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CGI Group, Inc. (NYSE:GIB)
Q1 2019 Earnings Conference Call
January 30, 2018 9:00 AM ET
Lorne Gorber - Executive Vice President, Investor and Public Relations
François Boulanger - Executive Vice President and CFO
George Schindler - President and CEO
Conference Call Participants
Thanos Moschopoulos - BMO Capital Markets
Steven Lee - Raymond James
Richard Tse - National Bank Financial
Paul Treiber - RBC Capital Markets
Maher Yaghi - Desjardins Securities
Edward Caso - Wells Fargo
Robert Young - Canaccord Genuity
James Schneider - Goldman Sachs
Howard Leung - Veritas Investment Research
Previous Statements by GIB
» CGI Group (GIB) Q4 2018 Results - Earnings Call Transcript
» CGI Group's (GIB) CEO George Schindler on Q3 2018 Results - Earnings Call Transcript
» CGI Group (GIB) Q2 2018 Results - Earnings Call Transcript
Thank you, Elena, and good morning. With me to discuss CGI’s First Quarter of Fiscal 2019 are George Schindler, our President and CEO; and François Boulanger, Executive Vice President and CFO.
This call is being broadcast on cgi.com and recorded live at 9:00 AM, Eastern Time on Wednesday, January 30, 2019. Supplemental slides as well as the press release we issued earlier this morning are available for download along with our Q1 MD&A, financial statements and accompanying notes, all of which have been filed with both SEDAR and EDGAR and are available for download on our website.
Please note that some statements made on the call may be forward-looking. Actual events or results may differ materially from those expressed or implied and CGI disclaims any intent or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required by applicable laws.
The complete Safe Harbor statement is available on both our MD&A and press release, as well as on cgi.com. We encourage our investors to read it in its entirety and to refer to the Risks and Uncertainties section of our MD&A for a description of the risks that could affect the Company.
We are reporting our financial results in accordance with the International Financial Reporting Standards, or IFRS. As before we will also discuss non-GAAP performance measures which should be viewed as supplemental. The MD&A contains definitions of each one used in our reporting. All of the dollar figures expressed on the call are in Canadian dollars, unless otherwise noted.
We are hosting our AGM this morning. So we hope you will join us live for that broadcast at 11:00 AM Eastern Time.
I'll turn it over to François now to review our Q1 financials, and then George will comment on operational and strategic highlights and outlook. François?
Thank you, Lorne, and good morning everyone. I am pleased to share our results for Q1 fiscal 2019 results. Revenue was $2.96 billion, an increase of $147 million or 5.2% compared with last year. On a constant currency basis, revenue grew 4.5%.
Bookings were over $3 billion or 102% of revenue 43% of the contract awards were related to new business while six of our top-ten bookings in the quarter were new multi-year recurring revenue streams.
Over the last twelve months, total bookings were $13.5 billion or 116% of revenue. As of December 31st, the backlog increased to $23.3 billion, up $2.2 billion compared with last year. Adjusted EBIT was $439 million, up 8.1% from last year. EBIT margin was 14.8%, an improvement of 40 basis points.
Our effective tax rate for the quarter was 25.9% stable with last year when excluding a one-time tax benefit in Q1 of 2018 related to U.S. Tax Reform. For the remainder of fiscal 2019, we expect a range of 24.5% to 26.5%.
Net earnings improved to $311 million in Q1 and EPS grew 13.3% to $1.11 per diluted share. Net margin on the same basis was 7.5%, up 40 basis points. When excluding expenses related to the acquisition and integration of ckc in Germany and earnings improved to $315 million or 10.6% of revenue, also up 40 basis points.
Earnings per share were $1.12, an improvement of 13.1% compared with the $0.99 in Q1 last year. In the quarter, our operations generated $392 million in cash or 13.2% of revenue. Over the last twelve months, we have generated $1.5 billion or $5.15 in cash per share compared to $4.26 for the same period last year. We ended the quarter with a DSO of 54 days, up from 52 days last quarter and 47 days last year.
This increase in DSO is mainly due to fluctuations in currency at the end of the quarter that had a three day impact. During the quarter, we disbursed $17 million against last year’s restructuring program. As previously communicated, we expect the majority of the remaining payments to be made in Q2.
In the first quarter, we allocated cash across several strategic priorities, invested $80 million back into our business including in the development of our IP and wrapping up of new outsourcing contracts. We acquired ckc for $23 million. We repurchased 4.2 million shares for $348 million and we repaid $383 million of long-term debt.
Combined with improved profitability, these accretive investments drove our return on invested capital to 14.5% or 80 basis points higher than last year. Buying back CGI’s stock remains an accretive and flexible way to return value to shareholders. As such, this morning, our Board of Directors approved the expansion of our share buyback program until February 2020.