ALYA - Earnings call transcript Q1 2023

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Operator

Good morning, ladies and gentlemen. Welcome to Alithya's First Quarter Fiscal 2023 Results Conference Call. 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

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

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

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

Now, the over call to I'm turn delighted to Paul Raymond.

Paul Raymond

the reputation that trust to of to would our business moment position growth details to regard, build year us take Merci, put and everyone. revenue of the you results and beginning call the strategic carve the long-term on execution plan strong joining off upon morning. bookings. a Rachel, the continues this We're morning, to In in a recent competitive with our pleased new Alithya for landscape to a our context kicking second good share of like objectives. and all fiscal of I'm I to excellence. and Thank continued three-year for a its year.

organic to pursue annual past selective have sustained order of the continue acquisitions in revenues, revenue reach of terms and billion to brought strategic the rate. Currently, run and the organic we $X.X In growth growth acquisitions mark. to million us year $XXX

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

to higher leverage targeting that. margin recent and Datum profile. We capabilities of Vitalyst to certainly examples also keep new acquisitions our very offshore gross intend and acquisitions are with good The

including costs. believe have office a reached we stabilization certain SG&A, a For and now categories, critical that corporate head we of certain mass and expense

with Hence, our those a acquisition Moving revenues to grow revenues. downward a intend to forward, including Alithya our on relating at revenue expect In $XXX is objective its million continue rent. SG&A the trend pace it come, still in savings to we margin with we can expenses as of of synergies some than X% achieve playbook EBITDA believes to to XX%. nutshell, slower step-by-step of of percentage longer-term that a three-year how realistically an

our ahead So a of before at take a jumping to quarter three our first performance. operations, of key highlights let's review first look

XX% last quarter, year. served during our that's same in to we the reporting year. Again, the time. has also quarter. same are a we organic important to million customers, other revenues. revenues, compared came first In from increase first revenues foremost, In our achieved Alithya and of words, that first repeat revenues repeat growth. note amounted quarter revenues our First also That's clients repeat $XXX to the for the of from the industry-leading XX% XX% It's our last quarter

minutes, address by the fueled and economic what's in be to predictor continues in are best remain strong United the business bookings a encouraged our funnel, come. of I Second, bookings in to we few and which context, States. global Despite our by will Canada the

into translated year, two large fiscal our million, our for Beneva be the keep which our of X.XX. from business book-to-bill book-to-bill in revenues a mind the Québecor, ratio XX-year above of start the with X.X. remove when important at would recurring that bookings rest of $XXX we ratio contracts So to It's our and reached the

of sequential first achieved increased basis revenue. salary margins as despite XX.X% we sequentially It growth this gross the Third, in a of of year. beginning at companywide into terms came points XX of percent annual which increases, to by the effect quarter

our significant gross So loan despite first which sequential growth new quarter, last offshore away showed we capacity. gradually leverage year's begin to our subcontractors from we plan move deploy PPP our to margin included unfavorable comparisons as and to recognition, of

and now, of future our across of is practices all For Alithya, that extends all to the geographies. our

was the the Alithya XX by that addition reputation continues of quarter clients, In the reflects trust garner. to new of fact, marked which

more take accompany our the it from a of practices, digital at the these stages including major Vitalyst States, Canada look in sector business bookings by revenues. in and new In Americans. of represents geographies. the a as record Alithya's offering new processes. their customer through practice. granular United Oracle record strong -- a US$XX with both a for coverage quarter public signed terms Let's transformation Oracle insurer total dental a reach Of over dental addition could insurers some logos, that as is including clients. was This United coverage note, XX% bookings States now from Oracle our enterprise with offering and of to the In Microsoft Practice, Canada, them cloud -- continues large contract existing That who contracts will well driven to million our of new millions of be important our large

in few the projects be fact, years. ministry areas. $XX for more cybersecurity domains than will XX, name a Alithya than agreements for security, involve potentially more of service experts implemented in with projects application specializations development the announced XXX across and July million next the Alithya's just to to we government will three Quebec signing multiple encompass In and over on Those

we a quarter, time, was growth but and particularly in That achieved market. clients the our takes their our that a accompanying the step gradual continuous In commitment journeys. to subcontractors we to in a Our European organic gross good as convert this with are margins continue digital our experienced transformation XXX% regular through process that very pleased improve France, into on employees. fact operations is

in professionals trusted X,XXX XXX retention joined strategic our and and X,XXX be continued clients. attraction footprint diversification professionals. periods joined four industry, we Alithya chapter members has along our means the In growing a this through out professional professionals of challenge from phase XXXX, respond talent growth initial that but the the our With mass years to have one highly on to in and now have numerous a a acquisitions order bold That path past which XX back reached latest public past year to has win, as confidently road, but picking In one culminating family, of rank become that XX consolidation. challenges. It skilled tall critical advanced since Alithya to with major alone, its phase, While vision, to carefully and with has our next, to Alithya up since continents. going XXXX. speed team in demonstrated a the now started November was five a ability in then, has years ago, adviser our those Alithya creation treading

offshore at let's look a our delivery formed take teams. newly Now, closer

First, potential operations. margin our from that we pleased the and growth with improvement are come very offshore

our professionals, for first services Morocco July year XX insurers by supported leader now over IT The the professionals past by as who who a Europe excluding in Eastern and the States. the India. opened Datum and center on was regulated Spain, delivery based the has Our closing such Alithya in such States in Canada, and X, counts other entities United are grow teams teams this of in will are of professionals. now governments, and Datum acquisition workforce XXX United individuals XX Europe, global Morocco, in

accelerate of clearly on We our our reiterate brings to Europe. to offshore in our in growth our Canada, efficiency. States activities that better order we our clients This serving future embrace future to me articulated and and to support base the focuses plan, which the expect improve current United continue and the customer in to

offering its U.S.-based of well in suite proprietary client our from SaaS continues product that a the strong and the and a base top and continue Canada capture have In States market legacy Our begun acquisitions customers. data of to has offerings. been Alithya as fast-growing as services market XX States Datum's to The response of insurtech growth. we insurance already cloud-based six acquiring United in organic complement includes have our penetration steady the United the enthusiastic, health and our Datum, in the customers insurers

management Vitalyst's quarter. learning proprietary $X.X the with acquisition and technologies. assist over ongoing extends adoption now Vitalyst their an to of Additionally, That expertise the that to offering, platform of life sorry, the contribution deliver. complete new offering our complementary the its XXXX cycle million life service of solutions to to and allows fiscal training change technology platform -- customers our we revenue generated Alithya complete extends service our and

accelerate examples a quality opportunity to expand that of recently the using we for Those experience accompany technologies to as Fortune of Currently, tools adopters approach growth acquired Vitalyst XXX positions both transformation acquisitions. their and suite to offering to that its disciplined good build As Office us. of Alithya are Viva brand they from get the for suite of leverage the Microsoft we our leveraging the a are continues platform XXX, Viva, is XX% collaborative Alithya new new Vitalyst's as digital employee companies foresee high projects. long-term

ahead us recognizing who of with past the out in thousands Year the excellence have In Impact by Award path. also partners been Partner As honors Microsoft we innovative an of right are separate on candidates, accolades was received Alithya Dynamics in Alithya plan, our Microsoft potential we and industry XXX. remind agile Microsoft that forge to months, categories. several few continue awarded Canada, validated two of the exclusive in that an demonstrated the efforts

Year Hospital for and Partner also in an prestigious finalist Agents is We the largest We And the the won automation Canada's Change Canada. lastly, OCTAS for accolade Oracle their and contest another Awards. families. kids Sainte-Justine during we awards, two which bank, we Oracle sick received Children's an Bank, as project an award a for help of received to sixth that delivered app BénéClic for National award

our to back strategic Now plan.

we line strategic Following especially is of We implemented XXXX began with on company-wide everyone objectives. processes as economic XXXX SG&A optimization is rationalization. the very our a with global targeting fiscal timely closely. growth, period situation sustained focus a XXXX, This in monitoring

is That the resistant tend companies at recession, as to reaching, we Alithya migration cloud a business and events clients. are world where through as build of is for periods possible. look effects that to and automation lower-cost of to during solution. strived While our significant excel recession helping far Typically, efficiencies

investments as in we initiatives no we financial and cost Claude at with for and with achievement with debt Claude? favorable major to are ahead I our Additionally, underway rest with look of believe business infrastructure financial situation, over terms will well-positioned Alithya, a year reduction that it now in to we optimism the and pass objectives. our XXXX to the fiscal of more metrics. progress

Claude Thibault

you, of Good Hi, quarter or $XXX.X turn $XX.X for for first our a Paul. increased morning. by XX.X% quarter Bonjour. highlights. total for million thank the Please to Revenues XX million. Slide

by a approximately on acquisition, true dollar organic XX.X% all due the operations, our of a of again. a growth, long-term February growth few XXXX. contracts was In continued Excluding concurrently revenues Vitalyst of to $XX.X once of In the all from increased impact growth the two including million, other the exchange growth impact acquisition, our States, increased rate sustained experienced United words, due signed we of contributed organic of acquisition to X, April areas U.S. XX.X% approximately currency to $X.X strong organic in and occurred which constant organic factors, strong Canada, million, combination the growth million. including in million XX% Vitalyst to XXXX, $XX.X $X.X revenues In with which XX%. favorable

XX.X% increasing also $X year. our international quarter quarter operations, last million $X.X to terms of in for a they from strong As million same for the revenues, reported

look to increased million $XX.X which in at let's or Now gross by $X.X QX. margin, million XX.X%

year, acquisition, first QX which, as in gross was been Gross basis, in we as year But As carries historical came a to QX had the Canada COVID $XX.X will $X.X the in in in increase from of despite and The QX increase salary very XX.X% starts. the certain beginning in which as a $X.X in first in initiatives to Paul sequential and decline the recorded at to higher from the subsidies, decrease our quarter. of showing percentage costs, to partially offset increase from target to COVID been due increases effect On margin mentioned. the into or is which and usual, we XX% had increases, internationally, had to project last from revenues mainly margin timing finally, QX. was in United an in expenses margins explain QX million. Partially margin percentage decreased margin these quarter. on certain in in of and reductions States. order consolidated as utilization SG&A of again subsidy, the last and had good against levels as million fourth by as was The by new comes same revenues quarter the in SG&A at by is U.S. last which quarter XX.X%. decreased in second. elements, for The revenues. down certain comparing the million quarter Vitalyst increase from quarter, cost from our by some $X.X increased of areas, year. salary a primarily wage June taking recorded impact million, in came percentage revenues, however, margin the at discussed a but well pre-COVID XX.X% U.S., in year, delays of pressures first eventually Vitalyst, QX The sequential due percentage to in general pursue underway the of market towards rates effect also our That as XX.X% of The are of SG&A into in salary of back significantly positively falling last gross impacted of decline annual I beginning the expenses areas business occurred the disclosure, increases the positive an totaled explained a salary the stemming XX.X%. both some in offsetting subsidies, of have U.S. annual year been again first the which effect of spending amount during increases last the quarter gross

quarter We to the last from million, adjusted these course $XXX,XXX expect of amounted coming over to $X.X to our initiatives EBITDA decrease the the a gradually quarter benefit year. Overall, of compared quarters. first same

into million the However, amounted the since included in performance adjusted impact year-over-year. of therefore, on closing to QX Datum's financial $X.X first in profitability I'd recorded increase the of last PPP loans remind is quarter July in that $X.X excluding forgiveness notable year, like translating you of disclosure place have EBITDA a not our X. would million, took to

$X.X million XX, However, XX-month as approximately million. revenues mentioned time at of the acquisition, the December generated for ended approximately period XXXX, of $XX of adjusted Datum EBITDA and

your as expenses totaling in attention of depreciation $X.X non-cash number previous would draw in $X.X are quarter of I in well the accounting As positive amortization and to as the resulting loss while million quarters, $X.X overall. million, net reporting we million, a an non-recurring

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

are recovery largely margin, these believe some are trend cyclical gross over see as some but We mentioned most in recent recovery. subject Regarding factors challenges we in with to small similar earlier, of dollars, percentages, and natural a time.

focusing focusing segments. selling our capabilities minutes to addressed and labor our the adjustments, and utilization a including growth future in with costs, a of also that mix Paul few reverse targeted ago, price higher with by margin offshore We our improvement, aim new number trend initiatives, on

With trend from are way we decrease three-year achieving challenges some well growth, EBITDA adjusted financial well gross our a a believe, objectives XXXX. and growth, as SG&A, in margin some generate revenues, but gradual long-term our despite acquisition gross percentage targeted to long-term recent we also as revenues. initiatives by higher as Our our organic percentage our SG&A and of margins a of increases as on to reflects continued decrease some acquisitions their sustained of

liquidity EBITDA Slide of working increase capital generated of P&L million We multiple. to comes during $XX.X debt net in variations, to used position quarter, cash cash net to financial of negative words, trailing positive including a capital revenues. net our debt and activities mainly of June March the The working coming turning in million operating from and can debt cyclical adjusted $X.X notable of $XX.X cyclical increase see increase on million, Now, XX. excluding variations in from the from XX-month other a unbilled flow. our mainly In

been XX-month EBITDA the adjusted and full-year of not trailing EBITDA quarters, acquisitions. but noted that Our two be million to of impact net $XX XX-months debt a also trailing couple adjusted it include does over past reported must recent has our multiple increasing of our profitable

As are a of Also, of X on for for reminder, in adjusted XXXX, our was not time $X.X will multiple. and months of million and yet of adjusted EBITDA includes the Datum structure balance leverage. only our already we of EBITDA acquisition XX, accounting reporting $XX.X at Datum not in annually, generating we impact payments, the five which debt any QX disclosed generating as are preparation of the sheet. July acquisition, June drawdown already and which appears Vitalyst historically annually, financing of historically million was the share the Moreover, issuances TTM while close as it earnout

And believe multiple. leveraged. recent that flow decrease this adjusted hit net shown existing cycle XX, a two debt our from full moderately trend our reporting XX-month the to cash our apparent expected As we positive on from despite trailing still structure operations, capital EBITDA the Slide of to continued acquisitions is points profitability our and with

you, Paul. back to Now

Paul Raymond

Claude. you, Thank

for quarter. three this So to the recap takeaways

an over run revenues, with quarterly billion, record rate in business. all growth geographies from derived and annual repeat First, $X.X XX% of

a finally, as in growth. initiatives leveraging to gross global a margin very ratio Second, growth percentage sequential capabilities. industry-leading further strong and book-to-bill revenues our expand margins and expanding And of by

now We Julie? take questions. will

Operator

[Operator Instructions]. Thank you.

from Please Your first go Partners. Echelon question Ezzat comes Amr from ahead.

Michael Vaccarino

Good morning. on behalf Michael It's Vaccarino Amr. here of

couple Just of a questions.

the mentioned on salaries some side, on in your compensation. of margin remarks margin and pressure prepared First, was the you that increased

next I entirety couple incremental this Just wanted reflected the to expect correctly. make the increases Is already in heard should of of increases quarters? in those quarter? Or sure we

Paul Raymond

question, the Thanks in already for Michael. so there. Yes, it's reflected

on company So April annual the basically, does X. increases

first of first every the for in whole the quarter, company our day So geography.

already So QX numbers. it's included our in

So increase, is despite which sequential still showed we in gross very margin, that good. growth the

Michael Vaccarino

Thanks mentioned clarifying or you a M&A. that. level. M&A for Should your the deleveraging on to Great. after a And a and you with having completed acquisitions recently? capital few be In then question were expecting comfortable shift remarks, continued prepared structure debt we

Paul Raymond

in -- the two, the as of for We we've acquisitions look if including ratios thanks they high those EBITDA EBITDA-to-debt question. of percentage. high and We the a past, at your -- done actually great they've actually reduced the because companies -- reduce you our the multiples last ratio

We is So we're deleveraging. good rapidly, quite but to -- open be deleveraging believe to the going on focus opportunities. opportunities always we're

Operator

for [Operator at this questions further are back Instructions]. Paul to Raymond will call I turn there closing the over no remarks. And time.

Paul Raymond

visit thank all of beaucoup. high held place meeting website. XX. thank that I To and like section the you would as clients you, to for they will all services day. be great Thank take all Wednesday, like Merci this professionals you would Investors access today. those and Thank also a Alithya us day. I the to of on our the deliver every trust a shareholders for virtual our opportunity on quality who General that clients also in the can remind passionate Meeting to circular, Julie. September Annual our advice participating to again to Have our

Operator

This concludes today's conference call.

disconnect. now may You

Alithya (ALYAF) 12 Aug 222023 Q1 Earnings call transcript