TORONTO and GATINEAU, Quebec, Feb. 17, 2022 (GLOBE NEWSWIRE) -- Converge Technology Solutions Corp. ("Converge" or "the Company") (TSX:CTS) (FSE:0ZB) (OTCQX:CTSDF) is pleased to announce preliminary, unaudited Net Revenue, Gross Profit, and Adjusted EBITDA1 results for its Q4 and year ended December 31, 2021.
Q4-2021 and FY21 Preliminary Results
For the three-month period ended December 31, 2021 ("Q4-2021") and full year 2021 ("FY21"), on a preliminary unaudited basis (as discussed in further detail below), management reports the following highlights:
- Q4-2021 Net Revenue of $497.5 million to $504.5 million compared to $289.6 million from the same quarter in 2020 ("Q4-2020"), increasing 73%4, and FY21 Net Revenue of $1,520.4 million to $1,527.4 million compared to $948.8 million last year ("FY20"), increasing 61%4
- Q4-2021 Gross Profit of $114.0 million to $116.0 million, increasing 62%4 from Q4-2020, and FY21 Gross Profit of $343.8 million to $345.8 million compared to $233.0 million in FY20; an increase of 48%4
- Adjusted EBITDA1 of $32.1 million to $34.8 million, increasing from $23.4 million in Q4-2020 or 43%4, and FY21 Adjusted EBITDA1 of $91.4 million to $94.1 million compared to $60.5 million in FY20; an increase of 53%4
- Generated approximately $17.8 million in cashflow from operations for Q4-2021 and $86.9 million for the year
- Cash position of approximately $248.0 million as at December 31, 2021, with $300 million of capacity available under the Company's ABL credit facility
- Bookings backlog3 increased to approximately $350 million in Q4 2021 compared to $250 million in Q3 2021
- Organic growth2 for FY21 compared to FY20 was approximately 9.6%
- As at the end of FY21, we have integrated over 70% of our companies onto our platform and we continue to integrate our sales organization by region and build our national platform of over 700 technical resources to better serve our customers for advanced analytics, cybersecurity, cloud, and managed services.
- In response to customer demand we expanded our cybersecurity capabilities across identity & data protection, risk and compliance, security intelligence and analytics, and threat assessments partnering with a few of our key strategic partners.
- Through the acquisition of CarpeDatum and LPA, we strengthened our skills and added capabilities around advanced analytics, artificial intelligence, business intelligence, data warehousing and financial performance management.
- We expanded our managed services and cloud offerings with our recently announced Google Cloud Marketplace solution, Converge Enterprise Cloud-IBM Power for Google Cloud (IP4G).
- We continue to experience supply chain disruptions, with our bookings backlog as at the end of Q4-2021 running at approximately $350 million. We are working closely with our 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 fueling 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 audio-visual 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, CEO of Converge. "The fact that we experienced such strong growth despite supply chain issues that have been experienced industry-wide throughout 2021 bodes extremely well for 2022, especially since we have a backlog in excess of $350 million."
The Company cautions that the above results 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 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 Q4-2021 and FY21 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 FY21. 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 Statements". 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.
Converge Technology Solutions Corp. is a software-enabled IT & 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 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.
For further information contact:
Converge Technology Solutions Corp.
Non-IFRS Financial Measures
This release refers to certain performance indicators including Adjusted EBITDA that does not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other companies. Management believes that these measures are useful to most shareholders, creditors, and other stakeholders in analyzing the Company's results. These non-IFRS financial measures should not be considered as an alternative to the consolidated income (loss) or any other measure of performance under IFRS.
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 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.
For Q4-2021, the Company expects to report between $32.1 million to $34.8 million of Adjusted EBITDA and has provided a reconciliation to the most comparable IFRS financial measure as follows:
|Net income (loss) before taxes||$|| 5,278||$|| 7,970||$||3,895|
|Share-based compensation expense||1,130||1,130||-|
|Depreciation and amortization||12,590||12,590||6,320|
|Foreign exchange loss (gain)||5,670||5,670||3,486|
|PPP loan forgiveness||-||-||(1,194||)|
|Adjusted EBITDA||$|| 32,078 ||$|| 34,770 ||$||23,375|
For FY21, the Company expects to report between $91.4 million to $94.1 million of Adjusted EBITDA and has provided a reconciliation to the most comparable IFRS financial measure as follows:
|Net income (loss) before taxes||$|| 18,686||$|| 21,378||$|| (2,501||)|
|Share-based compensation expense||2,323||2,323||-|
|Depreciation and amortization||39,581||39,581||26.575|
|Foreign exchange loss (gain)||645||645||2,878|
|PPP loan forgiveness||-||-||(1,194||)|
|Adjusted EBITDA||$|| 91,427 ||$|| 94,119 ||$||60,493|
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.
1 Adjusted EBITDA is a non-IFRS measure and not a recognized, defined or a standardized measure under IFRS. This measure reported by the Company is defined in the "Non-IFRS Financial Measures" section of this news release.
2 Organic growth is based on invoiced revenue and include companies that Converge has owned for at least 3 months
3 Bookings backlog is calculated as purchase orders received from customers not yet delivered at the end of the fiscal period
4 Percentage change is estimated at the midpoint of the stated range
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