Q3 results: Revenue +117.0%, EBITDA +140.8%, earnings +184.0%
CGI POSTS CONTINUING STRONG GROWTH IN THIRD QUARTER AND FIRST NINE MONTHS OF FISCAL 1999
MONTREAL, QUEBEC--
Revenue increased 117.0%, EBITDA 140.8% and earnings 184.0%
in third quarter
CGI continued to post strong revenue and earnings growth in the
third quarter ended June 30, 1999. All dollar amounts are in
Canadian dollars.
For the three months ended June 30, 1999, CGI reported a 117.0%
increase in revenue to $342.3 million, compared with $157.8
million in the same quarter one year prior. Earnings before
interest, taxes, depreciation and amortization (EBITDA) increased
140.8% to $56.5 million, from $23.4 million in 1998. Net earnings
increased 184.0% to $21.7 million or $0.16 per share, from $7.7
million or $0.07 per share the previous year. The weighted
average number of shares outstanding increased 16.8% to 134.2
million, compared with 114.9 million in the same period of 1998.
For the nine-month period ended June 30, 1999, CGI reported
revenue of $1,015.5 million, up 143.8% over revenue of $416.4
million posted in the same period of 1998. EBITDA totalled $157.7
million, compared with $58.5 million in 1998, an increase of
169.5%. Net earnings increased 227.5% year over year to $61.2
million, up from $18.7 million in 1998. On a per share basis,
reflecting a 19.6% increase in the weighted average number of
shares outstanding to 133.9 million, net earnings were $0.46,
compared with $0.17 one year ago. Cash flow from operations
increased 132.4% to $106.4 million ($0.79 per share) in the first
nine months of 1999, compared with $45.8 million ($0.41 per
share) in 1998.
In the third quarter, the net profit margin increased to 6.4%,
compared with 4.9% in the third quarter of 1998, as the Company
continues to benefit from growing economies of scale and
efficiencies realized through the application of ISO 9001
certified management frameworks.
"In the third quarter, we continued to achieve strong growth
while increasing our net margin," said Serge Godin, Chairman and
CEO of CGI. "We will concentrate on further consolidating our
position as a leading IT services provider in North America and
internationally and are confident that we will continue
delivering strong long term growth. Our recent acquisition of DRT
Systems International, which closed on July 1, 1999, represents
a first step in this growth strategy."
In the third quarter and after, CGI finalized several
transactions, including:
May 19, 1999 - Closing of a ten-year, renewable agreement with
BCE Mobile Communications Inc. (Bell Mobility), under which CGI
will provide Bell Mobility with the wireless carrier's
information technology services. The full IT outsourcing services
agreement, effective May 1, 1999, is expected to generate $100
million for CGI in the first 12 months, with revenue totalling
approximately $750 million over the ten-year term.
July 1, 1999 - Acquisition of DRT Systems International from
Deloitte Consulting, effective July 1, 1999. DRT Systems
International has annual revenue approaching US$100 million and
provides IT consulting services to clients in the U.S. and
Canada.
July 15, 1999 - Signing of a memorandum of understanding with
Brazilian-based telephone services provider Mirror S.A.,
according to which CGI will provide Mirror S.A. with IS/IT
systems integration services worth $57 million over a 12-month
period.
Building U.S. base
CGI is committed to becoming a major IT services player in the
U.S. market, where it plans to offer full IT services to its six
key industry sectors. Last fall, as part of its strategy to
increase its presence in the U.S. market, CGI listed its shares
on the New York Stock Exchange. The recent acquisition of DRT
Systems International provides CGI with a network of 12
additional offices, ten of which are in the U.S., and doubles its
U.S. revenue base to 18% of its total revenue on a run-rate
basis.
Evolution of revenue run-rate, backlog and cash position
CGI now has a revenue run-rate $1.5 billion and an order backlog
of more than $7.5 billion. The Company also has proposals
outstanding on potential large contracts with an estimated value
of $4 billion. CGI has a cash position net of bank indebtness of
$63.4 million.
Board appointment
The Chairman of the Board and CEO of CGI, Serge Godin, is pleased
to announce the appointment of Mr. Thomas E. Kierans, President
& CEO of the C.D. Howe Institute, and Mr. Yvan Allaire, Executive
Vice President, Bombardier Inc. and Chairman of the Board of
Bombardier Capital, to the Board of CGI. Their appointment,
effective June 26, 1999, is in replacement of Mr. Keith Gray and
Mr. John A. MacDonald, who have stepped down from the Board.
CGI is the largest independent information technology consulting
firm in Canada and the fifth largest in North America, based on
its revenue run rate. CGI has 10,000 professionals and provides
end-to-end IT services and business solutions to 2,000 clients in
Canada, the United States and some 23 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 100 indexes. Web site: www.cgi.ca.
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.
- 30 -
For information:
CGI
Andre Imbeau
Executive Vice-President and CFO
(514) 841-3200
Paule Dore
Executive Vice-President, Corporate Affairs
(514) 841-3200
CGI GROUP INC.
Consolidated statements of earnings
(in thousands of dollars, except earnings per share)
(unaudited)
Three months Nine months
ended June 30 ended June 30
1999 1998 1999 1998
$ $ $ $
--------------------------------------------------------------
Revenue 342,315 157,757 1,015,453 416,434
--------------------------------------------------------------
Operating expenses
Direct costs, selling
and administration
expenses 283,500 132,688 850,997 353,711
Research and
development 2,350 1,624 6,718 4,200
---------------------------------------------------------------
285,850 134,312 857,715 357,911
---------------------------------------------------------------
Operating earnings
(EBITDA) before: 56,465 23,445 157,738 58,523
---------------------------------------------------------------
Depreciation and
amortization of
fixed assets 6,904 3,556 20,563 9,846
Amortization of costs
related to outsourcing
contracts 6,433 2,974 14,504 8,286
Amortization of software
and development costs 469 649 1,406 1,287
Amortization of
goodwill 3,883 1,672 11,526 4,763
---------------------------------------------------------------
17,689 8,851 47,999 24,182
---------------------------------------------------------------
Earnings before the
following items 38,776 14,594 109,739 34,341
---------------------------------------------------------------
Interest
Long-term debt (149) (202) (619) (566)
Other - - - (107)
Revenue 1,089 - 4,568 -
---------------------------------------------------------------
940 (202) 3,949 (673)
---------------------------------------------------------------
Earnings before income
taxes, entity subject
to significant influence
and non-controlling
interest 39,716 14,392 113,688 33,668
Income taxes 17,990 6,735 52,509 15,221
---------------------------------------------------------------
Earnings before equity
subject to significant
influence and non-
controlling interest 21,726 7,657 61,179 18,447
Entity subject to
significant influence 20 - 57 -
Non-controlling interest - - - 253
---------------------------------------------------------------
Net earnings 21,746 7,657 61,236 18,700
===============================================================
Weighted average number
of outstanding Class A
subordinate shares,
Class B shares and for
1998, first
preferred shares,
Series 1 134,195,984 114,884,330 133,886,557 111,979,285
===============================================================
Earnings per share 0.16 0.07 0.46 0.17
===============================================================
Fully diluted earnings
per share 0.16 0.07 0.46 0.17
===============================================================
CGI GROUP INC.
Consolidated statements of retained earnings
(in thousands of dollars) (unaudited)
---------------------------------------------------------------
Three months Nine months
ended June 30 ended June 30
---------------------------------------------------------------
1999 1998 1999 1998
$ $ $ $
Balance at beginning 94,754 31,479 55,264 20,436
Net earnings 21,746 7,657 61,236 18,700
---------------------------------------------------------------
Balance at end 116,500 39,136 116,500 39,136
===============================================================
CGI GROUP INC.
Consolidated balance sheets
as at June 30
(in thousands of dollars) (unaudited)
--------------------------------------------------------------
1999 1998
--------------------------------------------------------------
$ $
Assets
Current assets
Cash and short-term investments 109,397 20,255
Accounts receivable 192,854 125,159
Work in progress 28,309 10,435
Prepaid expenses 9,490 6,210
--------------------------------------------------------------
340,050 162,059
Investment in an entity subject
to significant influence 678 579
Fixed assets 54,033 33,870
Costs related to outsourcing contracts 99,384 33,026
Software and development costs 468 2,692
Deferred income taxes 15,043 11,734
Goodwill 295,080 124,876
--------------------------------------------------------------
804,736 368,836
==============================================================
Liabilities
Current liabilities
Bank indebtedness 45,990 -
Accounts payable and accrued liabilities 175,903 81,568
Income taxes 17,229 9,664
Deferred revenues 7,035 -
Deferred income taxes 7,683 7,190
Current portion of long-term debt 5,486 4,908
--------------------------------------------------------------
259,326 103,330
Long-term debt 5,340 6,062
--------------------------------------------------------------
264,666 109,392
--------------------------------------------------------------
Shareholders' equity
Capital stock 423,359 220,097
Contributed surplus 211 211
Retained earnings 116,500 39,136
--------------------------------------------------------------
540,070 259,444
--------------------------------------------------------------
804,736 368,836
==============================================================
CGI GROUP INC.
Consolidated statement of cash flow
for the nine-month periods ended June 30
(in thousands of dollars) (unaudited)
--------------------------------------------------------------
1999 1998
--------------------------------------------------------------
$ $
Cash flow from operating activities
Net earnings 61,236 18,700
Adjustment for:
Depreciation and amortization
of fixed assets 20,563 9,846
Amortization of costs related
to outsourcing contracts 14,504 8,286
Amortization of software
and development costs 1,406 1,287
Amortization of goodwill 11,526 4,763
Deferred income taxes (2,741) 3,164
Entity subject to significant influence (57) -
Non-controlling interest - (253)
--------------------------------------------------------------
106,437 45,793
Changes in non-cash operating working
capital items (73,543) 1,082
--------------------------------------------------------------
32,894 46,875
--------------------------------------------------------------
Cash flow from financing activities
Bank indebtedness 45,990 -
Issue of shares 4,587 48,473
Decrease of long-term debt (465) (18,071)
--------------------------------------------------------------
50,112 30,402
--------------------------------------------------------------
Cash flow from investing activities
Business acquisitions (23,182) (9,043)
Investment in an entity subject
to significant influence - (577)
Acquisitions of fixed assets (17,849) (15,140)
Costs related to outsourcing contracts (53,996) (17,440)
--------------------------------------------------------------
(95,027) (42,200)
--------------------------------------------------------------
Cash and cash equivalents (outflow) inflow (12,021) 35,077
Cash and cash equivalents
position at beginning 121,418 (14,822)
--------------------------------------------------------------
Cash and cash equivalents position at end 109,397 20,255
==============================================================
CGI GROUP INC.
Note to the consolidated financial statements
as of and for the periods ended June 30
(in thousands of dollars) (unaudited)
Segmented information.
The Company provides information technology services. The
following presents information on the Company's operations in
different geographic areas.
---------------------------------------------------------------
Three months Nine months
ended June 30 ended June 30
1999 1998 1999 1998
---------------------------------------------------------------
$ $ $ $
REVENUE
Canada 289,914 128,201 859,987 338,415
U.S. 24,466 25,194 78,097 66,504
Other 27,935 4,362 77,369 11,515
---------------------------------------------------------------
Total 342,315 157,757 1,015,453 416,434
---------------------------------------------------------------
OPERATING EARNINGS (EBITDA)
Canada 50,930 21,094 141,552 52,653
U.S. 4,104 1,328 12,637 3,316
Other 1,431 1,023 3,549 2,554
---------------------------------------------------------------
Total 56,465 23,445 157,738 58,523
---------------------------------------------------------------
IDENTIFIABLE ASSETS
Canada 607,406 260,849 607,406 260,849
U.S. 83,259 97,640 83,259 97,640
Other 114,071 10,347 114,071 10,347
---------------------------------------------------------------
Total 804,736 368,836 804,736 368,836
---------------------------------------------------------------
=============================================================== |
