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Overview of Converge Technology Solutions' Year-End Results

On March 5, 2025, Converge Technology Solutions Corp. announced its financial outcomes for the fourth quarter and the entire fiscal year ending December 31, 2024. Despite some challenges, the company observed positive growth in sales and made key strategic decisions that may influence its market presence moving forward.

Fourth Quarter Highlights

In the final quarter of 2024, Converge reported gross sales reaching $1.11 billion, marking an increase of $27.4 million, or 2.5%, compared to the same quarter the previous year. The company achieved a 3.0% growth in gross sales on an organic basis, although gross profit remained stable at $178.6 million, a decrease of 1.6% year-over-year, resulting in a gross margin of 26.7%.

The revenue for this quarter rose to $680.8 million, up by $29.7 million or 4.6% from the last year. Adjusted EBITDA also saw a positive shift, increasing by 3.0% to reach $47.9 million. However, a notable decrease occurred in cash generated from operating activities, declining by $57.5 million to $57.0 million.

Converge demonstrated a commitment to returning value to its shareholders, as evidenced by a return of $20.6 million in capital, up from $4.7 million in the fourth quarter of the previous year. Furthermore, a notable reduction in net debt occurred, dropping by $14.5 million as the company maintained a leverage ratio of below 0.7x.

Fiscal Year Overview

For the entire fiscal year of 2024, Converge registered gross sales of $4.12 billion, representing an increase of $82.8 million or 2.1%. Organic growth for gross sales was recorded at 2.3%, while gross profit saw a slight decline to $691.4 million, with the gross profit margin at 26.7%. Notably, the company faced a net loss of $181.0 million, largely due to a non-cash impairment charge of $176.1 million regarding its segment in Germany. Adjusted EBITDA for the year was reported at $167.3 million, down by 1.7% from the previous year.

In terms of cash flow from operations, the company achieved $269.4 million, an increase of $39.9 million compared to the previous year. Alongside these results, net debt was notably reduced to $113.4 million, down from $209.8 million at the end of 2023.

Strategic Moves and Acquisitions

A significant development during this period was Converge's announcement on February 7, 2025, regarding an agreement with H.I.G. Capital for an acquisition. Under this agreement, H.I.G. will purchase all outstanding common shares for $5.50 each, with substantial premiums over recent trading prices. This potential sale values Converge at approximately C$1.3 billion and is expected to culminate in the delisting of the company's shares from public markets.

The transaction is set to be reviewed at a special shareholder meeting scheduled for April 10, 2025. Converge will not provide updated earnings forecasts or hold an earnings call during this interim, reflecting a strategic pivot during the acquisition process.

Conclusion

As Converge Technology Solutions navigates through financial challenges and opportunities with the impending acquisition, stakeholders will be keenly watching the company’s next steps. The results from the past fiscal year highlight both growth and substantial obstacles, particularly the net losses and ongoing debt management. By focusing on providing tailored IT solutions that address human challenges within businesses, Converge aims to reinforce its position in the market while adapting to the complexities of the tech industry.

For more information on Converge's services and innovations, visit their website at convergetp.com.