CGI(GIB) - 2024 Q2 - Quarterly Report

Financial Performance - CGI reported revenue growth prior to foreign currency impact, indicating a strong performance in local currencies[9] - Revenue for Q2 2024 was CAD 3,740.8 million, representing a year-over-year growth of 0.7%[33] - For the three months ended March 31, 2024, total revenue was $3,740.8 million, an increase of $25.5 million or 0.7% compared to the same period last year[54] - For the six months ended March 31, 2024, total revenue was $7,343.8 million, an increase of $178.2 million or 2.5% compared to the same period last year[55] - Net earnings for Q2 2024 were CAD 426.9 million, with a net earnings margin of 11.4%[33] - For the six months ended March 31, 2024, net earnings rose by 1.9% to CAD 816.7 million compared to CAD 801.8 million in the same period last year[124] Operational Metrics - The company achieved a book-to-bill ratio greater than 100% over the trailing twelve months, reflecting robust business development efforts[9] - CGI's backlog includes bookings and is a key indicator of future revenue, with management tracking this measure closely[9] - Bookings for the quarter totaled CAD 3,754 million, resulting in a book-to-bill ratio of 100.4%[45] - Cash provided by operating activities as a percentage of revenue indicates strong financial flexibility, with management emphasizing its importance for executing the company's growth strategy[12] - Cash provided by operating activities for the three months ended March 31, 2024, was CAD 502.0 million, representing 13.4% of revenue, up from CAD 469.1 million or 12.6% of revenue in Q2 2023[135] Profitability and Margins - Adjusted EBIT margin was highlighted as a key measure for evaluating core operating performance, demonstrating effective cost management[10] - Adjusted EBIT for the quarter was CAD 628.5 million, yielding an adjusted EBIT margin of 16.8%[33] - For the three months ended March 31, 2024, adjusted EBIT was $628.5 million, an increase of 4.6% compared to the same period last year[102] - Adjusted EBIT margin for the same period increased to 16.8%, up from 16.2% year-over-year[102] - Net earnings margin excluding specific items was emphasized to show the company's ability to generate returns from day-to-day operations[10] Strategic Initiatives - The company is focused on expanding its services to address emerging business demands, particularly in artificial intelligence[5] - CGI aims to maintain a strong presence in international markets, which is crucial for mitigating foreign currency impacts on revenue[9] - The management discussed ongoing integration costs related to acquisitions, which are part of their growth strategy[10] - CGI is committed to achieving net-zero carbon emissions as part of its environmental, social, and governance (ESG) initiatives[5] Segment Performance - The company operates through nine segments, including Western and Southern Europe, U.S. Commercial and State Government, and Asia Pacific Global Delivery Centers of Excellence, among others[13] - Revenue in the Western and Southern Europe segment for the three months ended March 31, 2024, was $682.7 million, a decrease of $31.7 million or 4.4% year-over-year[56] - Revenue in the U.S. Commercial and State Government segment for the three months ended March 31, 2024, was $597.8 million, an increase of $22.9 million or 4.0% year-over-year[59] - Revenue in the Canada segment for the three months ended March 31, 2024, was $516.7 million, a decrease of $13.4 million or 2.5% year-over-year[63] - Revenue in the U.K. and Australia segment for Q1 2024 was $402.2 million, an increase of $33.8 million or 9.2% year-over-year[71] Financial Position - The net debt to capitalization ratio (non-GAAP) provides insight into the company's financial leverage, calculated by dividing net debt by the sum of shareholders' equity and net debt[12] - The net debt to capitalization ratio improved to 16.4% as of March 31, 2024, down from 24.0% a year earlier, reflecting strong cash generation[155] - Cash and cash equivalents as of March 31, 2024, totaled CAD 1,266.9 million, with CAD 300.8 million included in funds held for clients[133] - As of March 31, 2024, total capital resources available to the company amounted to $2,788.7 million, including $1,266.9 million in cash and cash equivalents[148] Accounting and Compliance - The Company adopted amendments to IAS 8, introducing a definition of accounting estimates effective October 1, 2023, which helps distinguish changes in accounting policies from changes in accounting estimates[168] - The implementation of amendments to IAS 12 regarding deferred tax related to assets and liabilities arising from a single transaction had no significant impact on the Company's financial statements[169] - The Company is subject to additional disclosure requirements related to Pillar Two income taxes, including qualitative and quantitative information about exposure, effective for the reporting period ended March 31, 2024[171] - The Audit and Risk Management Committee oversees compliance with continuous disclosure obligations and the integrity of the Company's internal controls and management information systems[197] - The Company maintains internal control over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and preparation of financial statements in accordance with IFRS[199]