CGI posted strong revenue and earnings growth in the second quarter ended March 31, 1999 and maintained its momentum in the first half of fiscal 1999. All dollar amounts are in Canadian dollars.
For the three months ended March 31,1999, CGI reported a 137.1% increase in revenue to $338.8 million, compared with $142.9 million in the same quarter of fiscal 1998. Earnings before interest, taxes, depreciation and amortization (EBITDA) increased 170.3% to $52.7 million, from $19.5 million a year ago. Net earnings increased 248.8% to $21.3 million or $0.16 per share, from $6.1 million ($0.05 per share) the previous year. The weighted average number of shares outstanding increased 17% to 134.0 million, primarily reflecting shares issued for acquisitions. Cash flow from operations increased 172.6% to $39.6 million, up from $14.5 million for the same period in 1998.
For the six-month period ended March 31, 1999, CGI posted revenue of $673.1 million, up 160.2% from revenue of $258.7 million achieved the previous year. EBITDA increased 188.7% to $101.3 million, from $35.1 million for the first half of 1998. Net earnings for the first half of fiscal 1999 totalled $39.5 million, an increase of 257.6% over net earnings of $11.0 million for the same period in 1998. On a per share basis, reflecting a 21.0% increase in the average weigthed number of shares outstanding to 133,731,843, net earnings were $0.30 compared with $0.10 one year ago. Cash flow from operations increased 123.7% to $65.1 million ($0.49 per share) from $29.1 million ($0.26 per share) in the first half of fiscal 1998.
The net profit margin increased to 6.3%, from 4.3% in the second quarter of fiscal 1998 and 5.5% in the first quarter of fiscal 1999. The increase reflects the Company's growing economies of scale and additional efficiencies realized from the application of ISO 9001 certified management frameworks.
"In the second quarter, CGI continued to post strong growth, both internal and external, and we expect to remain a long-term high-growth company," said Serge Godin, Chairman and CEO of CGI. "In recent months, CGI signed letters of intent for several large systems integration and outsourcing contracts, several of which will begin contributing to our revenue base in the third quarter. As a result, in fiscal 1999 we remain confident of doubling our revenue year over year."
"Over the coming quarters, we plan to leverage our critical mass to further develop our competitive position as a leading end-to-end IT services provider in North America and internationally," said Mr. Godin.
Second quarter highlights
During the quarter ended March 31, 1999, CGI announced the signing of several significant agreements, including:
- January 5, 1999 - IT outsourcing agreement with Télébec, a wholly owned subsidiary of BCE which offers integrated telecommunications services in outlying regions of Quebec. CGI forecasts that the ten-year IT outsourcing contract will generate annual revenues of $8 million, as well as an additional $3.5 million per year for IT development projects. CGI recently announced the closing of this transaction.
- January 26, 1999 - Closing of a transaction based on which CGI acquired the assets and all contracts of Technologie Desjardins Laurentienne (TDL), for a cash consideration of $23.2 million. When the transaction was announced, TDL's annual revenue totalled $40 million. The contracts initially are worth $155 million over five years.
- March 1, 1999 - Agreement under which CGI will provide Bell Mobility with its information technology services. The ten-year agreement is expected to generate revenue in the order of $100 million for CGI in the first 12 months. Annual revenue in subsequent years will be dependent on Bell Mobility's growth and specific future requirements. The transaction is expected to become effective May 1, 1999.
- March 5, 1999 - Portugal Telecom Group selected CGI and two other partners to negotiate a long-term, full IS/IT service agreement. As part of the agreement, possibly extending over 10 years, CGI, with IBM Global Services and Portuguese-based IS company Case, will provide Portugal Telecom Group with full IS/IT services and work with the client to address the needs of the Portugal market at large. The agreement, for which a dollar value was not disclosed, is expected to be signed by June 1, 1999.
Building U.S. base
CGI is committed to becoming a major IT services player in the U.S. market, where it targets the financial services and telecommunications sectors. Last fall, as part of its strategy to increase its presence in U.S. markets, CGI listed its shares on the New York Stock Exchange. After the end of the second quarter, CGI announced it had signed a letter of intent with Deloitte Consulting, to acquire its DRT Systems International division. This acquisition, expected to become effective by June 1, 1999, will provide CGI with a network of 12 additional offices, ten of which are in the U.S., and will double the Company's U.S. revenue base to 18% of its total revenue.
Evolution of revenue run-rate, backlog and cash position
At March 31, 1999, CGI's order backlog was $7 billion. Once the preceding acquisitions and contracts have been completed, as at June 1, 1999, CGI's revenue run-rate will stand at $1.7 billion and its order backlog will total more than $8 billion. The Company also has proposals outstanding on potential large contracts with an estimated value of $4 billion. The balance sheet remains strong: after accounting for the $23.2 million cash acquisition of TDL, CGI has a cash position of $107.0 million and minimal debt.
Board appointment
The Chairman of the Board and CEO of CGI, Serge Godin, is pleased to announce that William D. Anderson, CFO of BCE Inc. and Bell Canada, has joined the Company's Board of directors, effective immediately. Mr Anderson will be replacing Louis A. Tanguay, President and COO of Bell Canada International, who has stepped down from CGI's 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 of $1.4 billion. The company's order backlog totals approximately $7 billion. CGI has 9,000 professionals and provides end-to-end IT services and business solutions to 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 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.
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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
