/NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR
DISSEMINATION IN THE UNITED
STATES/
VANCOUVER, BC and TORONTO, Nov.
9, 2020 /CNW/ - Converge Technology Solutions Corp.
("Converge" or "Company") (TSXV: CTS) (FSE: 0ZB)
(OTCQX: CTSDF) is pleased to provide its financial results for the
three and nine month period ended September
30, 2020. All figures are in CAD dollars unless
otherwise stated.
Recent Highlights
- Third quarter revenue increased 31% over last year to
$189.9
- Gross profit increased 50% over last year to $52.4 million and margins increased to 27.6% from
24.1% last year
- Adjusted EBITDA increased 151% to $14.6
million from $5.8 million last
year
- Signed a three-year committed $140
million revolving credit facility that will result in
material interest cost savings going forward
- Raised $54.6 million in two
equity offerings consisting of $20.1
million at $1.62 per common
share and $34.5 million at
$2.05 per common share.
- Acquired Unique Digital, a Texas-based IT Solution Provider focused on
Architecting and implementing solutions in big data, cloud,
networking, security and virtualization
- Ranked first on the 2020 CRN Fast Growth 150 List
- Achieved highest tier Titanium Partner status with Dell
technologies
"We are a much stronger company due to our Q3 activities, and
our Q3 financials show the results of our Phase 3 cost savings
initiatives and integration" said Shaun
Maine, CEO of Converge. "In Q3, we generated record
adjusted EBITDA, we raised $54.6
million in two successful bought deal equity financings and
last week we refinanced our credit facility, entering into a new
$140 million facility with a
syndicate of Canadian banks. We enter the fourth quarter with
a strong balance sheet and cost of debt that we estimate will
generate $ 8 million of annual
interest savings in addition to our significant SG&A savings.
During the quarter, we completed the integration of another three
back offices and the cost savings of these integrations and
removing duplicated front office costs are reflected in the third
quarter financial results with a $5.4
million sequential decrease in SG&A. In addition,
shortly after the quarter we announced the acquisition of Unique
Digital, a strong Dell and VMWare partner, which now gives us
access to the very lucrative Texas
marketplace."
Third Quarter Conference Call
The Company will host a conference call featuring management's
quarterly remarks and follow-up question and answer
period.
A recording of the call will be available and posted on the
Company's website. Dial-in details can be found below.
Conference Call Details:
Date: Monday, November
9th, 2020
Time: 5:00 PM Eastern Time
Participant Dial-in Numbers:
Local – Toronto (+1) 416 764
8609
Toll Free – North America (+1) 888
390 0605
Germany – 08007240293
United Kingdom - 08006522435
Conference ID: 53771605
Recording Playback Numbers:
Toronto (+1) 416 764 8677
Toll Free – North America (+1) 888
390 0541
Passcode: 771605#
Expiry Date: November
16th, 2020
Condensed Interim Consolidated Statements of Financial
Position
(expressed in thousands of Canadian dollars)
(unaudited)
|
September 30,
2020
|
December 31,
2019
|
Assets
|
|
|
Current
assets
|
|
|
|
Cash
|
$
59,051
|
$
20,590
|
|
Restricted
cash
|
8,053
|
7,848
|
|
Trade and other
receivables
|
186,349
|
220,138
|
|
Inventories
|
25,201
|
23,376
|
|
Prepaid
expenses and other assets
|
12,042
|
15,232
|
|
|
290,696
|
287,184
|
Long-term
assets
|
|
|
|
Property, equipment,
and right-of-use assets, net
|
22,012
|
27,428
|
|
Intangible assets,
net
|
89,692
|
92,047
|
|
Goodwill
|
89,858
|
80,271
|
|
Other non-current
assets
|
796
|
1,954
|
|
|
$
493,054
|
$
488,884
|
|
|
|
|
Liabilities
|
|
|
Current
liabilities
|
|
|
|
Trade and other
payables
|
$
254,185
|
$
248,218
|
|
Borrowings
|
91,402
|
142,123
|
|
Other financial
liabilities
|
26,706
|
35,734
|
|
Convertible
debenture
|
5,090
|
5,114
|
|
Debentures
|
4,013
|
3,629
|
|
Deferred revenue and
other liabilities
|
15,081
|
9,737
|
|
Income taxes
payable
|
-
|
660
|
|
|
396,477
|
445,215
|
Long-term
liabilities
|
|
|
|
Other financial
liabilities
|
27,614
|
33,111
|
|
Borrowings
|
15,158
|
14,573
|
|
Deferred tax
liability
|
5,495
|
5,862
|
|
|
$
444,744
|
$
498,761
|
|
|
|
|
Shareholders'
equity (deficiency)
|
|
|
|
Common
shares
|
83,711
|
20,612
|
|
Warrants
|
-
|
243
|
|
Contributed
surplus
|
307
|
307
|
|
Exchange
rights
|
4,853
|
6,773
|
|
Foreign exchange
translation reserve
|
(334)
|
69
|
|
Deficit
|
(40,227)
|
(37,881)
|
|
|
48,310
|
(9,877)
|
|
|
$
493,054
|
$
488,884
|
Condensed Interim Consolidated Statements of Income (Loss)
and Comprehensive Income (Loss)
(expressed in thousands of
Canadian dollars)
(unaudited)
|
|
For the three
months ended
September 30,
|
|
For the nine
months ended
September 30,
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
|
|
Product
|
$
|
143,450
|
$
|
113,797
|
$
|
509,141
|
$
|
374,316
|
Service
|
|
46,425
|
|
30,707
|
|
150,101
|
|
98,774
|
Total
revenue
|
|
189,875
|
|
144,504
|
|
659,242
|
|
473,090
|
Cost of
sales
|
|
137,480
|
|
109,615
|
|
497,163
|
|
364,856
|
Gross
profit
|
|
52,395
|
|
34,889
|
|
162,079
|
|
108,234
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
|
38,942
|
|
29,814
|
|
128,518
|
|
91,078
|
Income before the
following
|
|
13,453
|
|
5,075
|
|
33,561
|
|
17,156
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
5,180
|
|
3,225
|
|
16,204
|
|
8,409
|
Finance expense,
net
|
|
5,138
|
|
3,880
|
|
15,953
|
|
10,527
|
Special
charges
|
|
1,865
|
|
4,511
|
|
7,914
|
|
8,190
|
Other
expense
|
|
506
|
|
466
|
|
(114)
|
|
919
|
Income (loss)
before income taxes
|
|
764
|
|
(7,007)
|
|
(6,396)
|
|
(10,889)
|
|
|
|
|
|
|
|
|
|
Income tax expense
(recovery)
|
|
70
|
|
70
|
|
(1,271)
|
|
1,544
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
|
694
|
$
|
(7,077)
|
$
|
(5,125)
|
$
|
(12,433)
|
|
|
|
|
|
|
|
|
|
Other
comprehensive loss
|
|
|
|
|
|
|
|
|
Exchange loss (gain)
on translation
of foreign operations
|
|
(345)
|
|
155
|
|
403
|
|
(43)
|
Comprehensive
income (loss)
|
$
|
1,039
|
$
|
(7,232)
|
$
|
(5,528)
|
$
|
(12,390)
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
|
14,619
|
$
|
5,827
|
$
|
37,119
|
$
|
19,790
|
Adjusted EBITDA (Non-IFRS Financial
Measurement)
Adjusted EBITDA represents net loss or income adjusted to
exclude amortization, depreciation, interest expense and finance
costs, foreign exchange gains and losses, income tax expense, and
special charges. Special charges consist primarily of
restructuring related expenses for employee terminations, lease
terminations, and restructuring of acquired companies, as well as
certain legal fees or provisions related to acquired companies.
From time to time, it may also include adjustments in the fair
value of contingent consideration, and other such non-recurring
costs related to restructuring, financing, and acquisitions. The
Company uses Adjusted EBITDA to provide investors with a
supplemental measure of its operating performance and thus
highlight trends in its core business that may not otherwise be
apparent when relying solely on IFRS financial measures. The
Company believes that securities analysts, investors and other
interested parties frequently use non-IFRS measures in the
evaluation of issuers. Management also uses non-IFRS measures in
order to facilitate operating performance comparisons from period
to period, prepare annual operating budgets and assess the ability
to meet capital expenditure and working capital requirements.
Adjusted EBITDA is not a recognized, defined or standardized
measure under IFRS. The Company's definition of Adjusted EBITDA
will likely differ from that used by other companies and therefore
comparability may be limited. Adjusted EBITDA should not be
considered a substitute for or in isolation from measures prepared
in accordance with IFRS. Investors are encouraged to review
the Company's financial statements and disclosures in their
entirety and are cautioned not to put undue reliance on non-IFRS
measures and view them in conjunction with the most comparable IFRS
financial measures. The Company has reconciled Adjusted EBITDA to
the most comparable IFRS financial measure as follows:
|
For the three
months ended September
30,
|
For the nine
months ended September
30,
|
|
2020
|
2019
|
2020
|
2019
|
Net income (loss)
before taxes
|
$
764
|
$
(7,007)
|
$
(6,396)
|
$
(10,889)
|
Finance
expense
|
5,138
|
3,880
|
15,953
|
10,527
|
Depreciation and
amortization
|
5,180
|
3,225
|
16,204
|
8,409
|
Depreciation included
in cost of sales
|
1,271
|
1,348
|
4,052
|
3,488
|
Foreign exchange loss
(gain)
|
401
|
(130)
|
(608)
|
65
|
Special
charges
|
1,865
|
4,511
|
7,914
|
8,190
|
Adjusted
EBITDA
|
$
14,619
|
$
5,827
|
$
37,119
|
$
19,790
|
About Converge
Converge Technology Solutions Corp. is
a North American software-enabled, Hybrid IT solution provider
focused on delivering industry-leading solutions and services.
Converge's regional sales and services organizations deliver
advanced analytics, cloud, cybersecurity, and managed services
offerings to clients across various industries. The Company
supports these solutions with talent expertise and digital
infrastructure offerings across all major IT vendors in the
marketplace. This multi-faceted approach enables Converge to
address the unique business and technology requirements for all
clients in the public and private sectors. For more information,
visit convergetp.com.
1. Forward-Looking
Information
This press release contains certain
"forward-looking information" and "forward-looking statements"
(collectively, "forward-looking statements") within the
meaning of applicable Canadian securities legislation regarding
Converge and its business. Any statement that involves discussions
with respect to predictions, expectations, beliefs, plans,
projections, objectives, assumptions, future events or performance
(often but not always using phrases such as "expects", or "does not
expect", "is expected" "anticipates" or "does not anticipate",
"plans", "budget", "scheduled", "forecasts". "estimates",
"believes" or intends" or variations of such words and phrases or
stating that certain actions, events or results "may" or "could,
"would", "might" or "will" be taken to occur or be achieved) are
not statements of historical fact and may be forward-looking
statements. Forward-looking statements are necessarily based upon a
number of estimates and assumptions that, while considered
reasonable, are subject to known and unknown risks, uncertainties,
and other factors which may cause the actual results and future
events to differ materially from those expressed or implied by such
forward-looking statements. Except as required by law, Converge
assumes no obligation to update the forward-looking statements of
beliefs, opinions, projections, or other factors, should they
change. The reader is cautioned not to place undue reliance
on forward-looking statements.
For a detailed description of the risks and uncertainties facing
the Company and its business and affairs, readers should refer to
the Company's filings statement available on SEDAR under the
Company's profile at www.sedar.com including its most recent
Annual Information Form, its Management Discussion and Analysis and
its Annual and Quarterly Financial Statements.
Neither the TSX Venture Exchange nor its regulation services
provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
This press release does not constitute an offer to sell or a
solicitation of an offer to buy any of the securities in
the United States. The securities
have not been and will not be registered under the United States
Securities Act of 1933, as amended (the "U.S. Securities
Act") or any state securities laws and may not be offered or
sold within the United States
unless registered under the U.S. Securities Act and applicable
state securities laws, unless an exemption from such registration
is available.
SOURCE Converge Technology Solutions Corp.