GIB - Earnings call transcript Q3 2022

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Operator

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.

Kevin Linder

Thank you, Sylvia, and good morning. Perron, CGI's President Fiscal Executive and and and discuss George Results Vice to and CFO; our President Schindler, CEO; Steve me Third XXXX Quarter are President Corporate With Controller. Vice Senior François Boulanger, May Pacific and position assume U.S. operations, and Operating excluding on President North CGI's François Officer, will the Effective October overseeing announced American XX, X, Chief previously the of and Asia Federal segment. Vice Executive Steve will and Financial Officer. position assume President Chief of the of years He roles and ago senior joined number Controller finance being a XXXX. XX Corporate named CGI before held in roles appointments their and and The industry. François Steve of IT the understanding to business their CGI's new reflect of services deep of This a.m. is live broadcast recorded and at call X:XX on being cgi.com Eastern on Time July XX, Wednesday, XXXX. we for statements have are issued earlier as and slides of notes both Supplemental this SEDAR download, MD&A, financial with EDGAR. release available our and QX accompanying filed with which all well as been press along morning the on note forward-looking. made Please may some be that statements the call may those statements, whether Actual or new or forward-looking any or disclaims otherwise. expressed revise or obligation a to materially result intent events CGI and results information, as of any events implied update or differ future from well both The statement harbor is release available cgi.com. on MD&A complete and press in as safe as our read We entirety. recommend our it investors its in

accordance We or in reporting are our Reporting financial with Standards Financial International results IFRS.

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

Steve take outlook. our this expressed then market our dollar and turn the of key François? Canadian, George, and review on François then on over business will figures are to questions. it noted. comment George unless François All now call will otherwise to and I'll financials,

François Boulanger

again on share costs, and improved to the double-digit morning, constant revenue and EPS, our Kevin, for currency. we XX% of when pleased as am of considering third with growth XX currency QX, see to our points XXXX. and fluctuations our you, integration services. I everyone. of expanded excluding even demand fiscal by by quarter the strong we Thank impact basis delivered continue you Canadian acquisition In Adjusted XX%, results currency reporting good negative EBIT margin to European

Germany, this As during quarter now comprised new a and Scandinavia are reporting of and first Central in Europe, and are Scandinavian we These structure. particularly profitability, Sweden in April, reminder, as East to Eastern Republic. comprised expand and Netherlands, our and and the Northwest Europe with organization The allow of drive our countries. Denmark the and to our Central is call Scandinavia primarily Europe growth the announced will former us Czech and Central and Norway; changes segments, revenue

XX.X%; the the up up This commercial all quarter, and impact. state in year-over-year Pacific, Notably, was million the strong of when our following Southern currency segments Western up foreign constant up and positive Europe, up by segments: government, of revenue and delivered XX.X% billion, XX.X%; Canada, Asia unfavorable growth quarter. growth $X.XX currency XX.X%. driven $XXX was XX.X%; excluding For U.S.

The XX,XXX. consultants of for clients of located proximity our In members in and fact, close to by professionals support year-over-year a of majority number XX,XXX our increased total collaboration. our the are to

quarter, representing of delivery continued offshore services. a and for of productivity proportion in centers by system centers integration based enhance made XX% this our delivery robust demand were bookings of are However, a effectiveness. global delivery excellence our currently billion, excellence. large led of Total our our consulting quarter to of and for the in XXX% hires were members our book-to-bill Overall, $X.X

growing evidenced demand areas. for by recurring these IP we as service Our remain see managed services XX-month in and and deals both strong on expect pipeline to our a and bookings trailing basis, larger ongoing

Health XX% digitization. up led in XXX%. while a at space-based year-over-year government in months, projected book-to-bill delivers data and health date XX% had services cybersecurity, prioritize range and our our And proposition, delivery secured interest their X the proximity XXX% of clients months pipeline a basis. acceleration them and perspective, at savings value date as on solutions, cost see from the a care We of led basis. deals X-year by the next which year-over-year with a decision fact, state projected book-to-bill agencies high book-to-bill protection; above is supporting such opportunities decision data organizations next continue an virtual for strength health as managed a continue with social for with Australia for while and up to are U.K. all initiatives -- by XXX%, of geographic In commercial increasing IP with CGI. of in XX In environment on our pipeline XXX% also XX a QX, XXX% industry enable segments U.S. areas and domestic of having to as and privacy X a at government infrastructure, our services, ensuring and

in the to response more of as billable in acquisitions Our and on The XX-month XX%, of remain comprised adjusted X a year. and than driven X.Xx onboarding is high in basis of in recurring Europe notably XX.X% when offsets revenue QX and utilization as to to Western due long-term EBIT lower by was year-to-date well Asia recent to last up increase of QX new at billion, EBIT impact dilutive and $XXX segments geographies Southern while and XX continues at vast Canada margin, last demand. basis U.S. global for our Overall, at With services. XX.X% backlog stronger We largely Pacific $XX.X improvement and our margins, strong margin in to segments points million, book-to-bill at XX EBIT reporting points EBIT year-over-year revenue. delivered Federal to hires XX.X%. respect This basis engagement. was backlog demand very the an was representing improvements offshore basis, in our The to XX.X%, several temporary the year. strong new margin increased compared profitability, delivered compared XXX% trailing a we our U.S. on majority of

XX.X% tax effective QX prior XX.X% rate was compared in Our year. the in to

for were range strategy. earnings continue We growth of the expect Net were and of our and mainly diluted execution $X.XX Buy XX.X%. share improvement earnings driven per tax rate representing an XX.X% to to year-over-year. future quarters million of was by be to the Build our $XXX This in profitable expansion XX%

year. in Excluding earnings margin integration year. of net accretion provided $X.XX, XX.X% earnings and XX.X% In $X.XX diluted the $XXX to or same quarter a XX of $XXX was XX per comparable the million, by days days when year. X-day costs, Umanis removing of the created last prior DSO by reflecting timing was acquisition. to to cash million last of compares XX when the the quarter, compared activities This the share an days operating were impact

XX.X% XX provided Build represents share. segment. billion was to activities mainly Europe deployed fuel Southern $XXX growth revenue. quarter, or of months, cash and in last operating $X.XX Umanis and for cash Buy per profitable and Western our both in million $X.X our acquisitions, strategy, by the For This In the we Harwell the

million of buying all $XXX.XX. CGI announced and to acquired the XX% $XXX remaining at approximately in process launched a July back million we As invested shares X.X XX, on shares. of acquire average Umanis' price shares QX, In over squeeze-out weighted

million buy up back ago end under the NCIB authorization XX.X% a to had XX.X the yield our the to results invested program. period. June, year of of shares to XX.X% additional return capital As an in we on of current These compared prior

growth delivering was double-digit at be our on end At capital to CGI our focus net debt is strategy of is balance cornerstone the average The returns ratio by strong our long-term X.XX%. continues and profitable allocation rate interest sheet of ahead, and of June, XX.X% capitalization our to Looking shareholders. our fixed an to debt position. builds

needed. available $X.X We also readily cash to billion have access with if of more

I'll turn George. the to call Now George? over

George Schindler

good CGI's of a third rigor industries and performance strong consistent of economic enterprise the across of everyone. cycles. clients for our breadth the François, track value which proven the you, delivery Thank end-to-end again of in operational fiscal all morning, have and we XXXX, services, demonstrated record our all through the quarter

Our value benefit environment. clients today's portfolio drive expansion value-based we're able margin to right of solutions navigate end-to-end to stakeholders. CGI creating clients, and of of market all for the provides our the growth combination services for By revenue help our

currency Our and we strategy, revenue growth and broad-based XX.X% segments. constant all in margin. across growth basis accretion Consistent geographic the industry and a double-digit on quarter EPS expanded EBIT profitable was our again with delivered

CGI client services. Relating as expected clients flat managed plans OpEx interviews a plan from economic I for the spending clients opportunity managed the operations a to efficiency share representative the XX% good on to and year of operational were the into services quarters. we to and their CGI examples then agility. spend this the services value each cost for based asking and X,XXX response illustrate generate manage client executives. nearly We predictions. coming to cost their clients with conducted clear of year, visibility these legacy trend IT by of over the some declining insights end-to-end operations over to to would bookings years, new along we earlier interviews plan like next sustained increase demand, ongoing X to which that CGI's transformed clients' are take the engagements, managed subsequently on on part where In have point savings in with next XX% of and services, for services modernize to their over Correspondingly, up accelerating reliance awarded QX a to QX, in in

part their and of renewed to executives expanded CGI or reliability to to SRXXX, of partnership of $XXX the full hybrid ecosystem. long-term deliver a as will Human our office to Society partnership. and million, and Resource HR transformation. solutions the delivery managed safety public transformation a their leading their world. overall help improve proprietary through digital solutions ongoing selected digital protection accelerate which modernize deepen the company For a them as services their them services entered of the our portfolio. enable on cloud with and engagement, of their business deploy And home more client through example, will XX-year an CGI CGI serve member to for cloud U.K. X-year deliver the expected management Rio global help public with the use for and CGI partner has the the police digitization. CGI into $XXX site automates base Management future metals around also strategic will agency XXX,XXX Under technology which a million user-centric spend impact mining of than Tinto, work CGI strategic and and IP

voice flat over of XX% CapEx the the integration, our and systems year. planned to consulting related spend clients to increasing of Turning next clients' findings to

invest plan to more X our in IT plan our In IT digitization talent, years. clients XX% difficulty of higher Furthermore, new addition, IT are a over having to services of million $XXX they clients to who indicated leading next the programs the of proportion majority their externalize of over hiring of work. clients

demonstrated Given was and quarter. in these findings, systems integration CGI's by for This strong numerous services. wins remains consulting demand the

For deliver an the automated concept the chose CGI's a of example, independent development new CGI the also of a Maersk cybersecurity. Commission constellation. team the and Denmark IT German work strategic agreement will for to and satellite in application to operating development constellation support of services. our European satellite agile include embedding European range comprehensive awarded the consulting creation

reducing global to market engaged digital time help our the chain, and accelerate the to and agile and for CGI's delivery development increase bank's digital-first modernize transportation Bank logistics is risk. replicable will with value outcome-based services. of and while Development unique their their capacity for Maersk Canada transformation CGI helping slots. consultants reduce objectives velocity Our company's And improve model the Business costs model

operations, where intellectual we for our clients property. project for see an well impact increased a help of to counteract rising for CGI. we their in divestiture CGI's demand completed broader ongoing the the interest their on discussions, their such IP agility offerings on client and as as interest increase moving Now in rising engaging inflation, go-to-market engagements. to we through will Based monetizing of to part assume client-owned In proprietary optimize CGI ownership includes This IP as partnerships clients X IP. partnerships quarter,

a First, processes. to France bank for Financial mutual Canada end-to-end transfer banking global for agency retail with and second, a a fund in with in IGM solution streamline platform;

awarded also IP across CGI clients engagements QX, for industries. During multiple new

Cloud experience in IP. fashion hosted retail within For example, a will based The Google increase retailer CGI's our solution solution selected for omnichannel their consumers. France, performance point-of-sale suite and

for our California and Kentucky, the management and overview or of expanded Space CGI long-term financial This built sunflower with of Justice are York extended U.K., analytics as global One and with efficiently of momentum design is data finance government revenue and organizations was their a mergers sector, messaging, for federal and IP. for SenseXXX. development without partners rescue Agency we joined for extended provides result on firms. and the AFSXXX, as platform. IT cloud-based in Globally, services enterprise-wide that our clients our Consistent Department their a were ERP at for just M&A U.K. and U.S. platform and new built with the France, new partnership XX% government QX the solution continue expand we an based from contracts to IP. And IP-based organization revenue solution, level, helps Advantage more over operations. International search overall team, asset augmented accelerate New manufacturers pipeline include Spain. of the their the in our of services European for rescue and more percentage the CGI's in to reality state local Italy solutions asset recent government and and leading with implementation organize processing auto And relationship base of local CGI, onboarding in X holistic of situational in awarded new the systems support that management asset

and spent same compared our operates. of metrics Our the years management principles our structured current codifies system consultants stakeholders. and for by importantly, allowing to as well services active Through increase frameworks IP-based when XX integrate us time Including values, company. do last and policies, and rapidly IP, to and of we our services, around CGI Foundation by supported and and innovating enables This teams delivery, world our on one year. we consulting efficiently operational facilitate management Most effectively, mergers. X targets to secure and XXX% to are proven maximize project supporting act is M&A, incorporates Management best CGI the to our govern for to enables which integration managed practices profitably combination all value performance foundation, and to deliver clients. ensure new excellence the everywhere consistently time foundation The high-quality

Looking ahead, to Buy continue strategy continuously Build will positioning. pursue to and our we our strengthen

investments consulting emerging in to hires camps. courses join client First, we're boot preparing rapidly engagements new university through and practical technology

the part of training of addition, In we all existing plan year increase full ongoing development continue as in to career investment our to talent invest our by XX%.

in all Our in up last hiring high we levels compared same experience XX%, hires, to the graduate with quarter at line increases and of remains and and new university record respectively, needs. had talent XX% new at client Notably, year. a training

seek in Secondly, our clients managed services to savings. cost invest we capabilities increasingly who to support continue

respond additional adding engagement. capacity deal strategic to they local services we our to support center are an fact, client demand teams as larger for In in managed provide solutioning increasing for

services needs, IP-based alliance and to global our portfolio solutions, solutions well through existing added extending external our third-party IP our focused as to client proprietary investments enhancing relationships and on through to meet with bring client-based make their our adding Next, value IP with expanding our clients, delivering partners, as portfolio to in intellectual emerging we for and solutions IP M&A continue property. of integrating our firms new

a consultants to at robust, role this remain billion and primarily programs. buy nearly given on and data, and to services and in conditions the faster market the on solutions; buying executing activity metro be in and Umanis, serving XXX for transformational drive Harwell, M&A business in our pipeline and modernization in France. we with digital we our adding strategy, adding X services remains and digitization clients $X for is growth plan closed quantity critical plays our creating specializing mergers. positioned closing, mergers financial sector enterprise-level and the third new market X,XXX more are investment consultants quarter, We In all year. professionals well accelerating favorable in In services a continue mergers, helping demand IT end-to-end growing business client that pace. M&A in clients our and firms and planned meet our both quality Finally, through Valuations to pace continue of for

XX,XXX their with a and professionals are and of accelerate capacity, We help digital transformation. expertise team worldwide consultants footprint now clients a to

We support. questions now, are Go you well and structured interest continued margin the CGI and to all continue Kevin? of revenue benefit X driving growth your of expansion Thank for for to stakeholders.

Kevin Linder

Thanks, George.

from questions please. the up queue let's participants, we, the So

Operator

[Operator first Instructions]. BMO will at And your Markets. be Capital from question Moschopoulos Thanos

Thanos Moschopoulos

recent the demand roles. Clearly, you in still in cycles, customer tone, having to to weeks, conversations frames? new you're you're most been have side. strong decision-making there out with say explicitly Congratulations demand look you backdrop? seeing consistent is you call it geographies on on like and be terms But across very macro George, of terms in sounds the at of maybe changes time just sales industries if and expanding clear, François the Steve any environment. the would Or a that

George Schindler

but IT. And all And across this pretty up. and holding change it Yes. The discussions go CXOs, they of the with want IT. appetite course, in Europe they around with where not I doesn't had. given those mining the there's May is true North both more had and go way in is Thanos. their changing supply. overall their both demand about discussions where in Thanks consistent question, America, inflation resolve to that's write the economy think discussion demand But change the the recent cases, business their it's for I've tightening might I've discussions where the of for and

summer seriously, can that strong, that right IT remains you see pipeline. have of Europe But holidays. it the appears from course, our demand now, in Now we

Thanos Moschopoulos

extent more function past does in Or there guess, offshore the reasons? I you growth market? you're labor of that's pipe than favoring offshore growth where it the cost labor the is that availability a have clients seeing terms the across in for of a And industry, would and just we've that's more seen broadly, and say now to greater right the do with to Great.

George Schindler

combination I role. a cost think it's plays factors. of Certainly, increasingly a

the say probably driver. So the drivers, I key one would of key that's

I nature by the that lot they're recognition pandemic a given more it. think a remote the there's to open of of over work clients also

talent everybody around then of creative more that the secondary. And onshore CGI get something tell looking is and so also some -- you, I'll for. delivery you they're getting nearshore And a that's that availability the centers But global is has.

so And kind of that, combination a which there's interest you still in the gives above. of

Thanos Moschopoulos

And finally, seem kind the your offshore over would of the growing well XX% tracking about for Day, seeing, Investor that talked headcount at that growth we're given revenue point, X the at a years. you're a related It you take next but...

George Schindler

Exactly right. observation. Thanks delivery. right. in Exactly global percentage Higher for

Operator

Stephanie from And at next will be your Price CIBC. question

Stephanie Price

a takes I you and was in about hoping flow in little the could talk cash the puts bit quarter.

of As seen. revenue, looks historically like we've a it it's than percentage lower

François Boulanger

Yes. Thanks, Stephanie.

it cap. And a by of explained is working lot right. You're the

growth sure, for So -- it's more bit asking working be growth a to with -- invested. the the of acceleration to cap

So coming XX, high big XX to were and XXXX, reduce a where last the capable the year. that's we a XXs of reduction the it's or were year, it to days And had impact last at of we DSO at because least onetime and beginning really XXs, we from. year

that the at us because have, don't level. a bump that's the working on gave growth this we giving cap. same it with it pressure the we're But that that we maintaining see So naturally, some onetime year

Stephanie Price

some and CGI. IT clients was you large bit be. little open deeper you could a Okay. That's about talk to this mentioned are that into then, how comment helpful. dig hoping George, divest this I to could looking And

George Schindler

of in We've I in France, it's those. their they within mentioned year organizations. that? with at, X building conditions, current a our IT they're the economic this Well, and been IGM they then having And X, clients the pipeline have but that with and interesting, -- given And it's discussion X looking can here Canada And in the we're unlock sizable. Yes. of Stephanie. looking at every lock own pretty course,

they overall didn't Now build we into sure the to because fit have we them. make that portfolio

some so flavor the clients. both client providing M&A. same outsourcing back services have And M&A diligence a They come with the they we're of doing and we other due to of because us that kind with way usually maybe an do and even

but early So iceberg, of -- to on it's come tip the days, that. more

Stephanie Price

think a environment, pieces following out then And macro which up there could in If think And Thanos' has even business about be changing very weaker what of in me, weaker to for more, just resilient? question, demand been on finally or market can CGI's strong. more a through Obviously, we kind and walk you are economy? changing you this were opportunities the

George Schindler

Yes. with us proximity we've economic Well, those opening us got something it's multiple services and really in go-to-market conditions. services structured to emphasize that in mentioned the end-to-end is that I allow thrive It to are solution obviously to that my starts different enables really and remarks highest demand. which model,

more on In and both demand. the time, pivot we're point of highest -- this fact, services. also proximity by, and the IT structure support the systems in the integration. centers, in complement managed to But our and but those we're and kind consulting global those obviously, delivery solutions in the able At

to allows us that happen. structure So that make

typically areas far resilient. services the deliver you And cost the those at higher and and higher deals, those larger IT one. deals, we into nice about cost deals. because become be lower where margins move of clearly, and more that when So the once They savings important recurring to to tend thing get can we profit are is tend more it's longer-term managed be utilization sales

you And in recessionary as so very sure done we've prior well periods. I'm know,

and some Certainly seeing not out. it's in think We're differently. discretionary. in actually to an is that's systems IT even the not expect will pipeline strength you that no what gives shows, conversation integration the go demand little systems dramatically. I I longer we of is where going like consulting integration though, bit in different services And you, think those of time. is a see. this have. some what tell what I'll idea the That what don't Now I consulting. respond how certainly prior we're think end-to-end of play and we periods our don't contract

Operator

Next from Desjardins. Jerome be will Dubreuil question at

Jerome Dubreuil

I a negative tech the on have on your this is more or could for not available with also if positive particularly for Mine know your you but layoffs, impact I'm peers, direct CGI, but apparent talent clients. wondering guys

So maybe a economy. on not read great the

can So on if you this. provide color

George Schindler

Sure.

You're the consumer on right. the It's is it related. some One those gives unlock are but big than space in partnership looking us space opportunities. with IT. tech discussed around we consumer of side. what really side, lot Not really other is the not proprietary yes, to clients directly we A of said Stephanie talent or on the the that, closer to Having their just X are. unlike

a I with richer lines have think -- partners. bigger of big get global some for we'll partnerships we'll environment our are those a which some of tech

business-to-business is certainly, But there. our not directly in in IT on side opportunity to related the business there's think different. it's services I So

Operator

question be James. will at Raymond Next from Steven Li

Steven Li

the stood lumpy bookings Fed a your anything in saw but looks U.S. you I was George, to out, call bit want out Europe? or fine, anything

George Schindler

No, multiyear IT managed services. some particularly highlighted. And deals SI&C, the in those are they strong yes. that. bookings François the were thanks for Yes, and obviously Yes, not as that of

see. you what see you why that's So

still, it's said, you So strong. very very, like

some some without you we right. U.S. on that to government where CGI. bookings saw larger are see. strong bookings our of did even of bookings exceptionally had you Federal Some big were deals the the remind those so always right, the side, backlogs the that's though, I'll you, strongest in And are deals pushed the to push lumpy, what

a well And business CGI U.S. Xx over is about of of X.X. Canada, course, it's has X.X, revenue. Our the which federal backlog

and work the out. results the is that last and then of in point but -- thing some of itself the acquisitions time, recent skew will So some just restructuring the

pretty in So pipeline the feel healthy quarters. the to will coming confident we bookings that lead

So nothing looking big, you were commentary gives of color some for. -- some maybe the but you that

Steven Li

George? Europe, clocks in new And

George Schindler

the said like we Europe, in sustaining. In the earlier, Europe, see yes. I demand to I continue season. Europe, It's side on mean it's strength and holiday

cyclical still nature very weeks, But some I for the Europe to actions be recent in all discussions, get demand the just appears X You there. in there. strong and

Steven Li

Got it.

Okay. then how the update just give appointment. a similar congrats comment maybe up François, IT. your comments pipeline you much The year-over-year? helpful. very us it's an And Can on IT make on on pipeline, Or

François Boulanger

Yes. remarks. your in Thanks

So Yes, pipeline did IT year-over-year. up side Steven. go the on thanks,

So well. going it's

momentum -- have including lot side European We a and of the segments. with North that America on in in

So momentum XX a a that the decision-making larger we -- IT. the in is seeing and of on deals some in happen good saw lot will the we're there, last of months, next -- in

Steven Li

Typically, Got it. congrats, utilization And hires. utilization lower of for catch in the onboarding The up does then the quickly maybe we've a comments, Steve. margin quarter? new question Steve. and back Also, Canada U.S., pretty like next

Steve Perron

Yes.

questions. our you're strategy Thank Yes. and and you thank obviously, when hiring Look, it's you. now, are we congrats, doing you of right camps. utilization, thank your boot all, for the First for some people

people available. as training. utilization. folks are are are impact Obviously, an But in obviously, We new has they soon on the training it hires, finalizing as their

-- obviously, and this because the demand We we will readjust. are hiring see them

George Schindler

a bit to quickly, continue hire. Yes, a correct tailwind But pretty Steven. news is itself it's to we of good the

demand we're So we a the continue -- to have on hiring strong side.

So a to kind moderates, of be ultimately, but quarters the tailwind in will it come.

Operator

be from Goldman Brian will Sachs. question Essex at Next

Brian Essex

circle would could X,XXX back increase you about in Look, over you with that utilization lateral inorganic maybe the -- you imagine I some guess, would I been little maybe the like I I mentioned head were hiring if higher. was from have comments. think a a that on came you nice acquisition. commentary a looks wondering of that reconcile Could these, count add. had adds lot It of

of of So me the and one understand maybe mix that help have? dig utilization that kind to comments what you reconciles if you layer how can with the kind is deeper

George Schindler

question, Brian. the for Thanks Yes. Yes.

most right, pretty the stay inorganic As cases, much, you're hires, existing clients. billable in their with they

have Of utilization higher course, management -- we typically have of CGI part foundation. a as our target within

and So as process. as integration new go university new significantly, yes, that, But cetera. our are X,XXX hires do onboarding our of particularly training those hiring, mentioned, the joining independent of hires. et us of classes, training Over that's up the net those part through They I in grads. of part

are so some that as the to that centers best India. they're a And through camp of much particularly hit running X- suited delivery to about training go boot as really in those XX-week on hiring also well in to our make They clients. driving sure individuals ground our higher global

is comes a a discussed little where it we a of back bit as really But it Steven, So situation pretty with there's lag. quickly.

Brian Essex

integration that consulting across than challenging on when of we off are you versus 'XX integration business, system maybe enterprise Got to a you of appreciation seeing Are there a interesting seeing relative had a more What industry, fell of of particularly kind if environments? Or you've had just in the within newfound it. Very the is precipitously. digital cloud macro scalability Really demand, work integration frame the you saw business? work perhaps split of different 'XX, can mix in and and that inside consulting time exposure you out, historically commentary maybe helpful. environment. that

George Schindler

having tight. work the instances, There's I do externalize. right fact work talent. the to they of that really which clients adding lot would preferred in given to -- the supply we're IT interesting. normally doing couple that things very filling work now difficulty some that a is are integration our mentioned it's would systems of our is XX% that have themselves of the clients Well, are Yes. A different maybe hiring are

a high IT a is I continuing, demand. think been where this the absolutely so shift, I've point, I downturn there in having. that talent And continues especially see your be yes, to to in discussion can and is And

recently, and CXO I preparing also a shift. more ever have environment, Europe one preparing I like -- the in to than That's that. we a discussion discussion this. I where We're you for yet had IT that's recessionary a in we're think with went spend heard fact, don't think before. In

Brian Essex

commentary. Agree. Very Yes. Agree. helpful

appreciate really it. So

Operator

question Chan from be Next Securities. at will TD Daniel

Daniel Chan

whether any can you're Just wondering increased hide you're costs seeing? environment, offset able on color if the to you the pricing

George Schindler

has. sensitive our of to there. for there. services, the expand do mean ability, if some I that having that is despite our think that et IT some counteracting that And experience that some value-based doing to to the pricing wage doing and come -- in Services a yes. that our We're in of impact We getting of opportunities the particularly very new are going disciplined increase. the on that still management of we're that can foundation starts, given but some around wage to less of then about we're inflation, for project the with have -- built corresponding course, do margins. think seeing cetera. value rate in if price opportunities you in a there we're through through each lockstep, can talent good of the pretty new definitely raise IP Yes, And but in, has top the is elasticity pretty fact, to I We for job But of that project really obviously good yes, talked indexation world, our has in proposition team engagements. the headwinds Managed that us temporarily other you see clearly our we're the -- we're of that rotations. inflation we wages able

Daniel Chan

the That's helpful. joining I'm late. call very

asked someone you're if give on an else wonder this billion know just update already, for $X on don't that if I but can of acquisitions. you us still I whether So track

George Schindler

that did Yes. still a mention base. on we're Yes. I

Operator

question will from at Canaccord Next Genuity. Robert be Young

Robert Young

could me for be be whether a question the pause First would kind any in of demand. on there

that the spend XX% Is growing? a had managed on grown the said or might clients service budgets you of there budgets, shifting the And IT basis. maybe some in even potential? You if on year-over-year deals described or consistent prepared that comments a they way pipeline are IT

not or any people shift so that's towards a happening there delay. And Is pause elongation managed there services? as more

George Schindler

Yes, the in a XX be it's a months. now, right last there do but be don't shift question. opportunity managed and it see over there we've believe there why a -- will that's we been the services, good will investing I bigger

and that top something did of. that pipeline will kind the matter But that's rich we don't I of converting So you're those. in we'll be those a some right of stay have see but and seeing now, we that nice quarter, on gap wins us of have

Robert Young

CGI's what you long of agreement. exactly very better mean know that business is to just lot then a And on services. by outsourcing managed terms very, understand I contract

services of Is and Or maybe exactly just is is out the what that growth think So Like of multiyear? arc your services where context? in XX% is XX-year? lay landscape when managed managed is outsourcing you about of it it sort what exactly the occurring? to

George Schindler

Yes.

but it, but longer-term actually Society us understand the do why, Human legacy, going us of deals, but mention I they're operations. doing continue us on and in if X- services had do to I of it's take legacy, contract, Rio not a the typically XX-year that, little they're the this bit we're of later, with to manage so which XX-year So I bit you're of different the be modernize to to asking asking is my the did join those And for typically take typically, managed what and is development then some more a on the did which we again Resources, just remarks all they're with modernized that mentioned Tinto. where and to going modernization a to a are we you to contract, this that's

both And that's examples those that. that client, And of So talking and some not between and really cases. running here. a we we're what's for of We're an in change that's what integrated taking difference space. and what going by run about the about infrastructure the in just on portion a are talking mean on build that

Robert Young

question, hiring. comments And for just around color. Okay. the earlier the maybe last then around That's great

a I new continuing -- shifting a experienced the maybe impression younger more little you hire I is think aggressively. market, the a comment you're to that, inflation you term utilization not longer lag understand that short over market correcting I'm with hearing... term. if why around might wage tight trying that are that hiring tighter in to or or think -- that grader continue got And towards in the less But then correct? in

George Schindler

of you're -- the Well, Yes. absolutely right. one

you level delivery the price And be the clients. We to raising shifting to to also provide had ensure want hiring entry global of question the but to savings the and some and competitive rates, that's centers. are we the on that the

that And entry labor is folks our to so sure make and to delivery is bring global in level for in. that the that the one bring of ways we structure situated

a a So hiring ultimately it stops, that Once should I think continue. of But moderated to moderate the in when has over you it nothing from it there, bigger and would but tailwind, you'll when now a that that's see just the effect. hiring be to is system time. bit be going it's something, go more

Operator

will be question Next from RBC at Paul Treiber Capital.

Paul Treiber

pricing. your comments follow-up to on regards question in Just a

has You because mentioned indexes quarterly? Does CPI adjust? indexation other managed it services that pricing contracts. or that quickly it quite then year. Is use And significantly this increase there Or does include obviously, is CPI annual? you for been how

George Schindler

Yes, it's some And that. François, have... don't Steve, I typically or know you derivative if CPI of

François Boulanger

to really linked And IT increases, right?

George Schindler

not... So it's

François Boulanger

and CPI, not It's industry. overall but the really CPI IT

we'll annual discussion at the contract that depends the to of that's a have the that and the we time of the it outsourcing CPI. sometimes managed lot related when And have year of will be at for as where time, once that increase where it's specific again, services most -- anniversary on or really material side. So managed the increases services, faster than a

Paul Treiber

a broken driven growth looking next done there? or significant the year, then organic a pricing? did analysis to proportion out on of And be revenue have growth forward from this significant impact it pricing you over anticipate quarter? the Have And

François Boulanger

coming The increase right? our Because see headcount. can billable XX,XXX in the again the head I majority from -- and by if bulk headcount count, the of it say. quantity, increase is in We did you is headcount

say, I if the increase. price of bulk is quantity naturally, So the the indices can versus

Paul Treiber

one helpful. just And one. That's Okay. last

to quite small, just energy I terms Germany, in investments, their that around are business in German but thinking there the change be is I your headwinds facing costs? may any sort of you seeing in vertical, they know regards given that manufacturing macro Just mean, in IT of particular,

George Schindler

Yes.

maybe maybe are think consulting of side but more I a a It's bit less looking our end-to-end to they're play on where where services specific side. Germany, and in the at bit those little discussions. managed having some the services integration more -- on we systems little

it's and -- environment. So to still specific that very

I a think we're a discussions. that's the those more or of maybe one -- little having those of little more seeing area where

Operator

will Stifel. Suthan question Sukumar at be from Next

Suthan Sukumar

and Steve François on the appointments. Congrats

markets. your The first on question I had was on vertical the

to respect out we some of seeing quarter, within saw call you're with trends there board. strength some just of industry groups. across the I'm if This to here wondering these specific anything the

George Schindler

also right little actually, Thanks And if absolutely in services, services. the healthy, But that then small, for double-digit Yes. industries strongest the very health but that, us could growth for -- say but The is us. behind are MRD financial for financial it's strong I right question. smaller is was now strong. very a probably

of are larger kind the the with news. So CGI. which is areas strength us, stronger the of are right And ones government aligned of ones spending for good

government And U.S. in that's around come side, big on should book-to-bill continued growth that will our And strong back. there. out, business, which without so the And bookings which following Federal well like is pointed the we're for François bode world. -- which

good in. So we're we're the pretty about feeling industries biggest

Suthan Sukumar

Okay.

obviously, your here. to expansion margin margin testament ahead. on Okay. is -- And management mean, looking you still sounds it guys your the I margin And on Great. like a are outlook, your for performance cost further

what your of leveraging current that margin low-end longer you have some other available other term. there from pricing drive that to the you any address? Are power, can Aside expansion are levers fruits

George Schindler

one out Yes. structure. increase I I mean, margins in opportunities geographic area is new would point to those

changes more those and and Central and reasons bring the in we Scandinavia Central line. Europe made margins of the Northwest was East Europe to One to

in doing then bit is growth And revenues. on -- more of have addition starting the to the we're to to of do term, team see I'm with little but the you're about some the really so is talking improvements. we've longer what there. mix that And there, work we the pleased been a

building The deals. net managed than drive we a services in rates IT, different, more pointed of a quick healthy out because is As margins services, in larger on we very but that higher are and sales but why it those higher margin managed cost move it's And a a I higher also IT. we're pipeline rates utilization, SI&C, the the return. can those comes then lower of at to M&A

it's And different so just a business.

that's the services. in comes margins end-to-end over But expand all on pretty it bullish time. why we're obviously, Now continuing to together the

Operator

Bank will Kupferberg from of America. at be Jason question Next

Unidentified Analyst

assume is for above significantly book-to-bill should accurate on the quarters the bit insight we next it's One, a there more closer of term? be it be a at stratification short looking looks to by number others. When some it Two ahead, Or regions of more thinking any be when helpful. mixed would of there'll in questions. This Or going a with like Tyler DuPont would few to Jason. think bag a segment, about X? normalized LTM

George Schindler

Yes.

I lumpy. think are always the for bookings are -- bookings question, always the thanks

I So in -- reasons think any point time. stratification think there's for I don't key

like that mentioned, we out over North segments. a do environment I the in We a and some But more America numbers in I it's both time, I acquisitions demand a skew said. normalized these think way. see strong continuing more bit, across -- As in recent pretty have play they'll Europe

Unidentified Analyst

thoughts on M&A the one question. I'm curious guess I front. And Perfect. more your about

And multiples, the then private that we markets, or are impacts just that you're decision-making do? any target? trying how geographies specific amount where you also both the in can your there's you types the tuck-ins verticals or with if size the public discuss to with Given and of that

George Schindler

mean, you're the frankly, -- capital definitely are coming competition, down. Yes. quite think is of valuations And that Well, increasing. there's the I cost less I bit a given

for importantly versus last about is the year. us, size so XX% And the up, same time deal

opportunities bigger sites. in So that seeing we more are are our

François... to tuned the we stay at it continue we change have Does materialize. that it those, way and as look grow so actual on that pipeline And

François Boulanger

are a year no, not making ago. prices But sense more is really. saying, than perhaps No, George like naturally,

in be that's for So environment why -- is for starting the -- acquisitions. perfect it's time to to pretty

on is opportunity putting good pipeline a the We're up. why that's seeing going so even we're and more And for people this, future.

Operator

Next Divya question be at Goal will from Scotiabank.

Unidentified Analyst

good X specific questions. Congratulations have I a on quarter.

CGI is them? what with explanation of the is be peers the are the doing, view revenue George, looking records gave, managed the on One of that a side, at up services lumped the could them, some the services managed you services, other way professional

George Schindler

the systems Yes, seeing Yes. some absorb in services in of of integration. we're what this managed fact, is, have been about larger We those earlier talked would one it quarters.

was great for is because integration of lower system sales managed at get There more more that, us now of that's coming seeing course, utilization of that same your it. and always that you in but think cost and services. rate some Of bigger the I we're

Unidentified Analyst

Okay. That's perfect.

look industry-related the that building it a might in be economy, the with it we strength? an in you're risk the Second is result question, on excess that increase that recession in it staffing time? are the slowdown at think year's a right technology And be but an where and some the could the not potentially respect kind all or And in related? truly more bench Or general hiring, hiring hiring bookings. that could hard obviously, Is question. industry and to hiring a corporates across standpoint, of from talk everyone's of an wanted the With potential side, here. there And potential so upfront? is to, a we it's whatnot. to just answer, CGI's facing all the seeing -- doing well ask that of industry we given and obviously services specifically and of a But I global and to question. obviously trimming down But size question say, given bodes now, project scale, in, kind I that just hear

George Schindler

question. it's No, relevant a think I

You the hiring pretty very manage on we discussion in proximity model, the and in we're management that from way our part is the We're realize foundation. clear. rigorous my may of

François, now my team. and weekly basis utilization a the fact, review In Steve I on with

not we're so And hiring for bench.

delivery global on our in that tight we're centers. of some have pretty we that. Now again, But

the that. But pretty meet of demand. So to obviously, to we're on tighter probably to we peers, some compared want be our able client

Operator

have we And Mr. no Linder, time, proceed. Please further questions. at this

Kevin Linder

for everyone, Thanks, you. participating. Thank Okay.

X-XXX-XXX-XXXX either passcode dialing website a a will of As by our call or replay XXXXXX. be available reminder, via this and the using

hours. directed few again, X-XXX-XXX-XXXX. soon. speaking and at to of be forward me to be a a well, podcast everyone, Thanks for Follow-up within call will download can available As this questions look

Operator

you gentlemen, Thank conference does your And your ask at time, Ladies lines. call again, thank disconnect today. that attending. please we you, for for sir. this you indeed this and conclude do Once

CGI (GIB) 27 Jul 222022 Q3 Earnings call transcript