Decisive Dividend Corporation Announces Acquisition of Techbelt Limited
Highlights of the Acquisition
- Fully Funded: Fully funded through a drawdown on the Corporation's syndicated credit facility.
- Strong Business Fundamentals: Profitable and growing; manufactures consumable products that need to be replaced into less-cyclical markets; low capital intensity, niche market player with a solid reputation for quality; large addressable market, opportunities for product and geographic expansion.
- Additional wear-parts business servicing new industries: Enhances scale in Decisive's wear-parts product segment while introducing customers in the food and beverage, textiles, packaging, agriculture, and fast-moving consumer goods markets.
-
Expands portfolio in the
United Kingdom : Techbelt is Decisive's second acquisition in theUnited Kingdom . - Earnings growth and accretion: Expected to be immediately accretive to Decisive and represents on a pro forma basis an aggregate increase to the Corporation's 2023 Pro Forma(4) sales of 3% and an increase in Adjusted EBITDA(1) and Adjusted EBITDA(1) per share of 4%.
One of the vendors of Techbelt,
Techbelt management believes that its key competitive advantages are its ability to provide technical solutions for customers and its rapid turnaround for delivery of a broad range of products at high specification for markets with compliance and regulatory requirements.
The Acquisition is anticipated to be immediately financially accretive to Decisive and is expected to result in an increase in sales, gross profit, profit, Adjusted EBITDA(1), and Adjusted EBITDA(1) per share. The Acquisition is subject to the terms and conditions of a share purchase agreement which was executed today and provides for a base purchase price of
On closing, the aggregate
"We are thrilled to add Techbelt, its leadership team, employees, and high-margin wear-part products to our growing portfolio of businesses. Having the opportunity to add another business that sells wear-parts is a great fit for our dividend paying model and aligns with our strategy of investing in industry verticals we have previously invested in. The customers these wear-parts are sold to operate in the
food and beverage, packaging, textiles, agriculture, and fast-moving consumer goods industries
, with locations in the
"Myself and the whole Techbelt team are thrilled to be part of the Decisive family. Having spent the last 17 years building a business it was important that we find the right partner to continue our growth and take us to the next step. I'm passionate about our employees, customers and suppliers. We wanted to find a new owner with aligning values, who will allow us to continue with our own identity whilst providing us with the support and access to markets we have identified as growth opportunities. I look forward to the opportunities that Decisive will provide us in
The table below sets forth the pro forma combined financial information of Decisive, the applicable pre-acquisition periods for the acquisitions previously completed in 2023, and the acquisition of Techbelt, for the trailing twelve-month period ended
(Stated in thousands of dollars, except per share amounts) |
Add |
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pre-acquisition |
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periods for |
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Previously |
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Add |
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For the trailing twelve-month period |
|
Acquired |
|
12-months |
Total |
ended December 31, 2023 |
Decisive (2) |
Businesses (3) |
Pro Forma (4) |
Techbelt (5) |
Pro forma |
Sales |
134,881 |
17,078 |
151,959 |
5,198 |
157,157 |
Gross profit |
52,763 |
9,544 |
62,307 |
2,127 |
64,434 |
Gross profit % |
39 % |
56 % |
41 % |
41 % |
41 % |
Profit |
8,333 |
4,496 |
12,829 |
789 |
13,618 |
Per share basic |
0.48 |
|
0.69 |
|
0.73 |
Adjusted EBITDA(1) |
25,204 |
6,215 |
31,419 |
1,220 |
32,639 |
Per share basic |
1.45 |
|
1.69 |
|
1.75 |
(1) |
Adjusted EBITDA is not a recognized financial 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. See "Non-GAAP Financial Measures" later in this press release for the full description of Adjusted EBITDA and a reconciliation of applicable IFRS measures to non-IFRS measures. |
(2) |
Based on Decisive's audited financial information reported for the year ended |
(3) |
Based on the unaudited financial information for the pre-acquisition period from |
(4) |
The Pro Forma amounts are based on Decisive's audited financial information reported for the year ended |
(5) |
Based on Techbelt's unaudited financial information for the period from |
About
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Cautionary Statements
Neither
Information Relating to the Acquisitions
This press release contains certain information (including historical financial information) relating to the Acquisition as well as pre-acquisition historical financial information relating to the Previously Acquired Businesses. The information (including financial information) contained herein with respect to the Acquisition, as well as pre-acquisition historical financial information relating to the Previously Acquired Businesses, is based upon information provided to Decisive by Techbelt and the Previously Acquired Businesses, and their respective management and previous shareholders and includes certain non-recurring and related-party private company transactions that have been excluded from the calculation of Adjusted EBITDA below. The financial information relating to the Acquisition and Techbelt, as well as pre-acquisition historical financial information relating the Previously Acquired Businesses, has not been audited.
Non-GAAP Financial Measures
In this press release, reference is made to "Adjusted EBITDA", which is not a recognized financial measure under IFRS, but is believed to be meaningful in the assessment of the Corporation's performance.
"Adjusted EBITDA" is defined as earnings before finance costs, income taxes, depreciation, amortization, foreign exchange gains or losses, other non-cash items such as gains or losses recognized on the fair value of contingent consideration items, asset impairment, share-based compensation, and restructuring costs, and other non-operating items such as acquisition costs.
Adjusted EBITDA is a financial performance measure that management believes is useful for investors to analyze the results of the Corporation's operating activities prior to consideration of how those activities are financed and the impact of non-operating charges related to planned or completed acquisitions, foreign exchange, taxation, depreciation, amortization, and impairment charges.
The most directly comparable financial measure is profit or loss. Adjusted EBITDA per share is also presented, which is calculated by dividing Adjusted EBITDA, as defined above, by the weighted average number of common shares of Decisive outstanding during the period.
While Adjusted EBITDA is used by management to assess the historical financial performance of the Corporation, readers are cautioned that:
- Non- IFRS financial measures, such as Adjusted EBITDA, are not recognized financial measures under IFRS;
- The Corporation's method of calculating Non-IFRS financial measures, such as Adjusted EBITDA, may differ from that of other corporations or entities and therefore may not be directly comparable to measures utilized by other corporations or entities;
- Non- IFRS financial measures, such as Adjusted EBITDA, should not be viewed as an alternative to measures that are recognized under IFRS such as profit or loss or cash from operating activities; and
- A reader should not place undue reliance on any Non-IFRS financial measures.
Set forth below are reconciliations of Non-IFRS financial measures to their most relevant IFRS measures .
(Stated in thousands of dollars) |
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pre-acquisition |
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periods for |
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Previously |
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Add |
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For the trailing twelve-month period |
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Acquired |
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12-months |
Total |
|||
ended December 31, 2023 |
Decisive (2) |
Businesses (3) |
Pro Forma (4) |
Techbelt (5) |
Pro forma |
|||
Profit |
8,333 |
4,496 |
12,829 |
789 |
13,618 |
|||
Add (deduct): |
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|
|
|
|
|||
Financing costs |
3,795 |
27 |
3,822 |
55 |
3,877 |
|||
Income tax expense |
3,417 |
1,620 |
5,037 |
243 |
5,280 |
|||
Amortization and depreciation |
7,895 |
125 |
8,020 |
96 |
8,116 |
|||
Acquisition costs & restructuring costs |
1,001 |
- |
1,001 |
- |
1,001 |
|||
Inventory fair value adjustments |
28 |
- |
28 |
- |
28 |
|||
Share-based compensation expense |
745 |
- |
745 |
- |
745 |
|||
Foreign exchange income |
96 |
(12) |
84 |
23 |
107 |
|||
Interest and other income |
(9) |
(3) |
(12) |
(12) |
(24) |
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Gain on sale of equipment |
(97) |
(38) |
(135) |
10 |
(125) |
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Non-recurring transactions |
- |
- |
- |
15 |
15 |
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Adjusted EBITDA |
25,204 |
6,215 |
31,419 |
1,220 |
32,639 |
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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 future financial position, operations, business strategy, plans and objectives of the Corporation, and the potential impact, including growth expectations, of the Acquisition on the operations, financial condition, capital resources, business and dividend policy of the Corporation. 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: risks relating to acquisitions (as more particularly described under the heading "Risk Factors – Risk Related to Acquisitions" in the Corporation's most recent annual information form), as well as general economic conditions; pandemics; competition; government regulation; environmental regulation; access to capital; market trends and innovation; climate risk; general uninsured losses; risk related to acquisitions generally; dependence on customers, distributors and strategic relationships; supply and cost of raw materials and purchased parts; operational performance and growth; implementation of the growth strategy; product liability and warranty claims; litigation; reliance on technology, intellectual property, and information systems; availability of future financing; interest rates and debt financing; income tax matters; foreign exchange; dividends; trading volatility of Common Shares; dilution risk; reliance on management and key personnel; employee and labour relations; and conflicts of interest, all as more particularly described in the most recent annual management's discussion and analysis and annual information form of the Corporation available on the Corporation's profile at www.sedar.com. There can be no assurance as to the future financial performance of the Corporation or that the board of directors of the Corporation will declare or pay any dividends in the future or, if dividends are declared and paid, there can be no assurance as to the frequency or amount of such dividends . The Corporation cautions the reader that the risk factors referenced above are 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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