Good morning, ladies and gentlemen. Welcome to the CGI First Quarter Fiscal 2017 Conference Call. I would now like to turn the meeting over to Mr. Lorne Gorber, Executive Vice President, Global Communications and Investors Relations. Please go ahead, Mr. Gorber.

Thank you, Melanie, and good morning. With me to discuss CGI's first quarter fiscal 2017 results 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, February 1, 2017. 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 are being filed with both SEDAR and EDGAR. 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. The complete Safe Harbor statement is available in both our MD&A and press release, as well as on cgi.com. We encourage our investors to read it in its entirety. We are reporting our financial results in accordance with International Financial Reporting Standards or IFRS. As before, we'll 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 this call are Canadian unless otherwise noted. As most of you know, we're also hosting our AGM this morning. So, we're going to keep our comments brief in order to take as many questions as we can and to do so within the next 45 minutes. I'll turn it over to François first to review our Q1 financials and then George will comment on both strategic and operational highlights. So, with that, François. François Boulanger - CGI Group, Inc.: Thank you, Lorne, and good morning,…

Thank you, François, and good morning, everyone. I'm pleased with the start to our fiscal year. In the first quarter, revenue growth accelerated to 3.7% at constant currency, the third consecutive quarter of growth. Margin expanded to 14.8%. EPS ex-items increased to CAD 0.90, our operations generated CAD 350 million in cash and clients awarded us with CAD 3 billion in new contracts. We continue to make progress towards our IP30 goal. IP services and solutions accounted for 21% of revenue in Q1. That's compared with 17% in the same quarter last year and made up 23% of total bookings. These strong results are driven by the rapid shift to digital taking place for our clients and for our industry. Our end-to-end expertise is essential to help clients address the complexity of building today's digital organization. We have both the experience and expertise required to connect legacy business and technologies with clients' digital roadmaps. With that in mind, let's briefly review the Q1 highlights of our global operations beginning in Europe. In France, revenue grew 11%, the fifth consecutive quarter of growth. EBIT margin remained strong at 12.5% even as we make investments to further build a backlog of recurring revenue. Bookings were 117% of revenue, as we remain an expert of choice for major clients, such as Solvay and Société Générale. Our teams in France continue demonstrating the power of the CGI proximity model. Consulting-led relationships and engagements are driving new larger transformational outsourcing deals. In fact, consulting services continued to grow in Q1, while the operations' recurring revenue expanded significantly year-over-year. In the UK, revenue grew 16% as large-scale projects across the UK public sector continued to ramp up. EBIT margin expanded to 14.5% and we booked CAD 232 million, primarily related to government and utilities. We did…

Melanie, if we could poll for questions from the investment community, please.

Thank you. [Operating Instructions] The first question is from Richard Tse from National Bank Financial. Please go ahead.

Yes. Thank you. George, I wanted to get a better handle on your positioning in digital transformation. So, if you look at across your 5,000 customers, what percentage of them have actually engaged you guys to work on these digital transformation projects here? Can you give us a bit of color on that?

Yeah. I would say that by and large, Richard, most of our growth and all of our new deals have some element of digital transformation in them. That really is – we talked on the last call about the results of our Global 1000. It really is the driver of most initiatives with our clients, particularly on the commercial side. We don't split it out, as you know, and part of that is because it's part and parcel to what we're doing. And as I mentioned, I believe a differentiator for us in this market is our knowledge of the legacy and being able to connect that in, because this transformation is exactly a transformation. It's not just digital point solutions. It really is getting into the guts of the organization and linking that in with their digital initiatives. So, it is a driver.

Okay. And then in terms of Europe, it seems that you guys are sort of bucking the trend in areas like the UK and in France in terms of the progress there. So, would the bulk of that also be in digital transformation or is it something different than that?

No. It's a combination with both our existing and new customers. But as I mentioned, in France, specifically, we do have a very mature business consulting group that is helping to engage with clients to even create the digital roadmaps, which then leads to these digital transformation projects, and likewise in the UK. So, that's some of the strength, even outside of some of the one-timers that François talked about.

Okay. And then last one for me. It might be a difficult one to answer, but do you have any early indications given the change in the U.S. administration from your existing or prospective clients as to how that might impact their decisions here going for the next 12 months?

No, I think it's obviously early days. We like our positioning, and it's not as a reaction to this administration's policies or any administration. We believe the right way to serve our clients is that proximity model. I think given some of the early views of the new administration, that plays a very well, because we have most of our 11,000 people in the U.S., are based in the U.S. And as I mentioned, we now have six onshore delivery centers. So, it plays right into our model.

That's great. That's a lot, George.

Yes.

Thanks, Richard.

Thank you. The next question is from Steven Li from Raymond James. Please go ahead.

Thank you. Hey, George. Good start at Q1 here with the organic growth. (17:07) on some of the (17:09) the industry and how the CGI is positioned? We've heard from some of your – of the Indian heritage vendors about price pressure on traditional services, as such.

You're breaking up a little bit there, Steve. I just want to make sure we understood the question there.

Yeah. Sorry. Yeah, I'm trying to get your thoughts on the some of the pricing pressure on traditional services as software automation increase. I want to get your thoughts on that. And also you touch on the visa reforms in the U.S., is that going to be a cost headwind for CGI? Thanks.

Yes. So, on your first question, yes, the demand is shifting, but we see this as a tailwind for CGI, because given some of the outsourcing contracts we have, we have built-in efficiency expectations. So, the automation actually helps us achieve that and actually increases our return, doesn't decrease them. But then, of course, some of the consulting-led engagements and actual transformations requires more on site. That's a different price point and actually we see opportunities there. On the visa side, as I mentioned, our model is primarily to have in-country resources, complemented by both onshore in-country delivery centers as well as offshore. We always had a balanced blended model. We're very underleveraged, I guess, in comparison to – or underexposed, I should say, as compared to most of our competitors from a visa perspective. So, there is no expectation of any increased cost there. In fact, it's probably a tailwind.

Okay. And just a quick one, George, on ECS, it's one of your smaller geos, but it's been underperforming. Any thoughts here, as you go through 2017, where you see that?

Yeah. Well, I remain positive. If you look at the demand in that area, the growth in some of the larger countries that we will continue to look at, both building and buying to increase our strength there, and then the overall book to bill, again I think some of the investments we made are paying off and we'll continue improving that operation, I'm confident.

It's great. Thanks.

Yeah.

Thanks, Steve.

Thank you. The following question is from Thanos Moschopoulos of BMO Capital Markets. Please go ahead.

Hi. Good morning. George, now that growth seems to be accelerating, can you help us understand what that should mean for the margin trajectory? And so, I'm assuming that growth should be good thing from the perspective of utilization rates, but will there be some offset from higher biding costs or from project startup costs? So, would that be a mitigating factor on margin expansion?

Well, I think, in general, our model, they should go in lockstep. There are some investments that we will continue to make, but we'll make that in concert with that growth. So, I don't see any change in kind of our historical views there. And in fact, as I mentioned earlier, we're seeing both expansion from our operational excellence, the type of work, the mix, but also then the revenue growth. So, we have multiple levers to continue to increase our margins as we increase our growth.

Okay. And then from a macro perspective, you mentioned some commercial delays in the UK markets, I'm assuming, because of the uncertainty there. Any other commentary that you'd make, more broadly speaking, is the environment looking pretty consistent to what you saw last quarter?

In the UK?

Well, more broadly speaking, other regions as well. Any real change in the macro?

No, in the macro, again, we see consistent demand. That demand still requires cost savings. But we see demand to invest in businesses around the world and governments alike to play into the expectations of customers and citizens around the digital experience they need to have. So, we see opportunities on both sides; on the outsourcing to save costs and on the transformation side to help them with their initiatives. So, no change in that macro environment.

Great. Thanks. I'll pass the line.

Yes.

Thanks, Thanos.

Thank you. The following question is from Jason Kupferberg of Jefferies. Please go ahead.

Hi, guys. This is Amit Singh for Jason. Just quickly on the quarter, if you could talk about the contribution from Collaborative Consulting, just trying to get to the organic constant currency growth in the quarter. And then just related to that, I mean the bookings have been strong last few quarters and you guys have been seeing an acceleration in top-line growth. Should we expect that acceleration to sort of continue from here?

Yeah. So, on the Collaborative, just to remind you, we purchased that midway through the quarter, so it did not have a big material impact on the revenue or the margin. However, it's pretty much – now at this point, in the second quarter, it's integrated and we're already seeing synergies on both sides. So, we have some consulting-led engagements and relationships with Collaborative, where we see opportunities and are already now bidding on opportunities that they would not have had the opportunity to bid on, around larger outsourcing, transformational outsourcing bids. Likewise, we are using some of their resources right now with other existing clients in the region to bid on digital transformation in front-end projects. So, we're starting to see the synergies, but that's not in the quarter. So, it didn't have material effect on the quarter.

All right. And just related on the capital deployment.

Yeah.

I mean you extended the share buyback authorization. And during the Analyst Day last year, there was a lot of focus on M&A and that generally remains the focus for the company. If you could provide an update there. I think at the Analyst Day you guys had laid out a potential pipeline of around 350 companies and we're trying to narrow it down. Any updates there?

Yeah. Well, what I can say is that the conditions continue to be very favorable. The market, as we discussed, is highly fragmented. But the conditions are favorable really for a couple of reasons. As various companies around the world embark on these digital transformation opportunities, they really need partners that can be with them around the globe, but also have those skills on both the legacy and on the digital new side, and have the breadth and depth to make those connections. So, that makes it favorable for a company like ours to be very acquisitive. And what I'll give you the update is, in every one of our strategic business units, we do have current targets that we're working on. Priorities continue to be U.S. commercial, and UK, and Germany, particularly. But François, I don't know, if you want to add anything from the M&A front. François Boulanger - CGI Group, Inc.: No. So, like George was saying, we're working very closely with the operations to look at all of these targets, qualify them. And again, a lot in the funnel, but for sure, it needs to be the right one at the right price. So, we'll stay always disciplined. And because of it, depending on the timing and the evaluation of the shares, we'll be looking at share buyback, if needed. So, that's the strategy.

All right. Great. Thank you very much.

Yeah.

Thanks, Amit.

Thank you. The following question is from Paul Treiber of RBC Capital Markets. Please go ahead.

Thanks very much. Just wanted to focus a bit on the growth of IP revenue. It's continuing to rise. It's getting closer to 30% target that you outlined a couple of years ago. From what you see in the backlog and also contract pipeline, do you think there is sufficient customer demand and your business is transforming such that you'd be able to achieve that target of 30% target organically?

Yeah. As I mentioned, we're on that path. There are really three ways that we can do that, Paul. One is taking some of the local IP and making that more global, and we continue to see success there. We're also seeing success in taking some of that local IP and just moving it to a software-as-a-service. We're still continuing to see high demand for that service. And then as we embark on these digital transformation projects, we harvest some of the applications that we're building, we can harvest that and turn that into IP now that we have the channel and that machine working smoothly. So, there are three different ways that we can continue to move towards that path of IP30. So, I remain confident that that's the path we're on.

Okay. And then just looking at France for a moment, seen good growth last couple of quarters. How much of that reflects an improvement in the underlying market in France and how much do you attribute to CGI's execution? And then from an execution point of view, what can you – what are sort of the lessons you've learned from being in France and how much can you extend that to the rest of the Europe?

Well, I think a lot of it has to do with CGI's execution. Our team there is very strong. And you're correct, and that's why I highlighted, starting with that business consulting and moving that into those larger transformational deals is what's driving that growth. And we are on a path strategically and tactically to repeat that in every market, not just in Europe, but around the world.

Okay. And then just one quick one for François, just in regard to the cash flow, working capital has been a headwind to cash flow for, I think, the last five quarters or so. When should we see that headwind begin to diminish? François Boulanger - CGI Group, Inc.: I would expect at the end of this year, we'll diminish. We still have some legacy from Logica acquisition and some of the use of cash on some loss-making contracts. But I would expect that we're pretty at the tail of it now.

Great. Thank you. I'll pass the line.

Thanks, Paul.

Thanks, Paul.

Thank you. The following question is from Phillip Huang of Barclays. Please go ahead.

Thanks. Good morning. Just want to go back to the topic of the U.S. government. Obviously, there is quite a bit of focus here. Main question as it relates to the federal business, certainly what appears to us is there is some increased focused on defense under the Trump administration, which we believe should benefit CGI. But obviously, there's a lot of language around changes to Obamacare, which could impact your business. I was just wondering if you could talk a bit about your assessment of where the U.S. government could help or hurt the overall federal business in the next four years.

Yeah. No, thanks for the question. Yes, it's early days, but early indications are that there is probably more of an increase, as you suggest, on the defense, intel and international-type organizations maybe prioritized a little over domestic. We think we're well positioned. That's why we created a diversified portfolio. And as you may recall, we weren't as diversified before we made the Stanley acquisition. So, we are very diversified. In fact, as I look at our first quarter key wins, most were in the areas outside of your traditional domestic unit. And in fact, the credentialing with the DHS is one that I think is important. And that's where we're integrating various cybersecurity tools across – for DHS, on behalf of DHS, but across all agencies; 27 different agencies across the U.S. government. So, it's a nice opportunity, but a nice one where you see some of the priorities already starting to shift. So, we see this as a – we're well positioned as a diversified portfolio. On the health, specifically, we don't have any real exposure at this point to Obamacare.

Got it. No, that's very helpful, George. Maybe a question for François on U.S. tax reform. I was wondering if you could maybe share with us the potential range of outcomes in terms of benefits to future earnings, based on what we know so far. I believe you guys are currently paying full taxes in the U.S. But I was wondering if you could give us a better sense on the magnitude of the benefit. François Boulanger - CGI Group, Inc.: Yeah. So, for sure, as you know 30% of the business is in the U.S. and an example we're talking about the last quarter that – or this – yeah, the first quarter that we produced close to CAD 115 million EBIT in U.S. So, you can understand that today we're closer to 40% of tax on that amount. And we would go down, to depending where it's going, 20% to 15% of tax. So, that would be naturally a great news for us and great news on the – would have a big impact on the net earnings of CGI.

Got it. That's very helpful. And then maybe a last one for me, more broadly, of course, what does this mean for your M&A strategy going forward? Does this – obviously, I know you have mentioned that you guys are sharpening focus on opportunities in the U.S., but do you really see this as sort of meaningfully expanding the pipeline for CGI in the U.S.? Thanks. François Boulanger - CGI Group, Inc.: Clearly, it's a great opportunity, especially if we can do them before actually the tax rate is going down. So, that's why we're very active in the U.S. region and looking at all the (32:28) out there.

Great. Thanks very much.

Okay. Thank you.

Thanks, Phil.

Operator?

Melanie, are there other questions?

The following question is from Stephanie Price of CIBC. Please go ahead.

Good morning.

Stephanie.

Hi, Stephanie.

Hi.

You saw solid bookings in your financials vertical this quarter. So maybe if you could talk a little bit about the growth that you're seeing there.

Growth in banking continues to be strong across all of our regions, particularly in Canada, the U.S., and now pockets of Europe, including Eastern Europe. So, growth is strong. I don't have the actual growth numbers by sector.

I can circle back with you, Stephanie. I think that they're regions that George mentioned.

It is driving, yes (33:28), but that's where it's being driven.

Okay. And what specifically is driving it? What sort of products and services?

It is a combination of those transformational – digital transformational opportunities combined with our IP. Our IP is probably most developed in financial services outside of government. And so in financial services, our payment application, our trade application, our big opportunities, our collections application, are all opportunities for us to grow. And they're all being delivered in concert with some of these digital transformation projects.

Great. Thanks. And then on your tuck-in acquisition strategy, you've done a couple now. Can you talk about how they've been going and any key takeaways now that you have few of them under your belt?

Yeah. Actually, they're going very well. As I mentioned, the favorable conditions means that on both sides of the transaction, it's beneficial. So, our new colleagues that are coming on see more opportunities to have impactful – impact on their clients. And in turn as we mentioned, it provide us the depth and some of the expertise that we're looking for, particularly in specific metro markets within these larger strategic business units. So, it's going very well, which is why we're looking to accelerate our efforts there.

Great. Thank you.

Yes.

Thanks, Stephanie.

Thank you. The following question is from Maher Yaghi of Desjardins Capital Markets. Please go ahead.

Thank you for taking my question. Guys, could you discuss your outlook as you're seeing from your clients' 2017 budgets, how they look like versus 2016 and the type of work you're seeing them prioritizing? And the second question I had, I mean you talk a lot about digital transformation. Can you discuss the maturity level of that business into the different verticals? How we moved from, let's say, proof of concept into establishing new use case business models? And if you can split your comments, specifically, regarding business to consumer and business to business?

Sure. I think I can get all of that. But on the outlook for budgets across the board, we see – and part of this came out of even our surveys that really were conducted face to face with both business and IT. In general, IT is increasing across every industry, but one, which is oil and gas. But every other industry, the IT budgets are staying the same or going up. And this is at the same time that because of some of the automation, there are savings. So, the fact that they're staying flat means they're really going up. And if they're going up, they're going up by a higher rate. So, we see the demand out there. As far as the maturity level, I believe I mentioned that one of the biggest barriers of these transformational projects are actually the readiness for the organization adopting them to actually adapt their own organization, because by very nature, transformation is not just about doing things different or in an automated way. It's actually transforming the way they do business. So, that maturity level we do see different. It's most accelerated in the consumer industry, so that's the retail banking. It's most in the telecommunications. It's in the retail stores. That's where it's most advanced. Less advanced, as you move more to the business to business, but accelerating in those other areas. And then it varies. It's not a one-size-fits-all equation. It varies by organization to organization, which is why it's so important for us to have a proximity model, for us to have the relationships, for us to have knowledge of their legacy environments to help them on that journey, because that journey is different, I would argue, for every industry, but also every organization within that industry.

Thank you, George, and good luck for 2017.

Thank you.

Thanks, Maher.

Thank you. The following question is from Paul Steep of Scotia Capital. Please go ahead.

...Brexit and maybe the opportunity of what you think pipeline might look like in financial services, both in the UK and Europe, as clients in that region think about what that's going to mean?

Just missed the first few words, Paul up there.

We missed the first part (38:49)

Sorry. Yeah. The impact of Brexit just on opportunities in fin serv in UK and Europe, and what that means?

Yeah. Well, as I mentioned, we did see a slowdown in the large transformational projects, specifically in the UK, probably as a result of some of that uncertainty. So, some of the smaller projects, but the big transformational multiyear deals, we see a slowdown or a push to the right of those projects. Likewise, we see potentially some strength in government as they look to react to some of those changes. So, that's probably a temporary, it's still to be played out. As we know, it hasn't played out and has never been played out. So, we'll watch that closely. But again, we feel we're very well positioned given the relationships we have, the vehicles we have in government, and the relationships we have at large. So, we see it as still a strong market for us in the future.

And then in the Nordics, you had good bookings growth there. Can you maybe talk about what that market now looks like? I think I would assume you're through the clean-up of contracts that came with Logica? It sounds like we're sort of anniversaried that. Are there any headwinds at all in terms of expiries? And if those are out of the way, what's the opportunity set look like in the Nordics? Thanks.

Yes. No. Thanks for the question. You're right, in the Nordics, we've been shifting the business, but we're continuing to shift the business, because as the infrastructure with heavier iron types of projects and maybe limited to infrastructure only, as we look to renew or expand those opportunities, we are doing that with an eye to play into the – to shifting to the new. And so, the demand we see is more around the same demand we see around the world, around digital transformation projects. And so, we'll continue to shift our mix and move into that higher demand. We're not going to renew the same projects in the same ways necessarily. So, that's part of that shift that I mentioned earlier when I talked about infrastructure maybe changing because of the way we're now playing into the new demand.

Thank you.

Okay.

Thanks, Paul.

Thank you. The following question is from Daniel Chan of TD Securities Toronto. Please go ahead.

Hi, guys. U.S. revenue continues to decline, albeit at a much slower pace. The huge U.S. bookings last quarter may have suggested some growth in that market and you had another solid book-to-bill quarter. So, are the bookings predominantly renewals or is there something else going on here? And when do you expect this market to return to growth?

Yeah. No, I would – I don't have the exact number of new business, but – here it is. In the last quarter, this quarter, we had – new business was 35%. So, we are seeing new business. And that's a shift from where we were before, where it was primarily only more of those renewals just given the environment we were in at the end of the prior administration, which is natural when you're going through a transition of administration. So, yes, I think that from a government side, we see opportunity, our commercial continues to grow. And with Collaborative and some that we have in the pipeline, we're going to continue to buy into that growth as well. So, I do believe we're on that path, much like we're in the Nordics, to turn here to positive organic growth in that sector or in that geography.

Great. Thank you.

Thanks, Dan. Melanie, we have time for one last question.

Certainly. The final question is from Robert Young of Canaccord Genuity. Please go ahead.

Hi. Thanks for squeezing me in. Maybe just to continue on last question, you've highlighted some delays in the UK on large transformational projects. In the near term, should we expect a similar thing in the U.S. given some of the uncertainties there? Are you building any of that into your future here or how should we think of that?

Yeah, I don't think it's the same at all given that there is a little more certainty in the transition that's going on in the U.S. versus the transition that's never been done in the UK. Given some of the initial changes to less regulation and a better tax outlook, I don't see them the same at all. In fact, particularly on the commercial side, I see opportunities in that.

Great. And then on the financial services bookings very strong, looking back, it looks like Q1 is typically – see some seasonal strengths, maybe you talk about that and whether we should expect this sort of level of booking. It sounds like there is a good opportunity for you (44:23). But what should we expect as far as bookings growth?

On bookings growth, well, the pipeline is up, which is the predictor of bookings. The team has delivered very strong results. And I do believe that there is a differentiator that we have in the marketplace. So I see our bookings continuing to grow.

Okay. And last one. Some of the areas you highlighted where there's good strength in bookings, digital information. They seem to correlate with areas where you had stronger bookings this quarter. And then I look at the split between system integration and consulting, it seems that's a little bit lower. So, if you could talk about that, if there is a disagreement there, or at 45% SI and consulting, is that where you want to see it or can that grow from here?

Well, we see a balance over time, point in time, as I mentioned, just given the maturity that organizations are in, we see strong demand for some of that SI&C to help them. We're playing into that demand. But over time, we expect that, just as I mentioned in France and we've seen in Canada over the years, that's just going to drive that longer-term recurring revenue, and so the two play hand-in-hand and we'll continue to see a balance, although it may shift, point in time, we see that same balance moving forward.

Okay. Thanks a lot.

Thank you, Rob, and thank you, everyone, for joining us. Our AGM again this morning at 11 AM, and as usual, I remain available for follow-up questions, 514-841-3355. Thank you.

Thank you.

Thank you. The conference has now ended. Please disconnect your lines at this time. We thank you for your participation.