All righty, right. Sorry, we're going to start right at 5:00. I think we can get started here real quick. Next up presenting here at the Planet MicroCap Toronto 2026, powered by MicroCapClub, going in at the 5:00 P.M. Eastern slot, very much appreciate that. We got James Lorimer from DATA Communications Management.
Thanks very much, Bobby. Great to be here. James Lorimer, I'm the CFO at DATA Communications Management. We have the obligatory forward-looking statements disclosure, and we will also be referring to some non-IFRS standards measures. Details can be found in our public disclosure on SEDAR+.
Agenda for today, I'm going to provide a brief overview of DCM, talk a little bit about what we're doing to build a tech-enabled services platform, highlight a recent acquisition we made in July this summer, which we're very excited about, talk a little bit more about some other acquisitions we've made over the years, and give a brief financial overview.
What is DCM? We're a leading technology-enabled services provider of print and marketing communications solutions. What does that mean? Really, at the core of our business is managing complex print and marketing communications needs for our clients.
We're about CAD 450 million in revenue. With our recent acquisition, we're about 1,600 employees. Primarily located in Canada, we're right across the country. We have a small facility in Niles, which is just outside of Chicago. Core to us is our enterprise client base, and we work with all leading enterprises across primarily Canada, and we followed a lot of our Canadian clients as they've expanded into the U.S.
We do have 19 facilities across Canada, really kind of nine or 10 key manufacturing facilities, and then some smaller print-on-demand sites and some sales offices to serve local clients in other areas. Last year, we generated about CAD 60 million in adjusted EBITDA, which is about 13.5% of revenue. And we generate very strong free cash flow. Last year, we generated about CAD 25 million in cash from operations. I think what we're probably most proud about is our client base.
We literally work with some of the best kind of blue-chip clients across the country. Primary sector that we serve would be financial services. So think about any of the Canadian banks, any large insurance companies. We also work with the largest retailers, both think about big box, grocery, pharma. That's a big market for us. And then across a number of other sectors. There's some kind of unique sectors we serve, for example, the lottery market.
We work with virtually all the Canadian provincial lottery companies, providing tickets that you'd buy. So think about a 6/49 ticket or other types of lottery tickets. We've got a very strong and loyal customer base. Most of our clients have been with us for many, many years. Over 10-year relationships with our top 25 customers, many of whom have been with us for 25 and even 50 years.
We are pretty diversified in terms of our customer base, so no customer is more than 5% of revenue, and about 90% of our revenue comes from our largest 250 clients. Here is a bit of a snapshot to show our footprint across the country. We do have really five manufacturing facilities in the Greater Toronto Area, plus a large warehouse in Oshawa that helps serve our Montreal and Quebec clients, and a large factory in Calgary and a couple of large factories in Quebec.
One is in Montreal, one is in Drummondville, just outside of Montreal. We added this chart here just to show a little bit of the kind of try and convey the complex needs of our clients, and this highlights really six of our top 15 clients. We want to convey that we don't just provide one solution to our clients.
For example, with the first client, who is a large Canadian bank, we do all their conventional print. We do a lot of direct mail products for them, labels that would be on packages you get from the bank or otherwise, we do large format signage. Think about anything that you walk into a bank branch, anything that's behind the counter, on the floor, on the wall, something that comes to you in the mail from that bank.
We're managing all those complex communications. With one bank in particular, we also manage their rewards program, which is a really strong market and one that we see growth in. On the far right column here, DCMFlex, that's really kind of our platform. We call it our tech-enabled platform. That's deeply embedded into our clients.
When the CEO of this bank orders his business cards, he's using our platform to do that. When they're looking for a large distribution across the country to all their hundreds and thousands of branches, they're using our platforms to do that. So we have some really deep embedded offerings with our clients that really makes us a core part of their solutions to their clients. Print market, people think that the print market is dead.
We think it's actually not dead. It's growing, and it's actually changing. Big trends towards personalization, customization. It's about a CAD 10 billion market in Canada, of which we're about 5%. So we do have a large part of the market that there's still an opportunity to grow. Some of the higher growth segments that we really like are highlighted here in a quote from our CEO.
They include packaging, and for us, that's more paperboard packaging, labels, large format signage and displays, and in-store marketing, which is really a good, solid growth market. We want to give a little bit of a history of how we've built our platform. Our CEO, Richard Kellam, joined the company just over five years ago now and really came up with a philosophy that we've been living by since then, it's digital first.
We used to think like a print company and print first. Now everything we do, we're leading with digital and technology. Couple of platforms that we've bought or acquired. We have a platform we call OptiChanl, and that's a large campaign management offering or solution that helps our clients procure and distribute product to hundreds, if not thousands of branches and stores right across the country.
We've got, for example, a couple of large QSR clients that are using this platform, and they're using it for in-store signage, for menus, and to make sure that the right marketing material is getting to the right store at the right time in the right quantities. We bought a small company in 2024 out of New Zealand, does social media marketing and analytics. This is our second dabbling in AI.
It uses AI to help better understand what's performing for companies in terms of their social media messaging. Is it reels on Instagram? Is it videos on another platform? And you can compare different competitors and see what's working for one and how you can learn from how your competitive positioning is. We also have a digital asset management platform we call contentcloud.ai that's AI enabled.
Think about storing hundreds and thousands of digital images, marketing material, logos, different types of collateral, and be able to access it by typing in natural language. I want a picture of a blue car with a forest behind it, with people in front of it. You can type that in and access that.
Really an example of how we think about digital first. We recently acquired a company called Octacom, and I'll get into that in a little bit more detail, but that's given us exposure to a really fast-growing segment of the market that is very complementary to our core platform.
In fact, tech services generated about CAD 28 million for us last year. A combination of subscription services and programming services and fees was about CAD 20 million. And we also sell tech hardware, which was about CAD 7.5 million last year. That's a growth market for us.
Plays into things like digital screens and scanning equipment. Big market for us is the healthcare sector, where we have solutions for patient identification. So we have a really broad, diverse segment of clients that we're serving. Tell you a little bit about the Octacom acquisition, but before I do that, I wanted to talk to you about IDP or Intelligent Document Processing. Really what that is taking scanning of forms and documents to another level.
With the advent of AI, it's really transformed the types of information and data that you can pull out of historically physical stored documents. OCR was the first leg of this growth in this market, and with natural language processing, machine learning, and AI, it's really provided some tremendous growth opportunities in Intelligent Document Processing.
Some of the key drivers here, I don't think there's any surprise the explosion of unstructured data, the rapid breakthroughs that we've seen in AI in the last year, let alone the last three months. Things are changing so rapidly. With intelligence, now you can really see what is that data that was on that PDF before, or what was in that. I'm getting digital documents all the time.
How do we interpret that and ingest that into our operating systems and our CRM platforms to really make sense of all the data that we're seeing? Regulatory compliance in Canada in particular is a real driver to this market, and some of the right to access laws, PIPEDA, which is the privacy rules, are being upgraded and changed, led by Quebec's Law 25, and in Canada federally, Bill C-36.
What these rules mean is that you have the right as an individual to go into a bank branch or your law firm and ask them to give you all the personal information they have on you, and you can walk that across the street. Most organizations have no idea what personal information they have on you, and everyone's scrambling to try and figure that out. That is where IDP comes in to help solve that problem. Big sectors where IDP is important really align up with some of the markets that we are very active in ourselves at DCM.
We work with federal government agencies, we work with provincial government agencies, municipal governments, and this is a big opportunity for the market. Healthcare market is also important. Think about all the clinical records that are maybe stored on paper or doctors' prescriptions that are scribbled out.
How do you read that? How do you ingest that into a system at scale and make sure that it is accurate? Biggest market for us at DCM is the BFSI market. Think about banking and finance and insurance and all the various documents that go along with that for account opening, mortgage documents, et cetera. Transportation is a big market where historically we would have provided the business forms that get filled out when delivery happens.
Now you can take that form and digitize it and make sense of that at the end of the day. It gets all scanned and uploaded, and now you actually have some intelligence rather than having a bunch of paper. We are potentially going to cannibalize our historical market, but we see this as a real natural evolution for us. Why we like the IDP market, it is growing.
30%+ CAGR compared to the print market, which is probably in the 1%-2% market. This gives us a real growth engine. Octacom was probably one of the largest companies in its space in the Canadian market. Revenue in the last 12 months of about CAD 23 million. It has been growing at about the market rate in that kind of 30% range over the past three years. They also have a highly recurring revenue base.
About 10% of their revenue is derived from a SaaS offering they have called Odiss, which is a product that they offer to their clients. It allows the digitization and the gathering and processing of all this information. We had a small IDP business before we made the Octacom acquisition, but we had a huge pipeline of opportunities.
Rather than paying a third-party vendor CAD 0.02 per image, or call it 20% of an image, now we have that technology as our own. We got a great technology there. The company has actually been around for a long time, so it has got a long history. Like our business, it generates very strong free cash flow. Here is a sample to walk you through their process. You capture a document, whether it is through email, scanned, mobile, or other applications.
It gets read, translated, data gets extracted, goes to the customer. Where AI has really had a huge impact here is on the validation. Where validation rates used to be in the 60%-70% range, now they are in the high 90% range using AI. That kind of people in the loop is much less important.
As scale with everything, the throughput is becoming a lot more critical for folks. We can integrate this data into existing ERP systems, CRM systems, and other platforms. So now our clients can figure out what to do with that data. For us, it was a real kind of slam dunk, a great fit for us. It really helps us accelerate our leadership in IDP.
We put out a press release this morning. Since the acquisition, we have announced now a total of five new customer wins. Two of those customer wins have been DCM clients that we are now applying the Octacom applications to. In aggregate, the four we announced today were about CAD 1.5 million.
The fifth that we announced, we did not previously announce the acquisition, but all in we are north of CAD 2 million of incremental revenue since the acquisition just three and a half months ago. A real kind of critical part to this offering is enterprise-grade security. Our history and roots of high security, high compliance, dealing with leading banks and insurance companies and others.
We have had to have these kind of key elements as part of our offering for many years, so it is kind of a natural fit. I wanted to just kind of summarize, we have had a pretty good acquisition history. I have been with the company for 11 years now.
Over that period, I guess we have made about seven acquisitions. Some of those acquisitions in the early years were complementary print offerings that deepened our expertise in commercial print and in large format.
We also bought a company called Perennial that gave us strong expertise in retail marketing solutions. We made a transformational acquisition in 2023. We acquired the Canadian operations of R.R. Donnelley. That was a heavy lift. We took out a total of four facilities and over 430 people, integrated all our operating systems, and so now we go to market as one company.
We bought a small company called Zavy a few years ago, as I mentioned earlier, and then Octacom is the latest acquisition. Really the key difference between some of the earlier acquisitions were giving us additional capabilities in conventional print. The Moore Canada acquisition was really a synergy play. We had significant synergy opportunities there with headcount and efficiency utilization increases. Octacom is really about growth. Quick snapshot here.
With the Moore Canada business in 2024 combined, that helped us grow to about CAD 480 million in revenue. We did have some headwinds in 2025. We had a Canada Post strike at the end of 2024, and Canada Post is not only a large customer of ours, but a lot of our end products end up going through the postal stream. So with that disruption, plus a further strike in May of 2025, that took a little bit of the air out of our sails.
Yes, sails, the S-A-I-L-S, let alone top-line sales, I guess. Double entendre. But we did a good job protecting our margins. You can see our adjusted EBITDA. Despite revenue coming down by about CAD 30 million, adjusted EBITDA held in at CAD 60 million.
We are pretty confident that with the firming up in the postal system, which happened several months ago, plus while trade and uncertainty in the markets have caused some challenges in 2025, we are starting to see a recovery. We have guided the market that we will look for year-over-year growth in the second half of 2026, which we are now in. Despite some bumps along the way, we have continued to generate strong operating and free cash flow. in 2024, we made some significant investments in capital.
Post the Moore Canada acquisition, you can see 2025, our CapEx kind of moderated. We are kind of consistently in the CAD 4 million-CAD 5 million range of CapEx going forward, so we will expect to see continued free cash flow generation in 2026 and into 2027. Net debt, we levered up a bit for the Moore Canada acquisition, but you can see we have got very good discipline.
Just before the acquisition of Octacom, our net debt was sitting about CAD 65 million. We did finance CAD 45 million of the acquisition with debt. You will see our debt numbers will go up when we report Q3, but we are confident that we can maintain good kind of net debt to EBITDA coverage going forward. We do pay a dividend, CAD 0.025. When this was done, we were yielding about 3.4%.
I think we are probably about 4%-4.5% now. We have got a share buyback, so we have been buying back some shares in the market. We are certainly attuned to paying capital back to shareholders. In summary, we are really pleased with the acquisition. We have seen some really good early success from customer wins and kind of cross-selling. Really great collaboration with the team.
The business gave us kind of access to a much higher growth segment of the market, which is very complementary to our own business. We put a brand new credit facility in place for the acquisition. We are pleased with the support we have had from our lenders, and we are looking forward to continuing to support shareholders going forward.
Brief update. Any questions? I think we have got a couple of minutes, and I am around this evening and tomorrow for any further questions. All right. No questions? All right. Well, thanks very much.