Decisive Dividend Corporation Reports Financial Results for the

Three and Six Months Ended June 30, 2021 and Announces Monthly Dividend Increase

 

August 12, 2021 - TheNewswire – Kelowna, British Columbia: Decisive Dividend Corporation (TSXV:DE) (the “Company” or “Decisive”) today reported its financial results for the three and six months ended June 30, 2021.

 

Along with the release of its earnings, the Company is pleased to announce an increase in its monthly dividend to $0.025 per share. The increased monthly dividend represents annualized dividends of $0.30 per share, up from the previous level set at $0.24 per share on an annualized basis.

 

Highlights of the Company’s financial performance in Q2 2021 include the following:

- Consolidated sales increased 60% to $14.2 million in Q2 2021 compared to $8.9 million in Q2 2020.

- The quarterly sales increase brings first half consolidated sales to $28.1 million, an increase of $6.3 million, or 29%, relative to the first half of 2020.

- Generated $2.6 million in Adjusted EBITDA* in Q2 2021, an increase of 30% relative to Q2 2020.

- First half 2021 Adjusted EBITDA* of $4.7 million represents a 30% increase compared to the first half of 2020.

- Invested $0.9 million in the first half of 2021 toward equipment that increases production capacity and improves operational efficiency.

 

Selected Financial Highlights:

 

The following are selected financial highlights of Decisive for the three and six months ended June 30, 2021. All amounts are expressed in Canadian dollars. The Company’s unaudited interim condensed consolidated financial statements as well as its management’s discussion and analysis (“MD&A”) are posted on SEDAR and on Decisive’s website (www.decisivedividend.com).

 

(Stated in thousands of dollars, except per share amounts)
	For the three months ended								For the six months ended
June 30,		2021			2020		Change			2021			2020		Change
Sales	$	14,194		$	8,874		60%		$	28,139		$	21,820		29%
Gross profit		5,312			4,279		24%			10,469			8,960		17%
Gross profit %		37%			48%					37%			41%
Adjusted EBITDA*		2,564			1,973		30%			4,729			3,625		30%
Per share basic		0.22			0.17		27%			0.40			0.31		28%
Profit (loss) before tax		877			135		550%			1,362			(785)		nm
Profit (loss)		597			4		nm			875			(1,083)		nm
Per share basic		0.05			-		100%			0.07			(0.09)		nm
Per share diluted		0.05			-		100%			0.07			n/a		nm
Dividends declared		714			-		100%			714			1,037		-31%
Per share basic		0.06			-		100%			0.06			0.09		-33%

* Adjusted EBITDA is defined as earnings before finance costs, income taxes, depreciation, amortization, foreign exchange gains or losses, other non-cash items such as gains or losses recognized on the fair value of contingent consideration items, asset impairment and restructuring costs, and any unusual non-operating one-time items such as acquisition costs.  Adjusted EBITDA is not a defined performance measure under International Financial Reporting Standards (IFRS) and therefore may not be comparable to similar measures presented by other issuers, but it is used by Management to assess the performance of the Company and its segments. See the MD&A for a reconciliation of applicable IFRS measures to non-IFRS measures.

 

nm – not meaningful

Q2 2021 Highlights:

 

- Consolidated sales increased 60% to $14.2 million compared to $8.9 million in Q2 2020.

- Consolidated gross profit increased 24% to $5.3 million from $4.3 million in Q2 2020.

- Consolidated gross profit percentages declined to 37% from 48% in the comparative period of 2020. This was driven by a change in sales mix relative to Q2 2020, a lower exchange rate on United States dollar denominated sales, and supply chain and labour availability challenges, which resulted in material, freight, and labour cost increases.

- Consolidated Adjusted EBITDA* increased to $2.6 million, up 30% relative to Q2 2020, driven by the above noted increases in sales and gross profit.

- Blaze King’s robust demand continued in the quarter, with an 80% increase in sales relative to Q2 2020. Decisive invested $0.7 million in a new fiber laser for Blaze King which is expected to increase production capacity to further take advantage of the increased demand for its products.

- Slimline sales in the quarter were consistent with sales in Q2 2020, as increases in agricultural sprayer sales largely offset decreases in wastewater evaporator sales.

- Hawk, Unicast and Northside each experienced dramatic increases in customer demand relative to Q2 2020, when the onset of the COVID-19 pandemic limited sales. The results for these businesses were more affected by supply chain and labour availability challenges compared to Q2 2020.

- The Company’s subsidiaries received $1.8 million in subsidies from the Canada Emergency Wage Subsidy (“CEWS”), Canada Emergency Rent Subsidy (“CERS”), and paycheck protection programs in the quarter (Q2 2020 - $1.3 million).

- Consolidated net profit in the quarter was $0.6 million, or $0.05 per share, an increase of $0.6 million, or $0.05 per share, compared to Q2 2020.

 

2021 Year-to-Date Highlights:

 

- Consolidated sales increased 29% to $28.1 million, compared to $21.8 million in the first half of 2020.

- Consolidated gross profit increased 17% to $10.5 million from $9.0 million in the first half of 2020.

- Consolidated gross profit percentages declined to 37% from 41% in the first half of 2020.

- Consolidated Adjusted EBITDA* increased to $4.7 million, up 30% relative to the first half of 2020, driven by the above noted increases in sales and gross profit.

- Sales in the finished product segment increased by $4.3 million, or 39%, relative to the first half of 2020, driven by Blaze King’s increased market share after new EPA regulations took effect in May 2020.

- Sales for the component manufacturing segment increased by $2.1 million, or 19%, relative to the first half of 2020 based on customer demand increases driven by improving fundamentals in the sectors that those customers operate in Q2 2021.

- The Company’s subsidiaries received $2.2 million in subsidies from the CEWS, CERS and paycheck protection programs in the first half of 2021 (2020 - $1.3 million).

- Consolidated net profit in the first half of the year was $0.9 million, or $0.07 per share, an increase of $2.0 million, or $0.16 per share, compared to the first half of 2020. The first half 2020 net loss included a $1.4 million non-cash impairment loss recorded against Hawk’s goodwill.

 

Jeff Schellenberg, Chief Executive Officer of Decisive, noted:

 

“In Q2 Decisive delivered strong quarterly Adjusted EBITDA, driven by the diversified earnings of the business. Blaze King, specifically, performed ahead of expectations in the quarter, with its ongoing sales strength driving the performance of the Company’s finished product segment. In addition, increasing activity levels in the oil and gas, cement, commercial vehicle, and forestry sectors bolstered sales in the component manufacturing segment. These trends look to be continuing in Q3 as wood stove orders are trending well in excess of 2020, and commodity pricing trends, including in the oil and gas sector, continue to be positive. Margins are being pressured by supply chain and labour availability challenges, and we will continue to be vigilant in managing our costs and optimizing our operations to counter these pressures and meet the growing demand from our subsidiaries’ customers. Government subsidies received by the Company’s subsidiaries continued to provide support to the financial results of the Company. Excluding government subsidies, the Company earned $0.8 million of Adjusted EBITDA, 14% higher than Q2 2020.

 

As a result of this performance, we are very pleased to announce an increase in the monthly dividend to $0.025 per share per month. This is another step toward returning the Company’s dividend to pre-pandemic levels. This step is consistent with our objective of providing sustainable and growing dividends to our shareholders and we will continue to revisit the amount of the monthly dividend as the second half of the year unfolds.    

 

Finally, we are continuing to work towards completing our next acquisition from our healthy, and growing, pipeline of potential targets and look forward to providing further updates to our shareholders as we progress on this front.”

 

Outlook:

 

- Diversity of the portfolio continues to drive overall performance through the challenging economic environment.

- Each of the businesses in the portfolio witnessing improved demand for their products.

- Portfolio businesses all experiencing supply chain and labour availability challenges to varying degrees.

- Availability and magnitude of future subsidies to offset sales decreases that could occur in the face of a COVID-19 resurgence is uncertain.

- Initial investments have been made toward increasing production capacity and improving operational efficiency, with $0.7 million in equipment purchased for Blaze King and $0.2 million in equipment purchased for Northside.

- Further productivity and automation initiatives are being explored to help mitigate the effect of cost increases and labour shortages, meet the expected future demand levels of the Group’s customers, and capitalize on future market expansion opportunities.

- Decisive has increased its monthly dividend to $0.025 per share. The increase is the latest step towards returning the Company’s dividend to pre-pandemic levels and is consistent with Decisive’s objective of providing shareholders with long-term, sustainable, and growing dividends.

- Decisive continues to build its acquisition prospect pipeline by identifying and evaluating potential acquisitions which, if completed, will bolster its diversity and add strength and resilience to operations.

- Management believes that the balance sheet strength and flexibility gained over the last year has the Company well positioned to take advantage of potential opportunities as they arise.

  

Dividend:

 

As noted above, the directors of the Company have determined to increase the monthly dividend to $0.025 per common share. The monthly dividend represents annualized dividends of $0.30 per common share, up from the previous level set at $0.24 per common share on an annualized basis.

 

The $0.025 per common share dividend was declared for the month of September 2021 and is payable on September 15, 2021, to the shareholders of record at the close of business on August 31, 2021.

 

Eligible shareholders have the opportunity to reinvest dividends in accordance with the Corporation’s dividend reinvestment and cash purchase plan (the “DRIP”). Additional details are available under the investors section of the Corporation’s website www.decisivedividend.com.

 

This dividend is designated as an “eligible” dividend under the Income Tax Act (Canada) and any corresponding provincial legislation (“Tax Legislation”).

  

About Decisive Dividend Corporation

 

Decisive Dividend Corporation is an acquisition-oriented company, focusing on the manufacturing sector. The Company uses a disciplined acquisition strategy to identify profitable, established companies that have strong management teams, generate steady cash flow, operate in non-cyclical markets, and have opportunity for future growth.

       

For more information on Decisive, or to sign up for email notifications of Company press releases, please visit www.decisivedividend.com.

 

FOR FURTHER INFORMATION PLEASE CONTACT:

 

Jeff Schellenberg, Chief Executive Officer  

Rick Torriero, Chief Financial Officer

 

#201, 1674 Bertram Street

Kelowna, BC V1Y 9G4

Telephone: (250) 870-9146

 

Cautionary Statements

 

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

 

Forward-Looking Statements

Certain statements contained in this press release constitute forward-looking information. These statements relate to future events or future performance. The use of any of the words “could”, “intend”, “expect”, “believe”, “will”, “projected”, “estimated” and similar expressions and statements relating to matters that are not historical facts are intended to identify forward-looking information and are based on management’s current beliefs, assumptions and expectations as to the outcome and timing of such future events.  Actual future results may differ materially. In particular, this press release contains forward-looking information relating to the future prospects of the Company and its operating subsidiaries, the Company's long-term strategic and operational plans, Q3 order levels and commodity pricing trends, increasing demand from customers, potential future acquisitions, potential future capital expenditures surrounding productivity and automation initiatives being explored, the consideration of returning the Company's monthly dividend to pre-pandemic levels, as well as forward-looking information relating to the impact of the ongoing COVID-19 pandemic and future government subsidies on the operations and financial results of the Company and its subsidiaries. Risk factors that could cause actual results or outcomes to differ materially from the results expressed or implied by forward-looking information include, among other things: general economic conditions; pandemic; competition; government regulation; environmental regulation; access to capital; market trends and innovation; climate risk; general uninsured losses; risk related to acquisitions; dependence on customers, distributors and strategic relationships; supply and cost of raw materials and purchased parts; operational performance and growth; implementation of the growth strategy; product liability and warrant claims; litigation; reliance on technology and intellectual property risks; availability of future financing; interest rates and debt financing; income tax matters; foreign exchange; dividends; trading volatility of common shares; dilution risk; reliance on management and key personnel; employee and labour relations; and conflicts of interest, all as more particularly described in the most recent annual MD&A of the Company available on the Company’s profile at www.sedar.com. There can be no assurance as to the future financial performance of the Company or that the board of directors of the Company will declare or pay any dividends in the future or, if dividends are declared and paid, there can be no assurance as to the frequency or amount of such dividends. The Company cautions the reader that the risk factors referenced above are not exhaustive. The forward-looking information contained in this release is made as of the date hereof and the Company is not obligated to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by applicable securities laws. Because of the risks, uncertainties and assumptions contained herein, investors should not place undue reliance on forward-looking information. The foregoing statements expressly qualify any forward-looking information contained herein.

 

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