10:31:37 EDT Fri 29 Mar 2024
Enter Symbol
or Name
USA
CA



CGI Inc
Symbol GIB
Shares Issued 240,224,059
Close 2020-01-29 C$ 104.00
Market Cap C$ 24,983,302,136
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CGI earnings slip to $290.2-million in Q1

2020-01-29 08:22 ET - News Release

Mr. Lorne Gorber reports

CGI REPORTS STRONG Q1 FISCAL 2020 RESULTS

CGI Inc. had fiscal 2020 first quarter revenue $3.05-billion, representing growth of 3.1 per cent, or $90.8-million year over year. On a constant currency basis, revenue was up 4.8 per cent as foreign exchange fluctuations negatively impacted revenue by $52.6-million.

Q1 fiscal 2020 results and year-over-year highlights

  • Revenue of $3.05-billion, up 3.1 per cent year over year or 4.8 per cent in constant currency;
  • Adjusted EBIT (earnings before interest and taxes) of $474.1-million, up 8.0 per cent;
  • Adjusted EBIT margin of 15.5 per cent, up 70 basis points;
  • Net earnings of $290.2-million, for a margin of 9.5 per cent and diluted EPS of $1.06;
  • Net earnings excluding specific items* of $334.9-million, for a margin of 11.0 per cent and diluted earnings per share of $1.23;
  • Cash provided by operating activities of $465.3-million, up 18.8 per cent;
  • Bookings of $2.75-billion for book to bill of 90.0 per cent and 101.3 per cent over the last 12 months;
  • Backlog of $22.29-billion or 1.8 times annual revenue.

* Specific items in Q1 F2020 include $16.5-million in acquisition-related and integration costs and $28.2-million in restructuring costs, both net of tax. Specific items in Q1 F2019 include $3.2-million in acquisition-related and integration costs, net of tax.

On Oct. 1, 2019, the company adopted IFRS 16, which sets out the principles for the recognition, measurement, presentation and disclosure of leases. The change recognizes lease agreements on-balance sheet and, as a result, the Q1 F2020 consolidated statement of earnings now presents a decrease in the cost of services, selling and administrative expenses, partially offset by higher net finance costs with a non-material impact to the net earnings. These changes and their impact on capital structure ratios and cash from operations are noted below and detailed in the management's discussion and analysis and financial statements.

Adjusted EBIT was $474.1-million, an increase of $34.9-million from Q1 F2019, of which $9.7-million relates to the adoption of IFRS 16. EBIT margin of 15.5 per cent improved by 70 basis points compared with the same period last year.

Net earnings were $290.2-million in Q1 F2020, down $21.3-million compared with the year ago period, impacted by $44.7-million in one-time restructuring costs and integration expenses. Earnings per diluted share, as a result, were $1.06.

When excluding the specific items, net earnings in Q1 F2020 were $334.9-million, representing a margin of 11.0 per cent. On the same basis, EPS expanded by 9.8 per cent to $1.23 per diluted share, up from $1.12 from the year ago period.

"I am pleased with this quarter's results of continued profitable growth and strong cash generation as we successfully execute our build and buy strategy," said president and chief executive officer George Schindler. "We are experiencing strong demand for our end-to-end services and remain an active consolidator through mergers and acquisitions."

Bookings were $2.75-billion in Q1 F2020 and $12.36-billion over the last 12 months, representing 90.0 per cent and 101.3 per cent of revenue, respectively. At the end of December, 2019, the company's backlog stood at $22.29-billion.

Cash provided by operating activities was $465.3-million, or 15.2 per cent of revenue, representing an improvement of $73.7-million compared with Q1 F2019. Of this amount, $39.2-million resulted from the adoption of IFRS 16.

  
       In millions of Canadian dollars except earnings per share and where noted

                                                                        Q1 F2020   Q1 F2019

Revenue                                                                  3,054.7    2,963.9    
Growth                                                                       3.1%       5.2%       
Growth at constant currency                                                  4.8%       4.5%       
Adjusted EBIT                                                              474.1      439.2      
Margin                                                                      15.5%      14.8%      
Net earnings                                                               290.2      311.5      
Margin                                                                       9.5%       10.5%      
Net earnings excluding specific items*                                     334.9      314.7      
Margin                                                                      11.0%      10.6%      
Diluted earnings per share                                                  1.06       1.11       
Diluted earnings per share, excluding specific items*                       1.23       1.12       

Net finance costs                                                           26.7       14.6       
Net debt                                                                 2,810.6    1,738.7    
Net debt to capitalization ratio                                            27.7%      19.1%      
Cash provided by operating activities                                      465.3      391.5      
Days sales outstanding (DSO)                                                  49         54         
Return on invested capital (ROIC)                                           14.4%      14.5%      
Return on equity (ROE)                                                      18.0%      17.3%      
Bookings                                                                 2,749.3    3,030.8    
Backlog                                                                 22,292.4   23,337.9   

* Specific items in Q1 F2020 include: $16.5-million in acquisition-related and integration 
  costs and $28.2-million in restructuring costs, both net of tax; specific items in Q1 F2019
  include: $3.2-million in acquisition-related and integration costs, net of tax.


  

At the end of December, net debt stood at $2.8-billion, representing a net debt-to-capitalization ratio of 27.7 per cent, up from 19.1 per cent last year. When excluding the impact of adopting IFRS 16, the net debt to capitalization ratio would have been 20.9 per cent, slightly higher due to the investments made in metro market mergers.

Normal course issuer bid

The company's board of directors authorized earlier this morning the renewal of its normal course issuer bid, which, subject to approval by the Toronto Stock Exchange, allows for the purchase for cancellation of up to 20.1 million Class A subordinate voting shares over the next 12 months, representing approximately 10 per cent of the company's public float as of the close of business on Jan. 22, 2020. The current program will terminate on Feb. 5, 2020, and purchases of Class A subordinate voting shares under the renewed program may commence on Feb. 6, 2020. For further information, please refer to the company's press release regarding the renewal of its normal course issuer bid.

Q1 F2020 results conference call

Management will host a conference call this morning at 9 a.m. Eastern Time to discuss results. Participants may access the call by dialling 1-800-377-0758 or via the company's website. For those unable to participate on the live call, a podcast and copy of the slides will be archived for download at the company's website.

Annual general meeting of shareholders

This morning at 11 a.m. Eastern Time, the company will hold its annual general meeting of shareholders at the Centre Sheraton Montreal. The meeting, as well as the question-and-answer session that follows, will be broadcast live via the company's website.

About CGI Inc.

Founded in 1976, CGI is among the largest independent IT and business consulting services firms in the world. With approximately 77,500 consultants and professionals across the globe, CGI delivers an end-to-end portfolio of capabilities, from strategic IT and business consulting to systems integration, managed IT and business process services and intellectual property solutions. CGI works with clients through a local relationship model complemented by a global delivery network that helps clients digitally transform their organizations and accelerate results. With fiscal 2019 reported revenue of $12.1-billion, CGI shares are listed on the Toronto Stock Exchange and the New York Stock Exchange.

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