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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%.
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:
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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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
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