Lumine Group Inc. Announces Results for the Three Months Ended March 31, 2023


TORONTO, May 15, 2023 (GLOBE NEWSWIRE) -- Lumine Group Inc. (“Lumine Group” or “the Company”) (TSXV:LMN) announces financial results for the three months ended March 31, 2023. All amounts referred to in this press release are in US dollars unless otherwise stated.

The following press release should be read in conjunction with the Company’s unaudited condensed consolidated interim financial statements for the three months ended March 31, 2023, management’s discussion and analysis (“MD&A”) for the three months ended March 31, 2023, the audited consolidated financial statements of Lumine Group (Holdings) Inc. (“Lumine Holdings”) for the year ended December 31, 2022, and the Company’s MD&A for the year ended December 31, 2022, all of which can be found on SEDAR at www.sedar.com. Additional information about Lumine Group is also available on SEDAR and on Lumine Group’s website www.luminegroup.com.

Q1 2023 Headlines:

  • Revenue grew 59% to $95.4 million compared to $60.2 million in the same quarter prior year (including 1% organic growth after adjusting for foreign exchange impacts).
  • In February 2023, Lumine Group completed its previously announced acquisition of WideOrbit Inc. (“WideOrbit”), and public listing of its subordinate voting shares on the TSX Venture Exchange. In relation to the acquisition and listing, Lumine Group issued 63,582,712 preferred securities and 10,204,294 special securities.
  • An expense of $654.6 million was incurred in the quarter related to the increase in fair value of the redeemable preferred and special securities, of which, $646.5 million is non-cash related. Fair value of the preferred and special securities is primarily dependent on the price movement of the Company’s subordinate voting shares.
  • The Company generated a net loss of $651.6 million during the quarter, from net income of $7.9 million in the same quarter prior year. The net loss is primarily related to the redeemable preferred and special securities expense.
  • Acquisitions were completed in Q1 2023 for aggregate consideration of $544.3 million (which includes acquired cash). This includes deferred payments associated with these acquisitions with an estimated value of $17.8 million.
  • Cash flows from operations (“CFO”) increased $10.2 million to $15.0 million compared to $4.8 million in Q1 2022, representing an increase of 211%.
  • Free cash flow available to shareholders (“FCFA2S”) increased $7.7 million to $11.7 million compared to $4.0 million in Q1 2022, representing an increase of 193%.

Total revenue for the quarter ended March 31, 2023 was $95.4 million, an increase of 59%, or $35.2 million, compared to $60.2 million for the comparable period in 2022. The increase is primarily attributable to growth from acquisitions. The Company experienced organic growth of -3% for the three months ended March 31, 2023, or +1% after adjusting for foreign exchange impacts. Organic growth is not a standardized financial measure and might not be comparable to measures disclosed by other issuers.

Net loss for the quarter ended March 31, 2023 was $651.6 million compared to net income of $7.9 million for the same period in 2022. The decrease is primarily attributable to a $654.6 million expense booked in Q1 2023 related to fair value adjustments and dividends on the redeemable preferred and special securities issued in the quarter in relation to the acquisition of WideOrbit and public listing of Lumine Group.

For the quarter ended March 31, 2023, CFO increased $10.2 million to $15.0 million compared to $4.8 million for the same period in 2022 representing an increase of 211%. The primary reason for the increase is that CFO includes the impact of changes in non-cash operating assets and liabilities exclusive of effects of business combinations or, changes in non-cash operating working capital (“NCOWC”) which improved during the three months ended March 31, 2023 compared to the same period prior year.

For the quarter ended March 31, 2023, FCFA2S increased $7.7 million, or 193%, to $11.7 million compared to $4.0 million for the same period in 2022. The increase is primarily a result of higher CFO during the period.

Non-IFRS Measures

Free cash flow available to shareholders ‘‘FCFA2S’’ refers to net cash flows from operating activities less interest paid on lease obligations, interest paid on bank debt, transaction costs on bank debt, repayments of lease obligations, dividends paid to redeemable preferred and special securities holders, and property and equipment purchased, and includes interest and dividends received. The Company believes that FCFA2S is useful supplemental information as it provides an indication of the uncommitted cash flow that is available to shareholders if Lumine Group do not make any acquisitions, or investments, and do not repay any debts. While the Company could use the FCFA2S to pay dividends or repurchase shares, the Company’s objective is to invest all of its FCFA2S in acquisitions which meet the Company’s hurdle rate.

FCFA2S is not a recognized measure under IFRS and may not be comparable to similar financial measures disclosed by other issuers. Accordingly, readers are cautioned that FCFA2S should not be construed as an alternative to net cash flows from operating activities.

The following table reconciles FCFA2S to net cash flows from operating activities:

 Three months ended March 31,
 2023 2022 
Net cash flows from operating activities:15.0 4.8 
Adjusted for:  
Interest paid on lease obligations(0.1)(0.0)
Interest paid on other facilities(0.3)- 
Credit facility transaction costs(1.8)- 
Payment of lease obligations(0.8)(0.7)
Property and equipment purchased(0.2)(0.1)
Free cash flow available to shareholders11.7 4.0 


Forward Looking Statements

Certain statements herein may be “forward looking” statements that involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of Lumine Group or the industry to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Forward looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not such results will be achieved. A number of factors could cause actual results to vary significantly from the results discussed in the forward looking statements. These forward looking statements reflect current assumptions and expectations regarding future events and operating performance and are made as of the date hereof and Lumine Group assumes no obligation, except as required by law, to update any forward looking statements to reflect new events or circumstances.

About Lumine Group Inc.

Lumine Group acquires, strengthens, and grows, vertical market software businesses in the communications and media industry. Learn more at www.luminegroup.com.

For further information:

David Nyland
Chief Executive Officer
Lumine Group
david.nyland@luminegroup.com

Lumine Group Inc.
Condensed Consolidated Interim Statements of Financial Position

(In thousands of USD. Due to rounding, numbers presented may not foot.)

Unaudited

 March 31, 2023 December 31, 2022 
  Adjusted
 
Assets  
   
Current assets:  
Cash$149,481 $67,085 
Accounts receivable 102,186  64,014 
Unbilled revenue 34,988  9,982 
Inventories 533  60 
Other assets 32,625  22,944 
  319,813  164,085 
   
Non-current assets:  
Property and equipment 5,314  3,138 
Right of use assets 15,157  5,349 
Deferred income taxes 2,516  2,931 
Other assets 16,141  8,492 
Intangible assets and goodwill 809,213  212,619 
  848,341  232,529 
   
Total assets$1,168,154 $396,614 
   
Liabilities and Equity  
   
Current liabilities:  
Accounts payable and accrued liabilities$81,237 $63,158 
Due to related parties, net 8,768  35,466 
Current portion of bank debt 650  975 
Deferred revenue 94,277  61,768 
Provisions -  22 
Acquisition holdback payables 5,168  3,496 
Lease obligations 5,869  2,069 
Income taxes payable 14,391  15,047 
Preferred and Special Securities 2,257,682  - 
  2,468,042  182,001 
   
Non-current liabilities:  
Deferred income taxes 158,807  32,687 
Bank debt 191,488  18,138 
Lease obligations 10,695  4,719 
Other liabilities 13,604  5,289 
  374,594  60,833 
   
Total liabilities 2,842,636  242,834 
   
Equity:  
Capital stock -  - 
Net parent investment -  - 
Contributed surplus (1,015,661) 162,692 
Accumulated other comprehensive income (loss) (8,323) (8,912)
Retained earnings (deficit) (650,498) - 
  (1,674,482) 153,780 
   
   
Total liabilities and equity$1,168,154 $396,614 


Lumine Group Inc.
Condensed Consolidated Interim Statements of Income (Loss)
(In thousands of USD, except per share amounts. Due to rounding, numbers presented may not foot.)

Unaudited

 Three months ended March 31, 
  2023  2022 
  Adjusted
 
Revenue  
License$10,649 $8,730 
Professional services 16,827  12,509 
Hardware and other 4,608  2,281 
Maintenance and other recurring 63,297  36,646 
  95,381  60,166 
Expenses  
Staff 48,619  31,875 
Hardware 3,319  1,350 
Third party license, maintenance and professional services 4,735  2,422 
Occupancy 777  414 
Travel, telecommunications, supplies, software and equipment 4,672  2,266 
Professional fees 7,313  809 
Other, net 2,782  3,076 
Depreciation 1,510  1,211 
Amortization of intangible assets 14,836  6,724 
  88,563  50,147 
   
Redeemable Preferred and Special Securities expense 654,615  - 
Finance and other expenses (income) 1,925  (380)
  656,540  (380)
   
Income (loss) before income taxes (649,722) 10,400 
   
Current income tax expense (recovery) 7,513  4,407 
Deferred income tax expense (recovery) (5,670) (1,874)
Income tax expense (recovery) 1,843  2,533 
   
Net income (loss)$(651,565)$7,867 
   
Weighted average shares outstanding:  
Basic 67,787,851 N/A
Diluted 236,683,131 N/A
   
Earnings per share:  
Basic and diluted$(9.61)N/A
   


Lumine Group Inc.
Condensed Consolidated Interim Statements of Comprehensive Income (Loss)
(In thousands of USD. Due to rounding, numbers presented may not foot.)

Unaudited

 Three months ended March 31, 
  2023  2022 
  Adjusted
 
Net income (loss)$(651,565)$7,867 
   
Items that are or may be reclassified subsequently to net income (loss):  
   
Foreign currency translation differences from foreign operations and other 589  (2,619)
   
Other comprehensive (loss) income for the year, net of income tax 589  (2,619)
   
Total comprehensive income (loss) for the year$(650,976)$5,248 


Lumine Group Inc.
Condensed Consolidated Interim Statement of Changes in Equity
(In thousands of USD. Due to rounding, numbers presented may not foot.)

Unaudited

Three months ended March 31, 2023      
 Capital
stock
Contributed
surplus
Accumulated
other
comprehensive
(loss) income
Retained
earnings
(deficit)
Net parent
investment
Total equity
       
Balance at January 1, 2023$ - $ 162,692  $ (8,912)$ -  $ - $ 153,780  
       
Total comprehensive income (loss) for the year:      
Net income (loss) - -  -  (651,565) - (651,565)
       
Other comprehensive income (loss):      
Foreign currency translation differences from foreign operations and other - -  589  -  - 589 
       
Total other comprehensive income (loss) for the year  -   -    589    (651,565)  -   (650,976)
       
Total comprehensive income (loss) for the year  -   -    589    (651,565)  -   (650,976)
       
Transaction with Parent, recorded directly in equity      
Capital contributions by Parent - 22,451  -  -  - 22,451 
Amalgamation with Lumine Group (Holdings) Inc. - (1,200,804) -  -  - (1,200,804)
Special Share conversion - -  -  1,067  - 1,067 
       
Balance at March 31, 2023$ - $ (1,015,661)$ (8,323)$ (650,498)$ - $ (1,674,482)


Lumine Group Inc.
Condensed Consolidated Interim Statement of Changes in Equity
(In thousands of USD. Due to rounding, numbers presented may not foot.)

Unaudited and adjusted      
Three months ended March 31, 2022      
 Capital
stock
Contributed
surplus
Accumulated
other
comprehensive
(loss) income
Retained
earnings
(deficit)
Net parent
investment
Total equity
       
Balance at January 1, 2022$ - $ - $ 3,229  $ - $ 169,920 $ 173,149  
       
Total comprehensive income (loss) for the year:      
Net income (loss) - - -  - 7,867 7,867 
       
Other comprehensive income (loss):      
Foreign currency translation differences from foreign operations and other - - (2,619) - - (2,619)
       
Total other comprehensive income (loss) for the year  -   -   (2,619)  -   7,867   5,248  
       
Total comprehensive income (loss) for the year  -   -   (2,619)  -   7,867   5,248  
       
Transactions with Parent, recorded directly in equity      
Dividends to Parent - - -  - - - 
       
Balance at March 31, 2022$ - $ - $ 610  $ - $ 177,787 $ 178,397  


Lumine Group Inc.
Condensed Consolidated Interim Statements of Cash Flows
(In thousands of USD. Due to rounding, numbers presented may not foot.)

Unaudited 
 Three months ended March 31,
  2023  2022 
  Adjusted
 
Cash flows from (used in) operating activities:  
Net income (loss)$(651,565)$7,867 
Adjustments for:  
Depreciation 1,510  1,211 
Amortization of intangible assets 14,836  6,724 
Contingent consideration adjustments 670  1,144 
Preferred and Special Securities expense (income) 654,615  - 
Finance and other expenses (income) 1,925  (380)
Income tax expense (recovery) 1,843  2,533 
Change in non-cash operating assets and liabilities exclusive of effects of business combinations (4,031) (12,707)
Income taxes (paid) received (4,834) (1,573)
Net cash flows from (used in) operating activities 14,969  4,818 
   
Cash flows from (used in) financing activities:  
Interest paid on lease obligations (93) (31)
Interest paid on bank debt (342) - 
Cash transferred from (to) Parent (4,670) 3,192 
Proceeds from issuance of bank debt 175,000  - 
Repayments of bank debt (244) - 
Transaction costs on bank debt (1,771) - 
Payments of lease obligations (840) (743)
Issuance of Preferred Shares to Parent 181,484  - 
Net cash flows from (used in) in financing activities 348,524  2,417 
   
Cash flows from (used in) investing activities:  
Acquisition of businesses (314,760) - 
Cash obtained with acquired businesses 33,965  - 
Post-acquisition settlement payments, net of receipts (362) (3,048)
Property and equipment purchased (241) (62)
Net cash flows from (used in) investing activities (281,399) (3,111)
   
   
Effect of foreign currency on cash and cash equivalents 302  189 
   
Increase (decrease) in cash 82,396  4,313 
   
Cash, beginning of period 67,085  27,110 
   
Cash, end of period$149,481 $31,424