Delivered another record quarter with
improvements in all key indicators
Q2-2023 Highlights
- Revenues increased 22.5% to $128.9
million, compared to $105.3
million for the same quarter last year.
- Gross margin increased 32.6% to $37.8
million, compared to $28.5
million for the same quarter last year.
- Gross margin as a percentage of revenues(1) was
29.3%, compared to 27.0% for the same quarter last year. On a
sequential basis, gross margin as a percentage of revenues
increased from 26.9% for the first quarter of this year.
- Adjusted EBITDA(2) increased 87.5% to $9.4 million, or 7.3% of revenues, compared to
$5.0 million, or 4.8% of revenues,
for the same quarter last year.
- Net loss was $0.4 million, or nil
on a per share basis, compared to a net loss of $2.8 million, or $0.03 per share, for the same quarter last
year.
- Q2 bookings(1) reached $119.3
million, which translated into a book-to-bill
ratio(1) of 0.93 for the quarter, and on a trailing
twelve months basis, bookings were $497.1
million, which translated into a book-to-bill ratio of
1.02.
- Successfully completed 13 enterprise solution go-live
implementations and signed 34 new clients.
- Achieved the prestigious Microsoft Business Applications
2022/2023 Inner Circle award for the 17th time, and finalist for
best overall testing project on an Oracle environment at the North
American Software Testing Awards.
- Published inaugural Environmental, Social, and Governance
report outlining the Company's responsibility in helping customers
transition to more sustainable economies.
- Completed, at the beginning of the second quarter, the
acquisition of US-based Datum Consulting Group, LLC and its
affiliates ("Datum") (the "Datum Acquisition"), a leader in IP
enabled digital transformation services for data rich insurers and
other regulated entities such as state governments, adding over 150
professionals in the United
States, Europe,
India, and Australia to our team, and integration
progressing as planned.
MONTREAL, Nov. 10,
2022 /PRNewswire/ - Alithya Group inc.
(TSX: ALYA) (NASDAQ:
ALYA) ("Alithya" or the "Company") reported
today its results for the second quarter fiscal 2023 ended
September 30, 2022. All amounts are in Canadian dollars unless
otherwise stated.
Summary of the financial results for the second
quarter:
Financial
Highlights
(in thousands of $,
except for margin percentages)
|
F2023-Q2
|
F2022-Q2
|
Revenues
|
128,933
|
105,277
|
Gross Margin
|
37,760
|
28,473
|
Gross Margin
(%)
|
29.3 %
|
27.0 %
|
Selling, general and
administrative expenses
|
30,421
|
24,885
|
Selling, general and
administrative expenses (%)(1)
|
23.6 %
|
23.6 %
|
Adjusted
EBITDA(2)
|
9,440
|
5,035
|
Adjusted EBITDA Margin
(%)(2)
|
7.3 %
|
4.8 %
|
Net loss
|
(435)
|
(2,777)
|
(1)
|
This earnings release
incorporates by reference section 5, "Non-IFRS and Other Financial
Measures", of Alithya's MD&A for the quarter ended September
30, 2022, filed on SEDAR at www.sedar.com and on EDGAR at
www.sec.gov, which includes explanations of the composition and
usefulness of these other financial measures.
|
(2)
|
These are non-IFRS
financial measures or ratios without a standardized definition
under IFRS, which may not be comparable to similar measures or
ratios used by other issuers. Definition and quantitative
reconciliation of Adjusted EBITDA to the most directly comparable
IFRS measure is presented below under the caption ''Non-IFRS and
other financial measures''. "Adjusted EBITDA Margin" refers to the
percentage of total revenue that Adjusted EBITDA represents for a
given period. This earnings release incorporates by reference
section 5, "Non-IFRS and Other Financial Measures", of
Alithya's MD&A for the quarter ended
September 30, 2022, filed on SEDAR at www.sedar.com and
on EDGAR at www.sec.gov, which includes explanations of the
composition and usefulness of these non-IFRS financial measures and
non-IFRS ratios.
|
Quote by Paul Raymond,
President and CEO, Alithya:
"In a seasonally slower quarter, the Alithya team delivered
another record performance with improvements in all our key
indicators. We realized global Adjusted EBITDA growth of 87%, and
revenue growth of 23% for Q2 F2023, compared to the same quarter
last year.
Our efficiency initiatives and the ongoing integration of our
latest acquisitions are also showing a positive impact on our gross
margins. We are creating value for our clients by leveraging all
our assets across our platform.
Our robust performance is a testament to the continued health of
our client relationships and our pipeline of projects. Despite the
current global economic uncertainties, most of our clients, many of
which deliver essential services, remain committed to accelerating
their digital transformation projects. Our results also reflect the
performance of our people as we continue to leverage the growth of
our global delivery teams to meet all our client's project
needs.
Looking ahead, our second quarter performance hints at the
strong potential of Alithya's platform as all the streams of our
strategic plan start coming together. We remain committed to the
disciplined and quality approach that has enabled us to build our
reputation as the trusted advisor to our clients as they move
forward with their digital transformation projects."
Second Quarter Results
Revenues
Revenues amounted to $128.9
million for the three months ended
September 30, 2022, including $8.3
million from Vitalyst, LLC ("Vitalyst") and $4.9 million from Datum following their
respective acquisitions by the Company on January 31, 2022 (the "Vitalyst Acquisition") and
July 1, 2022, representing a $23.6
million increase, or 22.5%, from $105.3 million for the three months ended
September 30, 2021. On a sequential basis, revenues also
increased by $2.1 million, from
$126.8 million for the first
quarter of this year.
Revenues in Canada increased by
$8.1 million, or 12.2%, to
$75.1 million for the three months
ended September 30, 2022, from $67.0 million for the three months ended
September 30, 2021. The increase in revenues was due to
organic growth in all areas, including growth from the two
long-term contracts signed as part of an acquisition in the first
quarter of last year.
U.S. revenues increased by $14.7
million, or 41.8%, to $49.8
million for the three months ended
September 30, 2022, from $35.1
million for the three months ended
September 30, 2021, due primarily to revenues of
$8.3 million from the Vitalyst
Acquisition, $4.9 million from the
Datum Acquisition, and a favorable US$ exchange rate impact of
$1.7 million, partially offset by a
decrease of revenues in certain areas of the business. On a
sequential basis, revenues in the U.S. increased by $5.2 million, from $44.6 million for the first quarter of this
year.
International revenues increased by $0.8
million, or 25.3%, to $4.0
million, from $3.2 million for
the same quarter last year, driven by strong growth in activity
levels, partially offset by an unfavorable foreign exchange rate
impact of $0.5 million between the
two periods.
Gross Margin
Gross margin increased by $9.3
million, or 32.6%, to $37.8
million for the three months ended
September 30, 2022, from $28.5
million for the three months ended
September 30, 2021. Gross margin as a percentage of
revenues increased to 29.3% for the three months ended
September 30, 2022, from 27.0% for the three months ended
September 30, 2021. On a sequential basis, gross margin
as a percentage of revenues increased from 26.9% for the first
quarter of this year.
Gross margin as a percentage of revenues increased in
Canada, compared to the same
quarter last year and on a sequential basis, due to increased
revenues from permanent employees relative to subcontractors and
increased average hourly billing rates.
In the U.S., gross margin as a percentage of revenues increased,
compared to the same quarter last year and on a sequential basis,
despite annual salary increases which came into effect in the first
quarter of this year, as a result of a positive margin impact from
the acquisitions of Vitalyst and Datum.
International gross margin as a percentage of revenues decreased
compared to the same quarter last year as a result of market
pressures on salary costs.
Selling, General and Administrative Expenses
Selling, general and administrative expenses totaled $30.4
million for the three months ended September 30, 2022, an
increase of $5.5 million, or 22.2%,
from $24.9 million for the three months ended
September 30, 2021. As a percentage of consolidated
revenues, total selling, general and administrative expenses
amounted to 23.6% for the three months ended
September 30, 2022, similar to 23.6%for the same period
last year, driven mostly by the higher historical selling, general
and administrative expense percentage of Vitalyst, offset by
reductions in other expense categories. On a sequential basis,
expenses increased by $1.5 million, from $28.9 million for the first quarter, driven by a
sequential increase in share-based compensation of $1.0 million, expenses of $0.6 million from Datum, and an unfavorable US$
exchange rate impact of $0.3 million, partially offset by reductions
in other expense categories.
Adjusted EBITDA
Adjusted EBITDA amounted to $9.4
million for the three months ended
September 30, 2022, representing an increase of
$4.4 million, from $5.0 million for the three months ended
September 30, 2021. As explained above, increased gross
margin and the contributions from the acquisitions of Vitalyst and
Datum were partially offset by increased selling, general and
administrative expenses. Adjusted EBITDA Margin was 7.3% for the
three months ended September 30, 2022, compared to 4.8%
for the three months ended September 30, 2021.
Net Loss
Net loss for the three months ended September 30, 2022
was $0.4 million, a decrease of
$2.3 million, from $2.8 million for the three months ended
September 30, 2021. The decreased loss was driven by
increased gross margin and increased income tax recovery, partially
offset by increased selling, general and administrative expenses,
increased business acquisition, integration and reorganization
costs, increased depreciation and amortization of intangibles, and
increased net financial expenses in the three months ended
September 30, 2022, compared to the three months ended
September 30, 2021. On a per share basis, this translated
into a basic and diluted net loss per share of nil for the three
months ended September 30, 2022, compared to a net loss
of $0.03 per share for the three
months ended September 30, 2021.
Liquidity and Capital Resources
For the three months ended September 30, 2022, net
cash used in operating activities was $2.6 million,
representing an improvement of $4.9
million, from $7.5 million for the three months ended
September 30, 2021. The cash used in the three months
ended September 30, 2022 resulted primarily from the net
loss of $0.4 million, plus $4.1 million of non-cash adjustments to the
net loss, consisting primarily of depreciation and amortization and
share-based compensation, partially offset by deferred taxes and
unrealized foreign exchange, and $6.3 million in unfavorable changes in
non-cash working capital items. In comparison, the cash flows for
the three months ended September 30, 2021 resulted
primarily from the net loss of $2.8 million, plus $6.2 million of non-cash adjustments to the
net loss, consisting primarily of depreciation and amortization and
share-based compensation, and $10.9 million in unfavorable changes in
non-cash working capital items.
Six-Month Results
Revenues amounted to $255.7
million, including $16.7
million from the Vitalyst Acquisition and $4.9 million from the Datum Acquisition,
representing a $47.5 million
increase, or 22.8%, from $208.2
million for last year. Gross margin increased by
$15.0 million, or 26.4%, to
$71.8 million, from $56.8 million for last year. Adjusted EBITDA
amounted to $15.6 million,
representing an increase of $3.6
million, from $12.0 million,
including the forgiveness of $5.9
million in PPP loans, for last year. Net loss was
$4.6 million, a decrease of
$0.2 million, from $4.8 million, including the forgiveness of
$5.9 million in PPP loans, for last
year. On a per share basis, this translated into a basic and
diluted net loss per share of $0.05,
compared to a net loss of $0.06 per
share for last year.
Normal Course Issuer Bid Program ("NCIB")
On September 14, 2022, the
Company's Board of Directors authorized and subsequently the TSX
approved the renewal of its NCIB. Under the NCIB, the Company is
allowed to purchase for cancellation up to 2,491,128 Class A
Subordinate Voting Shares ("Subordinate Voting Shares"),
representing 5% of the Company's public float as of the close of
markets on September 8, 2022.
The NCIB plan commenced on September 20,
2022 and will end on the earlier of
September 19, 2023 and the date on which the Company will
have acquired the maximum number of Subordinate Voting Shares
allowable under the NCIB or will otherwise have decided not to make
any further purchases. All purchases of Subordinate Voting Shares
are made by means of open market transactions at their market price
at the time of acquisition, except for purchases that could be
effected pursuant to exemption orders issued by securities
regulatory authorities, which would be at a discount to the
prevailing market price as per the terms of the order.
Concurrently, the Company entered into an automatic share purchase
plan ("ASPP") with a designated broker in connection with its NCIB.
The ASPP allows for the designated broker to purchase for
cancellation Subordinate Voting Shares, on behalf of the Company,
subject to certain trading parameters established, from time to
time, by the Company.
Outlook
Notwithstanding the ongoing global uncertainties, the Company
has demonstrated its ability to navigate the crisis and maintain
focus on its long-term strategic plan, which sets as a goal to
consolidate its position to become a trusted leader in digital
transformation.
According to this plan, Alithya's consolidated scale and scope
should allow it to leverage its geographies, expertise, integrated
offerings, and position on the value chain to target the fastest
growing IT services segments. Alithya's specialization in digital
technologies and the flexibility to deploy enterprise solutions,
and deliver solutions tailored to specific business objectives,
responds directly to client expectations. More specifically,
Alithya has established a three-pronged growth plan focusing
on:
- Increasing scale through organic growth and complementary
acquisitions;
- Achieving best-in-class employee engagement;
- Providing its investors, partners and stakeholders with
long-term growing return on investment.
Forward-Looking Statements
This press release contains statements that may constitute
"forward-looking information" within the meaning of applicable
Canadian securities laws and "forward-looking statements" within
the meaning of the U.S. Private Securities Litigation Reform Act of
1995 and other applicable U.S. safe harbours (collectively
"forward-looking statements"). Statements that do not exclusively
relate to historical facts, as well as statements relating to
management's expectations regarding the future growth, results of
operations, performance and business prospects of Alithya, and
other information related to Alithya's business strategy and future
plans or which refer to the characterizations of future events or
circumstances represent forward-looking statements. Such statements
often contain the words "anticipates," "expects," "intends,"
"plans," "predicts," "believes," "seeks," "estimates," "could,"
"would," "will," "may," "can," "continue," "potential," "should,"
"project," "target," and similar expressions and variations
thereof, although not all forward-looking statements contain these
identifying words.
Forward-looking statements in this press release include, among
other things, information or statements about: (i) our ability to
generate sufficient earnings to support our operations; (ii) our
ability to take advantage of business opportunities and meet our
goals set in our three-year strategic plan; (iii) our ability to
develop new business, broaden the scope of our service offerings
and enter into new contracts; (iv) our strategy, future operations,
and prospects; (v) our need for additional financing and our
estimates regarding our future financing and capital requirements;
(vi) our expectations regarding our financial performance,
including our revenues, profitability, research and development,
costs and expenses, gross margins, liquidity, capital resources,
and capital expenditures; (vii) our ability to realize the expected
synergies or cost savings relating to the integration of our
business acquisitions, and (viii) the potential return to
pre-COVID-19 pandemic operations.
Forward-looking statements are presented for the sole purpose of
assisting investors and others in understanding Alithya's
objectives, strategies and business outlook as well as its
anticipated operating environment and may not be appropriate for
other purposes. Although management believes the expectations
reflected in Alithya's forward-looking statements were reasonable
as at the date they were made, forward-looking statements are based
on the opinions, assumptions and estimates of management and, as
such, are subject to a variety of risks and uncertainties and other
factors, many of which are beyond Alithya's control, and which
could cause actual events or results to differ materially from
those expressed or implied in such statements. Such risks and
uncertainties include but are not limited to those discussed in the
section titled "Risks and Uncertainties" of Alithya's Management's
Discussion and Analysis for the quarter ended September 30,
2022, Management's Discussion and Analysis for the year ended
March 31, 2022, and Management's Discussion and Analysis for
the quarter ended June 30, 2022, as
well as in Alithya's other materials made public, including
documents filed with Canadian and U.S. securities regulatory
authorities from time to time and which are available on SEDAR
at www.sedar.com and EDGAR at www.sec.gov.
Additional risks and uncertainties not currently known to Alithya
or that Alithya currently deems to be immaterial could also have a
material adverse effect on its financial position, financial
performance, cash flows, business or reputation.
Forward-looking statements contained in this press release are
qualified by these cautionary statements and are made only as of
the date of this press release. Alithya expressly disclaims any
obligation to update or alter any forward-looking statements, or
the factors or assumptions underlying them, whether as a result of
new information, future events or otherwise, except as required by
applicable law. Investors are cautioned not to place undue reliance
on forward-looking statements since actual results may vary
materially from them.
Non-IFRS Measures and other financial Measures
This press release includes certain measures which have not been
prepared in accordance with IFRS and other financial measures.
EBITDA, EBITDA Margin, Adjusted EBITDA and Adjusted EBITDA Margin
are non-IFRS measures and Bookings, Book-to-Bill Ratio, Gross
Margin as a Percentage of Revenues and Selling, General and
Administrative Expenses as a Percentage of Revenues are other
financial measures used in this press release. These measures do
not have any standardized meaning prescribed by IFRS and are
therefore unlikely to be comparable to similar measures presented
by other companies. These measures should be considered as
supplemental in nature and not as a substitute for the related
financial information prepared in accordance with IFRS. Additional
details for these non-IFRS and other financial measures can be
found in section 5,"Non-IFRS and Other Financial Measures", of
Alithya's MD&A for the quarter ended September 30, 2022, filed on SEDAR at
www.sedar.com and on EDGAR at www.sec.gov, and are incorporated by
reference in this press release, which includes explanations of the
composition and usefulness of these non-IFRS financial measures
and non-IFRS ratios.
The following table reconciles net loss to EBITDA and Adjusted
EBITDA:
|
|
For the three months
ended
September
30,
|
|
For the six months
ended
September
30,
|
(in $
thousands)
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
|
$
|
|
$
|
|
$
|
|
$
|
Revenues
|
|
128,933
|
|
105,277
|
|
255,697
|
|
208,198
|
Net
loss
|
|
(435)
|
|
(2,777)
|
|
(4,599)
|
|
(4,809)
|
Net financial
expenses
|
|
2,301
|
|
1,075
|
|
4,094
|
|
2,024
|
Income tax
recovery
|
|
(5,642)
|
|
(54)
|
|
(6,130)
|
|
(2,322)
|
Depreciation
|
|
1,602
|
|
1,247
|
|
3,181
|
|
2,800
|
Amortization of
intangibles
|
|
6,708
|
|
3,450
|
|
11,407
|
|
6,830
|
EBITDA
(1)
|
|
4,534
|
|
2,941
|
|
7,953
|
|
4,523
|
EBITDA Margin
(1)
|
|
3.5 %
|
|
2.8 %
|
|
3.1 %
|
|
2.2 %
|
Adjusted
for:
|
|
|
|
|
|
|
|
|
Foreign exchange loss
(gain)
|
|
64
|
|
(42)
|
|
(100)
|
|
26
|
Share-based
compensation
|
|
2,101
|
|
1,207
|
|
3,162
|
|
2,378
|
Business acquisition,
integration and reorganization costs
|
|
2,741
|
|
689
|
|
4,623
|
|
4,632
|
Internal ERP systems
implementation
|
|
—
|
|
240
|
|
—
|
|
488
|
Adjusted EBITDA
(1)
|
|
9,440
|
|
5,035
|
|
15,638
|
|
12,047
|
Adjusted EBITDA Margin
(1)
|
|
7.3 %
|
|
4.8 %
|
|
6.1 %
|
|
5.8 %
|
|
|
|
|
|
|
|
|
|
(1)
|
Non-IFRS measure.
See section 5 titled "Non-IFRS and Other Financial Measures" of
Alithya's MD&A for the quarter ended
September 30, 2022, filed on SEDAR at www.sedar.com and
on EDGAR at www.sec.gov.
|
Conference Call
Alithya will hold a conference call to discuss these results on
November 10, 2022 at 9:00 AM Eastern Time. Interested parties can
join the call by dialing 1 (888) 396 8049 or (416) 764 8646,
conference ID: 39822796, or via webcast at
https://www.icastpro.ca/fdra1t. The conference call recording can
be accessed via Alithya's website under the Investors section, or
directly at https://www.alithya.com/en/investors.
About Alithya
Alithya is a trusted North American leader in strategy and
digital transformation, employing a dedicated and highly skilled
workforce of 3,900 professionals in Canada, the United
States and internationally. Since its founding in 1992,
Alithya's capacity, size, and capabilities have continuously
evolved, guided by a long-term strategic vision to become the
trusted advisor of its clients. Alithya's strategy is based on a
plan of accelerated organic growth and complementary acquisitions
to create a global leader. The company's integrated offer is based
on four pillars of expertise: business strategies, enterprise cloud
solutions, application services, and data and analytics.
Alithya deploys leading-edge solutions, services, and skills as one
of the most prominent consulting firms, driving successful digital
change as a trusted advisor to customers in a variety of sectors,
including financial services, insurance, manufacturing, renewable
energy, telecommunications, transport and logistics, professional
services, healthcare, government, and beyond. Alithya strives to be
a model of corporate responsibility, professional equity,
diversity, and inclusion, with a vibrant business culture that
embraces social consciousness at its core. To learn more about
Alithya, visit www.alithya.com.
Note to readers: Management's Discussion and Analysis and
the interim consolidated financial statements and notes for the
three and six months ended September 30,
2022 are available on SEDAR at www.sedar.com, on EDGAR at
www.sec.gov and on the Company's website at www.alithya.com.
Shareholders may, upon request, receive a hard copy of these
documents free of charge.
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SOURCE Alithya