Converge Technology Solutions Reports Second Quarter 2022 Financial Results

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TORONTO and GATINEAU, Quebec, Aug. 09, 2022 (GLOBE NEWSWIRE) — Converge Technology Solutions Corp. (“Converge” or “the Company”) (TSX:CTS) (FSE:0ZB) (OTCQX:CTSDF) is pleased to provide its financial results for the three and six months ended June 30, 2022. All figures are in Canadian dollars unless otherwise stated.

Financial Summary

In $000s except per share amounts

Q2 2022

Q2 2021

Growth %

H1 2022

H1 2021

Growth %
Gross revenues 729,678  452,120 61% 1,403,607  860,220 63%
Net revenues 596,656  345,307 73% 1,146,693  655,509 75%
Gross profit (GP) 133,152  78,244 70% 242,196  146,040 66%
Gross profit (GP) % 22.3% 22.7%  21.1% 22.3% 
Adjusted EBITDA 39,188  21,720 80% 68,837  40,488 70%
Adjusted EBITDA as a % of GP 29.4% 27.8%  28.4% 27.7% 
Adjusted EBITDA as a % of Net Revenue 6.6% 6.3%  6.0% 6.2% 
Net income 11,678  1,025 1039% 9,270  4,690 98%
Net income per diluted share$0.05 $0.01 400%$0.05 $0.03 67%
Adjusted net income 29,900  14,148 111% 52,410  26,164 100%
Adjusted EPS$0.14 $0.08 75%$0.24 $0.16 50%

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Financial highlights for the three-month period ended June 30, 2022 (“Q2-2022”):

  • Q2-2022 net revenue increased 73% over the same quarter last year (“Q2-2021”) to $596.7 million
  • Q2-2022 gross profit increased 70% over last year to $133.2 million
  • Adjusted EBITDA1 increased 80% to $39.2 million from $21.7 million last year
  • For Q2-2022, the Company generated Adjusted Free Cashflow and Adjusted Free Cash Flow Conversion1 of $33.8 million and 86%, respectively
  • Reported Adjusted EPS1 of $0.14 per share for Q2-2022 increasing by 75% from $0.08 per share in Q2-2021
  • Organic gross revenue growth1 for Q2-2022 was approximately 8.5%
  • Product Bookings backlog2 increased to approximately $507 million in Q2-2022 compared to $472 million in Q1-2022, after clearing $375 million worth of Q1 backlog during the quarter
  • Q2-2022 Services Backlog2 was approximately $71 million compared to $45 million in Q1-2022
  • Achieved 109 net new logos in Q2-2022, securing 220 net new logos in H1-2022

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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 Bookings backlog is calculated as purchase orders received from customers not yet delivered at the end of the fiscal period.

Q2-2022 Business Highlights & Subsequent to Quarter

  • Acquired approximately $939.2 million of LTM gross revenue and $56.0 million EBITDA through 8 acquisitions year-to-date including Paragon Development Systems, Inc. (“PDS”); Visucom GmbH (“Visucom”); 1CRM Systems Corp. (“1CRM”); Creative Breakthroughs, Inc. (“CBI”); Interdynamix Systems (IDX); Solutions Notarius Inc. (“Notarius”); Gesellschaft für digitale Bildung, Institur für modern Bildung, and DEQSTER (collectively “GfdB”); and Technology Integration Group (“TIG”).
  • Announced a refinanced, five-year $500 million global revolving credit facility (the “Global Credit Facility”), led by J.P. Morgan and Canadian Imperial Bank of Commerce as joint lead arrangers with the Bank of Nova Scotia, the Toronto-Dominion Bank, and the Bank of Montreal participating in the lender group
  • The Global Credit Facility includes an uncommitted accordion feature of $100 million, for a total borrowing capacity of up to $600 million; double the Company’s existing ABL credit facility of $300 million
  • Converge announced TSX approval of Normal Course Issuer Bid to commence August 11, 2022 allowing the Company to purchase for cancellation up to an aggregate of 10,744,818 common shares
  • Expanded Converge Board of Directors with addition of Dr. Toni Rinow, bringing more than 20 years of international experience as a transformational finance and business leader
  • Converge ranked within the top 40 for both CRN® 2022 Solution Provider 500 list and CRN Fast Growth 150 list and placed eighth on 2022 CDN Top 100 Solution Providers

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“We continue to report record financial results, and I am incredibly proud that Converge grew by over 70% year-over-year across revenue, gross profit and Adjusted EBITDA,” said Shaun Maine, CEO of Converge. “Despite the macroeconomic challenges faced in the consumer market, business demand for digital transformation and hybrid IT solutions remains robust while the deep technical skills that Converge possesses surrounding analytics, cybersecurity, cloud and managed services remain scarce, especially in the mid-market. I’m proud of the fact that the Company has executed on our stated acquisition plans, closing 8 acquisitions to date including GfdB and TIG completed after quarter end, equating to approximately $939 million in LTM gross revenue and $56 million in Adjusted EBITDA year-to-date. Our North American team continues to refine their acquisition, integration, and cross-selling strategies, and it is my great pleasure to announce that in addition to Greg Berard’s role as President, he will now become the North American CEO to clarify his operational role in North America to customers, partners and employees.”

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Conference Call Details:

Date: Wednesday, August 10th, 2022

Time: 8:00 AM Eastern Time

Participant Webcast Link:

Webcast Link –

Participant Dial-in Details:

If you prefer to access via dial-in, please register using the following link:

Telco registration link –

Once registered, you will receive a unique dial-in number and PIN. To avoid delays we encourage participants to register a minimum of fifteen minutes ahead of the scheduled start time. Registration is now open.

Recording Playback:

A recording of the webcast will be available after the call using the following link:

Webcast Link –

Expiry Date: August 10th, 2023

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About Converge

Converge Technology Solutions Corp. is a software-enabled IT & Cloud Solutions provider focused on delivering industry-leading solutions and services. Converge’s global solution approach delivers advanced analytics, application modernization, cloud, 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

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For further information contact:

Converge Technology Solutions Corp.

Email: [email protected]

Phone: 416-360-1495

Summary of Consolidated Statements of Financial Position

(expressed in thousands of Canadian dollars)

 June 30, 2022

 December 31, 2021

Current assets  
 Cash$184,175 $248,193 
 Restricted cash 4,375   
 Trade and other receivables 597,468  416,499 
 Inventories 119,264  104,254 
 Prepaid expenses and other assets 17,855  11,762 
   923,137  780,708 
Long-term assets  
 Property, equipment, and right-of-use assets, net 49,097  30,642 
 Intangible assets, net 355,968  233,586 
 Goodwill 421,786  323,284 
 Other non-current assets 609  617 
  $1,750,597 $1,368,837 
Liabilities and shareholders’ equity  
Current liabilities  
 Trade and other payables$647,488 $519,434 
 Borrowings 192,257  816 
 Other financial liabilities 31,926  29,407 
 Deferred revenue 52,391  27,581 
 Income taxes payable 7,297  13,977 
   931,359  591,215 
Long-term liabilities  
 Other financial liabilities 86,347  85,296 
 Borrowings 80  412 
 Deferred tax liability 72,850  43,086 
  $1,090,636 $720,009 
Shareholders’ equity  
 Common shares 633,809  633,489 
 Contributed surplus 5,222  2,325 
 Exchange rights 2,076  2,396 
 Accumulated other comprehensive (loss) income (705) 329 
 Deficit (14,827) (25,050)
Total equity attributable to shareholders of Converge 625,575  613,489 
Non-controlling interest 34,386  35,339 
   659,961  648,828 
  $1,750,597 $1,368,837 

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Summary of Consolidated Statements of Income and Comprehensive Income

(expressed in thousands of Canadian dollars)

  Three months ended June 30,

  Six months ended June 30,

  2022  2021  2022  2021 
Product$491,821 $281,287 $945,210 $533,794 
Service 104,835  64,020  201,483  121,715 
Total revenue 596,656  345,307  1,146,693  655,509 
Cost of sales 463,504  267,063  904,497  509,469 
Gross profit 133,152  78,244  242,196  146,040 
Selling, general and administrative expenses 95,823  57,630  176,235  107,273 
Income before the following 37,329  20,614  65,961  38,767 
Depreciation and amortization 17,178  7,898  31,657  14,386 
Finance expense, net 3,094  1,727  4,912  4,147 
Special charges 5,559  5,354  11,280  8,405 
Share-based compensation expense 1,685    2,897   
Other (income) expenses (3,265) 1,913  3,138  3,006 
Income before income taxes 13,078  3,722  12,077  8,823 
Income tax expense 1,400  2,697  2,807  4,133 
Net income$11,678 $1,025 $9,270 $4,690 
Net income (loss) attributable to:        
Shareholders of Converge 12,017  1,025  10,223  4,690 
Non-controlling interest (339)   (953)  
 $11,678 $1,025 $9,270 $4,690 
Other comprehensive income (loss)        
Exchange differences on translation of foreign operations 5,883  820  (1,034) 618 
Comprehensive income$17,561 $1,845 $8,236 $5,308 
Comprehensive income (loss) attributable to:        
Shareholders of Converge 17,900  1,845  9,189  5,308 
Non-controlling interest (339)   (953)  
 $17,561  1,845  8,236  5,308 
Adjusted EBITDA2$39,188 $21,720 $68,837 $40,488 
Adjusted EBITDA as a % of Net Revenue3 6.6% 6.3% 6.0% 6.2%
Adjusted EBITDA as a % of Gross Profit4 29.4% 27.8% 28.4% 27.7%

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Non-IFRS measure. See “Adjusted EBITDA” under the Non-IFRS Financial Measures section of this news release.

3 Non-IFRS measure. See “Adjusted EBITDA as a % of Net Revenue” under the Non-IFRS Financial Measures section of this news release.

4 Non-IFRS measure. See “Adjusted EBITDA as a % of Gross Profit” under the Non-IFRS Financial Measures section of this news release.

Summary of Consolidated Statements of Cash Flows

(expressed in thousands of Canadian dollars)

  For the three months ended June 30,

 For the six months ended June 30,

  2022  2021  2022  2021 
Cash flows from operating activities        
Net income$11,678 $1,025  9,270 $4,690 
Adjustments to reconcile net income to net cash from operating activities        
Depreciation and amortization 18,739  9,070  33,969  16,311 
Unrealized foreign exchange losses (gains) (2,968) 1,954  3,701  2,966 
Share-based compensation expense 1,685    2,897   
Finance expense, net 3,094  1,727  4,912  4,147 
Change in fair value of contingent consideration       597 
Income tax expense 1,400  2,697  2,807  4,133 
  33,628  16,473  57,556  32,844 
Changes in non-cash working capital items        
Trade and other receivables (48,366) 36,224  (76,139) 59,019 
Inventories 4,709  (12,019) 11,258  (24,187)
Prepaid expenses and other assets (3,186) 264  (4,615) (301)
Trade and other payables 45,753  (30,462) 16,370  (65,601)
Income taxes payable (16,272) (2,474) (17,025) (1,979)
Other financial liabilities 319  1,871  2,236  1,871 
Deferred revenue and customer deposits 9,985  13,833  6,600  17,513 
Cash from (used in) operating activities 26,570  23,710  (3,759) 19,179 
Cash flows used in investing activities        
Purchase of property and equipment (3,123) (1,111) (14,479) (2,851)
Proceeds on disposal of property and equipment   43  178  131 
Repayment of contingent consideration   (2,134) (10,168) (5,502)
Repayment of deferred consideration (5,208) (624) (6,948) (3,748)
Business combinations, net of cash acquired (131,545) (85,956) (199,471) (96,150)
Cash used in investing activities (139,876) (89,782) (230,888) (108,120)
Cash flows from financing activities        
Transfers to (from) restricted cash 58,980  49,671  (4,513)  
Interest paid (2,102) (2,619) (3,058) (5,078)
Dividend paid (1,100)   (1,100)  
Payments of lease liabilities (2,304) (2,133) (5,032) (4,417)
Net proceeds from issuance of common shares and warrants   164,482    245,422 
Repayment of notes payable (38) (642) (159) (3,414)
Net proceeds from (repayment of) borrowings 22,351  (87,791) 184,819  (83,549)
Cash from financing activities 75,787  120,968  170,957  148,964 
Net change in cash during the period (37,519) 54,896  (63,690) 60,023 
Effect of foreign exchange on cash 4,526  1,595  (328) 133 
Cash, beginning of period 217,168  68,432  248,193  64,767 
Cash, end of period$184,175 $124,923 $184,175 $124,923 

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Non-IFRS Financial Measures

This news release refers to certain performance indicators including “Adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA)”, “Adjusted Free Cash Flow”, “Adjusted Free Cash Flow Conversion”, “Adjusted Net Income ” and “Adjusted Earnings per Share”, “Gross Revenue”, and “Organic Growth” which are not recognized under IFRS and do not have any standardized meaning prescribed by IFRS. Converge’s method of calculating such non-IFRS measures and ratios may differ from methods used by other companies and therefore 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.

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Management also uses non-IFRS measures and ratios 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 and ratios are furnished to provide additional information and should not be considered in isolation or 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 and are cautioned not to put undue reliance on non-IFRS measures and ratios and view them in conjunction with the most comparable IFRS financial measures.

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Adjusted EBITDA

Adjusted EBITDA represents net income (loss) or 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.

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.

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

 For the three months

ended June 30,
For the six months

ended June 30,
  2022  2021 2022 2021
Net income before taxes$13,078 $3,722$12,077$8,823
Finance expense 3,094  1,727 4,912 4,148
Share-based compensation expense 1,685   2,897 
Depreciation and amortization 17,178  7,898 31,657 14,386
Depreciation included in cost of sales 1,561  1,065 2,312 1,760
Foreign exchange loss (gain) (2,967) 1,954 3,702 2,966
Special charges 5,559  5,354 11,280 8,405
Adjusted EBITDA$39,188 $21,720$68,837$40,488

Adjusted Free Cash Flow and Adjusted Free Cash Flow Conversion

The Company calculates Adjusted Free Cash Flow as Adjusted EBITDA less: (i) recurring capital expenditures (“Recurring Capex”) and (ii) lease payments relating to the IFRS 16 lease liability (“IFRS 16 Lease Liability”). Management defines Recurring Capex as the actual capital expenditures which are required to maintain the Company’s existing and ongoing operations in its normal course of business. Recurring Capex excludes one-time expenditures to support growth initiatives that the Company categorizes as non-recurring in nature. Adjusted Free Cash Flow is a useful measure that allows the Company to primarily identify how much pre-tax cash is available for continued investment in the business and for the Company’s growth by acquisition strategy.

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Management also believes that Adjusted EBITDA is a good proxy for cash generation and as such, Adjusted Free Cash Flow Conversion is a useful metric that demonstrates that the rate at which the Company can convert Adjusted EBITDA to cash.

The following table provides a calculation for Adjusted Cash Flow and Adjusted Cash Flow Conversion:

 For the three months

ended June 30,
For the six months

ended June 30,
  2022  2021  2022  2021 
Adjusted EBITDA$39,188 $21,720 $68,837 $40,488 
Capex (3,123) (1,111) (5,857) (2,851)
Payment of lease liabilities (2,304) (2,133) (5,032) (4,417)
Adjusted Free Cash Flow$33,761 $18,476 $57,948 $33,220 
Adjusted Free Cash Flow Conversion 86% 85% 84% 82%

Adjusted EBITDA as a % of Net Revenue

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The Company believes that Adjusted EBITDA as a % of Net Revenue is a useful measure of the Company’s operating efficiency and profitability. This is calculated by dividing Adjusted EBITDA by net revenue.

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 and Adjusted Earnings per Share (“EPS”)

Adjusted Net Income represents net income adjusted to exclude special charges, amortization of acquired intangible assets, and share-based compensation. The Company believes that Adjusted Net Income is a more useful measure than net income 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 by the total weighted average shares outstanding on a basic and diluted basis.        

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

 For the three monthsFor the six months
ended June 30,ended June 30,
  2022  2021 2022 2021
Net income$11,678 $1,025$9,270$4,691
Special charges 5,559  5,354 11,281 8,405
Amortization of acquired intangible assets 13,946  5,815 25,262 10,102
Foreign exchange (gain) loss (2,968) 1,954 3,700 2,966
Share-based compensation 1,685   2,897 
Adjusted Net Income:$29,900 $14,148$52,410$26,164
Basic 0.14  0.08 0.24 0.16
Diluted 0.14  0.08 0.24 0.15

Gross revenue and Gross revenue for organic growth

Gross revenue, which is a non-IFRS measurement, reflects the gross amount billed to customers, adjusted for amounts deferred or accrued. The Company believes gross revenue 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 revenue by the cost of sale amount. Gross revenue for organic growth is calculated as i) the actual gross revenue for companies owned by Converge for at least three months that is included in the Company’s financial results for the year then ended, plus ii) for those acquisitions that occurred after January 1 and that have been under Converge ownership for at least three months, the pro forma gross revenue contribution had they been owned for the full fiscal year.

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

 For the three monthsFor the six months
ended June 30,ended June 30,
  2022 2021 2022 2021
Managed services 32,268 17,990 66,251 38,420
Third party and professional services 205,589 152,843 392,146 288,006
Adjustment for sales transacted as agent 133,022 106,813 256,914 204,711
Net revenue$596,656$345,307$1,146,693$655,509

The Company measures organic growth on an annual basis, at the gross revenue level, and includes companies that Converge has owned for at least three months. Once a company is acquired, there is lead time required to integrate and regionalize the acquired work force, align rebate programs, and begin to execute on cross-selling opportunities. Management believes that three months provides a good representation of the acquisition under Converge ownership and can begin to evaluate the acquired company from an organic growth standpoint. Organic growth is calculated by deducting prior year pro forma gross revenues from current year gross revenue for organic growth. Organic growth % is calculated by dividing organic growth by prior year pro forma gross revenues, as follows:

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The following table calculates organic growth for Q2-2022:



Gross revenue$729,678 
Less: gross revenues of Companies below three months ownership 34,913 
Gross revenue included in actual results 694,765 
Add: pro forma gross revenue  
Gross revenue for organic growth 694,765 
Prior period pro forma gross revenues 640,091 
Organic Growth – $$54,674 
Organic Growth – % 8.5%

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 the Company considers 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 available on SEDAR under the Company’s profile at including its most recent Annual Information Form, its Management Discussion and Analysis and its Annual and Quarterly Financial Statements.

Converge Technology Solutions

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