CSU Constellation Software Inc

Constellation Software Inc. (TSX:CSU) (“Constellation” or the “Company”) today announced its financial results for the third quarter ended September 30, 2024 and declared a $1.00 per share dividend payable on January 10, 2025 to all common shareholders of record at close of business on December 20, 2024. 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 nine months ended September 30, 2024 and the accompanying notes, our Management Discussion and Analysis for the three and nine months ended September 30, 2024 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, 2023, which can be found on SEDAR+ at www.sedarplus.com and on the Company’s website www.csisoftware.com. Additional information about the Company is also available on SEDAR+ at www.sedarplus.com.

Q3 2024 and Subsequent Headlines:

• Revenue grew 20% (2% organic growth, 1% after adjusting for changes in foreign exchange rates) to $2,541 million compared to $2,126 million in Q3 2023.
• Net income attributable to common shareholders decreased 28% to $164 million ($7.74 on a diluted per share basis) from $227 million ($10.70 on a diluted per share basis) in Q3 2023.
• A number of acquisitions were completed for aggregate cash consideration of $197 million (which includes acquired cash). Deferred payments associated with these acquisitions have an estimated value of $70 million resulting in total consideration of $267 million.
• Cash flows from operations (“CFO”) increased 1% or $3 million to $517 million compared to $513 million for the comparable period in 2023.
• Free cash flow available to shareholders1 (“FCFA2S”) decreased 2% or $6 million to $362 million compared to $367 million for the same period in 2023.(Due to rounding certain totals may not foot.)

Total revenue for the quarter ended September 30, 2024 was $2,541 million, an increase of 20%, or $415 million, compared to $2,126 million for the comparable period in 2023. For the first nine months of 2024 total revenues were $7,363 million, an increase of 21%, or $1,279 million, compared to $6,084 million for the comparable period in 2023. The increase for both the three and nine 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 2% and 3% respectively, 1% and 2% 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 September 30, 2024 was $164 million compared to $227 million for the same period in 2023. On a per share basis this translated into a net income per diluted share of $7.74 in the quarter ended September 30, 2024 compared to net income per diluted share of $10.70 for the same period in 2023. For the nine months ended September 30, 2024, net income attributable to common shareholders of CSI was $446 million or $21.04 per diluted share compared to $424 million or $20.02 per diluted share for the same period in 2023.

For the quarter ended September 30, 2024, CFO increased $3 million to $517 million compared to $513 million for the same period in 2023 representing an increase of 1%. For the first nine months of 2024, CFO increased $250 million to $1,518 million compared to $1,268 million during the same period in 2023, representing an increase of 20%.

1. See Non-IFRS measures.

For the quarter ended September 30, 2024, FCFA2S decreased $6 million to $362 million compared to $367 million for the same period in 2023 representing a decrease of 2%. For the nine months ended September 30, 2024, FCFA2S increased $155 million to $990 million compared to $835 million for the same period in 2023 representing an increase of 19%.

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 debt, debt transaction costs, payments of lease obligations, the IRGA / TSS membership liability revaluation charge, and property and equipment purchased, and includes interest and dividends received, and the proceeds from sale of interest rate caps. 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 September 30,							Nine months ended September 30,
				2024		2023					2024		2023
			($ in millions)							($ in millions)
	Net cash flows from operating activities			517		513					1,518		1,268
	Adjusted for:
	Interest paid on lease obligations			(4	)	(3	)				(10	)	(8	)
	Interest paid on debt			(63	)	(34	)				(141	)	(96	)
	Proceeds from sale of interest rate cap			-		(1	)				-		5
	Debt transaction costs			(1	)	(1	)				(13	)	(4	)
	Payments of lease obligations			(31	)	(25	)				(89	)	(78	)
	IRGA / TSS membership liability revaluation charge			(33	)	(25	)				(122	)	(94	)
	Property and equipment purchased			(19	)	(10	)				(42	)	(29	)
	Interest and dividends received			10		0					25		1
				376		415					1,125		965
	Less amount attributable to
	Non-controlling interests			(14	)	(47	)				(135	)	(129	)
	Free cash flow available to shareholders			362		367					990		835
	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 BakshChief Financial Officer (416) 861-9677 info@csisoftware.comwww.csisoftware.com

SOURCE: CONSTELLATION SOFTWARE INC.

CONSTELLATION SOFTWARE INC.
Condensed Consolidated Interim Statements of Financial Position
(In millions of U.S. dollars, except per share amounts. Due to rounding, numbers presented may not foot.)
Unaudited
			September 30, 2024			December 31, 2023			September 30, 2023
Assets
Current assets:
	Cash	$	2,069		$	1,284		$	1,076
	Accounts receivable		1,152			1,138			986
	Unbilled revenue		435			325			331
	Inventories		66			51			56
	Other assets		636			541			499
			4,358			3,340			2,948
Non-current assets:
	Property and equipment		220			142			129
	Right of use assets		323			312			282
	Deferred income taxes		202			108			85
	Other assets		331			287			271
	Intangible assets		7,139			6,677			6,325
			8,215			7,526			7,092
Total assets		$	12,573		$	10,866		$	10,039
Liabilities and Shareholders' Equity
Current liabilities:
	Debt with recourse to Constellation Software Inc.	$	294		$	861		$	907
	Debt without recourse to Constellation Software Inc.		414			225			235
	Redeemable preferred securities		-			814			536
	Accounts payable and accrued liabilities		1,421			1,428			1,239
	Dividends payable		21			21			21
	Deferred revenue		2,014			1,758			1,779
	Provisions		10			9			8
	Acquisition holdback payables		285			168			150
	Lease obligations		113			112			102
	Income taxes payable		116			88			113
			4,689			5,484			5,090
Non-current liabilities:
	Debt with recourse to Constellation Software Inc.		1,881			863			617
	Debt without recourse to Constellation Software Inc.		1,560			1,385			1,275
	Deferred income taxes		643			604			508
	Acquisition holdback payables		123			88			87
	Lease obligations		251			236			216
	Other liabilities		290			244			240
			4,748			3,421			2,943
Total liabilities			9,437			8,905			8,033
Shareholders' equity:
	Capital stock		99			99			99
	Accumulated other comprehensive income (loss)		(98	)		(99	)		(159	)
	Retained earnings		2,657			1,876			1,762
	Non-controlling interests		478			85			304
			3,136			1,961			2,006
Total liabilities and shareholders' equity		$	12,573		$	10,866		$	10,039

CONSTELLATION SOFTWARE INC.
Condensed Consolidated Interim Statements of Income (loss)
(In millions of U.S. dollars, except per share amounts. Due to rounding, numbers presented may not foot.)
Unaudited
	Three months ended September 30,								Nine months ended September 30,
		2024				2023				2024				2023
Revenue
License	$	84			$	84			$	259			$	254
Professional services		487				450				1,451				1,290
Hardware and other		78				71				204				191
Maintenance and other recurring		1,893				1,521				5,449				4,349
		2,541				2,126				7,363				6,084
Expenses
Staff		1,336				1,112				3,956				3,291
Hardware		43				42				114				113
Third party license, maintenance and professional services		243				208				701				592
Occupancy		18				11				48				37
Travel, telecommunications, supplies, software and equipment		120				99				365				285
Professional fees		43				36				126				107
Other, net		34				37				134				103
Depreciation		46				41				135				120
Amortization of intangible assets		271				214				771				620
		2,152				1,799				6,349				5,268
Foreign exchange loss (gain)		30				(23	)			16				3
IRGA/TSS Membership liability revaluation charge		33				25				122				94
Finance and other expense (income)		(18	)			2				(50	)			(7	)
Bargain purchase gain		1				(50	)			(4	)			(51	)
Impairment of intangible and other non-financial assets		2				1				17				4
Redeemable preferred securities expense (income)		-				37				58				319
Finance costs		72				50				207				132
		119				41				366				494
Income (loss) before income taxes		270				286				648				322
Current income tax expense (recovery)		126				99				396				315
Deferred income tax expense (recovery)		(43	)			(32	)			(196	)			(155	)
Income tax expense (recovery)		83				67				200				160
Net income (loss)		187				219				448				161
Net income (loss) attributable to:
Common shareholders of Constellation Software Inc.		164				227				446				424
Non-controlling interests		23				(8	)			2				(263	)
Net income (loss)		187				219				448				161
Earnings per common share of Constellation Software Inc.
Basic and diluted	$	7.74			$	10.70			$	21.04			$	20.02

CONSTELLATION SOFTWARE INC.
Condensed Consolidated Interim Statements of Comprehensive Income (loss)
(In millions of U.S. dollars, except per share amounts. Due to rounding, numbers presented may not foot.)
Unaudited
	Three months ended September 30,							Nine months ended September 30,
		2024			2023				2024			2023
Net income (loss)	$	187		$	219			$	448		$	161
Items that are or may be reclassified subsequently to net income (loss):
Foreign currency translation differences from foreign operations and other, net of tax		71			(58	)			8			(27	)
Other comprehensive income (loss), net of income tax		71			(58	)			8			(27	)
Total comprehensive income (loss)	$	258		$	161			$	456		$	135
Total other comprehensive income (loss) attributable to:
Common shareholders of Constellation Software Inc.		60			(46	)			7			(21	)
Non-controlling interests		11			(12	)			2			(6	)
Total other comprehensive income (loss)	$	71		$	(58	)		$	8		$	(27	)
Total comprehensive income (loss) attributable to:
Common shareholders of Constellation Software Inc.		224			180				453			404
Non-controlling interests		34			(20	)			3			(269	)
Total comprehensive income (loss)	$	258		$	161			$	456		$	135

CONSTELLATION SOFTWARE INC.
Condensed Consolidated Interim Statement of Changes in Equity
(In millions of U.S. dollars, except per share amounts. Due to rounding, numbers presented may not foot.)
Unaudited
Nine months ended September 30, 2024
	Equity Attributable to Common Shareholders of CSI
	Capitalstock		Accumulatedothercomprehensive income (loss)			Retainedearnings			Total			Non-controlling interests			Total equity
Balance at January 1, 2024	$	99	$	(99	)	$	1,876		$	1,877		$	85		$	1,961
Total comprehensive income (loss):
Net income (loss)		-		-			446			446			2			448
Other comprehensive income (loss)
Foreign currency translation differences from    foreign operations and other, net of tax		-		7			-			7			2			8
Total other comprehensive income (loss)		-		7			-			7			2			8
Total comprehensive income (loss)		-		7			446			453			3			456
Transactions with owners, recorded directly in equity
Non-controlling interests arising from business combinations		-		-			-			-			(0	)		(0	)
Conversion of Lumine Special Shares to subordinate votingshares of Lumine and settlement of accrued dividend onLumine Special Shares through the issuance of subordinatevoting shares of Lumine		-		-			-			-			872			872
Conversion of Lumine Preferred Shares to subordinate votingshares of Lumine and settlement of accrued dividend onLumine Preferred Shares through the issuance of subordinatevoting shares of Lumine				(6	)		400			394			(394	)		-
Other movements in non-controlling interests		-		-			(1	)		(1	)		(3	)		(4	)
Dividends paid to non-controlling interests		-		-			-			-			(86	)		(86	)
Dividends to shareholders of the Company		-		-			(64	)		(64	)		-			(64	)
Balance at September 30, 2024	$	99	$	(98	)	$	2,657		$	2,658		$	478		$	3,136

CONSTELLATION SOFTWARE INC.
Condensed Consolidated Interim Statement of Changes in Equity
(In millions of U.S. dollars, except per share amounts. Due to rounding, numbers presented may not foot.)
Nine months ended September 30, 2023
	Equity Attributable to Common Shareholders of CSI
	Capitalstock		Accumulatedother comprehensive income (loss)			Retainedearnings			Total			Non-controlling interests			Total equity
Balance at January 1, 2023	$	99	$	(150	)	$	1,763		$	1,713		$	221		$	1,933
Total comprehensive income (loss):
Net income (loss)		-		-			424			424			(263	)		161
Other comprehensive income (loss)
Foreign currency translation differences from    foreign operations and other, net of tax		-		(21	)		-			(21	)		(6	)		(27	)
Total other comprehensive income (loss)		-		(21	)		-			(21	)		(6	)		(27	)
Total comprehensive income (loss)		-		(21	)		424			404			(269	)		135
Transactions with owners, recorded directly in equity
Special dividend of Lumine Subordinate Voting Shares		-		12			(378	)		(366	)		366			-
Acquisition of non-controlling interests		-		-			-			-			(1	)		(1	)
Conversion of Lumine Special Shares to subordinate votingshares of Lumine		-		-			-			-			5			5
Other movements in non-controlling interests		-		0			16			16			(18	)		(2	)
Dividends to shareholders of the Company		-		-			(64	)		(64	)		-			(64	)
Balance at September 30, 2023	$	99	$	(159	)	$	1,762		$	1,703		$	304		$	2,006

CONSTELLATION SOFTWARE INC.
Condensed Consolidated Interim Statements of Cash Flows
(In millions of U.S. dollars, except per share amounts. Due to rounding, numbers presented may not foot.)
Unaudited
		Three months ended September 30,								Nine months ended September 30,
			2024				2023				2024				2023
Cash flows from (used in) operating activities:
	Net income (loss)	$	187			$	219			$	448			$	161
	Adjustments for:
	Depreciation		46				41				135				120
	Amortization of intangible assets		271				214				771				620
	IRGA/TSS Membership liability revaluation charge		33				25				122				94
	Finance and other expense (income)		(18	)			2				(50	)			(7	)
	Bargain purchase (gain)		1				(50	)			(4	)			(51	)
	Impairment of intangible and other non-financial assets		2				1				17				4
	Redeemable preferred securities expense (income)		-				37				58				319
	Finance costs		72				50				207				132
	Income tax expense (recovery)		83				67				200				160
	Foreign exchange loss (gain)		30				(23	)			16				3
	Change in non-cash operating assets and liabilities
	exclusive of effects of business combinations		(72	)			(7	)			(38	)			23
	Income taxes paid		(118	)			(62	)			(363	)			(310	)
	Net cash flows from (used in) operating activities		517				513				1,518				1,268
Cash flows from (used in) financing activities:
	Interest paid on lease obligations		(4	)			(3	)			(10	)			(8	)
	Interest paid on debt		(63	)			(34	)			(141	)			(96	)
	Proceeds from sale of interest rate cap		-				(1	)			-				5
	Increase (decrease) in CSI facility		-				175				(578	)			364
	Increase (decrease) in Topicus revolving credit debt facility without recourse to CSI		55				5				147				43
	Proceeds from issuance of Senior Notes		-				-				1,000				-
	Proceeds from issuance of debt facilities without recourse to CSI		37				35				313				290
	Repayments of debt facilities without recourse to CSI		(81	)			(100	)			(113	)			(227	)
	Other financing activities		(4	)			(2	)			(31	)			(1	)
	Dividends paid to non-controlling interests		-				-				(86	)			-
	Debt transaction costs		(1	)			(1	)			(13	)			(4	)
	Payments of lease obligations		(31	)			(25	)			(89	)			(78	)
	Distribution to the Joday Group		-				-				(64	)			-
	Principal repayments to the Joday Group pursuant to the Call Notice		-				-				(22	)			-
	Dividends paid to common shareholders of the Company		(21	)			(21	)			(64	)			(64	)
	Net cash flows from (used in) in financing activities		(113	)			28				250				224
Cash flows from (used in) investing activities:
	Acquisition of businesses		(196	)			(389	)			(871	)			(1,233	)
	Cash obtained with acquired businesses		23				19				89				113
	Post-acquisition settlement payments, net of receipts		(53	)			(35	)			(183	)			(168	)
	Purchases of investments and other assets		(4	)			(1	)			(5	)			(19	)
	Proceeds from sales of other investments and other assets		2				-				7				119
	Decrease (increase) in restricted cash		(4	)			(1	)			(13	)			(1	)
	Interest, dividends and other proceeds received		12				0				25				3
	Property and equipment purchased		(19	)			(10	)			(42	)			(29	)
	Net cash flows from (used in) investing activities		(240	)			(416	)			(993	)			(1,216	)
Effect of foreign currency on
	cash		33				(19	)			11				(10	)
Increase (decrease) in cash			195				107				785				265
Cash, beginning of period		$	1,873			$	970			$	1,284			$	811
Cash, end of period		$	2,069			$	1,076			$	2,069			$	1,076