Converge Technology Solutions Corp.

Q3 2024 gross sales were approximately C$945 million, down 8.9% year over year, or down 8.4% excluding Portage. IFRS revenue was C$630.7 million, down approximately 11.2% year over year. Gross profit was C$158.3 million, down 9.1% year over year, or down 7.3% excluding Portage, and gross margin was 25.1%, up 60 basis points. Adjusted EBITDA was C$32.1 million, down 22.2% year over year. Net loss was C$3.3 million. Cash from operating activities was C$48.9 million, free cash flow was C$40.6 million, and net debt was approximately C$128 million with leverage at 0.77x. For full-year fiscal 2024, Converge now expects revenue of C$2.5 billion to C$2.56 billion, gross profit of C$678 million to C$691 million, and adjusted EBITDA of C$155 million to C$166 million. For Q4 2024, it expects revenue of C$600 million to C$646 million, gross profit of C$165 million to C$178 million, and adjusted EBITDA of C$36 million to C$47 million. Management also said full-year cash conversion is now expected to be closer to 150%.

Greg Berard said Q3 weakness was driven by macro-driven delays in North America, especially in data center and device spending, but emphasized that the company’s strategic areas still grew double digits. He framed Converge’s model around its AIM strategy, partner ecosystem, and ability to win larger enterprise opportunities while still protecting the mid-market. His tone was constructive but realistic: cautious on current demand, yet confident in 2025 given AI, cloud, cybersecurity, services momentum, and the ERP rollout.

Avjit Kamboj focused on the mix-driven decline in sales and profits while stressing that cash generation remains strong. He cited Q3 gross sales of C$945 million, gross profit of C$158.3 million, adjusted EBITDA of C$32.1 million, free cash flow of C$40.6 million, and net debt of about C$128 million; he also noted 0.77x leverage and said the company targets around 1x, with up to 1.2x still acceptable in some cases. He said operating discipline and the new ERP should improve transparency and efficiency, and he underscored capital allocation toward share repurchases because management views the stock as a better return than non-accretive M&A.

Analysts pressed management on whether the sales force is shifting toward enterprise deals, the role of pricing pressure, the cause of the Q3 slowdown, and how aggressive buybacks could affect leverage. Management said it is not splitting the sales force today but is considering changes for 2025, described the weakness as broad-based across industries with public sector particularly affected, and said pricing pressure came from competitive deal behavior when customers delayed orders. On capital returns, they said buybacks will stay within a roughly 1x leverage framework and may be expanded further via NCIB or potentially other structures, but only if accretive and within ROI hurdles.