07:47:12 EDT Thu 28 Mar 2024
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or Name
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Altus Group Ltd
Symbol AIF
Shares Issued 38,610,012
Close 2017-08-02 C$ 26.36
Market Cap C$ 1,017,759,916
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Altus Group earns $105.49-million in Q2

2017-08-02 16:17 ET - News Release

Mr. Robert Courteau reports

ALTUS GROUP REPORTS SECOND QUARTER 2017 FINANCIAL RESULTS

Altus Group Ltd. has released its financial and operating results for the second quarter ended June 30, 2017.

Second quarter 2017 summary:

  • Consolidated revenues increased 17.1 per cent to $128.8-million.
  • Consolidated adjusted EBITDA (operating profit (loss) adjusted for the effects of amortization of intangibles, depreciation of property, plant and equipment, acquisition-related expenses (income), restructuring costs, share of profit (loss) of associates, unrealized foreign exchange gains (losses), gains (losses) on disposal of property, plant and equipment, gains (losses) on investment in associates, impairment charges, non-cash executive compensation plan costs, gains (losses) on hedging transactions, gains (losses) on equity derivatives, net of mark-to-market adjustments on related restricted share units (RSUs) and deferred share units (DSUs) being hedged, and other costs or income of a non-operating and/or non-recurring nature) increased 36.5 per cent to $25.0-million.
  • Altus analytics revenues increased 30.6 per cent to $47.4-million, and adjusted EBITDA increased 68.1 per cent to $16.4-million.
  • Commercial real estate (CRE) consulting revenues increased 8.6 per cent to $69.8-million, and adjusted EBITDA increased 7.0 per cent to $18.4-million.
  • Geomatics revenues increased 22.8 per cent to $11.8-million, and adjusted EBITDA increased to $700,000 from a loss last year.
  • Consolidated profit, in accordance with international financial reporting standards, was up significantly to $105.5-million, benefiting from the accounting gain on the partial deemed disposition of Altus Group's investment in Real Matters Inc. and remeasurement of the company's retained interest of 12.0 per cent after Real Matters completed its initial public offering.
  • Adjusted earnings per share increased 46.4 per cent to 41 cents.

"We are pleased with our double-digit growth in both revenues and earnings," said Robert Courteau, chief executive officer at Altus Group. "All of our businesses posted solid year-over-year growth, with outstanding performance at Altus analytics driven by a record sales quarter for Argus enterprise licences. We recently surpassed the 3,000-client milestone for Argus enterprise, solidifying our software as the standard for global commercial real estate valuation and portfolio management."

Summary of operating and financial performance (percentages are in comparison with the second quarter of 2016)

On a consolidated basis, second quarter revenues grew 17.1 per cent year over year to $128.8-million while adjusted EBITDA increased by 36.5 per cent to $25.0-million. Exchange rate movements against the Canadian dollar, namely the U.S. and United Kingdom currencies, impacted consolidated revenues by 0.9 per cent and adjusted EBITDA by 2.4 per cent. Acquisitions contributed 1.9 per cent to revenue growth and 4.3 per cent to adjusted EBITDA.

Consolidated profit, in accordance with IFRS, was $105.5-million or $2.77 per share, basic, and $2.73 per share, diluted, compared with $12.7-million and 34 cents per share, basic and diluted, during the same period in 2016. In addition to the adjusted EBITDA growth, the primary reason for the increase was the recording of an accounting gain of $115.7-million on the partial deemed disposition of the company's investment in Real Matters and remeasurement of the company's retained interest of 12.0 per cent.

Adjusted earnings per share were 41 cents in the second quarter, up 46.4 per cent compared with 28 cents in the second quarter of 2016.

Altus analytics had a record software licence sales quarter, delivering 30.6-per-cent revenue growth to $47.4-million. Recurring revenues grew by 11.0 per cent to $30.7-million, driven by an increase in subscriptions and steady growth in appraisal management and software maintenance. Non-recurring revenues grew by 93.8 per cent to $16.7-million, driven by record Argus enterprise (AE) licence sales. Licence sales benefited from customers adding more licences and additional functionality, new client additions, and client conversions (from legacy DCF product to AE) prior to DCF end of support on maintenance, which took place at the end of the quarter. Within non-recurring revenues, the company also experienced a significant increase in due diligence assignments. Adjusted EBITDA increased by 68.1 per cent to $16.4-million as a result of the revenue growth, partly offset by higher expenses due to increased investments for software product development activities. Changes in the exchange rates against the Canadian dollar impacted revenues by 2.5 per cent and adjusted EBITDA by 4.5 per cent.

CRE consulting revenues increased by 8.6 per cent to $69.8-million, and adjusted EBITDA increased by 7.0 per cent to $18.4-million. Property tax revenues were up by 9.6 per cent to $44.1-million, and adjusted EBITDA grew by 13.4 per cent to $15.7-million. The growth at property tax was driven by healthy performance in North America, specifically benefiting from strength in the Vancouver market in Canada and from a strong settlement cycle in Texas, U.S. Valuation and cost advisory revenues increased by 6.8 per cent to $25.7-million while adjusted EBITDA declined by 19.8 per cent to $2.7-million. Changes in exchange rates had no significant impact, as the benefit from U.S.-dollar gains offset losses from the British pound.

Geomatics's performance continued to be impacted by continuing market challenges in the oil and gas sector, although increased activity levels, combined with the cost-cutting initiatives undertaken in 2016, yielded improved performance. Revenues improved by 22.8 per cent to $11.8-million, and adjusted EBITDA improved by 169.3 per cent to $700,000, resulting in healthier adjusted EBITDA margins of 6.2 per cent.

Corporate costs were $10.6-million, compared with $7.7-million in the same period in 2016. The increase in corporate costs is mainly a result of investments being made in people and systems to modernize corporate functions, as well as an increase in variable compensation.

During the quarter, the company recorded a total of $3.6-million in restructuring costs, primarily related to employee severance, in connection to the companywide restructuring activities undertaken in the first and second quarters to further optimize operations. This restructuring program was completed during the second quarter.

At the end of the second 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 $140.0-million, representing a financed debt to EBITDA leverage ratio of 1.67 times, compared with 1.53 times as at Dec. 31, 2016. Also, the company's cash and cash equivalents stood at $45.6-million at the end of the second quarter.

Second quarter 2017 results conference call and webcast:

Date:  Aug. 2, 2017

Time:  5 p.m. ET

Webcast:  Altus Group (under the investor relations tab)

Live call:  1-866-223-7781 (toll-free) or 416-340-2216 (Toronto area)

Replay:  a replay of the call available by the webcast the Altus Group website

About Altus Group Ltd.

Altus Group is a leading provider of independent advisory services, software and data solutions to the global commercial real estate industry. Its businesses, Altus analytics and Altus expert services, reflect decades of experience, a range of expertise and technology-enabled capabilities. Its solutions empower clients to analyze, gain insight and recognize value on their real estate investments. Headquartered in Canada, it has approximately 2,300 employees around the world, with operations in North America, Europe and Asia Pacific.

                  INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)  
                     (expressed in thousands of dollars, except for per-share amounts)   

                                                                      Three months ended          Six months ended
                                                                            June 30                   June 30
                                                                       2017         2016         2017         2016

Revenues                                                           $128,815     $109,970     $238,022     $216,658
                                                                  ---------    ---------    ---------    ---------
Expenses
Employee compensation                                                77,621       67,869      148,983      138,782
Occupancy                                                             5,051        4,944       10,068       10,160
Office and other operating                                           23,186       20,704       44,105       40,961
Amortization of intangibles                                           7,171        6,585       13,765       13,730
Depreciation of property, plant and equipment                         1,725        1,735        3,309        3,502
Acquisition-related expenses (income)                                   574         (395)         868         (234)
Share of (profit) loss of associates                                  1,288          174        2,420        1,286
Restructuring costs                                                   3,563        1,371        4,558        3,081
(Gain) loss on investment in associates                            (115,671)      (9,935)    (115,179)      (9,935)
                                                                  ---------    ---------    ---------    ---------
Operating profit (loss)                                             124,307       16,918      125,125       15,325
                                                                  ---------    ---------    ---------    ---------
Finance costs (income), net                                             650        1,205        1,898        2,930
                                                                  ---------    ---------    ---------    ---------
Profit (loss) before income taxes                                   123,657       15,713      123,227       12,395
                                                                  ---------    ---------    ---------    ---------
Income tax expense (recovery)                                        18,160        3,054       17,237        1,948
                                                                  ---------    ---------    ---------    ---------
Profit (loss) for the period attributable to equity holders         105,497       12,659      105,990       10,447
                                                                  ---------    ---------    ---------    ---------
Other comprehensive income (loss)
Items that may be reclassified to profit or (loss) in
subsequent periods
Currency translation differences                                     (4,757)      (2,142)      (6,467)     (17,832)
Share of other comprehensive income (loss) of associates                 37         (339)         (46)      (1,048)
Change in fair value of available-for-sale investments              (21,272)           -      (21,272)           -
                                                                  ---------    ---------    ---------    ---------
Other comprehensive income (loss), net of tax                       (25,992)      (2,481)     (27,785)     (18,880)
                                                                  ---------    ---------    ---------    ---------
Total comprehensive income (loss) for the period, net of tax,
attributable to equity holders                                       79,505       10,178       78,205       (8,433)
                                                                  ---------    ---------    ---------    ---------
Earnings (loss) per share attributable to
the equity holders of the company during the period
Basic earnings (loss) per share                                        2.77         0.34         2.81         0.28
Diluted earnings (loss) per share                                      2.73         0.34         2.78         0.28
                                                                  ---------    ---------    ---------    ---------

We seek Safe Harbor.

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