- Net earnings for first nine months total $4.9 million or $0.52 per share
- Major strategic developments pave the way for sustained growth over the next quarters
For the three-month period ended June 30, 1997, net earnings of CGI (TSE, ME symbol GIB.A) grew by 178% to $2,407,000, compared with $867,000 in the corresponding quarter of 1996. Earnings per share increased 150% to $0.25 on a weighted average of 9,764,862 shares issued and outstanding, compared with $0.10 on an average of 8,875,348 shares last year. The company's revenues increased 119% from $32.4 million to $70.8 million, primarily as a result of strong growth in the outsourcing sector. The marked increase in profitability stems from the growth in revenue and from the increase in the operating margin, which went from 8.2% to 11.6%. Operating income posted a three-fold increase to $8.2 million from $2.7 million the previous year.
Revenues for the first nine months totalled $159.5 million, a 91% increase over the corresponding period of the previous year. CGI posted net earnings of $4,902,000, or $0.52 per share, compared with $2,146,000 or $0.26 per share in 1996. Operating income grew 155% from $6.5 million in 1996 (profit margin of 7.7%) to $16.5 million in 1997 (10.3% margin). Cash flow reached $12.8 million or $1.35 per share, for a growth of 156%.
Serge Godin, Chairman of the Board and CEO, said that in the past year CGI has been one of North America's fastest-growing information technology companies. "For the 12-month period ended June 30, 1997, we recorded net earnings of $5.5 million, or $0.58 per share on revenue of nearly $200 million. With an order backlog currently exceeding one billion dollars, we are well positioned to sustain our strong growth rate over the next quarters, particularly since recent events, such as the acquisition of CDSL and the Westburne and Spar contracts, will begin contributing fully to our results."
Third quarter major events
On April 18, 1997, CGI completed the acquisition of all shares outstanding of CDSL Holdings Limited for a total consideration of $37.3 million. This transaction was financed through the issue of 200,000 Class A subordinate shares and 745,000 first preferred shares, Series 3, which were subsequently converted into Class A subordinate shares, for a total consideration of $20.5 million and the balance through long-term debt. As of June 30, 1997, the company had 5,316,335 Class A subordinate shares issued and outstanding, as well as 2,788,714 Class B shares and 2,300,000 first preferred shares. CGI benefits from a solid balance sheet, with shareholders' equity totalling $67.2 million and long-term debt of $24.8 million.
The third quarter was also highlighted by the signing of major partnerships, including a long-term strategic agreement with Spar Aerospace. As part of this $25.3-million contract, CGI will manage the delivery of all IT services previously handled internally by Spar. This agreement will begin contributing fully to CGI's results as of the fourth quarter of the current fiscal year. This contract, which follows the signing of a strategic outsourcing partnership with Westburne in May 1997, further enhances CGI's position as a world-class leader in outsourcing, offering a full range of information technology services and fully capable of managing the largest projects.
During the third quarter, CGI secured several additional strategic contracts, including one worth $10 million over a five-year period for the management of INTERAC Association's Central Network Management Facility. The company also continued to successfully commercialize its business solutions, notably its year 2000 system conversion solution and its AMICUS library management software, which was selected by The British Library as part of a $3 million contract. Finally, on August 5, 1997, early in the fourth quarter, CGI signed a strategic partnership agreement with Bombardier Capital according to which both companies will cooperate in offering value-added services to their clients. CGI will make its information technology resources available and Bombardier Capital, its financing expertise.
Share split
At a special meeting held July 29, 1997, CGI's shareholders approved the subdivision of the company's shares on a 2-for-1 basis, effective August 12, 1997.
Profile
CGI is the largest Canadian-owned independent information technology consulting firm with 2,900 professionals and a revenue-run rate of $300 million. The company's order backlog is currently valued at over $1 billion. It provides end-to-end IT services and business solutions to more than 1,800 clients throughout Canada and elsewhere in the world.
For further information, contact:
André Imbeau, Executive Vice-President and CFO
Paule Doré, Executive Vice-President, Corporate Affairs
CGI
Telephone: (514) 841-3200
