Dazzling Stock: Alithya Group inc (NASDAQ: ALYA)

On 15 July 2020, Alithya Group inc (NASDAQ: ALYA) remained among the day losers and traded with change of 4% on volume of 27,445 shares in the last session as compared to average volume of 17.29K shares. During last trade its minimum price was $1.51 and it gained highest price of $1.58. ALYA has total market capitalization of $79.42M. Its closing value stands at $1.56.

Alithya Group inc (ALYA) stated recently its results for the fourth quarter of fiscal 2020 ended March 31, 2020.

“Alithya, and most of its consumers, are fortunate to operate as essential services providers. In response to the COVID-19 crisis, we proactively implemented business continuity plans focused on three priorities: protecting our people, our clients and the Company. We responded quickly by implementing an immediate work-from-home policy for our employees as well as offering our clients uninterrupted support and helping them migrate to cloud environments as they were forced to adapt to teleworking conditions. In addition, we took active steps to manage our liquidity by further optimizing our cost structure, restricting all non-essential expenses, limiting capital expenditures as well as reviewing and taking advantage of all accessible government programs. We are closely monitoring developments and will consider additional initiatives as the situation evolves,” stated Paul Raymond, President and CEO of Alithya.

Fiscal 2020 Results

Revenues amounted to $279.0M for the year ended March 31, 2020, a $69.5M increase, or 33.2%, from $209.5M for the year ended March 31, 2019. US revenues increased by $72.1M, driven primarily by additional months of revenues from our US acquisitions (Edgewater Technology and Travercent) contrast to the same period last year, partially offset by revenues lost from the divestiture of our UK subsidiary.

Revenues in Canada and Europe reduced by $2.6M, which was partially offset by additional revenues from the acquisitions of Matricis Informatique and Askida. In Canada and Europe, higher value-added service revenues increased, while lower margin service revenues reduced, for the year ended March 31, 2020, contrast to the year ended March 31, 2019.

During the year ended March 31, 2020, certain important historical consumers of the Company experienced a notable, cyclical decline in their IT spending totaling $21.0M in revenues, year-over-year. Alithya maintains preferred vendor status with each of these consumers, and continues to play a key role in their respective, evolving, IT and digital transformation needs. During the same period, revenues from all other Canadian consumers, including a number of new ones, grew by 14.6% before acquisitions.

The Company also recorded a decrease from Oracle legacy products and services in the US. The Company has mitigated the decline through growth, in Canada and the US, with new and existing clients, supported by the growth of its higher value-added, digital transformation services and the commercial benefits of its larger scale.

Gross margin increased by $28.7M, or 52.9%, to $83.0M for the year ended March 31, 2020, from $54.3M for the year ended March 31, 2019. Gross margin as a percentage of revenues increased to 29.7% for the year ended March 31, 2020, from 25.9% for the year ended March 31, 2019. The improvement was driven primarily by increased gross margin from acquisitions (Edgewater Technology, Travercent, and Matricis Informatique) and growth in higher value-added service revenues. US gross margin remained strong, while gross margin in Canada increased on a year-to-date basis, due in part to the changing mix of revenues described above.

The Company’s long-term strategy to move towards higher value, digital transformation services, as well as the increasing use of permanent employees’ contrast to contractors, also contributed to the increase in gross margin.

Selling, general and administrative expenses totaled $76.8M for the year ended March 31, 2020, a raise of $24.2M, or 45.9%, from $52.6M for the year ended March 31, 2019. The additional expenses from acquisitions (Edgewater Technology, Travercent, Matricis Informatique and Askida) contrast to the same period last year, accounted for $19.5M of the increased expenses, and were partially offset by the divestiture of our UK subsidiary and certain non-recurring items. Expenses in Canada and Europe increased by $4.7M, mainly Because of a $4.3M increase in employee compensation costs, used primarily to enhance operations and sales, and a $0.5M increase in professional fees required in order to adequately manage the additional duties related to becoming a public company, increased share-based compensation of $1.1M, increased insurance costs of $0.4M, and increased public listing fees of $0.3M, partially offset by a $1.8M decrease in occupancy costs mainly Because of the adoption of IFRS 16 – Leases.

Operating loss for the year ended March 31, 2020 was $41.0M, a raise of $27.9M versus an operating loss of $13.1M for the same period in 2019.

Adjusted EBITDA amounted to $11.8M for the year ended March 31, 2020, representing a raise of $5.6M, or 90.1%, from $6.2M for the year ended March 31, 2019. The positive contribution from the acquisitions of Edgewater Technology, Travercent, Matricis Informatique and Askida, increased margins from higher value business and a positive impact of $2.1M from the adoption of IFRS 16 – Leases, were partially offset by a combination of recurring and non-recurring expenses related to being a public company and expanding the business, as well as some initial impacts of COVID-19. Adjusted EBITDA Margin was equal to 4.2% for the year ended March 31, 2020, contrast to 3.0% for the year ended March 31, 2019.

As mentioned above, the Company has performed its yearly impairment testing, as at March 31, 2020, notably in the context of the COVID-19 pandemic and the importantly increased uncertainty surrounding global economic conditions in general, and the outlook of the Company’s clients’ different markets and industries in particular, as well as the consolidation of the Company’s tradenames. As a result, the Company recorded a total intangibles and goodwill impairment charge of $28.0M.

The price moved ahead of -5.60% from the mean of 20 days, -9.71% from mean of 50 days SMA and performed -31.92% from mean of 200 days price. Company’s performance for the week was -2.50%, -17.89% for month and YTD performance remained -43.88%.

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