Decisive Dividend Corporation Announces Reinstatement of Monthly Dividend and Reports Financial Results for the Fourth Quarter and Year Ended December 31, 2020

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(TheNewswire)



Kelowna, British Columbia - TheNewswire - April 8, 2021 – Decisive Dividend Corporation (TSXV:DE) (the “Company” or “Decisive”) is pleased to announce the following with respect to the reinstatement of its monthly dividend and its financial results for the fourth quarter and year ended December 31, 2020.

 
  • - Record sales for Blaze King and Slimline’s wastewater evaporators in 2020 drove strong sequential quarterly consolidated sales growth of 33% in Q3 2020 over Q2 2020, and another 25% in Q4 2020 over Q3 2020.

    - Consolidated sales increased 4% to $14.8 million compared to $14.3 million in Q4 2020.

    - Generated $8.1 million in Adjusted EBITDA* in fiscal 2020 amid COVID-19 economic backdrop, an increase of 25% relative to fiscal 2019.

    - Balance sheet strengthened with total debt reduction of $3.8 million in 2020 and, as of the date of this release, the Company had $5.1 million in cash and there were no amounts drawn on its operating line.

    - Reinstating $0.02 per share monthly dividend, $0.24 per common share on an annualized basis, with payments to recommence in May 2021.

 

Selected Financial Highlights

 

The following are selected financial highlights of Decisive for the fourth quarter and year ended December 31, 2020. All amounts are expressed in Canadian dollars. The Company’s audited consolidated financial statements as well as its management’s discussion and analysis (“MD&A”) are posted on SEDAR and on Decisive’s website (www.decisivedividend.com).

 

(Stated in thousands of dollars, except per share amounts)

             
               
 

For the three months ended

 

For the year ended

December 31,

 

2020

   

2019

 

Change

   

2020

   

2019

 

Change

                               

Sales

$

14,815

 

$

14,265

 

4%

 

$

48,457

 

$

47,390

 

2%

Gross profit

 

4,365

   

4,889

 

-11%

   

18,422

   

17,588

 

5%

Gross profit %

 

29%

   

34%

       

38%

   

37%

   

Adjusted EBITDA*

 

1,985

   

2,199

 

-10%

   

8,061

   

6,445

 

25%

Per share basic

 

0.17

   

0.19

 

-11%

   

0.70

   

0.58

 

20%

Profit (loss) before tax

 

(11)

   

329

 

-103%

   

(161)

   

992

 

-116%

Profit (loss)

 

(27)

   

456

 

-106%

   

(736)

   

759

 

-197%

Per share basic

 

-

   

0.04

 

-100%

   

(0.06)

   

0.07

 

-186%

Per share diluted

 

n/a

   

0.04

       

n/a

   

0.07

   

Dividends declared

 

-

   

1,030

 

-100%

   

1,037

   

4,041

 

-74%

Per share basic

 

-

   

0.09

 

-100%

   

0.09

   

0.36

 

-75%

                               

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

Q4 2020 Highlights:

 
  • - Blaze King achieved record sales each month during the quarter. The result was a 37% increase in Blaze King sales relative to Q4 2019, as demand for their products has remained robust amid the COVID-19 economic backdrop.

    - Slimline, Unicast and Northside each demonstrated resilience in the quarter and sales remained relatively consistent compared to Q4 2019.

    - The Canada Emergency Wage Subsidy (“CEWS”) program was utilized to offset sales decreases at Hawk in the quarter relative to Q4 2019, by reducing cash outlays on wage related expenses. Accessing the CEWS program allowed Hawk to retain necessary employees through this period. The overall amount of CEWS received in Q4 2020 reduced compared to the previous two quarters as sales levels increased in each of the businesses.

    - Consolidated gross profit decreased by 11% relative to Q4 2019 to $4.4 million and gross profit percentages decreased to 29% from 34% in 2019. The decrease was impacted by the aggregate $1.2 million in inventory obsolescence and fair value provisions, bad debt, and other provisions incurred in Q4 2020 in the component manufacturing segment.

    - Consolidated Adjusted EBITDA* decreased to $2.0 million, down 10% relative to Q4 2019, driven by the above noted provisions incurred in the fourth quarter that impacted Adjusted EBITDA*.

    - Consolidated net profit decreased by $0.5 million compared to Q4 2019.

    - Decisive was in compliance with the covenants originally contemplated in its credit agreement throughout 2020. Although Decisive had obtained covenant relief from its lenders to ensure financial flexibility through 2020, such covenant relief was not required.

 

2020 Annual Highlights:

 
  • - Sales increased by 2% relative to 2019 to $48.5 million, which demonstrates resiliency of the Decisive Group and value of diversification model.

    - Adjusted EBITDA* increased by 25% relative to 2019 to $8.1 million.

    - Sales in the finished product segment increased by $3.5 million, or 15% relative to 2019 driven by Blaze King’s increased market share after new EPA regulations took effect in May 2020 and a significant increase in Slimline’s wastewater evaporator sales.

    - Sales for the component manufacturing segment decreased 10% as the businesses in this segment were negatively affected by COVID-19 and oil price declines. The addition of a third business to this segment in Q3 2019, Northside, has helped mitigate the decrease.

    - CEWS program has offset sales decreases that have occurred through the last three quarters by reducing cash outlays on wage related expenses incurred to retain necessary employees.

    - Consolidated gross profit increased by 5% relative to 2019 to $18.4 million and gross profit percentages increased to 38% from 37% in 2019.

    - Consolidated net loss of $0.7 million, or $0.06 per share, in 2020. This 2020 loss included a $1.4 million non-cash impairment loss recorded against Hawk’s goodwill. Absent this non-cash impairment loss, consolidated net profit would be $0.7 million, or $0.06 per share, which is consistent with the $0.8 million, or $0.07 per share, in consolidated net profit in 2019.

    - Total debt reduced by $3.8 million in 2020 and, as of the end of the year, the Company had $3.0 million in cash and there were no amounts drawn on its operating line.

  

James Paterson, Chief Executive Officer of Decisive, noted:

 

“2020 was a remarkable year and I am very proud of how the management and staff at each of our businesses responded to the challenges posed by the pandemic. Our leadership teams have shown compassion and commitment to their businesses, their customers, and their employees, all while vigilantly following the recommendations of the applicable health authorities to prevent the spread of COVID-19. Despite the challenges faced, each of the businesses demonstrated resiliency in their operations, and as a group demonstrated the strength of Decisive’s diversification model.

 

Our philosophy coming out of the first quarter was to operate with an abundance of caution. To date this has served Decisive well, as all of our subsidiaries have remained operational, and the Company has strengthened its balance sheet. The financial strength gained through 2020 and 2021 could be applied to paying down debt further or toward a number of other strategic priorities, including potential acquisitions.

 

I am quite pleased with Decisive’s 2020 results, especially considering the economic backdrop under which they were achieved. Operating results for both Blaze King and Slimline were particularly strong throughout the year. Blaze King’s increased market share and exceptional 2020 operating results have validated the substantial investments made in that business over the last number of years and propelled it to the forefront of its industry. Growth in sales of Slimline’s wastewater evaporators this year has demonstrated the long-term growth potential for that product line as well. This positive momentum has continued into 2021 for these businesses and we are optimistic that it will continue for the foreseeable future. Unicast, Northside, and Hawk also proved their resiliency through this challenging economic period and the outlook for these businesses are all improving to varying degrees as underlying commodity and other economic indicators continue to improve.  

 

Dividend Reinstatement

 

As noted above, the directors of the Company have determined to reinstate a monthly dividend and have declared a dividend of $0.02 per common share for the month of May 2021. The dividend is payable on May 14, 2021 to the shareholders of record at the close of business on April 30, 2021.

 

The directors of the Company made the decision to reinstate monthly dividend payments based on their assessment of Decisive’s improving prospects. However, the directors of the Company have determined to remain cautious given the prevailing economic uncertainty and have reinstated a $0.02 per common share monthly dividend ($0.24 per common share on an annualized basis).

 

Eligible shareholders have the opportunity to reinvest dividends in accordance with the Corporation’s dividend reinvestment and cash purchase plan (the “DRIP”). Additional details are available under the investors section of the Corporation’s website www.decisivedividend.com. This dividend is designated as an “eligible” dividend under the Income Tax Act (Canada) and any corresponding provincial legislation (“Tax Legislation”).

 

James Paterson, Chief Executive Officer of Decisive, noted:

 

“I am very pleased with the reinstatement of the monthly dividend. Dividend is in our name and to be in a position to reinstate it speaks to the current momentum and outlook for our operations. Given there remains economic uncertainty in 2021, we will continue to manage ourselves with an abundance of caution. As a result, we have recommenced monthly dividend payments at $0.02 per share and intend to revisit the amount in the second half of the year with the aim of returning it to pre-pandemic levels.

  

Outlook

 

A key aspect of Decisive’s business model is diversification. The operations of the Company’s operating subsidiaries are diversified in terms of the industries, customers, and geographies they serve. The value of this diversification was demonstrated in 2020, as robust demand for both Blaze King and Slimline products more than offset the COVID-19 and oil price challenges that reduced demand for Hawk, Northside, and Unicast. Amidst the COVID-19 and low oil price economic backdrop, Decisive generated higher Adjusted EBITDA in 2020 than in 2019, despite the numerous challenges facing the Group. The positive momentum from the second half of 2020 has carried into 2021 as well, and each of the businesses in the Group have a stronger outlook than they did a year ago. Further commentary surrounding the outlook for each of the businesses in the Group is provided in the MD&A under the headings “Finished Product Segment Industry Trends and Outlook” and “Component Manufacturing Segment Industry Trends and Outlook”.

 

Decisive has been and continues to consult with the senior executives of its operating subsidiaries on a regular basis with a view to safeguarding its business, its workforce, and its customers. Decisive expects that certain of its subsidiaries will continue to experience some level of negative effect on their supply chains, customer demand, or both, in the near-term. Given the continuing uncertainty surrounding the overall economy, the timing of recoveries in certain sectors, the efficacy of COVID-19 vaccines, and the potential impact or severity of COVID-19 variants, Decisive intends to continue to manage itself with an abundance of caution as the world emerges from one of the most challenging business environments in history.

 

Since the onset of the worldwide COVID-19 pandemic and the resultant decrease in oil prices, Decisive has focused on preserving liquidity and financial strength to manage through the unpredictable global downturn and deal with unforeseen issues that could arise. In 2020, Decisive reduced its overall debt by $3.8 million in 2020 and currently has no amounts drawn on its operating line. Decisive also preserved cash and as of the reporting date had $5.1 million in cash on hand. To the extent that the current economic uncertainty continues to subside, any financial strength gained through 2020 and 2021 could be put toward paying down debt further, toward a future acquisition, toward capital expenditures in our existing businesses, toward share purchases under the normal course issuer bid, or a combination thereof.

 

Management remains confident in its long-term strategic and operational plans. The Company’s senior leadership is encouraged about the long-term business prospects of each of its subsidiaries and believes that the Group is well positioned for future growth. As one of Decisive's objectives is to pay a regular dividend to its shareholders over the long term, Decisive has determined to reinstate the monthly dividend effective May 2021. As noted above, Decisive intends to continue to manage itself cautiously and has reinstated a $0.02 per share monthly dividend. Should the recent positive momentum in its operations continue and not be hindered by the pandemic or unforeseen economic headwinds, Decisive expects it will be in a position to consider returning the dividend to pre-pandemic levels at some point in the second half of the year.

 

Management is also confident that its disciplined acquisition approach is the best path to generating shareholder value in the long term. Decisive continues to identify and evaluate potential acquisitions which, if completed, will bolster its diversity and add strength and resilience to operations. However, there can be no assurance that target companies identified from time to time will meet Decisive’s acquisition criteria or that Decisive will successfully acquire identified target companies that meet such criteria. In addition, given the significant impact that COVID-19 has had on financial markets and the global economy, capital availability may be constrained in the near-term. Management believes that preserving financial strength and flexibility during this last year has the Company well positioned to take advantage of potential opportunities as they arise.

   

About Decisive Dividend Corporation

 

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

       

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

 

FOR FURTHER INFORMATION PLEASE CONTACT:

 

Rick Torriero, Chief Financial Officer

#201, 1674 Bertram Street

Kelowna, BC V1Y 9G4

Telephone: (250) 870-9146

 

Cautionary Statements

 

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

 

Forward-Looking Statements

Certain statements contained in this press release constitute forward-looking information. These statements relate to future events or future performance. The use of any of the words “could”, “intend”, “expect”, “believe”, “will”, “projected”, “estimated” and similar expressions and statements relating to matters that are not historical facts are intended to identify forward-looking information and are based on management’s current beliefs, assumptions and expectations as to the outcome and timing of such future events.  Actual future results may differ materially. In particular, this press release contains forward-looking information relating to the future prospects of the Company and its operating subsidiaries, the Company's long-term strategic and operational plans, potential future acquisitions, potential future debt repayments, potential future capital expenditures, potential future share purchases under the normal course issuer bid, the consideration of a possible increase in the Company's monthly dividend in the second half of 2021, as well as forward-looking information relating to the impact of the ongoing COVID-19 pandemic and the price of oil on the operations and financial results of the Company and its subsidiaries and the availability of capital. Risk factors that could cause actual results or outcomes to differ materially from the results expressed or implied by forward-looking information include, among other things: general economic conditions; pandemic; competition; government regulation; environmental regulation; access to capital; market trends and innovation; climate risk; general uninsured losses; risk related to acquisitions; dependence on customers, distributors and strategic relationships; supply and cost of raw materials and purchased parts; operational performance and growth; implementation of the growth strategy; product liability and warrant claims; litigation; reliance on technology and intellectual property risks; availability of future financing; interest rates and debt financing; income tax matters; foreign exchange; dividends; trading volatility of common shares; dilution risk; reliance on management and key personnel; employee and labour relations; and conflicts of interest, all as more particularly described in the most recent annual MD&A of the Company available on the Company’s profile at www.sedar.com. There can be no assurance as to the future financial performance of the Company or that the board of directors of the Company will declare a dividend or reinstate a regular dividend policy in the future. The Company cautions the reader that the risk factors referenced above are not exhaustive. The forward-looking information contained in this release is made as of the date hereof and the Company is not obligated to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by applicable securities laws. Because of the risks, uncertainties and assumptions contained herein, investors should not place undue reliance on forward-looking information. The foregoing statements expressly qualify any forward-looking information contained herein.

 

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