Gross profit increased by 31% in Q4 2021 and by 20% in Fiscal
2021 driven by strong growth in Software & Cloud and
Services
Following record results in 2021, Softchoice updates 2022
outlook and announces 29% increase to dividend and new share
buyback program
Softchoice Corporation (“Softchoice” or the “Company”) (TSX:
SFTC) today announced its financial results for the quarter and
year ended December 31, 2021. The Company also updated its 2022
Outlook and announced a 29% increase to its quarterly dividend and
its intention to implement a normal course issuer bid (share
buyback). Softchoice’s management team will hold a conference
call/webcast to discuss its results today, March 4, 2022, at 8:30
a.m. ET, the details of which are further below. Unless otherwise
noted, all dollar ($) amounts are in U.S. dollars.
Commenting on Fiscal 2021 and the Company's 2022 outlook,
Vince De Palma, Softchoice’s President & Chief Executive
Officer, said:
“Our unique ability to unleash the potential of people and
technology drove exceptional results for Softchoice in Fiscal 2021,
including 20% growth in our top line gross profit while using our
free cash flow to aggressively reduce debt and initiate a quarterly
dividend. We achieved record salesforce productivity during the
year through our insight-driven approach with our customers and the
investments and initiatives we’ve made to support our strategic
focus on delivering advanced software- and cloud-focused IT
solutions. We continued to deepen our engagements with customers to
help them drive their digital transformation and succeed, resulting
in record Revenue Retention Rate of 113%. We are entering 2022 with
significant momentum and in a sound financial position. Given the
visibility in our business model and our continued strong
performance, we have increased our growth outlook for 2022.”
Commenting on Softchoice’s performance in the fourth quarter
of 2021 and capital allocation plans, Bryan Rocco, Softchoice’s
Chief Financial Officer, said:
“We were pleased to deliver very strong financial results this
past quarter including 31% gross profit growth over Q4 2020, driven
by significant growth in Software & Cloud and realizing gross
profit uplift from our business transformation initiative Project
Monarch. Adjusted EBITDA increased 2%, in line with our
expectations, as our gross profit growth both funded significant
investments in our technical resources, salesforce, and cloud
strategies, and offset a $10 million decline in CEWS funding. Our
Q4 2021 finish contributed to Softchoice achieving a record
Adjusted EBITDA in Fiscal 2021. Our strategic investments as well
as the benefits of Project Monarch, position Softchoice to drive
significant organic growth and Adjusted EBITDA margin expansion in
Fiscal 2022. In order to enhance shareholder returns while
maintaining balance sheet strength and flexibility, our Board has
also increased our quarterly dividend by 29% to 9-cents (Canadian)
per common share and we will commence a buy-back program for our
common shares.”
Financial Summary1
US$ M except per share amounts and
percentages
Q4 2021
Q4 2020
Growth %
Fiscal 2021
Fiscal 2020
Growth %
Gross Sales
634.3
526.7
20.4%
1,999.7
1,738.7
15.0%
Gross Sales by IT Solution Type*:
Software & Cloud
447.6
338.0
32.4%
1,360.9
1,099.9
23.7%
Services
26.8
22.1
21.4%
101.7
90.4
12.5%
Hardware
160.0
166.7
-4.0%
537.1
548.4
-2.1%
Net sales
258.2
231.4
11.6%
903.1
836.8
7.9%
Gross profit
85.8
65.4
31.1%
287.0
238.3
20.4%
Gross Profit by IT Solution Type*:
Software & Cloud
53.2
37.6
41.5%
176.4
143.0
23.3%
Services
7.3
4.3
70.2%
28.2
22.4
25.8%
Hardware
25.3
23.5
7.5%
82.5
72.9
13.2%
Adjusted EBITDA
26.5
26.0
1.8%
69.1
65.5
5.5%
Adjusted EBITDA as a % of Gross
Profit
30.8%
39.7%
24.1%
27.5%
Income (loss) from operations
10.7
14.5
(26.5%)
3.2
15.0
(78.3%)
Net income (loss)
7.4
19.3
(61.9%)
(10.0)
2.1
(575.9%)
Net income (loss) per Diluted Share
(attributable to the Owners of the Company)
$0.12
$0.21
(43.9%)
$(0.22)
$(0.01)
1947.2%
Adjusted Net Income
17.2
20.5
-16.4%
37.0
36.2
2.2%
Adjusted EPS (Diluted)
$0.27
$0.36
-25.5%
$0.65
$0.64
0.7%
* Amounts may not add to total due to
rounding
Selected Q4 2021 Highlights
- Gross Sales increased by 20.4% to $634.3 million from $526.7
million in Q4 2020, driven by a 32.4% increase in Software &
Cloud solutions.
- Net sales increased by 11.6% to $258.2 million from $231.4
million in Q4 2020, driven by double-digit growth in Software &
Cloud and Services solutions. Similar to previous quarters and
recent years, Gross Sales growth exceeded net sales growth due to
an increase in the mix of Software & Cloud solutions within
total Gross Sales, which is primarily recorded on a net basis for
accounting purposes.
- Gross profit increased by 31.1% to $85.8 million, from $65.4
million in Q4 2020, driven by growth in all IT solution types and
sales channels.
- Adjusted EBITDA increased by 1.8% to $26.5 million, from $26.0
million in Q4 2020, with the $20.4 million increase in gross profit
partially offset by a $19.8 million increase in Adjusted Cash
Operating Expenses, driven by the decrease in CEWS ($10.3 million
in Q4 2020 versus $nil in Q4 2021), growth investments made by the
Company in Q4 2021, and higher variable compensation tied to gross
profit performance.
Selected Fiscal 2021 Highlights
- Gross Sales increased by 15.0% to $2.0 billion from $1.7
billion in Fiscal 2020, driven by a 23.7% increase in Software
& Cloud solutions.
- Revenue Retention Rate increased to the highest level of 113%
in Fiscal 2021, compared to 94% in Fiscal 2020, illustrating strong
growth with existing Customers.
- Net sales increased by 7.9% to $903.1 million from $836.8
million in Fiscal 2020, driven by growth in all IT solution
types.
- Gross profit increased by 20.4% to $287.0 million, from $238.3
million in Fiscal 2020, driven by double-digit growth in all IT
solution types and sales channels.
- Adjusted EBITDA increased by 5.5% to $69.1 million, from $65.5
million in Fiscal 2020, with the $48.7 million increase in gross
profit partially offset by a $45.1 million increase in Adjusted
Cash Operating Expenses, driven primarily by the decrease in CEWS
($14.0 million in Fiscal 2020 versus $0.7 million in Fiscal 2021),
growth investments made by the Company in Fiscal 2021, and higher
variable compensation tied to gross profit performance.
Selected 2021 Business Highlights
- Made significant growth investments in our technical resources,
salesforce, and cloud strategies.
- Recipient of Microsoft Surface Velocity Partner of the Year,
which acknowledges the highest level of revenue growth in the
channel.
- Leveraged recognition as VMware’s Lifecycle Services Partner of
the Year to expand VMware Cloud market share, by accelerating the
migration of traditional on-premise environments into Amazon Web
Services (“AWS”), Microsoft Azure, and Google Cloud Platform
(“GCP”).
- Recipient of Red Hat Solution Provider Partner of the Year,
which represents the leadership we have demonstrated in using
software-defined tools to manage environments across private or
public cloud.
- Recipient of the U.S. Rising Star Partner of the Year by AWS
for strong pace of growth.
- Secured a multi-year partnership with AWS to strengthen cloud
migration and modernization service offerings which will enable
customers to transform and innovate in the cloud with agility.
- Honoured with the Social Impact Partner of the Year – Global
and Americas Security Partner of the Year at the Cisco Partner
Summit 2021, which recognizes the commitment of Softchoice to
create success for customers' organizations, their IT
professionals, and our communities.
- Subsequent to year-end, the Company achieved the elite Managed
Services Provider designation in the Google Cloud Advantage
Program, demonstrating the Company’s continued success in enabling
cloud transformation at scale with technical expertise in GCP.
Financial Position
The Company ended 2021 in strong financial condition, with
approximately $211 million in available funds from cash on hand and
through its $275 million revolving credit facility. Including
internally generated cash flows, the Company anticipates having
significant resources with which to pursue growth opportunities and
enhance shareholder returns.
The Company had approximately $66.8 million in loans and
borrowings outstanding as at year end. Net debt, equating to loans
and borrowings plus lease liabilities less cash-on-hand, was $85.9
million at December 31, 2021 compared to $190.6 million at December
31, 2020, with the decline driven by proceeds from the IPO as well
as net cash flows from operating activities in 2021. The ratio of
net debt to 2021 Adjusted EBITDA was 1.2x at December 31, 2021
compared to 2.9x at December 31, 2020.
Dividend
On March 3, 2022, the Company’s Board (the “Board”) of
Directors approved a 29% increase in quarterly cash dividends to
Cdn. $0.09 per common share (each, a “Common Share”), from Cdn.
$0.07 per Common Share. As such, the Company has declared a cash
dividend (the “Dividend”) in the amount of C$0.09 per Common Share
of the Company for the period from January 1, 2022 to March 31,
2022, payable as of April 14, 2022, to shareholders of record at
the close of business on March 31, 2022. The Dividend to which this
notice relates is an eligible dividend for tax purposes.
NCIB
On March 3, 2022, the Board approved the commencement of a
normal course issuer bid (“NCIB”) through the facilities of
the TSX and/or alternative Canadian trading systems to purchase and
cancel up to 3,018,528 of the Company’s Common Shares, representing
approximately 10% of the public float of 30,185,282, during the
twelve-month period commencing March 8, 2022 and ending March 7,
2023.
The Company intends to enter into an automatic purchase plan to
be effective on March 8, 2022 with a designated broker which will
allow for the purchase for cancellation of Common Shares, subject
to certain trading parameters, by its designated broker during
times when the Company would ordinarily not be active in the market
due to applicable regulatory restrictions or self-imposed blackout
periods. Outside of these periods, the Common Shares will be
repurchased by the Company at its discretion under the NCIB.
Our Outlook 1
Softchoice is revising its 2022 financial outlook that was
originally included in its Prospectus (as defined below) and
reiterated November 12, 2021. For full-year 2022, the Company is
now expecting:
Updated Fiscal 2022
Outlook
Gross Profit
>$320 million (>11.5%
growth over Fiscal 2021)
Adjusted EBITDA as a Percentage of
Gross Profit
~30% margin (Inclusive of ~$25
million of Project Monarch Uplift)
Adjusted Free Cash Flow
Conversion
Approximately 90%
Our outlook is based on certain assumptions and factors
(including those relating to our view of the drivers of, and
expectations related to, our anticipated growth), including the key
assumptions and factors set out in the Prospectus under ‘Our
Outlook’. Assumes an average U.S.$ / C$ exchange rate of 0.79 in
Fiscal 2022. For important information on risk factors, refer to
“Forward Looking Information Disclaimer” later in this news
release.
Quarterly Conference Call
Softchoice’s management team will hold a conference call to
discuss our fourth quarter and full year 2021 results today, March
4, 2022, at 8:30 a.m. ET.
DATE: Friday, March 4, 2022 TIME: 8:30 a.m.
Eastern Time DIAL-IN: 416-764-8659 or 1-888-664-6392,
Confirmation # 63207280 WEBCAST:
https://produceredition.webcasts.com/starthere.jsp?ei=1527612&tp_key=d22683293e
TAPED REPLAY: 416-764-8677 or 1-888-390-0541, Replay Code
207280 # (Available until Mar. 11, 2022)
A link to the webcast will also be available on the Events page
of the Investors section of Softchoice’s website at
http://investors.softchoice.com. Please connect at least 15 minutes
prior to the conference call to ensure adequate time for any
software download that may be required to join the webcast. An
archived replay of the webcast will be available for 90 days.
Capitalized Terms
Capitalized terms used in this release, including Project
Monarch, and terms we use to describe our IT solution types
including Software & Cloud, Services, and Hardware and sales
channels including SMB, Commercial, and Enterprise are described in
the Company’s Management’s Discussion and Analysis of Financial
Condition and Results of Operations for the three and twelve-months
ended December 31, 2021 (the “Q4 2021 MD&A”), and/or
defined in our Prospectus (as defined below) filed on SEDAR and
available on the Company’s investor relations website
http://investors.softchoice.com.
1 Non-IFRS Measures
This news release makes reference to certain non-IFRS measures
and other measures. These measures are not recognized measures
under International Financial Reporting Standards (“IFRS”) as
issued by the International Accounting Standards Board (“IASB”) and
do not have a standardized meaning prescribed by IFRS and are
therefore unlikely to be comparable to similar measures presented
by other companies. Rather, these measures are provided as
additional information to complement those IFRS measures by
providing further understanding of our results of operations from
management’s perspective. Accordingly, these measures should not be
considered in isolation nor as a substitute for analysis of our
financial information reported under IFRS. We use non-IFRS
measures, including “Adjusted EBITDA”, “Adjusted EBITDA as a
Percentage of Gross Profit”, “Adjusted Cash Operating Expenses”,
“Adjusted Net Income (Loss)”, “Adjusted EPS”, “Adjusted Free Cash
Flow Conversion”, and “Gross Sales”. These non-IFRS measures and
other measures are used to provide investors with supplemental
measures of our operating performance and thus highlight trends in
our core business that may not otherwise be apparent when relying
solely on IFRS measures. Our management uses these non-IFRS
measures and other measures in order to facilitate operating
performance comparisons from period to period, to prepare annual
operating budgets and forecasts and to determine components of
management compensation. We also believe that securities analysts,
investors and other interested parties frequently use certain of
these non-IFRS measures and other measures in the evaluation of
issuers. As required by Canadian securities laws, we reconcile the
non-IFRS measures to the most comparable IFRS measures. For more
information on non-IFRS measures and other measures, see the Q4
2021 MD&A filed on SEDAR and available on the Company’s
investor relations website http://investors.softchoice.com.
Reconciliations of Non-IFRS Financial Measures
(Information in thousands of U.S.
dollars, unless otherwise stated)
Three Months Ended December
31,
Fiscal Year Ended December
31,
Reconciliation of Net Sales to Gross
Sales
2021
2020
2021
2020
Net sales
258,175
231,391
903,066
836,751
Net adjustment for sales transacted as
agent
376,132
295,301
1,096,607
901,915
Gross Sales
634,307
526,692
1,999,673
1,738,666
Reconciliation of Operating Expenses to
Adjusted Cash Operating Expenses
Operating expenses
75,104
50,877
283,734
223,314
Depreciation and amortization
(5,027)
(5,938)
(21,167)
(23,141)
Equity-settled share-based compensation
and other costs (1)
(8,154)
(538)
(37,334)
(9,848)
Non-recurring compensation and other costs
(2)
(6)
(1,444)
(688)
(2,867)
Business transformation non-recurring
costs (3)
(499)
(3,516)
(1,573)
(14,630)
IPO related costs (4)
(79)
–
(3,071)
–
Follow-On Offering costs (5)
(287)
–
(287)
–
Non-recurring legal provision (6)
(1,714)
–
(1,714)
–
Adjusted Cash Operating
Expenses
59,338
39,441
217,900
172,828
Reconciliation of Income (loss) from
operations to Adjusted EBITDA
Income (loss) from operations
10,698
14,550
3,248
14,974
Depreciation and amortization
5,027
5,938
21,167
23,141
Equity-settled share-based compensation
and other costs (1)
8,154
538
37,334
9,848
Non-recurring compensation and other costs
(2)
6
1,444
688
2,867
Business transformation non-recurring
costs (3)
499
3,516
1,573
14,630
IPO related costs (4)
79
–
3,071
–
Follow-On Offering costs (5)
287
–
287
–
Non-recurring legal provision (6)
1,714
–
1,714
–
Adjusted EBITDA
26,464
25,986
69,082
65,460
Adjusted EBITDA as a Percentage of
Gross Profit (7)
30.8%
39.7%
24.1%
27.5%
Reconciliation of Net Income (Loss) to
Adjusted Net Income
Net income (loss)
7,358
19,302
(9,965)
2,094
Amortization of intangible assets
3,279
3,727
13,058
14,403
Equity-settled share-based compensation
and other costs (1)
8,154
538
37,334
9,848
Non-recurring compensation and other costs
(2)
6
1,444
688
2,867
Business transformation non-recurring
costs (3)
499
3,516
1,573
14,630
IPO related costs (4)
79
–
3,071
–
Follow-On Offering costs (5)
287
–
287
–
Non-recurring legal provision (6)
1,714
–
1,714
–
Related party debt interest (8)
–
1,006
1,736
3,891
Subordinated debt interest (8)
–
260
446
1,007
Interest expense (recovery) on accretion
of non-interest bearing notes (9)
–
(66)
120
96
Extinguishment of deferred financing fees
(10)
–
–
1,621
–
Unrecoverable withholding taxes (11)
(206)
–
829
–
Loss on lease modification (12)
–
–
1,184
–
Loss on disposal of property, plant and
equipment (13)
651
–
651
–
Foreign exchange gain (14)
(244)
(7,563)
(1,924)
(3,363)
Tax recovery on deferred tax liability
(15)
(2,612)
–
(5,475)
–
Related tax effects (16)
(1,810)
(1,635)
(9,994)
(9,306)
Adjusted Net Income
17,155
20,529
36,954
36,167
Weighted Average Number of Shares
(Basic)
59,457,156
45,162,331
53,406,543
45,135,727
Weighted Average Number of Shares
(Diluted)
63,227,619
56,402,447
57,177,006
56,375,843
Adjusted EPS (Basic) (17)
0.29
0.45
0.69
0.80
Adjusted EPS (Diluted) (17)
0.27
0.36
0.65
0.64
The following measures are reported on a trailing
twelve-month basis only:
Reconciliation of Net Cash (used in)
Provided by
Fiscal Year Ended December
31,
Operating Activities to Adjusted Free
Cash Flow
2021
2020
2019
Net cash provided by (used in)
operating activities
53,730
(10,548)
30,404
Adjusted for:
Share-based compensation and other costs
(18)
35,571
5,003
3,722
Non-recurring compensation and other costs
(2)
688
2,867
941
Business transformation non-recurring
costs (3)
1,573
14,630
12,334
IPO related costs (4)
3,071
–
–
Follow-On Offering costs (5)
287
–
–
Non-recurring legal provision (6)
1,714
–
–
Realized foreign exchange (gains)
losses
(7,515)
228
3,336
Finance and other expense (income)
(19)
846
(144)
(866)
Cash taxes paid
6,564
5,491
7,761
Cash interest paid
6,330
8,475
9,449
Change in non-cash operating working
capital
(33,777)
39,458
(4,623)
Adjusted EBITDA
69,082
65,460
62,458
Maintenance Capex
(1,796)
(1,132)
(2,830)
IFRS 16 lease payments (20)
(7,431)
(6,676)
(6,700)
Adjusted Free Cash Flow
59,855
57,652
52,928
Adjusted Free Cash Flow
Conversion
87%
88%
85%
Notes (Refer to the Q4 2021 MD&A for description of the
bolded items and sections with parentheses within these
Notes)
(1)
These expenses represent costs recognized
in connection with the Company’s legacy option plan and omnibus
long-term equity incentive plan, pursuant to which options granted
are fair valued at the time of grant using the Black-Scholes option
pricing model and adjusted for any plan modifications. Included in
Fiscal 2021, there was $16.9 million relating to certain payments
made in connection with extinguishment of certain equity-based
entitlements (the “Cash-Out Agreements”) in conjunction with
the IPO. In addition, $7.7 million relates to Cash-Out Agreements
in conjunction with the Follow-On offering. Other costs relate to
the employee investment plan and the long-term profit-sharing plan,
which were dissolved upon the completion of the IPO, and fair value
adjustments in relation to existing equity-based arrangements. As a
result of the IPO, a $6.1 million fair value adjustment was
triggered on an existing equity-based arrangement which was
dissolved thereafter. See “Share Information Prior to the
Completion of the Offering”.
(2)
These expenses include compensation costs
relating to severance and a one-time accrual recorded in Fiscal
2020 associated with the set-up of a new corporate vacation policy.
Other costs are comprised of professional, legal, consulting,
accounting and management fees that are non-recurring and are
sporadic in nature as they primarily relate to costs incurred in
connection with shareholder distributions.
(3)
These costs relate to the implementation
of Project Monarch which were largely comprised of one-time
third-party consulting expenses, personnel costs for dedicated
internal resources and software related costs. All costs relating
to Project Monarch were segregated for tracking purposes and are
monitored on a regular basis. As at December 31, 2021, $49.2
million has been invested in operating and capital expenditures for
Project Monarch. See “Summary of Factors Affecting Performance –
Business Transformation (Project Monarch)”.
(4)
In connection with the IPO, the Company
incurred expenses related to professional fees, legal, consulting,
accounting and compensation that would otherwise not have been
incurred and therefore are non-recurring. These costs have been
separately identified and adjusted for clarity. There were $253 of
IPO related costs which were incurred in three months ended March
31, 2021 that were previously classified under non-recurring
compensation and other costs; these costs have been reclassified
into IPO related costs in Fiscal 2021 year to date adjusted
amount.
(5)
In connection with the Follow-On Offering,
the Company incurred expenses related to professional fees, legal,
and accounting fees that would otherwise not have been incurred and
therefore are non-recurring. These costs have been separately
identified and adjusted above.
(6)
The Company has settled certain legal
claims, without admission of liability or wrongdoing, in respect of
U.S. wage and hour disputes and has provisioned $1.7 million for
such settlements, which are non-recurring in nature.
(7)
Adjusted EBITDA as a Percentage of Gross
Profit is calculated as Adjusted EBITDA divided by gross profit.
See “Non-IFRS Measures and Other Measures – Non-IFRS Measures –
Adjusted EBITDA and Adjusted EBITDA as a Percentage of Gross
Profit”.
(8)
Related party and subordinated debt
interest was settled at the time of Offering. For additional
details see “Related Party Transactions”, “Subordinated Debt
Information” and “Share Information Prior to the Completion of the
Offering”.
(9)
This represents the expense relating to
the accretion of the present value of the non-interest bearing
notes recognized over the term of the notes. These notes were
settled at the time of Offering. See also “Related Party
Transactions”, “Subordinated Debt Information” and “Share
Information Prior to the Completion of the Offering”.
(10)
As a result of the refinancing, the
unamortized balance of the deferred financing fees on the former
revolving credit facility and term credit facility of $1,621 were
extinguished in the June 2021.
(11)
Non-controlling interest portion of
unrecoverable withholding taxes on royalties. Non-controlling
interest was eliminated at the time of the IPO.
(12)
Loss on lease modification recognized in
three months ended September 30, 2021 (“Q3 2021”) as a
result the recognition of a sublease receivable for an office space
that has been subleased and the corresponding derecognition of a
right-of-use asset associated with this space.
(13)
Loss on disposal of property and equipment
recognized in Q4 2021 as a result of the disposal of assets related
to a subleased office space which is non-reoccurring in nature.
(14)
Foreign exchange gains (losses) includes
both realized and unrealized amounts.
(15)
Tax recovery on deferred tax liability as
a result of tax rate changes.
(16)
This relates to the tax effects of the
adjusting items, which was calculated by applying the statutory tax
rate of 26.5% and adjusting for any permanent differences and
capital losses.
(17)
Basic Adjusted EPS is calculated using the
weighted average number of shares outstanding during the period.
Diluted Adjusted EPS includes the dilutive impact of the stock
options in addition to the weighted average number of shares
outstanding during the period. See “Non-IFRS Measures and Other
Measures – Non-IFRS Measures – Adjusted Net Income (Loss) and
Adjusted EPS”.
(18)
Share-based compensation represents costs
recognized in connection with repurchases of stock options from
terminated employees. Included in the trialing twelve months ended
Q4 2021, there was $16.9 million relating to Cash-Out Agreements in
conjunction with the IPO and $7.7 million relating to Cash-Out
Agreements in conjunction with the Follow-On Offering. Other costs
are comprised of the employee investment plan and the long-term
profit-sharing plan, which were dissolved in connection with the
IPO; and fair value adjustments in relation to existing
equity-based arrangements. As a result of the IPO, a $6.1 million
fair value adjustment was triggered on an existing equity-based
arrangement which was dissolved thereafter. See “Share Information
Prior to the Completion of the Offering”.
(19)
Finance and other expense (income) refers
to interest income on cash, and payments received from employees
for parking, net of non-controlling interest portion of
unrecoverable withholding taxes on royalties.
(20)
Lease payments in Fiscal 2021 included a
one-time early lease termination payment of $0.5 million.
1 Forward-Looking Statements
This news release contains “forward-looking information” within
the meaning of applicable securities laws in Canada.
Forward-looking information may relate to our future business,
financial outlook and anticipated events or results and may include
information regarding our financial position, business strategy,
growth strategies, addressable markets, budgets, operations,
financial results, taxes, dividend policy, plans and objectives.
Particularly, information regarding our expectations of future
results, performance, achievements, prospects or opportunities or
the markets in which we operate is forward-looking information. In
some cases, forward-looking information can be identified by the
use of forward-looking terminology such as “plans”, “targets”,
“expects” or “does not expect”, “is expected”, “an opportunity
exists”, “budget”, “scheduled”, “estimates”, “outlook”, “financial
outlook”, “forecasts”, “projection”, “prospects”, “strategy”,
“intends”, “anticipates”, “does not anticipate”, “believes”, or
variations of such words and phrases or statements that certain
actions, events or results “may”, “could”, “would”, “might”,
“will”, “will be taken”, “occur” or “be achieved”. In addition, any
statements that refer to expectations, intentions, projections or
other characterizations of future events or circumstances contain
forward-looking information. Statements containing forward-looking
information are not historical facts but instead represent
management’s expectations, estimates and projections regarding
possible future events or circumstances.
Forward-looking information may include, among other things: (i)
the Company’s expectations regarding its financial performance and
outlook, including among others, net sales, gross profit, gross
profit growth rates, expenses, Adjusted EBITDA, Adjusted EBITDA to
Gross Profit margin, Adjusted Free Cash Flow Conversion,
operations, the number of account executives and employees, organic
growth and Adjusted EBITDA margin expansion; (ii) the Company’s
expectations regarding industry and market trends, growth rates and
growth strategies; (iii) the Company’s business plans and
strategies; (iv) the Company’s ability to retain customers and
increase margin per customer; (v) the Company’s relationship and
status with technology partners; (vi) the Company’s growth
strategies, future organic growth, and competitive position in the
IT industry; (vii) the Company’s dividend program and dividend
rates; (viii) the Company’s NCIB program and the purchase of Common
Shares in connection with such programs; and (ix) the long-term
impact of COVID-19 on our business, financial position, results of
operations and/or cash flows; (x) M&A opportunities; and (xi)
the materialization of the expected benefits of Project
Monarch.
Forward-looking information is necessarily based on a number of
opinions, estimates and assumptions that we considered appropriate
and reasonable as at the date such statements are made, and are
subject to known and unknown risks, uncertainties, assumptions and
other factors that may cause the actual results, level of activity,
performance or achievements to be materially different from those
expressed or implied by such forward-looking information, including
but not limited to the risk factors described in our Q4 2021
MD&A and under “Risk Factors” within the Company’s final
initial public offering prospectus dated May 26, 2021 (the
“Prospectus”). A copy of the Prospectus can be accessed under our
profile on the System for Electronic Document Analysis and
Retrieval (“SEDAR”) at www.sedar.com and on our website at
investors.softchoice.com. There can be no assurance that such
forward-looking information will prove to be accurate, as actual
results and future events could differ materially from those
anticipated in such information. Accordingly, readers should not
place undue reliance on forward-looking information, which speaks
only as at the date made.
In addition to the Forward-looking information cautions
described above, the outlook set forth herein includes Gross
Profit, Gross Profit growth, Adjusted EBITDA, Adjusted EBITDA to
Gross Profit margin and Adjusted Free Cash Flow Conversion, for
Fiscal 2022. Key underlying drivers for our forecast, particularly
related to Gross Profit and Gross Profit growth, include: (i) the
expected growth of our addressable market; (ii) the expected growth
of our salesforce and improvements of our salesforce productivity;
and (iii) the expected growth in our customer base and wallet share
amongst existing customers. A significant portion of the increase
in Gross Profit and Adjusted EBITDA for Fiscal 2022 is attributable
to the procurement savings, pricing margin improvements, and
business growth and reduced revenue leakage and expected net
workforce efficiencies anticipated to result from Project Monarch.
To the extent that these underlying drivers and benefits are not
realized as expected, our Gross Profit, Adjusted EBITDA, Adjusted
EBITDA to Gross Profit margin and, as a result, our Adjusted Free
Cash Flow Conversion, during the relevant period will be adversely
affected. The underlying assumptions relating to future results are
inherently uncertain and are subject to significant business,
economic, financial, regulatory, market and competitive risks,
including risks that our initiatives or projects (including Project
Monarch) do not result in the growth and increase in efficiencies
anticipated along with uncertainties that could cause actual
results to differ materially. If we do not achieve the anticipated
results, we may modify or discontinue certain of our other planned
business initiatives. In light of the foregoing, investors are
urged to put these statements in context and not to place undue
reliance on them.
About Softchoice
Softchoice (TSX: SFTC) is a software-focused IT solutions
provider that equips organizations to be agile and innovative, and
for their people to be engaged, connected and creative at work.
That means moving them to the cloud, helping them build the
workplace of tomorrow, and enabling them to make smarter decisions
about their technology portfolio. For more information, please
visit www.softchoice.com.
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version on businesswire.com: https://www.businesswire.com/news/home/20220304005088/en/
Investor Relations Tim Foran (416) 986-8515
investors@softchoice.com
Press Justin Hane (647) 917-1761
justin.hane@softchoice.com
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