LMN Lumine Group Inc

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 NylandChief Executive Officer Lumine Groupinvestors@luminegroup.com+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