Q3-2022 Highlights
- Revenues increased 55.4% to $109.7
million, compared to $70.6
million for the same quarter last year. The percentage
increase would have been 57.0% assuming a constant US$ exchange
rate.
- Adjusted EBITDA(1) increased 97.0% to $4.5 million, or 4.1% of revenues, compared to
$2.3 million, or 3.2% of revenues,
for the same quarter last year.
- Gross margin increased 38.3% to $28.3
million, compared to $20.4
million for the same quarter last year.
- Gross margin for the third quarter, as a percentage of
revenues, was 25.8%, or 28.1% when excluding the impact of the
April 2021 acquisition of R3D
Consulting Inc. ("R3D") (the "R3D Acquisition"), from 28.9% for the
same quarter last year.
- Selling, general and administrative expenses as a percentage of
revenues decreased to 22.8%, from 28.9% for the same quarter last
year.
- Net loss decreased to $3.5
million, or $0.04 per share,
compared to a net loss of $4.8
million, or $0.08 per share,
for the same quarter last year.
- Q3 Bookings(1) reached $125.2
million, which translated into a Book-to-Bill
Ratio(1) of 1.14 for the quarter, and on a trailing
twelve months basis, Bookings(1) were $1,017.4 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 2.57.
- Solid financial position, with net cash generated from
operating activities of over $10.1
million during the third quarter, $8.6 million of new secured loans to finance
refundable tax credits, and the senior secured revolving credit
facility usage decreasing from $56.2
million last quarter to $25.8
million.
- Successfully completed 27 enterprise cloud go-lives.
- After the closing of the quarter, acquisition of Vitalyst, a
provider of best-in-class e-learning services and change enablement
via an on-demand, subscription-based Adaptive Learning™ proprietary
platform.
MONTREAL, Feb. 10, 2022 /PRNewswire/ - Alithya Group
inc. (TSX: ALYA) (NASDAQ: ALYA) ("Alithya" or the "Company")
reported today its results for the third quarter fiscal 2022 ended
December 31, 2021. All amounts are in Canadian dollars unless
otherwise stated.
Summary of the financial results for the third
quarter:
Financial
Highlights
(in thousands of
$, except for margin percentages)
|
F2022-Q3
|
F2021-Q3
|
Revenues
|
109,713
|
70,606
|
Gross
Margin
|
28,257
|
20,428
|
Gross Margin
(%)
|
25.8 %
|
28.9 %
|
Adjusted
EBITDA(1)
|
4,514
|
2,290
|
Adjusted EBITDA
Margin(1) (%)
|
4.1 %
|
3.2 %
|
Net loss
|
(3,486)
|
(4,793)
|
(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:
"I am very proud to report that Q3 saw another record quarter
achievement in terms of revenues with over 55% year-over-year
growth. It was also a quarter where we experienced a continuation
of our industry leading organic growth, across all geographies.
Despite impacts from employee downtime due to COVID, and
well-deserved vacations for many of our people in December, we
posted a record quarter for billable hours and enterprise cloud
go-lives. In the US, our Oracle practice experienced its best
quarter ever in terms of bookings, driven largely by the
accelerated digital transformation timetables of clients in the
healthcare sector.
Q3 also witnessed the completion of the operational and
administrative integration of R3D. We also continue to ramp-up
projects associated with the long-term contracts with Québecor and
Beneva obtained in the context of this acquisition, which are to
generate an estimated $600 million in
total revenues, or more, over the next decade.
In terms of M&A activity, we are excited about our recently
announced acquisition of Vitalyst, a US-based learning and
workforce development company and award-winning Microsoft Gold
Partner. Vitalyst's flagship virtual training platform, Adaptive
LearningTM, is very well positioned to capitalize on the
recent expansion of the virtual training market, and the needs of
teleworkers. This new offering will be a great complement to our
enterprise cloud practice, enabling clients to accelerate the
adoption of their digital investments.
In Q3, we hired 190 new employees to bolster our ranks, as we
prepare for the exciting slate of new projects ahead of us. Of
note, the number of job openings we posted in the third quarter
increased by 92% compared to the same period a year earlier.
To summarize Q3, despite greater-than-usual non-billable hours
around the quarter end, many indicators continue to validate our
long-term strategy. We remain more focused than ever in delivering
our strategic plan which aims to reach $600
million in revenue and 9% to 13% EBITDA(1) by the
end of our 3-year cycle."
Third Quarter Results
Revenues
Revenues amounted to $109.7
million for the three months ended
December 31, 2021, including $15.4
million from the R3D Acquisition, representing a
$39.1 million increase, or 55.4%,
from $70.6 million for the three
months ended December 31, 2020. The percentage increase
would have been 57.0% assuming a constant US$ exchange rate.
Excluding the impact of the R3D Acquisition, revenues increased
33.5% over the same period, or 35.1% on a constant currency
basis.
Revenues in Canada increased by
$32.1 million, or 80.2%, to
$72.1 million for the three months
ended December 31, 2021, from $40.0 million for the three months ended
December 31, 2020. Organic growth in all areas, the
general recovery of activity levels, revenues of $15.4 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.
All new customer contracts, including the two long-term contracts,
and all new employees relating to R3D, and the corresponding
revenues, have generally been recorded in other Canadian entities
of the Group, in preparation for its administrative integration,
resulting in a gradual transition of its activity levels until such
integration was completed at the end of this quarter. On a
sequential basis, revenues in Canada increased by $6.0 million, from $66.1
million for the second quarter of this year.
U.S. revenues increased by $6.1
million, or 22.2%, to $33.7
million for the three months ended
December 31, 2021, from $27.6
million for the three months ended
December 31, 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 $34.9 million with a constant US$ exchange rate,
resulting in an organic increase in constant currency of 26.4%.
International revenues increased by 29.1%, to $3.8 million, from $3.0
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.
Gross Margin
Gross margin increased by $7.9
million, or 38.3%, to $28.3
million for the three months ended
December 31, 2021, from $20.4
million for the three months ended
December 31, 2020. Gross margin as a percentage of
revenues decreased to 25.8% for the three months ended
December 31, 2021, from 28.9% for the three months ended
December 31, 2020. However, excluding the impact of the
R3D Acquisition, gross margin as a percentage of revenues would
have amounted to 28.1% for the three months ended
December 31, 2021.
As explained above, the percentage decrease was driven in part
by decreased gross margin in Canada from the R3D Acquisition, whose
revenues historically show a higher proportion from billable
subcontractors, resulting in lower margins. Gross margin percentage
also decreased in other areas of the business due to an increase in
subcontractor revenues relative to revenues from permanent
employees, a symptom of the tightening labor market, increased
costs in certain customer projects in Canada and the U.S., and decreased software
revenues, which carry higher margins.
Selling, General and Administrative Expenses
As a percentage of consolidated revenues, total selling, general
and administrative expenses amounted to 22.8% for the three months
ended December 31, 2021, compared to 28.9% for the same
period last year. Selling, general and administrative expenses
totaled $25.0 million for the three months ended
December 31, 2021, an increase of $4.6 million, or 22.4%, from $20.4 million
for the three months ended December 31, 2020.
Adjusted EBITDA(1)
Adjusted EBITDA(1) amounted to $4.5 million for the three months ended
December 31, 2021, representing an increase of
$2.2 million, from $2.3 million for the three months ended
December 31, 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 4.1% for the three months ended
December 31, 2021, compared to 3.2% for the three months
ended December 31, 2020.
Net Loss
Net loss for the three months ended December 31, 2021
was $3.5 million, an improvement of
$1.3 million, from $4.8 million for the three months ended
December 31, 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 December 31, 2021,
compared to the three months ended December 31, 2020.
Liquidity and Capital Resources
During the quarter, Alithya entered into $8.6 million of new secured loans to finance
refundable tax credits with Investissement Québec and the credit
facility availability was increased to a maximum amount of
$125.0 million.
Net cash from operating activities was $10.1 million in the
three months ended December 31, 2021, including favorable
changes in non-cash working capital items of $7.8 million, representing an increase from
$0.9 million of net cash from
operating activities for the same period last year.
Net bank borrowing(1) reached $14.0 million, a decrease from $21.1 million as at March 31, 2021. Total
long-term debt as at December 31, 2021 increased by
$6.6 million, to $61.6 million, from $55.0
million as at March 31, 2021, due primarily to the
$10.0 million subordinated unsecured
loan and the $8.6 million secured
loans for the financing of refundable tax credits, partially offset
by the recording of forgiveness of $6.0
million of the unsecured promissory notes under the PPP and
a decrease of $5.3 million in
drawings under Alithya's credit facility. The increase in total
long-term debt was used to fund operations and resulted in a
$1.8 million increase in cash.
Nine-Month Results
Revenues increased to $317.9
million, compared to $209.7
million last year, excluding the R3D Acquisition, revenues
increased to $266.9 million; gross
margin was $85.1 million, or 26.8%,
versus $59.6 million, or 28.4%, last
year; Adjusted EBITDA(1) was $16.6 million, or 5.2%, compared to $6.4 million, or 3.0%, last year; operating loss
was $7.5 million, compared to
$14.4 million last year; and net loss
was $8.3 million, or $0.10 per share, compared to $14.8 million, or $0.25 per share, last year, for similar reasons
as reported for the third quarter.
Normal Course Issuer Bid Program ("NCIB")
On September 14, 2021, the Company
announced the implementation of a NCIB. Under the NCIB, the Company
is allowed to purchase for cancellation up to 5,462,572 Class A
subordinate voting shares until September
19, 2022, 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 nine months ended December 31,
2021, Alithya repurchased and cancelled 230,600 Class A
subordinate voting shares under its share repurchase plan for a
total cash consideration of $767,000.
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 remains 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.
Subsequent Events
On January 31, 2022, Alithya
acquired 100% of the issued and outstanding membership interest of
Vitalyst, LLC ("Vitalyst") ("Vitalyst Acquisition"), a
US-based learning, employee experience and transformative change
enablement business.
The Vitalyst Acquisiton was completed for total consideration of
US$50.2 million ($64.0 million), including the assumption of the
estimated IFRS 16 lease liabilities of US$3.2 million ($4.1
million), with US$46.0 million
($58.5 million) paid in cash, subject
to working capital and other adjustments, plus a potential earnout
of up to US$1.0 million ($1.3 million) payable before May 31, 2023. The purchase price and related
transaction costs were funded through a combination of a private
placement of 6,514,658 Class A subordinate voting shares to a
company controlled by a director and 1,628,664 Class A subordinate
voting shares to Investissement Québec, in both cases at an issue
market price of $3.07 per share, for
aggregate gross proceeds of $25.0 million, a $7.5 million draw on the subordinate
unsecured loan and availability under the Company's amended credit
facility.
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 December 31,
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
December 31, 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
February 10, 2022 at 9:00 AM Eastern Time. Interested parties can
join the call by dialing (888) 440-2069, conference ID: 1735627, or
via webcast at https://www.icastpro.ca/ti2hb6. 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 3,600 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, 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 December 31, 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