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GIB.A (TSX)
GIB (NYSE)
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Q1-F2020 results and year-over-year highlights
- Revenue of $3.05 billion, up 3.1%
year-over-year or 4.8% in constant currency;
- Adjusted EBIT of $474.1 million,
up 8.0%;
- Adjusted EBIT margin of 15.5%, up 70 basis points;
- Net earnings of $290.2 million,
for a margin of 9.5% and diluted EPS of $1.06;
- Net earnings excluding specific items* of $334.9 million, for a margin of 11.0% and diluted
EPS of $1.23;
- Cash provided by operating activities of $465.3 million, up 18.8%;
- Bookings of $2.75 billion for
book-to-bill of 90.0% and 101.3% over the last twelve months;
and,
- Backlog of $22.29 billion or 1.8x
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.
Note: All figures in Canadian dollars. Q1-F2020 MD&A,
interim condensed consolidated financial statements and
accompanying notes can be found at cgi.com/investors and have
been filed with both SEDAR in Canada and EDGAR in the U.S.
To access the financial statements – click here (PDF)
To access the MD&A – click here (PDF)
MONTRÉAL, Jan. 29, 2020
/PRNewswire/ - CGI (TSX: GIB.A) (NYSE: GIB) reported Fiscal 2020
first quarter revenue $3.05 billion,
representing growth of 3.1%, or $90.8
million year-over-year. On a constant currency basis,
revenue was up 4.8% as foreign exchange fluctuations negatively
impacted revenue by $52.6
million.
On October 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 MD&A 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% improved
by 70 basis points compared to 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%. On the same basis, EPS expanded by 9.8% 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 twelve months, representing 90.0% and 101.3% 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% 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
|
Weighted average
number of outstanding shares (diluted)
|
273,121,586
|
281,568,097
|
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%, up from 19.1% last year.
When excluding the impact of adopting IFRS 16, the net debt to
capitalization ratio would have been 20.9%, 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% of the Company's public float as of
the close of business on January 22,
2020. The current program will terminate on February 5, 2020 and purchases of Class A
subordinate voting shares under the renewed program may commence on
February 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 9:00 a.m.
Eastern time to discuss results. Participants may access the
call by dialing 1-800-377-0758 or via cgi.com/investors. For
those unable to participate on the live call, a podcast and copy of
the slides will be archived for download at cgi.com/investors.
Annual General Meeting of Shareholders
This morning at
11:00 a.m. Eastern time, the Company
will hold its Annual General Meeting of Shareholders at The Centre
Sheraton Montréal. The meeting, as well as the question and answer
session that follows will be broadcast live via
cgi.com/investors.
About CGI
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 C$12.1
billion, CGI shares are listed on the TSX (GIB.A) and the
NYSE (GIB). Learn more at cgi.com.
Non-GAAP financial metrics used in this press release:
Constant currency growth, adjusted EBIT, net debt, net debt to
capitalization ratio, bookings, book-to-bill ratio, backlog, DSO,
ROIC, ROE, net earnings and diluted EPS excluding specific
items.
CGI reports its financial results in accordance with IFRS.
However, management believes that these non-GAAP measures provide
useful information to investors regarding the Company's financial
condition and results of operations as they provide additional
measures of its performance. Additional details for these non-GAAP
measures can be found on pages 3 and 4 of our MD&A which is
posted on CGI's website, and filed with SEDAR and EDGAR.
Forward-looking information and statements
This press
release contains "forward-looking information" within the meaning
of Canadian securities laws and "forward-looking statements" within
the meaning of the United States Private Securities Litigation
Reform Act of 1995 and other applicable United States safe harbours. All such
forward-looking information and statements are made and disclosed
in reliance upon the safe harbour provisions of applicable Canadian
and United States securities laws.
Forward-looking information and statements include all information
and statements regarding CGI's intentions, plans, expectations,
beliefs, objectives, future performance, and strategy, as well as
any other information or statements that relate to future events or
circumstances and which do not directly and exclusively relate to
historical facts. Forward-looking information and statements often
but not always use words such as "believe", "estimate", "expect",
"intend", "anticipate", "foresee", "plan", "predict", "project",
"aim", "seek", "strive", "potential", "continue", "target", "may",
"might", "could", "should", and similar expressions and variations
thereof. These information and statements are based on our
perception of historic trends, current conditions and expected
future developments, as well as other assumptions, both general and
specific, that we believe are appropriate in the circumstances.
Such information and statements are, however, by their very nature,
subject to inherent risks and uncertainties, of which many are
beyond the control of CGI, and which give rise to the possibility
that actual results could differ materially from our expectations
expressed in, or implied by, such forward-looking information or
forward-looking statements. These risks and uncertainties include
but are not restricted to: risks related to the market such as the
level of business activity of our clients, which is affected by
economic and political conditions, and our ability to negotiate new
contracts; risks related to our industry such as competition and
our ability to attract and retain qualified employees, to develop
and expand our services, to penetrate new markets, and to protect
our intellectual property rights; risks related to our business
such as risks associated with our growth strategy, including the
integration of new operations, financial and operational risks
inherent in worldwide operations, foreign exchange risks, income
tax laws, our ability to negotiate favorable contractual terms, to
deliver our services and to collect receivables, and the
reputational and financial risks attendant to cybersecurity
breaches and other incidents; as well as other risks identified or
incorporated by reference in this press release, in CGI's annual
and quarterly MD&A and in other documents that we make public,
including our filings with the Canadian Securities Administrators
(on SEDAR at www.sedar.com) and the U.S. Securities and Exchange
Commission (on EDGAR at www.sec.gov). Unless otherwise stated, the
forward-looking information and statements contained in this press
release are made as of the date hereof and CGI disclaims any
intention or obligation to publicly update or revise any
forward-looking information or forward-looking statements, whether
as a result of new information, future events or otherwise, except
as required by applicable law. While we believe that our
assumptions on which these forward-looking information and
forward-looking statements are based were reasonable as at the date
of this press release, readers are cautioned not to place undue
reliance on these forward-looking information or statements.
Furthermore, readers are reminded that forward-looking information
and statements are presented for the sole purpose of assisting
investors and others in understanding our objectives, strategic
priorities and business outlook as well as our anticipated
operating environment. Readers are cautioned that such information
may not be appropriate for other purposes. Further information on
the risks that could cause our actual results to differ
significantly from our current expectations may be found in the
section titled "Risk Environment" of CGI's annual and quarterly
MD&A, which is incorporated by reference in this cautionary
statement. We also caution readers that the above-mentioned risks
and the risks disclosed in CGI's annual and quarterly MD&A and
other documents and filings are not the only ones that could affect
us. Additional risks and uncertainties not currently known to us or
that we currently deem to be immaterial could also have a material
adverse effect on our financial position, financial performance,
cash flows, business or reputation.
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SOURCE CGI Inc.