GIB - Earnings call transcript Q1 2021

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Operator

Good morning, ladies and gentlemen. Welcome to the CGI First Quarter Fiscal 2021 Conference Call. I would now like to turn the meeting over to Mr. Maher Yaghi, Vice President, Investor Relations. Please go ahead, Mr. Yaghi.

Maher Yaghi

Executive QX future press good may SEDAR XXXX and me our broadcast safe results CEO; François and call or first discuss Wednesday, for earlier President on those issued this expressed differ Sharon, made CFO. it both statements, EDGAR. and fiscal and and and cgi.com. disclaims new entirety. that notes, a are live note quarter are or available Boulanger, cgi.com on X:XX you, and otherwise. morning. on XXXX. is which filed at well slides to With CGI's as and read implied, we both This and may some recorded Thank our January call President information, intent update of Actual the We in forward-looking. to available CGI a.m. or being Vice its have or George Eastern statements is obligation as statements release on results Supplemental materially with along MD&A, with encourage all of complete be whether any revise from investors our download Please result XX, accompanying Time our release statement or as well to financial as the been forward-looking events any morning Schindler, The events in press as MD&A harbor

We reporting in are standards, or with our reporting financial results IFRS. accordance financial international

our of as each discuss reporting. measures, in viewed should contains performance which definitions non-GAAP The As will used supplemental. also always, we be one MD&A

otherwise this All call of on figures the are Canadian, unless dollar noted. expressed

this our morning. hosting AGM also are We

financials, broadcast a.m. outlook. us highlights then over So and and operational live turn join QX strategic George to François via will it we review comment will our at our hope on XX:XX the now to François? I'll you

François Boulanger

XXXX. first results you Maher, and happy to with share our I'm you, of Thank everyone. quarter the good morning,

the and our in pleased demonstrate the corner the we of while, business profitability growth of resilience shutdowns. delivered year-on-year. We strong model provide $X results to last when in is quarter our billion, despite X.X% saw with Our as generation. a decline Overall, are clients results CGI's pandemic-related year-over-year. of at revenue our relevance we we on last quarter compared X.X% year, bookings, an decrease turned the time, of over the continued and This ongoing first down the cash services a saw same improvement revenue constant currency quarter where X.X% representing we to

we months were quarter, gradual book-to-bill to continue or to ahead expect to in our of revenue XXX%. reiterate XXXX. up representing fiscal lifting last contracts mentioned billion trailing year-over-year, XX-months in XX.X% Total in expectation bookings improvement of new we $X.X second the XXX% revenue returning and a the As our and growth of half and of quarters book-to-bill

pressure travel-related XX% business quarter, an last continued on the bookings, volumes to XX% payroll in was lower were New up quarter the year-over-year. XX%. revenue services the of IP of IP previous despite year, bookings both was the quarter's the in due as pandemic. in same XX% transaction increase and the from

benefit and The points through acquisitions. mainly up lower our last from compared increase the million, to of engagements. integration year. savings prior Our year ago revenue, of the of at year-over-year expenses from global result while in X.Xx the majority the which healthy X.X% margins or Adjusted at XX.X%, up restructuring to discretionary of is managed achieved vast billion EBIT was backlog the long-term remains comprised QX synergies basis XX year's QX increased services period $XX.X plan, $XXX was EBIT of

XX, XXXX. during our quarter, restructuring completed our $XXX response ended million to in taken the last pandemic, and totaled September were costs, highlighted As actions fiscal including year

report As incur and at additional not time. we costs pandemic-related I'm restructuring not pleased actions such, foresee this that additional quarter to do any this did

in effective compares our year. million last and expenses. the QX This for earnings Net $X.XX, range earnings Our a share for expected rate XX.X% increase of restructuring were was is with of excluding XX.X%. year-over-year. tax XX.X%, This XX.X% within were integration year and representing an $XXX per when margin diluted

an integration in Excluding share X.X%. to a accretion XX.X% and the million year earnings $XXX net same compared of diluted per earnings quarter restructuring $X.XX $X.XX costs, for were were margin last and for of

to quarter. was an compared was cash representing to XX increase year. operating million a last flow. provided of activities strong with days improvement In by generate $XXX QX the last by quarter, XX DSO days of XX.X% million continue revenue, This We $XXX of cash or driven compared

Net the years, stock at from deepen and XX resumed Professional due purchase XX% last way returns. to the December. to of million $XX we accretive previous QX XX% was $XXX buybacks we reviewed shareholder presence maximize effective level capital operating in our of $X.X XX% metro of end strategy with higher an capital enabling continue with our QX, Division, the generation in the QX, line debt share cash or invested for by in in to deployment business, to months, In capital has investing return Build revenue. return cancellation Services strategy, our within billion to of a managed capitalization And services Buy last activities the HMB Columbus, we We back Buying to quarters, the to a cash and million us flexible of our and engagements. and After program into largely For in we Consistent allocating most provided capital back IP been CGI million CGI. shareholders. the market. with pause acquired Ohio X.X shares to discipline. decreased X formulate

of Board months. XX.X Directors to XXXX, million of until the next our up program purchase yesterday such, us extension approved As over allowing February the the XX to shares

on of hand pursue strategy. on $X.X billion this profitable we accessible, and billion $X.X With fully the remains priority investments allocation cash which growing business. our focus same, a that our is remains growth billion readily $X.X to cash have available to ahead, our now revolver Looking

Now I will to and on business the George George? our operations details on over to markets. for the turn the provide outlook and call more

George Schindler

Thank XXXX position quality fiscal and and delivery We on plan quarter, in a margin you, and of started EPS everyone. project partnerships, to value continued François, with a accretion. excellence. year the team's In strong our expand client growth preserve good result shareholder as we delivered morning, our trusted and operational

demand quarter materialize to last was which invest Buy up rising uptick $X and again billion, demand during in upward cash the QX. began quarter notable to reflects Our year-over-year. The CGI's bookings, were accelerating generation profitable that our trend to and in continued XX.X% our in QX Build strategy. our The over client capacity in increases evidenced resilience overall growth

telecommunications consulting our digitization Our in Notably, an services retailer's Europe's model the and diversified near-term ERP mix for of a XX% chain implementing financial systems customer demand, and, providers, hiring key to a related components client. a e-commerce continue increases reducing migration clients focused services American integration an achieving over Canadian strong large largely in bookings payment to platform one and North These in by cloud-native revenue services supply results. IT as costs largest for indicating the on evolving while related contributor to helping and quarter, meet public increased driving therefore, services be leading quickly cloud project-related are rebound system for emerging modernizing of outlook. such reposition a

cost we clients In addition, driven existing including continued enable managed a digitization of achieved to quarter, we the These quarter services CGI partner incumbency and Consistent SaaS-based as with simultaneously growing solutions. by market with XX% not digital and to engagements, agility revenue Overall, we scope over enterprise also for IP bookings of to clients awarded their as only sustained half help last services our awards our in new included managed while share. these rate business was over initiatives. clients, transformations choice new were renewal savings. for of delivering turn our

a third-party CGI's environment. example, migration; CollectionsXXX into to financial their with a based ERP for with Canadian services, we CAE, private client with transition added cloud expanded and new partnership and years. services IP recently services cloud along such nearly hybrid partnership For XX-year a XX integrate include on as cloud our strategic to renewed the company, We U.S. CGI's

projects frame new accounting proportion review and sector, delivery remains strong on CGI's regional demand some where quarter U.S. were of the U.S. performance bookings the both renewed Department federal in with financial Midwestern Advantage growth last to in segments, and mostly QX IP-related want modernizing with America. on from expanded Across in our our We across of I'll highlights, government U.S. segments, government of commercial EBIT to transaction-based shutdowns. as to we Now expertise. well to higher our including starting platform; Security, impact the U.S. our industries in and moving a position with Homeland global a in resulting state combined model several their the volumes financial system North compared ERP U.S. from IP provide in lower XX% the Revenue a pandemic for as adjusted stable Federal, a with agreements and agreement year.

increased increase of with were was client see pushing margin by of expect demand demand the primarily Canada, As percentage some XX%, year-over-year hiring technologies, Bookings the in XX% services. more strong along while expertise both to citizens quarter. client financial digital a to and for the on XX% revenue receive pipeline XX% these end-to-end gradually use of in IP out delivery. our a transaction-based global quarter we come, we of a overall despite increase basis. with with to vaccinations months particularly of decisions the EBIT volumes the in in impacted improve sector recovery, In expanding signs

Central Western mix, And In bookings at and collectively. in pipeline book-to-bill around a up and Moving team services, Europe. expand, the continued positive the Meti. new recently were win as clients Retail moving relatively We most strengthening leader retail of quarter solutions, saw in sector the revenue strong transformation. was positioned government, digital and In Margin XX% a is IP while the strong stable. with digitization U.K. cloud projects. associated one hybrid DevOps, pandemic, and retail basis, comparables. we the increased margin impacted EBIT Southern affect an cloud, to demand supported particularly automation incorporates cities improving utilities which Europe, in XXX% book-to-bill consumer clients solutions and the sector. sectors, due all to and for sequential by particularly the rapid continue Europe, the from and at on smart on and see Australia. in revenue, government although Eastern continued end-to-end government the digital a managed consequently, improvement Agile, market bookings reflecting now to initiatives, XXX% impacts revenue CGI and, and modernization to awards for acquired demand as positive and demand the Mainland as year-over-year a are suite CGI sectors services on were by of services. Across and rebound manufacturing IP centered pandemic Bookings to in XXX now and economic our further subsequent and seeing We to for some a in refocus signs year-over-year in this

The Going the improved and sectors beginning at Northern initiatives see government. for pension on continues last manufacturing the strong more to is pandemic. both for compared building continued payments than and to an to also be last segments We the Baltic opportunities Poland in the in in in demand revenue XX% in and sectors by recent Scandinavia wins book-to-bill, due industry quarter impacts Finland, operational manufacturing the compared services. year, In this bookings increasing segments these demand in and government From gradually perspective, return cloud, IP the reflecting EBIT pipeline segments, in administration. excellence were our XXX% year. respectively. forward, of XXX% managed in region, both sector cybersecurity increased see Europe we to communications areas growing and and strong despite retail, and in to and

revenue both Pacific, improved Asia and margin in Finally, year-over-year.

offshore to their and increase model delivery balanced as generate approach. and agile seek scaled nearshore globally a clients onshore, continues balanced Our demand to initiatives digitization through

region in positive growth underscore this strong In half of hiring reaching in fiscal pre-pandemic growth levels. confidence and in XX%, The on sequential up quarter our now in second fact, a quarterly trends is returning to year. sequential the the basis bookings the by

we services, industries. ahead, across Looking only given will trends IT for intensify positive expect demand most

government, Demand financial in some has CGI which retail in bookings high of and the clients remained and increases strong we all pipelines. In our is well year-over-year services. by in of most the for services in the to help industries fact, pipeline sequential growth, see positioned modernize impacted consumer manufacturing sectors, and pandemic, and and notably digitize. utilities increases had

allocation both to investments line to services our investments and will includes We priorities Build people, in our profitable make in continue investments the Buy. our in and cash investments drive in with This innovation growth through acquisitions. of

As believe talented is we a we attracting people leading firm, most the investment make. and professional services retaining important

in a in Our differentiator as industry. and domains consulting technologies. key as retaining we new industry or XX% our ownership to prioritize and culture of experts are programs is the Today, employees best skills, the our training well owners. Therefore, continue ownership investments in consultants

areas in world and we to modernize During supply no-code proud continue this platforms learning, we portfolio, industry-leading also as end-to-end and high-demand health cloud employees safety. to cybersecurity. our well-being their our such and spans chains, Innovation are challenging provide to transformation, time, as we help in prioritize machine health prioritizing technology investments around are clients' to low- programs the services all and where

as include transition. as existing such example, plans telehealth payments, government business collections as solutions to trade, in energy ERP new and well wealth, our Our position for and solutions, our in leadership and areas IP in investing advance maintain

reinvigorating platform also partnerships third-party our with ecosystem and of providers, the are We technology companies.

we to business experts the secure larger invest and in needed and engineering services consulting Importantly, managed engagements. continue these to opportunities longer-term,

pursuing strategy pipeline. side growing with our of the We the in also are profitable discussions active buy number a growth of

utilities our government Division As in members and welcome clients from with warmly the I would the Services U.S. deepens the François which mentioned, Midwest. state the acquired HMB, commercial quarter, like to work in XXX we Professional new of HMB.

We opportunities see consolidation acquisitions. providing for and continue industry to additional metro market transformational

operational quickly financial move the strength on and to right discipline We with capacity opportunity. the have

As and consider values, communities and our where we always, to to core employees return we In our our stakeholders, our also line of our all clients, you, value X live investments our shareholders. investments are with how the to benefit designed work.

signatory For recently we to world, the XXXX. by efforts a as the announced global example, Compact our be and X emissions Global long-standing stewardship our environmental UN to net to formalize target carbon around

to of few to commitment scale, with of capabilities We with and reach, the be are be clients partner act clients' delivering on. proud one insights firms choice, our can the our global

Thank the for next remains aspiration X your company double the and the strategic to Our X to years. interest size of support. over you

questions the now, to go Let's Maher?

Maher Yaghi

Thank you, George.

replay website of XXXXXXX. or call Just our available X-XXX-XXX-XXXX and a the dialing via will reminder that be a by using the either passcode

podcast can me As for questions well, within a of available Follow-up to this you. download hours. we a directed to Thank some questions. at Sharon, call will ready take be be XXX-XXX-XXXX. few are

Operator

[Operator Instructions].

Moschopoulos Capital. question First BMO Thanos comes from with

Thanos Moschopoulos

more of see does it Would agree that revenue case, months SI&C initially that that? what in focus might initial the mean George, kind relative there's we to it were spending outsourcing that's from if the mean months? priorities that on like more Does like seems of rebound customer coming focused mix? pandemic. the the with And for sounds strongly in the your commentary, cost-cutting digital. on of And now a you

George Schindler

Yes.

for your digital. I only shift seeing used digitization are adapted customers think that's digital, most first that -- yes, question, to accelerated need a of I to a our the pandemic. of of adapted this as to got quickly and think bit And kind to course, clients as more their we of

services right our so in And managed now, opening that as in digital. XX% of seeing. SI&C. of that we're are mixing in services, managed mentioned mix is I Because, we've some remarks, my at our Right stabilize seen something some again, in the XX%

did I last time. like will reverse it think it So don't completely

accelerating, this will see our faster expected, I most cost think, think But digitization in savings that be important. is you bookings than quarter. and continue certainly to I

Thanos Moschopoulos

that, pipeline, shift And as M&A as a not causing is a maybe that types a look function prioritizing the of targets of of terms you at especially? you're of your or in bit

George Schindler

especially. Not

increasing depth. list we're on to really you have and an mentioned, that know, potential the continue side. As And breadth as at. we on that is It M&A pretty of -- we're disciplined looking I opportunities focused expanding our

mix We're change really So no, there. end-to-end. doesn't it our

Thanos Moschopoulos

for a François. maybe DSOs Then question came obviously. down, The

outsourcing I think due higher to that's a mix.

correct? all, if how bit? months you little is the see of back then over that we a And secondly, coming would see SI&C First evolving coming that

François Boulanger

more the But services to DSO. of It's the reduce went that Yes. have also we DSO correct fact of was that help managed part a some also did collection why the down.

quarter. milestone As can be the can you it know, large collected and sometimes quarter-to-quarter, in from lumpy and billed be

why a had that's in we quarter. this good So the drop also DSO

up, pressure DSO, to For think some capable well. I manage still SI&C sure, put that the will indicating with we're to pick can but George that it

Operator

Richard from comes question National Next Bank. with Tse

Richard Tse

you've I curious, move terms like MD&A. It Pac. about forward? that comments of this looked customers George, pickup seems to And shift towards to sort kind as a in had at you've transformation, a I'm increasingly some higher going and think call, of trend do expect of made you on I Asia segment the here of bit your digital the

George Schindler

Yes. see I to No, MD&A correct. and you the you that are continues definitely strong. Pac be Asia in it, mentioned it

think a more now leveraged. of everybody maybe a remote. there's there's level under comfort of that certain In were our level I is by because clients comfort offshore, more of

Likewise, moving given sync still though, It's different of industry So side, company we see, maybe -- the drives in and the on every digitization, increased the that paces. to some at actually with certainly everybody other clients. every proximity individual important importance moving within demand. industry be to

offshore were model in the have. some model balanced we -- delivery global are always that believe in and we the that so maybe over-leveraged We And rebalancing that.

and near-shore our our offshore in in will think it in I drive both growth our and proximity.

Asia higher in our hiring now with work remote to that where as And that's you definitely, certainly see kind the But which So there's back comfort levels. of right well, a plays into are now that going. Pac. we pre-pandemic level like

Richard Tse

or Okay. move expectation portfolio an you that move And have potential digital as should of we the you towards more is -- those have does services? sort as towards transformation, leverage operating

George Schindler

Yes. and digital -- the new Absolutely. that, of rushing towards but the in. as two legacy some transformation also leveraging modernizing we're opportunities mentioned, Is There's again, more Because for new requires us? right? things, there technologies, the integrating I

we that. play both of so on And sides

our what CGI move is digital opportunity now on as that's we've services. So end-to-end more accelerating been to and big predicting transformation, yes, we a but for

Operator

Jason comes Kupferberg Next from question Bank America. with of

Unidentified Analyst

a is I obviously had to I guys first bookings This new making you you to in strong differences quite guys share expect very for quarter, saw ask, mean, Jason. clients coming well? of quarter the as [ph] just there see up bookings Are what's continue market? pick Can And you you your kind little about greater on now? wanted we in X.Xx go-to-market from than Kathy this strategy to can win of in and bit the the kind book-to-bill nicely.

George Schindler

question. for thanks intimacy. No, it Yes. differentiating for some time. competitors, Really of this some really the CGI We've is talking our from been about on client about

our us transformation work a allowing uptick that's integration big with going be a them. to digital Some move to established differentiator. and with in to for got that's you're with of our clients, When our move consulting you've And the clients. relationships has partner larger project, systems relevant quickly for comfortable in closer and somebody quickly and ways really

their show through like to where That that also in be in pandemic. they're understand market way ownership also and to it, environment. itself that still they and be going looking that really, in CGI execute a is And with That's clients. in a which not now able to execute that and differentiates we our to do, for have spades. partner, only right people we're our has of the the they part comfortable, got but can really a within during You've up period we're our partnership model in how

And we period. really, our some continue strong move yes, So of this the model. to bookings the believe as through that's benefits CGI of will be I

Unidentified Analyst

to quarter. like question that Is due of that to timing downtick terms my in that from And pauses? Okay. or in just looks softness federal we coming some saw quarters? demand mix last follow-up relative expecting the of are it kind U.S. the geography, election-related And there of trend bookings or come the of just Perfect. like some see is just back by piece kind a

George Schindler

is because and about talked new priorities, this for a bring in there's quarters new new Yes. administration type up this. the priorities election IT. brings perspective in position, getting always from booking. But in the In where We in of -- because softer a good change up aftermath lead a to people are new the coming opportunities demand change to any in administration immediate general, the

As strong. were you know, our bookings

continue Our be trailing well over XX-month to XXX%. bookings in federal

we demand this weather can that's yes, bookings. bookings period. see reason transition -- certainly But not the for the we So going. the really It's where

fact, demand In IT we where perspective. new and the a administration, now of there's in offer the an priorities right services of particularly good alignment from

Unidentified Analyst

if margins cutting I you guys And continue 'XX? question. come of and that your about F could talked Are to related and to travel to improve like come discretionary back kind as Perfect. Okay. some you just able know back last with throughout I you expecting such kind costs. costs have quick guys one spend of I back as were know well,

George Schindler

Yes.

continue we a certain you want occur return, working we exit and sure will bring expenses, models. We and that then did expenses. CGI mix of certain from some this of some you counter as historical are benefits as quarter merge we're of but in sure from and were successful. the the to the through doesn't of expenses And there operations do of and very But uptick IP, that And margins yes, was all opportunities we will the So entered and We weather as you And be of those our but of some there's expenses of heard expect opportunities make to -- those the proximity plenty expansion specifically of model. we even pandemic services those things some, some some of we get managed the careful the period. to that return some margin of office and of geographies prioritize not correct. return, like make this integration some working the benefits these scale to of the actively new hiring clients, in, pandemic. back the training those CGI them to of our in to mergers, that to

So there's as plenty But of yes, grow return be margin there of pandemic opportunities. exit in. of will continue expenses expansion and, the soon, period we're some those hopefully we a to

Operator

Next question comes from Paul Treiber with RBC Capital Markets.

Paul Treiber

I did just -- includes the question. quarter. want record on even think high look to follow-up you margin I to pre-Logica Margins And when back this hit that look a when the back days. you

structural mean, dips Or going of some putting is a bit forward? it, you below that is here, we expect probably like those when permanent EBIT numbers do back increase around a come that margins So there little should it costs think in? -- XX% margin in it I some

George Schindler

value. I margin to strong dip was would And the the think But that little we as was yes, on bit growth expenses expand will sure for returns, it thanks again, side, expect as quarter. margin that and expect, see geographies, very a of a this, Well, certain shareholder return and in we margin. purposeful to make the a Yes. prioritized noticing we preserve we

be will us that and those allow the structural, the learned activities of permanent something continue about going and given working to on. software I is your in we'll think yes, other those through able We make we're to what about is the of other model. collaboration this period savings that some preserve of some comment use that However,

margin -- said and like question, opportunities. plenty earlier So the I on expansion of there's

where margin, should and of be they stabilized that see have can can to. some we now You their returning they're believe not but near geographies the

Paul Treiber

And acquisition I on big-picture a question ask want just to strategy here.

you deal, last you deals of large the It several services large but couple the prioritize large do looking like tuck-ins? IT do or large of on you Obviously, passed priority potential in at -- are the potential speaking, the transformative how be a space. looks also In Atos mentioned profile imagine acquisitions deal risk years, there's DXC. generally then risks as them. Over at at acquisitions? I high, discipline, large versus been look there's between higher you And to the Because for the were look how well? then another

George Schindler

Yes. Well, as do prioritizing, want can to we -- Yes. it's mainly and far as both. we believe

of has regions been market, So highly each done them we've the in successful the there's of tuck-ins -- strategy the in. metro

that merge What so look cultural with part a aspiration our of absolutely, clients that going type changes we're be path priority for strategy. want path those that company culture the the And of looking our do that prong And And we we us, of to fit that on to cultural list. and that to work CGI have fit. doing, though, type meet and they're is the mainly is continues to if the But for as that of company and the a model. on. mesh they the remember, in transformational, be we're of continues doubling at transactions, will that don't that with the overall we're

going main and that some also we will we the list main the that the reason these, stages. This reason on be is beginning expanding have an we after. at still that's pass So it's of consolidation

Paul Treiber

And my minority when of culture last similar lot just at Like the to see market the it competitors competitors do you question, a a IT a on culture? culture. in similar with general, or you there out look of the is of you services

George Schindler

It's mix. a a mix. It's

for I they decide industry And That's we where provider digital play the to our transformation the is market the playing is broadening want -- to different the what each think say end-to-end mix can and to see of as that in. where and providers continue. that actually, as accelerates towards You want be enterprise I piece clients. we're player wants

Operator

Matt with Next Sachs. question comes from Goldman O'Neill

Matthew O'Neill

those sort as repurchase M&A best-ever of like a X- for potential consistent material and as, horizon well to little bit of seems to announced. as course, of come back margins the doubling, around down a It the of the lot both the share X-year themes as the well kind

the way, of I was So a could maybe in little of dig those more. we out with many bit hoping

when you an administration You mentioned change then new to of sort federal there? to could to point the it air duration administration new that Is then ultimately, bookings far to where little Is ramp represents us side there in. softness of a lot side. as the that a any and X, there's comes little federal historical maybe probably the up before point pocket around Or positive air of of a anything quarter things required above precedent magnitude? as on And you a bit back a of bit and generally a that pocket before? as or on they expect were

George Schindler

It's the no typically to more some that's thanks those questions. politicals or coupled positions. usually where their It's than just to new quarter in done things XXX-day with But get a quickly. a then Yes. -- politicals plan the are so for get same typically trying

data with of vehicles usually, it's be a security. of we're than those to administration's health, environment, our it's in opportunities that and in and priorities do going positioned both is course, nice national areas quarter. some be IT XG. technology, no new veterans' focus. alignment the So will well the more there intelligence as And believe cloud affairs, And artificial with I areas. And mentioned, a with We

come $XX we are. they've pledge example, exactly cyber initially of some an increase to they're as just in already and the said areas So in in going billion

we that But bit in historical there'll a that do is little very of well environment. that So transition. the be

Matthew O'Neill

federal that incrementally assumption? safe push be the up that administration more And on bit I there think a the word new digital Does it seems come but say going more that on -- the to has things frequently inclination inevitability, a helpful. be an already. really this to digital? it's side, It to seem of is all fairly call That's would safe

George Schindler

I think safe that's yes. assumption, a

Operator

Next question Capital. Paul comes with from Scotia Steep

Paul Steep

George, CGI looking can you're you within maybe might to the that just, then you of got opportunity, at that then gating against I've business, any however, And go categorize quick And the on either digital faster clarification. opportunity? the allow it? us to one remind factors maybe on want transformation, even size to

George Schindler

a making just gating and last your remote sure some COVID and learned that learned prior way mentioned get engage that with elegant is The to that. the given we ways some sure. ways, factor a that's question I we've in of is In in other in Well, first. challenging them. the relationships, in Yes, what more take offers do And environment. collaboration very ways, our customers really of front to we've

some one digital and really in hiring, that's can so why property because And I it our And in the is particularly our with people training, around people engineering, front. matter of of the accelerate mentioned investments business in that in business right transformation development the the get some a in that's clients those intellectual investments help of another and faster. us that getting

the gating. that's answer on So really the

first answers little we're probably bit perspective, doing now, right what of it change. still the time, a this as differently. that of seeing question these is part your point size now, we're in middle From the think Every a maybe I will well, company engagements. in But now pandemic. right

ways, or and somewhere phases in it in doing are some them some going of are Some between. all-in

and So really talked -- predicted this. it this. We about we

As exiting happen so meet rebounds which we proximity industry what to said rebounds is and differently know will industry, pandemic, and important within move the they why by is differently them again, to got the where the by is we will company are. because closer you've happen those

that's than seeing really that's but So less color you for, now, right or gives were you maybe color what looking that Paul. -- we're more

Paul Steep

categorized the desire acquisitions, just would past? versus table, be you're Is great that CGI think thus, interest has in? That's larger is might that should helpful. to, The things regards shouldn't clarification area off be there -- those characterize of a to thinking an the that example, be can legacy with infrastructure maybe you a avoid any having how book as transformational investors large for about maybe

George Schindler

only of do it. don't the do digital and Yes. any No, on new some the way, us and smaller thanks for the of don't on to required. we the ourselves elements limit of No, all is modernization legacy be quite think What important I in for not. is we're frankly, only to we transformation What's out question. miss would a want or, do part

fastest both biggest in we what the That's think certainly we and certainly and, clients to urge So them. to possible, is really want about we're sides, our consult successful to where will partner and be this to way. where best them them help that's play what on the

on not the you we get a client. say would where hold one but or side I wouldn't within that's play exclusively So never other, because pigeon

Operator

Daniel Next Chan from question comes with TD Securities.

Daniel Chan

Just competitive to The you? the that for environment these some potential on on expand questions DXC and impact of on the would and combination, infrastructure have acquisitions. transformational any Atos

George Schindler

exclusive the that's it to And Thanks playing. playing we're house. they they does play do infrastructure want of the Again, for side where that on play. that That's an from question. basis, No. not We're to where the end-to-end. if

somewhat. I results it's good clients. to -- think the like our sticking that our changes So does something and dynamics having But with always we're end-to-end, it

Daniel Chan

some the some or Okay. we just now open Brexit does delayed over but that the in increasing held on then over, maybe that And years? is or have few of the should largely across also the been EU? pent-up deals gates last being that not back expect And the U.K., opportunities,

George Schindler

their clients thought see think gradual Yes. are Brexit do But that's had work that working past helpful. -- to on shutdowns, et you like think good. That's that we're us of of I certainly better we that COVID, Most past glad say I'm -- I COVID being Yes, the see prepared that is But reacting we I didn't in, that in a COVID differently countries think that said the into cetera, I'd still something still basis. apologize. occurring. is I us. you plans. with was over. we'll -- many is

in U.K., thought COVID in we're that just reason the is period. think a of I still I the of shutdown immediately course,

a of Brexit. pent-up places. probably is as in that's as Brexit things comes in abates on that -- through point time will then so there some demand they U.K. be the and yes, more COVID than damper other and think But And past I us,

So I apologize.

Operator

from Ramsey comes Barclays. question El-Assal Next with

Ben Budish

in on for question way. the maybe it XXXth bit Budish a I'd a asking apologize Ramsey. ask in Ben could perhaps like I on to advance of for is This different margins and But M&A.

to your looking in at metro more services And some being remarks, I you like of acquisitions cases, think them strategy, some about growth-accretive and your tend to do as be market talked see lot large see the margin-additive. us IT of smaller for I think this with tend that you prepared a peers, in we margin-dilutive.

And add discuss, context looking targets kind so I'm metro market and not or maybe out? that for market could misunderstood of sure in earlier. But strategy, you at balance in that you mentioning perhaps least depth of the of if growth were all that either what I how how kind you the plays

George Schindler

portfolio, margins. the a cases, Yes, Yes. all it's lower margin When in we question. something CGI great is the CGI almost merge buy than and into the

we really day for up CGI the margins. up them X, then catalyst above bring is to margins but but Not margins the CGI. that the we So right, because, back growth, it's necessarily a dilutive, of bring CGI you're to it

so over you some of And that's see time, why that.

well that's highlighted And buy So why some why I market that's bit a of little François as a then as and metro in dilution, did back. we that, there's the prepared of larger remarks. comes it the mergers,

Ben Budish

could of lately talking being of investments big there? us sense you with I or up their if of a guys And CGI, We've doing that lot -- kind give activity kind again, what more your avenue. and -- you're sense. that one growth of ask making of really more. if I wonder could seen kind cloud how a of peers attractive kind size businesses just makes you and just kind That with for about Okay. in for a help is of

George Schindler

the clients the our integrations -- helping a -- systems in highlighted a actually lot and we're handful I I nuts. application migration that. cloud the extremely We and start the question. with in we've and the happen. space. and the some and yes, important. manage running built tools their it to clients of on then just assisting reinvigorating where for clients towards We'll use to is providers cloud We to that. with We're yes, make that of of various And some And we're to our cloud. thanks that. of with that examples mentioned in for I actually examples what have seeing methodologies that in to is the assist them Yes. highlighted when how how soup our And the partnerships consulting

this So providers. really is -- all cloud the and

them and, CGI. therefore, is them So for Oracle. And clients it's have Microsoft, we ongoing of Amazon, speak. really, getting important. opportunity to for a with each it's It's And as examples it's big it's Google, it's we and our projects closer

Operator

question CIBC. Price Stephanie Next comes from with

Stephanie Price

just terms what you delivery, a Just seeing in of project about wondering you if phase given could regions. little are in talk bit new are that the certain of lockdown

the mentioned U.K. you think ago. I minute a

George Schindler

Yes.

some are of better I say type at them bit with starts. of project of people even the a still think our way that of pandemic some wave So that we're this these engagements, shutdowns, kind of client what would they've a is differently. of up. things clients they ongoing our much they really, already have And looking They've working. or more the their kind the site though starts business. They delivering is plans. experience and of in they're from precautions, we that proper had are and working And built them prepared or office about stop the it's more of and based positive back They're It's the just didn't project an engagements. strategic more on of XX% way the delay, -- of this. into only giving actually experience start for have a new in more new their we're seeing had I confidence projects doing seeing And prepared to

Stephanie Price

seeing about And was a if you're for versus follow-up. what trends closure wondering the rates seeing could the deals? larger of deals? small you deals little sort the just around you're I bit talk maybe large a those And Okay.

George Schindler

and the to close larger actually larger seeing activity willingness on deals more We're Yes. deals. those

why in and it part, this smaller the remarks also I the think that's prepared on seeing I mentioned surprising we're side. the that

this next larger we with So say deals both. any And thought shutdowns. seeing it we're even move both of bit cost wave a deals little to going the just in more by of to But savings. seeing was are stopping We're way, I actually wouldn't that larger now. driven those

Operator

Young Canaccord comes from Genuity. with Next question Robert

Robert Young

seen to increases wanted said scope something just you've clarify driven renewals, earlier by around -- digital. strong I seen sometimes said you

was question, was more it you mixing And in Thanos' said towards digital. managed about asking think that was digital. I services shift

And so that guess you that said earlier. I you commented on

I'd are you in scope project? But the is this reference Or renewal at managed increase during -- So earlier service seeing taken point? comments happening renewals. to the that's your like something

George Schindler

if anytime. both. a little will, you, time. of A can remind renewal of happen renewal you time pronounced, both. It's But more It's at I'll little

do value it's savings, say couple that, in cetera. early the getting driven you of to right mechanisms our it we it's that and where managed I digitize. as these want the some in. now, need help can interesting renewal we're XXXX, able for et fund deals, make in-year at some wrap that to but doing get some So we a And contract transformation. savings a an and accelerate But actually said on service of correct agreements, proposition level is sure a to renewals reason that getting having way looking you to speak, to the being and fund upfront, that by in we're put the we ways digital clients. -- in-year That's But then being services it. in the also nice very But a

to wherewithal sheet do We just the have that. and the balance

that's that. And exciting. by mean So what pretty that's I

Robert Young

some margins? the would into shorter-term something... some work of of front-end better -- into turning is Okay. pulled projects are of And being like normally see sort And consulting for like managed front-end professional that Is is you deals? that larger -- services is -- that it Or normally these services?

George Schindler

and better margins, that. Yes. is about talked that for Well, have Yes. we

for other just turns into a sales that of a definitely lower that's because over a yes, consulting longer time opportunities. for And into utilization lead And that. experts big is contract intimacy, bigger that, the we client it's by of projects turns expertise can and that. systems have, different and, period -- not time. margin of the and reason the therefore, cost backed allows driver Some those and to you a relationship the have necessarily integration better up a That that rate,

Operator

Instructions]. [Operator

from Leung Veritas. Next with Howard question comes

Howard Leung

and savings SG&A to have talk I asked to touch lease just others about the kind of wanted focus on that on about side. -- the the

you last I comments offices time, for what the look the about guess model probably thought importance the after think it's made proximity the to CGI. at some guess, same I going about like, of you've I And noticed the I to you the were that? I vaccinations are modifications, of on year, to And think, what's There over. guys year's took Like lease last some kind also your thoughts write-downs some on made leases. statements.

how -- would kind back come the kind So stuff. what days it just to of thinking us people many give that the of of office and

George Schindler

of great -- benefits believe it's in others and we purposes Yes. clients creativity as out parts going about bringing the future. that, model, I that more thinking do office of exactly expect, is and for the the you to of the smaller said having in think of cities. question. to be We're that. to space do a proximity training interaction along. No, not our office office spaces is that's necessarily this And the Having our comes what being the spaces, and abandon with about. might at past not The there's looking we're to talking that different and We're of going

some see returning. go as convert on of All of be clients table business. over that and That will our we and for costs optimizing is to that. through for you'll time, time the our that take some certainly we'll But so the

Howard Leung

Right. Great.

point? more lease like rolls as at other that it's at might look options off So the you

George Schindler

Correct.

Howard Leung

then another turn is to wanted to renewal And rates. question the Right. I just

strong. that And guess, customer or I they're XX%, by by it is count? pre-COVID? what disclosed like, pretty revenue You which Is was

George Schindler

to revenue. X with XXs. where XX%? relationship. the strong we by No. been customers, consistent the have pretty And That's always mentioned good in pretty It's it been CGI. I've Was over have it's XX-year very common XXs. always tend relationships. in clients we've But over We X a

the highlighted remarks system that's how it do it today. approach giving highlighted it's part model and our I I That's the really opportunity the because relationships. value ownership the and services. and why And we so But to -- add-on of in us that

Howard Leung

correlate rate guess it Right. increase? bigger -- I you becomes if that to your part IP revenue, with expect Right. might of renewal And might a

George Schindler

giving Yes. financial Well, in investments but and pretty are business componentization now, IP, services, IP more is nice as as for we're IP. our something to all of right that them becoming specifically making more intellectual platforms we some in essentially service, property which repurposing co-creation opportunities talked be much haven't us government of our -- flagship about, a

business an in accelerator and, intelligence suites packaging our industries, certain financial intelligent from in clients' these IP our for so adding CGI for also also again, into data then And like health, and utilities automation but business. application across areas services. We're IP also becomes our both

make to driver So acceleration our exciting of business, for course, them some of a with our first, we're doing business. the for clients' for the work but IP --

Maher Yaghi

and to quarter. you, call, look you. Thank for us at we everyone, of being with speaking Thank on today forward end the to next you the

George Schindler

Thank you.

Operator

And today's this conference call. concludes

disconnect. You may now

CGI (GIB) 27 Jan 212021 Q1 Earnings call transcript