Q1-2023 Highlights
- Revenues increased 23.2% to $126.8
million, compared to $102.9
million for the same quarter last year.
- Adjusted EBITDA(1) amounted to $6.2 million, or 4.9% of revenues, compared to
$7.0 million, including the
forgiveness of $5.9 million in
Paycheck Protection Program ("PPP") loans, or 6.8% of revenues, for
the same quarter last year.
- Gross margin increased 20.2% to $34.1
million, compared to $28.3
million for the same quarter last year.
- Gross margin as a percentage of revenues(2) was
26.9%, compared to 27.5% for the same quarter last year. Excluding
the impact of the forgiveness of the $4.6 million in PPP loans recorded to cost
of revenues in the first quarter of last year, gross margin as a
percentage of revenues(1) would have amounted to 23.1%
for the three months ended June 30, 2021. On a sequential
basis, gross margin as a percentage of revenues increased from
26.5% for the fourth quarter of last year.
- Net loss was $4.2 million, or
$0.04 per share, compared to a net
loss of $2.0 million, including the
forgiveness of $5.9 million in PPP
loans, or $0.02 per share, for the
same quarter last year.
- Q1 bookings(2) reached $145.4 million, which translated into a
book-to-bill ratio(2) of 1.15 for the quarter, and on a
trailing twelve months basis, bookings were $468.7 million, which translated into a
book-to-bill ratio of 1.02.
- Successfully completed 17 go-live implementations and signed 15
new clients.
- Received several prestigious industry accolades,
including:
-
- Was recognized during the 2022 Microsoft Partner of the Year
Awards, and won the 2022 Microsoft Canada Business Applications
Finance & Operations Impact Award.
- Oracle Partner of the Year finalist for 2022.
- Received two OCTAS prizes, a prestigious contest held by the
Réseau Action TI, for projects that leverage digital and
information technologies in the province of Québec, Canada.
- Completed the acquisition on July 1,
2022, 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.
MONTREAL, Aug. 11,
2022 /CNW Telbec/ - Alithya Group inc. (TSX: ALYA)
(NASDAQ: ALYA) ("Alithya" or the "Company") reported today its
results for the first quarter fiscal 2023 ended June 30, 2022.
All amounts are in Canadian dollars unless otherwise stated.
Summary of the financial results
for the first quarter:
Financial
Highlights
(in thousands of $,
except for margin percentages)
|
F2023-Q1
|
F2022-Q1
|
Revenues
|
126,764
|
102,921
|
Gross Margin
|
34,064
|
28,340
|
Gross Margin
(%)
|
26.9 %
|
27.5 %
|
Selling, general and
administrative expenses
|
28,927
|
22,747
|
Selling, general and
administrative expenses (%)(2)
|
22.8 %
|
22.1 %
|
Adjusted
EBITDA
|
6,198
|
7,012
|
Adjusted EBITDA
Margin(1) (%)
|
4.9 %
|
6.8 %
|
Net loss
|
(4,164)
|
(2,032)
|
|
|
(1)
|
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
June 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.
|
(2)
|
This earnings release
incorporates by reference section 5, "Non-IFRS and Other Financial
Measures", of Alithya's MD&A for the
quarter ended June 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.
|
|
|
Quote by Paul Raymond, President and CEO,
Alithya:
"We are very pleased to begin a new fiscal year with continued
strong revenue growth and solid bookings. In terms of specific
geographies, we experienced record bookings in the US, which
reflect the reputation of trust that Alithya continues to garner.
In Canada, business continues to
be fueled by strong bookings from the public sector and new
business with existing clients. Actually, 85% of our revenues in
the first quarter came from clients which we also served during the
same quarter last year – in other words, that's 85% of repeat
revenues. We also added 15 new clients in the quarter.
Our Q1 financial results include company-wide salary increases
afforded to our valued workforce. Although this has short-term
impacts on our gross margin, they are absorbed in price increases
over time. Talent attraction, retention and nurturing continue to
be a priority in a volatile market, and inflationary pressures
remain. We are therefore pleased with the potential for margin
growth as we expand our offshore operations. We are currently
ramping up our Morocco office and
adding capabilities in India and
Eastern Europe through the recent
acquisition of Datum.
I would also like to highlight some of the prestigious industry
accolades garnered by Alithya teams in the past few months,
including Microsoft Partner of the Year awards in two separate
categories. Alithya was also named to Microsoft's prestigious Inner
Circle for the 16th year, and was honored by an IMPACT
Award, recognizing Microsoft partners who demonstrate excellence in
Microsoft Dynamics 365 new customer additions. Alithya was also
selected as an Oracle Game Changer Award for ERP/EPM Service
Delivery Partner of the Year finalist in 2022, and received two
OCTAS prizes, presented by Réseau Action TI, including an award in
the Culture and Society category for the work of our teams in
developing the BénéClic app for Saint-Justine Children's
Hospital.
Following a period of sustained and significant growth since
going public, we are entering Fiscal 2023 with an opportunity to
leverage our expanded global scale and resulting synergy
opportunities in order to optimize our SG&A cost structure.
Many initiatives are already underway, and we expect to benefit
from these over the course of the next few quarters."
First Quarter Results
Revenues
Revenues amounted to $126.8
million for the three months ended June 30, 2022,
including $8.4 million from Vitalyst,
LLC ("Vitalyst") following its acquisition by the Company on
January 31, 2022 (the "Vitalyst
Acquisition"), representing a $23.9
million increase, or 23.2%, from $102.9 million for the three months ended
June 30, 2021. On a sequential basis, revenues increased
by $6.8 million, from $120.0 million for the fourth quarter of last
year.
Revenues in Canada increased by
$9.2 million, or 13.3%, to
$78.2 million for the three months
ended June 30, 2022, from $69.0
million for the three months ended June 30, 2021.
The increase in revenues was due to organic growth in all areas and
continued growth from the two long-term contracts signed as part of
the acquisition of R3D Consulting Inc. On a sequential basis,
revenues in Canada increased by
$3.0 million, from $75.2 million for the fourth quarter of last
year.
U.S. revenues increased by $13.7
million, or 44.3%, to $44.6
million for the three months ended June 30, 2022,
from $30.9 million for the three
months ended June 30, 2021, due primarily to revenues of
$8.4 million from the Vitalyst
Acquisition, organic growth in all areas, and a favorable US$
exchange rate impact of $1.7 million.
On a sequential basis, revenues in the U.S. increased by
$3.9 million, from $40.7 million for the fourth quarter of last
year.
International revenues increased by $0.9
million, or 32.7%, to $3.9
million, from $3.0 million for
the same quarter last year, due primarily to a general recovery of
activity levels, partially offset by an unfavorable foreign
exchange rate impact of $0.3 million
between the two periods.
Gross Margin
Gross margin increased by $5.8
million, or 20.2%, to $34.1
million for the three months ended June 30, 2022,
from $28.3 million for the three
months ended June 30, 2021. Gross margin as a percentage
of revenues decreased to 26.9% for the three months ended
June 30, 2022, from 27.5% for the three months ended
June 30, 2021. Excluding the impact of the forgiveness of
the $4.6 million in PPP loans
recorded to cost of revenues in the first quarter of last year,
gross margin as a percentage of revenues would have amounted to
23.1% for the three months ended June 30, 2021. On a
sequential basis, gross margin as a percentage of revenues
increased from 26.5% for the fourth quarter of last year, despite
annual salary increases which came into effect in the first quarter
of this year.
Gross margin as a percentage of revenues increased in
Canada and internationally due to
increased revenues from permanent employees relative to
subcontractors and increased subscription, software and other
revenues, which carry higher margins.
In the U.S., gross margin as a percentage of revenues decreased
as a result of reduced governmental wage subsidies, mainly the
forgiveness of the PPP loans recorded in the first quarter of last
year, as explained above, market pressures on salary costs, and
decreased utilization rates in certain areas of the business due to
delays in the timing of new project starts. This decrease was
partially offset by a positive margin impact from the Vitalyst
Acquisition and increased subscription, software and other
revenues, which carry higher margins.
Selling, General and Administrative Expenses
Selling, general and administrative expenses totaled $28.9
million for the three months ended June 30, 2022, an
increase of $6.2 million, or 27.2%,
including $2.6 million in expenses
from Vitalyst, from $22.7 million for the three months ended
June 30, 2021. As a percentage of consolidated revenues,
total selling, general and administrative expenses amounted to
22.8% for the three months ended June 30, 2022, compared
to 22.1% for the same period last year, driven mostly by the higher
historical selling, general and administrative expense percentage
of Vitalyst.
Adjusted EBITDA
Adjusted EBITDA amounted to $6.2
million for the three months ended June 30, 2022,
representing a decrease of $0.8
million, from $7.0 million,
including the forgiveness of $5.9
million in PPP loans, for the three months ended
June 30, 2021. As explained above, increased selling,
general and administrative expenses and decreased governmental wage
subsidies, mainly the forgiveness of the PPP loans recorded in the
first quarter of last year, were partially offset by increased
gross margin and the contribution from the Vitalyst Acquisition.
Adjusted EBITDA Margin was 4.9% for the three months ended
June 30, 2022, compared to 6.8% for the three months
ended June 30, 2021.
Net Loss
Net loss for the three months ended June 30, 2022 was
$4.2 million, an increase of
$2.1 million, from $2.0 million, including the forgiveness of
$5.9 million in PPP loans, for the
three months ended June 30, 2021. The increased loss was
driven by decreased governmental wage subsidies, mainly the
forgiveness of the PPP loans recorded in the first quarter of last
year, increased selling, general and administrative expenses,
increased amortization of intangibles, increased net financial
expenses, and decreased income tax recovery, partially offset by
increased gross margin and decreased business acquisition,
integration and reorganization costs in the three months ended
June 30, 2022, compared to the three months ended
June 30, 2021. On a per share basis, this translated into
a basic and diluted net loss per share of $0.04 for the three months ended
June 30, 2022, compared to a net loss of $0.02 per share for the three months ended
June 30, 2021.
Liquidity and Capital Resources
For the three months ended June 30, 2022, net cash
used in operating activities was $11.4 million, representing
an increase of $11.9 million,
from $0.5 million of cash generated for the three months ended
June 30, 2021. The cash used in the three months ended
June 30, 2022 resulted primarily from the net loss
of $4.2 million, plus $6.6 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
$13.8 million in unfavorable
changes in non-cash working capital items, driven mainly by a
temporary increase in unbilled revenues. In comparison, the cash
flows for the three months ended June 30, 2021 resulted
primarily from the net loss of $2.0 million, less $2.0 million of non-cash adjustments to the
net loss, consisting primarily of the forgiveness of PPP loans and
deferred taxes, partially offset by depreciation and amortization
and share-based compensation, and $4.5 million in favorable changes in
non-cash working capital items.
Normal Course Issuer Bid Program
("NCIB")
On September 14, 2021, the
Company's Board of Directors authorized and subsequently the TSX
approved the implementation of a NCIB. Under the NCIB, the Company
is allowed to purchase for cancellation up to 5,462,572 Subordinate
Voting Shares, representing 10% of the Company's public float as of
the close of markets on September 8, 2021. Shareholders
may obtain a copy of the notice of NCIB approved by the TSX, free
of charge, by contacting the Company.
During the three months ended June 30,
2022, Alithya repurchased and cancelled 178,230 Class A
subordinate voting shares under its share repurchase plan for a
total cash consideration of $530,000.
As at June 30, 2022, the Company
could purchase up to 4,926,642 Subordinate Voting Shares for
cancellation under the NCIB.
Subsequent Event
On July 1, 2022, the Company
acquired 100% of the issued and outstanding equity interests of
U.S.-based Datum.
The Datum Acquisition was completed for total consideration of
up to US$45.5 million ($58.4 million), including the assumption of
estimated IFRS 16 lease liabilities of US$0.5 million ($0.6
million), subject to working capital and other adjustments.
The consideration consisted of: (i) approximately US$13.7 million ($17.6
million) in cash on closing; (ii) US$4.0 million ($5.1
million) payable by the issuance of 1,867,262 Subordinate
Voting Shares on closing, (iii) deferred cash consideration of
approximately US$10.3 million
($13.3 million) and deferred share
consideration of US$4.0 million
($5.1 million), both payable over
three years and (iv) potential earn-out consideration of up to
US$13.0 million ($16.7 million), payable in cash (75%) and shares
(25%), based on annual gross profit increases, payable over three
years.
Outlook
As a result of measures enacted during fiscal 2022 and 2021 to
combat the COVID-19 pandemic, increased uncertainty surrounding
global economic conditions and business impacts have resulted. In
this context, the Company's priority remains the protection of its
people, its clients and the Company. However, 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 North American digital transformation leader.
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 plan focusing on:
- Increasing scale through organic growth and strategic
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 impact of the continued
COVID-19 pandemic and related response measures on our business
operations, financial results and financial position and those of
our clients and on the economy in general.
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 June 30, 2022
and Management's Discussion and Analysis for the year ended
March 31, 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, Adjusted EBITDA Margin and
Gross Margin, Excluding PPP Loan Forgiveness, as a Percentage of
Revenues, are non-IFRS measures and Bookings, Book-to-Bill Ratio,
Gross Margin as a Percentage of Revenues and Selling, General and
Administrative 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 June 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 June 30,
|
(in $
thousands)
|
|
2022
|
|
2021
|
|
|
$
|
|
$
|
Revenues
|
|
126,764
|
|
102,921
|
Net
loss
|
|
(4,164)
|
|
(2,032)
|
Net financial
expenses
|
|
1,793
|
|
949
|
Income tax
recovery
|
|
(488)
|
|
(2,268)
|
Depreciation
|
|
1,579
|
|
1,553
|
Amortization of
intangibles
|
|
4,699
|
|
3,380
|
EBITDA
(1)
|
|
3,419
|
|
1,582
|
EBITDA Margin
(1)
|
|
2.7 %
|
|
1.5 %
|
Adjusted
for:
|
|
|
|
|
Foreign exchange loss
(gain)
|
|
(164)
|
|
68
|
Share-based
compensation
|
|
1,061
|
|
1,171
|
Business acquisition,
integration and reorganization costs
|
|
1,882
|
|
3,943
|
Internal ERP systems
implementation
|
|
—
|
|
248
|
Adjusted EBITDA
(1)
|
|
6,198
|
|
7,012
|
Adjusted EBITDA Margin
(1)
|
|
4.9 %
|
|
6.8 %
|
|
|
|
|
|
|
(1) Non-IFRS measure. See section 5
titled "Non-IFRS and Other Financial Measures" of Alithya's
MD&A for the quarter ended
June 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
August 11, 2022 at 9:00 AM Eastern Time. Interested parties can
join the call by dialing 1 (888) 440-2069 or (438) 803-0525,
conference ID: 1735627, or via webcast at
https://www.icastpro.ca/hnii6p. 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 months ended June 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