CGI GROUP results - Rev +189%, EBITDA +212%, earnings +268%
TSE, ME SYMBOL: GIB.A
NYSE SYMBOL: GIB
JANUARY 27, 1999
CGI Reports Continuing Strong Growth in First Quarter of
Fiscal 1999 - Revenue increased 189 percent, EBITDA 212
percent and earnings 268 percent
MONTREAL, QUEBEC--CGI continued to achieve triple-digit revenue
growth and increased profitability while maintaining a strong
financial position in the first quarter of fiscal 1999. All dollar
amounts are in Canadian dollars.
For the three months ended December 31,1998, CGI reported a 188.7
percent increase in revenue to $334.3 million, compared with
$115.8 million in the same quarter of fiscal 1998. Earnings before
interest, taxes, depreciation and amortization (EBITDA) increased
211.5 percent to $48.6 million, from $15.6 million a year ago. Net
earnings increased 268.4 percent to $18.2 million or $0.14 per
share, from $5.0 million ($0.05 per share) the previous year. The
weighted average number of shares outstanding increased by 24.8
percent to 133.4 million primarily reflecting shares issued for
acquisitions. Cash flow from operations increased 74.7 percent to
$25.5 million ($0.19 per share) from $14.6 million ($0.14 per
share) in the first quarter of fiscal 1998.
The net profit margin increased to 5.5 percent, from 5.0 percent
in the fourth quarter of fiscal 1998 and 4.3 percent in the first
quarter of fiscal 1998. The increase reflects the growing
proportion of business represented by IT outsourcing, increasing
economies of scale, and additional efficiencies realized from the
application of ISO 9001 certified management frameworks. In the
first quarter of fiscal 1999, outsourcing represented 75 percent
of revenue, compared with 62 percent in the first quarter of 1998.
At December 31, 1998 the order backlog was $6.5 billion. The
balance sheet was strong, with a cash position of $117.7 million
and minimal debt.
"Through acquisitions and internal growth, CGI is becoming a
long-term, strong growth company," said Serge Godin, Chairman and
Chief Executive Officer. "We are the largest independent IT
services company in Canada, where we continue to see excellent
growth potential, and the sixth largest in North America. We are
committed to becoming a major IT services player in the U.S.
market, where we are targeting the financial services and
telecommunications sectors."
As part of its strategy to increase its presence in U.S. markets,
CGI listed its shares on the New York Stock Exchange in October.
During and subsequent to the quarter ended December 31, 1998, CGI
signed a number of IT services contracts, including:
- An $18 million contract over five years with Air Canada to
support, maintain and assist in the evolution of the airline's
PeopleSoft enterprise resource planning (ERP) system for finance,
human resources and pay systems;
- A $22 million contract over six years with the Canadian Payments
Association to provide systems operating services for the Large
Value Transfer System (LVTS) which will become operational in
1999. The LVTS is a national electronic system designed primarily
for sending and receiving Canadian large value payments, expected
to total more than $100 billion per day;
- Contracts with two companies within the BCE Inc. group of
companies. CGI signed a $24 million 10-year contract with NEXACOR
Realty Management, Bell Canada's real estate subsidiary, which
includes applications built on J.D. Edwards ERP solutions. CGI
also signed two IT outsourcing contracts with Télébec, BCE's
telecommunications subsidiary serving 300 Quebec municipalities,
totalling $115 million over 10 years;
- A major enterprise software agreement with IBM Canada, to
cost-effectively support CGI customers who use IBM technology.
CGI is the largest independent information technology consulting
firm in Canada and the sixth largest in North America, based on
its revenue run rate of $1.3 billion. The company's order backlog
totals approximately $6.5 billion. CGI has 8,000 professionals and
provides end-to-end IT services and business solutions to some
2,000 clients in Canada, the United States and 20 countries around
the world. CGI's shares are listed on the New York Stock Exchange
(GIB), as well as on the Toronto and Montreal exchanges (GIB.A).
They are included in the Toronto Stock Exchange's TSE 300
Composite and TSE 200 indexes. Web site: www.cgi.ca
Financial Statements are attached.
All statements contained in this or any other press release of CGI
Group Inc., or in any document filed by the Company with the U.S.
Securities and Exchange Commission, or in any other written or
oral communication by or on behalf of the company, that do not
directly and exclusively relate to historical facts, constitute
"forward looking statements" within the meaning of the U.S.
Private Securities Litigation Report Act of 1995. These statements
represent the Company's expectations and beliefs, and no assurance
can be given that the results described in such statements will be
achieved.
This press release may contain forward looking statements that
involve a number of risks and uncertainties, including statements
regarding the outlook for the company's business and results of
operations. There are a number of factors that could cause actual
results to differ materially from those indicated. Such factors
include, without limitation, the various factors set forth in the
Company's annual report.
/T/
CGI GROUP INC.
Consolidated statements of earnings
for the three-month periods ended December 31
(in thousands of dollars, except earnings per share) (unaudited)
--------------------------------------------------------------
1998 1997
---------------------------------------------------------------
$ $
Revenue 334,348 115,796
---------------------------------------------------------------
Operating expenses
Direct costs, selling and
administration expenses 283,688 99,058
Research and development 2,072 1,154
---------------------------------------------------------------
285,760 100,212
---------------------------------------------------------------
Operating earnings
(EBITDA) before: 48,588 15,584
---------------------------------------------------------------
Depreciation and
amortization of fixed assets 6,918 3,160
Amortization of costs related
to outsourcing contracts 4,078 1,871
Amortization of software and
development costs 469 319
Amortization of goodwill 3,760 1,419
---------------------------------------------------------------
15,225 6,769
---------------------------------------------------------------
Earnings before the following items 33,363 8,815
---------------------------------------------------------------
Interest
Long-term debt (179) (174)
Other (66)
Revenue 1,502
---------------------------------------------------------------
1,323 (240)
---------------------------------------------------------------
Earnings before income taxes, entity
subject to significant influence
and non-controlling interest 34,686 8,575
Income taxes 16,468 3,786
---------------------------------------------------------------
Earnings before equity subject
to significant influence and
non-controlling interest 18,218 4,789
Entity subject to significant
influence 19
Non-controlling interest 161
---------------------------------------------------------------
Net earnings 18,237 4,950
---------------------------------------------------------------
---------------------------------------------------------------
Weighted average number of outstanding
Class A subordinate shares, Class B
shares and for 1997 first preferred
shares, Series 1 133,435,674 106,949,186
---------------------------------------------------------------
---------------------------------------------------------------
CGI GROUP INC.
Consolidated statements of retained earnings
for the three-month periods ended December 31
(in thousands of dollars) (unaudited)
---------------------------------------------------------------
1998 1997
---------------------------------------------------------------
$ $
Balance at beginning 55,264 20,436
Net earnings 18,237 4,950
---------------------------------------------------------------
Balance at end 73,501 25,386
CGI GROUP INC.
Consolidated balance sheets
as at December 31
(in thousands of dollars) (unaudited)
---------------------------------------------------------------
1998 1997
---------------------------------------------------------------
$ $
Assets
Current assets
Cash and short-term investments 117,657 9,916
Accounts receivable 196,234 93,795
Income taxes 200
Work in progress 6,511 13,987
Prepaid expenses 9,392 5,887
---------------------------------------------------------------
329,794 123,785
Investment in an entity subject
to significant influence 640
Fixed assets 54,463 30,672
Costs related to outsourcing contracts 61,566 24,927
Software and development costs 1,405 3,660
Deferred income taxes 13,588 10,025
Goodwill 284,305 128,220
---------------------------------------------------------------
745,761 321,289
---------------------------------------------------------------
---------------------------------------------------------------
Liabilities
Current liabilities
Accounts payable and
accrued liabilities 206,901 66,896
Income taxes 14,852
Deferred revenues 17,558
Deferred income taxes 1,031 5,215
Current portion of long-term debt 5,979 3,053
---------------------------------------------------------------
246,321 75,164
Long-term debt 6,956 4,786
Non-controlling interest 339
---------------------------------------------------------------
253,277 80,289
---------------------------------------------------------------
Shareholders' equity
Capital stock 418,772 215,403
Contributed surplus 211 211
Retained earnings 73,501 25,386
---------------------------------------------------------------
492,484 241,000
---------------------------------------------------------------
745,761 321,289
---------------------------------------------------------------
---------------------------------------------------------------
CGI GROUP INC.
Consolidated statements of changes in financial position
for the three-month periods ended December 31
(in thousands of dollars) (unaudited)
---------------------------------------------------------------
1998 1997
---------------------------------------------------------------
$ $
Operating activities
Net earnings 18,237 4,950
Items not affecting cash
Depreciation and amortization
of fixed assets 6,918 3,160
Amortization of costs related
to outsourcing contracts 4,078 1,871
Amortization of software
and development costs 469 319
Amortization of goodwill 3,760 1,419
Deferred income taxes (7,938) 3,014
Entity subject to
significant influence (19)
Non-controlling interest (161)
---------------------------------------------------------------
25,505 14,572
Changes in non-cash operating working
capital items (16,955) 3,373
---------------------------------------------------------------
8,550 17,945
---------------------------------------------------------------
Financing activities
Issue of shares 163,779
Increase in long-term debt 4,107
Repayment of long-term debt (2,463) (21,202)
---------------------------------------------------------------
1,644 142,577
---------------------------------------------------------------
Investing activities
Business acquisitions (126,996)
Acquisitions of fixed assets (7,150) (5,591)
Costs related to outsourcing contracts (6,805) (3,197)
---------------------------------------------------------------
(13,955) (135,784)
---------------------------------------------------------------
Net cash (outflow) inflow (3,761) 24,738
Cash position at beginning 121,418 (14,822)
---------------------------------------------------------------
Cash position at end 117,657 9,916
---------------------------------------------------------------
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