07.29
CGI reported “typical” Q3/F09 results — strong cash flow ($136 mln., or
$0.44/share), decent bookings ($1.06 bln., or a 1.1x book-to-bill), but weak
revenues ($950 mln. vs. consensus $973 mln., flat Y/Y as reported, but
down 4.5% in constant currency). EPS were $0.25 vs. consensus $0.24.
Bookings of $1.06 bln. generated a 1.1x book-to-bill — the sixth quarter of
the last seven with a +1x bookings ratio. Canadian revenues were down
10.4% in constant currency (down 7.5% YTD), while the U.S. business
continues to be the driver, up 7.3% in FQ3, 8.6% YTD.
Cash flow remains very strong — $171 mln. operating cash flow
($0.55/share) and $136 mln. free cash flow ($0.44/share). With the cash,
CGI repurchased 3.2 mln. shares, with a further 23.6 mln. available to be
repurchased through the NCIB. Net debt now stands at $30 mln.
Overall, we see CGI as offering a resilient core business, with organic EPS
growth to come from revenue growth (supported by bookings > 1x), debt
repayments, and share buybacks. We believe acquisition(s) are also now
likely given the strong balance sheet.
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