The following press release should be read in conjunction with the Company’s Unaudited Condensed Consolidated Interim Financial Statements for the three and nine months ended
Q3 2023 and Subsequent Headlines:
- Revenue grew 23% (8% organic growth, 6% after adjusting for changes in foreign exchange rates) to
$2,126 million compared to$1,725 million in Q3 2022. - A
$37 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 increased 30% to
$177 million ($8.36 on a diluted per share basis) from$136 million ($6.42 on a diluted per share basis) in Q3 2022. - On
September 14, 2023 , the Company completed the acquisition of the Optimal Blue business from Intercontinental Exchange, Inc. The Company paid cash of$201 million and assumed an estimated cash holdback payable of$1 million and a long-term promissory note payable of$500 million . - A number of additional acquisitions were completed for aggregate cash consideration of
$187 million (which includes acquired cash). Deferred payments associated with these acquisitions have an estimated value of$37 million resulting in total consideration of$223 million . - Cash flows from operations (“CFO”) were
$513 million , an increase of 60%, or$192 million , compared to$321 million for the comparable period in 2022. - Free cash flow available to shareholders1 (“FCFA2S”) increased 60% or
$138 million to$367 million compared to$229 million for the same period in 2022. - On
October 6, 2023 , a total of$157 million (C$213 million ) principal amount of Debentures were issued at a price ofC$133.00 perC$100.00 principal amount of Debentures purchased, representing proceeds to the Company of$209 million (C$283 million ) which was used by the Company to pay down indebtedness under its existing credit facility.
Total revenue for the quarter ended
1. | See Non-IFRS measures. |
The Net income attributable to common shareholders of CSI for the quarter ended
For the quarter ended
For the quarter ended
The board of directors of Constellation announced today the appointment of
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 | Nine months ended | |||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||
($ in millions) | ($ in millions) | |||||||||||
Net cash flows from operating activities | 513 | 321 | 1,268 | 897 | ||||||||
Adjusted for: | ||||||||||||
Interest paid on lease obligations | (3 | ) | (3 | ) | (8 | ) | (8 | ) | ||||
Interest paid on other facilities | (34 | ) | (23 | ) | (96 | ) | (49 | ) | ||||
Proceeds from sale of interest rate cap | (1 | ) | - | 5 | - | |||||||
Credit facility transaction costs | (1 | ) | (0 | ) | (4 | ) | (3 | ) | ||||
Payments of lease obligations | (25 | ) | (24 | ) | (78 | ) | (69 | ) | ||||
IRGA / TSS membership liability revaluation charge | (25 | ) | (33 | ) | (94 | ) | (89 | ) | ||||
Property and equipment purchased | (10 | ) | (8 | ) | (29 | ) | (27 | ) | ||||
Interest and dividends received | 0 | 0 | 1 | 0 | ||||||||
415 | 230 | 965 | 652 | |||||||||
Less amount attributable to Non-controlling interests | (47 | ) | (1 | ) | (129 | ) | (89 | ) | ||||
Free cash flow available to shareholders | 367 | 229 | 835 | 563 | ||||||||
Due to rounding, certain totals may not foot. | ||||||||||||
About
Constellation's common shares are listed on the
For further information:
Chief Financial Officer
(416) 861-9677
info@csisoftware.com
www.csisoftware.com
SOURCE:
Condensed Consolidated Interim Statements of Financial Position | ||||||||||||
(In millions of | ||||||||||||
Unaudited | ||||||||||||
Assets | ||||||||||||
Current assets: | ||||||||||||
Cash | $ | 1,076 | $ | 811 | $ | 665 | ||||||
Accounts receivable | 994 | 892 | 719 | |||||||||
Unbilled revenue | 329 | 219 | 225 | |||||||||
Inventories | 56 | 48 | 46 | |||||||||
Other assets | 497 | 497 | 474 | |||||||||
2,951 | 2,466 | 2,129 | ||||||||||
Non-current assets: | ||||||||||||
Property and equipment | 129 | 128 | 119 | |||||||||
Right of use assets | 282 | 283 | 266 | |||||||||
Deferred income taxes | 84 | 159 | 149 | |||||||||
Other assets | 199 | 174 | 160 | |||||||||
Intangible assets | 6,358 | 4,662 | 4,407 | |||||||||
7,052 | 5,406 | 5,101 | ||||||||||
Total assets | $ | 10,004 | $ | 7,872 | $ | 7,230 | ||||||
Liabilities and Shareholders' Equity | ||||||||||||
Current liabilities: | ||||||||||||
Debt with recourse to | $ | 907 | $ | 505 | $ | 364 | ||||||
Debt without recourse to | 235 | 316 | 234 | |||||||||
Redeemable preferred securities | 536 | - | - | |||||||||
Accounts payable and accrued liabilities | 1,246 | 1,083 | 916 | |||||||||
Dividends payable | 21 | 21 | 21 | |||||||||
Deferred revenue | 1,778 | 1,482 | 1,426 | |||||||||
Provisions | 8 | 11 | 9 | |||||||||
Acquisition holdback payables | 153 | 159 | 150 | |||||||||
Lease obligations | 103 | 96 | 93 | |||||||||
Income taxes payable | 112 | 99 | 103 | |||||||||
5,098 | 3,772 | 3,316 | ||||||||||
Non-current liabilities: | ||||||||||||
Debt with recourse to | 617 | 567 | 522 | |||||||||
Debt without recourse to | 1,275 | 586 | 705 | |||||||||
Deferred income taxes | 517 | 465 | 447 | |||||||||
Acquisition holdback payables | 87 | 73 | 62 | |||||||||
Lease obligations | 216 | 218 | 204 | |||||||||
Other liabilities | 238 | 258 | 273 | |||||||||
2,949 | 2,167 | 2,214 | ||||||||||
Total liabilities | 8,047 | 5,938 | 5,530 | |||||||||
Shareholders' equity: | ||||||||||||
Capital stock | 99 | 99 | 99 | |||||||||
Accumulated other comprehensive income (loss) | (159 | ) | (150 | ) | (227 | ) | ||||||
Retained earnings | 1,712 | 1,763 | 1,632 | |||||||||
Non-controlling interests | 304 | 221 | 196 | |||||||||
1,957 | 1,933 | 1,700 | ||||||||||
Total liabilities and shareholders' equity | $ | 10,004 | $ | 7,872 | $ | 7,230 | ||||||
Condensed Consolidated Interim Statements of Income (loss) | ||||||||||||||||
(In millions of | ||||||||||||||||
Unaudited | ||||||||||||||||
Three months ended | Nine months ended | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Revenue | ||||||||||||||||
License | $ | 84 | $ | 79 | $ | 254 | $ | 220 | ||||||||
Professional services | 450 | 375 | 1,290 | 985 | ||||||||||||
Hardware and other | 71 | 54 | 191 | 151 | ||||||||||||
Maintenance and other recurring | 1,521 | 1,217 | 4,349 | 3,418 | ||||||||||||
2,126 | 1,725 | 6,084 | 4,774 | |||||||||||||
Expenses | ||||||||||||||||
Staff | 1,112 | 925 | 3,291 | 2,581 | ||||||||||||
Hardware | 42 | 31 | 113 | 88 | ||||||||||||
Third party license, maintenance and professional services | 208 | 167 | 592 | 443 | ||||||||||||
Occupancy | 11 | 12 | 37 | 35 | ||||||||||||
Travel, telecommunications, supplies, software and equipment | 99 | 80 | 285 | 215 | ||||||||||||
Professional fees | 36 | 26 | 107 | 78 | ||||||||||||
Other, net | 37 | 64 | 103 | 132 | ||||||||||||
Depreciation | 41 | 38 | 120 | 105 | ||||||||||||
Amortization of intangible assets | 214 | 177 | 620 | 491 | ||||||||||||
1,799 | 1,521 | 5,268 | 4,167 | |||||||||||||
Foreign exchange loss (gain) | (23 | ) | (57 | ) | 3 | (98 | ) | |||||||||
IRGA/TSS Membership liability revaluation charge | 25 | 33 | 94 | 89 | ||||||||||||
Finance and other expense (income) | 2 | 8 | (7 | ) | 24 | |||||||||||
Bargain purchase gain | (0 | ) | (3 | ) | (1 | ) | (4 | ) | ||||||||
Impairment of intangible and other non-financial assets | 1 | - | 4 | 1 | ||||||||||||
Redeemable preferred securities expense (income) | 37 | - | 319 | - | ||||||||||||
Finance costs | 50 | 29 | 132 | 73 | ||||||||||||
91 | 11 | 544 | 86 | |||||||||||||
Income (loss) before income taxes | 236 | 193 | 272 | 521 | ||||||||||||
Current income tax expense (recovery) | 99 | 113 | 315 | 322 | ||||||||||||
Deferred income tax expense (recovery) | (32 | ) | (63 | ) | (155 | ) | (189 | ) | ||||||||
Income tax expense (recovery) | 67 | 50 | 160 | 133 | ||||||||||||
Net income (loss) | 169 | 143 | 112 | 388 | ||||||||||||
Net income (loss) attributable to: | ||||||||||||||||
Common shareholders of | 177 | 136 | 375 | 360 | ||||||||||||
Non-controlling interests | (8 | ) | 7 | (263 | ) | 28 | ||||||||||
Net income (loss) | 169 | 143 | 112 | 388 | ||||||||||||
Earnings per common share of Basic and diluted | $ | 8.36 | $ | 6.42 | $ | 17.68 | $ | 16.99 | ||||||||
Condensed Consolidated Interim Statements of Comprehensive Income (Loss) | ||||||||||||||||
(In millions of | ||||||||||||||||
Unaudited | ||||||||||||||||
Three months ended | Nine months ended | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Net income (loss) | $ | 169 | $ | 143 | $ | 112 | $ | 388 | ||||||||
Items that are or may be reclassified subsequently to net income (loss): | ||||||||||||||||
Foreign currency translation differences from foreign operations and other, net of tax | (58 | ) | (93 | ) | (27 | ) | (184 | ) | ||||||||
Other comprehensive income (loss), net of income tax | (58 | ) | (93 | ) | (27 | ) | (184 | ) | ||||||||
Total comprehensive income (loss) | $ | 111 | $ | 50 | $ | 85 | $ | 204 | ||||||||
Total other comprehensive income (loss) attributable to: | ||||||||||||||||
Common shareholders of | (46 | ) | (80 | ) | (21 | ) | (156 | ) | ||||||||
Non-controlling interests (notes 1 and 18) | (12 | ) | (13 | ) | (6 | ) | (27 | ) | ||||||||
Total other comprehensive income (loss) | $ | (58 | ) | $ | (93 | ) | $ | (27 | ) | $ | (184 | ) | ||||
Total comprehensive income (loss) attributable to: | ||||||||||||||||
Common shareholders of | 131 | 56 | 354 | 204 | ||||||||||||
Non-controlling interests | (20 | ) | (6 | ) | (269 | ) | 1 | |||||||||
Total comprehensive income (loss) | $ | 111 | $ | 50 | $ | 85 | $ | 204 | ||||||||
Condensed Consolidated Interim Statement of Changes in Equity | ||||||||||||||||||||||
(In millions of | ||||||||||||||||||||||
Unaudited | ||||||||||||||||||||||
Nine months ended | ||||||||||||||||||||||
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 | $ | 99 | $ | - | $ | (150 | ) | $ | 1,763 | $ | 1,713 | 221 | $ | 1,933 | ||||||||
Total comprehensive income (loss): | ||||||||||||||||||||||
Net income (loss) | - | - | - | 375 | 375 | (263 | ) | 112 | ||||||||||||||
Other comprehensive income (loss) | ||||||||||||||||||||||
Foreign currency translation differences from foreign operations and other, net of tax | - | - | (21 | ) | - | (21 | ) | (6 | ) | (27 | ) | |||||||||||
Total other comprehensive income (loss) | - | - | (21 | ) | - | (21 | ) | (6 | ) | (27 | ) | |||||||||||
Total comprehensive income (loss) | - | - | (21 | ) | 375 | 354 | (269 | ) | 85 | |||||||||||||
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 | - | - | - | - | - | 5 | 5 | |||||||||||||||
Other movements in non-controlling interests | - | - | 0 | 16 | 16 | (18 | ) | (2 | ) | |||||||||||||
Dividends to shareholders of the Company | - | - | - | (64 | ) | (64 | ) | - | (64 | ) | ||||||||||||
Balance at | $ | 99 | $ | - | $ | (159 | ) | $ | 1,712 | $ | 1,653 | $ | 304 | $ | 1,957 | |||||||
Condensed Consolidated Interim Statement of Changes in Equity | ||||||||||||||||||||||
(In millions of | ||||||||||||||||||||||
Unaudited | ||||||||||||||||||||||
Nine months ended | ||||||||||||||||||||||
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 | $ | 99 | $ | (179 | ) | $ | (66 | ) | $ | 1,206 | $ | 1,061 | $ | 460 | $ | 1,521 | ||||||
Total comprehensive income (loss): | ||||||||||||||||||||||
Net income (loss) | - | - | - | 360 | 360 | 28 | 388 | |||||||||||||||
Other comprehensive income (loss) | ||||||||||||||||||||||
Foreign currency translation differences from foreign operations and other, net of tax | - | - | (156 | ) | - | (156 | ) | (27 | ) | (184 | ) | |||||||||||
Total other comprehensive income (loss) | - | - | (156 | ) | - | (156 | ) | (27 | ) | (184 | ) | |||||||||||
Total comprehensive income (loss) | - | - | (156 | ) | 360 | 204 | 1 | 204 | ||||||||||||||
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 | - | - | 41 | 41 | ||||||||||||||||||
Other movements in non-controlling interests | - | 2 | 2 | (5 | ) | (2 | ) | |||||||||||||||
Dividends to shareholders of the Company (note 12) | - | - | - | (64 | ) | (64 | ) | - | (64 | ) | ||||||||||||
Reclassification of other equity to retained earnings | - | (127 | ) | 127 | - | - | ||||||||||||||||
Balance at | $ | 99 | $ | - | $ | (227 | ) | $ | 1,632 | $ | 1,504 | $ | 196 | $ | 1,700 | |||||||
Condensed Consolidated Interim Statements of Cash Flows | ||||||||||||||||
(In millions of | ||||||||||||||||
Unaudited | ||||||||||||||||
Three months ended | Nine months ended | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Cash flows from (used in) operating activities: | ||||||||||||||||
Net income (loss) | $ | 169 | $ | 143 | $ | 112 | $ | 388 | ||||||||
Adjustments for: | ||||||||||||||||
Depreciation | 41 | 38 | 120 | 105 | ||||||||||||
Amortization of intangible assets | 214 | 177 | 620 | 491 | ||||||||||||
IRGA/TSS Membership liability revaluation charge | 25 | 33 | 94 | 89 | ||||||||||||
Finance and other expense (income) | 2 | 8 | (7 | ) | 24 | |||||||||||
Bargain purchase (gain) | (0 | ) | (3 | ) | (1 | ) | (4 | ) | ||||||||
Impairment of intangible and other non-financial assets | 1 | - | 4 | 1 | ||||||||||||
Redeemable preferred securities expense (income) | 37 | - | 319 | - | ||||||||||||
Finance costs | 50 | 29 | 132 | 73 | ||||||||||||
Income tax expense (recovery) | 67 | 50 | 160 | 133 | ||||||||||||
Foreign exchange loss (gain) | (23 | ) | (57 | ) | 3 | (98 | ) | |||||||||
Change in non-cash operating assets and liabilities exclusive of effects of business combinations | (7 | ) | (8 | ) | 23 | (27 | ) | |||||||||
Income taxes paid | (62 | ) | (89 | ) | (310 | ) | (279 | ) | ||||||||
Net cash flows from (used in) operating activities | 513 | 321 | 1,268 | 897 | ||||||||||||
Cash flows from (used in) financing activities: | ||||||||||||||||
Interest paid on lease obligations | (3 | ) | (3 | ) | (8 | ) | (8 | ) | ||||||||
Interest paid on debt | (34 | ) | (23 | ) | (96 | ) | (49 | ) | ||||||||
Proceeds from sale of interest rate cap | (1 | ) | - | 5 | - | |||||||||||
Increase (decrease) in CSI facility | 175 | (32 | ) | 364 | 205 | |||||||||||
Increase (decrease) in Topicus revolving credit debt facility without recourse to CSI | 5 | 7 | 43 | 112 | ||||||||||||
Proceeds from issuance of debt facilities without recourse to CSI | 35 | 22 | 290 | 447 | ||||||||||||
Repayments of debt facilities without recourse to CSI | (100 | ) | (17 | ) | (227 | ) | (30 | ) | ||||||||
Other financing activities | (2 | ) | 3 | (1 | ) | 4 | ||||||||||
Credit facility transaction costs | (1 | ) | (0 | ) | (4 | ) | (3 | ) | ||||||||
Payments of lease obligations | (25 | ) | (24 | ) | (78 | ) | (69 | ) | ||||||||
Distribution to the | - | - | - | (23 | ) | |||||||||||
Dividends paid to redeemable preferred security holders | - | - | - | (7 | ) | |||||||||||
Dividends paid to common shareholders of the Company | (21 | ) | (21 | ) | (64 | ) | (64 | ) | ||||||||
Net cash flows from (used in) in financing activities | 28 | (89 | ) | 224 | 516 | |||||||||||
Cash flows from (used in) investing activities: | ||||||||||||||||
Acquisition of businesses | (389 | ) | (207 | ) | (1,233 | ) | (1,421 | ) | ||||||||
Cash obtained with acquired businesses | 19 | 42 | 113 | 190 | ||||||||||||
Post-acquisition settlement payments, net of receipts | (35 | ) | (39 | ) | (168 | ) | (98 | ) | ||||||||
Purchases of investments and other assets | (1 | ) | (0 | ) | (19 | ) | (96 | ) | ||||||||
Proceeds from sales of other investments and other assets | - | - | 119 | 3 | ||||||||||||
Decrease (increase) in restricted cash | (1 | ) | - | (1 | ) | - | ||||||||||
Interest, dividends and other proceeds received | 0 | 1 | 3 | 4 | ||||||||||||
Property and equipment purchased | (10 | ) | (8 | ) | (29 | ) | (27 | ) | ||||||||
Net cash flows from (used in) investing activities | (416 | ) | (211 | ) | (1,216 | ) | (1,445 | ) | ||||||||
Effect of foreign currency on cash | (19 | ) | (32 | ) | (10 | ) | (67 | ) | ||||||||
Increase (decrease) in cash | 107 | (11 | ) | 265 | (99 | ) | ||||||||||
Cash, beginning of period | $ | 970 | $ | 676 | $ | 811 | $ | 763 | ||||||||
Cash, end of period | $ | 1,076 | $ | 665 | $ | 1,076 | $ | 665 | ||||||||
Source:
2023 GlobeNewswire, Inc., source