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% 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% to $48.6 million, from $15.6 million a year ago. Net earnings increased 268.4% 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% to 133.4 million primarily reflecting shares issued for acquisitions. Cash flow from operations increased 74.7% 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%, from 5.0% in the fourth quarter of fiscal 1998 and 4.3% 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% of revenue, compared with 62% 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; and
- 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
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.
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For further information, contact:
André Imbeau
Executive Vice-President and CFO
(514)841-3200
Paule Doré
Executive Vice-President, Corporate Affairs
(514) 841-3200
