Thank you for joining us today for Alithya's Second Quarter Fiscal 2026 Results Conference Call. The press release, along with the MD&A containing condensed financial statements and related notes was published this morning and is now accessible 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 forward-looking statements, which are subject to various risks and uncertainties that may cause actual results to differ materially from those anticipated.

These statements include our estimates, plans, expectations and statements regarding future growth, operational results, performance and business prospects that do not solely relate to historical facts. These statements may also refer to future events, including expectations around client demand, business opportunities, leveraging our services, IP, AI and expertise to meet client needs, excelling in a competitive market, achieving our 3-year strategic plan and deploying our smart shoring capabilities.

For more information, please refer to the cautionary note included in our presentation and the forward-looking statements and Risks and Uncertainties section of our MD&A, which are accessible 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 included 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 Raymond, Alithya's President and Chief Executive Officer; Bernard Dockrill, Chief Operating Officer; and Pierre Turcotte, Chief Financial Officer.

I will now turn the call over to Paul Raymond. Paul?

Thank you, Dominic. Good morning, everyone, and thank you for joining us today.

Before we begin, I want to take a moment to thank our clients for their trust and to recognize the dedication of our teams across all of Alithya. Our people's commitment to excellence continues to drive our success and deliver meaningful impacts for our clients.

Alithya is not small, it is focused. Our second quarter operational results demonstrate the benefits and long-term potential of our strategy as we continue to execute our plan.

Our company has transformed, and we are seeing the benefits of this approach in a challenging economic environment. So despite Q2 being our summer quarter, Alithya has continued to progress on many fronts.

The first KPI that should stand out from our second quarter is our gross margins. We continue to work our way up the value chain.

Our gross margin percentage is now above many large integrators in our sector. This is not luck.

Our focus on higher-value services has now reached a maturity level that enables us to differentiate at a larger scale and fight above our weight. We win on the quality of our services and our delivery reputation.

This brings us to the second KPI that should retain your attention. Our revenues have decreased in the past as our shift to higher-value projects has replaced some of our past commodity services.

However, in Q2, despite market uncertainties and a wavering economy, it is not our global year-over-year revenue growth of 11.5% that should hold your attention, but rather our industry-leading 34.8% growth in our U.S. operations.

This impressive result by most standards comes from a combination of organic growth and the rapid integration of our eVerge acquisition. We realigned our U.S.

operations a few years ago with our long-term strategy. Since then, our enterprise application and transformation services have become a key differentiator and a strategic priority for clients looking to leverage enterprise-wide AI solutions.

It is also showing the potential of our platform in the largest market in the world for these services, the U.S.A. When you combine this strategic focus with strong execution, you get these growth results.

This realignment is the same that we are implementing across all our operations. Finally, the third KPI that should pique your interest is the continued progress of our adjusted EBITDA margins and cash flow generation.

Our trailing 12 months adjusted EBITDA is now over $52 million, which is a new high watermark for Alithya. Our transformation into a high-value trusted advisory has brought us to this point at just the right time.

The industry is evolving fast. AI is influencing everything we do, and our clients are looking for value creation and new ideas more than ever.

Cost savings will only get you so far. We have demonstrated that we can be the trusted adviser to accompany our clients in their AI-driven digital transformation.

And we know our model is scalable. You could say Alithya has arrived.

Before I pass it over to Pierre, I will also mention the noncash impairment charge we took in the second quarter as part of the ongoing repositioning of our business. And with that, I'll pass it over to Pierre to provide some financial highlights for the second quarter of fiscal '26, followed by Bernard to share some operational updates.

Pierre?

Thanks. Good morning, everyone.

I'm happy to join this conference call and highlight some of the company's achievements this past quarter. Our second quarter of fiscal 2026 was marked by year-over-year growth with improvement across several of our key metrics.

Let's begin with a review of these numbers. In the second quarter, consolidated revenue came in at $124.3 million, up $12.8 million or 11.5% on a year-over-year basis.

Looking at our continued profitability, we are reporting another quarter of year-over-year improvement on gross margin in dollars and as a percentage of revenues. Gross margin reached 34.4% in the quarter, up from 30.6% last year.

This performance reflects our focus on delivering higher-value services, improving utilization rates across core geographies and leveraging efficiently our smart shoring capabilities. Let's look at our performance by region, starting with Canada.

Revenues in Canada reached $55.2 million in the second quarter, down $4.4 million or 7.4% on a year-over-year basis. The decrease in revenue was due primarily to reduced revenues from government contracts and certain clients' projects reaching maturity, partially offset by revenues from the acquisition of XRM Vision, higher billing rates and a continued recovery in the banking sector.

Our gross margin in Canada as a percentage of revenue increased compared to the same quarter last year, mainly due to a positive margin contribution from XRM Vision, higher hourly billing rate, a decrease in the use of subcontractors and an increase in utilization rate. On a sequential basis, gross margin as a percentage of revenue also increased.

In the U.S., revenues increased by $16.3 million or 34.8% to $63.1 million. The increase is due primarily to organic growth in enterprise transformation services, higher billing rates in certain areas of the business, revenue from the eVerge acquisition and a favorable U.S.

dollar exchange rate. The U.S.

now represents over 50% of our revenues. Gross margin as a percentage of revenues from our U.S.

operation increased compared to the same quarter last year, primarily due to increased utilization rates, increased use of our smart shoring capabilities and higher billing rates. In our international business, revenue was slightly higher versus prior year with lower gross margin as a percentage of revenue.

The increase in revenue was primarily due to organic growth in enterprise transformation services. International gross margin as a percentage of revenue decreased compared to the same quarter last year, mainly due to one client project coming to maturity, which historically had a higher gross margin.

When looking at the geographies we operate in, our U.S. operation continued to represent a growing share of total revenues.

Combined with our ongoing expansion of Smart Shore capabilities, this has contributed to a stronger consolidated gross margin aligned with our strategic objectives. Now looking at SG&A expenses.

We are continuing to focus on optimizing our cost structure to ensure greater efficiency and long-term performance. In the second quarter, SG&A amounted to $31.3 million, an increase of $4.5 million or 20.8% year-over-year.

The increase in SG&A primarily reflects costs associated with the acquisition completed since the same quarter last year, increased employee compensation, professional fees and share-based compensation. This is partially offset by a decrease in the information technology and communication costs and business development costs.

SG&A as a percentage of revenue increased to 25.2% in Q2 compared to 23.2% in the same quarter last year. On a sequential basis, SG&A increased by $0.7 million from $30.6 million.

The increase takes into account salary increases that came into effect at the beginning of our fiscal year and expenses from our recent acquisitions. Looking at adjusted EBITDA, we are reporting $12.8 million or 10.3% of revenues in Q2, up compared to $9.3 million or 8.3% of revenues last year.

The increase was due primarily to increased gross margin, partially offset by increased SG&A. As Paul mentioned, this represents an adjusted EBITDA of over $52 million on a trailing 12-month basis.

Net loss for the second quarter was $31 million due to an impairment charge of $38 million. The variation includes impairment charge of $26.5 million from the Quebec portion of the Canadian cash-generating unit and $11.5 million from the industry solution cash-generating unit.

This impairment became necessary for both cash-generating units as we continue to -- our repositioning to align with our long-term strategic plan, just like we did with our U.S. operation over the past few years.

Our adjusted net earnings came in at $9.5 million or $0.10 per share year-over-year, representing an increase of $4.2 million. Finally, turning to our cash flow and financial position.

Cash generating from operating activities in Q2 was $11.7 million, offset by noncash items of $10.6 million, resulting in a net cash from operating activity of $1.1 million in the quarter, a decrease of $1.9 million compared to the same quarter last year. As part of our capital allocation strategy, we put in place a normal course issuer bid in the quarter, which allows us to purchase shares under certain conditions determined by the TSX.

As of September 30, 2025, net debt increased by $28.1 million to $122 million from $94 million as at March 31, 2025. This change is mainly driven by the acquisition of eVerge and the payment of the balance of sale.

Our leverage ratio stands at 2.3x net debt over our trailing 12-month adjusted EBITDA compared to 2.4x for the first quarter. I will now let Bernard share the operational highlights.

Thank you, Pierre, and good morning to everyone with us today. Our results truly highlight the depth of our expertise across our teams and our ability to demonstrate value for our clients amidst uncertain market conditions.

In the second quarter, we delivered year-over-year double-digit revenue growth at our global operations. As Paul and Pierre highlighted, our U.S.

segment grew by 34.8% year-over-year. This is a result of our focused strategy within this market as we expect it to grow faster than others.

The acquisition of eVerge has accelerated this growth along with continued demand for our services. Bookings for the quarter were $9.9 million.

This translates into a book-to-bill ratio of 0.73 for the quarter and 0.91 on a trailing 12-month basis. The book-to-bill ratio for the quarter is 0.80 when revenues from the 2 long-term contracts signed as part of an acquisition in the first quarter of fiscal year 2022 are excluded and 1.01 on a trailing 12-month basis.

We also signed 22 new clients during the quarter, including a global leader in engineering and construction within our Oracle practice in collaboration with our recently acquired eVerge team. By combining Alithya's multipillar approach with the enhanced human capital management capabilities from eVerge, we have opened new doors, enabling us to pursue opportunities that were previously out of reach for both parties.

The uncertainty in the market continues to result in longer sales cycles and many larger engagements being contracted in multiple smaller phases, which has impacted bookings in the quarter. As we look forward, we are focused on solutions that deliver the greatest value to our clients and continue to be in demand.

This is reflected in our pipeline, which grew by double digits over the same quarter last year. The largest increase in our pipeline is for new business within existing clients and a larger proportion of higher-value project services.

One area in which we see growth potential is our AWS-related services as organizations continue to transition from legacy systems toward cloud-based solutions. Our teams deliver high-value cloud migration and modernization projects, leveraging proven, repeatable processes.

Our recent work with Beneva, a major Canadian mutual insurance and financial services company is a testament to our expertise. We deployed our cloud migration factory methodology to migrate several applications to AWS.

The project was delivered on budget and ahead of schedule, achieving immediate savings and operational stability for Beneva. As Paul said, we are not small, we are focused.

And that starts with our focus on being experts in the industries we serve and our commitment to stay current with the latest trends, technologies and tools so we can best support our clients. For example, for a global B2B food company, our experts and FDA regulatory requirements migrated their on-premise ERP applications to the cloud on time and under budget, solving several complex manufacturing challenges.

For a global pharmaceutical manufacturer, we completed a multisite ERP implementation, leveraging our custom pharmaceutical solution and deep sector expertise to align our clients' operations with FDA and USDA validation requirements. We also enabled our client with AI-powered tools so they can harness the robust capabilities at scale.

And to ensure our teams remain at the forefront of innovation, we've invested in continuous learning, including AI-related competencies, accumulating over 5,000 hours of training during the second quarter. To help our clients with most of their investments in technology, we continue to invest in our IP, proprietary frameworks to accelerate the time to value for our clients.

Our diverse portfolio of IP spans multiple business applications and industries and differentiates Alithya in the market. For example, our Alithya FoodXpress accelerator, a proprietary framework designed to support rapid deployment of D365 to food and beverage manufacturers.

For Roskam Foods, a leading contract manufacturer, we are leveraging this IP and our industry expertise to implement D365 for finance and supply chain. Similarly, within the health care sector, we're developing the Alithya Vital program, a strategic enabler that combines Oracle ERP, human capital management, supply chain management, advanced analytics and AI tailored for health care.

Vital will empower health care systems to harness data to address challenges related to labor productivity, workforce scheduling and cost of care. Another example is our Microsoft Copilot-enabled data agents we develop for our clients operating in complex manufacturing environments, helping them overcome limitations within their existing systems by enabling fast, accurate access to detailed inventory data.

Our focus continues with our partnerships among leading solution providers, including Oracle, Microsoft, AWS and Salesforce. Our track record, commitment and investment with these providers enables us to provide our clients with the right solutions for their business challenges, including the adoption of Gen AI and agents.

Oracle invited Alithya among a select few Tier 1 partners to assist in building AI agents for Oracle Fusion Cloud applications. I'm proud to say that 2 of our agents, a sourcing assistant agent and a resource manager assistant agent will be available on Oracle's marketplace and will be accessible to all Fusion customers.

Our commitment, expertise and ability to innovate is recognized by our partners. In October, we were named finalists in the 2025 Oracle Partner Awards in the Global Industry Solutions category for Health and Life Sciences.

We earned this nomination for our work implementing workforce scheduling at Oklahoma State University Medical Center, becoming the first health care client to implement this solution. And finally, as we execute our focused growth strategy, we continue to build our global talent pool through our Smart Shore delivery centers.

Following our recent acquisitions, we now have more than 13% of our workforce in our Smart Shore centers. We have access to the top talent and can scale to deliver global projects with higher margins and fewer contractors.

In summary, we continue to make steady progress on all pillars of our growth strategy and remain focused on executing our plan. I will now turn it back to Paul for closing remarks.

Thank you, Bernard. As you can see, it was a positive quarter for Alithya.

We continue to demonstrate our ability to create value for our clients, our employees and our shareholders. Our financial position is strong, providing us with the flexibility to execute on our strategic plan.

As we believe our shares are significantly undervalued, we will continue to use our cash wisely and buy back our stock when appropriate, reinforcing our confidence in Alithya's long-term value and our commitment to delivering shareholder returns. We will now open the line for questions.

Joelle?

The first one is on the U.S. results, very strong congrats there.

I'd like to dive a bit there. Maybe if you can talk about which verticals are working best because we haven't seen resumption in discretionary spending with some of your peers.

And maybe so if you can talk about the verticals and if there's significant cross-selling from past deals, too.

Jerome, thanks for the question. I'll comment on the first part, and then I'll let Bernard comment on the industries.

But I think what people misunderstand about our business coming back to what I said at the beginning, we're different than the other players. We are really focused on niche high-end market for solutions that are in very high demand for large organizations who want to roll out enterprise-wide AI.

If you want to roll out AI at scale, you need data, you need one source of truth. Many organizations in the past years have gone through acquisitions, divestitures, consolidations and most organizations, regardless how well they run IT, have multiple different systems with different sources of data, and they're struggling to get all their data in one place to leverage AI like it should be.

So rolling out an ERP platform is a great way of getting there. And you can see that these hyperscalers, Microsoft, Oracle, AWS, I mean, you name them, are putting a lot of money and adding capability to their platforms around AI.

So we see huge demand for those services around what we do. And that's the bulk of what we do today.

We've gradually gotten there. And of course, the U.S.

being the largest market in the world and where the most investments in AI are going into, it is influencing demand for our services. In terms of the industries, I'll let Bernard comment on that because he's more familiar with the funnel and how we're doing.

Yes. Thanks, Jerome, for the question.

And first, I'll start. The U.S.

had good results, a lot of it is driven by our enterprise application transformation practice and our Microsoft practices. And as you know, we focus there in the health care space on the Oracle side and in the process manufacturing, you saw a couple of examples I used around food and beverage.

And these organizations are looking to take advantage of AI and other things. And to get there, they do need to modernize the back end.

And so you're seeing some of that there. One of the big drivers in the quarter was our EPM practice.

That's our enterprise performance management practice, where we see these are large multibillion global organizations. And they're looking to get better insights from their financial information for planning and whatnot.

So that's an area where we've seen growth. And you actually hit on it as well.

Over the last 18 months, we've been really focused on cross-selling and getting our teams to develop that motion to be able to bring more to our clients from other areas of the business. And that has driven some of our growth as well as we're seeing more of that, and that's going to continue to be a focus for us as we move forward.

That's great. Second question for me is on the bookings, a bit weaker this quarter.

So we're wondering if we should be expecting some slowing down of the organic growth next quarter? Or maybe it was just some maybe onetime event like with the government business in Canada.

So if you can comment on that and what this double-digit pipeline growth exactly means?

Yes. Thanks, Jerome.

Bookings, and I'll highlight what I said in the call, there's 2 things we're seeing is decisions are taking longer than they have traditionally, and that's some of the uncertainty in the market that we're seeing. But the other phenomenon we're seeing is large deals are getting broken up into smaller phases.

So typically, we would have had a an 18-month booking, it will end up being a 3- or 4-month. So that impacts the booking side of the house.

So we're seeing some of that in the market. The pipeline, as I mentioned, and some of this is a direct result of the cross-selling activities, where we're seeing pipeline growth of new business within our existing clients.

And again, typically, that's a higher win rate business from where we've already established a relationship there. So we're seeing that there, but it is in the past quarter.

And then Q2 traditionally has been a softer quarter for us in bookings just due to the fiscal years of our key partners that we work with. It is a slower quarter.

They go through a restructuring typically in the summertime. So we do see some softness there in Q2.

Congrats on the strong results. Maybe just to start on your macro comments about longer sales cycles and projects being kind of topped up into smaller pieces.

Curious how much that applies to the U.S. as well as Canada.

I think your prior commentary was that the macro environment was kind of a tale of 2 markets with the U.S. continuing to be quite strong.

Curious for any differences you're seeing between the 2 main geographies in the current state.

Yes. Thanks, Gavin.

Good question. When I look at the pipeline and the growth in the pipeline, we've got growth across all geographic segments.

And the same comment with the existing clients, we're seeing that in Canada as well as the U.S. on that as well as the proportion that's in more of the project services work versus the traditional consulting work that we've done in Canada.

So a little more of a switch there on that. But I don't see anything unique to Canada or the U.S.

I just think kind of where we are in our evolution, we're further ahead in the U.S., and we're seeing the results there earlier than we will see them in Canada.

Appreciate that. And then maybe just on the U.S.

gross margin. I know you don't specifically disclose it, but I suspect and I think you've talked about it being kind of around that 40% previously.

I'm curious if you're seeing further upside opportunities there. I mean you kind of ran off all the different drivers of strong performance this quarter in terms of utilization and smart shoring and higher-value projects.

Do you see an ability to drive that further? Or are we kind of topping out on U.S.

gross margin?

Yes. As I look at the U.S.

across the company, there are some areas of the business that we're operating very well, but there are areas that I still see opportunity to increase utilization. And also when I look at the smart shore operations, there's areas for improvement in certain areas where I think we can do more as we look at the business and we're pursuing new business, and we're bidding on new business.

we are structuring our deals with a larger portion of that being done smart shore. So that, I do believe, provides some upside there.

But in other areas, we're kind of at the targets where we expect it to be.

Maybe, Gavin, I'll add to what Bernard was just saying that every proposal that we put in now has an offshore component. So you've seen the steady growth of that.

We're over 13% now. We've stated in the past, kind of our long midterm view is to get to 30%.

So that alone is going to be improving gross margins across the board as we keep pushing that.

That's great. Very helpful.

And then maybe just lastly on Canada. We've talked about you walking away from some lower-margin work and being very deliberate about the work that you're going after, and you discussed the work that you did in the U.S.

business several years ago to really kind of transform the margins higher. So maybe you can just discuss kind of your longer-term plans for the Canadian business and how you're thinking about the ability to kind of transform that to look more like the U.S.

and what kind of time lines you think you can execute on that?

Yes. Great.

Thanks for the question. Well, if you look back at the U.S., it took us about 3 years from the start of the major shift to get to where we're at today.

We're in the middle of that in Canada. It's going faster in some areas than others.

But yes, the plan is that within the next couple of years, we're going to be there. That's the plan.

And hopefully, all the tariff issues and free trade stuff and everything else, all the noise around it goes away between now and then, which would also help, I think.

Yes, Paul, you had mentioned that the Q2 tends to be a slow booking quarter. I'm curious, thus far in the current quarter, how bookings are trending?

Vince, thanks for the question. I can't comment on the current quarter.

But Q2, which is our summer months for us, always slower. And as Bernard was saying, there's 3 factors.

One is the summer months, obviously, a lot of less people working. But despite that, we did better than last year.

So year-over-year, our bookings have grown in the summer, which is a good sign. The other 2 things is if you look at our strategic partners, these hyperscalers, whether it's Microsoft, Oracle, these other guys, our bookings tend to follow their year-end.

And their year-end is in a different quarter than ours. And so typically, if you look at our -- the quarters where we have the highest bookings, usually tend to align with their year-end.

So if you look at where Oracle is finishing, that's usually a good quarter, where Microsoft finishes, that's usually a good quarter. So -- but I can't comment on the current bookings, sorry.

No worries. And what are your...

The funnel is strong. As Bernard is saying, the funnel is growing, so...

Okay. And what are your thoughts on how well you're leveraging AI to generate programming efficiencies?

I think we're doing well. I think there's always room for improvement.

I look at our operations today, Vince, and we -- 13% for us, to about 3,000 people, so just under 400 people in our smart shore centers. If you had asked me this question 2 years ago, I thought we'd be 3x larger by now.

I think we've maintained that size just because of the use of the AI tools. I think our people are much more efficient in our smart shore centers than they were 2 years ago.

You also have to remember that our people in our smart shore centers aren't commodity. I mean we don't do maintenance and support and these types of things.

We have Oracle experts and Microsoft experts and AI experts that support our clients around the world. So by definition, these people use these tools every day.

And we're also helping Microsoft and Oracle integrate AI tools into their own platforms that we end up using after. So I think we're ahead of the curve on that.

Is there room to improve? Always.

There's always room to improve. So we like to stay -- we like to believe we're in front of the parade, and we want to stay there.

And last question. In Canada, the government contract business was weak in the quarter.

Do you have any expectations of a rebound there?

So yes, great question, Vince. So we -- as we said in the past, we are deliberately exiting some government -- low-margin government business.

And it was a conscious decision. You might say it's difficult because it impacts our revenues in Canada, as Pierre was mentioning.

But by the same token, our margins are growing. So the idea is as we do that transformation is how do we focus on the higher-margin government projects, and we are winning some.

We are growing our government business in areas of higher-margin projects instead of the lower-margin commodity stuff where you're only competing on price. When you compete on price, there's always somebody cheaper and you never win in the long term, and you can't invest in the new things we want to do.

So we made a conscious decision there. It reduces, but we're still winning some very interesting projects.

We've won several around Microsoft. We talked about XRM earlier.

We've won some project management or Microsoft project type stuff with some large organizations in the government that want to improve their project management. That's a very common theme right now in government circles.

And you're also looking at -- there's going to be massive investments in defense in the future. There are many announcements today, but before that trickles down into the machine, I think you're several quarters away before that impacts the business.

It usually takes time to trickle down. The big announcements sound good, but they usually take quite some time to trickle down into the machine.