Altus Group Limited (ʺAltus” or “the Company”) (TSX: AIF), an
Intelligence as a Service provider to the global commercial real
estate (“CRE”) industry, announced today its financial and
operating results for the third quarter ended September 30, 2022.
Q3
2022
Summary:
Unless otherwise indicated, all amounts are
unaudited and in Canadian dollars and percentages are in comparison
to the same period in 2021.
- Consolidated revenues were $177.7 million, up 17.1% (18.1% on a
constant currency* basis).
- Consolidated profit, in accordance with IFRS, was $6.8 million,
compared to a loss of ($0.3) million.
- Consolidated earnings per share, in accordance with IFRS, was
$0.15 per share basic and diluted, compared to ($0.01).
- Consolidated Adjusted EBITDA* was $32.9 million, up 34.8%
(33.6% on a constant currency basis).
- Adjusted EPS* was $0.42, up 7.7% from $0.39.
- Altus Analytics revenues were $87.6 million, up 34.6% (34.8% on
a constant currency basis), of which Over Time Revenues* were $76.9
million, up 39.6% (40.1% on a constant currency basis), and
Adjusted EBITDA was $20.9 million, up 78.4% (75.8% on a constant
currency basis) driving an Adjusted EBITDA margin* of 23.9%.
- Altus Analytics Bookings* totaled $26.9 million, up 30.9%
(27.9% on a constant currency basis). Recurring Bookings* were up
59.0% (54.5% on a constant currency basis).
- At the end of the third quarter, 55% of the Company’s total
ARGUS Enterprise (“AE”) user base had been contracted on ARGUS
Cloud (cloud adoption rate*).
- CRE Consulting revenues were $90.3 million, up 4.0% (5.7% on a
constant currency basis) and Adjusted EBITDA was $21.9 million,
down 2.7% (1.8% on a constant currency basis).
- As at September 30, 2022, bank debt was $324.0 million and cash
and cash equivalents were $46.6 million (representing a funded debt
to Adjusted EBITDA leverage ratio of 2.29 times, as such ratio is
defined in the Company’s credit facility agreement, or a net debt
to Adjusted EBITDA leverage ratio* of 2.20 times).
*Altus Group uses certain non-GAAP financial
measures such as Adjusted EBITDA, Adjusted EBITDA margin, Adjusted
EPS, constant currency, and net debt to Adjusted EBITDA leverage
ratio, as well as supplementary financial measures and other
measures such as Bookings, Recurring Bookings, Over Time Revenues,
and cloud adoption rate. Since these measures are not standard
measures under GAAP, they may not be comparable to similar measures
reported by other entities. Refer to the “Non-GAAP and Other
Measures” section for more information on each measure and a
reconciliation of Adjusted EBITDA to Profit (Loss) and Adjusted
Earnings (Loss) per Share to Profit (Loss).
Jim Hannon, Chief Executive Officer of
Altus said:
“Altus’ strong third quarter financial
performance demonstrates our ability to grow revenues and expand
margins. Our 17% topline improvement marks the sixth consecutive
quarter of double-digit growth. Additionally, the impressive 35%
increase in Adjusted EBITDA and the margin expansion reflects our
progress to scale our operations more efficiently. Most noteworthy,
Analytics Over Time revenues were up 40%, Recurring Bookings were
up 59%, and Adjusted EBITDA margins improved by 590 basis points.
With our unrelenting focus on client value and operational
excellence, Altus remains very well positioned to drive long-term
revenue growth and margin expansion.”
Summary of Operating and Financial
Performance by Business Segment:
CONSOLIDATED |
Three months ended Sept. 30, |
|
Nine months ended Sept. 30, |
|
In thousands of dollars, except for per share amounts |
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
Revenues |
$ |
177,691 |
|
$ |
151,797 |
|
$ |
551,689 |
|
$ |
462,478 |
|
Canada |
|
27% |
|
|
28% |
|
|
27% |
|
|
30% |
|
U.S. |
|
49% |
|
|
41% |
|
|
44% |
|
|
36% |
|
Europe |
|
19% |
|
|
26% |
|
|
25% |
|
|
29% |
|
Asia
Pacific |
|
5% |
|
|
5% |
|
|
4% |
|
|
5% |
|
Adjusted
EBITDA |
$ |
32,910 |
|
$ |
24,415 |
|
$ |
100,394 |
|
$ |
83,894 |
|
Adjusted
EBITDA margin |
|
18.5% |
|
|
16.1% |
|
|
18.2% |
|
|
18.1% |
|
Profit
(loss) |
$ |
6,827 |
|
$ |
(295) |
|
$ |
7,870 |
|
$ |
18,683 |
|
Earnings
(loss) per share: |
|
|
|
|
Basic |
$ |
0.15 |
|
$ |
(0.01) |
|
$ |
0.18 |
|
$ |
0.46 |
|
Diluted |
$ |
0.15 |
|
$ |
(0.01) |
|
$ |
0.17 |
|
$ |
0.44 |
|
Adjusted |
$ |
0.42 |
|
$ |
0.39 |
|
$ |
1.46 |
|
$ |
1.48 |
|
Dividends declared per share |
$ |
0.15 |
|
$ |
0.15 |
|
$ |
0.45 |
|
$ |
0.45 |
|
Altus Analytics |
Three months ended Sept. 30, |
|
Nine months ended Sept. 30, |
|
In thousands of dollars |
|
2022 |
|
|
2021 |
|
% Change |
|
Constant Currency % Change |
|
|
2022 |
|
|
2021 |
|
% Change |
|
Constant Currency % Change |
|
Revenues |
$ |
87,599 |
|
$ |
65,101 |
|
34.6% |
|
34.8% |
|
$ |
250,042 |
|
$ |
178,677 |
|
39.9% |
|
40.1% |
|
Adjusted
EBITDA |
$ |
20,917 |
|
$ |
11,728 |
|
78.4% |
|
75.8% |
|
$ |
45,906 |
|
$ |
30,869 |
|
48.7% |
|
46.7% |
|
Adjusted EBITDA margin |
|
23.9% |
|
|
18.0% |
|
|
|
|
18.4% |
|
|
17.3% |
|
|
|
Selected Metrics |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bookings |
$ |
26,865 |
|
$ |
20,525 |
|
30.9% |
|
27.9% |
|
$ |
78,367 |
|
$ |
63,946 |
|
22.6% |
|
21.5% |
|
Over Time
Revenues |
$ |
76,915 |
|
$ |
55,093 |
|
39.6% |
|
40.1% |
|
$ |
215,875 |
|
$ |
148,004 |
|
45.9% |
|
46.1% |
|
AE software
maintenance retention rate* |
|
97% |
|
|
95% |
|
|
|
|
96% |
|
|
94% |
|
|
|
Geographical
revenue split |
|
|
|
|
|
|
|
|
North
America |
|
76% |
|
|
73% |
|
|
|
|
77% |
|
|
75% |
|
|
|
International |
|
24% |
|
|
27% |
|
|
|
|
23% |
|
|
25% |
|
|
|
Cloud adoption rate (as at end of period) |
|
|
|
|
|
55% |
|
|
29% |
|
|
|
CRE Consulting |
Three months ended Sept. 30, |
|
Nine months ended Sept. 30, |
|
In thousands of dollars |
|
2022 |
|
|
2021 |
|
% Change |
|
ConstantCurrency % Change |
|
|
2022 |
|
|
2021 |
|
% Change |
|
ConstantCurrency% Change |
|
Revenues |
|
|
|
|
|
|
|
|
Property
Tax |
$ |
60,742 |
|
$ |
58,488 |
|
3.9% |
|
6.0% |
|
$ |
212,753 |
|
$ |
199,851 |
|
6.5% |
|
8.5% |
|
Valuation & Cost Advisory |
|
29,526 |
|
|
28,283 |
|
4.4% |
|
5.2% |
|
|
89,420 |
|
|
84,176 |
|
6.2% |
|
7.1% |
|
Revenues |
$ |
90,268 |
|
$ |
86,771 |
|
4.0% |
|
5.7% |
|
$ |
302,173 |
|
$ |
284,027 |
|
6.4% |
|
8.1% |
|
Adjusted EBITDA |
|
|
|
|
|
|
|
|
Property
Tax |
$ |
17,763 |
|
$ |
18,596 |
|
(4.5%) |
|
(3.5%) |
|
$ |
73,121 |
|
$ |
69,394 |
|
5.4% |
|
8.2% |
|
Valuation & Cost Advisory |
|
4,099 |
|
|
3,882 |
|
5.6% |
|
6.6% |
|
|
11,521 |
|
|
10,492 |
|
9.8% |
|
10.6% |
|
Adjusted EBITDA |
$ |
21,862 |
|
$ |
22,478 |
|
(2.7%) |
|
(1.8%) |
|
$ |
84,642 |
|
$ |
79,886 |
|
6.0% |
|
8.5% |
|
Adjusted EBITDA margin |
|
24.2% |
|
|
25.9% |
|
|
|
|
28.0% |
|
|
28.1% |
|
|
|
Q3 2022 Review
On a consolidated basis, revenues were $177.7
million, up 17.1% (18.1% on a constant currency basis) and Adjusted
EBITDA was $32.9 million, up 34.8% (33.6% on a constant currency
basis). Organic revenue* growth was 12.0% (13.2% on a constant
currency basis). Adjusted EPS was $0.42, up 7.7% from $0.39 in the
third quarter of 2021 (which included a lower weighted average
number of shares outstanding).
Consolidated profit, in accordance with IFRS,
was $6.8 million, up from a loss of $(0.3) million the same period
in 2021. In addition to the higher Adjusted EBITDA, profit was
impacted by restructuring costs related to the Company’s 2022
global restructuring program, higher amortization of
acquisition-related intangibles related to acquisitions, costs
related to organizational and strategic initiatives, and losses on
equity derivatives. This was partially offset by profit recognized
from the Company’s GeoVerra Inc. joint venture and unrealized gains
due to foreign exchange. Profit also benefitted from lower
acquisition and related transition costs for the integrations of
previous acquisitions in the prior year which are largely
complete.
Altus Analytics revenues increased to $87.6
million, up 34.6% (34.8% on a constant currency basis). Organic
revenue growth was 24.5% (25.0% on a constant currency basis). The
acquisition of Reonomy represented 10.1% of the total 34.6% revenue
growth. Adjusted EBITDA was $20.9 million, up 78.4% (75.8% on a
constant currency basis) driving an Adjusted EBITDA margin of
23.9%.
- Over Time Revenues were $76.9 million, up 39.6% (40.1% on a
constant currency basis). On an organic basis, Over Time Revenues
were up 27.7% (up 28.2% on a constant currency basis).
Sequentially, Over Time Revenues grew 8.5% (7.7% on a constant
currency basis) from $70.9 million in the second quarter of 2022.
Over Time Revenues benefitted from strong performance across key
solutions with robust customer expansion as well as new customer
additions. While the majority of growth continues to come from
North America, Altus Analytics also posted notable growth
internationally, both in EMEA and APAC.
- Bookings in the third quarter were $26.9 million, up 30.9%
(27.9% on a constant currency basis). Organic Bookings* growth was
23.0% (20.1% on a constant currency basis). Recurring Bookings were
up significantly, growing at 59.0% (54.5% on a constant currency
basis).
- As at the end of the third quarter, 55% of Company’s total AE
user base had been contracted on ARGUS Cloud, consistent with
Management’s expectations.
- Adjusted EBITDA growth and margin benefitted from higher
revenues, improving operating efficiencies, ongoing cost
optimization efforts, and foreign exchange fluctuations.
CRE Consulting revenues increased to $90.3
million, up 4.0% (5.7% on a constant currency basis) and Adjusted
EBITDA was $21.9 million, down 2.7% (1.8% on a constant currency
basis).
- Property Tax revenues were $60.7 million, up 3.9% (6.0% on a
constant currency basis) and Adjusted EBITDA was $17.8 million,
down 4.5% (3.5% on a constant currency basis). Most of the revenue
growth was organic with both the U.S. and Canadian Property Tax
operations up in the double-digits, offset by a decline in the U.K.
which continues to be impacted by the slowed cadence of settlement
volumes and foreign currency headwinds. The U.K. pipeline of cases
to be settled in upcoming quarters remains robust.
- Valuation and Cost Advisory revenues were $29.5 million, up
4.4% (5.2% on a constant currency basis) and Adjusted EBITDA was
$4.1 million, up 5.6% (6.6% on a constant currency basis),
benefitting from moderate growth at both businesses, as well as a
lower compare in the same period last year which included the
impact of the cybersecurity incident.
Corporate Costs were $9.9 million, compared to
$9.8 million in the same period in 2021. The decrease in corporate
costs reflects lower consulting fees for professional advisory.
Beginning in the first quarter of 2022, Altus
initiated a global restructuring program which resulted in
additional restructuring costs of $8.0 million in the third
quarter. More than half of that related to the Company’s ongoing
efforts to rationalize its leased office space in certain markets,
and the remainder related to employee severance costs reflecting
synergies from acquisitions, efficiencies gained from investments
in technology, and the ongoing evolution of the Company’s target
operating models in support of its strategic initiatives. The
program has resulted in $21.9 million of restructuring costs for
the nine-month period and is expected to continue until the end of
the year.
As at September 30, 2022, bank debt was $324.0
million and cash and cash equivalents were $46.6 million
(representing a funded debt to Adjusted EBITDA leverage ratio of
2.29 times, as such ratio is defined in the Company’s credit
facility agreement, or a net debt to Adjusted EBITDA leverage ratio
of 2.20 times).
*Altus Group uses certain supplementary
financial and other measures such as Organic Bookings, Organic
Revenues, and AE software maintenance retention rate. Since these
measures are not standard measures under GAAP, they may not be
comparable to similar measures reported by other entities. Refer to
the “Non-GAAP and Other Measures” section for more information on
each measure.
|
Q3 2022 Results Conference Call & Webcast |
Date: |
Thursday, November 10, 2022 |
Time: |
5:00 p.m. (ET) |
Webcast: |
altusgroup.com (under
Investor Relations) |
Live Call: |
1-800-319-4610
(toll-free North America) or 416-915-3239 (Toronto area) |
Replay: |
available via webcast
at altusgroup.com |
|
|
|
|
About Altus Group
Altus Group provides the global commercial real
estate industry with vital actionable intelligence solutions driven
by our industry standard ARGUS technology, unparalleled asset level
data, and industry expertise. Altus Group delivers Intelligence as
a Service to empower CRE professionals to make well-informed
decisions to maximize returns and reduce risk. Trusted by most of
the world’s largest CRE leaders, our solutions for the valuation,
performance, and risk management of CRE assets are integrated into
workflows critical to success across the CRE value chain. Founded
in 2005, Altus Group is a global company with approximately 2,700
employees across North America, EMEA, and Asia Pacific. For more
information about Altus (TSX: AIF) please visit altusgroup.com.
Non-GAAP and
Other Measures
Non-GAAP Financial Measures
We use certain non-GAAP measures as indicators
of financial performance. Readers are cautioned that they are not
defined performance measures, and do not have any standardized
meaning under IFRS and may differ from similar computations as
reported by other similar entities and, accordingly, may not be
comparable to financial measures as reported by those entities. We
believe that these measures which include non-GAAP financial
measures and non-GAAP ratios as defined in National Instrument
52-112 - Non-GAAP and Other Financial Measures Disclosure
(“NI 52-112”), may assist investors in assessing
an investment in our shares as they provide additional insight into
our performance. These non-GAAP measures should not be considered
in isolation or as a substitute for financial measures prepared in
accordance with IFRS.
Adjusted Earnings before Interest,
Taxes, Depreciation and Amortization (“Adjusted EBITDA”)
is a non-GAAP financial measure which represents profit (loss)
adjusted for the effects of: profit (loss) from discontinued
operations, occupancy costs calculated on a similar basis prior to
the adoption of IFRS 16, finance costs (income), net - other,
depreciation of property, plant and equipment and amortization of
intangibles, depreciation of right-of-use assets, finance costs
(income), net - leases, acquisition and related transition costs
(income), unrealized foreign exchange (gains) losses, (gains)
losses on disposal of right-of-use assets, property, plant and
equipment and intangibles, share of (profit) loss of joint venture,
impairment charges, non-cash share-based compensation costs,
(gains) losses on equity derivatives net of mark-to-market
adjustments on related restricted share units (“RSUs”) and deferred
share units (“DSUs”) being hedged, (gains) losses on derivatives,
restructuring costs (recovery), (gains) losses on investments,
(gains) losses on hedging transactions, other costs or income of a
non-operating and/or non-recurring nature, and income tax expense
(recovery). Refer to the below for a reconciliation of Adjusted
EBITDA to profit (loss).
Adjusted EBITDA margin is a
non-GAAP financial ratio which represents the percentage factor of
Adjusted EBITDA to revenues. We use Adjusted EBITDA and Adjusted
EBITDA margin to evaluate the performance of our business, as well
as when making decisions about the ongoing operations of the
business and our ability to generate cash flows.
Adjusted Earnings (Loss) is a
non-GAAP financial measure which represents profit (loss) adjusted
for the effects of: profit (loss) from discontinued operations,
occupancy costs calculated on a similar basis prior to the adoption
of IFRS 16, depreciation of right-of-use assets, finance costs
(income), net - leases, amortization of intangibles of acquired
businesses, unrealized foreign exchange losses (gains), (gains)
losses on disposal of right-of-use assets, property, plant and
equipment and intangibles, non-cash share-based compensation costs,
losses (gains) on equity derivatives net of mark-to-market
adjustments on related RSUs and DSUs being hedged, interest
accretion on contingent consideration payables, restructuring costs
(recovery), losses (gains) on hedging transactions and interest
expense (income) on swaps, acquisition and related transition costs
(income), losses (gains) on investments, share of (profit) loss of
joint venture, impairment charges, (gains) losses on derivatives,
other costs or income of a non-operating and/or non-recurring
nature, and the tax impact on these items. We use Adjusted Earnings
(Loss) to facilitate the calculation of Adjusted Earnings (Loss)
per Share (“Adjusted EPS”).
Adjusted EPS is a non-GAAP
financial ratio calculated by dividing the Adjusted Earnings (Loss)
by the basic weighted average number of shares adjusted for the
effects of the weighted average number of restricted shares. We use
Adjusted EPS to assess the performance of our business before the
effects of the noted items, because they affect the comparability
of our financial results and could potentially distort the analysis
of trends in business performance. Refer to the below for a
reconciliation of Adjusted EPS to profit (loss).
Constant currency is a non-GAAP
financial measure that allows for current financial and operational
performance to be understood against comparative periods without
the impact of fluctuations in foreign currency exchange rates
against the Canadian dollar. The financial results and non-GAAP
measures presented at constant currency within this document are
obtained by translating monthly results denominated in local
currency (US dollars, British pound, Euro, Australian dollars, and
other foreign currencies) at the foreign exchange rates of the
comparable month.
Net debt to Adjusted EBITDA leverage
ratio is a non-GAAP financial ratio which represents net
debt, or total borrowings less cash and cash equivalents (net of
short-term deposits), as a percentage of Adjusted EBITDA. We use
Net debt to Adjusted EBITDA leverage ratio as a measure of our
ability to service our debt and other long-term obligations.
Other Measures
We also apply certain other measures to allow us
to measure our performance against our operating strategy and
against the results of our peers and competitors. Readers are
cautioned that they are not standardized financial measurements in
accordance with IFRS and may differ from similar computations as
reported by other similar entities and, accordingly, may not be
comparable to financial measures as reported by those entities.
These other measures, which include supplementary financial
measures as defined in NI 52-112, should not be considered in
isolation or as a substitute for any other measure of performance
under IFRS.
Bookings is a
supplementary financial measure for the Altus Analytics business
segment. We define Bookings as the annual contract value for new
sales of our recurring offerings (software, Appraisal Management
and data subscriptions) and the total contract value for one-time
engagements (consulting, training and due diligence). The contract
value of renewals is excluded from this metric, with the exception
of additional capacity or products purchased at the time of
renewal. Organic Bookings is a supplementary financial measure
which represents Bookings, excluding Bookings from business
acquisitions that are not fully integrated, prior to the first
anniversary of the acquisition. Recurring Bookings is a
supplementary financial measure which represents the total annual
contract value of new sales of our recurring offerings. We use
Bookings, Organic Bookings, and Recurring Bookings as measures to
track the performance and success of our sales initiatives, and as
an indicator of future revenue growth.
Organic Revenue is a
supplementary financial measure which represents revenue,
consistent with IFRS 15, Revenue from Contracts with Customers,
excluding the revenues from business acquisitions that are not
fully integrated, prior to the first anniversary of the
acquisition. We use Organic Revenue to evaluate to assess revenue
trends in our business on a comparable basis versus the prior year,
and as an indicator of future revenue growth.
Over Time Revenues is a
supplementary financial measure consistent with IFRS 15, Revenue
from Contracts with Customers, for the Altus Analytics business
segment. Our Over Time Revenues are comprised of software
subscription revenues recognized on an over time basis in
accordance with IFRS 15, software maintenance revenues associated
with our legacy licenses sold on perpetual terms, Appraisal
Management revenues, and data subscription revenues. For greater
clarity, this measure does not include revenue from distinct
on-premise licenses which is recognized upfront at the point in
time when the software is delivered to the customer. Organic Over
Time Revenues represents Over Time Revenues, excluding the Over
Time Revenues from business acquisitions that are not fully
integrated, prior to the first anniversary of the acquisition. We
use Over Time Revenues and Organic Over Time Revenues as measures
to assess revenue trends in our business, and as an indicator of
future revenue growth.
AE software maintenance retention
rate is a supplementary financial measure calculated as a
percentage of AE software maintenance revenue retained upon
renewal; it represents the percentage of the available renewal
opportunity in a fiscal period that renews, calculated on a dollar
basis, excluding any growth in user count or product expansion. We
use AE software maintenance retention rate as a measure to evaluate
our success in retaining our AE software customers.
Cloud adoption
rate is another measure that represents the
percentage of the total AE user base contracted on the ARGUS Cloud
platform. It includes both new AE cloud users as well as those who
have migrated from our AE on-premise software. We use cloud
adoption rate as a measure of our progress in transitioning the AE
user base to our cloud-based platform, a key component of our
overall product strategy.
Forward-Looking Information
Certain information in this press release may
constitute “forward-looking information” within the meaning of
applicable securities legislation. All information contained in
this press release, other than statements of current and historical
fact, is forward-looking information. Forward-looking information
includes, but is not limited to, the discussion of our business and
operating initiatives, focuses and strategies, our expectations of
future performance for our various business units and our
consolidated financial results, including the guidance on financial
expectations, and our expectations with respect to cash flows and
liquidity. Generally, forward-looking information can be identified
by use of words such as “may”, “will”, “expect”, “believe”, “plan”,
“would”, “could”, “remain” and other similar terminology. All of
the forward-looking information in this press release is qualified
by this cautionary statement.
Forward-looking information is not, and cannot
be, a guarantee of future results or events. Forward-looking
information is based on, among other things, opinions, assumptions,
estimates and analyses that, while considered reasonable by us at
the date the forward-looking information is provided, inherently
are subject to significant risks, uncertainties, contingencies and
other factors that may cause actual results, performance or
achievements, industry results or events to be materially different
from those expressed or implied by the forward-looking information.
The material factors or assumptions that we identified and applied
in drawing conclusions or making forecasts or projections set out
in the forward-looking information include, but are not limited to:
engagement and product pipeline opportunities in Altus Analytics
will result in associated definitive agreements; continued adoption
of cloud subscriptions by our customers; retention of material
clients and bookings; sustaining our software and subscription
renewals; settlement volumes in the Property Tax business occurring
on a timely basis and assessment authorities processing appeals in
a manner consistent with expectations; successful execution of our
business strategies; consistent and stable economic conditions or
conditions in the financial markets; consistent and stable
legislation in the various countries in which we operate;
consistent and stable foreign exchange conditions; no disruptive
changes in the technology environment; opportunity to acquire
accretive businesses and the absence of negative financial and
other impacts resulting from strategic investments or acquisitions
on short term results; successful integration of acquired
businesses; and continued availability of qualified professionals.
Projections may also be impacted by macroeconomic factors, in
addition to other factors not controllable by the Company. Altus
Group has also made certain macroeconomic and general industry
assumptions in the preparation of such forward-looking statements.
Not all factors which affect the forward-looking information are
known, and actual results may vary from the projected results in a
material respect, and may be above or below the forward-looking
information presented in a material respect.
The COVID-19 pandemic has cast additional
uncertainty on each of these factors and assumptions. There can be
no assurance that they will continue to be valid. The duration,
extent and severity of the impact the COVID-19 pandemic, including
measures to prevent its spread, will have on our business is
uncertain and difficult to predict at this time. As of the date of
this press release, some of our offices and clients remain subject
to limited COVID-19 restrictions, and a significant portion of our
employees continue to work remotely.
Inherent in the forward-looking information are
known and unknown risks, uncertainties and other factors that could
cause our actual results, performance or achievements, or industry
results, to differ materially from any results, performance or
achievements expressed or implied by such forward-looking
information. Those risks, uncertainties and other factors that
could cause actual results to differ materially from the
forward-looking information include, but are not limited to: the
general state of the economy; the COVID‐19 pandemic; our
financial performance; our financial targets; the commercial real
estate market; acquisitions; industry competition; business
interruption events; third party information; cybersecurity;
professional talent; our cloud subscriptions transition; software
renewals; our sales pipeline; enterprise transactions; customer
concentration and loss of material clients; product enhancements
and new product introductions; technological strategy; intellectual
property; property tax appeals and seasonality; legislative and
regulatory changes; privacy and data protection; our brand and
reputation; fixed-price and contingency engagements; the Canadian
multi-residential market; currency fluctuations; interest rates;
credit; income tax matters; health and safety hazards; our
contractual obligations; legal proceedings; our insurance limits;
our ability to meet the solvency requirements necessary to make
dividend payments; our leverage and financial covenants; our share
price; our capital investments; and the issuance of additional
common shares and debt, as well as those described in our annual
publicly filed documents, including the Annual Information Form for
the year ended December 31, 2021 and Management’s Discussion and
Analysis for the year ended December 31, 2021 (which are available
on SEDAR at www.sedar.com).
Given these risks, uncertainties and other
factors, investors should not place undue reliance on
forward-looking information as a prediction of actual results. The
forward-looking information reflects management’s current
expectations and beliefs regarding future events and operating
performance and is based on information currently available to
management. Although we have attempted to identify important
factors that could cause actual results to differ materially from
the forward-looking information contained herein, there are other
factors that could cause results not to be as anticipated,
estimated or intended. The forward-looking information contained
herein is current as of the date of this press release and, except
as required under applicable law, we do not undertake to update or
revise it to reflect new events or circumstances. Additionally, we
undertake no obligation to comment on analyses, expectations or
statements made by third parties in respect of Altus Group, our
financial or operating results, or our securities.
FOR FURTHER INFORMATION PLEASE
CONTACT:
Camilla Bartosiewicz Chief Communications
Officer, Altus Group (416) 641-9773
camilla.bartosiewicz@altusgroup.com
Interim Condensed Consolidated Statements
of Comprehensive Income (Loss) For the Three and
Nine Months Ended September 30, 2022 and 2021
(Unaudited) (Expressed in Thousands of
Canadian Dollars, Except for Per Share Amounts)
|
Three months ended September 30 |
|
Nine months ended September 30 |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
Revenues |
$ |
177,691 |
|
$ |
151,797 |
|
$ |
551,689 |
|
$ |
462,478 |
|
Expenses |
|
|
|
|
Employee compensation |
|
114,486 |
|
|
99,274 |
|
|
349,934 |
|
|
294,121 |
|
Occupancy |
|
1,945 |
|
|
1,922 |
|
|
5,465 |
|
|
5,818 |
|
Office and other operating |
|
34,208 |
|
|
36,041 |
|
|
115,352 |
|
|
90,769 |
|
Depreciation of right-of-use assets |
|
2,873 |
|
|
3,100 |
|
|
9,137 |
|
|
8,910 |
|
Depreciation of property, plant and equipment |
|
1,607 |
|
|
1,419 |
|
|
5,015 |
|
|
3,867 |
|
Amortization of intangibles |
|
10,403 |
|
|
7,293 |
|
|
31,252 |
|
|
20,781 |
|
Acquisition and related transition costs (income) |
|
439 |
|
|
1,032 |
|
|
4,721 |
|
|
8,112 |
|
Share of (profit) loss of joint venture |
|
(1,082) |
|
|
(927) |
|
|
(2,227) |
|
|
(442) |
|
Restructuring costs (recovery) |
|
8,045 |
|
|
32 |
|
|
21,895 |
|
|
253 |
|
(Gain) loss on investments |
|
259 |
|
|
(1,336) |
|
|
117 |
|
|
(1,839) |
|
Finance costs (income), net - leases |
|
490 |
|
|
552 |
|
|
1,450 |
|
|
1,704 |
|
Finance costs (income), net - other |
|
(5,108) |
|
|
1,297 |
|
|
(2,634) |
|
|
2,808 |
|
Profit (loss) before income taxes |
|
9,126 |
|
|
2,098 |
|
|
12,212 |
|
|
27,616 |
|
Income tax expense (recovery) |
|
2,299 |
|
|
2,393 |
|
|
4,342 |
|
|
8,933 |
|
Profit (loss) for the period |
$ |
6,827 |
|
$ |
(295) |
|
$ |
7,870 |
|
$ |
18,683 |
|
Profit (loss) for the period attributable to: |
|
|
|
|
Non-controlling interest |
$ |
- |
|
$ |
- |
|
$ |
(3) |
|
$ |
- |
|
Shareholders of the Company |
$ |
6,827 |
|
$ |
(295) |
|
$ |
7,873 |
|
$ |
18,683 |
|
Other comprehensive income (loss): |
|
|
|
|
Items that may be reclassified to profit or loss in subsequent
periods: |
|
|
|
|
Currency translation differences |
|
13,862 |
|
|
4,717 |
|
|
2,382 |
|
|
(3,425) |
|
Items that are not reclassified to profit or loss in subsequent
periods: |
|
|
|
|
Changes in investments measured at fair value through other
comprehensive income, net of tax |
|
2,138 |
|
|
173 |
|
|
(232) |
|
|
2,272 |
|
Other comprehensive income (loss), net of tax |
|
16,000 |
|
|
4,890 |
|
|
2,150 |
|
|
(1,153) |
|
Total comprehensive income (loss) for the period, net of
tax |
$ |
22,827 |
|
$ |
4,595 |
|
$ |
10,020 |
|
$ |
17,530 |
|
Comprehensive income (loss) for the period, net of tax,
attributable to: |
|
|
|
|
Non-controlling interest |
$ |
- |
|
$ |
- |
|
$ |
(3) |
|
$ |
- |
|
Shareholders of the Company |
$ |
22,827 |
|
$ |
4,595 |
|
$ |
10,023 |
|
$ |
17,530 |
|
|
|
|
|
|
|
Earnings (loss) per share attributable to the shareholders
of the Company during the period |
|
|
|
|
Basic earnings (loss) per share |
$ |
0.15 |
|
$ |
(0.01) |
|
$ |
0.18 |
|
$ |
0.46 |
|
Diluted earnings (loss) per share |
$ |
0.15 |
|
$ |
(0.01) |
|
$ |
0.17 |
|
$ |
0.44 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interim Condensed Consolidated Balance
Sheets As at September 30, 2022 and December 31,
2021 (Unaudited) (Expressed in
Thousands of Canadian Dollars)
|
September 30, 2022 |
|
December 31, 2021 |
|
Assets |
|
|
Current assets |
|
|
Cash and cash equivalents |
$ |
46,640 |
|
$ |
51,271 |
|
Trade receivables and other |
|
233,061 |
|
|
223,315 |
|
Income taxes recoverable |
|
8,214 |
|
|
3,280 |
|
Derivative financial instruments |
|
1,158 |
|
|
5,868 |
|
Total current assets |
|
289,073 |
|
|
283,734 |
|
Non-current assets |
|
|
Trade receivables and other |
|
6,874 |
|
|
2,818 |
|
Derivative financial instruments |
|
17,043 |
|
|
15,661 |
|
Investments |
|
21,761 |
|
|
20,806 |
|
Investment in joint venture |
|
18,723 |
|
|
16,496 |
|
Deferred tax assets |
|
28,064 |
|
|
24,089 |
|
Right-of-use assets |
|
41,434 |
|
|
59,992 |
|
Property, plant and equipment |
|
20,762 |
|
|
21,624 |
|
Intangibles |
|
292,214 |
|
|
286,670 |
|
Goodwill |
|
491,508 |
|
|
467,310 |
|
Total non-current assets |
|
938,383 |
|
|
915,466 |
|
Total Assets |
$ |
1,227,456 |
|
$ |
1,199,200 |
|
Liabilities |
|
|
Current liabilities |
|
|
Trade payables and other |
$ |
204,516 |
|
$ |
193,388 |
|
Income taxes payable |
|
2,482 |
|
|
2,629 |
|
Lease liabilities |
|
15,026 |
|
|
13,914 |
|
Total current liabilities |
|
222,024 |
|
|
209,931 |
|
Non-current liabilities |
|
|
Trade payables and other |
|
21,258 |
|
|
24,913 |
|
Lease liabilities |
|
49,212 |
|
|
57,225 |
|
Borrowings |
|
321,919 |
|
|
286,924 |
|
Deferred tax liabilities |
|
34,528 |
|
|
27,864 |
|
Non-controlling interest |
|
- |
|
|
2,980 |
|
Total non-current liabilities |
|
426,917 |
|
|
399,906 |
|
Total Liabilities |
|
648,941 |
|
|
609,837 |
|
Shareholders’ Equity |
|
|
Share capital |
|
739,534 |
|
|
726,325 |
|
Contributed surplus |
|
28,361 |
|
|
42,364 |
|
Accumulated other comprehensive income (loss) |
|
40,589 |
|
|
38,439 |
|
Other equity |
|
- |
|
|
(244) |
|
Retained earnings (deficit) |
|
(229,969) |
|
|
(217,406) |
|
Equity attributable to the shareholders of the
Company |
|
578,515 |
|
|
589,478 |
|
Non-controlling interest |
|
- |
|
|
(115) |
|
Total Shareholders’ Equity |
|
578,515 |
|
|
589,363 |
|
Total Liabilities and Shareholders’ Equity |
$ |
1,227,456 |
|
$ |
1,199,200 |
|
|
|
|
|
|
|
|
Interim Condensed Consolidated Statements
of Cash Flows For the Nine Months Ended September
30, 2022 and 2021 (Unaudited)
(Expressed in Thousands of Canadian Dollars)
|
Nine months ended September 30 |
|
|
|
2022 |
|
|
2021 |
|
Cash flows from operating activities |
|
|
Profit
(loss) before income taxes |
$ |
12,212 |
|
$ |
27,616 |
|
Adjustments
for: |
|
|
Depreciation of right-of-use assets |
|
9,137 |
|
|
8,910 |
|
Depreciation of property, plant and equipment |
|
5,015 |
|
|
3,867 |
|
Amortization of intangibles |
|
31,252 |
|
|
20,781 |
|
Finance costs (income), net - leases |
|
1,450 |
|
|
1,704 |
|
Finance costs (income), net - other |
|
(2,634) |
|
|
2,808 |
|
Share-based compensation |
|
21,113 |
|
|
16,596 |
|
Unrealized foreign exchange (gain) loss |
|
(2,033) |
|
|
1,249 |
|
(Gain) loss on investments |
|
117 |
|
|
(1,839) |
|
(Gain) loss on disposal of right-of-use assets, property, plant and
equipment and intangibles |
|
- |
|
|
(248) |
|
(Gain) loss on equity derivatives |
|
13,580 |
|
|
(5,515) |
|
Share of (profit) loss of joint venture |
|
(2,227) |
|
|
(442) |
|
Impairment of right-of-use assets |
|
7,526 |
|
|
- |
|
Net changes in: |
|
|
Operating working capital |
|
(11,468) |
|
|
(28,946) |
|
Liabilities for cash-settled share-based compensation |
|
(10,538) |
|
|
4,080 |
|
Deferred consideration payables |
|
(3,644) |
|
|
10,844 |
|
Contingent consideration payables |
|
3,009 |
|
|
127 |
|
Net cash generated by (used in) operations |
|
71,867 |
|
|
61,592 |
|
Less: interest paid on borrowings |
|
(7,279) |
|
|
(2,313) |
|
Less: interest paid on leases |
|
(1,450) |
|
|
(1,704) |
|
Less: income taxes paid |
|
(14,647) |
|
|
(14,834) |
|
Add: income taxes refunded |
|
1,129 |
|
|
2,794 |
|
Net cash provided by (used in) operating
activities |
|
49,620 |
|
|
45,535 |
|
Cash flows from financing activities |
|
|
Proceeds from exercise of options |
|
3,921 |
|
|
11,950 |
|
Financing fees paid |
|
(1,896) |
|
|
(136) |
|
Proceeds from borrowings |
|
74,500 |
|
|
148,113 |
|
Repayment of borrowings |
|
(39,935) |
|
|
(22,606) |
|
Payments of principal on lease liabilities |
|
(10,505) |
|
|
(8,671) |
|
Dividends paid |
|
(18,415) |
|
|
(15,971) |
|
Treasury shares purchased for share-based compensation |
|
(4,617) |
|
|
(6,150) |
|
Cancellation of shares |
|
(8,058) |
|
|
- |
|
Net cash provided by (used in) financing
activities |
|
(5,005) |
|
|
106,529 |
|
Cash flows from investing activities |
|
|
Purchase of investments |
|
(675) |
|
|
(3,512) |
|
Purchase of intangibles |
|
(12,545) |
|
|
(3,208) |
|
Purchase of property, plant and equipment |
|
(3,650) |
|
|
(3,374) |
|
Proceeds from investment |
|
22 |
|
|
307 |
|
Acquisitions, net of cash acquired |
|
(29,853) |
|
|
(143,850) |
|
Net cash provided by (used in) investing
activities |
|
(46,701) |
|
|
(153,637) |
|
Effect of foreign currency translation |
|
(2,545) |
|
|
(1,696) |
|
Net increase (decrease) in cash and cash
equivalents |
|
(4,631) |
|
|
(3,269) |
|
Cash and cash equivalents, beginning of period |
|
51,271 |
|
|
69,637 |
|
Cash and cash equivalents, end of period |
$ |
46,640 |
|
$ |
66,368 |
|
|
|
|
|
|
|
|
Reconciliation of Adjusted EBITDA to
Profit (Loss)
The following table provides a reconciliation
between Adjusted EBITDA and profit (loss):
|
Three months ended September
30, |
|
Nine months ended September
30, |
|
In thousands of dollars |
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
Adjusted EBITDA |
$ |
32,910 |
|
$ |
24,415 |
|
$ |
100,394 |
|
$ |
83,894 |
|
Occupancy
costs calculated on a similar basis prior to the adoption of IFRS
16 (1) |
|
2,868 |
|
|
3,294 |
|
|
9,088 |
|
|
9,722 |
|
Depreciation
of right-of-use assets |
|
(2,873) |
|
|
(3,100) |
|
|
(9,137) |
|
|
(8,910) |
|
Depreciation
of property, plant and equipment and amortization of
intangibles |
|
(12,010) |
|
|
(8,712) |
|
|
(36,267) |
|
|
(24,648) |
|
Acquisition
and related transition (costs) income |
|
(439) |
|
|
(1,032) |
|
|
(4,721) |
|
|
(8,112) |
|
Unrealized
foreign exchange gain (loss) (2) |
|
1,740 |
|
|
(507) |
|
|
2,033 |
|
|
(1,249) |
|
Gain (loss)
on disposal of right-of-use assets, property, plant and equipment
and intangibles (2) |
|
(13) |
|
|
5 |
|
|
- |
|
|
248 |
|
Share of
profit (loss) of joint venture |
|
1,082 |
|
|
927 |
|
|
2,227 |
|
|
442 |
|
Non-cash
share-based compensation costs (3) |
|
(7,217) |
|
|
(5,865) |
|
|
(17,421) |
|
|
(13,277) |
|
Gain (loss)
on equity derivatives net of mark-to-market adjustments on related
RSUs and DSUs being hedged (3) |
|
(150) |
|
|
829 |
|
|
(4,371) |
|
|
1,005 |
|
Restructuring (costs) recovery |
|
(8,045) |
|
|
(32) |
|
|
(21,895) |
|
|
(253) |
|
Gain (loss)
on investments (4) |
|
(259) |
|
|
1,336 |
|
|
(117) |
|
|
1,839 |
|
Other
non-operating and/or non-recurring income (costs) (5) |
|
(3,086) |
|
|
(7,611) |
|
|
(8,785) |
|
|
(8,573) |
|
Earnings (loss) before finance costs and income
taxes |
|
4,508 |
|
|
3,947 |
|
|
11,028 |
|
|
32,128 |
|
Finance (costs) income, net - leases |
|
(490) |
|
|
(552) |
|
|
(1,450) |
|
|
(1,704) |
|
Finance (costs) income, net - other |
|
5,108 |
|
|
(1,297) |
|
|
2,634 |
|
|
(2,808) |
|
Profit (loss) before income taxes |
|
9,126 |
|
|
2,098 |
|
|
12,212 |
|
|
27,616 |
|
Income tax (expense) recovery |
|
(2,299) |
|
|
(2,393) |
|
|
(4,342) |
|
|
(8,933) |
|
Profit (loss) for the period |
$ |
6,827 |
|
$ |
(295) |
|
$ |
7,870 |
|
$ |
18,683 |
|
(1) |
Management uses the non-GAAP occupancy costs calculated on a
similar basis prior to the adoption of IFRS 16 when analyzing
financial and operating performance. |
(2) |
Included in office and other operating expenses in the interim
condensed consolidated statements of comprehensive income
(loss). |
(3) |
Included in employee compensation expenses in the interim condensed
consolidated statements of comprehensive income (loss). |
(4) |
Gain (loss) on investments relates to changes in the fair value of
investments in partnerships. |
(5) |
Other non-operating and/or non-recurring income (costs) for the
three and nine months ended September 30, 2022 relate to legal,
advisory, and other consulting costs related to organizational and
strategic initiatives, including those related to the transition of
certain members of our leadership team. For the three and nine
months ended September 30, 2021, other non-operating and/or
non-recurring income (costs) relate to (i) costs relating to the
June 13, 2021 cybersecurity incident net of insurance proceeds
received or receivable, and (ii) transaction and other related
costs. These are included in office and other operating expenses in
the interim condensed consolidated statements of comprehensive
income (loss). |
|
|
Reconciliation of
Adjusted Earnings (Loss) Per Share to
Profit (Loss)
The following table provides a reconciliation
between Adjusted EPS and profit (loss):
|
Three months ended September
30, |
|
Nine months ended September
30, |
|
In thousands of dollars, except for per share amounts |
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
Profit (loss) for the period |
$ |
6,827 |
|
$ |
(295) |
|
$ |
7,870 |
|
$ |
18,683 |
|
Occupancy
costs calculated on a similar basis prior to the adoption of IFRS
16 (1) |
|
(2,868) |
|
|
(3,294) |
|
|
(9,088) |
|
|
(9,722) |
|
Depreciation
of right-of-use assets |
|
2,873 |
|
|
3,100 |
|
|
9,137 |
|
|
8,910 |
|
Finance
costs (income), net - leases |
|
490 |
|
|
552 |
|
|
1,450 |
|
|
1,704 |
|
Amortization
of intangibles of acquired businesses |
|
9,682 |
|
|
7,293 |
|
|
29,688 |
|
|
20,781 |
|
Unrealized
foreign exchange loss (gain) |
|
(1,740) |
|
|
507 |
|
|
(2,033) |
|
|
1,249 |
|
Loss (gain)
on disposal of right-of-use assets, property, plant and equipment
and intangibles |
|
13 |
|
|
(5) |
|
|
- |
|
|
(248) |
|
Non-cash
share-based compensation costs |
|
7,217 |
|
|
5,865 |
|
|
17,421 |
|
|
13,277 |
|
Loss (gain)
on equity derivatives net of mark-to-market adjustments on related
RSUs and DSUs being hedged |
|
150 |
|
|
(829) |
|
|
4,371 |
|
|
(1,005) |
|
Interest
accretion on contingent consideration payables |
|
- |
|
|
- |
|
|
6 |
|
|
- |
|
Restructuring costs (recovery) |
|
8,045 |
|
|
32 |
|
|
21,895 |
|
|
253 |
|
Loss (gain)
on hedging transactions, including currency forward contracts and
interest expense (income) on swaps |
|
(8,748) |
|
|
- |
|
|
(10,252) |
|
|
- |
|
Acquisition
and related transition costs (income) |
|
439 |
|
|
1,032 |
|
|
4,721 |
|
|
8,112 |
|
Loss (gain)
on investments |
|
259 |
|
|
(1,336) |
|
|
117 |
|
|
(1,839) |
|
Share of
loss (profit) of joint venture |
|
(1,082) |
|
|
(927) |
|
|
(2,227) |
|
|
(442) |
|
Other
non-operating and/or non-recurring costs (income) |
|
3,086 |
|
|
7,611 |
|
|
8,785 |
|
|
8,573 |
|
Tax impact on above |
|
(5,609) |
|
|
(2,874) |
|
|
(16,230) |
|
|
(6,816) |
|
Adjusted earnings (loss) for the period |
$ |
19,034 |
|
$ |
16,432 |
|
$ |
65,631 |
|
$ |
61,470 |
|
Weighted
average number of shares - basic |
|
44,608,742 |
|
|
41,158,776 |
|
|
44,430,353 |
|
|
40,922,098 |
|
Weighted average number of restricted shares |
|
629,728 |
|
|
652,544 |
|
|
645,763 |
|
|
546,363 |
|
Weighted average number of shares - adjusted |
|
45,238,470 |
|
|
41,811,320 |
|
|
45,076,116 |
|
|
41,468,461 |
|
Adjusted earnings (loss) per share
(2) |
$ |
0.42 |
|
$ |
0.39 |
|
$ |
1.46 |
|
$ |
1.48 |
|
(1) |
Management uses the non-GAAP occupancy costs calculated on a
similar basis prior to the adoption of IFRS 16 when analyzing
financial and operating performance. |
(2) |
Refer to the Non-GAAP and Other Measures section above for the
definition of Adjusted EPS. |
|
|
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