Good morning, ladies and gentlemen. Welcome to the CGI Fourth Quarter and Fiscal Year 2019 Conference Call. I would now like to turn the meeting over to Mr. Lorne Gorber, Executive Vice President, Investor and Public Relations. Please go ahead, Mr. Gorber..

Thank you, Valerie, and good morning. With me to discuss CGI's fourth quarter and fiscal year 2019 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 from Montréal at 9:00 a.m. Eastern Time on November 6, 2019.

Supplemental slides as well as the press release we issued earlier this morning are available for download, along with our 2019 MD&A, financial statements and accompanying notes, all are 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, except as required by applicable laws.

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 and to refer to the Risks and Uncertainties section of our MD&A for a description of the risks that could affect the company.

We are reporting our financial results in accordance with International Financial Reporting Standards or IFRS. We will 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.

With that, I'll turn it over to François now to review and provide context to our Q4 and full year financial performance, and then George will comment on our operational highlights and update our strategic outlook.

François?.

$331 million reinvested in our business, in talent, contracts and intellectual property; $620 million to complete the Acando, ckc and Sunflower mergers; and $1.1 billion to repurchase 12.5 million shares at an average price of $90.37. At the end of September, our net debt stood at $2.1 billion or a net debt-to-capitalization ratio of 22.9%.

This is up from 19.2% at the end of 2018 and remains well within our comfort zone. As a reminder, we took advantage of the low interest rate environment to renegotiate a portion of our long-term debt at more attractive rates earlier in the year. We have the overall financial capacity and the intention to continue building and buying in fiscal 2020.

Before turning the call over to George, I want to highlight a few outcomes from our recent strategic business planning process. First, we are closing our delivery center in Brazil. Second, we are refocusing the infrastructure operation in Portugal to be a nearshore delivery center, following the nonrenewal of our large infrastructure-only contract.

These 2 actions will result in an annual revenue impact of approximately $27 million in Western and Southern Europe, but once completed, will improve this segment's EBIT margin.

Finally, we decided to create 2 separate Northern European strategic business units, a new Scandinavia segment, with over 5,500 members in Sweden, Norway and Denmark, and which generated approximately $1.1 billion in revenue last year.

As we stand up this new segment, we are using the opportunity to optimize and restructure parts of our infrastructure business in Sweden. The second new segment in the region is Finland, Poland and Baltics, with 4,300 members, and which generated approximately $800 million in revenue last year.

We will provide restated historical data for the new segments when we report our Q1 fiscal 2020 results. The combined cost of these actions related to Brazil, Portugal and Sweden are expected to total $30 million to $40 million, the majority of which we plan to expense in Q1. Now I'll turn the call over to George..

a combination of managed IT services and business process services, to help clients mitigate costs and budget pressures, allowing reallocation of funds for innovation investment; strategic IT and business consulting, to enable business agility and cultural change; systems integration to support IT modernization efforts, to optimize existing and new technologies; and intellectual property, which serves as an accelerator to apply relevant innovations more quickly.

In the right combination, these services offer the innovation, agility and financial benefits our clients need, while delivering recurring revenue streams at higher margins for CGI. We've been building a pipeline of these longer-term, larger opportunities over the past year.

Our 2020 plans include increased investments in the business engineering capacity, intellectual property offerings and consulting expertise required to advance these opportunities.

In addition to the right balance of end-to-end services, we believe that CGI is uniquely positioned in terms of the level of trust we have earned with our clients in consistently delivering on their largest, most complex systems integration projects.

This is reflected by achieving all-time high client ratings for satisfaction, innovation and loyalty this past year. And importantly, 85% of our employees are now CGI shareholders, giving us the talent, capacity and engagement for continued excellence in delivery.

In fact, the ongoing investments in talent are perhaps our most important, as these put us in an even stronger position to retain and onboard new employees.

Taken together, our proximity model, range of services, client trust and ownership culture, along with our financial strength, makes CGI resilient during times of economic and political uncertainty.

Our capital allocation approach is aligned to this positioning and will be prioritized to drive revenue growth and double-digit earnings per share accretion.

Specifically, we will continue to invest back into our business, including in people, IP, new offerings and managed IT contracts to drive profitable growth and optimal service mix; fund an active metro market merger strategy to accelerate our growth and pursue a disciplined consolidation strategy within the IT services industry; and buy back our stock to increase returns to our shareowners.

In conclusion, we are one of the few firms with the scale, reach, capabilities and commitment to be our clients' global partner of choice. We continue to see a market climate conducive to achieving our strategic aspiration of doubling CGI over the next 5 to 7 years. Thank you for your continued interest and support.

Let's go to the questions now, Lorne..

Just a reminder that a replay of the call will be available either via our website or by dialing 1-800-408-3053 and using the pass code 5380304 until December 7. As well, a podcast of the call will be available for download within a few hours, and follow-up questions could be directed to me at 514-841-3355.

Valerie, if we could poll up for questions, please..

[Operator Instructions]. Our first question is from Richard Tse with National Bank Financial..

George, with respect to your comments on sort of the uncertain backdrop and the interest in using technology to drive efficiencies and save on costs, are you suggesting there that if we see a softening economy that demand for your services would not change and, in fact, they have the potential to sort of move higher?.

Yes. So that's -- it's something I've been talking about for a few quarters now, Richard, thanks for the question. What we see in this kind of economic environment is a different mix of the CGI services portfolio.

So you typically see that intellectual property, actually, the demand goes up because the capital requirements are different for intellectual property for our clients. And of course, it accelerates the benefits rather than building bespoke systems integration project. Same thing goes for managed IT.

But this is a little different because, typically, the managed IT goes up and the systems integration and consulting goes down a bit. In this type of economy, IP demand, as I mentioned, goes up. But this is a bit of a different landscape because most of our clients, as I mentioned, are only partway through their digital transformation.

And so by mixing those services, giving them savings on that managed IT services and allowing them to reinvest, actually accelerate some of CGI's growth and enables our clients to meet their demands. So I see this environment actually being in the longer-term and the intermediate term being positive for CGI, but we're in that shift.

We're in that shift period, where the demand curve is just changing, as we discussed, and that's why you see some of the softening of the bookings, short term. Intermediate term, I think it plays in our -- to our strengths..

Okay. And then with respect to your current base, obviously, you guys have a pretty substantial base of existing customers.

Can you just share with us, at this point in time, how many of those customers -- order of magnitude or on a percentage basis, maybe have moved to these digital transformation projects here?.

I would say the majority of our customers are in the midst of a set of digital transformation projects. Some are in the earlier stage, where we're actually giving them some consulting help. Some are in the middle stage. I don't think anybody is clearly at the end stage.

And if they are, they're reinvestigating what else they have to do from a digital transformation perspective..

Okay. And just one last one for me.

And regarding your comments on Brazil and Portugal, should I read that to mean you're kind of backing off of South America and sort of doubling down on your plans for Europe?.

Yes, that would be the correct read on that. In fact, we've been, as you know, with the Logica merger, we had a lot more operations. We've been necking that down. We really had necked down Brazil to a delivery center only.

And given the risk and the declining demand for that and the opportunities in other parts of Europe, we made this strategic decision..

Our next question is from Jason Kupferberg with Bank of America..

I just had a question, maybe a couple, actually, on margins. So the adjusted EBIT margins were down 10 basis points year-over-year in the quarter. I know that's kind of a reversal of the trend we've been seeing for a while. You did call out, I think, one particular U.S. Federal project that had a charge related to it.

So I was curious just if you could size that for us? Just trying to get a sense of the underlying margins. And as we think about fiscal '20, I mean I know you guys don't provide specific guidance.

But should fiscal '20 be another up margin year, recognizing that you do have plans for some elevated reinvestments? And I'm not sure how you're going to treat those Brazil and Portugal costs.

Will they be in or out of adjusted EBIT?.

Yes. So on your last question, those costs that I mentioned, those will be out of the adjusted EBIT. I will remind you that, you're right, it's just the quarter where the margins are 30 basis points higher over the year on, really, the strength of our managed IT, of our growth and the excellence in our ability to integrate recent mergers.

Also remind you that we do have a merger, rather large merger, that's still undergoing. And I pointed that out in Northern Europe, with Acando, and as we see that merger integration successfully complete. And we're pretty disciplined about that.

And then the mix of business with IP and managed IT, certainly, our plan for those double-digit margins would be -- or double-digit EPS accretion would be to continue to expand our margins next year..

Okay. That's helpful. I was just curious also on the bookings, the new business mix there. I think it was only 20%, that's kind of well below typical levels. This can be lumpy, certainly, quarter-to-quarter, but it did just kind of stick out as being particularly low.

It sounded like you had a lot of really positive renewal activity, so it may have been a function of that.

But I just wanted to see if there were any other callouts or any reason to believe that we won't go back towards more sort of historical mix in the bookings as we look forward from here and based on what you see in your pipeline?.

Yes. No, Jason, that's a good observation. And as exactly as you pointed out, we did have a number of renewals and extensions. I will point out, though, that some of those are actually add-on business, so that's not all just rolling over existing business.

In fact, many of those, and we pointed that out, have add-on opportunities given this environment that we're in. And this is a bit of a natural shift when you talk about returning to the new level of bookings.

As I've been mentioning, we had higher -- a little bit higher than average on the new side in our bookings, and that was new systems integration and consulting clients. And now, as we continue to sell more services and extend that SI&C into managed services, it will show up more in the existing client rather than the brand new business.

But I think it's actually a richer mix of business and, therefore, it will drive some higher margins. So that's where we are right now in the evolution of the business mix..

Okay. And just last quick one for me.

Any way you can help us size what the total revenue contribution from SCISYS and Sunflower might be in fiscal '20?.

François, do we have the....

I don't have the specific, but perhaps we can take it to off-line what's going on there..

Yes. What I can tell you, it's over 800 employees -- members that will be joining CGI, about half in Germany, half in the U.K., so it will be a nice uptick there..

Our next question is from Ramsey El-Assal with Barclays..

I wanted to ask about the strength in the U.S. Federal business this quarter. You saw some nice growth there. I'm just wondering if I can get a little more color on that. And then in addition, I had a broader question about is there an impact to decision-making on contracts when it comes to U.S.

election cycles, typically? Is there anything we should expect going into, obviously, a presidential cycle? Right now, we're going through an election -- regional election cycle as well.

Just wondering if there's any takeaway there or not?.

Yes. So we have -- thanks for pointing out the strength in the federal business. That's really -- the growth is mainly on the strength of bookings we had over the trailing 12 months, 18 months, really. Projects in the federal space sometimes start up a little slower given the bureaucracy there.

But as I've been pointing out, so really, that's a nice tailwind from prior quarter's bookings. And we continue, obviously, to see that strength in the seasonally strong quarter -- fourth quarter that you see there. When you move into an election cycle, you're right, new starts tend to lean. And it's really -- this is where incumbency status rules.

And given the vehicles that we continue to win positions on and the incumbent status that we have in a number of the big agencies, that will propel our continued strength, I believe, straight through the election cycle..

Great. That's helpful. And one follow-up for me. I also wanted to ask about your metro market strategy.

Can you help us think through -- given it's a key growth driver next year, can you help us think through sort of where you are in that broader, longer-term journey in terms of the addressable market penetration rates? What inning are we in with that? Is this the gift that you'll keep to want getting for many, many, many years? Or are you sort of -- do you have a plan, and you're penetrating it to some degree this [indiscernible]?.

Yes. So we do have a plan. We are penetrating it. I mentioned we are now at scale at four additional markets. I think that puts us in the mid-20s. When we look at where, as a percentage of the total addressable market, we're at scale maybe in 25-or-so percent of the metro markets we've identified.

So we have a lot more growth to go there, and we're going to be disciplined then. As you might expect, a lot of that opportunity is in the United States, which continues to show strength in the economy, albeit slowing, and opportunities for us to continue to accelerate our M&A in that market. So that's kind of where we are..

Our next question is from Maher Yaghi with Desjardins..

Congratulations on another year with double-digit EPS growth. I wanted to maybe step back and ask you more a bigger question -- a bigger picture question regarding your position as a consolidator in the industry.

When you look at the opportunities that you have, apart from the metro market acquisition path that you have been on, when you look at larger transactions, what are you looking for now versus what maybe you have looked at in the past? Have you changed the way you look at large M&A transactions? Are you looking for higher-margin companies, companies with more IP? Or like you've done in the past, are you looking for companies that you can improve on in terms of margins that have struggled? Or just trying to figure out your -- and also geographically, where you'd rather have these companies positioned? And my second question is on your revenue growth.

If I'm not mistaken, your organic revenue growth, excluding acquisitions, was 4% to 4.5% in the quarter, up sequentially again. I wanted to know what your views are on that metric.

Are you satisfied with that number, or you're hoping to achieve a higher number in 2020?.

Yes. So maybe I'll start with the last question, Maher. I think there is opportunities for us in certain geographies to accelerate that organic growth, particularly as I look at places like the U.S., where now the state and local business has stabilized. For sure, we should be attacking more growth.

I mentioned some of the investments we're making in our business engineering expertise, which are really kind of our forward engineers. Many of them are former CIOs that are helping to kind of drive that opportunity for that managed IT services.

And we see that opportunity expanding, really, throughout the geographies but certainly bigger opportunities in the U.S. And so that's really is an opportunity. Now, how? The pace of that, as you know, it's easier to turn systems integration and consulting opportunities rapidly into organic growth. It takes a little harder and longer.

And you have to be more disciplined on those longer-term deals because they're 10-year deals. You live with those -- with that deal for a longer period of time. So you need to make that right for both parties. And we have a lot of trust from our clients, and so we're in those conversations.

So turning that pipeline into bookings into revenue growth is something that will take a little more time on that side. But certainly, I see that as an opportunity for us to accelerate. When you look at the M&A strategy, as I mentioned, we're certainly not through on the metro market merger strategy. There's lots of continued opportunities there.

But to your direct question on the transformational opportunities, I think, again, that we haven't seen it yet on the larger transformational opportunities on valuation. But I actually believe that we'll see more attractive valuations as the market continues to shift and slow in different geographies, most pronounced right now in Europe.

And what are we looking for is really to increase our depth and breadth in the markets that we're already in. That's the main focus. Yes, it would be to fill out the full end-to-end services, so we'd be looking for something that has some IP but also some consulting and systems integration opportunities.

We're still looking for managed IT, including in the full -- the ability to have full end-to-end capabilities for these managed IT, which will include some infrastructure elements. Because from an infrastructure perspective, although we've necked that down as a percentage of the overall, it's really stabilized.

And it's still an important element of being our full-scale provider to our clients. So we're really looking to increase our breadth and depth on the end-to-end.

And certainly, our belief is that when we look around the market, there will still be opportunities when we bring it into the CGI model, to also improve the margins as we go through the integration, really, in most of those companies that we would be looking at..

Our next question is from Thanos Moschopoulos with BMO Capital Markets. ..

George, just to expand on your commentary regarding the macro environment. You've spoken for some time about the mix shift to managed services towards SI&C.

But typically, how has the demand environment evolve over the past 3 months? Are there any specific regions you'd call out where customers have become notably more cautious than they were last quarter?.

Yes. I would say, I don't know, it's been the last 3 months. But certainly, over the last 6 months, we have seen that shift to be a little more pronounced. But you know it really varies, and it plays into the strength of our diversity across geographies, our strength of diversity across industries and then, of course, the services that we offer.

So it's -- it really -- it varies, a little more conservative on some of the SI&C and more interest in the savings associated with managed IT in Europe; a little more bullish, of course, in the U.S.; Canada is a little bit in between.

From an industry perspective, I would say, manufacturing is really focused on getting some of those savings, not surprising, given some of the effects of the trade climate has on manufacturing. On the other side, financial services are looking to accelerate, so more demand for IP.

And then what's interesting is we see that both in the retail and in the communications sector, the pipeline actually growing for some of our consulting and systems integration services as they look to integrate new technologies, kind of they're on the second wave, if you will, of digital transformation, given that they're consumer-driven, kind of on the tip of that, looking at more artificial intelligence, data analytics in -- into their portfolios.

And then in communications, really investing in 5G and the opportunities. It's still early days on that, but we kind of see that. That's probably why this shift is a little different than the last economic downturn.

Where you don't see that, that strong shift down certainly weakening on the consulting and system integration but still demand there, but still the uptick on the managed services. So intermediate term, I think the shift will be good for CGI. Short term, there's always disruption in that..

Great. And with respect to the actions you're taking in Portugal, Sweden and Brazil, you called out the restructuring impact.

What would be the revenue impact associated with those actions?.

It's about $20 million to $30 million revenue impact out of that -- out of those operations. And -- but again, we believe that we'll continue to be stronger because of it..

Okay.

And then finally, could you update us on the Acando integration?.

Update on Acando?.

Yes.

How it's progressing?.

Yes, it's progressing well. You see it does have some impact on the margin, short term, but it's progressing well. I've been there to talk to some of our newest members. We got a new set of strong leaders in. As we went through the business planning process, they've been fully engaged in that.

And again, I see that as strengthening our mix as being able to provide the consulting expertise required as part of those broader managed IT engagements..

Our next question is from Paul Treiber with RBC Capital Markets..

Just you reiterated the target to double the size of the company over the last -- over the next 5 to 7 years. You've mentioned that a number of times.

Can you just provide an update on how you think you're tracking to that goal? And what you may need to either keep doing or perhaps change or accelerate to achieve that goal?.

Yes. So thanks for the question, Paul. So as I've mentioned in the past, to me, it's really the combination of the Build and Buy. So as we approach 5% pure organic growth, what we really are looking for is 5% to 6% pure organic growth. You heard this quarter, we're at 4%, so that's moving along.

It's not where we want to be, need to be in order to get that doubling, but we're progressing along that path quite nicely. And on the other side, it's 5% to 6% on the inorganic growth, which would be targeting the 10% to 12% total growth. You hear in constant currency, we are at 7.7% this last quarter, so we're moving along that path.

And that's without, I'll remind you, without the transformational opportunity that we believe the market is more conducive to. So I would say we're tracking pretty well. We're not where we need to be, where we can be, but we're tracking that evolution very well..

And then in regards to the aspirations to achieve 5% to 6% organic, what do you see either in your pipeline or from a strategy perspective that gives you confidence in getting there?.

Well, the managed IT services deals are bigger by their very nature. So you think of a systems integration and consulting deal, regardless of how important they are to our clients, and we've done a lot of that. The reason I described them as a tip of the spear is they tend to be smaller, more discrete projects.

And as you move to managed IT, the opportunities get larger and the growth, therefore, in some of those deals. We take on new employees into CGI as well, and so you can actually accelerate your growth faster. So that's what gives me the confidence, and we're in those discussions. That's what's in the pipeline.

Of course, we have to work to get them into the bookings and then turn them into revenue, but that's what gives me the confidence..

Okay. And one last one for me. Just regards to the changes to Brazil and Portugal and then, I guess, the split up in Northern Europe.

Do you feel you're at the point where the organizational structure for the former Logica assets is now essentially fully optimized? Or asked another way, are there any areas in the former Logica assets you feel are underperforming your expectations?.

Yes. I would not say that they're fully integrated in with all of the services. And you see that in a number of our locations in Europe, where we could increase the intellectual property part of the business. And that's a key element of the business plans there in Europe.

As far as operating in the CGI model, 150% operating in the model, but there's still opportunities for us to continue to do that. And you even see in Central and Eastern Europe, there's still opportunity for us by introducing more IP and other services into the mix that we can continue to operate in that way.

I'm particularly pleased, if you want to look at what was an underperforming asset, clearly, was our Netherlands operations. And that has, as I mentioned now, the 4 straight quarter of increased revenue growth and margin accretion. And there's more opportunity to have now that they're operating in that moat..

Our next question is from Robert Young with Canaccord Genuity..

Maybe just to clarify some of the short-term comments.

It sounds like you're kind of a bit of weakness, particularly in short-term signings, some restructuring-driven factors? And maybe just be helpful, do you think that you can maintain constant currency growth over the next couple of quarters? I know you don't give guidance, but is that your expectation?.

Yes. Our expectation is to continue to grow, and that's what our plans are certainly oriented towards. The caution of anything is -- may see a pause in acceleration as we work through some of the shift in the environment. But certainly, growth is an important driver for us, and we believe we can continue that..

Okay. Great. And then the mix driven by renewals and expansions, that's a healthy thing. You're arguing 8 of the top 10 were large deals.

And so is this existing large deals that are rolling forward with some add-ons? Or are you seeing the conversion from some of these short-term consulting deals, the tip of the spear you're talking about, into large deals? Is that working? Or is this just big deals you're getting a lot on?.

No, no, no. It's beginning to work. These are -- some of those were actually conversion from SI&C work into more elements of managed services. And like I said, there were also add-on opportunities there, but it's a mix. But in all cases, it's adding on additional work. In some cases, it's managed services, adding on consulting.

In some cases, it's system integration, adding on and converting into managed services. So it's definitely a strength, and that's why I pointed it out..

Okay. And what we can see in the numbers, the shift towards the renewals and the shift towards outsourcing and the way that you report the bookings mix, this is -- these numbers are showing that the strategy is working over the last several quarters.

Do you expect to see that trend in the numbers continue over the next, say, year? Should we expect to see that?.

We do expect that to continue. And as you know, our long-term target is to get to that 70% managed services. And the reason for that -- and the 30% systems integration and consulting, just to remind you, the reason we do that is that gives us the highest margins but also the best opportunity for growth. If it's a 100% managed services, you miss a wave.

If it's a 100% systems integration and consulting, you leave opportunity on the table. And so that's why that mix. Right now, it's tilting now, starting to go over. I think it's 53%, 54% managed IT this quarter, so you see it tilting in the direction we want.

But there's a lot of opportunity to continue to expand that, and that's the opportunity as well for expanded margin..

Okay. Maybe one last little question, continuing the question on the U.S. government, the elections next year. I think there's some talk about government shutdown. Maybe refresh -- you've said that's a low area of risk for you in the past, maybe just refresh that..

Yes. I was with our team in federal in the U.S. just 1.5 weeks ago. And there is an opportunity that they don't come to a conclusion here at the end of November, and there is another government shutdown. I'm not -- it's not clear to me that that's likely, but it's hard to determine what's likely anymore in politics.

So I'm not going to go to make that decision. But what I can tell you is we're positioned very well. In past shutdowns, we've had a small, very small impact. Typically, that can be mitigated within quarter, depending on when it happens or very, very shortly thereafter. I'll remind you, most of our work is deemed to be mission-critical.

When a government shuts down, it doesn't mean that everybody stops working. And a lot of our work in the managed services and the intellectual property can continue, even if the government isn't working and then -- there might be a lag in the cash.

So I don't see a big impact for us, and that's what the team assured me when I was down there last week..

Our next question is from Howard Leung with Veritas Investment..

I just wanted to ask about the -- George, one of your comments, you mentioned that in Europe, there was a lot of business wants through -- there's interesting cost savings through managed services, IT in Europe.

Do you find that for those wins, there was a little more kind of price or cost competition? Or were you able to win through additional service offerings?.

Yes. No, it's a great question. And what I can tell you is we're very disciplined. As I mentioned, these are 5-, 7-, 10-year deals. And although, of course, we want to give the cost savings, and we design our offering to provide those cost savings early in the cycle for our clients, it's very important that we design those deals to be also good for CGI.

And so we're not -- we don't get into that game. In some cases, we'll walk away from deals, where it's short-term cost savings and only based on price and not based on, really, for our clients, the transformation that they need. And so we're very careful with that.

It's why these relationships and this trust and what we've been doing over the last few years on the systems integration side, that's why I pointed out that's so important, was we're not going to get into that price game. There are some clients that will buy that way. That's just reality. But we tend to stay away from those types of opportunities..

Right.

And for those clients that tend to do that, are they in a particular sector in Europe or a particular vertical, maybe?.

No, it varies. It's usually how pronounced maybe what they need and sometimes the -- what they -- how they procure. But again, with the clients that we're talking to in general, we're seeing a more -- a different approach, given that they're in the middle of a digital transformation, and they can't just stop that..

Right. No, that makes sense. And then just maybe one final one for François.

IFRS '16, when that gets adopted, because the lease expense shifts to D&A and interest, how is that going to affect adjusted EBIT margins going forward?.

For sure, it will have -- it will, at least on the margin, overall margin, we'll have a little bit of pressure in the first years of the lease, as you know, because we'll have -- we'll have some more interest at the beginning of the debt than in the future, so we'll reverse naturally after.

But as for specific -- for next year, I don't see a -- very, very minimal impact. As you -- if you saw the financial statement, for sure that, that will go up by $850 million, but the impact on the P&L will be very minimal next year..

Maybe, Valerie, we'll have time for a last question..

Yes. And maybe before we do the last question, I should correct. I mentioned that we had 800 people in sites, it's really over 600 people. And we'll get that revenue number to you afterwards as well. I misspoke there..

Our last question is from Deepak Kaushal with GMP Securities..

George, guys, I was just wondering -- George, you signaled a shift in the demand curve a couple of times. And you even made a minor comparison to the previous downturn. It sounds like you're also saying that customers are still willing to invest to cut costs rather than cut cost to cut costs.

Have you -- is that correct? Or have you seen the cut costs to cut costs in some markets? And how long can we expect this short-term kind of disruption to last? And what you're seeing? And then I have one follow-up to that..

Yes. No, no, no. That's -- it's the right way to phrase the question, because we are seeing a difference in this cycle, particularly as it pertains to IT. So IT is so embedded now into the business plans of our clients into the business. In some cases, it is the business of our clients.

They're cutting costs in other places, and they're using IT to cut costs in other places. But you're absolutely right, they're looking to cut costs in the IT operational elements, but they are reinvesting those in the IT that's going to drive their business forward. So that's what we're seeing right now, pretty much in every industry..

Okay.

And just a follow-up on that, is that -- from your customers, is this a reflection of their caution around the macro uncertainty? Or are they actually seeing a slowdown from their end customers?.

I think it's those two. I think it's a little of both. I think it's caution that they have and that they're seeing some of that. However, I pointed out the systems integration and consulting is strong in some of those consumer-driven areas, so I think it's a general caution..

Okay.

And are we holding our breath for 3 months, 6 months, 9 months? So what's kind of your gut telling you at this stage?.

Well, I don't know if we're holding our breath, given that we think that we can actually help them in this environment. But I do think this shift will play itself out over the next several quarters..

Thank you, everyone. We look forward to having you join us on January 30 for our Q1 fiscal 2020 results, followed by our Annual Shareholder Meeting. Thank you..

Thank you..

Thank you..

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