Data Communications Management Corp.

Ladies and gentlemen, thank you for standing by and welcome to the Data Communications Management Corp Fiscal 22 Financial Results Conference call. My name is James Lorimer and I'm pleased to be hosting today's call. Joining me is Richard Kellum, our President and Chief Executive Officer. Following our prepared remarks, we will be moderating a Q&A session. As a reminder, this call is being broadcast live and recorded. We'd also like to remind everyone that Richard and I are available after the call for any follow-up questions that you might have. Before we begin, I'll remind everyone that we will be referring to forward-looking information on today's call. This information is subject to certain risks and uncertainties as outlined in the forward-looking information disclosure in our press release and more fully disclosed within our public disclosure filings on CDAR. We have posted a brief video message from Richard, along with a summary of our results and our key initiatives in the year on our website in the form of an infographic. Our detailed information is also available on our website and CDAR. I'll now turn the call over to Richard.

Okay, good morning and good afternoon and good evening for any shareholders that are joining us from international time zones. Here's what we want to accomplish today. I want to take you through our results for Q4 2022, and then we'll look at our total year of 2022 and how we're building and have been building a better and a bigger business. I'll then briefly talk about the announced acquisition of RRD and where we are there, and then we'll turn over for any Q&A. So starting off with Q4 2022 results. We had an exceptional quarter in terms of revenue growth. Our revenue was up exactly 20% over a year ago at 73 million. So it was up a full $12.2 million versus prior year. So very good, solid quarter. If you look at momentum across the quarters, you can see it was our second strongest quarter on the year. Our highest quarter was quarter two. but you can also see this chart that we had positive growth in every quarter on the year of 11% in quarter one through to 20% in quarter four. So we're very pleased with the momentum that we delivered through each quarter and especially exiting 2022 with quarter four results of 20% growth. Looking at gross profit, our overall gross profit grew 33% on the quarter. So again, gross profit growing faster than revenue, which is super positive. $23.6 million in overall gross profit. That was up by $5.8 million versus a year ago. We're also very happy to report that our gross margin was 32.2%. So certainly one of the highest gross margin quarters we've delivered and getting very close to that five year range that we provided to shareholders of 35 to 40%. So certainly heading in a very positive direction. Looking at gross profit momentum through the year, as I said, 33%. Growth in gross profit in the quarter, and you can see positive momentum every quarter, starting off in quarter one at 8% growth, 29 in quarter two, 16 in quarter three, and again, exceptional growth in quarter four at 33%. So very pleased with how we've exited the year in overall business shape from a gross profit perspective. Our net income was also outstanding in the quarter at 3.7 million, up 5.5 million versus quarter four last year, which then kind of ladders down or leads down to EBITDA, and our EBITDA was very strong, up close to 90%, 89.9% versus last year, 9.5 million in EBITDA, so up 4.5 million over a year ago, And also, that's a clean EBITDA. It's the fourth quarter in a row, and I'll talk about this in a minute, where we've actually had no restructuring. As we committed to shareholders, no restructuring in 2022. So that's a clean EBITDA, hence the positive net income. And then if we look at that clean EBITDA momentum, you can see, if you're looking at the chart here, we've had positive EBITDA quarter by quarter, 29% in quarter one, 47% growth in quarter two. 25% growth in quarter three, and again, that 90% growth in quarter four. So our best quarter of the year and sets us up very positively as we exit 2022. Over to James for a little bit more detail.

Here's a little bit more detail on our financials, just laying out some of the numbers that Richard mentioned. As you can see, and Richard mentioned, gross margin was certainly strong compared to last year. SG&A was actually lower than last year's fourth quarter. Last year, we did have $2.3 million of restructuring expenses. This year we did have $1.9 million of acquisition costs, and that's really due diligence and one-time costs related to our review of our Donnelly Canada acquisition. I hope that this is the last time we'll talk about Q's adjusted EBITDA, but last year we had about $100,000 of wage subsidy benefit. So you can see kind of clean kind of Q's adjusted EBITDA here of Q's 15.5% of revenue, which we're very pleased with. And again, you know, tracking towards our five-year targets, that's a very good number for us.