TORONTO and GATINEAU, QC, Feb. 10, 2025 /PRNewswire/ -- Converge Technology Solutions Corp. ("Converge" or "the Company") (TSX: CTS) (FSE: 0ZB) (OTCQX: CTSDF), today announced preliminary results for the fourth quarter ("Q4-2024") and fiscal year ended December 31, 2024. The Company will hold a conference call to discuss complete financial results for Q4-2024 and fiscal year ended December 31, 2024 on Thursday, March 6^th, 2025 at 8:00am EST. The call will be hosted by the Converge leadership team, followed by a question-and-answer period. Converge will report its financial results in the morning prior to the call.

Q4-2024 Preliminary Results:

Gross sales¹ is expected to be approximately $1.1 billion, an increase of 2.5% year-over-year.
Revenue is expected to be approximately $680.8 million, an increase of 4.6% year-over-year.
Gross profit is expected to be approximately $178.6 million, a decline of 1.6% year-over-year.
Adjusted EBITDA¹ is expected to be approximately $47.9 million, an increase of 3.0% year-over-year.
Cash from operating activities is expected to be approximately $57.0 million, representing 119% of Adjusted EBITDA¹.
Loss before income taxes is expected to be approximately $21.2 million, an increase of $16.8 million year-over-year, primarily driven by loss from investment in Portage CyberTech Inc. ("Portage") of approximately $24.0 million due to impairment charges.

Fiscal 2024 Preliminary Results:

Gross sales¹ is expected to be approximately $4.1 billion, an increase of 2.1% year-over-year.
Revenue is expected to be approximately $2.6 billion, a decline of 4.2% year-over-year.
Gross profit is expected to be approximately $691.4 million, a decline of 1.6% year-over-year.
Adjusted EBITDA¹ is expected to be approximately $167.3 million, a decline of 1.7% year-over-year.
Cash from operating activities is expected to be approximately $269.4 million, representing 161% of Adjusted EBITDA¹.
Loss before income taxes is expected to be approximately $200.5 million, an increase of $182.0 million year-over-year, primarily driven by impairment loss on the Company' German segment of $176.1 million and loss from investment in Portage of approximately $25.9 million due to impairment charges.


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              [1] This is a non-IFRS measures and not a recognized, defined or a standardized measure under IFRS. This non-IFRS financial measure reported by the Company are defined in the "Non-IFRS Financial Measures" section of this press release.

The above results are preliminary in nature and unaudited, and are inherently uncertain due to a number of factors, and remain subject to review by the Company's management, audit committee and board of directors and the completion of regular financial closing and review procedures and audit procedures for Q4-2024 and fiscal year ended December 31, 2024, as applicable. These estimates are not a comprehensive statement of the Company's financial results for Q4-2024 and fiscal year December 31, 2024 The preliminary unaudited figures disclosed herein should not be viewed as a substitute for audited financial statements prepared in accordance with generally accepted accounting principles. Additional adjustments to the preliminary unaudited figures presented above may be identified, and final results for the relevant fiscal periods may differ materially from these preliminary unaudited figures and will not be finalized until after the Company completes its normal year-end accounting procedures, including execution of internal controls over financial reporting. These preliminary unaudited figures are intended to provide information about management's current expectations regarding certain aspects of Converge's financial performance. Reliance on the information presented herein may not be appropriate for other purposes. Please see the section below entitled "Forward- Looking Information".

The Company will provide additional discussion and analysis regarding its fourth quarter results when it reports its complete financial results for Q4-2024 and fiscal year ended December 31, 2024.

Conference Call Details:
Date: Thursday, March 6^th, 2025
Time: 8:00 AM Eastern Standard Time

Participant Webcast Link:
Webcast Link - https://app.webinar.net/5dw46kbzGAR

Participant Dial-in Details with Operator Assistance:
Conference ID: 07389
Toronto: 1-416-945-7677
North American Toll Free: 1-888-699-1199

International Toll-Free Numbers:
Germany: 498005889782
Ireland: 35315251826
Spain: 34917918582
Switzerland: 41432107274
United Kingdom: 448002797040

You may register and enter your phone number to receive an instant automated call back via https://emportal.ink/3WRn7js

Recording Playback:
Webcast Link - https://app.webinar.net/5dw46kbzGAR
Toronto: 1-289-819-1450
North American Toll Free: 1-888-660-6345
Replay Code: 07389 #
Expiry Date: March 13^th, 2025

Please connect at least 15 minutes prior to the conference call to ensure time for any software download that may be required to access the webcast. A live audio webcast accompanied by presentation slides and archive of the conference call and webcast will be available by visiting the Company's website at https://convergetp.com/investor-relations/.

About Converge
Converge Technology Solutions Corp. is reimagining the way businesses think about IT--a vision driven by people, for people. Since 2017, we've 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.

For further information:
Investor Relations
investors@convergetp.com
Phone: 416-360-1495

Non-IFRS Financial Measures

This press release refers to certain performance indicators including Adjusted EBITDA and gross sales 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.

Please see "Non-IFRS Financial & Supplementary Financial Measures" and "Summary of Consolidated Financial Results" in the Company's most recent Management 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.

Adjusted EBITDA

Adjusted EBITDA represents net income or loss adjusted to exclude amortization, depreciation, net finance expense, foreign exchange gains and losses, other expenses and income, share-based compensation expense, income tax expense or recovery, change in fair value of contingent consideration, impairment loss, gain or loss on loss of control of subsidiary, income or loss from investment in associates and acquisition, integration, restructuring and other expenses. Acquisition and transaction related costs primarily consists of acquisition-related compensation tied to continued employment of pre-existing shareholders of the acquiree not included in the total purchase consideration and professional fees. Integration costs primarily consist of professional fees incurred related to integration of acquisitions completed. Restructuring costs mainly represent employee exit costs as a result of synergies created from acquisitions and organizational changes. 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 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.

The IFRS measure most directly comparable to Adjusted EBITDA presented in the Company's financial statements is net (loss) income before taxes.

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


     (000' of CAD)                                         Q4 2023     Fiscal 2023

                                                        
     
           $ 
     
               $



     
                Net (loss) income before taxes           (4,454)        (18,565)



     Depreciation and amortization                          29,212          111,451



     Depreciation included in cost of sales                  2,427            8,532



     Finance expense, net                                   10,355           41,225



     Acquisition, integration, restructuring and other       2,679           13,648



     Change in fair value of contingent consideration        5,464           14,673



     Share-based compensation                                  954            3,692



     Other loss (income), net                                (132)         (4,362)



     
                Adjusted EBITDA                           46,505          170,294

Gross sales

Gross sales, which is a non-IFRS measure, reflects the gross amount billed to customers, adjusted for amounts deferred or accrued. The Company believes gross sales 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 sales by the cost of sale amount.

The Company has reconciled Gross sales to the most comparable IFRS financial measure as follows:


     (000' of CAD)                                        Q4 2023       Fiscal
                                                                           2023

                                                     
     
             $ 
     
            $



     Gross sales                                        1,078,663     4,037,921



     Less: adjustment for sales transacted as agent       427,573     1,332,714



     Revenue                                              651,090     2,705,207

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 expected revenue, gross profit, gross sales, Adjusted EBITDA, cash from operating activities and loss before income taxes are considered forward-looking information. The forward-looking information, including management's assessments of, and outlook for, revenue, gross profit, gross sales, Adjusted EBITDA, cash from operating activities and loss before income taxes 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 Discussion and Analysis for the three and nine months ended September 30, 2024. 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 expected revenue, gross profit, gross sales, Adjusted EBITDA, cash from operating activities and loss before income taxes 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; 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 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 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 are consistent with the forward-looking statements contained in this press release, those results of developments may not be indicative of results 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.

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