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WKN: A2PD0W | ISIN: CA21250C1068 | Ticker-Symbol: 0ZB
Düsseldorf
28.03.24
08:11 Uhr
3,895 Euro
+0,020
+0,52 %
Branche
IT-Dienstleistungen
Aktienmarkt
Sonstige
1-Jahres-Chart
CONVERGE TECHNOLOGY SOLUTIONS CORP Chart 1 Jahr
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CONVERGE TECHNOLOGY SOLUTIONS CORP 5-Tage-Chart
RealtimeGeldBriefZeit
3,9454,02528.03.
3,9554,01528.03.
PR Newswire
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Converge Technology Solutions Corp.: Converge Technology Solutions Reports Strong Q1 2023 Results and Declares Quarterly Cash Dividend

TORONTO and GATINEAU, QC, May 9, 2023 /PRNewswire/ -- Converge Technology Solutions Corp. ("Converge" or "the Company") (TSX: CTS) (FSE: 0ZB) (OTCQX: CTSDF) is pleased to provide its financial results for the three-month period ended March 31, 2023 ("Q1-23"). All figures are in Canadian dollars unless otherwise stated.

Q1-2023 Financial Highlights:

  • Gross sales1 for Q1-23 of $965.3 million compared to $673.9 million in Q1-22; an increase of $291.4 million or 43%
  • Gross Profit of $171.6 million compared to $109.0 million in Q1-22; an increase of $62.6 million or 57%
  • Organic gross profit growth1 increased to 16.5% from 13.9% in Q1-22
  • Cash flow from operating activities generated $28.8 million, compared to cash used in operations of $30.2 million in Q1-22, increasing by $59.0 million
  • Adjusted EBITDA1 of $41.2 million, increasing from $29.6 million in Q1-22 by 39%
  • Net revenue for Q1-23 of $678.2 million, an increase of 37% over Q1-22
  • Product backlog2 grew by $48M from Q4-22 to $527M at the end Q1-23
  • Adjusted EPS1 of $0.12 per share for Q1-23, increasing from $0.10 per share in Q1-22
  • Achieved 103 net new logos in Q1-23

"We are successfully executing against our strategy to demonstrate continued expansion in profitability and cash generation, each reaching new highs during Q1 despite current macro-economic conditions," stated Mr. Shaun Maine, Converge Group CEO. "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-IFRS measure (including non-IFRS ratio) and not a recognized, defined or a standardized measure under IFRS. See the Non-IFRS Financial Measures section of this news release for definitions, uses and a reconciliation of historical non-IFRS financial measures to the most directly comparable IFRS financial measures.

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 & 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 $0.01 per share
  • Announced the re-commencement 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 details at upcoming AGM 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 re-join 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 on-going cash generation, the Board of Directors has authorized the initiation of a quarterly dividend. The Board has declared a dividend of $0.01 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 August 11, 2022. The NCIB terminates one year after its commencement, or earlier if the maximum number of common shares under the NCIB have 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 10th, 2023
Time: 8:00 AM Eastern Time

Participant Webcast Link:
Webcast Link - https://app.webinar.net/Be13rwz0YGB

Participant Dial-in Details with Operator Assistance:
Confirmation #: 19352249
Toronto: 416-764-8609
North American Toll Free: 888-390-0605

International Toll-Free Numbers:
Germany: 08007240293
Ireland: 1800939111
Spain: 900834776
Switzerland: 0800312635
United Kingdom: 08006522435

You may register and enter your phone number to receive an instant automated call back via https://emportal.ink/41om1Vv

Recording Playback:
Webcast Link -https://app.webinar.net/Be13rwz0YGB
Toronto: 416-764-8677
North American Toll Free: 1-888-390-0541
Replay Code: 352249 #
Expiry Date: May 17th, 2023

Please connect at least 15 minutes prior to the conference call to ensure time for any software download that may be required to access the webcast. A live audio webcast accompanied by presentation slides and archive of the conference call and webcast will be available by visiting the Company's website at https://convergetp.com/investor-relations/.

About Converge
Converge Technology Solutions Corp. is a services-led, software-enabled, IT & Cloud Solutions 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 services expertise 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.

Summary of Consolidated Statements of Financial Position
(expressed in thousands of Canadian dollars)


March 31, 2023

December 31, 2022

Assets



Current assets




Cash

$ 139,028

$ 159,890


Restricted cash

5,105

5,230


Trade and other receivables

784,096

781,683


Inventories

157,608

158,430


Prepaid expenses and other assets

25,139

23,046



1,110,976

1,128,279

Long-term assets




Property, equipment, and right-of-use assets, net

79,897

88,352


Intangible assets, net

446,961

463,751


Goodwill

566,996

563,848


Other non-current assets

12,061

4,646



$ 2,216,891

$ 2,248,876





Liabilities



Current liabilities




Trade and other payables

$ 828,000

$ 824,924


Borrowings

460,221

421,728


Other financial liabilities

66,741

123,932


Deferred revenue and other liabilities

60,484

60,210


Income taxes payable

5,402

7,112



1,420,848

1,437,906

Long-term liabilities




Other financial liabilities

64,551

77,183


Deferred tax liability

98,513

102,977



$ 1,583,912

$ 1,618,066





Shareholders' equity




Common shares

599,233

595,019


Contributed surplus

8,767

7,919


Exchange rights

-

1,705


Accumulated other comprehensive income

15,881

13,708


Deficit

(20,398)

(18,441)

Total equity attributable to shareholders of Converge

603,483

599,910

Non-controlling interest

29,496

30,900



632,979

630,810



2,216,891

$ 2,248,876

Summary of Consolidated Statements of Loss and Comprehensive Loss
(expressed in thousands of Canadian dollars)



Three months ended March 31,




2023


2022








Revenues






Product

$

536,689

$

397,392


Service


141,509


96,648


Total revenue


678,198


494,040


Cost of sales


506,610


384,995


Gross profit


171,588


109,045








Selling, general and administrative expenses


132,033


80,412


Income before the following


39,555


28,633


Depreciation and amortization


25,890


14,480


Finance expense, net


9,350


1,818


Special charges


4,284


5,722


Share-based compensation expense


848


1,212


Other expense


2,469


6,403


Loss before income taxes


(3,286)


(1,002)








Income tax expense


75


1,406








Net loss

$

(3,361)

$

(2,408)


Net loss attributable to:






Shareholders of Converge


(1,957)


(1,794)


Non-controlling interest


(1,404)


(614)



$

(3,361)

$

(2,408)


Other comprehensive loss






Exchange (gain) loss on translation of foreign operations


(2,173)


6,587


Comprehensive loss

$

(1,188)

$

(8,995)


Comprehensive loss attributable to:






Shareholders of Converge


216


(8,381)


Non-controlling interest


(1,404)


(614)



$

(1,188)

$

(8,995)








Adjusted EBITDA3

$

41,208

$

29,649


Adjusted EBITDA as a % of Gross Profit3


24.0 %


27.2 %














____________________________

3 This is a Non-IFRS measure (including non-IFRS ratio) and not a recognized, defined or a standardized measure under IFRS. See the Non-IFRS Financial Measures section of this news release for definitions, uses and a reconciliation of historical non-IFRS financial measures to the most directly comparable IFRS financial measures.


Summary of Consolidated Statements of Cash Flows
(expressed in thousands of Canadian dollars)





For the three months
ended March 31,





2023


2022








Cash flows from (used in) operating activities







Net loss



$

(3,361)

$

(2,408)

Adjustments to reconcile net loss to net cash from operating activities








Depreciation and amortization




27,549


15,340

Unrealized foreign exchange losses




2,463


6,669

Share-based compensation expense




848


1,212

Finance expense, net




9,350


1,818

Income tax expense




75


1,406





36,924


24,037

Changes in non-cash working capital items







Trade and other receivables




(2,441)


(27,773)

Inventories




1,328


6,549

Prepaid expenses and other assets




(1,426)


(1,429)

Trade and other payables




781


(29,383)

Income taxes payable




(6,925)


(753)

Other financial liabilities




356


1,917

Deferred revenue and customer deposits




166


(3,385)

Cash from (used in) operating activities




28,763


(30,220)








Cash flows used in investing activities







Purchase of property and equipment




(5,106)


(11,356)

Proceeds on disposal of property and equipment




68


177

Repayment of contingent consideration




(8,960)


(10,134)

Repayment of deferred consideration




(25,654)


(1,740)

Repayment of NCI liability




(29,994)


-

Business combinations, net of cash acquired




-


(67,926)

Cash used in investing activities




(69,646)


(90,979)








Cash flows from financing activities







Transfers from (to) restricted cash




216


(63,493)

Interest paid




(7,877)


(956)

Payments of lease liabilities




(5,135)


(2,728)

Repayment of notes payable




(40)


(121)

Net proceeds from borrowings




34,199


162,468

Cash from financing activities




21,363


95,170








Net change in cash during the period




(19,520)


(26,029)

Effect of foreign exchange on cash




(1,342)


(5,500)

Cash, beginning of period




159,890


248,193

Cash, end of period



$

139,028

$

216,664

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

Adjusted EBITDA represents net income or loss adjusted to exclude amortization, depreciation, interest expense and finance costs, foreign exchange gains and losses, share-based compensation expense, 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.

The Company has reconciled Adjusted EBITDA to the most comparable IFRS financial measure as follows:


For the three months

ended March 31,


2023

2022

Net loss before taxes

$ (3,286)

$ (1,002)

Finance expense

9,350

1,818

Share-based compensation expense

848

1,212

Depreciation and amortization

25,890

14,480

Depreciation included in cost of sales

1,659

751

Foreign exchange loss

2,463

6,668

Special charges

4,284

5,722

Adjusted EBITDA

$ 41,208

$ 29,649


Adjusted EBITDA as a % of Gross Profit

The Company believes that Adjusted EBITDA as a % of Gross Profit is a useful measure of the Company's operating efficiency and profitability. This is calculated by dividing Adjusted EBITDA by gross profit.

Adjusted Net Income (Loss) and Adjusted Earnings per Share ("EPS")

Adjusted Net Income (Loss) represents net income (loss) adjusted to exclude special charges, amortization of acquired intangible assets, and share-based compensation. The Company believes that Adjusted Net Income (Loss) is a more useful measure than net income (loss) as it excludes the impact of one-time, non-cash and/or non-recurring items that are not reflective of Converge's underlying business performance. Adjusted EPS is calculated by dividing Adjusted Net Income (Loss) by the total weighted average shares outstanding on a basic and diluted basis.

The Company has provided a reconciliation to the most comparable IFRS financial measure as follows:


For the three months

ended March 31,


2023

2022

Net loss

$ (3,361)

$ (2,408)

Special charges

4,284

5,722

Amortization of acquired intangible assets

20,208

11,316

Foreign exchange loss

2,463

6,668

Share-based compensation

848

1,212

Adjusted Net Income:

$ 24,442

$ 22,510

Basic

0.12

0.10

Diluted

0.12

0.10


Gross sales and gross sales for organic growth

Gross sales, which is a non-IFRS measurement, reflects the gross amount billed to customers, adjusted for amounts deferred or accrued. The Company believes gross sales is a useful alternative financial metric to net revenue, the IFRS measure, as it better reflects volume fluctuations as compared to net revenue. Under the applicable IFRS 15 'principal vs agent' guidance, the principal records revenue on a gross basis and the agent records commission on a net basis. In transactions where Converge is acting as an agent between the customer and the vendor, net revenue is calculated by reducing gross sales by the cost of sale amount.

The Company has provided a reconciliation of gross sales to net revenue, which is the most comparable IFRS financial measure, as follows:


For the three months ended March 31,


2023

2022

Product

$ 665,310

$ 453,389

Managed services

40,636

33,983

Third party and professional services

259,312

186,557

Gross sales

$ 965,258

$ 673,929

Adjustment for sales transacted as agent

287,060

179,889

Net revenue

$ 678,198

$ 494,040


Organic Growth

The Company measures organic growth at the gross sales and gross profit levels, and includes the contributions under Converge ownership in the current and comparative period(s). In calculating organic growth, the Company therefore deducts gross sales and gross profit generated from companies that were acquired in the current reporting period.

Gross sales organic growth is calculated by deducting prior period gross sales, as reported in the Company's public filings, from current period gross sales for the same portfolio of companies. Gross sales organic growth percentage is calculated by dividing organic growth by prior period reported gross sales.

The following table calculates gross sales organic growth for Q123:

For the three months ended March 31,

Q1 2023

Q1 2022

Gross sales

$ 965,258

$ 673,929

Less: gross sales from companies not owned in comparative period

245,630

188,685

Gross sales of companies owned in comparative period

$ 719,628

$ 485,244

Prior period gross sales

673,929

408,100

Organic Growth - $

$ 45,699

$ 77,144

Organic Growth - %

6.8 %

18.9 %

Gross profit organic growth is calculated by deducting prior period gross profit, as reported in the Companies public filings, from current period gross profit for the same portfolio of companies. Gross profit organic growth percentage is calculated by dividing organic growth by prior period reported gross profit.

For the three months ended March 31,

Q1 2023

Q1 2022

Gross profit

$ 171,588

$ 109,045

Less: gross profit from companies not owned in comparative period

44,597

31,808

Gross profit of companies owned in comparative period

126,991

77,237

Prior period gross profit

109,045

67,797

Organic Growth - $

$ 17,946

$ 9,440

Organic Growth - %

16.5 %

13.9 %


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.

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.

Converge Technology Solutions Corp., Email: investors@convergetp.com, Phone: 416-360-1495

Cision View original content:https://www.prnewswire.co.uk/news-releases/converge-technology-solutions-reports-strong-q1-2023-results-and-declares-quarterly-cash-dividend-301820100.html

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