Alithya Group inc.

Good morning, ladies and gentlemen. Welcome to Alethea's third quarter fiscal 2023 results conference call. I would now like to turn the meeting over to Rachel Andrews, Vice President, Communications and Marketing at Alethea. Please go ahead, Ms. Andrews.

Good morning, and thank you once again for joining us for Alethea's third quarter fiscal 2023 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 are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated. For more information, please refer to the cautionary notes in our presentation and to the forward-looking statements and risk and uncertainties sections 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 measures section of our MD&A for more details. Presenting this morning are Paul Raymond, Aletheia's President and Chief Executive Officer, and Claude Thibault, Chief Financial Officer. I will now turn the call over to Paul Raymond. Paul?

Good morning, everyone. Thank you for joining us on the call this morning to discuss Aletheia's third quarter 2023 financial performance. So this morning, I'm pleased to disclose another very strong quarter for Aletheia as we enter the final months of our 2023 fiscal year, despite the ongoing global uncertainties. There are many important takeaways from this quarter, but if I were to highlight only a few, I'd draw your attention to one, another strong quarter of revenue growth at 19%, Two, a return to the 30% gross margin levels. And three, our first $10 million adjusted to bid the quarter. And perhaps one more thing, a significant cash generation and debt reduction. We continue to grow our reputation as the trusted advisor that our existing and new clients turn to to help resolve their critical digital transformation challenges. In the third quarter, we added 37 new clients and generated 83% of our revenue from repeat clients. On the gross margin front, as we explained in the past, we continue to increase our permanent employee ratio as we replace some contractors and grow our portfolio to higher value services. We're now back at the 30% gross margin threshold, and we continue to focus on improving this as we roll out our smart shoring strategy. Finally, we reached the $10 million adjusted EBITDA as we continue to implement our strategic plan into progress on all fronts, It should also be noted that Q3 included an extended holiday season for some of our clients as a temporary cost-cutting measure, which translated into less billable hours for Aletheia, as well as a slowdown in some of their e-learning activities. We believe Aletheia is in a favorable position to be the go-to trusted advisor that our clients need in these uncertain times. There will not be less technology in our lives 10 years from now. As our clients navigate through their challenges, they are looking for trusted partners who can rapidly deploy proven technology solutions to help accelerate automation and improve their efficiency. We have demonstrated that our model is sustainable, and as we reach critical mass, that Aletheia is in a favorable position to generate increased value from our rapid growth. During this past quarter, we continued to fill our healthy pipeline with projects for the quarters to come. We also took great strides towards the fulfillment of objectives outlined in our long-term strategic plan as we continue to implement measures designed to go up the value chain and to improve efficiencies. We see continued opportunities ahead to increase our profitability profile as well. Our business continues to be fueled by strong bookings in Canada and the United States, despite global economic uncertainty and recessionary warning signs, which I will address in a few moments. We are also encouraged by our funnel, and our bookings remain the best predictor of what's to come. As I said, we added 37 new clients in the third quarter, and our bookings reach $137 million, which translates into a book-to-bill ratio of 1.04. However, it's important to keep in mind that when we remove the recurring revenues from our two large 10-year contracts with Benevent Québécois, the book-to-bill ratio for the rest of our business would be 1.2. As for a trailing 12-month basis, the bookings were $509 million, which translates into a book-to-bill ratio of one, but again, this ratio is higher when taking the 10-year contracts into account. Now, more on our smart shoring strategy. So, one of our key priorities has been the scaling up of our smart shoring operations, which currently accounts for about 5% of our billable workforce. For us, Smart Shoring provides an option for a wider pool of available talent, including highly qualified experts who enable us to reduce project costs for our clients and to increase our competitiveness and value. Since opening our first Smart Shore operation in Morocco in 2021, we've added highly qualified experts in Eastern Europe and India through our M&A strategy and through new hirings. Datum Solution is just one example of how our M&A integration strategy is paying dividends. along with leveraging the cross-selling opportunities and prospects for longer-term generation. In line with the latter, we're quite pleased with our data and solutions' sequential revenue growth of over 20%. We are also targeting gross margin improvements through a reduction in the number of subcontractors we engage to carry out our projects. In the third quarter, transitioning to regular employees reduced our subcontractor workforce by 6% in Canada. It must be remembered that the transaction to acquire R3D in April 2021 included hundreds of subcontractors added to our workforce, and we have significantly reduced that number since through full-time employee conversion. In fact, we're proud to have returned to pre-R3D gross margin levels in just 18 months, which is a significant feat considering that a two-year timeline was initially targeted to do so. With further transitioning of subcontractors to regular employees still out on the horizon, and with our smart shoring operations gaining momentum, our objective is to continue to improve our gross margins in the future. Another contributor to gross margin improvement is our push to increase sales of subscription-based services. Subscriptions, software, and other revenue now represent 12.4% of our total revenues. With that being said, I'd also like to take a moment to provide a bit of additional color on a geographic basis. In Canada, our renewable energy digital business continues to benefit from major nuclear refurbishment projects, echoing an emerging trend that may prove to have long-term benefits for the planet and for Libya. Globally, there is a growing consensus that the attainment of global carbon reduction objectives will require increased use of nuclear energy. Currently, Aletheia is helping three major Canadian energy clients to prepare the landscape and to develop their digital strategies for doing just that. And we foresee deeper integration projects on the horizon for Aletheia as those efforts progress. On the local front, we signed a major three-year contract with a large Canadian retailer to assist them in replacing and optimizing their mission-critical systems supporting back-office operations. And in the U.S., despite a slowdown in the manufacturing sector, our healthcare sector business remains robust. Additionally, initiatives are being developed and implemented to increase the scale of our managed services within our large Oracle projects, which remain solid. In terms of year-over-year business, our combined U.S. bookings have cumulatively increased by 10% this fiscal year. In Europe, Aletheia's operations have not been impacted by the economic slowdown being experienced in some sectors across the continent. Despite current economic pressures being felt by Europe's business community, we generated over 25% organic growth with existing and new clients. Before I hand the presentation over to our Chief Financial Officer, Claude Siboul, I'd like to say a few words about our recent announcement concerning our new Chief Operating Officer. On January 12th, We announced the appointment of Bernard Dockrell as Chief Operating Officer effective January 30th, 2023. Chloé de Rousseau, who previously held a position, will be leaving the organization at the end of the current fiscal year on March 31st to embark on a very well-deserved retirement after having served for over eight years as a leading CEO. I'd like to take a moment to welcome Bernard to the Aletheia family. Bernard brings more than 25 years of experience in the managed services system integration consulting in the IT industry to Aletheia, and he now oversees all of Aletheia's operations. I'd also like to take this opportunity to sincerely thank Claude Rousseau for his invaluable contribution to Aletheia's growth and success, including the oversight of the merger and integration of more than 10 acquisitions under his watch. Claude will stay on as my special advisor during the transition period until his official retirement at the end of March. Claude has been a partner and a confidant, and he remains a great friend, and I wish him much health and happiness to enjoy the retirement life ahead. I will now pass it over to Claude to discuss the financial metrics of our third quarter. Claude?