Alight reports third quarter 2021 results
Lincolnshire, ill.--(business wire)--alight (nyse: alit), a leading cloud-based provider of integrated digital human capital and business solutions, today reported results for the third quarter ended september 30, 2021. “we delivered strong quarterly results, including new customer wins and the expansion of existing customer relationships, as powerful secular forces continue to move in alight’s favor,” said chief executive officer stephan scholl. “accelerated by the pandemic, companies are facing tightening labor markets, while also undertaking complex return to workplace strategies and facing ongoing workforce disruptions, all of which have shined a bright light on the need to place the wellbeing of their employees front and center to effectively navigate these challenges. through its bpaas solutions, which leverage the alight worklife platform, we believe alight is uniquely positioned to deliver a comprehensive view of health, wealth, wellbeing and pay, giving companies the ability to leverage data, ai and analytics to rethink their employee experience. with our continued momentum, we are pleased to raise our full-year outlook for the second time.” third quarter 2021 and subsequent highlights (all comparisons relative to third quarter 2020) on july 2, 2021, foley trasimene acquisition corp. (ftac) completed the business combination with alight holding company, llc 5.0% increase in employer solutions revenue, driving total revenue growth of 3.3% to $690 million business process as a service (bpaas) revenue growth of 19.8% to $97 million, representing 14.1% of total revenue, up from 12.1% bpaas bookings on total contract value basis increased 42.1% to $179 million with year-to-date bpaas bookings of $459 million ahead of original january full-year forecast with strong year-to-date bookings, ended the quarter with more than 95% of projected 2021 revenue and more than 65% of projected 2022 revenue under contract new wins and expanded relationships with companies including genworth, shell, aptar, randstad, arconic and camping world gross profit growth of 4.8% to $238 million, with employer solutions gross profit margin improving 140 basis points to 36.6%, and operating income of $25 million net loss of $120 million, mainly due to non-cash expenses related to the ftac merger, including seller earnouts, warrants, and tax receivable agreement revaluations adjusted ebitda increased by 15.9% to $153 million subsequent to quarter end completed acquisitions of aon’s retiree health exchange business and consumermedical raising full-year outlook for a second time based on strong results and acquisitions to revenue growth of 5% to 6%, up from 3% to 5%, and adjusted ebitda of $615 million to $625 million, up from $610 million to $620 million. third quarter 2021 results consolidated results total revenue increased 3.3% to $690 million for the successor three months ended september 30, 2021 from $668 million for the predecessor prior year period. the increase was driven by a 5.0% increase in employer solutions revenue while professional services revenue was flat. gross profit, inclusive of depreciation and amortization, increased 4.8% to $238 million for the successor three months ended september 30, 2021, or 34.5% of revenue, from $227 million, or 34.0% of revenue, for the predecessor prior year period. the increase in gross profit was primarily driven by revenue growth as noted above, partially offset by increases in costs associated with the growth in current and future revenues. selling, general and administrative expenses increased $7 million, or 5.5% for the successor three months ended september 30, 2021 compared to the predecessor prior year period. the increase was primarily driven by non-recurring professional expenses in relation to the merger with ftac completed in the third quarter of 2021, partially offset by lower expenses related to productivity initiatives, including the impact of lower restructuring and integration related costs. interest expense decreased to $28 million for the for the successor three months ended september 30, 2021 as compared to $61 million for the predecessor prior year period. the decrease was primarily a result of a total debt reduction of $1.2 billion in conjunction with the business combination completed during the third quarter of 2021. loss before income tax benefit was $120 million for the successor three months ended september 30, 2021 compared to $22 million for the predecessor prior year period. segment results employer solutions employer solutions are driven by alight’s digital, software and ai-led capabilities and spans total employee wellbeing and engagement, including integrated benefits administration, healthcare navigation, financial health, employee wellness and payroll. employer solutions total revenues were $587 million for the successor three months ended september 30, 2021 as compared to $559 million for the predecessor prior year period. the overall increase of $28 million was due to an increase of recurring revenues of $24 million, or 5%, from $498 million to $522 million as a result of net commercial activity and transitions from our hosted business to cloud-based services, and an increase in project revenues of $4 million, or 7%, from $61 million to $65 million. employer solutions gross profit was $215 million for the successor three months ended september 30, 2021, as compared to $197 million for the predecessor prior year period. the increase of $18 million, or 9%, was primarily due to revenue growth as discussed above and increases in costs associated with growth of current and future revenues, partially offset by lower expenses related to productivity initiatives, including the impact of lower restructuring and integration related costs. employer solutions adjusted ebitda was $151 million for the successor three months ended september 30, 2021, as compared to $120 million for the predecessor prior year period. the increase of $31 million was primarily due to revenue growth as discussed above. professional services professional services total revenues were $93 million for both the successor three months ended september 30, 2021 and the predecessor prior year period, which was due to an increase of recurring revenues of $4 million, or 14%, from $28 million to $32 million as a result of increases in net commercial activity, offset by a decrease in project revenues of $4 million, or 6%, from $65 million to $61 million. professional services gross profit was $24 million for the successor three months ended september 30, 2021, as compared to $30 million for the predecessor prior year period. the decrease of $6 million, or 20%, was primarily due to increases in costs associated with growth of future revenues, including investments in key resources. professional services adjusted ebitda was $4 million for the successor three months ended september 30, 2021, as compared to $12 million for the predecessor prior year period. the decrease of $8 million was primarily due to increases in costs associated with growth of future revenues, including investments in our commercial functions. hosted business hosted business revenues were $10 million for the successor three months ended september 30, 2021 as compared to $16 million for the predecessor prior year period. the decrease of $6 million was due to transitions from our hosted business to cloud-based services. hosted business gross profit (loss) was ($1) million for the successor three months ended september 30, 2021, as compared to immaterial million for the predecessor prior year period. the decrease of $1 million was primarily due to transitions from our hosted business to cloud-based services. hosted business adjusted ebitda was a loss of ($2) million for the successor three months ended september 30, 2021 as compared to immaterial for the predecessor prior year period. the decrease of $2 million was driven by a decrease in revenue during the period from the continued transition from our hosted business to cloud-based services, which outpaced a decrease in costs during the period. balance sheet highlights and subsequent events as of september 30, 2021, the company’s cash and cash equivalents balance was $769 million, total debt was $2,882 million and total debt net of cash and cash equivalents was $2,113 million. in connection with the closing of the business combination, the company repaid $1,786 million of debt, consisting of $556 million of term loan debt and $1,230 million of unsecured notes. during the quarter, the company added a new $525 million 7-year term to be used for both acquisitions and general corporate purposes, taking advantage of the lower interest rate environment. in october, the company completed the acquisition of consumermedical, a leading clinical advocacy and expert medical opinion company. consumermedical will enhance alight’s ability to help employers around the world build a healthier workforce through its data-driven, personalized solutions. consumermedical has a 25-year history of helping employers simplify and improve the way employees make medical decisions. in october, the company completed the acquisition of aon’s retiree health exchange business which will provide additional scale, expertise and capabilities in medicare enrollment to further expand the company’s ability to serve employees from hiring to retirement. business outlook given the strong momentum over the last three quarters and recent acquisitions, the company is raising its full-year 2021 revenue and adjusted ebitda outlook as follows: revenue growth to a range of 5% to 6% as recent acquisitions and positive momentum with existing businesses lead to more opportunities. this compares to the company’s previous full-year 2021 revenue growth outlook of 3% to 5% and original guidance of 1% growth. adjusted ebitda growth to a range of $615 million to $625 million. this compares to the previous range of $610 million to $620 million and original guidance of $600 million. earnings conference call and webcast information a conference call to discuss the company’s third-quarter 2021 financial results is scheduled for today, november 9, 2021 at 7:30 a.m. central time (8:30 a.m. eastern time). interested parties can listen to the conference call by dialing 1-877-407-0792 or 1-201-689-8263, or by accessing 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 with an unwavering belief that a company’s success starts with its people, alight solutions is a leading cloud-based provider of integrated digital human capital and business solutions. leveraging proprietary ai and data analytics, alight optimizes business process as a service (bpaas) to deliver superior outcomes for employees and employers across a comprehensive portfolio of services. alight allows employees to enrich their health, wealth and work while enabling global organizations to achieve a high-performance culture. alight’s 15,000 dedicated colleagues serve more than 30 million employees and family members. learn how alight helps organizations of all sizes, including over 70% of the fortune 100. 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 (the “securities act”), and section 21e of the securities exchange act of 1934, as amended. these statements include, but are not limited to, statements related to the expectations regarding the impact of and recovery from the covid-19 pandemic, the expected benefits of recent acquisitions, expectations regarding alight’s business, financial results, liquidity and capital resources and other non-historical statements, including the statements in the “business outlook” section of this press release. 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 the level of business activity of our clients, risks related to the impact of the covid-19 pandemic, including as a result of new strains or variants of the virus, competition in our industry, the performance of our information technology systems and networks, our ability to maintain the security and privacy of confidential and proprietary information and changes in regulation. 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 prospectus filed with the securities and exchange commission (the "sec") on august 24, 2021 pursuant to rule 424(b)(3) under the securities act, as such factors may be updated from time to time in alight’s filings with the sec, which are 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 read in conjunction with the other cautionary statements that are included in this press release 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. financial statement presentation this press release includes certain historical consolidated financial and other data for alight holding company, llc (formerly known as tempo holding company, llc) (“alight holdings”) and its subsidiaries. in connection with the completion of our business combination transaction with ftac on july 2, 2021 (the “business combination”), we undertook certain reorganization transactions so that substantially all of our assets and business are held by alight holdings, of which alight, inc. is the managing member. as a result of the business combination, for accounting purposes, the company is the acquirer and alight holdings is the acquiree and accounting predecessor. while the closing date was july 2, 2021, we have determined that as the impact of one day would be immaterial to the results of operations, we will utilize july 1, 2021 as the date of the business combination for accounting purposes. as a result of the business combination, the tables in this press release present selected financial data for the successor for the three months ended september 30, 2021, and the predecessor for the six months ended june 30, 2021 and three and nine months ended september 30, 2020. non-gaap financial measures adjusted ebitda, which is defined as earnings 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, is a non-gaap financial measure used by management and our stakeholders to provide useful supplemental information that enables a better comparison of our performance across periods. both adjusted ebitda and adjusted ebitda less capital expenditures are non-gaap measures that are used by management and stakeholders to evaluate our core operating performance. adjusted net income, which is defined as net loss attributable to alight, inc. 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. adjusted diluted earnings per share is defined as adjusted net income divided by the weighted-average number of shares of alight inc. common stock, diluted. adjusted diluted earnings per share is used to by us and our investors to evaluate our core operating performance and to benchmark our operating performance against our competitors. reconciliations of the historical non-gaap financial measures used in this press release are included in the attached tables. 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. reconciliations of projected non-gaap measures included in the “business outlook” section of this press release are not included as they cannot be provided without unreasonable effort because of the inherent difficulty of accurately forecasting the occurrence and financial impact of the various adjusting items necessary for such reconciliation that have not yet occurred, are out of our control, or cannot be reasonably predicted. for the same reasons, we are unable to assess the probable significance of the unavailable information, which could have a material impact on our future gaap financial results. three months ended six months ended three months ended nine months ended september 30, june 30, september 30, september 30, 2021 2021 2020 2020 690 1,361 668 2,008 442 888 423 1,329 10 38 18 47 238 435 227 632 135 222 128 364 78 111 57 170 213 333 185 534 25 102 42 98 90 — — — 27 — — — 28 123 61 172 — 9 3 (1 ) 145 132 64 171 (120 ) (30 ) (22 ) (73 ) — (5 ) 17 12 (120 ) (25 ) (39 ) (85 ) (13 ) — — — (107 ) (25 ) (39 ) (85 ) (0.24 ) (0.24 ) (120 ) (25 ) (39 ) (85 ) (1 ) 23 4 (32 ) (2 ) 8 14 (7 ) (3 ) 31 18 (39 ) (123 ) 6 (21 ) (124 ) (13 ) — — — (110 ) 6 (21 ) (124 ) alight, inc. successor predecessor september 30, december 31, 2021 2020 769 506 505 532 172 163 1,446 1,201 1,468 1,030 2,914 2,231 3,356 2,245 4,004 1,733 219 334 8 5 456 408 10,957 6,956 348 394 43 37 289 324 680 755 1,468 1,030 2,148 1,785 3 — 2,839 4,041 605 — 326 — 358 447 6,279 6,273 — — — — — — — — 4,024 — (168 ) (127 ) — 852 (3 ) (42 ) 3,853 683 825 — 4,678 683 10,957 6,956 successor predecessor three months ended six months ended nine months ended september 30, june 30, september 30, 2021 2021 2020 (120 ) (25 ) (85 ) 14 49 66 74 100 151 6 10 17 (1 ) 9 15 15 5 5 90 — — 27 — — — 1 1 (22 ) 51 81 14 (45 ) 35 (104 ) (97 ) (155 ) (7 ) 58 131 (1,394 ) — (52 ) (27 ) (55 ) (71 ) (1,421 ) (55 ) (123 ) 453 (15 ) 210 — (2 ) (3 ) — — (3 ) 576 110 726 (7 ) — (23 ) (57 ) (124 ) (435 ) (7 ) (17 ) (18 ) (4 ) (14 ) (14 ) — (1 ) — — (1 ) — (142 ) — — 1,813 — — — — (2 ) 2,625 (64 ) 438 4 — (3 ) 1,201 (61 ) 443 1,036 1,536 985 2,237 1,475 1,428 769 460 451 1,468 1,015 977 2,237 1,475 1,428 three months ended six months ended three months ended nine months ended september 30, june 30, september 30, september 30, 2021 2021 2020 2020 (120 ) (25 ) (39 ) (85 ) 28 123 61 172 — (5 ) 17 12 14 49 24 66 74 100 51 151 (4 ) 242 114 316 15 5 1 5 3 — — — 17 18 — — — — — 11 3 9 10 57 90 — — — 27 — — — 2 4 7 27 153 278 132 416 690 1,361 668 2,008 22.2 % 20.4 % 19.8 % 20.7 % reconciliation of adjusted ebitda less capital expenditures to cash (used for) provided by operating activities successor predecessor three months ended six months ended three months ended nine months ended september 30, june 30, september 30, september 30, 2021 2021 2020 2020 (7 ) 58 111 131 28 123 61 172 - (5 ) 17 12 (27 ) (55 ) (24 ) (71 ) 1 (10 ) (4 ) (15 ) (6 ) (10 ) (1 ) (17 ) 3 — — — 17 18 — — — — — 11 3 9 10 57 2 4 6 26 112 91 (68 ) 39 126 223 108 345 reconciliation of net loss to adjusted net income and adjusted diluted earnings per share (unaudited) successor three months ended september 30, 2021 (107 ) (13 ) 74 15 3 17 3 90 27 2 (4 ) 107 438,968,919 (0.24 ) 601,050,176 0.18 successor predecessor three months ended six months ended three months ended nine months ended september 30, june 30, september 30, september 30, 2021 2021 2020 2020 151 274 120 389 4 7 12 23 (2 ) (3 ) — 4 153 278 132 416 15 5 1 5 3 — — — 17 18 — — — — — 11 3 9 10 57 2 (5 ) 4 28 14 49 24 66 74 100 51 151 25 102 42 98 90 — — — 27 — — — 28 123 61 172 — 9 3 (1 ) (120 ) (30 ) (22 ) (73 ) 2021 change 2021 2020 2020 $ 522 4.8 % $ 1,049 $ 498 $ 1,516 65 6.6 % 107 61 162 587 5.0 % 1,156 559 1,678 32 14.3 % 60 28 78 61 (6.2 %) 124 65 194 93 0.0 % 184 93 272 10 (37.5 %) 21 16 58 $ 690 3.3 % $ 1,361 $ 668 $ 2,008 $ 215 9.1 % $ 392 $ 197 $ 550 24 (20.0 %) 46 30 77 (1 ) n/m (3 ) - 5 $ 238 4.8 % $ 435 $ 227 $ 632 36.6 % 33.9 % 35.2 % 32.8 % 25.8 % 25.0 % 32.3 % 28.3 % (10.0 %) n/m (14.3 %) 0.0 % 8.6 % 34.5 % 32.0 % 34.0 % 31.5 % $ 151 25.8 % $ 274 $ 120 $ 389 4 (66.7 %) 7 12 23 (2 ) n/m (3 ) - 4 $ 153 15.9 % $ 278 $ 132 $ 416 25.7 % 23.7 % 21.5 % 23.2 % 4.3 % 3.8 % 12.9 % 8.5 % (19.5 %) n/m (14.3 %) 0.0 % 6.9 % 22.2 % 20.4 % 19.8 % 20.7 % $ 680 4.3 % $ 1,340 $ 652 $ 1,950 $ 239 5.3 % $ 438 $ 227 $ 627 35.1 % 32.7 % 34.8 % 32.2 % $ 155 17.4 % $ 281 $ 132 $ 412 22.8 % 21.0 % 20.2 % 21.1 % $ 564 4.1 % $ 1,130 $ 542 $ 1,652 $ 97 19.8 % $ 187 $ 81 $ 241 14.1 % 13.7 % 12.1 % 12.0 % $ 179 42.1 % $ 280 $ 126 $ 201 $ 126 16.7 % $ 223 $ 108 $ 345
