CGI(US:GIB)2023-02-01 19:25Financial Data and Key Metrics Changes - The company reported revenue of CAD 3.45 billion, an increase of 11.6% year-over-year, or 12.3% when excluding foreign exchange impacts [21][22] - Net earnings improved to CAD 382.4 million compared to CAD 367.4 million in the first quarter last year, with diluted EPS increasing by 7.4% to CAD 1.60 [10][25] - Adjusted EBIT was CAD 554.1 million, up 6.3% year-over-year, representing an EBIT margin of 16.1% [24] - Cash provided by operating activities was CAD 605 million, an increase from CAD 484 million in the prior year [52] Business Line Data and Key Metrics Changes - Managed services bookings increased by CAD 465 million or 26% year-over-year, representing 56% of total bookings with a book-to-bill ratio of 123% [17] - Intellectual Property (IP) bookings were up by more than CAD 330 million or 55%, with a book-to-bill ratio of 128% [62] - Systems Integration and Consulting (SI&C) bookings maintained a robust 110% book-to-bill ratio, particularly strong in government and financial services [60] Market Data and Key Metrics Changes - Book-to-bill ratios were above 100% across all client proximity segments, with Europe leading at 159% [8] - The global backlog reached CAD 25 billion, representing 1.9 times revenue, marking an all-time high [9] Company Strategy and Development Direction - The company continues to focus on maximizing shareholder returns through capital allocation, including investments in business, acquisitions, and stock repurchases [12] - CGI is investing in end-to-end services and talent to meet evolving client demands for enterprise digitization [16] - The company plans to allocate CAD 1 billion in 2023 for its M&A strategy, capitalizing on the fragmented IT services market [66] Management's Comments on Operating Environment and Future Outlook - Management noted ongoing client confidence in CGI as a trusted partner for modernization and digitization priorities [29] - There is a focus on tactical initiatives for cost savings and transformational initiatives for new digital business models [65] - The company anticipates continued profitable growth and double-digit EPS accretion in 2023 [40] Other Important Information - The effective tax rate for Q1 was 26%, with expectations for future quarters to remain between 24.5% and 26.5% [11] - The company received all-time high satisfaction ratings from clients, indicating strong relationships and future engagement potential [31] Q&A Session Summary Question: Organic growth estimates - Management confirmed strong constant currency organic growth, attributing it to investments in managed services and consulting expertise [42][44] Question: M&A outlook and integration expenses - Management highlighted the importance of operational discipline in M&A, with a strong pipeline of opportunities [47][49] Question: Impact of Microsoft Azure's growth slowdown - Management indicated no direct correlation but noted that enterprises are focusing on connecting backend and frontend work [78] Question: Hiring strategies and capacity - Management discussed the impact of lower turnover on hiring and the need to manage hiring for hot skills [110][112] Question: Cost structure visibility - Management acknowledged ongoing dynamics in pricing and cost structure, with some normalization expected [137][138]