TORONTO, May 10, 2024 (GLOBE NEWSWIRE) — Constellation Software Inc. (TSX:CSU) (“Constellation” or the “Company”) today announced its financial results for the first quarter ended March 31, 2024 and declared a $1.00 per share dividend payable on July 11, 2024 to all common shareholders of record at close of business on June 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 months ended March 31, 2024 and the accompanying notes, our Management Discussion and Analysis for the three months ended March 31, 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.
Q1 2024 Headlines:
Revenue increased 23% (4% organic growth, 3% after adjusting for changes in foreign exchange rates) to $2,353 million compared to $1,919 million in Q1 2023.Net income attributable to common shareholders was $105 million for Q1 2024 ($4.95 on a diluted per share basis), compared to net income attributable to common shareholders of $94 million ($4.44 on a diluted per share basis) in Q1 2023.A number of acquisitions were completed for aggregate cash consideration of $223 million (which includes acquired cash). Deferred payments associated with these acquisitions have an estimated value of $65 million resulting in total consideration of $288 million.Cash flows from operations (“CFO”) were $737 million, an increase of 16%, or $104 million, compared to $632 million for the comparable period in 2023.Free cash flow available to shareholders1 (“FCFA2S”) decreased $7 million to $446 million compared to $453 million for the same period in 2023.
Total revenue for the quarter ended March 31, 2024 was $2,353 million, an increase of 23%, or $434 million, compared to $1,919 million for the comparable period in 2023. The increase is primarily attributable to growth from acquisitions as the Company experienced organic growth of 4% in the quarter, 3% after adjusting for the impact of changes in the valuation of the US dollar against most major currencies in which the Company transacts business. For acquired companies, organic growth is calculated as the difference between actual revenues achieved by each company in the financial period following acquisition compared to the estimated revenues they achieved in the corresponding financial period preceding the date of acquisition by Constellation. Organic growth is not a standardized financial measure and might not be comparable to measures disclosed by other issuers.
The net income attributable to common shareholders of CSI for the quarter ended March 31, 2024 was $105 million compared to $94 million for the same period in 2023. On a per share basis this translated into net income per basic and diluted share of $4.95 in the quarter ended March 31, 2024 compared to $4.44 for the same period in 2023. There was no change in the number of shares outstanding.
For the quarter ended March 31, 2024, CFO increased $104 million to $737 million compared to $632 million for the same period in 2023 representing an increase of 16%.
For the quarter ended March 31, 2024, FCFA2S decreased $7 million to $446 million compared to $453 million for the same period in 2023 representing a decrease of 2%.
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 other facilities, credit facility transaction costs, repayments 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
March 31, 2024
2023
($ in millions) Net cash flows from operating activities 737 632 Adjusted for: Interest paid on lease obligations (3)(3) Interest paid on other facilities (41)(26) Proceeds from sale of interest rate cap – – Credit facility transaction costs (11)(2) Payments of lease obligations (29)(25) IRGA / TSS membership liability revaluation charge (81)(39) Property and equipment purchased (10)(10) Interest and dividends received 6 1 568 529 Less amount attributable to Non-controlling interests (122)(76) Free cash flow available to shareholders 446 453 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 March 31, 2024 December 31, 2023 March 31, 2023 Assets Current assets: Cash$2,078 $1,284 $1,010 Accounts receivable 1,205 1,145 1,012 Unbilled revenue 360 326 282 Inventories 59 51 50 Other assets 568 542 450 4,270 3,348 2,803 Non-current assets: Property and equipment 142 143 128 Right of use assets 311 312 285 Deferred income taxes 157 110 108 Other assets 308 286 182 Intangible assets 6,734 6,682 5,324 7,651 7,533 6,028 Total assets$11,921 $10,881 $8,831 Liabilities and Shareholders’ Equity Current liabilities: Debt with recourse to Constellation Software Inc.$276 $861 $480 Debt without recourse to Constellation Software Inc. 348 225 199 Redeemable preferred securities – 814 409 Accounts payable and accrued liabilities 1,298 1,433 1,117 Dividends payable 21 21 21 Deferred revenue 2,267 1,757 1,995 Provisions 8 9 9 Acquisition holdback payables 174 173 139 Lease obligations 113 112 98 Income taxes payable 135 88 120 4,640 5,493 4,585 Non-current liabilities: Debt with recourse to Constellation Software Inc. 1,832 863 590 Debt without recourse to Constellation Software Inc. 1,470 1,385 793 Deferred income taxes 633 610 496 Acquisition holdback payables 105 86 68 Lease obligations 235 236 217 Other liabilities 255 246 236 4,530 3,426 2,400 Total liabilities 9,169 8,919 6,986 Shareholders’ equity: Capital stock 99 99 99 Accumulated other comprehensive income (loss) (145) (99) (128) Retained earnings 2,358 1,876 1,454 Non-controlling interests 439 85 419 2,752 1,961 1,845 Total liabilities and shareholders’ equity$11,921 $10,881 $8,831
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 March 31, 2024 2023 Revenue License $88 $81 Professional services 470 411 Hardware and other 59 57 Maintenance and other recurring 1,737 1,369 2,353 1,919 Expenses Staff 1,293 1,068 Hardware 35 35 Third party license, maintenance and professional services 215 185 Occupancy 14 13 Travel, telecommunications, supplies, software and equipment 112 89 Professional fees 38 36 Other, net 50 38 Depreciation 44 39 Amortization of intangible assets 242 193 2,042 1,695 Foreign exchange loss (gain) (18) 10 IRGA/TSS Membership liability revaluation charge 81 39 Finance and other expense (income) (9) (7)Bargain purchase gain (2) (1)Impairment of intangible and other non-financial assets 10 2 Redeemable preferred securities expense (income) 58 188 Finance costs 67 36 186 267 Income (loss) before income taxes 125 (43) Current income tax expense (recovery) 127 103 Deferred income tax expense (recovery) (75) (62)Income tax expense (recovery) 52 40 Net income (loss) 74 (83) Net income (loss) attributable to: Common shareholders of Constellation Software Inc. 105 94 Non-controlling interests (31) (177)Net income (loss) 74 (83) Earnings per common share of Constellation Software Inc. Basic and diluted $4.95 $4.44
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 March 31, 2024 2023 Net income (loss) $74 $(83) Items that are or may be reclassified subsequently to net income (loss): Foreign currency translation differences from foreign operations and other, net of tax (48) 16 Other comprehensive income (loss), net of income tax (48) 16 Total comprehensive income (loss) $25 $(67) Total other comprehensive income (loss) attributable to: Common shareholders of Constellation Software Inc. (40) 10 Non-controlling interests (8) 6 Total other comprehensive income (loss) $(48) $16 Total comprehensive income (loss) attributable to: Common shareholders of Constellation Software Inc. 65 105 Non-controlling interests (40) (171)Total comprehensive income (loss) $25 $(67)
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 Three months ended March 31, 2024 Equity Attributable to Common Shareholders of CSI Capital stockAccumulated other comprehensive income (loss)Retained earningsTotalNon-controlling interestsTotal equity Balance at January 1, 2024$99$(99)$1,876 $1,877 85 $1,961 Total comprehensive income (loss): Net income (loss) – – 105 105 (31) 74 Other comprehensive income (loss) Foreign currency translation differences from foreign operations and other, net of tax – (40) – (40) (8) (48) Total other comprehensive income (loss) – (40) – (40) (8) (48) Total comprehensive income (loss) – (40) 105 65 (40) 25 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 – – – – (85) (85) Dividends to shareholders of the Company – – (21) (21) – (21) Balance at March 31, 2024$99$(145)$2,358 $2,313 $439 $2,752
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 Three months ended March 31, 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 $1,933 Total comprehensive income (loss): Net income (loss) – – 94 94 (177) (83) Other comprehensive income (loss) Foreign currency translation differences from foreign operations and other, net of tax – 10 – 10 6 16 Total other comprehensive income (loss) – 10 – 10 6 16 Total comprehensive income (loss) – 10 94 105 (171) (67) Transactions with owners, recorded directly in equity Special dividend of Lumine Subordinate Voting Shares – 12 (378) (366) 366 – Acquisition of non-controlling interests – – – – (1) (1) Conversion of Lumine Special Shares to subordinate voting shares of Lumine – – – – 1 1 Other movements in non-controlling interests – 0 (4) (4) 4 (0) Dividends to shareholders of the Company – – (21) (21) – (21) Balance at March 31, 2023$ 99$ (128)$ 1,454 $ 1,426 $ 419 $ 1,845
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 March 31, 2024 2023 Cash flows from (used in) operating activities: Net income (loss) $74 $(83) Adjustments for: Depreciation 44 39 Amortization of intangible assets 242 193 IRGA/TSS Membership liability revaluation charge 81 39 Finance and other expense (income) (9) (7) Bargain purchase (gain) (2) (1) Impairment of intangible and other non-financial assets 10 2 Redeemable preferred securities expense (income) 58 188 Finance costs 67 36 Income tax expense (recovery) 52 40 Foreign exchange loss (gain) (18) 10 Change in non-cash operating assets and liabilities exclusive of effects of business combinations 208 268 Income taxes paid (68) (91) Net cash flows from (used in) operating activities 737 632 Cash flows from (used in) financing activities: Interest paid on lease obligations (3) (3) Interest paid on debt (41) (26) Increase (decrease) in CSI facility (578) (51) Increase (decrease) in Topicus revolving credit debt facility without recourse to CSI 114 (11) Proceeds from issuance of Senior Notes 1,000 – Proceeds from issuance of debt facilities without recourse to CSI 112 180 Repayments of debt facilities without recourse to CSI (18) (86) Other financing activities (2) 2 Dividends paid to non-controlling interests (85) – Debt transaction costs (11) (2) Payments of lease obligations (29) (25) 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) Net cash flows from (used in) in financing activities 351 (43) Cash flows from (used in) investing activities: Acquisition of businesses (223) (452) Cash obtained with acquired businesses 35 45 Post-acquisition settlement payments, net of receipts (76) (72) Purchases of investments and other assets (0) (31) Proceeds from sales of other investments and other assets 4 119 Decrease (increase) in restricted cash (11) – Interest, dividends and other proceeds received 5 3 Property and equipment purchased (10) (10) Net cash flows from (used in) investing activities (277) (398) Effect of foreign currency on cash (17) 7 Increase (decrease) in cash 794 199 Cash, beginning of period $1,284 $811 Cash, end of period $2,078 $1,010