Pivot Technology Solutions Reports Fourth Quarter and Full Year 2012 Results

Multi-vendor initiatives drive strong revenue growth
Achieving critical mass, integration of portfolio companies progressing

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CARLSBAD, CA, April 30, 2013 /CNW/ - Pivot Technology Solutions, Inc. ("Pivot" or the "Company") (TSX-V: PTG) today published the results of its wholly owned subsidiary Pivot Acquisition Corp. ("PivotAC") for the fourth quarter and full financial year ended December 31, 2012.  PivotAC was amalgamated with a wholly owned subsidiary of a predecessor of the Company, Acme Capital Corporation ("Acme") pursuant to a reverse takeover (RTO), completed on March 25, 2013.

Financial highlights Q4 2012

• Revenues increased by 27.8% to $329 million, as compared to Q4 of 2011
• Gross margin improved to 11.7% from 10.1% for the same period last year
• Adjusted EBITDA was $8.9 million, as compared to $6.4 million for Q4 2011.
• Net loss for the period was $5.0 million, compared to a $0.3 million profit for the same period in 2011. The loss was attributable mainly to Interest expense and non-cash charges.

Financial Highlights Full Year 2012

• Revenues increased by 26.4% to $1.4 billion, as compared to $1.1 billion for FY 2011.
• Gross margin improved to 9.8% from 9.7%
• Adjusted EBITDA came in at $37.8 million, as compared to $33.2 million for FY 2011.
• Net loss for the period was $22.1 million, as compared to a loss of $19.8 million for FY 2011. As a percentage of revenues, net loss was reduced from 1.8% to 1.5%.

Subsequent events

• On March 11, 2013, the Company completed a brokered private placement, raising gross proceeds of C$3.5 million, priced at C$0.80 per share.
• On March 25, 2013, Pivot completed the RTO of Acme, and the common shares of Pivot commenced trading on the TSX Venture Exchange effective April 1, 2013.
• Concurrent with the RTO, the Company's outstanding 12% debentures, with a total value of C$42.6 million, were converted into 102.5 million Class A Preferred Shares and 4.0 million common shares at a conversion price of C$0.40 per share.
• Following the conversion, $78.8 million in liabilities recorded on the Company's balance sheet (as at December 31, 2012) in relation to the debentures were reduced to $0, resulting in an equal increase in shareholders' equity.

Management Commentary

Greg Gallagher, CEO of Pivot, commented, "We are pleased with our progress over 2012, and we are on our way to becoming North America's dominant multi-vendor solutions provider (MVSP).  We are progressing well with the integration of our acquisitions, which have given us the critical mass needed to pursue, win and implement large and complex projects. Going forward we anticipate achieving significant synergies, such as operational efficiencies, transfer of certifications, and cross selling."

Warren Barnes, CFO of Pivot, added, "Growth for the quarter was driven by our focused efforts to sell multi-vendor solutions.  In particular, our ability to assist enterprise accounts in developing private cloud initiatives was a strong revenue driver.  We also experienced expansion of new customer accounts across other business segments, as our MVSP model is finding resonance with the market."

Mr. Barnes continued, "As can be seen from our adjusted EBITDA, on an operational level Pivot is a healthy cash flow generating business, despite the reported operating losses. We were very pleased with the development of our adjusted EBITDA, up by 14% for the full year, and up by an even more substantial 39% for the fourth quarter,."

Mr. Gallagher continued, "We are uniquely positioned to benefit from the ongoing changes in the technology ecosystem, where OEMs increasingly focus their resources on R&D and marketing, and require partners like Pivot to provide market reach and implementation capabilities.  Our recent listing and private placement have allowed us to make important changes in our capital structure and we are considering further options to strengthen our capital structure.  We will make announcements on this as and when material information becomes available."

Mr. Gallagher concluded, "We believe we are executing well on our MVSP strategy, and we look forward to providing shareholders with regular updates as we progress with our development."

About Pivot Technology Solutions, Inc.
Together with its portfolio companies and partners, Pivot delivers solutions that enable organizations to design, build, implement and maintain computing and communication infrastructure that addresses their unique business needs. Pivot's approach supports improvement of business performance, helps organizations reduce capital and operating expenses, and accelerates the delivery of new products and services to end-customers. With over 2,000 clients, many of whom are Fortune 1,000 companies, Pivot extends its value added solutions to help organizations of all sizes improve operating efficiency, reduce complexity and enhance service delivery through virtualization and cloud computing. Pivot enables businesses to extend their enterprise through mobility solutions to better connect business partners and customers. Pivot has offices throughout North America and can be found online at 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. Forward-looking statements may include financial and other projections, as well as statements regarding Pivot Technology Solutions, Inc.'s (Pivot) future plans, objectives or economic performance, or the assumptions underlying any of the foregoing. Pivot uses words such as "may", "would", "could", "will", "likely", "expect", "anticipate", "believe", "intend", "plan", "forecast", "project", "estimate" and similar expressions to identify forward-looking statements. Any such forward-looking statements 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, including the assumption that Pivot will achieve sustainable profitable growth, as well as other factors Pivot believes are appropriate under the relevant circumstances. However, whether actual results and developments will conform to Pivot's expectations and predictions is subject to any number of risks, assumptions and uncertainties. Many factors could cause Pivot's actual results, historical financial statements, or future events to differ materially from those expressed or implied by the forward-looking statements contained in this news release. These factors include, without limitation: uncertainty in the global economic environment; fluctuations in currency exchange rates; delays in the purchasing decisions of Pivot's customers; the competition Pivot faces in its industry and/or marketplace; and the possibility of technical, logistical or planning issues in connection with the deployment of Pivot's products or services.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Pivot Technology Solutions

SUMMARY CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

Full financial statements can be found on SEDAR and the Company's website www.pivotts.com

All figures are in US $ '000s, except Gross margin (in % of total revenue).

		FY 2012	FY 2011	Q4 2012	Q4 2011
Revenue		1,429,579	1,131,124	328,676	257,260
Gross Profit		140,400	109,923	38,354	25,994
Gross margin		9.82%	9.72%	11.67%	10.10%
	Selling and administrative	102,577	76,742	29,465	19,597
	Depreciation and amortization	10,550	9,693	3,212	2,453
	Transaction costs	784	18,401	1	2,000
	Interest expense	21,011	8,894	7,290	2,951
	Change in fair value of liabilities	32,383	13,078	3,610	(746)
	Other (income)/expense	(234)	2,516	(334)	248
Total operating costs		167,071	129,324	43,244	26,503
Loss before income taxes		(26,671)	(19,401)	(4,890)	(509)
Adjusted EBITDA*		37,823	33,181	8,889	6,397
Net income (loss) and comprehensive income (loss) for the period		(22,102)	(19,805)	(4,986)	279

*Non-IFRS Financial Measures
The Company internally measures its performance and results of initiatives through a number of measures that are not recognized under IFRS and may not be comparable to similar measures used by other companies.

Adjusted EBITDA
Adjusted EBITDA is a non-IFRS measure that management believes is a useful measurement to evaluate the performance of the Company. Investors should be cautioned, however, that Adjusted EBITDA should not be construed as an alternative to net earnings as determined in accordance with IFRS. The Company's method of calculating Adjusted EBITDA may differ from the methods used by other companies and, accordingly, it may not be comparable to similarly titled measures used by other companies.

Adjusted EBITDA is defined as earnings (loss) before income taxes, depreciation, amortization, transaction costs, interest expense, change in fair value of liabilities and other (income)/expense. Management believes it is useful to exclude these items as they are either non-cash expenses, items that cannot be influenced by management in the short term, or items that do not impact core operating performance, and Management uses this information internally for forecasting and budgeting purposes. 

The following provides a reconciliation of Adjusted EBITDA to Loss before income taxes:

		FY 2012	FY 2011	Q4 2012	Q4 2011
Loss before income taxes		(26,671)	(19,401)	(4,890)	(509)
Adjustments
	Depreciation and amortization	10,550	9,693	3,212	2,453
	Transaction costs	784	18,401	1	2,000
	Interest expense	21,011	8,894	7,290	2,951
	Change in fair value of liabilities	32,383	13,078	3,610	(746)
	Other (income)/expense	(234)	2,516	(334)	248
Adjusted EBITDA		37,823	33,181	8,899	6,397

 

 

SOURCE: Pivot Technology Solutions, Inc.

Marc Lakmaaker
TMX Equicom
[email protected]
Tel: [phone]