Altus Group Limited

will be a question and answer session. If you would like to ask a question during this time, simply press star, followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to Ms. Camila Bartisevich, Chief Communications Officer. You may begin your conference.

Thank you, and hi, everyone. Welcome to the conference call and webcast discussing Altus Group's fourth quarter and year-end results for the period ended December 31st, 2024. Our disclosure materials, notably the press release, MD&A, financial statements, and the slides accompanying our prepared remarks are all available on our website and as required have been filed to Cedar Plus after market closed this afternoon. I'm joined today by our CEO, Jim Hannon, and our CFO, Pavan Chopra. Some of our remarks on this call and in our disclosure may contain forward-looking information that is based on certain assumptions. and therefore subject to risks and uncertainties that could cause actual results to differ materially from those projected. Please refer to our forward-looking information disclaimer in today's materials. Please be reminded that ALTSA's group uses certain non-GAAP financial measures, ratios, total of segments measures, capital management measures, and supplementary and other financial measures as defined in National Instrument 52112. We believe that these measures may assist investors in assessing an investment in our shares as they provide additional insight into our performance. Readers are cautioned that they are not defined performance measures and do not have any standardized meaning under IFRS and they differ from similar computations as reported by other 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 substitutes for financial measures prepared in accordance with IFRS. An explanation of these measures is detailed in today's IR material. I would also like to point out that unless otherwise specified, all percentage and basis point growth rates we refer to on today's call will be on a constant currency basis over the same corresponding period in 2023. Okay, over to you, Kevin.

Thanks, Camilla, and thank you, everyone, for joining us today. I'll focus our conversation on fourth quarter results, and then Jim will review the financial and operating progress for the full year. Recapping our Q4 results, revenue is moderately up, driven by growth at analytics, which accounted for 79% of our consolidated revenue base. Profit from continuing operations was 22.9 million, benefiting from higher revenues and a recovery from income taxes, offset by the restructuring program and the impairment charge on our appraisals business. Adjusted EBITDA was up 51.8%, driving the 800 basis point improvement in margin. I would point out that this included a one-time 4.5 million FX gain on corporate costs. Cash generation, which reflects both continuing and discontinued operations, was down year over year. On a year-over-year view, the fourth quarter of 2023 benefited from a catch-up on billings related to the implementation of a new ERP system. The decrease is also a function of higher cash taxes paid on higher profits and higher transitional costs related to the property tax divestiture. For the full year, net cash provided by operating activities was up 11.9%, and free cash flow was up 23%. The strength in cash generation was fueled by strong adjusted EBITDA growth and improved working capital processes. This resulted in a higher conversion of adjusted EBITDA to free cash flow over last year. As an aside, in Q4, we recorded a $2.9 million restructuring cost globally across the business, bringing us to a total of $12.1 million this year. There will be a new restructuring program in 2025 as we right-size the business following the sale of the property tax. Turning to the analytics business segment, we delivered another quarter of top-line growth and margin expansion. Revenue growth was driven by higher software and VMS sales, as well as contributions from Forbury, offset by a decline in non-recurring revenue. The double-digit improvement in adjusted EBITDA reflects higher revenues, operating efficiencies, and our ongoing cost optimization efforts. Recurring revenue is a key metric for our performance. It comprises a low-churn revenue base made up of solutions that support our customers' most critical processes and workflows. We continue to focus our go-to-market efforts and investments to maintain consistent recurring revenue growth. Ninety-four percent of our analytics revenues were recurring in Q4, and recurring revenue makes up 75 percent of our consolidated revenue base. At 101.1 million in the quarter, recurring revenue was up 5.8 percent. Our software and VMS performance was solid, offset by softer performance and data solutions. Jim will talk to this a bit more in his prepared remarks. To ground you with some data points, Q4 felt very similar to Q3 with respect to the industry backdrop, and frankly, so does Q1. Q4 U.S. transaction volumes were still suppressed. However, we are seeing some green shoots emerging. For instance, U.S. transaction volumes, while still a decline year over year, are seeing another quarter of sequential improvement. Q4 NACREF Odyssey data shows open-ended fund returns were positive again for a second consecutive quarter after two years of negative returns. All sectors except office saw gains supported by improving cash flows and more stable valuations. We saw a very similar pattern in Europe through our pan-European valuation data set. European commercial property values also increased for the second consecutive quarter in Q4 of 2024. driven mainly by the industrial sector. This bodes well for our clients, signaling we're nearing price discovery and that the markets are gradually entering a recovery phase. Our margins continue to expand, up by 630 basis points in the quarter, delivering a 400 basis point improvement for the year in analytics, in line with our targets. Our margin ramp continues in 2025, More on that from Jim shortly. As you might recall, our medium term target is to achieve 35% margins for fiscal 2026 at Analytics. Now turning to Analytics new bookings, this metric reflects new and incremental business. We're pleased with the 10.9% improvement in recurring new bookings, which included a sequential improvement on both software and VMS. But as we previously said, bookings can be lumpy. and conversions to revenue can take longer in this current environment. As Jim mentioned last quarter, we're evaluating phasing out this metric in our external reporting and considering replacing it with a more predictive measure. And finally, we ended a quarter with 82% of our Argus users contracted on the cloud, a solid finish to the year and within our expectations. Turning briefly to appraisals and development advisory, While we faced some revenue headwinds, our focus has been on improving profitability. We achieved a $2.1 million improvement in adjusted EBITDA in Q4, up 93.4% over last year, and also good sequential improvement over Q3. I'll wrap with a recap of our balance sheet. We finished the quarter with a cash position of $41.9 million and with $282.9 million in bank debt. The funded debt to EBITDA leverage ratios defined in our credit agreement, which still factors in EBITDA for both continuing and discontinued operations, was 2.01 times. Our current total liquidity at the end of the year was $309 million. As you recall, on January 1, we completed the sale of the property tax business, gaining approximately $600 million in net proceeds, which further expands our total liquidity and ability to invest. More on that from Jim shortly. With that, I'll turn it over to Jim.