Lumine Group Inc. Announces Results for the Three and Nine Months Ended September 30, 2023


TORONTO, Nov. 02, 2023 (GLOBE NEWSWIRE) -- Lumine Group Inc. (“Lumine Group” or “the Company”) announces financial results for the three and nine months ended September 30, 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 and nine months ended September 30, 2023, management’s discussion and analysis (“MD&A”) for the three and nine months ended September 30, 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.sedarplus.ca. Additional information about Lumine Group is also available on SEDAR+ and on Lumine Group’s website www.luminegroup.com.

Q3 2023 Headlines:

  • Revenue grew 99% to $131.3 million compared to $66.0 million in the same quarter prior year (including 4% organic growth after adjusting for foreign exchange impacts).
  • The Company generated operating income of $45.1 million during the quarter, a 107% increase from $21.8 million in the same quarter prior year.
  • An expense of $194.8 million was incurred in the quarter related primarily to the increase in fair value of the redeemable preferred and special securities, of which, $174.6 million is related to the convertible shares and $20.2 million is related to the dividend payable. 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 $179.0 million during the quarter, from net income of $11.8 million in the same quarter prior year. The net loss is primarily related to the redeemable preferred and special securities expense.
  • Cash flows from operations (“CFO”) increased $32.4 million to $44.5 million compared to $12.1 million in Q3 2022, representing an increase of 269%.
  • Free cash flow available to shareholders (“FCFA2S”) increased $28.3 million to $39.6 million compared to $11.3 million in Q3 2022, representing an increase of 251%.

Year-to-Date Q3 2023 Headlines:

  • Revenue grew 90% to $356.6 million compared to $187.5 million in the same nine-month period prior year (including 2% organic growth after adjusting for foreign exchange impacts).
  • The Company generated operating income of $103.1 million in the nine-month period ended September 30, 2023, an increase of 82% from $56.7 million in the same period prior year.
  • An expense of $1,346.0 million was incurred in the nine-month period ended September 30, 2023 related to the increase in fair value of the redeemable preferred and special securities, of which, $1,297.7 million is related to the convertible shares and $48.3 million is related to the dividend payable. 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 $1,320.2 million during the nine-month period ended September 30, 2023, from net income of $28.5 million in the same period prior year. The net loss is primarily related to the redeemable preferred and special securities expense.
  • CFO increased $56.9 million to $81.9 million compared to $25.0 million in the nine-month period ended September 30, 2022, representing an increase of 227%.
  • FCFA2S increased $46.0 million to $68.6 million compared to $22.6 million in the nine-month period ended September 30, 2022, representing an increase of 203%.

Total revenue for the three months ended September 30, 2023 was $131.3 million, an increase of 99%, or $65.3 million, compared to $66.0 million for the comparable period in 2022. For the nine months ended September 30, 2023, total revenue was $356.6 million, an increase of 90%, or $169.1 million, compared to $187.5 million for the comparable period in 2022. The increase for the three and nine month periods is primarily attributable to growth from acquisitions. The Company experienced organic growth of 6% and 1% for the three months and nine months ended September 30, 2023, respectively, or 4% and 2%, respectively, after adjusting for foreign exchange impacts. For acquired companies, organic growth is calculated as the difference between actual revenues achieved by each business in the financial period following acquisition, compared to the estimated revenues they achieved in the corresponding financial period preceding the date of acquisition by the Company. Organic growth is not a standardized financial measure and might not be comparable to measures disclosed by other issuers.

Operating income for the three months ended September 30, 2023 was $45.1 million, an increase of 107%, or $23.3 million, compared to $21.8 million for the same period in 2022. Operating income for the nine months ended September 30, 2023 was $103.1 million, an increase of 82%, or $46.4 million, compared to $56.7 million for the same period in 2022. The increase for the three and nine month periods is primarily attributable to growth from acquisitions. Operating income is not a standardized financial measure and might not be comparable to measures disclosed by other issuers. See “Non-IFRS Measures”.

Net loss for the three months ended September 30, 2023 was $179.0 million compared to net income of $11.8 million for the same period in 2022. Net loss for the nine months ended September 30, 2023 was $1,320.2 million compared to net income of $28.5 million for the same period in 2022. The decrease in net income for the three and nine month periods is primarily attributable to an expense of $194.8 million for the three months ended September 30, 2023 and $1,346.0 million for the nine months ended September 30, 2023 related to fair value adjustments and accrued dividends on the redeemable preferred and special securities issued in relation to the acquisition of WideOrbit and public listing of Lumine Group.

For the three months ended September 30, 2023, CFO increased $32.4 million to $44.5 million compared to $12.1 million for the same period in 2022 representing an increase of 269%. For the nine months ended September 30, 2023, CFO increased $56.9 million to $81.9 million compared to $25.0 million for the same period in 2022 representing an increase of 227%. 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 nine months ended September 30, 2023 compared to the same period prior year.

For the three months ended September 30, 2023, FCFA2S increased $28.3 million, or 251%, to $39.6 million compared to $11.3 million for the same period in 2022. For the nine months ended September 30, 2023, FCFA2S increased $46.0 million, or 203%, to $68.6 million compared to $22.6 million for the same period in 2022. The increase is primarily a result of higher CFO during the period. FCFA2S is not a standardized financial measure and might not be comparable to measures disclosed by other issuers. See “Non-IFRS Measures”.

Non-IFRS Measures

Operating income (loss) refers to income (loss) before income taxes, amortization of intangible assets, redeemable Preferred and Special Share expense, and finance and other expenses (income). We believe that operating income is useful supplemental information as it provides an indication of the profitability of the Company related to its core operations. Operating income (loss) 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 operating income (loss) should not be construed as an alternative to net income (loss).

The following table reconciles operating income to net income:

 Three months ended
September 30,
Nine months ended
September 30,
 2023 2022 2023 2022 
Net income (loss)(179.0)11.8 (1,320.2)28.5 
Adjusted for:    
Amortization of intangible assets21.7 8.5 58.4 22.5 
Redeemable preferred and special securities expense194.8 - 1,346.0 - 
Finance and other expense (income)3.7 (0.2)10.0 (1.2)
Income tax expense (recovery)3.9 1.8 9.0 6.9 
Operating income (loss)45.1 21.8 103.1 56.7 


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. 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 does not make any acquisitions, or investments, and does 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 September 30,Nine months ended September 30,
 2023 2022 2023 2022 
Net cash flows from operating activities:44.5 12.1 81.9 25.0 
Adjusted for:    
Interest paid on lease obligations(0.2)(0.1)(0.5)(0.1)
Interest paid on other facilities(2.8)- (6.4)- 
Credit facility transaction costs0.0 - (1.8)- 
Payment of lease obligations(1.4)(0.6)(3.8)(2.0)
Dividends paid(0.0)- (0.0)- 
Property and equipment purchased(0.4)(0.1)(0.8)(0.3)
Free cash flow available to shareholders39.6 11.3 68.6 22.6 


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


Condensed Consolidated Interim Statements of Financial Position
(In thousands of USD. Due to rounding, numbers presented may not foot.)
 
Unaudited
 September 30, 2023 December 31, 2022 
  Adjusted
 
Assets  
   
Current assets:  
Cash$141,145 $67,085 
Accounts receivable 80,177  63,923 
Unbilled revenue 31,479  9,797 
Inventories 476  60 
Other assets 28,979  23,325 
  282,256  164,190 
   
Non-current assets:  
Property and equipment 4,411  3,115 
Right of use assets 12,828  5,349 
Deferred income taxes 3,233  2,931 
Other assets 14,859  8,492 
Intangible assets and goodwill 752,966  209,483 
  788,297  229,370 
   
Total assets$1,070,553 $393,560 
   
Liabilities and Equity  
Current liabilities:  
   
Accounts payable and accrued liabilities$78,719 $64,779 
Due to related parties, net 1,138  35,466 
Current portion of bank debt 653  975 
Deferred revenue 73,928  61,979 
Provisions 914  22 
Acquisition holdback payables 734  1,769 
Lease obligations 5,996  2,069 
Income taxes payable 19,878  12,217 
Preferred and Special Securities 2,945,019  - 
  3,126,979  179,276 
   
Non-current liabilities:  
Deferred income taxes 130,427  30,579 
Bank debt 141,068  18,138 
Lease obligations 8,167  4,719 
Other liabilities 8,544  7,068 
  288,206  60,504 
   
Total liabilities 3,415,185  239,780 
   
Equity:  
Capital stock -  - 
Contributed surplus (1,015,661) 162,692 
Accumulated other comprehensive income (loss) (13,880) (8,912)
Retained earnings (deficit) (1,315,091) - 
  (2,344,632) 153,780 
   
Subsequent events  
   
Total liabilities and equity$1,070,553 $393,560 


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 September 30, Nine months ended September 30, 
  2023  2022  2023  2022 
  Adjusted
    Adjusted
 
Revenue    
License$11,247 $8,874 $32,990 $27,282 
Professional services 23,061  12,901  63,328  37,723 
Hardware and other 5,651  1,851  14,987  5,605 
Maintenance and other recurring 91,342  42,403  245,262  116,852 
  131,301  66,029  356,567  187,462 
Expenses    
Staff 61,871  34,917  181,775  97,938 
Hardware 3,374  1,298  9,825  3,395 
Third party license, maintenance and professional services 7,783  2,793  20,568  8,138 
Occupancy 1,064  863  2,630  1,720 
Travel, telecommunications, supplies, software and equipment 5,218  3,361  15,104  8,197 
Professional fees 2,060  2,154  12,292  6,006 
Other, net 2,756  (3,012) 5,445  1,172 
Depreciation 2,120  1,855  5,825  4,165 
Amortization of intangible assets 21,662  8,480  58,371  22,543 
  107,908  52,709  311,835  153,274 
     
Redeemable Preferred and Special Securities expense 194,817  -  1,346,020  - 
Finance and other expenses (income) 3,703  (210) 9,960  (1,244)
  198,520  (210) 1,355,980  (1,244)
     
Income (loss) before income taxes (175,127) 13,530  (1,311,248) 35,432 
     
Current income tax expense (recovery) 12,651  1,927  30,813  13,630 
Deferred income tax expense (recovery) (8,734) (168) (21,859) (6,683)
Income tax expense (recovery) 3,917  1,759  8,954  6,947 
     
Net income (loss)$(179,044)$11,771 $(1,320,202)$28,485 
     
Weighted average shares outstanding:    
Basic 74,040,058 N/A  71,967,707 N/A 
Diluted 253,104,970 N/A  242,370,504 N/A 
         
Earnings per share:        
Basic and diluted$(2.42)N/A $(18.34)N/A 
     


Condensed Consolidated Interim Statements of Comprehensive Income (Loss)
(In thousands of USD. Due to rounding, numbers presented may not foot.)
 
Unaudited
 Three months ended September 30, Nine months ended September 30, 
  2023  2022  2023  2022 
  Adjusted
    Adjusted
 
Net income (loss)$(179,044)$11,771 $(1,320,202)$28,485 
     
Items that are or may be reclassified subsequently to net income (loss):    
     
Foreign currency translation differences from foreign operations and other (4,657) (10,338) (4,968) (22,581)
     
Other comprehensive (loss) income for the year, net of income tax (4,657) (10,338) (4,968) (22,581)
     
Total comprehensive income (loss) for the year$(183,701)$1,433 $(1,325,170)$5,904 


Condensed Consolidated Interim Statement of Changes in Equity
(In thousands of USD. Due to rounding, numbers presented may not foot.)
 
Unaudited
Nine months ended September 30, 2023     
 Capital stockContributed
surplus
Accumulated other
comprehensive
(loss) income
Retained
earnings
(deficit)
Total equity
      
Balance at January 1, 2023$- $162,692 $(8,912)$- $153,780 
      
Total comprehensive income (loss) for the year:     
Net income (loss) -  -  -  (1,320,202) (1,320,202)
      
Other comprehensive income (loss):     
Foreign currency translation differences from foreign operations and other -  -  (4,968) -  (4,968)
      
Total other comprehensive income (loss) for the year -  -  (4,968) (1,320,202) (1,325,170)
      
Total comprehensive income (loss) for the year -  -  (4,968) (1,320,202) (1,325,170)
      
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 -  -  -  5,110  5,110 
      
Balance at September 30, 2023$- $(1,015,661)$(13,880)$(1,315,092)$(2,344,633)


Condensed Consolidated Interim Statement of Changes in Equity
(In thousands of USD. Due to rounding, numbers presented may not foot.)
 
Unaudited and adjusted
Nine months ended September 30, 2022      
 Capital stockContributed
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) -  -  -  -  28,485  28,485 
       
Other comprehensive income (loss):      
Foreign currency translation differences from foreign operations and other -  -  (22,581) -  -  (22,581)
       
Total other comprehensive income (loss) for the year -  -  (22,581) -  28,485  5,904 
       
Total comprehensive income (loss) for the year -  -  (22,581) -  28,485  5,904 
       
Transactions with Parent, recorded directly in equity      
Capital contributions -  -  -  -  31,600  31,600 
Dividends to Parent -  -  -  -  (44,781) (44,781)
       
Balance at September 30, 2022$- $- $(19,352)$- $185,224 $165,873 


Condensed Consolidated Interim Statements of Cash Flows
(In thousands of USD. Due to rounding, numbers presented may not foot.)
 
Unaudited
 Three months ended September 30,Nine months ended September 30,
  2023  2022  2023  2022 
  Adjusted
    Adjusted
 
Cash flows from (used in) operating activities:    
Net income (loss)$(179,044)$11,771 $(1,320,202)$28,485 
Adjustments for:    
Depreciation 2,120  1,855  5,825  4,165 
Amortization of intangible assets 21,662  8,480  58,371  22,543 
Contingent consideration adjustments 58  (4,612) (2,420) (3,187)
Preferred and Special Securities expense (income) 194,817  -  1,346,020  - 
Finance and other expenses (income) 3,703  (210) 9,960  (1,244)
Income tax expense (recovery) 3,917  1,759  8,954  6,947 
Change in non-cash operating assets and liabilities exclusive of effects of business combinations 5,825  (5,167) (4,563) (28,422)
Income taxes (paid) received (8,565) (1,811) (20,077) (4,270)
Net cash flows from (used in) operating activities 44,494  12,065  81,868  25,017 
     
Cash flows from (used in) financing activities:    
Interest paid on lease obligations (205) (56) (464) (121)
Interest paid on bank debt (2,823) -  (6,414) - 
Cash transferred from (to) Parent (2,121) (3,290) (13,957) 66,835 
Proceeds from issuance of bank debt -  -  175,000  - 
Repayments of bank debt (50,244) -  (50,897) - 
Transaction costs on bank debt -  -  (1,771) - 
Payments of lease obligations (1,419) (640) (3,784) (2,003)
Issuance of Preferred Shares to Parent -  -  181,484  - 
Dividends paid (12) -  (24) - 
Net cash flows from (used in) in financing activities (56,823) (3,987) 279,173  64,711 
     
Cash flows from (used in) investing activities:    
Acquisition of businesses -  -  (314,760) (79,845)
Cash obtained with acquired businesses -  -  33,965  2,871 
Post-acquisition settlement payments, net of receipts (264) (764) (2,933) (3,728)
Property and equipment purchased (408) (68) (829) (292)
Other investing activities 72  -  (584) - 
Net cash flows from (used in) investing activities (600) (832) (285,142) (80,995)
     
     
Effect of foreign currency on cash and cash equivalents (1,828) (1,436) (1,839) (1,466)
Increase (decrease) in cash (14,758) 5,810  74,060  7,267 
     
Cash, beginning of period 155,903  28,567  67,085  27,110 
Cash, end of period$141,145 $34,377 $141,145 $34,377 


Mot-clé