Constellation Software Inc. and Topicus.Com Inc. Announce Results for Topicus.com Inc. for the Second Quarter Ended June 30, 2023
TORONTO, Aug. 03, 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 second quarter ended June 30, 2023. 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 Company’s Unaudited Condensed Consolidated Interim Financial Statements for the three and six months ended June 30, 2023 and the accompanying notes, our Management’s Discussion and Analysis for the three and six months ended June 30, 2023 and the Annual Consolidated Financial Statements of Topicus.com Inc. 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.sedarplus.ca and on Topicus.com Inc.’s website www.topicus.com. Additional information about Topicus.com Inc. is also available on SEDAR at www.sedarplus.ca.
*Q2 2023 Headlines:*
· Revenue increased 23% (6% organic growth) to €272.1 million compared to €220.6 million in Q2 2022.
· Net income increased to €23.5 million (€0.18 on a diluted per share basis) from €20.1 million (€0.16 on a diluted per share basis).
· Acquisitions were completed for aggregate cash consideration of €63.4 million (which includes acquired cash). Deferred payments associated with these acquisitions have an estimated value of €7.6 million resulting in total consideration of €71.1 million.
· Cash flows from operations (“CFO”) increased €16.7 million to negative €15.4 million compared to negative €32.0 million in Q2 2022 representing an increase of 52%.
· Free cash flow available to shareholders^1 (“FCFA2S”) increased €13.7 million to negative €13.1 million compared to negative €26.8 million in Q2 2022 representing an increase 51%.Total revenue for the quarter ended June 30, 2023 was €272.1 million, an increase of 23%, or €51.5 million, compared to €220.6 million for the comparable period in 2022. For the first six months of 2023 total revenues were €536.5 million, an increase of 26%, or €112.1 million, compared to €424.4 million for the comparable period in 2022. The increase for both the three and six-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 7%. 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 June 30, 2023 increased €3.4 million to €23.5 million compared to €20.1 million for the same period in 2022. On a per share basis, this translated into net income per basic and diluted share of €0.18 in the quarter ended June 30, 2023 compared to net income per basic and diluted share of €0.16 for the same period in 2022. For the six months ended June 30, 2023 net income increased €4.1 million to €44.6 million compared to €40.5 million for the same period in 2022. On a per share basis, this translated into net income per basic and diluted share of €0.35 in the six months ended June 30, 2023 compared to €0.30 for the same period in 2022.
For the quarter ended June 30, 2023, CFO were negative €15.4 million compared to negative €32.0 million for the same period in 2022. Many of the businesses invoice customers for annual software maintenance fees in Q1 each year resulting in a disproportionate amount of cash being received in the first quarter as compared to the remaining three quarters. For the six months ended June 30, 2023, CFO increased €14.6 million to €158.6 million compared to €144.0 million for the same period in 2022 representing an increase of 10%.
For the quarter ended June 30, 2023, FCFA2S was negative €13.1 million compared to negative €26.8 million for the same period in 2022. For the six months ended June 30, 2023, FCFA2S increased €53.3 million to €88.0 million compared to €34.7 million for the same period in 2022 representing an increase of 153%. The increase for the six month period is primarily as a result of the dividend paid to the Preferred Securities holders during the quarter ended March 31, 2022.
*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, and the proceeds from sale of interest rate caps. 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
June 30, Six months ended
June 30, 2023 2022 2023 2022 (€ in millions) (€ in millions)
*Net cash flows from operating activities* (15.4 ) (32.0 ) 158.6 144.0
*Adjusted for:*
Interest paid on lease obligations (0.3 ) (0.3 ) (0.7 ) (0.6 )
Interest paid on other facilities (3.5 ) (2.4 ) (6.6 ) (4.0 )
Proceeds from sale of interest rate cap 5.5 - 5.5 -
Credit facility transaction costs (0.2 ) - (0.2 ) -
Payments of lease obligations (5.5 ) (5.1 ) (10.8 ) (9.6 )
Property and equipment purchased (1.9 ) (1.6 ) (3.9 ) (3.6 )
Dividends paid to redeemable preferred securities holders - - - (66.6 ) (21.3 ) (41.4 ) 142.0 59.7
Less amount attributable to non-controlling interests 8.2 14.5 (54.0 ) (24.9 )
Free cash flow available to shareholders (13.1 ) (26.8 ) 88.0 34.7
^Due to rounding, certain totals may not foot.
*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.*
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*Topicus.com Inc.*
Condensed Consolidated Interim Statements of Financial Position
(In thousands of euros, except per share amounts. Due to rounding, numbers presented may not foot.)
Unaudited June 30, 2023 December 31, 2022 June 30, 2022
Assets
Current assets: Cash 172,315 136,772 159,728 Accounts receivable 130,456 95,790 92,317 Unbilled revenue 48,701 41,036 42,925 Inventories 4,268 1,419 902 Other assets 54,657 34,778 36,500 410,396 309,795 332,372
Non-current assets: Property and equipment 20,372 19,579 19,582 Right of use assets 57,919 54,412 57,927 Deferred income taxes 7,044 19,978 8,307 Other assets 12,161 17,030 11,502 Intangible assets 942,297 874,000 872,887 1,039,793 984,999 970,205
Total assets 1,450,189 1,294,794 1,302,577
Liabilities and Shareholders' Equity
Current liabilities: Topicus Revolving Credit Facility and current portion of term and other loans 168,228 201,275 151,570 Loan from CSI 30,281 30,867 - Accounts payable and accrued liabilities 162,868 174,824 142,840 Deferred revenue 241,980 116,989 197,492 Provisions 1,682 1,884 1,076 Acquisition holdback payables 14,878 14,009 18,416 Lease obligations 19,280 18,824 18,927 Income taxes payable 16,510 11,467 14,457 655,707 570,141 544,779
Non-current liabilities: Term and other loans 65,807 41,280 101,421 Loan from CSI - - 31,602 Deferred income taxes 147,382 150,521 145,731 Acquisition holdback payables 1,289 2,316 3,078 Lease obligations 39,684 36,634 40,076 Other liabilities 26,273 26,118 20,410 280,434 256,869 342,317
Total liabilities 936,141 827,009 887,096
Shareholders' Equity: Capital stock 39,412 39,412 39,412 Accumulated other comprehensive income (loss) 851 (232 ) 1,576 Retained earnings (deficit) 255,528 226,919 192,970 Non-controlling interests 218,258 201,685 181,523 514,048 467,784 415,481
Total liabilities and shareholders' equity 1,450,189 1,294,794 1,302,577
*Topicus.com Inc.*
Condensed Consolidated Interim Statements of Income (Loss)
(In thousands of euros, except per share amounts. Due to rounding, numbers presented may not foot.)
Unaudited Three months ended June 30, Six months ended June 30, 2023 2022 2023 2022
Revenue
License 7,847 6,418 14,825 11,885
Professional services 71,974 56,481 141,314 106,589
Hardware and other 3,705 2,293 6,385 4,534
Maintenance and other recurring 188,557 155,425 373,989 301,374 272,083 220,616 536,513 424,383
Expenses
Staff 155,841 123,809 305,949 235,704
Hardware 2,545 1,515 4,123 2,234
Third party license, maintenance and professional services 21,340 18,625 41,888 36,099
Occupancy 2,560 1,804 5,026 3,341
Travel, telecommunications, supplies, software and equipment 10,703 8,450 20,267 14,548
Professional fees 4,557 3,779 8,837 7,576
Other, net 964 4,762 7,178 9,182
Depreciation 7,695 7,008 14,990 13,203
Amortization of intangible assets 29,985 26,010 57,946 48,989 236,191 195,763 466,204 370,875
Finance and other expenses (income) 4,447 (51 ) 9,396 1,680 4,447 (51 ) 9,396 1,680
Income (loss) before income taxes 31,445 24,904 60,912 51,828
Current income tax expense (recovery) 14,898 11,041 27,226 22,263
Deferred income tax expense (recovery) (6,905 ) (6,237 ) (10,894 ) (10,894 )
Income tax expense (recovery) 7,993 4,805 16,332 11,370
Net income (loss) 23,452 20,099 44,580 40,458
Net income (loss) attributable to:
Equity holders of Topicus 14,572 12,526 28,472 24,097
Non-controlling interests 8,880 7,573 16,108 16,362
Net income (loss) 23,452 20,099 44,580 40,458
Weighted average shares Basic shares outstanding 81,889,764 80,097,017 81,889,764 80,011,366 Diluted shares outstanding 129,841,819 129,841,819 129,841,819 129,841,819
Earnings (loss) per common share of Topicus Basic 0.18 0.16 0.35 0.30 Diluted 0.18 0.16 0.35 0.30
*Topicus.com Inc.*
Condensed Consolidated Interim Statements of Comprehensive Income (Loss)
(In thousands of euros, except per share amounts. Due to rounding, numbers presented may not foot.)
Unaudited Three months ended June 30, Six months ended June 30, 2023 2022 2023 2022
Net income (loss) 23,452 20,099 44,580 40,458
Items that are or may be reclassified subsequently to net income (loss): Foreign currency translation differences from foreign operations and other 2,999 3,444 2,203 4,871
Other comprehensive (loss) income for the period, net of income tax 2,999 3,444 2,203 4,871
Total comprehensive income (loss) for the period 26,451 23,543 46,784 45,329
Total other comprehensive income (loss) attributable to:
Equity holders of Topicus 1,320 1,325 1,083 1,956
Non-controlling interests 1,679 2,119 1,120 2,915
Total other comprehensive income (loss) 2,999 3,444 2,203 4,871
Total comprehensive income (loss) attributable to:
Equity holders of Topicus 15,892 13,850 29,555 26,052
Non-controlling interests 10,559 9,693 17,228 19,277
Total comprehensive income (loss) 26,451 23,543 46,784 45,329
*Topicus.com Inc.*
Condensed Consolidated Interim Statement of Changes in Shareholders' Equity (Deficiency)
(In thousands of euros, except per share amounts. Due to rounding, numbers presented may not foot.)
Unaudited
Six months ended June 30, 2023 *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, 2023* *-* *39,412* *-* *(232* *)* *226,919* *266,099* *201,685* *467,784*
Total comprehensive income (loss) for the period:
Net income (loss) - - - - 28,472 28,472 16,108 44,580
Other comprehensive income (loss)
Foreign currency translation differences from foreign operations and other, net of income tax - - - 1,083 - 1,083 1,120 2,203
*Total other comprehensive income (loss)* *for the period* *-* *-* *-* *1,083* *-* *1,083* *1,120* *2,203*
*Total comprehensive income (loss) for the period* *-* *-* *-* *1,083* *28,472* *29,555* *17,228* *46,784*
Transactions with owners, recorded directly in equity Other movements in non-controlling interests and equity - - - - 137 137 70 207 Dividends paid to non-controlling interests - - - - - - (726 ) (726 )
*Balance at June 30, 2023* *-* *39,412* *-* *851* *255,528* *295,791* *218,258* *514,048*
*Topicus.com Inc.*
Condensed Consolidated Interim Statement of Changes in Shareholders' Equity (Deficiency)
(In thousands of euros, except per share amounts. Due to rounding, numbers presented may not foot.)
Unaudited
Six months ended June 30, 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 period:
Net income (loss) - - - - 24,097 24,097 16,362 40,458
Other comprehensive income (loss)
Foreign currency translation differences from foreign operations and other - - - 1,956 - 1,956 2,915 4,871
*Total other comprehensive income (loss) for the period* *-* *-* *-* *1,956* *-* *1,956* *2,915* *4,871*
*Total comprehensive income (loss) for the period* *-* *-* *-* *1,956* *24,097* *26,052* *19,277* *45,329*
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 - - (23 ) (0 ) (54 ) (78 ) 15,470 15,393 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 - - - - 799 799 (799 ) -
*Balance at June 30, 2022* *-* *39,412* *-* *1,576* *192,970* *233,958* *181,523* *415,481*
*Topicus.com Inc.*
Condensed Consolidated Interim Statements of Cash Flows
(In thousands of euros, except per share amounts. Due to rounding, numbers presented may not foot.)
Unaudited Three months ended June 30, Six months ended June 30, 2023 2022 2023 2022
Cash flows from (used in) operating activities: Net income (loss) 23,452 20,099 44,580 40,458 Adjustments for: Depreciation 7,695 7,008 14,990 13,203 Amortization of intangible assets 29,985 26,010 57,946 48,989 Finance and other expenses (income) 4,447 (51 ) 9,396 1,680 Income tax expense (recovery) 7,993 4,805 16,332 11,370 Change in non-cash operating assets and liabilities exclusive of effects of business combinations (75,465 ) (79,639 ) 41,134 48,989 Income taxes (paid) received (13,474 ) (10,255 ) (25,752 ) (20,673 ) Net cash flows from (used in) operating activities (15,367 ) (32,023 ) 158,626 144,014
Cash flows from (used in) financing activities: Interest paid on lease obligations (347 ) (277 ) (653 ) (556 ) Interest paid on other facilities (3,505 ) (2,432 ) (6,565 ) (3,987 ) Proceeds from sale of interest rate cap 5,516 - 5,516 - Net increase (decrease) in Topicus Revolving Credit Facility 45,000 45,000 35,000 100,000 Proceeds from issuance of term and other loans 21,941 - 26,218 346 Increase (decrease) in loan from Vela Software Group (468 ) 7,904 (468 ) 6,086 Repayments of term and other loans (4,497 ) (1,052 ) (72,941 ) (1,669 ) Credit facility transaction costs (175 ) - (238 ) - Payments of lease obligations (5,543 ) (5,063 ) (10,805 ) (9,574 ) Other financing activities - (580 ) - (580 ) Dividends to non-controlling interests (726 ) - (726 ) - Dividends paid to redeemable preferred securities holders - - - (66,614 ) Net cash flows from (used in) in financing activities 57,197 43,500 (25,663 ) 23,452
Cash flows from (used in) investing activities: Acquisition of businesses (63,252 ) (94,502 ) (88,048 ) (107,659 ) Cash obtained with acquired businesses 4,611 24,935 5,583 27,612 Post-acquisition settlement payments, net of receipts (6,567 ) (671 ) (11,055 ) (2,431 ) Interest, dividends and other proceeds received - 3,028 - 3,028 Property and equipment purchased (1,888 ) (1,587 ) (3,869 ) (3,613 ) Net cash flows from (used in) investing activities (67,096 ) (68,798 ) (97,388 ) (83,064 )
Effect of foreign currency on cash and cash equivalents 317 (0 ) (31 ) (0 )
Increase (decrease) in cash (24,950 ) (57,321 ) 35,543 84,402
Cash, beginning of period 197,265 217,049 136,772 75,326
Cash, end of period 172,315 159,728 172,315 159,728