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Pivot Technology Solutions, Inc. Reports First Quarter 2018 Results, Declares DividendAdjusted EBITDA1 up $3 million on Higher Revenue and Gross Profit TORONTO, May 14, 2018 /CNW/ - Pivot Technology Solutions, Inc. (TSX: PTG), ("Pivot"), a full-service information technology provider, today reported its financial results for the three months ended March 31, 2018, a period of strong revenue growth and improved operating performance. All figures are in US dollars unless otherwise stated. First Quarter Summary
Dividends and Normal Course Issuer Bid Management Commentary "Revenue from Pivot's direct services increased by 1.8%, led by growth in the Workforce channel. This partially offset the lower sales of OEM maintenance agreements, which tend to fluctuate from quarter to quarter. While there is variability based on the timing of customer orders for services, the trend continues to be positive." During the quarter, Pivot continued to advance Smart Edge™, its potentially disruptive developer platform designed to support enterprise Multi-Access Edge Computing (MEC) solutions. The Smart EdgeTM solution has demonstrated its ability to improve user experience and is expected to enable new revenue streams for our customers. Along with improving performance, Smart Edge™, reduces ongoing edge total cost of ownership. All the aforementioned factors are important in the adoption of 5G technologies. While the solution still must pass additional testing hurdles, the initial results are encouraging. Management expects to commercialize the technology this year through Smart-Edge.com, Inc., a subsidiary established for this purpose during the quarter. "We continue to invest in Smart Edge™ and anticipate generating revenue towards the end of 2018," said David Toews, Interim Chief Financial Officer. "SG&A also reflects the cost base added from consolidating a partially owned business, acquired late last year, along with an increase in headcount to support growth and expansion of the services portfolio. While these factors increased SG&A by $2.1 million, they are targeted to provide long-term growth." First Quarter Results Summary In general, changes in revenue quarter over quarter are attributable to a number of factors, including, but not limited to, timing of major projects and replenishments, vendor incentive programs, competitive pressures in the market, timing of service delivery, business seasonality and the mix in revenue between major and non-major customers. In the first quarter, major customers accounted for 31.7% of revenue compared to 38.4% in Q1 a year ago. First quarter 2018 cost of sales was $330.0 million, 14.5% or $41.7 million higher than a year ago. Gross profit was $39.3 million (10.6% margin), up 15.2% or $5.2 million from $34.1 million (10.6% margin) in Q1 a year ago. Gross margin performance reflected the consolidation of a partially owned business, acquired late last year and lower service delivery costs, partially offset by decreases in OEM maintenance revenue. Selling, general and administrative ("SG&A") expenses were $37.8 million, 6.0% ($2.1 million) higher than a year ago as a result of the consolidation of a partially owned entity, increased headcount primarily in services to support the Company's strategy to enhance Pivot's services portfolio and capabilities, and higher commissions related to the increase in gross profit. Adjusted EBITDA1 (see non-IFRS measures) was $1.5 million, a 196.6% increase from a loss of $1.6 million in Q1 2017 as a result of higher revenue and gross profit and stable gross margins. Net loss was $2.3 million with loss per share of $0.06 compared to net loss of $4.2 million or loss per share of $0.10 in Q1 2017. Looking Forward Among the recent advancements made, Pivot formed a strategy and business platform to commercialize Smart Edge™ under the leadership of Kurt Steinhauer, President of ACS; implemented Smart Edge™ use cases at over 15 additional sites (where preliminary results included a 40% reduction in WAN utilization and download speed improvement of 400%), which will support marketing and sales efforts for this potentially disruptive technology; expanded inside and outside sales resources; and added new customers. "Industry trends continue to support Pivot's comprehensive strategy to build on its products and expanded services business," said Mr. Shank. "Despite normal seasonality, we began 2018 with strong growth and look forward to capitalizing on our opportunities this year." Quarterly Results Materials SELECTED FINANCIAL INFORMATION AND OPERATING RESULTS
Non-IFRS Measures 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. A reconciliation of Adjusted EBITDA to net income is contained in the MD&A (see "Non-IFRS Measures"). First Quarter Conference Call At 8:30 a.m. eastern on Tuesday, May 15, 2018, the Company will host a conference call featuring management's quarterly remarks and follow-up question and answer period with analysts. The conference call can be accessed live by dialing (647) 427-7450 five minutes prior to the scheduled start time. About Pivot Technology Solutions Forward Looking Statements This news release contains statements that, to the extent they are not recitations of historical fact, may constitute "forward-looking statements" within the meaning of applicable Canadian securities laws. Forward-looking statements include statements regarding the commercialization of Smart Edge, long term growth, the payment of quarterly dividends in 2018, and the assumptions underlying any of the foregoing. Pivot uses words such as "may", "would", "could", "will", "likely", "expect", "believe", "intend", "anticipate" and similar expressions to identify forward-looking statements. Any such forward-looking statements are based on assumptions and analyses made by Pivot in light of its experience and its perception of historical trends, current conditions and expected future developments, including the market acceptance of the Smart EdgeTM solution, Pivot's continued financial liquidity to invest in its business and pay quarterly dividends, as well as other factors Pivot believes are appropriate under the relevant circumstances. However, whether actual results and developments will conform to Pivot's expectations and predictions is subject to any number of risks, assumptions and uncertainties. Many factors could cause Pivot's actual results to differ materially from those expressed or implied by the forward-looking statements contained in this news release. These factors include, without limitation: uncertainty in the global economic environment; the possibility that Pivot will be unable to capitalize on opportunities it has identified in the manner and timeframe anticipated, the possibility that Pivot will not be able to maintain its liquidity, and the risk that testing and operational results from the Smart-Edge platform will not meet expectations. The "forward-looking statements" contained herein speak only as of the date of this news release and, unless required by applicable law, the Company undertakes no obligation to publicly update or revise such information, whether as a result of new information, future events or otherwise. SOURCE Pivot Technology Solutions, Inc |