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    CSU   CA21037X1006

CONSTELLATION SOFTWARE INC.

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

08/05/2021 | 05:03pm EDT

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, 2021December 31, 2020June 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 stockOther equityAccumulated other comprehensive income (loss)Retained earningsTotal Non-controlling interestsTotal 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 stockOther equityAccumulated other comprehensive income (loss)Retained earningsTotalNon-controlling interestsTotal 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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Source: Constellation Software Inc.

2021 GlobeNewswire, Inc., source Press Releases

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Financials (USD)
Sales 2021 5 129 M - -
Net income 2021 180 M - -
Net Debt 2021 27,6 M - -
P/E ratio 2021 208x
Yield 2021 0,22%
Capitalization 38 073 M 38 090 M -
EV / Sales 2021 7,43x
EV / Sales 2022 6,33x
Nbr of Employees 19 000
Free-Float 93,8%
Chart CONSTELLATION SOFTWARE INC.
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Constellation Software Inc. Technical Analysis Chart | CSU | CA21037X1006 | MarketScreener
Technical analysis trends CONSTELLATION SOFTWARE INC.
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Income Statement Evolution
Consensus
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Mean consensus OUTPERFORM
Number of Analysts 8
Last Close Price 1 796,61 $
Average target price 1 773,99 $
Spread / Average Target -1,26%
EPS Revisions
Managers and Directors
Mark Henri Leonard Chairman & President
Jamal Nizam Baksh Chief Financial Officer
Mark Robert Miller Chief Operating Officer & Director
Bernard Anzarouth Chief Investment Officer
Stephen R. Scotchmer Lead Independent Director
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