DATA Communications Management Corp. (DCM) Earnings Call Transcript & Summary

Good morning, everyone. My name is Kingsley Ward, Chair of the Board of Directors, and I would like to welcome you to this Annual Meeting of DATA Communications Management Corp., which I'll refer to as DCM. For those of you who are shareholders, thank you for joining us today. And I would also like to welcome any guests that are in attendance. Also present with me are Richard Kellam, DCM's Chief Executive Officer; and James Lorimer, the company's Chief Financial Officer. We have decided to hold this annual shareholders' meeting in an all virtual format out of an abundance of caution to proactively deal with the public health impact of the COVID-19 outbreak and to mitigate the risks to the health and safety of our communities, shareholders, employees and other stakeholders. Our main objective is to ensure that all shareholders have the same opportunity to participate and vote regardless of their geographic location and that everyone stays safe. I would like to start by acknowledging this past fiscal year included a time of unprecedented societal and business challenges on a global scale. However, through it all, DCM's team worked to serve our customers, employees, shareholders and communities throughout the areas we serve, and I am very proud of how our team delivered positive results through very challenging times. DCM achieved strong financial results and played a critical role in the ongoing fight against the pandemic. As we look to the coming year, we remain focused on the opportunities DCM has in terms of its business, shareholder value creation and positive impacts in the communities we serve. Our engagement with shareholders is not limited to this meeting. Throughout the year, the Board and management -- I'm sorry. Throughout the year, the Board and management consider the shareholder feedback we received from a variety of sources. What we learn helps us prioritize our efforts and identify areas of emerging interest for the Board. Thank you for the trust you place in us and the opportunity to serve you and our company as a Director. The purpose of this meeting is to, a, receive DCM's financial statements for the year ended December 31, 2020, and the auditor's report thereon; two, to elect directors of DCM for the ensuing year; and three, to reappoint PricewaterhouseCoopers LLP as the auditors of DCM for the ensuing year and to authorize the directors to fix their remuneration. These matters are set out in the management information circular made available to shareholders in connection with this meeting. After the formal part of the meeting, Richard and James will provide a corporate update, and we will follow that with a Q&A session for any of you to join in. As this meeting is held virtually via live webcast, we wish to set out a few protocols for the orderly conduct of the meeting. The first one is questions can be submitted using the instant messaging service of the virtual interface. [Operator Instructions] Please note that only registered shareholders or duly appointed proxy holders are entitled to submit questions in respect to a motion during the formal part of the meeting. When asking a question, please indicate your name, which entity you represent, if any, and confirm you are a registered shareholder or a duly appointed proxy holder. General questions may be submitted during the formal part of the meeting, but will only be addressed during the Q&A period at the end of the meeting. Questions regarding procedural matters or directly related to the motions before the meeting may be addressed during the meeting. For the purpose of the meeting today, voting on all matters will be conducted by electronic ballot. Registered shareholders and duly appointed proxy holders will be asked to vote if they haven't already on each item of business after the presentation of all items. When you are asked to vote, you will receive a message on the virtual interface requesting you to register your votes. You will only have a certain amount of time to do so while the polls are open. We will now proceed with the formal portion of today's meeting. To expedite the formal part of the meeting, I will move and second all motions. I will act as Chair of the meeting and ask James Lorimer to act as Secretary. With the consent of the meeting, I appoint Computershare Investor Services Inc. as scrutineer and to compute the votes of any polls taken at this meeting. The notice calling this meeting, the accompanying Management Information Circular dated May 17, 2021, the consolidated financial statements of DCM for the year ended December 31, 2020, along with the auditor's report thereon and the form of proxy have been provided to each shareholder of record at the close of business on May 14, 2021. This has been done by mail or electronically in accordance with the notice and access provisions. And I have been advised by Computershare that the notice calling this meeting, together with a form of proxy were mailed to each such shareholder of record. With the consent of the meeting, reading of the notice of the meeting will be dispensed with. I therefore declare that the proper notice for this meeting has been given. At DCM, a quorum of shareholders is at least 2 holders of common shares present in person or by telephonic or electronic means and holding or representing by proxy not less than 25% of the votes entitled to be cast at this meeting. I have received the preliminary report on attendance from the scrutineer and I have determined that a quorum is present. I adopt this report as notice has been given, served in accordance with applicable law and bylaws of the corporation, and I declare this meeting to be regularly called and properly constituted for the transaction of business. The first item of business is to put before the meeting DCM's annual financial statements for the fiscal year ended December 31, 2020, and the auditor's report thereon. Those financial statements, together with the auditor's report remain available to all shareholders of DCM by mail or electronically in accordance with the notice and access provisions. We will be pleased to receive any questions you may have regarding the financial statements during the Q&A period at the end of this session. We will dispense with the reading of the financial statements and the auditor's report thereon. I realize that the vast majority of you have already voted. However, for those of you who haven't, voting today will be conducted by electronic ballot. And I declare that these polls are now open. The voting will be open while we review the matters to be voted upon. And once the electronic balloting closes, the voting page will disappear, and your votes will be automatically submitted. The next item of business is the appointment of auditors for the ensuing year and the authorization of the directors to fix their remuneration. I move and second the motion that PricewaterhouseCoopers LLP be reappointed auditors of DCM to hold office until the close of the next Annual Meeting of Shareholders or until their successors are appointed and that the directors are authorized to set their remuneration. Unless there are any questions, we'll move on to the next item. Next item is the election of directors. Pursuant to DCM's articles, there can be, at any time, a minimum of 3 and a maximum of 15 directors of DCM. As described in the Management Information Circular made available to all shareholders in connection with this meeting, there are 7 nominee directors for election as directors at this meeting. The nominees are as follows: myself, J.R. Kingsley Ward, Richard C. Kellam, Gregory J. Cochrane, Merri L. Jones, James J. Murray, Michael G. Sifton, Derek J. Watchorn. I declare the meeting open for nominations for the election of directors for the ensuing year or until their successors are elected or appointed. James, do we have any new nominees?

There are no further nominees.

Thank you. With no new nominations, I nominate each of the persons whose name appears in the Management Information Circular under the heading Election of Directors to be a Director of DCM until the close of the next Annual Meeting of Shareholders or until their successors are appointed, and I also second these nominations. As you know, DCM allows for the election of directors on an individual basis. According to our majority voting policy, any nominee who receives a greater number of votes withheld than votes for cast with respect to his or her election by the shareholders, in an uncontested election of directors, will tender his or her resignation promptly to the Corporate Governance and Comp Committee which will recommend to the Board whether or not to accept such resignation. I should advise the meeting that by virtue of votes already received by proxy, it is clear that all directors will receive more than enough votes to be elected today. I would like to advise the meeting that DCM did not receive any further nominations in accordance with its bylaws. I declare the nominations closed. If you have it already, this is your final opportunity to register your votes online for the auditors and directors. Just allow a couple of minutes here or a minute. [Voting]

The polls are now closed.

Thanks, James. We will file a report setting out the voting results on the SEDAR website following the meeting, but I can report that based on the proxies received in advance of the meeting, each of the resolutions has been carried with the fact that, a, the appointment of PwC as the auditors of DCM has been approved, and the Board of Directors has been authorized to fix their remuneration; b, each of the 7 nominees has been elected as a Director of DCM to serve until the next Annual Meeting of Shareholders or until successors are elected or appointed. The formal items of business as set out in the Notice of Meeting have now been dealt with, and there are no further business items to come forward. And as such, I declare the formal part of the meeting to be concluded. Before turning the meeting over to Richard, I would like to take a moment to thank Greg Cochrane, our former CEO and leader of DCM. Greg overcame monumental, personal and business hurdles and led us to this point where we are today. I am very thankful for all that Greg has done for the company, and I am thrilled to have him transition on to our Board and look forward to serving together over many years on the Board. I'd also like to thank Bill Albino for his 9 years on the Board and wish him the best of luck in his future endeavors. I'll now turn the meeting over to Richard and James for our corporate strategy update. Following their presentation, there will be a Q&A period for all shareholders and guests to ask questions. Richard, over to you, sir.

Thank you, Kingsley. And to recognize, we've got several participants on this call today [Technical Difficulty] geographies. Good morning, good afternoon and good evening to everybody. I am going to spend the next half hour talking about where we're going as a company and why we collectively believe that DCM is well positioned for growth. Before I do that, I want to go to the next slide here and do a little housekeeping [Technical Difficulty] remind that I need to do a little housekeeping before we get started. So before I begin, I'd like to remind everyone that we will be referring to forward-looking information in this presentation. This information is subject to certain risks and uncertainties as outlined in the forward-looking information disclosure in our MD&A, included in our most recent quarterly financial statements and also more fully within our other public disclosure filings that are available on SEDAR and also available on our website under the Investor Relations tab, okay? So that is the formal bit out of the way, and let's move straight into the presentation today and look forward to questions after this presentation as well. So I want to start off on the bottom of this slide and talk about who DCM is. I'm sure most on the call know us. For those that don't, we're one of Canada's leading marketing and communication providers. We've got slightly over 1,000 associates, as we call them, or employees and we serve 250 large corporate customers, as you'll see on the next slide. Our business consists, if we look at the center of this slide, of what we would call a conventional print business. It's about 68% of our business or $178 million in revenue as of 2020. Now that print is not your typical commercial print. That print is of higher value, higher complexity and sizable sort of margin compared to the industry. In the center bubble, we do a lot of tech-enabled marketing workflow, it's 32% of our business. So this is anything we do that starts with technology that delivers a workflow that is a digitally enabled or a tech-enabled workflow. 3 services we provide there. One is business process outsourcing. So think of if you're a large financial institution and you've got multiple number of branches across Canada, we have to manage supply chain and distribution on time across to that network. That would be 1 use case or 1 example that is tech-enabled. We do a lot of, obviously, print on demand. So think of highly automated print that flows through a digital stack. And then, of course, we're doing a fair bit of what we call digital-to-digital marketing solutions, think of e-mail marketing, social marketing, et cetera. So 32% of our business tech-enabled today. And the far right is a new opportunity for us, which we call digital asset management. Again, I'm going to give you more color and more detail on that as we progress through the presentation, a relatively small piece of business for us today at $3.4 million, but you'll see a big opportunity as we lean into that business. So our strategy is very clear. We want to migrate and move more of our conventional print into tech-enabled revenue or tech-enabled marketing workflow, which has a higher margin, higher loyalty, higher retention and then build out this digital asset management solution. So if you look across the top of the slide, we want to move from a print-first company to a digital-first company. And again, you'll hear a lot more details as I flip through the presentation today. Okay? So moving on to the next slide and having a look at our client list. You can see that we participate in 8 key verticals. We've got over 2,500 clients, as I said, 250 enterprise clients represent 93% of our revenue. And we've got a very high retention rate among those 250 enterprise clients at 97% retention rate. And roughly 70% of our business is what we would consider longer-term contracts. So anything north of a 1-year contract, several up to 3- to 5-year contracts. So about $182 million of our business is tied up in long-term contracts. And you can see certainly a very impressive client list. In fact, one of the reasons why I joined DCM was just the impressive client list that this team -- this commercial team has built over time. And you can see we're working with 70 of the largest corporations in Canada and 3 of the top 5 government agencies. There's not 1 customer that represents any more than 6% of revenue. So lots of diversification in verticals and clients. Okay. So I'm going to talk about the center pillar first, which is our tech-enabled marketing workflow and bring a little bit more color to everybody on the call today as to what we do in this space. So we have built a proprietary software platform we call DCM FLEX. And that technology is well embedded into clients' operational and business processes. The technology does many things. A few examples would be streamlining order flow, proofing, approvals, regulatory compliance, reporting, but a lot of functionalities, as you'll see in the next slide as well. The platform is fully customizable to meet the needs of our clients' businesses and well embedded into our clients' digital ecosystems. And we're -- if you look around the bubble on the right here, we're working with over 100 clients today, so 100 active clients embedded into those digital ecosystems. We're -- we have over 230,000 users on the platform, about 8,000 and that number is increasing quite quickly, about 8,000 active daily users. We're producing over 300,000 orders or processing over 300,000 orders a year. And again, I'm going to take you through the details in terms of what this application or this platform looks like, but it's a -- it's an API or application program interface dependent platform that uses best-in-class software. In fact, we've got APIs written to over 70 softwares. If we look at the bottom left of the slide here, lately, we have won over 70% of the RFPs that we participate in, so the request for proposals. And I can tell you that almost all of those are due to the technology we bring, the DCM FLEX technology that we bring to that RFP to that potential client. And we've had probably 5 most recent wins, all of them have been due to technology. And a couple of those are large kind of sizable FI wins. Okay. That's a little bit about the digital ecosystem. A little bit more detail here on our DCM FLEX platform. We call it an advanced tech-enabled service platform that delivers complete enterprise marketing and business communication solutions. So if you look around the center of the DCM FLEX logo here, you can see some of the functionality. This is not all the functionality, but this is -- this demonstrates some of the functionality. We've got marketing data, marketing workflow, CRM capabilities, data analytics capabilities, logistics, e-mail services, et cetera. Now not any 1 client use all these services. Some may use 5 or 6 or 7 different levels of functionality or 7 different functional services. And we would then customize this platform to meet that client's workflow needs. Hence, the name FLEX, we're highly flexible in terms of how we customize to meet the clients' needs. So pretty cool platform. I've got a demo video -- demo video on the next page here. which we're going to play for you in a second. There's actually 2 videos, one that demonstrates our capabilities for financial verticals and another one which demonstrates the capability for the cannabis vertical. And what you'll see is both of these are using our DCM FLEX platform. And you'll see slightly different use cases for each. And what it will also tell you is we do similar -- a lot of similar things across the other verticals, whether they're retail or energy or not for profit, right? But these are just a couple of examples in a couple of verticals where we bring value using our DCM FLEX. So I'll ask the moderator to please to play through -- play these videos. [Presentation]

Okay. So I actually said this on another call, but I'll say it again, what do they say, a picture says a thousand words and a video says 10,000. So hopefully, 2 videos have saved myself 20,000 words here. But hopefully, viewers, everybody watching can understand our tech capabilities. I actually consulted for the company a couple of months before joining and discovered, I heard this was a progressive print company. I didn't really have a lot of information and knowledge on the digital capabilities. But let me tell you, this is a very advanced company from a digital capability, and you saw that in the videos. And what I would say as well is there's actually more clients that are unaware of our digital capabilities versus clients that are aware of our digital capabilities because we've been thinking like a print-first company versus a digital-first company and there lies the opportunity, and that's the opportunity in this chart here. 32% of our business is digitally enabled today. We've got a plan to scale that to 45% by 2022 and north of 75% by 2025. As I said, higher retention, higher loyalty, higher margin if we're embedded into our clients' ecosystems and they become a very sticky client. I have a personal, and I know the Board is on the call today, so you know this, but I have a personal objective for the Board to be north of 40% in 2021, and we're well on track to deliver that. So we'll easily exceed that 2022 objective, okay? So I hope that the strategy is clear to everybody. We are going to drive penetration of our tech-enabled -- our tech-enabled services for our DCM FLEX platform. All right. I'm going to move on to the next topic or next theme, which is how we're going to build a digital asset management tech-enabled service. Again, we're already offering value to clients today. But we see it as a massive opportunity as you'll see in a minute. But first, before I do that, I just want to explain to our listeners today, what a digital asset management platform or functionality actually is. I won't spend a lot of time on this chart. But think of a digital asset, anything from photographs to documents to presentations; I mean the presentation I'm doing today is a digital asset; videos, any branded assets, communication assets, any social feeds that are being produced or have been produced. So think of large enterprise clients and the number of digital assets that they actually have, those need to be preserved. Those are valuable assets that need to be preserved. They need to be libraried and they need to be managed properly. And what I mean by managed properly, if you look across the center bubble here is you need proper version control. How do I know if I have the latest document, latest file, latest video. You need an approval process. You need to have a process that allows an asset to be used in multiple formats. You need file conversion functionality. You also need a simple way to tag an asset, right, to -- so it's discoverable and findable and that's where machine learning and artificial intelligence comes in. There's a lot of metadata in each asset that can be automated or auto-tagged and that's certainly what our platform allows for. It simplifies kind of that librarians job and makes those assets discoverable and findable, okay? And then, of course, once the asset is centralized and managed, you've got to have a platform that allows it to be distributed, to be utilized, whether it's utilized in print, which we do today and -- or other digital marketing services such as social or broadcast or mobile or web based, et cetera, right? So that's essentially the functionality of a digital asset management, a solution or platform. And if we look at the market today, it's a very sizable market. It's north of $5.2 billion and it's growing at an accelerated rate. We put a [indiscernible] of 21.2%. Depending on what data source you look at, some are calling it as high as 30%. And why? Because there are very few companies that actually have introduced a sophisticated digital asset management solution today, only 1 in 10. And companies see the problem and they're accelerating that solution or that need to solve that problem. So that's why you're seeing a massive growth in the industry. Revenue by region, certainly well positioned to where our strengths are. 40% -- close to 40% of the business in North America, and that's where we're well positioned. And a big part of that revenue or that market size is enterprise, our enterprise clients. And as I said earlier, 250 clients represent 93% of our business, and those are all enterprise clients. So we're well positioned for success here in this market. Now if I go to the next slide, why DCM? I think this is really an important one for -- for all of our listeners today. Look, we have been managing digital assets at DCM for over 40 years. When we started in business 65 years ago, we took a physical asset and we had to convert it to a physical printed asset. Those physical assets became digital assets 40 years ago. We had to figure out how to manage those digital assets. So literally, we're managing thousands of digital assets every single day on behalf of clients. We know how to manage version control, regulatory compliance. We know how to library it and tag it. So it's -- in fact, we would not have a printing business if we didn't know how to manage a digital asset. And we're literally managing thousands of digital assets for clients every single day. And because we have this tech-enabled service model, right, 32% of our business, over 100 clients that are using our tech stack today, we've got the tech skills and we've got the practical skills. And that's what creates what I call our unique selling proposition in the marketplace. The 40 years of experience plus the technology experience is a great solution for large complex enterprises. We see the opportunity here. As I said, we're $3.4 million today because we've been thinking like a print company versus a digital company. We think the opportunity is somewhere between $10 million and $20 million. And of course, this is a higher-margin business as well. And in 2022 -- in 2022, we'll really kind of define what the size of the prize will be moving forward. We're putting a range here between $25 million and $50 million. It could be north of $50 million through 2025, okay? So that's really the opportunity and why DCM has the right to play in this space. It's what I call an inside-out strategy, right? And we all know that inside-out strategies are the most productive strategies. So that's a little bit about our moving from print to digital. I want to just give you a little bit of color on our numbers. If we look at the top left and talk revenue, you can see our peak on revenue was in 2018, where we did north of $322 million in revenue. In 2019, we had a slight drop in revenue to $283 million, and that was 100% due to our ERP implementation. I'm sure everybody on the call knows the hardships of implementing ERP. This is probably one of the harder implementations that I've heard of. I've said to James a couple of times, I'm glad I wasn't here for it. But I'm really glad I'm here after because the data that we are now extracting and the insight we're extracting from the data that we're collecting through our ERP implementation is outstanding, and it's really guiding us for some huge opportunities I'll talk to in a minute. In 2020, of course, with consumer movements changing quite considerably with COVID clouds, right, shutdown or lockdown of the economy, it was a general impact to the entire industry, and that's why our revenue is what it was last year at $260 million. Now more importantly, if you look at our gross margin, what the team has done under Greg's leadership and Mike's leadership has been really focused on building a better business over time. And you can see gross margin went from a low of 22.7% in 2016 and our latest 12 months is 28.7%. So a very significant gross margin increase as the team worked to build a better business. And if you look at this quite interesting in 2020, gross margin -- actual cash gross margin was $73 million versus $69 million in 2019. So despite the headwinds from COVID because the team has been working to build a better business, you can see that gross margin delivered very, very strongly. And what I have said many times to the team is gross margin is your best friend, okay? That's really the kind of lifeblood of the business. And you can see what that did in terms of driving EBITDA and EBITDA margin. EBITDA went from $20 million in 2019 to $41.5 million in 2020, and we're continuing that on our latest 12 months at 16.6% margin. And of course, you can see what that did in terms of debt reduction. In fact, we're continuing to reduce debt. You can see that we're $41 million versus $79.8 million last year, okay? So a little bit more detail on this slide. Cash flow, as I already mentioned, but I wanted to put this in perspective, $47.6 million in cash flow last year up from a loss in 2019. I already referenced gross margin at 28% versus 24%. Debt reduction, we said it's a $36 million reduction in debt. That's a 45% decrease year-on-year. And the one thing I didn't reference in the prior slide, but part of that theme of building a better business is the team focused hard on SG&A productivity and took a 12% reduction in SG&A or $8 million. Just moving down to our performance through quarter 1. You can see that we're continuing to drive hard on cash flow. In fact, our cash flow is up $8.6 million versus a year ago. Revenues, if you compare, call it, in COVID quarters, we're up 3%. Our gross margin continues to be strong. In fact, we're north of 30%. Remember, I said in the prior slide, we were 28.7% on our latest 12 months. We were 30.1% in the quarter, so positive -- continued positive momentum on gross margin by managing mix and operational excellence. SG&A continues to reduce as we continue to drive hard on what we call NOG, negative operating growth or negative overhead growth, at minus 10%. And you can see what that did in terms of EBITDA and debt reduction down $7.2 million in the quarter. So good real strong year-end 2020 and off to a good start in 2021 through quarter 1. A quick look at the leadership team. Of course, people on the call know me and my background, 36 years of large corporate organizations, Mars, Wrigley, Molson and did a little bit in the automotive sector at Goodyear. And this presentation will be up on our website after. But I'm really pleased with the leadership team we've got here. A good mix of highly skilled people that know the business as well as individuals that bring skills from other companies. And I can tell you that this team was assembled from within. So I didn't have to bring in any of my prior kind of relationships or prior colleagues. These are all people that have been within the company. I think shareholders know that we made a big change -- 1 change before I arrived, taking a layer out and then certainly making some changes in leadership a couple of days after I arrived. This is a newly assembled team. It also lives up to a real important SG&A goal that I have, an important goal in terms of how we need to operate a business. And that is reducing layers and increasing spans of control or spans of responsibility. So you can see the span that I have, 11 people on the leadership team, and we're driving that into the organization, taking layers out. We obviously took 1 layer out before I joined and driving productivity, driving accountability, driving decision-making into the organization, reducing layers and increasing spans of control, ultimately building a better business, okay? So looking at management priorities moving forward. I talked a lot about digital innovation and about expanding and building that client penetration. On -- from a talent standpoint -- in fact, we've already started. We're off to a great start, really upskilling what we call our commercial team. So our selling teams, our client teams on digital expertise, and we've got great sort of competency guide that we put in place looking at what's required for commercial teams to both be ready for today as well as fit for the future. I talked about client penetration. From an M&A perspective, we will look at highly accretive consolidation opportunities, that we could tech enable as well as any marketing technology, more kind of seed capital around digital asset management, product information management and workflow. And from a global expansion you saw in the video that we've already started to penetrate the U.S. cannabis market. And because digital has no borders, we think it's an opportunity to work with some Canadian multinationals to scale or to help them on their digital asset management solutioning across multiple markets. If you're a large Canadian multinational, you wouldn't want a digital asset management platform for 1 country, you'd want it for multiple countries. So we think that's an opportunity to build our services outside of Canada. If we look at our targets. You saw that number back in 2018. We were well north of $300 million. So we've got an active process or program to get us back up north of $300 million. And much of that will come, obviously, once the economy returns to some level of normalcy. Remember, as a communication and marketing agency, consumer movements are important to us. And we'll certainly see some good wind in our sales once the economy opens. Moving on from there, 5% CAGR, an SG&A target of 18% to 20%. And to put that in perspective, we're currently operating at negative overhead growth. Our SG&A right now is $57 million. If we get to a business north of $300 million, and we can continue to operate at NOG, so bring that down, that SG&A down to $53 million or $54 million. We're already at the low range. We're already at 18% SG&A. So it's well within our sight lines. Gross margin, 35% to 40% gross margin. As I said in quarter 1, we were already north of 30%. So we've got a very active plan to get us to north of 35% and all that will spin out an adjusted EBITDA between 18% and 22%. So these are priorities that we're very much focused on as an entire enterprise, right, not just the leadership team, the entire enterprise is focused on these goals. I'm now going to turn it over to James to talk about capitalization and ownership, and then I'll come back in to close.

Thanks, Richard. We have about 50 million shares outstanding and a little bit more than 53% of those are held by long-standing and very supportive shareholders. So we're very fortunate to have a great shareholder base. As you can see, about 31% of our shares are held by directors and officers. We're very proud that since launching our employee share ownership plan approximately 2 years ago, almost 4% of our shares are held by employees in that plan. We also have a number of other key shareholders and an insider KST Industries, who's been a shareholder for more than 5 years and very supportive. You can see our share price performance over the past 1.5 years, pretty quiet through 2020, which was largely the kind of in-COVID year for us. Started to get a little bit more recognition after our third quarter results were reported in November last year. And really, I think the driver there was continued margin strength and probably most importantly, paying down significant amounts of debt, which we had incurred in for ERP challenges in 2019. Stock closed at $1.40 yesterday. So it's certainly a little bit higher than reflected here. And we've showed an enterprise value there. It's about $150 million, probably close to about $160 million today. In terms of our comparables, we prepared a summary here of what we think are good peer companies to give us a kind of a relative valuation. And we broke these into the 3 segments that Richard talked about earlier. If you look at conventional print solution providers, they're trading on average about 7.2x EBITDA. You can see in the middle there R.R. Donnelley would be our closest really kind of peer competitor. While they certainly are much larger than us, you can see they trade at about 5.8x. Our multiple down at the bottom, we're trading a little bit more than 3.6 million -- or 3.6x EBITDA presently. So we think there's some opportunity to just expand if we're just labeled as a conventional print solution provider. We've also shown tech-enabled marketing workflow providers. You can see they trade at about 12.1x EBITDA and about 1.8x revenue. Probably the best peer for us in that sector would be Cimpress, which owns Vistaprint, which would be a tech-enabled really more of an SME-focused offering, but very similar in terms of kind of the tech-enabled offering that they have. So you can see that there's an opportunity as we expand that focus and get more credit for that part of our business to expand that multiple for that part of our business. The third bucket is digital asset management and tech-enabled service providers. You can see they trade at pretty high EBITDA multiples, but many of these companies are really kind of investing in their platforms and/or their sales and commercialization efforts, really kind of building out client basis. We're fortunate we've got a very strong client base. So we don't have big expenses to incur on building that out. It's really commercializing what we have. And we've got a strong platform that as we make that shift from print-first to digital-first, it's really just commercializing the great capabilities that we already have. A peer opponent in that group for reference would be MediaValet, which is a pure digital asset management provider, they may be different in terms of their true kind of SaaS or software-as-a-service model, but you can see that they trade at about 11x. The peer group is trading at about 7.9x revenue. And as I mentioned earlier, you can see we're currently trading a little higher than 3.6x.

Thank you, James. I appreciate that. So I'm just going to close here with just building on what James said on the prior slide. If you look at our business, and if you were just to value the DCM business on print and print alone, $260 million in print, okay? Forget tech-enabled marketing workflow for a second. If you were just to value the print that entire business on a print multiple and using a peer, our value -- our enterprise value should be around $235 million. If you were to use a blended multiple and you took our print business 68%, 32% of our business which is tech-enabled, and again, let's not even include our digital asset management service at this point, but just kind of our current business, then our implied value would be north of $340 million. So the implied share price would be somewhere between $2.80 and $5, okay? So hence, we're certainly active out there sharing this information with shareholders and certainly driving performance in our business. And I trust that all the listeners and shareholders and future shareholders on the call today understand our strategy that we're going to move from a print-first to a digital-first business or digital-first enterprise to drive client penetration, loyalty, improved gross margins, continue to focus on building this better business and bigger business over time. And then, of course, build out this digital asset management solutioning business for us as well. And we're quite excited. We're really excited about the future here, and hopefully, you all are very excited as well, okay? So with that, I just want to thank you, and then I'm going to open up the floor for questions. And I'll ask all attendees who would like to ask a question to use the instant messaging feature on the virtual interface to do so. [Operator Instructions] And we're going to answer as many questions as time permits. So we'll now give attendees a moment to type in and register the questions. And [ Fernando ] is on the call today. He's going to summarize any questions and read them out loud. And then, of course, myself and James are here to answer them. Okay.

Hi, everybody. Thank you for joining. We actually do have a question from [ Patrick Mohan ] via phone call. So operator, if you can open up that line so he can ask the question to the team. Thank you.

It's pleasure to listening to your presentation. It's very, very good. My question for you guys today is considering what we've been through with COVID over the last year plus, you delivered pretty solid results in 2020. But can you take us through how you see the quarters unfolding in 2021?

Yes, I'll take that, James. So [ Patrick ], great question. Thanks, and thanks for asking and thanks for dialing in today. I've been here 100 days now, in fact, exactly 100 days. And I'm not running this business quarter-by-quarter. Hopefully, you saw the strategy, the quick accelerated pace we've had in terms of getting a strategy for future in place. And -- it's really hard to predict consumer movements in today's COVID environment. And as I said, as a marketing communication company, we rely on consumer movements. And really what I've been focused on in the last 100 days is us building a better business, as I've said a couple of times in the presentation today, and obviously working on the fundamentals to build a bigger business and also this tech-centric business. So that's really been my focus on the first 100 days. Business transformations do take time. And we are as a company and our entire enterprise, we're fully committed to deliver an accelerated journey over the next 12 months. And the other thing I'd say is when these COVID clouds clear, we're going to have some really good -- we'll have some really good win in our sales. So [ Fern ], over to you for any other questions. [ Pat ], thanks for that question.

We have 1 more question from [ Mr. Adamson ]. What have you learned from your past experiences that you think you can apply at DCM?

Yes, [ Mr. Adamson ], thanks for the question. So I briefly touched on my experience, 36 years working for large corporate organizations, 23 years working for a combination of Mars, Incorporated and Wrigley. In fact, Mars bought -- I was working at Wrigley good 7 years there. And then I joined Mars and about 4 years later, Mars bought Wrigley, so worlds collide. So combination working at Mars/Wrigley and other large enterprises. And at Mars, I was the President of -- I ran their confectionary business in Canada. I was the Managing Director of the business over in the U.K. I ran their European business based in Hamburg, Germany, 16 markets, 14 factories, multiple product lines, multiple brands, a fairly complex business. At Goodyear, I was the Head of Sales and Marketing globally. I also was based in Dubai and ran their emerging markets business for a period of time, 62 markets, a lot of different business units between consumer and commercial and off the road and aviation. So a lot of complexity in the world that I've had experience in. And I think what I can bring and have, hopefully -- James agrees, have brought to DCM over the first 100 days has helped to simplify that complexity really, bring simplicity to complexity. Certainly, even DCM has got a lot of complexity between all the product portfolios and product lines and clients, right? So to simplify that complexity through a very focused strategic effort. And I've certainly learned that over my last 36 years. And the other is -- and I learned a lot about this actually at Mars, a $40 billion private company, really values the associates, values the employees. So the importance of building high-performance teams. Business is only as good as the engagement, the skill, the capability and engagement of the people that you have working in the organization. So building high-performance teams, getting the best of the people, ensuring that people really feel they want to come to work every day versus have to come to work every day to collect their paycheck. And we certainly know that a highly engaged associate and highly engaged teams are far more productive than teams that are disengaged. So the combination of, call it, simplicity and simplifying complexity and bringing strategy and purpose and then this high-performing -- driving a high-performing culture and engagement is really what I can bring to DCM. And as I said, I've kind of built those skills over the last 36 years working in large enterprises and highly complex multi-market organizations.

Okay. And actually, we have a follow-up question to that. So using your past experiences, this move from print to digital strategy, do you see it more as a way to drive penetration within your existing client base? Or to go after new clients?

Yes. Listen, the short answer to that is both. If you recall in my presentation, I said we have 100 active clients using our digital stack today. We have 250 enterprise clients represent 93% of our business. So we really want to penetrate those enterprise clients. And as I said, because we've been thinking like a print company versus a digital-first company, there's probably more clients that are unaware of our digital capabilities versus clients that are aware of our capabilities. So we're really accelerating that pace for existing client penetration, digital penetration. And then we're already actively in discussions with many new opportunities out there as well, and those discussions are starting with digital versus starting with print. So a combination of driving penetration of existing clients and then prospecting and delivering value to new clients as well.

Thank you. We have 1 more question from [ Michael Doumet ]. Can you speak to the M&A opportunities? What are the types of acquisition opportunities DCM would look at that would be highly accretive, particularly in the context of DCM's low trading multiple? Also, can you further expand on whether you would like -- or where you would like to see leverage ratios long term?

Okay. Well, why don't I let James take that question, I can bring some additional color to it if necessary. James?

Thanks, Richard. We made a number of acquisitions back in 2017 and then Perennial in 2018. We've been very quiet on that front over the past couple of years. Now that we have paid down our debt, our debt is now down below $40 million. Our EBITDA has been performing strongly. Maybe to start with the back half of that question, [ Michael ], we certainly want to continue to pay down debt, and we think kind of debt-to-equity ratio is well below 1 or where we're striving for. That being said, we're going to be opportunistically looking at acquisitions. I think those acquisitions would need to be highly accretive and they'd also need to be opportunities where we can really drive digital penetration, digital adoption of existing capabilities. So print companies, as you saw in our peer comparables table, they tend to trade at anywhere from 3x to 5x to 7x or 8x EBITDA. Smaller businesses tend to trade at the lower end of that multiple. We're trading at kind of, call it, 4x EBITDA right now. So that does provide some limitations in terms of what we can do. But we also have a much better kind of capital structure now with a lot better leverage. So it does provide us with some opportunities to look at good acquisitions. And again, stressed that they need to be accretive and very manageable from a kind of debt-to-equity perspective. We also look at smaller acquisitions, so opportunities that will help us maybe advance some of the shift to digital-first. They may be small kind of seed investments in developing businesses. We don't have the trading multiple to be buying stand-alone kind of software companies at this point, but there may be some teams or there may be some product lines that they are complementary to where we're going, and it might be more appropriate to buy those rather than build. Richard, do you want to add anything further?

No, I think it's great. Thank you, James. Strategy is clear. We're moving from a print-first company to a digital-first company. If we've got some opportunities to acquire, strategy to build and buy, right? If we've got opportunities to buy, and we know that they're on strategy, so we can drive digital penetration and they're highly accretive, and we can increase margin and drive productivity and gross margin improvements, then we'll certainly consider that.

Thank you, guys. Actually, [ Mr. Doumet ] also has a follow-up. States, you highlighted potential upside from revenue, gross margins and lower SG&A. While revenues are hard to forecast given its market dependencies, can you speak to the cadence of the margin expansion for the next several quarters? What are the primary initiatives aimed at driving margin expansion?

Yes. I can talk to that real quickly. Obviously, we're not going to give guidance on the future quarters. But I can tell you, we've got very active projects. In fact, we've got an active project on SG&A, active project on -- on gross margin, on $300 million of revenue. We've got 13 active change management projects right now. On the gross margin one, a couple of things. One is, and I referenced it earlier, the information that we are now extracting from ERP, we now have a lot of details, shall I say, right? Profitability, gross margin by SKU, by customer, by product line. So we're using -- we built a -- quickly built a data warehouse and we plugged Microsoft Power BI, so a business intelligence tool into that. And we're extracting some incredible insights that are really important for us to drive that productivity improvement, right, to drive that improvement in gross margin. So that is one opportunity for gross margin improvement, sort of manage, what I call, mix, both customer mix and product mix. Obviously, as we move our business to more digital or more tech-enabled as well as the introduction of digital asset management solutioning, those are higher-margin businesses as well. The second is really driving hard on operational excellence. In fact, we've got an active, 1 of the 13 projects is an OpEx project, and that obviously has direct contribution to gross margins. And then the third is what we call revenue management, right, looking at pricing opportunities in the marketplace as well. So revenue management, business intelligence and operational excellence are all kind of active programs within our gross margin, 35 to 40 project, if you will. So I think we're -- one thing I've had a lot of experience in my career working for large enterprises is, as I said in my presentation, right, gross margin is your best friend. So really making sure that we've got that gross margin-centric focus as a business. [ Michael ], any further questions on that? Or is that clear?

Thank you, Richard, James. That's no further questions from [ Michael ] and no further questions on the board as well. I'll pass it off to you -- you 2 to sign it off.

Right. Okay. Thanks, [ Fern ], and thank you, everyone, for joining our call today. I really appreciate it. As we conclude our AGM, I wanted to take a moment to thank everyone who helped put this event together. And of course, thank all the participants, right? I know you've taken time out of your busy days. Our strategy, hopefully everybody on the call today can see, is clear strategy moving forward, moving from print-first to digital-first. And as we do this, we're going to strive to create significant value for our clients, obviously, the most important thing, and significant returns for our shareholders. While I said, I've only been here at DCM for exactly 100 days, I'm fortunate to be surrounded by really highly talented associates and highly talented employees. And this tech development that we've discovered, this great tech capability the company has, that really is going to drive the company forward. And as we continue to develop our digital-first strategy, I am really -- I'm really super confident that we can deliver sustainable results and build both a bigger and better business over time as well. So I look forward to -- look forward to our -- I guess, our AGM next year, but we're always available for questions, myself and James and anybody in the company for that matter, so please reach out. And I hope you're as excited as I am and as James and the entire associate base or talent base and the Board about our plans moving forward. Thank you, everyone.