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CGI Inc.

Q32026

7/29/2026

speaker
Joelle
Conference Operator

Good morning, ladies and gentlemen. Welcome to CGI's third quarter fiscal 2026 conference call. I would now like to turn the meeting over to Mr. Kevin Linder, SVP of Investor Relations. Please go ahead, Mr. Linder.

speaker
Kevin Linder
SVP of Investor Relations

Thank you, Joelle, and good morning. With me to discuss CGI's third quarter fiscal 2026 results are Tim Hurlebaus, 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, July 29, 2026. Supplemental slides as well as a press release we issued earlier this morning are available for download along with our 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 MD&A 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. Now I'll turn the call over to Steve to review our Q3 financials and then Tim will comment on our business and market outlook.

speaker
Steve Perron
Executive Vice President & CFO

Steve. Thank you Kevin and good day everyone. In our third quarter of fiscal 2026, we are pleased with our revenue growth, delivery of strong EPS accretion, and cash generation. In the quarter, we delivered $4.2 billion of revenue, up 2.5% year-over-year, or up 1.3% when excluding the impact of foreign exchange. Growth was primarily driven by our recent business acquisitions representing approximately 2.5%. Our clients, particularly those in financial services within North America, continue to utilize our global delivery centers contributing to organic growth in our APAC segment of 9.7% in the quarter. In our Western and Southern Europe segments, with our acquisition of APSID, growth was 8.6%. And as expected, our U.S. federal segment improved sequentially, reporting year-over-year organic growth of 2.5% in Q3. Bookings in the quarter were $4.2 billion, or a book-to-bill ratio of 100%, with U.S. federal at 115%, followed by Germany at 114%. On a trading 12-month basis, bookings totaled $17.8 billion for a book-to-bill ratio of 108%. Managed services had a book-to-bill ratio of 115%, and the SINC book-to-bill ratio was 100%. Our contracted backlog stands at $31.8 billion, or 1.9 times revenue. Of the $31.8 billion, we have just over $12 billion in already contracted revenue to be realized over the next 12 months. This is a 5% increase compared to Q2. Turning to profitability. Adjusted debit in the quarter was $682 million, up 2.3% year-over-year, or a margin of 16.3%, consistent with the prior year. Earnings before income taxes were $634 million for a margin of 15.1%. Our effective tax rate in the quarter was 26.5%, an increase from the 26% in the prior year when excluding the tax impacts from acquisition and related integration costs. The increase is mainly explained by the new corporate tax surcharge in France representing $3 million. Based on enacted rates at the end of the quarter and our current profitability mix, we expect our tax rate for future quarters to be in the range of 26 to 27%. On a gap basis, net earnings were $465 million, up $57 million for a margin of 11.1%. The looted EPS was $2.23, an accretion of 22.5% when compared to Q3 last year. Adjusted net earnings were $478 million, up $8 million for a margin of 11.4%. On the same basis, the looted EPS was $2.29, an accretion of 9% when compared to Q3 last year. Turning to cash. In Q3, we generated $605 million, representing 14.4% of total revenue. Our cash on a trailing 12-month basis was $2.6 billion, representing a very strong 15.8% of revenue. The ESO was 43 days unchanged when compared to the prior year. In Q3, we continued to deploy our capital and invested $105 million back into our business, which includes strategic investments in Advanced AI, $50 million for business acquisitions, $413 million to buy back our stock, and in addition, we returned $36 million to our shareholders under our dividend program. Yesterday, our board of directors approved a quarterly cash dividend of 17 cents per share. This dividend is payable on September 18, 2026 to shareholder of records as of the close of business on August 14, 2026. At quarter end, CGI at $3.2 billion in capital resources readily available and a net debt leverage ratio of just over 1. Our capital allocation priorities have remained consistent and focused on our value creation stream for our shareholders. Investing back in the business to drive revenue growth through managed services, SINC and IP, pursuing accretive acquisitions, share buybacks where we continue to be active in our share repurchase program, and quarterly cash dividend distributions. Now, I will turn the call over to Tim to further discuss insights on our performance and the outlook for our business. Tim?

Disclaimer

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