Robust Demand and Significantly Improved
Operational Efficiencies Drive Strong Financial
Performance
TORONTO and GATINEAU, QC,
Oct. 19,
2023 /CNW/ - Converge Technology Solutions Corp.
("Converge" or the "Company") (TSX: CTS) today
announced that it expects financial performance for its third
quarter, ended September 30, 2023
("Q3-2023") to be stronger than it had previously
indicated.
Specifically, based on strength of demand in Q3-2023, as well as
significantly improving operational efficiencies, the Company now
expects to report:
- Gross Profit in a range between $168.0
million to $174.0 million
compared to $139.7 million in
Q3-2022;
- Adjusted EBITDA1 in a range between $39.0 million to $41.0
million compared with $31.0
million in Q3-2022;
In millions
|
Q3-2022
Actual
|
Q3-2023
Expected
|
Gross
Profit
|
$139.7
|
$168.0 to
$174.0
|
Adjusted
EBITDA
|
$31.0
|
$39.0 to
$41.0
|
- Cash generated from operating activities improved significantly
in Q3-2023, resulting in positive free cash flow and a reduction in
net debt; and
- Net income for Q3-2023 is expected to be comparable to
Q2-2023.
The Company will provide additional discussion and analysis
regarding its financial results for the third quarter ended
September 30, 2023 on November 14, 2023.
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.
Non-IFRS Measures
This press release refers to certain performance indicators
including Adjusted EBITDA, that do 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 operating results,
and can highlight trends in its core business that may not
otherwise be apparent when relying solely on IFRS financial
measures. The Company also 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. 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. Investors are encouraged to review the Company's
financial statements and disclosures in their entirety, are
cautioned not to put undue reliance on non-IFRS measures and view
them in conjunction with the most comparable IFRS financial
measures.
Adjusted EBITDA represents net income 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 IFRS measure most directly comparable to
Adjusted EBITDA presented in the Company's financial statements is
net (loss) income.
Reconciliation of Net income before taxes to Adjusted EBITDA for
Q3, 2022 is as follows:
|
Q3
2022
|
Net income before
taxes
|
$
15,726
|
Finance
expense
|
5,886
|
Share-based
compensation expense
|
1,275
|
Depreciation and
amortization
|
23,094
|
Depreciation included
in cost of sales
|
1,008
|
Foreign exchange
gain
|
(24,233)
|
Special
charges
|
8,211
|
Adjusted
EBITDA1
|
$
30,967
|
Please see "Non-IFRS Financial & Supplementary Financial
Measures" and "Summary of Consolidated Financial Results" in the
Company's most recent Management's Discussion and Analysis, which
is available on the Company's profile on SEDAR+ at
www.sedarplus.ca, for further details on certain non-IFRS measures,
including relevant reconciliations of each non-IFRS measure to its
most directly comparable IFRS measure, which information is
incorporated by reference herein.
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.
Specifically, statements regarding Converge's forecast on
Revenue, Gross Profit and Adjusted EBITDA, expectations of future
results, performance, prospects, the markets in which it operates,
or about any future intention with regard to its business and
acquisition strategies are considered forward-looking information.
The foregoing demonstrates Converge's objectives, which are not
forecasts or estimates of its financial position, but are based on
the implementation of its strategic goals, growth prospects, and
growth initiatives. The forward-looking information, including
management's assessments of, and outlook for, Revenue, Gross Profit
and Adjusted EBITDA, are based on management's opinions, estimates
and assumptions, including, but not limited to: (i) Converge's
results of operations will continue as expected, (ii) the Company
will continue to effectively execute against its key strategic
growth priorities, (iii) the Company will continue to retain and
grow its existing customer base and market share, (iv) the Company
will be able to take advantage of future prospects and
opportunities, and realize on synergies, including with respect of
acquisitions, (v) there will be no changes in legislative or
regulatory matters that negatively impact the Company's business,
(vi) current tax laws will remain in effect and will not be
materially changed, (vii) economic conditions will remain
relatively stable throughout the period, (vii) the industries
Converge operates in will continue to grow consistent with past
experience, and (ix) those assumptions described under the heading
"About Forward-Looking Information" in the Company's Management's
Discussion and Analysis for the three and six-months ended
June 30, 2023. While these opinions,
estimates and assumptions are considered by the Company to be
appropriate and reasonable in the circumstances as of the date of
this press release, they are subject to known and unknown risks,
uncertainties, assumptions and other factors that may cause the
actual results, levels of activity, performance, or achievements to
be materially different from those expressed or implied by such
forward-looking information.
The forward looking information, including the achievement of
target Revenue, Gross Profit and Adjusted EBITDA set out above, are
subject to significant risks including, without limitation: that
the Company will be unable to effectively execute against its key
strategic growth priorities, including in respect of acquisitions;
the Company will be unable to continue to retain and grow its
existing customer base and market share; risks related to the
Company's business and financial position; that the Company may not
be able to accurately predict its rate of growth and profitability;
risks related to economic and political uncertainty; income tax
related risks; and those risk factors discussed in greater detail
under the "Risk Factors" section of the Company's most recent
annual information form and under the heading "Risks and
Uncertainties" in the Company's most recent Management's Discussion
and Analysis, which are each available under the Company's profile
on SEDAR+ at www.sedarplus.ca. Many of these risks are beyond the
Company's control.
If any of these risks or uncertainties materialize, or if the
opinions, estimates or assumptions underlying the forward-looking
information prove incorrect, actual results or future events might
vary materially from those anticipated in the forward-looking
information. Although the Company has attempted to identify
important risk factors that could cause actual results to differ
materially from those contained in forward-looking information,
there may be other risk factors not presently known to the Company
or that the Company presently believes are not material that could
also cause actual results or future events to differ materially
from those expressed in such forward-looking information.
Although the Company bases these forward-looking statements on
assumptions that it believes are reasonable when made, the Company
cautions investors that forward-looking statements are not
guarantees of future performance and that its actual results of
operations, financial condition and liquidity and the development
of the industry in which it operates may differ materially from
those made in or suggested by the forward-looking statements
contained in this press release. In addition, even if the Company's
results of operations, financial condition and liquidity and the
development of the industry in which it operates are consistent
with the forward-looking statements contained in this press
release, those results of developments may not be indicative of
results or developments in subsequent periods.
There can be no assurance that such information will prove to be
accurate, as actual results and future events could differ
materially from those anticipated in such information. No
forward-looking statement is a guarantee of future results.
Accordingly, you should not place undue reliance on forward-looking
information, which speaks only as of the date made. The
forward-looking information contained in this press release
represents the company's expectations as of the date specified
herein, and are subject to change after such date. However, the
Company disclaims any intention or obligation or undertaking to
update or revise any forward-looking information or to publicly
announce the results of any revisions to any of those statements,
whether as a result of new information, future events or otherwise,
except as required under applicable securities laws. Comparisons of
results for current and any prior periods are not intended to
express any future trends or indications of future performance,
unless specifically expressed as such, and should only be viewed as
historical data.
All of the forward-looking information contained in this press
release is expressly qualified by the foregoing cautionary
statements.
_______________________________
|
1 Adjusted
EBITDA is a non-IFRS measure and not a recognized, defined or
a standardized measure under IFRS. This non-IFRS financial measure
reported by the Company is defined in the "Non-IFRS Financial
Measures" section of this press release.
|
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SOURCE Converge Technology Solutions Corp.