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

TORONTO, Aug. 09, 2024 (GLOBE NEWSWIRE) -- Constellation Software Inc. (TSX:CSU) ("Constellation" or the "Company") today announced its financial results for the second quarter ended June 30, 2024 and declared a $1.00 per share dividend payable on October 10, 2024 to all common shareholders of record at close of business on September 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 six months ended June 30, 2024 and the accompanying notes, our Management Discussion and Analysis for the three and six months ended June 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.

Q2 2024 and Subsequent Headlines:

• Revenue grew 21% (2% organic growth, 3% after adjusting for changes in foreign exchange rates) to $2,468 million compared to $2,039 million in Q2 2023.
• Net income attributable to common shareholders increased 71% to $177 million ($8.35 on a diluted per share basis) from $103 million ($4.88 on a diluted per share basis) in Q2 2023.
• A number of acquisitions were completed for aggregate cash consideration of $451 million (which includes acquired cash). Deferred payments associated with these acquisitions have an estimated value of $173 million resulting in total consideration of $624 million.
• Cash flows from operations ("CFO") were $265 million, an increase of 116%, or $143 million, compared to $123 million for the comparable period in 2023.
• Free cash flow available to shareholders¹ ("FCFA2S") increased $168 million to $182 million compared to $14 million for the same period in 2023.
  

Total revenue for the quarter ended June 30, 2024 was $2,468 million, an increase of 21%, or $430 million, compared to $2,039 million for the comparable period in 2023. For the first six months of 2024 total revenues were $4,822 million, an increase of 22%, or $864 million, compared to $3,958 million for the comparable period in 2023. The increase for both the three and six 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, 3% for both periods 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 June 30, 2024 was $177 million compared to $103 million for the same period in 2023. On a per share basis this translated into a net income per diluted share of $8.35 in the quarter ended June 30, 2024 compared to net income per diluted share of $4.88 for the same period in 2023. For the six months ended June 30, 2024, net income attributable to common shareholders of CSI was $282 million or $13.31 per diluted share compared to $198 million or $9.32 per diluted share for the same period in 2023.

For the quarter ended June 30, 2024, CFO increased $143 million to $265 million compared to $123 million for the same period in 2023 representing an increase of 116%. For the first six months of 2024, CFO increased $247 million to $1,002 million compared to $755 million during the same period in 2023, representing an increase of 33%.

For the quarter ended June 30, 2024, FCFA2S increased $168 million to $182 million compared to $14 million for the same period in 2023. For the six months ended June 30, 2024, FCFA2S increased $161 million to $628 million compared to $467 million for the same period in 2023 representing an increase of 34%.

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 June 30,							Six months ended June 30,
		2024		2023					2024		2023
	($ in millions)							($ in millions)
Net cash flows from operating activities		265		123					1,002		755
Adjusted for:
Interest paid on lease obligations		(3	)	(3	)				(7	)	(5	)
Interest paid on debt		(37	)	(36	)				(78	)	(62	)
Proceeds from sale of interest rate cap		-		6					-		6
Debt transaction costs		(2	)	(1	)				(13	)	(3	)
Payments of lease obligations		(29	)	(28	)				(58	)	(53	)
IRGA / TSS membership liability revaluation charge		(8	)	(31	)				(89	)	(69	)
Property and equipment purchased		(13	)	(9	)				(23	)	(19	)
Interest and dividends received		9		0					15		1
		182		21					749		550
Less amount attributable to
Non-controlling interests		1		(7	)				(121	)	(83	)
Free cash flow available to shareholders		182		14					628		467
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
		June 30, 2024			December 31, 2023			June 30, 2023
Assets
Current assets:
	Cash	$	1,873		$	1,284		$	970
	Accounts receivable		1,117			1,144			976
	Unbilled revenue		429			326			308
	Inventories		60			51			57
	Other assets		618			544			460
			4,097			3,349			2,770
Non-current assets:
	Property and equipment		210			142			129
	Right of use assets		315			312			286
	Deferred income taxes		191			107			91
	Other assets		312			286			189
	Intangible assets		6,992			6,675			5,703
			8,019			7,523			6,399
Total assets		$	12,116		$	10,873		$	9,169
Liabilities and Shareholders' Equity
Current liabilities:
	Debt with recourse to Constellation Software Inc.	$	274		$	861		$	734
	Debt without recourse to Constellation Software Inc.		342			225			283
	Redeemable preferred securities		-			814			500
	Accounts payable and accrued liabilities		1,308			1,433			1,083
	Dividends payable		21			21			21
	Deferred revenue		2,079			1,757			1,869
	Provisions		11			9			11
	Acquisition holdback payables		277			172			148
	Lease obligations		113			112			98
	Income taxes payable		104			88			79
			4,528			5,492			4,827
Non-current liabilities:
	Debt with recourse to Constellation Software Inc.		1,834			863			614
	Debt without recourse to Constellation Software Inc.		1,604			1,385			795
	Deferred income taxes		622			603			503
	Acquisition holdback payables		112			86			104
	Lease obligations		240			236			217
	Other liabilities		272			246			240
			4,685			3,420			2,474
Total liabilities			9,213			8,911			7,300
Shareholders' equity:
	Capital stock		99			99			99
	Accumulated other comprehensive income (loss)		(158	)		(99	)		(112	)
	Retained earnings		2,517			1,876			1,547
	Non-controlling interests		445			85			335
			2,903			1,961			1,868
Total liabilities and shareholders' equity		$	12,116		$	10,873		$	9,169

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 June 30,								Six months ended June 30,
			2024				2023				2024				2023
Revenue
License		$	87			$	89			$	175			$	170
Professional services			495				428				964				840
Hardware and other			68				63				127				121
Maintenance and other recurring			1,819				1,459				3,556				2,828
			2,468				2,039				4,822				3,958
Expenses
Staff			1,328				1,112				2,620				2,179
Hardware			37				36				72				71
Third party license, maintenance and professional services			243				199				458				384
Occupancy			16				13				30				26
Travel, telecommunications, supplies, software and equipment			133				97				245				185
Professional fees			44				36				83				71
Other, net			51				29				101				67
Depreciation			45				40				89				79
Amortization of intangible assets			258				213				500				406
			2,155				1,774				4,197				3,469
Foreign exchange loss (gain)			4				16				(15	)			26
IRGA/TSS Membership liability revaluation charge			8				31				89				69
Finance and other expense (income)			(23	)			(2	)			(32	)			(9	)
Bargain purchase gain			(2	)			0				(5	)			(1	)
Impairment of intangible and other non-financial assets			6				1				16				3
Redeemable preferred securities expense (income)			-				94				58				282
Finance costs			69				46				136				82
			61				186				247				453
Income (loss) before income taxes			252				79				378				36
Current income tax expense (recovery)			143				114				270				217
Deferred income tax expense (recovery)			(78	)			(61	)			(153	)			(123	)
Income tax expense (recovery)			65				53				117				93
Net income (loss)			187				26				261				(57	)
Net income (loss) attributable to:
Common shareholders of Constellation Software Inc.			177				103				282				198
Non-controlling interests			10				(78	)			(21	)			(255	)
Net income (loss)			187				26				261				(57	)
Earnings per common share of Constellation Software Inc.
	Basic and diluted	$	8.35			$	4.88			$	13.31			$	9.32

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 June 30,								Six months ended June 30,
		2024				2023				2024				2023
Net income (loss)	$	187			$	26			$	261			$	(57	)
Items that are or may be reclassified subsequently to net income (loss):
Foreign currency translation differences from foreign operations and other, net of tax		(14	)			15				(62	)			31
Other comprehensive income (loss), net of income tax		(14	)			15				(62	)			31
Total comprehensive income (loss)	$	173			$	41			$	198			$	(26	)
Total other comprehensive income (loss) attributable to:
Common shareholders of Constellation Software Inc.		(13	)			15				(53	)			26
Non-controlling interests		(1	)			0				(9	)			6
Total other comprehensive income (loss)	$	(14	)		$	15			$	(62	)		$	31
Total comprehensive income (loss) attributable to:
Common shareholders of Constellation Software Inc.		164				118				229				223
Non-controlling interests		9				(77	)			(30	)			(249	)
Total comprehensive income (loss)	$	173			$	41			$	198			$	(26	)

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
Six months ended June 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)			-		-			282			282			(21	)		261
Other comprehensive income (loss)
Foreign currency translation differences from
	foreign operations and other, net of tax		-		(53	)		-			(53	)		(9	)		(62	)
Total other comprehensive income (loss)			-		(53	)		-			(53	)		(9	)		(62	)
Total comprehensive income (loss)			-		(53	)		282			229			(30	)		198
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			-		-			-			-			(86	)		(86	)
Dividends to shareholders of the Company			-		-			(42	)		(42	)		-			(42	)
Balance at June 30, 2024		$	99	$	(158	)	$	2,517		$	2,458		$	445		$	2,903

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
Six months ended June 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)			-		-			198			198			(255	)		(57	)
Other comprehensive income (loss)
Foreign currency translation differences from
	foreign operations and other, net of tax		-		26			-			26			6			31
Total other comprehensive income (loss)			-		26			-			26			6			31
Total comprehensive income (loss)			-		26			198			223			(249	)		(26	)
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			-		-			-			-			4			4
Other movements in non-controlling interests			-		0			6			6			(6	)		0
Dividends to shareholders of the Company			-		-			(42	)		(42	)		-			(42	)
Balance at June 30, 2023		$	99	$	(112	)	$	1,547		$	1,533		$	335		$	1,868

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 June 30,								Six months ended June 30,
				2024				2023				2024				2023
Cash flows from (used in) operating activities:
	Net income (loss)		$	187			$	26			$	261			$	(57	)
	Adjustments for:
		Depreciation		45				40				89				79
		Amortization of intangible assets		258				213				500				406
		IRGA/TSS Membership liability revaluation charge		8				31				89				69
		Finance and other expense (income)		(23	)			(2	)			(32	)			(9	)
		Bargain purchase (gain)		(2	)			0				(5	)			(1	)
		Impairment of intangible and other non-financial assets		6				1				16				3
		Redeemable preferred securities expense (income)		-				94				58				282
		Finance costs		69				46				136				82
		Income tax expense (recovery)		65				53				117				93
		Foreign exchange loss (gain)		4				16				(15	)			26
	Change in non-cash operating assets and liabilities
		exclusive of effects of business combinations		(174	)			(238	)			34				30
	Income taxes paid			(177	)			(158	)			(245	)			(249	)
	Net cash flows from (used in) operating activities			265				123				1,002				755
Cash flows from (used in) financing activities:
	Interest paid on lease obligations			(3	)			(3	)			(7	)			(5	)
	Interest paid on debt			(37	)			(36	)			(78	)			(62	)
	Proceeds from sale of interest rate cap			-				6				-				6
	Increase (decrease) in CSI facility			-				240				(578	)			189
	Increase (decrease) in Topicus revolving credit debt facility without recourse to CSI			(21	)			49				92				38
	Proceeds from issuance of Senior Notes			-				-				1,000				-
	Proceeds from issuance of debt facilities without recourse to CSI			164				75				276				254
	Repayments of debt facilities without recourse to CSI			(14	)			(42	)			(32	)			(128	)
	Other financing activities			(24	)			(2	)			(27	)			1
	Dividends paid to non-controlling interests			(0	)			-				(86	)			-
	Debt transaction costs			(2	)			(1	)			(13	)			(3	)
	Payments of lease obligations			(29	)			(28	)			(58	)			(53	)
	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	)			(42	)			(42	)
	Net cash flows from (used in) in financing activities			12				238				363				195
Cash flows from (used in) investing activities:
	Acquisition of businesses			(452	)			(393	)			(675	)			(845	)
	Cash obtained with acquired businesses			31				48				66				93
	Post-acquisition settlement payments, net of receipts			(54	)			(61	)			(130	)			(133	)
	Purchases of investments and other assets			(0	)			(16	)			(1	)			(18	)
	Proceeds from sales of other investments and other assets			2				-				5				119
	Decrease (increase) in restricted cash			2				29				(9	)			(0	)
	Interest, dividends and other proceeds received			8				0				13				3
	Property and equipment purchased			(13	)			(9	)			(23	)			(19	)
	Net cash flows from (used in) investing activities			(476	)			(402	)			(753	)			(800	)
Effect of foreign currency on
	cash			(5	)			1				(22	)			8
Increase (decrease) in cash				(205	)			(40	)			590				159
Cash, beginning of period			$	2,078			$	1,010			$	1,284			$	811
Cash, end of period			$	1,873			$	970			$	1,873			$	970