Altus Group Reports Q3 2024 Financial Results and Quarterly Dividend
TORONTO, Nov. 07, 2024 (GLOBE NEWSWIRE) -- Altus Group Limited ("Altus Group" 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 third quarter ended September 30, 2024, and the approval by its Board of Directors ("Board") of the payment of a cash dividend of $0.15 per common share for the fourth quarter ending December 31, 2024.
In Q3 2024, the results from the Property Tax segment have been classified as Discontinued Operations as a result of the previously announced disposition. Accordingly, all amounts except for Free Cash Flow and net cash related to operating activities represent results from Continuing Operations. Unless otherwise indicated, all amounts are in Canadian dollars and percentages are on an as reported basis in comparison to Q3 2023 (which has been restated to exclude results from Property Tax).
Q3 2024 Financial Highlights
Consolidated revenues were $128.4 million, up 3.2% (1.4% on a Constant Currency* basis).
Profit (loss) from continuing operations was $(2.9) million, compared to $(3.3) million.
Earnings per share ("EPS") from continuing operations were $(0.06) basic and diluted, compared to $(0.07) basic and diluted.
Consolidated Adjusted EBITDA* was $21.6 million, up 27.0% (23.5% on a Constant Currency basis).
Adjusted EPS* was $0.19, compared to $0.14.
Analytics revenues were $101.8 million, up 6.8% (4.7% on a Constant Currency basis).
Analytics Recurring Revenue* was $95.4 million, up 9.1% (7.0% on a Constant Currency basis).
Analytics Adjusted EBITDA was $30.8 million, up 32.1% (28.5% on a Constant Currency basis).
Analytics Adjusted EBITDA margin* improved to 30.3%, up 580 bps (560 bps on a Constant Currency basis).
Analytics Recurring New Bookings* were $18.0 million, up 30.3% (29.3% on a Constant Currency basis).
*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, New Bookings, Recurring New Bookings, Non-Recurring New Bookings, Organic Revenue, Recurring Revenue, Non-Recurring Revenue, Organic Recurring Revenue, 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.
"Analytics' third quarter results tracked our expectations, delivering high-single digit recurring revenue growth and progressive margin expansion," said Jim Hannon, Chief Executive Officer. "I'm incredibly proud of the resilience and innovation our team has shown this year. They have successfully navigated challenging macroeconomic conditions, delivering consistent recurring revenue growth, operational improvements, and new product innovations that will continue to drive value for our clients. The solid execution of our strategy leaves us strongly positioned to capitalize on market improvements and evolving client needs."
Summary of Operating and Financial Performance by Reportable Segment:
"CC" in the tables indicates "Constant Currency".
Consolidated
Three months ended September 30,
Nine months ended September 30,
In thousands of dollars
2024
2023
%Change
CC %Change
2024
2023
%Change
CC %Change
Revenues
$
128,419
$
124,450
3.2%
1.4%
$
384,226
$
378,682
1.5%
0.5%
Profit (loss) from continuing operations
$
(2,877)
$
(3,271)
12.0%
$
(23,665)
$
(25,174)
6.0%
Adjusted EBITDA*
$
21,568
$
16,981
27.0%
23.5%
$
50,475
$
44,906
12.4%
10.7%
Adjusted EBITDA margin*
16.8%
13.6%
320 bps
300 bps
13.1%
11.9%
120 bps
120 bps
Free Cash Flow*
$
16,013
$
34,101
(53.0%)
$
47,866
$
18,797
154.6%
Analytics
Three months ended September 30,
Nine months ended September 30,
In thousands of dollars
2024
2023
% Change
Constant Currency% Change
2024
2023
% Change
Constant Currency% Change
Revenues
$
101,811
$
95,338
6.8%
4.7%
$
303,561
$
289,723
4.8%
3.5%
Adjusted EBITDA
$
30,825
$
23,340
32.1%
28.5%
$
80,753
$
67,325
19.9%
17.9%
Adjusted EBITDA margin*
30.3%
24.5%
580 bps
560 bps
26.6%
23.2%
340 bps
320 bps
Other Measures
Recurring Revenue*
$
95,404
$
87,444
9.1%
7.0%
$
282,306
$
261,553
7.9%
6.7%
New Bookings*
$
21,253
$
22,221
(4.4%)
(5.2%)
$
60,461
$
68,239
(11.4%)
(12.1%)
Recurring New Bookings*
$
18,049
$
13,850
30.3%
29.3%
$
46,706
$
46,270
0.9%
0.3%
Non-Recurring New Bookings*
$
3,204
$
8,371
(61.7%)
(62.3%)
$
13,755
$
21,969
(37.4%)
(38.1%)
Geographical revenue split
North America
76%
77%
76%
77%
International
24%
23%
24%
23%
Cloud Adoption Rate* (as at end of period)
-
-
79%
72%
Appraisals and Development Advisory
Three months ended September 30,
Nine months ended September 30,
In thousands of dollars
2024
2023
% Change
Constant Currency% Change
2024
2023
% Change
Constant Currency% Change
Revenues
$
26,796
$
29,287
(8.5%)
(9.3%)
$
81,244
$
89,531
(9.3%)
(9.3%)
Adjusted EBITDA
$
3,191
$
2,969
7.5%
4.7%
$
5,508
$
9,286
(40.7%)
(41.3%)
Adjusted EBITDA margin
11.9%
10.1%
180 bps
160 bps
6.8%
10.4%
(360 bps)
(370 bps)
Q3 2024 Financial Review
On a consolidated basis, revenues were $128.4 million, up 3.2% (1.4% on a Constant Currency basis) and Adjusted EBITDA was $21.6 million, up 27.0% (23.5% on a Constant Currency basis). Adjusted EPS was $0.19, compared to $0.14 in the third quarter of 2023.
Profit (loss) from continuing operations was $(2.9) million and $(0.06) per share, basic and diluted, compared to $(3.3) million and $(0.07) per share basic and diluted, in the same period in 2023. Profit (loss) from continuing operations benefitted from higher revenues, offset by higher employee compensation costs, acquisition and related costs and the restructuring program.
Analytics revenues increased to $101.8 million, up 6.8% (4.7% on a Constant Currency basis). Organic Revenue* growth was 5.1% (3.1% on a Constant Currency basis). Adjusted EBITDA was $30.8 million, up 32.1% (28.5% on a Constant Currency basis), driving an Adjusted EBITDA margin of 30.3%, up 580 basis points (560 basis points on a Constant Currency basis).
Revenue growth was driven by Recurring Revenue performance benefitting from new sales, a higher number of assets on the Valuation Management Solutions ("VMS") platform, and contribution from Forbury (acquired in December 2023), offset by lower Non-Recurring Revenue* in the quarter compared to the prior year.
Recurring Revenue was $95.4 million, up 9.1% (7.0% on a Constant Currency basis). Organic Recurring Revenue* was $93.8 million, up 7.3% (5.3% on a Constant Currency Basis) from $87.4 million in the same period in 2023.\
New Bookings totalled $21.3 million, down 4.4% (5.2% on a Constant Currency basis). Recurring New Bookings were $18.0 million, up 30.3% (29.3% on a Constant Currency basis), and Non-Recurring New Bookings were $3.2 million, down 61.7% (62.3% on a Constant Currency basis).
Adjusted EBITDA growth and margin expansion benefitted from higher revenues, operating efficiencies, ongoing cost optimization efforts, and foreign exchange fluctuations.
Appraisals and Development Advisory revenues were $26.8 million, down 8.5% (9.3% on a Constant Currency basis) and Adjusted EBITDA was $3.2 million, up 7.5% (4.7% on a Constant Currency basis). Adjusted EBITDA increased primarily from cost optimization efforts. The revenue 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. The improvement in Adjusted EBITDA reflects ongoing cost optimization efforts.
Corporate Costs were $12.5 million, compared to $9.3 million in the same period in 2023. The increase in corporate costs primarily reflects certain one-time expenditures related to strategic corporate initiatives.
In early 2024, the Company initiated a global restructuring program as part of an ongoing effort to optimize its operating model. Restructuring costs were $2.0 million in the third quarter, totalling $9.1 million year to date. The restructuring costs primarily related to employee severance impacting both the Analytics and Appraisals and Development Advisory business segments, as well as corporate functions.
Q3 2024 Capital Allocation & Financing Summary
Cash generation (which reflects both continuing and discontinued operations) was down on a tough compare. Free Cash Flow was $16.0 million, and Net cash related to operating activities was $18.4 million, down 53.0% and 49.0%, respectively. On a year-over-year view, the third quarter of 2023 benefitted from a catch up on billings related to the implementation of a new enterprise resource planning ("ERP") system. Year-to-date, Free Cash Flow was up 154.6% and Net cash related to operating activities was up 106.5%.
As at September 30, 2024, bank debt was $306.1 million and cash and cash equivalents were $39.6 million, representing a Funded debt to EBITDA ratio as defined in the Company's credit facility agreement of 2.07 times, well below the Company's 4.5x maximum capacity limit under its credit facilities. At quarter end, the Company had approximately $283.5 million of total liquidity as measured by the sum of cash and cash equivalents and bank credit facilities available.
During the quarter, the Company re-purchased 203,400 common shares for cancellation under its normal course issuer bid at a cost of approximately $11.0 million.
In addition to its previously disclosed Property Tax divestiture transaction during the quarter, Altus Group continued to simplify its portfolio, including entering into a definitive agreement to sell certain non-core Finance Active assets for total cash consideration of approximately $12.1 million.
Q4 2024 Dividend
Altus Group's Board approved the payment of a cash dividend of $0.15 per common share for the fourth quarter ending December 31, 2024, with payment to be made on January 15, 2025 to common shareholders of record as at December 31, 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 ...
