Pivot Technology Solutions, Inc. Provides Q3 Update
Appoints Chief Operating Officer and Chief Financial Officer
TORONTO, Oct. 19, 2018 /CNW/ - Pivot Technology Solutions, Inc. (TSX: PTG) ("Pivot", or the "Company") today announced its estimated third quarter revenue and gross profit margin and made two executive appointments designed to strengthen its leadership team in support of the delivery of the Company's commercial transformation and value-creation strategies.
Chief Operating Officer
Matt Olson has been promoted to the position of Chief Operating Officer. In this role, Mr. Olson will be responsible for the Company's service delivery operations, including the design of existing and new service and solution offerings. He will report to Kevin Shank, President and Chief Executive Officer. Mr. Olson joined Pivot in February 2016 as Vice President of Service Solutions and was appointed Chief Strategy Officer in August 2016. Over the past two years, Mr. Olson has led the development of Pivot's services and solutions portfolio design and strategy. He brings close to 25 years of IT services experience to this important new role at Pivot, including more than two decades at a multinational IT services company where he led its development, growth and performance in various leadership roles. Mr. Olson has a proven track record in enterprise management, sales, field services, service operations and managed services. He is a graduate of the University of Wisconsin.
Chief Financial Officer
David Toews has been appointed as the Company's Chief Financial Officer, after having served as Interim Chief Financial Officer since June 2017. Mr. Toews has more than 25 years of experience in senior financial roles and a proven track record of success in the technology sector, including several CFO roles with public companies such as TSX-listed Leitch Technology Corporation. Over the past 16 months, he has introduced new financial disciplines and controls to enhance Pivot's business and operational effectiveness. Mr. Toews is a CPA, CA and a graduate of McMaster University.
Management Commentary
"These appointments are important to align our leadership team to execute our strategy," said Mr. Shank. "In his new role, Matt will assist me in accelerating our commercial transformation. By making Dave's appointment permanent, we maintain stability within our finance organization and ensure his expertise is available to us as we strive to improve our performance. I congratulate both Matt and Dave and very much look forward to continuing to leverage their talents."
Business Update
The Company remains focused on its strategy, which includes the following components: (i) continue to build on Pivot's core business of selling IT solutions, both products and services; (ii) enhance Pivot's service portfolio and capabilities, specifically related to services that Pivot delivers; (iii) continue the Company's commercial transformation to expand Pivot's addressable opportunities with existing customers; (iv) improve cost management; and (v) commercialize and monetize the Smart Edge™ technology.
"We continuously review our strategy against market trends and we plan to accelerate its adoption across the business," said Mr. Shank. "This includes investing in our services portfolio to drive stronger earnings in the future and further integrating our operations for cost efficiencies. Based on our initial analysis, we expect to remove over $5 million in annual costs through cost efficiencies to be implemented over the next two quarters."
Second Half 2018 Outlook
Q3 results of operations have yet to be finalized, however revenue is expected to be approximately US$321 million (compared to US$389 million in the prior-year period) due primarily to the timing of sales to major customers. Q3 gross profit margin is expected to be higher than the prior-year period at over 12% compared to 11% in Q3 2017. Despite the lower revenue, the Company expects to report positive Adjusted EBITDA1 for the quarter. Pivot is unable to comment further on its revenue and profitability for the third quarter, however the Company's preliminary outlook for Q4, which is historically the Company's strongest quarter, is for customers to return to more traditional buying patterns. (1Non-IFRS Measure. See Non-IFRS Measures section of this news release)
"Marketplace changes reinforce how important executing our strategy is to the long-term growth plans of our company," said Mr. Shank. "We remain confident that the approach we're taking is right for our customers and shareholders and that today's management appointments will help us accelerate our integration plans and facilitate the ongoing commercial transformation."
Smart Edge
The Company continues to make progress with Smart Edge™. Intel recently announced that Smart Edge™ was named a Solution Plus Partner in Intel's Network Builders Winners' Circle ("INBWC"). The INBWC is a program focused on accelerating network transformation by delivering technical innovation. "This award demonstrates the tremendous potential of the Smart Edge™ solution in the marketplace," said Mr. Shank. "We expect to receive orders for funded proof of concept projects in the fourth quarter."
Smart Edge™ is an innovative developer platform designed to support enterprise Multi-Access Edge Computing (MEC) solutions. Through use cases to date, the Smart Edge™ solution has demonstrated its ability to improve performance, enhance user experiences and reduce ongoing edge total cost of ownership – all key factors in customer adoption of 5G technologies. Revenue generation is expected to grow with the adoption of 5G.
The Company will announce its third quarter results on or prior to November 14, 2018 and will host a conference call at that time to provide additional commentary on the progress of the business.
NON-IFRS MEASURES
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 employee compensation and benefits and other selling, general and administrative expenses, and corresponds to income before income tax, depreciation and amortization, finance expense, change in fair value of liabilities, and other (income) expense.
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.
About Pivot Technology Solutions
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 OEM 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
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. 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 including statements about Q3 and Q4 results, cost reductions and the timing of Smart Edge™ orders 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. However, whether actual results and developments will conform to Pivot's expectations and predictions is subject to any number of risks, assumptions and uncertainties, including the risk that Q4 revenue and expenses will not meet management's expectations and the risks detailed in the Company's Annual Information Form for the year ended December 31, 2017 available at sedar.com. 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. 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
Investor Contacts: David Toews, CFO, Pivot Technology Solutions, Inc., [email protected]; Bill Mitoulas, Pivot Investor Relations, [email protected], Tel: 416.479.9547
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