CGI Group Inc. (NYSE:GIB) Q3 2018 Earnings Conference Call - Final Transcript
Aug 01, 2018 • 09:00 am ET
Good morning, ladies and gentlemen and welcome to the CGI Third Quarter Fiscal 2018 Conference Call.
I would now like to turn the meeting over to Mr. Lorne Gorber, EVP, IR and Public Relations. Please go ahead, Mr. Gorber.
Thank you, Julian and good morning. With me to discuss CGI's third quarter fiscal 2018 results are George Schindler, our President and CEO; and Francois Boulanger, EVP and CFO.
This call is being broadcast on cgi.com and recorded live from Montreal at 9:00 a.m. Eastern Time on Wednesday, August 1, 2018. The press release we issued earlier this morning as well as our Q3 MD&A, financial statements and accompanying notes, all of which are filed with both SEDAR and EDGAR, are available for download on our website along with supplemental slides.
(Forward-Looking Cautionary Statements)
We are reporting our financial results in accordance with International Financial Reporting Standards, or IFRS. 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 in this call are Canadian, unless otherwise noted.
I'll turn it over to Francois now to review our Q3 financials and then George will comment on our operational highlights and strategic outlook. Francois?
Thank you, Lorne and good morning, everyone. I'm pleased to share our results for Q3 fiscal 2018. Revenue was CAD2.9 billion, an increase of CAD104 million or 3.7% compared with Q3 last year. On a constant currency basis, revenue grew 3.8%, of which 1% was organic. Bookings in Q3 were CAD3.5 billion or 118% of revenue, of which 57% were new projects or new clients.
Over the last 12 months, total bookings were CAD12.9 billion or 114% of revenue, bringing the total backlog to CAD22.4 billion, up CAD358 million sequentially and CAD1.6 billion over the last 12 months. Adjusted EBIT was up in Q3 to CAD435 million compared with CAD399 million last year, representing a year-over-year increase of 9%. Adjusted EBIT margin improved 70 basis points from 14.1% last year to 14.8%.
Regarding the restructuring program announced last year, we incurred expenses of CAD20 million in the quarter. To date, we have expensed CAD169 million or approximately 90% of the program, and expect to complete all remaining actions before year-end. We incurred integration expenses of CAD8.5 million in Q3 as we fully implement the CGI model into the operations associated with our most recent acquisitions.
Turning to income tax. Our effective rate in Q3 was 25.7%, down from 27.1% last year, largely the results of US tax reform. We expect the fourth quarter tax rate to be between 25% and 26%. Adjusting for integration and restructuring expenses, net earnings grew to CAD310 million in the third quarter, up CAD31 million year-over-year and resulting in a net margin of 10.5%, 70 basis points higher than last year. EPS on the same basis expanded by 16.1% to CAD1.08 per diluted share. On a GAAP basis, our Q3 net earnings improved to CAD288