Altus Group Reports Q2 2023 Financial Results and Quarterly Dividend
Analytics Recurring New Bookings* increased sequentially and year-over-year; successfully managed through Property Tax jurisdictional reset and delivered double-digit growth at Analytics
TORONTO, Aug. 10, 2023 (GLOBE NEWSWIRE) -- Altus Group Limited (ʺAltus” or “the Company”) (TSX: AIF), a leading provider of asset and fund intelligence for commercial real estate (“CRE”), announced today its financial and operating results for the second quarter ended June 30 th , 2023 and the approval by its Board of Directors of the payment of a cash dividend of $0.15 per common share for the third quarter ending September 30, 2023.
Unless otherwise indicated, all amounts are in Canadian dollars and percentages are on an as reported basis in comparison to Q2 2022.
Q2 2023 Summary
- Consolidated revenues were $205.2 million, down 0.6% (4.1% on a Constant Currency* basis), reflecting the anticipated negative $33.2 million jurisdictional reset of the U.K. annuity billings in Property Tax.
- Profit was $11.9 million, compared to $12.5 million.
- Earnings per share (“EPS”) were $0.26 basic and diluted, compared to $0.28 basic and diluted.
- Consolidated Adjusted EBITDA* was $44.7 million, down 10.1% (15.3% on a Constant Currency basis).
- Adjusted EPS* was $0.53, compared to $0.77.
- Analytics revenues were $99.7 million, up 21.4% (15.5% on a Constant Currency basis), of which Recurring Revenue* was $88.8 million, up 25.2% (19.0% on a Constant Currency basis), and Adjusted EBITDA was $23.8 million, up 72.8% (59.0% on a Constant Currency basis) driving an Adjusted EBITDA margin* of 23.8%, up 700 basis points.
- Analytics New Bookings* totalled $24.6 million, up 4.9% (0.4% on a Constant Currency basis), of which Recurring New Bookings* were $18.4 million, up 7.9% (3.4% on a Constant Currency basis). Sequentially, Recurring New Bookings increased 30.5%.
- At the end of Q2 2023, 70% of the Company’s total ARGUS Enterprise (“AE”) user base had been contracted on ARGUS Cloud (Cloud Adoption Rate*), compared to 52% at the end of Q2 2022.
- Reflecting the anticipated reset of the U.K. annuity billings, Property Tax revenues were $75.1 million, down 19.7% (22.4% on a Constant Currency basis), and Adjusted EBITDA was $28.2 million, down 32.9% (35.3% on a Constant Currency basis). Excluding the $33.2 million impact of the U.K. annuity billings in 2022, revenue growth was 24.5% (20.4% on a Constant Currency basis).
- Appraisals and Development Advisory revenues were $30.5 million, down 1.2% (1.0% on a Constant Currency basis) and Adjusted EBITDA was $3.3 million, down 25.9% (25.3% on a Constant Currency basis).
- As at June 30, 2023, Funded debt to EBITDA ratio as defined in the Company’s credit facility agreement was 2.19 times, and Net debt to Adjusted EBITDA leverage ratio* was 2.10 times.
*Altus Group uses certain non-GAAP financial measures such as Adjusted Earnings (Loss), and Constant Currency; non-GAAP ratios such as Adjusted EPS; total of segments measures such as Adjusted EBITDA; capital management measures such as Free Cash Flow; and supplementary financial and other measures such as Adjusted EBITDA margin, Net debt to Adjusted EBITDA leverage ratio, New Bookings, Recurring New Bookings, Non-Recurring New Bookings, Organic Revenue, Recurring Revenue, Non-Recurring Revenue, AE Software Maintenance Retention Rate, and Cloud Adoption Rate. Refer to the “Non-GAAP and Other Measures” section for more information on each measure and a reconciliation of Adjusted EBITDA and Adjusted Earnings (Loss) to Profit (Loss) and Free Cash Flow to Net cash provided by (used in) operating activities.
Jim Hannon, Chief Executive Officer of Altus, said:
“Our second quarter results reflect the resiliency of our revenue model and continued focus to operate with increasing efficiency. Our U.S. and Canadian Property Tax operations had very strong quarters with double-digit growth over prior year. Our U.K. Property Tax team proficiently managed the reset of the annuity. Combined, the Property Tax teams significantly outperformed against our expectations.
We are also pleased with the continuation of strong results at Analytics with 21% revenue growth and a 700-basis point improvement in our Adjusted EBITDA margins. The steady execution of our strategy, alongside the improvement in our Analytics New Bookings, reinforce our outlook for the year to deliver sustained top and bottom-line growth.”
Q2 2023 Review
On a consolidated basis, revenues were $205.2 million, down 0.6% (4.1% on a Constant Currency basis) and Adjusted EBITDA was $44.7 million, down 10.1% (15.3% on a Constant Currency basis). Excluding the impact of the $33.2 million annuity billings at Property Tax in the prior year, consolidated revenue growth was 18.4% (14.3% on a Constant Currency basis). Adjusted EPS was $0.53, compared to $0.77 in the first quarter of 2022.
Profit (loss) was $11.9 million and $0.26 per share, basic and diluted, compared to $12.5 million and $0.28 per share basic and diluted, in the same period in 2022. The greatest driver of the year-over-year change was the completion of the 2022 global restructuring program, partially offset by the impact of higher income tax expenses.
Analytics revenues increased to $99.7 million, up 21.4% (15.5% on a Constant Currency basis). The year-over-year growth consisted solely of Organic Revenue*. Adjusted EBITDA was $23.8 million, up 72.8% (59.0% on a Constant Currency basis) driving an Adjusted EBITDA margin of 23.8%, up 700 basis points.
- Recurring Revenues were $88.8 million, up 25.2% (19.0% on a Constant Currency basis). Sequentially, Recurring Revenue increased 4.1% from $85.3 million in the first quarter of 2023.
- Revenue growth continues to be driven by strong Recurring Revenue performance, which is where the Company’s go-to-market efforts and investments are focused. The business had double-digit growth, benefitting from the ongoing transition to cloud subscriptions, new sales, and Valuation Management Solutions asset expansion. Overall, a high percentage of Recurring Revenue growth continues to be driven by customer expansion, supported by steady new customer additions. Non-Recurring Revenue* declined modestly.
- New Bookings totalled $24.6 million, up 4.9% (0.4% on a Constant Currency basis). Recurring New Bookings totalled $18.4 million, up 7.9% (3.4% on a Constant Currency basis), and Non-Recurring New Bookings were $6.3 million, down 2.9% (7.6% on a Constant Currency basis).
- Adjusted EBITDA growth and margin expansion benefitted from higher revenues, improving operating efficiencies, ongoing cost optimization efforts, and foreign exchange fluctuations.
Property Tax revenues were $75.1 million, down 19.7% (22.4% on a Constant Currency basis) and Adjusted EBITDA was $28.2 million, down 32.9% (35.3% on a Constant Currency basis). The business had double-digit growth in the U.S. and Canada, while the U.K. was impacted by the loss of the annuity billings that reset in the quarter this year. On a comparative view, the second quarter of 2022 was a historic record for the Property Tax segment, driven by a $33.2 million contribution from the annuity billings that reset in 2023. Adjusting for the impact of the annuity billings, revenues would have grown 24.5% (20.4% on a Constant Currency basis).
Appraisals and Development Advisory revenues were $30.5 million, down 1.2% (1.0% on a Constant Currency basis) and Adjusted EBITDA was $3.3 million, down 25.9% (25.3% on a Constant Currency basis). Growth from strong performance in Development Advisory was offset by a decline in Appraisals.
Corporate Costs were $10.6 million, in line with the same period in 2022.
Free Cash Flow was $19.1 million, and Net cash used in operating activities was $21.7 million. Free Cash Flow in the quarter continued to reflect temporarily higher working capital balances as the Company ramps up the new ERP system.
As at June 30, 2023, bank debt was $335.8 million and cash and cash equivalents was $43.1 million (representing a Funded debt to EBITDA ratio as defined in the Company’s credit facility agreement of 2.19 times, or a Net debt to Adjusted EBITDA leverage ratio of 2.10 times).
Q3 2023 Dividend
Altus Group’s Board of Directors approved the payment of a cash dividend of $0.15 per common share for the third quarter ending September 30, 2023, with payment to be made on October 16, 2023 to common shareholders of record as at September 30, 2023.
Altus Group’s Dividend Reinvestment Plan (“DRIP”) permits eligible shareholders to direct their cash dividends to be reinvested in additional common shares of the Company. For shareholders who wish to reinvest their dividends under the DRIP, Altus Group intends to issue common shares from treasury at a price equal to 96% of the weighted average closing price of the shares for the five trading days preceding the dividend payment date. Full details of the DRIP program are available on the Company website .
Altus Group confirms that all dividends paid or deemed to be paid to its common shareholders qualify as ʺeligible dividendsʺ for purposes of subsection 89(14) of the Income Tax Act (Canada) and similar provincial and territorial legislation, unless indicated otherwise.
About Altus Group
Altus Group is a leading provider of asset and fund intelligence for commercial real estate. We deliver intelligence as a service to our global client base through a connected platform of industry-leading technology, advanced analytics, and advisory services. Trusted by the largest CRE leaders, our capabilities help commercial real estate investors, developers, proprietors, lenders, and advisors manage risks and improve performance returns throughout the asset and fund lifecycle. Altus Group is a global company headquartered in Toronto with approximately 2,900 employees across North America, EMEA and Asia Pacific. For more information about Altus (TSX: AIF) please visit altusgroup.com.
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Source
https://money.tmx.com/quote/AIF/news/8716499658590171/Altus_Group_Reports_Q2_2023_Financial_Results_and_Quarterly_Dividend
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