Quorum Announces Acquisition of DealerMine Inc.
CALGARY, Alberta, Nov. 05, 2018 (GLOBE NEWSWIRE) — Quorum Information Technologies Inc. (TSX Venture: QIS) (“Quorum” or the “Corporation”) announced today that it has completed the arm’s-length acquisition (the “Transaction”) of DealerMine Inc., DealerMine USA Holdings Inc., and DealerMine USA Inc. (collectively, “DealerMine”) pursuant to a share purchase agreement dated October 31, 2018 (the “Agreement”) between Quorum and Powerband Global Inc. (“Powerband”).
Headquartered in Saint John, New Brunswick, Canada, with automotive dealership customers across Canada and the United States, DealerMine’s key products and services include the following:
- Service Customer Relationship Management (“CRM”) software;
- Sales CRM software; and
- Business Development Centre (“BDC”) / call centre services.
There are many strategic reasons for the transaction, including:
- Accelerating Quorum’s strategy to be a full-service provider to automotive dealerships by adding DealerMine’s complementary product set and BDC services.
- DealerMine is a fast growing business with a proven management team and a large number of very successful dealership customers.
- DealerMine’s Service CRM products and BDC services have a strong growth opportunity within the existing Quorum customer base.
- The Transaction significantly expands the new combined Company’s scale and footprint in the automotive dealership software space.
- Quorum expects some economies of scale in the areas of industry events/memberships, government financing/programs and OEM relationships/programs across the combined entity.
- Quorum expects the Software as a Service (“SaaS”) revenue, BDC revenue, EBITDA and cash flow from the Transaction to be immediately accretive.
Maury Marks, Quorum’s President and CEO stated, “The DealerMine team, under Robert Quirion’s (President of DealerMine) leadership, has a proven track record of developing exceptional CRM products for Sales and Service as well as providing exceptional BDC/call centre services that are successful in the North American retail automotive market. They also have many other innovative products like integrated Desking and OnLine Service Scheduling that complement their Sales and Service CRM offerings and have incredible growth potential. Robert and the DealerMine management team will remain in place to manage the business from Saint John, New Brunswick. The DealerMine team will continue to provide their products and services to their expanding customer base and will continue to be Dealership Management System (“DMS”) agnostic as they grow their business. We are delighted with the strong DealerMine brand in the automotive retail market and the company’s reputation of helping dealerships increase both their revenue and customer satisfaction.”
Marks continued, “At the time of the Transaction, only a few current Quorum customers subscribe to the DealerMine suite of products and, therefore, we plan to offer their Service CRM products and BDC services, in particular, to Quorum Dealership Management System (“DMS”) customers. Together we can provide Quorum DMS customers with a more integrated end-to-end business process for their dealerships’ service and parts operations and help drive more revenue growth in these critical departments.”
Robert Quirion commented, “We see the acquisition of DealerMine by Quorum as a key strategic move that will help Quorum form a true full-service software and services company for the automotive retail sector across North America. We are delighted that our management team and staff will continue to have the autonomy to innovate, grow our business and support our exceptional customers. For our customers, it will be business as usual and they will experience the same product innovation and support from our organization that they have come to expect.”
Under the terms of the Agreement, the Corporation will acquire from Powerband all of the issued and outstanding shares of DealerMine for consideration comprised of a combination of $9.625 million in cash and $4.375 million in Quorum shares valued at $0.58 per share based on a 30-day volume weighted average price, which equates to 7,543,103 Quorum shares. Quorum will finance the $9.625 million with $2.125 million from current cash reserves and the balance of $7.5 million will be financed with a one-year bridge debt facility from Covington Capital, which Quorum plans to replace with a longer-term financing solution. Under the initial Covington facility Quorum will pay only interest payments, with the interest rate at 0% for the first two months and 12% for the remaining ten months.
Some key DealerMine unaudited metrics are as follows:
- Customers: 413 dealership rooftops.
- Customer Distribution: 85% of the rooftops are Canadian dealerships and 15% are U.S. dealerships.
- Quorum customers with DealerMine Service CRM: 15 rooftops.
- SaaS and BDC revenue for the 12 months ended September 30, 2018 was $7.0 million and $4.8 million respectively. Including Other revenue of $0.6 million the Total revenue for the 12 months ended September 30, 2018 was $12.4 million. Total expenses for the 12 months end September 30, 2018 was $11.6 million and EBITDA was $0.8 million
- SaaS and BDC revenue for the 12 months ended September 30, 2017 was $5.8 million and $4.5 million respectively. Including Other revenue of $0.5 million the Total revenue for the 12 months ended September 30, 2017 was $10.8 million. Total expenses for the 12 months end September 30, 2017 was $10.6 million and EBITDA was $0.2 million.
Presidio Technology Partners acted as financial advisor to DealerMine in this Transaction.
A conference call has been scheduled for Tuesday, November 6, 2018 at 11:00 AM MT, at which time Maury Marks, President and Chief Executive Officer, and Marilyn Bown, Chief Financial Officer, will provide a presentation on the DealerMine Acquisition followed by a question and answer period.
Anyone wishing to participate in the call is asked to dial-in using the following numbers and ask for the Quorum Information Technologies Inc. DealerMine Acquisition Conference Call. Callers are asked to dial-in 10-15 minutes before the scheduled start time.
Details for anyone wishing to participate in the conference call are:
|Local:||1 (403) 451-9838|
|Toll-Free North America:||1 (888) 231-8191|
A replay of the conference call will be available beginning at 13:45 MT on November 6, 2018 until 21:59 MT on November 20, 2018, and can be accessed by dialing:
|Local:||1 (403) 451-9481|
|Toll-Free North America:||1 (855) 859-2056|
A replay of the conference call will also be available for at least 30 days following the call on Quorum’s website, under the Investors section, at www.quorumdms.com.
Quorum is a North American company focused on developing, marketing, implementing and supporting its automotive dealership and customer management system, XSellerator. Quorum offers the system to franchised, independent and some non-automotive dealerships in Canada and the United States. XSellerator automates, integrates and streamlines every process across departments in a dealership. The system includes tools designed to maximize revenue opportunities for dealerships such as Customer Relationship Management and service inspection and quoting processes. Quorum is a Microsoft partner and XSellerator is developed with modern mobile-enabled technology. Quorum Information Technologies Inc. is traded on the Toronto Venture Exchange (TSX-V) under the symbol QIS and in 2016 was selected to the TSX Venture 50®, an annual ranking of the strongest performing companies on the TSX Venture Exchange. For additional information please go to www.QuorumDMS.com.
This news release contains forward-looking information. Forward-looking information involves risks, uncertainties and other factors that could cause actual events, results, performance, prospects and opportunities to differ materially from those expressed or implied by such forward-looking information. Forward-looking information in this news release includes statements with respect to the anticipated timing of closing of the Transaction, the Corporation’s plans to integrate DealerMine with the operations of Quorum and management’s expectations of the effect of the Transaction on Quorum’s operations, financial performance and strategic position in certain market segments. Material assumptions and factors that could cause actual results to differ materially from such forward-looking information include market and industry conditions affecting Quorum’s operations, the successful integration of DealerMine’s products, employees and customers with Quorum, and the successful execution of Quorum’s strategic initiatives involving DealerMine.
Although the Corporation believes that the material assumptions and factors used in preparing the forward-looking information in this news release are reasonable, undue reliance should not be placed on such information, which only applies as of the date of this news release, and no assurance can be given that such events will occur. The Corporation disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, other than as required by law.
Neither the TSX Venture Exchange nor its regulation services provider (as that term is defined in the policies of the TSX Venture Exchange) has reviewed this release and neither accepts responsibility for the adequacy or accuracy of this release.
Contact: Maury Marks