– Continuing operations BPaaS revenue
increased 21% –
– Cash from operations increased by 39% to
$100 million –
– $3.1 billion of total company revenue
under contract for 2024 –
–Announced agreement to sell Payroll and
Professional Services business for up to $1.2 billion, on track for
closing mid-year 2024 –
– Announced promotion of Greg Goff to
President and Jeremy Heaton to Chief Financial Officer with Katie
Rooney focusing on supporting the closure of the Payroll and
Professional Services divestiture –
Alight, Inc. (NYSE: ALIT), a leading cloud-based provider of
integrated digital human capital and business solutions, today
reported results for the first quarter ended March 31, 2024.
“It has been an exciting start to the year for Alight, with the
announced agreement to sell our Payroll and Professional Services
business and create a world-class partnership with H.I.G. to
further accelerate our transformation,” said Chief Executive
Officer Stephan Scholl. “As we eagerly await the close of the
transaction, we kicked off 2024 with BPaaS revenue growth of 21%
from continuing operations, and further expanded our total company
revenue under contract to $3.1 billion for 2024. We are also
nearing the on-time completion of our cloud migration project,
which we expect will deliver improved profitability and cash
generation. Taken together, we believe our strategies on both the
top and bottom line are positioning Alight for delivering
sustainable, profitable growth.”
Update on Planned Transaction and Presentation of
Results
As announced on March 20, 2024, the Company entered into a
definitive agreement to sell its Professional Services segment and
its Payroll & HCM Outsourcing businesses (the “Payroll &
Professional Services business”). Closing of the transaction is
subject to various closing conditions, including regulatory
approvals, and is expected by mid-year 2024.
Beginning with the quarter ended March 31, 2024, the Company
began accounting for the assets and liabilities of the Payroll
& Professional Services business as “held for sale” and its
operating results as discontinued operations. As such, the
financial information contained in this release is presented on a
continuing operations basis, unless otherwise noted. Until closing,
the Payroll & Professional Services business will continue to
operate as a business of Alight; accordingly, this press release
also presents total company results.
First Quarter 2024 Continuing Operations Highlights (all
comparisons are relative to first quarter 2023)
- Revenue decreased 4.6% to $559 million
- Business Process as a Service (BPaaS) revenue grew 20.6% to
$117 million, representing 20.9% of total revenue
- Gross profit of $182 million and gross profit margin of 32.6%,
compared to $187 million and 31.9% in the prior year period,
respectively, and adjusted gross profit of $208 million and
adjusted gross profit margin of 37.2%, compared to $211 million and
36.0%, in the prior year period, respectively
- Net loss increased by $37 million over the prior year period to
$121 million driven primarily by a $43 million increase in non-cash
charges
- Adjusted EBITDA increased by $4 million over the prior year
period to $116 million
- Diluted earnings (loss) per share of $(0.22) compared to
$(0.16) in the prior year period, and adjusted diluted earnings per
share of $0.10 compared to $0.09 per share in the prior year
period
First Quarter 2024 Total Company Highlights (all
comparisons are relative to first quarter 2023)
- Revenue decreased 1.8% to $816 million
- Business Process as a Service (BPaaS) revenue grew 21.6% to
$208 million, representing 25.5% of total revenue
- Gross profit of $249 million and gross profit margin of 30.5%,
compared to $257 million and 30.9% in the prior year period,
respectively, and adjusted gross profit of $278 million and
adjusted gross profit margin of 34.1%, compared to $285 million and
34.3%, in the prior year period, respectively
- Net loss increased by $42 million over the prior year period to
$116 million driven primarily by a $43 million increase in non-cash
charges
- Adjusted EBITDA declined by $4 million to $150 million
- Diluted earnings (loss) per share of $(0.21) compared to
$(0.14) in the prior year period, and adjusted diluted earnings per
share of $0.13 was consistent with the prior year period
Continuing Operations First Quarter 2024 Results
Revenue decreased 4.6% to $559 million, as compared to $586
million in the prior year period. Excluding the exited Hosted
business, revenue decreased 3.0%. The decrease was driven by lower
volumes, net commercial activity and project revenue within our
Employer Solutions segment and the wind-down of our Hosted business
operations. Recurring revenues were 93.2% of total revenue,
compared to 92.7% in the prior year.
Gross profit was $182 million, or 32.6% of revenue, compared to
$187 million, or 31.9% of revenue in the prior year period. The
decrease in gross profit was primarily driven by lower revenue as
noted above partially offset by productivity savings.
Selling, general and administrative expenses were $146 million,
compared to $151 million in the prior year period. The decrease was
driven by lower compensation expenses primarily related to
share-based awards and lower costs incurred from our previously
announced restructuring program, partially offset by professional
fees related to the planned sale of our Payroll & Professional
Services business.
Interest expense was $31 million as compared to $33 million in
the prior year period. The decrease was primarily due to increased
hedging activity at favorable market rates, the opportunistic
repricing of our 2028 term loan, and higher interest income.
The Company’s loss from continuing operations before income tax
benefit was $148 million compared to loss from continuing
operations before income tax benefit of $107 million in the prior
year period. The change was primarily due to the non-operating fair
value remeasurements of financial instruments and the tax
receivable agreement.
Total Company First Quarter 2024 Results
Revenue decreased 1.8% to $816 million, as compared to $831
million in the prior year period. Excluding the exited Hosted
business, revenue decreased 0.6%. The decrease was driven by lower
volumes, net commercial activity and project revenue, and the
wind-down of our Hosted business operations. Recurring revenues
were 86.4% of total revenue, compared to 85.7% in the prior
year.
Gross profit was $249 million, or 30.5% of revenue, compared to
$257 million, or 30.9% of revenue in the prior year period. The
decrease in gross profit was primarily driven by lower revenue as
noted above partially offset by productivity savings.
Selling, general and administrative expenses were $183 million,
compared to $185 million in the prior year period. The decrease was
driven by lower compensation expenses primarily related to
share-based awards and lower costs incurred from our previously
announced restructuring program, partially offset by professional
fees related to the planned sale of our Payroll & Professional
Services business.
Total Company Balance Sheet Highlights
As of March 31, 2024, the Company’s cash and cash equivalents
balance was $286 million, total debt was $2,787 million and total
debt net of cash and cash equivalents was $2,501 million. $30
million of the cash and cash equivalents are held in current assets
held for sale.
Business Outlook
The Company is reaffirming its mid-term outlook. The Company
expects to update its full-year 2024 financial guidance after
closing the Payroll & Professional Services business
transaction.
Management Update
In addition to highlighting its first quarter results, in a
separate press release, the Company also announced that Jeremy
Heaton, previously Operating Chief Financial Officer, will assume
the role of Chief Financial Officer, effective as of May 8, 2024,
from Katie Rooney, who has served in that capacity since May 2017.
Ms. Rooney will continue to serve as Chief Operating Officer
through the anticipated closing of the Payroll & Professional
Services transaction. Additionally, Greg Goff, currently Chief
Technology and Delivery Officer, will assume the role of President,
effective as of May 8, 2024.
Earnings Conference Call and Webcast Information
A conference call to discuss the Company’s first quarter 2024
financial results is scheduled for today, May 8, 2024 at 7:30 a.m.
Central Time (8:30 a.m. Eastern Time). Interested parties can
access the live webcast and accompanying presentation materials by
logging on to the Investor Relations section on the Company’s
website at http://investor.alight.com. A replay of the conference
call and the accompanying presentation materials will be available
on the investor relations website for approximately 90 days.
About Alight Solutions
Alight is a leading cloud-based human capital technology and
services provider that powers confident health, wealth and
wellbeing decisions for 36 million people and dependents. Our
Alight Worklife® platform combines data and analytics with a
simple, seamless user experience. Supported by our global delivery
capabilities, Alight Worklife is transforming the employee
experience for people around the world. With personalized,
data-driven health, wealth, pay and wellbeing insights, Alight
brings people the security of better outcomes and peace of mind
throughout life’s big moments and most important decisions. Learn
how Alight unlocks growth for organizations of all sizes at
alight.com.
For more information, please visit www.alight.com.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. These statements include, but are not limited to,
statements regarding the sale of our Payroll & Professional
Services business, including the likelihood of the consummation of
the transaction, the expected time period to consummate the
transaction, and the anticipated benefits of the transaction
(including the achievement of our financial objectives), statements
related to our cloud migration project and its expected impact,
statements related to our expected revenue under contract and
statements related to the expectations regarding the performance
and outlook for Alight’s business, financial results, liquidity and
capital resources. In some cases, these forward-looking statements
can be identified by the use of words such as “outlook,”
“believes,” “expects,” “potential,” “continues,” “may,” “will,”
“should,” “could,” “seeks,” “projects,” “predicts,” “intends,”
“plans,” “estimates,” “anticipates” or the negative version of
these words or other comparable words. Such forward-looking
statements are subject to various risks and uncertainties
including, among others, risks related to declines in economic
activity in the industries, markets, and regions our clients serve,
including as a result of elevated interest rates or changes in
monetary and fiscal policies, competition in our industry, risks
related to our ability to consummate the agreement to sell our
Payroll and Professional Services business, risks related to the
performance of our information technology systems and networks,
risks related to our ability to maintain the security and privacy
of confidential and proprietary information, risks related to
actions or proposals from activist stockholders, risks related to
the ability to meet the contingent payment conditions of the seller
note, and risks related to changes in regulation, including
developments on the use of artificial intelligence and machine
learning. Additional factors that could cause Alight’s results to
differ materially from those described in the forward-looking
statements can be found under the section entitled “Risk Factors”
of Alight’s Annual Report on Form 10-K, filed with the Securities
and Exchange Commission (the "SEC") on February 29, 2024, as such
factors may be updated from time to time in Alight's filings with
the SEC, which are, or will be, accessible on the SEC's website at
www.sec.gov. Accordingly, there are or will be important factors
that could cause actual outcomes or results to differ materially
from those indicated in these statements. These factors should not
be construed as exhaustive and should be considered along with
other factors noted in this presentation and in Alight’s filings
with the SEC. Alight undertakes no obligation to publicly update or
review any forward-looking statement, whether as a result of new
information, future developments or otherwise, except as required
by law.
Non-GAAP Financial Measures and Other Information
This press release includes supplemental information presenting
the results of our operations on a total company basis that
includes the Payroll & Professional Services business. This
presentation is not considered to be prepared in accordance with
GAAP. However, as the Payroll & Professional Services business
will continue to operate as a business of Alight until the closing
of the transaction, we believe the total company results provide a
meaningful basis of comparison and are useful in identifying
current business trends for the periods presented.
The Company also refers to certain non-GAAP financial measures
in this press release, including: Adjusted EBITDA From Continuing
Operations, Adjusted EBITDA Margin From Continuing Operations,
Adjusted Net Income From Continuing Operations, Adjusted Diluted
Earnings Per Share From Continuing Operations, Operating Cash Flow
Conversion, Adjusted Gross Profit and Adjusted Gross Profit Margin.
Please see below for additional information and for reconciliations
of such non-GAAP financial measures. The presentation of non-GAAP
financial measures is used to enhance our investors’ and lenders’
understanding of certain aspects of our financial performance. This
discussion is not meant to be considered in isolation, superior to,
or as a substitute for the directly comparable financial measures
prepared in accordance with GAAP.
Adjusted EBITDA From Continuing Operations, which is defined as
earnings from continuing operations before interest, taxes,
depreciation and intangible amortization adjusted for the impact of
certain non-cash and other items that we do not consider in the
evaluation of ongoing operational performance. Adjusted EBITDA
Margin From Continuing Operations is defined as Adjusted EBITDA
From Continuing Operations divided by revenue. Both Adjusted EBITDA
From Continuing Operations and Adjusted EBITDA Margin From
Continuing Operations are non-GAAP financial measures used by
management and our stakeholders to provide useful supplemental
information that enables a better comparison of our performance
across periods as well as to evaluate our core operating
performance.
Adjusted Net Income From Continuing Operations, which is defined
as net income (loss) from continuing operations adjusted for
intangible amortization and the impact of certain non-cash items
that we do not consider in the evaluation of ongoing operational
performance, is a non-GAAP financial measure used solely for the
purpose of calculating Adjusted Diluted Earnings Per Share From
Continuing Operations.
Adjusted Diluted Earnings Per Share From Continuing Operations
is defined as Adjusted Net Income From Continuing Operations
divided by the adjusted weighted-average number of shares of Alight
Inc. common stock, diluted. Adjusted Diluted Earnings Per Share
From Continuing Operations is used by us and our investors to
evaluate our core operating performance and to benchmark our
operating performance against our competitors.
Operating Cash Flow Conversion is defined as cash provided by
operating activities divided by Adjusted EBITDA. Operating Cash
Flow Conversion is used by management and stakeholders to evaluate
our core operating performance.
Adjusted Gross Profit is defined as revenue less cost of
services adjusted for depreciation, amortization and share-based
compensation, and Adjusted Gross Profit Margin is defined as
Adjusted Gross Profit divided by revenue. Management uses Adjusted
Gross Profit and Adjusted Gross Profit Margin as key measures in
making financial, operating and planning decisions and in
evaluating our performance. We believe that presenting Adjusted
Gross Profit and Adjusted Gross Profit Margin is useful to
investors as it eliminates the impact of certain non-cash expenses
and allows a direct comparison between periods.
Revenue Under Contract is an operational metric that represents
management’s estimate of anticipated revenue expected to be
recognized in the period referenced based on available information
that includes historical client contracting practices. The metric
does not reflect potential future events such as unexpected client
volume fluctuations, early contract terminations or early contract
renewals. Our metric may differ from similar terms used by other
companies and therefore comparability may be limited.
Condensed Consolidated
Statements of Income (Loss)
(Unaudited)
Three Months Ended March
31,
(in millions, except per share
amounts)
2024
2023
Revenue
$
559
$
586
Cost of services, exclusive of
depreciation and amortization
356
382
Depreciation and amortization
21
17
Gross Profit
182
187
Operating Expenses
Selling, general and administrative
146
151
Depreciation and intangible
amortization
76
76
Total Operating expenses
222
227
Operating Income (Loss) From Continuing
Operations
(40
)
(40
)
Other (Income) Expense
(Gain) Loss from change in fair value of
financial instruments
21
25
(Gain) Loss from change in fair value of
tax receivable agreement
55
8
Interest expense
31
33
Other (income) expense, net
1
1
Total other (income) expense, net
108
67
Income (Loss) From Continuing
Operations Before Taxes
(148
)
(107
)
Income tax expense (benefit)
(27
)
(23
)
Net Income (Loss) From Continuing
Operations
(121
)
(84
)
Net Income (Loss) From Discontinued
Operations, Net of Tax
5
10
Net Income (Loss)
(116
)
(74
)
Net income (loss) attributable to
noncontrolling interests
(2
)
(6
)
Net Income (Loss) Attributable to
Alight, Inc.
$
(114
)
$
(68
)
Earnings Per Share
Basic and Diluted
Continuing operations
$
(0.22
)
$
(0.16
)
Discontinued operations
$
0.01
$
0.02
Net Income (Loss)
$
(0.21
)
$
(0.14
)
Condensed Consolidated Balance
Sheets
(Unaudited)
March 31,
December 31,
2024
2023
(in millions, except par values)
Assets
Current Assets
Cash and cash equivalents
$
256
$
324
Receivables, net
393
435
Other current assets
217
260
Fiduciary assets
250
234
Current assets held for sale
2,501
1,523
Total Current Assets
3,617
2,776
Goodwill
3,212
3,212
Intangible assets, net
3,066
3,136
Fixed assets, net
387
331
Deferred tax assets, net
86
38
Other assets
346
341
Long-term assets held for sale
—
948
Total Assets
$
10,714
$
10,782
Liabilities and Stockholders'
Equity
Liabilities
Current Liabilities
Accounts payable and accrued
liabilities
$
278
$
325
Current portion of long-term debt, net
25
25
Other current liabilities
282
233
Fiduciary liabilities
250
234
Current liabilities held for sale
1,475
1,370
Total Current Liabilities
2,310
2,187
Deferred tax liabilities
32
32
Long-term debt, net
2,762
2,769
Long-term tax receivable agreement
784
733
Financial instruments
132
109
Other liabilities
166
142
Long-term liabilities held for sale
—
68
Total Liabilities
$
6,186
$
6,040
Commitments and Contingencies
Stockholders' Equity
Preferred stock at $0.0001 par value: 1.0
shares authorized, none issued and outstanding
$
—
$
—
Class A Common Stock: $0.0001 par value,
1,000.0 shares authorized; 550.0 and 510.9 issued and outstanding
as of March 31, 2024 and December 31, 2023, respectively
—
—
Class B Common Stock: $0.0001 par value,
20.0 shares authorized; 9.9 and 9.9 issued and outstanding as of
March 31, 2024 and December 31, 2023, respectively
—
—
Class V Common Stock: $0.0001 par value,
175.0 shares authorized; 1.2 and 29.0 issued and outstanding as of
March 31, 2024 and December 31, 2023, respectively
—
—
Class Z Common Stock: $0.0001 par value,
12.9 shares authorized; 0.6 and 3.4 issued and outstanding as of
March 31, 2024 and December 31, 2023, respectively
—
—
Treasury stock, at cost (6.4 and 6.4
shares at March 31, 2024 and December 31, 2023, respectively)
(52
)
(52
)
Additional paid-in-capital
5,113
4,946
Retained deficit
(617
)
(503
)
Accumulated other comprehensive income
75
71
Total Alight, Inc. Stockholders'
Equity
$
4,519
$
4,462
Noncontrolling interest
9
280
Total Stockholders' Equity
$
4,528
$
4,742
Total Liabilities and Stockholders'
Equity
$
10,714
$
10,782
Condensed Consolidated
Statements of Cash Flows
(Unaudited)
Three Months Ended March
31,
(in millions)
2024
2023
Operating activities:
Net income (loss)
$
(116
)
$
(74
)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation
29
24
Intangible asset amortization
80
80
Noncash lease expense
5
6
Financing fee and premium amortization
(1
)
(1
)
Share-based compensation expense
28
37
(Gain) loss from change in fair value of
financial instruments
21
25
(Gain) loss from change in fair value of
tax receivable agreement
55
8
Release of unrecognized tax provision
—
(1
)
Deferred tax expense (benefit)
(30
)
(7
)
Other
—
1
Changes in operating assets and
liabilities:
Accounts receivable
48
40
Accounts payable and accrued
liabilities
(63
)
(117
)
Other assets and liabilities
44
51
Cash provided by operating
activities
$
100
$
72
Investing activities:
Capital expenditures
(36
)
(45
)
Cash used in investing
activities
$
(36
)
$
(45
)
Financing activities:
Net increase (decrease) in fiduciary
liabilities
60
(121
)
Repayments to banks
(6
)
(6
)
Principal payments on finance lease
obligations
(9
)
(7
)
Payments on tax receivable agreements
(62
)
(7
)
Tax payment for shares/units withheld in
lieu of taxes
(57
)
(6
)
Deferred and contingent consideration
payments
—
(3
)
Repurchase of shares
—
(10
)
Cash used in financing
activities
$
(74
)
$
(160
)
Effect of exchange rate changes on
cash, cash equivalents and restricted cash
(2
)
—
Net increase (decrease) in cash, cash
equivalents and restricted cash
(12
)
(133
)
Cash, cash equivalents and restricted
cash at beginning of period(a)
1,759
1,759
Cash, cash equivalents and restricted
cash at end of period(a)
$
1,747
$
1,626
(a) The cash flows related to discontinued
operations have not been separated, and are included in the
Consolidated Statements of Cash Flows. The Cash and cash
equivalents and Restricted cash included in fiduciary assets
amounts presented above differ from the Consolidated Balance Sheets
due to cash and fiduciary assets included in Current assets held
for sale.
Reconciliation of Net Income
(Loss) From Continuing Operations to Adjusted EBITDA from
Continuing Operations
(Unaudited)
Three Months Ended March
31,
(in millions)
2024
2023
Net Income (Loss) From Continuing
Operations (1)
$
(121
)
$
(84
)
Interest expense
31
33
Income tax expense (benefit)
(27
)
(23
)
Depreciation
26
22
Intangible amortization
71
71
EBITDA From Continuing
Operations
(20
)
19
Share-based compensation
28
34
Transaction and integration
expenses(2)
17
2
Restructuring
15
23
(Gain) Loss from change in fair value of
financial instruments
21
25
(Gain) Loss from change in fair value of
tax receivable agreement
55
8
Other
—
1
Adjusted EBITDA From Continuing
Operations
$
116
$
112
Revenue
$
559
$
586
Adjusted EBITDA Margin From Continuing
Operations (3)
20.8
%
19.1
%
(1) Adjusted EBITDA excludes the
impact of discontinued operations. Comparable periods have been
recast to exclude these impacts.
(2) Transaction and integration
expenses primarily relate to acquisition and divestiture
activities.
(3) Adjusted EBITDA Margin From
Continuing Operations is defined as Adjusted EBITDA from Continuing
Operations as a percentage of revenue.
Reconciliation of Net Income
(Loss) From Continuing Operations to Adjusted Net Income and
Adjusted Diluted Earnings per Share From Continuing
Operations
(Unaudited)
Three Months Ended March
31,
2024
2023
(in millions, except share and per share
amounts)
Numerator:
Net Income (Loss) From Continuing
Operations Attributable to Alight, Inc. (1)
$
(119
)
$
(78
)
Conversion of noncontrolling interest
(2
)
(6
)
Intangible amortization
71
71
Share-based compensation
28
34
Transaction and integration expenses
(2)
17
2
Restructuring
15
23
(Gain) Loss from change in fair value of
financial instruments
21
25
(Gain) Loss from change in fair value of
tax receivable agreement
55
8
Other
—
1
Tax effect of adjustments (3)
(29
)
(29
)
Adjusted Net Income From Continuing
Operations
$
57
$
51
Denominator:
Weighted average shares outstanding -
basic
540,780,315
476,145,761
Dilutive effect of the exchange of
noncontrolling interest units
1,189,156
—
Weighted average shares outstanding -
diluted
541,969,471
476,145,761
Exchange of noncontrolling interest
units(4)
4,471,277
57,966,505
Impact of unvested RSUs(5)
10,158,541
10,412,840
Adjusted shares of Class A Common Stock
outstanding - diluted(6)(7)
556,599,289
544,525,106
Basic (Net Loss) Earnings Per Share
From Continuing Operations
$
(0.22
)
$
(0.16
)
Diluted (Net Loss) Earnings Per Share
From Continuing Operations
$
(0.22
)
$
(0.16
)
Adjusted Diluted Earnings Per Share
From Continuing Operations
$
0.10
$
0.09
(1) Adjusted EBITDA excludes the
impact of discontinued operations. Comparable periods have been
recast to exclude these impacts.
(2) Transaction and integration
expenses primarily relate to acquisition and divestiture
activities.
(3) Income tax effects have been
calculated based on the statutory tax rates for both U.S. and
foreign jurisdictions based on the Company's mix of income and
adjusted for significant changes in fair value measurement.
(4) Assumes the full exchange of
the units held by noncontrolling interests for shares of Class A
Common Stock of Alight, Inc. pursuant to the exchange
agreement.
(5) Includes non-vested
time-based restricted stock units that were determined to be
antidilutive for U.S. GAAP diluted earnings per share purposes.
(6) Excludes two tranches of
contingently issuable seller earnout shares: (i) 7.5 million shares
will be issued if the Company's Class A Common Stock's
volume-weighted average price ("VWAP") is >$12.50 for any 20
trading days within a consecutive period of 30 trading days; (ii)
7.5 million shares will be issued if the Company's Class A Common
Stock VWAP is >$15.00 for any 20 trading days within a
consecutive period of 30 trading days. Both tranches have a
seven-year duration.
(7) Excludes approximately 14.4
million and 31.0 million performance-based units, which represents
the gross number of shares expected to vest based on achievement of
performance conditions as of March 31, 2024 and 2023,
respectively.
Reconciliation of Segment
Profit to Income (Loss) From Continuing Operations Before
Taxes
(Unaudited)
Segment Profit
Three Months Ended March
31,
(in millions)
2024
2023
Employer Solutions
$
182
$
187
Other
-
-
Total Gross Profit
182
187
Selling, general and administrative
146
151
Depreciation and intangible
amortization
76
76
Operating Income (Loss) From Continuing
Operations
(40
)
(40
)
(Gain) Loss from change in fair value of
financial instruments
21
25
(Gain) Loss from change in fair value of
tax receivable agreement
55
8
Interest expense
31
33
Other (income) expense, net
1
1
Income (Loss) From Continuing
Operations Before Taxes
$
(148
)
$
(107
)
Gross Profit to Adjusted Gross
Profit Reconciliation by Segment
(Unaudited)
Three Months Ended March 31,
2024
($ in millions)
Employer
Solutions
Other
Total
Gross Profit
$
182
$
-
$
182
Add: stock-based compensation
5
-
5
Add: depreciation and amortization
21
-
21
Adjusted Gross Profit
$
208
$
-
$
208
Gross Profit Margin
32.6
%
0.0
%
32.6
%
Adjusted Gross Profit Margin
37.2
%
0.0
%
37.2
%
Three Months Ended March 31,
2023
($ in millions)
Employer
Solutions
Other
Total
Gross Profit
$
187
$
-
$
187
Add: stock-based compensation
7
-
7
Add: depreciation and amortization
16
1
17
Adjusted Gross Profit
$
210
$
1
$
211
Gross Profit Margin
32.5
%
0.0
%
31.9
%
Adjusted Gross Profit Margin
36.5
%
10.0
%
36.0
%
Other Select Financial
Data
(Unaudited)
($ in millions)
Three Months Ended March
31,
Segment
Revenues
2024
2023
Employer Solutions:
Recurring
$
521
$
533
Project
38
43
Total Employer Solutions
559
576
Other (1)
-
10
Total revenue
$
559
$
586
Segment Gross
Profit
Employer Solutions
$
182
$
187
Other (1)
-
-
Total gross profit
$
182
$
187
Segment Gross
Margin
Employer Solutions
32.6
%
32.5
%
Other (1)
0.0
%
0.0
%
Total gross margin
32.6
%
31.9
%
Segment Adjusted
Gross Profit
Employer Solutions
$
208
$
210
Other (1)
-
1
Total adjusted gross profit
$
208
$
211
Segment Adjusted
Gross Margin Percent
Employer Solutions
37.2
%
36.5
%
Other (1)
0.0
%
10.0
%
Total adjusted gross margin percent
37.2
%
36.0
%
Adjusted EBITDA From Continuing
Operations
$
116
$
112
Cash provided by operating
activities
$
100
$
72
Other Key
Statistics
Recurring revenue, Ex. Other
$
521
$
533
BPaaS revenue
$
117
$
97
BPaaS revenue as % of total revenue
20.9
%
16.6
%
(1) Other primarily attributable
to the former Hosted Segment.
Supplemental Financial
Information
(Continuing Operations and
Discontinued Operations)
Alight, Inc. Condensed
Consolidated Statements of Income (Loss)
(Unaudited)
Three Months Ended March
31
(in millions, except per share
amounts)
2024
2023
Revenue
$
816
$
831
Cost of services, exclusive of
depreciation and amortization
543
555
Depreciation and amortization
24
19
Gross Profit
249
257
Operating Expenses
Selling, general and administrative
183
185
Depreciation and intangible
amortization
85
85
Total operating expenses
268
270
Operating Income (Loss)
(19
)
(13
)
Other (Income) Expense
(Gain) Loss from change in fair value of
financial instruments
21
25
(Gain) Loss from change in fair value of
tax receivable agreement
55
8
Interest expense
31
33
Other (income) expense, net
2
3
Total other (income) expense, net
109
69
Income (Loss) Before Income Tax
(128
)
(82
)
Income tax expense (benefit)
(12
)
(8
)
Net Income (Loss)
(116
)
(74
)
Net loss attributable to noncontrolling
interests
(2
)
(6
)
Net (Loss) Income Attributable to
Alight, Inc.
$
(114
)
$
(68
)
Earnings Per Share
Basic (net loss) earnings per share
$
(0.21
)
$
(0.14
)
Diluted (net loss) earnings per share
$
(0.21
)
$
(0.14
)
Reconciliation of Net Income
(Loss) to Adjusted EBITDA
(Unaudited)
Consolidated
Discontinued
Continuing
Consolidated
Discontinued
Continuing
Alight
Operations
Operations
Alight
Operations
Operations
Q1
Q1
Q1
Q1
Q1
Q1
(in millions)
2024
2024
2024
2023
2023
2023
Net Income (Loss)
$
(116
)
$
5
$
(121
)
$
(74
)
$
10
$
(84
)
Interest expense
31
-
31
33
-
33
Income tax expense (benefit)
(12
)
15
(27
)
(8
)
15
(23
)
Depreciation
29
3
26
24
2
22
Intangible amortization
80
9
71
80
9
71
EBITDA
$
12
$
32
$
(20
)
$
55
$
36
$
19
Share-based compensation
28
-
28
37
3
34
Transaction and integration
expenses(1)
17
-
17
2
-
2
Restructuring
17
2
15
26
3
23
(Gain) Loss from change in fair value of
financial instruments
21
-
21
25
-
25
(Gain) Loss from change in fair value of
tax receivable agreement
55
-
55
8
-
8
Other
-
-
-
1
-
1
Adjusted EBITDA
$
150
$
34
$
116
$
154
$
42
$
112
Revenue
$
816
$
257
$
559
$
831
$
245
$
586
Adjusted EBITDA Margin (2)
18.4
%
13.2
%
20.8
%
18.5
%
17.1
%
19.1
%
(1) Transaction and integration
expenses primarily relate to acquisition and divestiture
activities.
(2) Adjusted EBITDA Margin is
defined as Adjusted EBITDA as a percentage of revenue.
Reconciliation of Net Income
(Loss) to Adjusted Net Income and Adjusted Diluted Earnings per
Share (Unaudited)
Consolidated
Discontinued
Continuing
Consolidated
Discontinued
Continuing
Alight
Operations
Operations
Alight
Operations
Operations
Q1
Q1
Q1
Q1
Q1
Q1
2024
2024
2024
2023
2023
2023
(in millions, except share and per share
amounts)
Numerator:
Net (Loss) Income Attributable to Alight,
Inc.
$
(114
)
$
5
$
(119
)
$
(68
)
$
10
$
(78
)
Conversion of noncontrolling interest
(2
)
-
(2
)
(6
)
-
(6
)
Intangible amortization
80
9
71
80
9
71
Share-based compensation
28
-
28
37
3
34
Transaction and integration expenses
(1)
17
-
17
2
-
2
Restructuring
17
2
15
26
3
23
(Gain) Loss from change in fair value of
financial instruments
21
-
21
25
-
25
(Gain) Loss from change in fair value of
tax receivable agreement
55
-
55
8
-
8
Other
-
-
-
1
-
1
Tax effect of adjustments(2)
(32
)
(3
)
(29
)
(33
)
(4
)
(29
)
Adjusted Net Income
$
70
$
13
$
57
$
72
$
21
$
51
Denominator:
Weighted average shares outstanding -
basic
540,780,315
476,145,761
Dilutive effect of the exchange of
noncontrolling interest units
1,189,156
—
Weighted average shares outstanding -
diluted
541,969,471
476,145,761
Exchange of noncontrolling interest
units(3)
4,471,277
57,966,505
Impact of unvested RSUs(4)
10,158,541
10,412,840
Adjusted shares of Class A Common Stock
outstanding - diluted(5)(6)
556,599,289
544,525,106
Basic (Net Loss) Earnings Per
Share
$
(0.21
)
$
0.01
$
(0.22
)
$
(0.14
)
$
0.02
$
(0.16
)
Diluted (Net Loss) Earnings Per
Share
$
(0.21
)
$
0.01
$
(0.22
)
$
(0.14
)
$
0.02
$
(0.16
)
Adjusted Diluted Earnings Per
Share
$
0.13
$
0.03
$
0.10
$
0.13
$
0.04
$
0.09
(1) Transaction and integration
expenses primarily relate to acquisition and divestiture
activities.
(2) Income tax effects have been
calculated based on the statutory tax rates for both U.S. and
foreign jurisdictions based on the Company's mix of income and
adjusted for significant changes in fair value measurement.
(3) Assumes the full exchange of
the units held by noncontrolling interests for shares of Class A
Common Stock of Alight, Inc. pursuant to the exchange
agreement.
(4) Includes non-vested
time-based restricted stock units that were determined to be
antidilutive for U.S. GAAP diluted earnings per share purposes.
(5) Excludes two tranches of
contingently issuable seller earnout shares: (i) 7.5 million shares
will be issued if the Company's Class A Common Stock's
volume-weighted average price ("VWAP") is >$12.50 for any 20
trading days within a consecutive period of 30 trading days; (ii)
7.5 million shares will be issued if the Company's Class A Common
Stock VWAP is >$15.00 for any 20 trading days within a
consecutive period of 30 trading days. Both tranches have a
seven-year duration.
(6) Excludes approximately 14.4
million and 31.0 million performance-based units, which represents
the gross number of shares expected to vest based on achievement of
performance conditions as of March 31, 2024 and 2023,
respectively.
Gross Profit to Adjusted Gross
Profit Reconciliation
(Unaudited)
($ in millions)
Three Months Ended
March 31, 2024
Gross Profit
$
249
Add: stock-based compensation
5
Add: depreciation and amortization
24
Adjusted Gross Profit
$
278
Gross Profit Margin
30.5
%
Adjusted Gross Profit Margin
34.1
%
($ in millions)
Three Months Ended
March 31, 2023
Gross Profit
$
257
Add: stock-based compensation
9
Add: depreciation and amortization
19
Adjusted Gross Profit
$
285
Gross Profit Margin
30.9
%
Adjusted Gross Profit Margin
34.3
%
Total Company Revenue
Disaggregation
(Unaudited)
Three Months Ended March
31,
($ in millions)
2024
2023
Employer Solutions:
Recurring
$
521
$
533
Project
38
43
Total Employer Solutions
559
576
Revenue from Discontinued Operations
257
245
Total Revenue, excluding Hosted
816
821
Other (1)
-
10
Total Alight Revenue
$
816
$
831
(1) Other primarily attributable
to the formed Hosted segment.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240508932809/en/
Investors: Jeremy Cohen investor.relations@alight.com
Media: Mariana Fischbach mariana.fischbach@alight.com
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