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home / news releases / CSU:CC - Constellation Software Inc. Announces Results for the Second Quarter Ended June 30 2023 and Declares Quarterly Dividend

CSU:CC - Constellation Software Inc. Announces Results for the Second Quarter Ended June 30 2023 and Declares Quarterly Dividend

Constellation Software Inc.

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 shareholders 1 (“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:

Three months ended
June 30,
Six months ended
June 30,
2023
2022
2023
2022
($ in millions)
($ in millions)
Net cash flows from operating activities
123
78
755
576
Adjusted for:
Interest paid on lease obligations
(3
)
(3
)
(5
)
(5
)
Interest paid on other facilities
(36
)
(16
)
(62
)
(26
)
Proceeds from sale of interest rate cap
6
-
6
-
Credit facility transaction costs
(1
)
(2
)
(3
)
(3
)
Payments of lease obligations
(28
)
(23
)
(53
)
(45
)
IRGA / TSS membership liability revaluation charge
(31
)
(29
)
(69
)
(56
)
Property and equipment purchased
(9
)
(12
)
(19
)
(19
)
Interest and dividends received
0
0
1
0
21
(7
)
550
422
Less amount attributable to
Non-controlling interests
(7
)
18
(83
)
(87
)
Free cash flow available to shareholders
14
12
467
335
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

S OURCE: 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, 2023
December 31, 2022
June 30, 2022
Assets
Current assets:
Cash
$
970
$
811
$
676
Accounts receivable
976
892
758
Unbilled revenue
305
218
212
Inventories
56
48
45
Other assets
459
497
512
2,767
2,465
2,203
Non-current assets:
Property and equipment
128
128
128
Right of use assets
285
283
284
Deferred income taxes
89
159
114
Other assets
189
172
145
Intangible assets
5,730
4,667
4,447
6,422
5,410
5,117
Total assets
$
9,188
$
7,875
$
7,320
Liabilities and Shareholders' Equity
Current liabilities:
Debt with recourse to Constellation Software Inc.
$
734
$
505
$
389
Debt without recourse to Constellation Software Inc.
283
316
206
Redeemable preferred securities
500
-
-
Accounts payable and accrued liabilities
1,084
1,082
883
Dividends payable
21
21
21
Deferred revenue
1,867
1,484
1,555
Provisions
11
11
10
Acquisition holdback payables
148
159
140
Lease obligations
98
96
96
Income taxes payable
77
99
81
4,824
3,772
3,380
Non-current liabilities:
Debt with recourse to Constellation Software Inc.
614
567
541
Debt without recourse to Constellation Software Inc.
795
586
746
Deferred income taxes
530
466
455
Acquisition holdback payables
104
75
62
Lease obligations
216
218
222
Other liabilities
237
257
244
2,496
2,169
2,269
Total liabilities
7,320
5,941
5,650
Shareholders' equity:
Capital stock
99
99
99
Accumulated other comprehensive income (loss)
(112
)
(150
)
(147
)
Retained earnings
1,547
1,763
1,514
Non-controlling interests
335
221
204
1,868
1,933
1,670
Total liabilities and shareholders' equity
$
9,188
$
7,875
$
7,320


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,
2023
2022
2023
2022
Revenue
License
$
89
$
72
$
170
$
141
Professional services
428
340
840
610
Hardware and other
63
50
121
97
Maintenance and other recurring
1,459
1,156
2,828
2,201
2,039
1,618
3,958
3,050
Expenses
Staff
1,112
873
2,179
1,656
Hardware
36
29
71
56
Third party license, maintenance and professional services
199
153
384
276
Occupancy
13
12
26
23
Travel, telecommunications, supplies, software and equipment
97
80
185
135
Professional fees
36
28
71
52
Other, net
29
32
67
68
Depreciation
40
35
79
67
Amortization of intangible assets
213
168
406
314
1,774
1,411
3,469
2,647
Foreign exchange loss (gain)
16
(42
)
26
(42
)
IRGA/TSS Membership liability revaluation charge
31
29
69
56
Finance and other expense (income)
(2
)
18
(9
)
15
Bargain purchase gain
0
(0
)
(1
)
(1
)
Impairment of intangible and other non-financial assets
1
0
3
1
Redeemable preferred securities expense (income)
94
-
282
-
Finance costs
46
25
82
44
186
30
453
74
Income (loss) before income taxes
79
177
36
328
Current income tax expense (recovery)
114
110
217
209
Deferred income tax expense (recovery)
(61
)
(67
)
(123
)
(126
)
Income tax expense (recovery)
53
43
93
83
Net income (loss)
26
134
(57
)
245
Net income (loss) attributable to:
Common shareholders of Constellation Software Inc.
103
126
198
224
Non-controlling interests
(78
)
8
(255
)
21
Net income (loss)
26
134
(57
)
245
Earnings per common share of Constellation Software Inc.
Basic and diluted
$
4.88
$
5.94
$
9.32
$
10.58


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,
2023
2022
2023
2022
Net income (loss)
$
26
$
134
$
(57
)
$
245
Items that are or may be reclassified subsequently to net income (loss):
Foreign currency translation differences from foreign operations and other, net of tax
15
(96
)
31
(91
)
Other comprehensive income (loss), net of income tax
15
(96
)
31
(91
)
Total comprehensive income (loss)
$
41
$
38
$
(26
)
$
154
Total other comprehensive income (loss) attributable to:
Common shareholders of Constellation Software Inc.
15
(85
)
26
(76
)
Non-controlling interests
0
(11
)
6
(15
)
Total other comprehensive income (loss)
$
15
$
(96
)
$
31
$
(91
)
Total comprehensive income (loss) attributable to:
Common shareholders of Constellation Software Inc.
118
41
223
148
Non-controlling interests
(77
)
(3
)
(249
)
6
Total comprehensive income (loss)
$
41
$
38
$
(26
)
$
154


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
Other equity
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 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, 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):
Net income (loss)
-
-
-
224
224
21
245
Other comprehensive income (loss)
Foreign currency translation differences from
foreign operations and other, net of tax
-
-
(76
)
-
(76
)
(15
)
(91
)
Total other comprehensive income (loss)
-
-
(76
)
-
(76
)
(15
)
(91
)
Total comprehensive income (loss)
-
-
(76
)
224
148
6
154
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
-
-
40
40
Other movements in non-controlling interests
-
(1
)
(1
)
(1
)
(2
)
Dividends to shareholders of the Company (note 12)
-
-
-
(42
)
(42
)
-
(42
)
Reclassification of other equity to retained earnings
-
(127
)
127
-
-
Balance at June 30, 2022
$
99
$
-
$
(147
)
$
1,514
$
1,466
$
204
$
1,670






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,
2023
2022
2023
2022
Cash flows from (used in) operating activities:
Net income (loss)
$
26
$
134
$
(57
)
$
245
Adjustments for:
Depreciation
40
35
79
67
Amortization of intangible assets
213
168
406
314
IRGA/TSS Membership liability revaluation charge
31
29
69
56
Finance and other expense (income)
(2
)
18
(9
)
15
Bargain purchase (gain)
0
(0
)
(1
)
(1
)
Impairment of intangible and other non-financial assets
1
0
3
1
Redeemable preferred securities expense (income)
94
-
282
-
Finance costs
46
25
82
44
Income tax expense (recovery)
53
43
93
83
Foreign exchange loss (gain)
16
(42
)
26
(42
)
Change in non-cash operating assets and liabilities
exclusive of effects of business combinations
(238
)
(188
)
30
(18
)
Income taxes paid
(158
)
(146
)
(249
)
(190
)
Net cash flows from (used in) operating activities
123
78
755
576
Cash flows from (used in) financing activities:
Interest paid on lease obligations
(3
)
(3
)
(5
)
(5
)
Interest paid on debt
(36
)
(16
)
(62
)
(26
)
Proceeds from sale of interest rate cap
6
-
6
-
Increase (decrease) in CSI facility
240
237
189
237
Increase (decrease) in Topicus revolving credit debt facility without recourse to CSI
49
48
38
105
Proceeds from issuance of debt facilities without recourse to CSI
75
342
254
425
Repayments of debt facilities without recourse to CSI
(42
)
(6
)
(128
)
(13
)
Other financing activities
(2
)
2
1
2
Credit facility transaction costs
(1
)
(2
)
(3
)
(3
)
Payments of lease obligations
(28
)
(23
)
(53
)
(45
)
Distribution to the Joday Group
-
-
-
(23
)
Dividends paid to redeemable preferred security holders
-
-
-
(7
)
Dividends paid to common shareholders of the Company
(21
)
(21
)
(42
)
(42
)
Net cash flows from (used in) in financing activities
238
559
195
605
Cash flows from (used in) investing activities:
Acquisition of businesses
(393
)
(1,000
)
(845
)
(1,214
)
Cash obtained with acquired businesses
48
110
93
148
Post-acquisition settlement payments, net of receipts
(61
)
(26
)
(133
)
(59
)
Purchases of investments and other assets
(16
)
-
(18
)
(96
)
Proceeds from sales of other investments and other assets
-
-
119
3
Decrease (increase) in restricted cash
29
-
(0
)
-
Interest, dividends and other proceeds received
0
3
3
4
Property and equipment purchased
(9
)
(12
)
(19
)
(19
)
Net cash flows from (used in) investing activities
(402
)
(924
)
(800
)
(1,233
)
Effect of foreign currency on
cash
1
(33
)
8
(35
)
Increase (decrease) in cash
(40
)
(321
)
159
(87
)
Cash, beginning of period
$
1,010
$
996
$
811
$
763
Cash, end of period
$
970
$
676
$
970
$
676




Stock Information
Company Name: Constellation Software Inc.
Stock Symbol: CSU:CC
Market: TSXC
Website: csisoftware.com
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