Decisive Dividend Corporation Announces the Acquisition of Marketing Impact Limited

(TheNewswire)

April 18, 2022 - TheNewswire - Kelowna, British Columbia - Decisive Dividend Corporation (TSXV:DE) (the “Corporation” or “Decisive”) is pleased to announce the acquisition of Marketing Impact Limited (the “Acquisition”). The Acquisition is fully funded and is expected to be immediately accretive as it represents a 19% increase relative to the Corporation’s 2021 reported sales and Adjusted EBITDA(1). This Acquisition is the first completed by Decisive since 2019. Thus, it is an important milestone in executing on Decisive’s buy, build and hold business model, supporting growth and yield for the Corporation’s investors.

Marketing Impact Limited (“MIL”), located in the Greater Toronto Area, designs, manufactures, and distributes a comprehensive range of merchandising products, systems and solutions for retail customers including grocery stores, convenience stores, and pharmacies. It also designs and manufactures displays for consumer-packaged goods for use within those same channels.

MIL has a strong reputation for customer service, responsiveness, and innovation amongst its robust list of blue-chip, well-diversified retail customers across North America. Its design team is a leading innovator of merchandising systems and consumer-packaged goods displays which is evidenced by the more than 15 patents issued or pending in MIL’s portfolio.

MIL’s founders will remain on as President and Vice President respectively for one-year post-acquisition. Opportunities for ongoing involvement of the founders beyond the initial period are in place which will continue to help drive the future growth of MIL. MIL has a dedicated and experienced management team that will continue to report into the founders, led by Alex Viloria, MIL’s General Manager, who has extensive experience in the consumer-packaged goods industry across operations, sales and marketing and administrative functions.

The Acquisition is anticipated to be immediately financially accretive to Decisive and it is expected to result in an increase in sales, gross profit, profit, and Adjusted EBITDA(1). The Acquisition is subject to the terms and conditions of a share purchase agreement which provided for a base purchase price of $10.0 million, subject to customary adjustments, plus up to an additional $1.5 million contingent on MIL achieving certain earnings targets over the next three years. The base purchase price reflects the historical earnings of MIL and represents a multiple of approximately five times the average Adjusted EBITDA of MIL over the last five years.  

On closing, the $10.0 million base purchase price (subject to adjustment) was paid $9.0 million in cash (the “Cash Consideration”) and $1.0 million in common shares of Decisive (the “Share Consideration”). The Cash Consideration was funded through Decisive’s revolving acquisition and operating facilities. The Share Consideration was funded through the issuance of 235,294 common shares of Decisive (representing $1.0 million divided by $4.25, being the volume weighted average trading price of the common shares of Decisive for the 30-day trading period ended April 13, 2022).

Jeff Schellenberg, Chief Executive Officer of Decisive, noted:

“We are very pleased to be adding MIL into our group of companies which provides Decisive with further product, industry, and geographic diversity. They design and produce great products to service a wide range of top tier customers that are in non-cyclical industries selling non-discretionary products. These traits support recurring cash flows and, as a result, are extremely attractive to us and an excellent match for our dividend-paying business model. In addition, MIL has tremendous growth potential, and we look forward to supporting MIL and its leadership team in pursuit of this growth as part of our buy, build and hold strategy. The Marketing Impact team has done a terrific job in building the business to where it is today, and we welcome them to the Decisive group.”

Rick Torriero, Chief Financial Officer of Decisive, noted:

“Funding the acquisition within our credit facility was also a great outcome as it allowed us to move quickly on this opportunity. We can now look forward to balancing our long-term target 50/50 debt and equity ratio post acquisition as we work to integrate MIL into the Decisive group.”    

Alex Viloria and the founders of MIL noted:

“We are thrilled to join the Decisive Dividend family. Our customers, suppliers and especially our employees have helped to build MIL into the successful company it is today. We look forward to the continued growth of MIL with Decisive’ s support.”

The table below sets forth the pro forma combined financial information of Decisive and the acquisition of MIL for the trailing twelve-month period ended December 31, 2021:

1. Adjusted EBITDA is not a recognized financial 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 Corporation. See ”Non-GAAP Financial Measures” later in this press release for the full description of Adjusted EBITDA and a reconciliation of applicable IFRS measures to non-IFRS measures 

2. Based on Decisive’s audited financial information for the year ended December 31, 2021. 

3. Based on MIL’s unaudited financial information for the period from January 1, 2021 to December 31, 2021. See “Information Relating to MIL” later in this press release 

Decisive is continuing to evaluate further acquisition opportunities in its healthy, and growing, pipeline of potential targets and looks forward to providing updates to its shareholders as a result of these efforts.

Concurrent with the closing of the Acquisition, the Corporation also granted stock options to purchase an aggregate of 5,000 common shares of the Corporation at an exercise price of $4.50 per common share for a period of ten years from the date of grant. The stock options will vest over a thirty-six (36) month period, with one-third vesting twelve (12) months from the date of grant, one-third vesting twenty-four (24) months from the date of grant and the remaining one-third vesting thirty-six (36) months from the date of grant.

About Decisive Dividend Corporation

Decisive Dividend Corporation is an acquisition-oriented company, focused on opportunities in manufacturing. The Corporation’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 Corporation 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 Corporation press releases, please visit www.decisivedividend.com.

FOR FURTHER INFORMATION PLEASE CONTACT:

Jeff Schellenberg, Chief Executive 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.

Information Relating to MIL

This press release contains certain information (including historical financial information) relating to MIL, a private company acquired by Decisive. The information (including financial information) contained herein with respect to MIL is based upon information provided to Decisive by MIL and its management and shareholders and includes certain non-recurring and related party private company transactions that have been excluded from the calculation of Adjusted EBITDA below. The financial information relating to MIL has not been audited.

Non-GAAP Financial Measures

In this press release, reference is made to “Adjusted EBITDA”, which is not a recognized financial measure under IFRS, but is believed to be meaningful in the assessment of the Corporation’s performance.

“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 Corporation’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. While Adjusted EBITDA is used by management to assess the historical financial performance of the Corporation, readers are cautioned that:

• Non-IFRS financial measures, such as Adjusted EBITDA, are not recognized financial measures under IFRS 

• The Corporation’s method of calculating Non-IFRS financial measures, such as Adjusted EBITDA, 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, such as Adjusted EBITDA, should not be viewed as an alternative to measures that are recognized under IFRS such as profit or loss or cash from 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 measures.

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 financial position, operations, business strategy, plans and objectives of the Corporation, and the potential impact, including growth expectations, of the Acquisition on the operations, financial condition, capital resources, business and dividend policy of the Corporation. 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: risks relating to the Acquisition (as more particularly described under the heading "Risk Factors – Risk Relating to Acquisitions" in the Corporation's most recent annual information form), as well as general economic conditions; pandemics; competition; government regulation; environmental regulation; access to capital; market trends and innovation; climate risk; general uninsured losses; risk related to acquisitions generally; 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; 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 and annual information form of the Corporation available on the Corporation’s profile at www.sedar.com. There can be no assurance as to the future financial performance of the Corporation or that the board of directors of the Corporation 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 Corporation 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 Corporation 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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