/NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR
DISSEMINATION IN THE UNITED
STATES/
VANCOUVER and TORONTO, Jan. 31,
2020 /CNW/ - Converge Technology Solutions Corp.
("Converge" or "Company") (TSXV:CTS) (FSE:0ZB)
(OTCQX:CTSDF), a Software Enabled Hybrid IT Solutions Provider,
today announced preliminary full year and fourth quarter results
for 2019. All figures are in CAD dollars unless otherwise
stated.
Fourth quarter results of operations have not been finalized;
however, net revenue is expected to be approximately $210 - $220 million
(compared to $136 million in Q4 2018
and $144 million in the third quarter
of 2019). As a result of its fourth quarter preliminary
results, the Company expects full-year 2019 reported revenue to be
approximately $683 - $698 million (compared to $459 million in 2018).
Fourth quarter gross profit is expected to be approximately
$52 – $55
million (compared to $30.3
million in Q4 2018 and $34.9
million in the third quarter of 2019), or approximately 23.4
%– 23.6% gross profit margin compared to 22% in Q4 2018 and 24% in
the third quarter of 2019. Gross profit for 2019 is estimated
to be approximately $160 –
$165 million (compared to
$90 million in 2018) and gross margin
for all of 2019 is estimated to be approximately 23% – 23.2%.
The Company expects to report Adjusted EBITDA1 for
the fourth quarter of approximately $10 – 12 million, resulting in approximately
$30 – $32 million in Adjusted EBITDA1 for the
full year 2019. This compares to Adjusted EBITDA1
of $5.8 million for the third quarter
of 2019 and $16.5 million for
2018.
Actual results may differ materially from these estimates due to
the completion of the Company's financial closing procedures, final
adjustments, review by the Company's auditors and other
developments that may arise between now and the time the financial
results are finalized. These estimates are not a comprehensive
statement of the Company's financial results for Q4 2019 and should
not be viewed as a substitute for full financial statements
prepared in accordance with International Financial Reporting
Standards, and these estimates are not necessarily indicative of
the results to be achieved for Q4 2019. The preliminary results
provided in this press release constitute forward-looking
statements within the meaning of applicable securities laws, are
based on a number of assumptions and are subject to a number of
risks and uncertainties. Please see the section below entitled
"Forward-Looking Information". The Company will provide additional
discussion and analysis regarding its fourth quarter revenue,
margin and Adjusted EBITDA1 when the Company reports it
quarterly and full year 2019 results on or before North American
markets open on March 26, 2020 and
the Company will host its regular quarterly conference call on that
date.
"We are delighted to share these strong preliminary results with
the market" said Shaun Maine, CEO of
Converge. "As we enter 2020, we are excited to see the
financial contribution of the acquisitions we completed in 2019 and
we will continue to execute on our strategy as we aim to build one
of the premier software enabled Hybrid IT Solutions Providers in
North America. Thank you to all of our employees, customers,
and partners for helping us to achieve tremendous success in
2019".
The Company also announced today that Chief Financial Officer
Mary Anne Palangio will be leaving
the Company effective April 1, 2020
to take a Chief Financial Officer position with the Canadian
Securities Exchange, where she has served on the Board and as Chair
of the Audit Committee, and that Ron
Hinkle will become the Company's Interim Chief Financial
Officer on that date. Ron is currently the US CFO of Converge
and previously served as CFO of Converge subsidiary Corus
360. Ron brings over 25 years of financial experience to
Converge. Mary Anne will
remain with the Company through the completion of the audit of the
Company's 2019 financial statements.
Mr. Maine said "On behalf of the Company I would like to thank
Mary Anne for her contributions to
the success of the business over the last year and half and wish
her every success in the future."
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.
|
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
- 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.
- 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.
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.