DATA Communications Management Corp. (TSX: DCM; OTCQX: DCMDF)
(“DCM” or the "Company"), a leading provider of marketing and
business communication solutions, today announced the closing of
its previously announced acquisition of the Canadian operations of
R.R. Donnelley & Sons (“RRD Canada”) for a total cash purchase
price of $130.8 million, subject to final working capital and other
customary post-closing adjustments.
“The acquisition of RRD Canada is a significant milestone for
DCM and provides an exciting opportunity for us to continue our
momentum in building both a better and bigger business,” said
Richard Kellam, President & Chief Executive Officer of DCM. “We
believe that this is a compelling strategic opportunity to
accelerate our growth agenda by leveraging our expanded portfolio
of best-in-class products and services, stronger execution
capabilities, and enhanced speed to market for new innovations. As
one company, we are now focused on driving growth and value
creation by delivering consistent and seamless service to our
customers and positioning DCM for sustainable and long-term
success.”
With the addition of RRD Canada, DCM will have a significantly
larger presence in the Canadian market from day one with estimated
pro forma revenues of more than $520 million in 2022, an enhanced
portfolio of products and services, and an expanded customer base
serving more than 400 enterprise clients across a broad range of
industry verticals. DCM’s five-year strategic financial objectives
are now to grow its annual revenues organically at a compounded
annual growth rate of more than 5% per year; achieve Adjusted
EBITDA1 as a percentage of revenues of more than 14%; and reduce
its total net debt as a multiple of Adjusted EBITDA to less than
1.0x.
In conjunction with the completion of the acquisition, DCM
announced that RRD Canada President Rael Fisher will assume a new
role as Chief Integration Officer, reporting directly to
Kellam.
“We’re delighted to have Rael join our team in this critical
role overseeing the integration of the DCM and RRD Canada
businesses,” said Kellam. “Rael has served in key leadership roles
with RRD Canada over the last two decades and we expect his deep
knowledge of all aspects of the RRD Canada business and trusted
relationships with customers to be a great asset to us as we
integrate our businesses.”
“I’m excited to have this opportunity to be part of the DCM team
in this important role,” said Fisher. “The process of successfully
integrating the two businesses will be critical to our future
growth in the market and I look forward to contributing to our goal
of being “Better Together” as one company.”
TRANSACTION OVERVIEW
With the completion of the acquisition, Moore Canada
Corporation, the RRD Canada legal entity, is a wholly-owned
subsidiary of DATA Communications Management Corp. The acquisition
was funded through an amended revolving credit facility from a
Canadian chartered bank, which now provides for up to $90 million
of revolving credit capacity; a $30 million floating rate bridge
facility from the bank; and a new $50 million fixed rate credit
facility from Fiera Private Debt.
Included in the acquisition, DCM has acquired three sites owned
by RRD Canada. DCM has entered into a sale and lease-back
arrangement with respect to one of the sites, which is located in
Oshawa, Ontario. DCM expects to realize net proceeds of
approximately $23 million from the sale of the Oshawa site, which
is expected to close before the end of the second quarter of 2023,
subject to customary closing conditions. Net proceeds from the sale
of the Oshawa site will be used to substantially repay the bank
bridge facility.
ADVISORS
Boston Consulting Group provided due diligence counsel to DCM on
the acquisition and is serving as lead merger integration advisor
to DCM. In addition, Clarus Securities Inc. and
PricewaterhouseCoopers LLC acted as financial advisors to DCM and
McCarthy Tétrault LLP served as legal counsel to DCM.
ABOUT DATA COMMUNICATIONS MANAGEMENT CORP.
DCM is a marketing and business communications partner that
helps companies simplify the complex ways they communicate and
operate, so they can accomplish more with fewer steps and less
effort. For more than 60 years, DCM has been serving major brands
in vertical markets including financial services, retail,
healthcare, energy, other regulated industries, and the public
sector. We integrate seamlessly into our clients’ businesses thanks
to our deep understanding of their needs, transformative
tech-enabled solutions, and end-to-end service offerings. Whether
we’re running technology platforms, sending marketing messages, or
managing print workflows, our goal is to make everything
surprisingly simple.
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
This release and associated material change report contain
"forward-looking statements." Forward-looking statements can be
identified by words such as: "may," "should," “intend,”
“estimates,” and "will" and similar references to future periods.
Examples of forward-looking statements include, among others,
statements regarding the ability of DCM to successfully integrate
the DCM and RRD Canada businesses and realize anticipated benefits
from the combination of those businesses; the ability of DCM to
successfully complete the proposed sale and leaseback of RRD
Canada’s Oshawa site and two other sites and substantially reduce
its indebtedness outstanding under the bank bridge facility; and
DCM’s ability to achieve its strategic financial objectives in the
future.
Forward-looking statements are neither historical facts nor
assurances of future performance. Instead, they are based only on
our current beliefs, expectations, and assumptions regarding the
future of our business, future plans and strategies, projections,
anticipated events and trends, the economy and other future
conditions. Because forward-looking statements relate to the
future, they are subject to inherent uncertainties, risks and
changes in circumstances that are difficult to predict and many of
which are outside of our control. Our actual results and financial
condition may differ materially from those indicated in the
forward-looking statements. Therefore, you should not rely on any
of these forward-looking statements. The principal factors,
assumptions and risks that DCM made or took into account in the
preparation of these forward-looking statements, and which could
cause our actual results and financial condition to differ
materially from those indicated in the forward-looking statements,
include: our operating results are sensitive to economic
conditions, which can have a significant impact on us, and
uncertain economic conditions may have a material adverse effect on
our business, results of operations and financial condition; our
ability to successfully integrate the DCM and RRD Canada businesses
and realize anticipated benefits from the combination of those
businesses, including revenue and profitability growth from an
enhanced offering of products and services, larger customer base
and costs reductions from synergies; there is limited growth in the
traditional printing business, which may impact our ability to grow
our sales or even maintain historical levels of sales of printed
business and marketing communications materials; competition from
competitors supplying similar products and services, some of whom
have greater economic resources than us and are well established
suppliers; increases in the cost of, and supply constraints related
to, paper, ink and other raw material inputs used by DCM, as well
as increases in freight costs, may adversely impact the
availability of raw materials and our production, revenues and
profitability; our ability to meet our revenue and profitability
targets; our ability to comply with our financial covenants under
our credit facilities or to obtain financial covenant waivers from
our lenders if necessary; our ability to complete the proposed
sales and leasebacks of certain properties and substantially reduce
our bank bridge facility and total indebtedness; we may not be
successful in obtaining capital to fund our business plans on
satisfactory terms (or at all), including, without, limitation,
with respect to investments in digital innovation (such as the
development and successful marketing and sale of new digital
capabilities) and capital expenditures; all of our outstanding
indebtedness under our bank credit facility is subject to floating
interest rates and therefore is subject to fluctuations in interest
rates, an increase in which would increase our borrowing costs.
Any forward-looking statement made by us in this release and
associated material change report is based only on information
currently available to us and speaks only as of the date on which
it is made. Except as required by applicable securities laws, we
undertake no obligation to publicly update any forward-looking
statement, whether written or oral, that may be made from time to
time, whether as a result of new information, future developments
or otherwise.
NON-IFRS MEASURES This press release includes certain
non-IFRS measures as supplementary information. When used in this
press release, EBITDA means earnings before interest and finance
costs, taxes and depreciation and amortization; Adjusted EBITDA
means EBITDA adjusted for restructuring expenses, and one-time
business reorganization costs; Adjusted EBITDA as a percentage of
revenues means Adjusted EBITDA as a percentage of total revenues
for the relevant periods. In addition to net income(loss), DCM uses
non-IFRS measures and ratios, including Adjusted EBITDA and
Adjusted EBITDA as a percentage of revenues, to provide investors
with supplemental measurers of DCM’s operating performance and thus
highlight trends in its core business that may not otherwise be
apparent when relying solely on IFRS measures. DCM also believes
that securities analysts, investors, rating agencies and other
interested parties frequently use non-IFRS measures and ratios in
the evaluation of issuers. DCM’s management also uses non-IFRS
measures and ratios in order to facilitate operating performance
comparisons from period to period, prepare annual operating
performance comparisons from the period to period, prepare annual
operating budgets and assess its ability to meet future debt
service, capital expenditure and working capital requirements.
EBITDA, Adjusted EBITDA and Adjusted EBITDA as a percentage of
revenues are not earnings measures recognized by IFRS and do not
have any standardized meaning prescribed by IFRS. Therefore,
EBITDA, Adjusted EBITDA and Adjusted EBITDA as a percentage of
revenues are unlikely to be comparable to similar measurers
presented by other issuers.
1 Note: EBITDA, Adjusted EBITDA and Adjusted EBITDA as a
percentage of revenues are not earnings measures recognized by
International Financial Reporting Standards (IFRS), do not have any
standardized meanings prescribed by IFRS and might not be
comparable to similar financial measures disclosed by other
issuers. EBITDA, Adjusted EBITDA and Adjusted EBITDA as a
percentage of revenues should not be construed as alternatives to
net income (loss) determined in accordance with IFRS as an
indicator of DCM’s performance. For a description of the
composition of EBITDA, Adjusted EBITDA and Adjusted EBITDA as a
percentage of revenues, why we believe such measures are useful to
investors and how we use those measures in our business, together
with a quantitative reconciliation of net income (loss) to EBITDA
and Adjusted EBITDA, respectively, see the information under the
heading “Non-IFRS Measures” and Table 2 and Table 3 of DCM’s
management’s discussion and analysis (MD&A) dated March 21,
2023 for the year ended December 31, 2022, which information is
incorporated by reference into this press release. Such MD&A is
available on SEDAR at www.sedar.com.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230424005518/en/
For further information:
Mr. Richard Kellam President & Chief Executive Officer DATA
Communications Management Corp. (905) 791-3151
Mr. James E. Lorimer Chief Financial Officer DATA Communications
Management Corp. (905) 791-3151 ir@datacm.com
Data Communications Mana... (TSX:DCM)
Historical Stock Chart
From Mar 2024 to Apr 2024
Data Communications Mana... (TSX:DCM)
Historical Stock Chart
From Apr 2023 to Apr 2024