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Altus Group Ltd
Symbol AIF
Shares Issued 46,088,721
Close 2024-05-02 C$ 50.77
Market Cap C$ 2,339,924,365
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Altus Group loses $153,000 in Q1 2024

2024-05-02 16:41 ET - News Release

Mr. Jim Hannon reports

ALTUS GROUP REPORTS Q1 2024 FINANCIAL RESULTS AND QUARTERLY DIVIDEND

Altus Group Ltd. has released its financial and operating results for the first quarter ended March 31, 2024, and its board of directors has approved the payment of a cash dividend of 15 cents per common share for the second quarter ending June 30, 2024.

Unless otherwise indicated, all amounts are in Canadian dollars and percentages are on an as reported basis in comparison with Q1 2023.

Q1 2024 summary:

  • Consolidated revenues were $199.5-million, up 4.6 per cent (4.3 per cent on a constant currency basis).
  • Profit (loss) was $(200,000), compared with $(2.4-million).
  • Earnings per share (EPS) were (zero cents) basic and diluted, compared with (five cents) basic and diluted.
  • Consolidated adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $29.8-million, up 12.2 per cent (12.9 per cent on a constant currency basis).
  • Adjusted EPS was 33 cents, compared with 33 cents.
  • Analytics revenues were $99-million, up 4.6 per cent (4.5 per cent on a constant currency basis), of which recurring revenue was $91.7-million, up 7.5 per cent (7.5 per cent on a constant currency basis), and adjusted EBITDA was $23.1-million, up 14.2 per cent (14.6 per cent on a constant currency basis), driving a 23.3-per-cent Adjusted EBITDA margin.
  • Analytics new bookings totalled $19.7-million, down 8.2 per cent (7.8 per cent on a constant currency basis), of which recurring new bookings were $16-million, up 13.7 per cent (14.2 per cent on a constant currency basis). At the end of Q1 2024, 75 per cent of the company's total Argus Enterprise (AE) user base had been contracted on Argus Cloud (cloud adoption rate).
  • Property tax revenues were $74.1-million, up 11.2 per cent (10.2 per cent on a constant currency basis), and adjusted EBITDA was $18.8-million, up 24.9 per cent (24.9 per cent on a constant currency basis), driving a 25.4-per-cent adjusted EBITDA margin.
  • Appraisals and development advisory revenues were $26.6-million, down 10.4 per cent (9.6 per cent on a constant currency basis), and adjusted EBITDA was $(100,000), down 104 per cent (103.2 per cent on a constant currency basis).
  • Net cash related to operating activities was $(3-million), up 90.4 per cent, and free cash flow was $(5.7-million), up 83.5 per cent.
  • As at March 31, 2024, financed debt to EBITDA ratio as defined in the company's credit facility agreement was 2.15 times, and net debt to adjusted EBITDA leverage ratio was 2.06 times.

"Altus Group had a solid start to the year," said Jim Hannon, chief executive officer. "In Q1, our teams executed ahead of our management expectations on both revenue and adjusted EBTIDA. With market conditions showing signs of stability, we remain well positioned for sustained revenue growth and margin expansion throughout the year. Our full-year 2024 business outlook is unchanged."

Q1 2024 review

On a consolidated basis, revenues were $199.5-million, up 4.6 per cent (4.3 per cent on a constant currency basis), and adjusted EBITDA was $29.8-million, up 12.2 per cent (12.9 per cent on a constant currency basis). Adjusted EPS was 33 cents, compared with 33 cents in the first quarter of 2023.

Profit (loss) was $(200,000) and (zero cents) per share, basic and diluted, compared with $(2.4-million) and (five cents) per share basic and diluted, in the same period in 2023. Profit (loss) benefited from higher revenues and lower operating expenditures, offset by higher employee compensation costs, costs relating to the 2024 global restructuring program, and additional acquisition and related costs.

Analytics revenues increased to $99-million, up 4.6 per cent (4.5 per cent on a constant currency basis). Organic revenue growth was 3.6 per cent (3.6 per cent on a constant currency basis). Adjusted EBITDA was $23.1-million, up 14.2 per cent (14.6 per cent on a constant currency basis), driving an adjusted EBITDA margin of 23.3 per cent, up 190 basis points (210 basis points on a constant currency basis).

  • Revenue growth was driven by robust recurring revenue performance benefiting from the continuing transition to cloud subscriptions, new sales, a higher number of assets on the valuation management solutions (VMS) platform, and contribution from Forbury (acquired in December, 2023).
  • Recurring revenue was $91.7-million, up 7.5 per cent (7.5 per cent on a constant currency basis). Organic recurring revenue was $90.8-million, up 6.5 per cent (6.4 per cent on a constant currency basis) from $85.3-million in the same period in 2023. Sequentially, recurring revenue decreased by 1.4 per cent from $93-million in the fourth quarter of 2023, driven primarily by seasonality in sales and at VMS. Non-recurring revenue was lower in the quarter compared with the prior year.
  • New bookings totalled $19.7-million, down 8.2 per cent (7.8 per cent on a constant currency basis). Recurring new bookings were $16-million, up 13.7 per cent (14.2 per cent on a constant currency basis), and non-recurring new bookings were $3.7-million, down 50 per cent (50 per cent on a constant currency basis).
  • Adjusted EBITDA growth and margin expansion benefited from higher revenues, operating efficiencies, continuing cost optimization efforts and foreign exchange fluctuations.

Property tax revenues were $74.1-million, up 11.2 per cent (10.2 per cent on a constant currency basis), and adjusted EBITDA was $18.8-million, up 24.9 per cent (24.9 per cent on a constant currency basis), driving an adjusted EBITDA margin of 25.4 per cent, up 280 basis points (300 basis points on a constant currency basis). The growth was driven by a strong start to the year in the United States, offset by a decline in Canada and the United Kingdom. In the U.S. certain appeals were settled earlier than anticipated. In Canada, the comparative performance is largely a factor of cycle timelines in Western Canada and the impact of the continuing Ontario cycle extension. In the U.K. it is largely a factor of timing settlements as the backlog of opportunities remains robust.

Appraisals and development advisory revenues were $26.6-million, down 10.4 per cent (9.6 per cent on a constant currency basis), and adjusted EBITDA was $(100,000), down 104 per cent (103.2 per cent on a constant currency basis). Adjusted EBITDA declined primarily from reduction in revenues. The performance reflects muted market activity in the current economic environment as the business segment has some exposure to reduced transaction volumes and higher interest rates, resulting in fewer appraisals and new project starts.

Corporate costs were $12-million, compared with $11.7-million in the same period in 2023. Corporate costs remained relatively consistent, with higher costs from annual merit and benefits costs increases.

During the first quarter, the company initiated a global restructuring program as part of its continuing efforts to optimize its operating model. Restructuring costs were $5.4-million, primarily relating to employee severance costs impacting the analytics business segment and corporate functions.

Free cash flow was $(5.7-million), and net cash related to operating activities was $(3-million), both were up 83.5 per cent and 90.4 per cent, respectively. Free cash flow in the quarter reflected the impact of the company's annual bonus payouts and increased working capital balances that are typical with the seasonality of the first quarter. On a year-over-year view, the first quarter in the prior year was impacted by the anticipated delayed billings from the enterprise resource planning system implementation. However, free cash flow in the first quarter of 2024 was higher than the first quarter of 2022 ($(9.7-million)) which represents a better comparative period and reflects the company's continued focus on cash generation.

As at March 31, 2024, bank debt was $328.6-million and cash and cash equivalents were $44.3-million (representing a financed debt to EBITDA ratio as defined in the company's credit facility agreement of 2.15 times, or a net debt to adjusted EBITDA leverage ratio of 2.06 times).

Q2 2024 dividend

Altus Group's board approved the payment of a cash dividend of 15 cents per common share for the second quarter ending June 30, 2024, with payment to be made on July 15, 2024, to common shareholders of record as at June 30, 2024.

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 per cent 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 eligible dividends for purposes of Subsection 89(14) of the Income Tax Act (Canada) and similar provincial and territorial legislation, unless indicated otherwise.

About Altus Group Ltd.

Altus Group is a leading provider of asset and fund intelligence for commercial real estate. It delivers intelligence as a service to its global client base through a connected platform of industry-leading technology, advanced analytics and advisory services. Trusted by the largest CRE leaders, its capabilities help commercial real estate investors, developers, proprietors, lenders and advisers manage risks and improve performance returns throughout the asset and fund life cycle. Altus Group is a global company headquartered in Toronto with approximately 3,000 employees across North America, EMEA (Europe, Middle East, Africa) and Asia Pacific.

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