Constellation Software Inc. Announces Results for the Third Quarter Ended September 30, 2024 and Declares Quarterly Dividend

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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.

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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.)

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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.

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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%.

  1. 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.

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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.

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The following table reconciles FCFA2S to net cash flows from operating activities:

        Three months ended September 30,       Nine months ended September 30,  
        2024 2023       2024 2023  
      ($ 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.

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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    
   

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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    
                                 
   

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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    
   

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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
stock
Accumulated
other
comprehensive income (loss)
Retained
earnings
Total Non-controlling interests Total 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    
   

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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
stock
Accumulated
other comprehensive income (loss)
Retained
earnings
Total Non-controlling interests Total 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    
   

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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    
   


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