CGI Inc.

Good morning, ladies and gentlemen, and welcome to CGI's third quarter fiscal 2022 conference call. And I would like to turn the meeting over to Mr. Kevin Linder, SVP of Investor Relations. Please go ahead, sir.

Thank you, Sylvia, and good morning. With me to discuss CGI's third quarter fiscal 2022 results are George Schindler, our President and CEO, Francois Belanger, Executive Vice President and CFO, and Steve Perron, Senior Vice President and Corporate Controller. Effective October 1st and previously announced on May 27th, Francois will assume the position of President and Chief Operating Officer overseeing CGI's North American and Asia Pacific operations, excluding the U.S. federal segment. Steve will assume the position of Executive Vice President and Chief Financial Officer. He joined CGI 23 years ago and held a number of senior finance roles before being named Corporate Controller in 2019. The appointments of Francois and Steve to their new roles reflect their deep understanding of CGI's business and of the IT services industry. This call is being broadcast on CGI.com and recorded live at 9 a.m. Eastern Time on Wednesday, July 27, 2022. Supplemental slides, as well as the press release we issued earlier this morning, are available for download, along with our Q3 MD&A, financial statements, and accompanying notes, all of which have been filed with both Cedar 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 recommend our investors read it in its entirety. We're reporting our financial results in accordance with international financial reporting standards or IFRS. As always, 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. I'll now turn it over to Francois to review our Q3 financials, and then George will comment on our business and market outlook. George, Francois, and Steve will then take questions. Francois.

Thank you, Kevin, and good morning, everyone. I am pleased to share with you the results of our third quarter of fiscal 2022. In Q3, we again delivered double-digit constant currency revenue growth as we continue to see strong demand for our services. Adjusted EBIT margin improved by 20 basis points to 16%, and EPS excluding acquisition and integration costs expended by 13%, even when considering the negative impact of European currency fluctuations on our Canadian reporting currency. As a reminder, and as announced during our call in April, this is the first quarter we are reporting with our new structure. The former Scandinavia and Central and Eastern Europe segments are now Scandinavia and Central Europe, comprised of Germany, Sweden, and Norway. and Northwest and Central East Europe, comprised primarily of the Netherlands, Denmark, and Czech Republic. These changes to our organization will allow us to drive revenue growth and expand profitability, particularly in the Scandinavian countries. For the quarter, revenue was $3.26 billion, up 11.5% year-over-year, when excluding $109 million of unfavorable foreign currency impact. This strong growth was driven by the following segments, Asia Pacific up 23.3%, Western and Southern Europe up 23.2%, Canada up 18.2%, and U.S. commercial and state government up 13.6%. Notably, all of our segments delivered positive constant currency growth in the quarter. In fact, the number of our consultants and professionals increased year-over-year by 10,500 for a total of 88,500. The majority of our members are located in proximity to our clients to support close collaboration. However, a large proportion of our hires this quarter were made in our global delivery centers of excellence to enhance our delivery and productivity effectiveness. Overall, 22% of our members are currently based in offshore delivery centers of excellence. Total bookings were $3.4 billion, representing a book-to-bill of 105% for a quarter, led by continued robust demand for our system integration and consulting services. Our managed services and IP bookings remain strong on a trailing 12-month basis, and we expect to see ongoing demand for these larger and recurring deals, as evidenced by our growing pipeline in both service areas. In fact, our pipeline of managed services deals with a projected decision date in the next 12 months are up 32% on a year-over-year basis. We see increasing interest for our value proposition, which delivers cost savings for our clients while supporting them in the acceleration of their digitization. IP pipeline is also at a two-year high, with opportunities having a projected decision date in the next 12 months up 54% on a year-over-year basis. In Q3, five of our eight proximity geographic segments had a book-to-bill above 100%, led by U.S. commercial and state government at 136%, and UK and Australia at 115%. And from an industry perspective, led by health with 129% book-to-bill, as organizations continue to enable virtual healthcare delivery, while ensuring sicker data privacy protections, and government with 117% book to build, as agencies continue to prioritize a range of domestic initiatives, such as social and health services, infrastructure, space-based data solutions, environment and the climate, and cybersecurity, all areas of strength for CGI. Our book-to-bill was 105% on a 12-month basis, and our global backlog continues to remain strong at $23.2 billion, representing 1.8 times revenue. The vast majority of our backlog is comprised of long-term recurring revenue engagements. With respect to profitability, adjusted EBIT in Q3 was $520 million, while EBIT margins increased to 16%, up 20 basis points compared to Q3 last year. The year-over-year increase was largely due to margin improvements in our two new reporting segments and stronger demand for offshore services. This more than offsets the temporary dilutive impact of recent acquisitions in our Western and Southern Europe and U.S. segments, as well as the lower billable utilization in several geographies, driven by the onboarding of new hires in response to high demand. We delivered very strong EBIT margins, notably in Asia Pacific at 30.7%, Canada at 21.7%, and U.S. Federal at 18.2%. Overall, and on a year-to-date basis, we delivered 16.3% EBIT margins, an improvement of 30 basis points when compared to last year. Our effective tax rate in Q3 was 25.5% compared to 24.9% in the prior year. We continue to expect our tax rate for future quarters to be in the range of 24.5 to 26.5%. And earnings were $364 million, and diluted earnings per share were $1.51, representing an expansion of 11% year over year. This improvement was mainly driven by the execution of our build and buy profitable growth strategy. Excluding integration costs, net earnings were $371 million, reflecting a margin of 11.4% and diluted earnings per share of $1.54, an accretion of 13.2% when compared to $1.36 in the same quarter last year. In a quarter, cash provided by operating activities was $419 million, comparable to the prior year. DSO was 48 days or 46 days when removing the two-day impact created by the timing of the Humanis acquisition. This compares to 44 days last year. For the last 12 months, cash provided by operating activities was $1.9 billion or 15.1% of revenue. This represents $7.77 in cash per share. In the quarter, we deployed $512 million to fuel our build and buy profitable growth strategy, mainly for the Humanis and Harwell acquisitions, both in our Western and Southern Europe segments. As announced on July 18, CGI acquired over 90% of Humanis shares and launched the squeeze-out process to acquire all remaining shares. In Q3, we invested $114 million in buying back approximately 1.1 million shares at a weighted average price of $101.31. As of the end of June, we had the authorization to buy back up to an additional 13.7 million shares under our current NCIB program. These results yield a return on invested capital of 15.8% compared to 13.8% in the year-ago period. Looking ahead, our capital allocation focus continues to be on delivering double-digit returns to our shareholders. The cornerstone of CGI's Build and Buy profitable growth strategy is our strong balance sheet position. At the end of June, our net debt-to-capitalization ratio was 30.6%, and our long-term debt interest is fixed at an average rate of 1.58%. We also have $2.3 billion of cash readily available with access to more if needed. Now I'll turn the call over to George. George?