TORONTO, ONTARIO--(Marketwire - Nov. 2, 2011) - Constellation Software Inc. (TSX:CSU) ("Constellation" or the "Company") today announced its financial results for the three and nine months ended September 30, 2011. Please note that all dollar amounts referred to in this press release are U.S. Dollars unless otherwise stated.
The following press release should be read in conjunction with the Unaudited Condensed Consolidated Interim Financial Statements for the three and nine months ended September 30, 2011 and the accompanying notes, and with our annual Consolidated Financial Statements and our annual MD&A for the year ended December 31, 2010 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.
Q3 2011 Highlights:
- Revenue grew 24% compared to Q3 2010. Organic revenue growth was 11% in Q3 2011 compared to negative 3% in Q3 2010.
- Adjusted EBITDA grew 40% compared to Q3 2010.
- Adjusted EBITDA margin was 22% in Q3 2011 compared to 19% in Q3 2010.
- Adjusted net income grew 76% compared to Q3 2010.
- Two acquisitions were completed in the quarter for net cash consideration of $2 million.
- Subsequent to September 30, 2011, the Company completed three acquisitions for aggregate cash consideration of $2.6 million.
Total revenue for the quarter ended September 30, 2011 was $202 million, an increase of 24%, or $38 million, compared to $164 million for the comparable period in 2010. For the first nine months of 2011 total revenues were $575 million, an increase of 24%, or $113 million, compared to $462 million for the comparable period in 2010.
Constellation acquired the Public Transit Solutions business ('PTS') from Continental Automotive AG ('Continental') on November 2, 2009. Given the substantial amount of non-recurring revenue historically earned by PTS, gross revenue from PTS has fluctuated significantly in the past and will continue to do so in the future. As well, a number of acquired contracts were recorded at their estimated fair value as of the date of acquisition. Under this treatment, excess profits or costs relative to estimated normalized profitability are recorded as acquired contract assets or liabilities and amortized against revenues over the remaining life of the contract. As a result, the revenue and costs of these contracts reflected through profit or loss will differ from the revenue and costs that would have been recognized under normal course percentage of completion contract accounting. As such, management has chosen to provide supplemental organic growth disclosure to provide greater clarity regarding the impact of PTS on Constellation's consolidated financial results. Excluding PTS, organic growth for Constellation was 6% in Q3 2011 and 6% for the nine months ended September 30, 2011.
The following table provides a summary of the impact of PTS on Constellation's organic revenue growth:
Organic Revenue Growth
| Three months ended | Nine months ended | |||
| September 30, 2011 | September 30, 2011 | |||
| Constellation | 11 | % | 10 | % |
| Constellation excluding PTS | 6 | % | 6 | % |
Adjusted EBITDA for the third quarter 2011 was $44 million, a 40% increase compared to the prior year's third quarter Adjusted EBITDA of $32 million. Third quarter Adjusted EBITDA per share on a fully diluted basis increased 40% to $2.10, compared to $1.50 for the same period last year. Adjusted EBITDA for the nine month period ended September 30, 2011 was $121 million, an increase of 45% over last year's Adjusted EBITDA of $84 million for the same period. Adjusted EBITDA per share on a fully diluted basis for the nine month period ended September 30, 2011 increased 45% to $5.72, compared to $3.95 for the same period in 2010.
Adjusted net income for the third quarter 2011 was $40 million, compared to the prior year's third quarter Adjusted net income of $23 million, a 76% increase. Third quarter Adjusted net income per share on a fully diluted basis increased 76% to $1.87 compared to $1.06 for the prior year's third quarter. Adjusted net income for the nine month period ended September 30, 2011 was $100 million, an increase of 64% over last year's Adjusted net income of $61 million for the same period. Adjusted net income per share on a fully diluted basis for the nine month period ended September 30, 2011 increased 64% to $4.73, compared to $2.88 for the same period in 2010.
Net income for the quarter ended September 30, 2011 was $22 million compared to net income of $9 million for the same period in 2010. On a per share basis this translated into a net income per diluted share of $1.03 in the quarter ended September 30, 2011 vs. a net income per diluted share of $0.41 in the quarter ended September 30, 2010. For the first nine months of 2011, net income was $145 million or $6.83 per diluted share compared to $19 million or $0.90 per diluted share in the first nine months of 2010. Net income in the three months ended September 30, 2011 was positively impacted by the growth in our Adjusted EBITDA and gains on sale of available-for-sale equity securities, offset by an increase in amortization of intangible assets. Net income in the nine months ended September 30, 2011 was positively impacted by the growth in our Adjusted EBITDA, gains on sale of available-for-sale equity securities, and increase in future tax recovery, offset by an increase in amortization of intangible assets.
The following table displays our revenue by reportable segment and the percentage change for the three and nine months ended September 30, 2011 compared to the same periods in 2010:
| Three months ended September 30, |
Period-Over- Period Change |
Nine months ended September 30, |
Period-Over- Period Change |
|||||||||
| 2011 | 2010 | $ | % | 2011 | 2010 | $ | % | |||||
| ($000, except percentages | ) | ($000, except percentages | ) | |||||||||
| Public Sector | ||||||||||||
| Licenses | 9,832 | 9,044 | 788 | 9 | % | 30,592 | 25,375 | 5,217 | 21 | % | ||
| Professional services | 36,706 | 35,470 | 1,236 | 3 | % | 109,200 | 105,850 | 3,350 | 3 | % | ||
| Hardware and other | 29,035 | 17,772 | 11,263 | 63 | % | 74,311 | 46,013 | 28,298 | 62 | % | ||
| Maintenance | 74,269 | 58,878 | 15,391 | 26 | % | 212,929 | 169,291 | 43,638 | 26 | % | ||
| 149,842 | 121,164 | 28,678 | 24 | % | 427,032 | 346,529 | 80,503 | 23 | % | |||
| Private Sector | ||||||||||||
| Licenses | 4,713 | 3,761 | 952 | 25 | % | 13,927 | 9,362 | 4,565 | 49 | % | ||
| Professional services | 9,018 | 7,624 | 1,394 | 18 | % | 25,929 | 20,941 | 4,988 | 24 | % | ||
| Hardware and other | 3,019 | 2,541 | 478 | 19 | % | 8,847 | 6,074 | 2,773 | 46 | % | ||
| Maintenance | 35,661 | 28,498 | 7,163 | 25 | % | 99,249 | 79,073 | 20,176 | 26 | % | ||
| 52,411 | 42,424 | 9,987 | 24 | % | 147,952 | 115,450 | 32,502 | 28 | % | |||
Public Sector
For the quarter ended September 30, 2011, total revenue in the public sector reportable segment increased 24%, or $29 million, to $150 million, compared to $121 million for the quarter ended September 30, 2010. For the nine months ended September 30, 2011, total revenue increased by 23% or $80 million, to $427 million, compared to $347 million for the comparable period in 2010. The increases for both the three and nine month periods were significant across our license, hardware and other, and maintenance revenue streams. Revenue growth from acquired businesses was significant for both the three and nine month periods as we completed seventeen acquisitions since the beginning of 2010 in our public sector segment. Revenues increased organically by 12% in Q3 2011 and 10% in the nine months ended September 30, 2011 compared to the same periods in 2010. Excluding PTS, revenues increased organically by 5% in Q3 2011 and 4% in the nine months ended September 30, 2011.
| Organic Revenue Growth | ||||
| Three months ended | Nine months ended | |||
| September 30, 2011 | September 30, 2011 | |||
| Public Sector | 12 | % | 10 | % |
| Public Sector excluding PTS | 5 | % | 4 | % |
The organic revenue change was primarily driven by the following:
- Volaris operating group (formerly the Trapeze operating group) (increase of approximately $15 million in Q3 2011 and an increase of approximately $33 million for the nine months ended September 30, 2011). For both the three and the nine months ended September 30, 2011, organic growth was primarily driven from strong revenue from existing clients and new customers in its transit and agricultural business units.
Private Sector
For the quarter ended September 30, 2011, total revenue in the private sector reportable segment increased by 24%, or $10 million, to $52 million, compared to $42 million for the quarter ended September 30, 2010. For the nine months ended September 30, 2011 total revenue increased by 28% or $33 million, to $148 million, compared to $115 million for the comparable period in 2010. Revenue growth from acquired businesses was significant for both the three and nine month periods ended September 30, 2011 as we completed twenty acquisitions since the beginning of 2010 in our private sector segment. Revenues increased organically by 9% in Q3 2011 and 10% in the nine months ended September 30, 2011 compared to the same periods in 2010.
The organic revenue change was primarily driven by the following:
- Jonas operating group (increase of approximately $3 million in Q3 2011 and an increase of approximately $7 million for the nine months ended September 30, 2011). Jonas' organic growth was driven by strong sales to both existing and new customers primarily in its health club and food services verticals.
- Homebuilder operating group (increase of approximately $2 million in Q3 2011 and approximately $6 million for the nine months ended September 30, 2011). The organic growth was primarily driven by strong sales to both existing and new customers in Homebuilders' pulp and paper manufacturer and lease management verticals.
Constellation's bank indebtedness, net of cash, decreased to $18 million at September 30, 2011 as compared to $15 million at December 31, 2010, mainly due to a $43 million dividend payment and acquisitions of $36 million, offset by $81 million in cash flow from operations.
As disclosed in the Company's press release dated April 4, 2011, the Board of Directors is currently undertaking a review of strategic alternatives for the Company with the objective of enhancing shareholder value. As part of this strategic review process, the Board of Directors has been evaluating a broad range of strategic options, including but not limited to the sale of the Company and various financial restructuring options. Given current market conditions, the Board of Directors has determined not to pursue a sale transaction at this time. However, the Board of Directors is continuing to develop and assess a variety of strategic options with the objective of enhancing shareholder value. No decision on any particular strategic alternative has been reached at this time. There is no defined timeline for completion of this strategic review and there can be no assurance that this review will result in any specific action.
Outlook
For fiscal 2011, the Company expects gross revenue to be in the range of $765 million to $775 million and Adjusted EBITDA to be in the range of $160 million to $170 million. These statements are "forward looking statements" and are based on various assumptions which management believes are reasonable under the current circumstances. Although management believes the assumptions are reasonable in the current circumstances, they are subject to various risks and uncertainties and there are several factors that could cause actual results to differ materially from those specified above. See "Forward Looking Statements".
Conference Call and Webcast
Management will host a conference call at 8:30 a.m. (ET) on Thursday, November 3, 2011 to answer questions regarding the results. The teleconference numbers are 416-340-2216 or 866-226- 1792. The call will also be webcast live and archived on Constellation's web site at www.csisoftware.com.
A replay of the conference call will be available as of 11:30 a.m. ET the same day until 11:59 p.m. ET on November 16, 2011. To access the replay, please dial 905-694-9451 or 800-408-3053 followed by the passcode 5430585#.
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. Specifically, the statements included under "Outlook" above are forward looking and are based on the assumptions that revenue growth will be in the range of 21%-23% for fiscal 2011 (which includes the impact of all companies acquired to date and organic growth consistent with the recent performance of the Company), Adjusted EBITDA margins will be in the range of 21-22% for fiscal 2011 (which is consistent with the recent performance of the Company), no material acquisitions will be completed during the remainder of fiscal 2011 and general economic and market conditions will remain consistent with those in effect on November 2, 2011. Forward looking statements involve significant risks and uncertainties, and 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, including the risk that revenue can fluctuate significantly based on the demand for our software products, level of product and price competition, the geographical mix of our sales together with fluctuations in foreign currency, changes in mix and pricing of software solutions that our customers demand, our ability to successfully implement projects, order cancellations, renewal of maintenance agreements with customers, and patterns of spending and changes in budgeting cycles of our customers, and the risk that Adjusted EBITDA can fluctuate significantly based on the pricing and mix of software solutions that we sell, our customer demand, the geographical mix of our sales and cost base together with fluctuations in foreign currency exchange rates, and employee bonuses which are based on the performance of the Company. 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
This press release includes certain measures which have not been prepared in accordance with IFRS such as Adjusted EBITDA, Adjusted EBITDA margin, Adjusted net income and Adjusted net income margin.
The term "Adjusted EBITDA" refers to net income before deducting finance income, finance costs, income taxes, impairment of non-financial assets, depreciation, amortization, and foreign exchange loss (gain). The Company believes that Adjusted EBITDA is useful supplemental information as it provides an indication of the results generated by the Company's main business activities prior to taking into consideration how those activities are financed and taxed and also prior to taking into consideration asset depreciation and the other items listed above. "Adjusted EBITDA margin" refers to the percentage that Adjusted EBITDA for any period represents as a portion of total revenue for that period.
"Adjusted net income" means net income plus non-cash expenses (income) such as amortization of intangible assets, deferred income taxes, and certain other expenses (income). The Company believes that Adjusted net income is useful supplemental information as it provides an indication of the results generated by the Company's main business activities prior to taking into consideration amortization of intangible assets, deferred income taxes, and certain other non-cash expenses (income) incurred by the Company from time to time. "Adjusted net income margin" refers to the percentage that Adjusted net income for any period represents as a portion of total revenue for that period.
Adjusted EBITDA and Adjusted net income are not recognized measures under IFRS and, accordingly, shareholders are cautioned that Adjusted EBITDA and Adjusted net income should not be construed as alternatives to net income determined in accordance with IFRS. The Company's method of calculating Adjusted EBITDA and Adjusted net income may differ from other issuers and, accordingly, Adjusted EBITDA and Adjusted net income may not be comparable to similar measures presented by other issuers.
| The following table reconciles Adjusted EBITDA to net income: | |||||||||||
| Three months ended September 30, | Nine months ended September 30, | ||||||||||
| 2011 | 2010 | 2011 | 2010 | ||||||||
| ($000, except percentages | ) | ($000, except percentages | ) | ||||||||
| Total revenue | $ | 202,253 | $ | 163,588 | $ | 574,984 | $ | 461,979 | |||
| Net income | 21,918 | 8,786 | 144,746 | 19,139 | |||||||
| Add back: | |||||||||||
| Income tax expense (recovery) | 3,145 | 1,676 | (87,255) | 6,316 | |||||||
| Foreign exchange (gain) loss | (905) | 1,622 | 3,028 | 2,043 | |||||||
| Finance income | (2,795) | (306 | ) | (6,167) | (900 | ) | |||||
| Finance costs | 1,462 | 1,315 | 4,589 | 3,672 | |||||||
| Impairment of non-financial assets | 518 | - | 518 | - | |||||||
| Amortization of intangible assets | 19,135 | 16,782 | 55,733 | 48,666 | |||||||
| Depreciation | 1,957 | 1,964 | 6,039 | 4,728 | |||||||
| Adjusted EBITDA | 44,435 | 31,839 | 121,231 | 83,664 | |||||||
| Adjusted EBITDA margin | 22% | 19 | % | 21% | 18 | % | |||||
| The following table reconciles Adjusted net income to net income: | |||||||||||
| Three months ended September 30, | Nine months ended September 30, | ||||||||||
| 2011 | 2010 | 2011 | 2010 | ||||||||
| ($000, except percentages | ) | ($000, except percentages | ) | ||||||||
| Total revenue | $ | 202,253 | $ | 163,588 | $ | 574,984 | $ | 461,979 | |||
| Net income | 21,918 | 8,786 | 144,746 | 19,139 | |||||||
| Add back: | |||||||||||
| Amortization of intangible assets | 19,135 | 16,782 | 55,733 | 48,666 | |||||||
| Impairment of non-financial assets | 518 | - | 518 | - | |||||||
| Deferred income tax recovery | (1,854) | (3,052 | ) | (100,731) | (6,718 | ) | |||||
| Adjusted net income | 39,717 | 22,516 | 100,266 | 61,087 | |||||||
| Adjusted net income margin | 20% | 14 | % | 17% | 13 | % | |||||
The following tables provide supplemental net income and cash flow information of PTS:
| Statement of Operations | |||||||||||||||||||
| For the three and nine months ended September 30, 2011 | |||||||||||||||||||
| For the three months ended September 30, 2011 | For the nine months ended September 30, 2011 | ||||||||||||||||||
| (Unaudited) | Constellation Software Inc. (excluding PTS) | PTS | Consolidated | Constellation Software Inc. (excluding PTS) | PTS | Consolidated | |||||||||||||
| Revenue | $ | 160,416 | $ | 41,837 | $ | 202,253 | $ | 465,145 | $ | 109,839 | $ | 574,984 | |||||||
| Expenses | 123,967 | 33,851 | 157,818 | 363,791 | 89,962 | 453,753 | |||||||||||||
| Adjusted EBITDA | 36,449 | 7,986 | 44,435 | 101,354 | 19,877 | 121,231 | |||||||||||||
| EBITDA as % Total Revenue | 23 | % | 19 | % | 22 | % | 22 | % | 18 | % | 21 | % | |||||||
| Depreciation | 1,732 | 225 | 1,957 | 4,975 | 1,064 | 6,039 | |||||||||||||
| Amortization of intangible assets | 19,135 | - | 19,135 | 55,733 | - | 55,733 | |||||||||||||
| Other expenses (income), net | (1,524 | ) | (196 | ) | (1,720 | ) | (123 | ) | 2,091 | 1,968 | |||||||||
| Income before income taxes | 17,106 | 7,957 | 25,063 | 40,769 | 16,722 | 57,491 | |||||||||||||
| Income taxes (recovery) | |||||||||||||||||||
| Current | 3,334 | 1,665 | 4,999 | 10,124 | 3,352 | 13,476 | |||||||||||||
| Future | (1,472 | ) | (382 | ) | (1,854 | ) | (100,242 | ) | (489 | ) | (100,731 | ) | |||||||
| Income tax expense (recovery) | 1,862 | 1,283 | 3,145 | (90,118 | ) | 2,863 | (87,255 | ) | |||||||||||
| Net Income | $ | 15,244 | $ | 6,674 | $ | 21,918 | $ | 130,887 | $ | 13,859 | $ | 144,746 | |||||||
| Cash flow from operating activities | ||||||||||||||||||||
| For the three and nine months ended September 30, 2011 | ||||||||||||||||||||
| For the three months ended September 30, 2011 | For the nine months ended September 30, 2011 | |||||||||||||||||||
| (Unaudited) | Constellation Software Inc. (excluding PTS | ) | PTS | Consolidated | Constellation Software Inc. (excluding PTS | ) | PTS | Consolidated | ||||||||||||
| Cash flows from operating activities: | ||||||||||||||||||||
| Net income | $ | 15,244 | $ | 6,674 | $ | 21,918 | $ | 130,887 | $ | 13,859 | $ | 144,746 | ||||||||
| |
Adjustments to reconcile net income to net cash flows from operations: | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Depreciation | 1,732 | 225 | 1,957 | 4,975 | 1,064 | 6,039 | ||||||||||||||
| Amortization of intangible assets | 19,135 | - | 19,135 | 55,733 | - | 55,733 | ||||||||||||||
| Income tax expense (recovery) | 1,862 | 1,283 | 3,145 | (90,118 | ) | 2,863 | (87,255 | ) | ||||||||||||
| Other non-cash items | (1,559 | ) | (161 | ) | (1,720 | ) | (113 | ) | 2,081 | 1,968 | ||||||||||
| Change in non-cash operating working capital | 14,968 |
(2,457 |
) |
12,511 |
(1,265 |
) |
(29,172 |
) |
(30,437 |
) |
||||||||||
| - | - | |||||||||||||||||||
| Income taxes paid | (3,278 | ) | (17 | ) | (3,295 | ) | (9,714 | ) | (309 | ) | (10,023 | ) | ||||||||
| Cash flows from operating activities | $ | 48,104 | $ | 5,547 | $ | 53,651 | $ | 90,385 | $ | (9,614 | ) | $ | 80,771 | |||||||
The following table reconciles Adjusted EBITDA to net income for PTS:
Adjusted EBITDA to net income reconciliation
For the three and nine months ended September 30, 2011
| For the three months ended September 30, 2011 | For the nine months ended September 30, 2011 | |||||||||||||||||
(Unaudited) |
Constellation Software Inc. (excluding PTS) | PTS |
Consolidated |
Constellation Software Inc. (excluding PTS) |
PTS |
Consolidated |
||||||||||||
| Total revenue | $ | 160,416 | $ | 41,837 | $ | 202,253 | $ | 465,145 | $ | 109,839 | $ | 574,984 | ||||||
| Net income | 15,244 | 6,674 | 21,918 | 130,887 | 13,859 | 144,746 | ||||||||||||
| Add back: | ||||||||||||||||||
| Income tax expense | 1,862 | 1,283 | 3,145 | (90,118 | ) | 2,863 | (87,255 | ) | ||||||||||
| Other expenses (income) | (1,524 | ) | (196 | ) | (1,720 | ) | (123 | ) | 2,091 | 1,968 | ||||||||
| Amortization of intangible assets | 19,135 | - | 19,135 | 55,733 | - | 55,733 | ||||||||||||
| Depreciation | 1,732 | 225 | 1,957 | 4,975 | 1,064 | 6,039 | ||||||||||||
| Adjusted EBITDA | 36,449 | 7,986 | 44,435 | 101,354 | 19,877 | 121,231 | ||||||||||||
| Adjusted EBITDA margin | 23 | % | 19 | % | 22 | % | 22 | % | 18 | % | 21 | % | ||||||
About Constellation Software Inc.
Constellation's common shares are listed on the Toronto Stock Exchange under the symbol "CSU". Constellation Software is an international provider of market leading software and services to a number of industries across both the public and private sectors. The Company acquires, manages and builds vertical market software businesses that provide mission- critical software solutions to address the specific needs of its customers in those industries.
SOURCE: CONSTELLATION SOFTWARE INC.
| CONSTELLATION SOFTWARE INC. |
| Condensed Consolidated Interim Statements of Financial Position |
| (In thousands of U.S. dollars) |
| (Unaudited) | ||||||
| September 30, | December 31, | January 1, | ||||
| 2011 | 2010 | 2010 | ||||
| Assets | ||||||
| Current assets: | ||||||
| Cash | $ | 18,171 | $ | 30,911 | $ | 33,249 |
| Equity securities available-for-sale | 20,637 | 23,723 | 22,323 | |||
| Accounts receivable | 108,456 | 90,898 | 95,431 | |||
| Work in progress | 34,143 | 25,607 | 23,077 | |||
| Inventories | 16,177 | 15,945 | 14,320 | |||
| Other assets | 24,088 | 26,463 | 26,261 | |||
| 221,672 | 213,547 | 214,661 | ||||
| Non-current assets: | ||||||
| Property and equipment | 14,473 | 13,469 | 8,226 | |||
| Deferred income taxes | 108,286 | 15,368 | 4,779 | |||
| Other assets | 26,140 | 23,548 | 13,879 | |||
| Intangible assets | 274,508 | 269,987 | 222,239 | |||
| 423,407 | 322,372 | 249,123 | ||||
| Total assets | $ | 645,079 | $ | 535,919 | $ | 463,784 |
| Liabilities and Shareholders' Equity | ||||||
| Current liabilities: | ||||||
| Bank indebtedness | $ | 35,797 | $ | 46,041 | $ | 41,153 |
| Accounts payable and accrued liabilities | 103,010 | 104,905 | 86,639 | |||
| Deferred revenue | 187,188 | 158,025 | 135,299 | |||
| Provisions | 2,326 | 2,253 | 8,312 | |||
| Acquired contract liabilities | 6,211 | 10,908 | 7,652 | |||
| Acquisition holdback payments | 12,631 | 6,920 | 3,587 | |||
| Income taxes payable | 4,711 | 1,424 | 3,757 | |||
| 351,874 | 330,476 | 286,399 | ||||
| Non-current liabilities: | ||||||
| Deferred income taxes | 11,414 | 17,809 | 16,321 | |||
| Acquired contract liabilities | 29,333 | 35,633 | 41,482 | |||
| Acquisition holdback payments | 2,473 | 2,744 | 2,537 | |||
| Other liabilities | 6,795 | 6,206 | 4,018 | |||
| 50,015 | 62,392 | 64,358 | ||||
| Total liabilities | 401,889 | 392,868 | 350,757 | |||
| Shareholders' equity: | ||||||
| Capital stock | 99,283 | 99,283 | 99,283 | |||
| Accumulated other comprehensive income | 6,299 | 8,522 | 3,004 | |||
| Retained earnings | 137,608 | 35,246 | 10,740 | |||
| 243,190 | 143,051 | 113,027 | ||||
| Total liabilities and shareholders' equity | $ | 645,079 | $ | 535,919 | $ | 463,784 |
| CONSTELLATION SOFTWARE INC. | |||||||||||||
| Condensed Consolidated Interim Statements of Comprehensive Income | |||||||||||||
| (In thousands of U.S. dollars, except per share amounts) | |||||||||||||
| (Unaudited) | |||||||||||||
| Three months ended | Nine months ended | ||||||||||||
| September 30, | September 30, | ||||||||||||
| 2011 | 2010 | 2011 | 2010 | ||||||||||
| Revenue | $ | 202,253 | $ | 163,588 | $ | 574,984 | $ | 461,979 | |||||
| Expenses | |||||||||||||
| Staff | 103,085 | 88,501 | 299,691 | 263,354 | |||||||||
| Hardware | 18,723 | 14,138 | 47,607 | 31,812 | |||||||||
| Third party license, maintenance and professional services | 13,320 | 10,139 | 37,932 | 26,673 | |||||||||
| Occupancy | 4,948 | 4,257 | 14,251 | 12,240 | |||||||||
| Travel | 7,221 | 5,530 | 20,679 | 16,687 | |||||||||
| Telecommunications | 2,554 | 2,241 | 7,435 | 6,818 | |||||||||
| Supplies | 3,451 | 2,824 | 11,747 | 8,408 | |||||||||
| Professional fees | 2,068 | 1,927 | 6,788 | 5,766 | |||||||||
| Other | 2,448 | 2,192 | 7,623 | 6,557 | |||||||||
| Income before the undernoted | 44,435 | 31,839 | 121,231 | 83,664 | |||||||||
| Depreciation | 1,957 | 1,964 | 6,039 | 4,728 | |||||||||
| Amortization of intangible assets | 19,135 | 16,782 | 55,733 | 48,666 | |||||||||
| Impairment of non-financial assets | 518 | - | 518 | - | |||||||||
| Foreign exchange (gain) loss | (905 | ) | 1,622 | 3,028 | 2,043 | ||||||||
| Finance income | (2,795 | ) | (306 | ) | (6,167 | ) | (900 | ) | |||||
| Finance costs | 1,462 | 1,315 | 4,589 | 3,672 | |||||||||
| 19,372 | 21,377 | 63,740 | 58,209 | ||||||||||
| Profit before income tax | 25,063 | 10,462 | 57,491 | 25,455 | |||||||||
| Current income tax expense | 4,999 | 4,728 | 13,476 | 13,034 | |||||||||
| Deferred income tax recovery | (1,854 | ) | (3,052 | ) | (100,731 | ) | (6,718 | ) | |||||
| Income tax expense (recovery) | 3,145 | 1,676 | (87,255 | ) | 6,316 | ||||||||
| Net income | 21,918 | 8,786 | 144,746 | 19,139 | |||||||||
| Net change in fair value | |||||||||||||
| on available-for-sale financial | |||||||||||||
| assets during the period | 913 | 870 | 4,478 | 3,354 | |||||||||
| Net unrealized foreign exchange adjustment | |||||||||||||
| gain (loss) on available-for-sale financial | |||||||||||||
| assets during the period | (308 | ) | 409 | (90 | ) | (31 | ) | ||||||
| Reclassification of unrealized gain | |||||||||||||
| upon derecognition of available-for-sale | |||||||||||||
| investments | - | - | - | (696 | ) | ||||||||
| Amounts reclassified to profit during the period | |||||||||||||
| related to realized gains on | |||||||||||||
| available-for-sale investments | (2,770 | ) | - | (5,882 | ) | - | |||||||
| Foreign currency translation differences from foreign operations | (2,015 | ) | 1,517 | (1,212 | ) | 1,888 | |||||||
| Current tax recovery | 75 | - | 75 | - | |||||||||
| Deferred tax recovery (expense) | 430 | (404 | ) | 408 | (1,056 | ) | |||||||
| Other comprehensive income for the period, net of income tax | (3,675 | ) | 2,392 | (2,223 | ) | 3,459 | |||||||
| Total comprehensive income for the period | $ | 18,243 | $ | 11,178 | $ | 142,523 | $ | 22,598 | |||||
| Earnings per share | |||||||||||||
| Basic and diluted | $ | 1.03 | $ | 0.41 | $ | 6.83 | $ | 0.90 | |||||
| CONSTELLATION SOFTWARE INC. | |||||||||||||||||
| Condensed Consolidated Statements of Changes in Equity | |||||||||||||||||
| (In thousands of U.S. dollars) | |||||||||||||||||
| (Unaudited) | |||||||||||||||||
| Nine months ended September 30, 2011 | |||||||||||||||||
| |
Capital stock |
Accumulated other | |
Total accumulated other comprehensive income/(loss) |
|
Retained earnings |
|
Total |
|
||||||||
| comprehensive | |||||||||||||||||
| income/(loss) | |||||||||||||||||
| Cumulative translation account |
|
Amounts related to gains/losses on available- for-sale financial assets |
|||||||||||||||
| Balance at January 1, 2011 | $ | 99,283 | $ | 1,379 | $ | 7,143 | $ | 8,522 | $ | 35,246 | $ | 143,051 | |||||
| Total comprehensive income for the period | |||||||||||||||||
| Net income | 144,746 | 144,746 | |||||||||||||||
| Other comprehensive income (loss) | |||||||||||||||||
| Net change in fair value on available-for-sale financial assets during the period | 4,478 |
4,478 |
- |
4,478 |
|||||||||||||
| Net unrealized foreign exchange adjustment gain (loss) on available-for-sale financial assets during the period | (90 |
) |
(90 |
) |
- |
(90 |
) |
||||||||||
| Amounts reclassified to profit during the period related to realized gains on available-for-sale investments |
(5,882 |
) |
(5,882 |
) |
- |
(5,882 |
) |
||||||||||
| Foreign currency translation differences from foreign operations | (1,212 | ) | (1,212 | ) | - | (1,212 | ) | ||||||||||
| Current tax recovery | 75 | 75 | 75 | ||||||||||||||
| Deferred tax recovery | 124 | 284 | 408 | - | 408 | ||||||||||||
| Total other comprehensive income (loss) for the period | (1,013 | ) | (1,210 | ) | (2,223 | ) | - | (2,223 | ) | ||||||||
| Total comprehensive income for the period | (1,013 | ) | (1,210 | ) | (2,223 | ) | 144,746 | 142,523 | |||||||||
| Transactions with owners, recorded directly in equity Dividends to owners of the Company | (42,384 |
) |
(42,384 |
) |
|||||||||||||
| Balance at September 30, 2011 | $ | 99,283 | $ | 366 | $ | 5,933 | $ | 6,299 | $ | 137,608 | $ | 243,190 | |||||
| CONSTELLATION SOFTWARE INC. | |||||||||||||||||
| Condensed Consolidated Statements of Changes in Equity | |||||||||||||||||
| (In thousands of U.S. dollars) | |||||||||||||||||
| (Unaudited) | |||||||||||||||||
| Nine months ended September 30, 2010 | |||||||||||||||||
| Capital stock | Accumulated other comprehensive income/(loss) | Total accumulated other comprehensive income/(loss | ) | Retained earnings | Total | ||||||||||||
| Cumulative translation account | Amounts related to gains/losses on available-for-sale financial assets | ||||||||||||||||
| Balance at January 1, 2010 | $ | 99,283 | $ | - | $ | 3,004 | $ | 3,004 | $ | 10,740 | $ | 113,027 | |||||
| Total comprehensive income for the period | |||||||||||||||||
| Net income | 19,139 | 19,139 | |||||||||||||||
| Other comprehensive income (loss) | |||||||||||||||||
| Net change in fair value | |||||||||||||||||
| on available-for-sale financial | |||||||||||||||||
| assets during the period | 3,354 | 3,354 | - | 3,354 | |||||||||||||
| Net unrealized foreign exchange adjustment | |||||||||||||||||
| gain (loss) on available-for-sale financial | |||||||||||||||||
| assets during the period | (31 | ) | (31 | ) | - | (31 | ) | ||||||||||
| Reclassification of unrealized gain from prior periods | |||||||||||||||||
| upon derecognition of available-for-sale | |||||||||||||||||
| investments | (696 | ) | (696 | ) | - | (696 | ) | ||||||||||
| Foreign currency translation differences from foreign operations | 1,888 | - | 1,888 | - | 1,888 | ||||||||||||
| Deferred tax expense | (212 | ) | (844 | ) | (1,056 | ) | - | (1,056 | ) | ||||||||
| Total other comprehensive income (loss) for the period | 1,676 | 1,783 | 3,459 | - | 3,459 | ||||||||||||
| Total comprehensive income for the period | 1,676 | 1,783 | 3,459 | 19,139 | 22,598 | ||||||||||||
| Transactions with owners, recorded directly in equity | |||||||||||||||||
| Dividends to owners of the Company | (5,510 | ) | (5,510 | ) | |||||||||||||
| Balance at September 30, 2010 | $ | 99,283 | $ | 1,676 | $ | 4,787 | $ | 6,463 | $ | 24,369 | $ | 130,115 | |||||
| CONSTELLATION SOFTWARE INC. | ||||||||||
| Condensed Consolidated Statements of Cash Flows | ||||||||||
| (In thousands of U.S. dollars) | ||||||||||
| (Unaudited) | ||||||||||
| Three months ended | Nine months ended | |||||||||
| September 30, | September 30, | |||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||
| Cash flows from operating activities: | ||||||||||
| Net income | $ | 21,918 | $ | 8,786 | $ | 144,746 | $ | 19,139 | ||
| Adjustments for: | ||||||||||
| Depreciation | 1,957 | 1,964 | 6,039 | 4,728 | ||||||
| Amortization of intangible assets | 19,135 | 16,782 | 55,733 | 48,666 | ||||||
| Impairment of non-financial assets | 518 | - | 518 | - | ||||||
| Finance income | (2,795) | (306) | (6,167) | (900) | ||||||
| Finance costs | 1,462 | 1,315 | 4,589 | 3,672 | ||||||
| Income tax expense (recovery) | 3,145 | 1,676 | (87,255) | 6,316 | ||||||
| Foreign exchange (gain) loss | (905) | 1,622 | 3,028 | 2,043 | ||||||
| Change in non-cash operating working capital | 12,511 | 1,353 | (30,437) | (2,628) | ||||||
| Income taxes paid | (3,295) | (8,710) | (10,023) | (13,926) | ||||||
| Net cash flows from operating activities | 53,651 | 24,482 | 80,771 | 67,110 | ||||||
| Cash flows from financing activities: | ||||||||||
| Interest paid | (1,526) | (1,008) | (3,989) | (3,140) | ||||||
| Decrease in other non current liabilities | (1,800) | (716) | (1,959) | (209) | ||||||
| Decrease in bank indebtedness, net | (67,746) | (19,825) | (12,031) | (3,471) | ||||||
| Dividends paid | - | - | (42,755) | (5,510) | ||||||
| Net cash flows from financing activities | (71,072) | (21,549) | (60,734) | (12,330) | ||||||
| Cash flows from investing activities: | ||||||||||
| Acquisition of businesses, net of cash | ||||||||||
| acquired | (1,510) | (3,628) | (33,054) | (43,533) | ||||||
| Post-acquisition settlement payments, net of receipts | (1,503) | (2,667) | (2,602) | (5,560) | ||||||
| Purchases of available-for-sale equity securities | - | (2,163) | (5,944) | (10,411) | ||||||
| Proceeds from sale of available-for-sale equity securities | 7,011 | - | 13,499 | - | ||||||
| Decrease in restricted cash | 107 | - | 557 | 1,272 | ||||||
| Interest and dividends received | 164 | 118 | 318 | 197 | ||||||
| Property and equipment purchased | (1,640) | (1,926) | (5,704) | (5,149) | ||||||
| Cash flows provided for (used in) investing activities | 2,629 | (10,266) | (32,930) | (63,184) | ||||||
| Effect of currency translation adjustment on | ||||||||||
| cash and cash equivalents | 2,751 | 1,625 | 153 | (191) | ||||||
| Decrease in cash and cash equivalents | (12,041) | (5,708) | (12,740) | (8,595) | ||||||
| Cash, beginning of period | 30,212 | 30,362 | 30,911 | 33,249 | ||||||
| Cash, end of period | 18,171 | $ | 24,654 | $ | 18,171 | $ | 24,654 | |||
Contact Information:
John Billowits
Chief Financial Officer
(416) 861-2279
info@csisoftware.com
www.csisoftware.com