Lumine Group Inc. Announces Results for the Three and Nine Months Ended September 30, 2024

TORONTO, Nov. 01, 2024 (GLOBE NEWSWIRE) — Lumine Group Inc. (“Lumine Group” or “the Company”) (TSXV:LMN) announces financial results for the three and nine months ended September 30, 2024. 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, 2024, and management’s discussion and analysis (“MD&A”) for the three and nine months ended September 30, 2024, 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 2024 Headlines:

  • Revenue grew 35% to $177.3 million compared to $131.3 million in the same quarter prior year (including -9% organic growth after adjusting for foreign exchange impacts).
  • The Company generated operating income of $60.7 million during the quarter, a 35% increase from $45.1 million in the same quarter prior year.
  • The Company generated a net income of $18.3 million during the quarter, from net loss of $178.6 million in the same quarter prior year.
  • Cash flows from operations (“CFO”) decreased $25.7 million to $18.8 million compared to $44.5 million in Q3 2023, representing a decrease of 58%.
  • Free cash flow available to shareholders (“FCFA2S”) decreased $29.2 million to $10.4 million compared to $39.6 million in Q3 2023, representing a decrease of 74%.

Year-to-Date Q3 2024 Headlines:

  • Revenue grew 35% to $481.3 million compared to $356.6 million in the same nine-month period prior year (including -8% organic growth after adjusting for foreign exchange impacts).
  • The Company generated operating income of $141.7 million in the nine-month period ended September 30, 2024, an increase of 37% from $103.1 million in the same period prior year.
  • An expense of $317.4 million was incurred in the nine-month period ended September 30, 2024, up to the Mandatory Conversion Date, $298.7 million is related to the mark to market adjustments on the fair value of the Preferred and Special Securities and $18.7 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 $288.3 million during the nine-month period ended September 30, 2024, from net loss of $1,319.3 million in the same period prior year. The net loss is primarily related to the redeemable preferred and special securities expense.
  • CFO decreased $18.0 million to $63.9 million compared to $81.9 million in the nine-month period ended September 30, 2023, representing a decrease of 22%.
  • FCFA2S decreased $26.6 million to $42 million compared to $68.6 million in the nine-month period ended September 30, 2023, representing a decrease of 39%.

Total revenue for the three months ended September 30, 2024 is $177.3 million, an increase of 35%, or $46.0 million, compared to $131.3 million for the comparable period in 2023. For the nine months ended September 30, 2024, total revenue was $481.3 million, an increase of 35%, or $124.7 million, compared to $356.6 million for the comparable period in 2023. The increase for the three and nine months compared to the same period in the prior year is attributable to revenues from prior year and current year acquisitions. The Company experienced organic growth of -8% and -8%, respectively for the three and nine months ended September 30, 2024 or -9% and -8% after adjusting for the impact of changes in the valuation of the US dollar against most major currencies in which the Company transacts business. 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, 2024 was $60.7 million, an increase of 35%, or $15.6 million, compared to $45.1 million for the same period in 2023. Operating income for the nine months ended September 30, 2024 was $141.7 million, an increase of 37%, or $38.6 million, compared to $103.1 million for the same period in 2023. The increase for the three and nine-month periods is primarily attributable to prior year 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 Income for the three months ended September 30, 2024 was $18.3 million compared to net loss of $178.6 million for the same period in 2023. Net loss for the nine months ended September 30, 2024 was $288.3 million compared to net loss of $1,319.3 million for the same period in 2023. The decrease in net loss for the three and nine month periods is primarily attributable to the Mandatory Conversion of Preferred and Special Securities on March 25, 2024 such that no further preferred and special securities expense was booked in the current quarter.

For the three months ended September 30, 2024, CFO decreased $25.7 million to $18.8 million compared to $44.5 million for the same period in 2023 representing a decrease of 58%. For the nine months ended September 30, 2024, CFO decreased $18.0 million to $63.9 million compared to $81.9 million for the same period in 2023 representing a decrease of 22%. The decrease in CFO in the three and nine month periods is primarily attributable to the impact of changes in non-cash operating assets and liabilities exclusive of effects of business combinations.

For the three months ended September 30, 2024, FCFA2S decreased $29.2 million to $10.4 million compared to $39.6 million for the same period in 2023 representing a decrease of 74%. For the nine months ended September 30, 2024, FCFA2S decreased $26.6 million to $42.0 million compared to $68.6 million for the same period in 2023 representing a decrease of 39%. The decrease in the three and nine month periods is driven by lower CFO compared to the same periods in 2023. FCFA2S is a non-IFRS Measure. 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,
  2024 2023   2024   2023  
Net income (loss) 18.3 (178.6 ) (288.3 ) (1,319.3 )
Adjusted for:        
Amortization of intangible assets 29.6 21.4   81.6   57.7  
Redeemable preferred and special securities expense 194.8   317.4   1,346.0  
Finance and other expense (income) 8.9 3.7   18.9   10.0  
Income tax expense (recovery) 3.9 3.8   12.1   8.8  
Operating income (loss) 60.7 45.1   141.7   103.1  

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,
  2024   2023   2024   2023  
Net cash flows from operating activities: 18.8   44.5   63.9   81.9  
Adjusted for:        
Interest paid on lease obligations (0.1 ) (0.2 ) (0.4 ) (0.5 )
Interest paid on other facilities (5.7 ) (2.8 ) (13.3 ) (6.4 )
Credit facility transaction costs (0.0 ) 0.0   (1.9 ) (1.8 )
Payment of lease obligations (1.6 ) (1.4 ) (4.6 ) (3.8 )
Property and equipment purchased (1.1 ) (0.4 ) (1.7 ) (0.8 )
Free cash flow available to shareholders 10.4   39.6   42.0   68.6  


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
[email protected]
+1-437-353-4910

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Condensed Consolidated Interim Statements of Financial Position
(In thousands of USD. Due to rounding, numbers presented may not foot.)

Unaudited

  September 30, 2024 December 31, 2023
     
Assets    
     
Current assets:    
Cash $ 180,357   $ 146,509  
Accounts receivable, net   142,741     104,955  
Unbilled revenue, net   49,551     39,858  
Inventories   521     521  
Other assets   40,727     44,862  
    413,897     336,705  
     
Non-current assets:    
Property and equipment   7,243     4,164  
Right of use assets   7,716     11,973  
Deferred income taxes   10,400     6,197  
Other assets   12,939     13,063  
Intangible assets and goodwill   826,041     763,793  
    864,339     799,190  
     
Total assets $ 1,278,236   $ 1,135,895  
     
Liabilities and Equity    
     
Current liabilities:    
Accounts payable and accrued liabilities $ 101,136   $ 97,533  
Due to related parties, net   1,807     2,380  
Current portion of bank debt   2,248     3,071  
Deferred revenue   86,890     91,726  
Acquisition holdback payables   656     19  
Lease obligations   5,128     6,358  
Income taxes payable   12,978     12,436  
Preferred and Special Securities       4,469,996  
    210,843     4,683,519  
     
Non-current liabilities:    
Deferred income taxes   109,985     124,659  
Bank debt   286,457     149,636  
Lease obligations   3,583     6,921  
Other liabilities   7,767     13,127  
    407,792     294,343  
     
Total liabilities   618,635     4,977,862  
     
Equity:    
Capital stock   490,669      
Contributed surplus   185,142     (1,015,661 )
Accumulated other comprehensive income (loss)   (3,814 )   (6,296 )
Retained earnings (deficit)   (12,396 )   (2,820,010 )
    659,601     (3,841,967 )
     
Total liabilities and equity $ 1,278,236   $ 1,135,895  


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,
    2024     2023     2024     2023  
 
Revenue                  
License $ 12,798   $ 11,247   $ 36,205   $ 32,990  
Professional services   32,780     23,061     86,622     63,328  
Hardware and other   6,589     5,651     11,332     14,987  
Maintenance and other recurring   125,167     91,342     347,099     245,262  
    177,334     131,301     481,258     356,567  
Expenses        
Staff   89,929     61,871     250,662     181,775  
Hardware   3,657     3,374     6,595     9,825  
Third party license, maintenance and professional services   8,575     7,783     28,981     20,568  
Occupancy   2,246     1,064     4,117     2,630  
Travel, telecommunications, supplies, software and equipment   4,152     5,218     23,660     15,104  
Professional fees   2,637     2,060     11,124     12,292  
Other, net   3,011     2,754     7,467     5,443  
Depreciation   2,473     2,120     6,925     5,825  
Amortization of intangible assets   29,616     21,351     81,648     57,668  
    146,296     107,595     421,179     311,130  
         
Redeemable Preferred and Special Securities expense       194,817     317,362     1,346,020  
Finance and other expenses (income), net   8,898     3,703     18,868     9,960  
    8,898     198,520     336,230     1,355,980  
         
Income (loss) before income taxes   22,140     (174,814 )   (276,151 )   (1,310,543 )
         
Current income tax expense (recovery)   13,572     12,651     31,127     30,813  
Deferred income tax expense (recovery)   (9,710 )   (8,815 )   (18,982 )   (22,042 )
Income tax expense (recovery)   3,862     3,836     12,145     8,771  
         
Net income (loss) $ 18,278   $ (178,650 ) $ (288,296 ) $ (1,319,314 )
                 
Weighted average shares outstanding:                    
Basic       256,620,389     74,040,058     199,991,663     71,967,707  
Diluted       256,620,389     253,104,970     255,529,839     242,370,504  
                     
Earnings per share:                    
Basic and diluted     $ 0.07   $ (2.41 ) $ (1.44 )   (18.33 )
 


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,
    2024   2023     2024     2023  
         
Net income (loss) $ 18,278 $ (178,650 ) $ (288,296 ) $ (1,319,314 )
         
Items that are or may be reclassified subsequently to net income (loss):        
         
Foreign currency translation differences from foreign operations and other   7,082   (4,657 )   2,482     (4,968 )
         
Other comprehensive (loss) income for the year, net of income tax   7,082   (4,657 )   2,482     (4,968 )
         
Total comprehensive income (loss) for the year $ 25,360 $ (183,307 ) $ (285,814 ) $ (1,324,282 )


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, 2024          
  Capital stock Contributed surplus Accumulated other comprehensive (loss) income Retained earnings (deficit) Total equity
           
Balance at January 1, 2024 $ $ (1,015,661 ) $ (6,296 ) $ (2,820,010 ) $ (3,841,967 )
           
Total comprehensive income (loss) for the period:          
Net income (loss)             (288,296 )   (288,296 )
           
Other comprehensive income (loss):          
Foreign currency translation differences from foreign operations and other         2,482         2,482  
Total other comprehensive income (loss) for the period         2,482         2,482  
           
Total comprehensive income (loss) for the period         2,482     (288,296 )   (285,814 )
           
Settlement of Preferred and Special Share Dividends in Subordinate Voting Shares   87,368               87,368  
Mandatory Conversion of Special and Preferred Shares   403,301   1,200,803         3,095,910     4,700,014  
Balance at September 30, 2024 $ 490,669 $ 185,142   $ (3,814 ) $ (12,396 ) $ 659,601  


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 stock Contributed 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 period:          
Net income (loss)             (1,319,314 )   (1,319,314 )
           
Other comprehensive income (loss):          
Foreign currency translation differences from foreign operations and other         (4,968 )       (4,968 )
           
Total other comprehensive income (loss) for the period         (4,968 )       (4,968 )
           
Total comprehensive income (loss) for the period         (4,968 )   (1,319,314 )   (1,324,282 )
           
Transactions 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 ) $ (1,314,204 ) $ (2,343,746 )


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,
    2024     2023     2024     2023  
         
Cash flows from (used in) operating activities:        
Net income (loss) $ 18,278   $ (178,650 ) $ (288,296 ) $ (1,319,314 )
Adjustments for:        
Depreciation   2,473     2,120     6,925     5,825  
Amortization of intangible assets   29,616     21,351     81,648     57,668  
Contingent consideration adjustments   (1,357 )   58     (399 )   (2,420 )
Preferred and Special Securities expense (income)       194,817     317,362     1,346,020  
Finance and other expenses (income)   8,898     3,703     18,868     9,960  
Income tax expense (recovery)   3,862     3,836     12,145     8,771  
Change in non-cash operating assets and liabilities exclusive of effects of business combinations   (34,300 )   5,822     (68,428 )   (4,565 )
Income taxes (paid) received   (8,641 )   (8,565 )   (15,957 )   (20,077 )
Net cash flows from (used in) operating activities   18,829     44,492     63,868     81,868  
         
Cash flows from (used in) financing activities:        
Interest paid on lease obligations   (105 )   (205 )   (388 )   (464 )
Interest paid on bank debt   (5,702 )   (2,823 )   (13,304 )   (6,414 )
Cash transferred from (to) Parent   345     (2,121 )   (1,645 )   (13,957 )
Proceeds from issuance of bank debt   15,000         155,500     175,000  
Repayments of bank debt   (17,976 )   (50,244 )   (18,464 )   (50,897 )
Transaction costs on bank debt   (25 )       (1,874 )   (1,771 )
Payments of lease obligations   (1,560 )   (1,419 )   (4,594 )   (3,784 )
Issuance of Preferred Shares to Parent               181,484  
Dividends paid       (12 )       (24 )
Net cash flows from (used in) in financing activities   (10,023 )   (56,823 )   115,231     279,173  
         
Cash flows from (used in) investing activities:        
Acquisition of businesses           (144,325 )   (314,760 )
Cash obtained with acquired businesses               33,965  
Post-acquisition settlement receipts (payments), net   5,685     (264 )   4,706     (2,933 )
Property and equipment purchased   (1,058 )   (408 )   (1,689 )   (829 )
Other investing activities   (720 )   72     (984 )   (584 )
Net cash flows from (used in) investing activities   3,907     (600 )   (142,292 )   (285,142 )
         
         
Effect of foreign currency on cash and cash equivalents   72     (1,827 )   (2,959 )   (1,839 )
         
Increase (decrease) in cash   12,785     (14,758 )   33,848     74,060  
         
Cash, beginning of period   167,572     155,903     146,509     67,085  
         
Cash, end of period $ 180,357   $ 141,145   $ 180,357   $ 141,145  


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