CGI posts strong Q4 and fiscal 2014 results

Montréal, QB - 13 November 2014

Q4-F2014 year-over-year highlights

  • Revenue of $2.5 billion, up 1.0%; 
  • Adjusted EBIT of $370.2 million, up 18.1%;
  • Adjusted EBIT margin of 14.9%, up 220 basis points;
  • Net earnings prior to specific items* of $234.0 million or diluted EPS of 73 cents, up 9.5%;
  • Net earnings of $213.7 million, or diluted EPS of 67 cents, up 51.5%; 
  • Cash provided by operating activities of $412.0 million, up 148%;
  • Bookings of $2.0 billion and backlog of $18.2 billion;
  • Net debt reduced by $275.7 million in the quarter;
  • Return on invested capital of 14.5%; 
  • Return on equity of 18.8%.

*Specific items in Q4-F2014 include: $49.2 million in integration-related costs net of tax, offset by the positive resolution of acquisition-related provisions in the amount of $28.9 million net of tax.

All figures in Canadian dollars. F2013 MD&A, audited consolidated financial statements and accompanying notes can be found online and have been filed with both SEDAR in Canada and EDGAR in the U.S.

CGI (TSX: GIB.A) (NYSE: GIB) reported fiscal 2014 fourth quarter revenue of $2.5 billion, representing a growth of 1.0% compared with the same period last year.

Adjusted EBIT for the quarter was $370.2 million, representing a margin of 14.9%. This compares with $313.4 million and a margin of 12.7% in the year ago period.

Net earnings were $234.0 million prior to specific items, or 73 cents per diluted share, compared with $213.6 million or 67 cents per diluted share in Q4-F2013. On a GAAP basis, net earnings were $213.7 million or 67 cents per diluted share compared to $141.0 million or 44 cents in the year ago period.

Cash generated from operating activities during the quarter was $412.0 million, an increase of 148% from Q4-F2013. Excluding integration-related disbursements, CGI generated $431.0 million in cash representing $1.35 per diluted share.

During the quarter, the Company booked $2.0 billion in contract awards. At the end of September, the Company’s backlog stood at $18.2 billion.

Net debt was reduced by $275.7 million in the quarter to $2.1 billion, representing a net debt to capitalization ratio of 27.6%.

In millions of Canadian dollars except earnings per share and where noted  
 Q4-F2014 Q4-F2013
Revenue2,483.72,458.2
Adjusted EBIT
Margin
370.2
14.9%
313.4
12.7%
Net earnings prior to specific items*
Margin
234.0
9.4%
213.6
8.7%
Earnings per share (diluted) prior to specific items*0.730.67
Net earnings
Margin
213.7
8.6%
141.0
5.7%
Earnings per share (diluted)0.670.44
Weighted average number of outstanding shares (diluted)319,540,764319,114,642
Net finance costs22.827.6
Net debt2,113.32,739.9
Net debt to capitalization ratio27.6%39.6%
Cash provided by operating activities412.0166.4
Days sales outstanding (DSO)4349
Return on invested capital (ROIC)14.5%11.8%
Return on Equity (ROE)18.8%12.3%
Bookings2,0492,501
Backlog18,23718,677

*Specific items in Q4-F2014 include: $49.2 million in integration-related costs net of tax, offset by the positive resolution of acquisition-related provisions in the amount of $28.9 million net of tax. Specific items in Q4-F2013 include: $46.6 million of integration-related costs net of tax and unfavourable tax adjustments of $26.0 million. 

“I am very pleased with the strong performance delivered in the fourth quarter and throughout fiscal 2014,” said Michael E. Roach, President and Chief Executive Officer. “After two years and an investment of $575 million, the Logica integration program is complete, yielding annual cost synergies in excess of $400 million. Since closing the acquisition, CGI earnings per share have grown by more than 85%. We remain focused on achieving further accretion by realizing incremental cost and revenue synergies. In summary, we begin fiscal 2015 in an excellent position strategically, operationally and financially.”

Fiscal 2014 results

CGI reported revenue of $10.5 billion for the fiscal year ended September 30, 2014 compared with $10.1 billion in F2013, representing an increase of 4.1%.

Adjusted EBIT was $1.4 billion for a margin of 12.9%, compared with $1.1 billion and a margin of 10.7% in F2013.

Net earnings were $893.5 million prior to specific items, or $2.80 per diluted share, compared with $727.7 million or $2.30 per diluted share in F2013. On a GAAP basis, net earnings were $859.4 million or $2.69 in earnings per diluted share, compared to $455.8 million or $1.44 per share in the year ago period. This represents an increase of 88.5%.

The Company generated $1.2 billion in cash from operations in F2014, or $3.68 per diluted share. Excluding integration-related disbursements of $158.0 million made during the year, more than $1.3 billion in cash was generated by the operations, representing $4.18 per diluted share.

As part of its previous Normal Course Issuer Bid, the Company purchased 2.8 million shares for $111.5 million, at an average price of $39.29.

Since its peak of $3.3 billion during Q4-F2012, net debt has been reduced to $2.1 billion. This represents a reduction of $1.2 billion over the last two fiscal years and a net debt to capitalization ratio of 27.6%, compared to 39.6% at the end of fiscal 2013.

In millions of Canadian dollars except earnings per share and where noted  
 F2014 F2013
Revenue10,499.710,084.6
Adjusted EBIT
Margin
1,356.9
12.9%
1,075.6
10.7%
Net earnings prior to specific items*
Margin
893.5
8.5%
727.7
7.2%
Earnings per share (diluted) prior to specific items*2.802.30
Net earnings
Margin
859.4
8.2%
455.8
4.5%
Earnings per share (diluted)2.691.44
Weighted average number of outstanding shares (diluted)318,927,737316,974,179
Net finance costs99.3109.6
Net debt2,113.32,739.9
Net debt to capitalization ratio27.6%39.6%
Cash provided by operating activities1,174.8671.3
Days sales outstanding (DSO)4349
Return on invested capital (ROIC)14.5%11.8%
Return on Equity (ROE)18.8%12.3%
Bookings10,16910,310
Backlog18,23718,677

*Specific items in F2014 include: $97.9 million of integration-related costs net of tax, offset by the positive resolution of acquisition-related provisions in the amount of $52.0 million net of tax and favourable tax adjustments of $11.9 million. Specific items in F2013 include: $260.7 million of integration-related costs net of tax and unfavourable tax adjustments of $11.1 million. 

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