TORONTO, Aug. 09, 2024 (GLOBE NEWSWIRE) — Constellation Software Inc. (TSX:CSU) (“Constellation” or the “Company”) today announced its financial results for the second quarter ended June 30, 2024 and declared a $1.00 per share dividend payable on October 10, 2024 to all common shareholders of record at close of business on September 20, 2024. This dividend has been designated as an eligible dividend for the purposes of the Income Tax Act (Canada). Please note that all dollar amounts referred to in this press release are in U.S. Dollars unless otherwise stated.
The following press release should be read in conjunction with the Company’s Unaudited Condensed Consolidated Interim Financial Statements for the three and six months ended June 30, 2024 and the accompanying notes, our Management Discussion and Analysis for the three and six months ended June 30, 2024 and with our annual Consolidated Financial Statements, prepared in accordance with International Financial Reporting Standards (“IFRS”) and our annual Management’s Discussion and Analysis for the year ended December 31, 2023, which can be found on SEDAR+ at www.sedarplus.com and on the Company’s website www.csisoftware.com. Additional information about the Company is also available on SEDAR+ at www.sedarplus.com.
Q2 2024 and Subsequent Headlines:
Revenue grew 21% (2% organic growth, 3% after adjusting for changes in foreign exchange rates) to $2,468 million compared to $2,039 million in Q2 2023.Net income attributable to common shareholders increased 71% to $177 million ($8.35 on a diluted per share basis) from $103 million ($4.88 on a diluted per share basis) in Q2 2023.A number of acquisitions were completed for aggregate cash consideration of $451 million (which includes acquired cash). Deferred payments associated with these acquisitions have an estimated value of $173 million resulting in total consideration of $624 million.Cash flows from operations (“CFO”) were $265 million, an increase of 116%, or $143 million, compared to $123 million for the comparable period in 2023.Free cash flow available to shareholders1 (“FCFA2S”) increased $168 million to $182 million compared to $14 million for the same period in 2023.
Total revenue for the quarter ended June 30, 2024 was $2,468 million, an increase of 21%, or $430 million, compared to $2,039 million for the comparable period in 2023. For the first six months of 2024 total revenues were $4,822 million, an increase of 22%, or $864 million, compared to $3,958 million for the comparable period in 2023. The increase for both the three and six month periods compared to the same periods in the prior year is primarily attributable to growth from acquisitions as the Company experienced organic growth of 2% and 3% respectively, 3% for both periods after adjusting for the impact of changes in the valuation of the US dollar against most major currencies in which the Company transacts business. Organic growth is not a standardized financial measure and might not be comparable to measures disclosed by other issuers.
Net income attributable to common shareholders of CSI for the quarter ended June 30, 2024 was $177 million compared to $103 million for the same period in 2023. On a per share basis this translated into a net income per diluted share of $8.35 in the quarter ended June 30, 2024 compared to net income per diluted share of $4.88 for the same period in 2023. For the six months ended June 30, 2024, net income attributable to common shareholders of CSI was $282 million or $13.31 per diluted share compared to $198 million or $9.32 per diluted share for the same period in 2023.
For the quarter ended June 30, 2024, CFO increased $143 million to $265 million compared to $123 million for the same period in 2023 representing an increase of 116%. For the first six months of 2024, CFO increased $247 million to $1,002 million compared to $755 million during the same period in 2023, representing an increase of 33%.
For the quarter ended June 30, 2024, FCFA2S increased $168 million to $182 million compared to $14 million for the same period in 2023. For the six months ended June 30, 2024, FCFA2S increased $161 million to $628 million compared to $467 million for the same period in 2023 representing an increase of 34%.
Forward Looking Statements
Certain statements herein may be “forward looking” statements that involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of Constellation or the industry to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Forward looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not such results will be achieved. A number of factors could cause actual results to vary significantly from the results discussed in the forward looking statements. These forward looking statements reflect current assumptions and expectations regarding future events and operating performance and are made as of the date hereof and Constellation assumes no obligation, except as required by law, to update any forward looking statements to reflect new events or circumstances.
Non-IFRS Measures
Free cash flow available to shareholders ‘‘FCFA2S’’ refers to net cash flows from operating activities less interest paid on lease obligations, interest paid on debt, debt transaction costs, payments of lease obligations, the IRGA / TSS membership liability revaluation charge, and property and equipment purchased, and includes interest and dividends received, and the proceeds from sale of interest rate caps. The portion of this amount applicable to non-controlling interests is then deducted. We believe that FCFA2S is useful supplemental information as it provides an indication of the uncommitted cash flow that is available to shareholders if we do not make any acquisitions, or investments, and do not repay any debts. While we could use the FCFA2S to pay dividends or repurchase shares, our objective is to invest all of our FCFA2S in acquisitions which meet our hurdle rate.
FCFA2S is not a recognized measure under IFRS and, accordingly, readers are cautioned that FCFA2S should not be construed as an alternative to net cash flows from operating activities.
The following table reconciles FCFA2S to net cash flows from operating activities:
Three months ended
June 30, Six months ended
June 30, 2024 2023 2024 2023 ($ in millions) ($ in millions) Net cash flows from operating activities 265 123 1,002 755 Adjusted for: Interest paid on lease obligations (3)(3) (7)(5) Interest paid on debt (37)(36) (78)(62) Proceeds from sale of interest rate cap – 6 – 6 Debt transaction costs (2)(1) (13)(3) Payments of lease obligations (29)(28) (58)(53) IRGA / TSS membership liability revaluation charge (8)(31) (89)(69) Property and equipment purchased (13)(9) (23)(19) Interest and dividends received 9 0 15 1 182 21 749 550 Less amount attributable to Non-controlling interests 1 (7) (121)(83) Free cash flow available to shareholders 182 14 628 467 Due to rounding, certain totals may not foot.
About Constellation Software Inc.
Constellation’s common shares are listed on the Toronto Stock Exchange under the symbol “CSU”. Constellation acquires, manages and builds vertical market software businesses.
For further information:
Jamal Baksh
Chief Financial Officer
(416) 861-9677
info@csisoftware.com
www.csisoftware.com
SOURCE: CONSTELLATION SOFTWARE INC.
CONSTELLATION SOFTWARE INC.
Condensed Consolidated Interim Statements of Financial Position(In millions of U.S. dollars, except per share amounts. Due to rounding, numbers presented may not foot.) Unaudited June 30, 2024December 31, 2023June 30, 2023 Assets Current assets: Cash$1,873 $1,284 $970 Accounts receivable 1,117 1,144 976 Unbilled revenue 429 326 308 Inventories 60 51 57 Other assets 618 544 460 4,097 3,349 2,770 Non-current assets: Property and equipment 210 142 129 Right of use assets 315 312 286 Deferred income taxes 191 107 91 Other assets 312 286 189 Intangible assets 6,992 6,675 5,703 8,019 7,523 6,399 Total assets$12,116 $10,873 $9,169 Liabilities and Shareholders’ Equity Current liabilities: Debt with recourse to Constellation Software Inc.$274 $861 $734 Debt without recourse to Constellation Software Inc. 342 225 283 Redeemable preferred securities – 814 500 Accounts payable and accrued liabilities 1,308 1,433 1,083 Dividends payable 21 21 21 Deferred revenue 2,079 1,757 1,869 Provisions 11 9 11 Acquisition holdback payables 277 172 148 Lease obligations 113 112 98 Income taxes payable 104 88 79 4,528 5,492 4,827 Non-current liabilities: Debt with recourse to Constellation Software Inc. 1,834 863 614 Debt without recourse to Constellation Software Inc. 1,604 1,385 795 Deferred income taxes 622 603 503 Acquisition holdback payables 112 86 104 Lease obligations 240 236 217 Other liabilities 272 246 240 4,685 3,420 2,474 Total liabilities 9,213 8,911 7,300 Shareholders’ equity: Capital stock 99 99 99 Accumulated other comprehensive income (loss) (158) (99) (112) Retained earnings 2,517 1,876 1,547 Non-controlling interests 445 85 335 2,903 1,961 1,868 Total liabilities and shareholders’ equity$12,116 $10,873 $9,169
CONSTELLATION SOFTWARE INC.
Condensed Consolidated Interim Statements of Income (loss)(In millions of U.S. dollars, except per share amounts. Due to rounding, numbers presented may not foot.) Unaudited Three months ended June 30, Six months ended June 30, 2024 2023 2024 2023 Revenue License$87 $89 $175 $170 Professional services 495 428 964 840 Hardware and other 68 63 127 121 Maintenance and other recurring 1,819 1,459 3,556 2,828 2,468 2,039 4,822 3,958 Expenses Staff 1,328 1,112 2,620 2,179 Hardware 37 36 72 71 Third party license, maintenance and professional services 243 199 458 384 Occupancy 16 13 30 26 Travel, telecommunications, supplies, software and equipment 133 97 245 185 Professional fees 44 36 83 71 Other, net 51 29 101 67 Depreciation 45 40 89 79 Amortization of intangible assets 258 213 500 406 2,155 1,774 4,197 3,469 Foreign exchange loss (gain) 4 16 (15) 26 IRGA/TSS Membership liability revaluation charge 8 31 89 69 Finance and other expense (income) (23) (2) (32) (9)Bargain purchase gain (2) 0 (5) (1)Impairment of intangible and other non-financial assets 6 1 16 3 Redeemable preferred securities expense (income) – 94 58 282 Finance costs 69 46 136 82 61 186 247 453 Income (loss) before income taxes 252 79 378 36 Current income tax expense (recovery) 143 114 270 217 Deferred income tax expense (recovery) (78) (61) (153) (123)Income tax expense (recovery) 65 53 117 93 Net income (loss) 187 26 261 (57) Net income (loss) attributable to: Common shareholders of Constellation Software Inc. 177 103 282 198 Non-controlling interests 10 (78) (21) (255)Net income (loss) 187 26 261 (57) Earnings per common share of Constellation Software Inc. Basic and diluted$8.35 $4.88 $13.31 $9.32
CONSTELLATION SOFTWARE INC.Condensed Consolidated Interim Statements of Comprehensive Income (loss)(In millions of U.S. dollars, except per share amounts. Due to rounding, numbers presented may not foot.) Unaudited Three months ended June 30, Six months ended June 30, 2024 2023 2024 2023 Net income (loss)$187 $26 $261 $(57) Items that are or may be reclassified subsequently to net income (loss): Foreign currency translation differences from foreign operations and other, net of tax (14) 15 (62) 31 Other comprehensive income (loss), net of income tax (14) 15 (62) 31 Total comprehensive income (loss)$173 $41 $198 $(26) Total other comprehensive income (loss) attributable to: Common shareholders of Constellation Software Inc. (13) 15 (53) 26 Non-controlling interests (1) 0 (9) 6 Total other comprehensive income (loss)$(14) $15 $(62) $31 Total comprehensive income (loss) attributable to: Common shareholders of Constellation Software Inc. 164 118 229 223 Non-controlling interests 9 (77) (30) (249)Total comprehensive income (loss)$173 $41 $198 $(26)
CONSTELLATION SOFTWARE INC.
Condensed Consolidated Interim Statement of Changes in Equity(In millions of U.S. dollars, except per share amounts. Due to rounding, numbers presented may not foot.) Unaudited Six months ended June 30, 2024 Equity Attributable to Common Shareholders of CSI Capital stockAccumulated other comprehensive income (loss)Retained earningsTotal Non-controlling interestsTotal equity Balance at January 1, 2024$ 99$ (99)$ 1,876 $ 1,877 85 $ 1,961 Total comprehensive income (loss): Net income (loss) – – 282 282 (21) 261 Other comprehensive income (loss) Foreign currency translation differences from foreign operations and other, net of tax – (53) – (53) (9) (62) Total other comprehensive income (loss) – (53) – (53) (9) (62) Total comprehensive income (loss) – (53) 282 229 (30) 198 Transactions with owners, recorded directly in equity Non-controlling interests arising from business combinations – – – – (0) (0) Conversion of Lumine Special Shares to subordinate voting shares of Lumine and settlement of accrued dividend on Lumine Special Shares through the issuance of subordinate voting shares of Lumine – – – – 872 872 Conversion of Lumine Preferred Shares to subordinate voting shares of Lumine and settlement of accrued dividend on Lumine Preferred Shares through the issuance of subordinate voting shares of Lumine (6) 400 394 (394) – Other movements in non-controlling interests – – 1 1 (1) (0) Dividends paid to non-controlling interests – – – – (86) (86) Dividends to shareholders of the Company – – (42) (42) – (42) Balance at June 30, 2024$ 99$ (158)$ 2,517 $ 2,458 $ 445 $ 2,903
CONSTELLATION SOFTWARE INC.
Condensed Consolidated Interim Statement of Changes in Equity(In millions of U.S. dollars, except per share amounts. Due to rounding, numbers presented may not foot.) Unaudited Six months ended June 30, 2023 Equity Attributable to Common Shareholders of CSI Capital stockAccumulated other comprehensive income (loss)Retained earningsTotalNon-controlling interestsTotal equity Balance at January 1, 2023$ 99$ (150)$ 1,763 $ 1,713 $ 221 $ 1,933 Total comprehensive income (loss): Net income (loss) – – 198 198 (255) (57) Other comprehensive income (loss) Foreign currency translation differences from foreign operations and other, net of tax – 26 – 26 6 31 Total other comprehensive income (loss) – 26 – 26 6 31 Total comprehensive income (loss) – 26 198 223 (249) (26) Transactions with owners, recorded directly in equity Special dividend of Lumine Subordinate Voting Shares – 12 (378) (366) 366 – Acquisition of non-controlling interests – – – – (1) (1) Conversion of Lumine Special Shares to subordinate voting shares of Lumine – – – – 4 4 Other movements in non-controlling interests – 0 6 6 (6) 0 Dividends to shareholders of the Company – – (42) (42) – (42) Balance at June 30, 2023$ 99$ (112)$ 1,547 $ 1,533 $ 335 $ 1,868
CONSTELLATION SOFTWARE INC.
Condensed Consolidated Interim Statements of Cash Flows(In millions of U.S. dollars, except per share amounts. Due to rounding, numbers presented may not foot.) Unaudited Three months ended June 30, Six months ended June 30, 2024 2023 2024 2023 Cash flows from (used in) operating activities: Net income (loss)$187 $26 $261 $(57) Adjustments for: Depreciation 45 40 89 79 Amortization of intangible assets 258 213 500 406 IRGA/TSS Membership liability revaluation charge 8 31 89 69 Finance and other expense (income) (23) (2) (32) (9) Bargain purchase (gain) (2) 0 (5) (1) Impairment of intangible and other non-financial assets 6 1 16 3 Redeemable preferred securities expense (income) – 94 58 282 Finance costs 69 46 136 82 Income tax expense (recovery) 65 53 117 93 Foreign exchange loss (gain) 4 16 (15) 26 Change in non-cash operating assets and liabilities exclusive of effects of business combinations (174) (238) 34 30 Income taxes paid (177) (158) (245) (249) Net cash flows from (used in) operating activities 265 123 1,002 755 Cash flows from (used in) financing activities: Interest paid on lease obligations (3) (3) (7) (5) Interest paid on debt (37) (36) (78) (62) Proceeds from sale of interest rate cap – 6 – 6 Increase (decrease) in CSI facility – 240 (578) 189 Increase (decrease) in Topicus revolving credit debt facility without recourse to CSI (21) 49 92 38 Proceeds from issuance of Senior Notes – – 1,000 – Proceeds from issuance of debt facilities without recourse to CSI 164 75 276 254 Repayments of debt facilities without recourse to CSI (14) (42) (32) (128) Other financing activities (24) (2) (27) 1 Dividends paid to non-controlling interests (0) – (86) – Debt transaction costs (2) (1) (13) (3) Payments of lease obligations (29) (28) (58) (53) Distribution to the Joday Group – – (64) – Principal repayments to the Joday Group pursuant to the Call Notice – – (22) – Dividends paid to common shareholders of the Company (21) (21) (42) (42) Net cash flows from (used in) in financing activities 12 238 363 195 Cash flows from (used in) investing activities: Acquisition of businesses (452) (393) (675) (845) Cash obtained with acquired businesses 31 48 66 93 Post-acquisition settlement payments, net of receipts (54) (61) (130) (133) Purchases of investments and other assets (0) (16) (1) (18) Proceeds from sales of other investments and other assets 2 – 5 119 Decrease (increase) in restricted cash 2 29 (9) (0) Interest, dividends and other proceeds received 8 0 13 3 Property and equipment purchased (13) (9) (23) (19) Net cash flows from (used in) investing activities (476) (402) (753) (800) Effect of foreign currency on cash (5) 1 (22) 8 Increase (decrease) in cash (205) (40) 590 159 Cash, beginning of period$2,078 $1,010 $1,284 $811 Cash, end of period$1,873 $970 $1,873 $970