Wednesday, May 25

Constellation Software Inc. Announces Results for the First Quarter Ended March 31, 2022 and Declares Quarterly Dividend


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TORONTO, May 04, 2022 (GLOBE NEWSWIRE) — Constellation Software Inc. (TSX:CSU) (“Constellation” or the “Company”) today announced its financial results for the first quarter ended March 31, 2022 and declared a $1.00 per share dividend payable on July 11, 2022 to all common shareholders of record at close of business on June 20, 2022. 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 months ended March 31, 2022 and the accompanying notes, our Management Discussion and Analysis for the three months ended March 31, 2022 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, 2021, 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

Q1 2022 Headlines:

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  • Revenue increased 22% (1% organic growth, 3% after adjusting for changes in foreign exchange rates) to $1,431 million compared to $1,176 million in Q1 2021.
  • Net income attributable to common shareholders was $98 million for Q1 2022 ($4.63 on a diluted per share basis), compared to a net loss attributable to common shareholders of $9 million ($0.41 on a diluted per share basis) in Q1 2021.
  • A number of acquisitions were completed for aggregate cash consideration of $214 million (which includes acquired cash). Deferred payments associated with these acquisitions have an estimated value of $59 million resulting in total consideration of $273 million.
  • Cash flows from operations (“CFO”) were $498 million, an increase of 1%, or $3 million, compared to $495 million for the comparable period in 2021.
  • Free cash flow available to shareholders1 (“FCFA2S”) increased $55 million to $324 million compared to $269 million for the same period in 2021.
  • On May 2, 2022 the Company through its wholly-owned subsidiary, N. Harris Computer Corporation, completed the purchase from Allscripts Healthcare Solutions (“Allscripts”) of Allscripts’ Hospitals and Large Physician Practices business segment.
  • Subsequent to March 31, 2022, the Company completed or entered into agreements to acquire a number of additional businesses for aggregate cash consideration of $79 million (which includes acquired cash). Deferred payments associated with these acquisitions have an estimated value of $35 million resulting in total consideration of $113 million.

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Total revenue for the quarter ended March 31, 2022 was $1,431 million, an increase of 22%, or $255 million, compared to $1,176 million for the comparable period in 2021. The increase is primarily attributable to growth from acquisitions as the Company experienced organic growth of 1%, 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.

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The net income attributable to common shareholders of CSI for the quarter ended March 31, 2022 was $98 million compared to a net loss of $9 million for the same period in 2021. On a per share basis this translated into net income per basic and diluted share of $4.63 in the quarter ended March 31, 2022 compared to a net loss per basic and diluted share of $0.41 for the same period in 2021.

For the quarter ended March 31, 2022, CFO increased $3 million to $498 million compared to $495 million for the same period in 2021 representing an increase of 1%.

For the quarter ended March 31, 2022, FCFA2S increased $55 million to $324 million compared to $269 million for the same period in 2021 representing an increase of 21%.

Forward Looking Statements

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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 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. 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.  

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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,
 
    2022   2021    
  ($ in millions, except percentages)
         
Net cash flows from operating activities   498   495    
Adjusted for:        
Interest paid on lease obligations   (2 ) (2 )  
Interest paid on other facilities   (10 ) (9 )  
Credit facility transaction costs   (1 ) (2 )  
Payments of lease obligations   (22 ) (20 )  
IRGA / TSS membership liability revaluation charge   (27 ) (61 )  
Property and equipment purchased   (8 ) (4 )  
Interest and dividends received   0   1    
         
    429   397    
Less amount attributable to        
  Non-controlling interests   (105 ) (128 )  
         
Free cash flow available to shareholders   324   269    
         
Due to rounding, certain totals may not foot.        
         

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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
[email protected]
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, 2022   December 31, 2021   March 31, 2021    
                         
Assets                    
                         
Current assets:                    
  Cash             $ 996   $ 763   $ 932    
  Accounts receivable             660     600     518    
  Unbilled revenue             164     140     128    
  Inventories               41     35     27    
  Other assets             443     296     288    
                    2,305     1,835     1,892    
                         
Non-current assets:                  
  Property and equipment           98     93     92    
  Right of use assets             278     245     266    
  Deferred income taxes           66     66     57    
  Other assets             107     99     80    
  Intangible assets   3,644     3,428     2,759    
                    4,193     3,931     3,254    
                         
Total assets             $ 6,499   $ 5,766   $ 5,147    
                         
Liabilities and Shareholders’ Equity            
                         
Current liabilities:                  
  Debt with recourse to Constellation Software Inc.   $ 142   $ 143   $ 122    
  Debt without recourse to Constellation Software Inc.     124     60     34    
  Redeemable preferred securities             7     390    
  Accounts payable and accrued liabilities         772     832     637    
  Dividends payable             21     22     21    
  Deferred revenue             1,536     1,158     1,296    
  Provisions               12     11     15    
  Acquisition holdback payables           119     94     78    
  Lease obligations             85     79     77    
  Income taxes payable           119     56     91    
                    2,931     2,461     2,761    
                         
Non-current liabilities:                  
  Debt with recourse to Constellation Software Inc.     560     561     527    
  Debt without recourse to Constellation Software Inc.     443     354     271    
  Deferred income taxes           448     436     371    
  Acquisition holdback payables           60     68     31    
  Lease obligations             218     190     214    
  Other liabilities             200     175     139    
                    1,930     1,784     1,554    
                         
Total liabilities               4,860     4,245     4,315    
                         
                         
Shareholders’ equity:                  
  Capital stock             99     99     99    
  Other equity                 (179 )   (165 )  
  Accumulated other comprehensive income (loss)     (62 )   (66 )   (67 )  
  Retained earnings             1,410     1,206     950    
  Non-controlling interests           191     460     15    
                    1,638     1,521     832    
                         
                         
Total liabilities and shareholders’ equity       $ 6,499   $ 5,766   $ 5,147    
                         

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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 March 31,  
                2022       2021    
                     
                     
Revenue                
License         $ 69     $ 66    
Professional services         270       237    
Hardware and other         47       39    
Maintenance and other recurring       1,045       834    
                1,431       1,176    
                     
Expenses                
Staff           783       641    
Hardware           27       22    
Third party license, maintenance and professional services   122       96    
Occupancy           11       9    
Travel, telecommunications, supplies, software and equipment   56       39    
Professional fees         24       15    
Other, net           35       5    
Depreciation           32       29    
Amortization of intangible assets       146       118    
                1,236       975    
                     
                     
Foreign exchange loss (gain)       0       (13 )  
IRGA/TSS Membership liability revaluation charge   27       61    
Finance and other expense (income)     (2 )     (2 )  
Bargain purchase gain         (1 )        
Impairment of intangible and other non-financial assets   1       3    
Redeemable preferred securities expense (income)         263    
Finance costs           19       15    
                44       327    
                     
Income (loss) before income taxes       151       (126 )  
                     
Current income tax expense (recovery)     99       64    
Deferred income tax expense (recovery)     (58 )     (14 )  
Income tax expense (recovery)       40       49    
                     
Net income (loss)         111       (175 )  
                     
Net income (loss) attributable to:            
Common shareholders of Constellation Software Inc.   98       (9 )  
Non-controlling interests         13       (166 )  
Net income (loss)         111       (175 )  
                     
Earnings per common share of Constellation Software Inc.        
Basic and diluted         $ 4.63     $ (0.41 )  
                     

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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 March 31,  
                2022       2021    
                     
Net income (loss)       $ 111     $ (175 )  
                     
Items that are or may be reclassified subsequently to net income (loss):        
                     
Foreign currency translation differences from foreign operations and other, net of tax   6       (23 )  
                     
Other comprehensive income (loss) for the period, net of income tax   6       (23 )  
                     
Total comprehensive income (loss) for the period $ 116     $ (198 )  
                     
Total other comprehensive income (loss) attributable to:        
Common shareholders of Constellation Software Inc.   9       (17 )  
Non-controlling interests         (3 )     (6 )  
Total other comprehensive income (loss) $ 6     $ (23 )  
                     
Total comprehensive income (loss) attributable to:        
Common shareholders of Constellation Software Inc.   107       (26 )  
Non-controlling interests         9       (172 )  
Total comprehensive income (loss)     $ 116     $ (198 )  

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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                  
Three months ended March 31, 2022                
      Equity Attributable to Common Shareholders of CSI      
      Capital
stock
Other
equity

  Accumulated
other
comprehensive
income (loss)

  Retained
earnings
Total
  Non-controlling
interests

  Total
equity

   
                     
Balance at January 1, 2022 $ 99 $ (179 ) $ (66 ) $ 1,206   $ 1,061     460   $ 1,521    
                     
Total comprehensive income (loss) for the period:                
                     
Net income (loss)             98     98     13     111    
                     
Other comprehensive income (loss)                
                     
Foreign currency translation differences from foreign operations and other, net of tax         9         9     (3 )   6    
                     
Total other comprehensive income (loss) for the period
        9         9     (3 )   6    
                     
Total comprehensive income (loss) for the period         9     98     107     9     116    
                     
Transactions with owners, recorded directly in equity                
                     
Conversion of redeemable preferred securities to subordinate voting shares of Topicus.com Inc. and ordinary units of Topicus Coop and other movements     305     (5 )       301     (301 )      
                     
Non-controlling interests arising from business combinations                     23     23    
                     
Other movements in non-controlling interests             (0 )   (0 )   (0 )   (1 )  
                     
Dividends to shareholders of the Company             (21 )   (21 )       (21 )  
                     
Reclassification of other equity to retained earnings     (127 )     127                
                     
Balance at March 31, 2022 $ 99 $   $ (62 ) $ 1,410   $ 1,447   $ 191   $ 1,638    
                     

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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                  
Three months ended March 31, 2021                
                     
      Equity Attributable to Common 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)             (9 )   (9 )   (166 )   (175 )  
                     
Other comprehensive income (loss)                
                     
Foreign currency translation differences from foreign operations and other, net of tax         (17 )       (17 )   (6 )   (23 )  
                     
Total other comprehensive income (loss) for the period         (17 )       (17 )   (6 )   (23 )  
                     
Total comprehensive income (loss) for the period         (17 )   (9 )   (26 )   (172 )   (198 )  
                     
Transactions with owners, recorded directly in equity                
                     
Special dividend of Topicus Subordinated 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     (3 )       0     (3 )   6     3    
                     
  Dividends to shareholders of the Company           (21 )   (21 )       (21 )  
                     
Balance at March 31, 2021 $ 99 $ (165 ) $ (67 ) $ 950   $ 817   $ 15   $ 832    
                     

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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 March 31,  
                2022       2021    
                     
Cash flows from (used in) operating activities:        
  Net income (loss)   $ 111     $ (175 )  
  Adjustments for:          
    Depreciation     32       29    
    Amortization of intangible assets   146       118    
    IRGA/TSS Membership liability revaluation charge   27       61    
    Finance and other expense (income)   (2 )     (2 )  
    Bargain purchase (gain)   (1 )        
    Impairment of intangible and other non-financial assets   1       3    
    Redeemable preferred securities expense (income)         263    
    Finance costs     19       15    
    Income tax expense (recovery)   40       49    
    Foreign exchange loss (gain)   0       (13 )  
  Change in non-cash operating assets and liabilities        
    exclusive of effects of business combinations   169       198    
  Income taxes paid   (44 )     (51 )  
  Net cash flows from (used in) operating activities   498       495    
                     
Cash flows from (used in) financing activities:        
  Interest paid on lease obligations   (2 )     (2 )  
  Interest paid on debt     (10 )     (9 )  
  Increase (decrease) in revolving credit debt facilities without recourse to CSI   57       6    
  Proceeds from issuance of term debt facilities without recourse to CSI   83       79    
  Repayments of term debt facilities without recourse to CSI   (7 )     (1 )  
  Credit facility transaction costs   (1 )     (2 )  
  Payments of lease obligations   (22 )     (20 )  
  Distribution to the Joday Group   (23 )     (22 )  
  Dividends paid to redeemable preferred security holders   (7 )        
  Dividends paid to common shareholders of the Company   (21 )     (21 )  
  Net cash flows from (used in) in financing activities   47       6    
                     
Cash flows from (used in) investing activities:        
  Acquisition of businesses   (214 )     (314 )  
  Cash obtained with acquired businesses   38       44    
  Post-acquisition settlement payments, net of receipts   (33 )     (46 )  
  Purchases of other investments   (96 )     (0 )  
  Proceeds from sales of other investments   3          
  Interest, dividends and other proceeds received   0       3    
  Property and equipment purchased   (8 )     (4 )  
  Net cash flows from (used in) investing activities   (309 )     (319 )  
                     
Effect of foreign currency on        
  cash and cash equivalents   (2 )     (9 )  
                     
Increase (decrease) in cash   233       174    
                     
Cash, beginning of period $ 763     $ 758    
                     
Cash, end of period $ 996     $ 932    
                     

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