All right. Thanks everyone for joining us at the 44th running of our annual growth conference here in Boston. My name is Rob Young. I'm one of the Canadian technology analysts with Canaccord Genuity, and today I am your moderator. This session is a fireside chat with Converge Technology Solutions. This is a company that's been historically a very aggressive consolidator of VARs and IT solutions providers in North America and Europe. More recently, the company's paused that M&A, and they focused on integration, on cash generation, on organic growth, and we've seen that in the recent quarters. They're at the front end of introducing a new ER, ERP system, which is gonna bring a lot of interesting new reporting and disclosure, potentially next year, so we're looking forward to that. The business looks like it's in a very good position going forward from a cash flow point of view. With us today, we have Greg Berard, who's the current CEO. We have Shaun Maine in the audience, who is the outgoing CEO. We have Avjit Kamboj, the CFO, and we also have Dennis Fong here at the front, who manages IR. So I'm gonna hand the floor over to Avjit or Greg, just to give some introductory comments on the business, maybe a summary of the Q2 disclosure last week. We've got some of the numbers on the slide there, and then we'll get into questions. Like I said, this will be a fireside, but absolutely please jump in and ask questions when and as you feel. I'll hand it over to you guys. All right. Perfect! Thanks, Rob. Thanks for the time today, and thanks to the audience here. Yeah, so Q2 was a strong quarter for us. As Rob mentioned, we were a very strategic M&A organization up until November of 2023. So we've acquired 35 companies. We haven't made any acquisitions since actually November of 2022. So this will be two years coming in November, where we haven't made any acquisitions. We've really turned our focus into integrating all the acquisitions we've made and really putting focus on organic growth. So when you look at our performance in Q2, we've grown double digits year to date from a gross revenue perspective, and we're gonna continue to focus on driving single-digit to double-digit growth on the EBITDA line. Our goal right now is to finish the ERP system, which we're expected to go live October first, and once that goes live, we will then turn back to strategic M&A, specifically focused on North America. So we believe in the foundation of the business. We continue to execute well on our cross-sell strategy, and we've implemented a few things around organic growth that we continue to execute on, primarily around cross-sell execution, driving net new logos across the board, recruiting new experienced sellers, and continuing to focus on building and rolling out new solutions and IP. So we believe all of that will help us continue to execute on our strategy. Okay. First high-level question I wanted to start with is, I wanted to get your sense, or your view on what the advantages of building a VAR that combines hardware but also software and services. Most of the market is focused on software and services. What's the value that you bring, given the very, you know, extensive hardware offering you have? Yeah. It's really our ability to be the end-to-end solution provider for our clients. When we look at the acquisitions we've made, you know, we acquired a lot of clients that were just buying hardware from some of the solution providers that we acquired. And really, what that gives us, and, and I'll use high-performance compute as an example, is when you combine the power of networking, storage, and compute with the cybersecurity capabilities and with the AI and analytics skills, that really gives us a unique differentiator in the marketplace. 'Cause we can now take advantage of those hardware-centric clients and then sell them around the strategic initiatives that you're seeing in the marketplace, around analytics, around cloud, and around cyber. So our ability to go end to end is really, Rob, the key differentiator for us. All right. Now, you already alluded to this, in Q2, you moderated down the full year outlook a little bit. And so I was wondering, can you give us maybe an overview of what the drivers behind that decision would have been? Yeah. There's a different puts and takes in terms of providing our guidance for at the end of Q2. As you might have seen, we deconsolidated our majority-owned subsidiary called Portage. 51% owned subsidiary, we deconsolidated at the end of the quarter. It has a negative EBITDA, but it does have positive gross profit, so we reduced our gross profit guidance, but that also increased our Adjusted EBITDA guidance. At the same time, we also did see pushout and refresh of our end-user device cycle. That got pushed out where we were a little bit bullish earlier in the year that that will happen this year, but that got pushed out into either later this year or earlier next year. And the third pillar was just general market sentiment. I think you're seeing this across the world, that, yeah, IT spend is being challenged continuously. Investors are being cautious where they spend their money and what ROI get, and we're just being cautious. But we are still very optimistic in our performance. As I talked about on the call as well, we do have a large AI, high-performance compute deal that we have not included in our forecast, and that is a potential upside for this year. Okay, I want to talk about that in a second. I just wanted to. On the outlook, the macro headwind, is that something that you've- outside of end-user device, you highlight that specifically, but, are you seeing the demand environment getting worse, as you look into the back half of the year? I mean, we're used to seeing, you know, delayed orders, tougher purchasing decisions, things like that. Maybe just give us a sense of what you're seeing amongst your customers, if it's, if the macro is eroding just. Yeah In that one piece. We're not seeing that in our North America business. So our North America business represents about 88% of our global business, but we are seeing some of that in our Germany operations. We were expecting our Germany operations to recover at the end of the second half of this year. That is no longer true. We expect our second half of Germany to be very similar to the first half, and it continues to erode. So we are seeing more and more challenged spending in Germany, especially because of macroeconomic and the war that's been happening in Ukraine and Russia, where they've been diverting funds from education sector to other sectors. But outside of that, we're not seeing the same challenges in the North America business. But we're just generally being cautious 'cause you are seeing a lot of cautiousness just in the market overall. In general, if we look at just, software spend as a whole market, last quarter was one of the lowest quarters in the last two years. So internally, we're being a bit cautious, but we're not seeing any general signs of a market slowdown within our business. And Rob, what I would say is we're seeing a lot of focus and growth in the areas that we continue to strategically invest in. So when you look at where we've built up the business around analytics and AI, around application modernization and cloud, and around cybersecurity, we're continuing to see more and more demand there, and we're seeing nice growth across the business, specifically in North America. Right. As it says on the chart, 7.7% gross organic growth. That seems as though it's outgrowing the market, based on what I see. Would you agree with that statement? And, I mean, given that, I mean, why be more cautious on the back half? It seems like you're already outgrowing the market. So for the first half of the year, we did outgrow the market, but for the second half, for the things that I outlined, specifically around Germany and our U.K. operations, that did get hit in the second quarter because of the elections in U.K. And especially what happens with the new government in the U.K. from a government spending perspective, and then just the general market cautiousness. We prefer not to be optimistic in our guidance. We'd rather be cautious in our guidance, and based on the best data that we have available to us. Okay, that's great. Okay. This large deal that you highlighted, that's in the pipeline, that there's potential to close it in the year, if you close it, what impact would that have on your outlook? It would significantly be higher than what our current guidance is. It would probably put us in the range of our original guidance or even potentially exceed our original guidance, both on the gross profit perspective and from an Adjusted EBITDA perspective. The deal is, it's not a RFP. It's an existing customer that we have sold to many, many, many times before. The key risk items on that deal is the size and the timing. And even if the deal was to come in this quarter or next quarter, then the next question is, can we have it delivered to be able to recognize that revenue and the margin within that deal? And, and the deal could be small and could be very large, so the size is still something we're working through. Okay, and that strikes me as more conservatism as it relates to your guidance than in the past. Maybe if you talk about the way that you're thinking about providing guidance to the market, 'cause like I said, this does strike me as more conservative than we've seen in the past. Our goal is to provide guidance based on the best estimates we have internally, not based on a optimistic view of what could happen as the best-case scenario. We're providing as to what the likelihood scenario is, based on all the puts and takes we have internally. Okay. And then the other piece I would challenge the outlook is the plan to grow the sales force by 10%. So if the outlook on the back half of the year is maybe weaker than the first half, why continue to grow the sales force by 10%? Like, maybe give us some of the puts and takes around that. Sure. Yeah, so two things on that topic, right, is, as you're bringing on new experienced sellers, it takes you 6- 9- 12 months to get them ramped up, right? So you're not gonna generate a lot of GP in year one. You know, the goal is to break even year one, double that GP production in year two, and then get them off and running to be million-dollar producers year three and beyond. I think the second piece of that is, you know, as we look at continuing to increase the amount of sellers we have in the business, we're also taking out some of the lower performers at the same time, right? So offsetting some of the, the increase in new sellers to making sure that we're ramping up across the entire organization. Okay. Now, in the past, when you were consolidating a lot of the VARs and IT solutions vendors, you're actually acquiring existing or mature salespeople, experienced salespeople. So as you're going out in the market and looking to hire these people, do you have the proposition, the sales proposition to bring these salespeople in? Like, how is the quality of people that you're able to attract relative to your expectations? Yeah, one of the things we've prided ourselves on is culture, right? And we haven't lost a top producer since we acquired all these organizations. So the word on the street is that we are a great place to work, but also, when you look at the portfolio we've built up, we're able to go after some of our competition and say, "Come on board and drive the portfolio," right? Everything from analytics to AI, to cyber, to cloud, but not only that, it's really the strategic partnerships we have. When you look at our diversification across the vendors, that's a differentiator for us as well. So the sellers wanna make more money, so the opportunity for us to have that conversation and talk about what we're doing from a strategic perspective is what makes us unique. Okay. In the last quarter, the services business was a little bit weaker than expected. If you could give us maybe an overview of what happened in the services business? I think there were a couple different drivers there as well. Yeah, there were three different drivers that resulted in our services business decline last quarter. Number one was the three pillars I generally talk about are product services discipline as a number one pillar. So we reevaluated all the products and services we currently sell today, and for anything that was non-core, we made a decision to effectively divest those services. So we're no longer providing those services. That was one factor. Second one was related to resale of certain products and services, where we're reselling just managed services or professional services. We again made the decision to divest those sales, as we focus on more in-house professional services and managed services. The last driver was related to two large staff augmentation contracts or what we call our Talent Solutions, where we're effectively lending people on a contract basis to our customers, and those two contracts came to conclusion. This is, these are cyclical. As some of these customers do large projects, you'll see some of those that spend go up on talent contractors, and as they conclude, they either bring some of the spend in-house or complete the project and where we let go of those contractors as well. Okay. But aside from these three pillars, and overall, despite the overall decline, the practice areas that we are investing in, that Greg talked about, so these are AI, analytics, cybersecurity, cloud, and app mod, we did have double-digit growth in those practices. Right. So there was an intentional- Correct. A reduction in some part of the service. So what, what's the intent there? Is it, is it to drive margins, to provide better utilization? Is it to drive, more focus? What's the intent? All, all of the above. Yeah. All of the above. It's really making sure we can't be everything for everybody. It's really focusing on what we're good at and what we want to drive margin, and what, what are the areas that we internally want to be focused on and grow. And that's where we're looking at every single product and every single service we sell. If it doesn't make sense to do it, it might be a little profitable today, but if it's not a long-term strategic fit, then it doesn't make sense to do it. Hey, Rob, we talk a lot about focus and execution, right? So our ability to make sure we're focused on the right solutions moving forward, and we can execute on those. So we look at every practice, and we talk about investments, we talk about maintaining the business, and we talk about divestitures. And we'll continue to do that across the board to ensure we're bringing that right focus for our clients. Okay. You highlighted IP4G on the earnings call as an area of strength. Yeah. Haven't heard an update on that maybe in a while. Maybe just give us a sense of how that program's doing. Sure. So. What it is. Probably a lot of people don't know what it is. Yeah, I was just gonna say, for those that don't know, IP4G is IBM Power for Google. So a couple of years ago, we acquired some IP from IBM, and we partnered with both IBM and Google to be their go-to partner for all managed services, for any workloads that IBM clients are moving to the cloud. So for those that know IBM Power or IBM iSeries, the old AIX boxes, we have a lot of clients that are still using that technology on-premises. As they move to the cloud and move it to the Google GCP, the Google Cloud Platform, we are able to help them shift those workloads to the cloud. So it's driving professional services for us, it's driving managed services for us, and then it's driving cloud recurring revenue. We continue to see tremendous growth in that space. It continues to grow double digits for us. In the past two years, we've seen it grow significantly, and we still are in a lot of conversations. The other piece for us is it drives us into the larger enterprise accounts. So as we get into there, we can drive more of our professional services around AI, around app mod, and we continue to see that business grow significantly. Just to add to that, it is proprietary and exclusive IP for Google. There's nobody else that can help customers transition to Google Cloud for IBM Power other than us. All right. Now you've mentioned professional services and managed services. Maybe for the audience, just like, what is the difference, in, you know, Converge's context? What's the difference between those two things? Yes. So we talk a lot about our AIM strategy, advisory, implement, and managed. So professional services is on the advisory and implement side, right? That's where we're doing design thinking workshops, we're doing cloud readiness assessments, data modernization projects. That's all considered professional services. Managed services is when we have the SLA, and we're driving those services on a recurring basis month to month. Advisory and, and professional services tends to be more project-based, and that's really the difference for us. We're continuing, as we look across all of our practices, making sure we have offerings across the board, so we can be that end-to-end partner, where we're advising them on the right technology and what the right solution is for them. We can help them implement it and then manage it over time. Now, the professional services part of the business seems to me to be more volatile, shorter term. Managed services might be on multiyear contracts. Maybe you could talk about your preference. Like, where do you want the business to be weighted? Is professional services and some of these high-end offerings, is that good enough margins? If you just talk about the trade-off between those two things, Yeah. So, so we believe it's a combination of both, right? You wanna have the professional services 'cause that's really what differentiates you. You have the subject matter expertise, you can make the recommendations on what the right solutions are for our customers, and the margins are healthy, right? The margins are over 30% in that business. As you look at the managed services business, obviously, that gives you the steady recurring revenue, the consistent growth year-over-year, and that can be north of 35%-40% as you continue to drive more and more on the managed services side. So over time, we expect both to grow. We're putting the same amount of effort into driving both professional and managed services. Really no difference for us. We wanna drive that AIM strategy across all our solutions. Now, if you're getting more focused on the services in professional service, and utilization's getting better, like the margin structure and professional services should benefit over the next, I don't know, period. Maybe that's a question for you, Avjit. How do you think about that? That's correct. As we implement our new ERP system, it gives us more and more visibility into evaluating where our resources are being spent, where the time is being spent, what the utilization looks like, what practices, and so on. And we do expect to start realizing those benefits starting with second half of next year. Okay, that's a good segue over to the ERP system. You'd said it was on track on the earnings call, and not a lot of time has elapsed, but where is it today? It is still on track. Nothing has changed in five days now. The biggest risk remains is basically training our team members. We have over 600 team members across finance and operations, and this is getting them trained on the new system. Config is 100% complete. We've tested the system over the next 6 weeks. Now we're just in massive training, training, training phase, and still expecting to go live in October. Yeah, I know a lot of investors look at a new ERP system as a signal, like a red flag. What would you say to investors that think of, see that red flag as it relates to Converge? If done properly, it's not a red flag. A lot of companies don't go through the right process and the rigor to make sure it's tested properly, make sure you have multiple mock go-lives. So within our Converge philosophy, as part of our go-live, we're doing three different mock go-lives, so call it rehearsals as if you fully go live. So we're actually, we're doing four in total. So we're currently in our third mock go-live right now. We'll have our final mock go-live at the end of August, and mid-September, depending on how that mock go-live goes, we'll make the decision whether it's a go or a no-go. So it's just making sure you have the discipline and the rigor of doing multiple mock go-lives as practice runs before the real game happens is the key to success. Yeah, and Rob, I would say we look at it as an opportunity, right? When you think about the automation and the reporting that comes out of a new ERP system, we now have better access to data, right? So we can make faster business decisions. We can provide better customer experience by the automated invoicing and things of that nature. So it's a real big opportunity for us to continue to drive the business forward. And then the other piece, I think, would be that, that this is a company that had been very aggressive consolidator, and, the systems that were in place weren't sufficiently mature to manage all of that complexity. So this is a catch-up as well, I would think Is that. It’s a catch-up, and it allows us to build a platform for future acquisitions. This allows us to build a base and a platform for us to go on, do whether strategic or tuck-in acquisitions and be able to fold them onto our main platform. So this, this is our key success, not only for the past and giving us the data and consolidating from synergies perspective, but also for our go-forward future for acquisitions. Okay, we're at five minutes, so if there are any questions from the audience, you're running out of time. The Germany business has been under a lot of pressure. Can you give us the state of the union in Germany, how you're thinking of it as a management team, what levers you have to improve that business? Maybe just give us a summary of what's going on there. So it's predominantly a government business. We sell to the public sector and to the education sector in Germany. As you're all aware of all the challenges that are happening in Germany from a macroeconomic perspective and political perspective, that puts a lot of pressure on the government spending on and where we recur, we get a majority of our revenue from. A lot of the spending is also from DigitalPakt and end-user devices. When we bought these businesses, it was at the peak of end-user devices. There's obviously a lot of things have changed in the economy after that, and now we've been trying to stabilize the business. The way the government Germany business works is on framework agreements, and we continue to bid on and continue to win large framework agreements, but it takes time to recover. It takes time for you to mine those agreements. Once you win the agreement, you need to spend time mining those agreements, and it's over time. Generally, a lot of these framework agreements, you start off with low, low margin end-user devices. Once those devices get installed and sold, that's when the high profitable services businesses come through. So it'll just take time. And then, you'd said earlier that the expectation for end-user devices was challenged. So that would also be a challenge on Germany, I would think. So the opportunity to turn around that business isn't a short-term thing. Correct. Yeah, we've talked a lot about... In the first half, we saw end-user devices grow at single digits. Second half, we expect the same thing. We thought it was gonna be double digits in 2024, but we fully expect it to continue to ramp up as we head into 2025. Okay. At the beginning of the session, you suggested that there'd be an opportunity for M&A to start up again at some point in the future, I think you said after the ERP system is stabilized. What will you be looking for? What will the strategy around M&A be? You know, under Shaun, there was a very specific strategy around M&A. Yep. What should we expect? Yeah, so we will get back on the M&A path, and our focus is gonna be on continuing to build out our skills and capabilities, specifically primarily focused in North America for now, right? We wanna make sure we continue to invest in the right skills, the right solutions, and the right partnerships for our clients. So you'll see us really focus on the skills and the technical, professional, and managed services side of the house. We're also building a cookie-cutter model, where we can replicate the same model acquisition after acquisition. That goes from all the way from beginning as to how we build a pipeline, closing the deal, due diligence process, and how do we integrate, and that's our cookie-cutter approach that we'll be deploying. Okay, so more capabilities that they'd be smaller. Correct. likely benefiting the services business, is that- Correct. Okay. So you've been generating cash recently. Absolutely. Seen a lot of benefit from working capital. If you're not going to be active on M&A in the short run, what are you gonna do with the cash? It's the only two options available is pay down, continue reducing debt or buy back shares, and we've been aggressive on both. So just for this year alone, we paid over $50 million in debt, over $30 million in our contingent consideration liabilities from acquisitions, and we've also spent $50 million in buyback of shares, and we'll continue to have a good balance of both. You've been able to squeeze quite a bit of cash out of the working capital last couple of quarters. Is there more to come on that, or have you stabilized that? I'll repeat what Shaun always says: We've generated $375 million of cash over the last four quarters, and we've pretty much optimized our working capital at this point until we go on our ERP system. There might be a little bit more to squeeze, but I think we've squeezed a lot. Okay. I think, there's time for a question if there's anything from the audience. Just on that cash-