CGI Group Inc - News Release
CGI earns six cents per share in Q4 2001
CGI Group Inc GIB
Shares issued 254,609,035 Nov 6 2001 close $10.630
Tuesday Nov 6 2001 News Release
Ms. Julie Creed reports
All figures are in Canadian dollars unless otherwise indicated.
CGI Group has released unaudited results for the fourth quarter and audited results for the year ended Sept. 30, 2001.
Fourth quarter highlights:
revenue of $469.0-million represented 46.5-per-cent growth over the comparable period one year ago and 16.1 per cent quarterly sequential growth. Organic growth was 13.8 per cent year over year;
cash net earnings per share (earnings before amortization of good will) were eight cents, 166 per cent higher than the three cents posted for the same period a year ago;
operating cash flow was up 43.5 per cent to $75.6-million;
announced several major or strategic outsourcing, systems integration and consulting contracts, as well as contract renewals, totalling more than $900-million for periods of up to 10 years; and
backlog of signed contracts increased to $9.3-billion, or 5.9 times fiscal year 2001 annual revenue, from $8.5-billion as at June 30, 2001, and $7.0-billion at the same time last year. Contracts in the backlog have a weighted average remaining contract term of 7.3 years.
"This was a great quarter for CGI in many ways," said Serge Godin, chairman and chief executive officer. In addition to double-digit year-over-year and sequential revenue growth, we achieved a number of other business and financial objectives. The growth we realized in IT outsourcing, represented by some key contract and partnership wins in the quarter and a backlog of $9.3-billion, further increase our revenue visibility. Moreover, our sales pipeline has never been stronger, filled with numerous opportunities in Canada and, more importantly, in the U.S."
Fourth quarter results
Revenue for the fourth quarter ended Sept. 30, 2001, increased 47 per cent to $469.0-million from $320.1-million in the same quarter last year, and was up 16.1 per cent sequentially over third quarter revenue of $404.1-million. The significant improvement in year-over-year revenue growth was due primarily to business acquisitions as well as continuing strong demand for outsourcing services across all geographic areas but especially in Canada.
Based on CGI's current revenue runrate, revenue from long-term outsourcing contracts represents 69 per cent of the company's total revenue, including 10 per cent from business process services outsourcing, while project oriented consulting and systems integration work represents 31 per cent. Geographically, contribution to revenue from Canada was higher in the fourth quarter, representing 73 per cent of revenue, driven in part by several recent large outsourcing contract wins. Revenue from the United States represented 19 per cent with all other regions representing 8 per cent. CGI continued to solidify its leading position as an Internet technology (IT) services provider in the financial services sector, which represented 41 per cent of revenue in the fourth quarter, while telecom represented 29 per cent; manufacturing, retail and distribution represented 17 per cent; government represented 10 per cent; utilities and services represented 2 per cent; and healthcare represented 1 per cent.
Earnings before interest, taxes, depreciation and amortization (EBITDA) for the fourth quarter increased 192.7 per cent to $72.6-million, compared with $24.8-million in the same quarter a year ago, and was up 18.8 per cent sequentially, from $61.1-million reported in the third quarter of fiscal 2001. The EBITDA margin improved to 15.5 per cent at the end of the fourth quarter, compared with 15.1 per cent at the end of the third quarter of fiscal 2001 and 12.0 per cent at the end of fiscal 2000.
Cash net earnings in the quarter increased 284 per cent to $27.3-million, compared with $7.1-million in the same quarter a year ago and were 12.2 per cent higher sequentially compared with $24.3-million reported in the third quarter of fiscal 2001. Cash net earnings per share of eight cents for the quarter were up 167 per cent over three cents reported for the fourth quarter of fiscal 2000. Cash net earnings per share on a diluted basis were unchanged from the third quarter of fiscal 2001, after accounting for a 18.5-per-cent increase in weighted shares outstanding in the fourth quarter.
Net earnings in the fourth quarter of fiscal 2001 were $19.8-million, up 719-per-cent over the same period in the prior year and up 14.3 per cent sequentially over the $17.3-million reported in this year's third fiscal quarter. The net margin was 4.2 per cent compared with 4.3 per cent in the third quarter and 0.8 per cent in the fourth quarter of fiscal 2000.
CGI maintains a strong balance sheet and cash position, which together with bank lines, are sufficient to support the company's growth strategy and represent a competitive strength when proposing on outsourcing contracts. At Sept. 30, 2001, the total credit facility available amounted to approximately $225-million. As of Sept. 30, 2001, CGI had cash and cash equivalents of $46.0-million compared with $49.3-million as of Sept. 30, 2000.
Operating cash flow in the fourth quarter amounted to $75.6-million compared with $20.6-million in the fourth quarter a year ago and $52.7-million in the third quarter of fiscal 2001. The improvement in operating cash flow reflects mostly the improvement in net earnings and future income taxes.
The integration of IMRglobal is proceeding as expected. CGI's increased presence, especially in the U.S., has strengthened its capability to propose on large outsourcing contracts and gain market share. The recently integrated marketing and business development teams have ramped up sales development efforts, capitalizing on long-standing client relationships and the expanded service and delivery capabilities.
Fiscal year 2001 audited results
Revenue for the year ended Sept. 30, 2001, was $1.58-billion, up 10.1 per cent from revenue of $1.43-billion for the 2000 fiscal year. Revenue growth accelerated during the year, driven primarily by business acquisitions, as well as several large outsourcing contract wins.
Cash net earnings per share were 30 cents, up 11.1 per cent over fiscal year 2000 results of 27 cents.
At Sept. 30, 2001, CGI employed approximately 13,000 people in more than 20 countries around the world. Through 10 acquisitions, investments in four joint venture companies and several large new outsourcing contracts, CGI successfully integrated more than 5,000 members in fiscal year 2001.
Regarding CGI's annual results, Mr. Godin commented: "We are pleased with the increasing momentum of our business during fiscal year 2001. Over the last year, CGI has closed over $4-billion in new contract wins and renewals. Year-over-year revenue growth in our third and fourth quarters of 22.2 per cent and 46.5 per cent respectively signals our return to strong growth trends. Organic growth, year-over-year, of 3.6 per cent in the third quarter and 13.8 per cent in the fourth quarter also demonstrates our emphasis on internal growth initiatives."
Backlog and pipeline
The current backlog of signed contracts not yet delivered is $9.3-billion, or 5.9 times fiscal year 2001 annual revenue, with a weighted average time remaining of 7.3 years. CGI conservatively estimates its pipeline of proposals for large outsourcing contracts being reviewed by potential clients to be at $5-billion, up from $4-billion as stated during all of fiscal 2001. A large portion of this increase is driven by increased activity in Canada and in the U.S. Importantly, none of the deals in the sales pipeline have been cancelled in the last six months, despite more challenging economic conditions.
Initiatives and outlook
Mr. Godin added: "Our growth initiatives for fiscal year 2002 will capitalize on our core fundamentals and the excellent results we achieved in fiscal year 2001. Our pipeline of outsourcing contracts is more robust than ever, as organizations focus on ways to reduce their IT costs while maintaining their competitive position. Key to our growth will be an enhanced business development program to drive accelerated organic growth and a continued focus on identifying acquisitions that bring value to CGI."
Based on the information known today about current market conditions and demand, the company provides the following guidance for its fiscal year ending Sept. 30, 2002:
Base revenue for the year is expected to be between $2.1-billion and $2.2-billion, representing between 33-per-cent and 39-per-cent growth over fiscal 2001 results. These numbers do not include any contribution from potential large acquisitions or large outsourcing contract wins valued at more than $50-million per year;
Cash net earnings per share, which going forward will be referred to as net earnings, should be in the range of 37 cents and 40 cents, representing between 23 per cent and 33 per cent growth year over year.
In the first quarter ended Dec. 31, 2001, revenue is expected to total between $505-million and $520-million, representing between 51 per cent and 56 per cent year-over-year growth. Cash earnings per share are expected to be between seven cents and eight cents on a diluted basis.
Quarterly conference call
A conference call for the investment community will be held today, Nov. 6, 2001, at 11 a.m. (EDT). Participants may access the call by dialling 800-550-7368. A live audio Webcast of the conference call, with accompanying slides, will be available at CGI's Website, www.cgi.ca. For those unable to participate, a replay will be available until Nov. 22 by dialling (800) 558-5253, access number 19779536.
WARNING: The company relies upon litigation protection for "forward-looking" statements.
CONSOLIDATED STATEMENT OF OPERATIONS
Three months ended Sept. 30
(thousands of Canadian dollars)
2001 2000
Revenue $ 469,018 $ 320,101
------------ -----------
Operating
expenses
Costs of
services,
selling and
administrative
expenses 392,684 293,030
Research 3,704 2,250
------------ -----------
396,388 295,280
------------ -----------
Operating
earnings
before 72,630 24,821
------------ -----------
Depreciation
and
amortization
of fixed
assets 9,523 5,698
Amortization
of contract
costs 12,637 5,393
------------ -----------
22,160 11,091
------------ -----------
Earnings
before the
following
items 50,470 13,730
------------ -----------
Interest on
long-term debt (1,258) (946)
Other (233) 52
Income 800 810
------------ -----------
(691) (84)
------------ -----------
Earnings
before income
taxes,
entity subject
to significant
influence
and amortization
of good will 49,779 13,646
Income taxes 22,507 6,553
------------ -----------
Earnings
before entity
subject to
significant
influence and
amortization of
good will 27,272 7,093
Entity subject
to significant
influence - -
------------ -----------
Earnings before
amortization of
good will 27,272 7,093
Amortization of
good will, net of
income taxes 7,451 4,674
------------ -----------
Net earnings $ 19,821 $ 2,419
============ ===========
Basic and diluted
earnings before
amortization of
good will per
share $ 0.08 $ 0.03
Basic earnings
per share $ 0.06 $ 0.01
Diluted earnings
per share $ 0.06 $ 0.01
CONSOLIDATED STATEMENT OF OPERATIONS
Year ended Sept. 30
(thousands of Canadian dollars)
2001 2000
Revenue $ 1,581,315 $ 1,436,008
------------ -----------
Operating
expenses
Costs of
services,
selling and
administrative
expenses 1,339,110 1,254,351
Research 12,585 9,960
------------ -----------
1,351,695 1,264,311
------------ -----------
Operating
earnings
before 229,620 171,697
------------ -----------
Depreciation
and
amortization
of fixed
assets 32,536 26,387
Amortization
of contract
costs 33,460 21,991
------------ -----------
65,996 48,378
------------ -----------
Earnings
before the
following
items 163,624 123,319
------------ -----------
Interest on
long-term debt (4,206) (3,624)
Other (335) (130)
Income 2,999 3,898
------------ -----------
(1,542) 144
------------ -----------
Earnings
before income
taxes,
entity subject
to significant
influence
and amortization
of good will 162,082 123,463
Income taxes 72,165 49,985
------------ -----------
Earnings
before entity
subject to
significant
influence and
amortization of
good will 89,917 73,478
Entity subject
to significant
influence 7 64
------------ -----------
Earnings before
amortization of
good will 89,924 73,542
Amortization of
good will, net of
income taxes 27,135 17,876
------------ -----------
Net earnings $ 62,789 $ 55,666
============ ===========
Basic and diluted
earnings before
amortization of
good will per
share $ 0.30 $ 0.27
Basic earnings
per share $ 0.21 $ 0.21
Diluted earnings
per share $ 0.21 $ 0.20
CONSOLIDATED STATEMENT OF
RETAINED EARNINGS
Three months ended Sept. 30
(thousands of Canadian dollars)
2001 2000
Retained
earnings,
beginning
of period,
as previously
reported $ 226,124 $ 180,737
Adjustment
for change
in accounting
policy - -
------------ -----------
Retained
earnings,
beginning
of period,
as restated $ 226,124 $ 180,737
Net earnings $ 19,821 $ 2,419
------------ -----------
Retained
earnings,
end of period $ 245,945 $ 183,156
============ ===========
CONSOLIDATED STATEMENT OF
RETAINED EARNINGS
Year ended Sept. 30
(thousands of Canadian dollars)
2001 2000
Retained
earnings,
beginning
of period,
as previously
reported $ 183,156 $ 139,080
Adjustment
for change
in accounting
policy - (11,590)
------------ -----------
Retained
earnings,
beginning
of period,
as restated $ 183,156 $ 127,490
Net earnings $ 62,789 $ 55,666
------------ -----------
Retained
earnings,
end of period $ 245,945 $ 183,156
============ ===========
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