DSS: DSS begins generating revenue from new businesses and breaks even in cash flow in the fourth quarter


By Lisa Thompson

New York Stock Exchange:DSS


After considerable investment, DSS SSD begins to see revenue increase from new ventures. For the first time this quarter, the company generated revenue from its lending bank as well as its investment management business. Additionally, the REIT’s income began to increase with the purchase of additional real estate. These high-margin revenues resulted in the first positive cash flow quarter for the company in years, although free cash flow suffered as it spent $11.5 million in cap ex on new press and a new factory. The bad news is that the consolidation of Sharing, which will be evident in the first quarter of 2022, will put it back into negative cash territory.

We expect the addition of Sharing and the growth of all of its other businesses could boost revenue for 2022 to $70 million, although we expect the company to continue to be in a negative cash flow and loss position. throughout the year. Premier Packaging now has double the filling capacity and if it hadn’t had to face a shortage of paper, it could have filled it quickly. Paper supply is his biggest issue right now and we’ll have to see how that affects revenue until it’s resolved. We know that if he had had more paper in the fourth quarter, he could have had higher revenues.

In 2022, DSS must prove itself and perform. With a current enterprise value of $56 million or 0.8x estimated EV/2022 sales, it shouldn’t take much to push the stock higher if the company halts dilution and posts solid growth in earnings. income and success in its new activities. The plan is still to create a spinoff of the biomedical, REIT and banking business — all three could possibly happen this year, and that would only improve returns for investors. Impact BioMedical is the most advanced and we were expecting an updated S-1 with December financials in April.

Revenue grew 37% in the fourth quarter, helped by REIT and Bank revenue

In the fourth quarter of 2021, DSS revenue reached $7.1 million, up 37% from $5.2 million restated in the first quarter of 2020. Packaging, printing and manufacturing increased 5.9% year-over-year. It has been sold out for the remainder of 2021 and into early 2022. Since its new press was installed in the first quarter of 2022, it has doubled its 2021 capacity. Given capacity constraints, Walgreens and Shutterfly, its two major customers, were given priority in the fourth quarter and other orders were limited or refused. The new capacity is now starting to fill up and by the third quarter the company should have filled it if it can get enough paper. If it could generate $5 million in revenue per quarter before expansion, we could see $10 million in print products by Q4 2022. Direct marketing grew 65% to $876,000, while the REIT, with its purchase of hospitals in Texas and Pennsylvania, grew to $1 million in revenue during the quarter. The REIT’s revenue in the fourth quarter all came from the Connecticut building plus two months from hospitals. On November 4, 2021, he purchased three hospitals for a total of $62 million located in Fort Worth, Texas, Plano, Texas and Pittsburgh. DSS intends to take the REIT public once it reaches an appropriate size which it estimates to be around $100-150 million in real estate value. This could happen as soon as the end of the year, depending on how the company decides to allocate available capital. Even the bank generated $250,000 in revenue from the loans.

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