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DE:TSX.V
DE listed on
Investor Presentation
Winter 2019
DE:TSX.V
Investor Presentation Winter 2019 1 DE:TSX.V Forward Looking - - PowerPoint PPT Presentation
DE:TSX.V DE:TSX.V DE listed on Investor Presentation Winter 2019 1 DE:TSX.V Forward Looking Information Certain information in this presentation is forward-looking and related to anticipated financial performance, events and strategies of
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DE:TSX.V
DE listed on
Investor Presentation
Winter 2019
DE:TSX.V
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DE:TSX.V
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
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 additional 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. For a more detailed summary of risk factors which may impact actual results of the Corporation, see “Risk Factors” in Decisive’s most recent Annual Information Form and Management Discussion and Analysis, copies of which are available on Decisive’s profile on the System for Electronic Document Analysis and Retrieval at www.sedar.com. 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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In this presentation, in discussing the financial performance of the Corporation, reference is made to the measure “EBITDA” and “Adjusted EBITDA” which management of the Corporation believes are meaningful in the assessment of financial performance. “EBITDA” is defined as earnings before interest, income taxes, depreciation and amortization. “Adjusted EBITDA” is defined as earnings before interest, income taxes, depreciation, amortization, 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. These non-GAAP financial metrics are non-standard measures under GAAP (including IFRS in the case of the Corporation), and may not be identical to similarly titled measures reported by other companies. Readers are cautioned that the disclosure of these items is meant to add to, and not replace, the discussion of financial results as determined in accordance with GAAP. The primary purpose of non-GAAP financial measures is to provide supplemental information that may prove useful to investors who wish to consider the impact of certain non-cash or uncontrollable items on the Corporation’s operating performance and who wish to separate costs associated with business acquisitions that do not relate to the
the Corporation’s existing business. Readers are cautioned that the disclosure of these items is meant to add to, and not replace, the discussion of financial results as determined in accordance with GAAP. The primary purpose of non-GAAP measures is to provide supplemental information that may prove useful to investors who wish to consider the impact of certain non-cash or uncontrollable items on the Corporation’s operating performance and who wish to separate costs associated with business acquisitions that do not relate to the ongoing performance of the Corporation’s existing business. In calculating Adjusted EBITDA, certain items are excluded from net income or loss including interest, taxes, amortization and non-cash share-based
associated with using this non-GAAP financial measure as compared to profit or loss:
the amount of funds otherwise available for use. However, management of the Corporation does not consider the amount of income tax expense to be a representative component of the day-to- day operating performance of the businesses of its Subsidiaries.
a necessary expense as part of closing of acquisitions, however, management of the Corporation does not consider the amount of acquisition costs incurred in a particular financial period to be a representative component of the day-to-day operating performance of the business or of its Subsidiaries’ but part of the net investment in the acquired company.
business acquisition.
employees and consultants. However, share-based compensation is excluded from the Corporation’s operating expenses because the decisions which gave rise to these expenses were not made to increase revenue in a particular period, but were made for the Corporation’s long-term benefit over multiple periods. While strategic decisions, such as those to issue share-based awards are made to further the Corporation’s long-term strategic objectives and do impact the Corporation’s earnings under IFRS, these items affect multiple periods and management is not able to change or affect these items within any particular period. While EBITDA and Adjusted EBITDA are used by management of the Corporation to assess the historical financial performance of Corporation, readers are cautioned that:
corporations or entities and therefore may not be directly comparable to measures utilized by them;
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We raise capital from investors to buy companies that create value for our shareholders. We look for established manufacturing companies with strong predictable cash flow to provide
growing monthly dividends.
We are interested in North American based companies that have an enterprise value
Decisive was established to acquire a growing stable of successful companies for the long term that will provide steady and growing dividend payments to our shareholders.
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Share price $4.20 52-week range $3.28 - $4.49 Total shares outstanding 11.03M basic 0.24M warrants (weighted average exercise price - $4.00) 0.79M options (weighted average exercise price - $3.60) 12.06M fully diluted Market capitalization $46.9M Debt $13.2M Monthly dividend per share $0.03 Annualized dividends per share $0.36 Annualized yield 8.6% Ownership 18% Directors and/or Insiders
Decisive Dividend DE:TSX.V Listing
February 4, 2019
20000 40000 60000 80000 100000 120000 140000 3.2 3.4 3.6 3.8 4 4.2 4.4 4.6
Auditors PricewaterhouseCoopers LLP Legal Counsel MLT Aikins LLP Transfer Agent Computershare Banker Scotiabank
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Chief Executive Officer
Board and CEO since 2012
Solicitor with Pushor Mitchell LLP , the largest law firm outside the lower mainland in BC, since 2003
restructurings and corporate finance
Chief Corporate Development Officer
leadership experience with public companies, including high-tech, transportation and mining
Chief Operating Officer
in senior leadership roles
(2005 – 2017)
included VP , Southern Ontario and VP , Surrey / Fraser Valley, BC
Chief Financial Officer
in finance, accounting and taxation
positions at Savanna Energy Services Corp. TSX- SVY (2004 – 2018)
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Board of Directors Principal Occupation Committees James Paterson (Chair) See Management Team bio David Redekop See Management Team bio Terry Edwards See Management Team bio Risk Bruce Campbell President and Portfolio Manager of StoneCastle Investment Management, an investment fund manager Audit, Governance & Compensation Michael Conway President & Co-Founder, SightQuest Technology Inc., and formerly the President & CEO, Finance Executives International, a senior financial executives association Audit (Chair) Peter Jeffrey President of PD&J Associates, a consulting business, since February 2013 and previously President of Whitewater Composites Ltd./Formashape and President and CEO of Avcorp Industries Inc. Risk (Chair) Robert Louie Proprietor of Indigenous World Winery since 2016 and Chief of the Westbank First Nation, a self-governing First Nation, from 2002 to 2016. Audit Warren Matheos Senior Business Development Manager – Western Canada at Temple Lifestyle Ltd., a brand developing company Governance & Compensation Tim Pirie President of Prospect Energy Services Ltd. Tim is also the Founder and Director of a privately held engineering / construction company currently working on E&P projects in the Middle East and a Founder of Petro Toro Inc., a Peruvian focused Oil & Gas Exploration Company Governance & Compensation (Chair), Risk, Lead Director
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(max. 90% of the purchase price is paid in cash)
(min. 10% of the purchase price is paid in Decisive shares)
(Employee Share Purchase Plan)
Growing diversified portfolio of companies Monthly dividend policy
Growth opportunities
future acquisitions – strategic fit DE:TSX.V
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sustained EBITDA
►Minimum 10 years profitable operations, with an enterprise value of up to $25M ►Specialty manufacturing (sustainable competitive advantage) ►Focus on non-discretionary products ►Cash flow positive with growth potential Portfolio Company Qualities
►Acquire 100% ownership ►Purchase consideration includes min. 10% Decisive shares, remainder cash ►Long-term leverage target of 50% debt / 50% equity ►Operations based in North America Portfolio Company Criteria
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0.0x 1.0x 2.0x 3.0x 4.0x 5.0x 6.0x
Blaze King Unicast Slimline Hawk Machine
EV/EBITDA Multiple
Acquired Company Industry Acquisition Price Acquisition EV/EBITDA Multiple Full Time Employees Blaze King manufactures a variety of wood burning hearth products 6.9M 5.1x 81 Unicast designs and distributes quality cast replacement wear parts 9.7M 4.9x 18 Slimline designs, manufactures and markets agricultural sprayers and evaporation systems 7.0M 3.5x 33 Hawk Machine third-party producer of downhole tools for the oil and gas industry, and ground rod products for the power utility industry 12.3M 2.5x 92
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FY Cumulative Annual Yield FY15 $0.18 $0.18 4.9% FY16 $0.30 $0.48 9.4% FY17 $0.35 $0.83 8.3% FY18 $0.36 $1.19 9.3%
Dividends Paid Per Share Monthly Dividend
$0.020 $0.025 $0.030
$0.010 $0.015 $0.020 $0.025 $0.030 $0.035
6-2015 8-2015 10-2015 12-2015 2-2016 4-2016 6-2016 8-2016 10-2016 12-2016 2-2017 4-2017 6-2017 8-2017 10-2017 12-2017 2-2018 4-2018 6-2018 8-2018 10-2018 12-2018 2-2019
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Decisive shares commence trading on TSX Venture Exchange as a Capital Pool Company Blaze King Acquired Monthly Dividend Policy implemented - $0.02 per share $0.24 per share annualized 2013 September 2015 February 2015 June Monthly dividend increased 25% - $0.025 per share $0.30 per share annualized Unicast Inc. acquired Monthly dividend increased 20% - $0.03 per share $0.36 per share annualized 2015 September 2016 June 2017 March Slimline Manufacturing acquired Hawk Machine Works acquired Raised $14.95M raised at $4 per share 2018 May 2018 June 2018 July
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the U.S., however business remains intact and working to mitigate
for the current market and minimal EBITDA contraction expected
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Blaze King manufactures a variety of wood burning hearth products. As listed by the EPA, Blaze King has four of the top ten most efficient and cleanest wood stoves in North America
Washington
Profile
Key employees
Transaction
vendors
1,004,250 shares at $2
Financing:
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Unicast designs and distributes quality cast replacement wear parts for the cement, mining, aggregate, and coal industries worldwide
Transaction
vendors
1,659,114 shares at $3
debt issue
Financing:
Convertible Modular Valve Titanium Carbide Hammers Ceramic lined pipe Blow Bar
Profile
Engineering
Key employees
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Slimline designs, manufactures and markets agricultural sprayers and evaporation systems for sale and distribution in North America and worldwide
Transaction
$3.88 to the vendors
Financing:
SL130 Land-based Evaporator Sprayer with grape attachment Heavy Duty Sprayer
Profile
Key employees
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Hawk Machine is a third-party producer of downhole tools for the oil and gas industry, and ground rod products for the power utility industry.
Transaction
vendors;
raise 3,737,500 shares at $4
Financing:
Ground rod Downhole tool threading Ground rod threading Downhole tool
Profile
Key employees
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The table below sets forth the financial results for Decisive for the periods as described below:
Nine months Year ended Year ended Year ended Period ended: ended 2018 2017 2016 2015 Revenue (1) $ 24,379,272 $ 23,450,824 $ 17,512,709 $ 13,301,335 Gross margin 9,442,715 10,164,269 7,657,298 5,571,375 Expenses (8,376,659) (9,590,432) (8,123,511) (4,593,760) Profit before taxes 1,066,056 573,837 (466,213) 977,615 Add (deduct): Interest expense/financing costs (1,108) 1,029,450 401,786 197,592 Amortization 1,033,534 975,700 790,595 245,723 EBITDA 2,098,482 2,578,987 726,168 1,420,930 EBITDA % Add (deduct): Acquisition costs 8.6% 470,866 11.0%
381,296 10.7% 176,527 Fair value inventory adjustment 336,000 835,486 460,082
458,810 412,334 1,146,967 265,694 Gain on sale ofequipment
Adjusted EBITDA (2) $ 3,364,158 $ 3,824,666 $ 2,714,513 $ 1,841,303
1) Revenue for the year ended 2015 includes 10 months of operations
the year ended 2017 includes a full year of operations for both Unicast and Blaze King. Revenue for the nine months ended September 30, 2018 includes a full nine months of Unicast and Blaze King, four months of Slimline, and three months of Hawk Machine Works. 2) Adjusted EBITDA is used as a profitability measure in this document. Please refer to the “Non-GAAP Financial Measures” section of this document for further discussion on these measures.
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Growing monthly dividend backed by solid free cash flow
Diversification among portfolio companies, with attractive purchase multiples (average EV/EBITDA purchase multiple 3.6x) due to fragmented market ripe for consolidation
years of leadership experience
the day to day operations
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#201-1674 Bertram Street Kelowna, BC V1Y 9G4 Canada
Contact:
250-870-9146 dave@decisivedividend.com David Redekop, CCDO