Data Communications Management Corp. · TSX:DCM
Data Communications Management — Investor Day (December 2021)
89 slides from Data Communications Management's investor day presentation, Dec 1, 2021
Slide 1: Welcome to DCM Investor Day
Welcome to DCM Investor Day December 1, 2021
Slide 2: Welcome
Welcome
Slide 3: DCM Leadership Team
DCM Leadership Team Richard Kellam James Lorimer Phil Hammond Shelly Anwyll Sharad Verma President & CEO Chief Financial Officer Chief Revenue Officer SVP, North America, SVP, Strategy Emerging Markets Karen Redfern Barbara Jason Sharpe Christine Custodio Asem Moqbel VP, Customer Franovic- Wilkins V
Slide 4: DCM Board Members
DCM Board Members J.R. Kingsley Ward Greg Cochrane Merri Jones ICD.D James J. Murray, SIOR Chairman of the Board Vice Chairman Director Director 4
Slide 5: What does success look like?
What does success look like? • Better knowledge of challenges and opportunities facing clients today • Clear appreciation of DCM’s digital workflow strategy and capabilities • Clarity of DCM’s “print-first to digital-first” strategy and operational drive to build a better and bigger business • Under
Slide 6: Event Agenda
Event Agenda 3:00 p.m. – 3:10 p.m. Richard Kellam, President & CEO • Opening Remarks & Introductions Brad Jakeman, Former President of Global Beverages, PepsiCo & Jim Brennan, 3:10 p.m. – 3:40 p.m. • Marketing Technology and the Changing Role of the CMO Managing Director & Senior Partner, Boston Con
Slide 7: Brad Jakeman, Jim Brennan
Brad Jakeman Jim Brennan Senior Advisor, Boston Consulting Managing Director & Senior Group, former President of Global Partner, Boston Consulting Group Beverages, PepsiCo
Slide 8: Brad Jakeman, Jim Brennan
Brad Jakeman Senior Advisor, Boston Consulting Group Jim Brennan Managing Director & Senior Partner, Boston Consulting Group
Slide 9: Designing for Disruption
Designing for Disruption Key Trends Shaping The Future of Marketing
Slide 10: Copyright © 2021 by Boston Consulting Group. All rights reserved.
10 Copyright © 2021 by Boston Consulting Group. All rights reserved.
Slide 11: 11
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Slide 12: Six ongoing trends will shape the future of marketing
Six ongoing trends will shape the future of marketing Accelerated pace of Seamless & personalized Scalable marketing engines change & innovation customer experiences and new MarTech Solutions Rapidly evolving consumer demands, Consumers crave and expect Step changes in performance market dynamics, a
Slide 13: 13
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Slide 14: Trend: Accelerated pace of change and innovation
Trend | Accelerated pace of change and innovation FROM TO LENGTHY, COSTLY CONSUMER INSIGHTS DATA-DRIVEN CUSTOMER-CENTRIC MARKETING METHODOLOGIES REQUIRING MONTHS LEVERAGING REAL-TIME DATA AND FEEDBACK LOOPS TO IDENTIFY EMERGING MARKET TRENDS INNOVATION PART OF A ”GENERALIST” MARKETER’S INNOVATION AS
Slide 15: Tell Sell
Tell Sell 15
Slide 16: Trend: Seamless & personalized customer experiences
Trend | Seamless & personalized customer experiences FROM TO MASS MARKETING PERSONALIZED EXPERIENCES AND DEEP RELATIONSHIPS SINGLE CHANNEL COMMUNICATIONS SEAMLESS OMNICHANNEL EXPERIENCES ONE-SIZE-FITS-MANY CONTENT STRATEGY PERSONALIZED CONTENT DELIVERED AT SCALE Copyright © 2021 by Boston Consulting
Slide 17: 17
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Slide 18: Trend: Scalable marketing engines and new MarTech solutions
Trend | Scalable marketing engines and new MarTech Solutions FROM TO MARKETING HEAVILY FOCUSED ON COMMUNICATIONS NEW SKILL SETS REQUIRED IN ANALYTICS, INSIGHTS AND MEDIA MARKETING PERFORMANCE OFTEN MEASURED BY ‘SOFT MEASUREMENT SCIENCE UNLOCKING NEW LEVELS OF METRICS’ LIKE BRAND AFFINITY, PERSUASION
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Slide 20: Trend: Shifting roles across the value chain
Trend | Shifting roles across the value chain. FROM TO 2-3 AGENCIES ON A ‘ROSTER’ OVER 20 DIFFERENT PARTNERS RELIANCE ON OUTSOURCING ACCELERATED PACE OF INSOURCING MEDIA AND CONTENT PRODUCTION ‘CONTAINED’ TEAM, EASY TO MEASURE PERFORMANCE UNIVERSAL OPERATIONAL AND BUSINESS KPI FRAMEWORK CRITICAL AS
Slide 21: Authentic
Authentic 21
Slide 22: Trend: Social responsibility as the expectation
Trend | Social responsibility as the expectation FROM TO BRAND SCRUTINY- PURCHASE DECISIONS BASED ON “CONSCIOUS SHOPPING”- COMPANY’S ROLE IN SOCIETY FUNCTIONAL AND EMOTIONAL BRAND ATTRIBUTES SCRUTINIZED ACROSS MULTIPLE DIMENSIONS- DE&I, FAIR TRADE, ENVIRONMENTAL SUSTAINABILITY REQUIREMENT FROM CONSU
Slide 23: Copyright © 2021 by Boston Consulting Group. All rights reserved.
23 Copyright © 2021 by Boston Consulting Group. All rights reserved.
Slide 24: Trend: Growing demands on talent & teams
Trend | Growing demands on talent & teams FROM TO HOMOGENEOUS TEAMS SOURCED FROM SIMILAR PLACES DIVERSE TALENT MIXING CREATIVES, ANALYSTS TO CREATE EMOTIONALLY IMPACTFUL AND STRATEGICALLY PRECISE CONTENT LARGE COMPANIES AND BIG BRANDS REPRESENTING A WAR FOR DIGITAL TALENT WITH A RANGE OF NEW COMPELL
Slide 25: Complexity
COMPLEXITY 25 Copyright © 2021 by Boston Consulting Group. All rights reserved.
Slide 26: Stepping back …
The fragmentation In this market, the In-housing content ESG is a friend of media platforms sheer quantity of development (away and the accelerating content required by from agencies) will trend toward digital marketers is represent a engagement, unsustainable and significant together with a unaffor
Slide 27: bcg.com
BOSTON CONSULTING GROUP
Slide 28: Richard Kellam
Richard Kellam President & CEO
Slide 29: Print First to Digital First
From To Print Digital First First 29
Slide 30: From Low SKU to High SKU
FROM TO Low SKU High SKU High Volume Low Volume
Slide 31: From Simplicity to Complexity
From Simplicity to Complexity
Slide 32: DCM: The brand behind your brand
"CM - DCM THE BRAND BEHIND YOUR BRAND SURPRISINGLY SIMPLE _ 32 DCM
Slide 33: Our mission
Our mission is to transform our clients’ businesses by simplifying the way they communicate and operate – so they can accomplish more with fewer steps and less effort 33
Slide 34: We eat complexity for breakfast
We eat complexity for breakfast
Slide 35: More complex workflow, more digital capabilities
More complex More digital workflow capabilities 35
Slide 36: Cannabis Label Clients
• Total assets across all cannabis clients is >4,500 Cannabis Label • Creates dynamic bar codes • Automates workflows Clients • Manages regulatory compliance • Algorithms to manage the Federal legislation • Governance and oversight • Marketing communication and content • Reporting & insights • Third
Slide 37: Commercial Banking & Wealth Management Client
Commercial • Supports 7 lines of business • Streamlines on-demand content personalization Banking & Wealth for over 1,000 independent Investment Advisors, across 80 locations in Canada Management Client • 1,100+ branded assets efficiently managed for regulatory and brand compliance • Accelerates the
Slide 38: Large Pipeline Client
• Manage 1,200+ different messages for signage Large Pipeline Client • All signage is location-specific content • Order, print, bill, ship, ERP, payment, FedEx, production 38
Slide 39: Workflow Management to Digital Asset Management
Workflow Management Digital Asset Management
Slide 40: Karen Redfern
Karen Redfern VP of Customer Technology Solutions
Slide 41: DCMFLEX
DCMFLEX —
Slide 42: Wine ynalketing) andscapepsishittingmsmealler,
Wine ynalketing) andscapepsishittingmsmealler, eins, Telniae ottelesis, cinel mors toldnoolnis
Slide 43: What we developed
What we developed GOVERNMENT COMPLIANCE BUSINESS PROCESS OUTSOURCING PAYMENTS DAM SECURITY EMAIL SERVICES ORDERING/ STOREFRONT LOGISTICS MARKETING DATA DATA ANALYTICS MARKETING PRINT ON SOLUTIONS DEMAND WORKFLOW CRM MARKETING MANAGEMENT 43
Slide 44: Workflow optimization
Workflow optimization Marketing workflow solution 44
Slide 45: No one solution fits all
No one solution fits all 45
Slide 46: Why?
Why? • Higher Retention • Higher Value to Partnership • Sticky Data Governance Compliance 46
Slide 47: Shelly Anwyll
Shelly Anwyll SVP, North America, Emerging Markets & ASMBL
Slide 48: 48
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Slide 49: The Digital Asset Management market
The Digital Asset Management market $5.2 B 21.2% 1/10* CAGR during the companies currently using Market Size period of 2020-2025 a DAM solution REVENUE SHARE BY REGION REVENUE SHARE BY SIZE OF COMPANY 61.1% 38.9% 45.4% 54.6% North America Enterprise Rest Of World SME *2019 data. www.technavio.com No
Slide 50: Increasing complexity
Increasing complexity Data Governance Compliance 50
Slide 51: Wags audloyas sons 35% of inale tins
Wags audloyas sons 35% of inale tins Seal chingpomgaigital rlestandiassetsa
Slide 52: DCM competitive advantage in today's market
DCM competitive advantage in today’s market: making the complex simple • DCM Practitioner managing digital assets > 40 years • Automation is foundational to DCM growth • 70 of the top 100 organizations: Financial; Retail; Healthcare; Energy; Cannabis • Value Creation 52
Slide 53: DCM ASMBL Digital Ecosystem
DCM ASMBL Digital Ecosystem Advanced tech-enabled DAM service platform 53
Slide 54: Recent Client Win: Preeminent Technology Retailer
Recent Client Win: Preeminent Technology Retailer ASMBL Solution: • Enables client to create, execute, price-validate and traffic all promotional material • Centralizes crucial marketing workflows and digital assets, across several assets • Visible and trackable across all business lines and channel
Slide 55: The opportunity – next 5 years
The opportunity– next 5 years $3.4MM $10-$20MM $25-$50MM 2020 2022 2025 55
Slide 56: On the horizon
On the horizon Active Pipeline >$5.0MM $1.2MM $1.3MM $1.0MM $.5MM Financial Services Retail Cannabis Health Care 56
Slide 57: Natalie Mohamed
Natalie Mohamed Associate Creative Director, Brand Strategy & Communications
Slide 58: DCM's ESG reveal
DCM’s ESG reveal 58
Slide 59: DCM's ESG reveal
Environmental DCM’s ESG reveal Social Governance 59
Slide 60: Environmental commitments
Environmental commitments Carbon footprint Renewable energy Waste Sustainable forestry reduction transition reduction support 30% carbon footprint 100% renewable 10% annual reduction 144,000 trees reduction by 2030 energy by 2050 of solid waste planted annually Net zero by 2050 60
Slide 61: Environmental partnerships
Environmental partnerships • NFP that promotes sustainability in printing • Software platform that measures paper • Full solutions provider of LED lighting and other processes through standardized criteria, auditing, footprint in real time and reverse-calculates energy-efficient products and technol
Slide 62: Social highlights
Social highlights Quality of life Diversity, equity & Giving back for associates inclusion strategy • Habitat for Humanity partnership Wellbeing: Growth & development: • Partnership with Global Learning • NEW: volunteer day program • Workplace Options: Employee • Tuition reimbursement Inc. for DEI e
Slide 63: Governance highlights
Governance highlights Business ethics Safety & Regulatory Board security compliance management • Code of conduct • Health & safety policy • AODA compliance (as per • Board diversity policy • Pay equity policy • Privacy policy Accessibility for Ontarians • Whistleblower policy • Violence & harassment
Slide 64: James Lorimer
James Lorimer Chief Financial Officer
Slide 65: Financial Update
Fi n ncial Update . =
Slide 66: Forward Looking Statement Information Disclosure
Forward Looking Statement Information Disclosure Forward-looking Statements Certain statements in this presentation constitute “forward-looking” statements that involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance, objectives or achievement
Slide 67: 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 67
Slide 68: Positioned for top-line growth
Positioned for top-line growth As consumer movements return to pre-COVID levels $100.0 REVENUE (C$ MILLIONS) $78.6 $77.4 $75.0 $69.6 $71.5 $63.2 $63.9 $62.4 $60.6 $57.4 $55.2 $56.9 $50.0 $25.0 $- Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Q3 20 Q4 20 Q1 21 Q2 21 Q3 21 PRE-COVID Q1 19 – Q1 20 COVID Q2 20 –
Slide 69: OPEX, mix & revenue management
OPEX, mix & revenue management Initiatives have driven ~30% gross margins GROSS MARGIN % 30.7% 30.1% 30.20% 29.0% 28.7% 28.0% 26.4% 24.8% 24.1% 24.5% 22.6% +30% GM target in near term Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Q3 20 Q4 20 Q1 21 Q2 21 Q3 21 Providing operational leverage as post-COVID envir
Slide 70: Focus on operational excellence
Focus on operational excellence Digital Inkjet Brampton Calgary Hybrid Capabilities Consolidation Consolidation Work Model +$1M +$1M +$.75M +$0.8M Savings Previously Savings Previously OPEX Savings Overhead Savings Announced Announced 70
Slide 71: Cash flow from operations
Cash flow from operations CFO High free cash flow $20.7M conversion = YTD 2021 Paying down debt 71
Slide 72: Strong free cash flow
Strong free cash flow IN C$ MILLIONS 2019 2020 YTD 2021 Cash from Operations -$0.8 $47.6 $20.7 Capital Expenditures 1.0 0.3 0.6 Intangible Investment 3.9 0.6 1.1 Total Investing Activities $4.9 $0.8 $1.7 CFO less total investing -$5.7 $46.8 $19.0 "FREE CASH" CONVERSION nmf 98.2% 91.8% nmf = not mean
Slide 73: Organizational effectiveness initiatives
Organizational effectiveness initiatives -34% fewer employees vs. 2018 Severance payments subsiding -489 Headcount at end of Period Provisions paid / payable (millions) $6.5 1,433 $5.6 $5.2 1,221 1,078 $3.5 944 $0.3 2018 2019 2020 2021YTD 2019 2020 2021YTD N12M Long Term 73
Slide 74: Repayment of debt a significant priority
Repayment of debt a significant priority $79.8 M $48.2 M -54% Since Fiscal 2019 $41.0 M $39.1 M $36.3 M 2019 2020 Q1 2021 Q2 2021 Q3 2021 74
Slide 75: Debt refinancing
Debt refinancing 50% cost EXPECTED reduction on ~60% of debt = $1.5M ANNUAL INTEREST SAVINGS $10M Bank Term Facility closed November 8, 2021 $11M FPD VI Term Facility expected to close December 17, 2021 75
Slide 76: Current term debt maturity profile
Current term debt maturity profile DCM’s term credit facilities to be fully repaid in 2026 Outstanding Term Credit Facility Balances (millions) $40.0 $36.3 $34.1 $30.0 $11.0 $21.4 $2.2 $21.4 $20.0 $9.4 $9.4 $2.4 $10.0 $1.7 $1.2 $9.6 $10.5 $4.9 $6.3 $9.7 $7.9 $4.7 $5.8 $- $- $2.0 $1.8 30-Sep-21 31-De
Slide 77: Committed to paying down debt
Committed to paying down debt $26M of fixed term debt to be repaid through end of 2023 Principal Payments by Period (millions) $20.0 $1.9 $12.7 $11.8 $3.3 $1.6 $4.7 = $36.3 $1.6 $1.0 $1.6 $10.0 $1.2 $4.6 $4.9 $1.7 $3.8 $4.1 $1.6 $4.7 $1.8 $1.6 $- $- Q4 2021 2022 2023 2024 2025 2026 Bank Term Facilit
Slide 78: Supply chain headwinds and raw material price increases
Supply chain headwinds Raw material OPPORTUNITIES = price increases FOR TOP-LINE + Supply constraints GROWTH AND MARGIN ENHANCEMENT 78
Slide 79: Disciplined financial strategy
Disciplined financial strategy Three key initiatives: • Continue to increase margins Grow Free • Further working capital improvements Cash Flow • Pay down debt • Investment in digital asset management Fund Digital • Refresh strategic digital print assets Innovation • Support enhanced lead generation
Slide 80: Digital innovation provides paths to value creation
Digital innovation provides paths to value creation Multiple of Enterprise Value | Revenue 0.5X 1.1X 1.9X 9.3X Multiple of Enterprise Value | EBITDA 3.4X 7.4X 12.5X 29.1X DCM Today Conventional Print Tech-enabled Marketing DAM Tech-enabled Solution Providers Workflow providers Services Providers 80
Slide 81: Why invest?
Why invest? -54% REVENUE & VALUE DEBT SINCE MARGIN GROWTH CREATION FISCAL 2019 Driving digital innovation Tech enablement providing Repayment of debt path to growth a significant priority Currently trading at ~3.4x EBITDA Targeting <1x debt/EBITDA Re-rating opportunity as we accelerate innovation 81
Slide 82: Building both a better and bigger business
Building both a better and bigger business Talent Business Operational Client Technology- Intelligence Excellence Engagement enabled Services
Slide 83: Richard Kellam
Richard Kellam President & CEO
Slide 84: Print First to Digital First
From To Print Digital First First 84
Slide 85: Workflow Management to Digital Asset Management
Workflow Management Digital Asset Management
Slide 86: Better + Bigger Business
Better + Bigger Business 86
Slide 87: 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 87
Slide 88: Reception
Reception Shelly Anwyll SVP, North America, Emerging Markets Karen Redfern VP, Customer Technology Solutions Barb Franovic- Wilkins VP, Marketing
Slide 89: Thank you
Thank you y, P
Data Communications Management — Investor Day (December 2021) on 6ix