CGI Inc.
Q2 2021 Earnings Call Transcript

Published: 28 Apr 2021

[Operator:]

Good morning, ladies and gentlemen. Welcome to the CGI Second Quarter Fiscal 2021 Conference Call. I would now like to turn the meeting over to Mr. Maher Yaghi, Vice President, Investor Relations. Please go ahead, Mr. Yaghi.

[Maher Yaghi:]

Thank you, Jacqueline, and good morning, everyone. With me to discuss CGI’s second quarter conference call fiscal 2021 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

[George Schindler:]

Thank you, Maher, and good morning, everyone. We closed the first half of the fiscal year with strong second quarter results. Our team’s performance combined with the accelerating client demand for our end-to-end services across every industry and geography positions us well for a return to year-over-year growth in the second half of this year, beginning in Q3. In the quarter, we continued to deliver on our near-term plan to prioritize the preservation and expansion of shareholder value. Once again, sustaining EPS accretion and generating strong cash from operations. We also made investments in our Build and Buy strategy to fuel our future profitable growth for the benefit of all three stakeholders, our clients, members and shareholders. The rising client demand we noted last quarter, increased considerably during Q2 as demonstrated in our bookings, which were up over $1 billion compared to the same quarter last year. Demand for new digital and modernization projects was robust across nearly every geography and industry sector, particularly in retail and consumer services, financial services and government. New business comprised nearly 40% of total awards in the quarter, up both sequentially and year-over-year, included among the nearly $4 billion in contract awards during the quarter were numerous projects in the digital arena, such as a data modernization program with a U.S.-based global communications and media company. Through our consulting and systems integration services, we will help streamline and support the clients’ cloud-based data management platforms, an expansion and extension of our Trade360 IP engagement with one of Canada’s top multinational banks.

[François Boulanger:]

Thank you, George, and good morning, everyone. I’m happy to share with you the results of our second quarter 2021. Overall, we are pleased with our results. Bookings were once again strong and over the last few quarters we continue to add to our sizable book of business. Revenue is also continued to see improving growth trends, which couple with higher year-over-year margins lead to strong cash generation in the quarter. We delivered revenue of $3.1 billion, down 1.7% year-over-year on a constant currency basis. This is an improvement over the last quarter, where we saw a 3.6% decrease year-over-year. Particular strength in revenue growth was seen in Central and Eastern Europe with growth of 5.9% on a constant currency basis. Asia Pac delivered 4.7% as well as Canada and U.S. Federal both growing 1.9%, respectively. Given the current positive market dynamics and the strong bookings in the last few quarters, we would like to reiterate our expectation of returning to year-over-year revenue growth in the second half of fiscal 2021. Total bookings of $3.9 billion were up 40% year-over-year representing a book-to-bill of 126% and lifting our trailing 12 months book-to-bill to 113%. It is also important to highlight that all of our geographic segments now have a trailing 12 months book-to-bill of more than 100%. I would like to call out a few geographies with strong bookings in the quarter, such as Central and Eastern Europe with a book-to-bill of 172%, Canada at 142% and Western and Southern Europe at 139%. Each of these seeing material improvements in new bookings even in the midst of continued shutdowns in their economies due to COVID-19. New business was 38% of bookings, an increase from the previous quarter’s 28%. Our global backlog remains healthy at $23.1 billion or 1.9 times revenue. The vast majority of which is comprised of long-term managed services engagements. Adjusted EBIT in Q2 was $486 million, while EBIT margins increased to 15.8%, up 40 basis points compared to Q2 of last year. The year-over-year increase was mainly due to a combination of more profitable business mix, lower discretionary expenses and cost reductions. We saw strong margin improvements in the UK and U.S. Federal with margins up 250 and 220 basis points, respectively, partially offset by low margins in Western and Southern Europe due to fewer billable days and Scandinavia due to lower utilization. Our headcount has also increased by 1,000 professionals quarter-over-quarter as we invest in our business to respond to the continued improvement in client demand.

[George Schindler:]

Thank you, François. I will review the operations and market outlook in the context of the voice of our client’s program, which we initiated in the quarter as input to our annual strategic planning. This year, our leaders met with nearly 1,700 existing and new client executives in business and IT positions across every industry sector and geography where we operate. The conversations were in-depth discussions, covering industry trends, business priorities and IT priorities. These interview findings are shared with our clients to bring insights they can act on. And for CGI, they inform our business plans and investments.

[Maher Yaghi:]

Thank you, George. And Jacqueline, we’re ready to take any questions that might be in the queue.

[Operator:]

Certainly. Your first question comes from Jason Kupferberg from Bank of America. Your line is open.

[Kathy Chan:]

Hey, George and François. This is Kathy Chan on for Jason. Thanks for taking my question. So first I wanted to ask about bookings. Obviously, you guys had a very strong quarter of bookings. Could you just unpack that a little bit? And can we continue to kind of expect to see a strong bookings number in the back half of the year as well?

[George Schindler:]

Yes. Thanks, Kathy. Absolutely. We had very strong bookings there up in every service offering that we have and most pronounced, as I mentioned on the opening remarks in financial services, government and our manufacturing retail and distribution industry sectors, but every geography has now book-to-bill on a trailing 12-month basis over 100%. And it really comes from two factors, demand is up considerably and we do expect that to continue. But it’s also our ability to bring innovative ideas and offerings to our clients relevant by industry. And we are doing that by industry and that makes for a very compelling value proposition. And more importantly than ever before the fact that we backed that up with a very strong delivery track record is which gives our clients confidence, but also certainty that they can do that with speed, which is becoming more and more important. So it’s really a combination of the demand and our ability to really bring those compelling offerings to our clients. And again, it’s happening across every one of our geographies, all of our industries and each of our service offerings. And we do expect that Kathy to continue as I mentioned. It’s very clear that we’re still in the early stages of the digital transformation that many of our clients still have to go through.

[Kathy Chan:]

Got it. Got it. Very helpful. And then I wanted to ask a question on margin. So how should we think about margins for the second half? Obviously, you guys are expecting top lines to return to positive growth, which obviously should translate to a positive for margins, but can you kind of walk through some of the other pieces that we should be thinking about just in terms of the cadence of margins that we should expect in the back half of the year?

[George Schindler:]

Sure. So, yes, we will get some efficiencies associated with the growth and the scale of that growth. But also we will continue to see an improving revenue mix of recurring revenue. You heard me talk about some of the investments we’re making in our intellectual property that will bring more recurring revenue as well as bookings were up significantly in our managed services, and that brings an improved margin mix. Of course, systems integration and consulting will continue to grow, but the other items will grow faster and that will improve our margins in a nice, steady pace. Also we have opportunities for geographic improvements and so we’ll make some of those changes as we go out through the year. And we should see some improving models there. On the other side obviously as we go back with the vaccine rollouts, as we look to return, some of our people will probably go to – there’ll be a transition in a hybrid model. But as we start returning, there will be some additional costs to offset some of the benefits, but overall we see an improving opportunity on margins.

[Kathy Chan:]

Okay, perfect. And just a quick last question, obviously you guys announced Sense Corp and that’s going to bring about 300 employees. Is there anything you can share about how much revenue that generates or how fast it’s growing? I mean, is it fair to assume that it closes the next couple of weeks and brings about a half point of revenue and is that already baked into your expectation of the returning to positive growth in the back half of the year?

[George Schindler:]

Yes. That’s already baked into our expectations. As you know, we work on these inorganic growth opportunities for some time, go through a pretty rapid due diligence. But it takes a little bit of time to get them over the line, because again, we’re really focused on the culture aspects. We couldn’t be happier with the cultural alignment with Sense Corp. And I’ll just remind you, we did one right at the end of last quarter, announcing at the beginning of this quarter, HMB in the Midwest as well. And that’s already driving some organic growth in addition to the inorganic growth. So we’re very pleased with the opportunity here to merge the two companies. We think we’ve got some really good opportunities with new logos and areas. We weren’t as big in and strong in. So that’s very good for us to deliver the CGI end-to-end services to those clients, but we also get some very good capabilities, digital capabilities, cloud capabilities from the Sense Corp 300 members, new members to CGI. So we’re very excited about this.

[Kathy Chan:]

Okay, perfect. Thanks guys.

[George Schindler:]

Thank you.

[Operator:]

Your next question comes from Thanos Moschopoulos from BMO. Your line is open.

[Thanos Moschopoulos:]

Hi, good morning.

[George Schindler:]

Hi, Thanos.

[Thanos Moschopoulos:]

Hey, George, and appreciate the color commentary on the industry dynamic. So when I hear those comments, to me a lot of those initiatives sound like SI&C work. So just want to reconcile that with your comment about how I think you said you see the recurring mix growing even though it sounds like SI&C is quite active. Is that a function of just the bookings recently in the conversion of those? Or is it also that as you look at the pipeline there still is a very, very heavy weighting of managed services despite the strength you’re seeing in SI&C?

[George Schindler:]

Yes. Well, I mean, the managed services bookings were very strong. I was highlighting some of the digital opportunities, which I’ve often described as kind of the tip of the spear and it’s what gives us the capabilities. But the managed services are still very strong. They were a significant part of our bookings. We had six managed services deals this quarter over $100 million. I’ll highlight some of those, OP, Bavarian Justice, FashionCube others. So very, very strong bookings in the managed services side. And we see an increasing demand on the IP side. We had a big booking with the state of Virginia with our procurement solution there and a managed services deal. Again, these are long-term deals, so I’m very bullish on the recurring revenue increasing, but equally bullish on our ability to deliver the digital projects that more importantly and are accelerating into the managed services opportunities. I’ve been mentioning that for a while. The managed services opportunities are not just about legacy anymore, it’s about the digital transformations. And so we’re doing both.

[Thanos Moschopoulos:]

Great. And you said speed is becoming more important. So is that translating into shorter sales cycles and/or maybe a quicker contract grant when you do get a booking? What’s the dynamic there?

[George Schindler:]

Yes, I haven’t seen that yet, Thanos. That would be nice. But what I see is once they make the decision, it’s very important for them to deliver some of the results. And sometimes that’s done in phases. They want quick wins and then that considerably delivered through a period of time, more in an agile sense and model. The certainty and the speed though of delivering those is where our delivery track record really comes in. That’s where the trust comes in.

[Thanos Moschopoulos:]

Great. Thanks for the hotline.

[Operator:]

Your next question comes from Stephanie Price from CIBC. Your line is open.

[Stephanie Price:]

Good morning. Thanks for the color on some of the digitization initiatives. Was just curious, I wanted to dig a little bit deeper into that, around the percentage of revenue coming from IP in the quarter. And how you kind of think of that timeline for IP30? And maybe even given the increasing demand, do you think that you can get to IP30 organically? Or do you see IP factoring into the M&A strategy here?

[George Schindler:]

Yes. So the dedication of an executive to IP is really going to give us some more focus in a couple of ways, one on the IPs that are – have the most compelling value propositions now and we’ll do that by industry. And then we’ll invest in bringing them to the broader market. What we’re looking at doing Stephanie is replicating what has proven to be working in managed services. We have a central team of experts and sales capability, but there’ll be embedded in the proximity units. That way we get the focus, but we also get the benefit of the proximity. And that’s really been proven to be working well. And yes, by having that focus will be more focused on the inorganic growth opportunities in intellectual property. And the whole reason to do this is to accelerate. We’ve been stuck around 21%, 22% for the last several quarters. We think we’re entering a market opportunity where we can in fact accelerate that and that’s exactly what we’re planning to do.

[Stephanie Price:]

That’s helpful. And then the mix of new client bookings was strong in the quarter. Just wondering how we should think about a sales environment into these new customers here.

[George Schindler:]

Yes. So the new client bookings that is significant. I think it does come back to that value proposition, the compelling value proposition that our talented teams are able to put in front of our clients. I mentioned maybe a couple quarters ago, interestingly enough clients more than ever are open to these new ideas and new partners and that’s where some of that new work is coming from. I’d also caution you that bookings are lumpy. And so you have to look at it on a trailing 12-month basis, but having said that, it really is those compelling offerings that we’re putting in front. And then there’s the demand side of it. And the demand side is strengthening. And it’s also strengthening in the areas that are in our sweet spot, as far as really bringing a broader, more holistic IT modernization. There’s fewer partners that can deliver that. And very few that can do that with a certainty that CGI can do.

[Stephanie Price:]

That’s helpful. And then just one final quick one from me. You mentioned that utilization is above your internal targets. Just curious how you see utilization trending, and whether you think you could keep to maybe a bit of a higher target, just given the hybrid work model you mentioned.

[George Schindler:]

Yes. Yes. Well, we certainly have experienced some higher utilization given the better efficiency, quite frankly, with people being able to work and not be on a plane or a car or a train going to clients. And so certainly we have plans to capture and keep some of those opportunities. It allows us to bring subject matter experts to our clients faster. They’re more open to allowing for that. But we’re not going to abandon the proximity model. In fact, it strengthens proximity models. So utilization, I think will remain above some of our targets, but maybe not quite as high as it is right now.

[Stephanie Price:]

Thank you very much.

[George Schindler:]

Yes.

[Operator:]

Your next question comes from Richard Tse from National Bank Financial. Your line is open.

[George Schindler:]

Hi, Richard.

[Richard Tse:]

Hi, how are you?

[George Schindler:]

Good.

[Richard Tse:]

Thanks for sharing that voice of the client data. That was actually quite helpful. Can you maybe talk about how those results compared to what they would have been sort of pre-COVID? I guess the question is more along the lines of how much has really been accelerated by COVID in terms of order of magnitude here?

[George Schindler:]

Yes, thank you. Well, obviously environmental sustainability was not really on the list pre-COVID. And that’s not just COVID, but I think many say that breathing the clean air during COVID has given more impetus to the realities of this. But I think in general the IT modernization has definitely risen and I think that’s a recognition and a direct output from the pandemic and the acceleration of digitization. Many of our clients are recognizing that maybe there’s some technical debt that has been built up that they thought that they could get around because they had a slightly longer runway to get there. And I think that the compression and acceleration has caused IT modernization, which is why I mentioned is kind of in our sweet spot. And so it’s very good and it’s driving some of our bookings. The other new one and I think I highlighted this, Richard. And I think this comes up again from the fact of the pandemic is a business priority around introducing new products and offerings, again, when you’re in a more steady state that becomes less important. The pandemic caused many to have to do that. And what they realize is they were able to do that. And now the opportunity gets even bigger for them to do that. And of course IT is the big driver of all of that.

[Richard Tse:]

Okay. So I guess there probably can be a sort of view that we’re kind of in this new cycle of digital transformation, much like there was a cycle at one point for outsourcing. And you’ve been sort of in this business for some time. Like having sort of been there through that outsourcing cycle, do you think digital transformation is a bigger opportunity than what outsourcing was?

[George Schindler:]

Yes, I really do because if done correctly, digital transformation does two things, right? It gives a better growth opportunity for new offerings, new clients, but it also drives some cost savings. And so it’s a twofer, whereas outsourcing was really more around the cost benefits. Of course, you could still reinvest those, but this is now a tighter linkage, which makes I think the business cases broader, which makes the opportunity bigger for us.

[Richard Tse:]

Okay. And then just a last one for me. We’re obviously all sort of fortunate here to be kind of working and thriving, so to speak. But if you look at the market today, in the market that you’re in, the competition for talent I imagine is quite high and that’s an essential part of your business. What’s your ability to attract talent these days? Are you having to sort of pay up? Or what kinds of incentives are sort of being offered here to kind of bring that important talent on board?

[George Schindler:]

Yes. Well, it’s interesting today’s workforce is not just interested in the dollars and cents. They’re very interested in joining a socially minded company. Certainly, our ownership model and our core values play into that in a big way. Of course, what we’re doing in corporate social responsibility plays in a big way, what we’re doing with the environment and our pledges plays in a big way. But also they’re looking for an opportunity to grow their careers and make a difference. And so we’re focused a lot on career training and advancement. I mentioned the half a million courses in CGI academia, the emerging technology boot camps, et cetera, that becomes a big part of this. That’s why I highlighted the high satisfaction scores that we have because it really starts with retention. And what I mean by that is then we moved that into an opportunity to have employee referrals. We get our biggest influx of people through referrals. And right behind that is through hiring new students from colleges and universities. Our student training hires have already surpassed last year’s mark. And that’s a really important element because that’ll then allow us the backfill and others to continue to grow their career. So it’s not a one size fits all, of course, our onshore centers of excellence have – tend to have a lower turnover rate that helps us. And all of that allowed us to add a net of 1,000 people in the quarter. But there’s one other element that I’d add to that. And I do think that we need to continue to get creative in order to continue to build a talent base. And I’ve talked before about the seven campuses that we have in France. We call it a U’DEV school to attract non-traditional individuals into IT. And it’s a combination of apprenticeship and partnering with different universities. We’d like to expand that to right here in Canada and then to other locations because you got to get creative on this and it’s not – I apologize for the long-winded answer, but it’s not a one size fits all. You’ve got to really think about this holistically and that’s exactly what we’re doing.

[Richard Tse:]

That’s great. Thanks guys.

[Operator:]

Your next question comes from Paul Treiber from RBC Capital Markets. Your line is open.

[Paul Treiber:]

Thanks and good morning. I guess you’ve spent a lot of time speaking about digital, and then also IP. The CGI – you give IP revenue, the mix there, but typically your peers give sort of a broader metric of digital revenue. Should we think about – your digital, CGI digital mix being higher than just IP. And then why have you found it difficult or is it ambiguous to give digital as a percent of revenue just to make a comparison easier versus peers.

[George Schindler:]

Yes. Thanks for the question, Paul. So to your first – to the first part of your question, no, digital does not equate just to our IP revenue. Our digital – and that’s why I highlighted this quarter some of those digital projects are squarely in the SI&C space, not in the IP space. But again, the reason we don’t break that out is that digital is involved in our IP, digital is involved in our SI&C, and digital is involved in a lot of our outsourcing contracts. I mentioned the OP engagement. A big part of that is digital modernization of their core platform, but it’s wrapped in a longer term managed services agreement. This is the CGI value proposition. So it would be inexact at best. But a large percentage of our SI&C business is in the digital arena. And increasingly a large segment of our managed services includes digital. And that’s what I was trying to get across today.

[Paul Treiber:]

And then when you look at like the competitive landscapes in digital, I mean, how do you see CGI’s competitive advantages in digital? Like in particular, when you win deals in digital, why do customers select CGI over peers? And then conversely, if you’re not selected, why typically it’s not the case?

[George Schindler:]

Yes. Well, I would say on the selection side, it’s absolutely part and parcel to what I was just describing, it’s when it’s embedded in a broader relationship, a broader service offering through our end-to-end services. And increasingly that’s what our clients are looking for. They’re not looking for as many of those smaller point solutions. This is why IT modernization rose in the current voice of the clients, voice of our clients’ information. That’s why I highlighted it. It’s more of what’s going on right now. And there’s fewer players that can do that. It’s also what’s driving some of the M&A opportunities.

[Paul Treiber:]

And just last one for me. You mentioned inorganic opportunities in IP. I mean, should we think about that as CGI increasingly looking at acquiring pure play software companies? Or do you see it as sort of IP-enabled IT services companies? And then how do you look at balancing your own IP versus being viewed as a trusted advisor to clients?

[George Schindler:]

Yes, it’s more of the ladder and it’s exactly what we got. We got some nice intellectual property with SCISYS merger. We got some nice IP from the Meti merger and we’ll look to continue and find more of those types of opportunities going forward. So that’s an important dimension of our inorganic growth around IP.

[Paul Treiber:]

All right. Thank you.

[Operator:]

Your next question comes from Deepak Kaushal from GMP. Your line is open.

[Deepak Kaushal:]

Hi. Good morning, guys. Thanks for taking my questions. George, you gave some good color on the retail side and on the financial services side. Last quarter, you mentioned the healthcare industry, I’m just wondering how that is progressing. And really a bigger picture here, through this COVID pandemic, what kind of organic growth or new opportunities has this afforded you guys in the healthcare industry in particular?

[George Schindler:]

Yes. Well, health actually was a revenue growth engine this quarter. I was talking more about some of the future stuff. But, yes, health continues to be a big driver, and quite frankly, both on the government side and on the private sector side and even the linkage between the two, and so where we’re really putting some investments on health is in the government side because they’re going to play a heavier and heavier role. Having said that, we’ve had very strong growth in the life sciences space as they look at continued automation. And then we also, obviously, telemedicine will be a big opportunity in the future. I think that’s just, we scratched the surface during this unfortunate pandemic. But I think there’s going to be plenty of new opportunities around telemedicine. And again, IT and technology and data play a big role there as does data privacy, cyber security, et cetera. So I think there’ll be a lot of activity in this space. I didn’t – maybe I neglected to highlight that because I did that last quarter, but yes. Thanks for asking the question because it’s a big opportunity for us.

[Deepak Kaushal:]

Thanks. No, I appreciate that. So it sounds like as the economy’s open up, you’ve got these vertical markets like lighting up for financial services, obviously, you’re trying to deal with blockchain and modernization. You have retail manufacturing, even you mentioned energy. When you think of 12 to 18 months out, what other vertical markets should we think about potentially lighting up? Or do you think about being proactive in today to drive momentum in bookings in the next year?

[George Schindler:]

Yes. Well, one that you didn’t mention is space. I highlighted that a little bit. I think there’s going to be a lot of activity in the space sector, not just where it is today in government, but I think it’s going to explode even more in the future just some of the opportunities around data leveraging and harnessing the data that’s available there. I think that education is clearly going to be an area that will continue to blossom. It’s certainly been hurt, but I think there’s going to be a lot of spending that’s going to go in there. Some other opportunities I think, well, you mentioned energy. But also you mentioned financial services focus more on the banks right now, but I think insurance is also an opportunity that’s ripe, maybe even leapfrog were some of the other industries have been. So these are some of the areas we’re also looking at.

[Deepak Kaushal:]

Okay. That’s helpful. Thanks. How could I forget about space? I guess, welcome to the moon again, maybe Mars. So thanks again for taking my questions. Stay safe, all the best.

[George Schindler:]

Sure. Thanks.

[Operator:]

Your next question comes from Kevin Krishnaratne from Desjardins Securities. Your line is open.

[Kevin Krishnaratne:]

Hey there. Good morning. Why don’t you talk about your partner relationships specifically within SaaS and cloud vendors now? I know you’re vendor agnostic, but just given some of the momentum based on the cloud, the cloud providers who seem to be pushing new programs and initiatives to help drive sales on their own products, what are you seeing and how does that tie into the level of unique IP that you’re building when you’re leveraging other pack? I’m just curious about your thoughts there.

[George Schindler:]

Yes. No, that’s – thanks for the question. And I did highlight that we’re putting more and more emphasis on those technology partnerships. But in a way that it’s still appropriate for our clients because different clients have different needs, they have different partnerships. And as a systems integrator, we need to be bringing the partnerships in and lockstep with them. Having said that, we’ve established partnerships with all of the major cloud providers. We have different executives that run each of those partnerships so that we can maintain the separation and we’re investing in those partnerships, in many cases co-creating with some of those providers. And it doesn’t just end with the cloud providers that obviously extends into a number of the platform providers. So it’s a very important opportunity for systems integrators. And then as it relates to our own intellectual property, of course, we want to build our intellectual property to both be agnostic, but also architected in a way to leverage and build upon those platform providers and so we’re doing just that. So it’s a nice synergistic opportunity. And again, the driver is what’s best for our clients.

[Kevin Krishnaratne:]

That’s really helpful. And on the IP, there were some questions on mix of IP and mix of digital. Have you talked about maybe another way thinking about mix of tech, for example, SaaS, have you talked about the level of SaaS that’s running through your business, whether that’s your own or vendor SaaS?

[George Schindler:]

Yes. Well, I mean, on our own, I can tell you that well over half of our intellectual property is sold in a SaaS basis. I don’t have the other number. Maybe we can look into that. Obviously, it’s an important trend, and yet we’re seeing a mix. The reason it’s not 100% of our IP is it’s sold in that way. There still is a need for differentiation and some clients some of our largest enterprise clients look at that a little bit differently. So – but I could certainly look at that as well.

[Kevin Krishnaratne:]

Okay. Very good. Thank you. Just one last one for me. Just on vertical – thoughts on vertical. You see in the last few quarters, retail and MRD have obviously contribute to some of that revenue softness, but you did see a nice pick up in the retail and the bookings. When do we start to see some of that translate to revenue? Do you see that in Q3? Is that more of a Q4 dynamic in terms of revenue growth?

[George Schindler:]

Yes. Well, as I mentioned in my remarks, we definitely are going to see revenue growth globally across the company in Q3, which is right in line with our plan, our expectations and what we talked about. There are some areas that are accelerating faster than others. And I’ll remind you some of the growth is going to come from bookings, not just from this past quarter, but we’ve had strong bookings, last three quarters in a lot of these areas. So it’s going to come online at different levels, but MRD is recovering in certain areas. And I also remind you, if you look at the segment level revenue growth, we did have growth in Central and Eastern Europe in the quarter, and they have heavy manufacturing, retail and distribution particularly on the manufacturing side. So we’re seeing opportunities for growth.

[Kevin Krishnaratne:]

Okay, great to hear. Thanks a lot. I’ll pass the line.

[George Schindler:]

Okay.

[Maher Yaghi:]

Thank you, Kevin. And we’re running late here on the call. So I just wanted to remind everyone that a replay of the call will be available either via our website or by dialing 1 [phone] and using the passcode 6169566 as well. A podcast of this call will be available for download within a few hours. If you have any questions, you can direct them to me at [phone]. Thank you, George and François. And thank everyone for participating in today’s call. Hope to see you again soon.

[George Schindler:]

Thank you.

[François Boulanger:]

Thank you.

[Operator:]

This concludes today’s conference call. Thank you for participating. You may now disconnect.