Altus Group Limited ("Altus Group" or "the Company") (TSX:AIF) today announced
financial and operating results for the third quarter ended September 30, 2013.
Revenues were $80.1 million for the three months ended September 30, 2013, up
4.4% as compared to the same period in 2012. Adjusted EBITDA was $14.6 million
for the quarter, up 6.8% from the same period last year. Excluding the impact of
businesses and offices that were sold or closed, revenues rose 5.2% and Adjusted
EBITDA was up 12%. Third quarter revenue and Adjusted EBITDA growth was driven
by solid performance from ARGUS Software, North America RVA and North America
Property Tax.
Highlights from the quarter:
-- Continued momentum towards the Global Asset and Investment Management
market opportunity:
-- Strong performance from ARGUS Software, as revenues rose 29.1% year
over year to $9.5 million. Adjusted EBITDA rose 295.7% to $2.9
million, as compared to the same period last year;
-- North America RVA performance was healthy, as revenues were $18.2
million, rising 12.1% from the same period in 2012. Adjusted EBITDA
rose 17.6% to $4.9 million, year over year;
-- North America Property Tax benefited from a combination of organic
growth in Ontario and the acquisition of Complex Property Advisors
Corporation ("CPAC"), as revenues were $15.8 million, rising 35.1% year
over year. Adjusted EBITDA rose 47.2% to $4.1 million, as compared to
the same period last year;
-- Adjusted basic earnings per share were $0.30 for the quarter, as
compared to $0.25 in the same period in 2012;
-- Restructuring activity within the global Cost business to improve
performance;
-- Acquisition of CPAC to strengthen and expand our Property Tax business
into the United States; and,
-- Dividends of $0.15 per common share declared.
Subsequent to the quarter, on October 31, 2013, Altus Group completed the
issuance and sale to the public of 3,507,500 common shares at a price of $13.15
per common share for gross proceeds of $46.1 million (the "Offering"), which
included the exercise of an over-allotment option granted to the underwriters.
Substantially all of the net proceeds from the Offering were used for the
repayment of debt and the remaining balance will be used for general corporate
purposes, including the Company's growth strategy.
"Third quarter results demonstrate continued progress with our strategy and
validate the opportunity ahead of us," said Robert Courteau, Chief Executive
Officer, Altus Group. "Strong overall results in each of our businesses
highlight effective execution, and the completion of our $46 million bought deal
strengthens our balance sheet and better positions us to take advantage of
future opportunities."
Revenue growth of 29.1% from ARGUS Software was driven by higher license,
maintenance and consulting revenues. The business unit continues to benefit from
growing momentum around ARGUS Enterprise following the successful launch of AE
9.5, the most powerful version yet of its popular asset management platform.
Consulting revenues increased as a result of completing implementation
milestones on key client contracts.
North America RVA revenue growth was a result of new client acquisitions in the
US appraisal management business. In Canada, revenues increased resulting from
new initiatives including right of way work for national pipeline projects.
The increase in revenues in North America Property Tax was a combination of
organic growth in Ontario and the acquisition of CPAC.
Revenues were lower in North America Cost as a result of the sale of Altus
Capital Planning in 2012. Similarly, Asia Pacific Cost revenues were impacted by
office closures undertaken in 2012 as part of our strategy to transition to a
mix of higher value engagements.
Higher Adjusted EBITDA in Q3 2013, as compared to Q3 2012, was the result of
strong revenue performances by ARGUS Software, North America RVA and North
America Property Tax. Impacts to Adjusted EBITDA include investments in North
America Cost, higher employee costs in Geomatics and the effect of office
closures in Asia Pacific.
Adjusted basic earnings per share for the third quarter of 2013 were $0.30, as
compared to $0.25 in the same period in 2012. Under IFRS accounting, profit
(loss) for the quarter ended September 30, 2013 was $1.6 million or $0.07 per
share, basic and $0.06 per share, diluted, as compared to $2.3 million or $0.10
per share, basic and diluted, in the same quarter in 2012.
On July 1, 2013, Altus Group acquired certain business assets of CPAC and
entered into non-compete agreements with certain key employees. Based in Texas,
CPAC is a leading provider of appraisal and specialized property tax consulting
services to the healthcare and industrial sectors. The acquisition supports
Altus Group's growth strategy into the US, and is expected to be accretive to
Adjusted basic earnings per share within the first twelve months.
During the three months ended September 30, 2013, the contingent consideration
payable of US$13.2 million to the vendors of certain business assets of the PwC
Appraisal Management Practice, acquired on July 30, 2010, was paid through the
issuance of 1,360,625 common shares.
During the third quarter of 2013, Altus Group declared dividends of $0.15 per
common share, which are eligible for the DRIP program.
Analyst Call Details
To discuss these results, Altus Group will hold its Q3 analyst conference call
at 5:30 p.m. (ET) on Wednesday, November 13, 2013. To access the conference
call, please dial one of the following numbers five minutes prior to the
scheduled start time: 416-340-2216 (GTA) or 1-866-226-1792 toll-free. A
recording of this call will be available November 14 - 20, 2013. To access the
recording, please call 905-694-9451 (GTA) or 1-800-408-3053 toll-free (passcode:
9166759). The recording will also be available at www.altusgroup.com.
About Altus Group
Altus Group is a leading provider of independent commercial real estate
consulting and advisory services, software and data solutions. We operate five
interrelated Business Units, bringing together years of experience and a broad
range of expertise into one comprehensive platform: Research, Valuation and
Advisory; ARGUS Software; Property Tax Consulting; Cost Consulting and Project
Management and Geomatics. Our suite of services and software enables clients to
analyze, gain insight and recognize value on their real estate investments.
Altus Group has over 1,800 employees in multiple offices around the world,
including Canada, the United States, the United Kingdom, Australia and Asia
Pacific. Altus Group's clients include financial institutions, private and
public investment funds, insurance companies, accounting firms, public real
estate organizations, real estate investment trusts, healthcare institutions,
industrial companies, foreign and domestic private investors, real estate
developers, governmental institutions and firms in the oil and gas sector.
For more information, please visit www.altusgroup.com.
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. Generally, forward-looking
information can be identified by use of words such as "may", "will", "expect",
"believe", "plan", "would", "could" and other similar terminology. All of the
forward-looking information in this press release is qualified by this
cautionary statement.
Forward-looking information includes, but is not limited to, information that
relates to Altus Group's objectives, strategies and intentions, and future
financial and operating performance and prospects. 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 Altus Group 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 Altus Group identified and
were applied by Altus Group in drawing conclusions or making forecasts or
projections set out in the forward-looking information include, but are not
limited to: the successful execution of its 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; no
disruptive changes in the technology environment; the opportunity to acquire
accretive businesses; the successful integration of businesses; and, the
continued availability of qualified professionals.
Inherent in the forward-looking information are known and unknown risks,
uncertainties and other factors that could cause Altus Group's 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: general state of the economy;
competition in the industry; ability to attract and retain professionals;
integration of acquisitions; dependence on oil and gas sector; dependence on
Canadian multi-residential market; customer concentration; currency risk;
interest rate risk; reliance on larger software transactions with longer and
less predictable sales cycles; success of new product introductions; ability to
respond to technological change and develop products on a timely basis; ability
to maintain profitability and manage growth; revenue and cash flow volatility;
credit risk; protection of intellectual property or defending against claims of
intellectual property rights of others; weather; fixed-price and contingency
engagements; operating risks; performance of obligations/maintenance of client
satisfaction; appraisal mandates; legislative and regulatory changes; risk of
future legal proceedings; insurance limits; income tax matters; ability to meet
solvency requirements to pay dividends; leverage and restrictive covenants;
unpredictability and volatility of common share price; capital investment; and
issuance of additional common shares diluting existing shareholders' interests,
as well as those described in Altus Group's publicly filed documents, including
the Annual Information Form (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 Altus Group's and management's current
expectations and beliefs regarding future events and operating performance and
is based on information currently available to management. Although Altus Group
has 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,
Altus Group does not undertake to update or revise it to reflect new events or
circumstances. Additionally, Altus Group undertakes no obligation to comment on
analyses, expectations or statements made by third parties in respect of Altus
Group, its financial or operating results, or its securities.
Non-IFRS Measures
Altus Group uses certain non-IFRS measures as indicators of financial
performance. Readers are cautioned that they are not defined performance
measures 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 are
useful supplemental measures that may assist investors in assessing an
investment in shares of Altus Group and provide more insight into our
performance.
Adjusted Earnings before Interest, Taxes, Depreciation and Amortization,
("Adjusted EBITDA"), represents operating profit (loss) adjusted for the effect
of amortization of intangibles, depreciation of property, plant and equipment,
acquisition-related expenses (income), restructuring costs, share of profit or
loss of associate, unrealized foreign exchange gains (losses), gains (losses) on
sale of property, plant and equipment, gains (losses) on sale of business
assets, impairment charges, Executive Compensation Plan costs, gains (losses) on
hedging transactions and other expenses or income of a non-operating and/or
non-recurring nature.
Adjusted Basic Earnings (Loss) per Share, ("Adjusted Basic EPS"), represents
basic earnings per share adjusted for the effect of amortization of intangibles
acquired as part of business acquisitions, non-cash finance costs (income)
related to the revaluation of amounts payable to unitholders, distributions
related to amounts payable to unitholders, acquisition-related expenses
(income), restructuring costs, share of profit or loss of associate, unrealized
foreign exchange gains (losses), gains (losses) on sale of property, plant and
equipment, gains (losses) on sale of business assets, interest accretion on
vendor payables, gain (loss) on settlement of US convertible debentures,
impairment charges, Executive Compensation Plan costs, gains (losses) on hedging
transactions and other expenses or income of a non-operating and/or
non-recurring nature. All of the adjustments are made net of tax.
----------------------------------------------------------------------------
For the nine months
For the three months ended
Selected Financial Information ended September 30, September 30,
----------------------------------------------------------------------------
In thousands of Canadian Dollars,
except for per share amounts 2013 2012 2013 2012
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Operations
----------------------------------------------------------------------------
Revenues $ 80,139 $ 76,776 $ 234,865 $ 241,862
Adjusted EBITDA 14,616 13,690 40,697 39,362
Operating profit (loss) 7,689 7,272 27,235 20,989
Profit (loss) 1,600 2,262 11,650 8,808
Earnings (loss) per share:
Basic $ 0.07 $ 0.10 $ 0.51 $ 0.38
Diluted $ 0.06 $ 0.10 $ 0.47 $ 0.12
Adjusted basic $ 0.30 $ 0.25 $ 0.82 $ 0.67
Dividends declared per share $ 0.15 $ 0.15 $ 0.45 $ 0.45
----------------------------------------------------------------------------
----------------------------------------------------------------------------
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Segmented
Information: Three months ended Nine months ended September
Revenues September 30, 30,
----------------------------------------------------------------------------
In thousands of % %
Canadian Dollars 2013 2012 Change 2013 2012 Change
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Property Tax:
North America
Property Tax $ 15,750 $ 11,660 35.1% $ 45,392 $ 39,652 14.5%
UK 5,120 5,134 (0.3%) 16,514 16,333 1.1%
Global Asset and
Investment
Management:
North America RVA 18,241 16,275 12.1% 56,744 50,284 12.8%
ARGUS Software 9,488 7,347 29.1% 27,738 22,240 24.7%
North America
Geomatics 19,246 18,760 2.6% 50,926 53,455 (4.7%)
Cost Consulting
and Project
Management:
North America
Cost 7,327 10,071 (27.2%) 22,549 36,226 (37.8%)
Asia Pacific Cost 5,049 7,700 (34.4%) 15,234 24,583 (38.0%)
Eliminations (82) (171) 52.0% (232) (911) 74.5%
----------------------------------------------------------------------------
Revenues $ 80,139 $ 76,776 4.4% $234,865 $241,862 (2.9%)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
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Segmented
Information: Three months ended Nine months ended September
Adjusted EBITDA September 30, 30,
----------------------------------------------------------------------------
In thousands of % %
Canadian Dollars 2013 2012 Change 2013 2012 Change
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Property Tax:
North America
Property Tax $ 4,103 $ 2,788 47.2% $ 11,294 $ 11,350 (0.5%)
UK 867 1,101 (21.3%) 4,375 4,598 (4.8%)
Global Asset and
Investment
Management:
North America RVA 4,854 4,129 17.6% 15,385 10,805 42.4%
ARGUS Software 2,932 741 295.7% 8,192 2,284 258.7%
North America
Geomatics 5,186 5,836 (11.1%) 11,787 15,371 (23.3%)
Cost Consulting
and Project
Management:
North America
Cost 1,600 1,964 (18.5%) 4,491 6,487 (30.8%)
Asia Pacific Cost 163 1,695 (90.4%) 526 3,521 (85.1%)
Corporate (5,089) (4,487) (13.4%) (15,353) (14,342) (7.0%)
Eliminations - (77) 100.0% - (712) 100.0%
----------------------------------------------------------------------------
Adjusted EBITDA $ 14,616 $ 13,690 6.8% $ 40,697 $ 39,362 3.4%
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Reconciliation of Adjusted Three months ended Nine months ended
EBITDA to Profit (Loss) September 30, September 30,
----------------------------------------------------------------------------
In thousands of Canadian Dollars 2013 2012 2013 2012
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Adjusted EBITDA $ 14,616 $ 13,690 $ 40,697 $ 39,362
Depreciation and amortization (4,564) (5,797) (13,755) (17,336)
Acquisition related (expenses)
income (444) (178) (699) (178)
Share of profit (loss) of
associate (836) (141) (893) (660)
Unrealized foreign exchange gain
(loss) (85) 149 (156) 2,286
Gain (loss) on sale of property,
plant and equipment (52) (22) (244) 1,356
Gain (loss) on hedging
transactions - - - (400)
Gain (loss) on sale of certain
business assets - (99) 5,219 395
Executive Compensation Plan
costs (142) (67) (360) (211)
Restructuring costs (804) (76) (1,954) (3,175)
Other non-operating and/or non-
recurring costs - (187) (620) (450)
----------------------------------------------------------------------------
Operating profit (loss) 7,689 7,272 27,235 20,989
Finance (costs) income, net (5,600) (4,552) (13,090) (8,263)
----------------------------------------------------------------------------
Profit (loss) before income tax 2,089 2,720 14,145 12,726
----------------------------------------------------------------------------
Income tax recovery (expense) (489) (458) (2,495) (3,918)
----------------------------------------------------------------------------
Profit (loss) for the period $ 1,600 $ 2,262 $ 11,650 $ 8,808
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Interim Condensed
Consolidated Statements of Comprehensive Income (Loss)
For the Three and Nine Months Ended September 30, 2013 and 2012
(Unaudited)
(Expressed in Thousands of Canadian Dollars, Except for Shares and Per
Share Amounts)
----------------------------------------------------------------------------
Three months ended Nine months ended
September 30 September 30
----------------------------------------------------------------------------
2013 2012 2013 2012
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Revenues
Revenues $ 80,139 $ 76,776 $ 234,865 $ 241,862
Less: disbursements 6,694 8,819 20,130 29,426
----------------------------------------------------------------------------
Net revenue 73,445 67,957 214,735 212,436
----------------------------------------------------------------------------
Expenses
Employee compensation 46,676 43,556 139,894 137,611
Occupancy 3,338 3,392 10,326 10,054
Office and other operating 9,094 7,446 25,198 22,828
Amortization of intangibles 3,306 4,461 10,201 13,541
Depreciation of property, plant
and equipment 1,258 1,336 3,554 3,795
Acquisition related expenses
(income) 444 178 699 178
Share of (profit) loss of
associate 836 141 893 660
Restructuring costs 804 76 1,954 3,175
(Gain) loss on sale of certain
business assets - 99 (5,219) (395)
----------------------------------------------------------------------------
Operating profit (loss) 7,689 7,272 27,235 20,989
----------------------------------------------------------------------------
Finance costs (income), net 5,600 4,552 13,090 8,263
----------------------------------------------------------------------------
Profit (loss) before income tax 2,089 2,720 14,145 12,726
----------------------------------------------------------------------------
Income tax expense (recovery) 489 458 2,495 3,918
----------------------------------------------------------------------------
Profit (loss) for the period
attributable to equity holders $ 1,600 $ 2,262 $ 11,650 $ 8,808
----------------------------------------------------------------------------
Other comprehensive income
(loss):
Items that may be reclassified
to profit or loss in subsequent
periods:
Cash flow hedges 22 286 604 966
Currency translation
differences (1,146) (4,838) 4,796 (5,556)
----------------------------------------------------------------------------
Other comprehensive income
(loss), net of tax (1,124) (4,552) 5,400 (4,590)
----------------------------------------------------------------------------
Total comprehensive income
(loss) for the period, net of
tax, attributable to equity
holders $ 476 $ (2,290) $ 17,050 $ 4,218
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Earnings (loss) per share
attributable to the equity
holders of the Company during
the period
Basic earnings (loss) per share $ 0.07 $ 0.10 $ 0.51 $ 0.38
Diluted earnings (loss) per
share $ 0.06 $ 0.10 $ 0.47 $ 0.12
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Interim Condensed Consolidated Balance Sheets
As at September 30, 2013 and 2012
(Unaudited)
(Expressed in Thousands of Canadian Dollars)
----------------------------------------------------------------------------
September December 31,
30, 2013 2012
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Assets
Current assets
Cash and cash equivalents $ 2,933 $ 4,703
Trade and other receivables 106,686 105,746
Income taxes recoverable 1,485 637
----------------------------------------------------------------------------
111,104 111,086
----------------------------------------------------------------------------
Non-current assets
Trade and other receivables 281 3,320
Investment in associate 13,687 6,380
Deferred income taxes 12,264 12,429
Property, plant and equipment 18,148 18,663
Intangibles 77,614 80,022
Goodwill 189,624 186,139
----------------------------------------------------------------------------
311,618 306,953
----------------------------------------------------------------------------
Total Assets $ 422,722 $ 418,039
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Liabilities
Current liabilities
Trade and other payables $ 49,951 $ 69,599
Income taxes payable 446 997
Borrowings 247 1,361
Provisions 1,336 2,098
----------------------------------------------------------------------------
51,980 74,055
----------------------------------------------------------------------------
Non-current liabilities
Trade and other payables 9,336 6,120
Borrowings 203,603 205,449
Derivative financial instruments 2,646 3,783
Provisions 228 102
Deferred income taxes 2,235 1,084
Amounts payable to unitholders 4,353 3,052
----------------------------------------------------------------------------
222,401 219,590
----------------------------------------------------------------------------
Total Liabilities 274,381 293,645
----------------------------------------------------------------------------
Shareholders' Equity
Share capital 294,733 279,227
Equity component of convertible debentures 6,352 6,356
Contributed surplus 5,642 3,598
Accumulated other comprehensive income (loss) 4,433 (967)
Deficit (162,819) (163,820)
----------------------------------------------------------------------------
Total Shareholders' Equity 148,341 124,394
----------------------------------------------------------------------------
Total Liabilities and Shareholders' Equity $ 422,722 $ 418,039
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Interim Condensed Consolidated Statements of Cash Flows
For the Nine Months Ended September 30, 2013 and 2012
(Unaudited)
(Expressed in Thousands of Canadian Dollars)
----------------------------------------------------------------------------
Nine months ended September 30
----------------------------------------------------------------------------
2013 2012
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Cash flows from operating activities
Profit (loss) before income tax $ 14,145 $ 12,726
Adjustments for:
Amortization of intangibles 10,201 13,541
Depreciation of property, plant and equipment 3,554 3,795
Amortization of lease inducements 79 79
Tax credits recorded through employee
compensation (655) (172)
Finance costs (income), net 13,090 8,263
Share-based compensation 619 211
Unrealized foreign exchange (gain) loss 156 (2,286)
(Gain) loss on sale of certain business assets (5,278) (395)
(Gain) loss on disposal of property, plant and
equipment 244 (1,356)
Share of (profit) loss of associate 893 660
Net changes in operating working capital (5,239) (16,944)
----------------------------------------------------------------------------
31,809 18,122
Less: interest paid (7,861) (9,348)
Less: income taxes paid (2,159) (523)
Add: income taxes received 191 829
----------------------------------------------------------------------------
Net cash provided by (used in) operating
activities 21,980 9,080
----------------------------------------------------------------------------
Cash flows from financing activities
Proceeds from exercise of options 1,392 26
Redemption of Altus UK LLP Class B and D limited
liability partnership units (170) (78)
Financing fees paid - (2,438)
Proceeds from borrowings - 53,000
Repayment of borrowings (5,354) (57,325)
Dividends paid (9,841) (10,369)
Treasury shares purchased under Restricted Share
Plan (2,277) -
Interest paid to other unitholders (157) (177)
----------------------------------------------------------------------------
Net cash provided by (used in) financing
activities (16,407) (17,361)
----------------------------------------------------------------------------
Cash flows from investing activities
Purchase of intangibles (534) (1,981)
Purchase of property, plant and equipment (2,711) (3,675)
Proceeds from disposal of property, plant and
equipment 97 5,328
Acquisitions (4,416) -
Proceeds on disposal of certain business assets - 6,251
----------------------------------------------------------------------------
Net cash provided by (used in) investing
activities (7,564) 5,923
----------------------------------------------------------------------------
Effect of foreign currency translation 221 183
----------------------------------------------------------------------------
Net increase (decrease) in cash and cash
equivalents (1,770) (2,175)
Cash and cash equivalents
Beginning of period 4,703 6,590
----------------------------------------------------------------------------
End of period $ 2,933 $ 4,415
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----------------------------------------------------------------------------
FOR FURTHER INFORMATION PLEASE CONTACT:
Altus Group Limited
Elif McDonald
VP, Investor Relations and Corporate Communications
(416) 641 - 9804
Investor.relations@altusgroup.com
www.altusgrouplimited.com
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