Constellation Software Inc. and Topicus.Com Inc. Announce Results for Topicus.com Inc. for the Fourth Quarter and Year Ended December 31, 2022
TORONTO, Feb. 07, 2023 (GLOBE NEWSWIRE) -- Topicus.com Inc. (TSXV:TOI) in a joint release with Constellation Software Inc. (TSX:CSU) today announced financial results for Topicus.com Inc. (“Topicus” or the “Company”) for the fourth quarter and year ended December 31, 2022. Please note that all amounts referred to in this press release are in Euros unless otherwise stated.The following press release should be read in conjunction with the Annual Consolidated Financial Statements of Topicus.com Inc. (or the “Company”) for the year ended December 31, 2022, which we prepared in accordance with International Financial Reporting Standards (“IFRS”) and the Company’s annual Management’s Discussion and Analysis for the year ended December 31, 2022, which can be found on SEDAR at www.sedar.com and on Topicus.com Inc.’s website www.topicus.com. Additional information about Topicus.com Inc. is also available on SEDAR at www.sedar.com.
*Q4 2022 Headlines:*
· Revenue increased 27% (6% organic growth) to €263.7 million compared to €207.6 million in Q4 2021.
· Net income increased to €28.7 million (€0.21 on a diluted per share basis) from €27.0 million (negative €0.17 on a diluted per share basis).
· Acquisitions were completed for aggregate cash consideration of €10.5 million (which includes acquired cash). Deferred payments associated with these acquisitions have an estimated value of €2.9 million resulting in total consideration of €13.4 million.
· Cash flows from operations (“CFO”) increased €5.3 million to €48.1 million compared to €42.8 million in Q4 2021 representing an increase of 12%.
· Free cash flow available to shareholders^1 (“FCFA2S”) decreased €2.1 million to €18.6 million compared to €20.6 in Q4 2021.*2022 Headlines:*
· Revenue increased 23% (4% organic growth) to €916.7 million compared to €742.5 million in 2021.
· Net income was €87.6 million (€0.66 on a diluted per share basis) compared to a net loss of €2,222.2 million (negative €30.16 on a diluted per share basis) in 2021.
· A number of acquisitions were completed for total consideration of €183.1 million including holdbacks and contingent consideration.
· Cash flows from operations (“CFO”) increased €26.6 million to €203.0 million compared to €176.4 million in 2021.
· Free cash flow available to shareholders^1 (“FCFA2S”) decreased €32.7 million to €54.2 million compared to €86.8 million in 2021.Total revenue for the quarter ended December 31, 2022 was €263.7 million, an increase of 27%, or €56.1 million, compared to €207.6 million for the comparable period in 2021. For the twelve months ended December 31, 2022 total revenues were €916.7 million, an increase of 23%, or €174.1 million, compared to €742.5 million for the comparable period in 2021. The increase for both the three and twelve 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 6% and 4% respectively. Organic growth is not a standardized financial measure and might not be comparable to measures disclosed by other issuers.
Net income for the quarter ended December 31, 2022 increased €1.7 million to €28.7 million compared to €27.0 million for the same period in 2021. On a per share basis, this translated into net income per basic and diluted share of €0.21 in the quarter ended December 31, 2022 compared to net income per basic and diluted share of negative €0.17 for the same period in 2021. For the twelve months ended December 31, 2022, net income was €87.6 million or €0.66 per basic and diluted share compared to a net loss of €2,222.2 million or €30.16 per basic and diluted share for the same period in 2021. The net loss per basic and diluted share for the twelve months ended December 31, 2021 primarily resulted from the €2,302.2 million redeemable preferred securities expense. Diluted shares outstanding increased from 129.7 million to 129.8 million for the twelve months ended December 31, 2022.
For the quarter ended December 31, 2022, CFO increased €5.3 million to €48.1 million compared to €42.8 million for the same period in 2021 representing an increase of 12%. For the twelve months ended December 31, 2022, CFO increased €26.6 million to €203.0 million compared to €176.4 million for the same period in 2021 representing an increase of 15%.
For the quarter ended December 31, 2022, FCFA2S decreased €2.1 million to €18.6 million compared to €20.6 million for the same period in 2021 representing a decrease of 10%. For the twelve months ended December 31, 2022, FCFA2S decreased €32.7 million to €54.2 million compared to €86.8 million for the same period in 2021 representing a decrease of 38%. The decline for the twelve month period is primarily as a result of the dividend paid to the Preferred Securities holders.
^______________________________
1 See Non-IFRS measures.
*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 Topicus 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 Topicus 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 other facilities, credit facility transaction costs, repayments of lease obligations, dividends paid to redeemable preferred securities holders, and property and equipment purchased, and includes interest and dividends received. The portion of this amount applicable to non-controlling interests is then deducted. Topicus believes that FCFA2S is useful supplemental information as it provides an indication of the uncommitted cash flow that is available to shareholders if Topicus does not make any acquisitions, or investments, and does not repay any debts. While Topicus could use the FCFA2S to pay dividends or repurchase shares, Topicus’ objective is to invest all of our FCFA2S in acquisitions which meet Topicus’ 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 December 31, Year ended December 31, 2022 2021 2022 2021 (€ in millions) (€ in millions)
*Net cash flows from operating activities* 48.1 42.8 203.0 176.4 * *
*Adjusted for:* * *
Interest paid on lease obligations (0.3 ) (0.3 ) (1.2 ) (1.2 )
Interest paid on other facilities (4.4 ) (2.0 ) (11.8 ) (7.9 )
Credit facility transaction costs (3.1 ) (0.2 ) (3.2 ) (2.5 )
Payments of lease obligations (5.2 ) (4.5 ) (20.0 ) (17.5 )
Property and equipment purchased (2.5 ) (2.2 ) (7.3 ) (5.4 )
Dividends paid to redeemable preferred securities holders - - (66.6 ) - 32.5 33.6 92.8 142.0
Less amount attributable to
non-controlling interests (14.0 ) (13.0 ) (38.7 ) (55.2 )
Free cash flow available to shareholders 18.6 20.6 54.2 86.8
Due to rounding, certain totals may not foot.* *
Comparative financial information amended to reflect the Combination as if it occurred before the start of the earliest period presented.
*
About Topicus.com Inc.*
Topicus’ subordinate voting shares are listed on the Toronto Venture Stock Exchange under the symbol "TOI". Topicus acquires, manages and builds vertical market software businesses.
*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 Baksh
Chief Financial Officer
(416) 861-9677
info@topicus.com
www.topicus.com
*S**OURCE: TOPICUS.COM INC.*
*Topicus.com Inc.*
Consolidated Statements of Financial Position
(In thousands of euros, except per share amounts. Due to rounding, numbers presented may not foot.) December 31, 2022 December 31, 2021
Assets
Current assets: Cash 136,772 75,326 Accounts receivable 95,790 70,725 Unbilled revenue 41,036 32,592 Inventories 1,419 570 Other assets 34,778 21,776 309,795 200,989
Non-current assets: Property and equipment 19,579 15,326 Right of use assets 54,412 54,382 Deferred income taxes 19,978 6,831 Other assets 17,030 6,655 Intangible assets 874,000 744,136 984,999 827,330
Total assets 1,294,794 1,028,319
Liabilities and Shareholders' Equity
Current liabilities: Topicus Revolving Credit Facility and current portion of term loans 201,275 46,489 Loan from CSI 30,867 29,116 Redeemable preferred securities - 66,614 Accounts payable and accrued liabilities 174,824 135,993 Deferred revenue 116,989 82,179 Provisions 1,884 1,893 Acquisition holdback payables 14,009 8,876 Lease obligations 18,824 16,234 Income taxes payable 11,467 11,400 570,141 398,794
Non-current liabilities: Term and other loans 41,280 96,113 Deferred income taxes 150,521 125,004 Acquisition holdback payables 2,316 945 Lease obligations 36,634 38,955 Other liabilities 26,118 12,877 256,869 273,893
Total liabilities 827,009 672,687
Shareholders' Equity: Preferred shares - 2,047,473 Capital stock 39,412 39,412 Other equity - (1,009,996 ) Accumulated other comprehensive income (loss) (232 ) (380 ) Retained earnings (deficit) 226,919 (1,782,113 ) Non-controlling interests 201,685 1,061,236 467,784 355,632
Total liabilities and shareholders' equity 1,294,794 1,028,319 *Topicus.com Inc.*
Consolidated Statements of Income (Loss)
(In thousands of euros, except per share amounts. Due to rounding, numbers presented may not foot.) Year ended December 31, 2022 2021
Revenue
License 31,745 26,709
Professional services 239,674 196,565
Hardware and other 10,553 6,189
Maintenance and other recurring 634,710 513,078 916,681 742,541
Expenses
Staff 508,721 398,171
Hardware 5,831 2,985
Third party license, maintenance and professional services 76,577 72,027
Occupancy 7,649 5,665
Travel, telecommunications, supplies, software and equipment 32,807 20,383
Professional fees 16,206 12,956
Other, net 20,463 6,788
Depreciation 27,866 24,603
Amortization of intangible assets 107,078 85,060 803,195 628,640
Redeemable preferred securities expense (income) - 2,302,185
Impairment of intangible and other non-financial assets - 1,600
Finance and other expenses (income) 9,068 10,748 9,068 2,314,533
Income (loss) before income taxes 104,418 (2,200,632 )
Current income tax expense (recovery) 43,859 39,494
Deferred income tax expense (recovery) (27,051 ) (17,894 )
Income tax expense (recovery) 16,808 21,600
Net income (loss) 87,610 (2,222,233 )
Net income (loss) attributable to:
Equity holders of Topicus 52,928 (1,884,042 )
Non-controlling interests 34,682 (338,191 )
Net income (loss) 87,610 (2,222,233 )
Weighted average shares
Basic shares outstanding 80,488,504 63,318,650
Diluted shares outstanding 129,841,819 129,681,740
Earnings (loss) per common share of Topicus
Basic 0.66 (30.16 )
Diluted 0.66 (30.16 ) *Topicus.com Inc.*
Consolidated Statements of Comprehensive Income (Loss)
(In thousands of euros, except per share amounts. Due to rounding, numbers presented may not foot.) Year ended December 31, 2022 2021
Net income (loss) 87,610 (2,222,233 )
Items that are or may be reclassified subsequently to net income (loss):
Foreign currency translation differences from foreign operations and other 1,264 1,427
Other comprehensive (loss) income for the year, net of income tax 1,264 1,427
Total comprehensive income (loss) for the year 88,874 (2,220,806 )
Total other comprehensive income (loss) attributable to:
Equity holders of Topicus 148 635
Non-controlling interests 1,116 792
Total other comprehensive income (loss) 1,264 1,427
Total comprehensive income (loss) attributable to:
Equity holders of Topicus 53,075 (1,883,407 )
Non-controlling interests 35,798 (337,399 )
Total comprehensive income (loss) 88,874 (2,220,806 ) *Topicus.com Inc.*
Consolidated Statement of Changes in Shareholders' Equity (Deficiency)
(In thousands of euros, except per share amounts. Due to rounding, numbers presented may not foot.)
Year ended December 31, 2022 *Attributable to equity holders of Topicus* *Preferred Shares* *Capital Stock* *Other
equity* *Accumulated
other
comprehensive
(loss) income* *Retained
earnings (Deficit)* *Total* *Non-
controlling
interests* *Total equity*
*Balance at January 1, 2022* *2,047,473* *39,412* *(1,009,996* *)* *(380* *)* *(1,782,113* *)* *(705,604* *)* *1,061,236* *355,632*
Total comprehensive income (loss) for the year:
Net income (loss) - - - - 52,928 52,928 34,682 87,610
Other comprehensive income (loss)
Foreign currency translation differences from foreign operations and other, net of income tax - - - 148 - 148 1,116 1,264
*Total other comprehensive income (loss)* *for the year* *-* *-* *-* *148* *-* *148* *1,116* *1,264*
*Total comprehensive income (loss) for the year* *-* *-* *-* *148* *52,928* *53,075* *35,798* *88,874*
Transactions with owners, recorded directly in equity Conversion of preferred shares to subordinate voting shares (2,047,473 ) - 2,047,473 - - - - - Conversion of non-controlling interest preferred units to ordinary units and other movements in non-controlling interests - - 912,788 - - 912,788 (912,788 ) - Net acquisition of non-controlling interest associated with business combinations and other movements - - (23 ) (0 ) (166 ) (189 ) 24,341 24,152 Reductions of non-controlling interest associated with disposals - - - - - - (873 ) (873 ) Reclassification of other equity to retained earnings (deficit) - - (1,950,242 ) - 1,950,242 - - - Exchange of Topicus Coop ordinary units held by non-controlling interests to subordinate voting shares of Topicus - - - - 6,029 6,029 (6,029 ) -
*Balance at December 31, 2022* *-* *39,412* *-* *(232* *)* *226,919* *266,099* *201,685* *467,784* *Topicus.com Inc.*
Consolidated Statement of Changes in Shareholders' Equity (Deficiency)
(In thousands of euros, except per share amounts. Due to rounding, numbers presented may not foot.)
Year ended December 31, 2021 *Attributable to equity holders of Topicus* *Preferred Shares* *Capital Stock* *Other
equity* *Accumulated
other
comprehensive
(loss) income* *Retained
earnings
(deficit)* *Total* *Non-
controlling
interests* *Total equity*
*Balance at January 1, 2021* - *39,412* *-* *(1,409* *)* *138,572* *176,575* *88,106* *264,680*
Total comprehensive income (loss) for the year:
Net income (loss) - - - - (1,884,042 ) (1,884,042 ) (338,191 ) (2,222,233 )
Other comprehensive income (loss)
Foreign currency translation differences from foreign operations and other - - - 635 - 635 792 1,427
*Total other comprehensive income (loss) for the year* *-* *-* *-* *635* *-* *635* *792* *1,427*
*Total comprehensive income (loss) for the year* *-* *-* *-* *635* *(1,884,042* *)* *(1,883,407* *)* *(337,399* *)* *(2,220,806* *)*
Transactions with owners, recorded directly in equity Issuance of Topicus Coop Ordinary Units to non-controlling interests - - 9,770 127 - 9,896 (9,896 ) - Net acquisition of non-controlling interest associated with acquisitions and other movements - - - 267 (218 ) 49 1,399 1,448 Issuance of Redeemable preferred securities - - (1,001,469 ) - - (1,001,469 ) (124,797 ) (1,126,267 ) Dividends to common shareholders of the Company - - - - (36,425 ) (36,425 ) (18,175 ) (54,600 ) Reclassification of Redeemable preferred securities of Topicus from liabilities to preferred shares 2,073,205 - - - - 2,073,205 - 2,073,205 Reclassification of Redeemable preferred securities of Topicus Coop from liabilities to non-controlling interest - - - - - - 1,442,910 1,442,910 Exchange of Topicus Coop ordinary units held by non-controlling interests to subordinate voting shares of Topicus - - (18,297 ) - - (18,297 ) 18,297 - Accrued dividends to preferred shareholders of Topicus recorded subsequent to the Notification of Conversion (25,731 ) - - - - (25,731 ) - (25,731 ) Accrued dividends to preference unit holders of Topicus Coop recorded subsequent to the Notification of Conversion - - - - - - (17,157 ) (17,157 ) Issuance of equity of a subsidiary in conjunction with the acquisition of Geosoftware - - - - - - 17,950 17,950
*Balance at December 31, 2021* *2,047,473* *39,412* *(1,009,996* *)* *(380* *)* *(1,782,113* *)* *(705,604* *)* *1,061,236* *355,632* *Topicus.com Inc.*
Consolidated Statements of Cash Flows
(In thousands of euros, except per share amounts. Due to rounding, numbers presented may not foot.) Year ended December 31, 2022 2021
Cash flows from (used in) operating activities: Net income (loss) 87,610 (2,222,233 ) Adjustments for: Depreciation 27,866 24,603 Amortization of intangible assets 107,078 85,060 Redeemable preferred securities expense (income) - 2,302,185 Impairment of intangible and other non-financial assets - 1,600 Finance and other expenses (income) 9,068 10,748 Income tax expense (recovery) 16,808 21,600 Change in non-cash operating assets and liabilities exclusive of effects of business combinations 504 (8,044 ) Income taxes (paid) received (45,925 ) (39,098 ) Net cash flows from (used in) operating activities 203,008 176,423
Cash flows from (used in) financing activities: Interest paid on lease obligations (1,171 ) (1,159 ) Interest paid on other facilities (11,847 ) (7,875 ) Net increase (decrease) in Topicus Revolving Credit Facility 85,000 25,000 Proceeds from issuance of term and other loans 8,592 67,227 Proceeds from issuance of loan from CSI - 28,362 Increase (decrease) in loan from Vela Software Group (1,817 ) 2,207 Contribution from Vela Software Group towards the acquisition of Geosoftware - 17,950 Contribution from Vela Software Group towards the acquisition of Subsurface 7,905 - Repayments of term and other loans (4,375 ) (411 ) Credit facility transaction costs (3,207 ) (2,548 ) Payments of lease obligations (20,025 ) (17,459 ) Other financing activities (595 ) - Dividends paid to redeemable preferred securities holders (66,614 ) - Dividends paid to common shareholders - (54,600 ) Net cash flows from (used in) in financing activities (8,155 ) 56,694
Cash flows from (used in) investing activities: Acquisition of businesses (153,828 ) (241,507 ) Cash obtained with acquired businesses 38,126 19,929 Post-acquisition settlement payments, net of receipts (13,430 ) (15,061 ) Receipt of additional subscription amount from the sellers of Topicus.com B.V. - 27,589 Interest, dividends and other proceeds received 3,028 1,010 Property and equipment purchased (7,303 ) (5,385 ) Net cash flows from (used in) investing activities (133,407 ) (213,425 )
Effect of foreign currency on cash and cash equivalents
Increase (decrease) in cash 61,445 19,692
Cash, beginning of year 75,326 55,635
Cash, end of year 136,772 75,326