Alithya Group inc.

Good morning, ladies and gentlemen, and welcome to the Aletheia Second Quarter Fiscal 2025 Results Conference Call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, November 14, 2024. I would now like to turn the conference over to Aletheia Management. Please go ahead.

Thank you. Good morning, and thank you once again for joining us for Alethea's second quarter fiscal 2025 results conference call. The press release and MD&A with complete financial statements and related notes were issued this morning and are now posted on our website. The webcast presentation can also be found on our website in the investors section. Please be advised that this call will contain statements that are forward-looking and which are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated. These statements include, without limitation, our estimates, plans, expectations, and other statements regarding the future growth, results of operation, performance, and business prospects of Aletheia that do not exclusively relate to historical facts. These statements can also refer to future events, including those regarding our expectation of our clients' demands for our services, our ability to take advantage of business opportunities, to leverage our service offering, IP, AI, and expertise to meet clients' needs, to stand out and excel in a competitive market, and to meet our goals set in our three-year strategic plan, as well as our ability to deploy our smart shoring capability. For more information, please refer to the cautionary note in our presentation and to the forward-looking statements and risks and uncertainties section of our MD&A, available on our website. All figures discussed on today's call are in Canadian dollars, unless otherwise stated, and we may refer to certain indicators that are non-IFRS measures. Please refer to the cautionary note in our presentation and to the non-IFRS and other financial measures section of our MD&A for more detail. Presenting this morning are Paul Rimmel, ELITAS President and Chief Executive Officer, Bernard Dockrell, Chief Operating Officer, and Debbie DiGregorio, Interim Chief Financial Officer. I will now turn the call over to Paul.

Paul? Thank you, Benjamin. Good morning, everyone, and thank you for joining us today. I'd like to begin by highlighting three notable achievements from the second quarter of our fiscal 2025 year. I will then turn things over to Bernard to bring down the specifics of our operational performance, followed by Debbie to cover some of the financial highlights. First, I want to commend our team for the continued improvement in our profitability and for delivering a double-digit adjusted EBITDA increase. This was done in a difficult economic environment for discretionary technology spending and Given our current client base and type of work, you could say that most of our strategic and critical projects would fall in the discretionary spending category. When we take a closer look at our large digital transformation projects, once they get started, we know they seldom stop, and we deliver on our promises, which is reflected in the excellent scores we receive on our client satisfaction surveys, which contribute to our high-value reputation and future work. However, Because of the current economic environment, newer projects, especially the large ones, are much slower to kick off, and this impacts our quarterly bookings. As a reminder, while we stay focused on moving opportunities down our funnel on a daily basis, our trailing 12 months booking and total backlog are better measures of our future success. So despite this economic environment and seasonally softer summer months, we have delivered year-over-year growth in all areas of the business except within our Quebec client base, and our backlog is strong. Furthermore, we have significantly improved our adjusted net earnings, which amounted to $5.3 million in Q2, an increase of $5 million year over year. This is the result of our team's continued focus on reductions in SG&A expenses and higher value services mix. As we continue to deleverage and to diligently manage our net cash from operating activities, we are better positioned to address acquisition opportunities that may present themselves. Second, our gross margin as a percentage of revenue increased again year over year. This achievement was fueled by increasing demand for aletheia's higher margin services, improved utilization of our workforce, and continued SmartShore progress. And third, Despite growth challenges with a handful of clients in Quebec, we saw continued share gain across many of our business lines, particularly in the Canadian renewable energy sector, as well as in our Oracle and Microsoft implementations. We continue to grow and solidify our partnerships with industry-leading technology providers, And as we gain greater traction in higher margin segments, Alethea's reputation as a trusted advisor with increasingly specialized expertise continues to grow. And on that note, I will now turn things over to Bernard to provide more details about our second quarter operational performance. Bernard?

Thank you, Paul. Good morning, and thank you for joining our call today. Despite softer revenues in the second quarter, Largely attributable to spending reductions at a handful of clients in Quebec, particularly in the financial services and public sectors, we maintained our focus on improving gross margins by strengthening billable utilization and leveraging smart shore capabilities while providing more higher value offerings to our clients. Geographically, on a positive note for our Canadian-based activities, our legacy application modernization services position us well to take advantage of the growing demand in the marketplace. Our partnership with AWS, specifically related to Blue Age and application modernization, continues to deliver results in something that we are very excited about. Through our continued investment with our partner and commitment to developing industry-leading capabilities, Alizia has established itself as a trusted implementation partner for AWS Blue Age technology. The partnership has resulted in several projects with higher margins in Canada, particularly in mainframe modernization space. a rapidly growing market where we have developed a robust pipeline of opportunities. Blue Age is a specialized technology, and Aletheia is currently one of AWS's top partners in terms of certifications and specializations. Also in Canada, as demand for clean energy continues to rise, our revenues in this sector have increased as we see the demand for our specialized services increasing, supported by a pipeline of several opportunities in the various stages. particularly in operational technologies, cybersecurity, as well as control and digital systems, which has been refined over decades of engagement with key clients in the nuclear sector. Now, let's take a look at the U.S. Revenues in the second quarter increased by 2.3% over the prior year because of organic growth from enterprise transformation initiatives in collaboration with our leading technology partners, including Microsoft and Oracle. and due to a favorable U.S. dollar exchange rate impact. We are pleased with our new bookings in the second quarter in the U.S., where bookings exceeded one times the revenue for the quarter, reflecting strong demand and a healthy pipeline for our services. Specifically, we saw a strong demand for enterprise transformation, Microsoft Dynamics 365. Microsoft indicated in their last disclosure that they expect Dynamics 365 revenue growth to be in the mid to high teens, driven by continued growth across all workloads. Dynamics is an area where Lithia is well positioned to capitalize on opportunities alongside Microsoft, leveraging our long history of successful business transformations and our industry specialization. For example, we are investing in our offerings related to Microsoft Dynamics 365 Contact Center, expanding our capabilities in line with long-term demand signals. Microsoft Dynamics 365 Contact Center is a Microsoft co-pilot first contact center solution that delivers generative AI at every customer engagement channel. Also related to Dynamics, this time on the ERP side, Microsoft has purchased an Aletheia developed accelerator, Aletheia Edge, with the intention of integrating it into core Dynamics 365 process manufacturing and distribution functionality, specifically to address the U.S. Food and Drug Administration requirements. Microsoft has acquired IP from Lithia on several occasions to incorporate into Dynamics 365, emphasizing the strength of our long-term collaborative partnership. Similarly, Lithia has licensed the Microsoft utility to assist clients and they automated migration of robotic process automation platforms, or RPA, to their Microsoft Power Automate platform. This utility is available on the Microsoft Marketplace and is creating a pipeline of new opportunities for Lithia as we seek lower cost solutions for hyper automation needs. On the Microsoft Learning side, we also continue to assist our clients in improving their AI preparedness through our change enablement service offerings. In relation to our Oracle Cloud Transformation Services, our business continues to grow in line with the advancement of our industry diversification strategy, as we see our pipeline of future opportunities in life sciences, manufacturing, financial services, and professional services increase. Additionally, we're seeing a positive trend in Oracle Managed Services demand, where Lithia has garnered credibility, including in respect to the expansion of our SmartShore delivery centers. Multi-year managed services options are now included in many of our implementation proposals, and we continue to build a pipeline of standalone managed service opportunities. We also see increasingly exploring options as support for on-premise ERP platforms has phased out. We see this trend as a significant opportunity for Alithea to capitalize on growing demand for enterprise transformation and cloud migration expertise. Before I turn it over to Debbie, I would like to take the opportunity to recognize the Alithea team for their contributions to these efforts and continued focus on cost containment, profitability, and challenging market conditions. With that, let me turn it over to Debbie.

Merci, Bernard. Good morning, everyone, and thank you for joining us today. First, consolidated revenues came in at $111.5 million, a year-over-year decrease of 5.9% from $118.5 million for the second quarter of fiscal 2024. Despite the current situation regarding our revenue performance, approximately 84% of Aletheia's Q2 sales came from existing clients, which we had in Q2 of last year. It demonstrates a strong client relationship, trust, and satisfaction in Aletheia's services regardless of market trends. We are reporting another quarter of continued performance regarding gross margin as a percentage of revenues, increasing to 30.6% up from 29.4% in Q2 of last year. As noted during our investor day presentation in September, our focus remains on improving gross margin by leveraging previously outlined initiatives and prioritizing high-value offerings. From a geographic perspective, let's start with Canada, where Bernard addressed some of the challenges we face in our Canadian business. Revenues decreased to $59.6 million in Q2, or by 12.2% when compared year over year. However, when we look at our gross margin in Canada, we can see that compared to the same quarter last year, it increased. This is mainly due to higher billing rates and a proportionally larger decrease in the use of subcontractors compared to permanent employees. As for U.S. revenues, increased by $1.1 million, or 2.3%, to $46.8 million in Q2. due primarily to organic growth in certain areas of our business, including a favorable U.S. dollar exchange rate impact of $800,000 between the two periods. Our gross margin as a percentage of revenues decreased slightly compared to the same period last year due to decrease in software revenues, which historically have a higher gross margin. Our revenues from international operations also increased year over year. In fact, they increased 5.8% when compared to Q2 of fiscal 2024. Now looking at SG&A expenses, we are consistently and carefully optimizing our cost structure to ensure efficiency and long-term performance. In the second quarter, SG&A expenses amounted to $25.9 million, a decrease of 13.6% year over year. The decrease is in large part due to reduced employee compensation expenses, including variable compensation, as well as the optimization of our cost structure to gain efficiency. SG&A expenses as a percentage of revenues came in at 23.2% in Q2, compared to 25.3% for the same period last year. Overall, thanks to the above performance on cost management, our second quarter adjusted EBITDA amounted to $9.3 million, a 44% increase year over year. This is significantly higher than the same period last year when our revenues were notably higher. Again, this reflects our rigorous approach to not losing ground on the progress we've made in terms of operational performance. And it will position us well once we return to our higher historical revenue levels. As our adjusted net earnings came in at $5.3 million, representing an increase of $5 million or 5 cents per share year over year. I would point out that our accounting net loss of negative $270,000 in Q2 improved significantly from negative $9.2 million in the same period last year. Net cash generated by operations operating activities of $3 million represented an increase of 173 point, 117.3% year over year. As of September 30, 2024, when combined with other cash flow elements, this resulted in a total long-term debt reduction of $8.4 million to $109 million. Aletheia's net debt decreased to $97 million in Q2, down from $109 million at the end of fiscal 2024, primarily as a result of the decrease in long-term debt, partially offset by an increase in cash. Our goal is to continue deleveraging by diligently managing our net cash from operating activities in order to focus on debt reduction. Our deleveraging will provide for good positioning when the right acquisition opportunity presents itself. With that, I'll pass it back to Paul.

Thank you, Debbie. Before jumping to questions, I'd just like to take this opportunity to thank Debbie for her commitment and support over the past few months as our interim CFO. She's kept us on the right path and helped position the team for the arrival of our new CFO, Nicolas Lavoie. As announced this morning, Nicola will join us starting December 9th. Nicola brings a wide range of experience in leadership roles focused on strategic transformation, operational excellence, and accelerating growth through M&A. I look forward to having the opportunity to lead this performance with him, and I will now turn to questions. Loewe.

Thank you so much. And ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star followed by the number one on your touchtone phone, and you will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the number two. And if you're using a speakerphone, please lift the handset before pressing any keys. And our first question comes from the line of Gavin Fairweather of Coremark Security. Please ask your question.

Hi, guys. This is Graham Smith on for Gavin. My first one is on Quebec. This is Graham on for Gavin. The first thing I just wanted to ask about was on Quebec. Could you guys just give a bit more color on what you're seeing in the pipeline so far in Q4? Any color on that would be appreciated.

Yeah, thanks, Graham, for the question. As I did mention on that, we did see kind of continue from last quarter the slow bookings in Quebec. But as I did highlight on the AWS and what we're seeing, some larger transformation stuff to the pipeline, a lot of those deals are in the Quebec market. So I would say the pipeline remains where we expected it to be, just the deals have taken a little longer to get to closure.

That's great. Thanks. And then just on the offshore mix in the quarter, can you just kind of describe how that's progressing in terms of the cadence of it? What's the kind of outlook of that? Yeah, that'd be helpful.

Yeah, thanks, Graham.

Smart showing continues to be a key focus point for us. You know, with the limited growth, it gets a little more difficult to move stuff to smart show, but you've seen in some of the SG&A reductions and whatnot, we continue to find opportunities to move more of our effort there. And as we look forward, most of our proposals out the door now have a significant smart show component to them as well. Okay. We do expect that will continue to grow in quarters ahead.

Great, thanks. And just the last one for me, you know, the growth margins kind of dip in the quarter. I know it's a summer quarter, but maybe you can just kind of discuss a bit more in detail where utilization was versus kind of targets. Maybe any more kind of detail on changes in capacity that you guys are considering.

Yeah, you hit on it with, you know, the summer months having a little bit lower utilization with vacation. And we do see opportunities as we look at the next quarter. Again, another quarter of vacation period with the December holidays and November here in the U.S. But we do see the opportunities to continue to improve our utilization targets as well.

That's great. Thanks. I'll pass it on.

Thank you so much. And our next question comes from the line of Rob Goff of Ventum. Your line is now open.

Good morning, and thank you for taking my question.

Hey, good morning, Rob.

Perhaps a follow-up question on the Quebec outlook. Could you talk to where you see or when you see stabilization or potentially a return to year-on-year or Q-on-Q growth? Got it.

Great question, Rob. You know, this is an area where I said that the pipeline is still there. Our win rates haven't really changed. So it's not that we're losing deals. It's just the deals have taken longer to close. We continue. And also we mentioned that our analysts call back in September as well because we change our mix of services. The deals we're going after are larger deals. Just by nature, these larger deals are more complex. There's more buyers involved in the decision-making on the clients, and they do take a little longer to close. As I said before, the pipeline remains healthy, and we do see that as the market starts changing, we will return to growth in Quebec.

Very good. And perhaps if we could turn to south of the border, can you talk to how you see momentum in the U.S. revenues? Like, it was very notable that you're, you know, recording year-on-year growth, but do you see that potentially accelerating as we look forward?

Yeah, so our strategy remains, you know, we're really focused on the higher-mix work, so the business transformation. We've got very strong relationships with partners. We talked about the industry-first strategy we have. I'll refer back to what I talked about on the Oracle Cloud. We put in place in our last planning cycle industry diversification strategy, and we've seen some really good progress building up our pipeline and some new industries. Typically, we were very focused on the healthcare space, but we've been able to move into life sciences, manufacturing, professional services, some financial services. So we're seeing that grow. And then as well, in the enterprise transformation, as companies are starting to get back into some discretionary spending, you know, we saw it in the Microsoft dynamic space in the last quarter. Those deals are starting to come, and we're seeing signature on those deals, and our win rates are very positive there as well. Also, I talked with the Customer Contact Center with Microsoft. a new area where Microsoft has made some recent investments, and we're investing alongside them in our capabilities to capitalize on those opportunities. So I do see as the market changes and more of this discretionary spending is freed up, we will continue to see growth in those markets.

Thank you. I'll jump back into you.

Thank you so much.

And our next question comes from the line of Jerome Dubreuil of Desjardins. Your line is now open.

Thanks for taking my questions. I got a few as well. The first one is on the co-pilot implementation. I'd like to know where we are in terms of the roadmap, maybe the ramp up of interest. Are we just only talking about pilot projects or are we seeing actual implementation? And if you can talk about maybe the kind of early appetite and whether this could spur an inflection in demand.

I think when we look at AI in general, generative AI, in addition to just co-pilot, these are things that are embedded in other deals. It's not specifically just an AI opportunity. So when we talk about the Microsoft Contact Center, it's really based on a co-pilot-first strategy from Microsoft. So AI is embedded in the solutions. And a lot of our – I'll refer back to what we talked about in our product development. We talked about an iOS call, Investor Day, back in September. in our product development, embedding more AI into our products, and that's creating more revenue opportunities for us versus discrete AI opportunities. I'm not sure, Paul, if you had anything else that you wanted to add.

I think that's a great way to put it, Jerome. It's more and more part of everything that we do than specific individual AI initiatives.

Thanks. Second, I have I'm wondering if there's a link between the lower SG&A that we're seeing in the quarter and the slower bookings. In other words, are there less investments being made in sales right now and we could be seeing an impact on SG&A when things start picking up again or that's not the right way to think about it and the improvement is there to stay?

No, the SKA improvements is not coming from reductions in sales and business development. If anything, we're doubling down in certain areas there.

It's more in our operational efficiencies and other areas of the business.

That's great. Thanks. And last one for me. I wonder if you can talk a little more about your nuclear business. That's been a topic that's been picking up interest in capital markets. So Wondering if you can maybe discuss your exposure and how do you see growth in that particular segment evolve in the coming course? Thanks.

Yeah, so the revenue growth this quarter, as you may recall, we discussed a fairly large booking we had last in Q1. So we're seeing the benefits of that in the revenue side there. But again, talking more in pipeline where we're seeing some investments, specifically here in Canada where our focus is in Ontario, And then we've seen a strong pipeline growth in that space. I do believe there's also opportunities in other geographies in which we operate. That's kind of white space for us. We're seeing how we can kind of pivot into those places south of the border where there are some investments in maybe SMR technology around nuclear where we've kind of set ourselves apart in the Ontario market. So some opportunity there. I wouldn't say there's anything right now south of the border, anything like that, that's driving a lot of pipeline.

It's really in Canada where we're seeing the growth right now.

Thank you so much.

And our next question comes from the line of John Shaw of National Bank. Your line is now open.

Hey, good morning, guys. Thanks for taking my question. I just have a quick similar question to Rob regarding your U.S. markets. And based on the customer verticals you have in that market, any impact to your business from the election results? It seems like the new administration is going to cut down the government spending. So is the government vertical a big one for you in the U.S.?

Actually, that's one vertical where you have very, very small exposure to in the U.S. market. It's really in our digital adoption practice of business enablement where we have some very small contracts. Most of our business is in the commercial sector in the U.S. market.

Okay, that's great to know. And could you also maybe elaborate a bit more on the high margin services you mentioned that help to improve the quarters profitability? So what is the nature that those services are the multi-year long-term contract or short-term based?

Yeah, great question. Again, we look to move away from some of the lower margins because more of the monetize consulting business into, you know, more of the enterprise transformation, business transformation and managed services business. You know, the enterprise transformations, they drive higher margins on higher bill rates. And of course, in the managed services where we can drive higher end utilizations, more smart shore operations, we're able to drive higher margins there as well. So that's really kind of that mix of services and more and upmarket in the strategic consulting business. where we're helping our clients with their enterprise architecture and their road mapping on what to do, which also leads into more of that enterprise transformation and managed services work as we're leading them in the design phase, if you will.

Okay, thanks. And last one for me is, any way it can help us to quantify the reduction in variable compensation this quarter?

Just a modeling question. I'm not sure the question I understand, John.

Can you be more specific?

Yes, because in the prepared remarks, I think you guys mentioned that SG&A saw a reduction in variable compensation as well as an optimization for efficiency gains. So could you help us to maybe break down the contribution, the relative contribution of the two drivers in dollar terms?

So I'll let Debbie try to get a bit of visibility on what we can share, but most of it is tied to share-based compensation and the like.

Yeah, tied to our share-based compensation, there's some variables in the commission and some other triggers within the compensation. We kind of look at it more as you know, a year to date and where we are on that and adjust accordingly within, you know, within our records every quarter based on our view of the company's performance annually.

And some of it is tied to the reductions in commissions tied to reduction of sales. So kind of linear, John.

Thanks for the call. It's a pasta line. No problem. Thank you.

Thank you. Thank you so much. And our next question comes from the line of Stevia Goyal of Scotiabank. Your line is now open.

Good morning, everyone. So building on to some of the questions that have already been asked, I have two here. One is, could you actually elaborate the nature of the discretionary work that you have done? And I think in one of the questions you said you're seeing a slight uptick in the nature of the discretionary work. Could you help us understand what does it look like and what is the level of visibility that you have for the, say, coming quarters in the kind of work that you're signing for the discretionary basis?

So maybe I can give a little bit more color on that statement that I made, Aditya. Great question. Thank you. Most of the work that we do is discretionary to some degree. So when a client starts an ERP project, It usually takes several years to come to the decision to start it because it is a major, major endeavor that's going to impact the whole company and usually takes a few years. So they have flexibility on when they start the project. Usually they'll start it based on when they want to finish, which is tied to the end of a quarter, the end of a year, or an integration of an acquisition or things like that. So they have some flexibility on when they decide to do the work, which is why I say it's discretionary Now, by the same token, once they get started on these projects, they are critical and never stop or very seldom stop. So that's why we're seeing some delays in booking some of our larger projects. And of course, as we're growing, if you look at the type of deals that we sign now versus five years ago, the deals are much larger. So we're seeing that right now in Quebec as larger projects finish. You know, there's a delay in the startup of the new projects. They will have to do them at some point, but we're seeing some delays on when to get them started. So that's why, I don't know if that answers your question, but that's kind of what I meant by discretionary.

I know that's helpful, obviously. That's a trend in the industry. I was wondering if there are a lot of consulting engagements in the mix, and is that also causing some weakness in this bookings? that you potentially historically saw but are not seeing reviving in the near term?

On the consulting side, no.

I think a lot of that beginning of the tougher market conditions where clients were able to, what Paul talked about with these larger projects, once they start and they go to fruition, they don't actually get stopped mid-term. But some of the smaller consulting engagements, it's very easy for clients through tougher times to stop midstream, right, and end a smaller consulting agreement. So that was kind of early on that we saw in some of the market challenges. Now, you know, those deals I think are still signing at the pace that they were before. I will say that our focus being on higher margin business, there are some opportunities that we've walked away from because they don't hit our profile of what we want to achieve as far as our profitability.

That's helpful, but it does sound like your client base is going, so that's actually pretty good traction there. Just one question on the SG&A front, and I know it's been asked in variations here, but with respect to the sales reduction and the share comp reduction, will you potentially have to rehire, and is that something that will eventually pick up as the business picks up? Or would you be able to continue to sustain and manage with the existing workforce with increase in variable compensation going forward?

Just to be as I understand your question correctly,

You know, right now, no, we don't have to hire to pick up on the demand. Of course, as we continue to grow and the opportunities grow, we will always be looking to expand in this area. But from where we are right now, it's not as if we, going back to my comment before, we didn't reduce our SG&A around business development. If anything, we've found pockets where we see opportunities and we've further invested there. So I don't think that there's something we need to do around that area to accomplish our short-term goals. But also long-term, yeah, absolutely, we'll continue to grow in this area.

That's very helpful. Thanks for the clarification. And that's all for me.

Thank you.

Thank you so much. And our next question comes from the line of Vincent Colicchio of Barrington Research. Your line is now open.

Yes, Paul. Last quarter, I believe, the banking vertical was stable. Could you give us a sense, more color, on what happened this quarter and what the outlook would be?

I imagine your question is specifically around the Quebec market.

Is this where you're looking?

Excuse me?

Is it specifically to the banking sector in Quebec that you were referring to?

Yes, exactly.

Okay, yeah. Yeah, I think if we look back over a year ago, we had a very large transformation project with one client that came to an end, a successful end. And it's really still having to try to backfill that revenue that went away almost a year ago now. In this market conditions, that's been more of a challenge. And tied to some of these deals taking a little longer to get signature and get started, it's been a little slower recovery than we originally expected. That's in Quebec, Vince, just to be clear.

Like Bernard said earlier, bookings in the U.S. are solid. Same thing in Ontario when doing well. So it really talked to a handful of clients in Quebec.

And a question on your acquisition pipeline. Is it currently substantial, and how are valuations currently?

We have a very healthy funnel. Like I said, there's always three factors, right? The right acquisition at the right time for the right price. You're seeing the transactions in the market right now for larger companies. We've done very well in the past at finding niche, highly profitable companies that are play well into our platform and our mix of services. So we're keeping our focus on that. And you saw our balance sheet. We've deleveraged over $30 million over the last year. So I think we're under 2.5 times now in terms of our EBITDA, debt-to-EBITDA ratio. So I think we have a very healthy balance sheet to keep our M&A activities going.

We're very satisfied with where the funnel is. Thank you, Paul. Thank you, Vince.

Thank you so much. And we have a follow-up question from Rob Goff of Phantom. Please ask your question.

And thank you again. A bit more of a detailed modeling question, perhaps. Are you finding any trending in accounts receivables or account payables as we look at your working capital?

No, I think we continue to generate cash from operations. If you look sequentially over, we've reduced width amount. Those working process in Q2 went into our accounts receivable and they'll be collected within the normal course of business. So we do keep an eye on that and we do maximize the cash from operations and just diligent work on that front.

I think, Rob, if you look at the balance sheet, you'll see that in the past year, quarter over quarter, we've done a great job. The team's done a great job at making sure we're collecting on time, our DSO is low, and we're the leverage.

Very good. Thank you.

Thank you so much. And presenters, there are no further questions at this time. I would now like to turn the call to Paul for closing remarks.

Thanks, LeMay. Thank you very much, everybody, for joining us today and looking forward to talking in the near future.

Ladies and gentlemen, this includes today's conference calls. Thank you for participating and you may now disconnect. Have a good day.