15:16:50 EDT Sun 01 Oct 2023
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Converge Technology Solutions Corp
Symbol CTS
Shares Issued 209,133,903
Close 2023-05-09 C$ 3.51
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Converge loses $3.36-million in Q1

2023-05-09 18:41 ET - News Release

Mr. Shaun Maine reports


Converge Technology Solutions Corp. has provided its financial results for the three-month period ended March 31, 2023.

First quarter 2023 financial highlights:

  • Gross sales (1) for Q1 2023 of $965.3-million compared with $673.9-million in Q1 2022, an increase of $291.4-million or 43 per cent;
  • Gross profit of $171.6-million compared with $109.0-million in Q1 2022, an increase of $62.6-million or 57 per cent;
  • Organic gross profit growth (1) increased to 16.5 per cent from 13.9 per cent in Q1 2022;
  • Cash flow from operating activities generated $28.8-million, compared with cash used in operations of $30.2-million in Q1 2022, increasing by $59.0-million;
  • Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) (1) of $41.2-million, increasing from $29.6-million in Q1 2022 by 39 per cent;
  • Net revenue for Q1 2023 of $678.2-million, an increase of 37 per cent over Q1 2022;
  • Product backlog (2) grew by $48-million from fourth quarter 2022 to $527-million at the end of Q1 2023;
  • Adjusted EPS (earnings per share) (1) of 12 cents per share for Q1 2023, increasing from 10 cents per share in Q1 2022;
  • Achieved 103 net new logos in Q1 2023.

"We are successfully executing against our strategy to demonstrate continued expansion in profitability and cash generation, each reaching new highs during Q1 despite current macroeconomic conditions," stated Shaun Maine, Converge chief executive officer. "While the overall market is expected to remain relatively flat in 2023, with particular challenges at the large enterprise customer level, we anticipate that we will gain market share organically, clearly positioning us as the preferred partner among mid-market customers, and that we'll see further organic gross profit growth throughout the remainder of 2023 and beyond."

(1) This is a non-international financial reporting standard measure (including non-IFRS ratio) and not a recognized, defined or a standardized measure under IFRS.

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

Q1 2023 business highlights and subsequent to quarter:

  • Announced the conclusion of the strategic review process and the dissolution of the special committee;
  • The board has declared a quarterly dividend of one cent per share;
  • Announced the recommencement of the company's normal course issuer bid (NCIB);
  • Announced the appointment of Avjit Kamboj to chief financial officer, a finance and technology executive with over 16 years of experience in capital and international markets;
  • Converge subsidiary Stone Group earned Global winner green world awards 2023 and Global silver winner in corporate social responsibility category; the company plans on releasing further ESG (environmental, social and governance) details at coming annual general meeting on June 20, 2023.

"With the success of our cross-selling strategy, the company will be prioritizing organic growth over inorganic growth moving forward," continued Mr. Maine. "The company is also pleased to announce the appointment of Mr. Avjit Kamboj today as chief financial officer. After leading finance in the early phase of Converge's growth, Mr. Kamboj will rejoin the executive leadership team of Converge reporting into myself as group CEO."

Capital management initiatives

In light of the company's positive net cash flow and continuing cash generation, the board of directors has authorized the initiation of a quarterly dividend. The board has declared a dividend of one cent per common share of the company in respect of the first quarter of 2023. The dividend will be paid on or about June 16, 2023, to shareholders of record at the close of business on June 9, 2023. This dividend is designated to be an eligible dividend for purposes of Section 89(1) of the Income Tax Act (Canada).

The company also intends to resume purchases under the NCIB that commenced on Aug. 11, 2022. The NCIB terminates one year after its commencement or earlier if the maximum number of common shares under the NCIB has been purchased or the NCIB is terminated at the option of the company. As of the date hereof, 6,464,124 common shares of a maximum of 10,744,818 common shares have been repurchased by the company under the NCIB.

Conference call details

Date:  Wednesday, May 10, 2023

Time:  8 a.m. Eastern Time

A webcast will be available.

Participant dial-in details with operator assistance

Confirmation No.:  19352249

Toronto:  416-764-8609

North American toll-free:  888-390-0605

International toll-free numbers

Germany:  0800-724-0293

Ireland:  1-800-939-111

Spain:  900-834-776

Switzerland:  0800-312-635

United Kingdom:  0800-652-2435

You may register and enter your phone number to receive an instant automated callback.

Recording playback

A webcast playback will be available.

Toronto:  416-764-8677

North American toll-free:  1-888-390-0541

Replay code:  352249 followed by the number sign

Expiry date:  May 17, 2023

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

About Converge Technology Solutions Corp.

Converge is a services-led, software-enabled, information technology and cloud solution provider focused on delivering industry-leading solutions. Converge's global approach delivers advanced analytics, application modernization, cloud platforms, cybersecurity, digital infrastructure and digital workplace offerings to clients across various industries. The company supports these solutions with advisory, implementation and managed service expertise 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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