Dye & Durham Limited

Good morning. Welcome to Dye & Durham 4th Quarter and Fiscal Year 2026 Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. With me on the call today are Todd Schulte, Dye & Durham's Interim Chief Executive Officer, and Steve Vazak, Dye & Durham's Interim Chief Financial Officer. Diane Durham's Q4 and Fiscal 2036 Earnings Press Release audited annual financial statements and MD&A are available on CDAR+. Please note that statements made during this call may include forward-looking statements and information and future-oriented financial information regarding Diane Durham and its business. Any disclosure regarding possible future events, conditions, or results are based on information currently available to management and indicate management's current expectation of future growth, results of operations, business performance, and business prospects and opportunities. Such statements are made as of the date hereof, and Diane Durham assumes no obligation to update or revise them to reflect events, disclosures, or circumstances except as required by applicable securities laws. Such statements involve significant risks and uncertainties and are not a guarantee of future performance or results. A number of these risks and uncertainties could cause results to differ materially from the results discussed today. Given these risks and uncertainties, one should not place undue reliance on these statements and information. Please refer to the forward-looking statements section of our public filings including without limitation, our recently filed MD&A and earnings press release for additional information. In particular, for additional details regarding Guy & Durham's run rate cost saving results and Expectations, please refer to the section titled Update on Run Rate, Cost Savings in DAI & Durham's Q4 and Fiscal 2026 NB&A. In addition, certain financial results discussed on this call are non-IFRS financial measures, namely Adjusted EBITDA and Segment Adjusted EBITDA. These measures are not recognized measures under IFRS, do not have a standardized meaning prescribed by IFRS, and are therefore unlikely to be comparable to similar measures presented by other companies. Please refer to the Non-IFRS Measures section of our public filings including Without Limitation, our recently filed MD&A, and Earnings Press Release. For additional information on the company's use of Non-IFRS measures, include the company's definitions of Adjusted EBITDA and Segment Adjusted EBITDA. and applicable reconciliation of adjusted EBITDA and segment adjusted EBITDA to their most directly comparable IFRS measure. I'll now turn the call over to Todd Schulte.

Hello, everyone. Thank you for taking time out of your day and to join us on the Diane Durham fourth quarter and fiscal year 2026 conference call. We appreciate your time in order to sharing information with you. My name is Todd Schulte, and my background is in operational leadership of large multi-product software organizations. In addition to my role as COO, I was recently named interim CEO following the conclusion of the Transformation Committee of the Board. I want to start with the fourth quarter because it shows the direction this business is headed. Excluding the impact of the CREDIS disposal, revenue returned to growth up 4% year over year. adjusted EBITDA increased 18% on the same basis, and our adjusted EBITDA margin expanded to approximately 53% from approximately 45% in the fourth quarter last year. We generated $65.6 million of cash flow from operating activities in the quarter, which was up 15%. For the full year, our results reflect the company in transition. Fiscal 2026 revenue was $410.7 million, and adjusted EBITDA was $198.8 million, both lower than last year. The transition is ongoing, and I want to be clear with you about how we are managing it and where we are focused. I also want to acknowledge that adjustments to our Q3 2026 results were required, and those adjustments are reflected in the results we reported on Monday, including in the section titled Q3 2026 Adjustments of our Recent Earnings Press Report. Steve will walk through them, but I want to be clear that our technical corrections do not affect our cash position, revenue, cash flows from operating activities or adjusted EBITDA. As a leadership team, our focus is clear. First and foremost, we are operationalizing the business, using automation and AI to make Guy & Durham more efficient and to make our customers more efficient. At the same time, we are continuing to stabilize the company for our customers, Our employees and our shareholders. Diane Durham has a broad portfolio of products and services, and bringing automation to how we deliver them is the single largest opportunity in front of us. It is where I am spending most of my time. Internally, automation is how we are building a lasting, more efficient cost structure. We are automating the manual steps in our fulfillment and operations workflows so that high-volume, repeatable work is handled by system and not by hand. We are standardizing processes across all of our regions so that when we automate a workflow once, the improvement applies everywhere. And we are utilizing AI in multiple areas of the business, from resolving customer issues faster and more consistently to improving our internal efficiency. For our customers, making their jobs easier is what we sell. Our legal workflow platform and our legal due diligence and filing platform are designed to take manual effort out of how law firms, banks, and enterprises work, from intake and document automation through to embedding registry data and filing capabilities directly into our own systems and AI tools. The same discipline we apply to our operations is what we are building into our products. You can see the results of this work in our margins. Fourth quarter adjusted EBITDA margin was approximately 53% up from approximately 47% in the third quarter and approximately 45% in the fourth quarter of last year. Part of that sequential improvement is seasonal, but the year-over-year expansion reflects a more efficient operating model. Our cost basis is holding as volumes return. Fourth quarter operating costs, meaning those costs comprised of direct costs, technology and operations, G&A and sales and marketing were essentially flat compared to the third quarter at approximately $49 million, while revenue increased 13 million or 14%. That is the operating leverage we are building. As revenue grows, more of each additional dollar flows through to adjusted EBITDA. We also continue to see meaningful opportunity to remove costs from the business. In fiscal 2026, we achieved approximately 20 million in annualized run rate cost savings ahead of the target we set out here, driven by automation, process standardization, and a more efficient global operating model. We are on track to complete the remaining initiatives by the end of fiscal 2027. We plan to continue to reinvest a portion of these savings to generate into the product development, automation, and our customers, because efficiency is not only about spending less, It is about putting our resources to work where it creates the most volume. Operational improvement only works on a stable foundation, and we are continuing to enhance ours. For our customers, that means consistent, reliable services and a product roadmap they can count on. In the fourth quarter, Canada revenue grew 9% year over year, and Canada's segment adjusted even grew 13% year over year. We have also added resources and new performance measures so we can better track our service levels and drive continuous improvement. For our people, it means clear leadership, clear priorities, and a culture built on accountability and execution. For our shareholders, it means transparent reporting and a stronger balance sheet. Strong cash generation remains the foundation of our financial strategy, and strengthening our balance sheet remains a priority for the company. We are in compliance with the financial maintenance covenants under our senior credit agreement as of June 30th, 2026, and Steve will provide more detail on our capital structure. I'll now turn the call over to Steve to review our fourth quarter and full year financial results. Steve?

Thank you, Todd, and welcome, everyone. As usual, my comparisons to the equivalent periods in the prior year, unless otherwise noted, in all figures are in Canadian dollars. For revenue... For the 3 and 12 months ended June 30, 2026, revenue is $104.2 million and $410.7 million, respectively. Fourth quarter, revenue decreased by $1 million or 1%. Excluding the impact of CREDIS disposal in all periods, revenue increased by $3.5 million or 4%. The increase is primarily driven by our practice management and payment infrastructure platforms in Canada. For fiscal year of 2026, revenue decreased by $30.1 million, or 7%. Excluding the impact of the CREDIS disposal, revenue decreased by $24.6 million, or 6%. This decrease was primarily driven by the market downturn and by lower volumes in pricing on our practice management and data insight platforms, reflecting both customer losses and contract renewal terms. This is primarily offset by growth in banking technology, where the revenue increased by $4.8 million or 5% to $108.3 million, and by the LexisNexis Affinity platform. Now turning to adjusted EBITDA, fourth quarter adjusted EBITDA was $55.1 million, an increase of 7.4% or 15%. Excluding the impact of the previous disposal, adjusted EBITDA increased by $8.5 million or 18%. Adjusted EBITDA margin was approximately 53% compared to approximately 45% in the prior year quarter. The increase reflects the revenue growth I just described and the benefit of our cost-saving initiatives that Todd has mentioned. Technology in operations, general administration, and sales and marketing expenses decreased by 7.8 million, or 16%, by 5.4 million, or 12%, excluding CREDIS. This is primarily due to our operational efficiencies from saving initiatives anchored during the year, partially offset by the continued reinvestment of IT infrastructure. For 2026, adjusted EBITDA was $198.8 million, a decrease of $34.1 million, or 15%. Excluding the impact of the previous disposal, adjusted EBITDA decreased by $32.4 million, or 14%. Adjusted EBITDA margins for the year was approximately 48%, compared to approximately 53% in fiscal 25. The decrease reflects the revenue impacts that I described, as well as strategic reinvestments we made to stabilize the business, predominantly in the labor and IT infrastructure, and lower capitalization rates in the first half of the year, as we temporarily shifted certain expenditures from capitalized private to maintenance expenses. These are partially offset by operational efficiencies, which we realized largely in the third and fourth quarters. We executed the fiscal 26th Net loss and cash flow For the fourth quarter, net loss was $19.9 million compared to a net loss of $29.6 million. The lower net loss primarily reflects lower amortization, depreciation, and impairment, partially offset by higher finance costs, largely from non-cast foreign exchange and fair value movements, and lower income tax recovery. Cash flow provided by operating activities was 65.6 million, compared to 56.8 million, or an increase of 15%. For fiscal year 26, net loss was 38.5 million, compared to a net loss of 88 million. The lower net loss currently reflects the $81.5 million gain on the sale of Cretas, lower amortization depreciation, and lower acquisition, restructuring, and other costs, partially offset by higher finance costs, lower revenue, and higher stock-based compensation. As fiscal year 25 included a large non-recurring recovery. Cash flow provided by operating activities was $153.4 million compared to $142.8 million, an increase of 4%. In both periods, the increase in operating cash flow was driven by higher contributions of working capital and lower taxes paid, partially offset by higher financing costs. For sequential trends, compared to the third quarter, fourth quarter revenue increased by 13 million or 14%, and adjusted EBITDA increased by 12.2 million or 29%. As a reminder, our real estate conveyance and surge product lines experience seasonality, with revenue typically peaking in the spring and summer, which fall in our fourth and first fiscal quarters. The sequential improvements in adjusted EBITDA margin from approximately 47% to approximately 53% reflects both seasonal and cost efficiencies as Todd described. Now turning towards the balance sheet and liquidity. We were in compliance with the financial maintenance covenants under our senior agreements as of June 30, 2026. At URAM, we had $29.5 million on a revolving credit facility, or approximately 28% of the facility, well below the 35% level at which the leverage covenants tested. And our consolidated first lien leverage ratios defined in our senior credit agreement was approximately 5.17 times, which is also below the 5.8 times maximum. Cash and cash equivalents were $41.4 million. During the year, we repaid the $185 million of convertible debentures that matured in March 2026 and applied the $129.8 million of inept proceeds from the sale of Pretus to voluntarily prepay a portion of the term loan B, senior security notes and revolving facility. As a result, the term loan B has no further scheduled principal amortization before maturity. Loans and borrowings, together with convertible debentures, decreased from approximately $1.59 billion at June 30, 2025 to approximately $1.28 billion as of June 30, 2026. Now for the Q3 2026 adjustments. As described in our 2026 MDA, our fourth quarter net loss reflects certain adjustments that were recorded in Q4 2026 that relate to Q3 2026. These reduced previously reported 2026 net revenue by $32.5 million, consisting of $29.9 million adjusted to stock-based compensation, which is primarily the reversal of an incorrectly recorded recovery related to forfeited or expired options of former employees and $2.6 million adjusted to financing costs. These were technical corrections. They do not affect our cash position or our reported revenue, cash flows from operating activities, or adjusted EBITDA for Q3 2026. In summary, the fourth quarter showed the operating leverage in this business, revenue growth excluding CREDITS, significant margin expansion, and strong cash flow generation. The full year reflects the transition we are working through. As we move into fiscal 2027, we intend to remain focused on cost discipline, cash generation, and strengthening of our balance sheet. With that, let me turn back over to Todd.