*******
*** *****'* ********* ***** *** ******** outlook -** ***** *, **** ***** ********** **-**** ****** ************ ***** ****. *** ****** ******* is *** ******** ********* *** ** purchased ** *** $***, ******** ** and ******* ** ******. ********* ** the ****** ******* ********* ** **** sharing *** ******** ******.
Revenue ********* '** ***** **%'
**********'* ******* ** ******** ** ******* at ***** **% **** ****, *** Moody's ****** *******:
** ****** * ******** ** **** of **********’* ************ ****** ******-***** ******* 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]
************** ***** **** ******* ***'**** *** ** $*.* ******* *******'. Comparatively, ***** ********* **** ** **** ~20% ** **** ****** * *******:
*****'* ******* *** ******* ** ******** 2020 ******** ** ************* $*.* *******.
*** **** ******* ******** ********* ******* on *** *** *********** ****** ***** out.
Covenant *** ********* *********** *****
*************, **** ****** ******* **** ********* revenue, ********** *** ******* **** *********** due ** *** ***** **** ****. Moody's **** ** *** **** **** (the **** ****** ****** ***** *** $52 ******* *** *** ** ** 2019) *** *** * $** ******* revolver ***** ** ********* ***** *********** hit. *** **** ******* ******* ******* since ***********, **** ** ******* ****** pressure ** ***** ****.
*****'* ******** *** ******** ********* ****:
*** ****** ********* *** * ****** financial ********: * ******, *.******* *** *****-**** *************** ******** ** *** ******** ****. The ******** ** ********* ** ******** borrowings ****** **% (***** $** *******) of *** **********....
**********’* ************* $*** ******* ** (********* 2019) *****-**** **** **** ****, **** the $** ******* ********
********** *** **** *** * ******** of *** $** ******* ******** ****** it ********* * $***+ ******* ****** EBITDA *** **** (*.*., ** ******** the *.** ***** ****** ** *** first **** ** $*** *******). *** problem ** **** ******* ********* *** significant ***** ***** **** *** **** to ***, ********** *********** ****** ** the ***** ** *** **** ** very ****.
Pay ****, ********* *** '******** ****'
*************** *** ************ ****** *********** ************* **% ******* *** ******** ********* plus ******** ** ********** *******, *****'* described ** **** **********:
*** ******* *** ***** ******* ** reduce ******** ***** *** *** ********* discretionary ****** *** ********* ********.
***** **** *** ********** ********* **** the *********** ** **********'* ********** *** bondholders ** ****** *** **** ******** and *** *** *** ** ****.
Cash ********* / ******* *** ****
** **** ***, *****'* ** ********** that, **** ***** ******** ****, ********** will *** *** *** ** ****:
**** ****** ******* *** ******* ******* a **** **** ** ***** **** cash ***** *** ** ********* ** best.
** ********** **** *** *** ** cash, **** **** **** $** ******* left ** **** ** *** ******* risking ********** *** ********, ***** ** just *.*% ** * *******-****** ******* company.
Re-Occuring ** *********
* ******** **** *****'* ****** *** now *** *** ***** ** ***** a *******-***** ********:
********** ** ** **** *** ** the *******-***** ****** ** ******** ************ projects *** *** ******* **** ** recurring, ********- ** ************-***** ******** **** would ********* ******* ******* ******* *** delays *** *************.
***** **** ** ******* ******* *** system ***********, *****'* ********* ** **** emphasize ****:
*** *****'* ******* *** *** ********** credit ****** ******** ****'* ******** ** this, ****** *** **** ****** *********** between '**-********' *** '*********':
****’* *** * *************. **’* **** that *****’* * ****** ********** ******* “re-occurring” *** “*********” ******* ******. ********* revenue ******, **** ************-***** **** *** software *** ***** ** ********* *** alarm-monitoring *********, *** **** ********* *** more **********, ***** ****’** ******** *****. Contracts *** ********* ****-**** *** **** provide **** ******* ********** ** *** year. **********, *******, **** *** **** 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]
***** **** ** *** *** ** virtually *** ******** ***********, ** ***** of ******, **** ** *** ******* of ****** **** ** ****. ******** can *** **** ** *********** *********, indefinitely, ***** *** ******** ** **** than * ****. **** **** ******* financial ******** **** **** ******** ***** needs ** ** ****.
No **** ************ *** *** **** ***** ******
****** *** ****, *****'* **** **** acquisitions *** ** ****:
** ** ****** ** ******** *****, it *** **** ****** ** *** historically ****** *********** *******
** ****** *** ******* ** **** them ********** ** ***** **** ** order ** ******** *****.
$2.3 ******* ** ****
***** ** ****, **********'* **** ******** $2.3 ******* ****** ******* ** ****, a **** ** ~**%, ***** ** the ******* ***** **** ** ****:
** ********, *** *** **** ******* down ********** *****'* ********** ** ******* falling **** **** ****'* '**** *** of $*.* *******' ** ~$* *******.
***** **** ** ******* ** $*+ billion, **** **** ***** **** ~$*** million ** * *******, *** ** least **** ***** ** ************ - what ********** *** ******** ** ** 10% *******, **% *********** **** ****.
Outlook **** - ****
*** *********** ********* ** ** ******** and ******* **** *********** **** ******* any *******'* ******* **** ** ** 2023 ** *********.
*******, ** ****** ********** **** ** challenged ** ******** *** ~$*.* ******* revenue ***** **** ******* **** ****. The ******* ****** ** *** ****** in *** **** *******. ********** *** great ****** ********* ** **** ********* during *** **** *****. **** **** now *********** ***** *** ** **** and ** **** ** ********* *** them ** ****** *********** **** **** levels ** * ********* ** ****-********* phase. ******* **** **** *** ********** of *********** *** ****** ** ********* they **** ******** *** *** ***** scale **** **** *******, ***** ********* of ****** *** ** ******** **** a ***** ** ****** ** **.
Vote / ****
Comments (28)
John Honovich
Here are the 2 Moody's links - Convergint Moody's press release and Convergint Moody's credit opinion (paywalled). As we said in the post, we bought and reviewed the full credit opinion but the license does not allow sharing it. Our archiver won't let us post the links in the report body but we'll fixed this and add to the body of the report later today.
Btw, here is the LinkedIn thread where Convergint employees vent their anger at IPVM. I genuinely find it insightful to understand their mindsets and that most of them have an extremely poor understanding of economics. On the plus side, their anger shows the strength of Convergint culture, which will help them in this crisis.
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Undisclosed Integrator #3
Full disclosure up front: I am not Convergint. I am a competitor, who rarely sees them in our marketplace, so this article has little bearing on my business.
I found this article actually just stating the facts from Moody's and explaining them with simple and understandable explanations that most can understand. I must admit that reading a Moody's report even with a degree in business can be confusing.
My company has been on the good and bad side of IPVM. While I agree sometimes they poke the bear, they always seem to find the underlying truth of the matter.
Convergint folks.... what do they gain if they effect your business positively or negatively?
To infinity and beyond <--I felt I needed a catch phrase since everyone else had one... sorry too much quarantine with kids.
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Undisclosed Manufacturer #4
Do a search for ADT and you will see IPVM spreads the love just fine. I know it is hard not to feel picked on by IPVM when the company you love is part of a negative article, but I learned long ago that it is a waste of time and energy to worry about it and write comments as you did.
Check out Investor, Bloomberg, Seeking Alpha, Motley Fool or your favorite investing blog website and there are thousands of articles just like this one informing the audience of revised projections and the reasons why (and they all have "sensationalist" headlines). It's nothing personal, I don't think I've ever read a negative comment about Convergint on IPVM, you are in good shape and this article won't change that.
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Undisclosed Manufacturer #6
I am not Convergint and I'm not a competitor either. In fact, I really don't have a dog in this fight. What I find interesting is the business economics. This report is about Convergint, but it could be about a bunch of other businesses, regardless of their industry. It's not how we run our business, but it gives me insight into how some other companies operate. Obviously this isn't a low light camera test, but it is factual reporting on something that not only impacts our industry, but also business in general.
I get it's not fun to be the subject of the examination, but at the same time, I think it's valuable to read and learn from.
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Geoffrey King
I can't comment on the financial aspect of Convergint as there is so much uncertainty going on right now, but I just wanted to comment about the culture of Convergint. In my opinion, their culture is very admirable to say the least. They have incredible camaraderie within each branch and even across their branches.
I have worked with many Convergint team members throughout my career, some of which I would put at the very top of their class. At the end of the day, relationships are big part of this business (any business really) and that is something they do very well.
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Undisclosed End User #9
I've been following this and many other posts that come from IPVM. Holding back on commentary is my usual MO however, the Videos, comments by Convergint folks and what is written in places such as Glass Door Reviews and Indeed Reviews, at least raise an eyebrow? I don't think the challenge should be to the writers at IPVM; I think you owe to yourselves in the world of Convergint to challenge the Leadership you have rallied for? I also don't know what it means when the sign-off's are "I am Convergint"?? You all have identities that appear to be second....or third, to a privately owned Corporation? Without you, the person, the Corporation has nothing. No company has a perfect structure and no company is safe in these unprecedented times (stating the obvious), but when we are asked to take financial hits while working for large International organizations, albeit that the bosses followed suit to some extent, taking a moment to assess yours and the Corporation's future might be worthwhile. Just saying...
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Undisclosed #10
Short answer from what I have seen Convergint that there are some Offices or "CTC's" that will do really well ( the ones near Pharma, and national'/global chains), in fact there are 5 CTC's that I have seen maintain or pick up more work since the death flu as appeared, others will have to be cut.
however not every CTC is pulling their weight ( more importantly certain positions within those CTC's), and due the structure of Convergint Those are the ones are most likely going to be cut.
I will say its not just Convergint suffering these issues. all of the other integrators in my area are getting hit too. From the small local guys to JCI, ADT as well. They are trimming staff back to the just bread winners and not to many helpers floating around.
If this drags out like I think it will Convergint will have to restructure how they do things, along with every other company out there. like everyting else out there when the next round of free monopoly money gets handed out I expect them to get some along with quite a few others.
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Undisclosed #11
Is Convergint day postponed? Could a wood chuck chuck wood if a wood chuck CHOKES?
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Undisclosed #2
Moody's Blues...
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Undisclosed Manufacturer #13
There are a lot of amazing people at Convergint and it is unfortunate that so many are suffering due to this. It is frustrating to see the situation that has arisen. COVID is the driver for the economical state we are in, but historically, we were overdue for down turn aside from the pandemic. Debt loading during a time that historical trends showed a correction was due was a high risk gamble. A focus on building recurring revenue should have been the focus while the economy was hot to help weather inevitable storms. Unfortunately, a lot of orgs won't increase that focus because of short-term hits on the books. However, it would have been the right decision for the company and the employees. By no means did anyone expect a global pandemic but there were other economic factors that should have kept the org from taking on so much debt.
Hoping for the best for everyone affected. There are a lot of families having to make hard decisions right now and I'm sure that even Convergint's competitors don't want to see that.
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John Honovich
Convergint has a new video giving an update on their business. There are no quantitative nor metrics given about the business but certainly good video to keep people's spirits up top.
Of the 5 speakers, Sean Flint presenting for the US was the most confident:
He declared:
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Undisclosed Manufacturer #12
If you were faced with a decision of taking a job offer somewhere else (I still see Ziprecruiter send out regular emails about job postings) or staying with Convergint, would you not want to know the full story of about the health of the company you are working for?
If you were looking to invest money in the security industry and bonds related to Convergint came up, would you not want news about that company that would help in your decision?
Do you know who else loved their company and stuck with it right to the very end? Enron employees. Now sorry, I'm not trying to equate Convergint with Enron, but I am trying to make a point, it's nice to like the company you work for, but you should never, ever marry your job. You will find it a fickle mate. That's any company.
Out of curiosity, and I don't know but maybe IPVM does or can find out, how much of employees retirement plans at Convergint are tied up in company stock? And if in Convergint stock, what are the options for having Convergint stock converted for other stock or fund options in the retirement plan? Point being, if your retirement plan is heavily vested in company stock, would you not want to know the true financial health of the company so you could decide where to move your money?
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