CGI : reports Q2 Fiscal 2020 results

Q2-F2020 performance highlights

• Revenue of $3.13 billion, up 2.0% year-over-year or 3.0% in constant currency;
• Adjusted EBIT of $483.2 million, up 6.4% year-over-year;
• Adjusted EBIT margin of 15.4%, up 60 basis points;
• Net earnings of $314.8 million, for a margin of 10.1% and diluted EPS of $1.18;
• Net earnings excluding specific items* of $338.4 million, for a margin of 10.8% and diluted EPS of $1.26;
• Cash provided by operating activities of $396.5 million, representing 12.7% of revenue;
• Bookings of $2.78 billionfor a book-to-bill of 88.9% and 97.0% over the last twelve months; and,
• Backlog of $22.99 billionor 1.9x annual revenue.

*Specific items in Q2-F2020 include: $23.3 millionin acquisition-related and integration costs and $0.2 millionin restructuring costs, both net of tax; Specific items in Q2-F2019 include: $6.2 millionin acquisition-related and integration costs, net of tax;

Note: All figures in Canadian dollars. Q2-F2020 MD&A, interim condensed consolidated financial statements and accompanying notes can be found at cgi.com/investors and have been filed with both SEDAR in Canadaand EDGAR in the U.S.

To access the financial statements - click here (PDF)
To access the MD&A - click here (PDF)

MONTRÉAL, April 29, 2020- CGI (TSX: GIB.A) (NYSE: GIB) reported Fiscal 2020 second quarter results this morning. The Company stated that in light of the challenges related to COVID-19, the highest priority continues to be the health and safety of its consultants and other professionals, more than 90% of whom transitioned to delivering services to clients remotely during the quarter.

'Our diversified mix of critical services, vertical markets and multiple geographies helped, and is helping, mitigate the impact of COVID-19 on client demand. The pandemic has created unprecedented business conditions and I am proud of our members' ongoing commitment to ensuring service continuity for CGI clients in a safe and flexible manner,' said President and Chief Executive Officer, George Schindler. 'Our Q2 performance is a reflection of our resilient business model and our operational excellence.'

For the second quarter of F2020, the Company reported revenue of $3.13 billion, representing an increase of $62.9 million, or 2.0% year-over-year. On a constant currency basis, revenue grew by 3.0% as foreign exchange fluctuations negatively impacted revenue by $27.7 million.

Adjusted EBIT was $483.2 million, an increase of $29.1 millionfrom Q2-F2019, of which $9.3 millionrelates to the adoption of IFRS 16. Adjusted EBIT margin of 15.4% improved by 60 basis points compared to the same period last year.

Net earnings were $314.8 millionin Q2-F2020, down $3.4 millioncompared with the year ago period, impacted by $23.5 millionin one-time restructuring costs and integration expenses. As a result, earnings per diluted share on a GAAP basis were $1.18.

When excluding the specific items, net earnings improved to $338.4 millionin Q2-F2020, representing a margin of 10.8%. On the same basis, EPS expanded by 7.7% to $1.26per diluted share, up from $1.17in the year ago period.

Bookings were $2.78 billionin Q2-F2020 and $11.89 billionover the last twelve months, representing 88.9% and 97.0% of revenue, respectively. At the end of March 2020, the Company's backlog stood at $22.99 billion.

Cash provided by operating activities was $396.5 million, or 12.7% of revenue, representing a decrease of $65.5 millioncompared with Q2-F2019, including a positive impact of $45.2 millionresulting from the adoption of IFRS 16. Over the last twelve months, $1.6 billionin cash has been generated by operating activities, or 13.4% of revenue.

In millions of Canadian dollars except earnings per share and where noted	Q2-F2020	Q2-F2019
Revenue	3,131.1	3,068.3
Growth	2.0%	4.0%
Growth at constant currency	3.0%	4.7%
Adjusted EBIT	483.2	454.1
Margin	15.4%	14.8%
Net earnings	314.8	318.3
Margin	10.1%	10.4%
Net earnings excluding specific items*	338.4	324.5
Margin	10.8%	10.6%
Diluted earnings per share	1.18	1.14
Diluted earnings per share, excluding specific items*	1.26	1.17
Weighted average number of outstanding shares (diluted)	267.8	278.1
Net finance costs	26.6	18.8
Net debt	3,792.3	1,597.3
Net debt to capitalization ratio	34.8%	17.4%
Cash provided by operating activities	396.5	462.0
Days sales outstanding (DSO)	51	49
Return on invested capital (ROIC)	13.9%	14.9%
Return on equity (ROE)	18.0%	17.7%
Bookings	2,783.2	3,255.3
Backlog	22,994.5	22,946.9

*Specific items in Q2-F2020 include: $23.3 millionin acquisition-related and integration costs and $0.2 millionin restructuring costs, both net of tax; Specific items in Q2-F2019 include: $6.2 millionin acquisition-related and integration costs, net of tax;

With an objective of successfully navigating the current crisis and to strengthen its competitive position, the Company entered into a two-year, unsecured term loan credit facility of US$750 millionduring the quarter. Subsequently, the facility was amended and restated to add US$500 millionof additional flexibility. As a result, the Company now has access to $2.5 billionin readily available liquidity.

At the end of March, net debt stood at $3.8 billion dollars, representing a net debt-to-capitalization ratio of 34.8% percent, up from 17.4% last year. When excluding the impact of adopting IFRS 16, the net debt to capitalization ratio would have been 29.2%.

Normal Course Issuer Bid / Share buy back program
The company invested a total of $1.03 billionin Q2-F2020 to purchase and cancel 10.4 million Class A subordinate voting shares. Under the current Normal Course Issuer Bid, an additional 10.0 million Class A subordinate voting shares can be purchased before February 5, 2021.

Q2-F2020 results conference call
Management will host a conference call this morning at 9:00 a.m. Eastern timeto discuss results. Participants may access the call by dialing 1-800-377-0758 or via cgi.com/investors. For those unable to participate on the live call, a podcast and copy of the slides will be archived for download at cgi.com/investors.

About CGI
Founded in 1976, CGI is among the largest independent IT and business consulting services firms in the world. With 78,000 consultants and other professionals across the globe, CGI delivers an end-to-end portfolio of capabilities, from strategic IT and business consulting to systems integration, managed IT and business process services and intellectual property solutions. CGI works with clients through a local relationship model complemented by a global delivery network that helps clients digitally transform their organizations and accelerate results. With Fiscal 2019 reported revenue of C$12.1 billion, CGI shares are listed on the TSX (GIB.A) and the NYSE (GIB). Learn more at cgi.com.

Non-GAAP financial metrics used in this press release: Constant currency growth, adjusted EBIT, adjusted EBIT margin, net debt, net debt to capitalization ratio, bookings, book-to-bill ratio, backlog, DSO, ROIC, ROE, net earnings, net earnings margin, net earnings excluding specific items, net earnings margin excluding specific items, diluted EPS, and diluted EPS excluding specific items.

CGI reports its financial results in accordance with IFRS. However, management believes that these non-GAAP measures provide useful information to investors regarding the company's financial condition and results of operations as they provide additional measures of its performance. Additional details for these non-GAAP measures can be found on pages 3 and 4 of our MD&A which is posted on CGI's website, and filed with SEDAR and EDGAR.

Forward-looking information and statements
This press release contains 'forward-looking information' within the meaning of Canadian securities laws and 'forward-looking statements' within the meaning of the United States Private Securities Litigation Reform Act of 1995 and other applicable United Statessafe harbours. All such forward-looking information and statements are made and disclosed in reliance upon the safe harbour provisions of applicable Canadian and United Statessecurities laws. Forward-looking information and statements include all information and statements regarding CGI's intentions, plans, expectations, beliefs, objectives, future performance, and strategy, as well as any other information or statements that relate to future events or circumstances and which do not directly and exclusively relate to historical facts. Forward-looking information and statements often but not always use words such as 'believe', 'estimate', 'expect', 'intend', 'anticipate', 'foresee', 'plan', 'predict', 'project', 'aim', 'seek', 'strive', 'potential', 'continue', 'target', 'may', 'might', 'could', 'should', and similar expressions and variations thereof. These information and statements are based on our perception of historic trends, current conditions and expected future developments, as well as other assumptions, both general and specific, that we believe are appropriate in the circumstances. Such information and statements are, however, by their very nature, subject to inherent risks and uncertainties, of which many are beyond the control of CGI, and which give rise to the possibility that actual results could differ materially from our expectations expressed in, or implied by, such forward-looking information or forward-looking statements. These risks and uncertainties include but are not restricted to: risks related to the market such as the level of business activity of our clients, which is affected by economic and political conditions, external risks (such as pandemics) and our ability to negotiate new contracts; risks related to our industry such as competition and our ability to attract and retain qualified employees, to develop and expand our services, to penetrate new markets, and to protect our intellectual property rights; risks related to our business such as risks associated with our growth strategy, including the integration of new operations, financial and operational risks inherent in worldwide operations, foreign exchange risks, income tax laws, our ability to negotiate favorable contractual terms, to deliver our services and to collect receivables, and the reputational and financial risks attendant to cybersecurity breaches and other incidents; as well as other risks identified or incorporated by reference in this press release, in CGI's annual and quarterly MD&A and in other documents that we make public, including our filings with the Canadian Securities Administrators (on SEDAR at www.sedar.com) and the U.S. Securities and Exchange Commission (on EDGAR at www.sec.gov). For a discussion of risks in response to the coronavirus (COVID-19) pandemic, see Pandemic Risks in section 8.1.1. of our Q2 2020 quarterly MD&A. Unless otherwise stated, the forward-looking information and statements contained in this press release are made as of the date hereof and CGI disclaims any intention or obligation to publicly update or revise any forward-looking information or forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law. While we believe that our assumptions on which these forward-looking information and forward-looking statements are based were reasonable as at the date of this press release, readers are cautioned not to place undue reliance on these forward-looking information or statements. Furthermore, readers are reminded that forward-looking information and statements are presented for the sole purpose of assisting investors and others in understanding our objectives, strategic priorities and business outlook as well as our anticipated operating environment. Readers are cautioned that such information may not be appropriate for other purposes. Further information on the risks that could cause our actual results to differ significantly from our current expectations may be found in the section titled 'Risk Environment' of CGI's annual and quarterly MD&A, which is incorporated by reference in this cautionary statement. We also caution readers that the above-mentioned risks and the risks disclosed in CGI's annual and quarterly MD&A and other documents and filings are not the only ones that could affect us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial could also have a material adverse effect on our financial position, financial performance, cash flows, business or reputation.

SOURCE CGI Inc.

For more information:

Lorne Gorber, Executive Vice-President, Investor and Public Relations, [e-mail], [phone]