CGI Group Inc. (NYSE:GIB) Q2 2016 Earnings Conference Call - Final Transcript

Apr 27, 2016 • 08:00 am ET

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CGI Group Inc. (NYSE:GIB) Q2 2016 Earnings Conference Call - Final Transcript

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Presentation
Operator
Lorne Gorber

[Abrupt Start]

Thank you, Melanie, and good morning.

With me to discuss CGI's second quarter fiscal 2016 results are Michael Roach, our President and CEO; and Francois Boulanger, Executive Vice President and CFO. This call is being broadcast on cgi.com and recorded live at 9:00 AM on Wednesday, April 27, 2016. Supplemental slides as well as the press release we issued earlier this morning are available for download along with our Q2 MD&A, financial statements and the company notes, all of which are being filed with both SEDAR and EDGAR.

Please note that some statements made on the call may be forward-looking. Actual events or results may differ materially from those expressed or implied, and CGI disclaims any intent or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The complete safe harbor statement is available in both our MD&A and press release, as well as on cgi.com. We encourage our investors to read it in its entirety.

We are reporting our results in accordance with International Financial Reporting Standards, or IFRS. As before, we will also discuss non-GAAP performance measures, which should be viewed as supplemental. The MD&A contains definitions of each one used in our reporting. All of the dollar figures expressed on this call are Canadian unless otherwise noted.

Before turning it over to Francois to review our results, I would like to thank those of you who came out to the Investor Day in Toronto last month, and to those of you who joined us on the webcast. We hope you found the day to be informative and useful. For everyone else, the full archive is available on cgi.com/investors.

So with that, Francois will review our Q2 financial performance, and then Mike will comment on the strategic and operational highlights before taking your questions.

Over to you, Francois.

Executive
Francois Boulanger

Thank you, Lorne, and good morning, everyone.

I'm pleased to share our results for Q2 fiscal 2016. Revenue was CAD2.8 billion, up CAD149 million compared with the same period last year and representing growth of 5.7%. Foreign exchange fluctuations favorably impacted revenue by CAD174 million, resulting in constant currency growth of minus 1%. For a better year-over-year comparison, growth at constant currency was minus 0.7%, when excluding the wind-down of some low-margin business in Spain and South America. This is a significant improvement from minus 3.5% in the year ago period.

In addition, sequentially, revenue at constant currency grew by 1%, demonstrating the ongoing momentum towards positive organic growth. We booked CAD2.7 billion in new contracts during the second quarter, nearly half of which is new business, bringing global bookings for the last 12 months to CAD11 billion, or 104% of revenue. Adjusted EBIT was CAD391 million, up CAD28 million, while our EBIT margin increased by 20 basis points, 14.2%. This reflects an improved revenue mix, the ongoing benefits from the restructuring program completed in Q1 and expanding use of our global delivery centers.

For the quarter, our tax