Dye & Durham talks Proud, covenants in investor FAQ

Executive Summary

• Dye & Durham Ltd. issued an updated FAQ to clarify its preliminary unaudited fiscal 2025 and Q1 fiscal 2026 results, specifically addressing revenue recognition changes, covenant compliance, and a legal dispute with Matthew Proud and Plantro Ltd.
• The company confirmed it remains in compliance with leverage covenants for the periods ended June 30, 2025, and September 30, 2025, but is seeking a waiver for a late filing of quarterly financials for the period ended September 30, 2025.
• A key legal development involves Matthew Proud and Plantro Ltd. consenting to a temporary injunction to comply with a co-operation agreement pending a final court decision.

Key Details

• Financial Clarifications:
  • Fiscal 2025 revenue was down 3.7% to approximately $440.6 million (unaudited), a decline of ~$17.1 million year-over-year.
  • Approximately half of the revenue decline is attributed to macroeconomic headwinds, customer contract renewals, and reduced acquisition activity.
  • The remaining decline reflects a reclassification between direct costs and gross revenue; this reclassification had no impact on unaudited adjusted EBITDA or cash flow.
  • Q1 FY 2026 results already reflect this revised revenue treatment.
  • Tables were updated to correct the mislabeling of the quarter ended Sept. 30, 2025, from "audited" to "unaudited" and to align TTM figures.
• Covenant Compliance & Waiver Request:
  • The company expects to be in compliance with financial covenants under its senior credit agreement for the fiscal periods ended June 30, 2025, and September 30, 2025.
  • The company is working with the administrative agent for senior secured lenders to request a waiver for failing to deliver quarterly financial statements for the period ended September 30, 2025, by the required date.
  • The senior credit agreement includes a 30-day cure period. If the waiver is not obtained or the default is not cured on or before December 17, 2025, an event of default will occur, allowing lenders to exercise rights defined in the agreement.
• Legal Update (Proud/Plantro):
  • On November 16, 2025, lawyers for Matthew Proud and Plantro Ltd. advised that their clients will consent to a temporary injunction sought by Dye & Durham.
  • This consent order will require Mr. Proud and Plantro to comply with the terms of the co-operation agreement until the court makes a final decision in the case.

Notable Quotes

• "To give stakeholders greater visibility into approximately how the business is performing. This ensures all parties have equal access to the same publicly available unaudited financial information." (Regarding prereleasing unaudited results)
• "The reclassification had no impact on unaudited adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) or cash." (Regarding revenue presentation changes)