TORONTO, ONTARIO — (Marketwired) — 07/31/13 — Constellation Software Inc. (TSX: CSU) (“Constellation” or the “Company”) today announced its financial results for the second quarter ended June 30, 2013 and declared a $1.00 per share dividend payable on October 3, 2013 to all common shareholders of record at close of business on September 17, 2013. 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, 2013 and the accompanying notes, our Management-s Discussion and Analysis for the three and six months ended June 30, 2013, 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, 2012, which can be found on SEDAR at and on the Company-s website . Additional information about the Company is also available on SEDAR at .
Q2 2013 Headlines:
Cash flows from operations for the second quarter of 2013 were $18 million, a decrease of 31%, or $8 million, compared to $26 million for the comparable period in 2012. The decrease was caused by a negative variance in changes in non-cash operating working capital in the second quarter of 2013 versus the second quarter of 2012, and reverses the comparable positive variance in changes in non-cash operating working capital in the first quarter of 2013 versus the first quarter of 2012. The negative variance in the second quarter of 2013 primarily relates to the timing of payments associated with the Company-s bonus plan. For the first six months of 2013 cash flows from operations were $52 million, an increase of 35%, or $14 million, compared to $38 million for the comparable period in 2012.
Second quarter 2013 revenue was $298 million, an increase of 43%, or $89 million, compared to $209 million for the comparable period in 2012. For the first six months of 2013 total revenues were $555 million, an increase of 37%, or $150 million, compared to $404 million for the comparable period in 2012. The increase for both the three and six month periods compared to the same periods in the prior year is mainly attributable to growth from acquisitions, however, the Company did experience positive organic growth of 8% and 4%, respectively. During the second quarter of 2013, a contract that was previously accounted for on a zero margin basis was completed, resulting in the recognition of previously deferred profit margin as part of professional services revenue in the amount of $5 million. Excluding this amount, organic growth would have been 6% and 3% for the three and six month periods ended June 30, 2013 respectively.
Adjusted EBITDA for the second quarter of 2013 was $62 million, a 41% increase compared to the prior year-s second quarter Adjusted EBITDA of $44 million. Second quarter 2013 Adjusted EBITDA per share on a diluted basis increased 41% to $2.91, compared to $2.06 for the same period last year. Adjusted EBITDA for the six month period ended June 30, 2013 was $104 million, a 26% increase over last year-s Adjusted EBITDA of $83 million for the same period. Adjusted EBITDA per share on a diluted basis for the six month period ended June 30, 2013 increased 26% to $4.92, compared to $3.92 for the same period last year.
Adjusted Net Income for the second quarter of 2013 was $50 million, compared to the prior year-s second quarter Adjusted Net Income of $36 million, a 39% increase. Second quarter 2013 Adjusted Net Income per share on a diluted basis increased 39% to $2.36 compared to $1.71 for the prior year-s second quarter. Adjusted Net Income for the six month period ended June 30, 2013 was $83 million, an increase of 23% over last year-s Adjusted Net Income of $68 million. Adjusted Net Income per share on a diluted basis for the six month period ended June 30, 2013 increased 23% to $3.94, compared to $3.20 for the same period in 2012.
Net income for the second quarter 2013 was $19 million compared to the prior year-s second quarter net income of $18 million. On a diluted per share basis, this translates into net income per share of $0.91 for the second quarter of 2013 compared to $0.83 for the same period of 2012. Net income for the six month period ended June 30, 2013 was $28 million, a decrease of 10% over last year-s Net income of $32 million. Net income per share on a diluted basis for the six month period ended June 30, 2013 decreased 10% to $1.34, compared to $1.49 for the same period in 2012.
The following table displays our revenue by reportable segment and the percentage change for the three and six months ended June 30, 2013 compared to the same periods in 2012:
Public Sector
For the quarter ended June 30, 2013, total revenue in the public sector reportable segment increased by 36%, or $54 million to $201 million, compared to $148 million for the quarter ended June 30, 2012. For the six months ended June 30, 2013, total revenue increased by 32%, or $92 million to $378 million, compared to $286 million for the comparable period in 2012. Revenue growth from acquired businesses contributed approximately $40 million to our Q2 2013 revenues and $80 million to our six months ended June 30, 2013 revenues compared to the same periods in 2012, as we completed 26 acquisitions since the beginning of 2012. Organic revenue growth was 10% in Q2 2013 and 4% for the six months ended June 30, 2013 compared to the same periods in 2012. As mentioned above, during the quarter ended June 30, 2013, a contract that was previously accounted for on a zero margin basis due to uncertainty regarding profitability was completed, resulting in the recognition of previously deferred profit margin as part of professional services revenue in the amount of $5 million. Excluding this amount, organic growth would have been 6% and 2% for the three and six month periods ended June 30, 2013, respectively.
Private Sector
For the quarter ended June 30, 2013, total revenue in the private sector reportable segment increased 58%, or $36 million to $97 million, compared to $61 million for the quarter ended June 30, 2012. For the six months ended June 30, 2013 total revenue increased by 50%, or $59 million to $177 million, compared to $118 million for the comparable period in 2012. Revenue growth from acquired businesses contributed approximately $32 million to our Q2 2013 revenues and $53 million to our six months ended June 30, 2013 revenues compared to the same periods in 2012, as we completed 23 acquisitions since the beginning of 2012. Revenues increased organically by 6% in Q2 2013 and 5% for the six months ended June 30, 2013 compared to the same periods in 2012.
Conference Call and Webcast
Management will host a conference call at 9:00 a.m. (ET) on Thursday, August 1, 2013 to answer questions regarding the results. The teleconference numbers are 416-695-6623 or 800-952-4972. The call will also be webcast live and archived on Constellation-s website at .
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 August 14, 2013. To access the replay, please dial 905-694-9451 or 800-408-3053 followed by the passcode 4538771.
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
The term “Adjusted EBITDA” refers to net income before adjusting for finance income, finance costs, income taxes, equity in net income or loss of equity investees, impairment of non-financial assets, depreciation, amortization, and foreign exchange gain or loss. 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 amortization 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 adjusted for 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 or recognized 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, readers 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:
The following table reconciles Adjusted net income to net income:
About Constellation Software Inc.
Constellation Software acquires, manages and builds vertical market software businesses that provide mission-critical software solutions.
SOURCE: CONSTELLATION SOFTWARE INC.
Contacts:
Constellation Software Inc.
Jamal Baksh
Chief Financial Officer
(416) 861-9677
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