At Converge’s annual national sales meeting, Greg Berard (President, North America) and Justin Hall (VP of Strategic Alliances, North America) offer their thanks and thoughts on the event’s impact for the upcoming year. Designed to enable growth, ConvergeUP 2020 provides strategic partners & sales teams the opportunity to discuss business strategies and IT industry trends with the goal of furthering Converge’s influence and go-to-market strategy. #ConvergeUP2020
Ottawa is Canada’s capital, an energetic city of more than one million people located in Ontario on the Quebec border. It’s a place where English and French entwine; a place where you can discover Canada’s proud heritage at impressive national sites. In summer, visit one of a thousand parks or explore over 200 square kilometers of protected greenspace. In winter, enjoy a beavertail in the historical Market or skate the largest naturally frozen rink, the Rideau Canal (a UNESCO World Heritage Site).
If the cold isn’t your thing, hop on the LRT, Ottawa’s brand-new light rail transportation system and take a tour of the Parliament buildings. Perched high on a cliff overlooking the Ottawa River, these buildings have long represented not only our house of Government but our primary industry. Ottawa is the epitome of a ‘government town,’ with the Feds acting as a juggernaut when it comes to housing, real estate, and, most especially, employment since its creation in 1867.
But that’s changing.
These days, Ottawa is home to more than 1,750 of the best and fastest-growing tech companies in Canada. Not only are these companies raising more money in the public market than any other Canadian city, but they are also swallowing up Ottawa’s labor pool with the industry employing more than 68,500 people. In 2019 alone, the Information and Communications Technology Council predicted over 10,000 tech jobs would need to be filled. And these positions are diverse, spanning seven key industries: Aerospace, Defence and Security, Clean Technologies, Communications Technologies, Digital Media, Life Sciences, and Software.
The attractiveness of Ottawa as a tech talent hub was also the subject of a report released from real estate services firm CBRE. Ottawa came in second in the national report, which ranks cities based on metrics such as the availability of talent, the quality of labor, and gross operating costs. Ottawa again tops the country in terms of talent concentration, with 9.9 % of the capital’s labor force working in tech. Ottawa’s talent market separates itself from the pack in terms of education. Two of every five employees aged 25 to 64 in the capital’s labor force hold a bachelor’s degree or higher.
Programs that link the private sector with post-secondary institutions play a leading role in preparing students for a job in the tech sector. According to Sonya Shorey, vice president of marketing and communications at Invest Ottawa:
We have an incredible base of talent — both new and emerging talent from our post-secondary institutions in Ottawa. They ensure that we have a pipeline of talent that is well prepared to meet the needs of the industry sectors. That the talent pool is also diverse in terms of culture, experience, and levels of expertise, only adds to the draw for many companies.
The potential for growth the city’s Tech Market might best be illustrated by Ottawa’s e-commerce superstar, Shopify. Launched more than a decade ago as an online snowboard shop, Shopify has since bloomed into a global e-commerce platform used by more than one million merchants. They employ over a thousand people in Ottawa alone. However, that is not to say Ottawa is not diversified – the city also hosts multinational giants like Nokia, Ericsson, IBM, Cisco Systems, and Adobe.
Ottawa’s proximity to the federal government along with the communications technology infrastructure research that happens here is causing more and more IT-based companies from around the world chose to locate major research and development installations here; Ottawa’s tech dominance seems likely to continue well into the future.
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FOR IMMEDIATE RELEASE
January 31, 2020 – VANCOUVER, BRITISH COLUMBIA AND TORONTO, ONTARIO, CANADA – Converge Technology Solutions Corp. (“Converge” or “Company”) (TSXV:CTS) (FSE:0ZB) (OTCQX:CTSDF), a Software Enabled Hybrid IT Solutions Provider, today announced preliminary full year and fourth quarter results for 2019. All figures are in CAD dollars unless otherwise stated.
Fourth quarter results of operations have not been finalized; however, net revenue is expected to be approximately $210 – $220 million (compared to $136 million in Q4 2018 and $144 million in the third quarter of 2019). As a result of its fourth quarter preliminary results, the Company expects full-year 2019 reported revenue to be approximately $683 – $698 million (compared to $459 million in 2018).
Fourth quarter gross profit is expected to be approximately $52 – $55 million (compared to $30.3 million in Q4 2018 and $34.9 million in the third quarter of 2019), or approximately 23.4 % – 23.6% gross profit margin compared to 22% in Q4 2018 and 24% in the third quarter of 2019. Gross profit for 2019 is estimated to be approximately $160 – $165 million (compared to $90 million in 2018) and gross margin for all of 2019 is estimated to be approximately 23% – 23.2%.
The Company expects to report Adjusted EBITDA1 for the fourth quarter of approximately $10 – 12 million, resulting in approximately $30 – $32 million in Adjusted EBITDA1 for the full year 2019. This compares to Adjusted EBITDA1 of $5.8 million for the third quarter of 2019 and $16.5 million for 2018.
Actual results may differ materially from these estimates due to the completion of the Company’s financial closing procedures, final adjustments, review by the Company’s auditors and other developments that may arise between now and the time the financial results are finalized. These estimates are not a comprehensive statement of the Company’s financial results for Q4 2019 and should not be viewed as a substitute for full financial statements prepared in accordance with International Financial Reporting Standards, and these estimates are not necessarily indicative of the results to be achieved for Q4 2019. The preliminary results provided in this press release constitute forward-looking statements within the meaning of applicable securities laws, are based on a number of assumptions and are subject to a number of risks and uncertainties. Please see the section below entitled “Forward-Looking Information”. The Company will provide additional discussion and analysis regarding its fourth quarter revenue, margin and Adjusted EBITDA1 when the Company reports it quarterly and full year 2019 results on or before North American markets open on March 26, 2020 and the Company will host its regular quarterly conference call on that date.
“We are delighted to share these strong preliminary results with the market” said Shaun Maine, CEO of Converge. “As we enter 2020, we are excited to see the financial contribution of the acquisitions we completed in 2019 and we will continue to execute on our strategy as we aim to build one of the premier software enabled Hybrid IT Solutions Providers in North America. Thank you to all of our employees, customers, and partners for helping us to achieve tremendous success in 2019”.
The Company also announced today that Chief Financial Officer Mary Anne Palangio will be leaving the Company effective April 1, 2020 to take a Chief Financial Officer position with the Canadian Securities Exchange, where she has served on the Board and as Chair of the Audit Committee, and that Ron Hinkle will become the Company’s Interim Chief Financial Officer on that date. Ron is currently the US CFO of Converge and previously served as CFO of Converge subsidiary Corus 360. Ron brings over 25 years of financial experience to Converge. Mary Anne will remain with the Company through the completion of the audit of the Company’s 2019 financial statements.
Mr. Maine said “On behalf of the Company I would like to thank Mary Anne for her contributions to the success of the business over the last year and half and wish her every success in the future.”
About Converge
Converge Technology Solutions Corp. combines innovation accelerators and foundational infrastructure solutions to deliver best-of-breed solutions and services to customers. The Company is building a platform of regionally-focused Hybrid IT solution providers to enhance their ability to provide multi-cloud solutions, blockchain, resiliency, and managed services, enabling Converge to address the business and IT issues that public and private-sector organizations face today
For further information contact:
Mary Anne Palangio
Chief Financial Officer Virtus Advisory Group
Converge Technology Solutions Corp. Shareholder Inquiries
Email: investors@convergetp.com Email: converge@virtusadvisory.com
Phone: 416-360-1495 Phone: 416-644-5081
Notice to Reader: Use of Non-IFRS Financial Measures and Forward-Looking Statements
1. Non-IFRS Financial Measures
In this news release, management uses certain non-IFRS measures to evaluate the performance of the Company. The term “Adjusted EBITDA” does not have any standardized meaning prescribed within IFRS and therefore may not be comparable to similar measures presented by other companies. Such measures should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS such as net income. Adjusted EBITDA is defined as gross profit less selling, general and administrative expenses, and corresponds to income before income tax, depreciation and amortization, finance expenses, change in fair value of contingent consideration, transaction costs for acquisitions, initial public offering costs and other non-operating expenses.
Management believes Adjusted EBITDA is an important indicator as it excludes certain items that are non-cash expenses, items that cannot be influenced by management in the short term and items that do not impact core operating performance, demonstrating the Company’s ability to generate liquidity through operating cash flow to fund working capital needs, service outstanding debt and fund future capital expenditures. Adjusted EBITDA is used by some investors and analysts for the purposes of valuing an issuer. The intent of Adjusted EBITDA is to provide additional useful information to investors and analysts and is also used by management as an internal performance measurement.
2. 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 considered 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.
Neither the TSX Venture Exchange nor its regulation services provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
This press release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”) or any state securities laws and may not be offered or sold within the United States unless registered under the U.S. Securities Act and applicable state securities laws, unless an exemption from such registration is available.
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The city of Atlanta has been through many changes throughout the years. Not only has the city been the backdrop for important civil rights events, music evolution, and movie production, it’s also the southeastern hub for cutting-edge technology.
When people think of Atlanta now, they may think of the huge airport, the Atlanta United soccer team, or maybe even the birthplace of Coca-Cola, but to stop there would not be doing the city justice. Technology companies have taken special interest in the southern city.
After hosting the Olympics in 1996, Atlanta and the surrounding areas found themselves on the global map. Since then, talented engineers and architects have departed traditional western tech meccas to migrate to a city of exponential growth and development. Alpharetta, located in metro Atlanta, is home to over 600 technology companies across various industries that deliver value and advancement to both national and international businesses. Tax incentives (not unlike the ones given to movie productions) have attracted various tech companies to build their practice here, where all the action is happening.
Atlanta has been home to numerous successful start-ups in the technology industry over the last couple of decades. Amid the Atlanta tech boom in the 90’s and early 2000’s, disruptive companies the likes of MindSpring Enterprises (Charles Brewer), Universal Data Consultants (Jim Elliott and Ken Calhoun), Air Watch (John Marshall), and Optimus Solutions (Mark Metz) began popping up across Atlanta. After Optimus Solutions became a success, Metz went on to found Corus360 and turn it into one of the fastest growing companies in the U.S. Today, Corus360 remains one of the top IT consulting and solutions companies in the country.
The Atlanta Tech Village in the heart of Atlanta hosts technology startups that are focused on the development of pioneering technology; among them being AI-driven analytics and automation as well as cybersecurity management using hyperledger and blockchain technology. These startups span across a multitude of verticals: Healthcare, education, fintech, and local government.
This startup community’s mantra is, “It takes a village,” which emphasizes the importance the community puts on their people and the environment they work in. Atlanta Tech Village champions diversity in their workplace and is focused on inclusive work environments in the IT industry at large. Their perspective is that a diverse community with various backgrounds, experiences, and culture is what drives innovation in the everchanging market in Atlanta and around the world.
Atlanta’s proximity to world-class education institutions has contributed greatly to the diversity of tech professionals. Top schools like Georgia Tech, the University of Georgia, Kennesaw State University, and Auburn University are producing young graduates full of fresh thought and innovative ideas that drive progress in Atlanta and its metro area.
The Technology Association of Georgia (TAG) is also based in Atlanta. They advocate for the economic growth of Atlanta businesses through the means of technological advancement. Many Georgia-based technology organizations converge together annually for the TAG Summit to network and share knowledge with their peers. TAG completes its initiatives by partnering with the city, regional, and state chambers of commerce to promote organizations supporting technology in order to further growth-oriented objectives for Georgia.
Just outside the perimeter of I-285, the highway that surrounds Atlanta, sits the Sprint Curiosity™ Center that is spearheading the development of improving IoT technology with the use of 5G networking. The Curiosity™ Lab is the second autonomous test vehicle center utilizing 5G for automotive navigating in the United States. Located in the cornerstone of technological development, Technology Parkway Atlanta, Sprint’s aspiration to become the leader in IoT is a bold step in the right direction and brings more buzz to the city itself.
Atlanta, often called “the city too busy to hate,” has become a major hub for advanced technology and innovation. It’s projected that the population of Atlanta will increase from about 5.8 million residents to 7.2 million in the next decade. If the city is busy now, it’ll be even busier then. We’re hoping that the autonomous vehicle industry will take off and perhaps be the godsend we need to curb the awful Atlanta traffic.
Atlanta is on its way to becoming a major contender in the world of tech, and soon it could become something of a Silicon Valley of the East. My bias may be apparent in that statement; I love my city. I’m dedicated to the advancement of innovation across the state of Georgia, and I believe Atlanta will be the driving force behind the southeast’s rise to greater fame.
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