Alten: A Big Rebound in Q2
Strength of Rebound Was Unexpected
Alten impressed investors with its Q2 rebound: revenues had a big rebound (+19.7% yoy at cc/cs) to EUR 714m. We had anticipated this solid rebound: the comps were very favorable (Q2 2020 was down 18.4% yoy organically). However, we did not expect such momentum, with the commercial aviation and automotive markets still declining. Alten benefitted from its increasingly diversified client base (aero and automotive account for a combined 27% of revenues) and, as always, from superb execution.
The Engineer Headcount Is Higher than in 2019
The future looks promising: the company is back to recruitment (+2,200 net hires during H1, excluding M&As). At the end of Q2, Alten’s engineer headcount was 33,800, above 32,550 at the end of 2019. Its utilization rate is back and above its 92-92.5% standard range, reaching 93% in June. Alten wants to recruit faster to lower its utilization rate. The company has reduced its partial unemployment headcount to 350, down from 1,100 at the end of 2020. Alten has almost reached its objective of reducing its bench, largely resulting from the collapse in the commercial aviation sector.
M&As Lower than in 2020
Finally, Alten continues to conduct M&As, with ~EUR 80m in additional revenues acquired during H1. M&As represent ~635 additional engineers. The company has a significant M&A pipeline with half a dozen firms in due diligence. However, Alten will not reiterate its acquisition achievements of 2020 (~EUR 241m and 2,850 engineers acquired). Market valuations are high, PE is very active, and Alten maintains its financial discipline. Despite the pending acquisition by Adecco/Modis of Akka, Alten does not want to overspend.
Commercial Aeronautics Improving Slightly
Looking ahead, Alten sees all sectors back to growth, except for automotive and commercial aeronautics. Nevertheless, it expects automotive to reach its 2019 activity level by the end of 2021. Commercial aero is still down, with activity currently representing one-third of 2019. Industrial IT and analytics are back, and Alten is slightly more positive about the sector, expecting to reach 2019 levels by early 2024.
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