TORONTO, ONTARIO — (Marketwired) — 02/25/15 — Constellation Software Inc. (TSX: CSU) (“Constellation” or the “Company”) today announced its financial results for the fourth quarter and year ended December 31, 2014 and declared a $1.00 per share dividend payable on April 3, 2015 to all common shareholders of record at close of business on March 18, 2015. 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 Audited Consolidated Financial Statements for the year ended December 31, 2014 and the accompanying notes, prepared in accordance with International Financial Reporting Standards (“IFRS”), our Management–s Discussion and Analysis for the three and twelve months ended December 31, 2014, which can be found on SEDAR at and on the Company–s website . Additional information about the Company is also available on SEDAR at .
Q4 2014 Headlines:
2014 Headlines:
Fourth quarter 2014 revenue was $440 million, an increase of 29%, or $100 million, compared to $340 million for the comparable period in 2013. For the year ended December, 31 2014 total revenues were $1,669 million, an increase of 38%, or $459 million, compared to $1,211 million for the comparable period in 2013. The increase for both the three and twelve month periods ended December 31, 2014 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 0.5% and 4%, respectively. For the quarter ended December 31, 2014 the appreciation of the US dollar against most major currencies in which the Company transacts business resulted in an approximate 3.6% reduction in the Company–s organic growth rate. The impact to the full year 2014 organic growth rate was immaterial.
Adjusted EBITA for the fourth quarter of 2014 was $104 million, a 37% increase compared to the prior year–s fourth quarter Adjusted EBITA of $76 million. Fourth quarter 2014 Adjusted EBITA per share on a diluted basis increased 37% to $4.90, compared to $3.59 for the same period last year. Adjusted EBITA for the year ended December 31, 2014 was $348 million, a 49% increase over last year–s Adjusted EBITA of $234 million for the same period. Adjusted EBITA per share on a diluted basis for the year ended December 31, 2014 increased 49% to $16.43, compared to $11.03 for the same period last year.
Adjusted Net Income for the fourth quarter of 2014 was $87 million, compared to the prior year–s fourth quarter Adjusted Net Income of $69 million, a 25% increase. Fourth quarter 2014 Adjusted Net Income per share on a diluted basis increased 25% to $4.09 compared to $3.26 for the prior year–s fourth quarter. Adjusted Net Income for the year ended December 31, 2014 was $274 million, an increase of 33% over last year–s Adjusted Net Income of $207 million. Adjusted Net Income per share on a diluted basis for the year ended December 31, 2014 increased 33% to $12.94, compared to $9.76 for the same period in 2013.
Net income for the fourth quarter 2014 was $39 million compared to the prior year–s fourth quarter net income of $43 million. On a diluted per share basis, this translates into net income per share of $1.86 for the fourth quarter of 2014 compared to $2.00 for the same period of 2013. Net income for the twelve month period ended December 31, 2014 was $103 million, an increase of 11% over net income of $93 million for the same period in 2013. Net income per share on a diluted basis for the year ended December 31, 2014 increased 11% to $4.87, compared to $4.39 for the same period in 2013.
Cash flows from operations for the fourth quarter of 2014 were $97 million, an increase of 20%, or $16 million, compared to $81 million for the comparable period in 2013. For the year ended December 31, 2014 cash flows from operations were $341 million, an increase of 55%, or $121 million, compared to $220 million for the comparable period in 2013.
On December 23, 2014, in accordance with the terms of the purchase and sale agreement for the TSS acquisition, and on the basis of the term sheets attached thereto, Constellation and the sellers of TSS along with members of TSS– executive management team (collectively, the “minority owners”) entered into a Members Agreement pursuant to which the minority owners acquired 33.29% of the voting interests in Constellation Software Netherlands Holdings Cooperatief (the “Coop”). Proceeds from this transaction in the amount of EUR39.4 million (US$48.5 million) were applied to repay debt under the Constellation credit facility. In accordance with IFRS, 100% of the financial results for TSS are included in the consolidated financial results of the Company. A liability has been recorded on the Company–s Consolidated Statements of Financial Position to reflect the value of the interests in TSS sold to the minority owners.
The following table displays our revenue by reportable segment and the percentage change for the three and twelve months ended December 31, 2014 compared to the same periods in 2013:
Comparative figures have been reclassified to conform to the current year–s presentation.
Public Sector
For the quarter ended December 31, 2014, total revenue in the public sector reportable segment increased by 32%, or $74 million to $305 million, compared to $231 million for the quarter ended December 31, 2013. For the year ended December 31, 2014, total revenue increased by 45%, or $362 million to $1,172 million, compared to $810 million for the comparable period in 2013. Revenue growth from acquired businesses contributed approximately $75 million to our Q4 2014 revenues and $334 million to our year ended December 31, 2014 revenues compared to the same periods in 2013, as we completed 30 acquisitions since the beginning of 2013. Organic revenue growth was -0.3% in Q4 2014 and 3% for the twelve months ended December 31, 2014 compared to the same periods in 2013. For the quarter ended December 31, 2014 the appreciation of the US dollar against most major currencies in which the Company transacts business resulted in an approximate 4.1% reduction in the public sector revenue organic growth rate. The impact to the full year 2014 organic growth rate was immaterial.
Private Sector
For the quarter ended December 31, 2014, total revenue in the private sector reportable segment increased 23%, or $25 million to $134 million, compared to $109 million for the quarter ended December 31, 2013. For the twelve months ended December 31, 2014 total revenue increased by 24%, or $97 million to $498 million, compared to $401 million for the comparable period in 2013. Revenue growth from acquired businesses contributed approximately $23 million to our Q4 2014 revenues and $80 million to our twelve months ended December 31, 2014 revenues compared to the same periods in 2013, as we completed 23 acquisitions since the beginning of 2013. Revenues increased organically by 2% in Q4 2014 and 4% for the twelve months ended December 31, 2014 compared to the same periods in 2013. For the quarter ended December 31, 2014 the appreciation of the US dollar against most major currencies in which the Company transacts business resulted in an approximate 2.5% reduction in the private sector revenue organic growth rate. The impact to the full year 2014 organic growth rate was immaterial.
Conference Call and Webcast
Management will host a conference call at 9:00 a.m. (ET) on Thursday, February 26, 2015 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 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 March 12, 2015. To access the replay, please dial 905-694-9451 or 800-408-3053 followed by the passcode 9275174.
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 EBITA” refers to net income before adjusting for finance and other income, finance costs, income taxes, share in net income or loss of equity investees, impairment of non-financial assets, amortization, and foreign exchange gain or loss. The Company believes that Adjusted EBITA 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 intangible asset amortization and the other items listed above. “Adjusted EBITA margin” refers to the percentage that Adjusted EBITA for any period represents as a portion of total revenue for that period. Previously the Company has reported “Adjusted EBITDA” in certain financial disclosures, but has determined that Adjusted EBITA is a more meaningful measure going forward. Adjusted EBITDA refers to Adjusted EBITA as defined above then further excludes depreciation. The Company uses depreciation as a proxy for the cash flows used to purchase property and equipment required to support the Company–s main business activities. As such, the Company believes Adjusted EBITA is a more useful measure then Adjusted EBITDA.
“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 EBITA and Adjusted net income are not recognized measures under IFRS and, accordingly, readers are cautioned that Adjusted EBITA 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 EBITA and Adjusted net income may differ from other issuers and, accordingly, Adjusted EBITA and Adjusted net income may not be comparable to similar measures presented by other issuers.
The following table reconciles Adjusted EBITA to net income:
The following table reconciles Adjusted net income to net income:
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.
SOURCE: CONSTELLATION SOFTWARE INC.
Contacts:
Constellation Software Inc.
Jamal Baksh
Chief Financial Officer
(416) 861-9677
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