News

TORONTO, ONTARIO--(Marketwire - May 2, 2012) - Constellation Software Inc. (TSX:CSU) ("Constellation" or the "Company") today announced its financial results for the first quarter ended March 31, 2012 and declared a $1.00 per share dividend payable on July 4, 2012 to all common shareholders of record at close of business on June 18, 2012. 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 months ended March 31, 2012 and the accompanying notes, 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, 2011, which can be found on SEDAR at www.sedar.com and on the Company's website www.csisoftware.com. Additional information about the Company is also available on SEDAR at www.sedar.com.

Q1 2012 Highlights:

• Revenue grew 10% to $195 million compared to $178 million in Q1 2011. Organic revenue growth was 3% in Q1 2012 compared to 5% in Q1 2011.
• Adjusted EBITDA increased $4 million or 12% to $39 million as compared to Q1 2011.
• Adjusted Net Income increased $5 million or 17% to $32 million ($1.50 on a diluted per share basis) from $27 million ($1.28 on a diluted per share basis) in Q1 2012.
• March 31, 2012 cash position (net of borrowings on our line of credit) increased to $38 million, from $33 million at December 31, 2011.
• The Company's $160 million credit facility was replaced with a $300 million credit facility on more favourable terms.
• Four acquisitions were completed in the quarter for net cash consideration of $8 million.
• Subsequent to March 31, 2012, the Company completed four acquisitions for aggregate cash consideration of $12 million plus holdbacks of $3 million and declared a quarterly dividend of $1.00 per share payable on July 4, 2012 to all shareholders of record as of June 18, 2012.

First quarter 2012 revenue was $195 million, an increase of 10%, or $17 million, compared to $178 million for the comparable period in 2011. The increase was mainly attributable to growth from acquisitions, as organic growth from our existing businesses increased by approximately $5 million or 3% for the quarter. 

Adjusted EBITDA for the first quarter 2012 was $39 million, a 12% increase compared to the prior year's first quarter Adjusted EBITDA of $35 million. First quarter 2012 Adjusted EBITDA per share on a diluted basis increased 12% to $1.85, compared to $1.65 for the same period last year.

Adjusted Net Income for the first quarter 2012 was $32 million, compared to the prior year's first quarter Adjusted Net Income of $27 million, a 17% increase. First quarter 2012 Adjusted Net Income per share on a diluted basis increased 17% to $1.50 compared to $1.28 for the prior year's first quarter.

Net income for the first quarter 2012 was $14 million compared to the prior year's first quarter net income of $62 million. On a diluted per share basis, this translates into net income per share of $0.66 for the first quarter of 2012. This compares unfavorably to $2.95 for the same period of 2011, which included an unusual deferred income tax recovery. Excluding the deferred income tax recovery, net income increased by 46% to $12 million in the quarter ended March 31, 2012 from $8 million in the quarter ended March 31, 2011.

The following table displays our revenue by reportable segment and the percentage change for the three months ended March 31, 2012 compared to the same period in 2011:

	Three months ended March 31,		Period-Over-Period Change
	2012	2011	$		%
	($000, except percentages)
Public Sector
Licenses	9,790	10,545	(755	)	-7	%
Professional services	32,302	33,459	(1,157	)	-3	%
Hardware and other	22,289	21,257	1,032		5	%
Maintenance and other recurring	73,851	65,689	8,162		12	%
	138,232	130,950	7,282		6	%
Private Sector
Licenses	5,150	4,666	484		10	%
Professional services	9,825	8,330	1,495		18	%
Hardware and other	3,066	2,750	316		11	%
Maintenance and other recurring	39,005	30,936	8,069		26	%
	57,046	46,682	10,364		22	%

Public Sector

For the quarter ended March 31, 2012, total revenue in the public sector reportable segment increased 6% or $7 million, to $138 million, compared to $131 million for the quarter ended March 31, 2011. Revenue growth from acquired businesses was significant as we completed ten acquisitions since the beginning of 2011 in our public sector segment. It is estimated that acquisitions completed since the beginning of 2011 contributed approximately $5 million to our Q1 2012 revenues. Revenues increased organically by 2% or $2 million in Q1 2012 compared to the same period in 2011.

The organic revenue change was primarily driven by the following:

• Volaris operating group (increase of approximately $2 million for the three months ended March 31, 2012). The organic growth was primarily driven from strong revenue in its PTS and agriculture verticals.

Private Sector

For the quarter ended March 31, 2012, total revenue in the private sector reportable segment increased by 22%, or $10 million, to $57 million, compared to $47 million for the quarter ended March 31, 2011. Revenue growth from acquired businesses was significant for the three month period as we completed twelve acquisitions since the beginning of 2011 in our private sector segment. It is estimated that acquisitions completed since the beginning of 2011 contributed approximately $7 million to our Q1 2012 revenues. Revenues increased organically by 6% or $3 million in Q1 2012 compared to the same period in 2011. 

The organic revenue change was primarily driven by the following:

• Jonas operating group (increase of approximately $3 million for the three months ended March 31, 2012). Jonas' organic growth was driven by strong sales to both existing and new customers primarily in its fitness, construction, and food service verticals.

During the quarter, Constellation completed four acquisitions for total net cash consideration of approximately $8 million, and made $1 million in acquisition holdback payments. At March 31, 2012, Constellation's cash position (net of borrowings on our line of credit) increased to $38 million, from $33 million at December 31, 2011. Subsequent to March 31, 2012, the Company completed four acquisitions for aggregate cash consideration of $12 million. 

"Q1 was a respectable quarter across all metrics. Our businesses generated high rates of return while delivering modest organic growth." commented John Billowits, Chief Financial Officer of Constellation. "As previously noted, it was anticipated that our overall growth will slow in 2012 given the relatively small amount of capital deployed on acquisitions in 2011 and a moderation in the PTS organic revenue growth rate. However, we are optimistic about our acquisition prospects in the short term."

Conference Call and Webcast

Management will host a conference call at 9:00 a.m. (ET) on Thursday, May 3, 2012 to answer questions regarding the results. The teleconference numbers are 416-340-8061 or 800-396-7098. The call will also be webcast live and archived on Constellation's website at www.csisoftware.com. 

A replay of the conference call will be available as of 11:30 a.m. ET the same day until 11:59 p.m. ET on May 17, 2012. To access the replay, please dial 905-694-9451 or 800-408-3053 followed by the passcode 3771898.

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

The term "Adjusted EBITDA" refers to net income before adjusting for finance income, finance costs, income taxes, equity in net loss of equity investees, impairment of non-financial assets, depreciation, amortization, and foreign exchange loss (gain). The Company 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. "Adjusted EBITDA margin" refers to the percentage that Adjusted EBITDA for any period represents as a portion of total revenue for that period.

"Adjusted net income" means net income plus non-cash expenses (income) such as amortization of intangible assets, deferred income taxes, and certain other non-cash expenses (income). 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 amortization of intangible assets, deferred income taxes, and certain other non-cash expenses (income) incurred by the Company from time to time. "Adjusted net income margin" refers to the percentage that Adjusted net income for any period represents as a portion of total revenue for that period.

Adjusted EBITDA and Adjusted net income are not recognized measures under IFRS 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 IFRS. 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. See "Results of Operations -Adjusted EBITDA" and "- Adjusted net income" for a reconciliation of Adjusted EBITDA and Adjusted net income to net income.

The following table reconciles Adjusted EBITDA to net income:

The following table reconciles Adjusted EBITDA to net income for PTS:
Adjusted EBITDA to net income reconciliation
		For the three months ended March 31, 2012
(Unaudited)		Constellation Software Inc. (excluding PTS)			PTS			Consolidated
Total revenue	$	162,468		$	32,810		$	195,278
Net income		8,178			5,746			13,924
Adjusted for:
Income tax expense		2,914			397			3,311
Other expenses (income)		691			348			1,039
Amortization of intangible assets		19,275			-			19,275
Depreciation		1,553			165			1,718
Adjusted EBITDA		32,611			6,656			39,267
Adjusted EBITDA margin		20	%		20	%		20	%

About Constellation Software Inc.

Constellation's common shares are listed on the Toronto Stock Exchange under the symbol "CSU". Constellation Software is an international provider of market leading software and services to a number of industries across both the public and private sectors. The Company acquires, manages and builds vertical market software businesses that provide mission-critical software solutions to address the specific needs of its customers in those industries.