Cash from Operating Activities Expected to
Exceed $100M for the Fourth
Quarter
TORONTO and GATINEAU, QC,
Jan. 29,
2024 /PRNewswire/ - Converge Technology Solutions
Corp. ("Converge" or the "Company") (TSX: CTS), today
announced that it expects cash from operations for its fourth
quarter, ended December 31, 2023
("Q4-2023") to be stronger than it had previously indicated.
Throughout the second half of 2023, the Company has implemented
several new processes and updated controls to better align the
overall business with the global scale and reach it has realized in
recent years. During the fourth quarter, the combined effect of
strategically managing working capital and most notably, inventory,
contributed meaningfully to cash from operating activities. As a
result, the Company now expects to report:
- Cash from operating activities in Q4-2023 of $109.0 million to $116.0
million. This compares with $30.4
million in Q4-2022;
- Cash from operating activities for fiscal 2023 of $224.0 million to $231.0
million. This compares with $41.6
million for fiscal 2022; and,
- Reduction in Net debt1 by $52.0 million year over year to $209.8 million at the end of fiscal 2023,
compared to net debt of $261.8
million at the end of fiscal 2022.
In millions
|
Q4-2022
Actual
|
Q4-2023
Expected
|
Fiscal 2022
Actual
|
Fiscal 2023
Expected
|
Cash from operating
activities
|
$30.4
|
$109.0 to
$116.0
|
$41.6
|
$224.0 to
$231.0
|
Additionally, the Company expects to report Q4-2023 Gross Profit
and Adjusted EBITDA2 levels that are in line with
previously provided guidance and current consensus estimates.
Complete financial results for the fourth quarter and fiscal
2023 will be published before the markets open on Wednesday, March 6, 2024.
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 and Net Debt, 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.
Net Debt represents borrowings (both current and non-current)
less cash.
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,
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 cash
from operating activities, net debt, 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, cash from operating
activities, net debt, 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 nine-months
ended September 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 cash from operating activities, net debt, 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] Net
debt 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.
|
[2] 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.