Pivot Technology Solutions, Inc. (TSX: PTG), ('Pivot', 'Company'), a fullservice information technology provider, today announced financial results for the three and six months ended June 30, 2020.
Effective January 1, 2020, Pivot's Board of Directors elected to change the Company's presentation currency from U.S. dollars to Canadian dollars. The change in presentation currency is to improve investors' ability to compare the Company's financial results with other Canadian publicly traded businesses.
'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 Kevin Shank, CEO. '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 $7.4 million dollars in Adjusted EBITDA in the second quarter.' '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 $71.5 million; the prior year included a non-recurring project with a non-major customer of over $41.0 million and over $30.0 million of revenue slipped from Q2 2020 into Q3 2020 as a result of customer delays and product shipment delays due to supply chain issues, both caused by COVID-19.'
'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 North America.'
SECOND QUARTER RESULTS SUMMARY
Second quarter 2020 revenue was $332.1 million, a 27.8% decrease from the comparative period. This decrease was primarily attributable to lower product sales to major customers, the prior year included a non-recurring project with a non-major customer of over $41.0 million, partially offset by an increase in Pivot Provided Services. Over $30.0 million of revenue slipped from Q2 2020 into Q3 2020 as a result of customer delays and product shipment delays due to supply chain issues, both caused by COVID-19. Gross profit of $50.2 million for Q2 2020 decreased by $9.9 million or 16.5% as compared to the same period in the prior year. The gross profit margin was 15.1% in Q2 2020 as compared to 13.1% in Q2 2019. The decrease in gross profit for Q2 2020 is mainly driven by the decline in sales described above, partially offset by improved gross profit margin. During the first half of 2020, the continued favourable shift in the customer mix resulted in a lower percentage of revenue being generated from major customers, which improved overall gross profit margins. Since the gross profit margin from non-major customers is generally more favourable, Q2 2020 and the first half 2020 gross profit margins continued to benefit from this shift. In addition, the growth in Pivot Provided Services 3 revenue, which generally has higher gross profit margins than product sales, combined with continued cost management, contributed to the improvement in gross profit margin in Q2 2020. SG&A of $42.8 million for Q2 2020 decreased $4.4 million or 9.3% as compared to the same period in the prior year. Excluding the unfavourable foreign exchange effect of $1.5 million, the decrease was $5.9 million or 12.5%. There were a number of factors that impacted SG&A including: lower commissions and variable compensation; cost reductions due to the sale of the Smart Edge business in late 2019; increased costs due to investment in growth areas which have been mostly offset by cost reductions from integration activities and furlough actions and decreased costs associated with timing of events, travel and marketing spend primarily as a result of COVID19, partially offset by increased bad debt expense. Adjusted EBITDA(1) was $7.4 million in the 2020 second quarter. Net loss attributable to shareholders was $0.5 million, or $0.01 per share. Net loss includes $2.8 million of amortization of intangibles from acquisitions.
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 original equipment manufacturer partnerships and its own fulfillment, professional, deployment, workforce and managed services, Pivot supports the IT infrastructure needs of its clients.
Contact:
Tel: 416-519-9442
PIVOT TECHNOLOGY SOLUTIONS, INC. 
