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Converge Technology Solutions Corp
Symbol CTS
Shares Issued 214,896,369
Close 2022-02-17 C$ 9.97
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Converge Technology estimates 2021 revenue

2022-02-17 16:41 ET - News Release

Mr. Shaun Maine reports

CONVERGE TECHNOLOGY SOLUTIONS REPORTS STRONG PRELIMINARY Q4 2021 RESULTS

Converge Technology Solutions Corp. has released preliminary, unaudited net revenue, gross profit and adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) results for its Q4 and year ended Dec. 31, 2021.

Q4 2021 and full-year 2021 preliminary results

For the three-month period ended Dec. 31, 2021, and full-year 2021, on a preliminary unaudited basis (as discussed in further detail herein), management reports the following highlights:

  • Q4 2021 net revenue of $497.5-million to $504.5-million compared with $289.6-million from the same quarter in 2020, increasing 73 per cent, and full-year 2021 net revenue of $1,520.4-million to $1,527.4-million, compared with $948.8-million last year, increasing 61 per cent;
  • Q4 2021 gross profit of $114-million to $116-million, increasing 62 per cent from Q4 2020, and full-year 2021 gross profit of $343.8-million to $345.8-million, compared with $233-million in full-year 2020, an increase of 48 per cent;
  • Adjusted EBITDA1 of $32.1-million to $34.8-million, increasing from $23.4-million in Q4 2020, or 43 per cent, and full-year 2021 adjusted EBITDA of $91.4-million to $94.1-million, compared with $60.5-million in full-year 2020, an increase of 53 per cent;
  • Generated approximately $17.8-million in cash flow from operations for Q4 2021 and $86.9-million for the year;
  • Cash position of approximately $248-million as at Dec. 31, 2021, with $300-million of capacity available under the company's ABL (asset-based lending) credit facility;
  • Bookings backlog increased to approximately $350-million in Q4 2021, compared with $250-million in Q3 2021;
  • Organic growth for full-year 2021 compared with full-year 2020 was approximately 9.6 per cent.

Business update:

  • As at the end of full-year 2021, the company has integrated over 70 per cent of its companies onto its platform and the company continues to integrate its sales organization by region and build its national platform of over 700 technical resources to better serve its customers for advanced analytics, cybersecurity, cloud and managed services.
  • In response to customer demand, the company expanded its cybersecurity capabilities across identity and data protection, risk and compliance, security intelligence and analytics, and threat assessments partnering with a few of the company's key strategic partners.
  • Through the acquisition of CarpeDatum and LPA, the company strengthened its skills and added capabilities around advanced analytics, artificial intelligence, business intelligence, data warehousing and financial performance management.
  • The company expanded its managed services and cloud offerings with its recently announced Google Cloud Marketplace solution, Converge Enterprise Cloud-IBM Power for Google Cloud (IP4G).
  • The company continues to experience supply chain disruptions, with its bookings backlog as at the end of Q4 2021 running at approximately $350-million. The company is working closely with its vendors and customers to resolve and expect to see these orders fulfilled in the coming quarters.

Subsequent to quarter:

  • Announced the acquisition of PDS Holding Company, a Delaware corporation, and its wholly owned subsidiaries, including Paragon Development Systems Inc. (PDS), a Wisconsin-based organization focused on fuelling digital transformation, with expertise in supporting enterprise solutions, managed services and true digital workplace platforms;
  • Announced the acquisition of German-based Visucom GmbH, a trusted supplier of audiovisual products and services to the German education and public sector, which, along with Rednet GmbH that the company acquired in 2021, will enhance the company's ability to deliver a wide range of products and services to clients across Germany;
  • Named to CRN's Managed Service Provider (MSP) 500 list in the Elite 150 category for 2022.

"We are extremely proud of our organization's outstanding performance in 2021 and look forward to deepening our customer relationships and continued expansion into 2022," said Shaun Maine, chief executive officer of Converge. "The fact that we experienced such strong growth despite supply chain issues that have been experienced industrywide throughout 2021 bodes extremely well for 2022, especially since we have a backlog in excess of $350-million."

The company cautions that the results herein are preliminary in nature and unaudited as the company's audit for the 2021 fiscal year has not yet been completed. 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 auditor, 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 2021 and full-year 2021 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 2021 and full-year 2021. 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. The preliminary results have been prepared by and are the responsibility of management of the company. The company's independent registered public accounting firm, Ernst & Young LLP, has not reviewed the preliminary results. Neither Ernst & Young LLP nor any other independent accountants express an opinion or any other form of assurance with respect to the preliminary results.

The company will provide additional discussion and analysis regarding its fourth quarter revenue, gross profit and adjusted EBITDA when the company reports it quarterly and full-year 2021 results on March 22, 2022, after close of markets.

About Converge Technology Solutions Corp.

Converge Technology Solutions is a software-enabled IT (information technology) and cloud solutions provider focused on delivering industry-leading solutions and services. Converge's regional sales and services organizations deliver advanced analytics, cloud and cybersecurity offerings to clients across various industries. The company supports these solutions with managed services, digital infrastructure and talent expertise offerings across all major IT vendors in the marketplace. This multifaceted approach enables Converge to address the unique business and technology requirements for all clients in the public and private sectors.

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