Converge Reports Fourth Quarter and Fiscal Year 2024 Results
PR Newswire
TORONTO and GATINEAU, QC, March 5, 2025
TORONTO and GATINEAU, QC, March 5, 2025 /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 months and fiscal year ended December 31, 2024. All figures are in Canadian dollars unless otherwise stated.
Fourth Quarter 2024 Highlights (year-over-year, unless otherwise noted):
-- Gross sales1 of $1.11 billion, an increase of $27.4 million or 2.5%;
-- Gross sales organic growth1 of 3.0% and gross profit organic growth1 of
(0.0%);
-- Revenue of $680.8 million, an increase of $29.7 million or 4.6%;
-- Gross profit decreased 1.6% to $178.6 million, representing a gross
margin of 26.7%;
-- Adjusted EBITDA1 increased by 3.0% to $47.9 million;
-- Cash from operating activities was $57.0 million, a decrease of $57.5
million, compared to $114.5 million for the comparative period in the
prior year;
-- Returned $20.6 million of capital to shareholders1 as compared to $4.7
million return of capital to shareholders in Q4 FY23; and
-- Reduced net debt1 by $14.5 million from $127.9 million at Q3 2024;
maintaining a leverage ratio1 below 0.7x.
Fiscal Year 2024 Highlights (year-over-year, unless otherwise noted):
-- Gross sales1 of $4.12 billion, an increase of $82.8 million or 2.1%;
-- Gross sales organic growth1 of 2.3% and gross profit organic growth1 of
(0.7%);
-- Revenue of $2.59 billion, a decrease of $113.1 million or (4.2%);
-- Gross profit decreased 1.6% to $691.4 million, representing a gross
margin of 26.7%;
-- Adjusted EBITDA1 decreased by 1.7% to $167.3 million;
-- Net loss of $181.0 million, an increase in loss of $174.6 million, driven
by the non-cash impairment charge on the Germany segment of $176.1
million;
-- Returned $82.3 million of capital to shareholders1 as compared to $23.5
million return of capital to shareholders for the comparative period in
prior year;
-- Cash from operating activities was $269.4 million, an increase of $39.9
million, compared to $229.5 million for the comparative period in the
prior year; and
-- Reduced net debt1 by $96.4 million to $113.4 million, from $209.8 million
at Q4 2023.
_________
(1) This is a Non-IFRS measure (including non-IFRS ratio or supplementary
financial measure) and not a recognized, defined or standardized measure
under IFRS. See the "Non-IFRS Financial Measures" section of this press
release for definitions, uses and a reconciliation of historical non-IFRS
financial measures to the most directly comparable IFRS financial
measures.
Financial Summary
Three months ended Fiscal year ended
December 31, December 31,
In $000s except per share 2024 2023 2024 2023
amounts $ $ $ $
-------------------------------- --------- --------- --------- ---------
Gross Sales(1) 1,106,055 1,078,663 4,120,717 4,037,921
Revenue 680,778 651,090 2,592,081 2,705,207
Gross profit $(GP)$ 178,629 181,529 691,442 702,880
Gross profit (GP)% 26.2 % 27.9 % 26.7 % 26.0 %
Adjusted EBITDA(1) 47,885 46,505 167,315 170,294
Adjusted EBITDA as a % of GP(1) 26.8 % 25.6 % 24.2 % 24.2 %
Net loss (9,174) 4,781 (180,986) (6,393)
Adjusted net income(1) 45,586 38,214 130,289 108,399
Adjusted EPS(1) 0.23 0.19 0.66 0.53
Converge to be Acquired by H.I.G. Capital
On February 7, 2025, Converge announced that it had entered into an arrangement agreement (the "Arrangement Agreement") with an affiliate of H.I.G. Capital ("H.I.G."), whereby H.I.G will acquire all of the issued and outstanding common shares (the "Common Shares") of the Company (the "Transaction"). Under the terms of the Arrangement Agreement, shareholders will receive $5.50 per Common Share in cash, other than Common Shares held by certain shareholders who enter into rollover equity agreements, representing approximately 56% and 57% respective premiums to the closing price and 30-day volume weighted average price of the shares on the TSX on February 6, 2025, the last trading day prior to the date of the announcement of the Transaction. The purchase price of the Transaction values Converge at an enterprise value of approximately C$1.3 billion. Upon completion of the Transaction, the Company intends to apply to delist the Common Shares from all public markets and cease to be a reporting issuer under Canadian securities laws.
The Transaction is to be considered by shareholders at a special meeting of shareholders to be held on April 10, 2025. A management information circular with respect to the matters to be considered at that meeting will be filed by Converge on SEDAR+ at www.sedarplus.ca, and will been mailed to shareholders.
As a result of the proposed Transaction, the Company will not be holding an earnings conference call and is suspending its practice of providing its outlook for revenue, gross profit and Adjusted EBITDA for the 2025 fiscal year. As part of the Arrangement Agreement, Converge has agreed that its regular quarterly dividend during the pendency of the Transaction will not be declared.
__________
(1) This is a Non-IFRS measure (including non-IFRS ratio or supplementary
financial measure) and not a recognized, defined or standardized measure
under IFRS. See the "Non-IFRS Financial Measures" section of this press
release for definitions, uses and a reconciliation of historical non-IFRS
financial measures to the most directly comparable IFRS financial
measures.
About Converge
Converge Technology Solutions Corp. is reimagining the way businesses think about IT--a vision driven by people, for people. Since 2017, we have focused on delivering outcomes-driven solutions that tackle human-centered challenges. As a services-led, software-enabled, IT & Cloud Solutions provider, we combine deep expertise, local connections, and global resources to deliver industry-leading solutions.
Through advanced analytics, artificial intelligence (AI), cloud platforms, cybersecurity, digital infrastructure, and workplace transformation, we empower businesses across industries to innovate, streamline operations, and achieve meaningful results. Our AIM (Advise, Implement, Manage) methodology ensures solutions are tailored to our customers' specific needs, aligning with existing systems to drive success without complexity.
Discover IT reimagined with Converge--where innovation meets people. Learn more at convergetp.com.
Summary of Statements of Financial Position
(expressed in thousands of Canadian dollars)
December 31, December 31,
2024 2023
$ $
---------------------------------------------- ------------ ------------
Assets
Current
Cash 142,733 170,419
Trade and other receivables 1,000,573 803,652
Inventories 62,938 73,166
Prepaid expenses and other assets 30,728 26,528
--------------------------------------------- ------------ ------------
1,236,972 1,073,765
Non-current
Investment in associates 4,795 -
Unbilled receivables and other assets 204,208 64,158
Property, equipment and right-of-use assets,
net 69,696 75,488
Intangible assets, net 265,882 375,181
Goodwill 404,711 564,770
Total assets 2,186,264 2,153,362
---------------------------------------------- ------------ ------------
Liabilities
Current
Trade and other payables 1,202,943 853,655
Other financial liabilities 39,882 54,095
Deferred revenue 81,109 59,325
Borrowings 639 1,664
Income taxes payable - 9,286
---------------------------------------------
1,324,573 978,025
Non-current
Accrued liabilities and other payables 184,514 60,339
Other financial liabilities 34,174 57,668
Borrowings 255,464 378,007
Deferred tax liabilities 28,804 67,168
Total liabilities 1,827,529 1,541,207
---------------------------------------------- ------------ ------------
Shareholders' equity
Common shares 555,521 599,434
Contributed surplus 16,532 10,970
Accumulated other comprehensive income 28,603 3,963
Deficit (241,921) (28,167)
--------------------------------------------- ------------ ------------
Total equity attributable to shareholders of
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