Convergint Outlook Turns Negative

*******

*** *****'* ********* ***** the ******** ******* -** ***** *, **** press ********** **-**** ****** ************ ***** ****. *** credit ******* ** *** publicly ********* *** ** purchased ** *** $***, reviewed ** *** ******* it ******. ********* ** the ****** ******* ********* us **** ******* *** document ******.

Revenue ********* '** ***** **%'

**********'* ******* ** ******** to ******* ** ***** 10% **** ****, *** Moody's ****** *******:

** ****** * ******** in **** ** **********’* historically ****** ******-***** ******* growth ****, ** *decline ** ** ***** **%, and some margin pressure, resulting in higher Moody’s-adjusted debt-to-EBITDA leverage between 9.0 and 10.5 times. [emphasis added]

************** ***** **** ******* was'**** *** ** $*.* billion *******'. *************, ***** forecasts **** ** **** ~20% ** **** ****** a *******:

*****'* ******* *** ******* to ******** **** ******** of ************* $*.* *******.

*** **** ******* ******** certainly ******* ** *** the *********** ****** ***** out.

Covenant *** ********* *********** *****

*************, **** ****** ******* with ********* *******, ********** has ******* **** *********** due ** *** ***** junk ****. *****'* **** it *** **** **** (the **** ****** ****** given *** $** ******* for *** ** ** 2019) *** *** * $75 ******* ******** ***** it ********* ***** *********** hit. *** **** ******* falling ******* ***** ***********, this ** ******* ****** pressure ** ***** ****.

*****'* ******** *** ******** mechanics ****:

*** ****** ********* *** a ****** ********* ********: a ******, *.******* *** *****-**** *************** ******** ** *** revolver ****. *** ******** is ********* ** ******** borrowings ****** **% (***** $26 *******) ** *** commitment....

**********’* ************* $*** ******* of (********* ****) *****-**** term **** ****, **** the $** ******* ********

********** *** **** *** a ******** ** *** $75 ******* ******** ****** it ********* * $***+ million ****** ****** *** rate (*.*., ** ******** the *.** ***** ****** of *** ***** **** of $*** *******). *** problem ** **** ******* declining *** *********** ***** costs **** *** **** to ***, ********** *********** EBITDA ** *** ***** of *** **** ** very ****.

Pay ****, ********* *** '******** ****'

*************** *** ************ ****** significant ************* **% ******* *** salaried ********* **** ******** of ********** *******, *****'* described ** **** **********:

*** ******* *** ***** quickly ** ****** ******** costs *** *** ********* discretionary ****** *** ********* expenses.

***** **** *** ********** necessary **** *** *********** of **********'* ********** *** bondholders ** ****** *** bond ******** *** *** run *** ** ****.

Cash ********* / ******* *** ****

** **** ***, *****'* is ********** ****, **** those ******** ****, ********** will *** *** *** of ****:

**** ****** ******* *** company ******* * **** 2020 ** ***** **** cash ***** *** ** breakeven ** ****.

** ********** **** *** out ** ****, **** only **** $** ******* left ** **** ** tap ******* ******* ********** the ********, ***** ** just *.*% ** * billion-dollar ******* *******.

Re-Occuring ** *********

* ******** **** *****'* called *** *** *** the ***** ** ***** a *******-***** ********:

********** ** ** **** due ** *** *******-***** nature ** ******** ************ projects *** *** ******* lack ** *********, ********- or ************-***** ******** **** would ********* ******* ******* against *** ****** *** cancellations.

***** **** ** ******* obvious *** ****** ***********, Moody's ********* ** **** emphasize ****:

*** *****'* ******* *** the ********** ****** ****** answered ****'* ******** ** this, ****** *** **** subtle *********** ******* '**-********' and '*********':

****’* *** * *************. It’s **** **** *****’* a ****** ********** ******* “re-occurring” *** “*********” ******* models. ********* ******* ******, like ************-***** **** *** software *** ***** ** companies *** *****-********** *********, are **** ********* *** more **********, ***** ****’** contract *****. ********* *** typically ****-**** *** **** provide **** ******* ********** in *** ****. **********, however, **** *** **** recurring ********-***** ********. ***revenues *** “**-*********”, ** **** **** ****** ********** **** *** **** ********, *** **** *** **** **** ******* **** ************-***** ********. Each installation job is in effect a one-off project that does not in itself provide for an assured, future revenue stream the way a subscription contract does. That being said, each ************ *** ** **** ** *********** ** ***** * ****** ******* ************ **** * ******** so that that customer would use Convergint again in another project. Convergint seeks to grow along with its customers as they grow. [emphasis added]

***** **** ** *** aim ** ********* *** security ***********, ** ***** of ******, **** ** the ******* ** ****** lots ** ****. ******** can *** **** ** immediately *********, ************, ***** for ******** ** **** than * ****. **** puts ******* ********* ******** when **** ******** ***** needs ** ** ****.

No **** ************ *** *** **** ***** ******

****** *** ****, *****'* says **** ************ *** on ****:

** ** ****** ** conserve *****, ** *** also ****** ** *** historically ****** *********** *******

** ****** *** ******* to **** **** ********** in ***** **** ** order ** ******** *****.

$2.3 ******* ** ****

***** ** ****, **********'* plan ******** $*.* ******* annual ******* ** ****, a **** ** ~**%, shown ** *** ******* right **** ** ****:

** ********, *** *** line ******* **** ********** Moody's ********** ** ******* falling **** **** ****'* 'just *** ** $*.* billion' ** ~$* *******.

***** **** ** ******* to $*+ *******, **** like ***** **** ~$*** million ** * *******, was ** ***** **** based ** ************ - what ********** *** ******** to ** **% *******, 10% *********** **** ****.

Outlook **** - ****

*** *********** ********* ** so ******** *** ******* that *********** **** ******* any *******'* ******* **** be ** **** ** difficult.

*******, ** ****** ********** will ** ********** ** maintain *** ~$*.* ******* revenue ***** **** ******* last ****. *** ******* driver ** *** ****** in *** **** *******. Convergint *** ***** ****** advantage ** **** ********* during *** **** *****. They **** *** *********** maxed *** ** **** and ** **** ** difficult *** **** ** access *********** **** **** levels ** * ********* or ****-********* *****. ******* that **** *** ********** of *********** *** ****** of ********* **** **** acquired *** *** ***** scale **** **** *******, their ********* ** ****** may ** ******** **** a ***** ** ****** as **.

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