Record Revenue & EBITDA Growth Highlight MCC Acquisition Synergies and Improving Margins
DATA Communications Management Corp.is a Canadian-based provider of marketing and business communication solutions to companies in North America. Its technology-enabled content and workflow management capabilities solve the complex branding, communications, logistics, and regulatory requirements of leading enterprises so its customers can accomplish more in less time. Its services include printing, data & content management, labels & asset tracking, location-specific marketing, and multimedia campaign management. (1.0) COMPANY UPDATE: (1.1) DCM reported Q4/2023 and full-year 2023 financial results. Revenue increased to $130.0 million in Q4/2023, up 77.9% from $73.0 million in Q4/2022, and in-line with our estimate of $131.0 million. (1.2)For the full year, Revenue hit $447.7 million in 2023, up 63.5% from $273.8 million in 2022, and in-line with our estimate of $448.8 million. (1.3) In Q4/2023, DCM reported Adjusted EBITDA of $15.0 million, an increase of 32.4% from $11.3 million in the same quarter last year. The Adjusted EBITDA for 2023 was $53.4 million, a 30.3% increase from the previous year. (1.4) The Revenue and EBITDA growth were mainly attributable to the acquisition of Moore Canada Corporation (MCC), which closed in Q2/2023. (1.5) We estimate DCM could generate over $54.4 million of EBITDA in 2024, which could be allocated towards debt reduction, dividend distribution, or exploring further acquisition opportunities. (2.0) FINANCIAL ANALYSIS & VALUATION: (2.1) We updated our model with the DCM’s recent financials, shifted the model ahead one quarter, and slightly lowered the revenue growth from 2024 to 2026. (2.2) We estimate an equal-weighted price target of $6.90 based on a DCF valuation ($10.05/share), a Revenue Multiple valuation ($6.32/share), and an EBITDA Multiple valuation ($4.40/share). (2.3) We are maintaining a Buy rating and a one-year price target of $6.90.Data Communications Management is an unincorporated, open-ended, limited purpose trust. Through its subsidiaries, Co. is engaged in the provision of total document management solutions including printed products. Co. offers a variety of print and electronic products and related services, which include traditional business forms, labels, direct mail products, security documents, commercial print, and facility and print management.
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