TORONTO, May 23 /CNW/ - Constellation Software Inc. (TSX:CSU)
("Constellation" or the "Company") today announced its unaudited first quarter
financial results for the quarter ended March 31, 2006.
First quarter revenue was $51.2 million, an increase of 37% compared to
$37.5 million reported in the same period last year. First quarter revenue per
share on a fully diluted basis increased 34% compared to the prior year's
first quarter.
Adjusted EBITDA for the first quarter was $7.2 million, a 57% increase
compared to the prior year's first quarter Adjusted EBITDA of $4.6 million.
First quarter Adjusted EBITDA per share on a fully diluted basis increased 54%
compared to the prior year's first quarter.
Adjusted Net income for the first quarter was $5.1 million compared to
the prior year's first quarter Adjusted Net Income of $3.8 million, a 34%
increase. First quarter Adjusted Net Income per share on a fully diluted basis
increased 31% compared to the prior year's first quarter.
Net loss for the first quarter was $8.7 million compared to the prior
year's first quarter net income of $1.1 million. On a fully diluted per share
basis this translates into a net loss per share of $0.43 for the first quarter
of 2006 compared to a net income per fully diluted share of $0.05 in the same
period of 2005. The principal reason for the net loss was a charge relating to
the appreciation of common shares eligible for redemption of $10.1 million, as
detailed in our first quarter report this charge will no longer occur in the
future.
"During the quarter we delivered good results and progress across a
number of financial metrics," said Mark Leonard, President of Constellation.
"It should be noted that both our revenue growth and Adjusted EBITDA growth
rates during the quarter exceeded our five year objective of 20% per annum
average growth. In the future, we expect these growth rates to trend closer to
the five year average targets."
During the quarter Constellation made three acquisitions for cash
consideration of $3.4 million, and made an annual distribution to shareholders
of $2.5 million. At March 31, 2006 the Company had cash and marketable
securities net of bank debt of $16.3 million, down from $19.2 million as of
December 31, 2005. The Company continues to seek further organic growth
opportunities and acquisitions.
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. These
statements reflect current assumptions and expectations regarding future
events and operating performance and speak only as of the date hereof. 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 are made as of the date hereof and Constellation assumes no
obligation to update any forward looking statements to reflect new events or
circumstances.
Non-GAAP Measures
The term "Adjusted EBITDA" refers to net income before deducting
interest, taxes, depreciation, amortization, appreciation in common shares
eligible for redemption, other expenses and foreign exchange, and before
including gain on sale of short-term investments, marketable securities and
other assets. Constellation believes that Adjusted EBITDA 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 asset depreciation and the other items listed above. The term
''Adjusted Net Income'' means net income plus appreciation in common shares
eligible for redemption and amortization of intangible assets. 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 appreciation in common shares
eligible for redemption (which will no longer be included in net income for
periods following the closing of our IPO) and prior to taking into
consideration amortization of intangibles as these are non-cash expenses that
do not necessarily reflect the economic value of our acquisitions.
Adjusted EBITDA and Adjusted Net Income are not recognized measures under
GAAP and, accordingly, shareholders are cautioned that Adjusted EBITDA and
Adjusted Net Income should not be construed as alternatives to net income
determined in accordance with GAAP as an indicator of the financial
performance of the Company or as a measure of the Company's liquidity and cash
flows. The Company's method of calculating Adjusted EBITDA and Adjusted Net
Income may differ from other issuers and, accordingly, Adjusted EBITDA and
Adjusted Net Income may not be comparable to similar measures presented by
other issuers.
About Constellation
Constellation acquires, manages and builds vertical market software
businesses that provide mission critical software solutions. Constellation's
common shares are listed on the Toronto Stock Exchange under the symbol "CSU".
Further information about Constellation may be obtained from the Company's web
site at www.csisoftware.com.
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CONSTELLATION SOFTWARE INC.
Consolidated Balance Sheets
(In thousands of U.S. dollars)
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March 31 December 31
2006 2005
(unaudited)
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Assets
Current assets:
Cash and cash equivalents $ 15,348 $ 18,285
Short-term investments 2,096 932
Accounts receivable 29,606 27,655
Work in progress 12,930 11,535
Prepaid expenses and other current assets 5,328 4,520
Future income taxes 2,004 2,359
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67,312 65,286
Capital assets 6,655 6,446
Future income taxes 2,936 3,986
Other long-term assets 768 787
Goodwill 23,720 23,720
Intangible assets 59,842 58,258
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$ 161,233 $ 158,483
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Liabilities and Shareholders' Equity
Current liabilities:
Bank indebtedness $ 1,100 $ -
Accounts payable and accrued liabilities 26,088 34,653
Deferred revenue 52,112 44,939
Deferred compensation 331 237
Income taxes payable 1,821 1,276
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81,452 81,105
Future income taxes 7,557 9,267
Other long term liabilities 1,468 1,464
Deferred compensation 1,326 1,020
Common shares eligible for redemption 38,599 24,182
Shareholders' equity:
Capital stock 56,583 57,220
Cumulative translation adjustment (3,152) (3,152)
Deficit (22,600) (12,623)
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30,831 41,445
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$ 161,233 $ 158,483
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CONSTELLATION SOFTWARE INC.
Consolidated Statements of Operations
(In thousands of U.S. dollars, except per share amounts)
Unaudited
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Three months ended
March 31,
--------------------
2006 2005
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Revenue $ 51,220 $ 37,463
Cost of revenue 20,338 14,726
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30,882 22,737
Research and development 8,192 6,266
Sales and marketing 6,408 4,889
General and administration 9,053 6,979
Amortization of capital assets 636 554
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24,289 18,688
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Income before the undernoted 6,593 4,049
Appreciation in common shares eligible for
redemption 10,093 -
Amortization of intangible assets 3,661 2,722
Other expenses 884 -
Gain on sale of short-term investments,
marketable securities and other assets (8) (228)
Interest income (59) (260)
Foreign exchange loss 263 24
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Income (loss) before income taxes (8,241) 1,791
Income taxes (recovery):
Current 710 593
Future (295) 111
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415 704
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Net income (loss) $ (8,656) $ 1,087
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Net income (loss) per share:
Basic $ (0.43) $ 0.06
Diluted (0.43) 0.05
CONSTELLATION SOFTWARE INC.
Consolidated Statements of Cash Flows
(In thousands of U.S. dollars)
Unaudited
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Three months ended
March 31,
--------------------
2006 2005
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Cash flows from operating activities:
Net income (loss) $ (8,656) $ 1,087
Adjustments to reconcile net income to net
cash flows from operations:
Amortization of capital assets 636 554
Amortization of intangible assets 3,661 2,722
Loss on common shares eligible for
redemption 10,093 -
Deferred compensation 400 -
Future income taxes (295) 111
Gain on sale of short term investments
and marketable securities (8) (228)
Unrealized exchange loss (gain) 243 24
Change in non-cash operating working capital (5,871) 3,112
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Cash flows from operating activities 203 7,383
Cash flows from (used in) financing activities:
Increase (decrease) in long term liabilities 4 (65)
Dividends (1,381) -
Distributions to common shares eligible for
redemption (471) -
Issue of common shares eligible for
redemption 2,899 192
Redemption of common shares eligible for
redemption (14) (65)
Repayment of shareholder loans 1,910 87
Return of capital (637) -
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Cash flows from (used in) financing
activities 2,310 149
Cash flows from (used in) investing activities:
Acquisition of businesses, net of cash
acquired (3,433) (12,954)
Additions (reductions) to short-term
investments, marketable securities and
other assets (1,156) 833
Other assets 19 -
Capital asset purchases (687) (911)
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Cash flows from (used in) investing
activities (5,257) (13,031)
Effect of currency translation adjustment on
cash and cash equivalents (193) (11)
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Increase (decrease) in cash and cash
equivalents (2,937) (5,510)
Cash and cash equivalents, beginning of year 18,285 25,445
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Cash and cash equivalents, end of year $ 15,348 $ 19,935
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Constellation Software Inc. (TSX:CSU)
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