AND DECLARES QUARTERLY DIVIDEND
Prior to
SECOND QUARTER OVERVIEW
- Revenue was
$332.1 million , compared to$459.9 million in Q2 2019. - Pivot Provided Services revenue grew 12.1%.
- Gross profit margin improved to 15.1%, compared to 13.1% in Q2 2019.
- Gross profit was
$50.2 million , compared to$60.1 million in Q2 2019. - Selling, general and administrative expenses ("SG&A") declined 9.3% to
$42.8 million , compared to$47.2 million in Q2 2019. - Adjusted EBITDA(1) was
$7.4 million , compared to$12.9 million in Q2 2019. - Diluted earnings per share ("EPS") was (
$0.01 ) in Q2 2020, compared to$0.05 in Q2 2019. - The Company repurchased 497,260 shares during the quarter at a cost of
$0.7 million . - The Company paid dividends of
$1.5 million during Q2.
1 Non-GAAP Measure. See the Non-GAAP Measures section of this news release. |
"The second quarter of 2020 was highlighted by economic uncertainty as the world adapted to the challenges presented by COVID-19. Pivot entered this environment from a position of strength, with an efficient cost structure, a strengthened balance sheet, and a strategy to grow its service and higher margin product solutions," said
"During the second quarter, we continued to execute against our strategic plan. We are pleased that our results demonstrated the expected benefits from the transformation plan that was initiated in 2018. Pivot Provided Services continued on its growth path and grew 12.1% in the second quarter compared to the prior year and increased sequentially. These results would have been even better were it not for COVID-19, as we had several projects delay where we were unable to access customer locations due to the pandemic. Gross profit margin increased to 15.1% from 13.1% and our SG&A decreased by 9.3% compared to last year. The improved efficiency of our business and growth in Pivot Provided Services enabled us to generate
"Revenue declined compared to last years Q2, which was the strongest quarter for the Company in fiscal 2019, due to three factors: Revenue from major customers declined approximately
"We continue to focus on building our core products and services portfolio while enhancing our services and solutions capabilities from the edge to the cloud. Intel continues to be a key partner on our overall edge strategy to drive the sale, deployment, and management of edge solutions. During the second quarter, we were chosen as the Intel 2020 National Go-to-Market Partner of the Year for our work with Intel's Smart Edge solution. This award validates our expertise in delivering transformative services that are moving us closer to our goal of becoming the number one edge services provider in
Q2 2020 BUSINESS AND OPERATING HIGHLIGHTS
- In
June 2020 , the Company entered into an interest rate swap contract, with a notional amount ofUS$50.0 million , to lock in the LIBOR rate between 0.34% and 0.7%, covering the full term of the Company's credit facility, scheduled to expireMay 14, 2024 . - The Normal Course Issuer Bid ("NCIB") was utilized to repurchase 497,260 shares during the second quarter at a cost of
$0.7 million . - Awarded Intel's 2020 National Go-to-Market Partner of the Year award.
- The Company paid dividends of
$1.5 million during Q2 2020.
DIVIDEND
On
SECOND QUARTER RESULTS SUMMARY
Second quarter 2020 revenue was
Gross profit of
SG&A of
Adjusted EBITDA(1) was
OUTLOOK FOR 2020
While the global economy continues to be impacted by the COVID-19 pandemic, it has affected industries in different ways. While some customers have been negatively impacted, others have seen an increase in demand. Independent of how a company is performing, governments around the world have required that non–essential offices be closed. Management has been able to identify certain operations and resources that will be idle or less utilized as a result of the COVID-19 pandemic. As a result, the Company furloughed certain employees in
The Company's outlook is contained in its Management's Discussion and Analysis ("MD&A") for the three and six months ended
SELECTED FINANCIAL INFORMATION AND OPERATING RESULTS
(unaudited) | Three months ended | Six months ended | ||||
(in thousands of Canadian dollars, except per share amounts) | 2020 | 2019 | 2020 | 2019 | ||
(re-presented,in | (re-presented,in | |||||
Revenue | 332,136 | 459,902 | 708,943 | 849,763 | ||
Cost of sales | 281,947 | 399,797 | 606,664 | 740,967 | ||
Gross profit | 50,189 | 60,105 | 102,279 | 108,796 | ||
Selling, general and administrative expenses | 42,787 | 47,166 | 89,486 | 91,417 | ||
Income before depreciation and amortization, liabilities and other expenses | 7,402 | 12,939 | 12,793 | 17,379 | ||
Depreciation | 1,679 | 2,042 | 3,690 | 4,115 | ||
Amortization | 2,839 | 2,935 | 5,519 | 5,857 | ||
Finance expense | 1,497 | 2,018 | 3,241 | 4,234 | ||
Change in fair value of liabilities | 671 | 279 | 680 | 587 | ||
Other expenses | 1,747 | 1,124 | 2,194 | 5,269 | ||
Earnings (loss) before income taxes | (1,031) | 4,541 | (2,531) | (2,683) | ||
Income tax expense (recovery) | (476) | 3,199 | (2,960) | 1,292 | ||
Net income (loss) for the period | (555) | 1,342 | 429 | (3,975) | ||
Other comprehensive income (loss) | ||||||
Items that may be reclassified subsequently to income (loss): | ||||||
Exchange gain (loss) on translation of foreign operations | (299) | (11) | 868 | (324) | ||
Total comprehensive income (loss) | (854) | 1,331 | 1,297 | (4,299) | ||
Attributable to: | ||||||
Shareholders | (753) | 2,123 | 1,211 | (2,953) | ||
Non-controlling interest | (101) | (792) | 86 | (1,346) | ||
Total comprehensive income (loss) | (854) | 1,331 | 1,297 | (4,299) | ||
Attributable to shareholders: | ||||||
Earnings (loss) attributable to shareholders | (454) | 2,134 | 343 | (2,629) | ||
Earnings (loss) per common share | ||||||
Basic | ( | ( | ||||
Diluted | ( | ( | ||||
Certain comparative information has been reclassified to conform to current year presentation. |
The following is a summary of selected consolidated financial information for the past eight quarters.
(in thousands of Canadian dollars | 2020 | 2019 | 2018 | |||||||
except otherwise noted) | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | ||
(re-presented in Canadian dollars) | ||||||||||
Revenue | 332,136 | 376,807 | 402,477 | 352,404 | 459,902 | 389,861 | 395,872 | 417,094 | ||
Gross profit | 50,189 | 52,090 | 56,646 | 52,209 | 60,105 | 48,691 | 56,063 | 53,208 | ||
Gross profit margin | 15.1% | 13.8% | 14.1% | 14.8% | 13.1% | 12.5% | 14.2% | 12.8% | ||
Adjusted EBITDA(1) | 7,402 | 5,391 | 9,868 | 8,319 | 12,939 | 4,440 | 6,271 | 5,424 | ||
Adjusted EBITDA(1) margin | 2.2% | 1.4% | 2.5% | 2.4% | 2.8% | 1.1% | 1.6% | 1.3% | ||
Net income (loss) | (555) | 984 | 21,676 | 501 | 1,342 | (5,317) | (34) | (3,204) | ||
Net income (loss) attributable | (454) | 797 | 21,574 | (413) | 2,134 | (4,763) | 570 | (3,638) | ||
Earnings (loss) per share attributable to shareholders: | ||||||||||
Basic | ( | ( | ( | ( | ||||||
Diluted | ( | ( | ( | ( | ||||||
Cash dividends declared on | 1,529 | 1,556 | 1,585 | 1,586 | 1,579 | 1,579 | 1,579 | 1,579 | ||
Certain comparative information has been reclassified to conform to current year presentation. |
The following is a reconciliation of "income (loss) before income taxes" to "Adjusted EBITDA".
2020 | 2019 | 2018 | ||||||||
(in thousands of Canadian dollars) | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | ||
(re-presented in Canadian dollars) | ||||||||||
Income (loss) before income taxes | (1,031) | (1,500) | 29,622 | 506 | 4,541 | (7,224) | 840 | (2,920) | ||
Depreciation | 1,679 | 2,011 | 1,805 | 1,970 | 2,042 | 2,073 | 757 | 825 | ||
Amortization | 2,839 | 2,680 | 2,771 | 2,893 | 2,935 | 2,922 | 2,914 | 2,915 | ||
Finance expense | 1,497 | 1,744 | 1,841 | 1,922 | 2,018 | 2,216 | 1,989 | 1,997 | ||
Change in fair value of liabilities | 671 | 9 | 725 | 294 | 279 | 308 | 301 | 293 | ||
Other expenses (income) | 1,747 | 447 | (26,896) | 734 | 1,124 | 4,145 | (530) | 2,314 | ||
Adjusted EBITDA(1) | 7,402 | 5,391 | 9,868 | 8,319 | 12,939 | 4,440 | 6,271 | 5,424 | ||
Certain comparative information has been reclassified to conform to current year presentation. |
Key metrics on consolidated debt
Adjusted Debt
(in thousands of Canadian dollars) | 2020 | 2019 |
Current liabilities | 494,060 | 492,330 |
Other financial liabilities – long-term | 14,207 | 14,999 |
Less: Lease obligations – total | (18,330) | (18,769) |
Less: Current assets | (415,641) | (415,626) |
Adjusted Debt(1) | 74,296 | 72,934 |
Adjusted Debt(1) normalizes the impact of the changes in working capital. Management believes it is a more relevant indicator of the Company's debt position and is a more comparable metric with industry peers. The increase of Adjusted Debt(1) in 2020 was mainly due to foreign exchange; excluding the foreign exchange effect, Adjusted Debt was
The Company has financed its operations through an asset-based revolving credit facility as opposed to term debt or equity in order to take advantage of lower borrowing costs and flexibility that the facility allows to match the cash flow requirements of the Company. While the facility matures in
Below are the key metrics of our consolidated debt as of
2020 | 2019 | |
Adjusted Debt(1) to Adjusted EBITDA(1) | 2.40 | 2.05 |
Net interest coverage(1) | 4.42 | 4.45 |
Net interest coverage is defined as Adjusted EBITDA divided by finance expense on a trailing twelve-month basis. |
The change in Adjusted Debt to Adjusted EBITDA at
NON-GAAP MEASURES
The Company evaluates and measures its performance based on measures referred to as "Adjusted EBITDA", "Adjusted Debt", "Adjusted Debt to Adjusted EBITDA", and "Net Interest Coverage". These measures do not have any standardized meaning prescribed by GAAP and, therefore, may not be comparable to similar measures presented by other issuers. Such non-GAAP measures should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP such as net income (loss), cash flow, or other measures of financial performance and liquidity reported in accordance with GAAP. Detailed descriptions of these terms can be found in Pivot's disclosure documents, including its Management's Discussion and Analysis, filed with the securities regulatory authorities; these documents are available at www.sedar.com or on Pivot's website www.pivotts.com.
SECOND QUARTER CONFERENCE CALL
At
A telephone recording of the call will be available for one week (until midnight
ABOUT
Pivot is an industry-leading information technology services and solutions provider to many of the world's most successful companies, including members of the Fortune 1000, as well as governments and educational institutions. By leveraging its extensive original equipment manufacturer partnerships and its own fulfillment, professional, deployment, workforce and managed services, Pivot supports the IT infrastructure needs of its clients. For more information, visit www.pivotts.com.
FORWARD LOOKING STATEMENTS
Information in this release contain forward-looking statements, including statements concerning anticipated financial events, results, performance or expectations relating to the Company operations, financial condition, business strategy and the Company's outlook for the IT market and its business in 2020, and the impact of the COVID-19 pandemic on the Company's results of operations. Forward-looking statements are based on assumptions of future events that the Company believes are reasonable based upon information currently available, including the impact that COVID-19 pandemic may have on the Company and the IT market in the near future; the Company's ability to mitigate possible supply chain disruption and delays or interruptions in services provided to customers. Pivot assumes no obligation to update or revise any forward-looking statement, except as required by applicable securities law. These statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors, including that the COVID-19 pandemic will result in a more significant deferral or cancellation of new orders for goods and services than anticipate. Actual results could vary significantly from those expressed or implied in these statements. Readers are cautioned that assumptions used in the preparation of such information may prove to be incorrect. Further information with respects to the risks and uncertainties can be found in the MD&A for the three and six months ended
SOURCE
© Canada Newswire, source