Press-Releases

Constellation Software Inc. Announces Results for the


TORONTO, Aug. 05, 2021 (GLOBE NEWSWIRE) — Constellation Software Inc. (TSX:CSU) (“Constellation” or the “Company”) today announced its financial results for the second quarter ended June 30, 2021 and declared a $1.00 per share dividend payable on October 8, 2021 to all common shareholders of record at close of business on September 17, 2021. 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, 2021 and the accompanying notes, our Management Discussion and Analysis for the three and six months ended June 30, 2021 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, 2020, which can be found on SEDAR at www.sedar.com and on the Company’s website www.csisoftware.com. Additional information about the Company is also available on SEDAR at www.sedar.com

Q2 2021 Headlines:

  • Revenue grew 35% (14% organic growth, 8% after adjusting for changes in foreign exchange rates) to $1,249 million compared to $922 million in Q2 2020.  
  • Net income attributable to common shareholders increased 7% to $88 million ($4.16 on a diluted per share basis) from $83 million ($3.90 on a diluted per share basis) in Q2 2020.
  • A number of acquisitions were completed for aggregate cash consideration of $292 million (which includes acquired cash). Deferred payments associated with these acquisitions have an estimated value of $36 million resulting in total consideration of $328 million.
  • Cash flows from operations (“CFO”) were $171 million, a decrease of 28%, or $66 million, compared to $237 million for the comparable period in 2020.
  • Free cash flow available to shareholders1 (“FCFA2S”) decreased $46 million to $145 million compared to $190 million for the same period in 2020.
  • The Company determined that certain of its subsidiaries qualified for an estimated aggregate amount of $8 million of grants from various government authorities, and recognized such amounts as a reduction to expenses in the quarter.
  • The holders of the Topicus Coop Preference Units (the “Preferred Securities”) elected to convert their Preferred Securities into Topicus Coop Ordinary Units, which conversion will become effective on February 1, 2022.
  • Subsequent to June 30, 2021, the Company completed or entered into agreements to acquire a number of businesses for aggregate cash consideration of $122 million. Deferred payments associated with these acquisitions have an estimated value of $25 million resulting in total consideration of $146 million.

Total revenue for the quarter ended June 30, 2021 was $1,249 million, an increase of 35%, or $327 million, compared to $922 million for the comparable period in 2020. For the first six months of 2021 total revenues were $2,425 million, an increase of 29%, or $550 million, compared to $1,875 million for the comparable period in 2020. 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 14% and 10% respectively, 8% and 5% respectively after adjusting for the impact of changes in the valuation of the US dollar against most major currencies in which the Company transacts business.

The Net income attributable to common shareholders of CSI for the quarter ended June 30, 2021 was $88 million compared to net income of $83 million for the same period in 2020. On a per share basis this translated into a net income per diluted share of $4.16 in the quarter ended June 30, 2021 compared to net income per diluted share of $3.90 for the same period in 2020. For the six months ended June 30, 2021, net income attributable to common shareholders of CSI was $80 million or $3.76 per diluted share compared to $166 million or $7.81 per diluted share for the same period in 2020. There was no change in the number of shares outstanding.

For the quarter ended June 30, 2021, CFO decreased $66 million to $171 million compared to $237 million for the same period in 2020 representing a decrease of 28%. For the first six months of 2021, CFO increased $69 million to $667 million compared to $597 million during the same period in 2020, representing an increase of 12%.

For the quarter ended June 30, 2021, FCFA2S decreased $46 million to $145 million compared to $190 million for the same period in 2020.   For the first six months of 2021, FCFA2S decreased $88 million to $413 million compared to $501 million during the same period in 2020, representing a decrease of 18%.

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 TSS membership liability revaluation charge, and property and equipment purchased, and includes interest and dividends received. Constellation believes that FCFA2S is useful supplemental information as it provides an indication of the uncommitted cash flow that is available to shareholders if Constellation does not make any acquisitions, or investments, and does not repay any debts. While Constellation could use the FCFA2S to pay dividends or repurchase shares, Constellation’s objective is to invest all of our FCFA2S in acquisitions which meet Constellation’s 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,  
      2021   2020         2021   2020    
    ($ in millions, except percentages)   ($ in millions, except percentages)
                     
Net cash flows from operating activities     171   237         667   597    
Adjusted for:                    
Interest paid on lease obligations     (2 ) (2 )       (5 ) (4 )  
Interest paid on other facilities     (9 ) (5 )       (18 ) (14 )  
Credit facility transaction costs     (2 ) (0 )       (4 ) (0 )  
Payments of lease obligations     (20 ) (16 )       (41 ) (30 )  
IRGA / TSS membership liability revaluation charge     (22 ) (17 )       (82 ) (35 )  
Property and equipment purchased     (7 ) (6 )       (11 ) (13 )  
Interest and dividends received     1   0         1   0    
                     
      110   190         507   501    
Less amount attributable to                    
Non-controlling interests     35           (94 )    
                     
Free cash flow available to shareholders     145   190         413   501    
                     
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.
Consolidated 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, 2021 December 31, 2020 June 30, 2020
         
Assets      
         
Current assets:      
  Cash $ 851   $ 758   $ 585  
  Accounts receivable   505     483     393  
  Unbilled revenue   137     98     103  
  Inventories   28     27     32  
  Other assets   271     219     207  
      1,792     1,585     1,319  
         
Non-current assets:      
  Property and equipment   93     86     78  
  Right of use assets   263     251     241  
  Deferred income taxes   58     52     45  
  Other assets   86     75     73  
  Intangible assets   3,000     2,325     2,011  
      3,499     2,790     2,448  
         
Total assets $ 5,291   $ 4,375   $ 3,767  
         
Liabilities and Shareholders’ Equity      
         
Current liabilities:      
  Debt with recourse to Constellation Software Inc. $ 131   $ 113   $ 192  
  Debt without recourse to Constellation Software Inc.   41     28     3  
  Redeemable preferred securities   7          
  Accounts payable and accrued liabilities   671     666     480  
  Dividends payable   21     21     21  
  Deferred revenue   1,222     962     938  
  Provisions   13     12     10  
  Acquisition holdback payables   78     85     72  
  Lease obligations   80     74     67  
  Income taxes payable   67     78     95  
      2,332     2,040     1,879  
         
Non-current liabilities:      
  Debt with recourse to Constellation Software Inc.   548     421     374  
  Debt without recourse to Constellation Software Inc.   327     199     159  
  Deferred income taxes   372     285     243  
  Acquisition holdback payables   43     37     29  
  Lease obligations   209     201     193  
  Other liabilities   139     146     98  
      1,637     1,288     1,095  
         
Total liabilities   3,969     3,328     2,974  
         
         
Shareholders’ equity:      
  Capital stock   99     99     99  
  Other equity   (162 )        
  Accumulated other comprehensive income (loss)   (56 )   (31 )   (57 )
  Retained earnings   1,017     980     752  
  Non-controlling interests   423          
      1,322     1,048     794  
         
         
         
Total liabilities and shareholders’ equity $ 5,291   $ 4,375   $ 3,767  
         
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.)
               
Three and six months ended June 30, 2021            
Unaudited              
  Three months ended June 30,   Six months ended June 30,
    2021       2020       2021       2020  
               
               
Revenue              
License $ 71     $ 51     $ 137     $ 108  
Professional services   254       170       491       347  
Hardware and other   43       35       82       77  
Maintenance and other recurring   880       666       1,714       1,342  
    1,249       922       2,425       1,875  
               
Expenses              
Staff   665       480       1,306       990  
Hardware   23       22       45       45  
Third party license, maintenance and professional services   109       77       205       156  
Occupancy   10       8       19       17  
Travel, telecommunications, supplies, software and equipment   44       31       83       82  
Professional fees   17       13       32       26  
Other, net   14       0       19       5  
Depreciation   30       25       59       51  
Amortization of intangible assets   124       96       242       190  
    1,035       752       2,010       1,562  
               
               
Foreign exchange loss (gain)   15       10       2       4  
IRGA/TSS Membership liability revaluation charge   22       17       82       35  
Finance and other expense (income)   (2 )     (1 )     (4 )     (2 )
Bargain purchase gain   0       (0 )     0       (0 )
Impairment of intangible and other non-financial assets   2       4       5       8  
Redeemable preferred securities expense (income)   32             295        
Finance costs   17       10       32       22  
    86       39       413       67  
               
Income (loss) before income taxes   128       131       2       246  
               
Current income tax expense (recovery)   75       70       138       115  
Deferred income tax expense (recovery)   (25 )     (22 )     (39 )     (34 )
Income tax expense (recovery)   50       48       99       80  
               
Net income (loss)   78       83       (97 )     166  
               
Net income (loss) attributable to:              
Equity holders of Constellation Software Inc.   88       83       80       166  
Non-controlling interests   (11 )           (177 )      
Net income (loss)   78       83       (97 )     166  
               
Earnings per common share of Constellation Software Inc.              
Basic and diluted $ 4.16     $ 3.90     $ 3.76     $ 7.81  
               
               
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.)
               
Three and six months ended June 30, 2021            
Unaudited              
  Three months ended June 30,   Six months ended June 30,
    2021       2020     2021       2020  
               
Net income (loss) $ 78     $ 83   $ (97 )   $ 166  
               
Items that are or may be reclassified subsequently to net income (loss):              
               
Foreign currency translation differences from foreign operations and other   5       13     (18 )     (17 )
               
Other comprehensive income (loss) for the period, net of income tax   5       13     (18 )     (17 )
               
Total comprehensive income (loss) for the period $ 83     $ 96   $ (115 )   $ 149  
               
Total other comprehensive income (loss) attributable to:              
Equity holders of Constellation Software Inc.   11       13     (6 )     (17 )
Non-controlling interests   (6 )         (11 )      
Total other comprehensive income (loss) $ 5     $ 13   $ (18 )   $ (17 )
               
Total comprehensive income (loss) attributable to:              
Equity holders of Constellation Software Inc.   99       96     73       149  
Non-controlling interests   (16 )         (188 )      
Total comprehensive income (loss) $ 83     $ 96   $ (115 )   $ 149  
               
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, 2021              
    Equity Attributable to Shareholders of CSI    
    Capital stock Other equity Accumulated other comprehensive income (loss) Retained earnings Total Non-controlling interests Total equity
                 
Balance at January 1, 2021 $ 99 $   $ (31 ) $ 980   $ 1,048       $ 1,048  
                 
Total comprehensive income (loss) for the period:              
                 
Net income (loss)             80     80     (177 )   (97 )
                 
Other comprehensive income (loss)              
                 
Foreign currency translation differences from              
  foreign operations and other         (6 )       (6 )   (11 )   (18 )
                 
Total other comprehensive income (loss)              
  for the period         (6 )       (6 )   (11 )   (18 )
                 
Total comprehensive income (loss) for the period         (6 )   80     73     (188 )   (115 )
                 
Transactions with owners, recorded directly in equity              
                 
Special dividend of Topicus Subordinate Voting Shares     (141 )   (16 )       (157 )   157      
                 
Issuance of Topicus Coop Ordinary Units to non-controlling interests     (21 )   (2 )       (23 )   23      
                 
Net acquisition of non-controlling interest associated with acquisitions and other movements     1         0     1     2     3  
                 
Dividends to shareholders of the Company           (42 )   (42 )       (42 )
                 
Reclassification of Redeemable preferred securities of Topicus Coop from liabilities to non-controlling interest                     434     434  
                 
Accrued dividends to preference unit holders of Topicus Coop                     (5 )   (5 )
                 
Balance at June 30, 2021 $ 99 $ (162 )   (56 ) $ 1,017   $ 899   $ 423   $ 1,322  
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, 2020              
                 
    Equity Attributable to Shareholders of CSI    
    Capital stock Other equity Accumulated other comprehensive income (loss) Retained earnings Total Non-controlling interests Total equity
                 
Balance at January 1, 2020 $ 99 $ $ (40 ) $ 628   $ 687   $ $ 687  
                 
Total comprehensive income (loss) for the period:              
                 
Net income (loss)           166     166       166  
                 
Other comprehensive income (loss)              
                 
Foreign currency translation differences from              
  foreign operations and other       (17 )       (17 )     (17 )
                 
Total other comprehensive income (loss) for the period       (17 )       (17 )     (17 )
                 
Total comprehensive income (loss) for the period       (17 )   166     149       149  
                 
Transactions with owners, recorded directly in equity              
Dividends to shareholders of the Company           (42 )   (42 )     (42 )
                 
Balance at June 30, 2020 $ 99 $ $ (57 ) $ 752   $ 794   $ $ 794  
                 
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.)
                   
Three and six months ended June 30, 2021              
Unaudited              
      Three months ended June 30,   Six months ended June 30,
        2021       2020       2021       2020  
                   
Cash flows from (used in) operating activities:              
  Net income (loss) $ 78     $ 83     $ (97 )   $ 166  
  Adjustments for:              
    Depreciation   30       25       59       51  
    Amortization of intangible assets   124       96       242       190  
    IRGA/TSS Membership liability revaluation charge   22       17       82       35  
    Finance and other expense (income)   (2 )     (1 )     (4 )     (2 )
    Bargain purchase (gain)   0       (0 )     0       (0 )
    Impairment of intangible and other non-financial assets   2       4       5       8  
    Redeemable preferred securities expense (income)   32             295        
    Finance costs   17       10       32       22  
    Income tax expense (recovery)   50       48       99       80  
    Foreign exchange loss (gain)   15       10       2       4  
  Change in non-cash operating assets and liabilities              
    exclusive of effects of business combinations   (99 )     (35 )     100       100  
  Income taxes paid   (97 )     (19 )     (149 )     (57 )
  Net cash flows from (used in) operating activities   171       237       667       597  
                   
Cash flows from (used in) financing activities:              
  Interest paid on lease obligations   (2 )     (2 )     (5 )     (4 )
  Interest paid on debt   (9 )     (5 )     (18 )     (14 )
  Increase (decrease) in CSI facility         100             35  
  Increase (decrease) in revolving credit debt facilities without recourse to CSI   6             12       (55 )
  Proceeds from issuance of term debt facilities without recourse to CSI   55       15       134       15  
  Repayments of term debt facilities without recourse to CSI   (1 )     (3 )     (2 )     (4 )
  Credit facility transaction costs   (2 )     (0 )     (4 )     (0 )
  Payments of lease obligations   (20 )     (16 )     (41 )     (30 )
  Distribution to the Joday Group               (22 )      
  Dividends paid   (21 )     (21 )     (42 )     (42 )
  Net cash flows from (used in) in financing activities   6       67       12       (100 )
                   
Cash flows from (used in) investing activities:              
  Acquisition of businesses   (292 )     (68 )     (606 )     (175 )
  Cash obtained with acquired businesses   40       10       85       24  
  Post-acquisition settlement payments, net of receipts   (39 )     (23 )     (85 )     (55 )
  Receipt of additional subscription amount from the sellers of Topicus.com B.V.   33             33        
  Purchases of other investments         (1 )     (0 )     (2 )
  Interest, dividends and other proceeds received   1       1       3       1  
  Property and equipment purchased   (7 )     (6 )     (11 )     (13 )
  Net cash flows from (used in) investing activities   (263 )     (87 )     (582 )     (220 )
                   
Effect of foreign currency on              
  cash and cash equivalents   5       5       (4 )     (9 )
                   
Increase (decrease) in cash   (81 )     221       94       269  
                   
Cash, beginning of period $ 932     $ 364     $ 758     $ 316  
                   
Cash, end of period   851     $ 585     $ 851     $ 585  
                   



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