Mr. Jeff Schellenberg reports

DECISIVE DIVIDEND CORPORATION REPORTS FINANCIAL RESULTS FOR THE FOURTH QUARTER AND YEAR ENDED DECEMBER 31, 2023

Decisive Dividend Corp. has released its financial results for the fourth quarter and year ended Dec. 31, 2023.

Highlights of the company's financial performance include the following:

• Consolidated sales increased 16 per cent to $35.7-million in Q4 2023 compared with $30.8-million in Q4 2022;
• The quarterly sales increase brings consolidated annual sales for 2023 to $134.9-million, an increase of $36.3-million, or 37 per cent, relative to 2022;
• Generated $7.2-million in adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) in Q4 2023, an increase of 79 per cent relative to Q4 2022;
• Annual adjusted EBITDA in 2023 of $25.2-million represents an 84-per-cent increase compared with 2022;
• Generated net profit of $2.4-million, or 13 cents per share, in Q4 2023, an increase of $1.8-million, or nine cents per share, compared with Q4 2022;
• Annual net profit of $8.3-million, or 48 cents per share, in 2023, represents an increase of $4.2-million, or 17 cents per share, compared with 2022;
• Per-share monthly dividend increased twice in 2023 and again in March, 2024, to 4.5 cents per share, representing an aggregate increase of 50 per cent in the annualized per-share dividend over the last year;
• Balance sheet strength and flexibility; conservative leverage ratio of 1.5 times debt to adjusted EBITDA as of Dec. 31, 2023; ample liquidity as of the date of this press release with $5.2-million of cash and $48.8-million available on the committed portion of the new syndicated credit facility, plus $75-million of availability on the accordion facility.

Selected financial highlights

The attached table contains selected financial highlights of Decisive for the quarter and year ended Dec. 31, 2023. The company's consolidated financial statements, as well as its management's discussion and analysis, are posted on SEDAR+ and on Decisive's website.

Q4 2023 highlights:

• Consolidated sales increased 16 per cent to $35.7-million compared with $30.8-million in Q4 2022.
• Consolidated gross profit increased 38 per cent to $13.8-million from $10.0-million in Q4 2022.
• Consolidated gross profit percentages increased to 39 per cent from 32 per cent in Q4 2022. Both segments contributed to the margin increase that was a result of product mix changes, pricing increases and other margin-enhancing activities, as well as the contribution from the four high-margin businesses acquired in 2023.
• Consolidated adjusted EBITDA increased to $7.2-million, up 79 per cent relative to Q4 2022.
• In the finished product segment, the 17-per-cent increase in segment sales in the quarter was driven by the two businesses acquired in 2023, Capital I and IHT, although IHT sales were below preacquisition averages. Hearth product sales, Marketing Impact sales and Slimline sales all decreased relative to Q4 2022.
• In the component manufacturing segment, newly acquired businesses Micon and Procore contributed to the overall 22-per-cent increase in segment sales in the quarter. Although Unicast sales decreased compared with Q4 2022, both Hawk and Northside sales increased relative to Q4 2022.
• Consolidated net profit in the quarter was $2.4-million, or 13 cents per share, compared with $700,000, or four cents per share, in Q4 2022.
• Consolidated free cash flow increased 67 per cent to $4.8-million, or 25 cents per share, relative to Q4 2022.

2023 annual highlights:

• Consolidated sales increased 37 per cent to $134.9-million, compared with $98.6-million in 2022.
• Consolidated gross profit increased 61 per cent to $52.8-million from $32.9-million in 2022.
• Consolidated gross profit percentages increased to 39 per cent from 33 per cent in 2022, which was driven by product mix changes, pricing increases and other margin-enhancing activities, as well as the effect of higher sales covering a larger percentage of fixed costs and the impact of the high gross margin businesses acquired in 2023.
• Consolidated adjusted EBITDA increased to $25.2-million, up 84 per cent relative to 2022, driven by the above noted increases in sales and gross profit.
• The six businesses acquired in the two years ended Dec. 31, 2023, contributed meaningfully to the increased consolidated sales in 2023.
• On an aggregate basis, the five businesses owned prior to 2022 experienced organic revenue growth of 13 per cent in 2023, driven primarily by increased sales at Northside, Hawk and Unicast.
• Sales in the finished product segment increased by $25.0-million, or 44 per cent, relative to 2022.
• Sales for the component manufacturing segment increased by $13.4-million, or 32 per cent, relative to 2022.
• Consolidated net profit was $8.3-million, or 48 cents per share, an increase of $4.2-million, or 17 cents per share, compared with 2022.
• Consolidated free cash flow increased 87 per cent to $15.6-million, or 90 cents per share, relative to 2022.

Jeff Schellenberg, chief executive officer of Decisive, noted: "Q4 2023 culminated a very successful year for Decisive. We completed four acquisitions of proprietary product high-margin businesses; the five businesses we owned for full-year periods prior to 2022 experienced revenue growth of 13 per cent on a year-over-year basis; and margin-enhancing activities bolstered gross profit margins, which increased from 33 per cent to 39 per cent on a year-over-year basis. These factors have contributed to material growth in our pro forma adjusted EBITDA for the year ended Dec. 31, 2023, to over $31-million, once the preacquisition periods of the newly acquired businesses are included, which is 25 per cent higher than our reported adjusted EBITDA. More importantly, our per-share adjusted EBITDA and free cash flow, which grew by 38 per cent and 41 per cent on a year-over-year basis compared to 2022, provide clear evidence of the steps being taken to drive value-creating growth.

"We are seeing softening economic activity due to the ongoing high-interest-rate environment, geopolitical instability and ongoing inflation, though this appears to be stabilizing. Lower overall activity is impacting demand at certain subsidiaries, relative to what has been experienced over the last two years. Other subsidiaries are continuing to experience robust demand characteristics. As an example, Blaze King expects [first quarter] 2024 sales to be lower than the record levels achieved in Q1 2023. This is as a result of Blaze King entering 2024 with a significantly lower backlog relative to the start of 2023, but Blaze King's order levels are now tracking ahead of last year. Though Q1 2024 overall sales will be negatively impacted by these factors, we remain encouraged about 2024 over all, and the performance of our business in this period and in the long term.

"From [a merger and acquisition] perspective, our pipeline of acquisition opportunities remains strong, as demonstrated by our recently announced acquisition of Alberta Production Machining Ltd. We remain committed to continue pursuing opportunities to support the many legacy-minded exiting business owners who lack a succession plan and are looking for new ownership of their business that will preserve and build on the legacy they have created."

Outlook

Decisive remains focused on continuing to drive performance in line with its overall strategic objectives, including:

• Executing on the growth strategy, demonstrated by the completion of seven acquisitions in a 24-month span, to the date of this press release;
• Building a strong and growing acquisition prospect pipeline;
• Assembling a diversified portfolio of high-quality, high gross-margin product manufacturing businesses focused on achieving long-term organic growth to support continuing strength in per-share financial metrics even through periods of seasonality or lower demand;
• Solidifying subsidiary leadership and developing an ecosystem of support for its subsidiaries at head office;
• Optimizing operations, with an emphasis on enhancing margins and increasing market share;
• Increasing production capacity and improving operational efficiency, with an aggregate $3.5-million of growth capital expenditures on manufacturing equipment made over the last 24 months and utilization of third party manufacturing partners;
• Providing sustainable and growing dividends to shareholders, with three increases of the monthly dividend in the last year, representing an aggregate increase of 50 per cent in the annualized dividend from 36 cents per share to 54 cents per share; dividend payout ratio of 54 per cent in 2023, which would have been 66 per cent had 54-cent dividends per share been paid in 2023;
• Maintaining balance sheet flexibility with conservative leverage ratios and ample availability on the company's new syndicated credit facility;
• Bolstering Decisive's resilience through a variety of economic conditions by aligning the business with supportive shareholders and lenders, and further diversifying the portfolio through acquisition and organic growth.

Conference call

Decisive will host a conference call for interested parties on Thursday, March 21, 2024, at 8 a.m. Pacific Time (11 a.m. Eastern Time), to discuss the company's Q4 and year-end 2023 results. The call will be hosted by Mr. Schellenberg, and Rick Torriero, chief financial officer.

Details for those who wish to participate in this conference call are as follows.

Conference call details

Thursday, March 21, 2024, at 8 a.m. Pacific Time/11 a.m. Eastern Time (please call 10 minutes ahead of time)

Participant information

To join the conference call without operator assistance, you may register and enter your phone number to receive an instant automated callback.

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Replay information (replay available until March 28, 2024)

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About Decisive Dividend Corp.

Decisive is an acquisition-oriented company, focused on opportunities in manufacturing. The company's purpose is to be the sought-out choice for exiting legacy-minded business owners, while supporting the long-term success of the businesses acquired, and through that, creating sustainable and growing shareholder returns. The company uses a disciplined acquisition strategy to identify already profitable, well-established, high-quality manufacturing companies that have a sustainable competitive advantage, a focus on non-discretionary products, steady cash flows, growth potential and established, strong leadership.

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