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Director Massey Richard N
buys 20,000 shares at $9.96
8K employment contracts for CEO and CFO. The CEO has "change of control" language added.
Just saying
Voya reported insider selling, this morning. That probably kills the idea of a merger.
Mr. Charles Patrick Nelson Chief Growth Officer & Vice Chairman
Credit Suisse initiated coverage of Alight with a rating of Outperform and set a new price target of $15.00
transcript notes
The fact that we serve over half of the Fortune five hundred and have thirty million members today with that number going to an estimated thirty six million members once the federal program goes live next year,
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Ramsey El Assal (Barclay's)
23:18 Got it. That's very helpful. Thanks. A follow-up from me is there some recent media chatter about potential strategic alternatives for the company. Can you give us just your general view on your appetite for something some transformational merger?
Stephan Scholl
23:35 Yeah, listen, I mean, obviously, we don't comment on speculation. What I will say is the last year or so, there's a lot of excitement amongst our employee population amongst our clients. The transformation we started really does meet the needs of what our clients need Ramsey. There is a absolute pent up demand from our clients in giving employees just a lot more help around financial wellness and staying healthy. And so that's creating a lot of excitement around the company. So that's where we're focused on is really supporting what our clients need today as Alight.
Q2 transcript
https://seekingalpha.com/article/4448626-alight-inc-alit-ceo-stephan-scholl-on-q2-2021-results-earnings-call-transcript
Conference Call Participants
Peter Heckmann - D.A. Davidson
Ramsey El Assal - Barclays
Tien Tsin Huang - JPMorgan
Kevin McVeigh - Credit Suisse
Scott Schoenhaus - Stephens Inc.
Ryan Krueger - KBW
Scholl continued: “Our results for the first half of 2021 were ahead of plan. Given our momentum coming out of the first half, and the expected acquisition of the Aon Retiree Health Exchange, we are raising our full-year 2021 outlook for both revenue and adjusted EBITDA.”
Second Quarter 2021 and Subsequent Highlights (all comparisons relative to second quarter 2020)
Total revenue increased 3.9% to $672 million, driven by a 5.4% increase in Employer Solutions revenue and a 3.4% increase in Professional Services Revenue
Business Process as a Service (“BPaaS”) revenue increased 19.0% to $94 million and represented 14.0% of total revenue
Operating income increased 211.1% to $56 million, net loss decreased to $4 million from $25 million and adjusted EBITDA increased to $145 million from $136 million
Total bookings increased 13.9% to $435 million and BPaaS bookings increased 287.1% to $240 million on a total contract value basis
Landed and expanded a number of new logos and existing clients, including Sartorius, ABN AMRO, Ledesma and GE Appliances (a Haier company)
Completed Business Combination Agreement with Foley Trasimene Acquisition Corp. and repaid more than 40% of total debt on July 2, 2021 and began trading on NYSE under ticker “ALIT” on July 6, 2021
Second Quarter 2021 Results
Consolidated Results
Total revenue increased 3.9% to $672 million for the three months ended June 30, 2021 from $647 million for the prior year period. The increase was driven by a 5.4% increase in Employer Solutions revenue and a 3.4% increase in Professional Services revenue, partially offset by a 38.9% decline in Hosted Business revenue.
In 2020, Alight began measuring revenue growth as it relates to the cloud-based products and solutions that are central to its Alight Worklife platform and next-generation product suite, BPaaS solutions. These products capitalize on the Company’s robust data combined with artificial intelligence (“AI”) and analytics to deliver greater employee engagement and employer outcomes. BPaaS products and services span across both the Employer Solutions and Professional Services segments of the business. For the three months ended June 30, 2021, BPaaS revenue increased 19.0% to $94 million from the prior year period and represented 14.0% of total revenue.
In addition, Alight also considers bookings, defined as total contract value for customer agreements executed in the period, to be a key indicator of future revenue growth and used as a metric of commercial activity by management and investors. For the three months ended June 30, 2021, total bookings increased 13.9% to $435 million and BPaaS bookings increased 287.1% to $240 million from the prior year period.
Gross profit, inclusive of depreciation and amortization, increased 16.0% to $217 million, or 32.3% of revenue, for the three months ended June 30, 2021 from $187 million, or 28.9% of revenue, in the prior year period. The increase in gross profit was primarily driven by revenue growth as discussed above and lower delivery expenses related to the Company’s cloud-based services and productivity initiatives, including the impact of lower restructuring and integration related costs, partially offset by increases in costs associated with the growth in current and future revenues.
Selling, general and administrative expenses decreased 6.3% to $105 million, or 15.6% of revenue, for the three months ended June 30, 2021 from $112 million, or 17.3% of revenue, in the prior year period. The decrease was primarily driven by lower expenses related to productivity initiatives, including the impact of lower restructuring and integration related costs, partially offset by non-recurring professional expenses related to costs incurred in relation to the Company’s Business Combination Agreement completed in the third quarter of 2021 and higher costs related to investments in commercial functions.
Interest expense increased 15.1% to $61 million for the three months ended June 30, 2021 as compared to the prior year period. The increase was primarily due to incremental interest associated with the additional unsecured and secured senior notes issued in the second half of 2020.
As a result of the above factors, loss before income tax benefit was $6 million for the three months ended June 30, 2021 compared to $30 million for the three months ended June 30, 2020.
Income tax benefit was $2 million for the three months ended June 30, 2021, as compared to $5 million in the prior year period. The effective tax rate for the three months ended June 30, 2021 was approximately (34)% and was primarily driven by foreign and state income taxes in jurisdictions where the Company had operations that generated operating income or losses.
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 revenues increased 5.4% to $569 million for the three months ended June 30, 2021 as compared to $540 million for the prior year period. The increase was driven by a 5.5% increase in recurring revenues to $516 million as a result of net commercial activity and transitions from the Hosted Business to cloud-based services, and a 3.9% increase in project revenues to $53 million from the prior year period.
Employer Solutions Gross Profit increased 19.4% to $191 million, or 33.6% of Employer Solutions revenue, for the three months ended June 30, 2021 from $160 million, or 29.6% of Employer Solutions revenue, for the prior year period. The increase in gross profit was primarily due to revenue growth as discussed above and lower expenses related to productivity initiatives, including the impact of lower restructuring and integration related costs, partially offset by increases in costs associated with growth of current and future revenues.
Employer Solutions Adjusted EBITDA increased 8.7% to $138 million, or 24.3% of Employer Solutions revenue, for the three months ended June 30, 2021, as compared to $127 million, or 23.5% of Employer Solutions revenue, for the prior year period. The increase was primarily due to increased operating leverage and lower delivery expenses from productivity initiatives, partially offset by increased investments in the commercial functions and technology.
Professional Services
Professional Services includes project-based cloud deployment and advisory work on human capital and financial platforms such as Workday, SAP SuccessFactors, Oracle, and Cornerstone OnDemand.
Professional Services total revenues increased 3.4% to $92 million for the three months ended June 30, 2021 as compared to $89 million for the prior year period. The increase was primarily driven by a 19.2% increase of recurring revenues to $31 million as a result of increases in net commercial activity, partially offset by a 3.2% decrease in project revenues to $61 million from the prior year period.
Professional Services Gross Profit of $26 million for the three months ended June 30, 2021 was flat with the prior year period. The revenue growth discussed above was offset by increases in costs associated with growth of current and future revenues.
Professional Services Adjusted EBITDA decreased 22.2% to $7 million for the three months ended June 30, 2021, as compared to $9 million for the prior year period. The decrease was primarily due to increased investments in the Company’s commercial functions.
Hosted Business
The Hosted Business provides on-premise management of hosted human capital management platforms, including Oracle. In 2014, Alight stopped actively pursuing new clients in the Hosted Business and have since successfully migrated a significant number of its Hosted clients to cloud-based solutions. The remaining Hosted agreements are schedule to expire in 2023 and the Company does not intend to renew such agreements or enter into any new Hosted Business agreements.
Hosted Business revenues were $11 million for the three months ended June 30, 2021 as compared to $18 million for the prior year period. The decrease of $7 million was due to transitions from the Hosted Business to cloud-based services and the wind down of this segment.
Hosted Business Gross Profit and Adjusted EBITDA was immaterial for the three months ended June 30, 2021.
Successful Business Combination, Balance Sheet Highlights and Other Subsequent Events
The Company and Foley Trasimene Acquisition Corp. (“FTAC”), a publicly traded special purpose acquisition company, successfully completed their business combination on July 2, 2021. Proceeds from the business combination and the related PIPE transaction were used to repay certain existing borrowings of the Company.
As of June 30, 2021, the Company’s cash and cash equivalents balance was $460 million, total debt was $4,072 million and total debt net of cash and cash equivalents was $3,612 million. In connection with the closing of the merger with FTAC, the Company repaid $1,786 million of debt, consisting of $556 million of term loan debt and $1,230 million of unsecured notes. As a result, and in conjunction with the business combination, the Company reduced its total debt by more than 40% to $2,351 million.
On July 29, 2021, the Company entered into a definitive agreement to acquire the Aon Retiree Health Exchange business from Aon plc. The transaction is expected to be completed during the fourth quarter of 2021 and remains subject to regulatory approvals and other customary closing conditions.
Business Outlook
Given the momentum in the first half of the year along with the planned closing of the Aon Retiree Health Exchange acquisition early in the fourth quarter, the Company is raising its full-year 2021 revenue and adjusted EBITDA outlook as follows:
Revenue growth to a range of 3%-5%, or $2.81 billion to $2.86 billion, which is expected to be weighted toward the fourth quarter. This compares to the Company’s previous full-year 2021 revenue growth outlook of approximately 1%, or $2.76 billion.
Adjusted EBITDA growth to a range of 8%-10%, or $610 million to $620 million. This compares to the previous full-year 2021 adjusted EBITDA growth outlook of approximately 6%, or $600 million. In addition, the Company’s updated full-year adjusted EBITDA outlook now includes estimated public company costs, whereas the Company’s previous adjusted EBITDA outlook excluded any estimates for public company costs.
Earnings Conference Call and Webcast Information
A conference call to discuss the Company’s second-quarter 2021 financial results is scheduled for today, August 12, 2021, at 7:30 a.m. Central Time. Investors and analysts can participate on the conference call by dialing 1-877-407-0792 or 1-201-689-8263. Interested parties can also listen to a live webcast or replay of the conference call and access accompanying presentation materials by logging on to the Investor Relations section on the Company’s website at http://investor.alight.com. The replay of the conference call webcast and accompanying presentation materials will be available on the investor relations website for approximately 90 days.
Voya Explores a Potential Deal for Newly Public Alight
By Ed Hammond
and Crystal Tse
August 10, 2021, 6:01 PM EDT
Voya Financial Inc. has been exploring a potential acquisition of Alight Inc., just a month after the benefits administrator went public through a special purpose acquisition company, according to people with knowledge of the matter.
Voya, a New York-based retirement fund manager, has recently studied a purchase of Las Vegas-based Alight, the people said, asking not to be identified discussing private information. It isn’t clear whether the companies are in active talks, and there’s no guarantee that any deal will be reached, the people said.
Representatives for New York-based Voya and Alight didn’t respond to requests for comment.
Alight went public in July through a merger with Foley Trasimene Acquisition Corp., a blank-check company started by veteran investor Bill Foley. Alight was valued at $7.3 billion, including debt in the SPAC merger.
Shares of Alight closed at $10.50 on Tuesday, giving it a market value of almost $5.7 billion. Voya’s shares have risen almost 16% this year for a market value of $7.7 billion.
— With assistance by Gillian Tan
https://www.bloomberg.com/news/articles/2021-08-10/voya-is-said-to-explore-potential-deal-for-newly-public-alight
ValwithCatalyst
@valwithcatalyst
·
23m
$ALIT *VOYA IS SAID TO EXPLORE POTENTIAL DEAL FOR NEWLY PUBLIC ALIGHT $VOYA $CNNE
$ALIT *VOYA IS SAID TO EXPLORE POTENTIAL DEAL FOR NEWLY PUBLIC ALIGHT $VOYA $CNNE#SPAC #SPACSQUAD
— RLH Capital (@valwithcatalyst) August 10, 2021
CEO interviews from youtube
CNBC July 6th
Article, not sure of the date
https://utradea.com/positions/ALIT__Alight__Strong_Moat_Full_Service_Provider_High_Switching_Cost_Necessary_Service
$ALIT - Alight - Strong Moat, Full Service Provider, High Switching Cost, Necessary Service,
bullish
Original Post
portfolio-reddit logo
Background Information:
Alight is a benefits service provider that covers a spectrum of services in the space both in the U.S. and worldwide. It does 1) Health administration, 2) Healthcare Navigation, 3) Medicare Enrollment (For retiring people without pensions) 4) Wealth Administration, 5) Cloud Payroll, 6) Global Payroll, and 7) HCM Cloud Advisory and Deployment. In short it covers the full spectrum of the benefits service package, which no one has ever done before (even though it seems like a no brainer, which means it's competing in a fragmented space, offers better integration, has cross-selling opportunity, and can save their clients time while increasing gross and net profit margins). Don't believe me? Take a look at page 11 here: Welcome to a new way forward (q4cdn.com). They serve 70+% of fortune 100 companies, and over half the Fortune 500! The NAV of WPF which Alight merged with on July 6 was 10.70, but the company trades at 9.72, and it traded as low as 8.85 after the merger.
Earnings Expectations:
In an investor presentation update, Alight has already stated they are already modestly ahead of expectations on revenue and adjusted EBITDA because of strong booking growth. They have a strong product pipeline, and are also converting their revenue to BPAAS revenues which hold higher gross margins.
M&A
They have a strong acquisition streak, and their most recent one which was announced recently was the Aon Retiree Health Exchange for America, which complements their Choice Health Program. The deal terms were beneficial because Aon sold it as they are trying to get their M&A with Willis Towers approved and they have an anti trust trial they need to get through.
Product Pipeline in the 2nd Half of 2021
Next Gen Health Wealth and Payroll Cloud
Mobile First Workplace App Going For Live Enrollment in the Fall
The Numbers:
They had 96% revenue retention last year to this year, and an average of 15 year client tenure for their top 25 customers by revenue. They're also diversified by field, as companies from all segments need the services provided by Alight. 81% of their revenue is recurring (Subscription), while the rest is project based, and the CEO is trying to increase subscription revenues. They also expect 50% BPAAS revenue by 2023, which give higher margins, and the bundled health benefit BPAAS offers 50% more annual recurring revenue benefits.
They also have strong FCF and net leverage at a 3x ratio, which means they can pursue M&A safely to grow, and it's helpful that there are a large, fragmented and global pool of acquisition targets. With Bill Foley's experience, they'll be able to hone in on the best acquisition targets, since he will become the chairman.
These services can be integrated, and cross-sold, which Alight has already done with its current acquisitions as well.
They are looking to get 60%+ gross margin long term, and 40%+ by FYE 2023. Adjusted EBITDA Margin should be 24% in 2023.
Expected BPAAS Revenues (NOT TOTAL BOOKINGS) are 363M 2021E, 509M 202E, and 743M by 2023E. You can see their expectation for how much of that BPAAS revenue will comprise in the deck, but to sum it up it's 13, 17, 23%. In addition to margins, BPAAS will accelerate implementation and revenue recognition from the current 12-18 months to 6-9 months.
Total Revenue in 2021 is expected to be 2.76B in 2021, 2.945B in 2022, and 3.235B in 2023.
Free Cash Flow for 2021 is expected to be 465M, 493M in 2022, and 607M in 2023. Which means they can easily service the 300M bond in 2025, and the 1.976B Term Loan in 2026. I know they referenced potentially getting the terms changed so they pay a lower interest rate, but I'm not sure if they will.
Regardless after the merger, they received 360M to the balance sheet.
The best part of all this is that they are expected to have net income (excluding tax affected shareholder based compensation at a tax rate of 26% in 2021-2023E) of 9M at the end of 2021. This includes a one time 76M charge to extinguish their debt post merger, and one time restructuring costs regarding the merger which impact 2021 earnings for 44M. It also includes IT Optimus Investments which will run through 2021 and 2022 and can be found on page 20 of the slide deck. Finally intangible amortization is 201M, and Depreciation is 112M.
They expect Net income of 221M at the end of 2023.
Conclusion:
There are a few AMAZING gems in the shit pile that is SPACS. This one is my favorite, and I expect a 200% return in 2-3 years, because of the stickiness of the model and the cross-sell opportunities that this company has as a full service provider (the only one) for employee benefits and retirement. I was thinking of doing another one in a week for another SPAC company that is merging that are good, but I need to acquire a strong enough stake in them first.
For Alight, I bought 2 7.5 Calls at an average of 2.43 for Feb 2022 which are nearly in the money. I had hoped to buy more, but with nearly 10K tied in options on both Cannae and CCS I felt constricted by risk management, and so that's what I put in. I also have 523 shares in the company. I had talked in the yacht club about this company for a few days now, and there was a point (before today, and yesterday) where you could have bought the 7.5 calls for Feb and had a breakeven below 9.90-9.95, which is ridiculous considering the NAV price was 10.70, and most SPACS are priced at 10.
This is the type of company with the moat, growth, and operating margins (That are expanding) that I want. The CEO is a rockstar if you look him up. There's a strong board, and mergers and acquisitions have consistently been good. Strong FCF, quarterly execution that is coming out the gate strong with a slight beat already, and a clear path to GAAP profitability on a net income basis.
7/27/2021 DA Davidson Initiated Coverage Buy $16.00
Bill Foley's company Cannae Holdings, mentions it's ownership stake in ALIT
https://investor.cannaeholdings.com/static-files/39080000-7cb6-4379-8650-9a10ebde608b
Alight is probably the most compelling risk-weighted value in our
portfolio, which is why I was eager to invest an additional $42
Million when redemption requests from overcommitted hedge
funds in need of liquidity came through. Alight has also suffered
stock price dislocation as short-term SPAC investors exited the
stock and long-term fundamental investors rotate in. Stephan
Scholl is an outstanding leader, and he has made unexpectedly
rapid progress in converting Alight’s sales to BPaaS (Business
Process as a Service) sales – which to investors means more
products, higher margin, and more sticky, recurring revenues.
Alight is mission critical to its customers and we believe once
the investor community comes to see what I see in this business,
significant multiple expansion will be in order.
On June 30, 2021, Foley Trasimene Acquisition Corp.
shareholders approved the business combination with
Alight, which closed on July 2, 2021. Cannae has invested
approximately $440 Million and owns 50.4 Million Alight
common shares (NYSE: ALIT) and 8.0 Million warrants.
Excluding amounts for the warrants, our implied cost per
ALIT share is $8.65
NYSE: ALIT
At the end of the second quarter of 2021, Foley Trasimene
Acquisition Corp’s (NYSE: WPF) stockholders approved the
business combination with Alight Solutions (NYSE: ALIT), and
this deal formally closed on July 2, 2021. Alight is a leading
cloud-based provider of integrated digital human capital and
business solutions serving over 30 Million employees and their
family members and is installed in 50% of the Fortune 500. The
opportunity is to transform Alight into a Business Process as a
Service (BPaaS) enterprise where the company can leverage its
existing, industry-leading position to substantially grow revenue
and EBITDA.
In conjunction with the merger, Cannae funded $400 Million of
its investment commitments including a $150 Million forward
purchase agreement and a $250 Million PIPE agreement
announced in January 2021. Further, Cannae invested a net $42.1
Million to purchase 4.2 Million redeeming shares of WPF and
acquired 1.5 Million WPF Class B shares from other members
of the sponsor group as an incentive. The investments augment
Cannae’s founder shares from its approximately 20% economic
interest in the WPF sponsor and a $4.5 Million investment
in private placement warrants. These common shares were
automatically converted into ALIT Class A common shares at
closing. Cannae now holds 50.4 Million ALIT common shares
(~9.6% of outstanding equity) as well as warrants on 8.0 Million
common shares, with a net implied cost per common share of
$8.65, excluding the cost of the warrants. Alight is scheduled to
release their second quarter 2021 results on August 12, 2021
Alight (NYSE: ALIT) today announced it will release second quarter 2021 earnings results before the market open on Thursday, August 12, 2021. Management will discuss the results on a conference call at 8:30 am ET on Thursday, August 12, 2021. The webcast and a presentation of financial information will be publicly available at investor.alight.com. To listen by phone, please dial 1-877-407-0792 or 1-201-689-8263. A replay of the call will be available until midnight, Thursday, August 26, 2021, by dialing 1-844-512-2921 or 1-412-317-6671 and entering passcode 13721843.
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Alight Solutions LLC operates as a benefits administration and cloud-based human resource (HR) and financial solutions providers. It offers human resources outsourcing and consulting services. The company provides HR and financial solutions including software as a service (SaaS) advisory, cloud deployment solutions, support, and application management services. It also offers health and wealth solutions such as benefits administration, contribution administration, advocacy, reimbursements, dependent verification, and compliance solutions. In addition, the company provides consumer experience solutions in areas of human insight, strategy, and technology that includes employee value proposition creation and branding; total rewards and wellbeing; experience mapping; communication impact assessment; mindset research; benefits websites; UPoint platform; and social media campaigns. Alight Solutions LLC was founded in 1940 and is based in Lincolnshire, Illinois.
http://www.alight.com
Twitter @AlightSolutions
https://twitter.com/AlightSolutions
Investor Relations
https://investor.alight.com/overview/default.aspx
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