Converge Technology Solutions Corp.

Good morning. Welcome to the Converge Technology Solutions Corp fourth quarter and fiscal year 2022 results conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, then the number one on your telephone keypad. If you would like to read through your questions, simply press star and the number two. Your main hosts today are Sean Main, Group CEO, Thomas Volk, Board Chair, Greg Berard, Global President and CEO, and Matt Smith, Interim CFO. Before we begin, I am required to provide the forward-looking statement respecting forward-looking information which is made on behalf of Converge and all of its representatives that are on this call. All statements made on this call will contain forward-looking information. The actual results could differ materially from the conclusion, forecast, or prediction in the forward-looking information. Certain material factors or assumptions are applied in drawing a conclusion or making a forecast or a projection as reflected in the forward-looking information. Additional information about the material factors that could cause actual results to differ materially from the conclusion, forecast, or projection in the forward-looking information and material factors or assumptions that were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking information are contained in converse filings with the Canadian provincial securities regulators. Converge does not undertake to update any forward-looking statements. That statements only speak as of the date made. Today's discussion also refers to gross revenue, adjusted EBITDA, organic growth, and adjusted free cash flow and adjusted free cash flow conversion, which are non-IFRS measures and has no standardized meaning. Please refer to the Converge filing of Canadian provincial securities regulators for an explanation and reconciliation to IFRS measures. I will now turn the meeting over to Sean May, Group CEO. Mr. May, please proceed.

Thank you. Good morning, everyone, and good afternoon to those listening overseas. There are a few items I'd like to discuss prior to our team getting into the detailed financials. And before doing so, let me start by saying how pleased I am to be here this morning as I haven't had an opportunity to address investors these past few months. 2022 was another very active year for Converge. and I remain extremely proud of all of our teams we're able to accomplish. We completed more acquisitions last year than at any time since our inception in 2017, adding incredible leaders, capabilities, and customers. We achieved our stated goal of having presence in every NFL city, expanded our practice areas in Canada, extended our geographical coverage in Germany while adding a platform in the UK. As highlighted in our press release, Richard LaCouture has resigned due to medical reasons. Matt Smith will return to his role of interim CFO, which he previously held between June 2021 and September 2022. Richard advanced our finance organization with best-in-class processes during his tenure with us and made a long-lasting positive impact on Converge. I personally want to thank Richard for all he has done for Converge and wish him all the best in his recovery. Matt has proven himself as a strong finance executive, and I'm confident in Matt's ability to lead our finalized organization again and build upon what Richard has achieved. Additionally, Greg Berard has now assumed the role of Global President CEO while continuing to report to myself as Group CEO. Greg has been a key executive and personal friend since joining Converge through the acquisition of Lighthouse Computer Services in 2018. Greg has been instrumental in building out our practice areas and structuring the roadmap for transitioning Converge and its acquisitions into a mid-market leader, focused on cross-selling higher margin services across our customer base. In his updated role, Greg will continue reporting to me but expand his role to doing what he's been successfully executing in North America to having that same responsibility globally. In addition to advising Greg as Group CEO, I will oversee all corporate functions, including M&A and portage. While speaking of updated roles, I'd also like to personally highlight the appointment of Sean Colicchio as Convergence's Global Chief Information Security Officer, responsible for our physical and digital security strategies, as well as the identification and mitigation of potential risks. The addition of a CISO role within Converge organization represents a significant investment in advancing the company's knowledge, recognition, and responsibility surrounding cybersecurity practices and will be crucial to the long-term success of Converge's growth strategy. We are fortunate to have someone of Sean's caliber to help protect Converge and our clients. In closing, I'd like to express my personal appreciation to Thomas Volk, who has mentored me since joining our board in May of 2021 and has taken the lead in communicating with markets these past few months. I highly value Thomas' experience as a former CEO of CanCom and his experience running worldwide sales at HPE. Many of you have gotten the chance to interact with Thomas in person as he's traveled back and forth through Europe and across Canada throughout the winter. For those who've had the pleasure of meeting him, you will know why I praise and value Thomas among my leadership team. So with that, I will turn the call over to Thomas to discuss our performance in Q4 and fiscal 2022. Thank you, Sean.

2022 was another milestone year for Converge as the company made major progress on the execution of our corporate goal to become the leading provider of IT infrastructure technologies and services for the mid-market customers in North America and Europe. Converge grew faster than any comparable provider globally, expanding gross revenue by 57% year-over-year to $3.1 billion. We proved the value to our existing mid-market customers with our organic gross profit of 10.6%. and with the gross recurring revenue reaching 525 million, which demonstrates the long-term commitment of our customers. Not only has Converge grown their net revenue from 1.5 billion in 2021 to 2.5 billion in 2022, based on historical accounting policies, but it also has surpassed its acquisition targets by acquiring approximately 1.2 billion gross revenue and 68 million adjusted APDA throughout the fiscal year 22. This exceptional growth in revenue and profits instills the confidence in the execution of our business to realize the vision of becoming a 5 billion company in the next 3 to 4 years and to improve our everyday margins towards 10% through the growth of our services and managed services businesses. Our positioning has also been recognized by the IT market through a number of industry awards achieved throughout the year. This includes being named a 2022 Triple Crown Award winner by CRN, earning a spot on each of the Solution Provider 500, the Fast Growth 150 and the Tech Elite 250. More recently, CRN converged to its 2023 Managed Service Provider 500 list in the Elite 550 category. This is recognizing us as one of the industry-leading managed service providers in North America, driving a new wave of growth and innovation through forward-thinking approaches to manage services. As well, our very own Rochelle Manz, Vice President of Cloud Platform, was named Women in Cloud Female of the Year Leader. In addition, we were recognized with Partners of the Year awards from Pure Storage, Cisco, and IncoMicro. Each of these awards reinforced our evolution towards a higher-value services company And perhaps the best demonstration of all of the value we are adding is the addition of average more than 100 net new logos within each quarter of 2022. As the company's reputation continues to advance, we have been fortunate to earn the attraction of world-class IT talent, enhancing both our board and our leadership teams over the last year. In early 2022, we introduced Sean Telch as the Chief Revenue Officer. John has been joining Converge with 40 years of leadership experience following decades-long global career with IBM. John Telch has done a magnificent job at strengthening the overall company culture within the Converge sales organization, while working alongside Greg Barra, whose role has been expanded to global president and CEO, as John already mentioned. Elected at the 2022 AGM, the Converge board of directors welcomed Dr. Tony Reno, who displays over 20 years of international experience as a transformational finance and business leader with an impressive education portfolio. This includes masters of business administration, masters in accounting, a PhD in biophysics and chemistry, and trained in artificial intelligence at MIT. The accumulation of various individuals highlighted here along with the additional 1,300 employees joining us throughout 2022 will continue to strengthen Converge's unity becoming better together. As outlined generally on previous earning calls, Converge has dedicated itself to promoting equality, diversity, equity and inclusion throughout its workforce and partners. At the beginning of 2023, we have further supported these commitments with the official launch of our Converge Core Values. Our Core Values have been created as a commitment guideline and map to which we treat our customers, employees, partners and co-workers. Converge will demonstrate integrity in being honest and transparent with our employees, customers, partners, and stakeholders as we continue to evolve as an organization. Our motto of better together is evident in the unity we have created as part of our culture. We believe that the relationship built along with the contagious energy has created an environment that separates us in the IT marketplace. We continue to foster diversity and inclusion giving the space for our employees to be themselves. Our passion is evident throughout Converge as our commitment for all employees to feel valued and appreciated is at the forefront of our daily decisions as an organization. It is this drive for continuous improvement that creates a foundation for our leaders to be their very best while also attracting like-minded industry leaders. This mindset of excellence will remain an important threat by which we measure ourselves as we move towards the next phase of our growth strategy. As a symbol to honor the commitment from leadership, every employee is receiving a coin that displays these values as a reminder of convergence, unifying devotion to being better together. While hybrid work models continue to lighten our ecological footprints, Converge remains committed to conducting and operating business in a manner that reduces environmental impact while striving to conserve and protect through sound business practices. It remains a top priority to learn and advance from practices discovered through new acquisitions, such as our first UK acquisition, Stone Group. They were the UK's largest privately owned IT hardware manufacturer, displaying exemplary sustainability goals. Sustain was the winner of the International CSR Excellence Award in 2022. This is reflecting companies that have recently received CSR Accreditation Silver Award for the company's many environmental efforts, including reduction in carbon impact, charitable donations in support of social environmental initiatives, and which have commitments to a zero-waste policy. Stone identifies sustainability issues through continued 360-degree engagement with all relevant stakeholder groups and their strategies are clearly communicated to outline the company's intentions to respect to financial targets, employee development, trading and supply chain partners, environment and social development. Now let's turn our attention to the financial operation performance of Q4 and all of 2022. Let me give you an overview on the financial highlights. Beginning with our four-year financial highlights, despite ongoing supply chain challenges and general microeconomic uncertainty that companies are facing, Converge continues to see robust demand for its products and services, which has translated to strong year-over-year revenue, gross profit, and adjusted EBITDA growth. In 2022, gross revenue exceeded 3 billion for the first time, scoring 57% from 2021. This was driven both by acquisitions and organically. Gross profit, our most important trading performance metric, of 550.8 million was 59% ahead of last year and adjusted EBITDA was 142.9 million, which grew 52% over 2021. As with revenue, year-over-year cheap gross profit growth was driven both by our M&A activity and healthy organic growth. On an organic basis, we grew gross revenue by 8.6% in the full year and achieved double-digit gross profit organic growth of 10.5%. As a reminder, we measure organic growth based on actual reported gross revenue and gross profit for companies we owned in both the current reporting period and prior period so that we are comparing consistent portfolio companies. Net revenue consistent with prior reporting treatment was $2.52 billion for fiscal year 22, which is within the stated range in our preliminary Q4 and full year news release that was published in February. In Q4, the company adopted an accounting policy change in response to emerging IFRS guidance that introduced new interpretations of a company's role when it resells certain OEM software licenses. This strongly points companies like Converge that previously reported software revenue on a gross basis to move that to a net treatment. The accounting policy change is applied to the full year audited results, with 2021 comparative numbers reclassified to conform to this new presentation. As a result of this accounting change, the company reported net revenue of $2.17 billion for 2022 adjusted down by 356.8 million to reclassify the vendor cost on certain software licensing transactions from cost of sales against revenue. For 2021, net revenue previously reported at 1.53 billion based on this new treatment is now at 1.33 billion to reflect the same accounting impact in the prior year. As a result, on a like-for-like basis, net revenue increased by 834.9 million, which is 63% from 2021. We've seen this accounting change made recently amongst leading IT resellers, especially in Europe, that report under IFRS and believe this will promote comparability and reporting standardization across companies that operate in this space. It's important to note that this accounting change is purely isolated to the presentation of net revenue and cost of sales, and has zero dollar impact to gross revenue, gross profit, net income, or adjusted EBITDA. For ease of readability and comparability, where applicable, we've included the equivalent net revenue under the previous accounting rules throughout this earnings presentation. I also direct your attention to the included appendix of the earnings presentation for your reference, where we've presented a reconciliation of net product revenue and cost of sales as previously reported to the actually reported numbers inclusive of this change. Additionally, we've also provided detailed disclosure of the impact of adoption in our audited financials, and the quarterly reclassification impact for 2021 and 2022 is presented within our eight trailing quarters disclosure within our MD&A. This should provide full transparency on the impact of this IRF-based accounting change, which doesn't reflect any business or operational performance changes. Now I'll turn over to Matt to walk through financials in more detail. Matt.