 2019 2020 2021 -23.0% vs. 2020 -53.5% vs. 2019 Lowest debt since before our IPO in 2004 18
Slide 19: Debt Refinancing
5. Debt Refinancing Expected 50% cost $1.5M reduction on ~60% of debt = Annual interest savings $10M Bank Term Facility closed November 8, 2021 $11M FPD VI Term Facility closed December 17, 2021 19
Slide 20: Summary of Savings Initiatives
Summary of Savings Initiatives Significant long-term benefits from 2021 operational initiatives Post-COVID rationalization In year headcount reduction (FTEs) 156 Year over year reduction 14.5% Restructuring Annualized Savings Charges (millions) Mississauga / Brampton consolidation $0.8 $1.8 Edmonton
Slide 21: Better Business
Better Business 1. Headcount Reduction and Productivity Improvements 2. Leadership Team Optimization 3. Factory Consolidation & Operational Efficiencies 4. Office Consolidation & Overhead Reductions 5. Debt Reduction & Refinancing 6. Other Key Initiatives 21
Slide 22: Other key initiatives
6. Other key initiatives Associate • Gallup Q12 engagement • Competency & skills development Client • Voice of the customer survey engagement • 5-year strategic plan to best serve future client needs Environmental, • ESG strategy developed social, governance • PrintReleaf, FSC, DE&I initiatives alig
Slide 23: Better Business
Better Business 1. Headcount Reduction and Productivity Improvements 2. Leadership Team Optimization 3. Factory Consolidation & Operational Efficiencies 4. Office Consolidation & Overhead Reductions 5. Debt Reduction & Refinancing 6. Other Key Initiatives 23
Slide 24: Better and Bigger Business
Better and Bigger Business 24
Slide 25: Bigger Business
Bigger Business 1. Stabilized Revenue in Second Half of 2021 25
Slide 26: Stabilized Revenue in Second Half of 2021 vs. 2020
1. Stabilized Revenue in Second Half of 2021 vs. 2020 1st half Revenue % change vs. prior year 2nd half 0.5% -0.8% -13.7% -19.4% Q1 Q2 Q3 Q4 First half -16.8% vs. prior year Second half ~ flat % vs. prior year 26
Slide 27: Bigger Business
Bigger Business 1. Stabilized Revenue in Second Half of 2021 2. Core Business Strength 27
Slide 28: Core Business Strength in Second Half of 2021
2. Core Business Strength in Second Half of 2021 1st half Revenue by Quarter (millions) 2nd half -18.8% y/y -7.3% y/y +7.7% y/y +13.0% y/y $77.4 $16.3 $62.4 $63.9 $60.9 $60.6 $55.2 $57.4 $56.9 $9.1 $6.1 $12.8 $4.4 $8.0 $3.7 $12.1 $61.1 $49.6 $54.8 $50.8 $49.4 $53.2 $54.8 $48.5 Q1 '20 Q1 '21 Q2 '20 Q
Slide 29: Bigger Business
Bigger Business 1. Stabilized Revenue in Second Half of 2021 2. Core Business Strength 3. New Business Wins 29
Slide 30: New Business Wins
3. New Business Wins New logos across a wide variety of vertical markets Financial Healthcare Regulated Retail Manufacturing Hospitality Lottery services industries services 30
Slide 31: Bigger Business
Bigger Business 1. Stabilized Revenue in Second Half of 2021 2. Core Business Strength 3. New Business Wins 4. Gross Profit Delivering on Growth 31
Slide 32: Gross Profit Delivering on Growth
4. Gross Profit Delivering on Growth 1st half Gross profit by quarter (millions) 2nd half $21.6 -13.0% y/y -19.4% y/y $19.6 +3.0% y/y +18.0% y/y $18.8 $17.2 $17.7 $16.7 $15.8 $15.0 Q1 '20 Q1 '21 Q2 '20 Q2 '21 Q3 '20 Q3 '21 Q4 '20 Q4 '21 Gross profit +10.2% in 2H 2021 vs. 2H 2020 32
Slide 33: Bigger Business
Bigger Business 1. Stabilized Revenue in Second Half of 2021 2. Core Business Strength 3. New Business Wins 4. Gross Profit Delivering on Growth 5. Digital Acceleration 33
Slide 34: Digital Acceleration
5. Digital Acceleration • Leveraging 40+ years of workflow management and DAM expertise Digital • Converting conventional print workflows to DCMFlex, vertical markets and product solutions prioritized first • Digital acceleration training for commercial team • Pipeline of +$10M of tech-services / SA
Slide 35: Bigger Business
Bigger Business 1. Stabilized Revenue in Second Half of 2021 2. Core Business Strength 3. New Business Wins 4. Gross Profit Delivering on Growth 5. Digital Acceleration 35
Slide 36: 2021 Financial Results
2021 Financial Results
Slide 37: 2021 Financial Results
2021 Financial Results Fiscal year ended December 31, in millions Selected financial information 2021 2020 Better/(Worse) Revenue $235.3 $259.3 ($24.0) Gross profit $69.5 $72.9 ($3.4) Gross margin (%) 29.5% 28.1% +140 bps SG&A* $56.0 $56.5 +$0.5 Restructuring expenses $9.7 $2.8 ($6.9) Adjusted incom
Slide 38: 2021 Financial Results
2021 Financial Results Fiscal year ended December 31, in millions Selected financial information 2021 2020 Better/(Worse) Revenue $235.3 $259.3 ($24.0) Adjusted EBITDA* $33.3 $41.5 ($8.2) Less: Income from CEWS/CERS $4.6 $10.7 ($6.1) CEWS adjusted EBITDA** $28.7 $30.8 ($2.1) As percent of revenue 12
Slide 39: Story of "two halves"
2021 Financial Results Story of “two halves” Selected financial information First half Second half Fiscal 2021 Revenue $117.6 $117.8 $235.3 Gross profit $34.6 $34.9 $69.5 Gross margin (%) 29.5% 29.6% 29.5% SG&A* $26.7 $29.2 $56.0 Restructuring expenses $4.3 $5.4 $9.7 Adjusted EBITDA** $16.6 $16.7 $3
Slide 40: Story of "two halves"
2021 Financial Results Story of “two halves” Selected financial information First half Second half Fiscal 2021 Revenue $117.6 $117.8 $235.3 Adjusted EBITDA* $16.6 $16.7 $33.3 Less: Income from CEWS/CERS $4.3 $0.3 $4.6 “CEWS adj. CEWS Adjusted EBITDA** $12.3 $16.4 $28.7 EBITDA” As percent of revenue
Slide 41: Fourth Quarter 2021 Financial Results
Fourth Quarter 2021 Financial Results Quarter ended December 31, in millions Selected financial information Q4 2021 Q4 2020 Better/(Worse) Revenue $60.9 $60.6 +$0.3 Gross profit $17.7 $15.0 +$2.7 Gross margin (%) 29.1% 24.8% +430 bps SG&A* $15.4 $12.4 ($3.0) Restructuring expenses $2.3 $0.7 ($1.6) A
Slide 42: Positioned for Top-line Growth
Positioned for Top-line Growth Positive sequential trends entering seasonally strongest Q1 Revenue (millions) $77.4 $63.9 $60.6 $62.4 $60.9 $57.4 $55.2 $56.9 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 $141.4M $118.0M $117.6M $117.8M 1H 2020 2H 2020 1H 2021 2H 2021 42
Slide 43: Positive Trends in Gross Profit & Gross Margin
Positive Trends in Gross Profit & Gross Margin Gross Profit (millions) and Gross Margin (%) 40.0% $21.6 $19.6 $18.8 $20.0 $17.2 $17.7 $16.7 $15.8 $15.0 30.0% 30.7% 30.2% 30.1% $10.0 29.0% 29.1% 28.7% 27.9% 24.8% $- 20.0% Q1 '20 Q2 '20 Q3 '20 Q4 '20 Q1 '21 Q2 '21 Q3 '21 Q4 '21 Gross profit Gross marg
Slide 44: Organizational Effectiveness Initiatives
Organizational Effectiveness Initiatives Restructuring expenses have optimized the business for the future Restructuring expenses (millions) $9.5 $9.7 $7.5 $8.6M headcount + $2.7 $2.8 $1.1M facilities in 2021 2017 2018 2019 2020 2021 Negligible restructuring expenses planned in 2022 44
Slide 45: Negligible restructuring expenses planned in 2022
Negligible restructuring expenses planned in 2022
Slide 46: Current Term Debt Maturity Profile
Current Term Debt Maturity Profile Outstanding term credit facility balances (millions) $40.0 $34.1 $30.0 $11.0 $21.4 $2.2 $20.0 $9.4 $9.4 $1.2 $9.6 $10.0 $1.7 $4.9 $6.3 $4.7 $9.7 $7.9 $5.8 $- $- $1.8 31-Dec-21 2022 2023 2024 2025 2026 Bank Term Facility FPD III FPD IV FPD V FPD VI Excludes revolvin
Slide 47: Summary
Summary DCM ”*
Slide 48: Summary
Summary Strong exit • Clear strategy: Digital first to 2021 • Building a better and bigger business • Core business is strong • Digital business well positioned for growth Fast start to 2022 48
Slide 49: Contact Information
Contact Information For more information please visit www.datacm.com or reach out to: Investor, media and corporate development inquiries James Lorimer Chief Financial Officer jlorimer@datacm.com +1(905)494-4101 49
Slide 50: Appendix A
Appendix A Non-IFRS Measures Reconciliation: Fiscal 2021, 2020 and 2019 50
Slide 51: Appendix A
Appendix A Non-IFRS Measures Reconciliation: Q4 2021 and Q4 2020 51
Slide 52: Competitive Advantage
Competitive Advantage • 250 enterprise clients Clients • +2,000 SME clients • Penetration across 8 key verticals • +50 commercial sales reps • +40 years managing digital assets Digital Start-up Capabilities • Advanced tech-enabled workflow • API architecture • Significant install base of FLEX-enable