Decisive Dividend Corporation Reports Financial Results for the Three and Nine Months Ended September 30, 2024

KELOWNA, BC, Nov. 5, 2024 /CNW/ - Decisive Dividend Corporation (TSXV: DE) (the "Company" or "Decisive") today reported its financial results for the three and nine months ended September 30, 2024.

Q3 2024 operating performance was sequentially stronger than both Q2 2024 and Q1 2024, driven by several third quarter operational wins, cost control initiatives, and improved performance from Decisive's diversified portfolio of manufacturing businesses, combined with a move into stronger seasonal periods. Consolidated sales in Q3 2024 were 12% higher than in Q2 2024 and 10% higher than in Q1 2024, while overall Adjusted EBITDA* in Q3 2024 was 65% higher than in Q2 2024 and 42% higher than in Q1 2024. 

Recent Operating Highlights

Decisive and its subsidiaries have been undertaking significant efforts to drive revenue and enhance operational activities, leading to several positive developments which are expected to generate continued sequential improvement in results in Q4 2024 and also bolster results into 2025 as follows:

• Blaze King positioned for a potential competitive advantage in Q4 2024 and beyond, after having proactively renewed its compliance certificates under new EPA testing methodologies. Blaze King now has the top three most efficient wood stoves as listed by the EPA.
• ACR and Blaze King received regulatory approval for its new product design that incorporates Blaze King's combustion technology styled and sized for the United Kingdom and European markets, paving the way for final design and launch of the product in the United Kingdom in 2025.
• Slimline is experiencing improved order activity of its agricultural sprayers and has secured confirmed orders for its larger scale wastewater evaporator for delivery in Q4 2024 and early 2025, with improvements in product quality and performance positioning Slimline for improved performance in 2025.
• Marketing Impact order volumes and operational productivity have experienced steady improvement since Q1 2024, which should continue to positively affect results into 2025 on the back of capacity enhancement and enhanced distribution capabilities.
• Capital I secured a significant purchase order for delivery in Q4 2024 from a long-standing customer, as well as additional significant confirmed orders from this customer on a joint award with Unicast and Hawk for the first half of 2025.
• IHT order activity has increased, which is expected to positively impact Q4 2024 performance. Current optimism of improving pork futures and lowering feed costs, should positively impact demand into 2025 as well.
• Unicast orders in recent months have surpassed the same period in 2023, including those from the joint award with Capital I and Hawk, which is expected to enhance Unicast results in Q4 2024 and early 2025.
• Hawk secured significant confirmed orders on a joint award with Unicast and Capital I for an oil and gas customer that will positively impact results through the first half of 2025.
• Sales under Northside's contract with a new commercial vehicle customer are expected to commence in the coming weeks.
• Following its acquisition in April 2024, Techbelt's positive momentum has continued with sales ahead of pre-acquisition levels.
• Cost control initiatives have been undertaken across the business, ranging from workforce optimization to reductions or deferrals of both operating and capital expenditures.

Jeff Schellenberg, Chief Executive Officer of Decisive, noted:

"We believe that with the steps taken by our subsidiaries to drive sales of their products and enhance their operational efficiency, combined with the steps being taken by central banks to ease interest rates and make monetary policy less restrictive, we have experienced an inflection point in our business in Q3 2024 coming out of what was an extremely challenging first half of the year for our businesses. The operational efficiency enhancements made by our subsidiaries through 2024 positions our subsidiaries to experience the benefit of operating leverage in their businesses as demand firms, which is positive for the profitability of Decisive heading into Q4 2024 and 2025. 

Based on the opportunities we currently see in the business, we believe we are positioned to see continued sequential improvement in our results in Q4 2024, moving us back towards improving per share financial metrics, which is the standard of performance for the business. The outcome of improving per share financial metrics will be the enhancement of our availability and cost of capital which help support organic growth initiatives and execution around the strong flow of acquisition opportunities we continue to see. 

These factors, along with the diversified nature of the portfolio of businesses we own, the differentiated products these businesses produce, the size of the addressable markets these products are sold into, and the decisions and investments being made by our leadership to build teams, strategies and processes that support these longer term growth objectives give us confidence in Decisive's business model and the potential for long-term growth within it."

Selected Financial Information:

The following is selected financial information of Decisive for the three and nine months ended September 30, 2024. 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+ at www.sedarplus.ca and on Decisive's website (www.decisivedividend.com).

(Stated in thousands of dollars, except per share amounts)
	For the three months ended								For the nine months ended
September 30,		2024			2023		Change			2024			2023		Change
Sales	$	32,240		$	37,654		-14 %		$	90,289		$	99,213		-9 %
Gross profit		11,999			16,346		-27 %			33,235			38,966		-15 %
Gross profit %		37 %			43 %					37 %			39 %
Adjusted EBITDA*		5,627			7,862		-28 %			13,007			18,021		-28 %
Per share basic		0.29			0.43		-33 %			0.67			1.07		-37 %
Profit		948			2,739		-65 %			139			5,907		-98 %
Per share basic		0.05			0.15		-67 %			0.01			0.35		-97 %
Free cash flow*		3,380			4,795		-30 %			6,669			10,854		-39 %
Per share basic		0.17			0.26		-35 %			0.35			0.65		-46 %
Free cash flow less maintenance capital*		3,227			4,573		-29 %			6,019			9,791		-39 %
Per share basic		0.17			0.25		-32 %			0.31			0.58		-47 %
Dividends declared		2,642			2,210		20 %			7,745			5,465		42 %
Per share basic		0.14			0.12		17 %			0.40			0.33		21 %
For the trailing twelve month period ended September 30,										2024			2023
Dividend payout ratio*										95 %			55 %

* Adjusted EBITDA, Free Cash Flow, Free Cash Flow Less Maintenance Capital, and Dividend Payout Ratio are not recognized financial measures under International Financial Reporting Standards (IFRS) and therefore may not be comparable to similar measures presented by other issuers but are used by management to assess the performance of the Company and its segments. A reader should not place undue reliance on any Non-IFRS financial measures. See "Non-IFRS Financial Measures" later in this press release for detailed descriptions of these measures and reconciliations of applicable IFRS measures to non-IFRS measures.

Q3 2024 Results:

• Consolidated sales decreased 14% to $32.2 million compared to record sales of $37.7 million in Q3 2023. The decrease was driven by lower demand backlogs, lower energy prices, reduced overall consumer spending, warmer weather, decreases in specific customer project work and general macro-economic pressures that negatively impacted the Finished Product segment in particular. Hearth product and IHT sales were however sequentially stronger relative to Q2 and Q1 2024, and Q4 2024 order levels for these businesses continue to be positive. Similarly, although Slimline and Capital I sales were comparatively lower in Q3 2024 versus Q3 2023, due to Q3 2023 project work and a $3.5 million wastewater evaporator sale in that record quarter, both businesses have experienced improved order activity in these specific areas that will positively impact Q4 2024 and early 2025 results.
• Consolidated gross profit decreased 27% to $12.0 million from $16.3 million in Q3 2023, based primarily on the decrease in sales.
• Consolidated gross profit percentages decreased to 37% from 43% in Q3 2023 driven primarily by a change in product mix and the negative impact of fixed overhead costs on lower overall sales.
• Consolidated Adjusted EBITDA* decreased to $5.6 million, down 28% relative to the record quarterly Adjusted EBITDA* in Q3 2023. 
• Consolidated net profit in the quarter was $0.9 million, or $0.05 per share, compared to the record quarterly net profit of $2.7 million, or $0.15 per share, in Q3 2023.
• Consolidated free cash flow* decreased 30% to $3.4 million relative to Q3 2023.
• Lower sales in the quarter, as described above, offset by decreases in salaries, wages and benefits and other operating expenses relative to Q3 2023, was the main driver of the decrease in Adjusted EBITDA*, net profit, and free cash flow* relative to Q3 2023.

2024 Year-to-Date Results:

• Consolidated sales decreased 9% to $90.3 million, compared to $99.2 million in the first nine months of 2023. The decrease was driven primarily by decreases in hearth product sales, Unicast sales and the impact of Slimline's $3.5 million wastewater evaporator sale in Q3 2023. The lower hearth and Unicast sales were impacted by lower demand backlogs, lower energy prices, reduced overall consumer spending, warmer weather and general macro-economic pressures. In recent months, order levels for the hearth businesses and Unicast have trended higher, which should positively impact Q4 2024 and Q1 2025. Similarly, Slimline is witnessing considerable further interest in its larger scale wastewater evaporator, based on the performance of the product since its first sale in Q3 2023.
• Consolidated gross profit decreased 15% to $33.2 million from $39.0 million in the first nine months of 2023.
• Consolidated gross profit percentages decreased to 37% from 39% in the first nine months of 2023 driven primarily by a change in product mix and the negative impact of fixed overhead costs on lower overall sales.
• Consolidated Adjusted EBITDA* decreased to $13.0 million, a decrease of 28% relative to the first nine months of 2023. 
• Consolidated net profit was $0.1 million, or $0.01 per share, a decrease of $5.8 million, or $0.34 per share compared to the first nine months of 2023.
• Consolidated free cash flow* decreased 39% to $6.7 million relative to the first nine months of 2023.
• Lower sales in the first nine months of the year, as described above, and the increase in the scale of the organization and the associated operating expenses relative to the first nine months of 2023, were the main drivers of the decrease in Adjusted EBITDA*, net profit, and free cash flow* relative to the first nine months of 2023.

Conference Call

Decisive will host a conference call for interested parties on Wednesday November 6, 2024, at 8:00am Pacific Time (11:00am Eastern Time) to discuss the Company's Q3 2024 results and outlook for the remainder of the year. The call will be hosted by Jeff Schellenberg, Decisive's Chief Executive Officer and Rick Torriero, Chief Financial Officer.

Details for those who wish to participate in this conference call are as follows:

Conference Call Details:
Wednesday November 6, 2024, at 8:00am Pacific Time / 11:00am Eastern Time
(please call 10 minutes ahead of time)

Participant Information:
To join the conference call without operator assistance, you may register and enter your phone number at https://emportal.ink/4epECyd to receive an instant automated call back.

You can also dial direct to be entered into the call by an operator:
Dial in number – North America (toll free): 1-888-510-2154
Dial in number – United Kingdom (toll free): 448002797040
Dial in number – International: [phone]

Replay Information (replay available until November 13, 2024):
Replay number – North America (toll free): 1-888-660-6345
Replay number – International: [phone]
Replay access code 91407#

About Decisive Dividend Corporation

Decisive Dividend Corporation is an acquisition-oriented company, focused on opportunities in manufacturing. The Company's purpose is to be the sought-out choice for exiting legacy-minded business owners, while supporting the long-term success of the businesses acquired, and through that, creating sustainable and growing shareholder returns. The Company uses a disciplined acquisition strategy to identify already profitable, well-established, high quality manufacturing companies that have a sustainable competitive advantage, a focus on non-discretionary products, steady cash flows, growth potential and established, strong leadership.

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

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.

Non-IFRS Financial Measures

In this press release, reference is made to "Adjusted EBITDA", "Free Cash Flow", "Growth Capital Expenditures", "Maintenance Capital Expenditures" and "Dividend Payout Ratio", which are not recognized financial measures under IFRS Accounting Standards, but are believed to be meaningful in the assessment of the Company's performance as defined below.

"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, share-based compensation, and restructuring costs, and other non-operating items such as acquisition costs.

Adjusted EBITDA is a financial performance measure that management believes is useful for investors to analyze the results of the Company's operating activities prior to consideration of how those activities are financed and the impact of non-operating charges related to planned or completed acquisitions, foreign exchange, taxation, depreciation, amortization, and impairment charges.

The most directly comparable financial measure is profit or loss. Adjusted EBITDA per share is also presented, which is calculated by dividing Adjusted EBITDA, as defined above, by the weighted average number of shares outstanding during the period.

"Free Cash Flow" is defined as cash provided by operating activities, as defined by IFRS Accounting Standards, adjusted for changes in non-cash working capital, timing considerations between current income tax expense and income taxes paid, interest payments, required principal payments on long-term debt and right of use lease liabilities, and any unusual non-operating one-time items such as acquisition and restructuring costs (as described above).

Free Cash Flow is a financial performance measure used by management to analyze the cash generated from operations before the impact of changes in working capital items or other unusual items and after giving effect to expected income taxes thereon, as well as required interest and principal payments on long-term debt and right of use lease liabilities.

The most directly comparable financial measure is cash provided by operating activities. Adjustments made to cash provided by operating activities in the calculation of Free Cash Flow include other IFRS Accounting Standards measures, including changes in non-cash working capital, current income tax expense, income taxes paid, interest paid, and principal payments on long-term debt and right of use lease liabilities.

Free Cash Flow per share is also presented, which is calculated by dividing Free Cash Flow, as defined above, by the weighted average number of shares outstanding during the period.

"Free Cash Flow Less Maintenance Capital" is defined as Free Cash Flow, as defined above, less Maintenance Capital Expenditures, as defined below. Free Cash Flow Less Maintenance Capital is a financial performance measure used by management to analyze the cash generated from operations before the impact of changes in working capital items or other unusual items and after giving effect to expected income taxes thereon, as well as required interest and principal payments on long-term debt and right of use lease liabilities, and capital expenditures required to sustain the current operations of the Company.

The Company presents Free Cash Flow Less Maintenance Capital Expenditures per share, which is calculated by dividing Free Cash Flow Less Maintenance Capital, as defined above, by the weighted average number of shares outstanding during the period.

"Growth and Maintenance Capital Expenditures" maintenance capital expenditures are defined as capital expenditures required to maintain the operations of the Group at the current level and are net of proceeds from the sale of property and equipment. Growth capital expenditures are defined as capital expenditures that are expected to generate incremental cash inflows and are not considered by management in determining the cash flows required to sustain the current operations of the Company. While there are no comparable IFRS Accounting Standards measures for Maintenance Capital Expenditures or Growth Capital Expenditures, the total of Maintenance Capital Expenditures and Growth Capital Expenditures is equivalent to the total purchases of property and equipment, net of proceeds from the sale of property and equipment, on the Company's statement of cash flows.

"Dividend Payout Ratio" the Company presents a dividend payout ratio, which is calculated by dividing dividends declared by the Company by Free Cash Flow Less Maintenance Capital, as defined above. The Dividend Payout Ratio is a financial ratio used by management to analyze the percentage of cash generated from operations, before the impact of changes in working capital items or other unusual items and after giving effect to expected income taxes thereon, as well as required interest and principal payments on long-term debt and right of use lease liabilities, and capital expenditures required to sustain the current operations of the Company, returned to shareholders as dividends. Dividend Payout Ratio is analyzed on a trailing twelve-month basis in order to reduce the impact of seasonality on the analysis. 

While the above Non-IFRS financial measures are used by management to assess the historical financial performance of the Company, readers are cautioned that:

• Non-IFRS financial measures, such as Adjusted EBITDA, Free Cash Flow, Growth Capital Expenditures, Maintenance Capital Expenditures and Dividend Payout Ratio, are not recognized financial measures under IFRS Accounting Standards;
• The Company's method of calculating Non-IFRS financial measures may differ from that of other corporations or entities and therefore may not be directly comparable to measures utilized by other corporations or entities;
• Non-IFRS financial measures should not be viewed as an alternative to measures that are recognized under IFRS such as profit or loss or cash provided by operating activities; and
• A reader should not place undue reliance on any Non-IFRS financial measures.

Set forth below are reconciliations of Non-IFRS financial measures to their most relevant IFRS Accounting Standards measures.

Adjusted EBITDA

(Stated in thousands of dollars)
	For the three months ended						For the nine months ended
September 30,		2024			2023			2024			2023
Profit for the period	$	948		$	2,739		$	139		$	5,907
Add (deduct):
Financing costs		1,529			1,076			4,200			2,713
Income tax expense		225			1,253			325			2,680
Amortization and depreciation		2,544			2,232			7,120			5,322
Acquisition and restructuring costs		186			397			880			999
Inventory fair value adjustments and write downs		4			-			7			-
Share-based compensation expense		230			283			781			637
Foreign exchange gains		(31)			(100)			(374)			(124)
Interest and other expense (income)		(5)			21			(34)			(5)
Gain on sale of equipment		(3)			(39)			(37)			(108)
Adjusted EBITDA		5,627			7,862			13,007			18,021

Free Cash Flow

(Stated in thousands of dollars)
	For the three months ended					For the nine months ended
September 30,		2024			2023			2024			2023
Cash provided by operating activities	$	8,003		$	964		$	7,789		$	7,928
Add (deduct):
Changes in non-cash working capital		(2,557)			4,883			2,184			6,169
Income taxes paid		-			1,597			2,188			2,930
Current income tax expense		(141)			(1,574)			(608)			(3,409)
Acquisition and restructuring costs		186			397			880			999
Interest paid		(1,451)			(1,045)			(4,032)			(2,592)
Lease payments		(598)			(371)			(1,556)			(1,060)
Required principal repayments on debt		(62)			(56)			(176)			(111)
Free cash flow	$	3,380		$	4,795			6,669			10,854

Free Cash Flow Less Maintenance Capital and Dividend Payout Ratio

(Stated in thousands of dollars)
For the trailing twelve month period ended September 30,								2024			2023
Cash provided by operating activities							$	15,649		$	11,244
Add (deduct):
Changes in non-cash working capital								132			6,440
Income taxes paid								3,564			2,930
Current income tax expense								(1,473)			(3,552)
Acquisition and restructuring costs								881			1,439
Interest paid								(5,090)			(3,298)
Lease payments								(1,988)			(1,383)
Required principal repayments on debt								(236)			(111)
Free cash flow								11,439			13,709
Maintenance capital expenditures								(932)			(1,277)
Free cash flow less maintenance capital								10,507			12,432
Dividends declared								10,011			6,797
Dividend payout ratio								95 %			55 %

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 "believes", "expects", "could", "will", "may", "intends", "projects", "anticipates", "plans", "estimates", "continues" and similar words or the negative and grammatical variations thereof 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, Q4 2024 and 2025 demand levels, demand from customers, the timing of product sales and/or deliveries under existing customer contracts or significant orders received from customers, potential future acquisitions, and ongoing or planned initiatives to enhance margins and increase per share financial metrics. 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: (i) operational risks, including risks 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 warranty claims; litigation; reliance on technology, intellectual property, and information systems; (ii) financial risks, including risks relating to the availability of future financing; interest rates and debt financing; income tax matters; foreign exchange; dividends; trading volatility of common shares; dilution risk; (iii) external risks, including risks relating to general economic conditions; pandemics; competition; government regulation; environmental regulation; access to capital; market trends and innovation; climate risk; general uninsured losses; and (iv) human capital risks, including 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.sedarplus.ca. There can also 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.

SOURCE Decisive Dividend Corporation

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