CGI (ME, TSE: GIB A) today announced continuing strong growth for the third quarter and nine months ended June 30, 1998 compared with the same periods of fiscal 1997.
In the third quarter of fiscal 1998, revenue increased by 123% to $157.8 million, net earnings by 218% to $7.7 million and cash flow by 156% to $16.7 million, compared with the same period a year ago. The net profit margin increased to 4.9%, from 3.4% a year ago. On a per share basis, reflecting a 47% increase in shares outstanding on a weighted average basis to 114.9 million, net earnings per share were 7 cents, compared with 3 cents the previous year. Cash flow was 14.5 cents per share vs 8 cents in the same period a year ago.
The increase in revenue, earnings and cash flow reflects a balance of external and internal growth. Since March 1997, CGI has completed the acquisition of two major information technology (IT) services companies and has been awarded a number of major systems integration and outsourcing contracts. During the period, CGI further strengthened its position in its six target markets, in particular in financial services and retail and distribution.
For the nine months ended June 30, 1998, revenue increased by 161% to $416.4 million, net earnings by 281% to $18.7 million, and cash flow by 259% to $45.8 million. The net profit margin for the first nine months of fiscal 1998 was 4.5% compared with 3.1% in the same period of fiscal 1997. On a per share basis, reflecting a 48% increase in shares outstanding on a weighted average basis to 112.0 million, net earnings were 17 cents compared with 6 cents a year ago, and cash flow was 41 cents per share compared with 17 cents a year ago.
Shareholders' equity increased 286% to $259.4 million from a year ago, reflecting higher retained earnings, and shares issued as part payment for acquisitions. The company has practically no debt and $20.3 million cash.
"We continue to strengthen our position in our target markets and to further increase profitability," said Serge Godin, Chairman and CEO. "Effective July 1, 1998, we doubled our revenue run rate to $1.2 billion and tripled our order backlog to $6 billion with the completion of the multi-faceted transaction with BCE Inc. and Bell Canada. We are currently focused on successfully integrating the acquired operations while continuing to grow our business organically and through acquisitions."
Third Quarter Highlights
Bell Sygma Transaction Completed and Integration Underway
On June 29, 1998, CGI shareholders approved changes enabling CGI's acquisition of Bell Sygma Telecom Solutions and Bell Sygma International operations from Bell Canada in exchange for 17.2 million Series 6 preferred shares of CGI at $11.49 per share, converted one-for-one into Class A subordinate shares.
Concluded as of July 1, 1998, the transaction includes a 10-year outsourcing contract valued at more than $4.5 billion for CGI to develop and maintain Bell Canada's internal information systems. This is the largest outsourcing contract ever in Canada, and one of the largest in North America. CGI also acquired Bell Sygma International, with $80 million annual revenue. Additionally, CGI's partnership with Bell Canada to bid jointly on contracts was extended 10 years to 2008.
The integration of Bell Sygma's operations is well underway and is proceeding smoothly. Over the course of numerous acquisitions in recent years, the company has developed business processes which represent best practices in integrating the members and facilities that come with outsourcing contracts and corporate acquisitions. CGI has experienced a 100% renewal rate of contracts of acquired companies and a high retention rate of new members.
Backlog Evolution
The order backlog has increased from $1.3 billion in October 1997 to $1.5 billion at June 30, 1998 to more than $6 billion currently.
New Contracts
In June 1998, CGI entered into a five year partnership with ING Canada valued at $15 to $20 million, to provide consulting services to support their competitive position in the Canadian insurance market.
In July 1998, CGI announced the renewal of its contract with Industrial-Alliance Group valued at $20 million over five years to operate and manage their IT environment. CGI announced a $20 million contract with the National Research Council of Canada (NRC) to implement and support the day to day operations of NRC's enterprise resource planning system. CGI also announced a five-year agreement to provide electronic commerce and electronic funds transfer services to the Laurentian Bank of Canada, estimated at $20 million.
Corporate profile
CGI is the largest independent information technology consulting firm in Canada and the sixth largest in North America. It 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 has more than 7,500 professionals, an annualized revenue-run rate of more than $1.2 billion and an order backlog totalling approximately $6 billion. CGI's shares (GIB.A) are included in The Toronto Stock Exchange's TSE 300 Composite and TSE 200 indexes.
For information:
André Imbeau
Executive Vice-President
and CFO
(514) 841-3200
Paule Doré
Executive Vice-President
Corporate Affairs
(514) 841-3200
