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TRANSCRIPT
INVESTOR PRESENTATION
February 2019
FORWARD LOOKING STATEMENT
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This presentation contains certain statements that may constitute “forward-looking information” within the meaning of applicable securities laws in Canada and “forward-looking statements”
within the meaning of the United States Private Securities Litigation Reform Act of 1995 (collectively, the “forward-looking statements”), that are not limited to historical facts, but reflect
Alithya’s and Edgewater’s current beliefs, expectations or intentions regarding future events. Words such as “may,” “will,” “could,” “should,” “expect,” “plan,” “project,” “intend,” “anticipate,”
“believe,” “estimate,” “predict,” “potential,” “pursuant,” “target,” “continue,” and similar expressions are intended to identify such forward-looking statements. The statements in this
presentation that are not historical statements, including statements regarding expected timetable for completing the proposed transaction, benefits and synergies (including the timing of
realizing such synergies) of the proposed transaction, the tax treatment of the proposed transaction, costs and other anticipated financial impacts of the proposed transaction, the combined
company’s plans, objectives, future opportunities for the combined company, the offering, the conversion of the Subscription Receipts, future financial performance and operating results
and any other statements regarding Alithya’s and Edgewater’s future expectations, beliefs, plans, objectives, financial conditions, assumptions or future events or performance, are forward-
looking statements.
These statements are subject to numerous risks and uncertainties, many of which are beyond Alithya’s or Edgewater’s control, which could cause actual results to differ materially from the
results expressed or implied by the statements. These risks and uncertainties include, but are not limited to: failure to obtain the required votes of Alithya’s and/or Edgewater’s
shareholders; the timing to consummate the proposed transaction; conditions to closing of the proposed transaction may not be satisfied or that the closing of the proposed transaction
otherwise does not occur; the risk that a regulatory or court approval that may be required for the proposed transaction is not obtained or is obtained subject to conditions that are not
anticipated; the diversion of management time on transaction-related issues; the ultimate timing, outcome and results of integrating the operations of Alithya and Edgewater; the effects of
the business combination of Alithya and Edgewater following the consummation of the proposed transaction, including the combined company’s future financial condition, results of
operations, strategy and plans; potential adverse reactions or changes to business relationships resulting from the announcement or completion of the proposed transaction; expected
synergies and other benefits from the proposed transaction and the ability of the combined company to realize such synergies (including the timing of realizing such synergies) and other
benefits; expectations regarding regulatory approval, if required, of the transaction; results of litigation, settlements and investigations; actions by third parties, including governmental
agencies; global economic conditions; difficulty in integrating acquisitions; weather; loss of, or reduction in business with, key customers; legal proceedings; ability to effectively identify and
enter new markets; governmental regulation; and ability to retain management and field personnel.
Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained from time to time in Edgewater’s SEC
filings. Edgewater's filings may be obtained by contacting Edgewater or the SEC or through Edgewater’s web site at http://www.edgewater.com or through the SEC’s Electronic Data
Gathering and Analysis Retrieval System (EDGAR) at http://www.sec.gov. The foregoing list of risk factors is not exhaustive. These risks, as well as other risks associated with the
proposed transaction are more fully discussed in the prospectus/proxy statement that is included in the Registration Statement on Form F-4 that has been filed with the SEC in connection
with the proposed transaction. Each of Alithya, Edgewater and New Alithya does not undertake any obligation to update or revise any forward-looking statements, whether as a result of
new information, future events or otherwise, except as required by law.
This presentation may refer to non-IFRS or non-GAAP financial measures, including EBITDA and Adjusted EBITDA, that are not prepared in accordance with the International Financial
Reporting Standards or the accounting principles generally accepted in the United States and that may be different from non-IFRS or non-GAAP financial measures used by other
companies. Reconciliations of these non-IFRS or non-GAAP financial measures to the most directly comparable IFRS or GAAP financial measures, as the case may be, are included
elsewhere in this presentation.
WHO WE ARE
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65% Canada
28% U.S.
7% Europe
Pro-forma Revenues
~$300M(1)
2,000 Professionals
1992 Foundation
Strategic Partner Strategic Partner
(1) Refer to page 14 for details on pro-forma revenue.
Specialized in designing innovative and efficient solutions for complex digital integration and business challenges
• Second largest system integrator in Canada • Proven industry consolidator in highly fragmented market • Operates within faster growing segments of the overall IT sector • Solid financial position
A NORTH AMERICAN STRATEGY & DIGITAL TECHNOLOGY LEADER
EXPANDED PRESENCE IN NORTH AMERICA
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United States
37 states 400 professionals
Canada
5 provinces 1,450 professionals Europe (France and UK)
5 locations 150 professionals
A PROVEN GROWTH STRATEGY
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1998 to 2005 Growing presence in Canada and in France
2012 Sinapse Acquisition (public sector experience)
2015 Acquisition of TELUS professional services and of OSI Consulting Group (IT and recruitment capacity)
2016 Pro2p Acquisition (Oracle expertise)
2017 SWI Acquisition (Energy, Finance, BI and Analytics expertise)
2018/2019 Acquisition of Edgewater, i.e. Fullscope and Ranzal (Microsoft and Oracle expertise)
A proven consolidator with a history of successful integrations and strong organic growth
1992 Origin of the company
2011 Management Buy-out
200 professionals
1,000 professionals
2,000 professionals
11 professionals
+ 200 employees + 300 employees
+ 75 employees
+ 160 employees
+ 400 employees
Acquisition of Telus’ Managed Web Services activities
CREATION PHASE
DIVERSIFICATION PHASE
CONSOLIDATION & ACCELERATION
PHASE
A NEW NORTH AMERICAN LEADER
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Edgewater’s expertise complements that of Alithya
BI MACHINE LEARNING
Business analysis | Architecture | System development | Infrastructure | Project management | Exploitation | ERP | Data analytics | Investment management |
Strategic advisory and governance
PRACTICES
EXPERTISE
ERP EPM Analytics BI
PARTNERS
EXPERTISE
~C$130M Approximate Revenues Pre-transaction
~C$160M Approximate Revenues Pre-transaction
CRM
INTEGRATED OFFERING
Microsoft Solutions
• Enterprise Resource Planning (ERP)
• Customer Relationship Management (CRM)
• Business Intelligence
20+ Microsoft Partner Awards
Microsoft Canada Impact Award Winner
1
Oracle Solutions
• Enterprise Resource Planning (ERP)
• Enterprise Performance Management (ERM Cloud)
• Enterprise Business Suite (EBS)
• Integrated Analytics
NORTH AMERICA PARTNER Outstanding Achievement
in Big Data
100 Most Promising Big Data Solutions Providers
PLATINUM PARTNER Cloud Select
GOLD PARTNER PLATINUM PARTNER Cloud Select | North
America
Custom Solutions
• Remote Digital Solutions Center
• System Integration
• Business Analytics & Machine Learning
• Cloud Transition
• Agile Development
~50%
Strategy
• Strategic Consulting
• Organizational Performance
• Enterprise and Business Architecture
• Co-Management
3x
Cloud Partner of the Year
Note: As a percentage of pro-forma revenues. Please refer to page 14 for details on pro-forma revenue.
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~50%
F2019-Q3 Results
F2019-Q3 FINANCIAL HIGHLIGHTS
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F2019-Q3 F2018-Q3
REVENUES $58.2M $40.4M +44% • Acquisition of Edgewater
• Gained new clients and projects • Slowdowns or delayed starts in a few projects • Planned reduction of lower margin business
GROSS MARGIN $16.5M $9.6M +73%
• Acquisition of Edgewater • Slowdown in certain projects • Decrease in net payrolling revenues
GROSS MARGIN (%)
28.4% 23.7% +470bps
• Acquisition of Edgewater
ADJUSTED EBITDA(1) $1.3M $3.2M
• Acquisition of Edgewater • Recurring and non-recurring additional expenses
associated with: • Expanding the business • Becoming a new public issuer
• Synergies not yet apparent
(1) This is non-IFRS financial measure. Please refer to the “Non-IFRS Measures” section in the MD&A.
Strong revenue and margin growth
F2019-Q3 HIGHLIGHTS
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• Revenues grew in most geographies, as a result of new clients and projects, although offset by slowdowns or delays in project start
• Several opportunities in the pipeline as a result of sales synergies
• New gains in Canada, resulting from the combinaison of the two companies
• Performance driven by the transformational acquisition of Edgewater Technology
• Solid base business in Canada and France with strong bookings with governmental and private sector customers
• Edgewater integration is progressing well and as planned
STRATEGY
FOCUS ON FASTEST GROWING SEGMENTS OF THE IT SECTOR
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Enterprise Software and I.T. Services are expected to reach US$1,472B in projected spending in 2019
Source: Gartner Global I.T. Spending Forecast, April 2018
$1,392 $1,452 $1,468
$181 $188 $190
$663$706 $715
$933$1,003 $1,048
$352
$391$424
2017 2018E 2019E
Communication Services Data Center Systems Devices I.T. Services Enterprise Software
In US$B
~10% CAGR Fragmented market with high margin, specialized solutions
~6% CAGR
BUILD-AND-BUY LONG-TERM STRATEGY
CREATION PHASE (1992-2011)
> Regional firm progressively growing through small acquisitions in Canada and in France
DIVERSIFICATION PHASE (2011-2018)
7 strategic acquisitions
Diversifying from staff augmentation to strategy and digital transformation
Moving to higher added value segments
Enlarging geographic footprint to United States
From 200 to 2,000 professionals
CONSOLIDATION & ACCELERATION PHASE (2019+)
> Further diversification of geographies and customer base
> Strategic acquisitions
> To enlarge the geographic presence in North America
> To add strategic expertise with global solutions and niche practices
> Organic growth
> Through efficient integration of acquisitions
> in traditional and growing segments
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STRONG CLIENT RELATIONSHIPS
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C$144M
C$207M
FY2018
C$116M
C$152M
FY2017
Top 8 Customers Revenues Other Revenues
C$83M
C$105M
FY2016
Repeat business with Alithya’s top clients is a testimony of its success, while Edgewater brings a very diversified customer base
FY2016 FY2017 FY2018
(1)
Top 8 Client Revenue Growth of 40.3%
Top 8 Client Revenue Growth of 24.7%
1) Based on a constant top client basis over the last 3 fiscal years. Note: Alithya financials were prepared under IFRS; Alithya financials for the fiscal year ended March 31, 2016 are unaudited; Alithya financials for the fiscal years ended March 31, 2017 and 2018 are audited.
FY2016 FY2017 FY2018 LTM Q3-19 NTM, Pro forma, asat Nov.1, 2018
HISTORICAL RESULTS AND OUTLOOK
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FY2016 FY2017 FY2018 LTM Q3-19 NTM, Pro forma,as at Nov.1,
2018
C$159 Net revenue
Increased scale provides support to the global platform as it pivots to higher margin business opportunities both organically and through acquisitions
C$105*
C$152*
C$210
C$300-320**
Revenues (in millions)
Adj. EBITDA & Adj. EBITDA MARGIN (in millions and in %)
Synergies: $US5M
C$3.2
C$6.1 C$5.7
C$22-24**
* Gross revenues **Guidance provided at the time of the Edgewater acquisition (Nov. 1, 2018) for the year following closing, on a pro forma basis, as synergies stemming from the acquisition materialize.
~7%
C$207
C$10.0
4.0%
4.8%
2.5% 3.1%
INVESTMENT THESIS
1
4
2
3
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Proven industry consolidator in highly fragmented market
Short-term synergies & cross selling with Edgewater acquisition
Expanded geographic presence in the U.S.
Operating within faster growing segments of the overall IT sector
Solid financial position 5
6 Experienced Executive team
Robert Lamarre Chief Information Officer
AN EXPERIENCED EXECUTIVE TEAM
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Held several key senior management positions at a large IT firm and ran part of a large IT firm U.S. Operations for 11+ years based out of Boston
Paul Raymond President and CEO
Claude Rousseau Chief Operating Officer
Claude Thibault Chief Financial Officer
Nathalie Forcier Chief Legal Officer & Corporate Secretary
Held a series of key executive positions at national telecommunication companies
Strong financial experience with both public and private companies operating in diversified industries in Canada and abroad
Held various senior management positions at a large IT firm over a 20+ year period
Held senior legal positions for large technology and IT firms
Natalie Piccinin Senior Vice President, Human Capital
Held various senior positions in human resources and organizational performance in various industries
SHARE INFORMATION
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Ticker ALYA
Shares outstanding 55M
Market Cap $200M
Average daily volume 26,295
January 31: C$3.64
January 31: US$2.77
TSX
NASDAQ
Ticker ALYA
Shares outstanding 55M
Market Cap US$152M
Average daily volume 21,315 Source: Bloomberg
Analysts and Firms
Maher Yaghi – Desjardins Capital Markets - BUY
Gavin Fairweather – Cormark - BUY
Amr Ezzat - Echelon Wealth Partners - BUY
Deepak Kaushal – GMP Securities - BUY
TSX: ALYA, NASDAQ: ALYA Stock symbol
ANALYSTS COVERAGE
