Accelerating the execution of its long-term
strategy with leading organic growth
and the integration of R3D Consulting
Q2-2022 Highlights
- Revenues increased 54.0% to $105.3
million, compared to $68.4
million for the same quarter last year. The consolidated
percentage increase would have been 57.0% assuming a constant US$
exchange rate.
- Adjusted EBITDA(1) increased 511.2% to $5.0 million, or 4.8% of revenues, compared to
$0.8 million, or 1.2% of revenues,
for the same quarter last year.
- Gross margin increased 52.0% to $28.5
million, compared to $18.7
million for the same quarter last year.
- Gross margin for the second quarter, as a percentage of
revenues, was 27.0%, or 29.1% when excluding the impact of the
recent acquisition of R3D Consulting Inc. (the "R3D Acquisition"),
from 27.4% for the same quarter last year.
- Selling, general and administrative expenses as a percentage of
revenues decreased to 23.6%, from 29.5% for the same quarter last
year.
- Net loss decreased to $2.8
million, or $0.03 per share,
compared to a net loss of $5.5
million, or $0.09 per share,
for the same quarter last year.
- Q2 Bookings(1) reached $90.9
million, which translated into a Book-to-Bill
Ratio(1) of 0.86 for the quarter, and on a trailing
twelve months basis, Bookings(1) were $1,018.3 million, including the $600.0 million estimated value of the two
long-term contracts signed as part of the R3D Acquisition, which
translated into a Book-to-Bill Ratio(1) of 2.90.
- Solid financial position enhanced with a $10.0 million subordinated unsecured loan entered
into with Investissement Québec, as well as an extension of the
credit facility to April 1, 2024 with
a $10.0 million increase, for a
facility now amounting to $70.0.
- Launched a normal course issuer bid ("NCIB") on September 20, 2021.
MONTREAL, Nov. 11, 2021 /PRNewswire/ - Alithya Group
inc. (TSX: ALYA) (NASDAQ: ALYA) ("Alithya" or the "Company"), a
trusted advisor in strategy and digital transformation employing
more than 3,400 highly qualified professionals and offering
enterprise cloud solutions across Canada, the U.S. and Europe, reported today its results for the
second quarter fiscal 2022 ended September 30, 2021. 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)
|
F2022-Q2
|
F2021-Q2
|
|
Revenues
|
105,277
|
68,355
|
|
Gross
Margin
|
28,473
|
18,732
|
|
Gross Margin
(%)
|
27.0%
|
27.4%
|
|
Adjusted
EBITDA(1)
|
5,035
|
824
|
|
Adjusted EBITDA
Margin(1) (%)
|
4.8%
|
1.2%
|
|
Net loss
|
(2,777)
|
(5,491)
|
|
(1)
|
These are non-IFRS
financial measures. Please refer to the "Non-IFRS Measures" section
at the end of this press release and in the MD&A for more
information and calculated amounts.
|
Quote by Paul Raymond,
President and CEO, Alithya:
"We are thrilled to announce another record quarter in terms of
revenue, gross margin, and Adjusted EBITDA(1). We
experienced another quarter of industry leading organic growth
across all of our geographies, further confirming our long-term
strategy. For the second consecutive quarter, the numbers reflect
impressive organic growth, as well as a great contribution from the
new long-term contracts and R3D Acquisition closed on April 1.
Our integration of R3D Consulting is proceeding according to
plan, adding new transformation projects with long-term clients,
Beneva and Québecor, further contributing to the strength of our
overall performance. Our continued solid Bookings(1)
reflect not only strong demand for our digital transformation
services, but also the fact that new customers are turning to
Alithya seeking a trusted advisor to support their growth
initiatives. We continue to invest in our accelerated growth, and
we successfully attracted five hundred additional highly skilled
professionals in the first two quarters of fiscal 2022 who believe
in our vision to become an industry leading trusted advisor in
strategy and digital transformation.
We announced and launched our NCIB in September. While we view
this as an accretive use of capital, we remain fully committed to
securing future acquisitions that will generate industry,
knowledge, or geographic expansion to complement our growing market
presence and capabilities.
This strong Q2 2022 performance occurred during what is normally
our softer seasonal period. We are therefore encouraged by the
early indicators of a broader post-pandemic recovery and digital
transformation acceleration, and we continue to focus on our 2024
strategic objectives."
Second Quarter Results
Revenues
Revenues amounted to $105.3
million for the three months ended September 30, 2021, including $15.6 million from the R3D Acquisition,
representing a $36.9 million
increase, or 54.0%, from $68.4
million for the three months ended September 30, 2020. Excluding the impact of the
R3D Acquisition, revenues increased 31.2% over the same period, or
34.2% on a constant currency basis.
Revenues in Canada increased by
$27.2 million, or 69.7%, to
$66.1 million for the three months
ended September 30, 2021, from
$38.9 million for the three months
ended September 30, 2020. Organic
growth in all areas, the general recovery of activity levels, and
revenues of $15.6 million from the
R3D Acquisition, and growth from the two long-term contracts signed
as part of the R3D Acquisition, accounted for the bulk of the
increase in revenues.
U.S. revenues increased by $8.6
million, or 32.0%, to $35.7
million for the three months ended
September 30, 2021, from $27.1
million for the three months ended September 30, 2020. Organic growth in all areas
of the business and the general recovery of activity levels, was
partially offset by the negative impact of foreign exchange
variations between the periods. Revenues would have been
$37.8 million with a constant US$
exchange rate, resulting in an organic increase in constant
currency of 39.6%. On a sequential basis, revenues in the U.S.
increased by $4.3 million, from
$31.4 million for the first quarter
of this year, including a favorable US$ exchange rate impact of
$0.9 million, in what is historically
the softest quarter of the year due to seasonality.
In Europe, revenues increased
by 47.4%, to $3.5 million, from
$2.4 million for the same quarter
last year, due primarily to a general recovery of activity levels,
partially offset by the negative impact of foreign exchange
variations between the two periods. On a sequential basis, revenues
in Europe increased by
$0.2 million, from $3.3 million for the first quarter of this
year.
Gross Margin
Gross margin increased by $9.8
million, or 52.0%, to $28.5
million for the three months ended
September 30, 2021, from $18.7
million for the three months ended September 30, 2020. Gross margin as a percentage
of revenues decreased to 27.0% for the three months ended
September 30, 2021, from 27.4% for
the three months ended September 30,
2020. However, excluding the impact of the R3D Acquisition,
gross margin as a percentage of revenues would have amounted to
29.1% for the three months ended September 30, 2021.
The percentage decrease was driven primarily by decreased gross
margin in Canada from the R3D
Acquisition, whose revenues historically show a higher proportion
from billable subcontractors, resulting in lower margins. This
decrease was partially offset by increased gross margin in the U.S.
and Europe, due to increased
utilization rates.
On a sequential basis, the overall gross margin increased by
$0.2 million, or 0.5%, from
$28.3 million for the first quarter
of this year. Gross margin as a percentage of revenues decreased
slightly from 27.5% for the first quarter of this year. However,
excluding the impact of the R3D Acquisition, and excluding losses
from one large customer project and government subsidies recorded
in the first quarter of this year, gross margin as a percentage of
revenues increased in all geographies, sequentially.
Selling, General and Administrative Expenses
Selling, general and administrative expenses totaled $24.9
million for the three months ended September 30, 2021, an
increase of $4.7 million, or 23.5%,
from $20.2 million for the three months ended September 30, 2020. As a percentage of
consolidated revenues, total selling, general and administrative
expenses amounted to 23.6% for the three months ended September 30, 2021, compared to 29.5% for the
same period last year.
Adjusted EBITDA(1)
Adjusted EBITDA(1) amounted to $5.0 million for the three months ended
September 30, 2021, representing an
increase of $4.2 million, from
$0.8 million for the three months
ended September 30, 2020. The
contribution from the R3D Acquisition and increased gross margin
were partially offset by increased selling, general and
administrative expenses. Adjusted EBITDA Margin(1) was
4.8% for the three months ended September
30, 2021, compared to 1.2% for the three months ended
September 30, 2020.
Net Loss
Net loss for the three months ended September 30, 2021 was $2.8 million, an improvement of $2.7 million, from $5.5
million for the three months ended September 30, 2020. The decreased loss was driven
by increased gross margin, partially offset by increased selling,
general and administrative expenses, increased depreciation and
amortization, increased net financial expenses, increased business
acquisition and integration costs, and decreased income tax
recovery in the three months ended September
30, 2021, compared to the three months ended September 30, 2020.
Liquidity and Capital Resources
During the quarter, Alithya entered into a $10.0 million subordinated unsecured loan with
Investissement Québec and amended its credit facility to provide
for a maximum availability of $70.0
million, maturing on April 1, 2024.
Net cash used in operating activities was $7.5 million in
the three months ended September 30,
2021, including unfavorable changes in non-cash working
capital items of $10.9 million,
representing an increase from $6.7 million of cash used for the same
period last year.
Net bank borrowing(1) reached $29.6 million, an increase from $21.1 million as at March 31, 2021. Total
long-term debt as at September 30, 2021 increased by
$29.5 million, to $84.5 million, from $55.0
million as at March 31, 2021, due primarily to an
increase of $25.2 million in drawings
under Alithya's credit facility, partially related to the R3D
Acquisition, and the $10.0 million
subordinated unsecured loan, partially offset by the recording of
forgiveness of $6.0 million of the
unsecured promissory notes under the PPP. The increase in total
long-term debt was used to fund operations and resulted in a
$16.7 million increase in cash.
Six-Month Results
Revenues increased to $208.2
million, compared to $139.1
million last year; gross margin was $56.8 million, or 27.3%, versus $39.1 million, or 28.1%, last year; Adjusted
EBITDA(1) was $12.0
million, or 5.8%, compared to $4.1
million, or 2.9%, last year; operating loss was $5.1 million, compared to $10.2 million last year; and net loss was
$4.8 million, or $0.06 per share, compared to $10.0 million, or $0.17 per share, last year, for similar reasons
as reported for the second quarter.
Normal Course Issuer Bid Program
On September 14, 2021, the Company
announced the implementation of a NCIB. Under the NCIB, the Company
will be allowed to purchase for cancellation up to 5,462,572 Class
A subordinated voting shares (the "Subordinated Voting Shares") for
the next twelve months, representing 10% of the Company's public
float as of the close of markets on September 8, 2021. For further information,
please refer to our September 15
press release announcing the NCIB.
During the three months ended September
30, 2021, the Company repurchased and cancelled 26,400
Subordinated Voting Shares under its share repurchase plan for a
total cash consideration of $90,000.
Outlook
As the context surrounding the COVID-19 pandemic continues to
evolve, management is encouraged by the continued strong
Bookings(1) and strong demand from its clients. The
Company's priority still is the protection of its people, its
clients and the Company. However, notwithstanding the ongoing
pandemic, the Company has shown its ability to navigate the crisis
and maintain focus on its strategic plan, which sets as a goal to
consolidate its position as to become a 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-to-five-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 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 September 30,
2021 and Management's Discussion and Analysis for the year ended
March 31, 2021, 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
This press release includes certain measures which have not been
prepared in accordance with IFRS. EBITDA, EBITDA Margin, Adjusted
EBITDA, Adjusted EBITDA Margin, Net Bank Borrowing, Bookings and
Book-to-Bill Ratio are non-IFRS measures. 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. Please refer to the
Management's Discussion and Analysis for the quarter ended
September 30, 2021 for a description of such measures, a
reconciliation to the most directly comparable IFRS financial
measure and calculated amounts.
Conference Call
Alithya will hold a conference call to discuss these results on
November 11, 2021 at 8:00 AM Eastern Time. Interested parties can join
the call by dialing (800) 590-6590, conference ID: 1735627, or via
webcast at https://www.icastpro.ca/zm7bxd. 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 North American leader in strategy and digital
transformation, employing a dedicated and highly skilled workforce
of 3,400 professionals in Canada,
the United States and Europe.
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, 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 September 30, 2021
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