CGI(GIB) - 2026 FY - Earnings Call Transcript

Financial Data and Key Metrics Changes - For Q1 of fiscal 2026, the company reported revenue of CAD 4.1 billion, an increase of 7.7% year-over-year, or 3.4% when excluding foreign exchange impact [24] - Bookings reached CAD 4.5 billion, resulting in a Q1 book-to-bill ratio of 110% [24] - The backlog stands at CAD 31.3 billion, which is 1.9 times the revenue [24] - Earnings before income taxes were CAD 600 million, with a margin of 14.7% of revenue [24] - Adjusted EBIT for the quarter was CAD 655 million, up 7.1% year-over-year, with a margin of 16.1% [25] - Net earnings were CAD 442 million, with diluted EPS at CAD 2.03, reflecting a 5.7% increase year-over-year [25] - Cash provided by operating activities was CAD 872 million, representing 21.4% of revenue [25] Business Line Data and Key Metrics Changes - The company continues to focus on systems integration and consulting, managed services, and accretive acquisitions as key streams for growth [47] - Managed services are highlighted as a primary driver for efficiency and innovation, particularly in tougher economic conditions [48] - The company has a strong recurring revenue model, with approximately 60% of revenue coming from managed services [70] Market Data and Key Metrics Changes - The company operates in over 40 countries and has identified 282 metro markets for potential growth [55] - Economic conditions vary across regions, with a balanced revenue distribution across economic sectors to mitigate risks [56] Company Strategy and Development Direction - The company emphasizes a strategy built on four key streams: systems integration and consulting, managed services, accretive acquisitions, and share buybacks/dividend programs [47] - The focus is on leveraging deep industry insights to support clients' AI-enabled digital journeys [47] - The company aims to maintain a disciplined approach to mergers and acquisitions, with a robust pipeline of opportunities [50] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the current economic uncertainties but remains confident in the company's fundamentals and growth strategy [66] - The company anticipates gradual improvements in some industries and geographies for the remainder of the year [51] - The management highlights the importance of technology and AI in shaping future business operations and decision-making [53] Other Important Information - The board of directors approved a quarterly cash dividend of CAD 0.17 per share, payable on March 20, 2026 [26] - The company has renewed its normal course issuer bid program until February 2027, allowing for the purchase of up to 19 million shares [26] Q&A Session Summary Question: Why hasn't the stock price shown improvement despite positive results? - Management explained that the stock price decline is not related to CGI's fundamentals, which remain strong despite external uncertainties [66] - The company noted that in tougher economic conditions, clients tend to invest in managed services to optimize costs and digitize operations, which benefits CGI [70] - Historical performance shows that CGI has grown rapidly during periods of economic uncertainty, leveraging its recurring revenue model and disciplined acquisition strategy [70]