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”.

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 a price equal to 96% 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 .

Altus Group confirms that all dividends paid or deemed to be paid to its common shareholders qualify as ʺeligible dividendsʺ for purposes of subsection 89(14) of the Income Tax Act (Canada) and similar provincial and territorial legislation, unless indicated otherwise.

About Altus Group

Altus Group is a leading provider of asset and fund intelligence for commercial real estate. We deliver intelligence as a service to our global client base through a connected platform of industry-leading technology, advanced analytics, and advisory services. Trusted by the largest CRE leaders, our capabilities help commercial real estate investors, developers, proprietors, lenders, and advisors manage risks and improve performance returns throughout the asset and fund lifecycle. Altus Group is a global company headquartered in Toronto with approximately 2,900 employees across North America, EMEA and Asia Pacific. For more information about Altus (TSX: AIF) please visit

Non-GAAP and Other Measures

Altus Group uses certain non-GAAP financial measures, non-GAAP ratios, total of segments measures, capital management measures, and supplementary and other financial measures as defined in National Instrument 52-112 - Non-GAAP and Other Financial Measures Disclosure (“NI 52-112”). Management believes that these measures may assist investors in assessing an investment in the Company’s shares as they provide additional insight into the Company’s performance. Readers are cautioned that they are not defined performance measures, and do not have any standardized meaning 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. These measures should not be considered in isolation or as a substitute for financial measures prepared in accordance with IFRS.

Adjusted Earnings (Loss): Altus Group uses Adjusted Earnings (Loss) to facilitate the calculation of Adjusted EPS. How it’s calculated: Profit (loss) added or (deducted) by: profit (loss) from discontinued operations, net of tax; occupancy costs calculated on a similar basis prior to the adoption of IFRS 16; depreciation of right‐of‐use assets; amortization of intangibles of acquired businesses; acquisition and related transition costs (income); unrealized foreign exchange losses (gains); (gains) losses on disposal of right‐of‐use assets, property, plant and equipment and intangibles; share of (profit) loss of joint venture; non‐cash share‐based compensation costs; (gains) losses on equity derivatives net of mark‐to‐market adjustments on related RSUs and DSUs; (gains) losses on derivatives; interest accretion on contingent consideration payables; restructuring costs (recovery); impairment charges; (gains) losses on investments; (gains) losses on hedging transactions and interest expense (income) on swaps; other costs or income of a non‐operating and/or non‐recurring nature; finance costs (income), net ‐ leases; and the tax impact of these items.

Constant Currency: Altus Group uses Constant Currency to allow current financial and operational performance to be understood against comparative periods without the impact of fluctuations in foreign currency exchange rates against the Canadian dollar. How it’s calculated: The financial results and non-GAAP and other measures presented at Constant Currency within this document are obtained by translating monthly results denominated in local currency (U.S. dollars, British pound, Euro, Australian dollars, and other foreign currencies) to Canadian dollars at the foreign exchange rates of the comparable month in the previous year.

Adjusted EPS: Altus Group uses Adjusted EPS to assess the performance of the business, on a per share basis, before the effects of the noted items because they affect the comparability of the Company’s financial results and could potentially distort the analysis of trends in business performance. How it’s calculated: Adjusted Earnings (Loss) divided by basic weighted average number of shares, adjusted for the effects of the weighted average number of restricted shares.

Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”): Altus Group uses Adjusted EBITDA to evaluate the performance of the business, as well as when making decisions about the ongoing operations of the business and the Company’s ability to generate cash flows. This measure represents Adjusted EBITDA determined on a consolidated entity-basis as a total of the various segments. All other Adjusted EBITDA references are disclosed in the financial statements and are not considered to be non-GAAP financial measures pursuant to NI 52-112. How it’s calculated: Profit (loss) added or (deducted) by: profit (loss) from discontinued operations, net of tax; occupancy costs calculated on a similar basis prior to the adoption of IFRS 16; depreciation of right‐of‐use assets; depreciation of property, plant and equipment and amortization of intangibles; acquisition and related transition costs (income); unrealized foreign exchange (gains) losses; (gains) losses on disposal of right‐of-use assets, property, plant and equipment and intangibles; share of (profit) loss of joint venture; non‐cash share‐based compensation costs; (gains) losses on equity derivatives net of mark‐to market adjustments on related restricted share units (“RSUs”) and deferred share units (“DSUs”); (gains) losses on derivatives, restructuring costs (recovery); impairment charges; (gains) losses on investments; other costs or income of a non‐operating and/or non‐recurring nature; finance costs (income), net ‐ leases; finance costs (income), net ‐ other; and income tax expense (recovery).

Free Cash Flow: Altus Group uses Free Cash Flow to understand how much of the cash generated from operating activities is available to repay borrowings and to reinvest in the Company. How it’s calculated: Net cash provided by (used in) operating activities deducted by capital expenditures.

Adjusted EBITDA Margin: Altus Group uses Adjusted EBITDA margin to evaluate the performance of the business, as well as when making decisions about the ongoing operations of the business and its ability to generate cash flows. How it’s calculated: Adjusted EBITDA divided by revenue.

New Bookings, Recurring New Bookings and Non-Recurring New Bookings: For its Analytics reportable segment, Altus Group uses New Bookings, Recurring New Bookings and Non-Recurring New Bookings as measures to track the performance and success of sales initiatives, and as an indicator of future revenue growth. How it’s calculated: New Bookings: The total of annual contract values for new sales of the Company’s recurring solutions and services (software subscriptions, Valuation Management Solutions and data subscriptions) plus the total of contract values for one-time engagements (consulting, training, and due diligence). The value of contract renewals is excluded from this metric with the exception of additional capacity or products purchased at the time of renewal. The total annual contract values for VMS are based on an estimated number of assets at the end of the first year of the contract term. New Bookings is inclusive of any new signed contracts as well as any additional solutions and services added by existing customers within the Analytics reportable segment. Recurring New Bookings: The total of annual contract values for new sales of the recurring solutions and services. Non-Recurring New Bookings: The total of contract values for one-time engagements.

Organic Revenue: Altus Group uses Organic Revenue to evaluate and assess revenue trends in the business on a comparable basis versus the prior year, and as an indicator of future revenue growth. How it’s calculated: Revenue deducted by revenues from business acquisitions that are not fully integrated (up to the first anniversary of the acquisition).

Recurring Revenue, Non-Recurring Revenue, Organic Recurring Revenue: For its Analytics reportable segment, Altus Group uses Recurring Revenue and Non-Recurring Revenue, and Organic Recurring Revenue as measures to assess revenue trends in the business, and as indicators of future revenue growth. How it’s calculated: Recurring Revenue: Revenue from software subscriptions recognized on an over time basis in accordance with IFRS 15, software maintenance revenue associated with the Company’s legacy licenses sold on perpetual terms, Valuation Management Solutions, and data subscriptions. Non-Recurring Revenue: Total Revenue deducted by Recurring Revenue. Organic Recurring Revenue: Recurring Revenue deducted by Recurring Revenue from business acquisitions that are not fully integrated (up to the first anniversary of the acquisition).

Cloud Adoption Rate: For its Analytics reportable segment, Altus Group uses the Cloud Adoption Rate as a measure of its progress in transitioning the AE user base to its cloud-based platform, a key component of its overall product strategy. How it’s calculated: Percentage of the total AE user base contracted on the ARGUS Cloud platform.

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. Forward-looking information includes, but is not limited to, statements relating to expected financial and other benefits of acquisitions and the closing of acquisitions (including the expected timing of closing), as well as the discussion of the Company’s business, strategies and leverage (including the commitment to increase borrowing capacity), expectations of future performance, including any guidance on financial expectations, and the Company’s expectations with respect to cash flows and liquidity. Generally, forward-looking information can be identified by use of words such as “may”, “will”, “expect”, “believe”, “anticipate”, “estimate”, “intend”, “plan”, “would”, “could”, “should”, “continue”, “goal”, “objective”, “remain” and other similar terminology.

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 us at the date the forward-looking information is provided, inherently are subject to significant risks, uncertainties, contingencies and other factors that may not be known and 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 the Company identified and applied in drawing conclusions or making forecasts or projections set out in the forward-looking information (including sections entitled “Business Outlook”) include, but are not limited to: engagement and product pipeline opportunities in Analytics will result in associated definitive agreements; successful completion of the transaction to divest the Property Tax business in accordance with the terms thereof, unamended, absence of any material purchase price adjustment for working capital or otherwise; continued adoption of cloud subscriptions by the Company’s customers; retention of material clients and bookings; sustaining the Company’s software and subscription renewals; successful execution of the Company’s business strategies; consistent and stable economic conditions or conditions in the financial markets including stable interest rates and credit availability for CRE; consistent and stable legislation in the various countries in which the Company operates; consistent and stable foreign exchange conditions; no disruptive changes in the technology environment; opportunity to acquire accretive businesses and the absence of negative financial and other impacts resulting from strategic investments or acquisitions on short term results; successful integration of acquired businesses; and continued availability of qualified professionals.

Inherent in the forward-looking information are known and unknown risks, uncertainties and other factors that could cause the Company’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 include, but are not limited to: the commercial real estate market; the general state of the economy; the Company’s financial performance; the Company’s financial targets; the Company’s international operations; acquisitions; business interruption events; third party information and data; cybersecurity; industry competition; professional talent; the Company’s subscription renewals; the Company’s sales pipeline; client concentration and loss of material clients; the Company’s cloud transition; product enhancements and new product introductions; technological strategy; intellectual property; property tax appeals and seasonality; compliance with laws and regulations; privacy and data protection; artificial intelligence; the Company’s use of technology; the Company’s leverage and financial covenants; interest rates; inflation; the Company’s brand and reputation; fixed price and contingency engagements; currency fluctuations; credit; tax matters; health and safety hazards; the Company’s contractual obligations; legal proceedings; regulatory review; the Company’s insurance limits; the Company’s ability to meet the solvency requirements necessary to make dividend payments; the Company’s share price; the Company’s capital investments; the issuance of additional common shares and debt; the Company’s internal and disclosure controls; environmental, social and governance (“ESG”) matters; climate risk; and geopolitical risks, as well as those described in the Company’s annual publicly filed documents, including the Annual Information Form for the year ended December 31, 2023 (which are available on SEDAR+ at ).

Investors should not place undue reliance on forward-looking information as a prediction of actual results. The forward-looking information reflects management’s current expectations and beliefs regarding future events and operating performance and is based on information currently available to management. Although the Company 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, the Company does not undertake to update or revise it to reflect new events or circumstances. Additionally, the Company undertakes no obligation to comment on analyses, expectations or statements made by third parties in respect of Altus Group, the Company’s financial or operating results, or the Company’s securities.

Certain information in this Press Release, including sections entitled “Business Outlook”, may be considered as “financial outlook” within the meaning of applicable securities legislation. The purpose of this financial outlook is to provide readers with disclosure regarding Altus Group’s reasonable expectations as to the anticipated results of its proposed business activities for the periods indicated. Readers are cautioned that the financial outlook may not be appropriate for other purposes.

FOR FURTHER INFORMATION PLEASE CONTACT:

Camilla Bartosiewicz

Chief Communications Officer, Altus Group

(416) 641-9773

Martin Miasko

Investor Relations Director, Altus Group

(416) 204-5136

Interim Condensed Consolidated Statements of Comprehensive Income (Loss)

For the Three and Nine Months Ended September 30, 2024 and 2023

(Unaudited)

(Expressed in Thousands of Canadian Dollars, Except for Per Share Amounts)

⁽¹⁾ Comparative figures have been restated to reflect discontinued operations

Interim Condensed Consolidated Balance Sheets

As at September 30, 2024 and December 31, 2023

(Unaudited)

(Expressed in Thousands of Canadian Dollars)

Interim Condensed Consolidated Statements of Cash Flows

For the Nine Months Ended September 30, 2024 and 2023

(Unaudited)

(Expressed in Thousands of Canadian Dollars)

⁽¹⁾ Included in cash and cash equivalents as at September 30, 2024 is $8,490 related to discontinued operations

Reconciliation of Profit (Loss) to Adjusted EBITDA and Adjusted Earnings (Loss)

The following table provides a reconciliation of Profit (Loss) to Adjusted EBITDA and Adjusted Earnings (Loss):

⁽¹⁾ Comparative figures have been restated to reflect discontinued operations.

⁽²⁾ Management uses the non-GAAP occupancy costs calculated on a similar basis prior to the adoption of IFRS 16 when analyzing financial and operating performance.

⁽³⁾ Included in other operating expenses in the interim condensed consolidated statements of comprehensive income (loss).

⁽⁴⁾ Included in employee compensation expenses in the interim condensed consolidated statements of comprehensive income (loss).

⁽⁵⁾ Gain (loss) on investments relates to changes in the fair value of investments in partnerships.

⁽⁶⁾ Other non-operating and/or non-recurring income (costs) for the three and nine months ended September 30, 2024 relate to legal, advisory, consulting, and other professional fees related to organizational and strategic initiatives. These are included in other operating expenses in the interim condensed consolidated statements of comprehensive income (loss).

⁽⁷⁾ Refer to page 4 of the MD&A for the definition of Adjusted EPS.

⁽⁸⁾ For the purposes of reconciling to Adjusted Earnings (Loss), the amortization of intangibles of acquired businesses is adjusted from Profit (loss) for the period. Per the quantitative reconciliation above, the Company has added back depreciation of property, plant and equipment and amortization of intangibles and then deducted the depreciation of property, plant and equipment and amortization of intangibles of non-acquired businesses to arrive at the amortization of intangibles of acquired businesses.

⁽⁹⁾ For the purposes of reconciling to Adjusted Earnings (Loss), the interest accretion on contingent consideration payables and (gains) losses on hedging transactions and interest expense (income) on swaps is adjusted from Profit (loss) for the period. Per the quantitative reconciliation above, the Company has added back finance costs (income), net – other and then deducted finance costs (income), net – other prior to adjusting for interest accretion on contingent consideration payables and (gains) losses on hedging transactions and interest expense (income) on swaps.

⁽¹⁰⁾ For the purposes of reconciling to Adjusted Earnings (Loss), only the tax impacts for the reconciling items noted in the definition of Adjusted Earnings (Loss) is adjusted from profit (loss) for the period.

Reconciliation of Free Cash Flow

The Company proactively manages and optimizes Free Cash Flow available for reinvestment in the business. Free Cash Flow is reconciled as follows:

Constant Currency

The following tables provide a summarization of the foreign exchange rates used as presented based on the average monthly rates, and the foreign exchange rates used for Constant Currency for currencies in which the Company primarily transacts in: