ALYA.TO - Earnings call transcript Q2 2023

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Operator

Good morning, ladies and gentlemen. Welcome to Alithya Q2 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

thank quarter again call. fiscal and for joining everyone second Alithya’s XXXX morning, you for once us Good results conference press morning with notes MD&A on release statements The related and our complete website. were are and financial this now posted issued and call section. webcast the presentation our in be also The on found website Investors differ subject anticipated. could this of risks number that advised statements cause be a results will contain those that uncertainties to that materially are Please call forward-looking actual to and from are and

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

call my turn it’s to Paul? to the pleasure Raymond. Paul Now, over

Paul Raymond

sustained to continuous we experiences; exceptional the grow as providing continue and offerings. investing allowed and economic in congratulate everyone our in to morning, the Yes, Rachel. to through scale begin, back efficiency XXXX our Alithya is quarter to us would clients; us come to on a us for improvement what employee all three also discuss to second value typically quarter. like the I the joining second, and operational achieve which that team first, thank another third, Good on up-and-down ever-increasing and our call you on Alithya’s morning ahead: and seasonally To performance like record in this results principles financial I’d slower guide guiding delivering delivering performance. these

solution by to enterprise we clients. maintaining clients provide our complementary new our and strategic partners agreements in education sizes instrumental Foundry, ways higher existing to at looking is always leading programs. institutions more our their and the transformation for new partnerships OneWorldSIS acquisitions, up targeting replace grow of sector. its two Manufacturing with legacy ramping signing with digital and Frequency By top-tier to recent are We of all as Canadian partnerships system their value universities. Apps position are trusted transformation helping Power verticals, agreements as new clients certain partnerships with advance of recently help recent on new capacity Those Alithya assist higher such their partner examples Datum Alithya acquisitions for are well as were the choice Vitalyst Through of state-of-the-art The including also in as and continues our that. the to great to of journeys. for our Alithya developed integrated digital cloud education, XXX solutions,

and as is example, an As partner our for Solutions. Cloud the assisting sales which Alithya Microsoft apps, go-to strengthens Paint further in products their marketing using connecting position Cloverdale our currently

Office would Microsoft internally provide their XXX, very during staffing support be using just For clients transition enough many exercise. of our cost-prohibitive people a to

providing provided for to Microsoft support our with service how to use capabilities. So recently, support regarding and the Bank Vitalyst MUFG questions technology access new own later employees desk through

permanent growth permanent mobility our Academy, and with retention to professional is Leadership our development, internal of Initiatives such with people’s training the growth and investing In exceptional. addition we all learning employees tools, experiences to base. our and employee global in us footprint are initiatives, ensure our opportunities, continue our contributing to replace our our subcontractors and stimulating as

employees increase intend forward. continue to that an realized of we year, past trend XX% moving we the in Over permanent and

part in is Our playing process important an retention onboarding also our strategy.

quickly to easily hires their also and Our XX/X. a new mentor find phone from right new platform enables

first light Our leaders finally, our retention. create positive This many report between their best have that is which KPI on is earlier and employees. the metrics our relationship are our live employee we people initiatives driver and undertaken And can work in communities bearing our this to being considered indicate fruit, the shed by year, initiatives our and we and ESG impacts publishing in embrace. that best

processes, strategy assets advantages, multiple long-term to across us valuable As our with our our identify provides platform, leverage improve efficiencies. the is business ability demonstrating, and including to to scale

larger intelligence, upshoring, provides CRM, us Additionally, artificial and enables transformation practices opportunities a more. play Scale in leverage to our leveraged. we us process estate project real also management, and in with remote can expertise management our role our expertise delivery digital internally our where robotic many ERP, e-learning, optimize and apply best strategic our practices cloud change footprint reality. where automation, with can our alignment to also strategy, new in be our Scale

positive the single our process on around business. office, effect revolved Our management This of of across all approach, has project projects global a had our applying concept approach our has our management to project platform. a PMO also

is us all offerings. higher-value leverage Our enabling now our also to growing of platform for cross-geography opportunities

record with to alone, and performance of completed mind, in We Alithya during have those pace gross a indications. quarter growth In priorities to begun the across is way. experienced our XX% enterprise our see this slow the effects achievement adding a clients Alithya all new cross-asset another go-lives margins expense marked yet along QX QX, which in reductions. We by that context maintained key top deliver revenue Within cloud sector. in valuation while improvements significant typically and of XX XX solution

and inflation to more, ongoing global incurring our latest past have costs the posted our acquisitions control associated X spending, capabilities pleased our with of particularly X acquisitions, to indicating the of salary is increases, we results the and continues of our alone. good are teams. acquisition considering of direction, quarters the gross notably expanding it Therefore, the margin, right despite integration delivery trend As for

There in second key respect discuss that performance briefly put to is strategic initiatives on helps of fiscal our We into our XXXX are quarter me our highlights numerous but implementing, are and well our financial employees way much towards perspective. leaders outline XXXX targets. let three

has pride we good amounted past of the XX% of million the of $XXX competitive opportunities Datum robust fueled great measures adjusted compensation, consensus and career benefits a internal approach platform; reporting implemented exceeds utilization to beginning to set million, First, cross-asset and $X.X EBITDA the is in a third, series revenue ongoing based which Alithya of this on potential and and to of a longer quarter, abundant we of an that for growth take Vitalyst; the development reap in indicator term and training, a that shortage. acquisitions line significantly second, our of global embraced a labor mobility. we response or are by

with We clients grow and to working are door Private has currently from recent capabilities teams public of of demands. contribution global to also India. our Eastern our for to and offshore ensure in further delivery acquisition continue client and the some their sector opened preparedness delivery to our respond our Datum Europe to projects, teams

markets right-shoring. success managed and allow in and cost lower combination between That’s a we striking for for to efficiency. been to Accordingly, that new centers both begins work as and we services. cost key best enter capability talent of to with Alithya creating project-based Forging what have diligently and geographies a us pools the refer balance leverage path continued additional

to and As existing repeat to value or last business also outlined XX% Alithya. year. repeat strategy, addition during is our came provides Today, our from initiatives. in of us note evolve. of When clients, It with our both same new in subscription- and to our new provides stability our this mix to business IP-based from quarter long-term healthy quarter, second XX% fixed-fee from quarter, and revenues also we revenues, combined our significant to the business with opportunities. in client revenues continues clients that the and XX report or important continue clients clients is our we we believe segment derived the served growth of that the This of

able are essential support inflationary recession in comes local sectors. global our regardless the most other event As way. you a They services be be fears view our of gateway competitiveness. the external may transformation digital pressures, to or to aware, whatever of or as need of We them clients

the approach factors impacts and Claude partner performance, value of towards the adviser reinforces focused experts their bring help in their clients their positive our to pass financial will plan. that recognize our our over continue Our and transformation to trusted disciplined now and as of I execution Alithya Claude? metrics. for projects long-term to these The own all digital to find accelerate efficiencies more turn it our in organizations. to and QX

Claude Thibault

[Foreign Paul. Good morning. Language] you, Thank

growth. we have public, quarters the years, strong past growth no quarters few becoming and with organic since Over had with

margins steadily increased, challenge. We was our and SG&A quarters have gross even mainly driven acquisitions. And gross had by growth quarters in if margin where with our over strong strong time, a

such, shift presenting our margin SG&A strong clear gross on all performance namely marks Paul a financial organic we’re levels as progress mentioned, three As results in reductions. growth, Alithya’s today’s second quarter as and together,

amounted Let’s look million, second $X.X and of Slide second at $XXX.X Datum the the million million for revenues to Vitalyst an to to and XX.X% in $XX.X the turn increase respectively quarter those numbers XX. year. or of last $XXX.X compared in Revenues million million for quarter. detail. quarter Please contributed $X.X

million continued with In of of growth due on $XX.X increased February increased foreign $XX.X July our signed due all a across Canada, recorded favorable once dollar Excluding revenue U.S. X.X%. to X April contracts other two impact excluding those XX.X% XX.X% concurrently revenues and we impacts, million, again. again and to from exchange words, acquisitions, the Datum all sustained U.S., occurred X, growth In the and organic to acquisition XXXX. currency long-term some to acquisitions, which growth. organic operations, the Vitalyst respectively true organic growth and growth was rate by the the of including In organically XXXX good

during increase sequential all offset to QX, the increasing as $X last far On quarter growth, strong overall negative international the geographies. impacts. comes was also despite million terms revenues they quarter in partially million from our quarter by occurring As for in same of revenues from reported normal $X.X in mainly acquisition, some summer the a currency Datum which and basis versus to operations, slowdown usual the in XX.X% year the a QX

book-to-bill revenues of ratio quarter Of Lastly is first XXXX, years. our actually bookings second XX-year quarter our fiscal quarter was summer contracts, quick one excluding this QX on lump of note, X ratios second ratio quarter. a normal from is a to recorded under which word ratio book-to-bill in the X. guaranteed were higher all two of X.XX, actually previous in X above than year’s the revenues, the for And ratio on the

margin, gross from by increased quarter Now second to $XX.X $XX.X last by million XX.X% million which million, or let’s look up take a at our $X.X year.

QX of percentage the a consolidated percentage from and is to quarter over Canada account As XX.X%. gross employees impact last QX same increased XX%. most sequential The the to expected basis. margin and that U.S., is X.X improvement at to improved both mix of revenues, performance. gross was revenues sequential our comparing quarter performance, On basis, a selling derived year the project rates, year-over-year margin and percentage in at relative taking increase QX second points hourly on up utilization margin from This drivers, recent led average increase in positive permanent year, XXX increase this acquisitions. overall which are to, gross QX margin a we two subcontractors, for before margin a typically in points from project our rates XX.X% an from a from during is And gross the quarter In sequential showing cetera, a is into et increased softer again, XX.X% also perspective. basis of in

let’s look Now SG&A. at

million, $XX.X additional beginning increased show year. particularly expenses initiatives fiscal X gross back we of this totaled incurred compared in share-based increases the the kicked coming the to U.S. increase in appreciation. primarily are The of SG&A last about to as at the quarter beginning the last salary in quarter June, the of the the non-cash relative benefits from in million or XX.X% year. dollar as the well same year, $X.X $XX.X an increase increase expenses the the start acquisitions compensation X We costs to of and of in the in the million due completed quarters second Datum efficiency compensation the negative talked to impact Total at and considering Vitalyst an the was expenses the that acquisitions,

the fiscal More XXXX the of $X.X second looking importantly, the million quarter when of million an at $XX.X see SG&A, to variation increase $XX.X sequential or we in increase. quarter again million first from in a

impact of in an driven which which accruals, into following: take $X.X on by negative two, the the and million, we acquisitions; performance, the net overall hundreds expenses. improved dollars; can increase $X compensation to million; naturally if the other the dollar in we addition these the Datum we the are share-based thousands However, into SG&A the timing see three, sequential factors, item, U.S. in of of July non-cash expenses the four of of tied take variable acquired of in four, several reduction and of commissions appreciation business if is of compensation mainly that so notable company categories a X account of one, account increase

satisfied pre-COVID quite to spending certain with certain to reflected. progress expenses with currency need fully and expense like about review to-date the we some our return of inflation, the variations, initiatives timing we efforts the be about are certain still of and ongoing headwinds While be of careful

versus we of EBITDA XX.X% will or to such, to the continued second part same loss mid- Net long-term to of $X.X million and million $X.X increase to revenue well. year, sequential a amounted an year. second revenues, committed XX% of strong a from of $X.X come million, million last the for our also improvement of $XXX,XXX, As our in was remain quarter last as increase growth. loss an adjusted of net compared quarter quarter objective Overall, $X.X which

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

gross we a margin, trend Regarding similar dollars. in see

higher general quarter of also occurred percentage of utilization and of on factors a pressure showing row a XXXX on third number performance, mix, in put QX As some margins But sequential performance. fiscal a of this which and in gross revenues, marks reflecting and improving historical highlighting labor had a Vitalyst our our rates year the improvement, efforts project the Datum.

reflects improvements long-term recently, levels. initiatives continued financial trend well also SG&A, on SG&A Our margins, our generate growth are reductions margin we believe, objectives. our long-term in way acquisition and gross a focus in to on X-year organic our sustained adjusted EBITDA relative we and, to and more achieving With our again, gross higher steady growth, our

Now $X.X statement metric trending flow to financial operations right quarter, turning million of and our Page positive cash cash on XX, as direction. the indicated our in liquidity the generated of position another second in flows, in

balances to long-term increase the adjusted an into the of our of appreciation months that XX million and our operating $XX.X hand, This other currency, net X.Xx. with combined in in and million. U.S. changes combined acquisition $XXX.X timing the payable that impact the to EBITDA debt debt net working trailing of $X.X elements dollar to non-cash certain Datum items $X.X purchase negative the resulted and of led in resulting to the capital with On reach million, of balance net higher multiple in activities cash of of used disbursements of a million, translates relating in debt

of historical Vitalyst year recent calculating full a profitable incorporating When not pro covenant this into works, multiple and full is the of bank consideration However, how basis, our a profitability on the our impact the does X.Xx. acquisitions. is multiple only Datum, actually months XX forma of which take

the remains into considering current should timing-driven to on apparent As optimal. that historical levels despite annualized and basis, our adjusted our should past on EBITDA. capital reminder, drag trend that we Datum basis, account close On of that considering and believe working current the an of stabilize, Page quarters million translate for three $XX XX, a Vitalyst shown profitability steady the deleveraging, leverage

you, to back Now Paul.

Paul Raymond

Claude. Language] [Foreign

an the this a that $X.X adjusted to So EBITDA key quarter, first, quarter, three past of this we for record. amounted million to recorded takeaways recap,

capabilities growth compensation, based XX% training revenue mindset on as our as approach delivered longer career and opportunities. robust or delivery by we across of fueled the Second, $XXX leadership, of the has growing third, our abundant competitive And its workforce well teams. building million, leveraging Alithya term growth global platform of assets a to world-class valuable the

Remembrance I’d So around the tomorrow reminds struggles for before the And the human Ukraine, unfortunately veteran take also moment such and in to we cost that of war myself, events continue remind of the as horrible ongoing that is open up to me questions, war freedom a Day. everyone as to daily world. like a

forget those home, at that let us mark who’ve us each never to peace Here in year. day have sacrificed enabled this

So on Ennis, we that, will take questions.

Operator

Dubreuil sir. with Desjardins. go ahead. [Operator you, Thank from Jerome question Your first comes Instructions] Please

Jerome Dubreuil

on slide explain to question. taking Page model found. my for your X I evolving Thanks Good business

time So have fixed of that material. you and the it shows pricing versus more

and confirm what If still if the bit also you price this mean, inflation here, deals. you include escalators can can a longer-term could maybe for explain just fixed Thank. strategy that can

Paul Raymond

the Thanks, sure. Thanks Jerome. Yes, question. for

we’ve customers said, to as our value more turnkey the the So customers. with are And up solutions. chain for move more as grows, right, we and try business the of looking

the So them to on them it we solution, help the work decide them. which planning, a them it can of architecting helping helping implementing commit pick and and for then the and go, upfront, direction supporting strategic with

built we’ve to be platform in do pieces the project. to the grave the able cradle So of our to

MUFG spoke good example, we a earlier. So about Bank

implement in typical we a leave. we the and in So past, would a – project project,

can even a through Now in new and and the train management we support stay actually platform behind, process. people the them we change

or price those do things, many we’re either of we after basis transaction as or come projects a with when So those fixed envelope a a fixed supporting.

or us IP higher the client to or cloud. have legacy and business value, a same it’s per call move on the intellectual They towards have acquisition property going. keeps just Datum that per the more the to – of helps that transformation more actually accelerate or thing. per we repeat applications is try that and we it’s sees margin, more head so So because

of fee. those we types do again, it’s So a things, when service

So We We based the platform. margin quality we the We costs. control and anywhere. of do and control availability way a maximize to work can from our structure can on across the the personnel entrants. deliver in it we the what of

if not that for company. more more see plan our I’m evolving question, but sure that and Jerome, the we business. long-term So the your in that’s answers

Jerome Dubreuil

Yes. up? us I growth were quarter one, coming year, RXD if, model in two wondering from to was the third in acquisition a just And last of contracts bit fully the No, help ramped quarters. the great. that’s the second large the

Paul Raymond

So from reached now, as the the imagine as with minimum we’re improvement we’re that required agreement, And a still focus, and is revenue can in from full-time came we’re perspective, growing. we’ve margin employees. the agreement with that replacing the of the seeing quarter-over-quarter already you it the the seeing and subcontractors right part you’re

also that’s gross margin. So helping in the

Jerome Dubreuil

on congrats and the Great, quarter.

Paul Raymond

you. Thank

Operator

you. Thank

comes Deepak BMO go Capital Your ahead. from next question Please Kaushal Markets. with

Paul Raymond

hear question, we Whoever can’t hear you. asking is the We can’t you.

maybe next come So one, go to and will as we the back.

Operator

Echelon with Partners. ahead. question next Please go Wealth from Ezzat comes Your Amr

Amr Ezzat

Hi, my questions. thanks for taking

On the economic you of and clients the a to conversations book-to-bill, make are outlook? light more evolving both the on ones conclusions to fragile hard potential with quarter-to-quarter I on how could numbers, know existing in it’s maybe speak but us

Paul Raymond

become out the Thanks for and the question, with with happening my Amr. thing Everybody can concerned every us next help clients, question have with at the meeting what’s more Amr. conversation, efficient. ask team there. is It’s But ask is that we them they in I same a how I our that

we from slowdown. ways from increase. that our a experience, I perspective. we’re is I customers that on based mentioned seeing close at eye desire this it, believe efficient think seeing past more or to are our not going to slowdown I’ve anything, I for on not but a before, if the become And keeping we’re bookings, look If So and

funnel. positions. to process uptick and sales offerings, good still So our a I we services be modernize pretty in seeing of I robotic that offshore have over an I going the – have seeing efficient, believe projects automation, we’re We fixed still become we’re in backlog that many, more coming mean, area, think many the to open more price managed

not seeing so far. So we’re it

Amr Ezzat

quarter, to Okay. and to gross not that how permanent sure are That’s that we able margins, color staff it’s encouraging. from it or us tell on on where I’m I Then appreciate rebound far the you’re the process? subcontractors. along if shifts this ratio in pretty to see the stands good

Paul Raymond

of Just talk the subcontractors? want to about replacement

Amr Ezzat

to – Yes, yes, go the ahead.

Paul Raymond

Sure. Yes.

least completed is well. mix We’re to XX%. if we’d ago. RXD target And when said very, where still months RXD like you – the more acquisition we is very some That’s that, our we’d high we we’re to remember, and X.X had The room we XX on upside. we’re plan. said to always were like progressing a the get years for get percentage we of We going, there ourselves and through where there progressing And subcontractors. at give

Amr Ezzat

Okay.

room fair? sort a bit of innings of So is that but of late process

Paul Raymond

of No, anything, on more employees. I room. full-time still open back think also your think more Coming to there the if going for that’s first is lot question I up recession, a to opportunities

Amr Ezzat

Okay.

Okay. color. pro obviously, That’s great Then forma on leverage, the X.Xx. like yes,

couple earnouts, I you think which a December. one – up is you’ve of got in coming

expectation how is X.X. we speak guys to or deleverage you at leverage level? what could feel stay Is forward? you guys do the leverage you about So an going Maybe think optimal to for

Paul Raymond

within the cash as my our sure. a profitability, Well, it’s towards good. in range, and, within probably comfort it’s notes, deleveraging And And our it’s range, for of our that therefore, level I you – to pretty zone, conversion end of that is said higher flow but obviously. we’re know

been with little a variations, satisfied we’ve And three hit quite I we’re working So as last capital said, the that. bit. quarters on

that least very So least or at reverses typically at stabilizes. itself the

expect we debt better coming reduction can generation in and So cash quarters. flow

Amr Ezzat

Okay. Is ahead, I – sorry. yes, go there recall

Paul Raymond

a have to our was. leverage. we’re stock using between there. of I say, like acquisitions, and as we issuing it’s that said, overall, we shares we We did on – just choice purpose a not bit When make price got always No, where

to turned extent. a leverage certain we So to

it’s all on purpose. So

looking much to and it’s want pretty we’re So be, for going the where forward. we good future

Amr Ezzat

of one years. on from cap the the last Then last a Understood. couple drag just working

working been the this Your Is to for expectation flows. capital QX, the December a positive cash contributor has year? same your quarter

Paul Raymond

done it really depends. homework. The your You’ve –

you as We’re company, a service know.

impacts really lands and accrued So it payroll of stuff the end that. the when the depends the so quarter on like

I’m bit stabilization. we but expecting it’s have sure. I relief, to should have we’re confirm the a going a numbers, as crapshoot. So as for go some wouldn’t to a same far of

Amr Ezzat

Thanks for on. it pass Fantastic. all will I details. the

Paul Raymond

Amr. Thanks,

Operator

Thank you.

from Laurentian comes Bank. Agostino question go Nick with next Please ahead. Your

Nick Agostino

Yes. Apologies, the Good little late. morning. I joined bit a call

So were is you guys guys call margin your maybe – out MD&A you call or RXD what did presently? maybe out the in gross

Paul Raymond

call into Good it morning, call we operations Nick. No, our out. It’s didn’t separate. it merged now, so we don’t

Nick Agostino

Okay. where the far mean, improve – how journey How are? – on started I guys say if front think that you margins today, that would you the you where we about on margins to those versus along that

Paul Raymond

perspective, the On we commercial be. to agreement where wanted exactly we’re

that’s very going well. So

gross other the the improvement with Canadian some the permanent margins side. you’re improvements that’s again, also employees RXD is of progressing that The replacing rest on in seeing on saw these big the year-over-year And projects, and we of that’s business, subcontractors well. why

Nick Agostino

far slowing this number it prior and being service meet to I if employees able be maybe the a what the had maybe changed in your improve as maintain Or employee Should always able we but as it? guess quarter a latter, faster interpret as you bit are to – bit service was a a Is the I down sales the impacted margins you now conditions in and more What employees of quarters, different because, rate we permanent Okay. maybe and able in of line ratio? on the maybe – able abroad? market the prior Morocco should And a of – trying gross think changed I’m see to, of part has subcontractor and subcontractor use little the especially case hire to – just guess, permanent just to obviously, are has you – clients. understand than to quarters, would demand, to a to to guys on what that you’re along it’s at to you being strategy? strong your same approach. high

Paul Raymond

for Nick. It’s of many Thanks the a factors. question, combination

full run of I do scenario, to a bit a to So maybe you the through rewind. got

because so we quarter, back margins the already So subcontractors. And XX%. the or RXD couple of you a April which we our at April XXXX, we’ve type XX% the dramatically And that subcontractors full back headcount the of the the we’re gradually moving did ago, and been employees mix. to mix of were if – you mark, the gross margins of transforming were points. said XX% just mix time. the acquisition, years saw to that to almost which from went that gross of go thereabout Then type X.X was following They down mostly by within at business

that’s gradual business mix In that, thing. So of parallel the changed. with a has also

type projects XX% Slide is go or you that earlier, business if fixed projects. we our services again, So right? subscription-type projects about talked X price to managed of or the today recurring business, So either it’s

combined we throw changing offshore, new all now things have of tied are three so together gross workforce, And impacting So margins. improvement year that didn’t that’s our margin almost XXX people to So so X% the ago, right? again, those the from that, into a margin mix. have that also we working capability

I it’s I but something side the on we’re on that note, put can’t – think a it a yet, tracking. number

on of I a think see put one. but the that a recession some fear or I a what there hear. become based can’t to just is I employee versus It’s talk probably number on I people and out now permanent right a helping subcontractor, decide

Nick Agostino

like that I last Yes, comment.

of better I Everything you terms said, follow. because in mix a just also is or to trying of, quarter-over-quarter see else, I’m just read-through is environment change. revenue of interesting the that think but slowing more hiring as better if if the I potential the recession. is read-through

there. good all So

Paul Raymond

I a think combination, it’s yes.

Nick Agostino

question. operational at perspective? look and past, the out where your squeeze a Okay. meet you real noticed today guys you dollars in think I slide, you estate the an I needs came And you for to when think real last versus this earlier up then my in much are optimization estate the from obviously, can do how needs tomorrow,

Paul Raymond

answer to is challenge a the the That’s main good that question. subleasing market. And

can not it’s right now, you very as strong So imagine.

before the that needs. to be then considering need remain sure get that, front. and our always always we acquisition on to we leases we We say – how timing end go We’ve basis. and but to evolving on considering savings the of certain want to said not So we we’re in active specific

rent So need consider to other of that XX, not and because is you our P&L much. does that, – the thing all hit IFRS expense

overall coming if I over the Some I you to flow cash number, several – had statement. least But years, it our we’re rough we if at just give of for that, think looking very a we a our throw spend feel hits don’t guess to of that. we’re at XX% save

Nick Agostino

I appreciate you. pass will color. that I Okay. on. Thank it

Paul Raymond

Nick. you, Thank

Operator

Thank you.

Your Rini next ahead. Capital Please Markets. go with comes BMO Sharma question from

Rini Sharma

Hi, good you hear Can me? morning.

Paul Raymond

morning, good Yes, Rini.

Rini Sharma

morning. Good

So on mentioned this we flow had rate Or expectation to gain. flow would cash variance the of Is the and be? say a loss? that. little the things. that to a cash some quarter and start else loss what the for noticed expecting anything drove really, when that conversion the a versus do I And are flow you there EBITDA – question We I EBITDA that capital you’d – bit side just with you had know cash had working tracking

Claude Thibault

basically, flow, is Well, There That’s cash integration the spend. cash consider. acquisition few things to EBITDA expenses. conversion a of is there and to our

So it impacts flow. cash

beginning $X.X the of Datum QX was acquisition quarter. quarter. million We quarter at because this was the an acquired see You

we – very down. tax that have case. bit acquisition, – our that’s Then So low quickly there goes in obviously track If number a any is That’s a don’t cash taxes. will amount acquisitions. that of a

to That’s $XXX,XXX. You can way see a this go. stay small, will while is for very and that that quarter

pools can tax use. we We have

The one CapEx. other is

CapEx, sustainable in quarter. this we mind. amount our under spent That’s $XXX,XXX So a

lease The liabilities. of repayment other one is

see That’s the That’s you come that. So down. down we just And of until $XXX,XXX But now, it’s to that talked interest. is there we further end space our debt. We the leases. sublease finally, to for certain about eventually. or about going go

rate in combination increasing million So debt interest the a quarter, is interest also and level the $X.X the increasing. of

should down we amount that So cash be as generate we flow. deleverage trending

and million, leaves round depends number, it, then the in it tax you and deduct on EBITDA costs. our integration numbers, take and XX% $XX you of and acquisition if Rini, CapEx about interest. maybe So and then That

Rini Sharma

then it. particularly getting very you over the versus gain of on Are And side trend? similar you another going quarter? share-based employees to consistent sort seeing And a just terms quarter as on in with anything as the to expecting changed? expecting side – side, compensation OpEx do it be Yes. And contractors? you. exchange has Got be it will next That’s of trend more you question Okay. thank on of well Are this things. permanent helpful, the further the it

Claude Thibault

Okay.

that’s So when employees, talk part about we first question. your a of discussion mainly of subcontractors I versus gross if the understood margin

careful and that. provide away notes don’t So part, very we the from been I’ve guidance, first in stay to my

come, we to have cautions So we few positives have at. and a to look

on said, expense the took positive as So over the that I initiatives have reduction quarter. note, we place – initiatives second

So that impact. did full quarter not a have

keeping spend said, return There mentioned developments. we we’re levels. to there. we gains And travel, So as pre-COVID like But also expect spending some few you still, the is I eye a inflation. some a on headwinds, is business There that. close also and have can additional elements

So SG&A we keep fixed. eye on is that. not all And a close

variable, so are elements performance. will increase semi SG&A track to they Some

good So from. – a the we all trend, like my can second – base quarter stabilization. in trend. like we ear. work should We some and think say, – I had is how that we whispering the the level we’re we’re see the Yes, is to in we but combined, Paul

Rini Sharma

Okay, my color. Appreciate thank for you very the questions. taking much

Paul Raymond

Thank you, Rini.

Operator

Thank you.

comes National next John from Please with go ahead. Shao Bank. Your question

John Shao

morning. just updates want I the will could us synergies? my know the you beginning closed company of And that but I the was more you position. on give taking [indiscernible] realizing get when question. quarter, color expected for the do some on integration start at to good think current Thanks Hey, the works?

Claude Thibault

Did you say integration?

John Shao

Yes, integration.

Claude Thibault

acquisitions? Of our

John Shao

acquisition. Datum On

Claude Thibault

Okay.

operating and there is quite low very So They costs. the to expenses, talking with about – the there were operation much so not synergies had a efficiencies there. small be

about to really broad So mainly synergies the But there we expertise their is technologies there to talk and in too taking when place the it’s not customer with first at cross-selling base. Datum, savings unique taking many gain place. our side,

later modernization They their clients sooner or and industry. are expertise. tools All of will the need in insurance big our

clients we the before. time, had in at As we industry mentioned the insurance

revenues do started we So so margin. the cross-selling growth, great with accelerated higher there,

and seeing the the integration actual [indiscernible] we’re where – expenses. more the more than that’s the much upside, so expenses So

John Shao

will Okay, questions. Thanks. I great. the That’s all line. pass my

Paul Raymond

John. Thanks,

Operator

you. Thank There at Raymond, Mr. are no this time. further questions over to you.

Paul Raymond

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our strongly do like So read they those encourage care. high-quality I’d you deliver to and every Have a to trust to that great again. Take And opportunity place you continue and clients so. haven’t clients if us with take I day. who service to you thank thank this to professionals it, once advice our to Thank for passionate day. the

Operator

We thank Ladies and ask call concludes that and you for lines. your your for conference please this gentlemen, today. disconnect you participating

Alithya (ALYAF) 13 Nov 222023 Q2 Earnings call transcript