Data Communications Co. a Top Performer on Exchange in 2023

Data Communications Management Corp. (DCM:TSX; DCMDF:OTCQX) has been named the fifth-best performing company on the OTCQX exchange in 2023.

The Toronto print and marketing services company, which completed a big acquisition last year, was listed behind three mining and exploration companies and a crypto asset manager.

The year "was a transformative year for our company highlighted by the acquisition of Moore Canada Corp., which added significant scale to our business and positions DCM for sustainable long-term success and value creation," said President and Chief Executive Officer Richard Kellam. "The transaction also generated significant interest from the capital markets and liquidity in our shares.”

The OTCQX bases the list on the top 50 U.S. and international companies traded on the OTCQX Best Market based on equal weighting of one-year total return and average daily dollar volume growth.

"We congratulate this year's OTCQX Best 50 companies on their ability to achieve a high level of performance during another challenging year for market conditions," said OTC Markets Group Executive Vice President of Corporate Services Jason Paltrowitz. "This year's roster represents a diverse set of industries and geographies that clearly demonstrate the value global cross-border trading can provide for companies."

Noel Atkinson with Clarus Securities noted, "There is also increasing evidence of DCM building an economic moat within the Canadian commercial printing sector after the MCC acquisition."

The rest of the top five was Bravo Mining Corp. (BRVO:TSX.V; BRVMF:OTCQX) in first place, Collective Mining Ltd. (CNL:TSXV) in second place, Grayscale Bitcoin Cash TR BCH (BCHG:OTCQX) in third place, and LithiumBank Resources Corp. (LBNK.WT:TSX.V; LBNKF:OTCQX) in fourth.

Bravo Mining is a Canadian and Brazil-based exploration company focused on its Luanga PGM (platinum group metals)-Gold-Nickel project in Brazil with a market cap of CA$298.48 million.

All 50 companies on the list combined for a total of US$11.4 billion in volume last year, the exchange said. Investors made a median total return of 77% on them, and the median market cap was more than US$186 million – including 10 companies with a market cap greater than US$1 billion.

The Catalyst: 'Bigger and Better' Paying Off

DCM's third-quarter revenues were up 93.6% to CA$122.7 million compared to the same quarter in 2022 as the company continued to see momentum from its purchase of R.R. Donnelley & Sons' Canadian operations, Moore Canada Corp., in the second quarter for CA$130.8 million cash. The results reflected eight consecutive quarters of year-over-year (YoY) growth.

Corcoran, Atkinson, and Chris Thompson with eResearch, each rated DCM a Buy in their respective reports on its Q3/23 performance. Also, according to TipRanks, DCM is a Buy based on its technical indicators.

"The Q3/23 results demonstrate that DCM is successfully executing its 'bigger and better' strategy," Acumen Capital analyst Nick Corcoran wrote. "The integration of MCC is progressing well and ahead of target."

Noel Atkinson with Clarus Securities noted, "There is also increasing evidence of DCM building an economic moat within the Canadian commercial printing sector after the MCC acquisition."

Corcoran, Atkinson, and Chris Thompson with eResearch, each rated DCM a Buy in their respective reports on its Q3/23 performance. Also, according to TipRanks, DCM is a Buy based on its technical indicators.

Momentum Expected to Continue

On Wednesday, the company announced it had closed on the previously announced sale and leaseback of its Trenton, Ontario, facility for CA$9 million. Net proceeds of CA$8.5 million were applied toward DCM's revolving line of credit with a Canadian bank.

"DCM has now completed the planned sale and leaseback of all three owned facilities, which were included in the Company’s acquisition of Moore Canada Corporation in April 2023," the company noted in a release. "Collectively, these transactions have generated a total of (CA)$39.8 million in gross proceeds, and approximately (CA)$37.8 million in net proceeds, which have been used to pay down acquisition-related financing."

Through its digital platforms, DCM provides marketing, strategy, and creative services and management of workflow, digital assets, and print and communications to businesses in North America. Its client base is large and spans numerous sectors, including energy, financial services, retail, healthcare, and government.

"[DCM's] 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," Thompson explained.

The company's momentum is expected to continue, added Thompson. Management has committed to targeting 5% of growth per year over the medium term.

"We estimate DCM could generate over CA$60M of EBITDA in 2024," Thompson said.

DCM, over this year and into early next, due to merger synergies, expects to realize post-merger integration cost savings of CA$30 million to CA$35 million, Atkinson wrote.

The tech-enabled marketing and digital asset management (DAM) sectors are forecasted to grow annually by 15% and 21%, respectively, Thompson has said.

Ownership and Share Structure

According to Reuters, insiders own 32% of Data Communications Management. The Top 5 insider owners are KST Industries Inc. with 9.36%, Director Michael Sifton with 9.26%, Board Vice Chairman Greg Cochrane with 6.32%, Director J.R. Ward with 4.44%, and Chief Executive Officer Richard Kellam with 1.4%.

Institutions, six in all, own 6.71% of the company's shares. Of these, the top holders are CI Global Asset Management with 2.73% and BMO Asset Management with 2.19%.

Retail ownership accounts for the remaining 61.3% interest.  

Data Communications has 55 million shares outstanding and 37.5 million free float traded shares. Its market cap is CA$157.37 million and its 52-week trading range is between CA$1.28 and CA$3.81 per share.

Important Disclosures:

1. Data Communications Management Corp. is a billboard sponsor of Streetwise Reports and pays SWR a monthly sponsorship fee between US$4,000 and US$5,000.
2. Steve Sobek wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.
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