decisive dividend investor presentation – · pdf filecertain information in this...
TRANSCRIPT
DE LISTED ON
MAY 2017
INVESTOR PRESENTATION
Forward Looking Information
Certain information in this presentation is forward-looking and related to anticipated financial performance, events and strategies of Decisive Dividend Corporation (and, where the context requires, its subsidiaries) (collective, “Decisive”). When used in this context, words such as “will”, “anticipate”, “believe”, “plan”, “intend”, “target” and “expect” or similar words suggest future outcomes. Forward-looking statements relate to, among other things, Decisive’s objectives and strategy; future cash flows, financial condition, operating performance, financial ratios, projected asset base and capital expenditures; Decisive’s dividend policy; cash needs, capital requirements and need for and cost of additional financing; future assets; demand for services; Decisive’s competitive position; and anticipated trends and challenges in Decisive’s business and the markets in which it operates.
The forward-looking information and statements contained in this presentation reflect several material factors, expectations and assumptions of Decisive including, without limitation: that Decisive will conduct its operations in a manner consistent with its expectations and, where applicable, consistent with past practice; the general continuance of current or, where applicable, assumed industry conditions; the continuance of existing (and in certain circumstances, the implementation of proposed) tax and regulatory regimes; certain cost assumptions; the continued availability of adequate debt and/or equity financing and cash flow to fund its capital and operating requirements as needed; and the extent of its liabilities. Decisive believes the material factors, expectations and assumptions reflected in the forward-looking information and statements are reasonable but no assurance can be given that these factors, expectations and assumptions will prove to be correct.
By their nature, such forward-looking information and statements are subject to significant risks and uncertainties, which could cause the actual results and experience to be materially different than the anticipated results. Such risks and uncertainties include, but are not limited to the completion of proposed acquisitions, operating performance, regulatory and government decisions, competitive pressures and the ability to retain major customers, suppliers and contractors, rapid technological changes, availability and cost of financing, key management personnel, availability of labour and management resources and the performance of partners, contractors and suppliers. Readers are cautioned not to place undue reliance on forward-looking statements as actual results could differ materially from the plans, expectations, estimates or intentions expressed in the forward-looking statements. Except as required by law, Decisive disclaims any intention and assumes no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise.
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Corporate Profile (May 5, 2017)
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TSX.V Listing DE
Share price $4.23
52 week range $2.92 - $4.25
Total shares outstanding 6.14M basic
0.09 M warrants @ $3.00
0.51M options (42,500 @ $2.00, 463,500 @ $3.00)
6.74M fully diluted
Market capitalization $25.97M
Monthly dividend per share $0.03
Annualized dividends per share $0.36
Annualized yield 8.51%
Ownership 35% Directors / Insiders
Corporate Information
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Board of Directors Committees
James Paterson, Chief Executive Officer & Chairman Governance & Compensation
David Redekop, Chief Financial Officer & Director
Terry Edwards, Chief Operating Officer & Director Governance & Compensation
Bruce Campbell, Director Governance & Compensation
Audit
Michael Conway, Director Audit Chair
Peter Jeffrey, Director Audit
Robert Louie, Director Governance & Compensation
Warren Matheos, Director
Tim Pirie, Director Governance & Compensation Chair
Auditors Grant Thornton LLP
Legal Counsel MLT Aikins LLP
Transfer Agent Computershare
Banking Syndicate TD Canada Trust, Scotiabank, Banner Bank
Business Model
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Acquire established manufacturing companies
Hold companies for the long term
Provide a stable and growing dividend stream
to investors
Acquisition Criteria & Structure
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• Established operating history
• Management succession plan
• Sustainable competitive advantage
• Growth potential
• Operations based in North America
• EBITDA of $2M to $6M
• Not operating in cyclical, high technology or hospitality industries
Acquisition Criteria
• Disciplined approach to purchase price, based on 3 to 5 times EBITDA
• Acquire 100% ownership
• Purchase consideration includes minimum 10% Decisive shares, remainder cash
• Cash financing of 50% debt, 50% equity
• Annualized dividend pay out ratio of up to 75%
Acquisition Structure
Why Decisive?
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Vendors Employees Shareholders
• Exit opportunity
• Business legacy
continues
• Opportunity to cash out
(max 90% cash)
• Participate in Decisive
growth (min 10% shares)
• Business as usual
• Opportunity for equity
ownership (ESPP)
• Capital to grow the
business
• Stability of long term
ownership
• Growing portfolio of established companies
• Sustainable and growing dividends
• Conservative dividend payout ratio (target 75%)
• Growth opportunities
• Strong deal flow
• Goal to acquire one company annually
• Organic growth of existing companies
• Synergistic opportunities in existing and future
acquisitions – strategic fit
Milestones
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2013
September
• IPO - $1.5M @ $1.00 per share
• Decisive shares commence trading on TSX Venture Exchange as a Capital Pool Company
2015
February
•Private Placement - $2.0M @ $2.00 per share
•100% of Blaze King acquired for $6.9M as Decisive’s Qualifying Transaction
2015
June
•Monthly Dividend Policy implemented - $0.02 per share
•$0.24 per share annualized
2015
September
•Monthly dividend increased 25% - $0.025 per share
•$0.30 per share annualized
2016
June
•Private Placement - $5.0M @ $3.00 per share
•100% of Unicast Inc. acquired for $11.0M
2017
March
•Monthly dividend increased 20% - $0.03 per share
•$0.36 per share annualized
Dividend and Share Price Growth
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$0.020
$0.025 $0.030
$0.000
$0.005
$0.010
$0.015
$0.020
$0.025
$0.030
$0.035
Monthly Dividend
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
$4.00
$4.50
Share Price
Cumulative Dividends
to Date
FY13 $0.000
FY14 $0.000
FY15 $0.155
FY16 $0.455
YTD17
(end of April)
$0.590
51% CAGR*
*Compound Annual Growth Rate
Performance in Perspective
10
364%
29%
0%
50%
100%
150%
200%
250%
300%
350%
400%
Total Shareholder Return
Decisive Dividend Corporation S&P/TSX Composite Total Return Index
Blaze King manufactures a variety of wood burning hearth
products. As listed by the EPA, Blaze King has the most
efficient and cleanest line up of wood stoves in North
America.
Profile Knowledgeable, experienced management team
Established in 1977
Facilities in Penticton, BC & Walla Walla,
Washington
70 employees (57 in Canada, 13 in USA)
Alan Murphy, President
Sheila Hawthorne, Operations Manager
Andrew Hofer, Controller
Acquisition 1: Blaze King
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Princess Insert Ashford 25 Insert Chinook 30 Sirocco 30
Unicast Inc. designs, manufactures and markets wear
parts for the mining and cement industries.
Profile Knowledgeable, experienced management team
Established in 1994
Facilities in Kelowna, BC
20 Employees
Gerry L’Esperance, Founder & President
Shane Green, General Manager
Derek L’Esperance, Sales Manager
Patty Berg, Controller
Acquisition 2: Unicast Inc.
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Convertible Modular Valve Titanium Carbide Hammers Ceramic lined pipe Blow Bar
Financial Performance
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Fiscal year ended: 2016 2015
Revenue (1) $ 17,512,709 $ 13,301,335
Gross margin 7,657,298 5,571,375
Operating expenditures (2) (4,942,784) (3,730,072)
Adjusted EBITDA (3) 2,714,514 1,841,303
Amortization (790,595) (245,723)
Interest expense (406,349) (197,592)
Acquisition costs (347,396) (176,527)
ERP implementation costs (33,900) -
Cost of goods sold fair value adjustment (460,082) -
Share-based compensation expense (1,146,967) (265,694)
Interest revenue 4,563 -
Gain on sale of equipment - 21,848
Net income (loss) before tax (466,213) 977,615
Net income (Ioss) after tax (463,213) 388,615
Dividends declared 1,527,068 673,454
(1) Operating results for the year ended December 31, 2016 include Unicast operations for six months and seven days from its acquisition on June 23, 2016. Operating results for the year ended December 31, 2015 include Blaze King operations for the ten
months from its acquisition on February 27, 2015.
(2) Operating expenditures include all expenses other than amortization, interest, acquisition, ERP implementation costs, share-based compensation expense and cost of goods sold fair value adjustment. (3) “Adjusted EBITDA” is used as a profitability measure in this document. Please refer to the “Non-IFRS Measures” section of this MD&A for further discussion on these measures.
Financial Position
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Fiscal year ended: 2016 2015
Cash $ 1,447,451 $ 291,068
Working capital 5,900,931 2,939,451
Capital assets 1,699,000 963,387
Total assets 22,214,218 9,842,087
Bank debt 8,628,560 3,335,433
Equity 8,819,581 4,326,379
Common shares 6,056,495 3,750,570
Share price (1) $ 3.14 $ 3.59
Market Capitalization 19,017,394 13,464,546
Enterprise value $ 26,198,503 $ 16,508,911
(1) Closing share price on December 30, 2016 & December 31, 2015
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HEAD OFFICE 104-1420 St. Paul Street
Kelowna, BC V1Y 2E6
Phone: 250-870-9146
www.decisivedividend.com
DE LISTED ON
Contact Information
James Paterson Chief Executive Officer
David Redekop Chief Financial Officer
Terry Edwards Chief Operating Officer
Jonathan Pokhoy Manager, Finance & Integration