Mr. Richard Kellam reports

DATA COMMUNICATIONS MANAGEMENT CORP. ANNOUNCES SECOND QUARTER 2023 FINANCIAL RESULTS

Data Communications Management Corp. had continued momentum in the second quarter of 2023, with revenue up 74.7 per cent, and gross profit up 56.7 per cent, compared with the second quarter of 2022, respectively. Year-over-year growth is primarily driven by the acquisition of Moore Canada Corp. (MCC). The combined business achieved growth from expansion revenue with existing clients, new client wins and continuing progress passing raw material increases on to the customers.

SECOND QUARTER 2023 HIGHLIGHTS - BUILDING A BIGGER BUSINESS

• Revenue for the second quarter of 2023 was up +74.7%, or +$50.9 million, vs. Q2 year ago (YA), for total revenues of $119.0 million. This revenue growth is primarily driven by additional revenues from the acquisition of MCC;
• Gross profit accelerated +56.7%, or +$11.6 million for a total of $32.0 million; Gross profit margin was 26.9% for the second quarter of 2023 vs. 30.0% YA. As expected, the lower average gross margins of MCC contributed to a lower overall gross margin. Planned initiatives to drive synergies and optimize our operational footprint are already in action, and are expected to improve consolidated gross margins;
• Adjusted EBITDA1 increased +48.6% compared to last year, and was $13.8 million or 11.6% of revenue vs. $9.3 million or 13.7% of revenues YA. Adjusted EBITDA as a percentage of revenues declined due to the lower average gross margins of MCC;
• One-time adjustments recorded of $3.8 million in costs related to the acquisition and integration of MCC and restructuring costs of $2.7 million for the quarter;
• Total net debt at the end of the second quarter of 2023 was $93.6 million (total debt less cash on hand), down more than 30% since closing the MCC acquisition. During the second quarter of 2023, DCM financed 100% of the MCC with debt, and subsequently made repayments totaling $60.4 million, of which $24.5 million related to the Bank Credit Facility, $23.1 million to the Real Estate Bridge Loan, $6.1 million to repaying in full the FPD IV and FPD V term loans, and the remaining balance was applied towards regular principal repayments on term loans.

1 Note: EBITDA, Adjusted EBITDA, Adjusted EBITDA as a percentage of revenues, Adjusted net income (loss) and Adjusted net income (loss) as a percentage of revenues are not earnings measures recognized by International Financial Reporting Standards (IFRS), do not have any standardized meanings prescribed by IFRS and might not be comparable to similar financial measures disclosed by other issuers. EBITDA, Adjusted EBITDA, Adjusted EBITDA as a percentage of revenues, Adjusted net income (loss) and Adjusted net income (loss) as a percentage of revenues should not be construed as alternatives to net income (loss) determined in accordance with IFRS as an indicator of DCM's performance.

SECOND QUARTER 2023 OPERATIONAL HIGHLIGHTS - BUILDING A BETTER BUSINESS

• On April 24, 2023, DCM closed the acquisition of MCC for a total cash purchase price of $130.8 million. During the quarter, the total post-closing working capital adjustments to the purchase price were $4.9 million for a total cash purchase price of $135.8 million. MCC is now a wholly-owned subsidiary of DCM. The acquisition was funded through a revolving, floating rate credit facility from a Canadian chartered bank, which includes up to $90 million of revolving credit capacity; a $30 million floating rate term loan facility from the bank; and a new $50 million fixed rate credit facility from Fiera Private Debt.
• DCM commenced planned initiatives to drive organizational synergies. Restructuring expenses of $2.7 million were recorded in connection with a reduction in the size of our combined team by approximately 30 associates. On an annualized basis, we expect savings of approximately $4.2 million from this initiative.
• On May 25, 2023, DCM completed a private placement ("Offering") of common shares of the Company ("Common Shares"), and issued 8,707,200 Common Shares at a price per share of $3.00 for gross proceeds of $26.1 million (or $24.2 million after closing costs). In connection with the Offering, the Company issued to the Agents broker warrants enabling them to acquire up to 261,216 Common Shares at a price of $3.1627 per share.
• On June 8, 2023, DCM entered into a sale and leaseback of its Oshawa, Ontario warehouse facility, acquired as part of the Company's acquisition of MCC. The sale generated $24.1 million in gross proceeds ($23.1 million in net proceeds). As DCM intends to use the Oshawa facility, the Company entered into a ten-year lease agreement with options to extend the lease term for a total additional term of up to ten years. The lease term also includes a capital improvement allowance of $1.5 million.

MANAGEMENT COMMENTARY

"We'd like to remind shareholders that we closed the MCC acquisition on April 24, 2023, and the results we are reporting include the combined results of our DCM business and MCC's operations for one week in April, plus the months of May and June, so not quite a full quarter," said Richard Kellam, CEO and President of DCM.

"Gross profit as a percentage of revenue for the second quarter of 2023 exceeded our expectations. The opportunity to enhance MCC profit margins was one of the key aspects of our acquisition deal logic and we have a clear plan in place to return our combined gross profit margins to pre-acquisition levels."

"Another key element in our deal logic was MCC's relatively lower SG&A expenses as a percentage of revenues, and we expect this will contribute to our objectives of zero and even negative overhead growth going forward."

"We are making great progress on our integration strategy led by our combined Commercial team, whose collaborative efforts are delivering strong results including contract renewals, new business wins, and a growing pipeline. We are very optimistic we will deliver on our revenue plan and of exceeding our targeted 5% annual revenue growth rate."

"We remain on track to achieve our targeted total annualized post-merger synergies in the range of $25 - $30 million over the next 18 - 24 months and have already announced $4.2 million of this target has been achieved to date. We are moving forward with plans to optimize our operational footprint and announced our decision during the quarter to close our plants in Edmonton, Alberta and Fergus, Ontario and to transfer production to other facilities in our network."

"In the procurement area, our team is well on track to deliver anticipated savings by harmonizing our purchasing activities and leveraging our expanded scale to secure more favorable pricing for raw materials. We'll report back on anticipated savings from these initiatives in the coming quarters."

SECOND QUARTER 2023 EARNINGS CALL

The Company will host a conference call and webcast on Friday, August 11, 2023, at 9.00 a.m. Eastern time. Mr. Kellam, and James Lorimer, CFO, will present the second quarter 2023 results followed by a live Q&A period.

Instructions on how to access both the webcast and telephone call are available below. For those unable to join live, a replay of the webcast will be available on the DCM Investor Relations page.

DCM will be using Microsoft Teams to broadcast our earnings call, which will be accessible via the options below:

Meeting ID:   294 185 849 646

Passcode:   fLoJbK

Or call in (audio only):

Canada, Toronto:  +1 647-749-9154

Phone Conference ID:  643 054 499#

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.

About DATA Communications Management Corp.

DCM is a marketing and business communications partner that helps companies simplify the complex ways they communicate and operate, so they can accomplish more with fewer steps and less effort. For over 60 years, DCM has been serving major brands in vertical markets including financial services, retail, healthcare, energy, other regulated industries, and the public sector. We integrate seamlessly into our clients' businesses thanks to our deep understanding of their needs, transformative tech-enabled solutions, and end-to-end service offering. Whether we're running technology platforms, sending marketing messages, or managing print workflows, our goal is to make everything surprisingly simple.

We seek Safe Harbor.