Ms. Camilla Bartosiewicz reports
ALTUS GROUP REPORTS FIRST QUARTER FINANCIAL RESULTS FOR 2015
Altus Group Ltd. has released its financial and operating results for the first quarter ended March 31, 2015. On a consolidated basis, gross revenues increased 13.6 per cent to $98.5-million (compared with $86.7-million for the same period in 2014). Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) declined 18.1 per cent to $12.2-million (from $14.9-million in the same period last year), impacted by continued growth investments and lower organic revenues from the geomatics business. In the first quarter of 2015, adjusted basic earnings per share were 16 cents, down 38.5 per cent from 26 cents in the same period in 2014.
Highlights
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Maintained double-digit revenue growth for the sixth consecutive quarter;
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Grew recurring revenues from global asset and investment management
(GAIM) businesses by 43 per cent;
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Pursued investments to further long-term growth strategy;
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Furthered GAIM product road map with the launch of Argus Developer 7.0, a
beta version of Argus Express and a beta version of the research,
valuation and advisory (RVA) attribution data platform;
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Returned $4.9-million to shareholders through quarterly declared
dividends of 15 cents per common share;
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Subsequent to quarter-end, strengthened the company's financial
flexibility with an amended credit facility.
"We made great strides growing our recurring revenues from our GAIM businesses in the first quarter, delivering 57-per-cent growth in RVA's data solutions and 25-per-cent growth in Argus software's maintenance and subscription revenues," said Robert Courteau, chief executive officer at Altus Group. "With a global growth opportunity ahead of us, we are committed to hiring the right people and developing the best technology offerings to drive increased differentiation and boost future growth with higher recurring revenues. These investments in high-growth areas have paid off in the United States, and we're making great progress against our strategy."
SUMMARY OF OPERATING AND FINANCIAL PERFORMANCE
(in thousands of dollars)
Gross revenues Adjusted EBITDA
Q1 2015 Q1 2014 Q1 2015 Q1 2014
RVA 23,964 20,259 4,167 4,357
Argus software 13,134 11,551 2,720 3,659
Property tax 31,063 24,794 5,590 6,552
Cost 11,561 11,207 1,693 1,755
Geomatics 18,919 19,095 3,225 4,327
Intercompany
eliminations (176) (215)
Corporate (5,207) (5,768)
Total $98,465 $86,691 $12,188 $14,882
In the first quarter, the steady performance from RVA was strengthened by organic and acquisitive growth. RVA's revenues from data solutions increased by 56.8 per cent year over year to $12.2-million and declined by 5.7 per cent to $11.8-million from its valuations and advisory services. The 2014 acquisitions of RealNet Canada Inc. and Voyanta Ltd. were strong contributors to the solid growth in data solutions, along with the addition of new clients and assets to RVA's appraisal management platform in the United States and Europe. The valuations and advisory services business unit was impacted by lower revenues from the company's right-of-way work but showed improvement in valuations work and due diligence assignments. Adjusted EBITDA declined due to lower revenues in valuations and advisory services and was impacted by investments in data solutions, including with respect to Voyanta and RVA's European expansion.
During the quarter, RVA in partnership with the National Council of Real Estate Investment Fiduciaries (NCREIF), launched a beta version of its new attribution data product tailored to the asset and investment management industry. The Web-based application combines performance-based and appraisal-based data not previously available, giving portfolio managers and investors the ability to benchmark against indices and their competitive sets.
The Argus software business unit delivered mixed results in the first quarter. On a Canadian-dollar basis, revenues from licence sales were flat year over year at $3.8-million. However, maintenance and subscription revenues delivered 25.1-per-cent year-over-year growth to $7.2-million, and revenues from services increased by 5.9 per cent to $2.1-million. Strengthening of the exchange rate against the Canadian dollar improved overall revenues and adjusted EBITDA by 10.1 per cent. Softness in licence sales was impacted by a transition in sales leadership and a focus on multiyear subscription contracts. Argus will continue to pursue upfront licence sales, but will offer clients an alternative with subscription pricing to meet market demand and to achieve a greater mix of recurring revenues. Adjusted EBITDA for the quarter declined as investments continued in new product development, expansion of the sales team and operational capacity to support future growth. In addition, in the first quarter of last year, the company capitalized $500,000 of software development costs, which did not reoccur this quarter.
During the quarter, Argus launched an enhanced version of its developer product, Developer 7.0, which combines the project modelling and finance structuring capabilities of Argus Developer with the budgeting functionality of Developer Budget. Developer 7.0 enables users to model, forecast, manage, analyze and report on development project cost and cash flows from the initial feasibility study through delivery. Additionally, Argus launched a beta version of Argus Express, a software-as-a-service-based Web application that enables users requiring quick turnaround times (such as investment or mortgage brokers) to perform efficient analysis to price an investment, loan or acquisition.
In the first quarter, the global property tax business unit delivered solid revenue growth, with a 29-per-cent year-over-year increase in North America and a 14-per-cent increase in the United Kingdom. The increase in revenues was driven primarily by the acquisition of SC&H State and Local Tax in late 2014 and organic growth in the United States. Compared with a particularly strong first quarter in 2014, revenues from Canadian operations declined on a year-over-year basis, primarily due to timing of contingency settlements. Adjusted EBITDA was impacted by a 28.5-per-cent decrease in North America caused by lower revenues in the Canadian operations and continued investment in the U.S. practice, offset by acquisitive earnings from SC&H State and Local Tax and a 31.3-per-cent improvement in the United Kingdom.
The cost consulting and project management business unit delivered steady performance in the first quarter, benefiting from an increased volume in infrastructure assignments in North America, stable performance in Australia and a slight increase in Asia. Adjusted EBITDA was slightly down in North America and increased in Asia Pacific on higher revenues.
At the geomatics business unit, following a strong first quarter in 2014, the financial performance reflected the anticipated challenges associated with the slowdown in capital spending in Western Canada. Financial results were affected by both reduced activity in the oil and gas sector and overall rate reductions. Acquisitive growth from Maltais Geomatics Inc. compensated for some of the year-over-year decline and helped mitigate some of the challenges through industry diversification.
On a consolidated basis, favourable exchange rates against the Canadian dollar benefited revenues by 2.8 per cent and adjusted EBITDA by 4 per cent.
Management estimates that growth investments impacted adjusted EBITDA in the quarter by approximately $3-million, of which a great portion was aimed at growing recurring revenues from the company's GAIM businesses, including continued investments at RVA's European expansion, Voyanta and Argus.
In the first quarter, corporate costs were $5.2-million, compared with $5.8-million in the same period in 2014. The decrease in corporate costs was mainly due to lower accrual of variable compensation on lower performance in the businesses.
Under IFRS (international financial reporting standards) accounting, profit for the first quarter was $700,000, or two cents per share basic and diluted, compared with $4.9-million, or 17 cents per share basic and diluted, in the same period in 2014.
At the end of the first quarter, Altus Group's balance sheet remained strong, giving the company the financial flexibility to pursue its growth strategy. The company's bank debt was $134.5-million, representing a financed-debt-to-EBITDA leverage ratio of 1.92 times. Subsequent to quarter-end, the company amended its bank credit facility, further strengthening its financial flexibility. The amendments include a five-year extension, an increased maximum financed-debt-to-EBITDA ratio from 2.75:1 to 3:1, lower bank margins and additional borrowing flexibility.
2015 first quarter results conference call and webcast
Date: Thursday, May 7, 2015
Time: 5 p.m. (ET)
Webcast: On the company's website (under investor relations)
Live call: 1-866-225-0198 (toll-free) or 416-340-2218 (Greater Toronto Area and international)
Replay: 1-800-408-3053 or 905-694-9451 (passcode 9288033)
SELECTED FINANCIAL INFORMATION
(in thousands of dollars, except
for per-share amounts)
For the quarter ended
March 31, March 31,
2015 2014
Gross revenues $ 98,465 $ 86,691
Canada 56% 65%
United States 28% 20%
Europe 11% 10%
Asia Pacific 5% 5%
Adjusted EBITDA 12,188 14,882
Adjusted EBITDA margin 12.4% 17.2%
Profit (loss) 716 4,883
Earnings (loss) per share
Basic $0.02 $0.17
Diluted $0.02 $0.17
Adjusted basic $0.16 $0.26
Dividends declared per share $0.15 $0.15
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(expressed in thousands of dollars, except for per-share amounts)
Three months ended March 31,
2015 2014
Revenues
Gross revenues $ 98,465 $ 86,691
Less disbursements 7,417 8,008
Net revenue 91,048 78,683
Expenses
Employee compensation 64,303 52,318
Occupancy 4,265 3,574
Office and other operating 9,512 7,546
Amortization of intangibles 8,180 3,392
Depreciation of property, plant and equipment 1,508 1,158
Acquisition related expenses (income) - 159
Share of (profit) loss of associates 34 403
Restructuring costs - 22
Operating profit (loss) 3,246 10,111
Finance costs (income), net 2,657 3,761
Profit (loss) before income taxes 589 6,350
Income tax expense (recovery) (127) 1,467
Profit (loss) for the period attributable to
equityholders 716 4,883
Other comprehensive income (loss)
Items that may be reclassified to profit or
(loss) in subsequent periods
Cash flow hedges 92 161
Currency translation differences 16,927 5,543
Share of other comprehensive income
(loss) of associates 342 62
Other comprehensive income (loss), net of tax 17,361 5,766
Total comprehensive income (loss) for the
period, net of tax, attributable
to equityholders $ 18,077 $ 10,649
Earnings (loss) per share attributable to the
equityholders of the company during the period
Basic earnings (loss) per share $0.02 $0.17
Diluted earnings (loss) per share $0.02 $0.17
We seek Safe Harbor.
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