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GIB.A (TSX)
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Revenue up 13.7% and diluted Earnings Per
Share (EPS) up 15.0%
Q2-F2023 performance highlights
- Revenue of $3.72 billion, up
13.7% year-over-year or 11.4% year-over-year in constant
currency1;
- Earnings before income taxes of $564.5
million, up 13.2% year-over-year, for a margin1
of 15.2%;
- Adjusted EBIT1 of $600.8
million, up 14.7% year-over-year, for a margin of
16.2%1;
- Net earnings of $419.4 million,
up 12.7% year-over-year, for a margin of 11.3%;
- Net earnings excluding specific items1,2 of
$435.0 million, up 16.3%
year-over-year, for a margin1 of 11.7%1,
2;
- Diluted EPS of $1.76, up 15.0%
year-over-year;
- Diluted EPS excluding specific items1,2 of
$1.82, up 19.0% year-over-year;
- Cash from operating activities of $469.1
million, representing 12.6% of revenue;
- Bookings1 of $3.84
billion, for a book-to-bill ratio of 103.3%; and
- Backlog1 of $25.24
billion or 1.8x annual revenue.
Note: All figures in
Canadian dollars. Q2-F2023 MD&A, interim condensed consolidated
financial statements and accompanying notes can be found at
cgi.com/investors and have been filed with the Canadian
securities regulators on SEDAR at www.sedar.com and the U.S.
Securities and Exchange Commission on EDGAR at
www.sec.gov.
|
MONTRÉAL, April 26,
2023 /CNW/ - CGI (TSX: GIB.A) (NYSE: GIB)
Q2-F2023 results
"I am pleased with our performance in
the second quarter and throughout the first half of the fiscal
year," said George D. Schindler,
President and Chief Executive Officer. "Our team again delivered
double-digit EPS accretion and sustained margin expansion, both
driven by a combination of strong revenue growth and operational
discipline. We continue to invest in talent and end-to-end
offerings that are aligned with evolving client demand, notably to
help clients achieve business efficiencies and IT cost savings,
while simultaneously progressing their enterprise digitization
agendas."
For the second quarter of Fiscal 2023, the Company reported
revenue of $3.72 billion,
representing a year-over-year increase of 13.7%. When excluding
foreign currency impacts, revenue grew by 11.4% year-over-year.
Earnings before income taxes were $564.5
million, up 13.2% year-over-year, for a margin of 15.2%,
down 10 basis points compared to the same period last year.
Adjusted EBIT was $600.8 million, up
14.7% year-over-year, for a margin of 16.2%, up 20 basis points
compared to the same period last year.
1 Constant
currency growth, diluted EPS excluding specific items, adjusted
EBIT, adjusted EBIT margin, net earnings excluding specific items,
net earnings margin excluding specific items and diluted EPS margin
excluding specific items are non-GAAP financial measures or ratios.
Earnings before income taxes margin, net earnings margin, cash from
operating activities as a percentage of revenue, bookings and
backlog are key performance measures. See "Non-GAAP and other key
performance measures" section of this press release for more
information, including quantitative reconciliations to the closest
International Financial Reporting Standards (IFRS) measure, as
applicable. These are not standardized financial measures under
IFRS and might not be comparable to similar financial measures
disclosed by other companies.
|
2 Specific
items in Q2-F2023 include: $15.5 million in acquisition-related and
integration costs, net of tax; Specific items in Q2-F2022 include:
$2.1 million in acquisition-related and integration costs, net of
tax.
|
Net earnings were $419.4 million, up
12.7% compared with the same period last year, for a margin of
11.3%. Diluted earnings per share, as a result, were $1.76 compared to $1.53 last year, representing an increase of
15.0%. When excluding acquisition-related and integration costs,
net of tax, net earnings were $435.0
million. This represents an increase of 16.3%
year-over-year, and a margin of 11.7%. On the same basis, diluted
earnings per share increased by 19.0% to $1.82, up from $1.53 for the same period last year.
The number of CGI consultants and professionals worldwide
currently stands at approximately 91,000, representing a
year-over-year increase of 8.3%.
Cash provided by operating activities was $469.1 million, or 12.6% of revenue, representing
a decrease of 0.7% on a year-over-year basis. For the first
half of Fiscal 2023, cash provided by operating activities was
$1,074.4 million, or 15.0% of
revenue, representing an increase of 12.3% on a year-over-year
basis.
Bookings were $3.84 billion, up
$523 million on a year-over-year
basis, representing a book-to-bill ratio of 103.3%. As of
March 31, 2023, the Company's backlog
stood at $25.24 billion or 1.8x
annual revenue.
Financial
highlights
|
Q2-F2023
|
Q2-F2022
|
Change
|
In millions of
Canadian dollars except earnings per share and where
noted
|
|
|
|
Revenue
|
3,715.3
|
3,268.9
|
446.4
|
Growth
|
13.7 %
|
6.2 %
|
750 bps
|
Constant currency
growth
|
11.4 %
|
10.0 %
|
140 bps
|
Earnings before income
taxes
|
564.5
|
498.8
|
65.7
|
Margin
%
|
15.2 %
|
15.3 %
|
(10 bps)
|
Adjusted
EBIT
|
600.8
|
523.6
|
77.2
|
Margin
%
|
16.2 %
|
16.0 %
|
20 bps
|
Net earnings
|
419.4
|
372.0
|
47.4
|
Margin
%
|
11.3 %
|
11.4 %
|
(10 bps)
|
Net earnings excluding
specific items1
|
435.0
|
374.1
|
60.9
|
Margin
%
|
11.7 %
|
11.4 %
|
30 bps
|
Diluted EPS
|
1.76
|
1.53
|
0.23
|
Diluted EPS excluding
specific items1
|
1.82
|
1.53
|
0.29
|
Weighted average number
of outstanding shares (diluted)
|
238.5
|
243.8
|
(5.3)
|
Net finance
costs
|
15.4
|
22.5
|
(7.1)
|
Net
debt2
|
2,529.0
|
2,729.7
|
(200.7)
|
Net debt to
capitalization ratio2
|
24.0 %
|
28.7 %
|
(470 bps)
|
Cash provided by
operating activities
|
469.1
|
472.6
|
(3.5)
|
As a
percentage of revenue
|
12.6 %
|
14.5 %
|
(190 bps)
|
Days sales outstanding
(DSO) 2
|
41
|
42
|
(1)
|
Return on invested
capital (ROIC) 2
|
15.6 %
|
15.7 %
|
(10 bps)
|
Return on equity (ROE)
2
|
20.7 %
|
21.0 %
|
(30 bps)
|
Bookings
|
3,839
|
3,316
|
523
|
Backlog
|
25,241
|
23,144
|
2,097
|
1 Specific items in Q2-F2023 include:
$15.5 million in acquisition-related and integration costs, net of
tax; Specific items in Q2-F2022 include: $2.1 million in
acquisition-related and integration costs, net of tax.
|
2 Net
debt, net debt to capitalization ratio and ROIC are non-GAAP
financial measures or ratios. DSO and ROE are key performance
measures. See "Non-GAAP and other key performance measures" section
of this press release for more information, including quantitative
reconciliations to the closest International Financial Reporting
Standards (IFRS) measure, as applicable. These are not standardized
financial measures under IFRS and might not be comparable to
similar financial measures disclosed by other companies.
|
During the second quarter of Fiscal 2023, the Company invested
$107.2 million back into its business
and $400.0 million (at a weighted average price of
$119.58) under its current
Normal Course Issuer Bid to purchase for cancellation 3,344,996 of
its Class A subordinate voting shares.
Return on invested capital (ROIC) was 15.6%, a decrease of 10
basis points when compared to the prior year, and up 10 basis
points sequentially.
As at March 31, 2023, net debt
stood at $2.53 billion, down from
$2.73 billion at the same time last
year. The net debt-to-capitalization ratio stood at 24.0% at the
end of March 2023, down 470 basis
points when compared to the prior year.
At the end of March 2023, with
cash of $1.3 billion on hand
excluding funds held for clients, and a fully available revolving
credit facility, the Company had $2.8
billion in readily available liquidity to pursue its Build
and Buy profitable growth strategy.
To access the financial statements – click here
To access the Q2-F2023 MD&A – click here
Q2-F2023 results conference call
Management will host
a conference call this morning at 9:00 a.m.
(EDT) to discuss results. Participants may access the call
by dialing +1-888-396-8049 or +1-416-764-8646 Conference ID:
66993424 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. Participants may also access a
replay of the call by dialing +1-877-674-7070 Passcode: 993424,
until May 26, 2023.
About CGI
Founded in 1976, CGI is among the largest
independent IT and business consulting services firms in the world.
With 91,000 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. CGI Fiscal 2022
reported revenue is $12.87 billion
and CGI shares are listed on the TSX (GIB.A) and the NYSE
(GIB). Learn more at cgi.com.
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, additional external risks (such
as pandemics, armed conflict, climate-related issues and inflation)
and our ability to negotiate new contracts; risks related to our
industry such as competition and our ability 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 and other tax programs, the termination, modification,
delay or suspension of our contractual agreements, our expectations
regarding future revenue resulting from bookings and backlog, our
ability to attract and retain qualified employees, to negotiate
favourable contractual terms, to deliver our services and to
collect receivables, to disclose, manage and implement
environmental, social and governance (ESG) initiatives and
standards, and to achieve ESG commitments and targets, including
without limitation, our commitment to net-zero carbon emissions by
2030, as well as the reputational and financial risks
attendant to cybersecurity breaches and other incidents, and
financial risks such as liquidity needs and requirements,
maintenance of financial ratios, interest rate fluctuations and the
discontinuation of major interest rate benchmarks and changes in
creditworthiness and credit ratings; 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.
Non-GAAP and other key performance measures
Non-GAAP financial measures and ratios used in this press
release: Constant currency growth, adjusted EBIT, adjusted EBIT
margin, net earnings excluding specific items, net earnings margin
excluding specific items, diluted EPS excluding specific items, net
debt, net debt to capitalization ratio, and return on invested
capital (ROIC). 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. These measures do
not have any standardized meaning prescribed by IFRS and are
therefore unlikely to be comparable to similar measures presented
by other issuers and should be considered as supplemental in nature
and not as a substitute for the related financial information
prepared in accordance with IFRS. Key performance measures used in
this press release: cash from operating activities as a percentage
of revenue, bookings, book-to-bill ratio, backlog, days sales
outstanding (DSO), earnings before income taxes margin, net
earnings margin, and return on equity (ROE).
Below are reconciliations to the most comparable IFRS financial
measures and ratios, as applicable.
The descriptions of these non-GAAP measures and ratios and other
key performance measures can be found on pages 3, 4 and 5 of our
Q2-F2023 MD&A which is posted on CGI's website, and filed with
SEDAR at www.sedar.com and EDGAR at www.sec.gov.
Reconciliation between constant currency growth and
growth
In thousands of CAD
except for percentages
|
For the three months
ended March 31,
|
2023
|
2022
|
%
|
Total CGI
revenue
|
3,715,324
|
3,268,946
|
13.7 %
|
Constant currency
year-over-year revenue growth
|
11.4 %
|
|
|
Foreign currency
impact
|
2.3 %
|
|
|
Variation over
previous period
|
13.7 %
|
|
|
Reconciliation between adjusted EBIT and earnings before income
taxes
In thousands of CAD
except for percentage
|
For the three months
ended March 31,
|
2023
|
% of
revenue
|
2022
|
% of
revenue
|
Adjusted
EBIT
|
600,768
|
16.2 %
|
523,608
|
16.0 %
|
Minus the following
items:
|
|
|
|
|
Acquisition-related
and integration costs
|
20,945
|
0.6 %
|
2,248
|
0.1 %
|
Net finance
costs
|
15,366
|
0.4 %
|
22,539
|
0.7 %
|
Earnings before
income taxes
|
564,457
|
15.2 %
|
498,821
|
15.3 %
|
Net earnings and Diluted EPS, excluding specific items
In thousands of CAD
except for percentages and shares data
|
For the three months
ended March 31,
|
2023
|
2022
|
Change
|
|
|
|
|
Earnings before income
taxes
|
564,457
|
498,821
|
13.2 %
|
Add
back:
|
|
|
|
Acquisition-related
and integration costs
|
20,945
|
2,248
|
|
Earnings before
income taxes excluding specific items
|
585,402
|
501,069
|
16.8 %
|
Income tax
expense
|
145,042
|
126,833
|
14.4 %
|
Effective tax
rate
|
25.7 %
|
25.4 %
|
|
Add
back:
|
|
|
|
Tax deduction on
acquisition-related and integration costs
|
5,406
|
115
|
|
Impact on effective
tax rate
|
— %
|
(0.1 %)
|
|
Income tax expense
excluding specific items
|
150,448
|
126,948
|
18.5 %
|
Effective tax
rate excluding specific items
|
25.7 %
|
25.3 %
|
|
Net earnings
excluding specific items
|
434,954
|
374,121
|
16.3 %
|
Net earnings
margin excluding specific items
|
11.7 %
|
11.4 %
|
|
Weighted average
number of shares outstanding
|
|
|
|
Class A
subordinate voting shares and Class B multiple voting shares
(basic)
|
235,042,445
|
240,299,030
|
(2.2 %)
|
Class A
subordinate voting shares and Class B multiple voting shares
(diluted)
|
238,504,523
|
243,834,052
|
(2.2 %)
|
Earnings per share
excluding specific items (in dollars)
|
|
|
|
Basic
|
1.85
|
1.56
|
18.6 %
|
Diluted
|
1.82
|
1.53
|
19.0 %
|
Reconciliation between net debt and long-term debt and lease
liabilities
As at March
31,
|
2023
|
2022
|
In thousands of CAD
except for percentages
|
|
|
Reconciliation
between net debt and long-term debt and lease
liabilities1:
|
|
|
Net debt
|
2,528,956
|
2,729,684
|
Add
back:
|
|
|
Cash and cash
equivalents
|
1,280,800
|
1,056,252
|
Short-term
investments
|
4,737
|
3,133
|
Long-term
investments
|
18,114
|
16,646
|
Fair value of foreign
currency derivative financial instruments related to
debt
|
20,110
|
(72,213)
|
Long-term debt and
lease liabilities 1
|
3,852,717
|
3,733,502
|
|
|
|
Net debt to
capitalization ratio
|
24.0 %
|
28.7 %
|
Return on
equity
|
20.7 %
|
21.0 %
|
Return on invested
capital
|
15.6 %
|
15.7 %
|
Days sales
outstanding
|
41
|
42
|
1 As at
March 31, 2023, long-term debt and lease liabilities were
$3,170.3 million ($3,041.9 million as at March 31, 2022) and
$682.4 million ($691.6 million as at March 31, 2022),
respectively, including their current portions.
|
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SOURCE CGI Inc.