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Constellation Software Inc. Announces Results for the Second Quarter Ended June 30, 2021 and Declares Quarterly Dividend

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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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