ALYA - Earnings call transcript Q4 2022

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Operator

Good morning, ladies and gentlemen. And welcome to Alithya's Fourth Quarter and Fiscal 2022 Financial Results. . I would now like to turn the meeting over to Rachel Andrews, Vice President, Communications and Marketing at Alithya. Please go ahead, Ms. Andrews.

Rachel Andrews

with thank quarter again conference in issued and press also and on And for joining call. found this everyone. and be The release fourth statements Investors webcast now the Alithya's fiscal MD&A our morning morning, and you notes website posted for once section. us The our are Good related financial on were website. complete our XXXX can results presentation

conference contain I'd call community. are begin, to from are of like uncertainties could anticipated. number the advised that this risks forward-looking a intended we financial materially that is those Before cause Also that specify for this statements and be results please actual to differ and call subject will that to

note All please presentation Canadian are on and to Uncertainties in For refer our we may the statements available cautionary certain MD&A figures otherwise dollars, website. our refer unless the to on and in forward-looking information, our discussed section Risks stated. to And and call more today's of President morning Officer; in Financial Paul non-IFRS Thibault, Officer. for indicators note the more cautionary our the presentation Presenting Chief section and refer as to details. well this to as are measures. non-IFRS Alithya's MD&A Executive Please Raymond, measures that and our our Chief of are Claude

Paul Paul? Raymond. would I to the to like over Now call turn

Paul Raymond

our fourth into behind X. and before latest that which basis transaction, note, of like be Consulting discuss to here marked to acquisition a in I fiscal Group, record On this XXXX on And is morning, of our industry-leading close dive I'd the deeper Datum quarter close both I'm numbers, you good pleased everyone. EBITDA, with and Rachel. The adjusted take to was our you, to to expected July to Jour. year. on out the Thank Alithya revenues another growth speak moment a Bon morning for revenues sequential quarter drivers by quarter about year-over-year. very

a the you approach have in As mergers to seen to acquisitions. past, continue and to very disciplined adhere we

and Our at complementary to for our the approach balanced that strategy Again, to I for scale. epitomizes platform look can growth share are quality time companies that Datum acquiring growth the to generate transaction synergies accelerate leverage acquisition remains focused and right we would on companies the three of like that on our and The price. takeaways from strategy, from a with right really main you. organic there

industry that which staples is existing leader specialized the targets Datum insurance public foremost, primarily and and a and are in sectors, software operations. First transformation two digital services Alithya's of

penetrate the in As adds client insurTech the market, Alithya United top Datum six continues of the the our XX to of base. States acquisition global health through deeper into growing insurers

growing The suite of greatly wider flexibility enhances demand. proportion Software-as-a-Service, acquisition the in even synergies. range customer its offer solutions projects. spoke a XX our property-based I to generates products our from Datum earlier of our Datum bolster in SaaS an offering, about of And a adds that are cloud-based Alithya's of Additionally, intellectual growing importance of which of revenues will toolbox, which finally, addressing always

a back another with revenue, contracts performance. year record out and our quarter projects. of to our continue closed Now to We quarter the feed signed pipeline fourth healthy of

$XXX the to or three quarter about two last deal months. ratio quarter, a into of fiscal great a in in same bookings, future a forward. of the of into acquisitions head our in to which In spoke record add quarters revenue X.X over XX% XXXX. bookings the the we relevance million of increase also past our book-to-bill solid revenue. going XX fourth In a XXXX translates past contributed announcements quarters, Furthermore, with our the with bookings this will alone, the we So for fiscal past

healthy our Those head as have allowing XXXX, have welcome into in our We exceptionally and another the of we industry-leading year. strong bookings, new proud quarter we services XXX more in to in us Canada. more Also, this than to momentum. particularly the pipeline health the are terms to care was new achievement. At QX time, manufacturing States the financial the customers happy Alithya fiscal new replenished fiscal very same United in and bookings than are throughout maintain of verticals

digital in billable after inform per of particularly Canadian manufacturing also X with promised Now operations be these by in United trusted will acquisition. attributable with contracts and experienced Alithya of not generated the Alithya's sectors administrative XXXX, growth number need growth Quebecor note, operations. many two regional increase verticals. recovery track business and the are from accelerating QX growth Part by mentioned, driven clients, experienced to Of than company's partner. that general into as and year-over-year a included that care Beneva significant through is a That reached on as health XX% more a of minimums two pleased unless revenues, and million Organic bookings Alithya Alithya's I'm acquisition you revenue previously are XX% year year. $XX the note, in part and for the the revenue is April was in revenue to States, signed also synergies Beneva in contractual contracts that integration name hours game long-term a the generating of On of completion our the and basis, major doing Quebecor of RXD exceeded. on transformation we with in of that across future the where post-pandemic in economy the

$X a on and two Vitalyst the contribution from million in included newly growth that acquired from only months quarter. U.S. revenue the Our the books

and is particularly encouraged returns also of which the Microsoft and latter, are We substantial Oracle in growth generating practices by reported the quarters. in previous momentum U.S., bookings both the now our on continued

with Morocco cloud Filling of the ability internal province talent, fill year-over-year and forces increase customers to uncertainties with maintain provides revenues the in fiscal and the and welcome in enterprise challenges remains of transaction. At That and lives extension projects, best culture the one almost new growth an implementations. pipeline That are our time, optimism XX which confidence of more their expected forefront employees on stepped as colleagues leverage permanent and our X,XXX growing July XX%. a an in we harmonization digital by to margins. with Quebec the of our global of that we And including Digital of now go were by recruitment encouraging the closing of portfolio X France void customers Internationally, than being to order us European XXXX. the Indeed, to sign we competitive industry, on performance to available hire a hire new and gross lingering hub initiatives, in our the quarter is to projects experienced Our synergies its also in experienced our campaigns, in of X Center increase of dedicated our our XXXX, at inflationary Please organic headquartered Slide team Datum region of gross is and turn turn a is IT us in the the growing of growth operations important same pandemic. organizational pressures. subcontractors this and in along number about Accordingly, count the projects. successfully fiscal record business our healthy sometimes discuss drive addressing across margin accelerated a as professionals where operations, reluctantly during all namely continue Alithya have XX%. Solutions of our objectives. particularly can our to our a an expertise hit not the our biggest to strengthening our hard we technical offshore enter said, with of a assist new our on has office impact training that negative offices XXX completed of to

mass hire the company will expand who to our with industry continuing cost now as targets. plan, and maturity, to I and synergies complementary our critical services would growing to SG&A achieved our and financial acquire higher profiles. drive standard we Claude? Financial our accelerating explained companies to initiatives the across meeting in XXXX Given more and over -- turn XXXX QX, to I efficiencies we to that Officer, permanent Chief outlined. employees transition the on Claude like efforts margin to strategic higher-value new highlights in Alithya's started Thibault, Also, have are

Claude Thibault

quarter to turn Slide by for Revenues million. our Please $XX $XXX to the increased XX% morning. X highlights. fourth quarter million Good or for

track integrated fully specific RXD approximately which December organic and XX%. occurred Vitalyst organic RXD in XX% from we contracts XX, Excluding experienced which to In $XX.X acquisition, operations, U.S. our Alithya, the acquisition. no XXXX, because to and by was strong of growth X, general finally, RXD areas organic levels, revenues rate a we organic growth separately. other with into and true DT We growth growth impact exchange was X, occurred of longer RXD dollar see recovery revenues partially Beneva to strong associated the the due by areas, words, of the million and on impacts. increase months April the the XXXX, again. XX% on acquisition, of two increased XX.X% some of In revenues sustained XXXX, on two revenues levels million Quebecor. approximately all $X offset In Canada, $XX.X general numbers recovery increased long-term of activity February U.S., unfavorable the from all the for growth acquisition in Vitalyst and million as the we This

in the QX. increasing last million or reported for at $X.X quarter XX.X% they a to let's million increased operations, revenues, international $X.X As million XX% look $XX.X million Well, gross in terms by of margin. to from It for $X.X quarter year. record same our

As fourth XX.X% from XX.X% a quarter for that margin percentage down of same the year. was is quarter last gross revenues,

historically subcontractors those margin relative cost in revenues in permanent employees, an gross part percentage tightening also RXD comes of labor to those the the average higher the proportion showed increase The in mentioned, by explained the an subcontractors market. gross previously with profile. and As billable in from increase coupled corresponding decline lower of margin from a revenues subcontractors, the

compensation. year. positive offset impact projects. The QX in Secondly, absence costs internationally and customer last totaled XX.X%. acquisition. thirdly, share-based headcount to in partially expenses the higher course, of non-cash a which The communication offset costs, we increase up mostly margins in $X.X relating And to the in which employee overall received U.S. an Canada salaries as compensation and and as gross communication decrease, a increased international costs information $XX.X expenses salaries had technology and was subsidies, million and million, and increased the compensation of increase increase increased due costs, well employee due acquisition, from as by as however, and was decrease by Vitalyst variable COVID increased increased coming the to technology an partially in of QX, increase, RXD headcount of increase some of the primarily compensation was or increased wage trended margin SG&A certain revenues costs an of with along Vitalyst. in from and information

revenues, SG&A our consolidated help notable for turn to current pursue development, us million of compared our quarter a synergies to will to now million, can XX%. $X.X increase quarter our trend further of scale adjusted last fourth intend the to This to we continue the percentage total focus At decrease a EBITDA Overall, year. amounted an $X which year. of of compared a believe same operational QX, target last the and a get there. we which efficiencies, with to XX.X% we is amounted to XX.X% As

non-cash amortization quarters, previous of generation nonrecurring we in attention net and of in totaling million, adjusted overall. the bring to million $X.X I million, in and an while $X.X the resulting $X.X As have your a loss positive expenses would flow accounting the cash quarter depreciation

X, trends importantly, of our long-term of quarters. at our Slide and Looking can growth see past strong organic we of several acquisitions more on the the impact

with but percentages, improvement, higher-margin adjustments reflects Slide Morocco also our in cyclical, in new Regarding subject gross EBITDA operation, similar natural and dollars, growth, focusing selling on gradual well of believe are margin some despite our utilization of as future X, by and and recent price challenges long-term largely targeted also as recovery a in initiatives, number to focusing reverse gross growth to segments. trend challenges We margin, our mix trend mentioned trend decrease revenues. aim On with increases we factors but most before. SG&A as some as in percentage of over these time, our the a our we their including labor costs, a see recent

billion the organic and which again acquisitions Revenues, we fronts. the our long-term here on us push and recent $X.X have communicating close over we objectives, business our years. taken have maintain been to intend both to mark, are summarizing We growth the certainly

For long-term strategies relevant further gross gradual margin, we believe improvement. remain and our for recovery

just targeted as aim an of I Alithya on that it levels. continue our Our its how discussed, our we we achieve to SG&A, revenues believes believe of XXXX. can a percentage X% XX% revenues by SG&A gradual $XXX of objective will reach as will in is realistically and of to That with three-year margin million EBITDA decrease

conjunction net at acquisitions, bank from increase some issuance, we of translate QX, from did million of our of end the the cash January working In does to borrowing. $XXX.X the acquisition. up our we Vitalyst net end historical Slide debt, our because long-term negative organic the used from the increase turning on the and similar increase not growth. liquidity was QX and million, cash expenses a XX, with activities including which financial an capital in during strong Slide result with This million Vitalyst. line with strong large XX. increase increasing from debt operating of share Now operations non-recurring are cash This ratio a the position to On by metrics debt-to-EBITDA $XX.X proceeds in higher minus negative $X.X of of our balances much in of variations, however, flow see part which profitability in at into comes million, $X.X

will approximately is issuer A launched Operator? believe in July now will Class a and to and acquisition X, still The are course expecting bring profitability total impact has see forward. we for built-in shares $X.X will leverage back to such, either. normal leveraged, In we up good expect X.X as close significant has a opening Alithya closing, million. we which repurchased bid As operator steady terms have questions. Since trend canceled be deleveraging of moderately beginning, our and historical going planned. also financing September a progressing for the of Datum consideration on not million acquisition The

Operator

will Thank you, Agostino Mr. Thibault. Nick Bank. from [Operator question Instructions] Your at first be Laurentian

Nick Agostino

increase prepared specifically can increase was of basis. I'm if is Good that If morning, with in gentlemen. start reflective employees the acquisition? you -- some highlight of I of in us there, RXD a Yes. just that the permanent you would get first If Vitalyst noticed great. much much how remarks, maybe my on some How wondering your increase we could to question, on give year-over-year that XX% I breakdown color was segment? just tied be

Paul Raymond

had but I'm Yeah. employees, If Claude Good morning, Nick. Vitalyst here full Thanks going on question. me, correct for memory and I believe about the XXX time. all

from be would balance business. the of So the rest the

Nick Agostino

are rest, -- our you on or you them say hiring the staff when permanent specifically But and RXD target any

Paul Raymond

Yeah.

question. great yeah, So

increase significant agreements people signed. two we that of a new permanent the So there's tied to

RXD RXD of of base mostly about a high percentage business, subcontractors. remember, very you the when we was acquisition, If talked subcontractor

So the have agreements we're still instead in business with those that of we the we contracts. But new two have, of there a to large that contractors. employees deal of was getting significant from increase full-time there course, all

Nick Agostino

in stuff, increases pricing wondering received on roll appreciate talked and you whether then you just how think can and any prior I front being marketplace? that. on over calls, talk that on great. about you Okay, the they as about had -- it's And I maybe contracts implementations that

Paul Raymond

Yeah.

our that's yeah, are have some contract are that going new in ongoing that being out with all Any renewing proposals increases. priced time. we all So the that's

of want lot projects the last as customers, Finding people is, now. thing strategic -- it when seen of is the challenge. not And we not into And we win is the I because it's you right our down project. see absorbing mean, of get we our challenge what can We market a from turn these -- do challenge. is these the course, for we projects that's bookings, to have do. our The --

on, on what high though bid So very we in selective we're demand. very even we're

So we where permanent the some demand with up are find by enough. short term keeping we can't contractors that fast having staff

see So issue. as was that a transitionary we issue temporary Claude mentioning, a as or

had RXD plan, in finished that. of first two-year the year on the we we the front, On track. said We've a as past. We're

end So by that's the to of this going we year, be think resolved.

lot full-time a the there. hire business, operation lot us because help Morocco we a new to going On we of think people can the is

So that's our acquisition, on going reduce to to going into come that's X. subcontractors. And Datum, July latest the effect reliance also,

very the -- and soon some So us India Europe. would it's in but on Eastern in capacity bring family yet, the remote not also

and So we're real planning that one looking fast. that business actively to forward on scaling

Nick Agostino

maybe efforts efficiencies that the Great. And you and looking you're to indicated accelerate just two. then to One, drive synergies. on cost call,

in as reduction those, your guess, about say, over I rent synergies of initiatives that hoping undertaking. next Can far you year? are as now being expectations talk think what I accelerating, the -- out highlight you're presentation, you're when that maybe the you it, get you mentioned one to of

Paul Raymond

Sure. Yeah. question, Great Nick.

would So that for the looking as a we've over SG&A the of acquisitions be quarters, as about talked in down revenue past year integrated scale. percentage We three percentage with it been time at well. RXD completed during time. past some quite going two We've our this

it's we consolidations the on given in jobs on four, activity was our numbers, And basically the you in over we're some types we're close billion cost good plan redundancies in The things. that believe, for the operations lot there eliminating of is that. from recently, still opportunities running those to lot is the look I speak, saw mark If a So XX%. seeing here seeing right? shape. of by severance QX our And multiply in. We're to side a -- XX%. there rate at had support get around we're as We're synergies. industry high the M&A in if you the $X.X we average a back-office synergies run quarter. to revenue, and have And really we've We're for of in XX.X%,

we're XX% believe the that's and the existing get to pushing business we under committed And can that. what towards. team we is So on

lot a see now. opportunity we there So right of

Claude Thibault

significant can a are if We're managing I on growth. for few providing we add, specifics reasons. Just not this

just make consideration. it's can taken like So we without not decisions into that

will And our gain come the ongoing some in of growth. for percentage

to two, actions the is not taking we're we those in you timing balance providing well. got there and So specifics so as will timing. When but be and of on, and terms

Paul Raymond

how Maybe, of that. give couple you a can Nick, real examples we're I of seeing

So need businesses, as more example don't new rent, the mentioned, was we one we as you in bring offices.

one is one. an that easy So

external have the the that used internally a we of do Some scale past, we've to save then now services them and lot money. in

like leveraging has we things now. pandemic and offshore but which especially us not the our the are So with do operations Morocco past, there which that, enabled did do in to

opportunities, down. we're fruit that that managing that are there would that slowing at. with looking there now no we've a had we which low-hanging Claude plan growth the lot on on of right need based said, because we So balance call is growth But to as

Nick Agostino

That’s Appreciate Okay. all me. that. for

Operator

Please will at question Gavin Next Instructions] Cormark. [Operator go you. ahead. be Thank Fairweather from

Gavin Fairweather

funnel? of of your practices snapshot of are at stage? all It still of so across seeing to continuing the the regions? kind fears maybe signs or recessionary good see just given any here, Hey, a your the you of across into the growing hesitation can give But seeing like kind Or any morning. us kind strong that Are top to sounds business. ask you demand prebooking you're of very you

Paul Raymond

recession. No, concern coming Gavin. we're our seeing and actually, isn't the Good not morning,

money, experience more especially mean creative. transformation pressure launch past seeing to digital people. in funnel, Our were the to and efficient, concern hit, if be would more finding to in new based is I become what a more we're be products, mean try recession customers accelerating the our to now inflationary save on I

seeing for of table. kind because are cross-selling the the new us any they're Actually, of our seeing existing slowdown the new opportunities activity. and our in new up not that we're in customers no, customers opening funnel bringing So we're that the to acquisitions

So no, very optimistic going forward, Gavin.

Gavin Fairweather

And Canada kind of then capacity in for Canada U.S. region, thinking of you've being the mean capacity Maybe maybe versus just I some kind time. been zeroing do strong in Microsoft to to still by at speaking utilization and you on the seeing the bookings your Oracle of have in the U.S., headroom the some accommodate given FTEs? current strong kind practices with that bookings, you're on

Paul Raymond

Yeah.

from Oracle the both we've side. bookings. great the Microsoft some numbers the on U.S. both on saw you had and sides, So growth that here is And the

other same -- practice savings potential back The practice. as is the Microsoft that global, we're our coming to now seeing, our Oracle

have So we're and Microsoft U.S. the Oracle Oracle as Canada, now to We not in well. confined teams teams --

projects, look we projects and U.S. we and now in can at find when in in people Canada U.S. So the for Morocco.

And pandemic adding up opened that us remotely. the we're we again, work that capacity to So operations. everywhere have opportunity that do for the

very leverage that, over in competitive. Our and we it more customers can us actually competitive makes have to especially open to we improves have we now, capacity that margins an world offshore time. are If inflationary this be where

and really, that So well. very rate we're those academies working opportunity. and of as as well. an students seeing have accelerating well platforms. of that working That not we on That college well. IT incredible, background, do train retention really out we're is The right are them is a hiring program We're our lot

that's great the investment to people bringing that So we a industry. see of new

qualified finding way it's people. So of another

Gavin Fairweather

as of follow-on shoots with that kind just over thoughts moderate I've you X a easing to hiring And or weeks labor the that. your see a on days, green on been of been Curious the six of for maybe labor front? I crunch. front, have past early started mean that the I the some any mean has just month kind of on hearing freezes

Paul Raymond

that synergies we are was very it's we're finding opportunities saying, our demand. in side, Gavin, on for the high But back No. have the Like in I people more office.

billable roles. role were people our of some from to moving non-billable So

have to replacing it internal do outside scale an with we individual an now. it's because Sometimes the provider

open So staff. aggressively positions have hundred we that the the several still from business in that we're that perspective, working

machine. We have a recruiting

for We in do all global recruiters XX recruiting as front on We're active time they recruiting. very about have full the the international That's company. well.

really that on still cylinders going front. is that on So all

Gavin Fairweather

And was cross-sell the an obviously, Vitalyst a me, then of maybe of front acquisition on you days the for But lastly strategy kind just give early on key for how is part the mean, together? piece update coming I case of as well. can us business that that

Paul Raymond

together Yeah. our week a well. very the customers should training, It's actually, existing some following Well, Gavin, know the and they coming calling announcement, be who said, we of you had one for Microsoft you Vitalyst. called

existing So following our the the of through announcement, that in first came had week one the customers back opportunity, we actually door. our

So the very for We lot people because grows, efficiencies see locate were we U.S. well a see opportunities business as And well. located in opportunity there there. can of again, now we the of anywhere. as most that's working that And

become services. there and the to efficient business opportunities that more faster we some see we in grow again, So how deliver

Gavin Fairweather

on. Thanks. I’ll pass

Operator

you. Thank this questions. at with proceed closing And Please Instructions] [Operator further have no your remarks. time, we

Paul Raymond

in for being with forward August, We XXXX of confidence committed morning. look fiscal reiterate weekend. our optimism. us our to results enter And nice three-year focused I'll you, have quarter Again, you, a Thank this [Indiscernible] Thank and strategic plan. and with that and first on XXXX discussing we're we everyone

Operator

we please ask Once today. Ladies lines. you attending. thank for Thank this call again, gentlemen, sir. disconnect your time, at that conference And indeed you, conclude you and do does for this your

Alithya (ALYAF) 17 Jun 222022 Q4 Earnings call transcript