Constellation Software Inc. Announces Results for the First Quarter Ended March 31, 2024 and Declares Quarterly Dividend

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
[phone]
[e-mail]
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 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)			-		-			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 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)			-		-			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