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Converge Technology Solutions Corp
Symbol CTS
Shares Issued 214,896,369
Close 2022-03-22 C$ 10.66
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Converge Technology earns $16.36-million in 2021

2022-03-22 17:48 ET - News Release

Mr. Shaun Maine reports

CONVERGE TECHNOLOGY SOLUTIONS REPORTS FOURTH QUARTER AND FISCAL YEAR 2021 FINANCIAL RESULTS

Converge Technology Solutions Corp. has released its financial results for the three- and 12-month period ended Dec. 31, 2021. All figures are in Canadian dollars unless otherwise stated.

For the three-month period ended Dec. 31, 2021 (Q4 2021), and full year 2021 (FY21), Converge reports the following financial highlights:

  • Q4 2021 net revenue increased 74 per cent over the same quarter last year (Q4 2020) to $505.0-million;
  • Q4 2021 gross profit increased 63 per cent over Q4 2020 to $115.9-million;
  • Q4 2021 adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) increased 48 per cent to $34.7-million from $23.4-million in Q4 2020;
  • FY21 net revenue increased 61 per cent to $1,527.8-million compared with last year (FY20);
  • FY21 gross profit increased 48 per cent to $345.7-million from FY20;
  • FY21 adjusted EBITDA increased 55 per cent to $94.0-million from FY20;
  • For Q4 2021, the company generated adjusted free cash flow and adjusted free cash flow conversion of $29.0-million and 84 per cent, respectively, increasing from $17.5-million and 75 per cent in Q4 2020;
  • Organic growth for FY21 was approximately 9.6 per cent;
  • Reported adjusted EPS (earnings per share) of 12 cents per share for Q4 2021, and 35 cents per share for FY21, increasing from 12 cents per share and 27 cents per share for Q4 2020 and FY20, respectively;
  • Bookings backlog (1) increased to approximately $350-million in Q4 2021 compared with approximately $250-million in Q3 2021;
  • Closed three bought deal financings in FY21 for cumulative gross proceeds of approximately $518.0-million in equity financings, which, on a price-per-share basis, increased from $4.85 in January, 2021, to $10.55 in September, 2021.

Q4 2021 and FY21 business highlights

  • Completed nine acquisitions throughout 2021, including REDNET GmbH, an IT (information technology) solutions provider focused on serving clients in Germany's public sector, and serves as a platform acquisition in Europe for further growth;
  • Enhanced the analytics practice and managed services offerings, and deepened customer relationships through key North American acquisitions, including CarpeDatum LLC, Accudata Systems Inc., Dasher Technologies Inc., ExactlyIT Inc., Vicom Infinity and Infinity Systems Software, Inc., and LPA Software Solutions LLC;
  • 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;
  • Achieved 95 net new logos in Q4 2021 resulting in nearly 400 new logos throughout the fiscal year;
  • Formed majority owned cybersecurity-focused SaaS (software-as-a-service) entity, Portage CyberTech Inc., and closed a $35-million non-brokered private placement;
  • As at the end of FY21, the company had integrated over 70 per cent of its companies onto its platform and it continues to integrate its sales organization by region and build its international platform of over 700 technical resources to better serve its customers for advanced analytics, cybersecurity, cloud and managed services;
  • Announced a new Google Cloud marketplace solution, Converge Enterprise Cloud -- IBM Power for Google Cloud (IP4G) allowing Converge and Google Cloud the ability to provide infrastructure-as-a-service solution to clients across North America and Europe;
  • Expanded ABL credit facility from $190-million to $300-million in December, 2021, in an agreement with syndicate of banks led by CIBC, and added J.P. Morgan Chase & Co. to the company's syndicate of banks;
  • Graduated to the Toronto Stock Exchange from the TSX Venture Exchange in Q1 2021 and added to the S&P/TSX Composite Index in Q3 2021.

Subsequent to quarter in 2022

  • Appointed John Teltsch to the company's senior leadership team as chief revenue officer, who will work closely with president Greg Berard on profit alignment and global strategy;
  • Converge completed additional acquisitions of Paragon Development Systems Inc., a Wisconsin-based digital transformation specialist, and added a complementary European acquisition in Visucom GmbH, a Germany-based supplier in media devices within the education and public sector;
  • Portage CyberTech Inc. concluded phase 1 of its growth strategy upon completing the acquisition of 1CRM Systems Corp. a Canadian SaaS-based software provider;
  • CRN has named Converge to its managed service provider (MSP) 500 list in the Elite 150 category for 2022 and featured Converge on its 2022 Tech Elite 250 list recognizing the highest level of technical certifications from leading technology suppliers.

"The company has added strategic acquisitions throughout the year expanding on high-impact solution areas such as data analytics, AI, cloud and cybersecurity while simultaneously rolling out various managed services and expanding offerings into Europe with the platform acquisition of REDNET GmbH," stated Shaun Maine, chief executive officer of Converge. "To achieve the net new logos and organic growth the company has reported, while managing backlog and inventory challenges, really speaks to the level of commitment and success our employees strive for and reinforces the strength of our corporate culture. Additionally, we have rolled out various committees that are focused on wellness and inclusion initiatives, to progress employee satisfaction and awareness. I believe it is safe to say that Converge has advanced its business strategy beyond expectations for 2021 and will continue to do so throughout 2022, as we leverage our industry leaders including Doris Albiez, Thomas Volk and John Teltsch who provide invaluable leadership to our family of companies and overall global strategy."

Conference call details:

Date:  Wednesday, March 23, 2022

Time:  8 a.m. Eastern Time

Participant dial-in numbers:

Toll-free -- North America:   1-888-708-0720

Toll-free -- international:  929-517-9011

Germany:  0800-181-5287

United Kingdom:  0800-028-8438

Conference ID:  5783149

Recording playback numbers:

Toll-free:  855-859-2056

Alternative number:   404-537-3406

Conference ID:  5783149

Expiry date:  March 30, 2022

A live audio webcast and archive of the conference call will be available by visiting the company's website. Please connect at least 15 minutes prior to the conference call to ensure time for any software download that may be needed to hear the webcast.

About Converge Technology Solutions Corp.

Converge Technology Solutions is a software-enabled 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.

(1) Bookings backlog is calculated as purchase orders received from customers not yet delivered at the end of the fiscal period.

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