DATA Communications Management Corp. Reports Q1 2025 Financial Results

About this update from Data Communications Management Corp.

.bwalignc { text-align: center; list-style-position: inside } .bwalignl { text-align: left } .bwalignr { text-align: right; list-style-position: inside } .bwblockalignl { margin-left: 0px; margin-right: auto } .bwcellpmargin { margin-bottom: 0px; margin-top: 0px } .bwlistcircle { list-style-type: circle } .bwlistdisc { list-style-type: disc } .bwnowrap { white-space: nowrap } .bwpadb3 { padding-bottom: 4px } .bwpadl0 { padding-left: 0px } .bwpadl4 { padding-left: 20px } .bwpadl8 { padding-left: 40px } .bwpadr0 { padding-right: 0px } .bwsinglebottom { border-bottom: solid black 1pt } .bwtablemarginb { margin-bottom: 10px } .bwtopsingle { border-top: solid black 1pt } .bwvertalignb { vertical-align: bottom } .bwvertalignt { vertical-align: top } .bwwidth1 { width: 1% } .bwwidth100 { width: 100% } .bwwidth12 { width: 12% } .bwwidth2 { width: 2% } .bwwidth3 { width: 3% } .bwwidth6 { width: 6% } .bwwidth60 { width: 60% } .bwwidth61 { width: 61% } .bwwidth7 { width: 7% } .bwwidth70 { width: 70% } .bwwidth74 { width: 74% } .bwwidth76 { width: 76% } .bwwidth8 { width: 8% } FIRST QUARTER 2025 SUMMARY FINANCIAL RESULTS Net income was $5.1 million in the quarter vs. $1.5 million in Q1 2024 Adjusted net income 1 was $5.2 million compared to $4.9 million in Q1 2024 Revenues were $123.7 million in the first quarter vs. $129.3 million in Q1 2024 Gross profit as a percentage of revenues was 29.3% compared to 28.9% in Q1 2024 Adjusted EBITDA 1 represented 15.0% of revenue vs. 14.4% in Q1 2024 Adjusted EBITDA was $18.6 million vs. $18.7 million in Q1 2024 No restructuring or one-time charges incurred in the quarter Special dividend of $0.20 per common share paid in Q1 2025 Regular quarterly dividend of $0.025 per common share commenced in April 2025 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 first quarter 2025 financial results. MANAGEMENT COMMENTARY “We delivered first quarter results in line with our expectations, highlighted by adjusted EBITDA of 15.0% of revenues, and gross profit of 29.3% of revenues, marking continued progress towards our objective of returning to pre-acquisition levels of margin performance,” said Richard Kellam, President & CEO of DCM. “Revenues in the quarter were down 4.3% year over year but grew 6.4% sequentially compared to Q4 2024. First quarter revenues were primarily impacted by the order activity of a few large enterprise clients. We are encouraged about the success of our business development activities across our base of more than 400 enterprise clients which we expect to contribute to revenue in the second half of 2025 along with a return to modest year over year growth. “Much of our attention in the first quarter focused on preparing for the expected introduction of cross-border tariffs and the impact on our supply chain, raw material pricing and client orders. We have developed contingency plans including identifying alternative sources of supply for several raw materials. We continue to closely monitor the uncertain economic and geopolitical environment while navigating challenging conditions in our end markets including a potential Canada Post strike,” added Kellam. DCM continues to be guided by four strategic priorities for 2025: Drive profitable organic growth Deliver a return on our new capital investments focused on enhancing our efficiency Continue to drive gross margin improvement through top line revenue growth and operating efficiencies Demonstrate agility and adaptability to effectively navigate an uncertain environment. OTHER BUSINESS HIGHLIGHTS Sustainability Reporting In May 2025, DCM published its second annual corporate Sustainability Report, for the 2024 calendar year. Highlights of the Company’s 2024 report include: a reduction in our Scope 1 and Scope 2 greenhouse gas emissions by 33.3% from 2020 to 2024 the planting of two million trees since 2021 through our partnership with PrintReleaf advanced our long-term relationship with the Sustainable Green Printing Partnership formally signaled DCM’s support for the UN Global Compact sustainability initiative. DCM’s 2024 Sustainability Report is available on the Company’s website. Dividend Declaration On May 12, 2025, DCM’s board of directors declared a second quarterly dividend of $0.025 per common share, payable on June 30, 2025, to shareholders of record at the close of business on June 16, 2025. This dividend is designated as an “eligible” dividend for the purpose of the Income Tax Act (Canada) and any similar provincial legislation. Q1 2025 EARNINGS CALL DETAILS The Company will host a conference call and webcast on Tuesday, May 13, 2025 at 9:00 a.m. EDT Mr. Kellam and James Lorimer, CFO, will present the first quarter 2025 results followed by a live Q&A. 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 SEDAR+. A video message from Mr. Kellam will also be posted on the Company’s website. Footnotes: 1 Adjusted EBITDA, Adjusted EBITDA as a percentage of revenues, Adjusted net income (loss), Adjusted net income (loss) as percentage of revenues, Net Debt to Adjusted EBITDA and Free cash flow are non-IFRS Accounting Standards measures. For a description of the composition of these and other non-IFRS Accounting Standards measures used in this press release, and a reconciliation to their most comparable IFRS Accounting Standards measure, where applicable, see the information under the heading “Non-IFRS Accounting Standards Measures”, the information set forth on Table 2 and Table 3 herein, and our most recent Management Discussion & Analysis filed on SEDAR+. TABLE 1 The following table sets out selected historical consolidated financial information for the periods noted. For the three-months ended March 31, 2025, December 31, 2024 and March 31, 2024 (in thousands of Canadian dollars, except share and per share amounts, unaudited) March 31, 2025 December 31, 2024 March 31, 2024 Revenues $ 123,675 $ 116,225 $ 129,254 Gross profit 36,260 30,413 37,311 Gross profit, as a percentage of revenues 29.3 % 26.2 % 28.9 % Selling, general and administrative and research and development expenses 23,459 20,732 24,135 As a percentage of revenues 19.0 % 17.8 % 18.7 % Adjusted EBITDA 18,588 15,788 18,665 As a percentage of revenues 15.0 % 13.6 % 14.4 % Net income for the period 5,114 699 1,475 Adjusted net income 5,203 2,574 4,903 As a percentage of revenues 4.2 % 2.2 % 3.8 % Basic earnings per share $ 0.09 $ 0.01 $ 0.03 Diluted earnings per share $ 0.09 $ 0.01 $ 0.02 Adjusted net income per share, basic $ 0.09 $ 0.05 $ 0.09 Adjusted net income per share, diluted $ 0.09 $ 0.04 $ 0.08 Weighted average number of common shares outstanding, basic 55,308,951 55,308,951 55,022,883 Weighted average number of common shares outstanding, diluted 57,337,772 57,481,819 59,051,883 TABLE 2 The following table provides reconciliations of net income to EBITDA and of net income to Adjusted EBITDA for the periods noted. EBITDA and Adjusted EBITDA reconciliation For the periods ended March 31, 2025 and 2024 January 1 to March 31, 2025 January 1 to March 31, 2024 (in thousands of Canadian dollars, unaudited) Net income for the period $ 5,114 $ 1,475 Interest expense, net 5,148 5,553 Amortization of transaction costs 140 140 Current income tax expense 2,071 1,342 Deferred income tax recovery (911 ) (1,163 ) Depreciation of property, plant and equipment 1,722 1,523 Amortization of intangible assets 383 728 Depreciation of the ROU Asset 4,802 4,485 EBITDA $ 18,469 $ 14,083 Acquisition and integration costs — 283 Restructuring expenses — 1,085 Net fair value losses on financial liabilities at fair value through profit or loss 119 3,214 Adjusted EBITDA $ 18,588 $ 18,665 TABLE 3 The following table provides reconciliations of net income (loss) to Adjusted net income and a presentation of Adjusted net income per share for the periods noted. Adjusted net income reconciliation For the periods ended December 31, 2024 and 2023 January 1 to March 31, 2025 January 1 to March 31, 2024 (in thousands of Canadian dollars, except share and per share amounts, unaudited) Net income for the period $ 5,114 $ 1,475 Acquisition and integration costs — 283 Restructuring expenses — 1,085 Net fair value losses on financial liabilities at fair value through profit or loss 119 3,214 Tax effect of the above adjustments (30 ) (1,154 ) Adjusted net income $ 5,203 $ 4,903 About DATA Communications Management Corp. DCM is a leading Canadian tech-enabled provider of print and digital solutions that help simplify complex marketing communications and operations workflow. DCM serves over 2,500 clients including 70 of the 100 largest Canadian corporations and leading government agencies. Our core strength lies in delivering individualized services to our clients that simplify their communications, including customized printing, highly personalized marketing communications, campaign management, digital signage, and digital asset management. From omnichannel marketing campaigns to large-scale print and digital workflows, our goal is to make complex tasks surprisingly simple, allowing our clients to focus on what they do best. Additional information relating to DATA Communications Management Corp. is available on www.datacm.com , and in the disclosure documents filed by DATA Communications Management Corp. on SEDAR+ at www.sedarplus.ca . FORWARD-LOOKING STATEMENTS Certain statements in this press release constitute “forward-looking” statements that involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance, objectives or achievements of DCM, or industry results, to be materially different from any future results, performance, objectives or achievements expressed or implied by such forward-looking statements. When used in this press release, words such as “may,” “would,” “could,” “will,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” “plan,” and other similar expressions are intended to identify forward-looking statements. These statements reflect DCM’s current views regarding future events and operating performance, are based on information currently available to DCM, and speak only as of the date of this press release. These forward-looking statements involve a number of risks, uncertainties, and assumptions. They should not be read as guarantees of future performance or results and will not necessarily be accurate indications of whether or not such performance or results will be achieved. Many factors could cause the actual results, performance, objectives or achievements of DCM to be materially different from any future results, performance, objectives or achievements that may be expressed or implied by such forward-looking statements. We caution readers of this press release not to place undue reliance on our forward-looking statements since a number of factors could cause actual future results, conditions, actions, or events to differ materially from the targets, expectations, estimates or intentions expressed in these forward-looking statements. The principal factors, assumptions and risks that DCM made or took into account in the preparation of these forward-looking statements and which could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements are described in further detail in our most recent annual and interim Management Discussion and Analysis filed on SEDAR+, and include but are not limited to the following: industry conditions are influenced by numerous factors over which the Company has no control, including: declines in print consumption; labour disruptions at suppliers and customers, including Canada Post; the impact of tariffs and responses thereto (including by governments, trade partners and customers), which may include, without limitation, retaliatory tariffs, export taxes, restrictions on exports to the U.S. or other measures, increases in the cost of our input costs, and the effect of governmental regulations and policies in general; our ability to achieve and meet our revenue, profitability, free cash flow and debt reduction targets for 2025 and in the future; while we have received consents from our lenders for the declaration and payment of the special dividend and regular recurring dividend, including the exclusion of the special dividend from our fixed charge coverage ratios, our financial leverage may increase, and there is no guarantee that we will pay such dividends in the future; and, our ability to comply with our financial and other covenants under our credit facilities, which may preclude us from paying future dividends if our outlook and future financial liquidity changes. Additional factors are discussed elsewhere in this press release and under the headings "Liquidity and capital resources" and “Risks and Uncertainties” in DCM’s Management Discussion and Analysis and in DCM’s other publicly available disclosure documents, as filed by DCM on SEDAR+. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results may vary materially from those described in this press release as intended, planned, anticipated, believed, estimated, or expected. Unless required by applicable securities law, DCM does not intend and does not assume any obligation to update these forward-looking statements. NON-IFRS ACCOUNTING STANDARDS MEASURES NON-IFRS ACCOUNTING STANDARDS AND OTHER FINANCIAL MEASURES This press release includes certain non-IFRS Accounting Standards measures, ratios and other financial measures as supplementary information. This supplementary information does not represent earnings measures recognized by IFRS Accounting Standards and does not have any standardized meanings prescribed by IFRS Accounting Standards. Therefore, these non-IFRS Accounting Standards measures, ratios and other financial measures are unlikely to be comparable to similar measures presented by other issuers. Investors are cautioned that this supplementary information should not be construed as alternatives to net income (loss) determined in accordance with IFRS Accounting Standards as an indicator of DCM’s performance. Definitions of such supplementary information, together with a reconciliation of net income (loss) to such supplementary financial measures, can be found in our most recent annual and interim Management Discussion and Analysis and filed on SEDAR+ at www.sedarplus.ca . Condensed interim consolidated statements of financial position (in thousands of Canadian dollars, unaudited) March 31, 2025 December 31, 2024 $ $ Assets Current assets Cash and cash equivalents $ 7,284 $ 6,773 Trade receivables 108,453 103,445 Inventories 25,241 23,843 Prepaid expenses and other current assets 6,448 5,989 Income taxes receivable 2,761 3,432 150,187 143,482 Non-current assets Other non-current assets 2,538 9,104 Deferred income tax assets 9,200 8,224 Property, plant, and equipment 34,591 34,812 Right-of-use assets 167,769 162,510 Pension assets 3,520 3,142 Intangible assets 7,905 8,282 Goodwill 22,747 22,747 $ 398,457 $ 392,303 Liabilities Current liabilities Bank overdraft $ — $ 880 Trade payables and accrued liabilities 57,019 59,890 Dividend payable 1,383 — Current portion of credit facilities 8,714 15,175 Current portion of lease liabilities 12,120 10,525 Provisions 4,624 8,016 Deferred revenue 3,988 6,199 87,848 100,685 Non-current liabilities Provisions 669 1,279 Credit facilities 88,471 68,515 Lease liabilities 165,092 158,603 Deferred income tax liabilities 27 60 Pension obligations 19,134 18,354 Other post-employment benefit plans 1,344 1,409 Asset retirement obligation 3,466 3,438 $ 366,051 $ 352,343 Equity Shareholders’ equity Shares $ 284,592 $ 284,592 Warrants 219 219 Contributed surplus 3,148 3,078 Translation Reserve 302 307 Deficit (255,855 ) (248,236 ) $ 32,406 $ 39,960 $ 398,457 $ 392,303 Condensed interim consolidated statements of operations (in thousands of Canadian dollars, except per share amounts, unaudited) For the three months ended March 31, 2025 For the three months ended March 31, 2024 $ $ Revenues $ 123,675 $ 129,254 Cost of revenues 87,415 91,943 Gross profit 36,260 37,311 Expenses Selling, commissions and expenses 10,960 10,864 General and administration expenses 12,499 13,271 Research and development expenses 1,120 1,247 Restructuring expenses — 1,085 Acquisition and integration costs — 283 Net fair value losses on financial liabilities at fair value through profit or loss 119 3,214 24,698 29,964 Income before finance costs and income taxes 11,562 7,347 Finance costs Interest expense on long term debt and pensions, net 1,871 2,498 Interest expense on lease liabilities 3,277 3,055 Amortization of transaction costs 140 140 5,288 5,693 Income before income taxes 6,274 1,654 Income tax expense Current 2,071 1,342 Deferred (911 ) (1,163 ) 1,160 179 Net income for the period $ 5,114 $ 1,475 Other comprehensive income: Items that may be reclassified subsequently to net income Foreign currency translation (5 ) 30 (5 ) 30 Items that will not be reclassified to net income Re-measurements of pension and other post-employment benefit obligations (385 ) 7,013 Taxes related to pension and other post-employment benefit adjustment above 98 (1,842 ) (287 ) 5,171 Other comprehensive (loss) income for the period, net of tax $ (292 ) $ 5,201 Comprehensive income for the period $ 4,822 $ 6,676 Basic earnings per share 0.09 0.03 Diluted earnings per share 0.09 0.02 Condensed interim consolidated statements of cash flows (in thousands of Canadian dollars, unaudited) For the three months ended March 31, 2025 For the three months ended March 31, 2024 $ $ Cash provided by Operating activities Net income for the period $ 5,114 $ 1,475 Items not affecting cash Depreciation of property, plant, and equipment 1,722 1,523 Amortization of intangible assets 383 728 Depreciation of right-of-use-assets 4,802 4,485 Share-based compensation expense 70 211 Net fair value losses on financial liabilities at fair value through profit or loss 119 3,214 Pension expense 372 472 Gain on disposal of property, plant, and equipment — (22 ) Gain on disposal of sale and leaseback — (11 ) Provisions — 1,085 Amortization of transaction costs 140 140 Accretion of asset retirement obligations 28 31 Other post-employment benefit plans expense 43 149 Income tax expense 1,160 179 Changes in non cash working capital (12,263 ) (6,560 ) Contributions made to pension plans (355 ) (319 ) Contributions made to other post-employment benefit plans (108 ) (51 ) Provisions paid (4,002 ) (4,105 ) Income taxes (paid) received (1,400 ) 50 Total cash (used in) generated from operating activities (4,175 ) 2,674 Investing activities Proceeds on sale and leaseback transaction 6,694 8,661 Purchase of property, plant, and equipment (1,489 ) (2,766 ) Purchase of non-current assets (143 ) — Proceeds on disposal of property, plant, and equipment — 535 Total cash provided by investing activities 5,062 6,430 Financing activities Proceeds from credit facilities 32,232 21,000 Repayment of credit facilities (18,873 ) (24,893 ) Decrease in bank overdrafts (880 ) (1,365 ) Transaction costs (4 ) — Dividends paid (11,063 ) — Principal portion of lease payments (1,775 ) (1,675 ) Total cash (used in) financing activities (363 ) (6,933 ) Change in cash and cash equivalents during the period 524 2,171 Cash and cash equivalents – beginning of period 6,773 17,652 Effects of foreign exchange on cash balances (13 ) 19 Cash and cash equivalents – end of period $ 7,284 $ 19,842 View source version on businesswire.com: https://www.businesswire.com/news/home/20250512380125/en/ Mr. Richard Kellam President and Chief Executive Officer DATA Communications Management Corp. Tel: (905) 791-3151 Mr. James E. Lorimer Chief Financial Officer DATA Communications Management Corp. Tel: (905) 791-3151 [email protected]

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