Constellation Software Inc. Announces Results for the Second Quarter Ended June 30, 2023 and Declares Quarterly Dividend

TORONTO, Aug. 11, 2023 (GLOBE NEWSWIRE) -- Constellation Software Inc. (TSX:CSU) (“Constellation” or the “Company”) today announced its financial results for the second quarter ended June 30, 2023 and declared a $1.00 per share dividend payable on October 11, 2023 to all common shareholders of record at close of business on September 20, 2023. 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, 2023 and the accompanying notes, our Management Discussion and Analysis for the three and six months ended June 30, 2023 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, 2022, which can be found on SEDAR at www.sedarplus.ca and on the Company’s website www.csisoftware.com. Additional information about the Company is also available on SEDAR at www.sedarplus.ca

Q2 2023 and Subsequent Headlines:

• Revenue grew 26% (4% organic growth, 5% after adjusting for changes in foreign exchange rates) to $2,039 million compared to $1,618 million in Q2 2022.  
• A $94 million expense related to the increase in fair value of redeemable preferred securities was incurred in the quarter, which is non-cash related. Fair value of the preferred securities is primarily dependent on the price movement of Lumine Group Inc.’s (TSXV:LMN) Subordinate Voting Shares.
• Net income attributable to common shareholders decreased 18% to $103 million ($4.88 on a diluted per share basis) from $126 million ($5.94 on a diluted per share basis) in Q2 2022.
• A number of acquisitions were completed for aggregate cash consideration of $392 million (which includes acquired cash). Deferred payments associated with these acquisitions have an estimated value of $114 million resulting in total consideration of $506 million.
• Cash flows from operations (“CFO”) were $123 million, an increase of 58%, or $45 million, compared to $78 million for the comparable period in 2022.
• Free cash flow available to shareholders¹ (“FCFA2S”) increased 22% or $3 million to $14 million compared to $12 million for the same period in 2022.
• On July 17, 2023, the Company announced that its Perseus operating group has entered into a binding commitment with Intercontinental Exchange, Inc. and Black Knight, Inc. to acquire Black Knight’s Optimal Blue business for $700 million.
• On August 3, 2023 the Company announced a rights offering pursuant to which the Company intends to distribute rights that will entitle holders of common shares of the Company on the applicable record date to purchase up to C$700 million aggregate principal amount of Debentures of the Company.

Total revenue for the quarter ended June 30, 2023 was $2,039 million, an increase of 26%, or $421 million, compared to $1,618 million for the comparable period in 2022. For the first six months of 2023 total revenues were $3,958 million, an increase of 30%, or $908 million, compared to $3,050 million for the comparable period in 2022. 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 4% and 3% respectively, 5% 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.

The Net income attributable to common shareholders of CSI for the quarter ended June 30, 2023 was $103 million compared to net income of $126 million for the same period in 2022. On a per share basis this translated into a net income per diluted share of $4.88 in the quarter ended June 30, 2023 compared to net income per diluted share of $5.94 for the same period in 2022. For the six months ended June 30, 2023, net income attributable to common shareholders of CSI was $198 million or $9.32 per diluted share compared to $224 million or $10.58 per diluted share for the same period in 2022.

For the quarter ended June 30, 2023, CFO increased $45 million to $123 million compared to $78 million for the same period in 2022 representing a increase of 58%. For the first six months of 2023, CFO increased $179 million to $755 million compared to $576 million during the same period in 2022, representing a increase of 31%.

For the quarter ended June 30, 2023, FCFA2S increased $3 million to $14 million compared to $12 million for the same period in 2022 representing an increase of 22%. For the six months ended June 30, 2023, FCFA2S increased $133 million to $467 million compared to $335 million for the same period in 2022 representing an increase of 40%.  

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:

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.