TORONTO, Nov. 08, 2024 (GLOBE NEWSWIRE) — Constellation Software Inc. (TSX:CSU) (“Constellation” or the “Company”) today announced its financial results for the third quarter ended September 30, 2024 and declared a $1.00 per share dividend payable on January 10, 2025 to all common shareholders of record at close of business on December 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 nine months ended September 30, 2024 and the accompanying notes, our Management Discussion and Analysis for the three and nine months ended September 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.
Q3 2024 and Subsequent Headlines:
Revenue grew 20% (2% organic growth, 1% after adjusting for changes in foreign exchange rates) to $2,541 million compared to $2,126 million in Q3 2023.Net income attributable to common shareholders decreased 28% to $164 million ($7.74 on a diluted per share basis) from $227 million ($10.70 on a diluted per share basis) in Q3 2023.A number of acquisitions were completed for aggregate cash consideration of $197 million (which includes acquired cash). Deferred payments associated with these acquisitions have an estimated value of $70 million resulting in total consideration of $267 million.Cash flows from operations (“CFO”) increased 1% or $3 million to $517 million compared to $513 million for the comparable period in 2023.Free cash flow available to shareholders1 (“FCFA2S”) decreased 2% or $6 million to $362 million compared to $367 million for the same period in 2023.
(Due to rounding certain totals may not foot.)
Total revenue for the quarter ended September 30, 2024 was $2,541 million, an increase of 20%, or $415 million, compared to $2,126 million for the comparable period in 2023. For the first nine months of 2024 total revenues were $7,363 million, an increase of 21%, or $1,279 million, compared to $6,084 million for the comparable period in 2023. The increase for both the three and nine 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, 1% and 2% 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 September 30, 2024 was $164 million compared to $227 million for the same period in 2023. On a per share basis this translated into a net income per diluted share of $7.74 in the quarter ended September 30, 2024 compared to net income per diluted share of $10.70 for the same period in 2023. For the nine months ended September 30, 2024, net income attributable to common shareholders of CSI was $446 million or $21.04 per diluted share compared to $424 million or $20.02 per diluted share for the same period in 2023.
For the quarter ended September 30, 2024, CFO increased $3 million to $517 million compared to $513 million for the same period in 2023 representing an increase of 1%. For the first nine months of 2024, CFO increased $250 million to $1,518 million compared to $1,268 million during the same period in 2023, representing an increase of 20%.
See Non-IFRS measures.
For the quarter ended September 30, 2024, FCFA2S decreased $6 million to $362 million compared to $367 million for the same period in 2023 representing a decrease of 2%. For the nine months ended September 30, 2024, FCFA2S increased $155 million to $990 million compared to $835 million for the same period in 2023 representing an increase of 19%.
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 September 30, Nine months ended September 30, 20242023 20242023 ($ in millions) ($ in millions) Net cash flows from operating activities 517 513 1,518 1,268 Adjusted for: Interest paid on lease obligations (4)(3) (10)(8) Interest paid on debt (63)(34) (141)(96) Proceeds from sale of interest rate cap – (1) – 5 Debt transaction costs (1)(1) (13)(4) Payments of lease obligations (31)(25) (89)(78) IRGA / TSS membership liability revaluation charge (33)(25) (122)(94) Property and equipment purchased (19)(10) (42)(29) Interest and dividends received 10 0 25 1 376 415 1,125 965 Less amount attributable to Non-controlling interests (14)(47) (135)(129) Free cash flow available to shareholders 362 367 990 835 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 September 30, 2024 December 31, 2023 September 30, 2023 Assets Current assets: Cash$2,069 $1,284 $1,076 Accounts receivable 1,152 1,138 986 Unbilled revenue 435 325 331 Inventories 66 51 56 Other assets 636 541 499 4,358 3,340 2,948 Non-current assets: Property and equipment 220 142 129 Right of use assets 323 312 282 Deferred income taxes 202 108 85 Other assets 331 287 271 Intangible assets 7,139 6,677 6,325 8,215 7,526 7,092 Total assets$12,573 $10,866 $10,039 Liabilities and Shareholders’ Equity Current liabilities: Debt with recourse to Constellation Software Inc.$294 $861 $907 Debt without recourse to Constellation Software Inc. 414 225 235 Redeemable preferred securities – 814 536 Accounts payable and accrued liabilities 1,421 1,428 1,239 Dividends payable 21 21 21 Deferred revenue 2,014 1,758 1,779 Provisions 10 9 8 Acquisition holdback payables 285 168 150 Lease obligations 113 112 102 Income taxes payable 116 88 113 4,689 5,484 5,090 Non-current liabilities: Debt with recourse to Constellation Software Inc. 1,881 863 617 Debt without recourse to Constellation Software Inc. 1,560 1,385 1,275 Deferred income taxes 643 604 508 Acquisition holdback payables 123 88 87 Lease obligations 251 236 216 Other liabilities 290 244 240 4,748 3,421 2,943 Total liabilities 9,437 8,905 8,033 Shareholders’ equity: Capital stock 99 99 99 Accumulated other comprehensive income (loss) (98) (99) (159) Retained earnings 2,657 1,876 1,762 Non-controlling interests 478 85 304 3,136 1,961 2,006 Total liabilities and shareholders’ equity$12,573 $10,866 $10,039
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 September 30, Nine months ended September 30, 2024 2023 2024 2023 Revenue License$84 $84 $259 $254 Professional services 487 450 1,451 1,290 Hardware and other 78 71 204 191 Maintenance and other recurring 1,893 1,521 5,449 4,349 2,541 2,126 7,363 6,084 Expenses Staff 1,336 1,112 3,956 3,291 Hardware 43 42 114 113 Third party license, maintenance and professional services 243 208 701 592 Occupancy 18 11 48 37 Travel, telecommunications, supplies, software and equipment 120 99 365 285 Professional fees 43 36 126 107 Other, net 34 37 134 103 Depreciation 46 41 135 120 Amortization of intangible assets 271 214 771 620 2,152 1,799 6,349 5,268 Foreign exchange loss (gain) 30 (23) 16 3 IRGA/TSS Membership liability revaluation charge 33 25 122 94 Finance and other expense (income) (18) 2 (50) (7) Bargain purchase gain 1 (50) (4) (51) Impairment of intangible and other non-financial assets 2 1 17 4 Redeemable preferred securities expense (income) – 37 58 319 Finance costs 72 50 207 132 119 41 366 494 Income (loss) before income taxes 270 286 648 322 Current income tax expense (recovery) 126 99 396 315 Deferred income tax expense (recovery) (43) (32) (196) (155) Income tax expense (recovery) 83 67 200 160 Net income (loss) 187 219 448 161 Net income (loss) attributable to: Common shareholders of Constellation Software Inc. 164 227 446 424 Non-controlling interests 23 (8) 2 (263) Net income (loss) 187 219 448 161 Earnings per common share of Constellation Software Inc. Basic and diluted$7.74 $10.70 $21.04 $20.02
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 September 30, Nine months ended September 30, 2024 2023 2024 2023 Net income (loss)$187 $219 $448 $161 Items that are or may be reclassified subsequently to net income (loss): Foreign currency translation differences from foreign operations and other, net of tax 71 (58) 8 (27) Other comprehensive income (loss), net of income tax 71 (58) 8 (27) Total comprehensive income (loss)$258 $161 $456 $135 Total other comprehensive income (loss) attributable to: Common shareholders of Constellation Software Inc. 60 (46) 7 (21) Non-controlling interests 11 (12) 2 (6) Total other comprehensive income (loss)$71 $(58) $8 $(27) Total comprehensive income (loss) attributable to: Common shareholders of Constellation Software Inc. 224 180 453 404 Non-controlling interests 34 (20) 3 (269) Total comprehensive income (loss)$258 $161 $456 $135
CONSTELLATION SOFTWARE INC.
Condensed Consolidated Interim Statement of Changes in Equity (In millions of U.S. dollars, except per share amounts. Due to rounding, numbers presented may not foot.) Unaudited Nine months ended September 30, 2024 Equity Attributable to Common Shareholders of CSI Capital
stockAccumulated
other
comprehensive income (loss)Retained
earningsTotal Non-controlling interestsTotal equity
Balance at January 1, 2024$ 99$ (99)$ 1,876 $ 1,877 $ 85 $ 1,961 Total comprehensive income (loss): Net income (loss) – – 446 446 2 448 Other comprehensive income (loss) Foreign currency translation differences from
foreign operations and other, net of tax – 7 – 7 2 8 Total other comprehensive income (loss) – 7 – 7 2 8 Total comprehensive income (loss) – 7 446 453 3 456 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) (3) (4) Dividends paid to non-controlling interests – – – – (86) (86) Dividends to shareholders of the Company – – (64) (64) – (64) Balance at September 30, 2024$ 99$ (98)$ 2,657 $ 2,658 $ 478 $ 3,136
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.) Nine months ended September 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) – – 424 424 (263) 161 Other comprehensive income (loss) Foreign currency translation differences from
foreign operations and other, net of tax – (21) – (21) (6) (27) Total other comprehensive income (loss) – (21) – (21) (6) (27) Total comprehensive income (loss) – (21) 424 404 (269) 135 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 – – – – 5 5 Other movements in non-controlling interests – 0 16 16 (18) (2) Dividends to shareholders of the Company – – (64) (64) – (64) Balance at September 30, 2023$ 99$ (159)$ 1,762 $ 1,703 $ 304 $ 2,006
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 September 30, Nine months ended September 30, 2024 2023 2024 2023 Cash flows from (used in) operating activities: Net income (loss)$187 $219 $448 $161 Adjustments for: Depreciation 46 41 135 120 Amortization of intangible assets 271 214 771 620 IRGA/TSS Membership liability revaluation charge 33 25 122 94 Finance and other expense (income) (18) 2 (50) (7) Bargain purchase (gain) 1 (50) (4) (51) Impairment of intangible and other non-financial assets 2 1 17 4 Redeemable preferred securities expense (income) – 37 58 319 Finance costs 72 50 207 132 Income tax expense (recovery) 83 67 200 160 Foreign exchange loss (gain) 30 (23) 16 3 Change in non-cash operating assets and liabilities exclusive of effects of business combinations (72) (7) (38) 23 Income taxes paid (118) (62) (363) (310) Net cash flows from (used in) operating activities 517 513 1,518 1,268 Cash flows from (used in) financing activities: Interest paid on lease obligations (4) (3) (10) (8) Interest paid on debt (63) (34) (141) (96) Proceeds from sale of interest rate cap – (1) – 5 Increase (decrease) in CSI facility – 175 (578) 364 Increase (decrease) in Topicus revolving credit debt facility without recourse to CSI 55 5 147 43 Proceeds from issuance of Senior Notes – – 1,000 – Proceeds from issuance of debt facilities without recourse to CSI 37 35 313 290 Repayments of debt facilities without recourse to CSI (81) (100) (113) (227) Other financing activities (4) (2) (31) (1) Dividends paid to non-controlling interests – – (86) – Debt transaction costs (1) (1) (13) (4) Payments of lease obligations (31) (25) (89) (78) 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) (64) (64) Net cash flows from (used in) in financing activities (113) 28 250 224 Cash flows from (used in) investing activities: Acquisition of businesses (196) (389) (871) (1,233) Cash obtained with acquired businesses 23 19 89 113 Post-acquisition settlement payments, net of receipts (53) (35) (183) (168) Purchases of investments and other assets (4) (1) (5) (19) Proceeds from sales of other investments and other assets 2 – 7 119 Decrease (increase) in restricted cash (4) (1) (13) (1) Interest, dividends and other proceeds received 12 0 25 3 Property and equipment purchased (19) (10) (42) (29) Net cash flows from (used in) investing activities (240) (416) (993) (1,216) Effect of foreign currency on cash 33 (19) 11 (10) Increase (decrease) in cash 195 107 785 265 Cash, beginning of period$1,873 $970 $1,284 $811 Cash, end of period$2,069 $1,076 $2,069 $1,076