Dye & Durham Ltd. DND-T stock sold off sharply for the third time in a month Thursday after the legal software vendor said it is seeking a second extension from the Ontario Securities Commission and its lenders to file much-delayed audited annual financial statements. It also announced preliminary results that were below analysts’ expectations.
D&D stock closed the day at a record low of $3.86, down 19.4 per cent.
The company said in a release that its preliminary results for its fiscal year ended June 30 indicated revenue was approximately $440.6-million, down 3.8 per cent from the prior year, while adjusted operating earnings were $231.3-million, down 10 per cent. Its annual net loss is expected to come in at about $82.7-million, an improvement from a $174.3-million loss in its prior fiscal year.
Tyler Proud, brother of former Dye & Durham CEO, calls for chairman to step down
The company blamed the revenue decline on macroeconomic factors and the impact of customer contract renewals, but also blamed its revenue and earnings shortfalls in part on a couple of accounting changes.
First-quarter revenue, meanwhile, came in at $109.5-million, down 9 per cent year-over-year and below consensus analyst estimates of $116.6-million. Adjusted quarterly operating earnings were down 25 per cent to $49.7-million, and 19 per cent below analysts’ expectations.
D&D said based on its unaudited results it expects to be in compliance with the financial covenants under its senior credit agreements. The company also said new chief executive officer George Tsivin had launched a cost-saving program that is expected to deliver $15-million to $20-million in savings by June 30, 2027, with most of that realized by next June.
The company is also committed to a strategic review that could result in the sale of some or all of D&D. It has already announced one divesture.
In the meantime, it has asked the OSC for an extension for filing its annual audited financial statements. They were initially due by Sept. 29 and the OSC gave the company an initial extension until Nov. 29.
The company is also asking for an additional waiver from lenders to file its audited results under a senior credit agreement beyond the Dec. 1 date initially granted to ensure it doesn’t trigger a default under its obligations.
As a result, D&D said it would delay its annual meeting slightly to Dec. 31, by which time it said it expected to have filed results.
“Clearly there is a lot of uncertainty given there has been some significant management changes and we still don’t have fully audited financials, and the timing for filing is still unclear,” BMO Capital Markets analyst Thanos Moschopoulos said in an interview. He added D&D still had “a respectable base” of operating earnings and it is expected it will likely pursue additional asset sales to reduce debt.
D&D stock crashed twice in one week last month, first after former CEO Matt Proud withdrew his offer to buy the company for $10.25 a share, then when it disclosed CIBC Capital Markets had backed out of leading the strategic review. The stock is down more than 80 per cent from its 52-week high last December.
D&D has had a brutal 2025, following Mr. Proud’s exit and the election of a new board last December after a successful activist campaign led by hedge fund Engine Capital LP.
The new board’s efforts to hire a CEO dragged on as D&D’s results disappointed, and it rehired and then quickly fired a former chief financial officer.
Last month, S&P Global Ratings and Moody’s Ratings cut their credit ratings on the company, flagging concerns about its leadership and governance issues.
Mr. Proud led his own activist campaign against his former company earlier this year, agreeing to back off in July when D&D reached a standstill agreement with him. That resulted in the company okaying a tense standstill agreement that saw it appoint one of his nominees to the board. But the agreement has been tested since then, including by the company suing to enforce its co-operation agreement and accusing Mr. Proud of making misleading statements about its financial leverage and prospects.
D&D’s continuing turmoil follows years of concerns by large shareholders about the acquisitive company’s rising debt, its management and governance under Mr. Proud’s leadership, which culminated in their support for Engine’s campaign last year. Engine founder Arnaud Ajdler is chair of D&D.