/NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR
DISSEMINATION IN THE UNITED
STATES/
VANCOUVER and TORONTO, May 22,
2019 /CNW/ - Converge Technology Solutions Corp.
("Converge" or "Company") (TSXV:CTS) (FSE:0ZB)
(OTCQX:CTSDF), a Hybrid IT solutions provider ("ITSP"), is pleased
to provide its financial results for the three months ended
March 31, 2019. All figures are
in CAD dollars unless otherwise stated.
"2019 is off to an exciting start. We are seeing
continued momentum from the end of last year as our strategy of
transforming ITSPs into Hybrid IT providers with a strong recurring
revenue base delivers results," said Shaun
Maine, Chief Executive Officer of Converge. "The success in
cross-selling opportunities between the Converge family of
companies have already exceeded our expectations. In particular, we
have seen a number of our longstanding clients begin their
transition into cloud services, with particular emphasis on our Red
Hat offerings from Lighthouse. This is only the beginning of an
industry-wide paradigm shift towards ITSPs offering more cloud
solutions and Converge is at the forefront of this change."
First Quarter 2019 Financial Highlights
- Revenue for the three months ended March
31, 2019 was $164.8 million
compared to $119.8 million for the
same period in 2018, an increase of 37.5%.
- Gross profit for the three months ended March 31, 2019 was $37.2
million or 22.6% compared to $17.1
million or 14.3% for the same period in 2018.
- Adjusted EBITDA1 for the three months ended
March 31, 2019 was $8.5 million compared to $5.6 million for the same period in 2018, an
increase of 50.8%.
1 EBITDA and Adjusted
EBITDA are non-IFRS financial measures and do not have any
standardized meaning under IFRS. See "Use of Non-IFRS Financial
Measures" below.
|
Key Items from the First Quarter
- The Company acquired Software Information Systems, LLC ("SIS")
for USD $11.5 million in cash plus
the issuance of a right for the vendors of SIS to exchange specific
membership units in SIS for an aggregate of 8,000,000 common shares
of Converge over a three-year period.
- Northern Micro, a Converge company, was announced as a
qualified supplier of artificial intelligence solutions to the
Government of Canada.
- Converge achieved five Microsoft Gold Competencies, most
notably making remarkable use of the Gold Cloud Platform Competency
to successfully migrate numerous clients from legacy data center
technologies to Microsoft Azure infrastructure.
- Converge strengthened relationships with partners such as IBM
and announced Platinum status on IBM's PartnerWorld Program
demonstrating that the Company consistently operates at the highest
level of technical skill and client service.
- The Company achieved DELL/EMC Gold Partner tier status for all
its US members, in addition to Northern Micro's DELL/EMC Titanium
partner status.
- Converge began trading on the Frankfurt Stock Exchange under
the ticker 0ZB, enhancing the coverage and accessibility of the
Company on a global scale.
Key Items Subsequent to Quarter End
- The Company began trading on the OTCQX Exchange under the
symbol CTSDF, providing a venue for American employees and
investors to more easily acquire shares in the Company.
- Converge graduated to DELL/EMC Platinum Partner for all US
based business units achieving competencies in Core Client, Storage
and Server.
Quarterly Results Materials
The Company's outlook is
contained in its MD&A for the three months ended March 31, 2019, which is available along with the
complete condensed interim consolidated financial statements for
the three months ended March 31, 2019
and 2018, at www.convergetp.com and at www.sedar.com.
Summary of Consolidated Financial Results
(in thousands of dollars)
|
For the three
months
ended March
31,
|
|
2019
|
2018
|
Revenues
|
$
|
164,762
|
$
|
119,785
|
Cost of
sales
|
|
127,570
|
|
102,699
|
Gross
profit
|
|
37,192
|
|
17,086
|
|
|
|
|
|
Selling, general and
administrative expenses
|
|
29,631
|
|
11,735
|
Income before the
following:
|
|
7,561
|
|
5,351
|
|
|
|
|
|
Depreciation and
amortization
|
|
2,608
|
|
812
|
Finance expense,
net
|
|
3,381
|
|
1,248
|
Change in fair value
of contingent consideration
|
|
-
|
|
3,013
|
Transaction costs –
acquisitions, including
retention bonuses
|
|
3,178
|
|
334
|
Other expense
(income)
|
|
234
|
|
(78)
|
Gain (Loss) before
income taxes
|
$
|
(1,840)
|
$
|
22
|
|
|
|
|
|
Income tax expense
(recovery)
|
|
1,055
|
|
1,490
|
|
|
|
|
|
Net loss
|
|
(2,895)
|
|
(1,468)
|
Exchange loss on
translation of foreign operations
|
|
33
|
|
47
|
Comprehensive
loss
|
$
|
(2,928)
|
$
|
(1,515)
|
|
|
|
|
|
EBITDA1
|
$
|
5,055
|
$
|
2,260
|
Adjusted
EBITDA1
|
|
8,453
|
|
5,607
|
1 EBITDA and Adjusted
EBITDA are non-IFRS financial measures and do not have any
standardized meaning
under IFRS. See "Use of Non-IFRS Financial Measures"
below.
|
First 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: Thursday, May
23rd, 2019
Time: 9:00 AM Eastern Time
Participant Dial-in Numbers:
Local – Toronto (+1) 416 764
8609
Toll Free – North America (+1) 888
390 0605
Conference ID: 86063067
Recording Playback Numbers:
Toronto (+1) 416 764 8677
Toll Free – North America (+1) 888
390 0541
Passcode: 063067 #
Expiry Date: Thursday, June
6th, 2019 11:59pm
About Converge
Converge Technology Solutions Corp. combines innovation
accelerators and foundational infrastructure solutions to deliver
best-of-breed solutions and services to customers. The Company is
building a platform of regionally-focused Hybrid IT solution
providers to enhance their ability to provide multi-cloud
solutions, blockchain, resiliency, and managed services, enabling
Converge to address the business and IT issues that public and
private-sector organizations face today.
Notice to Reader: Use of Non-IFRS Financial Measures
and Forward-Looking Statements
1. Non-IFRS
Financial Measures
In this news release, management
uses certain non-IFRS measures to evaluate the performance of the
Company. The term "Adjusted EBITDA" does not have any
standardized meaning prescribed within IFRS and therefore may not
be comparable to similar measures presented by other
companies. Such measures should not be considered in
isolation or as a substitute for measures of performance prepared
in accordance with IFRS such as net income. Adjusted EBITDA
is defined as gross profit less selling, general and administrative
expenses, and corresponds to income before income tax, depreciation
and amortization, finance expenses, change in fair value of
contingent consideration, transaction costs for acquisitions,
initial public offering costs and other non-operating expenses.
Management believes Adjusted
EBITDA is an important indicator as it excludes certain items that
are non-cash expenses, items that cannot be influenced by
management in the short term and items that do not impact core
operating performance, demonstrating the Company's ability to
generate liquidity through operating cash flow to fund working
capital needs, service outstanding debt and fund future capital
expenditures. Adjusted EBITDA is used by some investors and
analysts for the purposes of valuing an issuer. The intent of
Adjusted EBITDA is to provide additional useful information to
investors and analysts and is also used by management as an
internal performance measurement. A reconciliation of Adjusted
EBITDA to net income is contained in the MD&A (see "Non-IFRS
Financial Measures").
2. 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 filing statement dated November 1st, 2018 which is available
on SEDAR under the Company's profile at www.sedar.com in
addition to the consolidated financial statements for the years
ended December 31 2018, and 2017
together with the corresponding Management's Discussion and
Analysis for additional risk factors described under "Risk
Management".
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.