HIGHLIGHTS
FISCAL 2016
- Refinement of sales leadership team, and enhancements to sales
process and go-to market strategy
- Further cost reductions through rationalization of headcount
across various functions of the business
- Improvements to production capabilities and facilities
- Refinanced senior credit facility
- Corporate rebranding as "DATA Communications Management"
- Revenues of $278.4 million, a
decrease of 8.6% year over year
FOURTH QUARTER 2016
- Appointment of Gregory J.
Cochrane as President
- Completed closure of large Edmonton,
Alberta manufacturing facility
RECENT EVENTS
- Completed acquisitions of Eclipse Colour & Imaging Corp.
("Eclipse") and Thistle Printing Limited ("Thistle")
- Increased availability and amended certain terms on senior
credit facilities
- Streamlined order-to-production process
BRAMPTON, ON, March 9,
2017 /CNW/ - DATA Communications Management Corp. (TSX:
DCM) ("DATA" or the "Company"), a leading provider of business
communication solutions to companies across North America, announced its consolidated
financial results for the fourth quarter and the year ended
December 31, 2016.
OVERVIEW
"It was a busy year at DATA. While we made significant progress
in our operating efficiencies and developed our strategy for
growth, we fell short on our revenue and EBITDA targets.
Nonetheless, we believe that the progress made and the initiatives
completed have positioned DATA for success", said Michael G. Sifton, Chief Executive Officer of
DATA. "I would like to commend our team for simultaneously
closing our recent strategic acquisitions of Eclipse and Thistle.
We believe we are well positioned to execute on additional
acquisitions in our pipeline. DATA has laid the groundwork to
strategically evolve, be better positioned to meet client needs,
and become more profitable."
Further improvements in operations and
technology
Operationally, DATA made significant
improvements in its production capabilities and facilities
including the closure of its large Edmonton, Alberta manufacturing facility
during the fourth quarter of 2016 ahead of schedule and below
budget. DATA has significantly downsized to a 10,000 square
foot sales, customer experience and high-volume digital print
production facility in order to strategically serve the local
market. Total cost savings from the large Edmonton, Alberta closure and a number of
strategic headcount reductions across several functions of the
business are expected to be $5.2
million on an annualized basis. Total restructuring
costs related to its operational improvements in 2016, primarily
pertaining to headcount reductions, were $4.2 million. In total, DATA has reduced
its total production facilities by over 600,000 square feet reduced
its total workforce by more than 400 employees in the last three
years.
On January 31, 2017, DATA
announced a process realignment of its operations, which DATA
anticipates will result in estimated cost savings of $2.4 million on an annualized basis. In
connection with these improvements, DATA will incur a total of
approximately $1.8 million in
severance expenses in 2017. This restructuring primarily
involves a reduction of DATA's indirect labour force across its
operations, which is designed to streamline DATA's
order-to-production process. This process redesign and
automation is expected to improve manufacturing processes from
DATA's on-line web-to-print ordering system, directly to digital
production.
With respect to the Company's IT infrastructure, the technology
team was busy in 2016 enhancing DATA's network capabilities,
streamlining its employee and systems work flow, and advancing its
Enterprise Resource Planning ("ERP") project.
Leadership strength and sales
On the sales
front, DATA continued to build its sales leadership, go-to-market
strategies, and vertical market focus. In November
2016, DATA announced the appointment of Gregory J. Cochrane President of DATA. In
his new role, Mr. Cochrane is focused on sales and business
development and will help lead the organization through its next
stages of growth. He has tremendous experience in the
marketing communications and services industries, with extensive
industry knowledge and C-suite client relationships. Mr.
Sifton remains as CEO of DATA with a focus on financial and
strategic initiatives.
Strategic acquisitions
On February 22,
2017, DATA completed the acquisition of substantially all of the
assets of Eclipse and all of the shares of Thistle.
Eclipse is a leading Canadian large-format and point-of-purchase
printing and packaging company located in Burlington, Ontario. The acquisition of
Eclipse adds significantly expanded wide format, large format, and
grand format printing capabilities to DATA's portfolio of products
and services, with Eclipse having a product mix focused on in-store
print, outdoor, transit, display, packaging, kitting and fulfilment
capabilities. The net purchase price was approximately
$9.4 million which was satisfied with
the payment of $3.5 million in cash
on closing, $1.3 million through the
issuance of common shares of DATA, and $4.6
million through the issuance of a secured, non-interest
bearing vendor take-back promissory note.
Thistle is a full service commercial printing company located in
Toronto, Ontario. The
acquisition of Thistle provides DATA with a full service commercial
print facility in Eastern Canada
and enables DATA to expand its margins by insourcing commercial
printing capabilities which it has historically outsourced to local
tier two suppliers. The net purchase price was approximately
$6.1 million which was satisfied with
a payment of $1.1 million in cash on
closing, $1.5 million through the
issuance of common shares of DATA, and $3.5
million in the form of a secured, non-interest bearing
vendor take-back promissory note.
"We believe that these two transactions will position DATA to
grow revenue within our Retail and Financial Services client
bases. Both businesses will provide enhanced product
offerings to our sales team, enabling us to target further
opportunities with our clients," said Mr. Sifton. "We believe there
are significant other strategic acquisitions available to us at
attractive prices that could help us further diversify our business
from the declines we have been experiencing."
Increase in senior credit facilities and amendment to
existing terms
On January 31,
2017, DATA amended its senior credit facilities. DATA
entered into an amended senior revolving credit facility with a
Canadian chartered bank, including an increase in the total
available commitment under that facility from $25.0 million to up to $35.0 million and the extension of the term of
this facility by one year to March 31, 2020 from
March 11, 2019. DATA also completed an amendment to our
term facility which provides DATA with a total borrowing base of up
to $72.0 million from $50.0 million. The increased availability
under its senior credit facilities was partially used to finance
the up-front cash components of the Eclipse and Thistle
acquisitions and related transaction expenses and will also provide
DATA with additional flexibility to continue to pursue its
strategic growth objectives.
RESULTS OF OPERATIONS
All financial information in this press release is presented in
Canadian dollars and in accordance with International Financial
Reporting Standards ("IFRS"), as issued by the International
Accounting Standards Board ("IASB").
Table
1 The following table
sets out selected historical consolidated financial information for
the periods noted.
|
|
|
|
|
|
For the periods
ended December 31, 2016 and 2015
|
Oct. 1 to
Dec. 31,
2016
|
Oct. 1 to
Dec. 31,
2015
|
Jan. 1 to
Dec. 31,
2016
|
Jan. 1 to
Dec. 31,
2015
|
(in thousands of
Canadian dollars, except per share amounts,
unaudited)
|
$
|
$
|
$
|
$
|
Revenues
|
68,191
|
81,010
|
278,363
|
304,575
|
Cost of
revenues
|
54,950
|
61,237
|
215,295
|
233,505
|
Gross
profit
|
13,241
|
19,773
|
63,068
|
71,070
|
|
|
|
|
|
Selling, general and
administrative expenses
|
13,394
|
13,082
|
55,934
|
56,663
|
Restructuring
expenses
|
1,721
|
1,545
|
4,200
|
13,560
|
Impairment of
goodwill
|
31,066
|
—
|
31,066
|
26,000
|
Gain on redemption of
convertible debentures
|
—
|
(12,766)
|
—
|
(12,766)
|
Acquisition
costs
|
68
|
—
|
68
|
—
|
|
|
|
|
|
(Loss) income before
finance costs and income taxes
|
(33,008)
|
17,912
|
(28,200)
|
(12,387)
|
|
|
|
|
|
Finance costs
(income)
|
|
|
|
|
|
Interest
expense
|
839
|
1,370
|
3,414
|
5,599
|
|
Interest
income
|
—
|
(1)
|
(8)
|
(11)
|
|
Amortization of
transaction costs
|
111
|
163
|
578
|
468
|
|
950
|
1,532
|
3,984
|
6,056
|
|
|
|
|
|
(Loss) income before
income taxes
|
(33,958)
|
16,380
|
(32,184)
|
(18,443)
|
|
|
|
|
|
Income tax (recovery)
expense
|
|
|
|
|
|
Current
|
194
|
941
|
1,572
|
1,191
|
|
Deferred
|
(1,037)
|
2,034
|
(1,649)
|
(462)
|
|
(843)
|
2,975
|
(77)
|
729
|
|
|
|
|
|
Net (loss) income for
the year
|
(33,115)
|
13,405
|
(32,107)
|
(19,172)
|
|
|
|
|
Basic (loss) earnings
per share
|
(2.77)
|
11.27
|
(2.89)
|
(40.33)
|
Diluted (loss)
earnings per share
|
(2.77)
|
11.27
|
(2.89)
|
(40.33)
|
Weighted average
number of common shares outstanding, basic
|
11,975,053
|
1,188,967
|
11,125,518
|
475,382
|
Weighted average
number of common shares outstanding, diluted
|
11,975,053
|
1,188,967
|
11,125,518
|
475,382
|
|
|
|
As at December 31,
2016, 2015 and 2014
|
As at
Dec. 31,
2016
|
As at
Dec. 31,
2015
|
(in thousands of
Canadian dollars, unaudited)
|
$
|
$
|
Current
assets
|
68,620
|
80,125
|
Current
liabilities
|
58,473
|
90,298
|
|
|
|
Total
assets
|
90,910
|
134,067
|
Total non-current
liabilities
|
42,372
|
24,750
|
|
|
|
Shareholders' equity
(deficit)
|
(9,935)
|
19,019
|
Table
2
|
The following table
provides reconciliations of net (loss) income to EBITDA and of net
(loss) income to Adjusted EBITDA for the periods noted. See
"Non-IFRS Measures".
|
|
|
|
|
|
EBITDA and
Adjusted EBITDA Reconciliation
|
|
|
|
|
For the periods
ended December 31, 2016 and 2015
|
Oct. 1 to
Dec. 31,
2016
|
Oct. 1 to
Dec. 31,
2015
|
Jan. 1 to
Dec. 31,
2016
|
Jan. 1 to
Dec. 31,
2015
|
(in thousands of
Canadian dollars, unaudited)
|
$
|
$
|
$
|
$
|
Net (loss) income for
the year
|
(33,115)
|
13,405
|
(32,107)
|
(19,172)
|
|
|
|
|
|
Interest
expense
|
839
|
1,370
|
3,414
|
5,599
|
Interest
income
|
—
|
(1)
|
(8)
|
(11)
|
Amortization of
transaction costs
|
111
|
163
|
578
|
468
|
Current income tax
expense
|
194
|
941
|
1,572
|
1,191
|
Deferred income tax
(recovery) expense
|
(1,037)
|
2,034
|
(1,649)
|
(462)
|
Depreciation of
property, plant and equipment
|
815
|
1,182
|
4,052
|
4,754
|
Amortization of
intangible assets
|
560
|
504
|
2,092
|
1,949
|
EBITDA
|
(31,633)
|
19,598
|
(22,056)
|
(5,684)
|
|
|
|
|
|
Restructuring
expenses
|
1,721
|
1,545
|
4,200
|
13,560
|
One-time business
reorganization costs
|
995
|
—
|
1,103
|
—
|
Impairment of
goodwill
|
31,066
|
—
|
31,066
|
26,000
|
Gain on redemption of
convertible debentures
|
—
|
(12,766)
|
—
|
(12,766)
|
Acquisition
costs
|
68
|
—
|
68
|
—
|
Adjusted
EBITDA
|
2,217
|
8,377
|
14,381
|
21,110
|
Table
3
|
The following table
provides reconciliations of net income (loss) to Adjusted net
income and a presentation of
Adjusted net income per share and Pro forma Adjusted net income per
share for the periods noted. See "Non-
IFRS Measures".
|
|
|
|
|
|
Adjusted Net
Income Reconciliation
|
|
|
|
|
|
|
|
|
|
For the periods
ended December 31, 2016 and 2015
|
Oct. 1 to
Dec. 31,
2016
|
Oct. 1 to
Dec. 31,
2015
|
Jan. 1 to
Dec. 31,
2016
|
Jan. 1 to
Dec. 31,
2015
|
(in thousands of
Canadian dollars, except share and per share
amounts, unaudited)
|
$
|
$
|
$
|
$
|
Net (loss) income for
the year
|
(33,115)
|
13,405
|
(32,107)
|
(19,172)
|
|
|
|
|
|
Restructuring
expenses
|
1,721
|
1,545
|
4,200
|
13,560
|
One-time business
reorganization costs
|
995
|
—
|
1,103
|
—
|
Impairment of
goodwill
|
31,066
|
—
|
31,066
|
26,000
|
Gain on redemption of
convertible debentures
|
—
|
(12,766)
|
—
|
(12,766)
|
Acquisition
costs
|
68
|
—
|
68
|
—
|
Tax effect of the
above adjustments
|
(710)
|
1,253
|
(1,386)
|
(1,858)
|
Adjusted net
income
|
25
|
3,437
|
2,944
|
5,764
|
|
|
|
|
|
Adjusted net income
per share, basic and diluted
|
—
|
2.89
|
0.26
|
12.12
|
Pro forma Adjusted
net income per share, basic (1)
|
—
|
0.29
|
0.25
|
0.48
|
Pro forma Adjusted
net income per share, diluted (1)
|
—
|
0.28
|
0.24
|
0.46
|
Weighted average
number of common shares outstanding,
basic
|
11,975,053
|
1,188,967
|
11,125,518
|
475,382
|
Weighted average
number of common shares outstanding,
diluted
|
11,975,053
|
1,188,967
|
11,125,518
|
475,382
|
Number of common
shares outstanding, basic
|
11,975,053
|
9,987,528
|
11,975,053
|
9,987,528
|
Number of common
shares outstanding, diluted
|
12,465,818
|
9,987,528
|
12,464,343
|
9,987,528
|
|
|
(1)
|
Pro forma Adjusted
net income per share, basic and pro forma Adjusted net income per
share, diluted, are non-IFRS measures: assumes Adjusted net income
per share, basic and diluted, were calculated on the basis of the
total number of common shares outstanding of 11,975,053 and of
12,465,818, respectively at December 31, 2016, rather than the
weighted average, basic and diluted, number of common shares
outstanding at the respective period ends, given the
significant changes in the number of common shares of DATA
outstanding during comparable periods.
|
Revenues
For the quarter ended December 31, 2016, DATA recorded revenues of
$68.2 million, a decrease of
$12.8 million or 15.8% compared with
the same period in 2015. The decrease in revenues was due to
(i) lower volumes and pricing from certain customers, (ii)
approximately $3.6 million of
non-recurring work related to labels and forms from a major
retailer and certain government agencies, respectively, in 2015,
(iii) disruption caused by the closure of the large Edmonton, Alberta manufacturing facility and
reassignment of contracts to other plants during the fourth
quarter.
For the year ended December 31,
2016, DATA recorded revenues of $278.4 million, a decrease of $26.2 million or 8.6% compared with the same
period in 2015. The decrease in revenues for the year ended
December 31, 2016 was primarily due
to lower volumes and pricing pressures from certain customers that
reduced their overall spend during the year, with some shift to
digital advertising. Other contributors included: (i) the
threatened Canada Post labour disruption, which reduced demand for
work destined directly or indirectly for the mail stream, (ii)
approximately $5.1 million of
non-recurring work related to labels and forms, from a major
retailer and certain government agencies, respectively, in 2015,
(iii) a weaker economy in Western
Canada, (iv) disruption caused by the closure of the large
Edmonton, Alberta manufacturing
facility and reassignment of contracts to other plants, and (v)
training of the sales force to transition to DATA's new business
structure, which is now more vertical market focused.
Cost of Revenues and Gross Profit
For the
quarter ended December 31, 2016, cost
of revenues decreased to $55.0
million from $61.2 million for
the same period in 2015. Gross profit for the quarter ended
December 31, 2016 was $13.2 million, which represented a decrease
of $6.5 million or 33.0% from
$19.8 million for the same
period in 2015. Gross profit as a percentage of revenues
decreased to 19.4% for the quarter ended December 31, 2016 compared to 24.4% for the same
period in 2015.
For the year ended December 31,
2016, cost of revenues decreased to $215.3 million from $233.5
million for the same period in 2015. Gross profit for
the year ended December 31, 2016 was
$63.1 million, which represented
a decrease of $8.0 million or
11.3% from $71.1 million for the
same period in 2015. Gross profit as a percentage of revenues
decreased to 22.7% for the year ended December 31, 2016 compared to 23.3% for the same
period in 2015.
The decrease in gross profit as a percentage of revenues for the
quarter and the year ended December 31,
2016 were due to the decrease in revenues, changes in
product mix, one-time business reorganization costs incurred
related to the closure of the large Edmonton, Alberta manufacturing facility, and
compressed margins on recently negotiated large contracts with
certain existing customers. The decrease in gross profit as a
percentage of revenues was partially offset by cost reductions
realized from prior cost savings initiatives implemented in
2015.
Selling, General and Administrative
Expenses
Selling, general and administrative
("SG&A") expenses for the quarter ended December 31, 2016 increased $0.3 million or 2.4% to $13.4 million compared to $13.1 million in the same period in
2015. As a percentage of revenues, these costs were 19.6% of
revenues for the quarter ended December 31,
2016 compared to 16.1% of revenues for the same period in
2015. The increase in SG&A expenses for the quarter ended
December 31, 2016 was primarily
attributable to increased marketing expenses and costs related to
DATA's ERP system development.
SG&A expenses for the year ended December 31, 2016 decreased $0.7 million or 1.3% to $55.9 million compared to $56.7 million for the same period of
2015. As a percentage of revenues, these costs were 20.1% and
18.6% of revenues for the years ended December 31, 2016 and
2015, respectively. The decrease in SG&A expenses for the
year ended December 31, 2016 was
primarily attributable to cost savings initiatives implemented in
2015, including headcount reductions across sales, general and
administration functions, and was partially offset by higher
expenses related to share-based compensation expense, increased
marketing expenses, costs related to DATA's development of its ERP
system and additional corporate costs related to changes in the
Board of Directors in the second quarter of 2016, the change in
DATA's legal name on July 4, 2016 and
the share consolidation.
Restructuring Expenses
For the quarter ended
December 31, 2016, DATA incurred
restructuring expenses of $1.7
million primarily to related headcount reductions associated
with the closure of its large Edmonton,
Alberta manufacturing facility, in addition to headcount
reductions across other functions of the business. For the
quarter ended December 31, 2015, DATA
incurred restructuring expenses of $1.5
million primarily related to a lease exit charge associated
with the closure of its Vancouver,
British Columbia manufacturing facility as well as
additional headcount reductions completed in the fourth quarter of
2015.
For the year ended December 31,
2016, DATA incurred total restructuring expenses of
$4.2 million. Throughout the
year, a number of strategic headcount reductions were made across
several functions of the business resulting in $2.1 million of restructuring
costs. Additionally, in the third quarter of 2016, DATA
closed its Richmond Hill, Ontario
location. In order to exit the lease for this facility there were
approximately $0.4 million in
restructuring charges that were incurred. Further, during the
fourth quarter of 2016, DATA completed the closure of its large
Edmonton, Alberta manufacturing
facility and incurred approximately $1.7
million in restructuring charges, primarily related to
headcount reductions. DATA anticipates these restructuring
initiatives will generate total cost savings of $5.2 million on an annualized basis.
For the year ended December 31,
2015, DATA incurred restructuring expenses of $13.6 million comprised of (i) $11.2 million of restructuring expenses due to
changes in senior management, headcount reductions across DATA's
operations and the closure of certain manufacturing and warehouse
locations, and (ii) a charge to onerous contracts of $2.3 million for lease exit charges for a
warehouse that was closed in Brampton,
Ontario and the closure of other facilities in Calgary, Alberta and Vancouver, British Columbia.
Impairment of Goodwill
During the fourth
quarter of 2016, DATA performed its annual review of impairment of
goodwill by comparing the fair value of each cash generating unit
("CGU") to the CGU's carrying value. The recoverable amounts
of all CGU's were determined based on their respective fair value
less cost to sell, using the income approach which is predicated on
future cash flows discounting them to their present value.
Revenue growth rates and operating margins were based on the 2017
budget approved by the Board and projected over a five-year
period. These forecasts were adjusted downwards given the
declining operating results experienced by DATA in the past and the
specific trends of the printing industry. Accordingly, a
weighted average declining growth rate based on a range of 1% to 3%
was applied to revenue and a perpetual long-term growth rate of 0%
thereafter were used to derive the recoverable amount of its
CGU's. As a result, DATA recorded a non-cash impairment of
goodwill for $31.1 million.
There was no further goodwill remaining as at December 31,
2016.
During the fourth quarter of 2015, DATA performed its annual
review of impairment of goodwill. As a result of that review, DATA
concluded that no further goodwill impairment charges were required
at that time. However, earlier in the year, during the second
quarter of 2015, impairment indicators, including changes in
revenue trends and profit forecasts and the failure to meet certain
financial covenants under its credit facilities, indicated that
DATA's assets may be impaired. As a result of this
information, DATA performed an impairment analysis at June 30, 2015 and DATA recorded a non-cash
impairment of goodwill for $26.0
million during the three month period ended June 30, 2015.
These non-cash impairment charges had no impact on DATA's cash
flow or compliance with debt covenants.
Gain on Redemption of Convertible
Debentures
During the year ended December 31, 2015, DATA redeemed
$33.5 million aggregate principal
amount of its $44.7 million
outstanding 6.00% Convertible Unsecured Subordinated Debentures
(the "6.00% Convertible Debentures") on December 23, 2015. DATA elected to satisfy
its redemption payment obligation by issuing and delivering common
shares of DATA to the holders of the 6.00% Convertible Debentures,
in lieu of cash. The common shares had a fair value of
$19.5 million for purposes of IFRS,
compared with a carrying value of $32.7
million on that date. This resulted in a gain on
partial redemption of the 6.00% Convertible Debentures of
$13.2 million.
Adjusted EBITDA
For the quarter ended
December 31, 2016, Adjusted EBITDA
was $2.2 million, or 3.3% of
revenues. Adjusted EBITDA decreased $6.2 million or 73.5% from the same period in the
prior year and Adjusted EBITDA margin for the quarter, as a
percentage of revenues, decreased from 10.3% of revenues in 2015 to
3.3% of revenues in 2016. The decrease in Adjusted EBITDA for
the fourth quarter was due to lower gross profit as a result of
lower revenues and higher SG&A expenses.
For the year ended December 31,
2016, Adjusted EBITDA was $14.4
million, or 5.2% of revenues, after adjusting EBITDA for the
non-cash impairment of goodwill for $31.1
million, removing $4.2 million
in restructuring charges and adding back $1.1 million related to one-time business
reorganization costs. Adjusted EBITDA for the year ended
December 31, 2016 decreased
$6.7 million or 31.9% from the same
period in the prior year and Adjusted EBITDA margin for the period,
as a percentage of revenues, decreased from 6.9% of revenues in
2015 to 5.2% of revenues in 2016. The decrease in Adjusted
EBITDA for 2016 was attributable to lower levels of revenue and
gross profit which was partially offset by lower SG&A expenses
compared to the prior comparable period.
Interest Expense
Interest expense, including
interest on debt outstanding under DATA's credit facilities, on its
outstanding 6.00% Convertible Debentures, on certain unfavourable
lease obligations related to closed facilities and on DATA's
employee benefit plans, was $0.8
million for the quarter ended December 31, 2016 compared to $1.4 million for the same period in 2015, and was
$3.4 million for the year ended
December 31, 2016 compared to
$5.6 million for the same period in
2015. Interest expense for the quarter and year ended
December 31, 2016 were lower than the same periods in the
prior year primarily due to reductions in the aggregate
principal amount of outstanding 6.00% Convertible Debentures and
debt outstanding under DATA's credit facilities, respectively.
Income Taxes
DATA reported a loss before income
taxes of $34.0 million and a net
income tax recovery of $0.8 million
for the quarter ended December 31,
2016 compared to income before income taxes of $16.4 million and a net income tax expense of
$3.0 million for the quarter ended
December 31, 2015. The current
income tax expense was primarily related to the income taxes
payable on DATA's estimated taxable income for the quarters ended
December 31, 2016, and 2015, respectively. The deferred
income tax recoveries primarily related to changes in estimates of
future reversals of temporary differences and new temporary
differences that arose during the quarters ended December 31,
2016 and 2015, respectively.
DATA reported a loss before income taxes of $32.2 million and a net income tax recovery of
$77 thousand for the year ended
December 31, 2016 compared to a loss
before income taxes of $18.4 million
and a net income tax expense of $0.7
million for the year ended December
31, 2015. The net income tax recovery for the year
ended December 31, 2016, includes
current tax expense due to the income taxes payable on DATA's
estimated taxable income, a reclassification from deferred taxes
related to an adjustment of a tax filing in the prior year and is
offset by taxes recovered from a prior period. The current
tax expense was offset by deferred income tax recoveries primarily
related to changes in estimates of future reversals of temporary
differences and new temporary differences that arose during year,
offset by a reclassification to current income taxes related to an
adjustment of a tax filing in the prior year.
Net (Loss) Income
Net loss for the quarter
ended December 31, 2016 was
$33.1 million compared to net income
of $13.4 million for the same period
in 2015. The decrease in comparable profitability for the
quarter ended December 31, 2016 was
substantially due to lower gross profit as a result of lower
revenues, higher SG&A expenses, a non-cash goodwill impairment
charge, restructuring expenses, and one-time business
reorganization costs incurred in 2016. The net income for the
quarter ended December 31, 2015
included a gain for purposes of IFRS on the partial redemption of
the 6.00% Convertible Debentures.
Net loss for the year ended December 31,
2016 was $32.1 million
compared to a net loss $19.2 million
for the same period in 2015. The decrease in comparable
profitability for the year ended December
31, 2016 was primarily due to a larger non-cash impairment
of goodwill, lower revenue, and larger deferred income tax recovery
during in 2016. The decrease was partially offset by lower
restructuring charges and interest expenses, combined with a larger
current income tax expense during the year ended December 31, 2016. During 2015, the net
loss included a non-cash gain on redemption of convertible
debentures which did not recur in 2016, along with a non-cash
impairment of goodwill totaling $26.0
million.
Adjusted Net (Loss) Income
Adjusted net income
for the quarter ended December 31,
2016 was $25.0 thousand
compared to Adjusted net income of $3.4
million for the same period in 2015. The decrease in
comparable profitability for the quarter ended December 31, 2016 was attributable to gross
profit as a result of lower revenues and higher SG&A expenses
which was partially offset by lower interest expense in 2016.
Adjusted net income for the year ended December 31, 2016 was $2.9
million compared to Adjusted net income of $5.8 million for the same period in 2015.
The decrease in comparable profitability for the year ended
December 31, 2016 was attributable to lower revenues, which
was partially offset by lower SG&A expenses and interest
expenses in 2016.
CASH FLOW FROM OPERATIONS
During the year ended December 31,
2016, cash flows provided by operating activities were
$10.1 million compared to
$8.2 million during the same period
in 2015. $12.1 million of
current year cash flows resulted from operations, after adjusting
for non-cash items, compared with $16.7
million in 2015. The $4.6
million decrease over the prior year related primarily to
lower revenue earned in the current year. Changes in working
capital in 2016 generated $7.6
million compared with $3.5
million in the prior year primarily due to lower accounts
receivables, deferred revenue and inventory on hand as a result of
lower sales and due to higher collections on outstanding
receivables from customers at the end of 2016. Accounts
payables decreased due to the timing of payments to suppliers for
purchases and lower production levels, also a result of lower
revenues. In addition, $7.4 million
of cash was used to make payments primarily related to severances
and lease termination costs, compared with $9.8 million of restructuring related payments in
2015. Contributions made to the Company`s pension plans were
$1.9 million, which was unchanged
from the prior year.
INVESTING ACTIVITIES
During the year ended December 31,
2016, $2.9 million in cash
flows were used for investing activities compared with $3.9 million during the same period in
2015. In 2016, this lower level was primarily made up of
$2.7 million in capital expenditures
to recalibrate machinery and equipment that was moved from the
large Edmonton, Alberta
manufacturing facility to other locations, install new racking in
the Calgary, Alberta warehouse and
the purchase of new software. There were $3.2 million of capital expenditures in the prior
year, which mainly related to the consolidation of three
manufacturing facilities into the Calgary, Alberta manufacturing facility.
Total capital expenditures as a percentage of revenue were
approximately 1% for both years.
FINANCING ACTIVITIES
During the year ended December 31,
2016, cash flow used by financing activities was
$6.5 million compared to $4.3 million during the same period in
2015. $2.8 million in gross
proceeds were received, less issuance expenses of $0.1 million, for net aggregate proceeds of
$2.7 million from the private
placement completed in 2016. The net proceeds of the private
placement were used by DATA for general working capital
purposes. During the year ended December 31, 2016, DATA established new credit
facilities and used cash from advances under those credit
facilities totaling $43.3 million to
repay the outstanding principal amounts under its prior credit
facilities. In addition, DATA repaid a total of $7.2 million of the principal amount outstanding
under its new credit facilities during the year compared to
$4.0 million of principal repaid
under its prior credit facilities in 2015. DATA incurred
$1.3 million of transaction costs
related to the establishment of new credit facilities during the
year ended December 31, 2016.
OUTLOOK
During 2016, DATA made progress on several important strategic
projects. These included: further improvements to operating
efficiencies through headcount reductions across various functions,
in addition to the closure its large Edmonton, Alberta manufacturing facility,
which was completed ahead of schedule; the advancement of DATA's
internal ERP replacement project; the implementation of new
technology for improving service levels, new data storage
facilities and PC platforms; refinement of DATA's sale team at the
leadership level, along with enhancements to DATA's sales process
and go-to market strategy, which is now more vertical market
focused; and in addition to DATA's executive leadership team with
the introduction of Greg J. Cochrane
as President.
DATA continued into 2017 with further cost reductions to
streamline the Company's order-to-production process and has now
shifted its focus onto the growth of its business through organic
growth and potential acquisitions. In February of 2017, DATA
took its first step in executing on its growth strategy by
successfully completing the acquisitions of Eclipse and
Thistle. The Company is currently working on integrating
these businesses and identifying potential revenue synergies and
other opportunities for synergies. DATA is actively pursuing
other growth opportunities it sees in its markets which leverage
its key competencies of managing complexity and providing superior
execution for its clients' business and marketing communications
needs.
Including the additions of Eclipse and Thistle, the Company
expects full year non-IFRS Adjusted EBITDA to be between
$22.0 million and $26.0 million in
2017, representing an improvement of approximately 53% to 80%
compared to 2016, despite anticipated softness in the first quarter
of 2017.
At the end of the second quarter of 2017, the 6.00% Convertible
Debentures will come due. DATA is currently evaluating
various alternatives to finance the settlement of the 6.00%
Convertible Debentures on maturity. Management expects to be
able to meet all of its ongoing obligations and finance future
growth through a potential combination of its operating cash flows,
drawing upon or increasing its senior credit facilities,
refinancing, redeeming or amending the terms of the 6.00%
Convertible Debentures and through the issuance of common
shares.
"We recognize that there were certain anomalies that transpired
during the year, especially in the second half, which affected our
ability to meet our annual financial targets for 2016. In
addition, we are conscious of the challenges that lie ahead,
however, we expect 2017 will be a better year as the strategic
projects completed in 2016 are now behind us and there is optimism
that the benefits of these initiatives will come to fruition in the
years to follow", said Michael G.
Sifton, Chief Executive Officer of DATA.
About DATA Communications Management Corp.
DATA is a leading provider of business communication solutions,
bringing value and collaboration to marketing and operation teams
in companies across North America. We help marketers and
agencies unify and execute communications campaigns across multiple
channels, and we help operations teams streamline and automate
document and communications management processes. Our core
capabilities include direct marketing, commercial print services,
labels and asset tracking, event tickets and gift cards, logistics
and fulfilment, content and workflow management, data management
and analytics, and regulatory communications. We serve
clients in key vertical markets such as financial services, retail,
healthcare, lottery and gaming, not-for-profit, and energy.
We are strategically located across Canada to support clients on a national basis,
and serve the U.S. market through our facilities in Chicago, Illinois.
Additional information relating to DATA Communications
Management Corp. is available on www.datacm.com, and in the
disclosure documents filed by DATA Communications Management Corp.
on the System for Electronic Document Analysis and Retrieval
(SEDAR) at www.sedar.com.
FORWARD-LOOKING STATEMENTS
Certain statements in this press release constitute
"forward-looking" statements that involve known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance, objectives or achievements of DATA, or industry
results, to be materially different from any future results,
performance, objectives or achievements expressed or implied by
such forward-looking statements. When used in this press
release, words such as "may", "would", "could", "will", "expect",
"anticipate", "estimate", "believe", "intend", "plan", and other
similar expressions are intended to identify forward-looking
statements. These statements reflect DATA's current views
regarding future events and operating performance, are based on
information currently available to DATA, and speak only as of the
date of this press release. These forward-looking statements
involve a number of risks, uncertainties and assumptions and should
not be read as guarantees of future performance or results, and
will not necessarily be accurate indications of whether or not such
performance or results will be achieved. Many factors could
cause the actual results, performance, objectives or achievements
of DATA to be materially different from any future results,
performance, objectives or achievements that may be expressed or
implied by such forward-looking statements. The principal
factors, assumptions and risks that DATA made or took into account
in the preparation of these forward-looking statements include: the
limited growth in the traditional printing industry and the
potential for further declines in sales of DATA's printed business
documents relative to historical sales levels for those products;
the risk that changes in the mix of products and services sold by
DATA which are related to reduced demand for its printed products
will adversely affect DATA's financial results; the risk that DATA
may not be successful in reducing the size of its legacy print
business, realizing the benefits expected from restructuring and
business reorganization initiatives, reducing costs, reducing and
repaying its long-term debt, repaying or refinancing its
outstanding 6.00% convertible unsecured subordinated debentures,
and growing its digital communications business; the risk that DATA
may not be successful in managing its organic growth; DATA's
ability to invest in, develop and successfully market new digital
and other products and services; competition from competitors
supplying similar products and services, some of whom have greater
economic resources than DATA and are well-established suppliers;
DATA's ability to grow its sales or even maintain historical levels
of its sales of printed business documents; the impact of economic
conditions on DATA's businesses; risks associated with acquisitions
by DATA; the failure to realize the expected benefits from
acquisitions and risks associated with the integration of acquired
businesses; increases in the costs of paper and other raw materials
used by DATA; and DATA's ability to maintain relationships with its
customers. Additional factors are discussed elsewhere in this
press release and under the headings "Risk Factors" and "Risks and
Uncertainties" in DATA's management's discussion and analysis and
in DATA's other publicly available disclosure documents, as filed
by DATA on SEDAR (www.sedar.com). Should one or more of these
risks or uncertainties materialize, or should assumptions
underlying the forward-looking statements prove incorrect, actual
results may vary materially from those described in this press
release as intended, planned, anticipated, believed, estimated or
expected. Unless required by applicable securities law, DATA
does not intend and does not assume any obligation to update these
forward-looking statements.
NON-IFRS MEASURES
This press release includes certain non-IFRS measures as
supplementary information. Except as otherwise noted, when used in
this press release, EBITDA means earnings before interest and
finance costs, taxes, depreciation and amortization and Adjusted
net income (loss) means net income (loss) adjusted for the impact
of certain non-cash items and certain items of note on an after-tax
basis. Adjusted EBITDA means EBITDA adjusted for
restructuring expenses, one-time business reorganization costs,
goodwill impairment charges, gain on redemption of convertible
debentures, and acquisition costs. Adjusted net income (loss)
means net income (loss) adjusted for restructuring expenses,
one-time business reorganization costs, goodwill impairment
charges, gain on redemption of convertible debentures, acquisition
costs and the tax effects of those items. Adjusted net income
(loss) per share (basic and diluted) is calculated by dividing
Adjusted net income for the period by the weighted average number
of common shares (basic and diluted) outstanding during the
period. Pro forma Adjusted net income (loss) per share (basic
and diluted) assumes that Adjusted net income (loss) per share was
calculated on the basis of the total number of common shares
outstanding at December 31, 2016, rather than the weighted
average or the weighted average diluted number of common shares
outstanding at the respective period ends, given the significant
changes in the number of common shares of DATA outstanding during
those periods. DATA believes that, in addition to net income
(loss), Adjusted net income (loss), Adjusted net income (loss) per
share, Pro forma Adjusted net income (loss) per share, EBITDA and
Adjusted EBITDA are useful supplemental measures in evaluating the
performance of DATA. Adjusted net income (loss), Adjusted net
income (loss) per share, Pro forma Adjusted net income (loss) per
share, EBITDA and Adjusted EBITDA are not earnings measures
recognized by IFRS and do not have any standardized meanings
prescribed by IFRS. Therefore, Adjusted net income (loss),
Adjusted net income (loss) per share, Pro forma Adjusted net income
(loss) per share, EBITDA and Adjusted EBITDA are unlikely to be
comparable to similar measures presented by other issuers.
Investors are cautioned that Adjusted net income (loss),
Adjusted net income (loss) per share, Pro forma Adjusted net income
(loss) per share, EBITDA and Adjusted EBITDA should not be
construed as alternatives to net income (loss) determined in
accordance with IFRS as an indicator of DATA's performance.
For a reconciliation of net income (loss) to EBITDA and a
reconciliation of net income (loss) to Adjusted EBITDA, see Table 2
above. For a reconciliation of net income (loss) to Adjusted
net income (loss) and a presentation of Adjusted net income (loss)
per share and Pro forma Adjusted net income (loss) per share, see
Table 3 above.
CONSOLIDATED
STATEMENTS OF FINANCIAL POSITION
|
|
|
|
(in thousands of
Canadian dollars, unaudited)
|
December 31,
2016
$
|
December 31,
2015
$
|
|
|
|
Assets
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
1,544
|
871
|
|
Trade
receivables
|
29,157
|
38,051
|
|
Inventories
|
33,252
|
37,053
|
|
Prepaid expenses and
other current
assets
|
4,667
|
4,150
|
|
68,620
|
80,125
|
Non-current
assets
|
|
|
|
Deferred income tax
assets
|
3,839
|
2,070
|
|
Restricted
cash
|
425
|
—
|
|
Property, plant and
equipment
|
12,483
|
14,422
|
|
Pension
assets
|
1,589
|
770
|
|
Intangible
assets
|
3,954
|
5,614
|
|
Goodwill
|
—
|
31,066
|
|
|
|
|
90,910
|
134,067
|
|
|
|
Liabilities
|
|
|
Current
liabilities
|
|
|
|
Trade
payables
|
27,304
|
29,766
|
|
Current portion of
Credit facilities
|
5,886
|
43,095
|
|
Current portion of
Convertible debentures
|
11,082
|
—
|
|
Provisions
|
3,305
|
5,723
|
|
Income taxes
payable
|
2,231
|
903
|
|
Deferred
revenue
|
8,665
|
10,811
|
|
58,473
|
90,298
|
Non-current
liabilities
|
|
|
|
Provisions
|
675
|
1,483
|
|
Credit
facilities
|
29,156
|
—
|
|
Convertible
debentures
|
—
|
10,912
|
|
Deferred income tax
liabilities
|
—
|
76
|
|
Other non-current
liabilities
|
1,691
|
1,362
|
|
Pension
obligations
|
8,340
|
8,354
|
|
Other post-employment
benefit plans
|
2,510
|
2,563
|
|
100,845
|
115,048
|
|
|
|
Equity
|
|
|
Shareholders' equity
(deficit)
|
|
|
|
Shares
|
237,432
|
234,782
|
|
Conversion
options
|
128
|
128
|
|
Contributed
surplus
|
1,164
|
385
|
|
Accumulated other
comprehensive income
|
258
|
306
|
|
Deficit
|
(248,917)
|
(216,582)
|
|
(9,935)
|
19,019
|
|
|
|
|
90,910
|
134,067
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
|
|
|
(in thousands of
Canadian dollars, except per share amounts,
unaudited)
|
For the three
months ended
December 31, 2016
|
For the three
months ended
December 31, 2015
|
|
$
|
$
|
|
|
|
Revenues
|
68,191
|
81,010
|
|
|
|
Cost of
revenues
|
54,950
|
61,237
|
|
|
|
Gross
profit
|
13,241
|
19,773
|
|
|
|
Expenses
|
|
|
|
Selling, commissions
and expenses
|
7,521
|
7,847
|
|
General and
administration expenses
|
5,873
|
5,235
|
|
Restructuring
expenses
|
1,721
|
1,545
|
|
Impairment of
goodwill
|
31,066
|
—
|
|
Gain on redemption of
convertible debentures
|
—
|
(12,766)
|
|
Acquisition
costs
|
68
|
—
|
|
46,249
|
1,861
|
|
|
|
(Loss) income
before finance costs and income taxes
|
(33,008)
|
17,912
|
|
|
|
Finance costs
(income)
|
|
|
|
Interest
expense
|
839
|
1,370
|
|
Interest
income
|
—
|
(1)
|
|
Amortization of
transaction costs
|
111
|
163
|
|
950
|
1,532
|
|
|
|
(Loss) income
before income taxes
|
(33,958)
|
16,380
|
|
|
|
Income tax
(recovery) expense
|
|
|
|
Current
|
194
|
941
|
|
Deferred
|
(1,037)
|
2,034
|
|
(843)
|
2,975
|
|
|
|
Net (loss) income
for the period
|
(33,115)
|
13,405
|
|
|
|
Basic (loss)
earnings per share
|
(2.77)
|
11.27
|
|
|
|
Diluted (loss)
earnings per share
|
(2.77)
|
11.27
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
|
|
|
(in thousands of
Canadian dollars, except per share amounts,
unaudited)
|
For the year
ended
December 31, 2016
|
For the year
ended
December 31, 2015
|
|
$
|
$
|
|
|
|
Revenues
|
278,363
|
304,575
|
|
|
|
Cost of
revenues
|
215,295
|
233,505
|
|
|
|
Gross
profit
|
63,068
|
71,070
|
|
|
|
Expenses
|
|
|
|
Selling, commissions
and expenses
|
31,376
|
33,194
|
|
General and
administration expenses
|
24,558
|
23,469
|
|
Restructuring
expenses
|
4,200
|
13,560
|
|
Impairment of
goodwill
|
31,066
|
26,000
|
|
Gain on redemption of
convertible debentures
|
—
|
(12,766)
|
|
Acquisition
costs
|
68
|
—
|
|
91,268
|
83,457
|
|
|
|
Loss before
finance costs and income taxes
|
(28,200)
|
(12,387)
|
|
|
|
Finance costs
(income)
|
|
|
|
Interest
expense
|
3,414
|
5,599
|
|
Interest
income
|
(8)
|
(11)
|
|
Amortization of
transaction costs
|
578
|
468
|
|
3,984
|
6,056
|
|
|
|
Loss before income
taxes
|
(32,184)
|
(18,443)
|
|
|
|
Income tax
(recovery) expense
|
|
|
|
Current
|
1,572
|
1,191
|
|
Deferred
|
(1,649)
|
(462)
|
|
(77)
|
729
|
|
|
|
Net loss for the
year
|
(32,107)
|
(19,172)
|
|
|
|
Basic loss per
share
|
(2.89)
|
(40.33)
|
|
|
|
Diluted loss per
share
|
(2.89)
|
(40.33)
|
CONSOLIDATED
STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
|
|
|
|
(in thousands of
Canadian dollars, unaudited)
|
For the three
months ended
December 31, 2016
|
For the three
months ended
December 31, 2015
|
|
$
|
$
|
|
|
|
Net (loss) income
for the period
|
(33,115)
|
13,405
|
|
|
|
|
|
|
Other
comprehensive income (loss):
|
|
|
|
|
|
Items that may be
reclassified subsequently to net (loss)
income
|
|
|
|
Foreign currency
translation
|
43
|
61
|
|
43
|
61
|
|
|
|
Items that will
not be reclassified to net (loss) income
|
|
|
|
Re-measurements of
post-employment benefit obligations
|
2,482
|
(601)
|
|
Taxes related to
post-employment adjustment above
|
(648)
|
157
|
|
1,834
|
(444)
|
|
|
|
Other
comprehensive income (loss) for the period, net of
tax
|
1,877
|
(383)
|
|
|
|
Comprehensive
(loss) income for the period
|
(31,238)
|
13,022
|
|
|
|
|
|
|
CONSOLIDATED
STATEMENTS OF COMPREHENSIVE LOSS
|
|
|
|
|
(in thousands of
Canadian dollars, unaudited)
|
For the year
ended
December 31, 2016
|
For the year
ended
December 31, 2015
|
|
$
|
$
|
|
|
|
Net loss for the
year
|
(32,107)
|
(19,172)
|
|
|
|
|
|
|
Other
comprehensive (loss) income:
|
|
|
|
|
|
Items that may be
reclassified subsequently to net loss
|
|
|
|
Foreign currency
translation
|
(48)
|
214
|
|
(48)
|
214
|
|
|
|
Items that will
not be reclassified to net loss
|
|
|
|
Re-measurements of
post-employment benefit obligations
|
(309)
|
159
|
|
Taxes related to
post-employment adjustment above
|
81
|
(41)
|
|
(228)
|
118
|
|
|
|
Other
comprehensive (loss) income for the year, net of
tax
|
(276)
|
332
|
|
|
|
Comprehensive loss
for the year
|
(32,383)
|
(18,840)
|
|
|
|
|
|
|
CONSOLIDATED
STATEMENTS OF CHANGES IN EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
|
|
|
(in thousands of
Canadian dollars, unaudited)
|
Shares
|
Conversion
options
|
Contributed
surplus
|
Accumulated
other
comprehensive income
|
Deficit
|
Total
equity (deficit)
|
|
$
|
$
|
|
$
|
$
|
$
|
|
|
|
|
|
|
|
Balance as at
December 31, 2014
|
215,336
|
513
|
—
|
92
|
(197,528)
|
18,413
|
|
|
|
|
|
|
|
Net loss for the
year
|
—
|
—
|
—
|
—
|
(19,172)
|
(19,172)
|
Other comprehensive
income for the year
|
—
|
—
|
—
|
214
|
118
|
332
|
Total comprehensive
income (loss) for the year
|
—
|
—
|
—
|
214
|
(19,054)
|
(18,840)
|
|
|
|
|
|
|
|
Shares issued on the
redemption of convertible debentures
|
19,446
|
(385)
|
385
|
—
|
—
|
19,446
|
|
|
|
|
|
|
|
Balance as at
December 31, 2015
|
234,782
|
128
|
385
|
306
|
(216,582)
|
19,019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as at
December 31, 2015
|
234,782
|
128
|
385
|
306
|
(216,582)
|
19,019
|
|
|
|
|
|
|
|
Net loss for the
year
|
—
|
—
|
—
|
—
|
(32,107)
|
(32,107)
|
Other comprehensive
loss for the year
|
—
|
—
|
—
|
(48)
|
(228)
|
(276)
|
Total comprehensive
loss for the year
|
—
|
—
|
—
|
(48)
|
(32,335)
|
(32,383)
|
|
|
|
|
|
|
|
Issuance of common
shares
|
2,650
|
—
|
—
|
—
|
—
|
2,650
|
Share-based
compensation expense
|
—
|
—
|
779
|
—
|
—
|
779
|
|
|
|
|
|
|
|
Balance as at
December 31, 2016
|
237,432
|
128
|
1,164
|
258
|
(248,917)
|
(9,935)
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
(in thousands of
Canadian dollars, unaudited)
|
For the three
months ended
December 31, 2016
|
For the three
months ended
December 31, 2015
|
|
$
|
$
|
|
|
|
Cash provided by
(used in)
|
|
|
|
|
|
Operating
activities
|
|
|
Net (loss) income for
the period
|
(33,115)
|
13,405
|
Adjustments to net
(loss) income
|
|
|
|
Depreciation of
property, plant and equipment
|
815
|
1,182
|
|
Amortization of
intangible assets
|
560
|
504
|
|
Share-based
compensation expense
|
61
|
—
|
|
Pension
expense
|
147
|
153
|
|
Loss on disposal of
property, plant and equipment
|
120
|
22
|
|
Impairment of
goodwill
|
31,066
|
—
|
|
Gain on redemption of
convertible debentures
|
—
|
(12,766)
|
|
Provisions
|
1,721
|
1,545
|
|
Amortization of
transaction costs
|
111
|
163
|
|
Accretion of
convertible debentures
|
21
|
75
|
|
Other non-current
liabilities
|
75
|
254
|
|
Other post-employment
benefit plans, net
|
(96)
|
(463)
|
|
Income tax credits
recognized
|
—
|
—
|
|
Income tax (recovery)
expense
|
(843)
|
2,975
|
|
643
|
7,049
|
Changes in working
capital
|
7,696
|
(4,013)
|
Contributions made to
pension plans
|
(479)
|
(481)
|
Provisions
paid
|
(1,960)
|
(2,795)
|
Income taxes
paid
|
(12)
|
(232)
|
|
5,888
|
(472)
|
|
|
|
Investing
activities
|
|
|
Purchase of property,
plant and equipment
|
(1,371)
|
(281)
|
Purchase of
intangible assets
|
(281)
|
—
|
Proceeds on disposal
of property, plant and equipment
|
33
|
15
|
|
(1,619)
|
(266)
|
|
|
|
Financing
activities
|
|
|
Repayment of credit
facilities
|
(1,869)
|
(1,000)
|
Proceeds from loan
payable
|
—
|
1
|
Repayment of loan
payable
|
(56)
|
(19)
|
Finance and
transaction costs
|
—
|
(552)
|
Finance lease
payments
|
—
|
(10)
|
|
(1,925)
|
(1,580)
|
|
|
|
(Decrease) in
(bank overdraft) / decrease in cash and cash equivalents during the
period
|
2,344
|
(2,318)
|
(Bank overdraft)
cash and cash equivalents – beginning of period
|
(829)
|
3,153
|
Effects of foreign
exchange on cash balances
|
29
|
36
|
Cash and cash
equivalents – end of period
|
1,544
|
871
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
(in thousands of
Canadian dollars, unaudited)
|
For the year
ended
December 31, 2016
|
For the year
ended
December 31, 2015
|
|
$
|
$
|
|
|
|
Cash provided by
(used in)
|
|
|
|
|
|
Operating
activities
|
|
|
Net loss for the
year
|
(32,107)
|
(19,172)
|
Adjustments to net
loss
|
|
|
|
Depreciation of
property, plant and equipment
|
4,052
|
4,754
|
|
Amortization of
intangible assets
|
2,092
|
1,949
|
|
Share-based
compensation expense
|
779
|
—
|
|
Pension
expense
|
589
|
609
|
|
Loss on disposal of
property, plant and equipment
|
358
|
56
|
|
Impairment of
goodwill
|
31,066
|
26,000
|
|
Gain on redemption of
convertible debentures
|
—
|
(12,766)
|
|
Provisions
|
4,200
|
13,560
|
|
Amortization of
transaction costs
|
578
|
468
|
|
Accretion of
convertible debentures
|
85
|
212
|
|
Other non-current
liabilities
|
469
|
692
|
|
Other post-employment
benefit plans, net
|
94
|
(250)
|
|
Tax credits
recognized
|
(124)
|
(181)
|
|
Income tax (recovery)
expense
|
(77)
|
729
|
|
12,054
|
16,660
|
Changes in working
capital
|
7,619
|
3,521
|
Contributions made to
pension plans
|
(1,878)
|
(1,878)
|
Provisions
paid
|
(7,426)
|
(9,757)
|
Income taxes
paid
|
(223)
|
(380)
|
|
10,146
|
8,166
|
|
|
|
Investing
activities
|
|
|
Purchase of property,
plant and equipment
|
(2,653)
|
(4,300)
|
Purchase of
intangible assets
|
(432)
|
(302)
|
Proceeds on disposal
of property, plant and equipment
|
167
|
654
|
|
(2,918)
|
(3,948)
|
|
|
|
Financing
activities
|
|
|
Increase in
restricted cash
|
(425)
|
—
|
Proceeds from
issuance of common shares, net
|
2,650
|
—
|
Proceeds from credit
facilities
|
49,532
|
—
|
Repayment of credit
facilities
|
(56,737)
|
(4,000)
|
Proceeds from loan
payable
|
—
|
342
|
Repayment of loan
payable
|
(191)
|
(32)
|
Finance and
transaction costs
|
(1,341)
|
(565)
|
Finance lease
payments
|
(18)
|
(37)
|
|
(6,530)
|
(4,292)
|
|
|
|
Increase
(decrease) in cash and cash equivalents during the
year
|
698
|
(74)
|
Cash and cash
equivalents – beginning of year
|
871
|
812
|
Effects of foreign
exchange on cash balances
|
(25)
|
133
|
Cash and cash
equivalents – end of year
|
1,544
|
871
|
SOURCE DATA Communications Management Corp.