Gross profit increases 14% and Adjusted EBITDA 20% driven by
strong growth in Software & Cloud solutions
Softchoice revises 2022 outlook, announces Q3 dividend, and
provides update on share buybacks
Softchoice Corporation (“Softchoice” or the “Company”) (TSX:
SFTC) today announced its financial results for the quarter ended
June 30, 2022 (“Q2 2022”). Softchoice will hold a conference
call/webcast to discuss its results today, August 12, 2022, at 8:30
a.m. ET. Unless otherwise noted, all dollar ($) amounts are in U.S.
dollars.
Selected Q2 2022 Financial Highlights
- Gross Sales increased by 15.7% to $583.1 million from $504.1
million in Q2 2021, driven by increases in Software & Cloud
solutions. Net sales increased by 19.6% to $254.3 million from
$212.7 million in Q2 2021 with growth in all solution types.
- Gross profit increased by 14.2% to $83.3 million, from $73.0
million in Q2 2021, driven by 15.7% growth in Software & Cloud
solutions.
- Income from operations increased by $32.0 million to $18.4
million, from a loss of $13.6 million in Q2 2021. The increase was
primarily driven by the reduction in non-recurring costs related to
the IPO which were reflected in Q2 2021.
- Adjusted EBITDA increased by 19.8% to $25.0 million, from $20.9
million in Q2 2021, as gross profit increased by $10.3 million,
which was partially offset by an increase in Adjusted Cash
Operating Expenses of $6.2 million. The increase in Adjusted Cash
Operating Expenses was driven by accelerated growth investments
made over the past year and increases in certain variable
compensation costs which are tied to gross profit performance.
- Net income increased by $20.9 million to $7.8 million from net
loss of $13.1 million in Q2 2021. The increase was driven by the
growth in income from operations, partially offset by an increase
in net foreign exchange loss and income tax expense.
- Adjusted Net Income increased by 41.7% or $4.9 million to $16.7
million from $11.8 million in Q2 2021.
Selected Q2 2022 Business Highlights
- Account Executive (“AE”) headcount increased to 424 at June 30,
2022, already within the range of end-of-2022 AE target of 423 to
433 AEs.
- Customers grew to 4,667 at June 30, 2022, an increase of 29
versus December 31, 2021.
- Expanded board of directors of the Company (the “Board”) to
eight directors, comprising seven incumbent directors and one new
director, Sylvie Veilleux, elected by shareholders at the Company’s
annual general meeting.
- Received Intel Canada Award of Innovation for expanding its
customer value and capabilities across managed services and hybrid
multi-cloud environments to help organizations accelerate their
cloud adoption and meet their business priorities.
- Named as the 2022 VMware Partner of the Year, which is a global
distinction awarded to a single partner each year as part of
VMware’s annual Partner Achievement Awards. The Company was
recognized by VMware for delivering the most customer value and
impact to their organizations, creating on-prem to cloud and
as-a-service opportunities.
- Named a Best Workplace™ in Canada by the Great Place to Work®
Institute for the 17th straight year. Also recognized as a "Best
Place to Work for LGBTQ Equality" in the Human Rights Campaign’s
2022 Corporate Equality Index, receiving a perfect score.
Commenting on Q2 2022 and the Company's 2022 outlook, Vince
De Palma, Softchoice’s President & Chief Executive Officer,
said:
“We recorded a healthy second quarter of organic growth driven
by our Software & Cloud IT solutions, notably from public cloud
consumption and workplace software sales. Demand has been resilient
as organizations continued to prioritize IT investments to increase
flexibility, agility and security, so that they can compete and win
in their markets. We continued to drive higher customer retention
and engagement, resulting in record revenue retention, and returned
to growth in our customer base in Q2, driven by our expanded
frontline salesforce.
“We are maintaining our top line gross profit growth outlook for
2022 as we continue to see robust demand. However, we have lowered
our Adjusted EBITDA margin expectations for fiscal 2022. We
outperformed in recruiting and retaining talent in high-growth
areas of our business which, while beneficial over the long run, is
a temporary drag on earnings in this fiscal year. We are also
seeing modest impacts from wage inflation and are taking a more
cautious view on the relative contribution to our gross profit from
certain areas of our business, which carry a higher EBITDA margin.
All things considered, our talent investments are positively
impacting our customers and our business, and we are confident in
our organization’s ongoing ability to drive sustained profitable
growth.”
Please refer to the cautionary statements under “Forward-Looking
Statements” of this press release.
Financial Summary1
US$ M except per share amounts and
percentages
Q2 2022
Q2 2021
Growth %
H1 2022
H1 2021
Growth %
Gross Sales
583.1
504.1
15.7%
1,049.7
938.9
11.8%
Net sales
254.3
212.7
19.6%
477.2
445.9
7.0%
Gross profit
83.3
73.0
14.2%
150.4
136.0
10.6%
Adjusted EBITDA
25.0
20.9
19.8%
35.0
31.3
11.6%
as a Percentage of Gross Profit
30.0%
28.6%
23.2%
23.0%
Income from operations
18.4
(13.6)
NMF
22.2
(12.1)
NMF
Net income (loss)
7.8
(13.1)
NMF
11.5
(15.1)
NMF
Net income (loss) per Diluted Share
(attributable to the Owners of the Company)
$0.12
$(0.30)
NMF
$0.18
$(0.35)
NMF
Adjusted Net Income
16.7
11.8
41.7%
21.3
14.3
48.5%
Adjusted EPS (Diluted)
$0.27
$0.22
22.7%
$0.34
$0.28
21.4%
US$ M except per share amounts and
percentages
Q2 2022
Q2 2021
Growth %
H1 2022
H1 2021
Growth %
Gross Sales by IT Solution
Type*:
Software & Cloud
399.1
360.6
10.7%
698.1
631.3
10.6%
Services
31.3
26.5
18.2%
56.0
50.7
10.5%
Hardware
152.7
117.0
30.4%
295.6
257.0
15.0%
Gross Profit by IT Solution
Type*:
Software & Cloud
54.1
46.8
15.7%
94.5
83.2
13.6%
as a percentage of Gross Sales
13.6%
13.0%
13.5%
13.2%
Services
8.3
6.9
19.8%
14.8
14.0
5.3%
as a percentage of Gross Sales
26.4%
26.1%
26.3%
27.6%
Hardware
20.9
19.3
8.4%
41.2
38.8
6.1%
as a percentage of Gross Sales
13.7%
16.5%
13.9%
15.1%
* Amounts may not add to total due to rounding
Financial Position
The Company ended Q2 2022 in strong financial condition, with
approximately $200 million in available funds from cash on hand and
through its $275 million revolving credit facility. Including
internally generated cash flows, the Company anticipates having
significant resources with which to pursue growth opportunities and
enhance shareholder returns.
The Company had approximately $83.6 million in loans and
borrowings outstanding at the end of Q2 2022. Net debt, equating to
loans and borrowings plus lease liabilities less cash-on-hand, was
$95.7 million at June 30, 2022. Net debt decreased from $108.4
million at March 31, 2022 due primarily to cash generated by
operating activities in Q2 2022. The quarter end ratio of net debt
to Adjusted EBITDA for the trailing twelve-months ended June 30,
2022 was 1.3x compared with 1.6x at March 31, 2022 and 1.2x at
December 31, 2021.
Dividend
The Board has declared a quarterly cash dividend of C$0.09 per
common share of the Company (each, a “Common Share”) for the period
from July 1, 2022 to September 30, 2022, to be paid on October 14,
2022 to shareholders of record at the close of business on
September 30, 2022. The Dividend to which this notice relates is an
eligible dividend for tax purposes.
NCIB
On March 3, 2022, the Board approved the commencement of a
normal course issuer bid (“NCIB”) through the facilities of the TSX
and/or alternative Canadian trading systems to purchase and cancel
up to 3,018,528 of the Company’s Common Shares, representing
approximately 10% of the public float of 30,185,282, during the
twelve-month period commencing on March 8, 2022 and ending March 7,
2023. During the three and six-month periods ended June 30, 2022,
695,426 Common Shares and 824,412 Common Shares, respectively were
repurchased and cancelled under the NCIB.
In connection with the NCIB, the Company entered into an
automatic purchase plan effective as of March 8, 2022 with a
designated broker which allows for the purchase and cancellation of
Common Shares, subject to certain trading parameters, by the
Company’s designated broker during times when Softchoice would
ordinarily not be active in the market due to applicable regulatory
restrictions or self-imposed blackout periods. Outside of these
periods, the Common Shares will be repurchased by the Company at
our discretion under the NCIB.
Our Outlook 2
The following outlook supersedes all prior statements made by
the Company and is based on current expectations.
The Company has revised its financial outlook for the fiscal
year ending December 31, 2022 based on its results for the six
months ended June 30, 2022. We are maintaining our gross profit
growth outlook but reducing our Adjusted EBITDA margin outlook as a
result of accelerated growth investments, including in advanced
value services, public cloud capabilities, and sales capacity,
along with cost pressure in pockets of our organization due to the
inflationary environment. We are also taking a more cautious view
on the relative contribution to gross profit from certain areas of
our business which carry a higher EBITDA margin. See also
“Forward-Looking Statements” below for further details on
assumptions underlying our financial outlook.
Softchoice is revising its 2022 financial outlook as
follows:
Current Fiscal 2022
Outlook
Prior Fiscal 2022
Outlook
Gross Profit
>$320 million (>11.5%
growth over Fiscal 2021)
>$320 million (>11.5%
growth over Fiscal 2021)
Adjusted EBITDA as a Percentage of
Gross Profit
~25% to 28% margin
(Inclusive of ~$25 million of
Project Monarch Uplift)
~30% margin
(Inclusive of ~$25 million of
Project Monarch Uplift)
Adjusted Free Cash Flow
Conversion
Approximately 90%
Approximately 90%
The outlook above constitutes forward-looking information within
the meaning of applicable securities laws and is based on a number
of assumptions and risks described under the heading
“Forward-Looking Statements” of this press release. The Company’s
outlook also constitutes "financial outlook" within the meaning of
applicable securities laws and is provided for the purposes of
assisting the reader in understanding the Company's financial
performance and measuring progress toward management's objectives
and the reader is cautioned that it may not be appropriate for
other purposes.
Quarterly Conference Call
Softchoice’s management team will hold a conference call to
discuss our second quarter 2022 results today at 8:30 a.m.
(ET).
DATE: Friday, August 12, 2022
TIME: 8:30 a.m. Eastern Time
DIAL-IN: 416-764-8659 or 1-888-664-6392, Confirmation #
75636215
WEBCAST:
https://produceredition.webcasts.com/starthere.jsp?ei=1556709&tp_key=f414f1961f
TAPED REPLAY: 416-764-8677 or 1-888-390-0541, Replay Code
636215 # (Available until August 19, 2022)
A link to the webcast will also be available on the Events page
of the Investors section of Softchoice’s website at
http://investors.softchoice.com. Please connect at least 15 minutes
prior to the conference call to ensure adequate time for any
software download that may be required to join the webcast. An
archived replay of the webcast will be available for 90 days.
Capitalized Terms
Capitalized terms used in this release, including Project
Monarch, and terms we use to describe our IT solution types
including Software & Cloud, Services, and Hardware and sales
channels including SMB, Commercial, and Enterprise are described in
the Company’s Management’s Discussion and Analysis of Financial
Condition and Results of Operations for the three- and six-months
ended June 30, 2022 (the “Q2 2022 MD&A”), and/or defined
in our annual information form dated March 29, 2022 (the “AIF”)
filed on SEDAR and available on the Company’s investor relations
website http://investors.softchoice.com.
1 Non-IFRS Measures
This news release makes reference to certain non-IFRS measures
and other measures. These measures are not recognized measures
under International Financial Reporting Standards (“IFRS”) as
issued by the International Accounting Standards Board (“IASB”) and
do not have a standardized meaning prescribed by IFRS and are
therefore unlikely to be comparable to similar measures presented
by other companies. Rather, these measures are provided as
additional information to complement those IFRS measures by
providing further understanding of our results of operations from
management’s perspective. Accordingly, these measures should not be
considered in isolation nor as a substitute for analysis of our
financial information reported under IFRS. We use non-IFRS
measures, including “Adjusted EBITDA”, “Adjusted EBITDA as a
Percentage of Gross Profit”, “Adjusted Cash Operating Expenses”,
“Adjusted Net Income (Loss)”, “Adjusted EPS”, “Adjusted Free Cash
Flow Conversion”, and “Gross Sales”. These non-IFRS measures and
other measures are used to provide investors with supplemental
measures of our operating performance and thus highlight trends in
our core business that may not otherwise be apparent when relying
solely on IFRS measures. Our management uses these non-IFRS
measures and other measures in order to facilitate operating
performance comparisons from period to period, to prepare annual
operating budgets and forecasts and to determine components of
management compensation. We also believe that securities analysts,
investors and other interested parties frequently use certain of
these non-IFRS measures and other measures in the evaluation of
issuers. As required by Canadian securities laws, we reconcile the
non-IFRS measures to the most comparable IFRS measures. For more
information on non-IFRS measures and other measures, see the Q2
2022 MD&A filed on SEDAR and available on the Company’s
investor relations website http://investors.softchoice.com
Reconciliations of Non-IFRS Financial Measures
(Information in thousands of U.S.
dollars, unless otherwise stated)
Three Months Ended
Six Months Ended
June 30,
June 30,
Reconciliation of Net Sales to Gross
Sales
2022
2021
2022
2021
Net sales
254,310
212,653
477,232
445,883
Net adjustment for sales transacted as
agent
328,763
291,410
572,450
493,058
Gross Sales
583,073
504,063
1,049,682
938,941
Reconciliation of Operating Expenses to
Adjusted Cash Operating Expenses
Operating expenses
64,930
86,576
128,156
148,064
Depreciation and amortization
(4,897
)
(5,393
)
(9,770
)
(10,716
)
Equity-settled share-based compensation
and other costs (1)
(1,142
)
(25,872
)
(1,714
)
(28,682
)
Non-recurring compensation and other costs
(2)
(2
)
(237
)
(22
)
(519
)
Business transformation non-recurring
costs (3)
(337
)
(467
)
(898
)
(740
)
IPO related costs (4)
–
(2,504
)
–
(2,757
)
Non-recurring legal provision (5)
(235
)
–
(322
)
–
Adjusted Cash Operating
Expenses
58,317
52,103
115,430
104,650
Reconciliation of Income from
operations to Adjusted EBITDA
Income from operations
18,402
(13,593
)
22,241
(12,068
)
Depreciation and amortization
4,897
5,393
9,770
10,716
Equity-settled share-based compensation
and other costs (1)
1,142
25,872
1,714
28,682
Non-recurring compensation and other costs
(2)
2
237
22
519
Business transformation non-recurring
costs (3)
337
467
898
740
IPO related costs (4)
–
2,504
–
2,757
Non-recurring legal provision (5)
235
–
322
–
Adjusted EBITDA
25,015
20,880
34,967
31,346
Adjusted EBITDA as a Percentage of
Gross Profit (6)
30.0
%
28.6
%
23.2
%
23.0
%
Reconciliation of Net Income (Loss) to
Adjusted Net Income
Net income (loss)
7,788
(13,113
)
11,517
(15,110
)
Amortization of intangible assets
3,230
3,279
6,438
6,498
Equity-settled share-based compensation
and other costs (1)
1,142
25,872
1,714
28,682
Non-recurring compensation and other costs
(2)
2
237
22
519
Business transformation non-recurring
costs (3)
337
467
898
740
IPO related costs (4)
–
2,504
–
2,757
Non-recurring legal provision (5)
235
–
322
–
Related party debt interest (7)
–
721
–
1,736
Subordinated debt interest (7)
–
183
–
446
Interest expense on accretion of
non-interest-bearing notes (8)
–
–
–
120
Extinguishment of deferred financing fees
(9)
–
1,621
–
1,621
Unrecoverable withholding taxes (10)
–
1,035
–
1,035
Gain on lease modification (11)
–
–
(209
)
–
Foreign exchange loss (gain) (12)
5,862
(3,844
)
3,208
(5,726
)
Tax recovery on deferred tax liability
(13)
–
(2,863
)
–
(2,863
)
Related tax effects (14)
(1,931
)
(4,340
)
(2,606
)
(6,106
)
Adjusted Net Income
16,665
11,759
21,304
14,349
Weighted Average Number of Shares
(Basic)
59,186,978
49,588,217
59,348,710
47,450,345
Weighted Average Number of Shares
(Diluted)
62,850,758
53,879,978
63,012,490
51,742,105
Adjusted EPS (Basic) (15)
0.28
0.24
0.36
0.30
Adjusted EPS (Diluted) (15)
0.27
0.22
0.34
0.28
Reconciliation of Net Cash Provided by
Operating Activities to
Adjusted Free Cash Flow
Trailing Twelve-Months Ended
June 30,
2022
2021
Net cash provided by operating
activities (16)
28,736
17,581
Adjusted for:
Share-based compensation and other costs
(17)
8,410
28,405
Non-recurring compensation and other costs
(2)
191
2,596
Business transformation non-recurring
costs (3)
1,731
7,776
IPO related costs (4)
314
2,757
Follow-On Offering costs (18)
287
–
Non-recurring legal provision (5)
2,036
–
Realized foreign exchange loss (gain)
3,796
(10,077
)
Finance and other (income) expense
(19)
(282
)
1,019
Cash taxes paid, net
9,831
6,171
Cash interest paid
4,856
7,577
Change in non-cash operating working
capital (16)
12,800
6,644
Adjusted EBITDA
72,706
70,449
Maintenance Capex
(2,016
)
(331
)
IFRS 16 lease payments (20)
(6,791
)
(7,041
)
Adjusted Free Cash Flow
63,899
63,077
Adjusted Free Cash Flow
Conversion
88
%
90
%
Notes (Refer to the Q2 2022 MD&A for description of the
sections with parentheses within these Notes)
(1)
These expenses represent costs
recognized in connection with the Company’s legacy option plan and
omnibus long-term equity incentive plan, pursuant to which options
granted are fair valued at the time of grant using the
Black-Scholes option pricing model and adjusted for any plan
modifications, and expenses related to RSUs and DSUs (as defined
below). Other costs relate to the employee investment plan and the
long-term profit-sharing plan, which were dissolved upon the
completion of the IPO, and fair value adjustments in relation to
existing equity-based arrangements. See “Share Information Prior to
the Completion of the Offering”.
(2)
These expenses include
compensation costs relating to severance and other costs comprised
of professional, legal, consulting, accounting and management fees
that are non-recurring and are sporadic in nature as they primarily
relate to costs incurred in connection with shareholder
distributions.
(3)
These costs in Fiscal 2021 relate
to the implementation of Project Monarch, which were largely
comprised of one-time third-party consulting expenses, personnel
costs for dedicated internal resources and software related costs.
All costs relating to Project Monarch were segregated for tracking
purposes and are monitored on a regular basis. The costs in YTD
2022 relate to system enhancements after the implementation of
Project Monarch. As at June 30, 2022, $50.1 million has been
invested in operating and capital expenditures for Project Monarch
and related system enhancements. See “Summary of Factors Affecting
Performance – Business Transformation (Project Monarch)”.
(4)
In connection with the IPO, the
Company incurred expenses related to professional fees, legal,
consulting, accounting and compensation that would otherwise not
have been incurred and therefore are non-recurring. These costs
have been separately identified and adjusted for clarity. There
were $253 of IPO related costs which were incurred in Q1 2021 that
were previously classified under non-recurring compensation and
other costs; these costs have been reclassified into IPO related
costs for the six months period ended June 30, 2021.
(5)
The Company has settled certain
legal claims, without admission of liability or wrongdoing, in
respect of U.S. wage and hour disputes and has incurred $2.0
million in expenses for such settlements, which are non-recurring
in nature. These legal claims were settled in Q2 2022.
(6)
Adjusted EBITDA as a Percentage
of Gross Profit is calculated as Adjusted EBITDA divided by gross
profit. See “Non-IFRS Measures and Other Measures – Non-IFRS
Measures – Adjusted EBITDA and Adjusted EBITDA as a Percentage of
Gross Profit”.
(7)
Related party and subordinated
debt interest was settled at the time of Offering. For additional
details see “Related Party Transactions”, “Subordinated Debt
Information” and “Share Information Prior to the Completion of the
Offering”.
(8)
This represents the expense
relating to the accretion of the present value of the
non-interest-bearing notes recognized over the term of the notes.
These notes were settled at the time of Offering. See also “Related
Party Transactions”, “Subordinated Debt Information” and “Share
Information Prior to the Completion of the Offering”.
(9)
As a result of the refinancing,
the unamortized balance of the deferred financing fees on the
former revolving credit facility and term credit facility of $1,621
were extinguished.
(10)
Non-controlling interest portion
of unrecoverable withholding taxes on royalties. Non-controlling
interest was eliminated upon the IPO of the Company.
(11)
Gain on lease modification
recognized in Q1 2022 as a result the derecognition of the lease
liabilities related to rental parking as the associated office
space has been subleased.
(12)
Foreign exchange (gain) loss
includes both realized and unrealized amounts.
(13)
Decrease of deferred tax
liability recorded on undistributed earnings from foreign
jurisdiction due to change of tax rate applicable as the Company
status changed from Canadian Controlled Private Company to public
company.
(14)
This relates to the tax effects
of the adjusting items, which was calculated by applying the
statutory tax rate of 26.5% and adjusting for any permanent
differences and capital losses. The comparative period has been
reclassified due to a change in tax impact on adjusted items.
(15)
Basic Adjusted EPS is calculated
using the weighted average number of shares outstanding during the
period. Diluted Adjusted EPS includes the dilutive impact of the
stock options in addition to the weighted average number of shares
outstanding during the period. See “Non-IFRS Measures and Other
Measures – Non-IFRS Measures – Adjusted Net Income (Loss) and
Adjusted EPS”.
(16)
The TTM figures include adjusted
figures for reclassification of costs between net cash provided by
operating activities and change in non-cash operating working
capital.
(17)
Share-based compensation
represents costs recognized in connection with repurchases of stock
options from terminated employees. Included in the trailing twelve
months ended Q2 2021 and Q2 2022, there was $16.9 million relating
to Cash-Out Agreements in conjunction with the IPO and $7.7 million
relating to Cash-Out Agreements in conjunction with the Follow-On
Offering, respectively. Other costs are comprised of the employee
investment plan and the long-term profit-sharing plan, which were
dissolved in connection with the IPO; and fair value adjustments in
relation to existing equity-based arrangements. As a result of the
IPO, a $6.1 million fair value adjustment was triggered on an
existing equity-based arrangement which was dissolved thereafter.
See “Share Information Prior to the Completion of the
Offering”.
(18)
In connection with the Follow-On
Offering, the Company incurred expenses related to professional
fees, legal, and accounting fees that would otherwise not have been
incurred and therefore are non-recurring. These costs have been
separately identified and adjusted above.
(19)
Finance and other (income)
expense refers to interest income on cash, net of non-controlling
interest portion of unrecoverable withholding taxes on
royalties.
(20)
Lease payments in the TTM Q2 2022
included a one-time early lease termination payment of $0.5
million, which occurred in Q3 2021.
2 Forward-Looking Statements
This news release contains “forward-looking information” within
the meaning of applicable securities laws in Canada.
Forward-looking information may relate to our future business,
financial outlook and anticipated events or results and may include
information regarding our financial position, business strategy,
growth strategies, addressable markets, budgets, operations,
financial results, taxes, dividend policy, NCIB, business plans and
objectives. Particularly, information regarding our expectations of
future results, performance, achievements, prospects or
opportunities or the markets in which we operate is forward-looking
information. In some cases, forward-looking information can be
identified by the use of forward-looking terminology such as
“plans”, “targets”, “expects” or “does not expect”, “is expected”,
“an opportunity exists”, “budget”, “scheduled”, “estimates”,
“outlook”, “financial outlook”, “forecasts”, “projection”,
“prospects”, “strategy”, “intends”, “anticipates”, “does not
anticipate”, “believes”, or variations of such words and phrases or
statements that certain actions, events or results “may”, “could”,
“would”, “might”, “will”, “will be taken”, “occur” or “be
achieved”. In addition, any statements that refer to expectations,
intentions, projections or other characterizations of future events
or circumstances contain forward-looking information. Statements
containing forward-looking information are not historical facts but
instead represent management’s expectations, estimates and
projections regarding possible future events or circumstances.
Forward-looking information may include, among other things: (i)
the Company’s expectations regarding its financial performance and
outlook, including among others, net sales, gross profit, gross
profit growth rates, expenses, Adjusted EBITDA, Adjusted EBITDA to
Gross Profit margin, Adjusted Free Cash Flow Conversion,
operations, the number of account executives and employees, organic
growth and Adjusted EBITDA margin expansion; (ii) the Company’s
expectations regarding industry and market trends, growth rates and
growth strategies; (iii) the Company’s business plans and
strategies; (iv) the Company’s ability to retain customers and
increase margin per customer; (v) the Company’s relationship and
status with technology partners; (vi) the Company’s growth
strategies, future organic growth, and competitive position in the
IT industry; (vii) the Company’s dividend program and dividend
rates; (viii) the Company’s NCIB program and the purchase of Common
Shares in connection with such programs; and (ix) the long-term
impact of COVID-19 on our business, financial position, results of
operations and/or cash flows; (x) M&A opportunities; and (xi)
the materialization of the expected benefits of Project
Monarch.
Forward-looking information is necessarily based on a number of
opinions, estimates and assumptions that we considered appropriate
and reasonable as at the date such statements are made, and are
subject to known and unknown risks, uncertainties, assumptions and
other factors that may cause the actual results, level of activity,
performance or achievements to be materially different from those
expressed or implied by such forward-looking information, including
but not limited to the risk factors described in our Q2 2022
MD&A and under “Risk Factors” in the AIF. A copy of the AIF can
be accessed under our profile on the System for Electronic Document
Analysis and Retrieval (“SEDAR”) at www.sedar.com and on our
website at investors.softchoice.com. There can be no assurance that
such forward-looking information will prove to be accurate, as
actual results and future events could differ materially from those
anticipated in such information. Accordingly, readers should not
place undue reliance on forward-looking information, which speaks
only as at the date made.
In addition to the forward-looking information cautions
described above, the outlook set forth herein includes Gross
Profit, Adjusted EBITDA as a Percentage of Gross Profit and
Adjusted Free Cash Flow Conversion, in each case, for Fiscal 2022.
Key underlying drivers for our forecast include: (i) the expected
growth of our addressable market; (ii) the expected growth of our
salesforce and improvements of our salesforce productivity; (iii)
the expected growth in our customer base and wallet share amongst
existing customers; and (iv) our view of the drivers of, and
expectations related to, our anticipated growth as well as certain
cost management measures and operational efficiencies we expect to
realize. A significant portion of the increase in Gross Profit and
Adjusted EBITDA for Fiscal 2022 is attributable to the procurement
savings, pricing margin improvements, and business growth and
reduced revenue leakage and expected net workforce efficiencies
anticipated to result from Project Monarch. To the extent that
these underlying drivers and benefits are not realized as expected,
our Gross Profit, Adjusted EBITDA, Adjusted EBITDA as a Percentage
of Gross Profit and, as a result, our Adjusted Free Cash Flow
Conversion, during the relevant period will be adversely affected.
The underlying assumptions relating to future results are
inherently uncertain and are subject to significant business,
economic, financial, regulatory, market and competitive risks,
including risks that our initiatives or projects (including Project
Monarch) do not result in the growth and increase in efficiencies
anticipated, and could cause actual results to differ materially.
If we do not achieve the anticipated results, we may modify or
discontinue certain of our other planned business initiatives. In
light of the foregoing, investors are urged to put these statements
in context and not to place undue reliance on them.
About Softchoice
Softchoice (TSX: SFTC) is a software-focused IT solutions
provider that equips organizations to be agile and innovative, and
for their people to be engaged, connected and creative at work.
That means moving them to the cloud, helping them build the
workplace of tomorrow, and enabling them to make smarter decisions
about their technology portfolio. For more information, please
visit www.softchoice.com.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220812005063/en/
Investor Relations Tim Foran (416) 986-8515
investors@softchoice.com
Press Justin Hane (647) 917-1761
justin.hane@softchoice.com
Softchoice (TSX:SFTC)
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