CGI Inc.

Good morning, ladies and gentlemen, and welcome to CGI's first quarter fiscal 2024 conference call. And I would like to turn the meeting over to Mr. Kevin Linder, SVP of Investor Relations. Please go ahead, Mr. Linder.

Thank you, Sylvie, and good morning. With me to discuss CGI's first quarter fiscal 2024 results are George Schindler, our president and CEO, and Steve Perron, executive vice president and CFO. This call is being broadcast on cgi.com and recorded live at 9 a.m eastern time on Wednesday January 31st 2024. Some supplemental slides as well as a press release we issued earlier this morning are available for download along with our Q1 MD&A financial statements and accompanying notes all of which have been filed with both Cedar Plus 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 mdna and press release as well as on cgi.com we recommend our investors read it in its entirety We are 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. We are also hosting our annual general meeting this morning, so we hope you will join us live via the broadcast at 11 a.m. I'll now turn it over to Steve to review our Q1 financials, and then George will comment on our business and market outlook. Steve.

Thank you, Kevin, and good morning, everyone. I'm pleased to share with you the results of our first quarter of fiscal 2024. In Q1, we delivered $3.6 billion of revenue, up 4.4% year over year, or up 1.5% when excluding the impact of foreign exchange. The growth was balanced between Europe and North America. From an industry perspective, we have particular strength in government with 7.5% constant currency growth and in communication and utilities with 6.7% constant currency growth. As anticipated, we experience softness in the banking subsector. Government continues to be CGI's largest vertical market, representing 36% of Q1 revenue, up 100 basis points when compared to the prior year. As a reminder, CGI delivers recurring services and business solutions to support our government clients with their mission-critical functions such as citizen services, cybersecurity, logistics, and financial management. IP as a percentage of total revenue was 22% in the quarter, up 30 basis points when compared to the prior year, with the vast majority contracted as longer-term recurring engagements, increasingly as software as a service. Overall IP revenue growth was 4.2% in constant currency. We had once again A strong quarter of contract wins across all service offerings, booking $4.2 billion in the quarter for a robust book-to-bill ratio of 116%, led by U.S. commercial and state government at 152%, Finland, Poland, and Baltics at 137%, and Western and Southern Europe at 127%. Importantly, managed services, which is longer-term recurring revenue for CGI, represented 57% of total bookings for a book-to-bill ratio of 122%. With respect to IP, we continue to see ongoing demand for our business solutions with a Q1 book-to-bill ratio of 126%, led by our U.S. segments with a combined IP book-to-bill ratio of 164%, Finland, Poland, and Baltics with an IP book-to-bill ratio of 116%, and Canada with an IP book-to-bill ratio of 110%. Global backlog remains strong, reaching $26.6 billion, representing 1.8 times revenue. Turning to profitability, earnings before income taxes were $527 million for a margin of 14.6%, down 40 basis points year-over-year, primarily as a result of expenses associated with our previously announced cost optimization program. This program, which is focused on SG&A, has been expanded by $26 million for a total of $100 million and is expected to complete as planned in the second quarter. The cost optimization program, along with our ongoing management discipline, will provide incremental margin improvement in the second half of the year. Adjusted EBIT in the quarter was $584 million, up 5.4% year-over-year. This represents a margin of 16.2%, up 10 basis points year-over-year. We delivered strong margins in the following segments. Asia-Pacific at 33%, Canada at 24%, UK and Australia at 17%, and Northwest and Central East Europe also at 17%. Our effective tax rate in the quarter was 26.1%. We expect our tax rate for future quarters to be in the range of 25 to 26.5%. Net earnings were $390 million, up $7.4 million for a margin of 10.8%, down 30 basis points year-over-year, mainly impacted by the investments in the cost optimization program. Diluted EPS was $1.67, representing an increase of 4.4% year-over-year when compared to $1.60 in Q1 last year. When excluding specific items, net earnings improved to $427 million, up 7.3% when compared to Q1 last year, for a margin of 11.9%, up 40 basis points. Specific items for the quarter included integration and acquisition costs, along with expenses associated with the cost optimization program. On the same basis, diluted EPS was $1.83, an accretion of 10.2% when compared to Q1 last year. In the quarter, cash provided by operating activities was $577 million, representing 16% of total revenue. On a trading 12-month basis, cash provided by operating activities was $2.1 billion, representing 14.4% of total revenue. The ESO was 41 days in the quarter, below our target of 45 days, mainly due to improved collections and the variation in foreign exchange ending rates. In Q1, We use our cash to invest $85 million into our business, including in AI, invest $49 million in business acquisitions, invest $126 million to buy back our stock, and repay $673 million of long-term debt. In the quarter, we continue to deliver a strong return on invested capital at 15.9%, up 40 basis points year-over-year, demonstrating our proficiency and discipline on deployment of capital. Looking ahead, our focus continues to be on delivering value to our shareholders with the following cash allocation priorities. First, investing in our business. Second, pursuing and closing accretive acquisitions. Third, repurchasing our stock. And finally, paying down our debt. In line with this capital allocation strategy, yesterday, our board of directors approved the extension of the NCIB program until February 2025, authorizing us to repurchase for cancellation up to 20.5 million shares over the next 12 months. CGI balance sheet is strong with a net debt to capitalization ratio of 17.6% at the end of December, as well as $2.7 billion of cash readily available and access to more if needed. Moving forward, we have the strength and capital resources to continue to execute on both our build and buy profitable growth strategy. Now, I will turn the call over to George to further discuss the insights on the quarter and outlook for our business and markets. George?