![Constellation Software Inc. and Topicus.Com Inc. Announce Results for Topicus.com Inc. for the Third Quarter Ended September 30, 2023](https://cdn.newsserve.net/ONPglobe256.png)
Constellation Software Inc. and Topicus.Com Inc. Announce Results for Topicus.com Inc. for the Third Quarter Ended September 30, 2023
TORONTO, Nov. 02, 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 third quarter ended September 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 nine months ended September 30, 2023 and the accompanying notes, our Management’s Discussion and Analysis for the three and nine months ended September 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.
*Q3 2023 Headlines:*
· Revenue increased 22% (8% organic growth) to €278.8 million compared to €228.6 million in Q3 2022.
· Net income increased to €28.3 million (€0.22 on a diluted per share basis) from €18.4 million (€0.15 on a diluted per share basis).
· Acquisitions were completed for aggregate cash consideration of €7.2 million (which includes acquired cash). Deferred payments associated with these acquisitions have an estimated value of €0.2 million resulting in total consideration of €7.4 million.
· Cash flows from operations (“CFO”) increased €14.6 million to €25.5 million compared to €10.9 million in Q3 2022 representing an increase of 134%.
· Free cash flow available to shareholders^1 (“FCFA2S”) increased €7.0 million to €6.5 million compared to negative €0.5 million in Q3 2022.Total revenue for the quarter ended September 30, 2023 was €278.8 million, an increase of 22%, or €50.2 million, compared to €228.6 million for the comparable period in 2022. For the first nine months of 2023 total revenues were €815.3 million, an increase of 25%, or €162.4 million, compared to €653.0 million for the comparable period in 2022. 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 8% 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 September 30, 2023 increased €9.9 million to €28.3 million compared to €18.4 million for the same period in 2022. On a per share basis, this translated into net income per basic and diluted share of €0.22 in the quarter ended September 30, 2023 compared to net income per basic and diluted share of €0.15 for the same period in 2022. For the nine months ended September 30, 2023 net income increased €14.0 million to €72.9 million compared to €58.9 million for the same period in 2022. On a per share basis, this translated into net income per basic and diluted share of €0.57 in the nine months ended September 30, 2023 compared to €0.45 for the same period in 2022.
For the quarter ended September 30, 2023, CFO were €25.5 million compared to €10.9 million for the same period in 2022 representing an increase of 134%. 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. A longer collection cycle for the Q1 invoiced amounts in 2023 as compared to 2022 is the primary reason for the large Q3 increase. For the nine months ended September 30, 2023, CFO increased €29.2 million to €184.1 million compared to €154.9 million for the same period in 2022 representing an increase of 19%.
For the quarter ended September 30, 2023, FCFA2S was €6.5 million compared to negative €0.5 million for the same period in 2022. For the nine months ended September 30, 2023, FCFA2S increased €58.8 million to €94.5 million compared to €35.7 million for the same period in 2022 representing an increase of 165%. The increase for the nine month period is primarily as a result of the dividend paid to the Preferred Securities holders during the quarter ended March 31, 2022. Excluding the dividend, FCFA2S increased €18.4 million or 24% for the nine months ended September 30, 2023.
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, 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
September 30, Nine months ended
September 30, 2023 2022 2023 2022 (€ in millions) (€ in millions)
*Net cash flows from operating activities* 25.5 10.9 184.1 154.9
*Adjusted for:*
Interest paid on lease obligations (0.4 ) (0.3 ) (1.0 ) (0.9 )
Interest paid on other facilities (4.8 ) (3.4 ) (11.4 ) (7.4 )
Proceeds from sale of interest rate cap (0.7 ) - 4.8 -
Credit facility transaction costs - (0.1 ) (0.2 ) (0.1 )
Payments of lease obligations (5.5 ) (5.2 ) (16.3 ) (14.8 )
Property and equipment purchased (1.4 ) (1.2 ) (5.2 ) (4.8 )
Dividends paid to redeemable preferred securities holders - - - (66.6 ) 12.8 0.6 154.8 60.3
Less amount attributable to non-controlling interests (6.3 ) (1.2 ) (60.3 ) (24.6 )
Free cash flow available to shareholders 6.5 (0.5 ) 94.5 35.7
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.*
*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 September 30, 2023 December 31, 2022 September 30, 2022
Assets
Current assets: Cash 161,707 136,772 135,797 Accounts receivable 114,818 95,790 83,182 Unbilled revenue 48,132 41,036 44,335 Inventories 4,797 1,419 1,336 Other assets 59,685 34,778 35,413 389,139 309,795 300,063
Non-current assets: Property and equipment 19,437 19,579 19,328 Right of use assets 55,631 54,412 56,854 Deferred income taxes 5,148 19,978 9,135 Other assets 13,540 17,030 16,439 Intangible assets 917,219 874,000 896,251 1,010,976 984,999 998,007
Total assets 1,400,115 1,294,794 1,298,070
Liabilities and Shareholders' Equity
Current liabilities: Topicus Revolving Credit Facility and current portion of term and other loans 175,845 201,275 156,945 Loan from CSI - 30,867 33,707 Accounts payable and accrued liabilities 172,183 174,824 139,581 Deferred revenue 179,833 116,989 152,486 Provisions 1,208 1,884 1,186 Acquisition holdback payables 9,875 14,009 14,527 Lease obligations 19,055 18,824 19,040 Income taxes payable 19,689 11,467 16,826 577,688 570,141 534,299
Non-current liabilities: Term and other loans 65,468 41,280 106,201 Deferred income taxes 138,752 150,521 147,642 Acquisition holdback payables 1,529 2,316 2,578 Lease obligations 37,665 36,634 38,931 Other liabilities 26,787 26,118 23,879 270,201 256,869 319,231
Total liabilities 847,889 827,009 853,530
Shareholders' Equity: Capital stock 39,412 39,412 39,412 Accumulated other comprehensive income (loss) 839 (232 ) 1,828 Retained earnings (deficit) 273,519 226,919 205,812 Non-controlling interests 238,456 201,685 197,488 552,226 467,784 444,541
Total liabilities and shareholders' equity 1,400,115 1,294,794 1,298,070
*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 September 30, Nine months ended September 30, 2023 2022 2023 2022
Revenue
License 7,513 6,409 22,338 18,294
Professional services 72,104 59,576 213,418 166,165
Hardware and other 3,906 2,039 10,291 6,573
Maintenance and other recurring 195,286 160,565 569,276 461,940 278,810 228,589 815,322 652,972
Expenses
Staff 152,862 128,687 458,811 364,392
Hardware 2,988 1,575 7,111 3,809
Third party license, maintenance and professional services 22,265 18,602 64,153 54,701
Occupancy 679 2,039 5,705 5,379
Travel, telecommunications, supplies, software and equipment 11,140 8,399 31,407 22,947
Professional fees 3,815 3,960 12,653 11,536
Other, net 3,303 3,722 10,481 12,903
Depreciation 7,718 7,333 22,708 20,536
Amortization of intangible assets 31,874 28,905 89,820 77,894 236,644 203,222 702,848 574,098
Finance and other expenses (income) 5,308 1,700 14,705 3,380 5,308 1,700 14,705 3,380
Income (loss) before income taxes 36,857 23,666 97,769 75,494
Current income tax expense (recovery) 14,317 11,934 41,543 34,198
Deferred income tax expense (recovery) (5,805 ) (6,690 ) (16,699 ) (17,584 )
Income tax expense (recovery) 8,512 5,245 24,844 16,614
Net income (loss) 28,345 18,421 72,926 58,880
Net income (loss) attributable to:
Equity holders of Topicus 17,983 11,834 46,455 35,931
Non-controlling interests 10,362 6,587 26,471 22,949
Net income (loss) 28,345 18,421 72,926 58,880
Weighted average shares
Basic shares outstanding 81,889,764 80,477,481 81,889,764 80,168,445
Diluted shares outstanding 129,841,819 129,841,819 129,841,819 129,841,819
Earnings (loss) per common share of Topicus
Basic 0.22 0.15 0.57 0.45
Diluted 0.22 0.15 0.57 0.45
*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 September 30, Nine months ended September 30, 2023 2022 2023 2022
Net income (loss) 28,345 18,421 72,926 58,880
Items that are or may be reclassified subsequently to net income (loss):
Foreign currency translation differences from foreign operations and other 481 1,742 2,684 6,613
Other comprehensive (loss) income for the period, net of income tax 481 1,742 2,684 6,613
Total comprehensive income (loss) for the period 28,826 20,164 75,610 65,493
Total other comprehensive income (loss) attributable to:
Equity holders of Topicus (5 ) 252 1,078 2,208
Non-controlling interests 486 1,490 1,606 4,405
Total other comprehensive income (loss) 481 1,742 2,684 6,613
Total comprehensive income (loss) attributable to:
Equity holders of Topicus 17,978 12,086 47,533 38,138
Non-controlling interests 10,848 8,078 28,076 27,354
Total comprehensive income (loss) 28,826 20,164 75,610 65,493
*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
Nine months ended September 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) - - - - 46,455 46,455 26,471 72,926
Other comprehensive income (loss)
Foreign currency translation differences from foreign operations and other, net of income tax - - - 1,078 - 1,078 1,606 2,684
*Total other comprehensive income (loss) for the period* *-* *-* *-* *1,078* *-* *1,078* *1,606* *2,684*
*Total comprehensive income (loss) for the period* *-* *-* *-* *1,078* *46,455* *47,533* *28,076* *75,610*
Transactions with owners, recorded directly in equity
Other movements in non-controlling interests and equity - - - (7 ) 144 138 (196 ) (58 )
Contribution by non-controlling interests - - - - - - 9,617 9,617
Dividends paid to non-controlling interests - - - - - - (726 ) (726 )
*Balance at September 30, 2023* *-* *39,412* *-* *839* *273,519* *313,770* *238,456* *552,226*
*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
Nine months ended September 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) - - - - 35,931 35,931 22,949 58,880
Other comprehensive income (loss)
Foreign currency translation differences from foreign operations and other - - - 2,208 - 2,208 4,405 6,613
*Total other comprehensive income (loss) for the period* *-* *-* *-* *2,208* *-* *2,208* *4,405* *6,613*
*Total comprehensive income (loss) for the period* *-* *-* *-* *2,208* *35,931* *38,138* *27,354* *65,493*
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 ) (166 ) (189 ) 24,478 24,289
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 - - - - 1,919 1,919 (1,919 ) -
*Balance at September 30, 2022* *-* *39,412* *-* *1,828* *205,812* *247,052* *197,488* *444,541*
*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 September 30, Nine months ended September 30, 2023 2022 2023 2022
Cash flows from (used in) operating activities: Net income (loss) 28,345 18,421 72,926 58,880 Adjustments for: Depreciation 7,718 7,333 22,708 20,536 Amortization of intangible assets 31,874 28,905 89,820 77,894 Finance and other expenses (income) 5,308 1,700 14,705 3,380 Income tax expense (recovery) 8,512 5,245 24,844 16,614 Change in non-cash operating assets and liabilities exclusive of effects of business combinations (42,776 ) (40,471 ) (1,642 ) 8,517 Income taxes (paid) received (13,463 ) (10,211 ) (39,216 ) (30,884 ) Net cash flows from (used in) operating activities 25,518 10,922 184,145 154,937
Cash flows from (used in) financing activities: Interest paid on lease obligations (375 ) (310 ) (1,029 ) (866 ) Interest paid on other facilities (4,801 ) (3,430 ) (11,366 ) (7,417 ) Proceeds from sale of interest rate cap (707 ) - 4,809 - Net increase (decrease) in Topicus Revolving Credit Facility 5,000 5,000 40,000 105,000 Proceeds from issuance of term and other loans 4,954 7,808 31,172 8,154 Repayment of loan from CSI (29,878 ) - (29,878 ) - Increase (decrease) in loan from Vela Software Group 1,810 (7,904 ) 1,342 (1,817 ) Contribution from Vela Software Group into GeoSoftware and Geoactive 9,617 - 9,617 - Contribution from Vela Software Group towards the acquisition of Geoactive - 7,905 - 7,905 Repayments of term and other loans (4,232 ) (2,706 ) (77,173 ) (4,375 ) Credit facility transaction costs - (145 ) (238 ) (145 ) Payments of lease obligations (5,475 ) (5,203 ) (16,280 ) (14,777 ) Other financing activities (24 ) (15 ) (24 ) (595 ) Dividends to non-controlling interests - - (726 ) - Dividends paid to redeemable preferred securities holders - - - (66,614 ) Net cash flows from (used in) in financing activities (24,112 ) 1,000 (49,775 ) 24,452
Cash flows from (used in) investing activities: Acquisition of businesses (7,190 ) (35,660 ) (95,238 ) (143,319 ) Cash obtained with acquired businesses 1,443 9,872 7,026 37,484 Post-acquisition settlement payments, net of receipts (4,845 ) (8,869 ) (15,900 ) (11,300 ) Interest, dividends and other proceeds received - - - 3,028 Property and equipment purchased (1,381 ) (1,197 ) (5,249 ) (4,810 ) Net cash flows from (used in) investing activities (11,973 ) (35,853 ) (109,362 ) (118,918 )
Effect of foreign currency on cash and cash equivalents (41 ) (73 )
Increase (decrease) in cash (10,608 ) (23,931 ) 24,935 60,471
Cash, beginning of period 172,315 159,728 136,772 75,326
Cash, end of period 161,707 135,797 161,707 135,797