Daily Tech News, Interviews, Reviews and Updates

Constellation Software Inc. Announces Results for the Fourth Quarter and Year Ended December 31, 2022 and Declares Quarterly Dividend

TORONTO, March 29, 2023 (GLOBE NEWSWIRE) — Constellation Software Inc. (TSX:CSU) (“Constellation” or the “Company”) today announced its financial results for the fourth quarter and year ended December 31, 2022 and declared a $1.00 per share dividend payable on April 14, 2023 to all common shareholders of record at close of business on April 6, 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 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.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.

Q4 2022 Headlines:

  • Revenue grew 34% (negative 1% organic growth, positive 4% after adjusting for changes in foreign exchange rates) to $1,847 million compared to $1,383 million in Q4 2021.  
  • Net income attributable to common shareholders increased 23% to $152 million ($7.19 on a diluted per share basis) from $124 million ($5.86 on a diluted per share basis) in Q4 2021.
  • A number of acquisitions were completed for aggregate cash consideration of $211 million (which includes acquired cash). Deferred payments associated with these acquisitions have an estimated value of $66 million resulting in total consideration of $277 million.
  • Cash flows from operations (“CFO”) were $400 million, an increase of 17%, or $59 million, compared to $341 million for the comparable period in 2021.
  • Free cash flow available to shareholders1 (“FCFA2S”) increased $46 million to $290 million compared to $244 million for the same period in 2021.

2022 Headlines:

  • Revenue grew 30% (negative 1% organic growth, positive 3% after adjusting for changes in foreign exchange rates) to $6,622 million compared to $5,106 million in 2021.
  • Net income attributable to common shareholders increased 65% to $512 million ($24.18 on a diluted per share basis) from $310 million ($14.65 on a diluted per share basis) in 2021.
  • A number of acquisitions were completed for total consideration of $1,875 million including holdbacks and contingent consideration.
  • Cash flows from operations (“CFO”) was $1,297 million, a decrease of $2 million, compared to $1,300 million for the comparable period in 2021.
  • Free cash flow available to shareholders (“FCFA2S”) decreased $30 million to $853 million compared to $883 million for the same period in 2021 representing a decrease of 3%.

1. See Non-IFRS measures. 

Total revenue for the quarter ended December 31, 2022 was $1,847 million, an increase of 34%, or $465 million, compared to $1,383 million for the comparable period in 2021. For the year ended December 31, 2022 total revenues were $6,622 million, an increase of 30%, or $1,515 million, compared to $5,106 million for the comparable period in 2021. The increase for both the three and twelve 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 negative 1% in both periods, positive 4% and 3% 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.   Organic growth is not a standardized financial measure and might not be comparable to measures disclosed by other issuers.

Net income attributable to common shareholders of CSI for the quarter ended December 31, 2022 was $152 million compared to $124 million for the same period in 2021. On a per share basis this translated into a net income per diluted share of $7.19 in the quarter ended December 31, 2022 compared to net income per diluted share of $5.86 for the same period in 2021. For the twelve months ended December 31, 2022, net income attributable to common shareholders of CSI was $512 million or $24.18 per diluted share compared to $310 million or $14.65 per diluted share for the same period in 2021. There was no change in the number of shares outstanding.

For the quarter ended December 31, 2022, CFO increased $59 million to $400 million compared to $341 million for the same period in 2021 representing an increase of 17%. For the twelve months ended December 31, 2022, CFO decreased $2 million to $1,297 million compared to $1,300 million for the same period in 2021 representing a decrease of 0.2%. The primary reasons for the decline in CFO for the twelve months ended December 31, 2022 is that CFO includes the impact of changes in non-cash operating assets and liabilities exclusive of effects of business combinations or, changes in non-cash operating working capital (“NCOWC”), and income taxes paid. For the twelve months ended December 31, 2022 there was $60 million of cash used in NCOWC compared to $45 million of cash generated from NCOWC for the same period in 2021. There are many reasons contributing to the NCOWC variance for the Company, none of which are indicative of an underlying concern with the overall NCOWC balance. Specifically, there are no concerns with accounts receivable or unbilled revenue aging. Income taxes paid increased 33% or $86 million for the twelve months ended December 31, 2022 over the same periods in 2021. Approximately $100 million in cash tax payments were made in the twelve month period ending December 31, 2022 relating to the deferral of Research and Experimentation expenses associated with the Tax Cuts and Jobs Act.

For the quarter ended December 31, 2022, FCFA2S increased $46 million to $290 million compared to $244 million for the same period in 2021 representing an increase of 19%. For the twelve months ended December 31, 2022, FCFA2S decreased $30 million to $853 million compared to $883 million for the same period in 2021 representing a decrease of 3%. The items negatively impacting CFO summarized above are the same items negatively impacting FCFA2S. In addition interest payments on debt facilities for the twelve months ended December 31, 2022 increased $34 million or 88% compared to the same period in 2021. On February 1, 2022, the Topicus Preferred Shares and Topicus Coop Preference Units were converted to Topicus Subordinate Voting Shares and Topicus Coop Ordinary Units respectively. As a result of this conversion the non-controlling interest in Topicus.com Inc. decreased from approximately 70% to 39%.

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. 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
December 31,
        Year ended
December 31,
   
    2022   2021         2022   2021    
    ($ in millions)         ($ in millions)    
                           
Net cash flows from operating activities   400   341         1,297   1,300    
Adjusted for:                          
Interest paid on lease obligations   (3 ) (2 )       (11 ) (9 )  
Interest paid on other facilities   (26 ) (10 )       (74 ) (40 )  
Credit facility transaction costs   (4 ) (2 )       (7 ) (6 )  
Payments of lease obligations   (25 ) (22 )       (94 ) (83 )  
IRGA / TSS membership liability revaluation charge   (23 ) (25 )       (112 ) (132 )  
Property and equipment purchased   (14 ) (10 )       (41 ) (29 )  
Interest and dividends received   0   0         1   2    
                           
    306   271         958   1,003    
Less amount attributable to                          
Non-controlling interests   (16 ) (27 )       (105 ) (120 )  
                           
Free cash flow available to shareholders   290   244         853   883    
                           
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
[email protected]
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.)
 
  December 31, 2022   December 31, 2021  
         
Assets        
         
Current assets:        
Cash $ 811   $                         763  
Accounts receivable 876   600  
Unbilled revenue 230   140  
Inventories 48   35  
Other assets 496   296  
  2,461   1,835  
         
Non-current assets:        
Property and equipment 128   93  
Right of use assets 283   245  
Deferred income taxes 160   66  
Other assets 172   99  
Intangible assets 4,679   3,428  
  5,422   3,931  
         
Total assets $ 7,882   $                      5,766  
         
Liabilities and Shareholders’ Equity        
         
Current liabilities:        
Debt with recourse to Constellation Software Inc. $ 505   $                       143  
Debt without recourse to Constellation Software Inc. 316   60  
Redeemable preferred securities   7  
Accounts payable and accrued liabilities 1,080   832  
Dividends payable 21   22  
Deferred revenue 1,484   1,158  
Provisions 11   11  
Acquisition holdback payables 159   94  
Lease obligations 96   79  
Income taxes payable 97   56  
  3,768   2,461  
         
Non-current liabilities:        
Debt with recourse to Constellation Software Inc. 567   561  
Debt without recourse to Constellation Software Inc. 586   354  
Deferred income taxes 471   436  
Acquisition holdback payables 77   68  
Lease obligations 217   190  
Other liabilities 262   175  
  2,181   1,784  
         
Total liabilities 5,949   4,245  
         
         
Shareholders’ equity:        
Capital stock 99   99  
Other equity   (179 )
Accumulated other comprehensive income (loss) (150 ) (66 )
Retained earnings 1,763   1,206  
Non-controlling interests 221   460  
  1,933   1,521  
         
         
Total liabilities and shareholders’ equity $ 7,882   $                  5,766  
         

CONSTELLATION SOFTWARE INC.
Consolidated Statements of Income (Loss)
(In millions of U.S. dollars, except per share amounts.  Due to rounding, numbers presented may not foot.)
           
  Year ended December 31,  
  2022     2021  
           
           
Revenue          
License $                  320     $                 287  
Professional services 1,381     1,033  
Hardware and other 233     176  
Maintenance and other recurring 4,688     3,611  
  6,622     5,106  
           
Expenses          
Staff 3,539     2,695  
Hardware 134     99  
Third party license, maintenance and professional services 626     433  
Occupancy 49     40  
Travel, telecommunications, supplies, software and equipment 307     186  
Professional fees 114     79  
Other, net 154     62  
Depreciation 143     121  
Amortization of intangible assets 676     518  
  5,740     4,233  
           
           
Foreign exchange loss (gain) (56 )   1  
IRGA/TSS Membership liability revaluation charge 112     132  
Finance and other expense (income) 0     (7 )
Bargain purchase gain (16 )   (2 )
Impairment of intangible and other non-financial assets 7     12  
Redeemable preferred securities expense (income)     295  
Finance costs 110     68  
  156     499  
           
Income (loss) before income taxes 725     374  
           
Current income tax expense (recovery) 403     257  
Deferred income tax expense (recovery) (228 )   (51 )
Income tax expense (recovery) 175     206  
           
Net income (loss) 551     169  
           
Net income (loss) attributable to:          
Common shareholders of Constellation Software Inc. 512     310  
Non-controlling interests 38     (142 )
Net income (loss) 551     169  
           
Earnings per common share of Constellation Software Inc.          
Basic and diluted $                24.18     $              14.65  
           

CONSTELLATION SOFTWARE INC.
Consolidated Statements of Comprehensive Income (Loss)
(In millions of U.S. dollars, except per share amounts.  Due to rounding, numbers presented may not foot.)
 
  Year ended December 31,
  2022   2021  
           
Net income (loss) $           551     $                 169  
           
Items that are or may be reclassified subsequently to net income (loss):          
           
Foreign currency translation differences from foreign operations and other, net of tax (90 )   (41 )
           
Other comprehensive income (loss) for the year, net of income tax (90 )   (41 )
           
Total comprehensive income (loss) for the year $           460     $                 128  
           
Total other comprehensive income (loss) attributable to:          
Common shareholders of Constellation Software Inc. (79 )   (16 )
Non-controlling interests (12 )   (25 )
Total other comprehensive income (loss) $            (90 )   $                  (41 )
           
Total comprehensive income (loss) attributable to:          
Common shareholders of Constellation Software Inc. 433     294  
Non-controlling interests 27     (167 )
Total comprehensive income (loss) $           460     $                 128  
           

CONSTELLATION SOFTWARE INC.
Consolidated Statement of Changes in Equity
(In millions of U.S. dollars, except per share amounts.  Due to rounding, numbers presented may not foot.)
                           
Year ended December 31, 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) for the year:                          
                           
Net income (loss)     512   512   38   551  
                           
Other comprehensive income (loss)                          
                           
Foreign currency translation differences from                          
foreign operations and other, net of tax   (79 )   (79 ) (12 ) (90 )
                           
Total other comprehensive income (loss)                          
for the year   (79 )                       (79 )                  (12 ) (90 )
                           
Total comprehensive income (loss) for the year    (79 ) 512                       433                             27                      460  
                           
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 related movements 305   (5 )   301   (301 )  
                           
Non-controlling interests arising from business combinations         41   41  
                           
Other movements in non-controlling interests     2   2   (6 ) (4 )
                           
Dividends to shareholders of the Company     (85 ) (85 )   (85 )
                           
Reclassification of other equity to retained earnings (127 )   127        
                           
Balance at December 31, 2022 $ 99 $   $ (150 ) $                     1,763   $                 1,713   $ 221   $ 1,933  

              
CONSTELLATION SOFTWARE INC.             
Consolidated Statement of Changes in Equity          
(In millions of U.S. dollars, except per share amounts.  Due to rounding, numbers presented may not foot.)
                           
Year ended December 31, 2021             
  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, 2021 $             99 $   $                     (31 ) $                        980   $                 1,048   $   $              1,048  
                           
Total comprehensive income (loss) for the year:                          
                           
Net income (loss)     310   310   (142 ) 169  
                           
Other comprehensive income (loss)                          
                           
Foreign currency translation differences from                          
foreign operations and other, net of tax   (16 )   (16 ) (25 ) (41 )
                           
Total other comprehensive income (loss) for the year   (16 )   (16 ) (25 ) (41 )
                           
Total comprehensive income (loss) for the year   (16 ) 310   294   (167 ) 128  
                           
Transactions with owners, recorded directly in equity                          
                           
Special dividend of Topicus Subordinated Voting Shares (141 ) (16 )   (157 ) 157    
                           
Issuance of Topicus Coop Ordinary Units to non-controlling interests (note 4) (21 ) (2 )   (23 ) 23    
                           
Net acquisition of non-controlling interest associated with acquisitions and other movements (16 ) (0 ) 0   (16 ) 17   1  
                           
Dividends to shareholders of the Company     (85 ) (85 )   (85 )
                           
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 December 31, 2021 $             99 $                   (179 ) $                     (66 ) $                     1,206   $                 1,061   $                      460   $              1,521  

 
CONSTELLATION SOFTWARE INC.
Consolidated Statements of Cash Flows
(In millions of U.S. dollars, except per share amounts.  Due to rounding, numbers presented may not foot.)
 
  Year ended December 31,
  2022     2021  
           
Cash flows from (used in) operating activities:          
Net income (loss) $ 551     $ 169  
Adjustments for:          
Depreciation 143     121  
Amortization of intangible assets 676     518  
IRGA/TSS Membership liability revaluation charge 112     132  
Finance and other expense (income) 0     (7 )
Bargain purchase (gain) (16 )   (2 )
Impairment of intangible and other non-financial assets 7     12  
Redeemable preferred securities expense (income)     295  
Finance costs 110     68  
Income tax expense (recovery) 175     206  
Foreign exchange loss (gain) (56 )   1  
Change in non-cash operating assets and liabilities          
exclusive of effects of business combinations (60 )   45  
Income taxes paid (343 )   (257 )
Net cash flows from (used in) operating activities 1,297     1,300  
           
Cash flows from (used in) financing activities:          
Interest paid on lease obligations (11 )   (9 )
Interest paid on debt (74 )   (40 )
Increase (decrease) in CSI facility 322      
Increase (decrease) in Topicus revolving credit debt facility without recourse to CSI 91     30  
Proceeds from issuance of debt facilities without recourse to CSI 476     176  
Repayments of debt facilities without recourse to CSI (102 )   (6 )
Other financing activities (3 )   3  
Credit facility transaction costs (7 )   (6 )
Payments of lease obligations (94 )   (83 )
Distribution to the Joday Group (23 )   (22 )
Dividends paid to redeemable preferred security holders (7 )    
Dividends paid to common shareholders of the Company (85 )   (85 )
Net cash flows from (used in) in financing activities 483     (41 )
           
Cash flows from (used in) investing activities:          
Acquisition of businesses (1,633 )   (1,224 )
Cash obtained with acquired businesses 216     153  
Post-acquisition settlement payments, net of receipts (149 )   (145 )
Receipt of additional subscription amount from the sellers of Topicus.com B.V.     33  
Purchases of other investments (97 )   (44 )
Proceeds from sales of other investments 6     13  
Interest, dividends and other proceeds received 5     5  
Property and equipment purchased (41 )   (29 )
Net cash flows from (used in) investing activities (1,694 )   (1,238 )
           
Effect of foreign currency on          
cash (39 )   (16 )
           
Increase (decrease) in cash 48     5  
           
Cash, beginning of period $ 763     $ 758  
           
Cash, end of period $ 811     $ 763  

Disclaimer: The above press release comes to you under an arrangement with GlobeNewswire. TheTechOutlook.com takes no editorial responsibility for the same.



Readers like you help support The Tech Outlook. When you make a purchase using links on our site, we may earn an affiliate commission. We cannot guarantee the Product information shown is 100% accurate and we advise you to check the product listing on the original manufacturer website. Thetechoutlook is not responsible for price changes carried out by retailers. The discounted price or deal mentioned in this item was available at the time of writing and may be subject to time restrictions and/or limited unit availability. Amazon and the Amazon logo are trademarks of Amazon.com, Inc. or its affiliates Read More
You might also like

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More