Wednesday, IT and business process services provider CGI Group Inc. (GIB-A.TO, GIB) reported a decline in third-quarter profit, that reflected last year's one-time tax benefit. Separately, the company said that Commonwealth of Virginia extended its contract for CGI's Electronic Procurement System or eVA to June 2016.
The Montreal, Canada-based company's net earnings for the quarter declined to C$76.5 million or C$0.25 per share from C$78 million or C$0.24 per share in the previous year. The company noted that results for the previous year included a one-time tax benefit of C$10.8 million.
On average, six analysts polled by Thomson Reuters expected the company to report earnings of $0.23 per share for the quarter. Analysts' estimates typically exclude special items.
During its preceding second quarter, the company posted net income of C$77.5 million or C$0.25 per share, compared to C$68.8 million or C$0.21 per share in the same quarter last year.
Revenues for the third quarter were C$950.4 million, compared to C$950.5 million in the earlier year. Wall Street analysts estimated revenues of $945.44 million for the quarter. In its second quarter, the company posted revenues of C$948.3 million, an increase of 1.9% from the comparable quarter last year.
The company noted that during the third quarter, 43% of global revenue was generated outside of Canada, an increase of 37% from last year, which is in line with the company's business strategy. The company further noted that revenues for the third quarter grew 2.7% at constant currency from its sequential second quarter.
CGI Group generated C$170.9 million in cash from its continuing operating activities, or 18.0% of revenue.
During the quarter, the company said it booked C$1.06 billion in new contract wins or 111% of revenue, mainly related to government and healthcare as well as financial services, up 7.4% from the prior-year quarter. At the end of June 2009, CGI's order backlog stood at $11.8 billion or 3.1 times annual revenue.
Year-to-date net earnings increased to C$233.9 million or C$0.75 per share from C$219.5 million or C$0.67 per share in the preceding year. Revenues for the period increased to C$2.9 billion from C$2.78 billion in the prior-year period.
For the nine-month period, CGI generated C$437.8 million in cash from continuing operating activities or 15.1% of revenue, an increase of C$165.1 million from the same period last year.
The company's net debt declined to C$15.9 million from C$368.7 million in the previous year. According to the company, debt repayments during the first nine months totaled C$271.2 million.
Michael Roach, president and chief executive officer commented, "Our financial performance remains strong enabling us to reduce our net debt to $15.9 million and to increase our participation in our share purchase program at a time when IT services firms are trading at very attractive valuations."
CGI Group, under its normal course issuer bid, bought back 3.15 million shares during the quarter for a total investment of C$32.1 million and said it is authorized to purchase an additional 23.6 million shares under the current program running until February 2010.
"Our growing sales funnel, strong contract bookings and a gradual increase in our systems integration and consulting business provide continued optimism with respect to increasing growth opportunities in future quarters," added Roach.
Separately, CGI Group said today that the Commonwealth of Virginia extended its contract for CGI's Electronic Procurement System or eVA. The deal, worth $70 million extends the program to June 2016.
CGI initially implemented the system in 2001 and since then, the company said that the Commonwealth used eVA to purchase $20 billion of products and services, with $11.6 billion purchased from small, minority or women-owned business, while saving the state and taxpayers more than $280 million.
Timothy Kaine, Governor, Commonwealth of Virginia commented, "eVA has increased the Commonwealth's efficiency, reduced the cost of government, and allowed us to leverage our buying power, all critical objectives during these tough budget times."
GIB closed Tuesday's regular trading at $9.4 on the NYSE, while GIB-A.TO ended at C$10.2.
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