Decisive Dividend Corporation Reports Financial Results for the Three and Nine Months Ended September 30, 2018

(via TheNewswire)

November 13, 2018 / TheNewswire / Kelowna, British Columbia: Decisive Dividend Corporation (TSX-V: DE) (the "Corporation") reported its financial results for the three and nine-month periods-ended September 30, 2018. All amounts are expressed in Canadian dollars. The Corporation's unaudited financial statements and management's discussion and analysis ("MD&A") for Q3 2018 have been posted on SEDAR and on the Corporation's website.

CEO Commentary:

James Paterson, Chief Executive Officer of Decisive, said:

"The additions of Slimline Manufacturing and Hawk Machine Works to the group during the second quarter had a meaningful impact on Decisive's third-quarter results. Having these two quality businesses for a full quarter enabled the group to report 129% higher revenue for Q3 2018 versus Q3 2017, and significantly increase both gross margin and EBITDA.. We are very pleased with how seamlessly the integration of these two companies is progressing. Blaze King and Unicast also performed well during the quarter. Despite supply chain challenges, including the effect of steel tariffs on their Chinese production, Unicast was able to generate gross margin in-line with Q3 2017. Blaze King continues to beat our expectations and achieved higher revenues and gross margins relative to Q3 of last year."

Q3 2018 Financial and Operating highlights:

• Revenues for the third quarter were $13.6 million, up 129% over Q3 2017;

  Revenues for the nine months ended September 30, 2018 were $24.4 million, up $8.5 million, or 53%, over the nine months ended September 30, 2017.

  Adjusted EBITDA* for the quarter, as defined in the Corporation's Q3 MD&A, was $2.6 million, a considerable increase compared to Q3 2017 adjusted EBITDA of $0.8 million.

  Adjusted EBITDA* for the nine months ended September 30, 2018 was $3.4 million compared to $2 million for the nine months ended September 30, 2017.

  Profit for the quarter was $0.7 million, or $0.06 per share, as compared to a profit of $0.2 million, or $0.04 per share in Q3 2017.

  Profit for the nine months ended September 30, 2018 was $0.7 million, or $0.09 per share, compared to a small loss of $0.01 per share for the nine months ended September 30, 2017.

  Completion of the $2.16 million over-allotment option, with respect to the best efforts public offering of common shares, that allowed for the purchase of Hawk Machine Works Ltd. in Q2 2018. This brought the total raised in this offering to $14.95 million, which was the maximum amount plus the over-allotment option. The final closing of the offering occurred on July 19, 2018.

* Adjusted EBITDA is defined as earnings before interest, income taxes, depreciation, amortization, one-time acquisition costs, and non-cash items such as stock compensation expense and IFRS fair value adjustments. Adjusted EBITDA is not a defined performance 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 and its segments. See the MD&A for a reconciliation of applicable IFRS measures to non-IFRS measures.

Review of Results - Blaze King

In Q3 2018, Blaze King recorded revenues of $4.2 million and gross margins of $1.8 million or 41.7%, compared to revenues $4.0 million and gross margins of $1.6 million or 39.0% in Q3 2017. The increase in both revenue and gross margin over the prior period is primarily as a result of higher selling prices implemented in 2018 to offset raw material price increases. Additionally, gross margin percentages can fluctuate between the quarters as a result of Blaze King's early-buy program, which is normally in place in the first half of the year, wherein dealers and distributors can choose between receiving a sales discount, or extended payment terms.

During the nine-month period ended September 30, 2018, Blaze King achieved revenues of $10.4 million and gross margins of $4.2 million or 39.8%, compared to revenues of $9.7 million and gross margins of $3.7 million or 38.8% in the same period in 2017. The 7.9% increase in sales over the same period in the prior year was a result of a year-over-year increase in units sold as well as pricing increases, which took effect in Q3 2018. The increase in units sold was a result of the success of Blaze King's early buy program, as dealers and distributors took advantage of sales and shipping incentives in the first half of 2018, as well as sales into new markets. Gross margin percentage is slightly higher relative to the prior period as the Company has more than offset price increases in raw materials with increased sales prices.

As noted above, Blaze King's business is highly seasonal, with the first and second quarters being the slowest of the year. Traditionally, Blaze King has experienced between 35% - 40% of its sales in the first two quarters of the year, and 60% - 65% of its sales in the last two quarters of the year. Blaze King has substantial fixed costs that do not meaningfully fluctuate with product demand in the short-term. This pattern is expected to continue through the remainder 2018 and 2019.

Management of Blaze King believes that the Blaze King brand has significant opportunities for growth in both the wood and gas stove sectors of the hearth products industry. Blaze King's distribution network in eastern Canada and the northeastern United States is now established and it is anticipated by management that this will lead to Blaze King increasing its share of the wood stove market in these areas. There are also market opportunities for Blaze King's products in Europe, New Zealand and Australia.

Review of Results - Unicast

In Q3, 2018, Unicast recorded $2.2 million of sales revenue and gross margin of $1.0 million, or 43.8%, compared to gross margin of $1.0 million, or 50.5%, on revenue of $1.9 million in Q3 2017. The decrease in gross margin percentage over the comparative period is primarily a result of steel tariffs on its products entering the U.S. as well as a change in sales-product mix.

In the nine-month period ended September 30, 2018, Unicast realized $6.2 million of sales revenue and gross margin of $3.0 million, or 48.6% compared to gross margin of $3.1 million, or 49.1%, on revenue of $6.2 million the same period in 2017. Gross margins for Unicast have remained relatively flat year-over-year as increased tariffs on steel products sold into the U.S. in Q3 2018 have partially offset the 2017 fair value charges on Unicast inventory initially acquired as part of the business acquisition.

The market for Unicast's wear parts continues to be buoyant as the economy continues to grow in the United States, Canada, and other markets that Unicast serves. Increased infrastructure spending has caused continued upward demand on the cement industry. Unicast is also seeing increasing demand from non-traditional markets such as the Middle East and Latin America. As noted above, steel tariffs introduced in Q3 2018, on Chinese steel products entering the U.S., negatively impacted gross margins for Unicast in the third quarter. Unicast is looking at options to source its products from foundries in other countries, however, until it is able to secure adequate suppliers outside of China, the above noted steel tariffs will continue to negatively impact gross margin.

Review of Results - Slimline

Slimline was acquired on May 30, 2018, and accordingly, only four months of results have been included in the nine-month period ended September 30, 2018. Slimline realized revenues of $1.6 million and gross margin of $0.3 million, or 15.4%, since being acquired. In Q3 2018, Slimline's gross margin was $0.2 million, or 13.2%, on $1.1 million of revenue.

Slimline's business is highly seasonal, with the first and fourth quarters being the strongest of the year, and the third quarter being the slowest. Slimline has substantial fixed costs that do not meaningfully fluctuate with product demand in the short-term. This pattern is expected to continue through the remainder of 2018 and 2019. Additionally, included in the year-to-date gross margins above are $0.2 million in non-cash charges to expense the fair value increment of acquired inventories sold in the period that were originally valued as part of the initial purchase in a business acquisition and $0.1 million of intangible asset amortization. The effect of these non-cash charges, on what is historically the slowest quarter for Slimline, was meaningful. Absent these charges, Slimline's gross margin would have been of $0.6 million, or 33.4%, for the four months since being acquired, and $0.4 million, or 32.2%, for Q3 2018.

Slimline has two primary product lines: agricultural sprayers and industrial evaporators: new management will be looking to serve the existing base in the Pacific Northwest but is also focused on aggressive expansion through a number of markets in North America and a focus on large grower operations. There are great opportunities in tree nut farms, wineries, stone fruits and citrus fruits. The industrial evaporator market is currently in its infancy, and we are looking to partner with other service providers to deliver comprehensive remediation solutions to the oil and gas and mining industries.

Review of Results - Hawk

The Hawk acquisition was closed effective June 28, 2018 and accordingly, Hawk's Q3 results are also substantially the results for the year-to-date. Hawk realized revenues of $6.1 million and gross margin of $2.0 million, or 33%, since being acquired.

Hawk management will be focusing on meeting the needs and exceeding the expectations of the current customer base as well as diversifying the Company's overall risk profile. North American exploration and production companies have been able to reduce their cost structures in response to lower oil and natural gas prices and have also utilized technologies to increase efficiency and improve well performance. This trend towards more complex wells has resulted in selling more sleeves per well on average, which increases the revenue opportunity per well completion.

Outlook

"At Decisive, we maintain a long-term perspective when looking at our businesses," stated Mr. Paterson. "I continue to be very optimistic that all of our companies remain on track with our expectations and are expected to into 2019. All of our subsidiaries are managing their identified risks and dealing and reacting to new risks and issues as they come forward. We believe our operations are well-positioned to provide continued, sustainable earnings and growth going forward. We are extremely excited to have added Slimline and Hawk to the Decisive group of companies, each of which demonstrated in this quarter the benefit to the Decisive group of an increased customer base, an expanded product offering and diversification of our overall business risk profile. We continue to monitor the marketplace for good quality businesses to acquire that will complement and further diversify our portfolio.

The Corporation's management continues to maintain a positive outlook for Decisive. Management believes that Decisive is well positioned for future growth and is continually looking for further acquisitions to bolster diversity, which adds strength and resilience to operations. Management believes that continuing to follow a balanced and disciplined acquisition approach is the best path to generating shareholder value.

About Decisive Dividend Corporation

Decisive Dividend Corporation is an acquisition-oriented company, focusing on the manufacturing sector. The Corporation uses a disciplined acquisition strategy to identify already profitable, established companies that have strong management teams, generate steady cash flow, operate in non-cyclical markets, and have opportunity for future growth.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of the contents of this News Release.

FOR FURTHER INFORMATION PLEASE CONTACT:

Mr. Rick Torriero, Chief Financial Officer

or

Mr. David Redekop, Director and Chief Corporate Development Officer

#201, 1674 Bertram Street

Kelowna, BC V1Y 9G4

Telephone: (250) 870-9146

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Cautionary Statements

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 proposed financings. 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: the failure to successfully complete the proposed financings; identification of target companies meeting the Corporation's standards; and all other risks associated with the businesses carried on by operating subsidiaries of the Corporation. The Corporation cautions the reader that the above list of risk factors is 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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