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Decisive Dividend Corp
Symbol DE
Shares Issued 19,212,822
Close 2024-05-08 C$ 9.75
Market Cap C$ 187,325,015
Recent Sedar Documents

Decisive earns $187,000 in Q1

2024-05-08 20:14 ET - News Release

Mr. Jeff Schellenberg reports

DECISIVE DIVIDEND CORPORATION REPORTS FINANCIAL RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 2024

Decisive Dividend Corp. has released its financial results for the three months ended March 31, 2024.

Highlights of the company's financial performance in first quarter 2024 include the following:

  • Quarterly consolidated sales in Q1 2024 decreased 5 per cent to $29.4-million, compared with $30.9-million in Q1 2023;
  • Generated $4.0-million, or 21 cents per share, in adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) in Q1 2024, a decrease of 19 per cent relative to $4.9-million, or 33 cents per share, in Q1 2023;
  • Consolidated net profit in the quarter was $200,000, or one cent per share, compared with $2.0-million, or 13 cents per share, in Q1 2023;
  • Lower sales in the quarter, particularly with respect to hearth products, where backlogs to start the year were significantly lower than the start of 2023, and the increase in the scale of the organization and the associated operating expenses relative to Q1 2023, were the main drivers of the decrease in adjusted EBITDA and net profit relative to Q1 2023;
  • Balance sheet strength and flexibility: conservative leverage ratio of 2.1 times debt to adjusted EBITDA as of the date of this press release, after debt financing two acquisitions in 2024; ample liquidity as of the date of this press release with $4.1-million of cash and $43.2-million available on the committed portion of the company's syndicated credit facility, plus $75.0-million of availability on the accordion facility;
  • In March, 2024, the company increased its per-share monthly dividend to 4.5 cents from 4.0 cents previously.

Selected financial highlights

Selected financial highlights of Decisive for the three months ended March 31, 2024, are provided herein. The company's unaudited interim condensed consolidated financial statements, as well as its management's discussion and analysis, are posted on SEDAR+ and on Decisive's website.

Jeff Schellenberg, chief executive officer of Decisive, noted: "Two thousand twenty-four has started off as a tale of two contrasts, as we have seen continued on-strategy acquisition activity while a challenging macroeconomic environment and the work being done by our subsidiary leadership on their teams, strategies and processes to support longer-term growth objectives impacted quarterly operating results.

"Even as demand has been challenged, our gross profit percentages have remained strong as a result of the margin-enhancing activities the subsidiaries have undertaken, along with the quality of the margins of the acquisitions we have completed. The new company we acquired in April, 2024, Techbelt, has a similar high-margin profile, and, as a result, we expect them to further support margin levels. While our subsidiaries are currently seeing softer demand for their products and we are expecting a more historically typical quiet [second quarter] due to the seasonality of some of our businesses (including our hearth and machined products businesses), they are actively pursuing opportunities to bolster demand, enhance market share and position the business to respond to demand generated as economic conditions improve or the businesses enter stronger seasonal periods.

"From [mergers and acquisitions] perspective, we are extremely pleased with the acquisition of Techbelt as it adds another reoccurring revenue, high-margin, low-capital-intensity wear-parts business to our portfolio. We were also pleased with the opportunity to complete our first tuck-in acquisition into an existing subsidiary in March, 2024. Further, the number of acquisition opportunities we are seeing that fit within the profile of our current portfolio of businesses continue to be robust, and we remain well positioned with respect to available capacity under our credit facility to fund acquisitions.

"Finally, while we have seen our payout ratio increase to 66 per cent on a trailing 12-month basis in Q1 2024, up from 54 per cent at year-end 2023, this shift illustrates the importance of the deliberate approach we have taken with respect to decisions to change dividend levels. While we have substantially increased the dividend over the last five quarters, each of the shifts was from a position of strength with the payout ratio being well within target levels. This measured approach positions us to maintain a growing and sustainable dividend, a key characteristic of a dividend aristocrat, being one of which is a key objective of the organization."

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 eight acquisitions in a 24-month span, to the date of the completion of the acquisition of Techbelt;
  • 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 long-term strength in per-share financial metrics;
  • Solidifying subsidiary leadership and developing an ecosystem of support for its subsidiaries at head office;
  • Taking steps to work through current operational headwinds and to position each of the businesses to deliver long-term organic growth, including through developing new markets, securing new customers, product development, university-backed research studies, customer product trials, facility expansions, organizational rightsizing and/or organizational structure realignment for growth;
  • Increasing production capacity and improving operational efficiency, including through automation initiatives, with an aggregate $3.8-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 12.5-per-cent increase in the annualized dividend from 48 cents per share to 54 cents per share; dividend payout ratio 66 per cent for the trailing 12-month period ended March 31, 2024;
  • 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 by acquisition.

Conference call

Decisive will host a conference call for interested parties on Thursday, May 9, 2024, at 8 a.m. Pacific Time (11 a.m. Eastern Time), to discuss the company's Q1 2024 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, May 9, 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.

You can also dial direct to be entered into the call by an operator.

Dial-in number -- North America (toll-free):  1-800-836-8184

Dial-in number -- United Kingdom (toll-free):  0800-652-2435

Dial-in number -- international:  1-289-819-1350

Replay information (replay available until May 16, 2024)

Replay number -- North America (toll-free):  1-888-660-6345

Replay number -- international:  1-289-819-1450

Replay access code:  58265 followed by the number sign

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.

We seek Safe Harbor.

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