Alight(ALIT) - 2024 Q4 - Annual Results

Alight Fourth Quarter and Full Year 2024 Financial Results Financial Highlights Alight reported mixed Q4 and full year 2024 results, showing slight revenue decrease but improved profitability, strong cash flow, and strategic capital returns Fourth Quarter 2024 Highlights Q4 2024 saw stable revenue at $680 million, a significant net income turnaround, and strong growth in BPaaS revenue and ARR bookings Q4 2024 Key Financial Metrics (vs. Q4 2023) | Metric | Q4 2024 | Q4 2023 | Change | | :--- | :--- | :--- | :--- | | Revenue | $680M | $682M | -0.3% | | BPaaS Revenue | $146M | $133M (implied) | +9.8% | | Gross Profit | $271M | $270M | +0.4% | | Adjusted EBITDA | $217M | $206M | +5.3% | | Net Income (Loss) | $29M | $(121)M | N/A | | Diluted EPS | $0.05 | $(0.23) | N/A | | Adjusted Diluted EPS | $0.24 | $0.13 | +84.6% | - Annual Recurring Revenue (ARR) bookings grew by 18% to $114 million in 2024[4] - The stock repurchase program was increased by an additional $200 million[4] - Secured new or expanded relationships with clients such as Fortune Brands Innovations and Agilis Partners[5] Full Year 2024 Highlights Full year 2024 revenue decreased 2.3% to $2,332 million, but net loss improved, Adjusted EBITDA grew, BPaaS revenue increased 15.0%, and a new dividend and stock repurchases were initiated Full Year 2024 Key Financial Metrics (vs. FY 2023) | Metric | FY 2024 | FY 2023 | Change | | :--- | :--- | :--- | :--- | | Revenue | $2,332M | $2,386M | -2.3% | | BPaaS Revenue | $499M | $434M | +15.0% | | Gross Profit | $794M | $810M | -2.0% | | Adjusted EBITDA | $556M | $537M | +3.5% | | Net Loss | $(140)M | $(317)M | N/A | | Diluted EPS | $(0.25) | $(0.61) | N/A | | Adjusted Diluted EPS | $0.48 | $0.43 | +11.6% | - Repurchased $167 million of common stock under the existing share repurchase program during the year[12] - A dividend program was initiated, with the first payment made in the fourth quarter[12] Detailed Financial Performance Financial performance reflects a strategic shift post-divestiture, with slight revenue decline offset by improved profitability, increased gross profit, and enhanced net income from lower interest expenses Fourth Quarter 2024 Results Q4 2024 revenue decreased 0.3% to $680 million, with gross profit rising and pre-tax income significantly improving to $55 million, primarily due to lower interest expense - Revenue decreased 0.3% to $680 million, with recurring revenues constituting 90.7% of the total[6] - Interest expense improved by $11 million to $20 million, benefiting from a term loan repricing and a $740 million debt paydown in Q3[9] - Income from continuing operations before tax was $55 million, a significant improvement from a loss of $96 million in the prior-year period, aided by lower interest expense and other income from the divestiture's transition services agreement[10] Full Year 2024 Results Full-year 2024 revenue decreased 2.3% to $2,332 million, with pre-tax loss from continuing operations narrowing significantly to $148 million, largely due to reduced interest expense and divestiture-related income - Full-year revenue decreased 2.3% to $2,332 million; excluding the exited Hosted business, the decrease was 1.2%, with recurring revenues at 91.6% of total revenue[11] - Interest expense for the year improved by $28 million to $103 million due to debt repricing and paydown[15] - Loss from continuing operations before tax improved to $148 million from $337 million in the prior year, driven by lower interest costs and income from the divestiture's transition services agreement[16] Balance Sheet Highlights As of December 31, 2024, Alight maintained solid liquidity, with its balance sheet reflecting recent divestiture and debt reduction activities Key Balance Sheet Items (as of Dec 31, 2024) | Metric | Amount | | :--- | :--- | | Cash and cash equivalents | $343M | | Total debt | $2,025M | | Total debt net of cash | $1,682M | Business Outlook and Corporate Actions Alight issued its 2025 financial outlook, projecting revenue and Adjusted EBITDA growth, with acceleration expected in H2 2025, complemented by an increased stock repurchase authorization 2025 Business Outlook The company projects 2025 as a transitional year, with revenue impacted by prior contract losses, but anticipates growth in Adjusted EBITDA, Adjusted Diluted EPS, and Free Cash Flow 2025 Full Year Outlook | Metric | Guidance Range | | :--- | :--- | | Revenue | $2,318M - $2,388M | | Adjusted EBITDA | $620M - $645M | | Adjusted Diluted EPS | $0.58 - $0.64 | | Free Cash Flow | $250M - $285M | - Management notes that the 2025 revenue growth rate is negatively impacted by historical contract losses; absent these, the growth rate would be over two points higher[19] - Full-year 2024 retention rates improved by 8 points compared to the prior year, which is expected to favorably impact revenue later in 2025 and into 2026[19] Subsequent Events & Shareholder Returns Subsequent to quarter end, Alight's Board authorized an additional $200 million for stock repurchases, bringing the total to $281 million, reinforcing commitment to shareholder capital returns - The Board of Directors authorized an additional $200 million for the repurchase of Class A common stock[18] - The total amount authorized for stock repurchase is now $281 million[18] Consolidated Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements for Q4 and full year 2024 and 2023, including Income Statements, Balance Sheets, and Cash Flows Condensed Consolidated Statements of Income (Loss) For Q4 2024, Net Income from Continuing Operations was $29 million on $680 million revenue, a significant improvement, and full year Net Loss was $140 million on $2,332 million revenue, a substantial reduction Income Statement Highlights (Continuing Operations) | Metric | Q4 2024 | Q4 2023 | FY 2024 | FY 2023 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $680M | $682M | $2,332M | $2,386M | | Gross Profit | $271M | $270M | $794M | $810M | | Operating Income | $44M | $40M | $(90)M | $(81)M | | Net Income (Loss) | $29M | $(121)M | $(140)M | $(317)M | | Diluted EPS | $0.05 | $(0.23) | $(0.25) | $(0.61) | Condensed Consolidated Balance Sheets As of December 31, 2024, Total Assets were $8.19 billion, down from $10.78 billion, and Total Liabilities decreased to $3.88 billion from $6.04 billion, primarily due to discontinued operations and debt reduction Balance Sheet Summary (Year-End) | Metric | Dec 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total Current Assets | $1,267M | $2,776M | | Total Assets | $8,193M | $10,782M | | Total Current Liabilities | $892M | $2,187M | | Long-term debt, net | $2,000M | $2,769M | | Total Liabilities | $3,880M | $6,040M | | Total Stockholders' Equity | $4,313M | $4,742M | Condensed Consolidated Statements of Cash Flows For full year 2024, net cash from operating activities was $252 million, investing activities provided $836 million, and financing activities used $1,074 million, driven by debt repayments and share repurchases Statement of Cash Flows Summary (Full Year) | Activity | FY 2024 | FY 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $252M | $386M | | Net cash provided by (used in) investing activities | $836M | $(159)M | | Net cash provided by (used in) financing activities | $(1,074)M | $(231)M | Reconciliation of GAAP to Non-GAAP Measures This section provides detailed reconciliations of GAAP to non-GAAP financial measures, including Adjusted EBITDA, Adjusted Net Income, and Adjusted Gross Profit, along with other key operational data Reconciliation to Adjusted EBITDA Adjusted EBITDA from Continuing Operations for Q4 2024 was $217 million (31.9% margin) and for full year was $556 million (23.8% margin), adjusted for non-cash and non-recurring items Reconciliation to Adjusted EBITDA (Continuing Operations) | Metric | Q4 2024 | Q4 2023 | FY 2024 | FY 2023 | | :--- | :--- | :--- | :--- | :--- | | Net Income (Loss) | $29M | $(121)M | $(140)M | $(317)M | | Adjustments | $188M | $327M | $696M | $854M | | Adjusted EBITDA | $217M | $206M | $556M | $537M | | Adj. EBITDA Margin | 31.9% | 30.2% | 23.8% | 22.5% | Reconciliation to Adjusted Net Income and Adjusted Diluted EPS Adjusted Diluted EPS from Continuing Operations increased to $0.24 in Q4 2024 and to $0.48 for the full year, adjusted for non-cash and non-recurring items Reconciliation to Adjusted Diluted EPS (Continuing Operations) | Metric | Q4 2024 | Q4 2023 | FY 2024 | FY 2023 | | :--- | :--- | :--- | :--- | :--- | | Net Income (Loss) Attributable to Alight | $29M | $(113)M | $(138)M | $(300)M | | Adjusted Net Income | $127M | $73M | $261M | $234M | | Adjusted Diluted EPS | $0.24 | $0.13 | $0.48 | $0.43 | Reconciliation to Adjusted Gross Profit Adjusted Gross Profit for Q4 2024 was $300 million (44.1% margin) and for full year was $904 million (38.8% margin), adjusted for depreciation, amortization, and stock-based compensation Adjusted Gross Profit Reconciliation | Metric | Q4 2024 | Q4 2023 | FY 2024 | FY 2023 | | :--- | :--- | :--- | :--- | :--- | | Gross Profit | $271M | $270M | $794M | $810M | | Adjusted Gross Profit | $300M | $297M | $904M | $912M | | Adjusted Gross Profit Margin | 44.1% | 43.5% | 38.8% | 38.2% | Other Select Financial Data This data highlights key operational trends, showing recurring revenue as the majority of total revenue, with BPaaS revenue growing significantly in Q4 and full year, increasing its share BPaaS Revenue Growth | Metric | Q4 2024 | Q4 2023 | FY 2024 | FY 2023 | | :--- | :--- | :--- | :--- | :--- | | BPaaS Revenue | $146M | $133M | $499M | $434M | | BPaaS as % of Total Revenue | 21.5% | 19.5% | 21.4% | 18.2% | - For the full year 2024, recurring revenue was $2,135 million, while project revenue was $197 million, demonstrating the stability of the company's revenue base[44]