Converge Technology Solutions Reports First Quarter 2021 Financial Results
05/11/2021 - 04:00 PM
TORONTO and GATINEAU , QC, May 11, 2021 /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 , 2021. All figures are in CAD dollars unless otherwise stated.
Q121 Highlights
First quarter revenue increased 28% over last year to $310.2 million Gross profit increased 24% over last year to $67.8 million Adjusted EBITDA increased to $18.8 million from $11.0 million last year Net income was $3.7 million compared to a loss of $1.4 million last year Closed $86.5 million equity financing at $4.85 per common share in January 2021 Graduated to the TSX from the TSX Venture Exchange on February 11 th , 2021 Expanded ABL credit facility from $140 million to $190 million on March 22 nd , 2021 Completed the acquisitions of CarpeDatum LLC. and Accudata Systems, Inc., adding key capabilities around analytics, networking, and security Subsequent to Quarter
Achieved Five Key 2021 IBM Awards including: the Beacon Award; Top North America Sell Business Partner of the Year; Top North America IBM and Red Hat Synergy Partner of the Year; IBM Data and AI Business Unit Excellence Award for Cloud Pak for Data; and, IBM Business Unit Excellence Award for Protect: Digital Trust Announced partnership with Lucira Health to provide first single-use PCR quality over the counter COVID 19 at-home test kit Completed acquisition of Dasher Technologies, Inc., a leading Silicon Valley-based IT solution provider "Converge has attained yet another historic Q1 earnings and I am pleased to witness our 2020 momentum carry us successfully into the new year, despite the challenges we continue to face around the globe. I am especially honored that our team is partnering with Lucira Health to help enable the safe re-opening of our communities and economies, while also showing the unique combination of capabilities that Converge offers its customers", said Shaun Maine , CEO of Converge. "Converge and all of its employees have continued to work extremely hard through the quarter executing on milestones such as the TSX graduation, the additional $86.5 million equity financing, the expansion of our ABL credit facility, our recent acquisitions and being recognized as both IBM and RedHat's partners of the Year."
First Quarter Conference Call
The Company will host a conference call featuring management's quarterly remarks and follow-up question and answer period.
A recording of the call will be available and posted on the Company's website. Dial-in details can be found below.
A live audio webcast and archive of the conference call will be available by visiting the Company's website at https://convergetp.com/investor-relations/ . 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.
Conference Call Details:
Date: Tuesday, May 11 th , 2021 Time: 5:00 PM Eastern Time
Participant Dial-in Numbers: Local – Toronto (+1) 416 764 8609 Toll Free – North America (+1) 888 390 0605Germany – 08007240293United Kingdom - 08006522435 Conference ID: 09152198
Recording Playback Numbers:Toronto (+1) 416 764 8677 Toll Free – North America (+1) 888 390 0541 Passcode: 152198 # Expiry Date: May 18 th , 2021
Summary of Consolidated Statements of Financial Position (expressed in thousands of dollars)
March 31, 2021
December 31, 2020
Assets
Current assets
Cash
$
68,432
$
64,767
Restricted cash
49,671
-
Trade and other receivables
345,239
364,308
Inventories
51,710
37,868
Prepaid expenses and other assets
10,397
10,376
525,449
477,319
Long-term assets
Property, equipment, and right-of-use assets, net
25,509
23,558
Intangible assets, net
113,066
108,926
Goodwill
121,447
110,068
Other non-current assets
2,023
749
$
787,494
$
720,620
Liabilities and shareholders' equity
Current liabilities
Trade and other payables
$
370,030
$
398,003
Borrowings
141,316
133,281
Other financial liabilities
19,952
22,125
Deferred revenue and other liabilities
20,885
17,376
Income taxes payable
1,461
764
553,644
571,549
Long-term liabilities
Other financial liabilities
30,403
28,858
Borrowings
895
5,882
Deferred tax liability
14,527
12,584
$
599,469
$
618,873
Shareholders' equity
Common shares
217,907
135,354
Exchange rights
5,115
4,853
Foreign exchange translation reserve
614
817
Deficit
(35,611)
(39,277)
188,025
101,747
$
787,494
$
720,620
Summary of Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) (expressed in thousands of dollars)
For the three months ended March 31,
2021
2020
Revenues
Product
$
252,507
$
190,383
Service
57,695
51,142
Total revenue
310,202
241,525
Cost of sales
242,405
186,690
Gross profit
67,797
54,835
Selling, general and administrative expenses
49,643
45,204
Income before the following
18,154
9,631
Depreciation and amortization
6,488
5,401
Finance expense, net
2,420
5,499
Special charges
3,051
1,939
Other expense (income)
1,093
(1,619)
Income (loss) before income taxes
5,102
(1,589)
Income tax expense (recovery)
1,436
(173)
Net income (loss)
$
3,666
$
(1,416)
Other comprehensive loss
Exchange loss on translation of foreign operations
203
1,699
Comprehensive income (loss)
$
3,463
$
(3,115)
Adjusted EBITDA
$
18,768
$
11,044
Adjusted EBITDA (Non-IFRS Financial Measurement)
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 in order 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,
2021
2020
Net income (loss) before taxes
$
5,102
$
(1,589)
Finance expense
2,420
5,499
Depreciation and amortization
6,488
5,401
Depreciation included in cost of sales
695
1,434
Foreign exchange loss (gain)
1,012
(1,640)
Special charges
3,051
1,939
Adjusted EBITDA
$
18,768
$
11,044
About Converge
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 .
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.
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SOURCE Converge Technology Solutions Corp.