DH Corporation Announces Reallocation of Capital and Reduction in Dividend to Further its Transformation as a Leading Fintech Company
TORONTO, Nov. 21, 2016 /CNW/ - DH Corporation (TSX:DH) ("D+H" or the "Company"), a leading provider of technology solutions to domestic and global financial institutions, today announced that its Board of Directors has determined to reduce the quarterly dividend from $0.32 per share to $0.12 per share, effective January 1, 2017, which is consistent with the ongoing strategic transformation of D+H into a leading FinTech company.
The reduction in the dividend will provide additional capital for the Company to repurchase shares, reduce debt, and invest in the growth of the business. Since going public in 2001, D+H has paid in excess of $1.1 billion in dividends and distributions to its owners. Including the dividend payable on December 30, 2016, the Company will have paid approximately $124 million in cash dividends to shareholders in 2016.
Cash totaling approximately $85.5 million is anticipated to be available in 2017 through the dividend reduction. The Company currently expects to allocate approximately 45 - 50% towards repurchasing shares, approximately 40 - 45% towards reducing debt and the remaining towards investing in ongoing organic growth initiatives in payments and lending.
"Over the last several years, D+H has been executing on its strategic transformation into a global financial technology provider. The decision we announced today is consistent with that direction and enables us to position our capital structure to support this continued evolution," said Gerrard Schmid, Chief Executive Officer of D+H. "We are taking a deliberate and thoughtful approach to our capital allocation program and believe it is important that our capital structure reflect the go-forward requirements of the Company. We believe the decision to reduce our dividend at this time is in the best interest of the Company, and will support our shareholder value and growth objectives by providing additional capital to repurchase shares, reduce debt, and invest in the Company. As we pursue our strategic objectives, our entire organization remains focused on providing our customers with the high-quality solutions they have come to expect from D+H as a leading financial technology provider."
"Today's announcement, together with our November 10, 2016 announcement of amendments to our debt covenants, reflect D+H's commitment to building a company that has the appropriate capital structure for its development as a leading FinTech provider," said Paul Damp, D+H's non-executive Chairman. "Our intention to implement a share repurchase program in 2017 further supports our view of an appropriate approach to deliver value to shareholders. The Company generated net cash from operating activities of approximately $289 million in the most recent 12 months ending September 30, 2016. We utilized this cash to pay dividends of $115 million, invested $97 million of capital to support growth in the business, and repaid $80 million in debt."
The first regular quarterly dividend of $0.12 per share (equivalent to $0.48 per share annualized) is expected to be declared in February 2017 and paid in March 2017. The previously declared quarterly dividend of $0.32 per share for shareholders of record at the close of business on December 16, 2016, will be paid on December 30, 2016.
D+H (TSX: DH) is a leading financial technology provider that the world's financial institutions rely on every day to help them grow and succeed. Our global payments, lending and financial solutions are trusted by nearly 8,000 banks, specialty lenders, community banks, credit unions, governments and corporations. Headquartered in Toronto, Canada, D+H has more than 5,500 employees worldwide who are passionate about partnering with clients to create forward-thinking solutions that fit their needs. With annual revenues in excess of $1.5 billion, D+H is recognized as one of the world's top FinTech companies on IDC Financial Insights FinTech Rankings and American Banker's FinTech Forward rankings. For more information, visit dh.com
CAUTION CONCERNING FORWARD-LOOKING STATEMENTS
This press release contains certain statements that constitute forward-looking information within the meaning of applicable securities laws ("forward-looking statements"). Statements concerning D+H's objectives, goals, strategies, priorities, intentions, plans, beliefs, expectations and estimates, and the business, operations, financial performance and condition of D+H are forward-looking statements. The words "believe", "expect", "estimate", "intend", "may", "will", "would", "could", "should", "continue", "goal", "objective", and similar expressions and the negative of such expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.
Certain material factors and assumptions were applied in providing these forward-looking statements. Forward-looking information involves numerous assumptions including projections, completion of bookings, successful project implementation, operating expense levels, volumes and values for products and transaction processing services in the Canadian segment and implementation of our global operating realignment. Projections may be impacted by macroeconomic factors, changes in the value of the Canadian and U.S. dollar relative to other currencies, the timing of client decisioning on technology investments, the pace of implementation of technology by the customer, in addition to other factors not controllable by the Company. D+H has also made certain macroeconomic and general industry assumptions in the preparation of such forward-looking statements. Management believes that the expectations reflected in forward-looking statements are based upon reasonable assumptions; however, Management can give no assurance that actual results will be consistent with these forward-looking statements. Not all factors which affect our forward-looking information are known, and actual results may vary from the projected results in a material respect, and may be above or below the forward-looking information presented in a material respect.
Actual declared dividends will be subject to the discretion of the D+H Board of Directors and may vary from the intentions stated depending on, among other things, the Company's earnings, financial requirements, and other conditions existing at such future time. Any share repurchase program implemented by the Company will be subject to receipt of all necessary regulatory approval and compliance with applicable laws.
A comprehensive discussion of the risks that impact D+H can be found on the Company's most recently filed Annual Information Form and the most recently filed annual MD&A for the year ended December 31, 2015, available on SEDAR at www.sedar.com.
D+H does not undertake any obligation to update forward-looking statements should the factors and assumptions related its plans, estimates, projections, beliefs and opinions, including those listed above, change except as required by applicable securities laws.
All of the forward-looking statements made in this press release are qualified by these cautionary statements and other cautionary statements or factors contained herein and there can be no assurance that the actual results or developments will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, the Company.
REGULATORY FILINGS AND ADDITIONAL INFORMATION
DH Corporation is listed on the Toronto Stock Exchange under the symbol DH. Further information can be found at dh.com and in the disclosure documents filed by DH Corporation with the securities regulatory authorities at sedar.com.
SOURCE DH Corporation