Data Communications Management Corp T.DCM

Excellent Q1...Ebitda of $9.6 m and net earnings of $0.06

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DATA Communications Management Corp. (TSX: DCM) (“DCM” or the "Company"), a leading provider of marketing and business communication solutions to companies across North America, announces its consolidated financial results for the three months ended March 31, 2021.

FIRST QUARTER HIGHLIGHTS

• Revenues for the quarter were $62.4 million compared with $77.4 million in the first quarter of 2020. Despite declines versus the year ago “non-covid” quarter, first quarter 2021 revenues were slightly ahead (+3%) of the average prior three “in-covid” quarters.
• Gross profit was $18.8 million, the strongest since Q2 2020 and gross margin was 30.1%, an increase from the first quarter of 2020 of 28.0%. Gross margin was positively impacted by the full benefits from the cost saving initiatives implemented throughout 2020 and in the first quarter of 2021, including measures in reaction to the impact of COVID-19 on the business, mitigated by COVID related softness in sales.
• SG&A expenses declined 9.8% to $15.5 million compared to $17.2 million and were 24.9% of total revenues compared to 22.2% in the first quarter of 2020.
• Restructuring expenses incurred of $3.4 million compared to $0.7 million in the first quarter of 2020, including the departure of certain senior executive team members.
• Net income was $1.3 million compared with a net income of $2.2 million in the first quarter of 2020.
• Adjusted EBITDA was $9.3 million or 14.9% of revenue, up from 13.5% in the first quarter of 2020. Adjusted EBITDA as a percentage of revenues was positively impacted by improved gross margins, lower SG&A expenses, and $1.9 million received from the CEWS program. A one-time gain of $1.5 million from proceeds of litigation and termination of an option agreement was deducted from EBITDA in calculating Adjusted EBITDA.
• Basic and diluted EPS of $0.03 compared with $0.05; basic and diluted adjusted EPS of $0.06 compared with $0.06.
• Total debt at the end of March 31, 2021 was $41.1 million, down 14.9% from December 31, 2020.

MANAGEMENT COMMENTARY

"We are generally pleased with our performance in the first quarter of 2021, which was a tough comparative to last year," said Richard Kellam, President and CEO. "COVID-19 had little impact to the market and our business up until late March 2020. Q1 2021 of course was a very different environment versus last year, with extended lockdowns and stay at home orders in effect. Despite the headwind these lockdowns created in revenue flows, we continued to deliver improved mix and operational excellence, positively impacting our gross margin and overall financial performance. Given our continued strength and partnerships with enterprise clients, we are well positioned for revenue recovery as vaccinations roll out and consumer movements return to some level of normalcy."

Under the new leadership of Mr. Kellam, DCM has highlighted five new themes revolving around our people and capabilities, and how your leadership team is preparing for the future, which includes: talent, client engagement, operational excellence, business intelligence and digital proficiency.

"The DCM team has deep experience delivering innovative solutions to our clients. Our content and workflow management capabilities solve the complex branding, communications, logistics and regulatory requirements of Canada's leading enterprises. The capabilities of our technology-enabled service model is why we are winning and retaining business. Expect to hear more about this as we accelerate our commercial strategies around this key platform," added Mr. Kellam.

FIRST QUARTER EARNINGS CALL

The Company will host a conference call on Wednesday, May 12, 2021 at 9.00 a.m. Eastern time. Participants may dial into the conference call using: Toll free: [phone] or: [phone], followed by Conference ID# 6939526. The operator will ask for participant's registration information. The conference call will also be accessible at: https://onlinexperiences.com/Launch/QReg/ShowUUID=AB66DD24-814F-49F0-866F-D98539C59509. A replay of the call will be available from 12:00 p.m. Eastern time May 12, 2021 until midnight Eastern time May 19, 2021 by calling: Toll-free: [phone] or: [phone], followed by Conference ID#: 6939526.

For the periods ended March 31, 2021 and 2020	January 1 to March 31, 2021				January 1 to March 31, 2020
(in thousands of Canadian dollars, except share and per share amounts, unaudited)
Revenues	$	62,361			$	77,415
Gross profit	18,793				21,641
Gross profit, as a percentage of revenues	30.1		%		28.0		%
Selling, general and administrative expenses	15,505				17,185
As a percentage of revenues	24.9		%		22.2		%
Adjusted EBITDA	9,288				10,479
As a percentage of revenues	14.9		%		13.5		%
Net income for the period	1,312				2,210
Adjusted net income	2,768				2,764
As a percentage of revenues	4.4		%		3.6		%
Basic and diluted earnings per share	$	0.03			$	0.05
Adjusted net income per share, basic and diluted	$	0.06			$	0.06
Weighted average number of common shares outstanding, basic	43,911,885				43,047,030
Weighted average number of common shares outstanding, diluted	45,157,904				43,047,030

About DATA Communications Management Corp.

DCM is a communication solutions partner that adds value for large enterprises by creating more meaningful connections with their customers. Our technology-enabled content and workflow management capabilities solve the complex branding, communications, logistics and regulatory requirements of Canada’s leading enterprises. We pair customer insights and thought leadership with cutting-edge products, modular enabling technology, and services to power our clients’ go-to-market strategies. We help our clients manage how their brands come to life, determine which channels are right for them, manage multimedia campaigns, deploy location-specific and 1:1 marketing, execute custom loyalty programs, and fulfill their commercial printing needs all in one place.

Our extensive experience has positioned us as experts at providing communication solutions across many verticals, including the financial, retail, healthcare, cannabis, energy, and public sectors. Thanks to our locations throughout Canada and in the United States, we meet our clients’ varying needs with scale, speed, and efficiency – no matter how large or complex the ask - delivered through our technology-enabled service model.