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Net debt ~C$2.0B, net debt/EBITDA ~1.2x; a 20% EBITDA decline would push leverage to ~1.5x, still within investment-grade covenant comfort.

~75% of debt is fixed-rate; a 20% rise in floating-rate costs adds ~C$15–20M annual interest expense, modest vs C$1.6B EBIT.

Medium intensity; US-China trade tariffs on metals and components disrupt supply chains.

Labor talent pools concentrated in India and Eastern Europe; geopolitical disruption in either region could constrain delivery capacity significantly.

Top markets: UK (GBP), France (EUR), Australia (AUD); EUR/GBP weakness vs CAD has historically compressed reported margins by 200–300 bps.

Operations in 40+ countries; ~55% revenue from outside North America, with EUR and GBP as largest FX exposures creating meaningful translation risk.

Medium intensity; commodities: Steel, Aluminum, Copper, Crude Oil (fuel), Rare Earth Elements, Plastics/Resins; geopolitical: US-China trade tariffs on metals and components disrupt supply chains.

No single vendor exceeds 30% of input costs; CGI owns most IP and infrastructure, limiting substitutability risk to niche subcontractors.

Managed services and IT outsourcing (multi-year contracts); cloud termination risk is moderate—CGI operates hybrid/on-premise environments for most clients.

IT consulting and systems integration; project-based work less cloud-dependent, reducing single-provider termination exposure materially.

High API coupling risk is client-side, not CGI-side; CGI's proprietary IP (e.g., CGI Advantage ERP) creates strong client lock-in, not vendor dependency.

Not applicable; CGI's revenue model is fee-for-service IT contracts—no investment contract, common enterprise, or profit-from-others'-efforts structure.

Medium

High exposure: CGI processes government and healthcare data across EU and UK; GDPR compliance is operationally embedded but remains an ongoing audit and liability risk.

Low-moderate; CGI holds <5% of global IT services market; no dominant market position in any single geography to trigger meaningful antitrust scrutiny.

Medium burden; regimes: FAA, DOT, OSHA, EPA, ITAR, FTC; Export controls and defense procurement rules create contract concentration risk.

~75–80% recurring (long-term managed services, outsourcing retainers); ~20–25% transactional (consulting projects, systems integration engagements).

Primary monetization via multi-year outsourcing contracts (5–10 year terms) with annuity-like cash flows; secondary via time-and-materials consulting billings.

Cost-plus and fixed-price contract mix; inflation in labor costs (largest input) compresses margins on fixed-price deals—key stress point in wage-inflationary environments.

Moderate; long-term contracts limit near-term repricing but include CPI escalators; competitive RFP market constrains aggressive price increases at renewal.

Gross margin ~28–32%; managed services higher (~35%), consulting lower (~22%); below software-pure peers but stable and predictable.

No meaningful free-rider leakage; services are billed and contracted. Churn risk is low given 5–10 year contract terms and high client switching costs.

Revenue growth is headcount-sublinear at scale due to automation and IP reuse; offshore delivery mix (~31% in India/offshore) improves productivity per dollar.

Doubling revenue requires ~60–70% headcount growth (not 100%) given IP leverage, automation tools, and offshore scaling; EBITDA margins expand modestly at scale.

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At 10x scale, CAC efficiency improves via brand and incumbency; however, government procurement rules limit sole-source awards, requiring continued RFP investment.

Weak direct network effects; value accrues from proprietary IP and domain expertise accumulation, not user-to-user interaction—durable but not exponential.

AI displaces junior consulting and testing roles (~15–20% of workforce over 5 years) but expands managed services margins; net positive for asset-light delivery.

Tier 2 (resilient); ~45% of revenue from government clients provides counter-cyclical stability; private-sector IT discretionary spend is vulnerable in downturns.

Government and public sector (~45% of revenue); high retention, long contracts, but procurement-constrained and politically sensitive on pricing.

Financial services and utilities (~30% of revenue); regulated industries with high IT dependency and multi-year outsourcing contracts.

["11-0000 Management Occupations", "13-0000 Business and Financial Operations Occupations", "15-0000 Computer and Mathematical Occupations", "17-0000 Architecture and Engineering Occupations", "23-0000 Legal Occupations", "33-0000 Protective Service Occupations", "37-0000 Building and Grounds Cleaning and Maintenance Occupations", "41-0000 Sales and Related Occupations", "43-0000 Office and Administrative Support Occupations", "47-0000 Construction and Extraction Occupations", "49-0000 Installation, Maintenance, and Repair Occupations", "51-0000 Production Occupations", "53-0000 Transportation and Material Moving Occupations"]

0.3 (HIL — ~30% of characteristic roles agent-automatable)

Capex is low (~2–3% of revenue); capital allocation skews toward M&A (build-to-acquire strategy) rather than legacy infrastructure, indicating forward-state orientation.

0001061574

GIB