Data Communications Management Corp

TSX:DCM

Earnings Call Transcript 2024-Q2

[Richard Kellam, executive]

Hello, everyone. We just released our quarter 2 results. And in this video, I'll share highlights of the quarter, recap our financial performance and review our priorities for 2024. I'm pleased to report on our continued progress during the second quarter, which was marked by the 1-year anniversary of completing our acquisition of Moore Canada.

I'll start by highlighting our progress building a strong platform for profitable growth. During the quarter, our commercial team recorded several client wins, both increasing our wallet share with existing clients and winning new logos. We also launched our strategic revenue management program following a top-to-bottom review of our full client base. This is a key step in support of our goal of driving margin improvement across the business.

We continue to focus on improving our product mix, including our expanded offering of tech-enabled workflow solutions. I'm very excited about the recent launch of ASMBL, our newest technology solution. ASMBL is a digital asset management platform fully enabled by AI. ASMBL allows companies of any size to efficiently find, organize and share files of all types to maximize the value of their content investments.

Another key area of progress in the quarter was the consolidation of our production network. We completed the consolidation of our Thistle and Bond facilities in June, and we remain on track to complete the closure of our Fergus and Trenton plants by the end of 2024. In our remaining facilities, we have invested in new equipment to enhance our production capabilities and our operating efficiencies.

Turning to our financial performance in the quarter, here are some key takeaways. Our Q2 revenue was $125.8 million, up 5.7% versus the prior year. Gross profit increased 7.2% to $34.3 million. Gross margin for the quarter was 27.3%, up almost 0.5 point versus a year ago. This year-over-year improvement keeps us on track to return our gross margin to the 30% range. Our adjusted EBITDA in quarter 2 improved nearly 2 percentage points versus the prior year to 13.4% of revenues, marking further progress towards our goal of growing adjusted EBITDA margins to more than 14%.

Turning to our top 3 priorities for 2024, we remain focused on the following: first, complete the post-merger integration of MCC and deliver on our annualized synergy commitments of $30 million to $35 million; second, drive improvement in our gross margin with a focus on enhancing profit margins in the legacy MCC business; and third, deliver profitable growth by leveraging our large-scale expanded products and services, and the skills and capabilities of our combined team.

Finally, I want to extend my thanks to the entire DCM team for your contributions in the quarter and your continued focus on delivering results. I look forward to reporting on our progress in future quarters. Thank you.