Pivot Technology Solutions Inc.

July 11, 2017 Technology IT Services Pivot Technology Solutions Inc. Reiterate Top Pick; H2 is Pivot s Stronger Half PTG-TSX: C$2.45 C$5.50 Target Event: We are reiterating PTG as one of our two top small cap picks for H217. All figures are in US$ unless otherwise noted. Projected Return: 124% Investment Thesis: With $1.5B in revenue and $29M in EBITDA (1.9% margins) expected in 2017, the Company is well-positioned to capitalize on growth in IT spending, with ~70% of revenue from Fortune 100 enterprises. In a very dynamic IT landscape, Pivot has managed to build a strong brand through successful differentiation, based on: (1) its multi-vendor service provider (MVSP) business model; (2) a strong focus on deep customer relationships (15-20+ years); (3) having embedded pre-sales engineers; (4) consistent delivery of quality; (5) operational and organizational reliability; and (6) innovation. PTG is well-positioned to pursue sustainable growth of profitability through leveraging its growing brand awareness, realizing integration synergies, expanding its product and service offerings, and pursuing growth in Canada. The recent acquisition of TeraMach provides the initial footprint to grow/acquire in Canada. From a seasonality perspective, the second half is normally Pivot s stronger half of the year; we are modelling 81% of 2017 EBITDA to be generated in Q3 and Q4, as a result of seasonal business patterns and enhanced cost savings driven by a focused management team and board. See our AGM update note here. With a payout ratio of ~25%, cash flows and dividend support are not an issue. Focus Points: A Leading VAR Few Investors have Heard of: With $1.5B in revenue and $29M in EBITDA (~1.9% margins) expected in 2017, the Company is well-positioned to capitalize on growth in IT spending, with ~70% of its revenue from Fortune 100 enterprises. Focused Management Team: With the arrival of new CEO Kevin Shank and new Chairman Wade Dawe, the management team is focused on fixing all the legacy issues, and positioning PTG for the next phase of growth to $2B in revenue over the next few years. Managed Services and Margin Expansion: We see EBITDA margins doubling from 2% to 4% over the next few years as PTG takes its higher-margin Managed Services business from ~11% of revenues today to 30%. The strategic value of Managed Services comes from: (1) closer client relationships driving increased share of IT spend wallet; (2) differentiation from the generic VAR box pusher ; (3) recurring revenue with typical three-year deals that provide better visibility and predictability; and (4) increased gross margins versus just hardware sales. We estimate every 1% increase in EBITDA % adds ~$2 in value to equity holders. Robust Cash Flow Profile: With a capex light model, PTG is positioned to continue paying a dividend, while paying down debt in the near-to-mid-term and looking for more acquisitions longer term. FCFPS in 2016 was $0.53, and we are modelling $0.52 for 2017 and $0.53 for 2018, implying a 2016, 2017, and 2018 FCF yield of 28%, 27%, and 28%, respectively. Secular Tailwinds: The secular trends play to Pivot s strengths: (1) higher IT spending; (2) greater IT complexity and innovation requires specialized expertise; (3) increased IT pressure for always on as platforms move to the cloud and provide more opportunity for Pivot s lifecycle support; and (4) broader IT supply chain rationalization is driving the need for scale. Gianluca Tucci 647.794.1926 gtucci@echelonpartners.com Page 1 of 5

Price (C$) Volume (M) Pivot Technology Solutions Inc. (PTG-TSX) July 11, 2017 Pivot Technology Solutions Inc. Tear Sheet (PTG-TSX, BUY, $5.50 PT) $3.00 $2.50 $2.00 $1.50 1.20 1.00 0.80 0.60 Company Description Current Return Pivot Technology Solutions, Inc. provides information technology services. It designs, sells, and supports information technology (IT) solutions w hich include hardw are, maintenance, and support. It Rating: Target: 5.50 124% also offers data centre, management, infrastructure management, systems architecture, technical Median: 5.50 124% services, and procurement/integration services. High: 5.50 124% Low : 5.50 124% $1.00 $0.50 $0.00 Jul/16 Sep/16 v/16 Jan/17 Mar/17 May/17 0.40 0.20 0.00 1 Hold 0 Sell 0 # of Ratings 1 Financial Summary/Key Metrics 2015 2016 Q117 Q217E Q317E Q417E 2017E 2018E 2019E 2020E Product Sales 1,315 1,315 291 343 344 392 1,371 1,439 1,511 1,587 Top Inst. Ownership % Held Service Revenues 160 155 38 41 38 44 162 172 180 190 Stanton Asset Managemen 1.0% Total Revenue 1,489 1,471 330 384 382 437 1,533 1,611 1,691 1,776 Redw ood Asset Managem 0.2% Growth y/y -1% -1% 3% 5% 10% 4% 5% 5% 5% Law rence Decter Investme 0.1% Gross Margin 11.4% 12.0% 10.3% 11.8% 12.0% 12.0% 11.6% 11.8% 11.8% 11.8% Adjusted EBITDA 31 25-2 7 10 14 29 45 59 71 Growth y/y -19% -207% -24% 51% 65% 14% 56% 31% 20% Fully Diluted IFRS EPS 0.07 (0.12) (0.10) 0.03 0.08 0.17 0.18 0.52 0.79 1.01 Growth y/y -268% 15% -770% -210% 203% -254% 190% 52% 28% Net Debt 149 158 109 147 143 143 143 127 100 66 Key Statistics Value CAPEX 6 2 1 1 1 1 3 4 3 2 52 Wk High 2.60 Top Ten Customers 51% 35% 38% 52 Wk Low 1.35 YTD Chg. 43% Balance Sheet 2015 2016 Q117 Q217E Q317E Q417E 2017E 2018E 2019E 2020E 1 Yr. Chg. 57% Cash & Equivalents 8 8 8 2 8 9 9 22 44 76 Beta - 0.08 Accounts receivable 266 300 243 283 281 322 322 338 355 373 Market Cap 99 Inventories 83 49 64 74 73 84 84 88 93 97 EV 244 Total Current Assets 387 391 344 388 392 444 444 478 521 575 Shares Outstanding 40 Growth y/y 1% 1% -3% 14% 13% 13% 8% 9% 10% LTM Dividend 0.16 Total Assets 496 496 450 492 493 544 544 574 616 667 Dividend Yield 6.5% Deferred revenue & customer deposit 34 39 39 11 11 13 13 13 14 15 Valuation 2016 2017E Accounts payable & accrued liabilitie 254 248 254 291 289 331 331 348 366 384 EV/Rev 0.13 0.12 Revolving credit facility 123 139 91 93 95 97 97 93 89 86 EV/EBITDA 7.4 6.5 Total Current Liabilities 445 452 407 419 418 463 463 478 492 508 P/E (16.3) 10.6 Total Liabilities 457 467 426 468 468 513 513 527 542 557 Total Liabilities & Shareholders' E 496 496 450 492 493 544 544 574 616 667 Comparables Price Target Div Yield Return Rev EBITDA EPS Multiples Analysis 1 Week 1 Month 3 Month YTD 1 Year 2016 2017 2016 2017 2016 2017 PTG-CA 2.45 5.50 6.5% -1% 17% 40% 43% 57% 1,471 1,533 25 29 (0.12) 0.18 TECD 104.76 0.0% 4% 3% 16% 24% 46% 26,235 34,981 387 707 6.36 9.71 CDW 62.36 1.0% 0% 1% 8% 20% 56% 13,982 14,805 1,107 1,168 3.43 3.84 SNX 120.70 0.8% 1% 5% 16% 0% 29% 14,062 15,717 519 634 7.04 8.41 NSIT 40.19 0.0% 1% -6% -3% -1% 57% 5,486 6,438 203 243 2.52 3.08 SCSC 39.65 0.0% -2% 3% 4% -2% 6% 3,540 3,545 117 118 2.71 2.76 Comparables FCF Yield EV/Rev EV/EBITDA P/E EV Multiples Analysis 2016 2017 2016 2017 2016 2017 2016 2017 PTG-CA 185 #N/A #N/A 0.1 0.1 7.4 6.4 #N/A 10.6 TECD 5,349 #N/A #N/A 0.2 0.2 13.8 7.6 16.5 10.8 CDW 13,626 6.8% 6.8% 1.0 0.9 12.3 11.7 18.2 16.3 SNX 5,568 #N/A #N/A 0.4 0.4 10.7 8.8 17.1 14.4 NSIT 1,821 #N/A #N/A 0.3 0.3 9.0 7.5 15.9 13.1 SCSC 1,059 4.0% 10.2% 0.3 0.3 9.0 9.0 14.6 14.4 Source: data - FactSet, Historical Data Company Filings, Forecasts/estimates Echelon Wealth Partners. Page 2 of 5

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The contents hereof are intended solely for the use of, and may only be issued or passed onto persons described in part VI of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2001. This report does not constitute an offer to sell or the solicitation of an offer to buy any of the securities discussed herein. Copyright: This report may not be reproduced in whole or in part, or further distributed or published or referred to in any manner whatsoever, nor may the information, opinions or conclusions contained in it be referred to without in each case the prior express written consent of Echelon Wealth Partners. ANALYST CERTIFICATION Company: Pivot Technology Solutions Inc. PTG:TSX I, Ralph Garcea, hereby certify that the views expressed in this report accurately reflect my personal views about the subject securities or issuers. 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Has the Analyst received any compensation from the subject company in the past 12 months? Is Echelon Wealth Partners Inc. a market maker in the issuer s securities at the date of this report? Issuer Yes Page 3 of 5

RATING DEFINITIONS Speculative Hold Sell The security represents attractive relative value and is expected to appreciate significantly from the current price over the next 12 month time horizon. The security is considered a BUY but in the analyst s opinion possesses certain operational and/or financial risks that are higher than average. The security represents fair value and no material appreciation is expected over the next 12-18 month time horizon. The security represents poor value and is expected to depreciate over the next 12 month time horizon. Under Review Tender Dropped Coverage While not a rating, this designates the existing rating and/or forecasts are subject to specific review usually due to a material event or share price move. Echelon Wealth Partners recommends that investors tender to an existing public offer for the securities in the absence of a superior competing offer. Applies to former coverage names where a current analyst has dropped coverage. Echelon Wealth Partners will provide notice to investors whenever coverage of an issuer is dropped. RATINGS DISTRIBUTION Recommendation Hierarchy Speculative Hold Sell Under Review Restricted Tender Number of recommendations 42 35 10 0 2 2 3 % of Total (excluding Restricted) 47% 39% 11% 0% 2% Number of investment banking relationships 11 14 0 0 0 2 0 % of Total (excluding Restricted) 44% 56% 0% 0% 0% PRICE CHART, RATING & PRICE TARGET HISTORY $6.00 $5.00 $4.00 $3.00 $2.00 $1.00 $0.00 Pivot Technology Solutions (TSX:PTG) Date Target (C$) Rating 21-Feb-17 $ 5.50 Price Target (C$) Coverage initiated: 02/21/2017 Data sourced from FactSet Page 4 of 5

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