View consolidated financial statements of CGI Group Inc. for the twelve months ended September, 30, 2001
CGI Group Inc. (NYSE: GIB; TSE: GIB.A), a leading provider of end-to-end information technology services and business solutions, today reported unaudited results for the fourth quarter and year ended September 30, 2001. All figures are in Canadian dollars unless otherwise indicated.
Fourth Quarter Highlights
- Revenue of $469.0 million represented 46.5% growth over the comparable period one year ago and 16.1% quarterly sequential growth. Organic growth was 13.8% year-over-year
- Cash net earnings per share (earnings before amortization of goodwill) were $0.08, 166% higher than the $0.03 posted for the same period a year ago
- Operating cash flow was up 43.5% to $75.6 million
- Announced several major or strategic outsourcing, systems integration and consulting contracts, as well as contract renewals, totalling more than $900 million for periods of up to 10 years
- Backlog of signed contracts increased to $9.3 billion, or 5.9 times FY2001 annual revenue, from $8.5 billion as at June 30, 2001 and $7.0 billion at the same time last year. Contracts in the backlog have a weighted average remaining contract term of 7.3 years
"This was a great quarter for CGI in many ways," said Serge Godin, chairman and CEO. In addition to double-digit year over year and sequential revenue growth, we achieved a number of other business and financial objectives. The growth we realized in IT outsourcing, represented by some key contract and partnership wins in the quarter, and a backlog of $9.3 billion, further increase our revenue visibility. Moreover, our sales pipeline has never been stronger, filled with numerous opportunities in Canada and, more importantly, in the US."
Fourth Quarter Results
Revenue for the fourth quarter ended September 30, 2001 increased 47% to $469.0 million, from $320.1 million in the same quarter last year, and was up 16.1% sequentially over third quarter revenue of $404.1 million. The significant improvement in year-over-year revenue growth was due primarily to business acquisitions as well as continuing strong demand for outsourcing services, across all geographic areas, but especially in Canada.
Based on CGI's current revenue run-rate, revenue from long-term outsourcing contracts represents 69% of the Company's total revenue, including 10% from business process services outsourcing; while project oriented consulting and systems integration work represents 31%. Geographically, contribution to revenue from Canada was higher in the fourth quarter, representing 73% of revenue, driven in part by several recent large outsourcing contract wins. Revenue from the US represented 19%; and all other regions, 8%. CGI continued to solidify its leading position as an IT services provider in the financial services sector, which represented 41% of revenue in the fourth quarter, while telecom represented 29%; manufacturing, retail and distribution, 17%; government, 10%; utilities and services, 2%; and healthcare, 1%.
EBITDA for the fourth quarter increased 192.7% to $72.6 million, compared with $24.8 million in the same quarter a year ago, and was up 18.8% sequentially, from $61.1 million reported in the third quarter of fiscal 2001. The EBITDA margin improved to 15.5% at the end of the fourth quarter, compared with 15.1% at the end of the third quarter of fiscal 2001 and 12.0% at the end of fiscal 2000.
Cash net earnings in the quarter increased 284% to $27.3 million, compared with $7.1 million in the same quarter a year ago, and were 12.2% higher sequentially compared with $24.3 million reported in the third quarter of fiscal 2001. Cash net earnings per share of $0.08 for the quarter were up 167% over $0.03 reported for the fourth quarter of fiscal 2000. Cash net earnings per share on a diluted basis were unchanged from the third quarter of fiscal 2001, after accounting for a 18.5% increase in weighted shares outstanding in the fourth quarter.
Net earnings in the fourth quarter of fiscal 2001 were $19.8 million, up 719% over the same period in the prior year, and up 14.3% sequentially over the $17.3 million reported in this year's third fiscal quarter. The net margin was 4.2%, compared with 4.3% in the third quarter and 0.8% in the fourth quarter of fiscal 2000.
CGI maintains a strong balance sheet and cash position, which together with bank lines are sufficient to support the Company's growth strategy and represent a competitive strength when proposing on outsourcing contracts. At September 30, 2001, the total credit facility available amounted to approximately $225 million. As of September 30, 2001, CGI had cash and cash equivalents of $46.0 million, compared with $49.3 million as of September 30, 2000.
Operating cash flow in the fourth quarter amounted to $75.6 million, compared with $20.6 million in the fourth quarter a year ago and $52.7 million in the third quarter of fiscal 2001. The improvement in operating cash flow reflects mostly the improvement in net earnings and future income taxes.
The integration of IMRglobal is proceeding as expected. CGI's increased presence, especially in the US, has strengthened its capability to propose on large outsourcing contracts and gain market share. The recently integrated marketing and business development teams have ramped up sales development efforts, capitalizing on long-standing client relationships and the expanded service and delivery capabilities.
Fiscal Year 2001 Audited Results
Revenue for the year ended September 30, 2001 was $1.58 billion, up 10.1% from revenue of $1.43 billion for the 2000 fiscal year. Revenue growth accelerated during the year, driven primarily by business acquisitions, as well as several large outsourcing contract wins.
Cash net earnings per share were $0.30, up 11.1% over fiscal year 2000 results of $0.27.
At September 30, 2001 CGI employed approximately 13,000 people in more than 20 countries around the world. Through ten acquisitions, investments in four joint venture companies and several large new outsourcing contracts, CGI successfully integrated more than 5,000 members in fiscal year 2001.
Regarding CGI's annual results Mr. Godin commented, "We are pleased with the increasing momentum of our business during fiscal year 2001. Over the last year, CGI has closed over $4 billion in new contract wins and renewals. Year-over-year revenue growth in our third and fourth quarters of 22.2% and 46.5% respectively signals our return to strong growth trends. Organic growth, year-over-year, of 3.6% in the third quarter and 13.8% in the fourth quarter also demonstrates our emphasis on internal growth initiatives."
Backlog and Pipeline
The current backlog of signed contracts not yet delivered is $9.3 billion, or 5.9 times FY2001 annual revenue, with a weighted average time remaining of 7.3 years. CGI conservatively estimates its pipeline of proposals for large outsourcing contracts being reviewed by potential clients to be at $5 billion, up from $4 billion as stated during all of fiscal 2001. A large portion of this increase is driven by increased activity in Canada and in the US. Importantly, none of the deals in the sales pipeline have been cancelled in the last six months, despite more challenging economic conditions.
Initiatives and Outlook
Mr. Godin added: "Our growth initiatives for FY2002 will capitalize on our core fundamentals and the excellent results we achieved in FY2001. Our pipeline of outsourcing contracts is more robust than ever, as organizations focus on ways to reduce their IT costs while maintaining their competitive position. Key to our growth will be an enhanced business development program to drive accelerated organic growth and a continued focus on identifying acquisitions that bring value to CGI."
Based on the information known today about current market conditions and demand, the company provides the following guidance for its fiscal year ending September 30, 2002:
- Base revenue for the year is expected to be between $2.1 billion and $2.2 billion, representing between 33% and 39% growth over fiscal 2001 results. These numbers do not include any contribution from potential large acquisitions or large outsourcing contract wins valued at more than $50 million per year.
- Cash net earnings per share, which going forward will be referred to as net earnings, should be in the range of $0.37 and $0.40, representing between 23% and 33% growth year-over-year.
In the first quarter ended December 31, 2001, revenue is expected to total between $505 and $520 million, representing between 51% and 56% year over year growth. Cash earnings per share are expected to be between $0.07 and $0.08 on a diluted basis.
Quarterly Conference Call
A conference call for the investment community will be held today, November 6, 2001 at 11:00 am (Eastern Daylight Time). Participants may access the call by dialing 800-550-7368. A live audio webcast of the conference call, with accompanying slides, will be available at CGI's website, www.cgi.ca. For those unable to participate, a replay will be available until November 22 by dialing (800) 558-5253, access number 19779536.
Forward-Looking Statements
All statements in this press release and MD&A that do not directly and exclusively relate to historical facts constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements represent CGI Group Inc.'s intentions, plans, expectations, and beliefs, and are subject to risks, uncertainties, and other factors, of which many are beyond the control of the Company. These factors could cause actual results to differ materially from such forward-looking statements.
These factors include and are not restricted to the timing and size of contracts, acquisitions and other corporate developments; the ability to attract and retain qualified employees; market competition in the rapidly-evolving information technology industry; general economic and business conditions, foreign exchange and other risks identified in the Management's Discussion and Analysis (MD&A) in CGI Group Inc.'s Annual Report or Form 40F filed with the SEC, the Company's Annual Information Form filed with the Canadian securities commissions, on the Registration Statement on Form F-4 filed with the SEC in connection with the acquisition of IMRglobal and with the Forms 10-K and 10-Q of IMRglobal filed with the SEC for the periods ended December 31, 2000 and March 31, 2001 respectively. All of the risk factors included in these filed documents are included here by reference. CGI disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
-30-
For more information:
CGI Investor Relations
Julie Creed - USA
Vice-president, investor relations
(312) 201-8094, # 210
Ronald White - Canada
Director, investor relations
(514) 841-3230
CGI Media Relations
Eileen Murphy
Director, media relations
(514) 841-3430
