TORONTO, ONTARIO — (Marketwired) — 04/27/16 — Constellation Software Inc. (TSX: CSU) (“Constellation” or the “Company”) today announced its financial results for the first quarter ended March 31, 2016 and declared a $1.00 per share dividend payable on July 6, 2016 to all common shareholders of record at close of business on June 17, 2016. 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 months ended March 31, 2016 and the accompanying notes, our Management Discussion and Analysis for the three months ended March 31, 2016 and with 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, 2015, which can be found on SEDAR at and on the Company–s website . Additional information about the Company is also available on SEDAR at .
Q1 2016 Headlines:
First quarter 2016 revenue was $487 million, an increase of 15%, or $64 million, compared to $423 million for the comparable period in 2015. The increase is mainly attributable to growth from acquisitions as the Company experienced negative organic growth of 2%, 0% after adjusting for the impact of the appreciation of the US dollar against most major currencies in which the Company transacts business.
Adjusted EBITA for the first quarter 2016 was $108 million, a 15% increase compared to the prior year–s first quarter Adjusted EBITA of $93 million. First quarter 2016 Adjusted EBITA per share on a diluted basis increased 15% to $5.08, compared to $4.41 for the same period last year. Adjusted EBITA margin was 22% for the three months ended March 31, 2016 compared to 22% for the prior year–s first quarter. Adjusted EBITA margins in the first quarter of every year are typically lower as compared to other quarters, largely attributable to increased payroll tax costs associated with our annual bonus payments that are made in the month of March.
Adjusted Net Income for the first quarter 2016 was $63 million, compared to the prior year–s first quarter Adjusted Net Income of $75 million, a 16% decrease. First quarter 2016 Adjusted Net Income per share on a diluted basis decreased 16% to $2.95 compared to $3.52 for the prior year–s first quarter. Excluding the impact of the $19 million unrealized foreign exchange loss in Q1 2016 and the $2 million unrealized foreign exchange gain in Q1 2015 the Adjusted Net Income per share on a diluted basis would have been $3.86 and $3.44 for the first quarters of 2016 and 2015 respectively, representing a 12% increase from Q1 2015 to Q1 2016.
Net income for the first quarter 2016 was $19 million, compared to the prior year–s first quarter Net income of $33 million. Net income per share on a diluted per share basis for the first quarter of 2016 decreased 43% to $0.88, compared to $1.55 for the first quarter of 2015.
Cash flows from operations for the first quarter of 2016 were $146 million, an increase of 30%, or $33 million, compared to $113 million for the comparable period in 2015.
The following table displays our revenue by reportable segment and the percentage change for the three months ended March 31, 2016 compared to the same periods in 2015:
Public Sector
For the quarter ended March 31, 2016, total revenue in the public sector reportable segment increased 11%, or $31 million, to $322 million, compared to $291 million for the quarter ended March 31, 2015. For purposes of calculating organic growth, the adjustment required to March 31, 2015 revenue relating to pre-acquisition revenue earned in that period from the 19 acquisitions we completed in the previous twelve months was $39 million. Organic revenue growth was negative 2% for the three months ended March 31, 2016 compared to the same period in 2015 and 0% after adjusting for the impact of the appreciation of the US dollar against most major currencies in which the Company transacts business.
Private Sector
For the quarter ended March 31, 2016, total revenue in the private sector reportable segment increased 25%, or $33 million to $165 million, compared to $132 million for the quarter ended March 31, 2015. For purposes of calculating organic growth, the adjustment required to March 31, 2015 revenue relating to pre-acquisition revenue earned in that period from the 18 acquisitions we completed in the previous twelve months was $34 million. Organic revenue growth was negative 1% in the three months ended March 31, 2016 compared to the same period in 2015 and 2% after adjusting for the impact of the appreciation of the US dollar against most major currencies in which the Company transacts business.
Conference Call and Webcast
Management will host a conference call at 8:00 a.m. (ET) on Thursday, April 28, 2016 to answer questions regarding the results. The teleconference numbers are 416-340-2216 or 866-225-2055. 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 12:30 pm. ET the same day until 11:59 p.m. ET on May 12, 2016. To access the replay, please dial 905-694-9451 or 800-408-3053 followed by the passcode 9390982.
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, bargain purchase gain, finance costs, income taxes, share in net income or loss of equity investees, impairment of non-financial assets, amortization, TSS membership liability revaluation charge, 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, the TSS membership liability revaluation charge, and certain other expenses (income), and excludes the portion of the adjusted net income of Total Specific Solutions (TSS) B.V. (“TSS”) attributable to the minority owners of TSS. 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, the TSS membership liability revaluation charge, and certain other non-cash expenses (income) incurred or recognized by the Company from time to time, and adjusts for the portion of TSS– Adjusted net income not attributable to shareholders of Constellation. “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. Adjusted EBITA includes 100% of the Adjusted EBITA of TSS.
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.
Contacts:
Constellation Software Inc.
Jamal Baksh
Chief Financial Officer
(416) 861-9677
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