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Constellation Software Inc. and Topicus.Com Inc. Announce Results for Topicus.com Inc. for the First Quarter Ended March 31, 2023

TORONTO, May 04, 2023 (GLOBE NEWSWIRE) — Topicus.com Inc. (TSXV:TOI) in a joint release with Constellation Software Inc. (TSX:CSU) today announced financial results for Topicus.com Inc. (“Topicus” or the “Company”) for the first quarter ended March 31, 2023. Please note that all amounts referred to in this press release are in Euros 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 months ended March 31, 2023 and the accompanying notes, our Management’s Discussion and Analysis for the three months ended March 31, 2023 and the Annual Consolidated Financial Statements of Topicus.com Inc. for the year ended December 31, 2022, which we prepared in accordance with International Financial Reporting Standards (“IFRS”) and the Company’s annual Management’s Discussion and Analysis for the year ended December 31, 2022, which can be found on SEDAR at www.sedar.com and on Topicus.com Inc.’s website www.topicus.com. Additional information about Topicus.com Inc. is also available on SEDAR at www.sedar.com.

Q1 2023 Headlines:

  • Revenue increased 30% (8% organic growth) to €264.4 million compared to €203.8 million in Q1 2022.  
  • Net income increased to €21.1 million (€0.17 on a diluted per share basis) from €20.4 million (€0.14 on a diluted per share basis).
  • Acquisitions were completed for aggregate cash consideration, net of an expected vendor holdback receivable, of €22.7 million, (which includes acquired cash). Deferred payments associated with these acquisitions have an estimated value of €1.1 million resulting in total consideration of €23.8 million.
  • Cash flows from operations (“CFO”) decreased €2.0 million to €174 million compared to €176 million in Q1 2022 representing a decrease of 1%.
  • Free cash flow available to shareholders1 (“FCFA2S”) increased €39.7 million to €101.1 million compared to €61.4 in Q1 2022. 

Total revenue for the quarter ended March 31, 2023 was €264.4 million, an increase of 30%, or €60.7 million, compared to €203.8 million for the comparable period in 2022. The increase for the three-month period compared to the same period in the prior year is primarily attributable to growth from acquisitions as the Company experienced organic growth of 8%.   Organic growth is not a standardized financial measure and might not be comparable to measures disclosed by other issuers.

Net income for the quarter ended March 31, 2023 increased €0.8 million to €21.1 million compared to €20.4 million for the same period in 2022. On a per share basis, this translated into net income per basic and diluted share of €0.17 in the quarter ended March 31, 2023 compared to net income per basic and diluted share of €0.14 for the same period in 2022.

For the quarter ended March 31, 2023, CFO decreased €2.0 million to €174 million compared to €176 million for the same period in 2022 representing a decrease of 1%. Contributing to the decrease in CFO was an increase in aged accounts receivable at March 31, 2023 compared to the same period in 2022.

For the quarter ended March 31, 2023, FCFA2S increased €39.7 million to €101.1 million compared to €61.4 million for the same period in 2022 representing an increase of 65%.   The increase is primarily as a result of the dividend paid to the Preferred Securities holders during the quarter ended March 31, 2022.     

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 Topicus 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 Topicus 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, dividends paid to redeemable preferred securities holders, and property and equipment purchased, and includes interest and dividends received. The portion of this amount applicable to non-controlling interests is then deducted. Topicus believes that FCFA2S is useful supplemental information as it provides an indication of the uncommitted cash flow that is available to shareholders if Topicus does not make any acquisitions, or investments, and does not repay any debts. While Topicus could use the FCFA2S to pay dividends or repurchase shares, Topicus’ objective is to invest all of our FCFA2S in acquisitions which meet Topicus’ 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 March 31,    
    2023   2022    
    (€ in millions)    
             
Net cash flows from operating activities   174.0   176.0    
Adjusted for:            
Interest paid on lease obligations   (0.3 ) (0.3 )  
Interest paid on other facilities   (3.1 ) (1.6 )  
Credit facility transaction costs   (0.1 )    
Payments of lease obligations   (5.3 ) (4.5 )  
Property and equipment purchased   (2.0 ) (2.0 )  
Dividends paid to redeemable preferred securities holders     (66.6 )  
             
    163.3   101.1    
Less amount attributable to            
non-controlling interests   (62.2 ) (39.6 )  
             
Free cash flow available to shareholders   101.1   61.4    
             
Due to rounding, certain totals may not foot.            
             

About Topicus.com Inc.

Topicus’ subordinate voting shares are listed on the Toronto Venture Stock Exchange under the symbol “TOI”. Topicus acquires, manages and builds vertical market software businesses.

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
[email protected]
www.topicus.com

SOURCE: TOPICUS.COM INC.

Topicus.com Inc.
Condensed Consolidated Interim Statements of Financial Position
(In thousands of euros, except per share amounts. Due to rounding, numbers presented may not foot.)
       
Unaudited      
  March 31, 2023 December 31, 2022 March 31, 2022
       
Assets      
       
Current assets:      
Cash 197,265   136,772   217,049
Accounts receivable 143,923   95,790   89,916
Unbilled revenue 47,210   41,036   35,124
Inventories 1,481   1,419   687
Other assets 49,574   34,778   35,068
  439,453   309,795   377,844
       
Non-current assets:      
Property and equipment 19,685   19,579   15,776
Right of use assets 53,933   54,412   54,203
Deferred income taxes 21,133   19,978   7,064
Other assets 17,021   17,030   8,250
Intangible assets 878,286   874,000   741,528
  990,057   984,999   826,820
       
Total assets 1,429,510   1,294,794   1,204,665
       
Liabilities and Shareholders’ Equity      
       
Current liabilities:      
Topicus Revolving Credit Facility and current portion of term and other loans 123,871   201,275   101,688
Loan from CSI 30,361   30,867  
Accounts payable and accrued liabilities 190,889   174,824   153,174
Deferred revenue 288,188   116,989   223,851
Provisions 1,081   1,884   1,444
Acquisition holdback payables 10,293   14,009   11,365
Lease obligations 18,384   18,824   16,747
Income taxes payable 14,041   11,467   12,687
  677,109   570,141   520,957
       
Non-current liabilities:      
Term and other loans 44,935   41,280   95,446
Loan from CSI     29,713
Deferred income taxes 154,430   150,521   125,378
Acquisition holdback payables 1,958   2,316   1,531
Lease obligations 36,635   36,634   38,279
Other liabilities 26,300   26,118   16,185
  264,258   256,869   306,532
       
Total liabilities 941,367   827,009   827,490
       
       
Shareholders’ Equity:      
Capital stock 39,412   39,412   39,412
Accumulated other comprehensive income (loss) (469 ) (232 ) 261
Retained earnings (deficit) 240,820   226,919   179,646
Non-controlling interests 208,380   201,685   157,855
  488,143   467,784   377,175
       
Total liabilities and shareholders’ equity 1,429,510   1,294,794   1,204,665
       

Topicus.com Inc.
Condensed Consolidated Interim Statements of Income (Loss)
(In thousands of euros, except per share amounts. Due to rounding, numbers presented may not foot.)
       
Unaudited      
  Three months ended March 31,
  2023   2022
       
Revenue      
License 6,977     5,467  
Professional services 69,340     50,108  
Hardware and other 2,680     2,242  
Maintenance and other recurring 185,432     145,949  
  264,430     203,767  
Expenses      
Staff 150,108     111,895  
Hardware 1,578     719  
Third party license, maintenance and professional services 20,548     17,475  
Occupancy 2,466     1,537  
Travel, telecommunications, supplies, software and equipment 9,564     6,098  
Professional fees 4,280     3,797  
Other, net 6,214     4,419  
Depreciation 7,296     6,195  
Amortization of intangible assets 27,960     22,978  
  230,014     175,112  
       
Finance and other expenses (income) 4,950     1,731  
  4,950     1,731  
       
Income (loss) before income taxes 29,467     26,924  
       
Current income tax expense (recovery) 12,328     11,222  
Deferred income tax expense (recovery) (3,989 )   (4,657 )
Income tax expense (recovery) 8,338     6,565  
       
Net income (loss) 21,128     20,359  
       
Net income (loss) attributable to:      
Equity holders of Topicus 13,900     11,571  
Non-controlling interests 7,229     8,788  
Net income (loss) 21,128     20,359  
       
Weighted average shares      
Basic shares outstanding 81,889,764     79,924,764  
Diluted shares outstanding 129,841,819     129,841,819  
       
Earnings (loss) per common share of Topicus      
Basic 0.17     0.14  
Diluted 0.17     0.14  
       
       

Topicus.com Inc.
Condensed Consolidated Interim Statements of Comprehensive Income (Loss)
(In thousands of euros, except per share amounts. Due to rounding, numbers presented may not foot.)
       
Unaudited      
  Three months ended March 31,
  2023   2022
       
Net income (loss) 21,128     20,359
       
Items that are or may be reclassified subsequently to net income (loss):      
       
Foreign currency translation differences from foreign operations and other (796 )   1,427
       
Other comprehensive (loss) income for the period, net of income tax (796 )   1,427
       
Total comprehensive income (loss) for the period 20,332     21,786
       
Total other comprehensive income (loss) attributable to:      
Equity holders of Topicus (237 )   631
Non-controlling interests (559 )   796
Total other comprehensive income (loss) (796 )   1,427
       
Total comprehensive income (loss) attributable to:      
Equity holders of Topicus 13,663     12,202
Non-controlling interests 6,669     9,584
Total comprehensive income (loss) 20,332     21,786
       

Topicus.com Inc.
Condensed Consolidated Interim Statement of Changes in Shareholders’ Equity (Deficiency)
(In thousands of euros, except per share amounts. Due to rounding, numbers presented may not foot.)
                   
Unaudited                  
Three months ended March 31, 2023                  
  Attributable to equity holders of Topicus    
  Preferred
Shares
Capital
Stock
Other
equity
Accumulated
other
comprehensive
(loss) income
  Retained
earnings
(Deficit)
  Total   Non-
controlling
interests
  Total equity  
                   
Balance at January 1, 2023 39,412 (232 ) 226,919   266,099   201,685   467,784  
                   
Total comprehensive income (loss) for the period:                  
                   
Net income (loss)   13,900   13,900   7,229   21,128  
                   
Other comprehensive income (loss)                  
                   
Foreign currency translation differences from                  
foreign operations and other, net of income tax (237 )   (237 ) (559 ) (796 )
                   
Total other comprehensive income (loss)                  
for the period (237 )   (237 ) (559 ) (796 )
                   
Total comprehensive income (loss) for the period (237 ) 13,900   13,663   6,669   20,332  
                   
Transactions with owners, recorded directly in equity                  
                   
Other movements in non-controlling interests and equity   1   1   25   26  
                   
Balance at March 31, 2023 39,412 (469 ) 240,820   279,763   208,380   488,143  
                   

Topicus.com Inc.
Condensed Consolidated Interim Statement of Changes in Shareholders’ Equity (Deficiency)
(In thousands of euros, except per share amounts. Due to rounding, numbers presented may not foot.)
                   
Unaudited                  
Three months ended March 31, 2022                  
                   
  Attributable to equity holders of Topicus    
  Preferred
Shares
  Capital
Stock
  Other
equity
  Accumulated
other
comprehensive
(loss) income
  Retained
earnings
(deficit)
  Total   Non-
controlling
interests
  Total equity  
                   
Balance at January 1, 2022 2,047,473   39,412   (1,009,996 ) (380 ) (1,782,113 ) (705,604 ) 1,061,236   355,632  
                   
Total comprehensive income (loss) for the period:                  
                   
Net income (loss)         11,571   11,571   8,788   20,359  
                   
Other comprehensive income (loss)                  
                   
Foreign currency translation differences from                  
foreign operations and other       631     631   796   1,427  
                   
Total other comprehensive income (loss) for the period       631     631   796   1,427  
                   
Total comprehensive income (loss) for the period       631   11,571   12,202   9,584   21,786  
                   
                   
Transactions with owners, recorded directly in equity                  
                   
Conversion of preferred shares to subordinate voting shares (2,047,473 )   2,047,473            
                   
Conversion of non-controlling interest preferred units to ordinary units and other movements in non-controlling interests     912,788       912,788   (912,788 )  
                   
Net acquisition of non-controlling interest associated with business combinations     (23 ) 10   (53 ) (66 ) (177 ) (243 )
                   
Reclassification of other equity to retained earnings (deficit)     (1,950,242 )   1,950,242        
                   
Balance at March 31, 2022   39,412     261   179,646   219,320   157,855   377,175  
                   

Topicus.com Inc.
Condensed Consolidated Interim Statements of Cash Flows
(In thousands of euros, except per share amounts. Due to rounding, numbers presented may not foot.)
       
Unaudited      
  Three months ended March 31,
  2023   2022
       
Cash flows from (used in) operating activities:      
Net income (loss) 21,128     20,359  
Adjustments for:      
Depreciation 7,296     6,195  
Amortization of intangible assets 27,960     22,978  
Finance and other expenses (income) 4,950     1,731  
Income tax expense (recovery) 8,338     6,565  
Change in non-cash operating assets and liabilities      
exclusive of effects of business combinations 116,599     128,627  
Income taxes (paid) received (12,279 )   (10,418 )
Net cash flows from (used in) operating activities 173,993     176,037  
       
Cash flows from (used in) financing activities:      
Interest paid on lease obligations (306 )   (280 )
Interest paid on other facilities (3,060 )   (1,555 )
Net increase (decrease) in Topicus Revolving Credit Facility (10,000 )   55,000  
Proceeds from issuance of term and other loans 4,277     346  
Increase (decrease) in loan from Vela Software Group     (1,817 )
Repayments of term and other loans (68,445 )   (617 )
Credit facility transaction costs (63 )    
Payments of lease obligations (5,263 )   (4,511 )
Dividends paid to redeemable preferred securities holders     (66,614 )
Net cash flows from (used in) in financing activities (82,860 )   (20,048 )
       
Cash flows from (used in) investing activities:      
Acquisition of businesses (24,796 )   (13,158 )
Cash obtained with acquired businesses 972     2,677  
Post-acquisition settlement payments, net of receipts (4,487 )   (1,760 )
Property and equipment purchased (1,981 )   (2,026 )
Net cash flows from (used in) investing activities (30,292 )   (14,267 )
       
Effect of foreign currency on      
cash and cash equivalents (348 )   (0 )
       
Increase (decrease) in cash 60,493     141,722  
       
Cash, beginning of period 136,772     75,326  
       
Cash, end of period 197,265     217,049  
       

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