Decisive Dividend Corporation Reports Financial Results for the Three and Six Months Ended June 30, 2018

August 17, 2018 at 17:32 PM EDT

Tickers: XTSX:DE, XTSX:DE.P
Tags: Finance

August 17, 2018 / ThewNewswire / Kelowna, British Columbia: Decisive Dividend Corporation (TSX-V: DE) (the "Corporation") reported its financial results for the three and six-month periods-ended June 30, 2018. All amounts are in Canadian currency. The results have been posted on SEDAR and on our website.

CEO Commentary:

James Paterson, Chief Executive Officer of Decisive, said:

"We are pleased with our results for the second quarter of 2018. Unicast has been experiencing supply chain challenges, but now is expected to complete the rest of the year on budget; Blaze King continues to beat our expectations and is trending to have a record year; and we are extremely excited about adding Slimline Manufacturing and Hawk Machine Works to the group during the quarter and look forward to integrating them into the Decisive group of companies."

Q2 2018 Financial and Operating highlights:

Completion of $6 million financing with a Canadian financial institution, that allowed for the completion of the purchase of Slimline Manufacturing Ltd. on May 30, 2018.

Completion of the best efforts public offering of common shares, that allowed for the completion of the purchase of Hawk Machine Works Ltd. on June 28, 2018. The maximum amount plus the over-allotment option was raised, bringing the total to $14.95 million. The final closing of the offering occurred on July 19, 2018.

Revenues for the second quarter were $5.3m, up 8.1% over Q2-2017;

Revenues for the six months ended June 30, 2018 were $10.8m, up 8.1% over the six months ended June 30, 2017 revenue of $10.0m.

Adjusted EBITDA* for the quarter, as defined in the Q2 MD&A, was $463,076, as compared to Q2-2017 adjusted EBITDA of $587,987.

Adjusted EBITDA* for the six months ended June 30, 2018 was $803,018 compared to $1,186,000 for the six months ended June 30, 2017.

The loss for the quarter was $261,595, or $0.04 per share, as compared to a loss for the quarter Q2-2017 of $64,300, or $0.01 per share. The loss was primarily driven to acquisition-related and financing costs expensed in profit or loss for the period totalling $324,433.

The profit for the six months ended June 30, 2018 was $11,014, or $0.00 per share, compared to a loss of $249,300, or $0.04 per share for the six months ended June 30, 2017.

* - Adjusted EBITDA is defined as earnings before interest, income taxes, depreciation, amortization, one-time acquisition costs, and non-cash items such as stock compensation expense and IFRS fair value adjustments. 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 Corporation and its segments. See the MD&A for a reconciliation of applicable IFRS measures to non-IFRS measures.

Review of Results - Blaze King

During the six-month period ended June 30, 2018, Blaze King recorded revenues of $6,180,128 (2017 - $5,645,995). The 9.5% increase in sales over the same period in the prior year is a continuation of the sales strength seen in the fourth quarter of 2017. Gross margin is largely consistent with the prior period as the Company has offset price increases in raw materials with increased sales prices.

Blaze King's business is highly seasonal, with the first and second quarters being traditionally the weakest of the year. Traditionally, Blaze King has experienced between 35% - 40% of its sales in the first two quarters of the year, and 60% - 65% of its sales in the last two quarters of the year. Blaze King has substantial fixed costs that do not meaningfully fluctuate with product demand in the short-term. This pattern is expected to continue through 2018.

Management of Blaze King believes that the Blaze King brand has significant opportunities for growth in both the wood and gas stove sectors of the hearth products industry. Blaze King's distribution network in eastern Canada and the northeastern United States is now established and it is anticipated by management that this will lead to Blaze King increasing its share of the wood stove market in these areas. There are also market opportunities for Blaze King's products in Europe, New Zealand and Australia.

Review of Results - Unicast

In the six-month period ended June 30, 2018, Unicast recorded sales revenue of $3,998,242 ($4,314,716 in 2017) and had costs of manufacturing of $1,947,665 ($2,225,316 in 2017), which resulted in a gross margin of $2,050,577, or 51.3% ($2,089,400 or 48.4% in 2017).

The market for Unicast's wear parts continues to be buoyant as the economy continues to grow in the United States, Canada, and other markets that Unicast serves. Increased infrastructure spending has caused continued upward demand on the cement industry. Unicast is also seeing increasing demand from non-traditional markets such as the Middle East and Latin America. Unicast management is currently reviewing the impact of the new US tariffs on aluminum and steel imports. Initial work performed by management indicates that their current products manufactured in China and sold to their customers in the US will be subject to the 25% tariff. Unicast management anticipates that the cost of this tariff, along with the increased cost seen on the supply side for raw materials, will be largely passed onto customers in a price increase.

Review of Results - Slimline and Hawk

As noted above, the Slimline transaction was completed on May 30, 2018, and accordingly, only one month of financial results have been included in the six-month period ended June 30, 2018. The Hawk transaction was completed on the third last day of the quarter, and accordingly, Hawk has not meaningfully contributed to the results for the period ended June 30, 2018.

Slimline has two primary product lines: agricultural sprayers and industrial evaporators: new management will be looking to serve the existing base in the Pacific Northwest but is also focused on aggressive expansion through a number of markets in North America and a focus on large grower operations. There are great opportunities in tree nut farms, wineries, stone fruits and citrus fruits. The industrial evaporator market is currently in its infancy, and we are looking to partner with other service providers to deliver comprehensive remediation solutions to the oil and gas and mining industries.

Hawk management will be focusing on meeting the needs and exceeding the expectations of the current customer base as well as diversifying the Company's overall risk profile. North American exploration and production companies have been able to reduce their cost structures in response to lower oil and natural gas prices and have also utilized technologies to increase efficiency and improve well performance. This trend towards more complex wells has resulted in selling more sleeves per well on average, which increases the revenue opportunity per well completion.

Outlook

"As I have noted previously, we maintain a long-term perspective when looking at our businesses," stated Mr. Paterson. "And as I look to the future, I am very optimistic that our companies are on track with our expectations, managing identified risks and our operations are well-positioned to provide continued, sustainable growth going forward. We have continued to execute on our acquisition strategy and are extremely excited about adding Slimline and Hawk to the group, each of which is expected to grow our customer base, expanded product offerings to our existing customers and diversified our overall business risk profile."

Management believes that the Corporation is positioned for future growth and is continually looking for further acquisitions to bolster diversity, which adds strength and resilience to operations. The Corporation closed the Slimline Manufacturing Ltd. transaction on May 30, 2018 and closed the Hawk Machine Works Ltd. transaction on June 28, 2018. A full quarter of results for both companies will be reflected in the third quarter of 2018. These transactions further diversify the Corporation, significantly expand our manufacturing customer base, and strategically strengthen our product offerings.

About Decisive Dividend Corporation

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

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

FOR FURTHER INFORMATION PLEASE CONTACT:

Mr. David Redekop, Director and Chief Financial Officer

#201, 1674 Bertram Street

Kelowna, BC V1Y 9G4

Telephone: (250) 870-9146

Cautionary Statements

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 proposed financings. 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: the failure to successfully complete the proposed financings; identification of target companies meeting the Corporation's standards; and all other risks associated with the businesses carried on by operating subsidiaries of the Corporation. The Corporation cautions the reader that the above list of risk factors is 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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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.