34 slides from Data Communications Management's earnings presentation, Aug 11, 2023
Slide 1: Q2 2023 Report to Shareholders
Q2 2023 Report to Shareholders DATA Communications Management Corp. DCM-TSX | DCMDF-OTCQX August 11, 2023
Slide 2: Forward-looking Statements and Information Disclosure
Forward-looking Statements Information Disclosure Forward-looking Statements Non-IFRS Measures Certain statements in this presentation constitute “forward-looking” statements that involve known This presentation includes certain non-IFRS measures as supplementary information. In and unknown risks, u
Slide 3: Today's Objectives
• Q2 2023 Consolidated Results Today’s Objectives • Bigger + Better Business • Questions and Answers 3
Slide 4: Q2 2023 Results
Q2 2023 Results
Slide 5: Bigger Business
Bigger Business 5
Slide 6: Q2 Revenue $119.0M
Q2 Revenue +74.7% $119.0M vs. Q2 2022 vs. $68.1M Q2 2022 +$50.9M vs. prior year 6
Slide 7: First Half Revenue Growth
First Half Revenue Growth Comparison to Prior Year Period + 16.8% + 15.9% + 8.2% 1H 2022 vs. 2021 2H 2022 vs. 2021 1H 2023 vs. 2022 * Year / year growth tracking ahead of +5% CAGR objective * First half 2023 vs. First Half 2022 pro forma, as if MCC was 100% owned for entire respective periods. 7
Slide 8: Revenue Momentum Continued in Q2 2023
Revenue Momentum Continued in Q2 2023 +74.7% vs. 2022 Quarterly Revenue (millions) $119.0 +9.8% vs. 2022 +20.0% 2021 $76.1 +11.4% $73.0 $69.3 $68.1 2022 $62.4 $63.4 $60.9 $55.2 $56.9 2023 Q1 Q2 Q3 Q4 Q2 2023 = Seventh consecutive quarter of year/year growth 8
Slide 9: Q2 Gross Profit $32.0M
Q2 Gross Profit Lower relative MCC margins a key opportunity going forward +56.7% $32.0M 26.9% vs. Q2 2022 vs. $20.4M Q2 2022 of Revenue vs. 30.0% As expected, lower MCC gross profit margins vs. recent DCM 9
Slide 10: Gross Profit Momentum Continues in Q2 2023
Gross Profit Momentum Continues in Q2 2023 +56.7% vs. 2022 Quarterly Gross Profit (millions) $32.0 +17.0% vs. 2022 +33.0% $23.8 +15.7% $23.6 2021 $20.3 $20.4 $19.9 $18.8 2022 $17.2 $17.7 $15.8 2023 Q1 Q2 Q3 Q4 Q2 2023 = Eight consecutive quarters of year over year growth 10
Slide 11: Share Price Momentum Continues YTD
Share Price Momentum Continues YTD DCM-TSX Share Price Performance: +133% YTD (3-Aug-23) $4.00 $3.38 3-Aug-23 $3.50 Q1 2023: $3.00 $1.45 to $2.37 = +63.4% $2.50 +$7.4M M2M Q2 2023: Adj. + Vesting +$2.3M $2.37 to $2.91 = +22.8% $2.00 Q2 YTD $1.50 $1.00 Q2 Mark-to-Market Fair $0.50 Value Adj. + Vestin
Slide 12: Q2 Adjusted EBITDA $13.8M
Q2 Adjusted EBITDA +48.6% $13.8M 11.6% vs. Q2 2022 vs. $9.3M Q2 2022 of Revenue vs. 13.7% Q2 2022 +$4.5M vs. prior year 12
Slide 13: Adjusted EBITDA Growth
Adjusted EBITDA Growth Strong performance normalizing for acquisition-related impacts +48.6% vs. 2022 Quarterly Adjusted EBITDA (millions) +28.9% vs. 2022 $13.8 +72.8% $12.8 $12.6 (2.3%) $9.4 $9.9 $9.3 $9.4 $9.2 $7.2 $7.3 2021 2022 2023 Q1 Q2 Q3 Q4 Strong first half performance vs. 2022 (partial qua
Slide 14: Second Quarter 2023 Financial Results
Second Quarter 2023 Financial Results Quarter ended June 30, in millions Selected financial information Q2 2023 Q2 2022* Better/(Worse) Revenue $119.0 $68.1 +$50.9 Gross profit $32.0 $20.4 +$11.6 Gross margin (%) 26.9% 30.0% (310 bps) SG&A $23.0 $14.0 ($9.0) Restructuring expenses $2.7 - ($2.7) Acqu
Slide 15: First Half 2023 Financial Results
First Half 2023 Financial Results Six months ended June 30, in millions Selected financial information 1H 2023 1H 2022* Better/(Worse) Revenue $195.0 $137.4 +$57.7 Gross profit $55.8 $40.8 +$15.0 Gross margin (%) 28.6% 29.7% (110 bps) SG&A $36.9 $27.1 ($9.7) Restructuring expenses $2.7 - ($2.7) Acqu
Slide 16: Better Business
Better Business 16
Slide 17: Q2 SG&A $23.0M
Q2 SG&A Lower relative MCC SG&A expenses a key deal feature +70.4% $23.0M 19.3% vs. Q2 2022 vs. $14.0M Q2 2022 of Revenue vs. 20.5% Q2 2022 SG&A as percentage of revenues improved post-acquisition 17
Slide 18: Q2 Restructuring and One-Time Costs
Q2 Restructuring and One-Time Costs Commenced planned organizational and operational synergies $2.7M $3.8M $4.2M Restructuring Acquisition & Integration Annualized Savings Expenses Expenses to date from Organizational Changes Implemented ~15% of expected $25 to $30 million in annualized synergies 18
Slide 19: Headcount Reduction & Productivity Improvements
Headcount Reduction & Productivity Improvements Headcount at End of Period Revenue per Employee (thousands) 1822 $300.9 $299.6 1,433 $240.6 $255.2 $225.2 $231.7 1,221 1,078 922 910 2018 2019 2020 2021 2022 *Q2 2023 2018 2019 2020 2021 2022 *Q2 2023 YTD YTD * Q2 2023 YTD Active employees: DCM= 918; M
Slide 20: ESG
ESG ESG at DCM: Creating a Better World for Tomorrow Key Targets ASGP2238 DCM. | ausiness FORESTS’ FOR ALL Governance 20
Slide 21: ESG
ESG 79,708,105 959,018 LB of Paper Standard Trees Reforested DCM customers have collectively offset 80M lb of paper consumption by reforesting 960K trees since joining PrintReleaf in October 2021
Slide 22: Solution Portfolio
Solution Portfolio Marketing campaign omnichannel workflow 1st Half 2023 Digital asset management +18% Growth Workflow management and order fulfillment Campaign collateral allocation and distribution $2.9M Revenue Personalized video 22
Slide 23: Total Debt Reduction
Total Debt Reduction Committed to Paying Down Debt: –20% reduction since MCC Closing $143.1 Total Debt Outstanding (millions) $114.6 $79.8 $48.2 $37.1 $27.3 $22.6 2019 2020 2021 2022 Q1 2023 *April 24 2023 Q2 2023 20% reduction in Total Debt since April 24, 2023 MCC closing … 23
Slide 24: Net Debt Reduction
Net Debt Reduction Key initiatives in “First 100 Days” Net Debt / Repayments in millions Increase Decrease Total $126.0 -$24.2 $93.6 -$23.1 -$4.6 $19.6 Net Debt Q1 2023 MCC Acquisition Private Placement Oshawa Sale Working Capital Net Debt Q2 2023 …. and a Net Debt reduction of +33.4% to $93.6M sinc
Slide 25: Well Prepared For Integration
Well Prepared For Integration Operational Organizational Procurement Revenue Objective: Achieve $25M - $30M in Annualized Synergies 25
Slide 26: Updated Five-Year Strategic Financial Objectives
Updated Five-Year Strategic Financial Objectives “From Print first to Digital first” +5% +14% <1.0x +60% Organic Adjusted EBITDA Debt / EBITDA Martech Growth, Revenue CAGR +80% Gross Margin 26
Slide 27: DCM. setiers'sigger
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Slide 28: Q&A
Q&A
Slide 29: Thank you
Thank you For more information, please visit www.datacm.com or reach out to: Richard Kellam James Lorimer President & CEO Chief Financial Officer rkellam@datacm.com jlorimer@datacm.com +1 (416) 451-1117 +1 (905) 494-4101 DCM – TSX | DCMDF - OTCQX 29
Slide 30: Non-IFRS Measures
Non-IFRS Measures 30
Slide 31: EBITDA and Adjusted EBITDA Reconciliation
EBITDA and Adjusted EBITDA Reconciliation 31
Slide 32: EBITDA and Adjusted EBITDA Reconciliation
EBITDA and Adjusted EBITDA Reconciliation The following table provides reconciliations of net (loss) income to EBITDA and of net (loss) income to Adjusted EBITDA for the periods noted, following adoption of “net fair value (gains) losses on financial liabilities at fair value through profit or loss”
Slide 33: Adjusted Net Income Reconciliation
Adjusted Net Income Reconciliation 33
Slide 34: DCM. setiers'sigger
7 | DCM. setiers'sigger