Good afternoon and welcome to the Constellation Software Inc C onference Call and Webcast. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Jamal Baksh, CFO. Please go ahead. Thank you. Following our announcement last week of Mark Leonard's resignation, I've spoken with many investors, and a common request from all of them was to hear from Mark Miller to help with their understanding of Mark Miller's background and how management of CSI might change under his direction. That is the purpose for this call. I'd therefore like to turn the call over to Mark right now for a brief overview of his journey at Constellation Software Inc., and then we'll open up the line for our Q&A. Mark. Thank you, Jamal. I appreciate the opportunity to chat with everyone today and look forward to the questions. A bit of background on myself. I started a business with a couple of co-founders in the late 1980s, in 1988, 1989. We were acquired by Constellation as the first acquisition in 1995. I've been fortunate enough to be with Constellation Software Inc. now for over 30 years and had an opportunity to learn how to, as well as organically grow, the business that I initially co-founded, to also learn how to do capital deployment and acquisitions. Over that time, have continued to build out that business inside of Constellation which was in the transit area, helping sort of schedule buses and trains and allocate drivers to those particular vehicles. As we grew, we ultimately moved into new verticals, and we created an operating group inside of Constellation called Volaris, and over time have continued to grow Volaris. As well as serving as the Chief Operating Officer at Constellation. I have had the opportunity to work with the entire team at Constellation for many years now. I'm very honored to have been appointed the President of Constellation and can't say enough about Mark Leonard, who founded and helped us get to this point. I hope with the entire management team of Constellation all of the operating group managers who are exceptional in what they do, will continue to move the business forward, as it has done historically. That's a bit of an overview, Jamal. I think maybe turn it over to questions now. Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question comes from Richard Tsay at National Bank Capital Markets. Please go ahead. Yes, thanks for hosting this call, and I hope Mark Leonard's doing well. Mark, obviously, there's probably a lot of common ground in terms of how the company approached capital deployment. That said, I can't help but wonder where there's differences of opinion. If so, what's unique in terms of maybe your strategic priorities over the next year and how would they potentially differ from how Mark Leonard looked at things? Honestly, Richard, I really think it's business as usual. Just continue to push ahead with our existing strategy. I appreciate that sounds like an easy answer, but I think we just continue to push forward, continue to learn, and try to get better at what we're doing within the organization. There's a lot of opportunities to improve how we do capital allocation, operate our businesses. We'll just continue to focus on the same things that we always have here at Constellation in a completely decentralized fashion. Okay, thanks for that. I just have one other question. It seems like the pace of capital deployment over the past year has been running a little bit lower than in the past years. I'm curious as to what you may think about that. If it is the case, what's your rating in that rate of capital deployment? Over time, capital deployment has gone up and it's gone down. I cannot attribute it to any specific reason. I feel very comfortable with what we're doing as far as covering our potential opportunities to deploy capital and just continue to try to improve upon that. I have no major insightful answer to that question, Richard. Okay, I appreciate it. No. Okay, thanks. I'll pass the line. Thank you. The next question comes from Thanos Nishapulos with BMO Capital. Please go ahead. Hi, good afternoon. Mark, could you provide some color with respect to how Mark Leonard had been focusing his time over the last couple of years, and whether you envisage having the same approach to the role and the same set of priorities, or whether there'll be a difference in that regard? I think one of the things that, as Constellation has grown and as our operating groups have grown, we tend to spend more time, and this would be the operating group managers and Mark, studying the larger investments we're making and trying to support each other and thinking through how to do those and how to do those better. I think that won't change. I will spend time with any of our larger capital deployment opportunities and really focus on very much the same things Mark was looking at, compensation, making sure that we're optimizing our compensation to our team across the board, as well as looking at continuing to share best practices amongst the operating groups as we're seeing evolution in technology, for example, with artificial intelligence, more capital deployment, or just different things that we see as an opportunity to improve our businesses. I think very similar in a lot of ways. I probably am a bit more operational. I'm a programmer by background, and I'll clearly want to think about how we can improve our businesses as well. Are there any other Senior Leadership changes that might stem from this transition, or is that not something you'd expect out of the gate necessarily? I actually had the opportunity, of course, speaking to all of the leadership team after the announcement was made. I have to admit my comfort level increased as I spoke to the team. I think we've got a great team around the table at Constellation and inside of Lumen and Topicus. I want to continue to just work with them. There's no plans to change any of the management team at all. Great, I'll pass the line. Thank you. The next question comes from David Kwan in TD Cowen. Please go ahead. Thanks for having this call. Mark, can you maybe talk about what some of your top priorities are for the first 90 days and the first year, where you really might need to get up to speed more versus how you're running things at Volaris? Okay, I think the priority is capital deployment in my mind, and then also making sure that we're continuing to develop our management team succession plans, what have you. I'm immediately going to spend my time on any of the large opportunities that we're considering now from an investment perspective and that are outside of what I've been currently looking at. I think short-term priorities will be capital deployment and making sure we have, you know, a good succession plan in place throughout the organization for the next level of leadership that will report into me. That's what I'm sort of thinking right now. No, that's helpful. As it relates to the M&A program, I think Mark would have a lot of great relationships that would help on the large acquisition front. Now, obviously, he's not actively involved now. Do you expect any disruption with some of these larger deals that sounds like you really want to get more involved with, particularly outside of Volaris? No, I don't. We don't see a disruption. I think just continue to focus on those, right? I don't see any disruption there. That's great. I'll jump back in the queue. The next question comes from Jerome Ubrill at Desjardins. Please go ahead. Hey, thanks for taking my question and the best wishes to Mark. I think one of the main things Mark has been focusing on, as I understand, was finding new areas where to deploy a significant amount of capital at high rates of return. Mark, I guess you were involved in this initiative. If you can confirm this, and historically, you know, management has sometimes been tampering expectations on this front, if you can provide an update. No, I think you probably covered it correctly, considering some other opportunities to do that, and the board discusses it as well. As things evolve, you'll hear about them. Right now, there's really nothing further I can comment on that. Apologies. Yeah, no, that's fair. The second one for me is you're a programmer by training. Historically, the company has found that investing a lot in R&D wasn't generating returns on investment as strong as M&A. I was listening to the call from Volaris the other day on AI, and it seems like improving the software is becoming key. I'm wondering if there's a bit of a shift in terms of how you think about the R&D spend going forward. The R&D spend, you look at it on an individual business-by-business basis, and we have hundreds and hundreds of businesses. I encourage all of our businesses to be close to their customers, studying their needs, and developing additional products that they're able to provide those customers to help them run their businesses better. I think that's been a historical focus. I think with AI, there's an opportunity to maybe do it faster, quicker. I'm hoping that we can encourage some of our leaders that are open to that to use some of these new tools to try to improve some of the products and services we offer our existing customers across the world. That's great. Thanks. The next question comes from Samana at Jefferies. Please go ahead. Hi, good afternoon. Thank you for taking my question. I want to echo the well wishes of the others for Mark Leonard's initiative and the speedy recovery. My first question is, should we think about the last two weeks where we've had two major update calls as a sign that maybe we'll be getting more regular updates with a broader audience and/or more engagement with the investment community, particularly as we think about a transition as large as this, or should we look at this as an outlier? I have one follow-up. I honestly don't think we've decided on that. We're going to have a chance to chat about it over the next little bit, and I think we'll revert on that question. Thank you for it. Great. As you think about, you mentioned succession planning. As you think about maybe what might influence how to think about succession planning going forward, just maybe help us understand the timeline of the recent handoff. As you think about future succession planning, does what's happening with AI influence how you're thinking about the type of leadership, whether it's more focused on somebody with strong capital deployment skills versus strong technology background, just to help us think about those influences? No, we bind hope forever. When we talk to our leaders and talk to the companies that we're hoping that we can invest in and acquire over time, we like to think over a very, very, very long horizon. You need to be thinking about succession planning in advance, thinking about who could be, for example, the President of Constellation in 2040 or something like that. You need to be thinking about that well in advance. That's mostly what I'm concerned with. As far as skill sets, one of the biggest and most important skill sets on top of capital deployment is going to be the ability to develop other people. We'll look for leaders who are able to develop people and deploy capital and have the wherewithal to think long term. Great. We appreciate you doing this today. I think investors would appreciate more engagement. Thank you so much, and look forward to staying in touch. Appreciate you guys. Thank you. The next question comes from Daniel Gerdes in Constellation. Please go ahead. Hi. Thank you very much for hosting this Q&A. I have one question and one follow-up, please, on capital allocation. My first question is around, I think it was on Friday, we saw that the Chairman and some other members of the investment team were buying shares in their own name. My question is around the potential for share buybacks or a share buyback program. Is that something that is being considered by the board? If not, is that something that potentially shareholders can read into, that the opportunity set currently for the business on capital deployment is more attractive than potentially buying back shares? No, we're not considering buying back shares. I don't think there's any, you can extrapolate into that other than, you know, both John, the Chairman, and myself acquired some shares. We really just felt it was sending a signal to people that we were very comfortable with the company and its long-term future. That's all that's to be read into that. Thanks, Mark. My follow-up question is also around capital allocation. Is there a separate committee of the board that approves larger deals or that the board sits on to consider larger M&A deals for Constellation? If there is, what changes are being considered or being implemented as part of the process going forward for these larger deals? I think we have a very good process in place now that doesn't need to be changed. Before the actual large investment arrives at the board of Constellation, a handful of the operating group managers meet to discuss it with each other and kind of give it a bit of a thumbs up, thumbs down, which I think is pretty helpful. I think that process works very, very well and we'd like to do that. I think we'll continue to do that in the future. It's been a good process and it works really, really well. It's nice to get some feedback from your peers as an operating group manager, too, before you present to the board a large investment. There is no subcommittee of the board per se that looks at investments. Thank you. The next question comes from Stephanie Price with CIBC. Please go ahead. Hi, it's Sam Schmidt on for Stephanie Price. Best wishes to Mark. Just one from me. What are you hearing from customers in the current environment, including around AI, and how do you think about the go-to-market approach evolving over time? I think it probably depends on, I mean, we have hundreds of businesses around the world. It depends on the sector, and there's no individual message or consolidated message you get from customers. We are, one of the, I did a call with the operating group managers yesterday before, you know, anticipating some questions on this today. Our general sense is we've got a group of people focused on it internally, and we're hoping that we're able to show some good examples to our businesses that are working closely with customers implementing AI solutions, the other ones who have not yet done that, and that as normal within Constellation, sharing best practices and sharing better ways of doing things will continue in this particular front. We're using some very specific examples right now, which I think are pretty interesting. We'll just kind of get the word out as well. That's great. Thank you very much. The next question comes from Paul Treiber with RBC Capital Markets. Please go ahead. Thanks. Thanks for taking the questions. Just a couple of questions. In regards to artificial intelligence, have you seen artificial intelligence begin to influence valuations in the private markets, and then influence in any way the pace of acquisitions that you may have done over the past year? No, Paul. I mean, I've not seen anything, any impact on pace or valuation. Not at all. Stay tuned if there's something else. I haven't seen anything so far. A second question also related to AI is, have you seen as a result of AI an increase in competition at the business unit level, specifically within Volaris, any of the segments there? Has there been any change in competitive intensity over the last couple of years with either new AI entrants or new entrants in general? I haven't heard of any. I asked that question yesterday, actually, about it. What my question was is, you know, sort of what damage have you gotten from competitors in AI? There didn't seem to be yet any concern about that so far. One of the things important to note, as always, with our businesses in Constellation, we tend to be fast followers. Our business leaders, particularly our better business leaders, are usually quick to respond to changes inside of their markets due to moves their competitors make or new entrants make into the market. Great, thank you for taking the questions. Again, if you have a question, please press star then one. The next question comes from Kevin McVey at UBS. Please go ahead. Great, thanks so much. Best wishes to Mark and congratulations. I wonder if, from an operational perspective, it sounds like you started in transit and transitioned up to Volaris. Any best practices you would call out over your career transition, which is obviously a very rich history within Constellation that you would look to implement across the broader organization? We've been very good at sharing our best practices. We speak at each other's events. We get together with everyone across the organization in various meetings. I can't think of anything that I wouldn't have shared already. One of the more interesting things that we did a lot of at Volaris was we made businesses smaller by breaking them up and by creating a couple of businesses out of one that would be more focused on the customer strategy. I'd love to see more of that done across Constellation. I know Topicus has done a lot of that, but we've done an extraordinary amount of that. I really do believe it positions us well to stay close to our customers, especially when you're in a buy and hold forever mode. When you're close to those customers, you're going to be able to adjust with them over time. Sometimes you might want to split the business by large clients versus small clients, or it could be by geography. Thinking of best practices, if there's one thing I could share, it is keep your team small. It allows you to develop your people better, allows you to be closer to your customers, and create better products that are more suited to their needs. Even with the advent of AI coming out, it allows you to be more sensible as to how you apply it to the particular situation. Just as an aside, I think that's an interesting one. I'd love to see more done. Things aren't magically done by waving a wand at Constellation. We try to coach our leaders and let them meet with other people who have done things and hope that when it makes sense, they apply that best practice to their particular business or portfolio or situation. Congratulations on a great opportunity. Thank you. The next question is a follow-up from David Kwan with TD Cowen. Please go ahead. Thanks. Mark, you're obviously wearing a lot of hats, particularly within your various roles at Constellation. Can you talk about how you plan to allocate your time amongst the various roles you have in Constellation in particular? I think the focus of my attention is going to be on capital deployment, and that goes across any of the roles I'm in. In particular, Volaris, I made myself Executive Chairman of Volaris a year ago, a year and a half ago. Just the talent that we have, right? I had three particular groups, if you want to call it, Lumen being a separate public company, Madaxo, which is our transit business, and essentially the rest of Volaris. The people running those are outstanding and doing a great job. I really want to just help and focus on making sure that when we're looking at doing a large investment, that it's done wisely across the board at Constellation Software Inc. That's just a good place to spend my time. I also want to keep a close eye on succession planning and make sure that we have continued to develop our, not the people who are directly reporting into Constellation but the next layer below them. We've got an organization that will continue to last decades into the future. That's helpful. Maybe just one follow-up as it relates to kind of these larger acquisitions. Obviously, Mark had structured that spin-out as one way for you guys to be more competitive in terms of some of these larger acquisitions and ones that are, you know, generating probably much better margins and growth than your typical acquisition. Can you talk about, have there been a lot of opportunities that you've been able to pitch that structure over the last couple of years, at least since the Lumen spin-out? You know, we try, and you need a combination of a good opportunity, as you suggested, and a willing seller who'd like to be involved in that. You need a particular vertical or geography that's of good enough size. You also need a management team that is willing to take that on, like for example, the Lumen management team. You need all three of those to come together to make something like a spin-out work. We're definitely open to doing more spin-outs. I think it's been really great to give people that ability, that separate accountability. It's just another way to consider to do decentralization. It gives you another, it's another tool in the decentralized model. You need a few things to be ticked off before you can kind of do those, right? We're very fortunate with Lumen to acquire a business called Widerbit, and one of the better businesses that we've acquired over time. Hopefully, we can do more of those, but I can't predict when and where. It just requires a few things to come together to make them happen. I appreciate the color. Thanks. The next question comes from Charles Nadim with Jarislowsky Fraser. Please go ahead. Yes, thank you. Hi, Mark. I guess a question and a follow-up. If you were in a situation where there's not enough, I guess, targets that meet your, or especially large targets that meet your hurdle rate to keep the growth going, and the board asks you to make a recommendation, how would you rank the following? Lower the hurdle rate to keep the train going, which remains significantly above your cost of capital, or pay a special dividend, or let the cash pile up? How do you think about those three items? It's a hard question to answer. Like lowering the hurdle rate, not a fan of, right? Last we did a special dividend in 2018, and even after we did that, we're debating, should we have done that or not, right? It's a difficult question. I think it'll be situational in how we answer it. We'll do what we think is in the best interest of our shareholders. Based on the right data, there's a lot more we need to do better as far as capital allocation as well. I'd like to see an improvement in our coverage and our processes around covering the market, covering our potential investment opportunities over the next little while as well. That would be my answer to it. It may seem a little lazy. Just to clarify, when you say improve our capital allocation, you mean like having hire more people to look at more deals? Or what do you exactly mean by that? It's just like any process inside of any business that you do. It's just making sure that you get the right people doing the right things in the right ways to make sure you're covering the market optimally. It's just to continue to improve on what we're doing. Okay. Just a clarification, the answer you provided before on the buyback, is that just a philosophical thing where, you know, we're not interested in buybacks, or is it a reflection of, you know, when you look at the valuation today relative to the opportunities, you still think the stock is basically not as good? From my perspective, it's a philosophical thing. We've never been a fan of doing share buybacks in Constellation. Okay, thank you. This concludes our question and answer session. I would like to turn the conference back over to Mark Miller for any closing remarks. I just want to thank everybody at Constellation, the entire team, and of course, also wish Mark Leonard a speedy recovery and look forward to working with everybody on a go-forward basis. Thank you very much, and thank you very much for attending this call. Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.